PURCHASE AND SALE AGREEMENT
[Magnolia Mall, Florence, South Carolina]
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of the
30th day of June, 1997 by and between MAGNOLIA RETAIL ASSOCIATES, L.L.C., a
Delaware limited liability company ("Seller") with an office at c/o Equity
Group Investments, Inc., Two North Riverside Plaza, Suite 1000, Chicago,
Illinois 60606; and The Rubin Organization, Inc. ("Purchaser"), a Pennsylvania
corporation with an office at The Bellevue, 200 South Broad Street,
Philadelphia, Pennsylvania 19102.
RECITALS:
A. Seller is the owner of (a) a certain parcel of real estate (the
"Tract 10-B Property") in the City of Florence, County of Florence, State of
South Carolina, which parcel is more particularly described in Exhibit A
attached hereto; (b) the leasehold estate under the ground lease described in
Exhibit B attached hereto (the "Ground Lease") which demises, among other
things, the real property located in the City of Florence, County of Florence,
State of South Carolina, which parcel is more particularly described in
Exhibit C attached hereto (the "Shopping Mall Property"), and upon which is
located a retail shopping center commonly known as "Magnolia Mall"; (c) rights
to purchase all or a portion of the Shopping Mall Property from the Ground
Lessor (as such term is defined in Exhibit B) in accordance with the terms and
provisions of the Option Agreement and the Anchor Pad Purchase Agreement
described in Exhibit B attached hereto. For reference purposes herein, the
Tract 10-B Property, the Shopping Mall Property and all of Seller's rights and
interests under the Option Agreement and the Anchor Pad Purchase Agreement
shall sometimes collectively be referred to as the "Real Property".
B. Purchaser is the manager of the Shopping Mall Property pursuant to
a Management and Operating Agreement dated as of January 1, 1995 ("Management
Agreement") between Seller and Equity Properties and Development Limited
Partnership, an Illinois limited partnership ("EPDLP") as assigned by EPDLP to
Purchaser.
C. Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, the Property (as such term is hereinafter defined), each
in accordance with and subject to the terms and conditions set forth in this
Agreement.
D. Purchaser and Seller originally intended that the closing would
occur no later than June 30, 1997. Accordingly, certain provisions of this
Agreement provide that certain attributes and risks of ownership not
customarily borne by purchasers until the transfer of title will be borne by
Purchaser from and after June 30, 1997.
THEREFORE, in consideration of the above Recitals, the mutual
covenants and agreements herein set forth and the benefits to be derived
therefrom, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Purchaser and Seller agree as
follows:
1. PURCHASE AND SALE
Subject to and in accordance with the terms and conditions set forth
in this Agreement, Purchaser shall purchase from Seller, and Seller shall sell
or cause to be sold to Purchaser, all of Seller's right, title and interest in
and to (i) the Real Property, including without limitation Seller's fee
interest in the Tract 10-B Property, Seller's leasehold interest in the
Shopping Mall Property pursuant to the Ground Lease, and all of Seller's
rights and interests under the Option Agreement and Anchor Pad Purchase
Agreement; (ii) all buildings and improvements owned by Seller and located on
the Real Property as well as any and all of Seller's rights, easements and
privileges presently thereon or appertaining thereto; (iii) the leases of the
Real Property as of the date hereof and other leases entered into in
accordance with this Agreement, and all amendments thereto (the "Leases")
affecting the Real Property or any part thereof and all unapplied security or
other deposits paid under the Leases; (iv) all tangible personal property
owned or leased by Seller and used or useful in the ownership, operation or
maintenance of Real Property (or any portion thereof) and located at the Real
Property or used solely in connection with the Property, including without
limitation the personal property set forth on Exhibit E attached hereto
(subject to ordinary depletion) and all additions to or substitutions for the
foregoing or any part thereof between the date hereof and the date of Closing
(the "Tangible Personal Property"); (v) any and all of the maintenance,
service, advertising and other like contracts and agreements and equipment
leases (to the extent assignable and to the extent Purchaser is to accept an
assignment thereof, as provided below) with respect to the ownership and
operation of the Real Property and/or the improvements thereon and other
agreements entered into in accordance with this Agreement, and all amendments
thereto (the "Service Contracts"); and (vi) all other intangible personal
property owned by the Seller and used in the ownership, operation or
maintenance of the Property or any portion thereof, including without
limitation (A) to the extent assignable, the right to use the trade name
"Magnolia Mall" and all other trade names; (B) to the extent assignable and
obtained, all certificates of occupancy and other permits, licenses and
certificates held by Seller and necessary to occupy, operate and transfer the
Real Property (collectively, "Permits and Licenses"); (C) to the extent
assignable, all utility, security and other deposits and reserve accounts made
(and any refunds thereof) as security for the fulfillment of any obligation of
Seller or any person claiming by or through Seller in connection with the Real
Property; (D) if and to the extent in Seller's possession or control, all
files, budgets, reports, and other business records pertaining to the Real
Property including without limitation those relating to any marketing,
advertising or similar promotional fund or merchant's association
(collectively, "Promotional Organizations") relating to the Property
(collectively, "Business Records"); (E) all matured and unmatured claims and
causes of action which arise from events occurring from and after Closing; (F)
to the extent assignable, all warranties, guaranties and other assurances of
performance ("Guaranties and Warranties"); (G) to the extent assignable, all
telephone numbers and directory advertising agreements; and (H) to the extent
assignable, all surveys, drawings, plans, specifications, diagrams, reports,
environmental assessments and other architectural or engineering work product
if and to the extent in Seller's possession or control (collectively, the
"Plans and Reports"), all to the extent applicable to the period from and
after the Closing (as such term is hereinafter defined); (items (i) through
(vi) above are collectively referred to in this Agreement as the "Property").
All of the foregoing expressly excludes all property owned by the Ground
Lessor under the Ground Lease or by tenants or other users or occupants of the
Property.
Notwithstanding the foregoing, "Business Records" shall exclude (a)
internal memoranda, correspondence, analyses, documents or reports prepared by
or for Seller in connection with this Agreement or in connection with the
transaction contemplated by this Agreement, (b) appraisals, assessments or
other valuations of the Real Property in the possession of Seller, and (c)
communications between Seller and its attorneys (collectively, the "Excluded
Items").
2. PURCHASE PRICE
The purchase price to be paid by Purchaser to Seller for the Property
is Forty-Five Million Three Hundred Sixty-Five Thousand and No/100 Dollars
($45,365,000.00) (the "Purchase Price"). The Purchase Price shall be paid as
follows:
A. Down Payment. Purchaser shall, within one (1) business
day from the date of this Agreement, deliver to Seller the sum of One Hundred
Thousand and No/100 Dollars ($100,000.00) (the "Initial Down Payment"). If
Purchaser does not terminate this Agreement pursuant to and in accordance with
Section 10 (A) below, then (i) prior to the end of the Review Period (as
hereinafter defined), Purchaser shall deliver to Seller the additional sum of
Nine Hundred Thousand and No/100 Dollars ($900,000.00) (the "Interim Down
Payment"), and (ii) on or before July 9, 1997, Purchaser shall deliver to
Seller the additional sum of Four Million Dollars ($4,000,000.00) (the "Final
Down Payment"). The Initial Down Payment and the Interim Down Payment and, if
delivered to Seller or required to be delivered to Seller, the Final Down
Payment, together with interest on such payments at the rate per annum equal
to 5.5%, are collectively referred to as the "Down Payment".
If Purchaser fails to timely terminate this Agreement in
accordance with Section 10.A. hereof, and fails to timely deposit the Final
Down Payment, Purchaser shall be in default, Seller may retain the Initial
Down Payment and the Interim Down Payment, as Seller's sole remedy, and this
Agreement shall automatically terminate.
B. Cash at Closing. At Closing, Purchaser shall pay to
Seller, by wire transferred current federal funds to a bank located in the
continental United States, an amount (the "Cash Portion") equal to the
Purchase Price minus the sum of (i) the Down Payment, plus (ii) the total
dollar amount of the "OP Units" (as defined below), if any, plus (iii) the
outstanding principal balance of the Existing Loan (as defined in Section 3.C.
hereof), and (iv) plus or minus, as the case may require, the closing
prorations and adjustments to be made pursuant to Section 4(C) below. Seller
shall give Purchaser its wiring instructions at least three (3) business days
before Closing. If the Down Payment exceeds the Cash Portion, Seller shall
return the balance to Purchaser at Closing.
C. OP Units. In accordance with the provisions set forth
below, if this Agreement is assigned by Purchaser to a TRO Assignee (as
defined in the Asset Purchase Agreement) (which hereinafter shall be referred
to as a "REIT Assignee"), Seller may elect to receive a portion of the
Purchase Price in the form of limited partnership interests ("OP Units") in
the REIT Assignee's operating partnership ("Operating Partnership"), which OP
Units shall be redeemable
as provided in the partnership agreement of the Operating Partnership into
unregistered common shares of beneficial interest ("Shares") in the REIT
Assignee (as defined in the Management Agreement) or into cash. In connection
with an assignment to a REIT Assignee, the REIT Assignee may designate a
controlled (directly or indirectly) affiliate of the REIT Assignee to accept
title to the Property ("Titleholder").
(i) As soon as reasonably practicable after the date
of this Agreement, but in no event later than July 31, 1997, Purchaser shall (A)
notify Seller in writing of the identity of Purchaser's proposed assignee, if
any, and (B) provide to Seller, or cause to be provided to Seller, information
(the "Information") regarding the ownership structure of the REIT Assignee, the
Operating Partnership and the Titleholder as each will be structured as of
Closing, including a description of the form of the ownership interests therein,
as each will be structured as of Closing, any applicable rights or restrictions
regarding the ownership interests, as each will be structured as of Closing, and
including all information regarding the REIT Assignee, the Operating Partnership
and the Titleholder, and the ownership interests therein as are generally
provided by the Operating Partnership to prospective sophisticated and
experienced investors including, without limitation, as applicable, partnership
agreements, certificates of limited partnership, and the REIT Assignee's
existing Trust Agreement and such other items as Seller may reasonably request.
Seller's sole remedy in the event of Purchaser's failure to deliver the
Information in a timely fashion shall be to have a corresponding extension of
time to deliver the Election Notice (defined below).
(ii) Seller shall have twenty-one (21) days from
Seller's receipt of such notice and copies of the Operating Partnership's
partnership agreement (or the most current draft thereof), the REIT Assignee's
existing trust agreement and the proxy statement in substantially the form to be
filed by REIT Assignee (and Purchaser will send final documents to Seller as
soon as available) to notify Purchaser in writing ("Election Notice") (A)
whether it elects to receive a portion of the Purchase Price as OP Units, (B)
the total dollar amount of the Purchase Price it would like to receive in OP
Units and (C) the identity of the proposed recipients of the OP Units and the
dollar amount to be received by each. Failure by Seller to elect to receive a
portion of the Purchase Price as OP Units on or prior to said 21st day shall be
deemed to be an election to receive the entire Purchase Price in cash.
(iii) If Seller elects to accept any OP Units, then
between the receipt of the Election Notice and Closing, (A) Seller shall provide
Purchaser with such information as Purchaser may reasonably request to determine
whether the issuance of the OP Units would comply with federal and state
securities laws and to determine accredited investor status as to each
prospective recipient of OP Units and (B) Purchaser shall provide Seller with
such additional information regarding the REIT Assignee, the Operating
Partnership, the Titleholder, the OP Units and the Shares in Purchaser's
possession or control or which is readily available to Purchaser, the REIT
Assignee or Titleholder as Seller may reasonably request. A proposed recipient
of OP Units which is not an accredited investor shall not be eligible to receive
OP Units and shall instead receive its portion of the Purchase Price solely in
cash.
(iv) Notwithstanding the foregoing, (a) the maximum
number of OP Units which Seller and/or its affiliates may receive at Closing may
not, when aggregated with
the number of OP Units received by Diversified Equity Corporation of Illinois,
Inc. ("North Dartmouth Seller") and its affiliates in connection with the sale
of North Dartmouth Mall to the REIT Assignee (or its nominee), exceed 1,300,000
OP Units; (b) Samuel Zell and affiliates thereof (excluding The Northwestern
Mutual Life Insurance Company and affiliates thereof) may not elect to receive
directly or indirectly OP Units which, when aggregated with the number of OP
Units received by Samuel Zell and affiliates thereof (excluding Arthur Cohen and
affiliates thereof) in connection with the sale of North Dartmouth Mall, exceed
650,000 OP Units; and (c) if Seller elects to receive a portion of the Purchase
Price as OP Units, the minimum number of OP Units which Seller and/or its
affiliates may receive at Closing may not, when aggregated with the number of OP
Units received by North Dartmouth Seller and its affiliates in connection with
the sale of North Dartmouth Mall to the REIT Assignee (or its nominee), be less
than 135,000 OP Units. Upon consummation of the Closing, Seller shall be issued
the number of OP Units determined by dividing (i) the total dollar amount of
consideration to be paid to Seller as OP Units by (ii) the "Market Price".
"Market Price" means the average closing sales price of the Shares on its
publicly traded exchange for the 20 business days prior to the earlier of (A)
the first public announcement of Purchaser's intended transaction with the REIT
Assignee (or any affiliate thereof) or (B) the first public announcement that
Samuel Zell or his affiliates may invest in the REIT Assignee (or any affiliate
thereof).
(v) Seller's election to accept a portion of the
Purchase Price as OP Units shall be conditioned upon (x) Seller's receipt at or
prior to Closing, of (1) confirmation that the issuance of the OP Units to
Seller has been duly authorized by the Operating Partnership and the REIT
Assignee or its general partner(s) and that all necessary consents to such
issuance have been obtained; (2) confirmation that the OP Units will be
redeemable at any time or times after Closing in accordance with the Operating
Partnership's partnership agreement; (3) confirmation that the Shares have been
duly authorized and reserved, for issuance upon the election of the holders of
OP Units to convert OP Units to Shares; (4) confirmation of such other legal
issues as are customarily and reasonably confirmed by sophisticated investors in
investments similar to the OP Units (and Purchaser shall use reasonable efforts
to cause such items to be delivered to Seller); and (5) evidence of the
unconditional obligation of the REIT Assignee and Operating Partnership to
provide the holders of the OP Units with the registration rights described on
Exhibit F attached hereto; and (Y) there being no material adverse change in the
attributes of the Operating Partnership, REIT Assignee, OP Units or Shares from
those disclosed to Seller in the Information. If such conditions are not
satisfied, then at Seller's election the Purchase Price shall be paid by
Purchaser entirely in cash.
(vi) There shall be no restrictions upon the holders
of OP Units with respect to (a) the purchase or acquisition by such holders of
additional OP Units or Shares or (b) the time period during which OP Units can
be redeemed as described above, except that such holders may not take any such
action which would cause REIT Assignee to lose its status as a real estate
investment trust under any applicable Law.
D. Allocation. Prior to Closing, and if requested by Seller or
Purchaser, Purchaser and Seller shall act reasonably in agreeing upon the
allocation of the Purchase Price among the land, improvements and personal
property.
3. EVIDENCE OF TITLE
A. Title Examination; Commitment for Title Insurance. Except
as otherwise provided in this Section 3, Purchaser shall have until the
expiration of the Review Period to examine title to the Property. Purchaser
shall be responsible for obtaining from Chicago Title Insurance Company (in
such capacity, the "Title Insurer"), at Purchaser's expense, a title insurance
commitment (the "Title Commitment") covering the Shopping Mall Property and
the Tract 10-B Property, under which the Title Insurer agrees to insure title
to the Shopping Mall Property and the Tract 10-B Property at customary rates
in the full amount of the Purchase Price under an ALTA Leasehold Title Policy
(as to the Shopping Mall Property) and an ALTA Form B (1992) owner's policy
(as to the Tract 10-B Property), in each case free and clear of all
restrictions, encumbrances and title objections, except for the "Permitted
Exceptions" (as defined below), and endorsing over the exclusion with respect
to rights of creditors (collectively, "Insurable Title"). Purchaser shall
instruct the Title Insurer to deliver to Purchaser and Seller copies of the
Title Commitment and all instruments referenced in Schedule B thereof.
B. Survey.
(i) During the Review Period, Purchaser shall, at
Purchaser's expense, be responsible for employing a surveyor or surveying firm
to prepare a survey (the "Survey") of the Property. Purchaser shall instruct
said surveyor to deliver a copy of the Survey to Purchaser, Seller and the Title
Insurer.
(ii) If Purchaser causes a Survey of the Property to
be made, the metes and bounds description in the Deed and Ground Lease
Assignment referred to in Section 4(B)(i) below shall, at Purchaser's option, be
based on and conform to the Survey provided said description accurately
describes the Real Property owned by Seller.
C. Title Objections; Cure of Title Objections.
(i) Seller shall convey and transfer all of Seller's
right, title and interest in and to the Real Property at Closing to Purchaser
subject only to Permitted Exceptions. The "Permitted Exceptions" shall consist
of only (a) the first mortgage (the "Existing Loan Mortgage") encumbering the
Property as security for the $25,500,000 loan (the "Existing Loan") heretofore
made to Seller by Teachers Insurance and Annuity Association of America
("Existing Lender"), which Existing Loan is evidenced and secured by the
documents described on the attached Exhibit G; (b) the Option Agreement and
Anchor Pad Purchase Agreement; and (c) those additional title exceptions and
survey items which are noted on the attached Exhibit H. If a Title Commitment
exception or Survey item arises between the date the Review Period expires and
the Closing (a "New Exception"), and such New Exception is not a Permitted
Exception, Purchaser shall have five (5) business days after it has been made
aware of same within which to notify Seller of any such New Exception (other
than a New Exception which is a Permitted
Exception on the attached Exhibit H) to which it objects. Any such New Exception
not objected to by Purchaser as aforesaid shall become a Permitted Exception.
(ii) Notwithstanding anything to the contrary
contained in the preceding paragraph (i):
(A) With respect to New Exceptions which are
not Permitted Exceptions and were caused by an intentional violation by Seller
of an obligation of Seller hereunder, Seller shall be obligated to remove or to
obtain Title Insurer's waiver of, or endorsement over, such New Exception. Any
violation of Section 5.C. shall be deemed "intentional" for purposes of this
Section.
(B) With respect to New Exceptions which are
not Permitted Exceptions but arose from events occurring prior to June 30, 1997,
Seller shall be obligated to remove or to obtain Title Insurer's waiver of, or
endorsement over, such New Exceptions but shall not be required to spend, in the
aggregate, more than $500,000. If such New Exceptions require the expenditure of
amounts in excess of $500,000 to be so cured, and Seller elects not to cure such
New Exceptions, Seller shall not be in breach under Section 9.A., but Purchaser
may elect either (a) to close subject to such New Exceptions (in which event
Seller shall credit Purchaser in the amount of $500,000 at Closing), or (b) to
terminate this Agreement in which event the Down Payment will promptly be
re-paid to Purchaser and neither party shall have any further obligation
hereunder except as expressly survives pursuant to this Agreement.
(C) With respect to New Exceptions which are
Permitted Exceptions, Seller shall have no obligation to cure the same. Seller
shall, upon receipt of any notice of a claim or lawsuit related to an event
occurring after June 30, 1997 which could result in a New Exception, forward a
copy of such notice to Purchaser and respond thereto in such manner as Purchaser
may reasonably direct, at Purchaser's sole cost and expense.
(D) Seller may delay Closing as necessary
for up to thirty (30) days in order to cure any exception which it is required
or may elect to cure hereunder.
(iii) If this Agreement is not terminated in
accordance with Section 9.A. as a result of a New Exception, Purchaser shall
consummate the Closing without any adjustment in the Purchase Price (except as
provided in paragraph (ii)B above) and accept title to the property subject to
all such exceptions and items (in which event, all such exceptions and items
shall be deemed Permitted Exceptions).
4. CLOSING
A. Closing Date. The "Closing" of the transaction
contemplated by this Agreement (that is, the payment of the Purchase Price,
the transfer of title to the Property and the satisfaction of all other terms
and conditions of this Agreement) shall occur at the Philadelphia office of
the Title Insurer at 10:00 a.m. on either (i) September 30, 1997, (ii) such
earlier date (provided all conditions precedent to Closing required in
accordance with Section 10 hereof have
been satisfied) as may be set forth in a written notice from Purchaser to Seller
received by Seller at least five (5) business days prior to such designated
date, or (iii) at such other time and place as Seller and Purchaser shall agree
in writing. The "Closing Date" shall be the date of Closing, provided the Cash
Portion (net of Seller's closing costs) has been wired to Seller and the OP
Units (if any) have been duly issued by 2:00 p.m. C.S.T. on that day; otherwise
the Closing Date shall be deemed to be the next business day. If the date for
Closing above provided for falls on a Saturday, Sunday or legal holiday, then
the Closing Date shall be the next business day.
B. Closing Documents
(i) Seller. In addition to the other items and
documents required elsewhere under this Agreement to be delivered to Purchaser
at Closing, Seller shall also execute and/or deliver (or cause to be delivered)
to Purchaser the following at Closing:
(a) a special warranty deed (the "Deed") in
form attached as Exhibit I duly acknowledged and in proper form for recording;
(b) a bill of sale in form attached as
Exhibit J, to which will be attached an updated list of the Tangible Personal
Property;
(c) a letter advising tenants under the
Leases of the change in ownership of the property in form attached as Exhibit K;
(d) assignments and assumptions of the
Leases and the Service Contracts that are to be transferred to Purchaser
pursuant to this Agreement, in the form attached as Exhibits L and M;
(e) if and to the extent not previously
delivered to Purchaser pursuant to the Management Agreement, (i) the originals
(or if not available, copies certified as true to Seller's Knowledge) of the
Leases and the Service Contracts, (ii) to the extent in the possession or
control of Seller, the originals (or if not available, copies) of the Permits
and Licenses, Business Records, Guaranties and Warranties and Plans and Reports,
and (iii) the originals (or if not available, copies certified as true) of the
Ground Lease, Option Agreement, Anchor Pad Purchase Agreement and the documents
(collectively, the "Existing Loan Documents") evidencing, securing, guarantying
or otherwise pertaining to the Existing Loan;
(f) a Non-Foreign Certification in form
attached as Exhibit N;
(g) a closing statement to be executed by
Seller and Purchaser, setting forth the prorations and adjustments to the
Purchase Price as required by Section 4(C) below;
(h) the schedule of past-due rents for the
Property, if any, as described in Section 4(C)(i)(b) below;
(i) at Purchaser's option, either (A) a
termination of the Management Agreement or (B) an assignment and assumption from
Seller to Purchaser of Seller's rights and obligations thereunder;
(j) an affidavit of title, in such form and
containing such reasonable terms and conditions as may be required by the Title
Insurer to enable Title Insurer to insure Purchaser's title to the Property in
conformity with Section 3 of this Agreement which Affidavit will not require
Seller to make any statements that would expand or increase any of Seller's
statements or obligations set forth herein, and specifically, (i) will not
require Seller to make any statements regarding the operation of the Property
(a) to the extent relating to the period following the end of the Review Period
or (b) which relate to matters which are the responsibility of Purchaser as
Manager of the Property and (ii) which will state that the knowledge of
Purchaser (as manager) shall not be imputed to Seller;
(k) a written statement of Seller setting
forth, to Seller's Knowledge, any changes in Seller's representations and
warranties which have occurred since the effective date of such representations
and warranties, which statement is to be delivered for informational purposes
only and any error therein shall not subject Seller to any liability whatsoever
or entitle Purchaser to any remedy whatsoever;
(l) corporate resolutions of Seller's
managing member's general partner authorizing this transaction, and an
incumbency certificate for the officers signing this Agreement and the other
documents to be executed and delivered by Seller pursuant to this Agreement;
(m) a current Certificate of Good Standing
for Seller;
(n) Intentionally Omitted;
(o) appropriate documents transferring
unencumbered title to any motor vehicles included in this sale for which
ownership must be evidenced by a separate title certificate;
(p) if necessary, the withdrawal by Seller
of any registration of the trade name "Magnolia Mall";
(q) assignment and assumption of the Ground
Lease (the "Ground Lease Assignment") in form attached as Exhibit O-1,
assignment of Option Agreement in form attached as Exhibit O-2 ("Option
Assignment"), and assignment of Anchor Pad Purchase Agreement in form attached
as Exhibit O-3 ("Anchor Pad Assignment"), each duly acknowledged and in proper
form for recording;
(r) assignment and assumption of the
Existing Loan together with such other documents as may be reasonably required
by Seller or Existing Lender (which will not provide that Purchaser shall have
any obligations materially in excess of those contemplated
by Exhibit P hereto) to evidence Purchaser's assumption of Seller's obligations
under the Existing Loan (including a release of Seller's obligations (unless
such release is waived by Seller as provided below) under the Existing Loan
documents with respect to events arising after the Closing Date) (collectively,
"Loan Assumption Documents") (Purchaser and Seller agree that an assignment and
assumption in substantially the form of Exhibit P, although not a required form
of assignment and assumption, is an acceptable form of such assignment and
assumption); and
(s) such other documents requested by
Purchaser, and consistent with the provisions of this Agreement, as may be
reasonably required to complete this transaction.
(ii) Purchaser. At Closing, Purchaser shall deliver
or cause to be delivered to Seller the following:
(a) the Cash Portion;
(b) such duly executed instruments and
verifications as are standard in the securities industry and are necessary to
evidence that the OP Units have been legally and irrevocably transferred and
which are in form reasonably satisfactory to Purchaser and Seller;
(c) a counterpart of the termination or
assignment of the Management Agreement, as the case may be;
(d) assignments and assumptions of the
Leases and the Service Contracts that are to be transferred to Purchaser
pursuant to this Agreement, in the form attached as Exhibits K and L;
(e) the closing statement referred to in
Section 4(B)(i)(g) above;
(f) a certificate that the representations
and warranties of Purchaser contained in this Agreement remain true and correct;
(g) resolutions/consents of Purchaser
authorizing this transaction, and an incumbency certificate for the officer(s)
signing this Agreement and the other documents to be executed and delivered by
Purchaser pursuant to this Agreement;
(h) a then current lease schedule for the
Property, containing the same types of information set forth on Exhibit B, and
certified by The Rubin Organization, Inc., to be complete and accurate to
"Purchaser's Knowledge" (as defined below) and in reliance in part on Seller's
representation set forth in 6.A(v)(a)(i);
(i) a written statement of Purchaser setting
forth, to Purchaser's Knowledge, any changes in Purchaser's representations and
warranties which have
occurred since the effective date of such representations and warranties, which
statement is to be delivered for informational purposes only and any error
therein shall not subject Purchaser to any liability whatsoever or entitle
Seller to any remedy whatsoever;
(j) the Ground Lease Assignment, Option
Assignment and Anchor Pad Assignment, each duly acknowledged and in proper form
for recording;
(k) the Loan Assumption Documents and such
documentation as may be reasonably required in replacement of the Guarantee and
Indemnity [as such terms are defined in Exhibit G hereto] required to be
released at Closing in accordance with the provisions of Section 10.D. hereof;
and
(l) such other documents requested by
Seller, and consistent with the provisions of this Agreement, as may be
reasonably required to complete this transaction.
(iii) Tenant Estoppels. Seller shall use diligent
efforts (which shall be limited to filling out the certificate for each tenant,
delivering the certificate to all tenants with a request that it be returned to
Seller within 10 days and if a tenant fails to timely return an executed
certificate, sending a written request to such tenant that the certificate be
promptly executed and returned) to furnish Purchaser with estoppel certificates
substantially in the form attached as Exhibit Q ("Estoppel Certificates") from
all tenants which are tenants of the Property as of sixty (60) days prior to the
Closing Date. Seller shall keep Purchaser reasonably apprised as to the status
of receipt of the estoppel certificates. Seller's liability under the
representations or warranties under Section 6.A.(v) as to a particular tenant
shall terminate upon the sooner of: (i) 270 days from the Closing Date, and (ii)
if Purchaser subsequently receives an Estoppel Certificate for the applicable
tenant (provided, if Purchaser receives an Estoppel Certificate which confirms
some but not all of the matters which are the subject of the representations and
warranties under Section 6.A.(v), then as to such Tenant, (x) if the Estoppel
Certificate was received prior to Closing, the representations and warranties
set forth in Section 6.A.(v) shall be deemed to omit such matters stated on the
Estoppel Certificate as to such matters and (y) if received after Closing, the
representations and warranties under Section 6.A.(v) shall cease to survive as
to such matters but shall continue to survive for the remainder of the survival
period described in clause (i) above as to matters not contained in such
Estoppel Certificate). Purchaser's failure to receive any Estoppel Certificate
shall not entitle Purchaser to terminate this Agreement or to exercise any
remedy hereunder except in the event of a breach by Seller (when made) of any
representation or warranty set forth in Section 6A(v), until the Representations
Expiration Date.
C. Closing Prorations and Adjustments
(i) The following items are to be prorated or
adjusted (as appropriate) as of 11:59 p.m. on the day before the Closing Date
and reprorated (if necessary) pursuant to Section 4(C)(ii) below, it being
understood that for purposes of prorations and adjustments, Seller shall be
deemed the owner of the Property on the day before the Closing Date, and
Purchaser shall be deemed the owner of the Property on the Closing Date:
(a) real estate and personal property taxes
based on the fiscal year used by the taxing authority and assessments for
improvements commenced after the date of this Agreement (on the basis of the
most recent ascertainable tax or assessment bill if the current bill is not then
available), with Seller obligated to pay all assessments relating to
improvements in progress or completed as of the date of this Agreement;
(b) the "minimum" or "base" rent payable by
tenants under the Leases; provided, however, that rent and all other sums which
are due and payable to Seller by any tenant but uncollected as of the Closing
shall not be adjusted, but Purchaser shall cause the rent and other sums for the
period prior to Closing to be remitted to Seller if, as and when collected. At
Closing, Seller shall deliver to Purchaser a schedule, certified to be complete
and accurate by Purchaser and Seller (to their knowledge), of all such past due
but uncollected rent and other sums owed by tenants (including without
limitation those described in paragraphs (c) and (d) below). Purchaser shall
include the amount of such rent and other sums in the first bills thereafter
submitted to the tenants in question after the Closing, and shall continue to do
so for twelve (12) months thereafter. In connection with the allocation of such
uncollected rent and other sums, the parties shall disregard any purported or
attempted designation by tenants of the months or periods to which their
payments should be applied. Purchaser shall not be obligated to start a law suit
to collect any such sums or to evict any tenant for the failure to pay any such
sums but Seller shall retain the right to do so after the Closing provided
Purchaser may not seek to terminate any Lease or evict any tenant. However,
Purchaser shall promptly remit to Seller any such rent or other sums paid by
scheduled tenants, but only if there is no deficiency in the then current rent
and such other sums;
(c) to the extent not set forth on the
schedule of uncollected rent described in Section 4(C)(i)(b) above, "percentage"
or "overage" rent that is (1) attributable to any Percentage Rent lease year in
which the Closing Date falls and (2) not yet due or payable (not including
estimated payments) as of the Closing Date (collectively, "Current Year
Percentage Rent"), shall be prorated as follows: promptly upon receipt by
Purchaser, Purchaser shall furnish to Seller copies of all sales reports from
tenants relative to Current Year Percentage Rent, including, without limitation,
all sales reports with respect to any tenants whose Percentage Rent lease years
have expired as of the Closing but whose sales reports were not delivered to
Seller as of the Closing Date and sales reports of any tenants whose Percentage
Rent lease years expire after the Closing, and the amount of any Current Year
Percentage Rent shall be payable in accordance with such tenant's Lease as
existing as of the Closing Date, and Purchaser shall (to the extent not paid to
Seller by way of estimated payments prior to Closing) pay to Seller a pro rata
portion of such rent based upon the apportionment being made as of the Closing
Date (in
proportion to the relative number of days in the subject year occurring prior
and subsequent to the Closing Date), promptly after the date when such rent is
received from the tenant. The schedule referred to in Section 4(C)(i)(b) above
shall include an itemized breakdown of the total estimated payments made by each
tenant as of the Closing Date on account of Current Year Percentage Rent;
(d) to the extent not set forth on the
schedule of uncollected rent described in Section 4(C)(i)(b) above, any real
estate taxes, common area maintenance, mall maintenance, utility charges, water
and sewer charges, contributions to Promotional Organizations and other charges
to or contributions by tenants under the Leases that are attributable to the
operating year in which the Closing Date falls (collectively, "Current Year
Operating Charges") shall be allocated between Seller and Purchaser as follows:
Seller shall be entitled to retain amounts paid by (and shall be responsible for
the refunding of excess amounts paid by) tenants for Current Year Operating
Charges that are attributable to the period prior to the Closing Date; Purchaser
shall be entitled to retain amounts paid by (and shall be responsible for the
refunding of excess amounts paid by) tenants for Current Year Operating Charges
attributable to the period from and after the Closing Date. Any excess Current
Year Operating Charges payable by Seller shall be refunded directly to the
appropriate tenants. The schedule referred to in Section 4(C)(i)(b) above shall
include an itemized breakdown of the total estimated payments made by each
tenant as of the Closing Date on account of Current Year Operating Charges;
(e) Seller and Purchaser shall, as to each
of the Leases set forth on Exhibit S and any lease or amendment entered into
after the date hereof, allocate the responsibility for all leasing costs
(including but not limited to tenant improvement costs, tenant allowances,
leasing commissions, and attorneys' fees) as follows: Leasing costs payable
pursuant to leases and lease amendments to be assigned to Purchaser are to be
prorated between Purchaser and Seller as follows: Purchaser shall pay
"Purchaser's Pro Rata Share" and shall credit Seller for any part of
"Purchaser's Pro Rata Share" that has already been paid by Seller as of Closing,
and Seller shall pay "Seller's Pro Rata Share" and shall credit Purchaser for
any portion of "Seller's Pro Rata Share" that has not yet been paid by Seller as
of Closing. "Purchaser's Pro Rata Share" shall be a portion of the leasing costs
equal to the percentage that the base rent required to be paid under the
applicable Lease for the period from and after the Closing Date bears to the
total base rent required to be paid under the Lease over the entire term,
without regard to extension or cancellation options. "Seller's Pro Rata Share"
shall be the portion of leasing costs equal to the percentage that the base rent
required to be paid under the applicable Lease prior to Closing bears to the
base rent required to be paid under the Lease over the entire term, without
regard to extension or cancellation options. Except as aforesaid, Purchaser will
be responsible for and pay when due, if Closing occurs, all leasing costs for
Leases, to the party entitled to such payment and in accordance with the
Management Agreement, as fully as if the Management Agreement had terminated on
the Closing Date (whether or not the Management Agreement is in fact terminated
as of the Closing Date). Seller and Purchaser agree to pay when due all leasing
costs for which each is responsible, and to pay any leasing commissions payable
by each under this Agreement in accordance with the Management Agreement;
(f) the amount of unapplied security
deposits and other tenant deposits paid under the Leases, and the tenants'
portion of any interest required to be paid thereon, if any, which shall be paid
or credited to Purchaser at Closing;
(g) to the extent not paid by tenants, gas,
water, electric, telephone and all other utility and fuel charges, fuel on hand
(at cost plus sales tax), and any deposits with utility companies (to the extent
possible, utility prorations will be handled by final meter readings obtained
from the utility providers on the day immediately preceding the Closing Date);
(h) amounts due and prepayments under the
Service Contracts assigned to Purchaser under this Agreement;
(i) assignable license and permit fees;
(j) contributions of Seller to the
Promotional Organizations shall be adjusted and prorated by the parties based
upon the period to which such charges relate and any transferable deposits by
tenants with respect to such Promotional Organizations, all cash on hand and in
bank accounts and all reserves of such Promotional Organizations shall be paid
or credited to Purchaser at the Closing;
(k) rent payable under the Ground Lease,
together with any deposits with the Ground Lessor thereunder which will be held
by the Ground Lessor for the benefit of Purchaser following the Closing, if any;
(l) all interest and other required payments
related to the Existing Loan, together with any escrows on deposit with Existing
Lender which will be held by Existing Lender for the benefit of Purchaser
following the Closing;
(m) all costs and expenses incurred in
connection with work at the Property involving the installation of irrigation
equipment, including the cost of the equipment itself, shall be paid fifty
percent (50%) by Seller and fifty percent (50%) by Purchaser; and
(n) other similar items of income and
expenses of operation if and to the extent not paid or reimbursed by Tenants.
(ii) If any item of income or expense set forth in
this Section 4(C) is subject to final adjustment after Closing, then Seller and
Purchaser shall make, and each shall be entitled to, an appropriate reproration
to each such item promptly when accurate information becomes available. Any such
reproration shall be paid promptly in cash to the party entitled thereto.
(iii) For purposes of this Section 4(C). the amount
of any expense credited by one party to the other shall be deemed an expense
paid by that party. The terms of
this Section 4(C), to the extent they call for adjustments, prorations or
payments after Closing (collectively, "Post-Closing Adjustments"), shall survive
the Closing.
(iv)(a) It is the intention of the parties that
except as otherwise specifically provided above, Seller shall be entitled to all
income and responsible for all expenses accrued during the period of time up to
but not including the Closing Date, and the Purchaser shall be entitled to all
income and responsible for all expenses accrued during the period of time from,
after and including the Closing Date (as if the Management Agreement terminated
at Closing, even if the Management Agreement is instead assigned at Closing)
(b) Except as otherwise provided herein, in
the Management Agreement or in any document or instrument to be executed at the
Closing, as between Seller and Purchaser, if the closing occurs: (1) Seller
shall pay and be responsible for any liabilities resulting from claims for
injury to or death of persons which arise prior to June 30, 1997, (and if any
such amount is subject to a judgment lien as of Closing, then, subject to
Section 3.C.(ii)(b), Seller shall either credit Purchaser for such amount at
Closing or discharge such liability or provide adequate security for the contest
of such liability), and (2) Purchaser shall pay and be responsible for any
liabilities resulting from claims for injury to or death of persons which arise
from and after June 30, 1997. Purchaser and Seller shall cooperate with each
other to the extent reasonably necessary in connection with the defense of any
such claims. The provisions of this subparagraph (iv) shall survive the Closing,
and shall not benefit any third party.
D. Transaction Costs
Purchaser shall pay the cost of the title insurance premium
and the survey. Seller shall pay the cost of all transfer taxes or document
stamps attributable to the Deed, the Ground Lease Assignment, the Option
Assignment and the Anchor Pad Assignment. All other closing and transaction
costs (including, without limitation, sales and use taxes, mortgage or
intangible taxes and similar taxes or charges and recording charges) shall be
paid by Purchaser, except that escrow fees shall be divided equally between
Purchaser and Seller. Seller and Purchaser shall, however, be responsible for
the fees of their respective attorneys.
E. Possession
Upon Closing, Seller shall deliver to Purchaser possession
of the Property.
5. OPERATION OF PROPERTY PRIOR TO CLOSING
A. (i) Notwithstanding anything to the contrary contained in
the Management Agreement:
(a) Prior to expiration of the Review
Period, and except for the "Consent Transactions" (as defined below), Seller may
in the ordinary course of business modify, extend, renew, cancel or permit the
expiration of any Lease or Service Contract, or enter into any
proposed Lease or Service Contract which Service Contract is terminable as of
Closing or upon 30 days notice without any fee, without Purchaser's consent,
except that Seller may not without Purchaser's advice and consent in each
instance (which shall not be unreasonably withheld or delayed) modify, extend,
renew or cancel, or enter into, any lease for any space now occupied or
hereafter vacated by any of the tenants described in Exhibit T attached hereto
(each, an "Anchor Tenant"), or enter into a Service Contract which Service
Contract is not terminable upon 30 days notice or as of Closing (collectively,
"Consent Transactions").
(b) After the expiration of the Review
Period, Seller may not, without Purchaser's prior consent, which may not be
unreasonably delayed or withheld, (i) modify, extend, renew, cancel or permit
the expiration of the any Lease or Service Contract, (ii) enter into any
proposed Lease or Service Contract, or (iii) modify, extend, renew, cancel or
permit the expiration of the Ground Lease, Option Agreement, Anchor Pad Purchase
Agreement or any of the Existing Loan Documents.
(c) Should Seller seek in writing
Purchaser's consent for any such action, Purchaser shall respond in writing to
Seller (therein giving consent or specifying the precise nature of Purchaser's
objection to the action) within five (5) business days of receipt of Seller's
request. If Purchaser does not respond within said five (5) business day period,
Purchaser shall be deemed conclusively to have consented to the action requested
by Seller.
(ii) At least thirty (30) days prior to the Closing,
Purchaser will advise Seller as to which Service Contracts, if any, will be
assigned to Purchaser at the Closing. As to any of the other Service Contracts,
Seller shall upon written request by Purchaser give written notice canceling
such Service Contract as of the Closing Date and Purchaser shall pay any
cancellation fee in connection therewith.
B. From the date hereof until the Closing or earlier
termination of this Agreement, Seller shall not remove (or direct the removal
of) any item of Tangible Personal Property except as may be required for
repair or replacement or to retire obsolete property; Seller shall cause any
property so removed to be promptly replaced by property of equal function and
of equal or greater quality.
C. From the date hereof until the Closing or earlier
termination, Seller shall keep all existing insurance for the Property (as
described in Exhibit U) in full force and effect. Promptly after execution of
this Agreement, Seller agrees (a) to purchase such additional insurance as may
be necessary to reduce the deductible under Seller's property/business
interruption/boiler and machinery insurance coverage to $5,000 and (b) to name
Purchaser and Pennsylvania Real Estate Investment Trust (or Titleholder,
provided Pennsylvania Real Estate Investment Trust notifies Seller in writing
of the identity of Titleholder) as named insureds as their interest may
appear, under the Seller's general and umbrella liability (including
automobile liability) insurance coverage and as loss payees under the Seller's
property/business interruption/boiler and machinery insurance coverage.
D. Seller also covenants that between the date of this
Agreement and the Closing Date:
(i) Seller shall not take any action which violates
the Management Agreement, or fail to take any action required to be taken under
the Management Agreement (including without limitation the failure to spend
money in accordance with an approved budget pursuant to the Management Agreement
or in order to comply with the Management Agreement), and shall not direct
Purchaser as manager under the Management Agreement to take any action which
violates the Management Agreement, or to fail to take any action required to be
taken under the Management Agreement (including without limitation the failure
to spend money in accordance with an approved budget pursuant to the Management
Agreement or in order to comply with the Management Agreement), (1) which would
cause the Property to be operated, managed and maintained other than in a
substantially similar manner as the Property is currently operated, managed and
maintained, (2) which would violate or continue the violation of any Law (as
defined below), (3) which would violate the provisions of this Agreement, or (4)
which would cause any of the representations and warranties of Seller contained
in this Agreement to be incorrect, in any material respect as of the Closing, or
(5) which would cause any improvements, painting, repairs, alterations or any
other tenant finish work required to be performed by the landlord under the
Leases (or any amendments or extensions thereof) by their terms prior to Closing
not to be performed on or prior to Closing.
(ii) Without limiting the generality of the preceding
paragraph (i):
(a) Seller shall timely comply with its
obligations as Owner under the Management Agreement.
(b) Seller shall not cause any "Hazardous
Substances" (as defined below) to be placed in, on or under the Property in a
manner or in quantities that require remediation under applicable "Environmental
Laws" (as defined below).
(c) Seller shall not grant any new liens or
encumbrances against the Property, or grant any easements affecting the
Property.
(d) Seller shall not release or modify any
of the Guaranties and Warranties without the Purchaser's prior consent.
(e) Intentionally Omitted.
(f) Unless a Lease is terminated, Seller may
not apply the tenant security or other deposits under that Lease to cure any
defaults under that Lease.
E. Seller shall not be deemed to have breached any covenant
set forth in this Section 5 if the failure of such covenant to be complied
with is the result of an act or omission of Purchaser which is not authorized
by, or is in violation of, the Management Agreement.
6. REPRESENTATIONS
A. Seller's Representations and Warranties: Seller represents
and warrants to Purchaser that as of the date of this Agreement (unless
otherwise stated below):
(i) Seller is a duly formed and validly existing
limited liability company organized under the laws of Delaware. Seller is
authorized to own and convey title to land in the State of South Carolina.
(ii) Subject to obtaining the consent required in
accordance with Section 10.G. hereof, 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 it pursuant hereto (collectively, the "Seller's
Documents"), to consummate the transaction contemplated in this Agreement, and
to perform its obligations under this Agreement and the Seller's Documents. The
person signing this Agreement on behalf of Seller is authorized to do so.
(iii) Seller has not been served with any litigation
which is still pending with respect to the Property that would adversely affect
Seller's ability to perform its obligations under this Agreement, or that would
affect title to the Property after Closing or the enforcement of any of the
Leases, or that would materially and adversely affect the financial condition or
operation of the Property.
(iv) Purchaser has been given access to, or
possession of, complete and accurate copies of (a) the Ground Lease, the Option
Agreement, the Anchor Pad Purchase Agreement, and the Existing Loan Documents
existing as of the date of this Agreement, and (b) to Seller's Knowledge, the
Leases, the Permits and Licenses, the Guaranties and Warranties, the Service
Contracts and the Plans and Reports (and all amendments thereto) existing of as
December 31, 1996.
(v) (a)(1) the information contained in the schedule
of leases attached to and made a part of this Agreement as Exhibit D (the "Lease
Schedule") is complete and accurate as of December 31, 1996; and (2) there were
no leases, or to Seller's Knowledge, tenancies or other rights to occupy the
Property as of December 31, 1996 other than those set forth in the Lease
Schedule.
(b) Except as set forth in the Lease
Schedule or as previously disclosed to or learned by Purchaser as manager under
the Management Agreement:
(1) No action or proceeding has been
instituted against Seller (in which Seller has received process) by any tenant
of the Property which is presently pending in any court, except with respect to
claims involving personal injury or property damage, other than those referred
to in Exhibit V attached to and made a part of this Agreement and, with the
exception of claims or offsets referred to in Exhibit W, there are no
outstanding written claims for rent offsets or otherwise by any tenants against
Seller.
(2) Seller holds no security or other tenant
deposits.
(3) All security and other tenant deposits
have been held and, where applicable, returned in compliance with all applicable
rules, ordinances and statutes.
(4) There are no leasing commissions
outstanding which are payable out of rents.
(5) To Seller's Knowledge, each Lease is in
full force and effect.
(6) No default exists on the part of Seller,
or to Seller's Knowledge, any tenant under any Lease.
(7) No tenant has any defense, offset or
counterclaim against or with respect to rent and other sums payable by it under
its Lease except as set forth in its Lease.
(8) There are no concessions, free rent
periods, tenant improvement obligations or improvement allowances to any tenant
not specified in the applicable Lease.
If any Lease contains provisions which are inconsistent with the foregoing
representations and warranties, such representations and warranties shall be
deemed modified to the extent necessary to eliminate such inconsistency and to
conform such representations and warranties to the provisions of such Lease.
(vi) Intentionally Omitted.
(vii)(a) Except as may have been previously disclosed
to or learned by Purchaser as manager under the Management Agreement or as
described in the documents set forth on Exhibit X ("Environmental Reports"):
(1) Seller has no Knowledge of any failure
to comply with any applicable laws, regulations, ordinances, codes, judgments,
or other governmental requirements (collectively, "Laws") with respect to the
use, occupancy, construction or condition of the Property (collectively,
"Violations"), including without limitation zoning, planning, building, safety,
health, electrical, plumbing, or fire Laws and "Environmental Laws" (as defined
below) which has not been corrected to the satisfaction of the appropriate
governmental authority prior to the date of this Agreement.
(2) No written notice has been received from
any insurer of the Property requesting any improvements, alterations, additions,
corrections, or other work in, on or about the Property. Purchaser shall be
promptly notified if any such notice is received that Seller did not obtain from
Purchaser as manager under the Management Agreement.
(b) Without limiting the preceding subparagraph (a),
except as may have been previously disclosed to or learned by Purchaser as
manager under the Management Agreement or as described in the Environmental
Reports, to Seller's Knowledge:
(1) No enforcement action for violation of
Environmental Laws has been taken while Seller owned the Property, or is now
pending or threatened by any governmental authority with respect to the
Property.
(2) No Hazardous Substance is present on the
Property that is handled or stored in a manner, or is present in quantities,
which require remediation under applicable Environmental Laws.
(3) There are no underground or above ground
storage tanks at the Property.
As used in this Agreement, the term "Hazardous Substances" means any
hazardous, toxic, corrosive or flammable substance or waste, pollutant or
contaminant, including without limitation petroleum, petroleum products, PCBs
and asbestos containing materials and including those defined as such under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. ss.9601, et. seq.; the Resource Conservation and Recovery
Act ("RCRA"), 42 U.S.C. ss.6903(5); the Clean Water Act, 42 U.S.C. ss.7401, et.
seq.; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et. seq.; or under other
similar applicable federal or state laws and regulations (collectively,
"Environmental Laws").
(viii) To Seller's Knowledge, Exhibit E attached to
and made a part of this Agreement is a complete and accurate schedule of
material items of Tangible Personal Property as of the date of this Agreement.
(ix) To Seller's Knowledge, Exhibit Y attached to and
made a part of this Agreement is a complete list of the Service Contracts and
Seller is not in default under any of the Service Contracts.
(x) Attached to and made a part of this Agreement as
Exhibit Z is a complete and accurate list of all Permits and Licenses affecting
the Property. To Seller's Knowledge, none of the Permits and Licenses have been
revoked and Seller has received no notice that any Permit or License is subject
to revocation.
(xi) Attached to and made a part of this Agreement as
Exhibit U is a complete and accurate schedule of all insurance now carried by
Seller with respect to the Property.
(xii) Seller is not a party to an unrecorded
agreement relating to the installation or use of any water, sanitary sewer or
septic system.
(xiii) Except as disclosed on Exhibit AA, there are
no existing claims under any of the Guaranties and Warranties.
(xiv) Exhibit G attached to and made a part of this
Agreement is a complete and accurate schedule of all material Existing Loan
Documents.
B. Purchaser's Representations and Warranties Purchaser
represents and warrants to Seller that as of the date of this Agreement:
(i) Purchaser is a duly formed and validly existing
corporation organized under the laws of Pennsylvania.
(ii) Purchaser has the full legal right, power and
authority to execute and deliver this Agreement and all documents now or
hereafter to be executed by Purchaser pursuant to this Agreement (collectively,
the "Purchaser's Documents"), to consummate the transaction contemplated hereby,
and to perform its obligations hereunder and under Purchaser's Documents.
C. Seller (as of the end of the Review Period) and Purchaser
(as of Closing) shall be deemed to remake and restate the representations and
warranties set forth in this Section 6 above. Should Seller proceed to Closing
with the Knowledge of Purchaser's violation of any representation or warranty
contained in this Section 6, Seller will be conclusively deemed to have waived
any remedy therefor. Should Purchaser proceed to Closing with Knowledge
obtained prior to the end of the Review Period, of Seller's violation of any
representation or warranty of Seller contained in this Section 6, Purchaser
will be conclusively deemed to have waived any remedy therefor, including any
adjustment in Purchase Price.
D. The representations and warranties set forth in Section 6
above, as of the date made (or deemed made) shall survive the Closing, but any
"Claims" (as defined below) thereunder must be made in writing within 270 days
after Closing (the "Representations Expiration Date") or they shall thereafter
be deemed to have lapsed and to be null, void and of no further force or
effect.
E. No inspection or examination by Purchaser shall limit
Purchaser's right to rely on the representations and warranties of Seller
contained herein except as set forth in Section 6.C. Purchaser agrees to
promptly notify Seller if Purchaser becomes aware that any representation or
warranty is untrue.
7. CASUALTY LOSS AND CONDEMNATION
If, prior to the end of the Review Period, the Property or any
material part thereof shall be condemned, or destroyed or damaged by fire or
other casualty, Seller shall promptly so notify Purchaser. In the event the
effect of such condemnation or casualty occurring prior to the end of the
Review Period is material (as hereinafter defined), Purchaser shall have the
option either to terminate this Agreement
or to consummate the transaction contemplated by this Agreement notwithstanding
such condemnation, destruction or damage. If Purchaser elects to consummate the
transaction contemplated by this Agreement or if a casualty or condemnation is
immaterial or occurs after the end of the Review Period, Purchaser may not
terminate this Agreement but, providing Closing occurs, shall be entitled (a) in
the event of a condemnation, to receive the condemnation proceeds, subject to
the prior rights thereto of Existing Lender under the Existing Loan Documents
and the Ground Lessor under the Ground Lease; provided, however, that in the
event any portion of any condemnation award relates solely to Seller's leasehold
interest under the Ground Lease and either Ground Lessor retains such portion in
accordance with the terms of the Ground Lease or Lender applies such portion in
reduction of the principal balance of the Existing Loan in accordance with the
provisions of the Existing Loan Documents, then Purchaser shall be entitled at
Closing to a credit against the Purchase Price in the amount of such portion;
and (b) in the event of a casualty, to settle the loss under all policies of
insurance applicable to the destruction or damage and receive the proceeds of
insurance applicable thereto, subject to the prior rights thereto of Existing
Lender under the Existing Loan Documents, and Seller shall, at Closing, execute
and deliver to Purchaser all customary proofs of loss, assignments of claims and
other similar items; provided, however, that in the event Existing Lender
applies any such insurance proceeds in reduction of the principal balance of the
Existing Loan in accordance with the provisions of the Existing Loan Documents,
then Purchaser shall be entitled at Closing to a credit against the Purchase
Price in the amount of the insurance proceeds so applied. If, upon a material
condemnation or casualty prior to the end of the Review Period, Purchaser elects
to terminate this Agreement, the Initial Down Payment shall be returned to
Purchaser by the Seller, in which event this Agreement shall, without further
action of the parties, become null and void and neither party shall have any
further rights or obligations under this Agreement. For purposes of this
provision, a condemnation or casualty loss shall be deemed to be "material" if
(i) the cost of repairing or restoring the premises in question would be, in the
opinion of an independent architect selected by Seller and reasonably approved
by Purchaser, equal to or greater than One Million and No/100 Dollars
($1,000,000.00), (ii) such loss would materially and detrimentally impair access
to the Property or its improvements or common areas after Closing, or (iii) such
loss results in the termination of the Lease of an Anchor Tenant or (iv) such
loss results in the termination of Leases for other tenants occupying, in the
aggregate, fifteen percent (15%) or more of the gross leasable area of the
Property. The provisions of this Section 7 shall supersede the provisions of any
Law regarding the allocation of the risk of loss between buyers and sellers.
8. BROKERAGE
Purchaser and Seller each hereby represents and warrants to the other
that it has not dealt with any broker, finder or other party in connection
with the negotiation of this Agreement or otherwise in connection with the
Property. Seller and Purchaser shall each indemnify and hold the other
harmless from and against any and all claims of all other brokers and finders
claiming by, through or under the indemnifying party and in any way related to
the sale and purchase of the Property, this Agreement or otherwise, including,
without limitation, attorneys' fees and expenses incurred by the indemnified
party in connection with such claim.
9. DEFAULT AND REMEDIES
A. Notwithstanding anything to the contrary contained in
this Agreement, if Seller has breached a representation or warranty hereunder
(as of the date made or deemed made) or breaches an obligation under this
Agreement at any time after the end of the Review Period, then: (1) Purchaser
shall be obligated to close in accordance with this Agreement and (2) as
Purchaser's sole remedy, Purchaser may make a claim in accordance with Section
12.L hereof if Seller fails to cure such breach after written notice from
Purchaser, except that:
(i) if Seller's breach consists of (x) a failure to
deliver title to the Property at Closing subject only to Permitted
Exceptions, or (y) a failure to deliver the items described in
Sections 4.B.(i)(a) through (s) duly executed by Seller as required,
or (z) a breach of Section 5.C. hereof which results in an actual
loss to Purchaser for which Seller refuses to credit or does not
credit Purchaser at Closing (any of the foregoing, a "Major Breach"),
and the Major Breach continues for ten (10) days after Purchaser has
given Seller notice thereof, then, as Purchaser's sole and exclusive
remedy hereunder, Purchaser may terminate this Agreement, in which
event the Down Payment theretofore delivered to Seller shall be
returned to Purchaser, together with Purchaser's actual out-of-pocket
costs incurred in connection with this transaction as of the date of
such termination not to exceed $75,000 in the aggregate (and
Purchaser shall provide documentation evidencing such costs to
Seller) ("Termination Damages"), and this Agreement shall be null and
void, and neither party shall have any rights or obligations under
this Agreement, and in no event shall Purchaser be entitled to
recover additional money damages against Seller or to compel Seller
to spend any sums of money in excess of those specifically required
under this Agreement;
(ii) if Closing does not occur solely as a result
of a failure to deliver either (A) the Ground Lessor Estoppel
Certificate (as hereinafter defined), or (B) the Existing Lender
Certificate (as hereinafter defined) (each, an "Estoppel Failure"),
then (1) Seller may elect to extend the Closing Date for up to sixty
(60) days in order to obtain the applicable certificate, and (2) in
the event Seller does not make such election, or upon expiration of
such extension period, Purchaser may terminate this Agreement, in
which event either (a) the Down Payment theretofore delivered to
Seller shall be returned to Purchaser, and this Agreement shall be
null and void, and neither party shall have any rights or obligations
under this Agreement, and in no event shall Purchaser be entitled to
recover any money damages (including without limitation Termination
Damages) against Seller or to compel Seller to spend any sums of
money in excess of those specifically required under this Agreement,
or (b) in the event the Estoppel Failure occurs as a result of a
Noncooperation Event (as hereinafter defined), the Down Payment shall
be retained by Seller as Seller's sole remedy and as liquidated
damages; and
(iii) Purchaser shall retain all rights and
remedies available to Purchaser at law, in equity or under this
Agreement, and to sue for return of the Down Payment and payment of
the Termination Damages, if Seller made any intentional
misrepresentation when initially made or commits fraud in connection
with this Agreement; provided in no
event shall Purchaser be entitled to seek punitive, exemplary, special
or consequential damages, and any action for damages shall be limited
to actual damages.
Purchaser and Seller acknowledge and agree that any
representation or warranty of Seller which is true as of the end of the Review
Period but becomes untrue thereafter, shall not be deemed a default or breach
by Seller (unless caused by an intentional breach by Seller of a covenant set
forth in this Agreement) in any event and shall not excuse Purchaser from
proceeding to Closing.
Purchaser and Seller agree that the remedy of termination of
this Agreement shall be available to Purchaser only in the event of a Major
Breach or an Estoppel Failure.
B. If Purchaser fails to complete closing in accordance with
the terms of this Agreement, then this Agreement shall be terminated and the
Down Payment shall be retained by Seller as Seller's sole remedy and as
liquidated damages.
C. In the event there is a failure of the condition
precedent required in accordance with clause (ii) in Section 10.D. below (a
"Release Failure"), then Seller may elect either (i) to terminate this
Agreement, in which event the Down Payment shall be returned to Purchaser
unless the Release Failure occurs as a result of a Noncooperation Event, (ii)
to extend the Closing Date for up to sixty (60) days in order to obtain a
satisfactory release from Existing Lender in accordance with Section 10.D., or
(iii) to proceed to Closing notwithstanding the failure of such condition
precedent and to rely, in lieu thereof, on the indemnification provisions set
forth in Section 12.AA. hereof. Notwithstanding the foregoing, no
Noncooperation Event shall be deemed to have occurred if Purchaser (a) prepays
the Existing Loan at Closing with Existing Lender's consent, and (b) otherwise
satisfies Seller, in Seller's reasonable discretion, that Seller will have no
continuing liabilities or obligations under the Existing Loan Documents.
D. As used in this Section 9, the term "Noncooperation
Event" shall mean Purchaser's failure to use diligent efforts (i) to deliver
to Existing Lender such documentation as Existing Lender reasonably requires
or requests, and to otherwise cooperate with Existing Lender, (a) in order to
enable Existing Lender to determine the acceptability of Purchaser as the
obligor under the Existing Loan Documents, and (b) in connection with the
issuance of the Existing Lender Certificate and the release required in
Section 10.D. hereof; and (ii) to cooperate with Seller, including delivery to
Ground Lessor of such documentation as Ground Lessor reasonably requests, in
connection with Ground Lessor's issuance of the Ground Lessor Estoppel
Certificate (unless Purchaser waives the condition precedent that it be
obtained). Notwithstanding the foregoing, in no event shall Purchaser be
required to deliver or disclose information to Existing Lender or Ground
Lessor which violates any Law or any confidentiality agreement to which
Purchaser is a party or otherwise exposes Purchaser to liability as a result
of such disclosure. Seller and Purchaser acknowledge and agree that: (i) the
Down Payment is a reasonable estimate of and bears a reasonable relationship
to the damages that would be suffered and costs incurred by Seller as a result
of having withdrawn the Property from sale and the failure of Closing to occur
due to a default of Purchaser under this Agreement or due to a Noncooperation
Event; (ii) the actual damages suffered and costs incurred by Seller as a
result of
such withdrawal and failure to close due to a default of Purchaser under this
Agreement or Noncooperation Event would be extremely difficult and impractical
to determine; (iii) Purchaser seeks to limit its liability under this Agreement
to the amount of the Down Payment in the event this Agreement does not close due
to a default of Purchaser under this Agreement or a Noncooperation Event; and
(iv) such amount shall constitute valid liquidated damages.
E. After Closing and subject to any limitations set forth in
this Agreement, including but not limited to Section 12.L, Seller and
Purchaser shall, subject to the terms and conditions of this Agreement, have
such rights and remedies as are available at law or in equity, but only for
such obligations as expressly survive Closing; except that neither Seller nor
Purchaser shall be entitled to recover from the other consequential,
exemplary, punitive or special damages.
10. CONDITIONS PRECEDENT
A. (i) Subject to Sections 11, 12(G) and 12(H) below,
Purchaser shall have the period of time beginning on the date hereof and
ending on June 30, 1997, within which to inspect and investigate the Property
and its operations (the "Review Period"). If Purchaser determines that the
Property is unsuitable for its purposes and notifies Seller of such decision
within the Review Period (or if Purchaser fails to deposit the Interim Down
Payment by expiration of the Review Period), the Initial Down Payment shall be
returned to Purchaser, at which time this Agreement shall be null and void and
neither party shall have any further rights or obligations under this
Agreement, except those which by their terms expressly survive such
termination. Purchaser need not disclose its reasons for termination. Seller
shall cooperate with Purchaser to allow Purchaser and Purchaser's
Representatives free access to the Property, to allow Purchaser and
Purchaser's Representatives free access to all information and documentation,
and otherwise to promptly provide such information and documentation, relating
to the Property and its operations as Purchaser may reasonably request
(including, without limitation, tenant sales reports and other financial
information, income and expense statements for the prior three years and
appraisals in Seller's possession (with such material deleted from the
appraisals as Seller may, in its reasonable discretion, elect to delete)) but
excluding Excluded Items, to the extent such information and documentation has
not been previously delivered to or generated by Purchaser pursuant to the
Management Agreement and is in Seller's possession or control, and to the
extent Seller is not prohibited by written agreement from disclosing such
information and documentation. Purchaser's failure to object within the Review
Period shall be deemed a waiver by Purchaser of the condition contained in
this Section 10.
(ii) Purchaser acknowledges that, notwithstanding any
contrary provision contained in the Management Agreement (and all other
management agreements between Purchaser and Seller's affiliates), if Purchaser
terminates this Agreement in accordance with this paragraph, the Management
Agreement (and all other management agreements between Purchaser and Seller's
affiliates), may be terminated by an owner due to Purchaser's failure to acquire
the Property, unless and only if Purchaser has terminated this Agreement due to
a Major Breach which remains uncured during, and as of the end of, the cure
period set forth for a Major Breach in Section 9.A. hereof or if Purchaser
terminates this Agreement under Section 3.C.(ii) hereof.
B. As a condition of Purchaser's obligation to complete
Closing, Seller must not have committed a Major Breach which continues beyond
applicable notice and cure periods.
C. As a condition of Seller's obligation to complete
Closing, Purchaser must complete Closing in accordance with this Agreement
(including, without limitation, satisfaction of the condition precedent set
forth in Section 10.D. below).
D. As conditions to Seller's obligation to complete Closing,
Purchaser shall be obligated to take such actions and to execute such
documentation (i) as are required in accordance with the terms of the Existing
Loan Documents so as to cause (a) all indemnitors under the Indemnity
described in Exhibit G to be released of all Released Environmental
Obligations (as such term is defined in Paragraph 25 of the Existing Loan
Mortgage), and (b) all guarantors under the Guarantee described in Exhibit G
to be released of all obligations thereunder, and (ii) as may be reasonably
required by Seller to cause Seller to be released of all obligations under the
other Existing Loan Documents, except those obligations preceding Closing
which, in accordance with the terms of the Existing Loan Documents, survive
Purchaser's assumption of the Existing Loan.
E. As a condition to Purchaser's obligation to complete
Closing, Seller shall furnish Purchaser with an estoppel certificate (the
"Ground Lessor Estoppel Certificate") from Ground Lessor in a form consistent
with the requirements set forth in the Ground Lease, the Option Agreement and
the Anchor Pad Purchase Agreement, collectively. Purchaser hereby acknowledges
that a Ground Lessor Estoppel Certificate substantially in the form attached
hereto as Exhibit R-1 shall also be acceptable and shall satisfy the
requirements of this Section 10.E.
F. As a condition to Purchaser's obligation to complete
Closing, Seller shall furnish Purchaser with one or more certificate(s)
(collectively, the "Existing Lender's Certificate") from the Existing Lender
consenting to the transfer of Seller's interest in the Property to Purchaser
and the assumption of all obligations under the Existing Loan Documents by
Purchaser, and certifying (i) that to Existing Lender's knowledge, there are
no defaults under the Existing Loan Documents, and (ii) as to the outstanding
principal balance of the Existing Loan as of the date of the certificate.
Purchaser hereby acknowledges that (i) the form of Existing Lender's
Certificate attached hereto as Exhibit R-2 contains more information than is
required in accordance with this paragraph, and that such form shall also be
acceptable and shall satisfy the requirements of this Section 10.F. In the
event the Existing Lender's Certificate contains a certification from Existing
Lender substantially or substantively identical to Seller's representation
under Section 6.A.(xiv) hereof, Seller's liability for such representation
shall terminate upon delivery of the Existing Lender's Certificate to
Purchaser.
G. As a condition to Seller's and Purchaser's obligations to
complete Closing, Seller shall by August 1, 1997 obtain the consent of The
Northwestern Mutual Life Insurance Company to the transaction contemplated by
this Agreement. Seller shall promptly notify Purchaser if and when Seller
receives any response or correspondence with respect to such consent. If
Closing does not occur solely as a result of a failure to satisfy this
condition
precedent, this Agreement shall be automatically terminated, null and void, the
Down Payment shall be returned to Purchaser, and neither party hereto shall have
any further obligation to the other under this Agreement.
11. PROPERTY INFORMATION AND CONFIDENTIALITY
A. Purchaser agrees that, prior to the Closing, Purchaser
shall use diligent efforts to keep all "Property Information" (as defined
below) confidential, and that Property Information shall not, without the
prior consent of Seller, be disclosed by Purchaser or Purchaser's
Representatives (as hereinafter defined), except to a REIT Assignee and its
Purchaser Representatives, and that Property Information will not be used for
any purpose other than investigating and evaluating the Property or fulfilling
Purchaser's responsibilities as manager under the Management Agreement.
Moreover, Purchaser agrees that, prior to the Closing, the Property
Information will be transmitted only to a REIT Assignee, and to the
Purchaser's, Representatives and such REIT Assignee, who need to know the
Property Information for the purpose of investigating and evaluating the
Property, and who are informed by Purchaser of the confidential nature of the
Property Information and who agree in writing to comply with and be bound by
this Section 11 for the benefit of Seller. The provisions of this Section
11(A) shall not apply to Property Information which is disclosed in compliance
with the Management Agreement, or which is a matter of public record and shall
not be used or construed by Seller to impede Purchaser from complying with its
obligations under the Management Agreement or from complying with laws,
including, without limitation, governmental regulatory, disclosure, tax and
reporting requirements, subpoenas or court orders.
B. Purchaser and Seller, for the benefit of each other,
hereby agree that between the date of this Agreement and the Closing Date,
they will not release or cause or permit to be released any press notices,
publicity (oral or written) or advertising promotion relating to, or otherwise
announce or disclose or cause or permit to be announced or disclosed, in any
manner whatsoever, the terms, conditions, parties to or substance of this
Agreement or the transactions contemplated herein, without first obtaining the
written consent of the other party hereto, as to the portion of the disclosure
relating to this transaction, the Property or such party and its affiliates,
which consent shall not be unreasonably withheld. Seller agrees not to object
to any disclosure (including public announcements) required by law to the
extent it identifies the parties, property and purchase price (and method of
payment thereof) in connection with this transaction. Failure to disapprove
any disclosure within two (2) business days of receipt shall be deemed an
approval. It is understood that the foregoing shall not preclude either party
from discussing the substance or any relevant details of the transactions
contemplated in this Agreement, subject to the terms of this Section 11, with
a REIT Assignee or any of Purchaser's or such REIT Assignee's attorneys,
accountants, professional consultants or potential lenders, as the case may
be, or prevent either party hereto from complying with applicable laws,
including, without limitation, governmental regulatory, disclosure, tax and
reporting requirements, subpoenas or court orders, or prevent Seller from
coordinating with tenants to obtain the Estoppel Certificates.
C. Deleted Prior to Execution.
D. In the event this Agreement is terminated, Purchaser and
Purchaser's Representatives shall promptly return to Seller all originals and
copies of the "New Seller-Supplied Information" (defined below) in the
possession of Purchaser and Purchaser's Representatives (or certify to Seller
that the same has been destroyed).
E. As used in this Agreement, the term "Property Information"
shall mean:
(i) All information and documents relating to the
Property, the operation thereof or the sale thereof (including, without
limitation, the Ground Lease, Option Agreement, Anchor Pad Purchase Agreement,
Existing Loan Documents, Leases, Service Contracts, labor contracts and
licenses) generated by Purchaser pursuant to the Management Agreement, or
furnished to, or otherwise made available by Seller or any of Seller's
Affiliates for review by, Purchaser or a REIT Assignee, or their respective
directors, officers, employees, affiliates, partners, brokers, agents, title
insurers, surveyors or other representatives, including, without limitation,
attorneys, accountants, contractors, consultants, engineers and financial
advisors (collectively, "Purchaser's Representatives"), and if and to the extent
such information and documents have not been previously furnished to or
otherwise made available to Purchaser, or generated by Purchaser, under the
Management Agreement such Property Information shall constitute "New
Seller-Supplied Information".
(ii) All analyses, compilations, data, studies,
reports or other information or documents prepared or obtained by Purchaser or
Purchaser's Representatives containing or based in any material part on any
information or documents described in the preceding clause (i).
F. In addition to any other remedies available to Seller
under this Agreement, Seller shall have the right to seek equitable relief,
including, without limitation, injunctive relief or specific performance,
against Purchaser or Purchaser's Representatives in order to enforce the
provisions of this Section 11.
G. The provisions of this Section 11 shall survive the
termination of this Agreement.
H. Notwithstanding anything to the contrary contained in
this Section 11 or in the Management Agreement, no failure by Purchaser to
comply with this Section 11 shall give Seller the right to terminate the
Management Agreement or any other Management Agreement between Seller (or its
affiliates) and Purchaser.
12. MISCELLANEOUS
A. All understandings and agreements heretofore had between
Seller and Purchaser with respect to the Property are merged in this
Agreement, which alone fully and completely expresses the agreement of the
parties.
B. Neither this Agreement nor any interest hereunder shall
be assigned or transferred by Purchaser or Seller without the prior written
consent of the other party, except that Purchaser may assign its rights under
this Agreement to a "TRO Assignee", as such term is defined in the Asset
Purchase Agreement (defined below) or to Pennsylvania Real Estate Investment
Trust or a limited partnership controlled thereby (any of the foregoing,
together with any TRO Assignee, shall be referred to as a "Permitted Assignee"
and shall be deemed a "REIT Assignee") and the Permitted TRO Assignee may
assign such rights back to The Rubin Organization, Inc., in either event
without having to first obtain Seller's consent, provided Seller shall receive
written notice of the identity of the ultimate assignee at least five (5)
business days prior to Closing.
C. This Agreement shall not be modified or amended except in
a written document signed by Seller (or its attorneys) and Purchaser (or its
attorneys).
D. Time is of the essence of this Agreement.
E. This Agreement shall be governed and interpreted in
accordance with the laws of the State of South Carolina.
F. All notices, requests, demands or other communications
required or permitted under this Agreement shall be in writing and delivered
personally, by certified mail, return receipt requested, postage prepaid, by
overnight courier (such as Federal express), or by facsimile transmission
(with confirmation of transmission), addressed as follows:
If to Seller: Magnolia Retail Associates, L.L.C.
c/o Equity Group Investments, Inc.
Two North Riverside Plaza, Suite 1000
Chicago, Illinois 60606
Attention: George C. Touras
Telephone: 312/466-3635
Facsimile: 312/454-0826
With copies to: Richard Schnell
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue, 16th Floor
Milwaukee, Wisconsin 53202
Telephone: 414/299-7036
Facsimile: 414/299-1557
and
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza, Suite 1600
Chicago, Illinois 60606
Attention: Douglas J. Lubelchek, Esquire
Telephone: 312/466-3598
Facsimile: 312/454-0335
If to Purchaser: The Rubin Organization, Inc.
The Bellevue
200 South Broad Street
Philadelphia, Pennsylvania 19102
Attention: Alan F. Feldman
Vice President and Secretary
Attention: Gerald Broker, Esquire
Telephone: 215/875-0700
Facsimile: 215/546-0240
With a copy to: Gary W. Levi, Esquire
Klehr, Harrison, Harvey, Branzburg & Ellers
457 Haddonfield Road
Suite 510
Cherry Hill, New Jersey 08002-2220
Telephone: 609/486-7900
Facsimile: 609/486-4875
John W. Fischer, Esquire
Drinker Biddle & Reath
Suite 300
1000 Westlakes Drive
Berwyn, Pennsylvania 19312
Telephone: 610/993-2221
Facsimile: 610/993-8585
All notices given in accordance with the terms hereof shall be deemed received
three (3) business days after posting (in the case of notices sent by
certified mail), or when delivered personally or otherwise received or receipt
is refused (in the case of all other methods of notice). Either party hereto
may change the address for receiving notices, requests, demands or other
communication by notice sent in accordance with the terms of this Section
12(F).
G. (i) Purchaser's right of inspection pursuant to Section
10 above shall include the right to enter on the Property, but shall be
subject to the rights of Ground Lessor under the Ground Lease and tenants
under the Leases and other occupants and users of the Property. No inspection
shall be undertaken without reasonable prior notice to Seller. Seller shall
have the right to be present at any or all inspections. No inspection shall
involve the taking of samples or other physically invasive procedures without
the prior consent of Seller, which consent
may be withheld in Seller's sole discretion. Notwithstanding anything to the
contrary contained in this Agreement, Purchaser shall restore the Property to
its condition existing prior to Purchaser's entry thereon, and indemnify and
hold Seller and Seller's Affiliates, and each of them, harmless from and against
any and all losses, claims, damages and liabilities (including, without
limitation, attorneys' fees incurred in connection therewith) arising out of or
resulting from Purchaser's exercise of its rights under this Agreement,
including, without limitation, its right of inspection as provided for in
Section 10 above. The terms of this the preceding sentence shall survive the
termination of this Agreement.
(ii) Nothing contained in the preceding paragraph (i)
shall be deemed to limit Purchaser's rights as Manager under, or limit its
ability to comply with its obligations as Manager under, the Management
Agreement.
H. Except as provided for in, or as may be done pursuant to,
the Management Agreement, Purchaser or Purchaser's Representatives shall not
contact Ground Lessor or a tenant or prospective tenant for the Property
regarding this transaction unless Purchaser or Purchaser's Representatives
first obtains Seller's prior written approval therefor (not to be unreasonably
withheld or delayed). Seller shall have the right to be present for all such
tenant interviews.
I. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
MANAGEMENT AGREEMENT (TO THE EXTENT SET FORTH THEREIN AND SUBJECT TO THE TERMS
THEREOF) OR, AS CONCERNS EQUITY PROPERTIES AND DEVELOPMENT LIMITED PARTNERSHIP
("EPDLP") ONLY, THAT CERTAIN ASSET PURCHASE AGREEMENT DATED DECEMBER 31, 1996
BY AND BETWEEN EPDLP AND THE RUBIN ORGANIZATION, INC. (THE "ASSET PURCHASE
AGREEMENT"), IT IS UNDERSTOOD AND AGREED THAT NEITHER SELLER NOR ANY OF
SELLER'S AFFILIATES IS MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH RESPECT
TO THE PROPERTY, INCLUDING BUT NOT LIMITED TO, ANY WARRANTIES OR
REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR
ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS,
VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH
GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY
INFORMATION OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO
PURCHASER, OR ANY OTHER MATTER OR THING REGARDING THE PROPERTY. PURCHASER
ACKNOWLEDGES AND AGREES THAT EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT,
AT CLOSING SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL
ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS" AS OF THE END OF THE
REVIEW PERIOD. EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT, THE ASSET PURCHASE AGREEMENT (AS TO EPDLP ONLY), OR THE MANAGEMENT
AGREEMENT (TO THE EXTENT SET FORTH THEREIN AND SUBJECT TO THE TERMS THEREOF),
PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND NEITHER
SELLER NOR ANY OF SELLER'S AFFILIATES IS LIABLE FOR OR BOUND BY, ANY EXPRESSED
OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT
LIMITATION, PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE
PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGER OF THE PROPERTY, ANY REAL
ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, OR ANY
THIRD-PARTY, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN
WRITING. PURCHASER ACKNOWLEDGES THAT PURCHASER HAS CONDUCTED, OR WILL CONDUCT
PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED
TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS
NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE
EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY
HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY
SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER
OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS
AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON
EXPIRATION OF THE REVIEW PERIOD, EXCEPT FOR SELLER'S REPRESENTATIONS AND
WARRANTIES THAT WILL SURVIVE CLOSING, AND EXCEPT FOR THE SURVIVING
REPRESENTATIONS AND WARRANTIES UNDER THE ASSET PURCHASE AGREEMENT (AS TO EPDLP
ONLY), OR THE MANAGEMENT AGREEMENT (TO THE EXTENT SET FORTH THEREIN AND SUBJECT
TO THE TERMS THEREOF), PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS,
INCLUDING BUT NOT LIMITED TO CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S
INVESTIGATIONS, AND PURCHASER, UPON EXPIRATION OF THE REVIEW PERIOD, SHALL BE
DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER AND SELLER'S AFFILIATES
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES
OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING
ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER EXCEPT FOR
CLAIMS BASED ON FRAUD, CRIMINAL CONDUCT OR INTENTIONAL TORTS, KNOWN OR UNKNOWN,
WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER OR SELLER'S
AFFILIATES AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT
CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS
(INCLUDING WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER
ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY.
J. In any lawsuit or other proceeding initiated under or
with respect to this Agreement, Purchaser and Seller waive any right they may
have to trial by jury.
K. If for any reason Purchaser does not consummate the
Closing, then Purchaser shall, upon Seller's request, assign and transfer to
Seller, without representation, warranty or recourse, all of its right, title
and interest in and to any and all studies, reports, surveys and other
information, data and/or documents relating to the Property or any part
thereof prepared by or at the request of Purchaser, its employees and agents,
and shall deliver to Seller copies of all of the foregoing
L. (i) After Closing, Seller shall not be liable to
Purchaser in respect of obligations under this Agreement which survive Closing
for any amounts in excess of the amount of the "Holdback Funds" (as defined
below), or for any amounts less than Fifty Thousand Dollars ($50,000.00) (the
"Deductible Amount") in the aggregate, Purchaser hereby waiving any and all
claims it may have to such recoveries in excess of, or less than, the
foregoing amounts. The foregoing limitations shall apply only to liabilities
admitted by Seller to exist or proven by Purchaser to exist through the final
adjudication thereof in an appropriate judicial proceeding (a "Final
Judgment"), and not to reprorations made pursuant to Section 4(C)(ii) above.
(ii) In order to secure the obligations and
liabilities of Seller under this Agreement that survive Closing, including
without limitation the obligation to make Post-Closing Adjustments pursuant to
Section 4 above (collectively, "Seller's Surviving Obligations"), and the
obligations of Seller under the Management Agreement which survive if the
Management Agreement is terminated, Seller covenants not to distribute to its
equity owners (except in accordance with clauses (v), (vi) and (vii) below), an
amount of consideration (referred to below as the "Holdback Funds") with a value
equal to Seven Hundred Fifty Thousand Dollars ($750,000.00) (either in the form
of cash or a portion of the OP Units, at Seller's election). The term "Holdback
Funds" shall include all interest earned thereon, if any.
(iii) If Purchaser incurs any loss, damage, cost or
expense (including attorneys' fees) for any matter Purchaser believes is covered
under Seller's Surviving Obligations (a "Claim"), and desires to seek recovery
from Seller, Purchaser shall give Seller written notice thereof ("Claim Notice")
describing the Claim in reasonable detail. The Claim Notice shall, if
applicable, be accompanied by appropriate documentation (including by way of
illustration, but not of limitation, receipted bills or canceled checks) and any
appropriate calculations which demonstrate that the Deductible Amount has been
satisfied. If the Claim Notice states a Claim for a specified amount of money,
the Claim Notice shall also be accompanied by appropriate documentation thereof
(including by way of illustration, but not of limitation, estimates by
independent and reputable vendors, contractors, engineers or architects or other
responsible estimators unaffiliated with Purchaser, third party invoices,
receipted bills or canceled checks).
(iv) Seller and Purchaser, acting reasonably and in
good faith, shall attempt to amicably resolve each Claim within thirty (30) days
after its Claim Notice becomes effective. If such amicable resolution results in
an agreed amount payable to Purchaser, Seller shall promptly pay the appropriate
amount to Purchaser out of the Holdback Funds. If such Claim is not amicably
resolved, then Purchaser may proceed to litigate the Claim, and if Purchaser
obtains Final Judgment in its favor with respect to the Claim, Seller shall
disburse the appropriate amount to Purchaser out of the Holdback Funds. As used
herein, "Final Judgment"
means a final judgment or verdict rendered by a court of competent jurisdiction,
after all appeals (or expiration of all appeal periods, if no appeal is taken).
(v) If no Claim is made before the Representations
Expiration Date, then the Holdback Funds may thereafter be distributed by
Seller.
(vi) If any Claim Notice is given before the
Representations Expiration Date (collectively, "Eligible Claim[s]") Seller shall
not distribute an amount of Holdback Funds in the amount of 150% of such Claims
(but in no event more than $750,000 in the aggregate), and retain such amount
until such time as (i) Purchaser and Seller jointly agree upon disposition of
such funds or (ii) a Final Judgment is entered with respect to such funds. Any
balance may be distributed by Seller as of the Representation Expiration Date.
(vii) Promptly after Purchaser and Seller jointly
agree upon disposition of such funds or Final Judgment with respect to all
Eligible Claims has been entered, Seller shall pay the appropriate amount(s) to
Purchaser, and may distribute the balance of the Holdback Funds, if any, and
this holdback arrangement shall thereupon terminate. Purchaser may in such event
take such legal action to convert any OP Units delivered to Purchaser into cash.
M. Seller and Purchaser hereby designate Title Insurer to
act as and perform the duties and obligations of the "reporting person" with
respect to the transaction contemplated by this Agreement for purposes of 26
C.F.R. Section 1.6045-4(e)(5) relating to the requirements for information
reporting on real estate transaction closed on or after January 1, 1991. In
this regard, Seller and Purchaser each agree to execute at Closing, and to
cause the Title Insurer to execute at Closing, a Designation Agreement,
designating Title Insurer as the reporting person with respect to the
transaction contemplated by this Agreement.
N. Purchaser agrees that it does not have and will not have
any claims or causes of action against any disclosed or undisclosed trustee,
partner, affiliate, beneficiary, principal, member, agent, managing entity,
shareholder, director, officer, or employee of Seller (whether direct or
indirect), including, without limitation, their attorneys, accountants,
consultants, engineers, brokers, and advisors (collectively, "Seller's
Affiliates"), arising out of or in connection with this Agreement or the
transactions contemplated hereby except in the event of fraud, criminal
conduct or intentional tort by such person. Purchaser agrees to look solely to
the Holdback Funds for the satisfaction of any liability or obligation arising
under this Agreement or the transactions contemplated hereby, or for the
performance of any of the covenants, warranties or other agreements contained
herein, and further agrees not to sue or otherwise seek to enforce any
personal obligation against any of Seller's Affiliates with respect to any
matters arising out of or in connection with this Agreement or the
transactions contemplated hereby, except in the event of fraud, criminal
conduct or intentional tort by such person.
O. Seller shall have the exclusive right to file and control
any tax appeal for the real estate taxes attributable to the period prior to
and including the calendar year 1996 (the "Pre-1997 Tax Period") but shall
keep Purchaser informed of the progress and outcome of any such appeal. To the
extent that Seller shall receive a refund therefor, Seller shall disburse to
any
tenant not in default under its Lease a portion of such refund as may be due
that tenant under its Lease. To the extent that Purchaser's assistance is
required in disbursing the refund to the tenants, Purchaser agrees to assist
Seller in that regard at Seller's cost. Purchaser shall have the exclusive right
to file and control any tax appeal for the real estate taxes attributable to the
period after and including the calendar year 1997 (the "1997 Tax Period"), but
shall keep Seller informed of the progress and outcome of such appeal and
subject to Seller's consent as to calendar year 1997 (which consent shall not be
unreasonably withheld or delayed). To the extent that Purchaser shall receive a
refund therefor, Purchaser shall disburse to any tenant not in default under its
Lease a portion of such refund as may be due that tenant under its Lease. The
remainder of the refund, if any, shall be prorated between Purchaser and Seller
as of the proration date provided in Section 4(C) after deducting therefrom the
cost and expenses reasonably incurred in pursuing the appeal and not charged to
tenants. The terms of this Section 12(O) shall survive the Closing.
P. At Seller's request, Purchaser shall furnish to Seller
copies of any reports prepared by third parties unaffiliated with Purchaser
received by Purchaser relating to any inspections of the Property conducted on
Purchaser's behalf, if any (including, specifically, without limitation any
reports analyzing compliance of the Property with the provisions of the
Americans with Disabilities Act ("ADA"), 42 U.S.C. ss.12101, et. seq., if
applicable).
Q. This Agreement may be executed in any number of
counterparts, any or all of which may contain the signatures of less than all
of the parties, and all of which shall be construed together as a single
instrument. For purposes of this Agreement, a telecopy of an executed
counterpart shall constitute an original.
R. In the event of litigation between the parties with
respect to this Agreement or the transactions contemplated hereby, the
prevailing party therein shall be entitled to recover from the losing party
therein its attorney's fees and costs of suit.
S. Neither party shall record this Agreement or a memorandum
thereof.
T. Seller agrees, at all times prior to and after the
Closing, at Purchaser's cost and with no additional liability to Seller, to
execute and deliver, or cause to be executed and delivered, and to do, or
cause to be done, such other documents and acts as Purchaser may reasonably
deem necessary or desirable to assure the effectiveness and benefits of this
Agreement and to vest in Purchaser title to and ownership of all of the assets
and property being sold to Purchaser under this Agreement.
U. The term "Seller's Knowledge" as used in this Agreement
means (i) actual knowledge possessed by, Sharon Polonia, Robert Tanaka, or
George Touras or (ii) any written notice respecting any of the matters
contained in this Agreement that has been received by any of such persons but
shall exclude any actual knowledge of (or notice received by) Purchaser or its
agents or employees which may be imputed to such persons as a result of the
relationship between Seller and Purchaser created by the Management Agreement.
Seller represents to Purchaser that, as of the date of this Agreement, such
persons are the persons within Seller's organization who have management or
supervisory responsibility in connection with the Property and who
would likely have Knowledge of the matters represented by Seller in this
Agreement. The term "Purchaser's Knowledge" as used in this Agreement means (i)
actual knowledge possessed by Pat Berns, Gerald Broker, Tim Colby, Betty
Hampilos, Alan Feldman, Ed Glickman, George Rubin, Richard Brown or Bob
Wahlquist or (ii) any written notice respecting any of the matters contained in
this Agreement that has been received by any of such persons. Purchaser
represents to Seller that such persons are the persons within Purchaser's
organization who would likely have knowledge of the matters represented by
Purchaser in this Agreement.
V. For purposes of this Agreement, the masculine shall be
deemed to include the feminine and the neuter, and the singular shall be
deemed to include the plural, and the plural the singular, as the context may
require.
W. The invalidity or unenforceability of any provision of
this Agreement shall in no way affect the validity or enforceability of any
other provision.
X. The captions contained in this Agreement are not a part
of this Agreement. They are only for the convenience of the parties and do not
in any way modify, amplify or give full notice of any of the terms, covenants
or conditions of this Agreement.
Y. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective legal or personal
representatives, heirs, executors, administrators, successors, and permitted
assigns.
Z. Purchaser shall cooperate with Seller and shall execute
any and all documents necessary to allow Seller (or its affiliates) to
effectuate the conveyance of the Property as an exchange under Section 1031 of
the Internal Revenue Code; provided however, that at no time shall Purchaser
be required to take title to real estate other than the Property or incur any
obligations other than those set forth elsewhere in this Agreement. Seller
shall pay all reasonable costs which may be incurred by Purchaser in
connection with such tax free exchange and Seller shall indemnify Purchaser
and hold it harmless from any loss, cost, damage, expense or liability
incurred in connection therewith. Purchaser acknowledges and agrees that
Seller may, if necessary, in order for one or more of its affiliates to
qualify for an exchange, distribute the Property to its equity owners prior to
Closing provided the same shall not relieve Seller of its obligations
hereunder and such distributees shall assume the obligations of Seller
hereunder (to the extent of such distribution). No such exchange may result in
the transfer of OP Units to any party other than a recipient described in
Section 2.C.
hereof.
AA. Purchaser hereby agrees, from and after Closing, to
indemnify, defend and hold harmless (i) to the extent the release required in
accordance with Section 10.D. hereof has not been obtained and Seller
nonetheless elects to proceed to Closing, (a) all guarantors under the
Guarantee described in Exhibit G from and against any and all loss, cost,
liability or expense that may be incurred by such parties thereunder; (b) all
indemnitors under the Indemnity described in Exhibit G from and against any
and all loss, cost, liability or expense incurred by such parties thereunder
with respect to Released Environmental Obligations (as such term is defined in
Paragraph 25 of the Existing Loan Mortgage); and (c) Seller and all of
Seller's affiliates from and
against any and all loss, cost, liability or expense arising under any of the
other Existing Loan Documents for events occurring after Closing; and (ii)
Seller and all of Seller's affiliates from and against any and all loss, cost,
liability or expense arising under the Ground Lease, the Option Agreement, and
Anchor Pad Purchase Agreement for events occurring after Closing. The provisions
of this Section 12.AA. shall survive Closing, and shall not operate in
limitation of any other provision set forth in this Agreement.
BB. By signing this Agreement, Samuel Zell, personally and
unconditionally, guarantees that to the extent that the Down Payment is
required to be re-paid to Purchaser hereunder, such amount shall be re-paid to
Purchaser, and guarantees payment of Holdback Funds to Purchaser if, as and
when required under Section 12.L. of this Agreement. The provisions of this
paragraph shall not be affected by any amendment to this Agreement except as
otherwise set forth in such amendment. If and to the extent Samuel Zell makes
or is required to make any payment in accordance with the provisions of this
paragraph, Samuel Zell shall be subrogated to Purchaser's rights against
Seller hereunder.
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered
this Agreement as of the date first above written.
SELLER:
MAGNOLIA RETAIL ASSOCIATES, L.L.C., a Delaware limited liability company
By: Florence Mall Partners, an Illinois limited partnership, a member
By: Samuel Zell Robert Lurie General Partners, an Illinois general
partnership, its general partner
By: Zell General Partnership, Inc., its general partner
By:/S/ Sheil Z. Rosenberg
-------------------------
Name: Sheli Z. Rosenberg
Its: Vice President
PURCHASER:
THE RUBIN ORGANIZATION, INC., a Pennsylvania corporation
By: /S/ Ronald Rubin
--------------------------------------------
Its:____________________________________________
JOINDER
The undersigned, Samuel Zell, hereby executes this
Agreement for the sole purpose of reflecting his agreement to be bound by the
provisions of Section 12.BB. hereof.
/S/ Sheli Z. Rosenberg
----------------------
Sheli Z. Rosenberg as attorney-in-fact for Samuel Zell, pursuant to
Power of Attorney dated May 15, 1997