PURCHASE AND SALE AGREEMENT
[North Dartmouth Mall, Dartmouth, Massachusetts]
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of the
30th day of June, 1997 by and between DIVERSIFIED EQUITY CORPORATION OF
ILLINOIS, INC., an Illinois corporation ("Seller") with an office at 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 certain parcel of real estate (the "Real
Property") in the City of Dartmouth, Commonwealth of Massachusetts, which
parcel is more particularly described in Exhibit A attached hereto and upon
which is located a retail shopping center commonly known as "North Dartmouth
Mall".
B. Purchaser is the manager of the Real Property pursuant to a
Property Management Agreement dated as of December 31, 1996 ("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, the Real Property together with: (i) 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; (ii) Seller's right, title and interest in
and to 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; (iii) 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 C 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"); (iv) all right,
title and interest of Seller under 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 (v) 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 "North Dartmouth 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 (v) above, together with the Real
Property, are collectively referred to in this Agreement as the "Property").
All of the foregoing expressly excludes all property owned 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 Thirty-Five Million and No/100 Dollars ($35,000,000.00) (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) ("Initial Down Payment"). If Purchaser does not
terminate this Agreement pursuant to and in accordance with Section 10 (A)
below, then 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) ("Final Down Payment"). The Initial Down
Payment and the Final Down Payment (together with interest on such payments at
the rate per annum equal to 5.5%), are referred to as the "Down Payment."
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 equal to the Purchase Price, minus the
Down Payment, minus the total dollar amount of the "OP Units" (as defined
below), if any, and plus or minus, as the case may require, the closing
prorations and adjustments to be made pursuant to Section 4(C) below ("Cash
Portion"). 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 REIT Assignee (as
defined in the Management Agreement) 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 Seller's affiliates may receive at
Closing may not, when aggregated with the number of OP Units received by
Magnolia Retail Associates, L.L.C. ("Magnolia Seller") and its affiliates in
connection with the sale of Magnolia Mall to the REIT Assignee (or its nominee),
exceed 1,300,000 OP Units; (b) Samuel Zell and affiliates thereof (excluding
Arthur Cohen 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 the Northwestern Mutual Life
Insurance Company and affiliates thereof) in connection with the sale of
Magnolia 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 Magnolia Seller and its affiliates in
connection with the sale of Magnolia 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 it
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 D 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 (i) the purchase or acquisition by such holders of
additional OP Units or Shares or (ii) 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 Property, under which the
Title Insurer agrees to insure title to the Property at customary rates in the
full amount of the Purchase Price under an ALTA Form B (1992) owner's policy
and free and clear of all restrictions, encumbrances and title objections,
except for the "Permitted Exceptions" (as defined below), and endorsing over
the standard 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 referred to in Section
4(B)(i)(a) 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 title to the Real Property at Closing to Purchaser
subject only to Permitted Exceptions. The "Permitted Exceptions" shall consist
of only those title exceptions and survey items which are noted on the
attached Exhibit E. 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 E) 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) Seller shall be obligated to pay
and cause to be removed as an exception to title the existing first mortgage
encumbering the Property); and
(B) (1) 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.
(2) 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.
(3) 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.
(4) 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 (B)(2) 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 as may be set forth in a written notice from Purchaser to Seller
received by Seller at least five 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 F duly acknowledged and in proper form for recording;
(b) a bill of sale in form attached as
Exhibit G, 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 H;
(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 I-1 and I-2;
(e) if and to the extent not previously
delivered to Purchaser pursuant to the Management Agreement, the originals (or
if not available, copies (certified as true to Seller's Knowledge)) of the
Leases, the Service Contracts and 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;
(f) a Non-Foreign Certification in form
attached as Exhibit J;
(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
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 "North Dartmouth Mall";
(q) if required by the Title Insurer, a
corporate excise tax lien waiver issued by the Commonwealth of Massachusetts;
and
(r) 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 I-1 and I-2;
(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; and
(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), 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) 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 S ("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 V 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; and
(k) 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. 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 (I) for any space now occupied or hereafter vacated by any
"Anchor Tenant" or "Major Tenant" (as those terms are defined on Exhibit T) (II)
for any movie theater, or (III) for an Ames Stores, or enter into a Service
Contract which Service Contract is not terminable upon 30 days notice, or as of
Closing (collectively, "Consent Transactions"). Seller will cooperate with
Purchaser, as Purchaser may reasonably request, to cause General Cinema to amend
its Lease in the manner described on Exhibit X.
(b) After the expiration of the Review
Period, Seller may not modify, extend, renew, cancel or permit the expiration of
any Lease or Service Contract, or enter into any proposed Lease or Service
Contract, without Purchaser's prior consent, which may not be unreasonably
delayed or withheld.
(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 L) 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 interests 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
corporation organized under the laws of Illinois. Seller is authorized to own
and convey title to land in the State of Massachusetts.
(ii) 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) To Seller's knowledge, Purchaser has been given
access to, or possession of, complete and accurate copies of 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 B (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 M attached to and made a part of this Agreement and, with the
exception of claims or offsets referred to in Exhibit N, 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 Y ("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. Section 9601, et. seq.; the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 6903(5); the Clean Water Act, 42 U.S.C.
Section 7401, et. seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et.
seq.; or under other similar applicable federal or state laws and regulations
(collectively, "Environmental Laws").
(viii) To Seller's Knowledge, Exhibit C 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 W 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 Q 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 L 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 R, there are no
existing claims under any of the Guaranties and Warranties.
(xiv) Seller has received no written notices that it
is in default under the mortgage loan encumbering the Property.
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 to receive the condemnation
proceeds or 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 holder of the existing first
mortgage covering the Property ("Existing Lender"), 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" (defined in Exhibit T) or two (2) or more
"Major Tenants" (defined in Exhibit T) 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 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 (w) Seller's
failure to deliver to Purchaser evidence of the consent of The
Northwestern Mutual Life Insurance Co. as provided in section 10.G of
that certain Purchase and Sale Agreement dated June 30, 1997 between
Magnolia Retail Associates, L.L.C. and Purchaser for Magnolia Mall,
Florence, South Carolina and/or (x) a failure to deliver title to the
Property at Closing subject only to Permitted Exceptions and/or (y) a
failure to deliver the items described in Sections 4.B.(i)(a) through
(q) duly executed by Seller as required and/or (z) a breach of
Section 5.C hereof which results in an actual loss to Purchaser which
Seller refuses to credit or does not credit Purchaser at Closing (any
of the foregoing, "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
(except in the case of a Major Breach described in clause (w) above)
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; and
(ii) 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.
B. If Purchaser fails to close in accordance with the terms
of this Agreement, the Down Payment shall be retained by Seller as liquidated
damages which shall be Seller's sole remedy for such failure. 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; (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 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; and (iv)
such amount shall constitute valid liquidated damages.
C. 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 Final 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
Section 9.1(g) of 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)(B)(2) hereof.
B. As the only 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 close in accordance with the provisions of this
Agreement (beyond applicable notice and cure periods).
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, 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 that term is defined in the Management
Agreement) and the 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 Massachusetts.
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: Two North Riverside Plaza, Suite 1000
Chicago, Illinois 60606
Attention: George C. Touras
Telephone: 312/466-3635
Facsimile: 312/454-0826
With a copy to: 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 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 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, THAT
CERTAIN ASSET PURCHASE AGREEMENT DATED DECEMBER 31, 1996 BY AND BETWEEN EQUITY
PROPERTIES AND DEVELOPMENT LIMITED PARTNERSHIP AND THE RUBIN ORGANIZATION,
INC. (THE "ASSET PURCHASE AGREEMENT") OR THE MANAGEMENT AGREEMENT (TO THE
EXTENT SET FORTH THEREIN AND SUBJECT TO THE TERMS THEREOF) 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, 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, 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. INTENTIONALLY OMITTED.
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, Andrew Levin, 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 or Richard Brown 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 (or one or more undivided
interests therein) to one or more of its equity owners prior to Closing
provided the same shall not relieve Seller of its obligations hereunder and
such distributees shall take subject to the obligations of Seller hereunder
(to the extent of such distribution) without personal liability. 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. 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:
DIVERSIFIED EQUITY CORPORATION OF ILLINOIS, INC.,
an Illinois corporation
By: /S/ Kelly Stonebraker
-------------------------------------
Its: Vice President
PURCHASER:
THE RUBIN ORGANIZATION, INC., a Pennsylvania corporation
By: /S/ Ronald Rubin
-------------------------------------
Its: CEO
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.AA. hereof.
/S/ Sheli Z. Rosenberg
------------------------------------------
Sheli Z. Rosenberg as attorney-in-fact for
Samuel Zell, pursuant to
Power of Attorney dated May 15, 1997.