AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 30th
day of August, 1996, by and between COMMERCIAL VENTURES, INC., a Delaware
corporation ("Purchaser"), and JONATHONS LANDING LIMITED PARTNERSHIP, an
Illinois limited partnership ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Twenty Two Million and No/100 Dollars ($22,000,000.00) (the
"Purchase Price"), that certain property commonly known as Jonathans Landing,
Kent, Washington legally described on Exhibit A attached hereto (the
"Property"). Included in the Purchase Price is all of the personal property set
forth on Exhibit B attached hereto (the "Personal Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of Two Hundred
Thousand Dollars ($200,000.00) (the "Earnest Money") to be held in escrow by
and in accordance with the provisions of the Escrow Agreement ("Escrow
Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Evergreen Title Company, Inc.
for Lawyers Title Insurance Corporation dated April 1, 1996 for the Property
(the "Original Title Commitment"). For purposes of this Agreement, "Permitted
Exceptions" shall mean: (a) the general printed exceptions contained in the
standard title policy to be issued by Title Insurer (as defined below) based on
the Title Commitment (as defined below); (b) general real estate taxes,
association assessments, special assessments, special district taxes and
related charges not yet due and payable; (c) matters shown on the "Survey"
(hereinafter defined); (d) matters caused by the actions of Purchaser; and (e)
the title exceptions set forth in Schedule B of the Original Title Commitment
as in Schedule "B" - Section 1 II C. Numbers 1 through 20, inclusive, (except
that Numbers 1-12, and 15-18 do not interfere with the operation of buildings),
21 (to the extent not due and payable), 23 and 27 to the extent that same
affect the Property. All other exceptions to title shall be referred to as
"Unpermitted Exceptions". Purchaser shall obtain an updated title commitment
(the "Title Commitment") from Old Republic Title Insurance Company (the "Title
Insurer"). The Title Commitment shall be conclusive evidence of good title as
therein shown as to all matters to be insured by the title policy, subject only
to the exceptions therein stated. On the Closing Date, Title Insurer shall
deliver to Purchaser a standard title policy in conformance with the previously
delivered Title Commitment, subject to Permitted Exceptions and Unpermitted
Exceptions waived by Purchaser (the "Title Policy"). Seller shall pay for the
costs of the Title Commitment and Title Policy (in an amount no greater than
$19,930.00), and Purchaser shall pay for the cost of any endorsements to the
Title Policy which Purchaser or its lender require and all escrow charges.
3.2. Purchaser has received a survey of the Property prepared by
Smith-Roberts National Corporation (the "Survey"). The Survey will be
certified to Purchaser, Purchaser's lender and the Title Insurer. Seller will
pay the costs of updating the Survey. However, if Purchaser requires any
additional survey work over and above that required by the Title Insurer in
order to issue the Title Policy, Purchaser shall pay for the cost of such
additional work. Purchaser hereby acknowledges that all matters disclosed by
the Survey are acceptable to Purchaser.
3.3. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1 and 3.2, Seller
shall pay for costs of the documentary or transfer stamps to be paid with
reference to the "Deed" (hereinafter defined), and Seller shall pay the cost of
all other stamps, intangible, transfer, documentary, recording, sales tax and
surtax imposed by law with reference to any other sale documents delivered in
connection with the sale of the Property to Purchaser and all other closing
costs and charges of the Title Insurer in connection with this transaction.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment or the Survey discloses any new Unpermitted Exception, Seller
shall have thirty (30) days from the date of the date-down to the Title
Commitment or the Survey, as applicable, at Seller's expense, to (i) bond over,
cure and/or have any Unpermitted Exceptions which, in the aggregate, do not
exceed $200,000.00, removed from the Title Commitment or to have the Title
Insurer commit to insure against loss or damage that may be occasioned by such
Unpermitted Exceptions, or (ii) have the right, but not the obligation, to bond
over, cure and/or have any Unpermitted Exceptions which, in the aggregate,
equal or exceed $200,000.00, removed from the Title Commitment or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions. In such event, the time of Closing shall be
delayed, if necessary, to give effect to said aforementioned time periods. If
Seller fails to cure or have said Unpermitted Exception removed or have the
Title Insurer commit to insure as specified above within said thirty (30) day
period or if Seller elects not to exercise its rights under (ii) in the
preceding sentence, Purchaser may terminate this Agreement upon notice to
Seller within five (5) days after the expiration of said thirty (30) day
period. Absent notice from Purchaser to Seller in accordance with the
preceding sentence, Purchaser shall be deemed to have elected to take title
subject to said Unpermitted Exception. If Purchaser terminates this Agreement
in accordance with the terms of this Paragraph 5.1, this Agreement shall become
null and void without further action of the parties and all Earnest Money
theretofore deposited into the escrow by Purchaser together with any interest
accrued thereon, shall be returned to Purchaser, and neither party shall have
any further liability to the other, except for Purchaser's obligation to
indemnify Seller and restore the Property, as more fully set forth in Paragraph
7.
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by special warranty deed (the "Deed") in recordable form subject only
to the Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Seller shall maintain casualty and rent loss insurance on the
Property in accordance with its current practices. Notwithstanding the
foregoing, in the event of damage to the Property by fire or other casualty
prior to the Closing Date, repair of which would cost less than or equal to
$100,000.00 (as determined by Seller in good faith) Purchaser shall not have
the right to terminate its obligations under this Agreement by reason thereof,
but Seller shall have the right to elect to either repair and restore the
Property (in which case the Closing Date shall be extended until completion of
such restoration) or to assign and transfer to Purchaser on the Closing Date
all of Seller's right, title and interest in and to all insurance proceeds paid
or payable to Seller on account of such fire or casualty, and Seller shall pay
to Purchaser at the Closing the amount of Seller's insurance deductible.
Seller shall promptly notify Purchaser in writing of any such fire or other
casualty and Seller's determination of the cost to repair the damage caused
thereby. In the event of damage to the Property by fire or other casualty
prior to the Closing Date, repair of which would cost in excess of $100,000.00
(as determined by Seller in good faith), then this Agreement may be terminated
at the option of Purchaser, which option shall be exercised, if at all, by
Purchaser's written notice thereof to Seller within five (5) business days
after Purchaser receives written notice of such fire or other casualty and
Seller's determination of the amount of such damages, and upon the exercise of
such option by Purchaser this Agreement shall become null and void, the Earnest
Money deposited by Purchaser shall be returned to Purchaser together with
interest thereon, and neither party shall have any further liability or
obligations hereunder. In the event that Purchaser does not exercise the
option set forth in the preceding sentence, the Closing shall take place on the
Closing Date and Seller shall assign and transfer to Purchaser on the Closing
Date all of Seller's right, title and interest in and to all insurance proceeds
paid or payable to Seller on account of the fire or casualty, including rent
loss proceeds for the period following closing, if any, and Seller shall pay to
Purchaser at the Closing the amount of Seller's insurance deductible.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impair the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such five (5) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on July 10, 1996 and ending at 5:00
p.m. Chicago time on August 23, 1996 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser copies of the current rent roll
for the Property, the most recent tax and insurance bills, utility account
numbers, service contracts, unaudited year end 1995 and 1996 year to date
operating statements. Furthermore, if the following are reasonably available
to Seller, Seller shall deliver to Purchaser plans and specifications.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability, cost
and expense (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) suffered or incurred by Seller or Affiliates of
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property. Purchaser shall undertake its obligation to
defend set forth in the preceding sentence using attorneys selected by Seller,
in Seller's sole discretion.
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
Purchaser acknowledges the Inspection Period has terminated and that
Purchaser no longer has any right to terminate this Agreement under this
Paragraph 7.1.
7.2. Seller (or its predecessor) acquired title to the Property by
foreclosure or deed-in-lieu thereof. Seller can make no representations or
warranties relating to the condition of the Property or the Personal Property.
Purchaser acknowledges and agrees that it will be purchasing the Property and
the Personal Property based solely upon its inspections and investigations of
the Property and the Personal Property, and that Purchaser will be purchasing
the Property and the Personal Property "AS IS" and "WITH ALL FAULTS", based
upon the condition of the Property and the Personal Property as of the date of
this Agreement, wear and tear and loss by fire or other casualty or
condemnation excepted. Without limiting the foregoing, Purchaser acknowledges
that, except as may otherwise be specifically set forth elsewhere in this
Agreement, neither Seller nor its consultants, brokers or agents have made any
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property or the Personal Property, including, but
not limited to, the condition of the land or any improvements comprising the
Property, the existence or non-existence of "Hazardous Materials" (as
hereinafter defined), economic projections or market studies concerning the
Property, any development rights, taxes, bonds, covenants, conditions and
restrictions affecting the Property, water or water rights, topography,
drainage, soil, subsoil of the Property, the utilities serving the Property or
any zoning or building laws, rules or regulations or "Environmental Laws"
(hereinafter defined) affecting the Property. Seller makes no representation
or warranty that the Property complies with Title III of the Americans with
Disabilities Act or any fire code or building code. Purchaser hereby releases
Seller and the Affiliates of Seller from any and all liability in connection
with any claims which Purchaser may have against Seller or the Affiliates of
Seller, and Purchaser hereby agrees not to assert any claims for contribution,
cost recovery or otherwise, against Seller or the Affiliates of Seller,
relating directly or indirectly to the existence of asbestos or Hazardous
Materials on, or environmental conditions of, the Property, whether known or
unknown. As used herein, "Environmental Laws" means all federal, state and
local statutes, codes, regulations, rules, ordinances, orders, standards,
permits, licenses, policies and requirements (including consent decrees,
judicial decisions and administrative orders) relating to the protection,
preservation, remediation or conservation of the environment or worker health
or safety, all as amended or reauthorized, or as hereafter amended or
reauthorized, including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601
et seq., the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.
Section 6901 et seq., the Emergency Planning and Community Right-to-Know Act
("Right-to-Know Act"), 42 U.S.C. Section 11001 et seq., the Clean Air Act
("CAA"), 42 U.S.C. Section 7401 et seq., the Federal Water Pollution Control
Act ("Clean Water Act"), 33 U.S.C. Section 1251 et seq., the Toxic Substances
Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe Drinking Water
Act ("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq., the Atomic
Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational Safety and
Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the Hazardous Materials
Transportation Act (the "Transportation Act"), 49 U.S.C. Section 1802 et seq.
As used herein, "Hazardous Materials" means: (1) "hazardous substances," as
defined by CERCLA; (2) "hazardous wastes," as defined by RCRA; (3) any
radioactive material including, without limitation, any source, special nuclear
or by-product material, as defined by AEA; (4) asbestos in any form or
condition; (5) polychlorinated biphenyls; and (6) any other material, substance
or waste to which liability or standards of conduct may be imposed under any
Environmental Laws. Notwithstanding anything contained herein to the contrary,
the terms of this Paragraph 7.2 shall survive the Closing and the delivery of
the Deed and termination of this Agreement.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Such financial information is the
financial information relied upon by Seller for reporting purposes to Seller's
partners and in preparation of Seller's tax returns. Seller and Purchaser
hereby acknowledge that such information has been provided to Purchaser at
Purchaser's request. Seller makes no representation or warranty that such
material is complete or, except with respect to financial information prepared
by Seller which relates to prior periods and not projections, budgets, or the
like, accurate or that Purchaser will achieve similar financial or other
results with respect to the operations of the Property, it being acknowledged
by Purchaser that Seller's operation of the Property and allocations of
revenues or expenses may be vastly different than Purchaser may be able to
attain. Purchaser acknowledges that it is a sophisticated and experienced
purchaser of real estate and further that Purchaser has relied upon its own
investigation and inquiry with respect to the operation of the Property and
releases Seller and the Affiliates of Seller from any liability with respect to
such historical information. Notwithstanding anything contained herein to the
contrary, the terms of this Paragraph 7.3 shall survive the Closing and the
delivery of the Deed and termination of this Agreement.
7.4. Seller has provided to Purchaser the following existing report: Phase
I Environmental Site Assessment Report, Chandler's Bay Apartment Complex, 1024
North Central Avenue, Kent, Washington 98032 dated May 8, 1992 and an Updated
Phase I Environmental Site Assessment Report, Chandler's Bay Apartment Complex,
1024 North Central Avenue, Kent, Washington 98032 dated July 5, 1995 (together,
the "Existing Report"). Seller makes no representation or warranty concerning
the accuracy or completeness of the Existing Report. Purchaser hereby releases
Seller and the Affiliates of Seller from any liability whatsoever with respect
to the Existing Report, or, including, without limitation, the matters set
forth in the Existing Report, and the accuracy and/or completeness of the
Existing Report. Furthermore, Purchaser acknowledges that it will be
purchasing the Property with all faults disclosed in the Existing Report.
Notwithstanding anything contained herein to the contrary, the terms of this
Paragraph 7.4 shall survive the Closing and the delivery of the Deeds and
termination of this Agreement.
8. CLOSING. The closing of this transaction (the "Closing") shall on October
12 (the "Closing Date"), at the office of First City Escrow, 4221 Wilshire
Blvd., #388, Los Angeles, California, at which time Seller shall deliver
possession of the Property to Purchaser. This transaction shall be closed
through an escrow with Title Insurer, in accordance with the general provisions
of the usual and customary form of deed and money escrow for similar
transactions in Washington or at the option of either party, the Closing shall
be a "New York style" closing at which the Purchaser shall wire the Purchase
Price to Title Insurer on the Closing Date and prior to the release of the
Purchase Price to Seller, Purchaser shall receive the Title Policy or marked up
commitment dated the date of the Closing Date. In the event of a New York
style closing, Seller shall deliver to Title Insurer any customary affidavit in
connection with a New York style closing. All closing and escrow fees shall be
divided equally between the parties hereto.
9. FINANCING CONTINGENCY. Purchaser's and Seller's obligations under this
Agreement are contingent upon Purchaser's ability to procure a commitment for
first mortgage financing for the acquisition of the Property in an amount of
not less than that proposed by Lehman Brothers on terms proposed by Lehman
Brothers (the "Financing Contingency") on or before September 25, 1996.
Purchaser acknowledges and agrees that it shall submit its application (or
equivalent) for a commitment for such financing in accordance with the
provisions set forth above by September 9, 1996 and pay all application and
other fees associated therewith. Purchaser shall provide Seller with a letter
from Lehman Brothers evidencing that said application (or equivalent) has been
received and completed by September 12, 1996. In the event Purchaser has
complied with the requirements set forth in the preceding sentence, but is
unable to satisfy the Financing Contingency on or before September 25, 1996,
then Purchaser shall have the option, upon written notice to Seller, exercised
no later than September 25, 1996, to terminate this Agreement, in which case
this Agreement shall become null and void without further action of the parties
and all Earnest Money theretofore deposited into the escrow by Purchaser
together with any interest accrued thereon, shall be delivered to Purchaser,
and neither party shall have any further liability to the other, except for
those covenants and obligations hereunder which expressly survive the
termination of this Agreement. In the event Purchaser fails to deliver such
notice to Seller, the Financing Contingency shall be deemed satisfied and the
parties hereto shall proceed to Closing.
10. CLOSING DOCUMENTS.
10.1. On or prior to the Closing Date, Seller and Purchaser shall execute
and deliver to one another a joint closing statement. In addition, Purchaser
shall deliver to Seller the balance of the Purchase Price, an assumption of the
documents set forth in Paragraph 9.2.3 and 9.2.4 and such other documents as
may be reasonably required by the Title Insurer in order to consummate the
transaction as set forth in this Agreement.
10.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
10.2.1. the Deed (in the form of Exhibit E attached hereto),
subject to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
10.2.2. a quit claim bill of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
10.2.3. assignment and assumption of intangible property (in the
form attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H;
10.2.4. an assignment and assumption of leases and security
deposits (in the form attached hereto as Exhibit I);
10.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
10.2.6. original, and/or copies of, leases affecting the Property
in Seller's possession, which shall be delivered at the Property;
10.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
10.2.8. possession of the Property to Purchaser, subject to the
terms of leases;
10.2.9. evidence of the termination of the management agreement;
10.2.10. notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the leases
and the obligation to refund the security deposits (in the form of Exhibit K);
and
10.2.11. an updated rent roll.
11. PURCHASER'S DEFAULT. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND
THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
12. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS (i) ITS AND NOT AN UNRELATED THIRD PARTY'S AFFIRMATIVE,
WILLFUL ACTION WHICH RESULTS IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE
PROPERTY WITH THE INTENTION TO PREVENT THE SALE OF THE PROPERTY IN ACCORDANCE
WITH THE TERMS HEREOF AND WHICH GIVES RISE TO PURCHASER'S RIGHT TO TERMINATE
THIS AGREEMENT PURSUANT TO PARAGRAPH 5 HEREOF; (ii) ITS FAILURE TO EXPEND UP TO
$200,000 IF (A) SELLER IS ABLE TO BOND OVER, CURE OR REMOVE A MINOR UNPERMITTED
EXCEPTION FOR A COST NOT TO EXCEED $200,000 OR (B) THE TITLE INSURER IS WILLING
TO INSURE OVER A MINOR UNPERMITTED EXCEPTION FOR A COST NOT TO EXCEED $200,000
IN ACCORDANCE WITH THE TERMS HEREOF WITH THE TERMS HEREOF OR (iii) ITS WILLFUL
REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE.
13. PRORATIONS.
13.1. Rents (exclusive of delinquent rents, but including prepaid rents);
prepaid associations dues, refundable security deposits (which will be assigned
to and assumed by Purchaser and credited to Purchaser at Closing); water and
other utility charges; fuels; prepaid operating expenses; real and personal
property taxes and other similar items shall be adjusted ratably as of 11:59
p.m. on the Closing Date, and credited against the balance of the cash due at
Closing. Assessments payable in installments which are due subsequent to the
Closing Date shall be paid by Purchaser. If the amount of any of the items to
be prorated is not then ascertainable, the adjustments thereof shall be on the
basis of the most recent ascertainable data. All prorations will be final
except as to delinquent rent referred to in Paragraph 12.2 below.
13.2. All rent paid following the Closing Date by any tenant of the
Property who is indebted under a lease for basic rent for any period prior to
and including the Closing Date shall be deemed a "Post-Closing Receipt" until
such time as all such indebtedness is paid in full. If on the Closing Date
rent is in arrears only for the calendar month in which the Closing occurs,
then the first rent collected by Purchaser shall be apportioned between Seller
and Purchaser. All other rent received by Purchaser after the Closing Date
shall be applied first to current rental obligations and thereafter as a
Post-Closing Receipt. Within ten (10) days following each receipt by Purchaser
of a Post-Closing Receipt, Purchaser shall pay such Post-Closing Receipt to
Seller. Purchaser shall use its best efforts to collect all amounts which,
upon collection, would constitute Post-Closing Receipts hereunder. Within 120
days after the Closing Date, Purchaser shall deliver to Seller a reconciliation
statement of Post-Closing Receipts through the first 90 days after the Closing
Date. Upon the delivery of the Post-Closing Receipts reconciliation, Purchaser
shall deliver to Seller any Post-Closing Receipts owing to Seller and not
previously delivered to Seller in accordance with the terms hereof. Seller
retains the right to conduct an audit, at reasonable times and upon reasonable
notice, of Purchaser's books and records to verify the accuracy of the
Post-Closing Receipts reconciliation statement and upon the verification of
additional funds owing to Seller, Purchaser shall pay to Seller said additional
Post-Closing Receipts and the cost of performing Seller's audit. Paragraph
12.2 of this Agreement shall survive the Closing and the delivery and recording
of the deed.
14. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
15. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller to any entity in which Purchaser owns a controlling interest
provided that Purchaser remains liable for and the Assignee assumes the
obligations of Purchaser hereunder. If any assignee of Purchaser under this
Agreement petitions or applies for relief in bankruptcy or Assignee is
adjudicated as a bankrupt or insolvent, or Assignee files any petition,
application for relief or answer-seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other statute,
law, code or regulation relating to bankruptcy, insolvency, or other relief for
debtors (collectively, a "Bankruptcy Filing") on or before the Closing Date,
said Bankruptcy Filing shall be a default under this Agreement and Purchaser
shall indemnify Seller for all costs, attorney's fees and expenses of Seller
resulting from Seller's efforts to obtain the Earnest Money as liquidated
damages and to clear title to the Property from any encumbrance resulting from
the Bankruptcy Filing.
16. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Pinnacle Realty Management Company ("Pinnacle") (to be paid by
Seller). Any commission due MJ Realty Group will be paid by Pinnacle in
accordance with Seller's agreement with Pinnacle. Seller's commission to
Pinnacle shall only be payable out of the proceeds of the sale of the Property
in the event the transaction set forth herein closes. Purchaser and Seller
shall indemnify, defend and hold the other party hereto harmless from any claim
whatsoever (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) from anyone claiming by or through the indemnifying
party any fee, commission or compensation on account of this Agreement, its
negotiation or the sale hereby contemplated other than to Pinnacle and MJ
Realty Group. The indemnifying party shall undertake its obligations set forth
in this Paragraph 16 using attorneys selected by the indemnifying party and
reasonably acceptable to the indemnified party. The provisions of this
Paragraph 16 will survive the Closing and delivery of the Deed.
17. REPRESENTATIONS AND WARRANTIES.
17.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Mark A. Saturno or Michael Becker (together, "Seller's
Representatives"), and any representation or warranty of the Seller is based
upon those matters of which the Seller's Representatives have actual knowledge.
Seller's Representatives shall deliver a copy of the representations and
warranties contained in Section 17.2 below to the existing on-site property
manager, for its review, and request the on-site property manager to inform
Seller's Representatives of any inaccuracies contained in such representations
and warranties. Any knowledge or notice given, had or received by any of
Seller's agents, servants or employees shall not be imputed to Seller, the
general partner or limited partners of Seller, the subpartners of the general
partner or limited partners of Seller or Seller's Representative.
17.2. Subject to the limitations set forth in Paragraph 17.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
not survive Closing:
(i) Seller has no knowledge of any pending or threatened litigation,
claim, cause of action or administrative proceeding concerning the Property;
(ii) Seller has the power to execute and deliver this Agreement and
consummate the transactions contemplated herein;
(iii) the rent roll attached hereto as Exhibit L which Seller will update
as of the Closing Date is accurate as of the date set forth thereon; and
(iv) Seller has not received written notice of default under Title IX of
the Americans with Disabilities Act, any fire code or building code that have
not been previously corrected.
17.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute and deliver this
Agreement and consummate the transactions contemplated herein.
18. LIMITATION OF LIABILITY.
18.1. Neither Seller, nor any Affiliate of Seller, nor any of their
respective beneficiaries, shareholders, partners, officers, directors, agents
or employees, heirs, successors or assigns shall have any personal liability of
any kind or nature for or by reason of any matter or thing whatsoever under, in
connection with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Purchaser hereby waives for itself and
anyone who may claim by, through or under Purchaser any and all rights to sue
or recover on account of any such alleged personal liability.
19. TIME OF ESSENCE. Time is of the essence of this Agreement.
20. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Alan Lieberman
(847) 317-4360
(847) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: Commercial Ventures, Inc.
500 South Sepulveda
Suite 303
Los Angeles, CA 90049
Attention: Joseph F. Ruvolo and Roy Allenstein, Esq.
(310) 471-0206
(310) 471-6770 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
21. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
22. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Washington, except that with respect to the retainage of
the Earnest Money as liquidated damages the laws of the State of Illinois shall
govern.
23. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
24. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
25. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
COMMERCIAL VENTURES, INC., a Delaware corporation
By: /s/ Richard J. Nathan
-----------------------------------
Name: Richard J. Nathan
Its: President
SELLER:
JONATHONS LANDING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Jonathons Landing, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
------------------------------------
Name: James E. Mendelson
------------------------------------
Its: Authorized Rep.
------------------------------------
Pinnacle Realty Management Company ("Seller's Broker") executed this Agreement
in its capacity as a real estate broker and acknowledges that the fee or
commission due it from Seller as a result of the transaction described in this
Agreement is as set forth in that certain Listing Agreement, dated _____, 1996
between Seller and Seller's Broker (the "Listing Agreement"). Seller's Broker
also acknowledges that payment of the aforesaid fee or commission is
conditioned upon the Closing and the receipt of the Purchase Price by the
Seller. Seller's Broker agrees to deliver a receipt to the Seller at the
Closing for the fee or commission due Seller's Broker and a release, in the
appropriate form, stating that no other fees or commissions are due to it from
Seller or Purchaser.
Pinnacle Realty Management Company
By:
--------------------------------------
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Rent Roll