AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 27
day of March, 1997 by and between CMD Southwest, Inc., an Arizona corporation
("Purchaser"), and Stemmons Center 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 Thirteen Million Dollars ($13,000,000) ("Purchase Price"), and
on the terms and conditions hereinafter set forth, the property commonly known
as Stemmons Center, Dallas, Texas, consisting of the following (the
"Property"):
1.1 The real property ("Land") and all buildings and other improvements
("Improvements") situated on the Land, as more particularly described on
Exhibit A attached hereto and made a part hereof (the Land and the Improvements
are sometimes referred to herein together as the "Real Property"), together
with all easements and appurtenances thereunto belonging and all of Seller's
right, title and interest in and to all streets, alleys and public ways
adjacent thereto, if any, and together with all of Seller's right, title and
interest in and to all strips and gores located on or adjacent to the Property
or located between any parcels constituting the Land, if any;
1.2 The personal property set forth on Exhibit B attached hereto
("Personal Property");
1.3 The tenant leases described in the rent roll set forth on Exhibit C
attached hereto and made a part hereof together with such other tenant leases
of the Property as may be made prior to Closing (as hereinafter defined) in
accordance with the terms of this Agreement ("Leases");
1.4 If and to the extent assignable and to the extent of Seller's
interest therein, if any: (a) all guarantees, warranties and indemnifications,
if any, received from suppliers, contractors, materialmen or subcontractors
arising out of, or in connection with, the installation, construction or
maintenance of the Property including, without limitation, the right to sue any
obligor for any breach of any covenant, agreement, representation, warranty or
guarantee contained therein; (b) all licenses, permits, certificates of
occupancy and franchises issued by any federal, state, county or municipal
authority relating to the use, maintenance or operation of the Property running
to or in favor of Seller or pertaining to the Property; (c) all trade styles,
and trade names, including, without limitation, the name "Stemmons Center", and
all contract rights, brochures, manuals, lists of prospective tenants,
advertising material, books and records, utility contracts and telephone
numbers; (d) the plans and specifications for the Improvements and all
unexpired claims and sureties, if any, received in connection with the
construction, improvement or equipment of the Improvements; and (e) those of
the service and maintenance contracts set forth in Exhibit D ("Service
Contracts") which are Assumed Contracts (as hereinafter defined).
1.5 Notwithstanding anything contained in this Agreement to the contrary,
Seller is not conveying or assigning to Purchaser the items described in
Paragraph 15.4 hereof.
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1 Within two business days after the execution of this Agreement and
the Escrow Agreement by all parties hereto and thereto, the sum of Two Hundred
Fifty Thousand Dollars ($250,000) ("Earnest Money"), by check payable to the
escrow agent, to be held in escrow by and in accordance with the provisions of
the Escrow Agreement ("Escrow Agreement") attached hereto as Exhibit E; and
2.2 On the Closing Date (as hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 2:00 p.m. Chicago time. Any
provisions herein providing for the delivery of the Earnest Money to either
party hereof are intended to mean the Earnest Money plus any interest earned
thereon and less all escrow and investment fees; provided, however, that if the
transaction contemplated by this Agreement closes, Purchaser and Seller shall
each pay one-half of the joint order Earnest Money escrow fee, and Purchaser
shall pay any investment fees incurred in investing the Earnest Money.
3. TITLE COMMITMENT AND SURVEY.
3.1 Seller shall use reasonable efforts to deliver to Purchaser, within
10 days of the date hereof, a title commitment for an owner's standard title
insurance policy issued by Charter Title Company, as agent for Chicago Title
Insurance Company, (hereinafter referred to as "Title Insurer"), for the
Property ("Title Commitment"). For purposes of this Agreement, "Permitted
Exceptions" shall mean: (a) general ad valorem real estate taxes for the year
1997 and subsequent years not yet due and payable; (b) matters caused by the
action or inaction of Purchaser or its agents (and Purchaser hereby agrees to
amend the Escrow Agreement, if necessary, to reflect as a Permitted Exception
any such matter which may be raised by the Title Insurer); (c) the rights of
tenants under Leases; and (d) liens or encumbrances of a definite or
ascertainable amount which may be removed or insured over by the payment of
money or other security at the Closing Date, and which Seller removes or causes
to be insured over at the Closing Date in accordance with Paragraph 5 hereof.
All other exceptions to title shall be referred to as "Unpermitted Exceptions".
On the Closing Date, Title Insurer shall deliver to Purchaser a standard Texas
form of owners title policy (Form T-1) insuring Purchaser's fee simple title to
the Property, in the full amount of the Purchase Price, dated no earlier than
the date and time of recording of the Deed, and otherwise in conformance with
the previously delivered Title Commitment, subject only to Permitted Exceptions
(excluding, however, the Permitted Exceptions described in subclause (d) above)
and Unpermitted Exceptions waived in writing by Purchaser provided, however,
that (i) the standard printed exception dealing with area, boundaries and other
matters shall be deleted, except for "shortages in area," at Purchaser's sole
cost, (ii) the standard exception as to restrictive covenants shall either be
deleted or modified to except only any restrictive covenants that are Permitted
Exceptions, and (iii) the exception as to standby fees and taxes shall be
limited to standby fees and taxes for the year of Closing and subsequent years,
and subsequent assessments for prior years due to changes in land usage or
ownership ("Title Policy"). The Title Policy 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 and requirements therein stated. Seller
shall pay the costs of the Title Commitment and Title Policy (exclusive of
costs for the items described in clauses (i) - (iii) above and any
endorsements) and Purchaser shall pay for the cost of the items described in
clauses (i) - (iii) above and any endorsements to the Title Policy as requested
by Purchaser or Purchaser's lender.
3.2 Seller shall use reasonable efforts to deliver to Purchaser, within
10 days after the date hereof, a current survey meeting the requirements of
this paragraph 3.2 ("Survey"). Purchaser and Seller shall each pay one-half of
the costs associated with the Survey. The Survey shall be certified to CMD
Southwest, Inc. and Title Insurer. The Survey shall be an "urban survey" of
the Land and Improvements prepared in accordance with the most recent "Minimum
Standard Detail Requirements for Land Title Surveys" jointly established by
ALTA and ACSM and shall include items 1, 2, 3, 4, 7, 8, 9, 10 and 11 from
Table A thereof. The flood hazard certification on the Survey shall reference
the most current Flood Insurance Rate Map available.
3.3 The obligations of Purchaser and Seller to pay various costs set
forth in Paragraphs 3.1 and 3.2 shall survive the termination of this
Agreement.
3.4 Within 10 business days after delivery to Purchaser of the last to be
delivered of the Title Commitment and the Survey, Purchaser shall deliver to
Seller written notice of any objections to the Title Commitment and Survey
("Objection Notice"). If Purchaser fails to deliver the Objection Notice in a
timely manner, all matters raised by the Title Commitment and Survey shall be
deemed to be additional Permitted Exceptions. If Seller fails to cure any of
the objections in the Objection Notice on or prior to the Closing Date,
Purchaser may terminate this Agreement by written notice to Seller on the
Closing Date, whereupon all Earnest Money, together with all interest accrued
thereon, shall be returned to Purchaser, and neither party shall have any
further liability to the other, except for those covenants that specifically
survive termination of this Agreement. If this Agreement is not so terminated,
Purchaser and Seller shall proceed with the Closing and any objections raised
by Purchaser in its Objection Notice shall be deemed additional "Permitted
Exceptions."
4. PAYMENT OF CLOSING COSTS.
4.1 In addition to the costs set forth in Paragraphs 3.1 and 3.2, Seller
and Purchaser shall each pay one-half of the costs of the documentary or
transfer stamps to be paid with reference to the Deed (as hereinafter defined)
and 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.
5. CONDITION OF TITLE.
5.1 If, prior to Closing (as hereinafter defined), a date-down to the
Title Commitment or any other title search discloses any new Unpermitted
Exceptions which, in the aggregate, do not exceed $25,000 (each, a "Minor
Unpermitted Exception"), Seller shall, at Seller's expense, bond over, cure
and/or have such Minor Unpermitted Exceptions removed from the Title Commitment
or have the Title Insurer commit to insure against loss or damage that may be
occasioned by such Minor Unpermitted Exceptions. Notwithstanding the
foregoing, if such date down to the Title Commitment or any other title search
discloses any new Unpermitted Exceptions which, in the aggregate, equal or
exceed $25,000, Seller shall have the right, but not the obligation, to bond
over, cure and/or have such exceptions 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. If Seller fails to bond over, cure
or have any Unpermitted Exception removed or have the Title Insurer commit to
insure as specified above and provide reasonably satisfactory evidence of such
action to Purchaser within five (5) business days from the date of the date
down to the Title Commitment or any other title search, Purchaser may terminate
this Agreement upon written notice to Seller within three (3) business days
after the expiration of such five (5) business day period; provided, however,
and notwithstanding anything contained herein to the contrary, if the
Unpermitted Exception which gives rise to Purchaser's right to terminate was
recorded against the Property as a result of the affirmative action of Seller
or if Seller is able to bond over, cure or remove a Minor Unpermitted Exception
for a cost not to exceed $25,000 or the Title Insurer is willing to insure over
a Minor Unpermitted Exception for a cost not to exceed $25,000 in accordance
with the terms hereof and Seller fails to expend such funds in either case,
then Purchaser shall have the additional rights contained in Paragraph 14
herein. 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, without any reduction in or setoff against the
Purchase Price as a result thereof. If Purchaser terminates this Agreement in
accordance with the terms of this Paragraph 5.1, this Agreement shall terminate
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 those covenants and obligations that
specifically survive termination of this Agreement.
5.2 Seller agrees to convey fee simple title to the Property to Purchaser
by special warranty deed ("Deed") (in the form attached hereto as Exhibit G) in
recordable form subject only to the Permitted Exceptions and any Unpermitted
Exceptions not objected to by Purchaser in accordance with Paragraph 5.1 above.
5.3 Notwithstanding anything to the contrary set forth herein, (i) in all
events, Seller agrees to discharge at or prior to Closing all liens or
encumbrances created with the consent or agreement of Seller, of a definite or
ascertainable amount and no such lien or encumbrance shall be deemed a
"Permitted Exception," and, in the event Seller fails to discharge said liens
or encumbrances, Purchaser shall have the right to deduct from the Purchase
Price at Closing the amount of any such liens or encumbrances, and (ii) if any
title or survey matters which are unacceptable to Purchaser and which are not
Permitted Exceptions ("Unpermitted Matters") are the result of or constitute a
default hereunder by Seller, or if Seller has created any Unpermitted Matters
between the date of this Agreement and the Closing Date, then whether or not
this Agreement was terminated pursuant to Paragraph 7.1, Purchaser shall have
the rights and remedies provided for in Paragraph 14 hereof.
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 through the Closing. Seller agrees to maintain its existing "all risk"
replacement cost casualty insurance and rent loss insurance in place until the
Closing Date. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other insured casualty prior to the Closing Date, repair of
which would cost less than or equal to $100,000 (as reasonably determined by
Seller in good faith), and which would not entitle any Major Tenant
(hereinafter defined) to terminate its lease, 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
if such repair or restoration may be completed prior to the Closing Date 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 plus the amount of Seller's insurance
deductible. As used herein, "Major Tenant" means any of Cybertek Corporation,
Commercial Metals Company and U.S.P.S. Seller shall promptly notify Purchaser
in writing of any such fire or other casualty and Seller's estimate 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 (as reasonably determined by Seller in good faith), or would
cost in excess of the sum of any insurance proceeds to become available and any
deductible amount to be paid to Purchaser by Seller, or would allow any Major
Tenant to terminate its lease, 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 twenty (20) days after Purchaser
receives written notice of such fire or other casualty from Seller and Seller
and Purchaser agree upon the amount of such damages, and upon the exercise of
such option by Purchaser this Agreement shall terminate without further action
by the parties, 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, except for those covenants and
obligations which expressly survive termination of this Agreement. In the
event that Purchaser does not exercise the option to terminate in accordance
with this Paragraph 6.1, 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 and shall pay to Purchaser
the amount of Seller's insurance deductible. Notwithstanding anything contained
herein to the contrary, Seller's obligation to transfer all insurance proceeds
paid to Seller as set forth more fully in this Paragraph 6.1 shall survive the
Closing and the recording of the Deed.
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)
impair access to the Property; (ii) cause any 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; (iii) adversely impair the use of the Property as it is
currently being operated, or (iv) allow any Major Tenant to terminate its lease
(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,
except for those covenants and obligations hereunder which expressly survive
termination of this Agreement; 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 or to be made in connection with such condemnation or eminent domain
proceedings. Notwithstanding anything contained herein to the contrary,
Seller's obligation to transfer Seller's interest in such award as set forth
more fully in this Paragraph 6.2.2 shall survive the Closing and the recording
of the Deed.
Purchaser shall then notify Seller, within twenty (20) 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 twenty (20) day period, Purchaser shall be deemed to have
elected to proceed with Closing in accordance with 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 the date hereof and ending at 5:00
p.m. Chicago time on April 14, 1997 (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 to
inspect the Property and to conduct and prepare such studies, tests and surveys
as Purchaser may deem reasonably necessary and appropriate, including, without
limitation, a review of Seller's files relating to the Property, including,
without limitation, to the extent the following are in Seller's or Seller's
agents' possession: (i) any schedule setting forth all presently effective
insurance policies (of whatever nature) carried by the Seller and relating to
the Property, and certificates of insurance thereon; (ii) copies of any
as-built plans and specifications for the Property; (iii) copies of assignable
warranties and guarantees issued in connection with the Property; (iv) reports,
tests and studies relating to the Property, including copies of site plans,
building plans and specifications, engineering plans, architectural plans,
environmental reports, geological reports, maintenance reports, certificate of
occupancy, certificates of compliance and other permits and licenses affecting
the Property or its operation; and (v) such other information and materials
reasonably requested by Purchaser. In connection with Purchaser's review of
the Property, Seller has delivered to Purchaser documents which purport to be
copies of the current rent roll for the Property, the tax and insurance bills
and assessments for 1994, 1995, 1996, and 1997, copies of the Leases, utility
account numbers, a personal property inventory, the Service Contracts,
unaudited annual operating statements for 1994 through 1996 and monthly
unaudited operating statements for January 1997.
Within five (5) days from the date hereof, Seller shall deliver to
Purchaser the following: (i) a list, if any, of proposed leases, renewals
and/or expansions currently being negotiated with the proposed effective dates
and expiration dates, rental rates, expense stops, rent concessions or
abatements, tenant improvements and expected completion date and commissions;
(ii) a schedule as of a date subsequent to the date of this Agreement,
describing all service, and other presently effective agreements and warranties
relating to the operation and/or maintenance of the Property, together with
complete and correct copies thereof; (iii) all existing licenses and permits,
and any letters from any governmental authorities concerning uncured violations
or code issues relating to the Building; and (iv) a schedule listing all
leasing commission and brokerage agreements relating to the Property entered
into by Seller, along with copies of each such agreement.
All of the foregoing tests, investigations and studies which may be
conducted under this Paragraph 7.1 by Purchaser shall be subject to the
following:
(i) Such tests, inspections and investigations shall take place
during normal business hours upon reasonable notice to Seller or its designated
agents;
(ii) Except as may be required by law or reasonably necessary
for Purchaser to complete its due diligence or to obtain financing in order to
close this transaction, all information set forth in the documents to be
reviewed hereunder by Purchaser, its employees, agents, contractors and
consultants shall be held in strict confidence until Closing and thereafter in
the event that the Closing does not occur;
(iii) In the event the Closing does not occur, Purchaser shall
promptly return to Seller any documents obtained from Seller or Seller's
agents;
(iv) Neither Purchaser nor any of its employees, agents,
contractors or consultants shall cause any lien, claim or charge of any kind
whatsoever to attach to the Property or any part thereof; and
(v) such tests, investigations and studies shall be at
Purchaser's sole cost and expense, and in the event of any damage to the
Property caused by Purchaser, its agents, engineers, employees, contractors or
surveyors (including, without limitation, pavement, landscaping and surface
damage), Purchaser shall pay the cost incurred by Seller to restore the
Property to the condition existing prior to the performance of such tests,
investigations or studies.
Purchaser shall defend, indemnify and hold Seller and any affiliate or parent
of Seller, and all shareholders, employees, officers, directors and partners of
Seller or Seller's affiliate or parent (hereinafter collectively referred to as
"Affiliates of Seller") harmless from any and all liability, cost and expense
(including without limitation, reasonable attorneys' fees, court costs and
costs of appeal) suffered or incurred by Seller or Affiliates of Seller for
physical injury to persons or property caused by Purchaser's investigations,
tests, studies and inspections of the Property. Purchaser shall undertake its
obligation to defend set forth in the preceding sentence using attorneys
selected by Purchaser and reasonably acceptable to Seller. 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.
If Purchaser is dissatisfied with the results of the tests, studies or
investigations performed or information received pursuant to this Agreement, or
otherwise, for any reason, or for no reason, Purchaser shall have the right, in
its sole discretion, to terminate this Agreement by giving written notice of
such termination to Seller at any time prior to the expiration of the
Inspection Period. If written notice is not given by Purchaser pursuant to
this Paragraph 7.1 prior to the expiration of the Inspection Period, then the
right of Purchaser to terminate this Agreement pursuant to this Paragraph 7.1
shall be waived. If Purchaser terminates this Agreement by written notice to
Seller prior to the expiration of the Inspection Period: (i) Purchaser shall
promptly deliver to Seller copies of all third party studies, reports and other
investigations commissioned by Purchaser in connection with its due diligence
during the Inspection Period; provided the Purchaser makes no representation as
to their accuracy and completeness and shall have no liability with respect
thereto, and provided further that Seller may not distribute the same to any
other person or entity (except as may be required by any governmental
requirements) without Purchaser's prior written consent, which consent shall
not be unreasonably withheld; and (ii) the Earnest Money deposited by Purchaser
shall be immediately paid to Purchaser, together with any interest earned
thereon, less the sum of One Hundred and No/100 Dollars ($100.00), which shall
be paid to Seller in consideration for such period of inspection, and neither
Purchaser nor Seller shall have any right, obligation or liability under this
Agreement, except for those covenants and obligations which expressly survive
the termination of this Agreement. Notwithstanding anything contained herein
to the contrary, Purchaser's obligation to indemnify Seller and pay the costs
of restoring the Property, as more fully set forth in this Paragraph 7.1, shall
survive Closing and recording of the Deed and the termination of this
Agreement, as applicable.
7.2 Except for the express representations, warranties and covenants of
Seller set forth herein or in any closing document, 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, ordinary
wear and tear and loss by fire or other casualty or condemnation excepted and
that Seller makes no warranty or representation, express or implied, or arising
by operation of law, including, but not limited to, any warranty of condition,
habitability, merchantability or fitness for a particular purpose, in respect
of the Property. Without limiting the foregoing, Purchaser acknowledges that,
except as may otherwise be specifically set forth elsewhere in this Agreement
or in any closing document, 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: (i) the condition of the Land or any
improvements comprising the Property; (ii) the existence or non-existence of
any pollutant, toxic waste and/or any hazardous materials or substances;
(iii) economic projections or market studies concerning the Property, or the
income to be derived from the Property; (iv) any development rights, taxes,
bonds, covenants, conditions and restrictions affecting the Property; (v) the
nature and extent of any right of way, lease, lien, encumbrance, license,
reservation or other title matter; (vi) water or water rights, topography,
geology, drainage, soil or subsoil of the Property; (vii) the utilities serving
the Property; (viii) the suitability of the Property for any and all activities
and uses which Purchaser may elect to conduct thereon; or (ix) the compliance
of the Property with any zoning, environmental, building or other laws, rules
or regulations affecting the Property. Seller makes no representation or
warranty that the Property complies with 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 or
substances on, or environmental conditions of, the Property, whether known or
unknown. As used herein, the term "hazardous materials or substances" means
(i) hazardous wastes, hazardous substances, hazardous constituents, toxic
substances or related materials, whether solids, liquids or gases, including
but not limited to substances defined as "hazardous wastes," "hazardous
substances," "toxic substances," "pollutants, "contaminants," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.; the Toxic
Substance Control Act, 15 U.S.C. Section 2601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1802; the Resource Conservation and
Recovery Act, 42 U.S.C. Section 9601. et seq.; the Clean Water Act, 33 U.S.C.
Section 1251; the Safe Drinking Water Act, 42 U.S.C. Section 30Of et seq; the
Clean Air Act, 42 U.S.C. Section 7401 et seq.; and in any permits, licenses,
approvals, plans, rules, regulations or ordinances adopted, or other criteria
and guidelines promulgated pursuant to the preceding laws or other similar
federal, state or local laws, regulations, rules or ordinance now or hereafter
in effect relating to environmental matters (collectively, "Environmental
Laws"); and (ii) any other substances, constituents or wastes subject to any
applicable federal, state or local law, regulation or ordinance, including any
Environmental Law, now or hereafter in effect, including but not limited to (A)
petroleum, (B) refined petroleum products, (C) waste oil, (D) waste aviation or
motor vehicle fuel and (E) asbestos. Except as otherwise set forth herein,
Purchaser acknowledges that being given the opportunity to inspect the
Property, except to the extent covered by a representation, warranty or
covenant set forth herein or in any closing document, Purchaser shall rely
solely on its own investigation of the Property and not on any information
provided or to be provided by Seller. Purchaser further acknowledges that the
information provided and to be provided with respect to the Property was
obtained from a variety of sources, and that except as otherwise set forth
herein, Seller (x) has not made any independent investigation or verification
of such information and (y) makes no representations as to the accuracy or
completeness of such information, except as provided herein or in any closing
document.
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. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except for the express
representations, warranties and covenants of Seller set forth herein, Seller
makes no representation or warranty that such material is complete or 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.
7.4 Seller has provided to Purchaser a Report of Preliminary
Environmental Site Assessment and Limited Asbestos Survey dated June 27, 1990
prepared by Law Associates (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, including,
without limitation, the matters disclosed by 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.
7.5 Notwithstanding anything contained herein to the contrary, the
acknowledgements, agreements, waivers and releases of Purchaser set forth in
this Paragraph 7 shall survive Closing and recording of the Deed and the
termination of this Agreement as applicable.
8. CLOSING.
8.1 The closing of this transaction ("Closing") shall be on April 29,
1997 ("Closing Date"), at the office of Seller's attorneys, Hopkins & Sutter,
Three First National Plaza, Suite 4300, Chicago, Illinois 60602, or at Seller's
option, at the office of the Title Insurer in Chicago, Illinois, at which time
Seller shall deliver possession of the Property to Purchaser. This transaction
shall be closed in accordance with the provisions of the Escrow Agreement. All
deed and money escrow fees (including, so-called "New York style" closing fees)
shall be paid one-half by Purchaser and one-half by Seller.
8.2 The following shall be conditions precedent to Purchaser's obligation
to close ("Purchaser Conditions"), including, without limitation, Purchaser's
obligations under Paragraphs 2.2 and 9.1:
(a) the Title Insurer shall be irrevocably committed to issue the
Title Policy in the form set forth in Paragraph 3.1;
(b) No material adverse change in any zoning regulations since the
date of this Agreement shall have occurred prior to the Closing Date;
(c) Seller shall be irrevocably committed to perform its obligations
under Paragraph 9.2;
(d) Seller shall have performed all of its obligations and covenants
under this Agreement; and
(e) all of Seller's representations and warranties in this Agreement
shall be true as of the Closing.
(f) Seller shall deliver an estoppel certificate from Insignia
Commercial Group, Inc. ("Manager") stating that it is not entitled to any
commissions relating to any lease at the Property, including any renewals,
expansions or extensions (whether heretofore or hereafter exercised) of any
Lease or leasing of additional space.
If any of the Purchaser Conditions have not occurred or been satisfied
within the time periods and strictly in accordance with the terms set forth
herein then, Purchaser shall so notify Seller and Seller shall have 30 days
from the date of such notice to satisfy any Purchaser Conditions. If Seller
fails to satisfy all the Purchaser Conditions within such 30 day period,
Purchaser shall have the right (without limitation of any other remedies
provided herein), to terminate this Agreement by written notice to Seller, in
which event the Earnest Money and all interest earned thereon shall be returned
to Purchaser, all other obligations of the parties hereto shall thereupon cease
(with the exception of any obligations which expressly survive the termination
of this Agreement) and this Agreement shall thereafter be of no further force
and effect.
9. CLOSING DOCUMENTS.
9.1 On the Closing Date, Seller and Purchaser shall execute and deliver
to one another a joint closing statement and shall deliver the Earnest Money
from the joint order escrow. In addition, Purchaser shall deliver to Seller
the balance of the Purchase Price, subject to any prorations and adjustments as
provided in this Agreement, an assumption of the documents set forth in
Paragraph 9.2.3 and 9.2.4, counterparts of any transfer tax declarations and
such other documents as may be reasonably required by the Title Insurer and not
inconsistent with the terms of this Agreement in order to consummate the
transaction as set forth in this Agreement.
9.2 On the Closing Date, Seller shall deliver to Purchaser the following:
9.2.1 the Deed, subject to Permitted Exceptions and those Unpermitted
Exceptions waived by Purchaser in writing or not objected to by Purchaser in
accordance with Paragraph 5.1 hereof;
9.2.2 a special warranty bill of sale conveying the Personal Property
(in the form of Exhibit H attached hereto);
9.2.3 assignment and assumption (with respect to periods from and
after the Closing) of intangible property (in the form attached hereto as
Exhibit I) including the Assumed Contracts, but excluding Service Contracts
which are not Assumed Contracts;
9.2.4 an assignment and assumption (with respect to periods from and
after the Closing) of Leases and security deposits (in the form attached hereto
as Exhibit J);
9.2.5 non-foreign affidavit (in the form of Exhibit K attached
hereto);
9.2.6 originals, and/or copies of, the Leases in Seller's possession
or control (unless Seller elects to leave such documents in the on-site
management office);
9.2.7 all documents and instruments reasonably required by the Title
Insurer to issue the Title Policy;
9.2.8 possession of the Property to Purchaser, subject to the Leases
and the Permitted Exceptions;
9.2.9 evidence of the termination of the management agreement, and
any agreement, lease or license pursuant to which Insignia has possession of
all or part of the Property, and those Service Contracts which are not Assumed
Contracts along with a lien waiver executed by the property manager, if
applicable;
9.2.10 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 the extent credit is given to Purchaser at Closing for the
applicable security deposit) to refund the refundable security deposits (in the
form of Exhibit L);
9.2.11 an updated rent roll certified by Seller to be true and
correct, subject to the provisions of Paragraph 17.1 and Paragraph 18 hereof;
9.2.12 Broker's Lien Waivers signed by Manager and Insignia
Mortgage & Investment Company ("Insignia");
9.2.13 an Owner's Title Affidavit or ALTA extended coverage statement
in form reasonably acceptable to Seller and Title Insurer;
9.2.14 such formative and authorization documents of Seller as may be
reasonably required by Title Insurer;
9.2.15 copies of all books and records as may be necessary to
calculate tenant escalations and reconciliations (unless Seller elects to leave
such documents in the on-site management office);
9.2.16 to the extent in Seller's possession or control, all
warranties and guarantees as to the Property, the complete tenant files,
including, without limitation, records of rental payments, correspondence and
escalation letters, service contracts and plans and specifications for the
Property, if any and such other papers or documents requested by Purchaser as
may be useful to Purchaser as the new owner and operator of the Property.
9.2.17 the Tenant Certificates and, if applicable, the Seller
Certificates (as hereinafter defined); and
9.2.18 all keys to the Improvements.
10. ESTOPPEL CERTIFICATES.
10.1 Seller shall use reasonable efforts to obtain, at least five (5) days
prior to Closing, tenant estoppel certificates in the form attached hereto as
Exhibit M ("Tenant Certificates") from each tenant occupying space within the
Property. Purchaser's obligation to close the transaction contemplated herein
is contingent upon the delivery to Purchaser without any Qualification
(hereafter defined) of (i) a Tenant Certificate from each Major Tenant; and
(ii) a Seller Certificate in the form attached hereto as Exhibit N ("Seller
Certificate") from every tenant occupying space in the Property as of the
Closing Date that has not provided a Tenant Certificate. If such condition is
not satisfied prior to Closing, Purchaser shall have the right to terminate
this Agreement by written notice to Seller, in which event the Earnest Money
and all interest earned thereon shall be returned to Purchaser, all other
obligations of the parties hereto shall thereupon cease (with the exception of
any obligations which expressly survive the termination of this Agreement) and
this Agreement shall thereafter be of no further force and effect.Seller agrees
to provide a Seller Certificate at Closing for any tenant occupying space in
the Property that has not provided a Tenant Certificate. As used herein,
"Qualification" means any information which affects the use or value of the
Property or the obligations of the tenant or affects the rights of the landlord
under any lease which is not disclosed on the Rent Roll attached hereto as
Exhibit C or in the copies of the Leases delivered to Purchaser. If Purchaser
fails to notify Seller of any objections to a Tenant Certificate within five
business days after receipt of such Tenant Certificate by Purchaser, such
Tenant Certificate shall be deemed acceptable to Purchaser for purposes of this
Section 10.1.
10.2 Notwithstanding anything contained herein to the contrary, the
representations and warranties contained in any Seller Certificate executed by
Seller shall be subject to the provisions of Paragraph 18 hereof and the
limitations on the survival of such representations and warranties as set forth
in Paragraph 17.10 hereof.
10.3 Upon receipt after Closing by Purchaser of a Tenant Certificate
containing the information herein required from a tenant under a lease for whom
Seller has executed and delivered a Seller Certificate at Closing, the related
Seller Certificate executed and delivered by Seller at Closing shall become
null and void, and the Tenant Certificate received from the tenant or tenants
shall be substituted therefor.
11. SERVICE CONTRACTS. Prior to the expiration of the Inspection Period,
Purchaser shall notify Seller in writing of all Service Contracts which
Purchaser wishes to assume at Closing (the "Assumed Contracts"). Except as
provided below, all other Service Contracts, and any management and leasing
brokerage agreements, shall be terminated by Seller. Seller shall provide
notice of such termination to each contractor under the Service Contracts which
are not Assumed Contracts on the earlier of (i) the waiver by Purchaser of all
of the Purchaser's Conditions or (ii) the Closing Date. Seller has advised
Purchaser that the Service Contracts are terminable on 30 days prior written
notice. With respect to any Service Contracts which are not Assumed Contracts,
Purchaser and Seller shall prorate the payments due under such Service
Contracts as of the Closing Date, with the Purchaser being responsible for its
pro rata share of any payments attributable to the period after the Closing
Date and prior to the termination date of such Service Contracts. On the
Closing Date, Seller shall assign the Assumed Contracts to Purchaser, and
Purchaser shall assume in writing responsibility of the obligations arising
from and after the Closing Date under the Assumed Contracts. Seller shall use
reasonable efforts to obtain any required consent with respect to the
assignment of the Assumed Contracts; provided, however, that Seller's inability
to obtain such approval shall not be a default hereunder or a condition
precedent to Purchaser's obligations to close hereunder.
12. LEASING OF PROPERTY.
12.1 After the expiration of the Inspection Period, Seller shall not enter
into any lease or third-party contract or any modification or termination of
any lease or third party contract which does not expire prior to Closing
(collectively "New Agreements") relating to the Property (including any leasing
commission agreements) without prior written notification to and approval by
Purchaser. Prior to the expiration of the Inspection Period, Seller shall
provide Purchaser with written notification of any New Agreement together with
a copy thereof, a statement fully disclosing the obligations and costs
associated therewith, including, without limitation, the tenant improvement
costs, tenant finish out and leasing commissions (collectively, as disclosed,
the "Disclosed Costs"), and any other information reasonably requested by
Purchaser. If Purchaser disapproves of any such New Agreement, Purchaser
shall, within five (5) business days after notification by Seller, either
terminate this Agreement by written notification to Seller, or waive the right
to terminate this Agreement pursuant to Paragraph 7.1 in which event Seller
shall not enter into such agreement. Failure of Purchaser to disapprove any
such New Agreement and terminate this Agreement, in writing and delivered to
Seller, within such five-day period shall be deemed approval by Purchaser of
such proposed New Agreement for all purposes hereunder. The Disclosed Costs
for any approved New Agreement which is a lease or modification thereof shall
be the obligation of Purchaser. Nothing herein shall obligate Purchaser to
assume any third-party contract which Purchaser has not elected to assume
pursuant to Paragraph 11. Any New Agreement so approved by Purchaser shall be
a "Lease" or a "Service Contract," as applicable.
12.2 The termination of any Lease prior to Closing by reason of a tenant's
default will not affect the obligations of Purchaser under this Agreement in
any manner, or entitle Purchaser to an abatement of or credit against the
Purchase Price, or give rise to any other claim by Purchaser, and if any space
in the Improvements is vacant on the Closing Date, Purchaser will accept the
Property subject to the vacancy.
13. DEFAULT BY PURCHASER. 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 AND THE FAILURE OF PURCHASER TO CLOSE THE
TRANSACTION CONTEMPLATED HEREBY AT THE TIME AND IN THE MANNER PROVIDED HEREIN,
SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND THE INTEREST THEREON AS
SELLER'S SOLE RIGHT WITH RESPECT TO DAMAGES OR ANY OTHER REMEDY, EXCEPT FOR
SELLER'S REMEDIES FOR A BREACH OF THOSE COVENANTS AND OBLIGATIONS OF PURCHASER
WHICH EXPRESSLY SURVIVE TERMINATION OF THIS AGREEMENT. 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.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, BUT SUBJECT TO THE
LIMITATIONS ON LIABILITY PROVIDED IN SECTION 18, IN THE EVENT THE CLOSING
OCCURS AND IN THE EVENT OF A BREACH BY PURCHASER OF ANY REPRESENTATION,
WARRANTY, COVENANT, AGREEMENT, PRORATION OR REPRORATION OBLIGATION OR INDEMNITY
IN THIS AGREEMENT OR ANY CLOSING DOCUMENT WHICH SURVIVES CLOSING, SELLER SHALL
HAVE ALL RIGHTS AND REMEDIES AT LAW OR AT EQUITY, WITHOUT LIMITATION.
14. 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, EXCEPT THAT PURCHASER SHALL ALSO
HAVE THE RIGHT TO REIMBURSEMENT FROM SELLER FOR ITS ACTUAL, DOCUMENTED THIRD
PARTY EXPENSES (NOT TO EXCEED $100,000 IN ANY EVENT) INCURRED IN THE
NEGOTIATION OF THIS AGREEMENT AND THE PERFORMANCE OF ITS DUE DILIGENCE
HEREUNDER. UPON THE RETURN OF THE EARNEST MONEY AND THE REIMBURSEMENT BY
SELLER FOR OUT OF POCKET COSTS AS PROVIDED ABOVE, THE PARTIES SHALL HAVE NO
FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR THOSE COVENANTS
AND OBLIGATIONS WHICH EXPRESSLY SURVIVE TERMINATION OF THIS AGREEMENT.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S DEFAULT
RESULTS FROM (i) ITS (AND NOT AN UNRELATED THIRD PARTY'S) AFFIRMATIVE ACTION
WHICH RESULTS IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY AND WHICH
GIVES RISE TO PURCHASER'S RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO
PARAGRAPH 5 HEREOF; OR (ii) SELLER'S FAILURE TO EXPEND UP TO $25,000 IF (a)
SELLER IS ABLE TO BOND OVER, CURE OR REMOVE A MINOR UNPERMITTED EXCEPTION FOR A
COST NOT TO EXCEED $25,000 OR (b) THE TITLE INSURER IS WILLING TO INSURE OVER A
MINOR UNPERMITTED EXCEPTION FOR A COST NOT TO EXCEED $25,000 IN ACCORDANCE WITH
THE TERMS HEREOF OR (iii) SELLER'S REFUSAL TO DELIVER THE DEED OR THE OTHER
CONVEYANCE DOCUMENTS DESCRIBED IN PARAGRAPHS 9.2.1-9.2.7, 9.2.10-9.2.11 and
9.2.13-9.2.16 OF THIS AGREEMENT, PURCHASER SHALL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE. IN NO EVENT SHALL SELLER BE LIABLE FOR ANY ACTUAL,
PUNITIVE, SPECULATIVE OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY DEFAULT BY
SELLER. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, BUT SUBJECT
TO THE LIMITATIONS ON LIABILITY PROVIDED IN SECTION 18, IN THE EVENT THE
CLOSING OCCURS AND IN THE EVENT OF A BREACH BY SELLER OF ANY REPRESENTATION,
WARRANTY, COVENANT, AGREEMENT, PRORATION OR REPRORATION OBLIGATION OR INDEMNITY
IN THIS AGREEMENT OR IN ANY SELLER CERTIFICATE OR CLOSING DOCUMENT WHICH
SURVIVES CLOSING, THE PURCHASER SHALL HAVE ALL RIGHTS AND REMEDIES AT LAW OR AT
EQUITY, WITHOUT LIMITATION; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL SELLER'S
LIABILITY UNDER ANY REPRESENTATION, WARRANTY, COVENANT, AGREEMENT, PRORATION,
REPRORATION OBLIGATION OR INDEMNITY MADE HEREUNDER OR UNDER ANY CLOSING
DOCUMENTS EXCEED $250,000 IN THE AGGREGATE ("SELLER'S MAXIMUM LIABILITY").
15. PRORATIONS.
15.1 Water and other utility charges due for the period prior to 12:01
a.m. on the Closing Date ("Proration Date") shall be paid by Seller. Regular
ad valorem real estate taxes shall be prorated as of the Proration Date. Real
Estate tax prorations shall be based on the maximum discounted rate available
at Closing. Prior to Closing, Purchaser and Seller shall notify all utilities
providing service to the Property of the prospective change in ownership and
that all bills for the period from and after the Proration Date shall be paid
by Purchaser, with no interruption in service. All utility deposits, if any,
may be withdrawn by and refunded to Seller and Purchaser shall make its own
replacement deposits for utilities as may be required by the respective
utilities involved. Assessments, excluding regular ad valorem real estate
taxes, which are due prior to the Closing Date shall be paid by Seller.
Assessments, excluding regular ad valorem real estate taxes, 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. If any
ongoing real estate tax contest has not been finalized as of the Closing Date,
Purchaser and Seller agree that the tax bill existing prior to the contest,
shall be the most recent data for the tax year being contested and (i)
Purchaser agrees to re-prorate such amount as it relates to the real estate tax
proration for the current tax year to the extent such tax contest is
successful. All other prorations will be final except as provided in
Paragraphs 15.2, 15.3 and 15.4 below.
15.2 All base rent, percentage rent and other common area maintenance, tax
and insurance charges actually paid by tenants under the Leases and all other
items of income actually received from the operation of the Property (all such
charges other than base rent, "Additional Rent") shall be prorated as of the
Proration Date. To the extent that estimated payments of 1997 taxes and
operating expenses made by tenants prior to the Proration Date are less than
the actual amounts due from such tenants for such period, based on actual
operating expense and tax figures calculated for the period January 1, 1997
through the Proration Date, Purchaser shall credit Seller at Closing with any
such shortfall. To the extent that estimated payments of 1997 taxes and
operating expenses made by tenants prior to the Proration Date are greater than
the actual amounts due from such tenants for such period, based on actual
operating expense and tax figures calculated for the period January 1, 1997
through the Proration Date, Seller shall credit Purchaser with any such
overpayments. Purchaser and Seller shall reprorate 1997 taxes, tenant
operating expense reimbursement obligations and tenant real estate tax
reimbursement obligations (such reimbursement obligations to be prorated in the
manner set forth in the preceding two sentences), as of October 1, 1997, using
the current real estate tax and operating expense information available as of
October 1, 1997. Such reprorated credits shall be final, irrespective of the
actual amounts collected by Purchaser from tenants in any final 1997 tax and
operating expense reconciliations. Purchaser shall receive a credit at Closing
for all prepaid rent and security deposits. Seller agrees that Seller shall
promptly remit to Purchaser any rental or other payments that Seller, or any of
its affiliates or agents, may receive post-Closing, except that Seller need not
remit payments attributable to periods prior to the Proration Date if the
tenant making such payment to Seller is current in all payments due to
Purchaser for periods after the Proration Date. Notwithstanding anything to
the contrary herein, the provisions of this Paragraph shall survive the
Closing.
15.3 There shall be no credit to Seller for rent or other amounts
delinquent as of the Closing Date. All basic 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 the Proration Date in an amount greater than the amount
of all current basic rent owed by said tenant to Purchaser for periods on or
after the Closing Date shall be deemed a "Post-Closing Receipt" until such time
as all such indebtedness is paid in full. 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 reasonable, good faith
efforts, at no additional cost or expense to Purchaser, and without any
obligation to terminate leases or initiate lawsuits, to collect all amounts
which, upon collection, would constitute Post-Closing Receipts hereunder.
Within 180 days after the Closing Date, Purchaser shall deliver to Seller a
reconciliation statement of Post-Closing Receipts through the first 150 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. Purchaser shall provide Seller with any information reasonably
necessary 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. This
Paragraph 15.3 of this Agreement shall survive the Closing and the delivery and
recording of the Deed.
15.4 All refunds for time periods prior to the Proration Date in
connection with any ongoing real estate tax protests for the Property initiated
by Seller prior to the Closing shall remain the property of Seller (except to
the extent required to be refunded to tenants under such tenants' leases) and
are not being assigned by Seller to Purchaser pursuant to this Agreement. In
the event any such refunds are paid to Purchaser, Purchaser agrees to promptly
remit all such sums to Seller subject to the rights, if any, of any existing
tenant of the Real Property to receive any pro rata share of such refund under
such tenant's lease. Purchaser agrees, at no cost, expense, liability or
potential liability to Purchaser, to execute any documents reasonably requested
by Seller in connection with such tax protests.
16. BROKER. The parties hereto represent and warrant that no broker commission
or finder fee is due and payable in connection with this transaction, by reason
of their respective actions, other than to Insignia. All amounts owing to
Insignia shall be paid by Seller. Seller's commission to Insignia 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 attorneys' 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 Insignia. Seller shall
indemnify, defend and hold Purchaser harmless from any claim (including,
without limitation, reasonable attorneys' fees, court costs and costs of
appeal) for any claim by Insignia for any fee, commission or compensation on
account of this Agreement, its negotiation or the sale hereby contemplated,
other than any claim by Insignia on account of any agreement or negotiations
between Insignia and Purchaser. 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, WARRANTIES AND COVENANTS.
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 Thomas Molina ("Seller's Representative"), and any representation or
warranty of the Seller is based upon those matters of which the Seller's
Representative has actual knowledge. Seller's Representative is the asset
manager for the Property and is primarily responsible for the management and
operation of the Property. Prior to the execution of this Agreement by Seller,
Seller's Representative shall provide a copy of this Agreement to Nancy Jacobs,
Seller's on-site property manager, and review with Nancy Jacobs the accuracy of
each of the representations and warranties made herein by Seller. Except to
the extent disclosed to Seller's Representative by Nancy Jacobs as provided
above, 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 shall be deemed remade as of the Closing and except as to (ii)
below, are made to Seller's knowledge and all of which shall survive Closing
for a period of 180 days: (i) except as listed on Exhibit O, 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 this Agreement and consummate the transactions contemplated herein;
(iii) the rent rolls attached hereto as Exhibit C and updated as of the Closing
Date are accurate and complete (with respect to the categories of information
included therein) in all material respects as of the date set forth therein;
(iv) the Seller has not given or suffered any assignment, pledge or encumbrance
with respect to any of the Leases or its interests thereunder; (v) the list of
Service Contracts attached hereto as Exhibit D is accurate as of the date
hereof and comprises all service and maintenance contracts relating to the
Property; (vi) except as listed on Exhibit O, Seller has received no written
notice or claim relating to an uncured breach or violation of any Environmental
Laws or any other laws, regulations, ordinances or covenants, conditions and
restrictions in connection with the Property; (vii) except as listed on Exhibit
O, Seller has received no notice of any uncured landlord default from any
tenant in connection with any Lease; (viii) the execution of this Agreement by
Seller and Seller's observance and performance of all of its covenants and
obligations hereunder do not contravene any judgment or order binding on Seller
or make inoperative or result in any material adverse affect on any lease,
easement, right or interest binding upon Seller or any of the Property;
(ix) Seller has not entered into any contracts for the sale of any option or
any other rights to purchase all of any portion of the Property; and (x) the
leasing commission and brokerage agreements delivered to Purchaser by Seller in
accordance with Paragraph 7.1 hereof constitute all of the leasing commission
and brokerage agreements for the Property entered into by Seller, and Seller
has paid all commissions due under such agreements as of the date hereof with
respect to events occurring prior to the date hereof.
17.3 Purchaser hereby represents and warrants to Seller that Purchaser has
the full right, power and authority to execute this Agreement and consummate
the transactions contemplated herein.
17.4 Seller covenants to operate, maintain and manage the Property in the
same manner that it has managed, maintained and operated the Property during
the period of Seller's ownership, subject to reasonable wear and tear and
casualty.
17.5 Any document or instrument which Seller has executed or, subject to
Section 5.1 hereof, which has been recorded or filed (between the date of this
Agreement and the Closing Date) as the case may be, which document or
instrument grants or conveys a lien, security interest, encumbrance or other
interest in or against the Property, shall be terminated and removed from
public records by Seller at or prior to the Closing.
17.6 Seller shall not (except for alterations that are required by any
governmental authority or are specifically required under any of the Leases)
make any alterations to the Property which adversely affect the Property
without obtaining the prior written consent of Purchaser (which consent shall
not be unreasonably withheld).
17.7 Prior to Closing, Seller shall (i) timely perform and comply with all
of its obligations under the Leases and the Assumed Contracts; (ii) deliver to
Purchaser copies of all notices, correspondence, demands and other written
documents delivered or received by Seller or its agents under or in connection
with any of the Leases or the Service Contracts or otherwise relating to the
Property; (iii) not terminate any of the Leases after the expiration of the
Inspection Period without Purchaser's prior written consent, which may be
granted or withheld in Purchaser's sole and absolute discretion; and (iv) not
terminate any Leases prior to the end of the Inspection Period without
Purchaser's prior written consent, which may be granted or withheld in
Purchaser's sole and absolute discretion; provided, however, that if Purchaser
refuses to consent to any such termination prior to the end of the Inspection
Period, Purchaser shall, within 5 business days after notification by Seller,
either terminate this Agreement or waive the right to terminate this Agreement
pursuant to Paragraph 7.1 hereof.
17.8 Seller shall not initiate, consent to, approve or otherwise take any
action with respect to zoning or any other governmental rules or regulations
presently applicable to any part of the Property (other than compliance with
the requirements of any applicable laws, rules and regulations) without the
prior written consent of Purchaser (which consent shall not be unreasonably
withheld).
17.9 Seller shall, at Seller's sole cost and expense, terminate any lease
or occupancy agreement with Manager as of the Closing Date.
17.10 The representations, warranties and covenants set forth herein
and in any Seller Certificate or Closing Document shall survive Closing for a
period of 180 days after the Closing Date ("Survival Period"). All rights of
Purchaser or Seller hereunder with respect to any such surviving
representation, warranty or covenant shall be deemed waived if Purchaser or
Seller, as the case may be, do not, by notice to the other, advise the other of
any alleged breach of representation, warranty or covenant prior to the
expiration of the Survival Period. Notwithstanding anything herein to the
contrary, Seller's liability under any representation, warranty or covenant
made hereunder or in any Seller Certificate or any Closing Document shall in no
event exceed Seller's Maximum Liability.
On the Closing Date, Seller shall deposit the sum of $250,000 into escrow
in accordance with the Escrow Agreement in order to secure Seller's obligations
under any such surviving representations, warranties or covenants.
18. LIMITATION OF LIABILITY. None of Seller's or Purchaser's beneficiaries,
shareholders, partners, officers, agents, employees or heirs or any of the
successors or assigns of such beneficiaries, shareholders, partners, officers,
agents, employees or heirs, 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 each of the parties hereto hereby waives
for itself and anyone who may claim by, through or under such party any and all
rights to sue or recover from any of the foregoing on account of any such
alleged personal liability.
19. 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 A200
Bannockburn, Illinois 60015
Attention: Ilona Adams
(847) 317-4462 (FAX)
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 317-4462 (FAX)
and to: Hopkins & Sutter
Three First National Plaza
Suite 4100
Chicago, Illinois 60602
Attention: Wayne F. Osoba
(312) 558-6538 (FAX)
TO PURCHASER: CMD Southwest, Inc.
c/o CMD Realty Investments, Inc.
17304 Preston
Suite 960
Dallas, Texas 75252-5613
Attention: Kevin R. Brands
(214) 733-6969 (FAX)
with copies to: CMD Realty Investment Fund III, L.P.
227 W. Monroe
Suite 3400
Chicago, Illinois 60602
Attention: Randal J. Selig, Esq.
(312) 726-9473 (FAX)
and to: Barack, Ferrazzano, Kirschbaum & Perlman
333 W. Wacker Drive
Suite 2700
Chicago, Illinois 60606
Attention: Howard J. Kirschbaum, Esq.
(312) 984-3150 (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 when received (or upon refusal to accept receipt) or
the same day as given if sent via facsimile transmission and received by 5:00
p.m. Chicago time, or on receipt or refusal to accept, if sent by certified
mail, 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 or by overnight courier or by facsimile transmission as
aforesaid shall be deemed to be given, delivered or made only 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 at the address
specified in the Escrow Agreement. All time periods for responses by either
party set forth in this Agreement shall commence upon the receipt of notice as
set forth hereinabove.
20. 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. Seller will forward one (1) copy of the
executed Agreement to Purchaser and will forward to the escrow agent 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.
21. JURISDICTION AND VENUE. Seller and Purchaser each hereby irrevocably
submits to the jurisdiction of any State or Federal court sitting in the County
of Cook and State of Illinois over any action or proceeding arising out of or
relating to this Agreement, and Seller and Purchaser each hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard or
determined in any such State or Federal court. Seller and Purchaser each
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding. Seller and Purchaser each irrevocably consents to the service of
any and all process in any such action or proceeding by the mailing of copies
of such process to Seller or Purchaser, as the case may be, at its respective
address specified in Paragraph 19 hereof. Seller and Purchaser each hereby
agrees that the final judgment in any such action or proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other matter provided by law. Nothing in this paragraph
shall affect the right of Seller or Purchaser, as the case may be, to serve
legal process in any other manner permitted by law or affect the right of
Seller or Purchaser, the case may be, to bring any action or proceeding against
the other in the courts of any other jurisdiction.
22. MISCELLANEOUS
(a) Time is of the essence of each provision of this Agreement.
(b) This Agreement and all provisions hereof shall extend to and be
obligatory upon and inure to the benefit of the respective heirs, legatees,
legal representatives, successors and assigns of the parties hereto.
(c) The section and paragraph headings of this Agreement are for
convenience only and in no way define, limit or enlarge the scope or meaning of
the language hereof. The terms "hereby," "herein," "hereof," "hereto,"
"hereunder" and any similar terms used in this Agreement refer to this
Agreement. The term "including" shall not be construed in a limiting nature,
but shall be construed to mean "including, without limitation." Words
importing persons shall include firms, associations, partnerships, trusts,
corporations and other legal entities, including public bodies, as well as
natural persons. Words importing the singular shall include the plural and
vice versa. Words of the masculine gender shall be deemed to include
correlative words of the feminine and neuter genders.
(d) This Agreement and the Escrow Agreement and the closing
documents contain the entire agreement between the parties relating to the
transactions contemplated hereby, and all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, are merged
herein. No representations, warranties, undertakings or promises (whether oral
or written, express or implied), can be made or have been made by Seller or its
agents, representatives or brokers to Purchaser or any other person unless
expressly stated herein or in the closing documents. No modification or
amendment of this Agreement or any waiver of any provision hereof shall be
effective unless the same is in writing signed by the party against whom
enforcement of such modification, amendment or waiver is sought.
(e) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas. If any of the provisions of this
Agreement or the application thereof to any persons or circumstances shall, to
any extent, be deemed invalid or unenforceable, the remainder of this Agreement
and the application of such provisions to persons or circumstances other than
those as to whom or which it is held invalid or unenforceable shall not be
affected thereby, and every provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
(f) This Agreement and any document or instrument executed pursuant
hereto may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
(g) The submission by Seller of this Agreement to Purchaser for
examination does not constitute an offer by Seller to sell, or a reservation of
or option to purchase the Property. This Agreement shall not become a contract
until executed and delivered by Purchaser and Seller in the manner set forth
herein.
(h) If Purchaser or Seller consist of more than one entity, then
each such person or entity executing this Agreement as Purchaser or Seller
shall be jointly and severally liable for the obligations of Purchaser or
Seller hereunder.
(i) Purchaser shall not record this Agreement or any memorandum
hereof, and any such recording shall be a default hereunder.
(j) Prior to Closing, Purchaser and Seller shall jointly prepare and
issue all releases of information relating to the sale of the Property, and any
inquiries regarding the transaction contemplated hereby shall be responded to
only after consultation with the other party hereto.
(k) If either party institutes a legal action against the other
relating to this Agreement or any default hereunder, the unsuccessful party to
such action will reimburse the successful party for the reasonable expenses of
prosecuting or defending such action, including without limitation, attorneys
fees and disbursements and court costs.
(l) This Agreement shall not be construed more strictly against one
party than against the other merely by virtue of the fact that the Agreement
may have been prepared primarily by counsel for one of the parties, it being
recognized that both Purchaser and Seller have contributed substantially and
materially to the preparation of this Agreement.
(m) 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 13 hereof. Notwithstanding the foregoing, Purchaser
may assign its interest in this Agreement without the consent of Seller to any
entity affiliated with, controlling, or controlled by or under common control
with Purchaser, CMD Corporation, CMD REIM III, CMD Realty Investors, Inc., or
CMD Realty Investment Fund III, L.P. (each, an "Assignee"), provided that
Purchaser remains liable for and the Assignee assumes the obligations of
Purchaser hereunder. If the Assignee petitions or applies for relief under any
bankruptcy laws or is adjudicated as a bankrupt or insolvent, or if 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 damage and to clear title to the Property with
respect to any encumbrance resulting from the Bankruptcy Filing.
23. PROPERTY EXCHANGE. In the event Purchaser desires to designate the
Property as replacement property, in an exchange under Section 1031 of the
Internal Revenue Code, for any property which Purchaser has owned or currently
owns (the "Relinquished Property"), Seller will cooperate with Purchaser (at no
cost, expense, liability or potential liability to Seller) in effecting such an
exchange in compliance with the Internal Revenue Code and applicable treasury
regulations, including the assignment of this Agreement, if necessary. Seller
will not be responsible for the tax consequences to Purchaser of the
transactions contemplated under this Agreement or under the agreement to sell
the Relinquished Property. Seller will not be required to accept title to the
Relinquished Property and will have no obligations whatsoever to the owner of
the Relinquished Property. Under no circumstances will Purchaser be relieved
of any of its obligations under this Agreement as a result of the contemplated
exchange. Purchaser shall defend, indemnify and hold Seller and any Affiliates
or Seller harmless from any and all liability, cost and expense (including,
without limitation, reasonable attorneys' fees, court costs and costs of
appeal) suffered or incurred by Seller or Affiliates of Seller in connection
with any such exchange.
24. FURTHER ASSURANCES. Each party agrees that it will without further
consideration execute and deliver such other documents and take such other
action, whether prior or subsequent to Closing, as may be reasonably requested
by the other party to consummate more effectively the purposes or subject
matter of this Agreement; provided, however, that neither Seller nor Purchaser
shall be obligated to incur any obligations or material expenses except as
otherwise required hereunder. Without limiting the generality of the
foregoing, Seller shall provide reasonable assistance to Purchaser in
connection with the preparation by Purchaser of financial statements and bills
including, without limitation, preparation, at Purchaser's sole cost and
expense, of audited income and expense statements prepared in accordance with
generally accepted accounting principles consistently applied with respect to
the Property for calendar years 1994, 1995 and 1996 and shall cooperate with
the auditor preparing such statements in order to enable such auditor to render
an opinion on such statements, provided that Seller shall not be obligated to
incur any liability or material expenses in connection therewith. The
provisions of this Paragraph shall survive Closing for a period of six months.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
PURCHASER:
CMD SOUTHWEST, INC., an Arizona corporation
By: /s/ Kevin R. Brands
-------------------------------
Name: Kevin R. Brands
-------------------------------
Its: Vice President
-------------------------------
SELLER:
STEMMONS CENTER LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Stemmons Center Partners, Inc.,
an Illinois corporation, its general
partner
By: /s/ Jerry M. Ogle
--------------------------------------
Name: Jerry M. Ogle
--------------------------------------
Its: Managing Director and Secretary
--------------------------------------
Insignia Mortgage & Investment Company ("Broker") executes this Agreement in
its capacity as a real estate broker and acknowledges that the fee or
commission ("Fee") due to it as a result of the transaction described in this
Agreement is the amount as set forth in the listing agreement between Broker
and Seller. Broker also acknowledges that payment of the aforesaid Fee is
conditioned upon the Closing and the receipt of the Purchase Price by the
Seller. Broker agrees to deliver a receipt to the Seller at the Closing for
the Fee and a release stating that no other fees or commissions are due to
Broker from Seller or Purchaser.
INSIGNIA MORTGAGE & INVESTMENT COMPANY
By: /s/ Phillip Schechter
------------------------------------
Phillip Schechter
Vice President
LIST OF EXHIBITS
A. Legal Description
B. Personal Property
C. Leases/Rent Roll
D. Service and Maintenance Contracts
E. Escrow Agreement
F. [Intentionally Deleted]
G. Limited Warranty Deed
H. Special Warranty Bill of Sale
I. Assignment and Assumption of Intangible Property
J. Assignment and Assumption of Leases and Security Deposits
K. FIRPTA
L. Tenant Notice Letter
M. Tenant Certificate
N. Seller Certificate
O. Disclosure