PURCHASE AND SALE AGREEMENT
AGREEMENT made this ______ day of August, 1999, between THE PRIME OUTLETS
AT BIRCH RUN, L.L.C., a Delaware limited liability company; THE PRIME OUTLETS AT
WILLIAMSBURG, L.L.C., a Delaware limited liability company; and OUTLET VILLAGE
OF HAGERSTOWN LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter
collectively called "Seller"), with an address at 000 Xxxx Xxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx Xxxxxxxxx, telecopier
number 000-000-0000, and XXXX TRIPLE OUTLET, L.C., a Florida limited liability
company, its successors or assigns (hereinafter called "Buyer"), with an address
c/o Estein & Associates USA, Ltd., 0000 Xxxxxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx
00000, telecopier number 407354-3243.
W I T N E S S E T H:
For good and valuable consideration, the receipt and sufficiency of which
are acknowledged by Seller and Buyer, the parties agree:
ARTICLE 1
DEFINITIONS
The following terms as used in this Agreement shall have the meanings ascribed
to them below:
1.1 "Effective Date". The date when this Agreement has been executed and
delivered by Buyer and Seller.
1.2 "Escrow Agent". Chicago Title Insurance Company.
1.3 "Investigation Period". A period of time commencing on the Effective Date
and ending the later of August 31, 1999 or forty-five (45) days after
delivery by Seller to Buyer of all the Key Property Materials.
1.4 "Key Property Materials". That part of the Property Materials consisting
of: existing as-built surveys of the Real Properties (excluding Hagerstown,
Williamsburg Section Two and Hagerstown Section Two); copies of existing
title policies for each of the Real Properties (excluding that portion of
Williamsburg Section Two identified on Exhibit XIII hereto ("Williamsburg
Section Two A")); existing most recent environmental studies or reports of
the Projects (excluding Williamsburg Section Two A); detailed rent rolls of
each of the Projects; copies of operating statements for the partial year
1998 and year-to-date 1999 (through June 30, 1999) reflecting all income
and expenses of the Projects; copies of the underlying mortgage loan
documents and amortization schedules for the existing loan(s) on Birch Run
that will be wrapped around per Section 1.7 hereof; copies of the
Hagerstown bond documentation (including copies of the bonds); to the
extent Seller has them in its possession, copies of certificates of
occupancy or other evidence that all space in the Projects (excluding
Hagerstown Section Two and Williamsburg Section Two) may be lawfully
occupied; copies of all current tax bills and special assessment notices
for each of the Projects (excluding Williamsburg Section Two A); and copies
of substantially all Leases in effect on the date hereof for space in the
Projects.
1.5 "Leases". Leases for space in the Projects with tenants which are
identified on the Rent Rolls attached as Exhibit I, together with any and
all other leases which may be executed by Seller with tenants for the
vacant spaces in the Projects.
1.6 "Lender". The lender or lenders which agree(s) to make the Loans to be
arranged by Seller pursuant to Sections 1.7 and 3.3.
1.7 "Loans". Mortgage loans the initial principal amount of which shall be in
an aggregate minimum principal amount of $151,000,000.00 and an aggregate
maximum principal amount of $152,000,000.00 which shall be arranged by
Seller for the purpose of furnishing a portion of the purchase price
hereunder for each Project and, to the extent funds are available, for the
purpose of the initial funding of the operating account for each Project.
The principal amount of the Loan for each Project shall, at the time of the
Loan closing thereon, be within the following ranges: (i) Birch Run:
minimum of $64,500,000.00, maximum of $65,000,000.00; (ii) Williamsburg:
minimum at initial closing without Williamsburg Section Two of
$32,500,000.00; minimum including Williamsburg Section Two of
$42,250,000.00, maximum including Williamsburg Section Two of
$42,500,000.00; (iii) Hagerstown: minimum of $44,250,000.00, maximum of
$44,500,000.00. The Loan for each Project shall be in place at or, at
Seller's option, prior to the time of payment of the purchase price of such
Project. The Loans shall bear interest at one or more fixed interest rates,
shall be for a term of at least ten (10) years from the closing on the
Loan, and shall be amortized over a period of twenty-five (25) years. The
Loans shall be secured by first mortgages on the Projects. The Loans shall
be non-recourse to the Joint Venture and the Ownership Entity (as defined
in Section 15.4) (except for Lender required carve-outs which, to the
extent required, shall be guaranteed by the two joint venturers under the
Joint Venture Agreement referred to in Section 15.4), provided, however,
that, at the sole election of Seller, an underlying Loan that is wrapped by
a wrap-around Loan provided by Prime Retail, L.P. may be recourse to Seller
or Prime Retail, L.P. The Loans shall be subject to the customary
conditions for a loan of the nature of the Loan, which conditions shall be
commercially reasonable. Seller shall be responsible for all costs
associated with the origination and closing of the Loans (excluding Buyer's
attorneys fees). The Loan for Birch Run may take the form of a 10 year
wrap-around loan from Prime Retail, L.P. which (a) wraps the existing
mortgage loan(s) on such Project, (b) provides a rate of interest on the
total wrap mortgage debt of 7.75%, (c) provides an amortization period on
the total wrap mortgage debt of 25 years (and any such refinancing shall be
deemed a "Loan" for all purposes of this Agreement), (d) obligates Prime
Retail, L.P., at or prior to the maturity of each of the mortgage loan(s),
to refinance such maturing existing mortgage loan(s) and, at the option of
Prime Retail, L.P., the additional financing provided by the wrap around
loan for a new term co-extensive with that of the wrap-around loan
(provided that if only a portion of the existing mortgage loan(s) are
maturing, Prime Retail, L.P. may put in place as a Loan underlying the
wrap-around Loan held by Prime Retail, L.P. temporary bridge financing for
the maturing existing loan pending the maturity of the remainder of the
existing loans), (e) obligates Prime Retail, L.P., provided it timely
receives the monthly payment due under the wrap-around loan to timely make
the payment due under all of the underlying loan(s),(f) is structured such
that the monthly payments due under the underlying loan(s) will never
exceed the monthly payments due under the wrap around loan, (g) is
structured so that the principal amount plus interest due under the
underlying loan(s) will never exceed the principal balance plus interest
due under the wrap around loan; and (h) provides for a pledge of the
Seller's interest in the joint venture to be formed in accordance with
Section 15.4 as security for the performance by Prime Retail, L.P. of its
obligations under clauses (d) and (e).
1.8 "Management Agreement". A Management and Leasing Agreement or agreements to
be entered into between Prime Retail, L.P., Seller or an affiliate of Prime
Retail, L.P. reasonably acceptable to Buyer and Buyer at the time of
closing providing for Seller or its affiliate to manage and lease the
Projects for and on behalf of Buyer. The Management Agreement will be in
form reasonably acceptable to Seller and Buyer and will contain provisions,
inter alia, for those matters set forth on Exhibit II.
1.9 "Net Operating Income". Net Operating Income of a property is aggregate net
cash flow from operations of the property (but excluding revenues from
insurance or condemnation proceeds, refinancings and other non-operation
revenues) after payment of management fees for management of the property
pursuant to the Management Agreement (or comparable replacement thereof if
Buyer should exercise a lawful right to terminate the Management
Agreement), but before payment of capital expenditures, leasing commissions
and tenant allowances and principal and interest payments on indebtedness
for borrowed money.
1.10 "Personal Property". Seller's interest in all plans, drawings, permits,
governmental authorizations, contracts, documents, surveys, site plans,
engineering reports, soil and environmental studies, leases, construction
and manufacturer warranties, supplies and all other tangible personal
property located on, the Real Properties and intangible property arising
from ownership and/or operation thereof exclusive of accounts receivable
for any period prior to the closing date and exclusive of the right of use
of the names of the Projects, which will be licensed to Buyer pursuant to
Section 15.2. The Personal Property shall not include bonds, letters of
credit, deposits and other sureties placed by Seller with governmental
authorities or utility companies in connection with the construction (but
excluding such items as utility deposits required to remain in place for
the operation of the Projects) of the Hagerstown Project and Williamsburg
Section Two (collectively "Construction Security"), all of which shall
remain the property of Prime Retail, L.P. or the Seller. If, however, the
Construction Security is required or is otherwise in the name of the Buyer,
then, Buyer agrees to fully cooperate with Seller in obtaining the return
of the Construction Security and upon any return of the Construction
Security, Buyer shall immediately deliver the Construction Security to
Seller to the extent received by Buyer. The Personal Property shall,
however, include the bonds issued in connection with the special assessment
district applicable to the Hagerstown Project which bonds are currently
owned by Seller or an affiliate of Seller.
1.11 "Projects". Those three commercial real estate Prime Outlet Centers located
on and encompassing the Real Properties and described on Exhibit III. For
purposes of this Agreement, the Projects will be identified by the cities
in which they are located and will be called the "Birch Run" Project,
"Williamsburg" Project and "Hagerstown" Project if referred to individually
herein. The Williamsburg Project is intended to be constructed to include
70,000 square feet of net rentable space, more or less on that portion of
the Williamsburg Project identified on Exhibit XIII ("Williamsburg Section
Two"). The Hagerstown Project is to be constructed to contain approximately
163,000 square feet of net leaseable space on that portion of the
Hagerstown Project identified on Exhibit XIV ("Hagerstown Section Two").
Except where the context indicates otherwise, references to the
Williamsburg Project and the Hagerstown Project include Williamsburg
Section Two and Hagerstown Section Two, respectively.
1.12 "Property". All of the Real Properties and the Personal Property.
1.13 "Property Materials". All instruments, documents, leases, contracts,
surveys, plats, plans, specifications, reports, studies, permits,
applications, authorizations, approvals, proposals, applicable copyright
and trademark materials, estoppel letters from all tenants in form of
Exhibit IV and as may be requested by Lender, and other materials owned by
or within Seller's control or possession which consist of the Personal
Property or which in any way pertain to the Real Properties or Personal
Property. The following enumerated items are included in the definition of
"Property Materials" but are not intended to constitute a complete or
comprehensive list thereof: as-built surveys; existing title policies and
exceptions to title; site plan; Leases; copies of any lease proposals not
yet finalized; soil tests; environmental studies; rent roll; service and
utility letters, proposals and contracts; construction bids and contracts;
copies of documents regarding joint use and/or maintenance of roads,
parking areas and ingress and egress easements; zoning authorizations; the
Loan documents for the existing Birch Run mortgage Loan(s); copies of all
Leases in effect on the date hereof for space in the Projects; lease
summaries and abstracts (but Seller does not represent or warrant the
accuracy of such lease abstracts and lease summaries); existing
certificates of occupancy and other governmental approvals and permits;
title insurance commitment and legible copies of all exceptions listed
thereon to be issued pursuant to Section 6.1; copies of the Hagerstown Bond
documents (including copies of the bonds); construction contracts and plans
and specifications for Hagerstown Section Two, to the extent available; and
copies of real property tax bills and special assessment notices for each
of the Projects.
1.14 "Real Properties". Those parcels on which the Projects are located, which
are legally described on Exhibit V. Included within the term Real
Properties is all of Seller's right, title and interest in and to:
A. Any land lying in the bed of any highway, street, road or avenue, open or
proposed, in front of or abutting or adjoining the Real Properties.
B. All riparian rights.
C. All appurtenances, hereditaments, tenements and air rights appertaining to
the Real Properties.
D. All improvements located on or affixed to the Real Properties.
1.15 "Title Insurance Company". Chicago Title Insurance Company, through its
National Business Unit in Washington, D.C. Attention: Xxxxx Xxxxxxx, Esq.
ARTICLE 2
SALE OF PROPERTY
2.1 Subject to the terms and provisions herein contained, Seller agrees to sell
to Buyer and Buyer agrees to purchase from Seller the Property. As more
fully provided herein, the purchase and sale hereunder are to be structured
generally as follows: (i) a joint venture is to be formed by and between an
affiliate of Prime Retail, L.P. and Triple Outlet World, Ltd., a limited
partnership ("TOWL") of which Buyer is the general partner, which will be
owned 30% by the Prime Retail, L.P. affiliate and 70% by TOWL, (ii) at or
prior to a closing on a Project, Seller will refinance the Project in
accordance with the provisions hereof, (iii) at the time of closing on a
Project, all of the rights of the Buyer hereunder as to that Project will
be assigned to the joint venture, (iv) the joint venture will form and be
the sole owner of three entities, each of which will be conveyed title to
one of the Projects at the closing on the Project, and (v) the joint
venture will pay the purchase price for the Project net of the Deposit
allocable to the Project, net of the then principal balance of the
refinancing on the Project, and net of Prime Retail, L.P.'s 30% capital
contribution allocable to each Project which will be paid in the form of a
credit to the buying entity.
ARTICLE 3
PURCHASE PRICE
3.1 Price. The purchase price to be paid for the Property is $274,000,000.00,
allocable among each of the Projects as set forth below.
X. Xxxxx Run: $117,000,000.00;
B. Williamsburg: $59,000,000.00;
C. Williamsburg Section Two: $17,500,000.00; and
D. Hagerstown: $80,500,000.00.
3.2 Deposits. The first component of the purchase price is payment of a
$1,000,000.00 xxxxxxx money deposit to the Escrow Agent within three
business days after the Effective Date. An additional xxxxxxx money deposit
will be due and payable by Buyer to Escrow Agent in the amount of
$1,000,000.00 within one business day following the end of the
Investigation Period, unless Buyer has terminated this Agreement as
provided in Article 4. At the time of payment of the purchase price for
each Project, the Deposit shall be credited to the purchase price of each
Project as follows: (i) Birch Run: $1,000,000.00; (ii) Williamsburg:
$500,000.00; and (iii) Hagerstown: $500,000.00. The xxxxxxx money deposits
of $1,000,000.00 initially and $2,000,000.00 in the aggregate will be
placed in an interest-bearing investment approved by Buyer and Seller,
which approval will not be unreasonably withheld, with interest to be paid
to Buyer unless Buyer shall default hereunder and Seller shall become
entitled to the xxxxxxx money deposit(s), in which case all such interest
shall be paid to Seller. All references in this Agreement to return of the
xxxxxxx money deposit(s) hereunder to Buyer shall be deemed to include
interest earned thereon. At closing on each Project hereunder, the
applicable portion of the xxxxxxx money deposits as provided herein will be
delivered to Seller and credited to Buyer against the cash portion of the
purchase price that is payable at such closing. Interest on the xxxxxxx
money deposits will be allocated for tax purposes to the party receiving
it.
3.3 Loans. A portion of the purchase price as set forth in Section 1.7 above
shall be provided by the Loans, which shall be arranged by Seller, and
either closed simultaneously with the closing on the Project or closed in
Seller's name prior to such time and assumed by Buyer at the closing of
each Project. The Loans shall be allocated among the Projects as set forth
in Section 1.7. The Loans shall satisfy the requirements of Section 1.7,
and the loan documents for the Loans (other than the existing mortgage
Loan(s) on Birch Run) shall, in addition, meet the requirements of Exhibit
VI hereto, unless Buyer's approval (which approval shall not be
unreasonably withheld) is obtained. From and after the payment of the
purchase price for each Project, if the face interest rate on a Loan
exceeds 7.75% per annum, Seller shall make monthly payments to Buyer equal
to the amount by which the regular monthly payments under the Loan exceeds
what the payments would be under the Loan if the interest rate were 7.75%
(the "Seller Interest Subsidy Payment"), but if the face interest rate on a
Loan is less than 7.75% per annum, then Buyer shall make monthly payments
to Seller equal to the amount by which the regular monthly payment under
the Loan is less than what the payments would be under the Loan if the
interest rate were 7.75% (the "Buyer Interest Savings Payment"). Such
payments shall be netted against one another and the net amount shall be
due and payable on the dates when the payments under the Loan are due and
payable. For purposes of this Section 3.3, the term "Loan" shall be deemed
to include the wrap-around loan for the Birch Run Project contemplated by
Section 1.7 hereof and any refinancing of such wrap-around loan
contemplated by Section 1.7. The Buyer Interest Savings Payment shall be a
first priority payment obligation under the joint venture agreement
referred to in Section 15.4 and shall be paid as part of and when debt
service payments are to be made. The obligation of Seller to pay the Seller
Interest Subsidy Payment shall be secured by a pledge of the joint venture
interest of Seller in the joint venture and, in addition, if any portion of
the Seller Interest Subsidy Payment is not paid when due, such unpaid
portion may be setoff against the management fees payable under the
Management Agreement.
3.4 Balance. The balances of the purchase price shall be payable to the Escrow
Agent at closing by wired funds or certified check drawn on a United States
bank; subject, however, to prorations and adjustments as provided in
Section 12.1. Notwithstanding the foregoing, the portion of the cash
purchase price which would otherwise be required to be provided by Seller
as the 30% joint venture partner of Buyer pursuant to the Joint Venture
Agreement described in Section 15.4, shall be paid by crediting such amount
against the cash portion of the purchase price due to Seller.
3.5 Allocation. The purchase price will be allocated among the Projects as set
forth in Section 3.1. Buyer and Seller agree that the purchase price will
be allocated separately among various components of the Property including
land, buildings, mechanical systems and Personal Property, to the Covenant
Not To Compete being provided by Seller pursuant to Section 15.3 hereof,
and to the License to be granted by Seller under Section 15.2 hereof for
each Project as provided on Exhibit XV hereto.
ARTICLE 4
INVESTIGATION
4.1 Buyer Investigation Rights. During the Investigation Period and upon prior
reasonable notice and subject to the provisions of Section 4.4, Buyer and
Buyer's agents, professionals and independent contractors shall have the
right of access to the Property and to Seller's records in Baltimore,
Maryland at any reasonable time during the Investigation Period to conduct
tests; take measurements; complete surveys; review bids; review Leases and
contracts; conduct conversations with Seller and Seller's agents, employees
(which shall mean Senior Vice President of Finance, Senior Vice President
of Leasing, Senior Vice President for Operations and their respective
seconds in command at Prime Retail, L.P., as well as Prime Retail, L.P.
senior staff members in Baltimore, Maryland, applicable regional operations
individuals and local site employees, provided meetings with the local site
employees will be arranged by senior staff in Baltimore) and independent
contractors, and with tenants and prospective tenants (provided meetings
with tenants and prospective tenants will be arranged by the senior staff
of Prime Retail, L.P. in Baltimore, Maryland), governmental officials,
utility company representatives and all other parties having anything to do
with the Property; and examine and investigate the Property, and Property
Materials in any reasonable way for all other purposes consistent with
evaluation of and potential ownership, development and operation of the
Property. Seller agrees to reasonably cooperate with Buyer in Buyer's
investigation.
4.2 Costs. The cost and expense of delivering the Property Materials shall be
borne by Seller. The cost and expense of all other aspects of Buyer's
investigations shall be borne by Buyer. However, Seller shall, to the
extent Seller has them in its control or possession deliver to Buyer as
soon as possible after the Effective Date that portion of the Property
Materials comprising all soil tests, environmental tests, engineering
studies, feasibility studies, traffic studies, surveys (including as-built
surveys), and plans and specifications and Seller will use reasonable
efforts to have same certified (but not updated) to Buyer or Buyer's
assigns or to obtain a letter from the preparers thereof addressed to Buyer
entitling Buyer to rely thereon. If there is an extra charge to Seller for
obtaining such certification or letter and such charge is reasonable and
customary, Buyer will bear the cost thereof. Seller will not be obligated
to obtain any new tests or studies for Buyer.
4.3 Right of Termination. If Buyer, in Buyer's sole discretion, shall determine
for any reason that Buyer is not entirely satisfied with the results of
Buyer's inspections or that Buyer no longer desires to acquire the
Property, Buyer shall have the right to terminate this Agreement as to all
of the Projects by giving notice to Seller and Escrow Agent hereunder prior
to the expiration of the Investigation Period, in which case, Buyer will be
entitled to return of its xxxxxxx money deposit. If Buyer does not
terminate this Agreement as provided in the preceding sentence, Buyer shall
pay the additional $1,000,000.00 xxxxxxx money deposit in accordance with
Section 3.2. Upon the expiration of the Investigation Period without Buyer
having terminated this Agreement, all of the xxxxxxx money deposits shall,
subject to the provisions of this Agreement, be at risk.
4.4 Insurance, Repair and Indemnity. Prior to entry onto any of the Real
Properties to perform studies, tests, investigations or surveys, Buyer (or
each contractor performing such services for Buyer) will provide a
certificate of insurance to Seller naming Seller as an additional insured
in amounts and form reasonably acceptable to Seller. Buyer agrees to
repair, at Buyer's cost and expense, any damage caused to any of the
Projects caused by any of the studies performed by or for Buyer. Buyer also
agrees all of its studies will be performed in a manner that will not
unreasonably interfere with operation of the Projects or tenants operating
within the Projects. Buyer will indemnify and hold Seller harmless from and
against any cost, expense, damage or liability incurred by Seller as a
result of Buyer or its agents or independent contractors entering the Real
Properties, and/or performing work or conducting studies thereon, which
indemnification and hold harmless will survive closing hereunder or
termination or this Agreement.
4.5 Delivery of Loan Documents. Promptly upon Seller's receipt of any Loan
documents for the Loans, Seller shall provide copies thereof to Buyer to
enable Buyer to confirm that the Loan and Loan documents satisfy the
requirements of this Agreement.
4.6 Delivery of Plans and Specifications, Construction Contracts and Property
Materials for Hagerstown Section Two and Williamsburg Section Two. Seller
shall provide to Buyer copies of the construction plans and specifications
and construction contracts for Williamsburg Section Two when available
("Williamsburg Section Two Construction Materials"). Buyer shall have the
right to approve the Williamsburg Section Two Construction Materials, which
approval shall not be unreasonably withheld and shall be given or withheld
within fifteen (15) days following receipt thereof. In addition, at least
45 days prior to the closing the Hagerstown Project and Williamsburg
Section Two, as applicable, Seller shall deliver to Buyer copies of all
other Property Materials for Hagerstown Section Two or Williamsburg Section
Two, as applicable in Seller's control or possession.
ARTICLE 5
TITLE
5.1 Permitted Exceptions. The Real Properties are sold and shall be conveyed by
special warranty deeds subject only to the following:
Ai Real estate taxes and special assessments for the year in which the closing
shall occur.
Bi Zoning and/or restrictions and prohibitions imposed by governmental
authorities, none of which shall prevent use of the Real Properties as
factory outlet malls as presently configured.
Ci Restrictions, reservations and easements recorded in the Public Records of
the counties where the Projects are located, none of which shall interfere
with the use of the Real Properties for their intended purposes, contain
any rights of reverter, or render the title unmarketable in the opinion of
Buyer's attorney as determined during the title insurance review period set
forth in Section 6.1, and all of which shall be subject to the reasonable
approval of Buyer's attorney as provided in Section 6.1.
Di Rights of tenants under the Leases, none of whom will have any option to
purchase or rights of first refusal to purchase any portion of the
Property.
Ei The mortgages and other documents securing the Loans (including the
existing mortgage loans on Birch Run).
Fi Other matters agreed to pursuant to Section 6.1.
ARTICLE 6
TITLE INSURANCE
6.1 Commitments. Seller shall, within twenty-one (21) days after the Effective
Date, deliver to Buyer evidence of title to the Real Properties in the form
of a title insurance commitment for each of the Real Properties (which, as
to Williamsburg Section Two A, will indicate that Seller is not the current
owner thereof) from the Title Insurance Company. The commitments will be in
the amounts of the purchase price allocated to each of the Projects in
Section 3.1 and are to be accompanied by legible copies of all exceptions
shown thereon. The commitments shall contain the Title Insurance Company's
undertaking to issue to Buyer at closing Form B title insurance policies in
the name of Buyer in the amount of the purchase price of each of the
Projects. If any of such title insurance commitments shall disclose any
defects in title, Buyer shall so notify Seller in writing within fifteen
(15) days after receipt thereof. Within ten (10)days after receipt of
Buyer's notice of objection to any title matter, Seller will notify Buyer
if Seller will undertake to attempt to cure the objectionable title matter.
If Seller elects not to cure the objectionable matter, Buyer shall, by
notice to Seller given within ten (10) days after receipt of Seller's
notice, either terminate this Agreement or waive all such title objections
which Seller has not agreed to cure. If Seller elects to cure the
objectionable matter but is unable to do so after thirty (30) days, Buyer
can elect to give Seller an additional 50 days to cure or terminate this
Agreement (but not beyond the closing date for the Birch Run Project). If
after such additional period, the defect is still not cured, Seller or
Buyer can terminate this Agreement. Any termination pursuant to this
Section shall result in return of the xxxxxxx money deposit(s) to Buyer.
Buyer will not have the right to reject title to one or more of the Real
Properties and still close on any of the others. Seller has no obligation
to cure any title defects disclosed by the title commitments, but Seller
agrees it will keep title to the Real Properties in the same condition
(except for (i) defects which Seller may elect to cure, (ii) Leases entered
into by Seller in accordance with this Agreement, and (iii) such easements,
public works agreements, covenants, site plan approvals and other matters
as shall be reasonably required in connection with the approval,
development and construction of Hagerstown Section Two and Williamsburg
Section Two, provided such easements and other matters do not materially
interfere with the operation of the Real Properties) as reflected on the
title commitments, unless Buyer shall consent to any change therein, which
consent will not be unreasonably withheld. The Title Insurance Company
shall obtain reinsurance in such amounts and with such companies as are
approved by Buyer, whose approval will not be unreasonably withheld. Buyer
is to be given the right of direct access to any one or more reinsurers at
its election.
6.2 Policies. The title insurance commitments shall be brought down to a
current date at the time of closing, and at closing they shall be marked
down or endorsed by the Title Insurance Company. Buyer and Seller shall
each provide such copies of their documents of formation, resolutions and
good standing certificates as required of them in Schedule B-I of the title
commitments. The final title policies are not to contain the standard
printed exceptions normally contained in title policies. The "gap" will be
deleted from the commitments at closing as will all items listed in
Schedule B-I. Seller shall pay all costs and expenses for issuance of the
title insurance commitments, the owner's title insurance policies and any
endorsements or title policies required by the Lender. In the event the
title insurance commitments are issued by a title insurance agent rather
than a branch office of the Title Insurance Company, a title insurance
protection letter issued by the Title Insurance Company and addressed to
Buyer will be supplied. The final policies will contain an affirmative
insurance endorsements, if available at standard insurance rates for such
endorsements, insuring (a) that none of the restrictions applicable to the
real Properties has been violated to date and that a future violation will
not result in a reversion or forfeiture of title, and (b) the zoning
endorsement. However, the providing of such insurance shall not, in and of
itself, render acceptable any otherwise objectionable restriction
hereunder.
ARTICLE 7
SURVEY
7.1 Existing Surveys and Updates. As part of the Property Materials, Seller is
delivering to Buyer existing as-built surveys of each of the Real
Properties (excluding the Hagerstown Project and Williamsburg Section Two)
under seal of a surveyor licensed in the state where the Real Property
which is the subject of each survey is located. Seller shall deliver to
Buyer such an as-built survey of the Hagerstown Project, excluding
Hagerstown Section Two, within twenty-one (21) days after the Effective
Date. Buyer shall have the right to have the surveys updated or redone by
the same or other surveyors. If any of the surveys delivered by Seller or
obtained by Buyer show any encroachment on the Real Property surveyed, or
that improvements located on the Real Property surveyed in fact encroach on
lands of others or violate any of the applicable setbacks or restrictive
covenants, or that there is not access to the Real Property surveyed from a
public road, or that there are any gaps, gores, hiatuses, or overlaps, the
same shall be treated as a title defect, and the provisions and conditions
of Section 6.1 shall govern any obligation of Seller to cure the title
defect and any rights of Buyer.
7.2 Title Commitments and As-Built Surveys for Hagerstown Section Two and
Williamsburg Section Two. Seller may include, as part of the title and
survey materials to be submitted to and reviewed by Buyer in accordance
with Articles 6 and 7, title commitments (together with copies of the
exceptions listed in the title commitments) for Hagerstown Section Two
and/or Williamsburg Section Two and surveys of the land on which Hagerstown
Section Two and Williamsburg Section Two will be located (which may be
included in the as-built surveys of the Hagerstown Project and Williamsburg
Project). If so, then all of the provisions of Articles 5, 6 and 7 as to
the review and approval of title and survey matters shall be applicable to
the title commitments and surveys so submitted. After substantial
completion of Hagerstown Section Two and Williamsburg Section Two, as
applicable and, in any event, at least twenty-one (21) days prior to the
scheduled, applicable closing date, Seller shall deliver to Buyer an
updated as-built survey and an updated title commitment for Hagerstown
Section Two or Williamsburg Section Two, as applicable. If the updated
as-built survey or updated title commitment for Hagerstown Section Two or
Williamsburg Section Two reveals a matter to which Buyer, under the
provisions of Section 6.1 or Section 7.1 could object, other than matters
(i) shown on the title commitment or survey previously delivered to Buyer
as hereinabove provided, or (ii) which are encumbrances Seller is permitted
to create under clauses (i), (ii) and (iii) of Section 6.1, then Buyer,
within fifteen (15) days after receipt thereof shall be entitled to object
to such matters in accordance with the provisions of Section 6.1 and, in
such event, all of the provisions of Section 6.1 with respect to title
defects and objections shall be applicable thereto, with all time periods
beginning and being measured from the expiration of the time period for
Buyer to give notice of objections under this Section 7.2.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of Seller. Seller hereby represents and
warrants all of following to Buyer, which are true and correct as of the
Effective Date and will be true and correct as of the closing date for each
Project, and all of such representations and warranties shall survive
closing for each Project for a period of 18 months:
Ai Each of the parties comprising Seller is a duly formed and validly existing
limited partnership or limited liability company, as the case may be, under
the laws of the State of Delaware, and each is duly qualified to transact
business in the State in which the Project it owns is located. All
appropriate resolutions and authorizations precedent to Seller's authority
and power to execute this Agreement and perform its obligations hereunder
have been properly and duly taken.
Bi Other than as reflected in financial information provided, real property
tax bills, and special assessment notices, if any, there are no impact fees
or hook up fees which will be due or payable by Buyer to any utility
company or supplier, or governmental or quasi-governmental authority as a
result of or in connection with development of any portion of the Projects
(other than Williamsburg Section Two and Hagerstown Section Two).
Ci To Seller's knowledge, the legal descriptions which are attached to this
Agreement as Exhibit V describe the Real Properties (other than
Williamsburg Section Two) fully and do not omit any portion thereof. The
Projects contain the approximate acreage and square footage (except that
Seller cannot now represent the acreage and square footage of Williamsburg
Section Two) reflected on Exhibit III.
Di To Seller's knowledge, (i) there are no violations by Seller of any
copyrights or trademarks with respect to any of the Personal Property, and
(ii) no claims have been asserted against use of the names "Prime Outlets
at Birch Run", "Prime Outlets at Williamsburg" or "Prime Outlets at
Hagerstown". Seller has full right, power and authority to authorize Buyer
to utilize said names and will defend same against all third party claims.
Ei To Seller's knowledge, all of the Property Materials delivered or to be
delivered to Buyer (other than lease abstracts and lease summaries as to
which Seller makes no representations or warranties) are true, correct and
complete with no misstatements and with no material omissions.
Fi All service contracts, leases other than tenant Leases and other contracts
of any kind or nature are for $10,000.00 or less per contract or are
terminable on 30 days' notice or less (except as may be listed on Exhibit
VII or disclosed in the title insurance commitments or except as permitted
in Section 9.2) which will be binding upon Buyer after the closing date.
Gi Except as set forth on Exhibit IX, Seller has received no notice of any
violations of any portion of any of the Projects from any governmental
agency or authority and to Seller's knowledge all permits and governmental
authorizations which are appropriate or necessary for construction and
operation of the Projects (excluding Williamsburg Section Two and
Hagerstown Section Two) have been duly issued, are in full force and effect
and will be assigned to Buyer at closing to the extent assignable.
Hi To Seller's knowledge, except as disclosed in Seller's existing
environmental reports to be delivered by Seller to Buyer hereunder, there
is (i) no contaminant, pollutant or toxic or hazardous waste, substance or
gas in, on, under, over or affecting any part of any of the Real Properties
or their water supplies and (ii) no adverse environmental condition or
violation of any local, state or federal environmental law with respect to
any of the Property or any part thereof.
Ii No brokerage commission or compensation of any kind is due or will be due
from Buyer or the Projects or the rents therefrom for the leasing of any
space in the Projects (except for leasing commissions which may become
payable pursuant to the Management Agreement and leasing commissions
payable by Seller for leases entered into prior to closing or in connection
with the initial lease-up of Williamsburg Section Two and Hagerstown
Section Two). Leasing Commissions for Leases entered into after the date
hereof shall be governed by the provisions of Section 9.2 hereof.
Ji Seller has no knowledge of any pending or contemplated condemnation or
eminent domain proceeding or of any moratorium affecting any portion of any
of the Projects.
Ki To Seller's knowledge, there are no third party claims pertaining to or
affecting the Property except for rights of tenants arising under the
Leases, rights of the Lender under the Loan documents, rights of parties
under contracts listed on Exhibit VII and contracts referred to in
paragraph F above, tort and similar claims covered by insurance maintained
by Seller, rights of parties that will be reflected in the title insurance
commitments delivered by Seller to Buyer hereunder, and those matters set
forth on Exhibit X. This paragraph K does not apply to Williamsburg Section
Two A.
Li Except for leasing or financing arrangements entered into in the ordinary
course of business and taken into account in the operating expenditures of
the Projects in the financial information delivered by Seller to Buyer or
entered into after the Effective Date in accordance with the provisions of
Section 9.2 hereof, and except for rights of architects and engineers in
the plans and specifications, Seller is the owner of the Personal Property
free and clear of all liens, third party claims and encumbrances except for
security interests therein incident to existing financing for the Projects
(which, except in the case of the existing mortgage loan(s) on Birch Run
where Seller has elected to provide wrap-around financing, will be released
prior to closing on the applicable Project) and the Loans. This Paragraph L
does not apply to Williamsburg Section Two or Hagerstown Section Two to the
extent that, as of the Effective Date, construction thereof is not
complete.
Mi To Seller's knowledge and to the extent needed, all electricity, telephone,
drinking water, irrigation water, water for fire purposes, sanitary sewage
and storm drainage capacity in sufficient quantity to service the Projects
and their tenants adequately is available to the Real Properties and is
fully hooked up and operable without payment by Buyer or the Projects after
closing hereunder of any impact or connection fees, and all necessary and
appropriate approvals for same have been obtained. The only fees payable by
Buyer in connection with such utilities shall be normal usage fees, unless
otherwise disclosed in the real property tax bills, special assessment
notices, title commitments or financial information provided to Buyer. The
provisions of this Paragraph M do not apply to Williamsburg Section Two or
Hagerstown Section Two.
Ni To Seller's knowledge and unless otherwise disclosed in the real property
tax bills, special assessment notices or title commitments, all entrances
and curb cuts for the Real Properties reflected on the as-built surveys
have been approved by all governmental and quasi-governmental bodies having
jurisdiction thereover, and any road construction or installation of
traffic signals or similar off-site improvements which were required as a
result of construction or operation of the Projects has been fully
completed and paid for. The provisions of this Paragraph N do not apply to
Williamsburg Section Two or Hagerstown Section Two.
Oi Unless otherwise disclosed in the title commitments, Seller has no
knowledge of any pending governmental or quasi-governmental assessment
liens or of any planned improvements (other than construction of
Williamsburg Section Two and Hagerstown Section Two) that might result in
any assessments being levied by a governmental or quasi-governmental
authority against any of the Projects, other than special assessments on
Hagerstown Section Two the proceeds of which will be used to pay principal
and interest on the Hagerstown bonds to be issued in connection therewith
and to be endorsed and delivered to Buyer at Closing on the Hagerstown
Project, which special assessments on Hagerstown Section Two are passed
through on substantially all of the Leases for Hagerstown Section Two.
Pi There are no collective bargaining or union agreements with any employee of
Seller, and no employee contracts or relationships exist which will be
binding upon Buyer after closing.
Qi The Rent Rolls attached as composite Exhibit I are true, correct and
complete depictions of those terms set forth on the Rent Rolls for all
leases for the Projects as of the dates of such Rent Rolls, all of which
are in full force and effect with no known defaults thereunder by the
Landlord or Tenant, except as disclosed on Exhibit VIII. To Seller's
knowledge, except as set forth on Exhibit VIII, all Leases are valid and
enforceable in accordance with their terms. Except as disclosed in the
Leases, no tenant will be entitled to any concession or rebate after
Closing. No tenant improvement funds or allowances will be due from Buyer
as to any Lease in effect as of Closing except for tenant improvement
payments which are credited to Buyer at Closing or which are owed under
Leases that are subject to a Master Lease referred to in Section 10.1.O. To
Seller's knowledge, all spaces within the Projects (excluding Williamsburg
Section Two and Hagerstown Section Two) may legally be occupied for the
purposes for which they leased.
Ri Except as disclosed on Exhibit X, Seller has received no notice of any
actions or claims filed or threatened by anyone against the Real Properties
or Personal Property, Seller or Seller's agents in connection with any
personal injury or property damage sustained by reason of the development,
use, occupancy or operation of the Projects.
S. At the time of closing on a Project, the Loan for such Project shall comply
with the requirements of Section 1.7 hereof, and such Loan shall be current
and in good standing, with no defaults thereunder by Seller. At the time of
closing on each Project, the principal amount of the Loan on the Project
(excluding reductions due to casualty or condemnation) shall be: (i) for
Birch Run, not less than $64,500,000 nor more than $65,000,000, (ii) for
Hagerstown, not less than $44,250,000 nor more than $44,500,000, (iii) for
Williamsburg, without Williamsburg Section Two, not less than $32,500,000
and (iv) for Williamsburg, inclusive of Williamsburg Section Two, not less
than $42,250,000 nor more than $42,500,000.
T. As of July 31, 1999, the principal balance(s) and monthly principal and
interest payments under the existing underlying loan(s) on the Birch Run
Project are as set forth on Exhibit XVI.
U. The quality of materials and construction of Hagerstown Section Two and
Williamsburg Section Two shall be at least equal to the quality of
materials and construction of the Hagerstown Project or the Williamsburg
Project, as the case may be, and the appearance of Hagerstown Section Two
and Williamsburg Section Two shall be consistent and compatible with the
appearance of the Hagerstown Project and the Williamsburg Project, as
applicable.
8.2 Update. At the time of closing, Seller will update the representations and
warranties contained in Section 8.1(G), (H), (J), (K), (L), (M), (O), (Q)
and (R) if Seller can truthfully do so. If Seller cannot do so as to any
such paragraphs, then Seller shall be in default hereunder unless the
inability to update a representation and warranty is the result of actions
of Seller permitted pursuant to Section 9.2 or if the inability to update
arises from any event beyond the reasonable control of Seller or from any
act or omission of a third party unrelated to Seller and which cannot be
timely corrected by Seller by an expenditure of funds which in the
aggregate for any one Project will not exceed $250,000; provided, however,
if there has been a notice of violation of the kind encompassed by
paragraph (G), and if the cost to rectify same in Buyer's reasonable
estimation will not exceed $250,000 [in the aggregate if there is more than
one (1) violation], then Seller shall not be in default but shall agree
with Buyer to rectify the violation at Seller's sole cost and expense. To
secure Seller's obligation to rectify the violation Seller will deposit a
sum equal to one hundred thirty percent (130%) of the estimated cost to
complete rectification of the violation in escrow with the Escrow Agent
which shall be released from escrow only when the violation(s) has (have)
been rectified and final lien waivers are delivered from all parties
supplying work and/or materials in connection therewith. The amount placed
in escrow will not be the limit of Seller's liability under this Section if
the costs of rectification exceed the estimate plus thirty percent (30%)
thereof.
8.3 Indemnification. Seller hereby agrees to indemnify and hold Buyer free and
harmless from and against all claims, costs and expenses incurred by Buyer
as a result of a material breach of or the material falsity of any of
Seller's representations or warranties and, in the event Buyer is made a
party to any arbitration, mediation or litigation as a result of such
breach or falsity, Seller will pay all the costs and expenses thereof
including reasonable attorneys' fees. The provisions of this Section 8.3
will survive the closing as to any claim hereunder asserted by Buyer within
eighteen (18) months after the applicable closing for each Project
hereunder. If Buyer has actual knowledge of representations and warranties
being incorrect and then closes, breach of the warranty is deemed waived.
8.4 Williamsburg Section Two and Hagerstown Section Two. As of the date of
closing on Williamsburg Section Two and the Hagerstown Project), Seller,
subject to Seller's right to update under Section 8.2 hereof, shall be
deemed to have represented and warranted that the statements in Sections
8.1.B and 8.1.C (except that the legal description of Williamsburg Section
Two shall be that contained in the updated title commitment for Section Two
and the acreage and square footage for Williamsburg Section Two shall be as
set forth in a rent roll to be provided by Seller to Buyer prior to the
closing date), G, K, L, M, N, O and Q are true and correct (to Seller's
knowledge where so stated in such Sections) as to Williamsburg Section Two
or Hagerstown Section Two on which closing is occurring, which
representations and warranties shall survive the applicable closing for a
period of 18 months.
8.5 Representations and Warranties of Buyer. Buyer hereby represents and
warrants all of following to Seller, which are true and correct as of the
Effective Date and will be true and correct as of the closing date for each
Project, and all of such representations and warranties shall survive
closing for each Project for a period of 18 months:
Ai Each of the parties comprising Buyer is a duly formed and validly existing
limited partnership or limited liability company, as the case may be, under
the laws of the State of Florida, and each is or, prior to Closing, will be
duly qualified to transact business in the State in which the Project it
owns is located, if such qualification is required by applicable law. All
appropriate resolutions and authorizations precedent to Buyer's authority
and power to execute this Agreement and perform its obligations hereunder
have been properly and duly taken.
ARTICLE 9
OPERATING COVENANT
9.1 Maintenance and Operations. Seller agrees and covenants that, except for
matters relating to the approval, development and construction of
Hagerstown Section Two and Williamsburg Section Two, it will during the
term of this Agreement operate, manage and maintain the Projects in their
present condition, normal wear and tear excepted, and at least to the same
standards which Seller has operated, managed and maintained the Projects
prior to the Effective Date. Seller agrees to construct Hagerstown Section
Two and Williamsburg Section Two in a good and workmanlike manner and
substantially in accordance with the plans and specifications delivered to
Buyer during the Investigation Period (in the case of the Hagerstown
Section Two) or delivered to Buyer in accordance with Section 4.6 (in the
case of Williamsburg Section Two), as modified to accommodate the
requirements of individual tenants, and, following construction and prior
to closing thereon, agrees to operate, manage and maintain Hagerstown
Section Two and Williamsburg Section Two in accordance with the same
standards that Seller has operated, managed and maintain the Hagerstown
Project and the Williamsburg Project. Seller shall comply with all material
obligations of the landlord under the Leases and all other material
agreements and contractual arrangements affecting the Projects by which
Seller is bound. Seller shall provide written notice to Buyer of any notice
from any party alleging that Seller is in material default in its
obligations under any of the Leases or under any permit, agreement or Loan
document affecting the Property or any portion or portions thereof as well
as any other notices pertaining to or affecting any of the Projects in any
material way received from any governmental or quasi-governmental body,
utility supplier or fire underwriter.
9.2 Contracts and Leasing. No contract out of the ordinary course of business
for or on behalf of or affecting any of the Projects, except for matters
relating to the approval, development and construction of Hagerstown
Section Two and Williamsburg Section Two, shall be negotiated or entered
into which are in excess of $10,000.00 or cannot be terminated on 30 days'
or less notice unless Buyer shall have approved same, which approval will
not be unreasonably withheld. Any and all new Leases and renewals (other
than Leases for space to be covered by a Master Lease for Williamsburg
Section Two or Hagerstown Section Two as provided in Section 10.1, and
those renewals of existing Leases the terms of which have already been
agreed to with existing tenants) of Leases entered into from and after the
Effective Date shall be subject to Buyer's prior approval, which approval
shall not be unreasonably withheld or delayed (and shall be deemed given if
written objection is not made within eight (8) business days after
receipt); except to the extent that Buyer's approval is not required for
Leases in space subject to a master lease, as provided in Section 10.1D.
All of such Leases and renewals shall be in the ordinary course of Seller's
business and shall be for a use which is consistent with the present
operations of the Project for which the Lease or renewal is executed.
Copies of all Leases entered into by Seller after the Effective Date shall
be delivered to Buyer promptly after complete execution thereof. All
leasing commissions, including leasing commissions to third party brokers,
and tenant improvement allowances for Leases entered into after the
Effective Date and prior to closing in accordance with the provisions of
this Section 9.2 shall be paid by Seller, and neither Seller nor any
affiliate of Seller shall be entitled to any leasing commissions as to such
Leases provided in Paragraph 3 of Exhibit II. In addition, all leasing
commissions for Leases entered into after closing (including leasing
commissions to third party brokers unless the Management Agreement of
Seller has been terminated and the Lease was entered into after the
termination, in which case Seller shall not be responsible for any leasing
commissions to third party brokers for such Lease in excess of that which
would otherwise have been due to Seller under Paragraph 3 of Exhibit II)
and tenant improvement allowances for the initial occupancy of each space
in Hagerstown Section Two and Williamsburg Section Two shall be paid by
Seller (subject to any continuing obligation of Seller under a master lease
to continue to pay such sums as provided in Section 10.1D), and Seller
shall not be entitled to the leasing commissions as provided in Paragraph 3
of Exhibit II with respect to such occupancies. Seller will not enter into
any new personal property leasing or financing arrangements on or after the
Effective Date except in the ordinary course of business where impact on
Net Operating Income is negligible.
9.3 Liabilities. Except to the extent closing adjustments and prorations have
taken into account any obligations, expenses, costs, liabilities or claims
accruing for periods before the closing date on a Project and in any way
pertaining to or arising from the ownership or operation of the Project,
Seller shall be responsible to pay the same. Seller agrees to indemnify and
save Buyer free and harmless from all of such claims. This Section 9.3 will
survive closing. Buyer shall pay all such obligations, expenses, costs,
liabilities and claims accruing for periods after the closing date on a
Project and shall indemnify and save Seller free and harmless from all of
such claims, unless such claims arise from a breach by Seller of a
representation and warranty under this Agreement of which Seller is given
notice prior to the expiration of such representation or warranty.
ARTICLE 10
CONDITIONS PRECEDENT
10.1 Buyer's Preconditions. The following are conditions precedent to Buyer's
obligations under this Agreement and in the event any one or more of such
conditions in subparagraphs A, B or E below are not met on or before the
dates set forth, Buyer shall have the unqualified right (which, if such
failure of condition also constitutes a default by Seller, shall be in
addition to the other remedies available to Buyer on account of Seller's
default), to terminate this Agreement as to all Projects on which Closing
has not yet occurred and obtain from Escrow Agent a refund of its xxxxxxx
money deposits not previously applied to the purchase price of a Project.
If one or more of the conditions precedent in subparagraphs C or D are not
met, Buyer's sole remedy shall be to extend the closing date for a period
not to exceed thirty (30) days, to see if the condition(s) can then be met
or to terminate this Agreement (on the applicable extended closing date if
the condition is still not met, at Buyer's election) and obtain a refund of
its xxxxxxx money deposits not previously applied to the purchase price of
a Project from Escrow Agent. If the condition in subparagraph F below is
not met on or before the date set forth, Buyer shall have the unqualified
right (which shall be in addition to the other remedies available on
account of Seller's default), to terminate this Agreement as to
Williamsburg Section Two only and obtain from Escrow Agent a refund of the
portion of the xxxxxxx money deposit allocable to the purchase price of
Williamsburg Section Two, and this Agreement shall remain in effect as to
the remaining Projects:
Ai The representations and warranties of Seller shall be true and correct in
all material respects as of the closing date and Seller shall have
performed all of its material obligations hereunder to be performed at or
prior to the closing.
Bi Seller will have obtained and delivered to Buyer estoppel letters addressed
to Buyer substantially in the form attached hereto as Exhibit IV from
tenants occupying at least 70% of the leasable space in the Project on
which closing is occurring. To the extent estoppel letters are not required
hereunder and not obtained, Seller will deliver to Buyer Seller's affidavit
as to such Leases containing the same information that the estoppel letters
contain.
Ci There shall not be any local insurrection, war, disaster, moratorium
preventing tenants from operating, or other event (other than a matter
covered by Article 13 hereof) preventing the Real Properties from being
occupied by a material number of tenants with concurrent right to tenants
not to pay rent.
Di As to Hagerstown Section Two or Williamsburg Section Two, as applicable,
80% of the net rentable space in such Section Two shall be leased and
subject to occupancy within 90 days after the closing date of such Section
Two and 70% of the net rentable space in such Section Two shall be leased
and occupied on a full rent-paying basis (the "Leasing Requirement"). If
the Net Operating Income is not equal to or greater than the following
amounts: (i) Williamsburg Section Two: $1,820,000; and (ii) Hagerstown
Section Two: $2,240,000 (the "NOI Requirement") but if the Leasing
Requirement is met as to such Section Two at the closing date of such
Section Two, closing shall occur, Buyer shall pay the full purchase price
for such Section Two, and, at closing, Seller shall master lease (the
"Master Lease") from Buyer all of the rentable space in such Section Two
that is not then occupied on a full rent-paying basis for a period of ten
(10) years (subject to termination as hereafter provided) with rent equal
to the shortfall in meeting the NOI Requirement for each Section Two, which
rent shall be determined and fixed at the time of closing and shall
thereupon be deemed the "Master Lease Rent" for such Section Two. If the
NOI Requirement is not met, Seller shall be obligated to enter into the
Master Lease and pay the Master Lease Rent regardless of whether any space
will be subject to the Master Lease. After closing, Seller, under the
Master Lease, shall have the sole right to lease the space covered thereby
on such terms and conditions as Seller in its sole and absolute discretion
deems appropriate, subject, however, to the requirement that the use being
made of space so leased be consistent with the existing operation of the
Project and not violate any covenants in existing Leases in the Project.
All income from leases of space subject to the Master Lease shall be paid
to Buyer in partial satisfaction on a dollar for dollar basis of the Master
Lease Rent then due from Seller or, if the Master Lease Rent then due is
thereby fully satisfied, in partial satisfaction of the Master Lease Rent
thereafter coming due during the same calendar year. However, if such
income from space leases exceeds in any calendar year the Master Lease Rent
payable by Seller, Buyer shall be entitled to all of such excess without
credit or liability to Seller therefor. All leasing commissions (including
those to third party tenant brokers) and tenant improvement expenses for
space covered by a Master Lease shall be the sole responsibility of Seller.
If Seller enters into a Lease for space covered by a Master Lease which
satisfies the "Acceptable Lease Standard" (as hereinafter defined), then,
from and after the date the tenant under the Lease occupies the space and
commences paying full rent (with any free rent or similar abatement periods
having expired), such space shall be automatically excluded from the Master
Lease (except for Seller's continuing obligation to pay for any tenant
improvements or to pay any tenant improvement allowances as provided in the
Lease) and the Master Lease Rent shall automatically be reduced by the Net
Operating Income payable under the Lease; but the Master Lease and Seller's
obligation to pay the Master Lease Rent shall continue until the Master
Lease Rent is reduced to Zero Dollars regardless of whether any space
remains subject to the Master Lease. Once the Master Lease Rent is reduced
to zero Dollars, the Master Lease shall automatically terminate (except for
Seller's continuing obligation to pay for any tenant improvements or to pay
any tenant improvement allowances for Leases of space which were covered by
the Master Lease at the time of the execution of such Leases). For purposes
hereof, a Lease shall be deemed to have satisfied the Acceptable Lease
Standard if: (x) the Lease was delivered to Buyer as part of the Property
Materials during the Investigation Period, or (y) the Lease was approved by
Buyer under the provisions of Section 9.2. The form of the Master Lease
shall be agreed upon by Seller and Buyer during the Investigation Period.
E. As to the Hagerstown Project, as of Closing thereon, Seller shall have
completed construction of Hagerstown Section Two, except for minor
punch-list work (which Seller shall complete promptly after Closing, which
obligation shall survive Closing) and tenant improvement work in space
covered by the Master Lease for Hagerstown Section Two.
F. As to Williamsburg Section Two, as of Closing thereon, Seller shall have
completed construction of Williamsburg Section Two, except for minor
punch-list work (which Seller shall complete promptly after Closing, which
obligation shall survive Closing) and tenant improvement work in space
covered by the Master Lease for Williamsburg Section Two.
10.2 Seller's Preconditions. The following are preconditions to Seller's
obligations under this Agreement and in the event the condition in
subparagraph A below is not met on or before the closing date, Buyer shall
be in default hereunder and Seller shall be entitled to avail itself of the
remedy provided in Article 18. If the precondition listed in subparagraph C
below is not met, Seller may terminate this Agreement solely as to
Williamsburg Section Two and this Agreement shall continue in effect as to
all of the remaining Projects and the portion of the xxxxxxx money deposit
allocable to the purchase price of Williamsburg Section Two will be
returned to Buyer:
Ai The representations and warranties of Buyer shall be true and correct as of
the closing date(s) and Buyer shall have performed all of its material
obligations hereunder to be performed at or prior to the closing.
B. Intentionally Omitted.
C. As to Williamsburg Section Two only, on or before June 1, 2000, Seller
shall have obtained all site plan approvals, special use permits, zoning
variances and special exceptions, building permits, utility connection
permits and all other governmental, quasi-governmental and utility company
permits and approvals necessary for the construction of the Williamsburg
Project to contain not less than 70,000 square feet of net rentable space.
Notwithstanding the foregoing, if all such approvals are obtained for
Williamsburg Section Two, but such approvals do not authorize development
of at least 70,000 square feet of net rentable area, then this condition
shall be deemed satisfied, but the purchase price for Williamsburg Section
Two, the NOI Requirement for Williamsburg Section Two and the required loan
amounts for Williamsburg Section Two (as provided in Section 1.7 and
Section 8.1S), shall be reduced on a per square foot basis to reflect the
reduction in size of Williamsburg Section Two.
10.3 Mutual Preconditions. The following are preconditions to the obligations of
Seller and Buyer under this Agreement, and if any one or more of them is
not met on or before the dates set forth below, either party may terminate
this Agreement as to all Projects on which closing has not occurred and the
xxxxxxx money deposit(s) not previously applied to the purchase price of a
Project will be refunded to Buyer:
Ai The form of Management Agreement and Master Lease will have been approved
by Seller and Buyer prior to expiration of the Investigation Period.
Bi The License Agreement referred to in Section 11.2(F) will have been
approved by Seller and Buyer prior to expiration of the Investigation
Period.
C. On or before the expiration of the Investigation Period, Seller shall have
obtained a loan commitment or term sheet for a loan for each Project (or,
if Seller elects to provide a wrap-around mortgage loan for the Birch Run
Project, then, Seller shall have obtained the written consent of the
lender(s) under the underlying loan(s) for the Birch Run Project for the
sale of such Project to Buyer and the subjection of the Project to the
wrap-mortgage loan) satisfying the requirements of Section 1.7 hereof and
otherwise on terms and conditions reasonably satisfactory to both Buyer and
Seller.
ARTICLE 11
CLOSING
11.1 Place, Time, Etc. Subject to satisfaction or waiver of the conditions
precedent to closing set forth in Article 10 above and the other provisions
of this Agreement, closing on each project shall take place in Orlando,
Florida at the office of the Title Insurance Company or the office of
Buyer, or at such other place as the parties may mutually agree (provided,
however, that if the Loan for such closing is to occur simultaneously, then
the Lender shall determine the place of closing), on the following dates,
except as otherwise provided herein:
Ai as to the Birch Run Project, November 18, 1999 or, provided all conditions
as to Seller's and/or Buyer's obligations under Article 10 are then
satisfied and the Loan for the Project will be closed on or before such
earlier date, such earlier date as Buyer may specify by written notice to
Seller given at least 30 days in advance of such earlier date;
Bi as to the Williamsburg Project, exclusive of Williamsburg Section Two,
February 15, 2000, or, provided all conditions as to Seller's and/or
Buyer's obligations under Article 10 are then satisfied and the Loan for
the Project will be closed on or before such earlier date, such earlier
date as Buyer may specify by written notice to Seller given at least 30
days in advance of such earlier closing date;
Ci as to Williamsburg Section Two, such date to be specified by written notice
from Buyer to Seller given at least 30 days in advance, which shall be no
earlier than the later of the closing on the Loan for Williamsburg Section
Two or the closing date for the purchase of the Williamsburg Project
exclusive of Williamsburg Section Two and no later than September 30, 2000;
provided, however, that if Seller determines that on the closing date all
conditions as to Seller's and/or Buyer's obligations under Article 10 are
not likely to have been satisfied due to permitting, construction or
lease-up delays, Seller, by written notice to Buyer given on or before June
1, 2000 may elect to extend the closing date to a date not later than March
31,2001; and
Di as to the Hagerstown Project, April 15, 2000 or, provided the Loan for the
Project will be closed on or before such earlier date, such earlier date as
Buyer may specify by written notice to Seller given at least 60 days in
advance of such earlier date; provided, however, that if Seller determines
that on the closing date all conditions as to Seller's and/or Buyer's
obligations under Article 10 are not likely to have been satisfied due to
permitting, construction or lease-up delays, Seller, by written notice to
Buyer given on or before December 15, 1999, may elect to extend the closing
date to a date not later than October 15, 2000.
If Closing does not occur on the Hagerstown Project or Williamsburg Section
Two by the applicable outside dates set forth above (as extended pursuant to the
provisions thereof) due to a breach by Seller of this Agreement or due to
permitting, construction or lease-up delays, and Buyer elects to extend Closing
on account thereof, then, at Closing thereon, the Purchase Price for the
applicable Project shall be reduced by $2,877 per day for Williamsburg Section
Two or $14,877 per day for the Hagerstown Project for the period of time
required for Seller to correct such item.
11.2 Documents, etc. by Seller. Seller shall cause copies of the form of all
closing documents that are to be prepared by Seller to be delivered to
Buyer for review at least fifteen (15) days prior to closing. The documents
and other materials to be executed (where applicable) and delivered by
Seller for closing include:
Ai Closing Statements.
Bi Special warranty deeds.
Ci Bills of Sale for the Personal Property for the Project on which
closing is occurring, with special warranties of title.
Di Assignments of Leases for the Project on which closing is occurring,
with warranty of title.
Ei Notices to tenants of the Project on which closing is occurring, of
sale.
Fi License Agreement of right of use of the names "Prime Outlets at Birch
Run", "Prime Outlets at Williamsburg", and "Prime Outlets at
Hagerstown" per Section 15.2 as applicable for the Project on which
closing is occurring.
Gi Seller's Affidavits typically required by the Title Insurance Company.
Hi FIRPTA Affidavits.
Ii Any forms or documents required in order to convey real estate and
record the transactions in the counties where the Project on which
closing is occurring, is located.
Ji Evidence of the authority of the Seller to act and corporate (or other
entity, if applicable) resolutions authorizing the actions of any such
partner signing on behalf of the Seller.
Ki Certificates of good standing of the corporate (or other entity, if
applicable) general partners of Seller in the states of their
organization and if required by law to qualify to do business, in the
state where the Project on which closing is occurring, is located.
Li To the extent assignable, as to the Project on which closing is
occurring, assignments and delivery of all original permits, licenses,
leases, contracts, approvals, plans, specifications, surveys,
certifications, warranties, and authorizations referred to herein and
all items of Personal Property being assigned or conveyed to Buyer,
including originals of the Property Materials in Seller's possession
or control. Included within the term "warranties" are all of Seller's
rights, if any, pertaining to the Projects against Seller's
architects, engineers, other professionals, contractors,
manufacturers, suppliers and other third parties.
Mi Covenant Not to Compete per Section 15.3 (first closing only).
Ni Estoppel letters from tenants (and affidavits of Seller per Section
10.1.B if applicable) for the Project on which closing is occurring.
Oi Management Agreement (the form of which is to be agreed upon during
the Investigation Period) for the Project on which closing is
occurring.
Pi Notes, Mortgages, Deeds of Trust, Indemnity Deeds of Trust, Loan
Agreements and other Loan documents (as soon as possible after the
Lender has provided same) for the Project on which closing is
occurring and, in the case of the Birch Run Project, the consent of
the existing lender to the sale and wrap-around mortgage.
Q. Joint Venture Agreement as provided under Article 15 (first closing
only).
R. Master Lease, if applicable.
S. Assignment and endorsement of the bond for the Hagerstown Project.
T. Pledge of the joint venture interest of the affiliate of Seller acting
as the joint venturer under the Joint Venture Agreement, as provided
in Section 1.7, Section 3.3 and Section 11.5.
11.3 Documents, etc. By Buyer. Buyer shall cause copies of documents that
are to be delivered by Buyer to Seller at closing to be delivered to
Seller for review at least 15 days prior to closing. The documents and
materials to be executed (where applicable) and/or delivered by Buyer
for closing include:
Ai Evidence of the good standing and qualification to transact
business in the State of Florida and in the states where the
Project on which closing is occurring is located, for Buyer, if
required by applicable law, and the Ownership Entity (as defined
in Section 15.4) (along with certificate of good standing of the
joint venturers in the state of their organization and, if
required by law to qualify to do business, in the states where
the Projects are located).
Bi Evidence of authority of Buyer to act and resolution authorizing
the actions of the general partner signing on behalf of the
Buyer.
Ci Sufficient funds to the Title Insurance Company escrow account to
complete the closing. (The funds need not be delivered until the
day of closing.)
D. Covenant Not to Compete per Section 15.3 (first closing only).
E. Management Agreement for the Project on which closing is
occurring.
F. Master Lease, if applicable.
G. Loan Documents, if closing is occurring simultaneously with
closing, or such assignment and assumption documents as the
Lender may require if the Loan has already closed and Buyer is
assuming the Loan for the Project on which closing is occurring;
H. Joint Venture Agreement as provided under Article 15 (first
closing only);
I. The License Agreement referred to in Section 15.2.F. above.
11.4 Further Documents. Buyer and Seller each agree to execute all the documents
contemplated by this Agreement to be executed by them to complete closing
hereunder and such further documents and instruments and to deliver to each
other such further materials in their possession at closing (or thereafter
if forgotten at closing or if the need did not become apparent until after
closing) as may be necessary or appropriate to accomplish the purpose and
intent hereof.
11.5 Property Acquisition of Williamsburg Section Two. Because the land on which
approximately 34,000 net rentable square feet of Williamsburg Section Two
may not be physically and legally subdivided from the rest of the
Williamsburg Project, Seller and Buyer have agreed that this portion of
Williamsburg Section Two, as more fully identified in Exhibit XIII will be
conveyed to Buyer at the time of closing on the Williamsburg Project
(unless such portion has then been physically and legally subdivided), but
payment of the purchase price for Williamsburg Section Two will only occur
at the time provided in Section 11.1.C hereof. At the initial closing on
the Williamsburg Project, Seller and Buyer shall execute, deliver and
record a cross-easement agreement between the Williamsburg Project and
Williamsburg Section Two providing easements to and from the Williamsburg
Project and Williamsburg Section Two for vehicular and pedestrian ingress
and egress, utilities, storm water management, parking and other
appropriate matters (including easements on that portion of the
Williamsburg Project on which Williamsburg Section Two A will be located
for the development, construction and leasing of Williamsburg Section Two).
Until such time as closing and payment of the purchase price on
Williamsburg Section Two occurs, all rents, income and profits, and all
liabilities and expenses of Williamsburg Section Two shall remain
exclusively the property and responsibility of Seller (however, Seller and
Buyer acknowledge that the common areas of the Williamsburg Project and
Williamsburg Section Two will be operated as one center with appropriate
allocations of such items) and Seller shall indemnify Buyer from all such
liabilities and expenses, and the cross-easement agreement shall so
provide. Buyer shall fully cooperate with Seller in its development,
construction and leasing of Williamsburg Section Two and, from and after
closing on the Williamsburg Project, shall execute any and all
applications, easements, public work agreements, Leases and other documents
as Seller may reasonably require in connection therewith; as long as (x)
either such instruments provide that Seller and not Buyer will have all
financial and other responsibility and liability therefor or Seller
indemnifies Buyer from all such liability, and (y) no liens may be filed
against any portion of the Williamsburg Project or Buyer agrees to
indemnify Seller from all such liens and fully bond all such liens if
filed. In addition, Prime Retail, L.P. shall provide to Buyer at Closing on
the Williamsburg Project an indemnification against such liens and against
the other matters for which Seller is providing indemnification as set
forth above in this Section 11.5, which indemnification shall be secured by
a pledge of the joint venture interest of the affiliate of Prime Retail,
L.P. in the joint venture referred to in Section 15.4. At Closing on
Williamsburg Section Two, Seller shall cause Buyer's title insurance policy
on the Williamsburg Project to be endorsed to insure against mechanics
liens arising from Seller's construction of Williamsburg Section Two.
Seller shall continue to have the right at all times to enter upon
Williamsburg Section Two for any and all activities as Seller requires in
connection with its development, construction and leasing of Williamsburg
Section Two. If, for any reason whatsoever, closing on Williamsburg Section
Two does not occur, then Buyer shall reconvey to Seller any portion of
Williamsburg Section Two then owned by Buyer or, if a conveyance is not
physically or legally permitted, Buyer shall ground lease such portion of
Williamsburg Section Two to Seller for a period of 99 years at a net rent
of $1 per year. The provisions of this Section 11.5 shall survive
settlement or any termination of this Agreement and shall be embodied in
the cross-easement agreement and/or other instruments.
ARTICLE 12
CLOSING ADJUSTMENTS AND PRORATIONS
12.1 The following items are to be apportioned at closing in an equitable manner
as of 11:59 p.m. on the last day immediately preceding the day on which the
closing occurs ("the Adjustment Date") so that the income and expense items
with respect to the period on and prior to the Adjustment Date will be for
Seller's account and the income and expense items with respect to the
period after the Adjustment Date will be for Buyer's account.
A. Rents as and when collected. If at the time of the Adjustment Date
there are basic rents owed by tenants that have not been collected by
Seller and are applicable to any period of time prior to the
Adjustment Date, Seller shall deliver to Buyer a schedule of such
uncollected rents, and Buyer agrees that such rents, if and when
collected, shall be paid by Buyer to Seller. Rents collected by Buyer
shall be applied first to then current rents, and only after they have
been paid will application be made to past-due rents and then in
reverse order of accrual.
Any percentage rentals received after the closing date and
attributable entirely or in part to a period before the closing date
shall be allocated between Buyer and Seller such that Seller's share
with respect to each tenant shall be an amount equal to the total
percentage rentals received for such tenant's lease year, multiplied
by a fraction equal to that portion of such tenant's lease year
preceding the closing date. Prorated percentage rentals will be paid
by the party receiving the percentage rentals from the tenants within
ten days after receipt, as and when received.
Payments of utility, common area, sprinkler, insurance, and other
charges (including, without limitation, sewer charges and insurance,
but excluding marketing fund or promotion fund charges) from tenants
shall be apportioned in an equitable manner. Marketing fund or
promotion fund charges and the costs expenses paid or to be paid with
such charges shall be treated as a fund, which shall not be adjusted
at Closing. Instead, the fund balance, whether positive or negative at
Closing, shall be transferred to the manager under the Management
Agreement who shall continue to collect all marketing fund and
promotion fund charges and pay any marketing or promotion fund
expenses after Closing through the end of the then fiscal year for the
marketing or promotion fund. The Manager shall not be obligated to
expend for marketing and advertising expenses in such fiscal year more
than the marketing and promotion fund charges received after Closing
plus or minus (if the fund has a negative balance) the balance in the
fund delivered to the Manager at Closing. After the expiration of the
then fiscal year of the marketing or advertising fund, the Manager
shall deliver any excess moneys remaining n the fund to the Buyer or,
at Owner's discretion, retain such excess, in either case for
application to marketing and promotion fund expenses subsequently
incurred.
B. Real estate taxes and annual installments of special assessments, and
other state, county or city taxes or assessments, if any, on the basis
of the fiscal year for which assessed. If the closing date shall occur
before the tax rate or assessment is fixed, the apportionment of such
real estate taxes at the closing shall be upon an estimate of the
taxes for the year of closing; provided, however, that readjustment
will be made based upon the actual tax amount, when determined.
C. Amounts paid or payable in respect of any service contracts that are
assumed and all costs and expenses incurred in common area maintenance
charges, or insurance charges; provided, however that Buyer shall have
no liability on account of any of the foregoing (other than costs and
expenses included in common area maintenance charges), unless included
in the operating budgets, or income and expense statements provided by
Seller to Buyer prior to the execution hereof. Following issuance of
any annual reconciliations to the tenants of the Project and receipt
of any reconciliation payments due from the tenants, Buyer and Seller
shall readjust the items under this paragraph C and the corresponding
income items under paragraph A.
D. Personal property taxes, if any, on the basis of the fiscal year for
which assessed. However, a readjustment shall be made based upon the
actual tax amount effective for the Adjustment Date, when determined.
E. Water, electricity, oil, gas, steam, telephone, sewer and other
utilities based on actual charges when final meter readings have been
obtained or actual expenses determined. Seller, to the extent current
readings are available, shall endeavor to furnish readings made on or
immediately prior to the Adjustment Date.
F. Wages and payroll taxes, vacation pay and fringe benefits for
employees of Seller, if any, to be hired by Buyer.
G. Such other apportionments and adjustments as are customarily
apportioned upon the transfers of property similar to the Projects.
H. Interest on the Loan and any escrows held under the Loan.
I. Tenant security deposits.
12.2 Liens. Notwithstanding the foregoing, certified, confirmed and
ratified special assessment liens as of the date of closing are to be
paid by Seller unless (a) the Leases provide for the tenants to pay
them under their Leases or (b) such assessment liens were disclosed in
the real property tax bills, special assessment notices or title
commitments delivered to Buyer, or (c) the proceeds of the special
assessments are used to pay principal and interest on the Hagerstown
bonds to be endorsed and delivered to Seller at Closing. Pending
special assessments which have not yet been assessed against a Project
as of the date of closing shall be assumed by Buyer, provided,
however, that where the improvement has been substantially completed
or where Seller had knowledge of the proposed improvement on or before
the date of Closing, such pending lien shall be considered as
certified, confirmed or ratified and Seller shall, at Closing, be
charged an amount equal to the last estimate by the appropriate public
body of the assessment for the improvement unless (a) the Leases
provide for the tenants to pay same or (b) the proceeds of the special
assessments are used to pay principal and interest on the Hagerstown
bonds to be endorsed and delivered to Seller at Closing, in which case
such special assessments shall be adjusted between Buyer and Seller as
provided in Section 12.1 and paid thereafter by Buyer.
ARTICLE 13
RISK OF LOSS
13.1 Damage. If the improvements at any Project on which closing has not
occurred are damaged by fire or other casualty prior to closing on
such Project, then the following provisions shall apply. Seller shall
promptly notify Buyer of the occurrence of the fire or other casualty.
If the cost of restoring the damage, as reasonably estimated by the
contractor selected by Seller to perform the restoration, is less than
$15,000,000, then, unless the Lender then holding the Loan on the
Project requires that the insurance proceeds be applied to the Loan
and Seller does not elect to provide its own funds for such purpose
(provided, however, that if the amount of insurance proceeds applied
to the Loan exceeds $500,000, Seller may not make such election
without Buyer's written consent), Seller shall proceed to restore the
Project at Seller's expense and closing on the Project shall occur as
scheduled hereunder. If the Lender holding the Loan applies the
insurance proceeds to the Loan and the Seller does not elect to
provide its own funds for such purpose, or, if the insurance proceeds
so applied exceed $500,000 and Buyer does not approve of Seller
providing its own funds for such purpose within 15 days after a
request therefor from Seller, then Seller shall terminate this
Agreement. If restoration cannot be completed within 120 days after
the closing date set forth herein, as reasonably estimated by the
contractor selected by Seller to perform the restoration, Buyer may
terminate this Agreement by giving written notice to Seller within 30
days after Seller notifies Buyer of such casualty and of the estimated
time and cost of restoration. If the cost of restoring the damage is
$15,000,000.00 or more, as reasonably estimated by the contractor
selected by Seller to perform the restoration, either Seller or Buyer
may terminate this Agreement.
13.2 Taking. In the event there shall be a threatened, pending or completed
exercise of the power of eminent domain or deed in lieu thereof of any
material or substantial portion of the Projects, Buyer shall have the
option, to be exercised within 30 days after Buyer is given written
notice thereof, (a) if the amount of proceeds from the condemnation
has not yet been determined, to postpone the date of closing for a
period of up to 30 days, or (b) to complete closing hereunder and take
an assignment of the proceeds paid or to be paid therefor, or (c)
either at such time or prior to the expiration of the extension period
as provided in (a) above, to terminate this Agreement as to all
Projects on which closing has not occurred.
13.3 Termination. Upon any termination under this Article 13, Buyer shall
be refunded its entire xxxxxxx money deposit(s) not previously applied
to the purchase price for a Project and neither party shall have any
further liability to the other hereunder as to all Projects as to
which the termination is effective, except that the indemnification
and repair obligations of Buyer under Section 4.4 shall survive.
ARTICLE 14
EXPENSES
14.1 Seller's Expenses. Seller shall pay all documentary stamps required to
be affixed to the deeds and/or transfer taxes thereon, the cost of the
title insurance commitment and the owner's title insurance policy
premiums; all costs of recording documents which may be necessary to
convey good and marketable title to the Property and of clearing title
to the Property; any escrow fee charged by the Title Insurance
Company; Seller's attorney's fees; all other costs and expenses
necessary to deliver the Property Materials and title to the Property
to Buyer as required by the terms of this Agreement; the cost of any
title premiums for updating or endorsing the mortgagee title policies
held by Lender; and all other costs and expenses associated with
assumption of the Loans by Buyer (excluding Buyer's attorneys' fees).
14.2 Buyer's Expenses. Buyer shall pay the cost of recording the deeds and
Buyer's attorney's fees and any of Buyer's Inspection Period studies
and tests, as well as updates of existing surveys (unless the update
is required by the Lender in order to close the Loan, in which case
Seller shall pay for the update).
ARTICLE 15
MANAGEMENT AGREEMENT; COVENANT NOT TO
COMPETE AND JOINT VENTURE AGREEMENT
15.1 Management Agreement. As an inducement to Buyer and to Seller to enter
into this Agreement, Buyer and Seller have agreed that Seller will
manage the Projects on behalf of Buyer in accordance with the terms of
the Management Agreement.
15.2 Use of Names. Buyer and any successor to Buyer shall have a license to
use the names "Prime Outlets at Birch Run", "Prime Outlets at
Williamsburg" and "Prime Outlets at Hagerstown" until the final
expiration or termination, as provided for therein, of the Management
Agreement. If the Management Agreement is terminated in accordance
with its terms for "good cause", such license shall simultaneously
terminate, which termination shall require the immediate and permanent
cessation of usage of such names. The form of the licensing agreement
will be agreed upon during the Inspection Period. "Good cause" for
termination of the Management Agreement is defined in Exhibit II.
15.3 Covenant Not to Compete. As a further inducement to Buyer to enter
into this Agreement, Seller has agreed that upon the closing of the
sale of the first Project pursuant to this Agreement, Seller will
enter into, and will cause the Principals specified therein to enter
into, the Covenant Not To Compete that is attached hereto as Exhibit
XI.
15.4 Joint Venture Agreement. Title to all of the Property being sold
hereunder (together with all rights and obligations of Buyer hereunder
as to the Property on which closing is occurring) shall be assigned,
conveyed and transferred at closing to separate special purpose
entities (the "Ownership Entity") (the name of which shall be subject
to the approval of both Buyer and Seller, such approval not to be
unreasonably withheld) wholly owned by Triple Outlet World Joint
Venture, a Florida joint venture to be formed at or prior to the first
closing (except that, to the extent required by a lender under a Loan,
a 1% non-managing interest in the special purpose entity shall be
assigned for each Project to a separate, bankruptcy remote limited
liability company or other limited liability entity, wholly owned and
controlled (except as required to satisfy any bankruptcy remote
requirements) by the joint venture). The form of the Joint Venture
Agreement to be executed by TOWL and Prime Retail, L.P. or an
affiliate thereof at or prior to the first closing hereunder, is
attached hereto as Exhibit XII. Buyer and TOWL acknowledge and agree
that Seller and its affiliates shall not be responsible for any of the
materials provided to the investors in connection with Buyer's and
TOWL's contemplated syndication of TOWL's interest in the joint
venture. Buyer and TOWL (by execution hereof) agree to jointly and
severally, defend, indemnify and hold harmless the Joint Venture,
Prime Retail, L.P., Prime Retail, Inc. and their affiliates, from and
against any liability or obligation (including attorneys' fees and
expenses) asserted by investors or potential investors in Buyer or
TOWL arising in connection with Buyer's activities or omissions
relating to the raising of its required capital contribution to the
Joint Venture (the "Syndication"). Buyer also agrees that each
definitive agreement, offering circular or memorandum, prospectus or
similar agreement or document relating to the Syndication (each, a
"Syndication Document") shall include, where appropriate, a disclaimer
in form and substance reasonably satisfactory to Prime Retail L.P.,
disclaiming any liability or responsibility of the Joint Venture,
Prime Retail, L.P., Prime Retail, Inc. or their affiliates, in respect
of the Syndication.
ARTICLE 16
DEFAULT
16.1 If Buyer shall default in Buyer's obligations under this Agreement in
any material manner, the xxxxxxx money deposit(s) paid to date by
Buyer and not previously applied to the purchase price of the
Projects, together with any interest that may have been earned
thereon, shall be paid to Seller as full, complete and liquidated
damages in full settlement of any and all claims hereunder, whereupon
all parties shall be released of all obligations under this Agreement,
except for those obligations of Buyer which, pursuant to specific
provisions of this Agreement, survive any termination of this
Agreement. If Seller shall default in Seller's obligations under this
Agreement in any material manner, Buyer may elect as its sole and
exclusive remedies to (i) terminate this Agreement and obtain a refund
of its deposit(s) or (ii) Buyer may avail itself of specific
performance, and, in either case, recover actual damages in a maximum
amount equal to the amount of the xxxxxxx money deposits then being
held pursuant to this Agreement and not previously applied to the
purchase price of Projects (plus return of such deposits if Buyer has
elected to terminate this Agreement).
ARTICLE 17
BROKERAGE COMMISSION
17.1 No Broker. Seller and Buyer each represent and warrant one to the
other, that they have dealt with no broker, finder or similar
individual or entity in connection with this transaction. Seller
hereby agrees to hold Buyer free and harmless from all brokerage or
similar claims made by any entity claiming through or as a result of
dealings with Seller. Buyer hereby agrees to hold Seller free and
harmless from all brokerage or similar claims made by any entity
claiming through or as a result of dealings with Buyer including Xxxx
Enterprises and its employees. The provisions of this Section shall
survive closing hereunder and shall survive any termination of this
Agreement.
ARTICLE 18
SURVIVAL OF CERTAIN PROVISIONS
18.1 Wherever in this Agreement obligations of Seller or Buyer are stated
to survive closing hereunder, such obligations shall survive closing
and delivery of the deeds, subject to any limitations on the period of
survival set forth in this Agreement.
ARTICLE 19
NOTICES
19.1 How Given. All notices hereunder shall be written and shall be deemed
given upon receipt thereof or, if receipt is refused, upon the date of
refusal. Notices shall be valid if delivered by any of the following
means: certified mail, return receipt requested; telecopier; hand
delivery or delivery by bonded courier, reputable overnight delivery
services, or telegram.
19.2 Notices to Seller shall be sent to Seller at the address set forth at
the beginning of this Agreement with copies to:
C. Xxxx Xxxxxxxxx, Esq.
Prime Retail, L.P.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Telecopier No. 410/234-1761
19.3 To Buyer. Notices to Buyer shall be sent to Buyer at the address set
forth at the beginning of this Agreement with copies to:
Xxxx Xxxxxxx, Esq.
Lewis, Vegosen, Xxxxxxxxx, Xxxxxx & Xxxxxx, P.A.
500 S. Australian Avenue, 00xx Xxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Telecopier No. 561/832-1991
19.4 Change. Any party may change its address or telecopier number for
notices by giving due notice of such change to the other party hereto.
ARTICLE 20
ESCROW AGENT
The following provisions apply to the Escrow Agent, but only in its
capacity as such and not in its capacity as a title insurer or
otherwise:
20.1 Exculpation. Escrow Agent is hereby released and exculpated of all
liability whatsoever arising out of or in connection with its
activities as Escrow Agent hereunder, except to the extent of loss or
damage caused by Escrow Agent's misconduct or negligence.
20.2 Reliance. Escrow Agent may rely and shall be protected in acting upon
any paper or other document which may be submitted to it in connection
with its duties hereunder and which is believed by it to be genuine
and to have been signed or presented by the proper party or parties.
20.3 Standard of Duty. Except to the extent caused by Escrow Agent's
misconduct or negligence, the Buyer and Seller jointly and severally
promise and agree to indemnify and save Escrow Agent harmless from any
claims, liabilities, judgments, reasonable attorneys' fees and other
expenses of every kind and nature which may be incurred by Escrow
Agent by reason of its acceptance of, and performance under, this
instrument.
20.4 Compensation. Escrow Agent shall not be entitled to any fee or other
compensation for acting as Escrow Agent hereunder. If Escrow Agent
shall be required to interplead any escrow funds or shall become
involved in litigation over the xxxxxxx money deposit(s) or any
portion thereof, then Escrow Agent shall be entitled to the costs,
expenses and attorneys' fees incurred in such action.
20.5 Disputes. Escrow Agent assumes no liability hereunder except that of a
stakeholder. If there is any dispute as to whether Escrow Agent is
obligated to deliver any funds or documents, or as to whom the funds
or documents are to be delivered, Escrow Agent will not be obligated
to make any delivery, but in such event may hold the funds or
documents until receipt by Escrow Agent of an authorization in writing
signed by all of the persons having an interest in such dispute,
directing the disposition of any escrow funds or documents held by
Escrow Agent. In the absence of such authorization, Escrow Agent may
hold the deposit or documents until the final determination of the
rights of the parties in an appropriate proceeding. If such written
authorization is not given, or proceedings for such determination are
not begun and diligently continued, Escrow Agent may, but is not
required, to bring an appropriate action or proceeding for leave to
place the deposit or documents with the court, pending such
determination. Once Escrow Agent has tendered into the registry or
custody of any court of competent jurisdiction all money and/or
documents in its possession under this Agreement, or has made delivery
of the deposit in any other manner provided for herein, Escrow Agent
shall be discharged from all duties and shall have no further
liability hereunder as Escrow Agent.
20.6 Investigation Period. Anything to the contrary in this Article 20
notwithstanding, if Buyer delivers notice to the Escrow Agent (and
reflects that a copy thereof has also been provided to Seller) to
terminate this Agreement within the time period and as set forth in
Section 4.3, Escrow Agent will return the xxxxxxx money deposit to
Buyer without requiring any confirmation from Seller and
notwithstanding any contrary request or demand from Seller.
ARTICLE 21
MISCELLANEOUS
21.1 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted
assigns. Except as otherwise provided in Section 15.4 hereof, neither
Buyer nor Seller may assign this Agreement without the prior written
consent of the other, which, except as otherwise expressly provided
herein, may be withheld in the sole discretion of the non-assigning
party. This Agreement may be executed in multiple counterparts and,
when executed by all parties, shall constitute one Agreement effective
and binding on all parties.
21.2 Severability. In the event of the invalidity of any provision hereof,
same shall be deemed stricken from this Agreement, which shall
continue in full force and effect as if the offending provision were
never a part hereof.
21.3 Pronouns. Use of pronouns or nouns in any form where they appear in
this Agreement shall be read as either masculine, feminine or neuter
and either singular or plural wherever the context and facts permit.
21.4 Headings and Exhibits. Article, Section and paragraph headings are
inserted solely for ease of reference and shall not be construed to
enlarge, modify or limit the provisions hereof. References to numbered
or lettered Articles, Sections or paragraphs refer to Articles,
Sections and paragraphs of this Agreement unless specified to the
contrary. References to Exhibits are to the Exhibits attached hereto
which are, by this reference, made a part hereof.
21.5 Time of the Essence. Time is of the essence hereunder. However, if any
due date hereunder falls on a Saturday, Sunday or
nationally-recognized holiday, the due date shall be the first day
thereafter which is not a Saturday, Sunday or holiday.
21.6 Attorneys' Fees. In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to reimbursement of
the costs and expenses thereof from the other party, including
reasonable attorneys' fees and including such costs, expenses and fees
incurred on appeals of such litigation.
21.7 Construction of Agreement. The parties agree that this Agreement was
prepared jointly by each of them and shall be construed on a parity as
between the parties. There shall be no canon of construction for or
against any party by reason of the physical preparation of this
instrument.
21.8 Effect of Words. Wherever the word "including" appears in this
Agreement, it shall be deemed to mean "including, without limitation"
if the context permits.
21.9 No Amendment. No amendment, modification, change or alteration of this
Agreement shall be valid or binding unless in writing and signed by
all the parties.
21.10No Agency. Nothing in this Agreement shall be deemed to create an
agency relationship between Seller and Buyer. The relationship of the
parties is strictly that of a seller and a buyer.
21.11Governing Law. All matters involving this Agreement shall be governed
by and construed in accordance with Maryland law.
21.12Back Up Contracts. Seller shall, if not in default hereunder, have
the right to negotiate and sign back-up contracts while this Agreement
is in effect, provided that Seller discloses to the other party
thereto the existence of this Agreement and provided further that
notice thereof is provided to Buyer.
21.13Entire Agreement. Except for a Confidentiality Agreement among Xxxxxx
Xxxxxx, Estein & Associates USA, Ltd. and Prime Retail, L.P. dated
__________, 1999, which shall survive execution hereof, this is the
only Agreement among the parties and/or their affiliates pertaining to
the subject matter hereof, and all prior negotiations and agreements
are merged herein.
21.14Faxes. Faxed signatures hereon shall be binding as if they were
originals.
In the Presence of: SELLER:
THE PRIME OUTLETS AT BIRCH RUN, L.L.C., a Delaware
limited liability company
By: PRIME RETAIL, L.P., its managing member
BY: PRIME RETAIL, INC., its general partner
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board
---------------------
THE PRIME OUTLETS AT WILLIAMSBURG, L.L.C., a Delaware
limited liability company
By: PRIME RETAIL, L.P., its managing member
BY: PRIME RETAIL, INC., its general partner
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board
---------------------
OUTLET VILLAGE OF HAGERSTOWN LIMITED PARTNERSHIP, a
Delaware limited partnership
By: PRIME RETAIL, L.P., its general partner
BY: PRIME RETAIL, INC., its general partner
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board
---------------------
BUYER:
XXXX TRIPLE OUTLET, L.C., General Partner
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Manager and Chief Executive Officer
-----------------------------------
LIMITED JOINDER
Triple Outlet World, Ltd. joins in this Agreement solely for the
purpose of agreeing to be bound by the provisions of Section 15.4.
TRIPLE OUTLET WORLD, LTD.
By: Xxxx Triple Outlet, L.C., General Partner
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Manager and Chief Executive Officer
-----------------------------------
JOINDER
The Escrow Agent will join in this Agreement in its capacity as Escrow
Agent only to acknowledge its agreement to the provisions of Article 20 and its
agreement to hold the xxxxxxx money deposit(s) pursuant hereto.
CHICAGO TITLE INSURANCE COMPANY, Escrow Agent
By:
SCHEDULE OF
EXHIBITS
I. Rent Rolls
II. Terms of Management Agreement
III. Description of Projects, Including Acreage and Square Feet of Net
Rentable Area
IV. Form of Tenant Estoppel Letter
V. Legal Descriptions
VI. Loan Document Requirements
VII. Surviving Contracts
VIII. Defaults under Tenant Leases
IX. Existing Violation Notices
X. Schedule of Existing Claims
XI. Forms of Covenant Not To Compete
XII. Forms of Joint Venture Agreement
XIII. Site Plan or Aerial View of Williamsburg Section Two
XIV. Site Plan or Aerial View of Hagerstown Section Two
XV. Allocation of Purchase Prices
XVI. Schedule of Principal Balances and Monthly Principal and Interest
Payments on Existing Birch Run Loans
