EXHIBIT 10.3
AGREEMENT OF PURCHASE AND SALE
AGREEMENT OF PURCHASE AND SALE (this "Agreement"), made as of the th
day of February, 1999 by and among each of the entities listed in the column
entitled Sellers of Schedule A attached hereto (each individually, a "Seller"
and collectively, the "Sellers", and PRIME GROUP REALTY, L.P., a Delaware
limited partnership ("Buyer").
Background
A. Each Seller is a member of BRE/City Center L.L.C. ("City Center
LLC"). City Center LLC is the fee owner of the land described on Schedule A-1
attached hereto and the buildings and other improvements located thereon and the
owner of a leasehold interest in and to the parcel of land described on Schedule
A-2 attached hereto, together with the buildings and other improvements located
thereon (collectively, the "Property").
B. The membership, beneficial and other ownership interests in City
Center LLC owned by the Sellers shall be referred to herein as the "Interests",
and the Interests, together with the Asset Related Property, to the extent such
Asset-Related Property is related to the Interests, shall be referred to as the
"Asset".
C. The Sellers desire to sell to the Buyer, and the Buyer desires to
purchase from the Sellers, the Asset on the terms and conditions hereinafter set
forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section I.1 Defined Terms. The capitalized terms used herein will
have the following meanings.
"Agreement" shall mean this Agreement of Purchase and Sale and all
amendments hereto, together with the exhibits and
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schedules attached hereto, as the same may be amended, restated, supplemented or
otherwise modified.
"Asset" shall have the meaning assigned thereto in "Background"
paragraph B.
"Asset File" shall mean the materials with respect to the Asset
previously delivered or made available to the Buyer or its representatives by or
on behalf of the Sellers.
"Asset-Related Property" shall have the meaning assigned thereto in
subsection 2.1(b).
"Basket Limitation" shall mean an amount equal to one percent (1%)
of the Purchase Price.
"BREA" shall mean Blackstone Real Estate Acquisitions L.L.C.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks are authorized or required by law to be closed in
Chicago, Illinois or New York City, New York.
"Buyer" shall have the meaning assigned thereto in the Preamble to
this Agreement.
"Buyer's Leasing Costs" shall have the meaning assigned thereto in
Subsection 11.12(a).
"Buyer-Related Entities" shall have the meaning assigned thereto in
subsection 12.1.
"Cap Limitation" shall mean an amount equal to four percent (4%) of
the Purchase Price. For the avoidance of doubt, the Cap Limitation shall be
reached when the aggregate sum of all monies payable by, collectively, the
Sellers, pursuant to any and all of the indemnities provided for in this
Agreement, equals 4% of the Purchase Price.
"City Center Ground Lessor" shall mean the lessor under the National
City Bank Lease.
"City Center LLC" shall have the meaning assigned thereto in
"Background" paragraph A.
"Closing" shall have the meaning assigned thereto in Section 2.3(a).
"Closing Date" shall have the meaning assigned thereto in Section
2.3(a).
"Complying Title Policy" shall have the meaning set forth in Section
2.2(b)(ii).
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"Condition of the Assets" shall have the meaning assigned thereto in
subsection 4.1(f).
"Contemplated Leases" shall mean those Space Leases identified on
Schedule F-2.
"Contracts" shall have the meaning assigned thereto in Subsection
2.1(b).
"Designated Assignor" shall mean that certain Seller designated by
the remainder of the Sellers (a) to receive and distribute the Purchase Price on
behalf of the remainder of the Sellers and (b) to perform certain other
obligations designated by the remainder of the Sellers or otherwise set forth
herein.
"Xxxxxxx Money" shall have the meaning assigned thereto in
subsection 2.2(b).
"Eastdil" shall mean Eastdil Realty Company, L.L.C.
"Existing Survey" shall mean the survey with respect to the Property
listed on Schedule B attached hereto.
"Existing Title Commitment" shall mean the title commitment with
respect to the Property listed on Schedule B attached hereto.
"Financial Statements" shall have the meaning assigned thereto in
subsection 3.1(j),
"Fixed Rents" shall have the meaning assigned thereto in subsection
11.1(a).
"Ground Lease" shall mean the National City Bank Lease.
"Hazardous Materials" shall have the meaning assigned thereto in
subsection 4.1(f).
"Intangible Personal Property" shall have the meaning assigned
thereto in subsection 2.1(b).
"Interests" shall have the meaning assigned thereto in background
paragraph "B".
"IRS" shall mean the Internal Revenue Service.
"IRS Reporting Requirements" shall have the meaning assigned thereto
in subsection 15.4(c).
"LC Agreement" shall have the meaning ascribed thereto in Subsection
11.12(a).
"LC Amount" shall have the meaning ascribed thereto in Subsection
11.12(a).
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"Leasing Expenses" shall mean all capital costs, tenant improvement
costs, relocation costs, temporary leasing costs, leasing commissions, legal,
design and other professional fees, and other expenses incurred with respect to
the Space Leases and allowances granted to any tenants in lieu of any of the
above.
"Letter of Credit" shall have the meaning ascribed thereto in
Subsection 11.12(a).
"Loan Documents" shall mean all documents evidencing and securing
the NY Life Loan.
"Losses" shall have the meaning assigned thereto in subsection 12.1.
"National City Bank Lease" shall mean the lease entered into between
The Xxxx Realty Company, as lessor, and National City Bank, as lessee, a
memorandum of which was filed for record on October 26, 1976 and recorded in
Volume 515, Page 1 of Cuyahoga County, Ohio Lease Records, the lessee's interest
therein having been assigned to National City Center Joint Venture by Assignment
of Lease filed for record on October 21, 1977 and recorded in Volume 523, Page
47, of Cuyahoga County, Ohio Lease Records, and from National City Center Joint
Venture to Euclid-Ninth Community Urban Redevelopment Corporation by Assignment
of Lease filed for record on December 12, 1977 and recorded in Volume 524, Page
469, of Cuyahoga County, Ohio Lease Records and from Euclid-Ninth Community
Urban Redevelopment Corporation to City Center LLC by Assignment and Assumption
of the Xxxx Lease dated as of February 10, 1998 and recorded in Volume 98-1563,
Page 20 of Cuyahoga County records.
"NCB Space Lease" shall mean that certain Agreement of Lease between
City Center LLC, as successor in interest to National City Center Joint Venture,
as landlord, and National City Bank, as tenant.
"NY Life Loan" shall mean the loan from New York Life Insurance
Company to City Center LLC secured by the Property.
"NY Life Loan Closing Balance" shall have the meaning assigned
thereto in subsection 2.2(d).
"Option Agreement" shall have the meaning assigned thereto in
Article XIV.
"Overage Rent" shall have the meaning assigned thereto in subsection
11.2(a).
"Permitted Exceptions" shall mean with respect to the Property, (i)
excluding any affirmative coverage and affirmative insurance with respect
thereto, the matters set forth in the Existing Title Commitment or the Existing
Survey, (ii) the Ground Lease, Space Leases, and Contracts affecting the
Property and any
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Space Leases, or Contracts entered into after the date hereof, in accordance
with the terms of this Agreement, (iii) liens for current real estate taxes
which are not yet due and payable, (iv) standard exclusions and the terms and
provisions contained in forms of title insurance policies, subject to Seller
causing the Title Company to provide extended coverage over the general title
exceptions, except those exclusions and conditions and stipulations which
customarily remain in fee and leasehold title insurance policies in the
jurisdiction in which the Property is located and the rights of tenants under
leases (v) subject to the adjustments provided for herein and if a lien, any
service, installation, connection or maintenance charge due after Closing and
charges for sewer, water, electricity, telephone, cable television or gas,
excluding mechanic's liens, (vi) as to assets which are not real property,
rights of vendors and holders of security interests on personal property
installed on the Property and owned by tenants and rights of tenants to remove
trade fixtures at the expiration of the term of the Space Leases of such
tenants, (vii) matters contained in the updated title commitment or survey with
respect to each Property obtained by the Buyer as permitted under Section 9.2
which matters do not qualify as Permitted Exceptions under one of the other
clauses of this definition and with respect to which either (A) the Buyer has
not raised an objection within the time period required in Section 9.2 or (B)
the Buyer has raised an objection within the time period required in Section 9.2
and the Seller has not agreed to cause such title exception to be removed prior
to Closing, provided Buyer either waives such objection at or prior to the
Closing or Buyer closes the transaction despite such objection (viii) liens
securing the NY Life Loan affecting the Property (the matters described in
clauses (i) through (viii) above, collectively, the "Permitted Exceptions").
"Person shall mean a natural person, partnership, limited
partnership, limited liability company, corporation, trust, estate, association,
unincorporated association or other entity.
"Property" shall have the meaning assigned thereto in "Background"
paragraph A.
"Purchase Price" shall have the meaning assigned thereto in
subsection 2.2(a).
"Repayment Costs" shall have the meaning assigned thereto in
subsection 2.2(d).
"Reporting Person" shall have the meaning assigned thereto in
subsection 15.4(c).
"Seller" shall have the meaning assigned thereto in the Preamble to
this Agreement.
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"Seller-Related Entities" shall have the meaning assigned thereto in
subsection 12.2.
"Seller's knowledge" shall mean the actual knowledge of the Seller
based upon the actual knowledge of Xxxx X. Xxxxxx and Xxxxxxxx Xxxxxxx without
any duty on the part of any such executive officer or other Person to conduct
any independent investigation or make any inquiry of any Person.
"Seller's Leasing Costs" shall have the meaning assigned thereto in
subsection 11.12(b).
"Space Leases" shall have the meaning assigned thereto in subsection
2.1(b).
"Survival Period" shall have the meaning assigned thereto in
subsection 12.4.
"Tangible Personal Property" shall have the meaning assigned thereto
in Section 2.1(b).
"Tenant Notices" shall have the meaning assigned thereto in Article
VI.
"UCC" shall mean the Uniform Commercial Code adopted by the state in
question.
"Union Contracts" shall mean any and all contracts with the
International Union of Operating Engineers local 186 and its branches.
"Updated Estoppel Certificates" shall have the meaning assigned
thereto in Section 3.3(h).
"Voluntary/De Minimis Title Exceptions" shall mean title exceptions
affecting the Property that are (i) knowingly and intentionally created by the
Sellers or City Center LLC, as applicable, after the date of this Agreement
through the execution by the Sellers or City Center LLC of one or more
instruments creating or granting such title exceptions, or (ii) dischargeable by
the payment of not more than $200,000 (which $200,000 shall be the maximum
aggregate amount required to be spent by the Sellers, collectively, in
connection with all title exceptions, other than those referenced in (i) above,
that arise with respect to the Property), or (iii) without regard to the cap in
clause (ii) above, mechanic's or materialman's liens arising from nonpayment for
any work performed or to be performed by City Center LLC in connection with City
Center LLC's existing lease obligations which are more particularly set forth in
Section 11.12 hereof and on Schedule F-1 and F-4 attached hereto; provided,
however, that the term "Voluntary/De Minimis Title Exceptions" as used in this
Agreement shall not include the following: (a) any Permitted Exceptions; (b)(1)
Space Leases for the Property and ; (b)(2) any title exception created pursuant
to
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a Space Lease for the Property by the tenant thereunder, provided such tenant
has the express right under such Space Lease to create such title exception; (c)
any title exceptions that are approved, waived or deemed to have been approved
or waived by the Buyer pursuant to the terms of this Agreement or that are
created in accordance with the provisions of this Agreement; (d) any title
exceptions which, pursuant to a Space Lease for the Property or otherwise, are
to be discharged by a tenant or occupant of such Property; (e) except as set
forth in (iii) of the definition of Voluntary/De Minimis Title Exceptions,
mechanic's or materialman's liens which, when aggregated with any sums required
to discharge title exceptions pursuant to the provisions of (ii) and sums
required to pay any federal tax liens, exceed $200,000 or (f) any federal tax
liens, which when aggregated with any sums required to discharge title
exceptions pursuant to the provisions of (ii) and sums required to discharge any
mechanic's liens, exceed $200,000.
ARTICLE II
SALE, PURCHASE PRICE AND CLOSING
Section II.1 Sale of Asset. (a) On the Closing Date (as hereinafter
defined) and pursuant to the terms and subject to the conditions set forth in
this Agreement, Sellers shall sell to the Buyer, and the Buyer shall purchase
from Sellers, the Asset.
(b) The transfer of the Asset to the Buyer shall include the
transfer, directly or indirectly, of all Asset-Related Property with respect to
such Asset. For purposes of this Agreement, "Asset-Related Property" shall mean
all of the Seller's right, title and interest (to the extent, by operation of
law, the Sellers own such right title and interest), in and to (A) all
easements, covenants and other rights appurtenant to said Property and all
right, title and interest of the Seller, if any, in and to any land lying in the
bed of any street, road, avenue or alley or any other right of way, open or
closed, in front of or adjoining said Property, (B) all furniture, fixtures,
equipment and other tangible personal property (except items owned or leased by
tenants from third parties or which are leased by the Seller which are now, or
may hereafter prior to the Closing Date be, placed in, attached to, situated in
or upon such Property (collectively, with all additions and replacements
thereof, the "Tangible Personal Property"), (C) to the extent they may be
transferred under applicable law, all licenses, franchises, certifications,
approvals, permits and authorizations presently issued in connection with the
operation, ownership and maintenance of all or any part of the Property as it is
presently being operated, (D) to the extent assignable, all warranties, if any,
issued or assigned to the Seller by any manufacturer or contractor in connection
with construction or installation of equipment or any component of the
improvements included as part of the Property, (E) to the extent assignable, all
service,
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supply and maintenance contracts including commitments therefor (if any) held by
the Seller with respect to its Property, including, without limitation, those
contracts listed on Schedule E attached hereto (collectively, the "Contracts"),
(F) to the extent assignable by the Seller, all trade names, logos, designs,
trademarks, service marks, copyrights and other general intangibles and
intellectual property (including any computer software programs used in
connection with tenant escalation xxxxxxxx and maintained at the Property)
relating to the Property, including, without limitation, but limited,
nonetheless, to the extent assignable and subject to the provisions of Paragraph
36 of the NCB Space Lease, the name "National City Center" (collectively, the
"Intangible Personal Property") and (G) all leases, licenses, contracts and
other agreements, to the extent transferable, for the use and occupancy of all
or any part of the Property, including, without limitation, all of Sellers' and
City Center LLC's interests, as lessor, in and to the NCB Space Lease (the
"Space Leases") and all security and escrow deposits (including any interest or
other amounts accrued or earned thereon) that are required to be returned to
tenants pursuant to Space Leases held by City Center LLC in connection with any
such leases, licenses, contracts and other agreements. For avoidance of doubt,
it is understood and agreed that the interests of the Sellers in and to the
Property and the Asset-Related Property with respect thereto are indirect and
derivative by virtue of their membership Interests in City Center LLC and no
direct assignment of property rights is intended to occur by the Sellers with
respect to the Asset-Related Property except to the extent that the Sellers are
direct holders of such rights.
Section II.2 Purchase Price; Xxxxxxx Money. (a) The consideration
for the Asset shall be equal to One Hundred Million Dollars ($100,000,000) (the
"Purchase Price"), subject to the prorations and credits as hereinafter provided
in this Agreement.
(b) The Purchase Price shall be paid to the Sellers as follows:
(i) simultaneously with the execution of this Agreement, the Buyer
is delivering to Sellers, to be held by Sellers in accordance with the
terms of this Agreement, cash in an amount equal to Fifteen Million
Dollars ($15,000,000.00) in immediately available funds (the cash,
together with any interest earned thereon, shall be referred to as the
"Xxxxxxx Money"); the Xxxxxxx Money shall be held by Sellers and shall be
nonrefundable to the Buyer except as otherwise set forth in this
Agreement. If for any reason Sellers do not receive, on the date hereof,
the Xxxxxxx Money or if Buyer restrains Sellers' receipt or use of the
Xxxxxxx Money, Buyer shall continue to be liable (A) to deliver to Sellers
the Xxxxxxx Money and (B) in connection with its failure to deliver the
Xxxxxxx Money in accordance with this Agreement. In the event the Closing
occurs on the
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same day as the date of this Agreement, Buyer shall be obligated to
deliver, or cause the delivery of, the Xxxxxxx Money to Sellers and such
monies shall not be treated as Xxxxxxx Money, but as a portion of the
Purchase Price payable to the Sellers; and
(ii) on the Closing Date, simultaneously with the delivery of (A) a
marked commitment for an ALTA form 1992 Owner's and Leasehold Owner's
Title Insurance Policy in the amount of the Purchase Price, subject only
to the Permitted Exceptions with extended coverage endorsements (a
"Complying Title Policy") (provided that the sole conditions to the
effectiveness thereof are that Buyer shall have completed, or is
simultaneously completing, all of its Closing obligations and deliveries
in accordance with this Agreement, including payment of the Purchase
Price) and (B) the Sellers' Interests, in accordance with the terms of
this Agreement, the Buyer shall deliver to the Sellers or the Designated
Assignor in immediately available funds by wire transfer to such account
or accounts that the Designated Assignor shall designate to the Buyer, and
subject only to the closing adjustments as provided for in Article XI of
this Agreement, an amount equal to the difference between (x) the Purchase
Price and (y) the sum of (1) the Xxxxxxx Money, and (2) the NY Life Loan
Closing Balance, whether assumed or paid provided, however, in the event
that the Closing occurs on the same day as the date of this Agreement, the
Xxxxxxx Money shall be deemed to be a portion of the Purchase Price and
Buyer shall be obligated to deliver, or cause the delivery of, the Xxxxxxx
Money to Seller as a portion of the Purchase Price; and
(c) No adjustment shall be made to the Purchase Price except as
explicitly set forth in this Agreement.
(d) Upon the Closing, the Buyer shall, at its option, either repay
the outstanding balance of principal and interest on the NY Life Loan
(collectively, the "NY Life Loan Closing Balance") or acquire the Interests,
subject to the outstanding balance of principal and interest on the NY Life
Loan, it being understood that City Center LLC is the borrower under the terms
of the NY Life Loan and the NY Life Loan encumbers the Property. In addition to
the Purchase Price, the Buyer agrees to pay (i) all prepayment, due on sale and
similar amounts, if any, payable to holders of the NY Life Loan in connection
with the transfer of the Asset and the repayment of such NY Life Loan in
connection therewith, and all breakage costs under any interest rate swap, cap
or similar agreement relating to the NY Life Loan (other than any such costs not
set forth in the Loan Documents or written requests previously received by
Buyer), (ii) all assumption fees and similar amounts in connection with the
assumption and retention of such NY Life Loan, including without limitation that
certain 1% assumption fee, and (iii) all legal fees, title fees, other fees and
closing costs required by the holders of the NY
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Life Loan in connection with the assumption, retention or repayment thereof
(collectively, the "Repayment Costs"). Notwithstanding anything to the contrary
contained herein, the repayment, retention or assumption of the NY Life Loan
including, without limitation, all Repayment Costs in connection therewith,
shall be the sole responsibility of Buyer hereunder. Sellers hereby agree to
reasonably cooperate in connection with Buyer's assumption or repayment of the
NY Life Loan, including, without limitation, executing any and all instruments
reasonably necessary and specifically required by the NY Life Loan lender to
effectuate same. For the avoidance of doubt, it is hereby understood and agreed
that it shall be the sole responsibility of Buyer to obtain from NY Life any and
all consents necessary in connection with the assumption or repayment of, or the
transferring of the Interests subject to, the NY Life Loan and any failure to
obtain the consent from NY Life shall not be a failure to meet a condition of
Closing and shall not give Buyer a reason to delay the Closing. Buyer hereby
indemnifies and holds Sellers (and all of their affiliates) harmless from and
against all Losses (as hereinafter defined) that Sellers (and/or any of their
affiliates) incur in connection with the assumption or repayment of, or the
transfer of Interests subject to, the NY Life Loan and from and after the
Closing Date (and not subject to the limitations contained in Article XII
hereof), the NY Life Loan.
Section II.3 The Closing. The closing of the purchase and sale of
the Asset (the "Closing") shall take place on February , 1999, TIME BEING OF THE
ESSENCE WITH RESPECT TO BUYER'S OBLIGATIONS HEREUNDER (the "Closing Date"); at
which Closing, subject to the terms and in accordance with the provisions of
this Agreement, including the condition that Buyer deliver to Sellers the
Purchase Price, Sellers shall convey to the Buyer all of their right, title and
interest in and to the Interests. Notwithstanding anything to the contrary
contained herein, TIME SHALL BE OF THE ESSENCE WITH RESPECT TO SELLER'S
OBLIGATIONS HEREUNDER on the day that is fourteen days after the Closing Date.
(a) The Closing shall be held on the Closing Date at 10:00 A.M. at
the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 425 Lexington Avenue, New York, New
York, or at such other location agreed upon by the parties hereto.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
Section III.1 General Seller Representations and Warranties. City
Center LLC and each Seller hereby represents, warrants and covenants to the
Buyer as of the date hereof and as of the Closing Date, with respect to itself
and, to the extent applicable, the Property owned and/or the Asset being sold or
assigned by such party, as follows:
(a) Formation; Existence. It is a limited partnership or limited
liability company or corporation, as applicable, duly formed, validly
existing, in good standing under the laws of the state of Delaware and
City Center LLC, is, or will at Closing be, qualified to do business in
the State of Ohio unless the absence of such qualification does not
materially adversely affect the City Center LLC's ownership or ability to
convey the Property or the Asset or performance of its other obligations
under this Agreement.
(b) Power and Authority. It has all requisite power and authority to
enter into and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation
of the transactions provided for in this Agreement have been duly
authorized by all necessary action on its part. This Agreement has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights and
by general principles of equity (whether applied in a proceeding at law or
in equity).
(c) No Consents. Except (i) as set forth in Schedule D and (ii) for
any consent, license, approval, order, permit, authorization,
registration, filing or declaration, the failure of which to obtain will
not adversely affect (A) the individual Seller's ability to consummate the
transactions contemplated by this Agreement, (B) the applicable Seller's
or City Center LLC's ownership of its Asset or Property or (C) in a
material adverse manner, the operation or value of the Property to Buyer,
no consent, license, approval, order, permit or authorization of, or
registration, filing or declaration with, any court, administrative agency
or commission or other governmental authority or instrumentality, domestic
or foreign, is required to be obtained or made in connection with the
execution, delivery and performance of this Agreement or any of the
transactions required or contemplated hereby.
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(d) No Conflicts. The execution, delivery and compliance with, and
performance of the terms and provisions of, this Agreement, and the sale
of the Asset will not (i) conflict with or result in any violation of the
relevant Seller's organizational documents, (ii) except as set forth on
Schedule D, to each Seller's knowledge, conflict with or result in any
violation of any provision of any bond, note or other instrument of
indebtedness, contract, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which such Seller or
City Center LLC is a party in its individual capacity, or (iii) violate
any existing term or provision of any order, writ, judgment, injunction,
decree, statute, law, rule or regulation applicable to that Seller or its
assets or properties except, in each case, for any conflict or violation
which (A) will not adversely affect (1) the Seller's ability to consummate
the transactions contemplated by this Agreement, (2) the ownership of the
Asset or Property (3) in a material adverse manner, the operation by City
Center LLC of the Property or value thereof or (B) arises under the
documents evidencing or securing the NY Life Loan.
(e) Subsidiaries/ Authority to Conduct Business. City Center LLC has
no subsidiaries. Except to the extent that the absence of such power does
not materially adversely affect the City Center LLC's ownership or ability
to convey the Property and the Asset or performance of its other
obligations under this Agreement, City Center LLC has full power and
authority to carry on the lines of business it currently conducts and to
own, lease and use the properties owned, leased and used by it.
(f) Limited Liability Company Agreement. That certain BRE/City
Center L.L.C. Limited Liability Company Agreement dated as of December 2,
1997, a copy of which was previously delivered to Buyer, (i) constitutes
the entire agreement between the Sellers with respect to City Center LLC
and (ii) has not been amended or modified.
(g) Sellers. As of the date of this Agreement and as of the Closing
Date, the identity of each Seller, and the respective percentage ownership
interest of each Seller, is set forth on Schedule A. The Sellers are the
owners of all of the issued and outstanding interests in City Center LLC
free and clear of any and all liens, claims, encumbrances and security
interests. None of the Interests in City Center LLC listed here on
Schedule A have been transferred, assigned, sold, hypothecated, pledged or
encumbered.
(h) Restrictions upon Acquisition of Interests. Except as set forth
in this Agreement and except with respect to any right of first refusal or
purchase option affecting the Property and in connection with the NY Life
Loan, there are no subscriptions, warrants, options,
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conversion rights or other agreements of any kind to purchase or otherwise
acquire or sell any Seller's Interest in City Center LLC.
(i) Transferability of Interests. Except with respect to the NY Life
Loan and any right of first refusal or purchase option affecting the
Property, to the extent applicable, City Center LLC is not a party to, and
to its knowledge, no Seller is a party to, any voting agreement, voting
trusts, proxies or any other agreements, instruments or understandings
with respect to the voting of any Interests of City Center LLC, or any
agreements with respect to the transferability of any Interest in City
Center LLC.
(j) Liabilities. As of the date reflected on the Financial
Statements (as defined below), City Center LLC does not have any
obligations or liabilities required to be reflected on a balance sheet in
accordance with preparation of a balance sheet on an accrual basis of
accounting used for income tax purposes ("Tax Basis") other than (a)
liabilities reflected on the unaudited financial statements of City Center
LLC internally prepared on a Tax Basis for the period from December 17,
1997 (inception) to December 31, 1997 and for the eleven months ending
November 30, 1998, and on the unaudited monthly operating statements of
City Center LLC for the eleven months ending November 30, 1998, internally
prepared on a Tax Basis for their respective periods (such financial and
operating statements collectively, the "Financial Statements"), (b)
liabilities arising out of the NY Life Loan and (c) leases, contracts or
other matters disclosed in this Agreement. The foregoing representation
shall not imply that Buyer is assuming the liabilities set forth on the
Financial Statements other than the NY Life Loan, which NY Life Loan has
an outstanding principal balance of $61,820,136 as of November 30, 1998.
Accounts payable and real estate taxes which are shown on the Financial
Statements will be handled in the manner described in Article XI of this
Agreement.
(k) Financial Statements. City Center LLC has delivered to the Buyer
prior to the date hereof the Financial Statements, prepared on a Tax
Basis, as the case may be, which Financial Statements are true, correct
and complete and, in accordance with the basis used for their preparation,
fairly present the assets, liabilities and financial condition of City
Center LLC as of the date of such Financial Statement and the results of
operations for the periods then ended, as applicable.
(l) Obligations. Between the date that City Center LLC's Financial
Statements are delivered to Buyer and the Closing Date, and other than in
connection with (i) the NY Life Loan as requested by Buyer or (ii) as
permitted under the provisions of this Agreement: City Center LLC will not
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incur any obligations, contingent or non-contingent liabilities or
liabilities for any charges, long-term leases or unusual forward or
long-term commitments which are not reflected on the balance sheet of City
Center LLC or disclosed hereunder and which could, alone or in the
aggregate, reasonably be expected to have a material adverse effect on the
ownership, operation or value of the Property or the Interests, unless
approved by Buyer, which approval shall not be unreasonably withheld.
(m) Income Taxes. All federal, state, municipal and other income tax
returns and reports required by law to be filed by City Center LLC before
the date hereof have been duly executed and filed and with respect to such
income taxes, all taxes, levies, imposts, deductions, or withholdings, and
all liabilities with respect thereto, interest and penalties due have been
paid in full. No such returns have been subject to written requests for
data by, notice for audit by, or under audit by, any taxing authority.
(n) Foreign Person. The Seller is not a "foreign person" as defined
in Internal Revenue Code Section 1445 and the regulations issued
thereunder.
Section III.2 Representations and Warranties of the Sellers as to
the Assets. Each Seller and City Center LLC hereby represents, warrants and
covenants to the Buyer as of the date hereof and as of the Closing Date, with
respect to the Asset and Property owned by such Seller or City Center LLC, as
follows:
(a) Ownership of the Asset. (i) Such Seller or City Center LLC is
the owner of the Asset or Property free and clear of any lien, pledge,
charge, security interest, encumbrance, title retention agreement, adverse
claim or restriction except for the Permitted Exceptions and (ii) with
respect to the Ground Lease, the Ground Lease is in full force and effect,
neither Seller, nor City Center LLC, has received any notice of default
(which remains uncured) and knows of no event which with the giving of
notice or the passing of time or both will constitute a default under such
Ground Lease, and the Seller and City Center LLC have not terminated or
modified or, as applicable, caused City Center LLC to terminate or modify
the Ground Lease, except as set forth on Schedule A-2. It has the right to
sell the Asset pursuant to the terms of this Agreement. Upon transfer of
the Asset by Seller to the Buyer and upon delivery by the Buyer to the
Sellers of the Purchase Price, the Buyer will receive the Asset free and
clear of any encumbrances other than (i) the Permitted Exceptions and
(ii)any encumbrances arising from acts of the Buyer or its affiliates. It
has not prior to the date hereof sold (or entered into an agreement to
sell) the Asset, and with respect to the Property, the Seller has not
caused City Center LLC to sell
15
(or enter any agreement to sell) said Property (except for the possible
granting of security interests, all of which, except with respect to the
NY Life Loan being assumed or taken subject to by Buyer, will be
terminated prior to the Closing). Other than as set forth on Schedule C-1
hereto and except as contained in the Loan Documents, there are no
options, instruments or agreements to which any Interest is bound or
pursuant to which any such Interest might be restricted or otherwise
encumbered.
(b) Contracts. The Contracts affecting the Property are set forth on
Schedule E attached hereto and to each Seller's knowledge the same have
not been modified or amended, except as shown in such documents. Neither
Seller, nor City Center LLC, has received any written notice of default
under any of the Contracts affecting the Property (which remains uncured).
(c) Space Leases. With respect to the Space Leases listed on
Schedule F and F-2 attached hereto, (A) such Space Leases constitute all
the leases, licenses or other occupancy agreements relating to the
Property, (B) such Space Leases have not been modified or terminated
except as stated in Schedule F, (C) such Space Leases contain the entire
agreement between the relevant landlord and the tenants named therein, (D)
except as set forth in Schedules F and F-2, fixed rent and additional rent
are currently being collected under such Space Leases without offset,
counterclaim or deduction and (E) neither Seller, nor City Center LLC, has
received any written notice of a default (which remains uncured) or has
knowledge of any event which with the giving of notice or the passage of
time or both will constitute a default under any of the Space Leases. True
copies of the Space Leases have been delivered to the Buyer. Except as set
forth on Schedules F-1 and F-2, all tenant improvements or other
construction work which as of the date of this Agreement are required to
be performed by the landlord under the Space Leases have been or will be
prior to the relevant Closing Date fully completed or made and paid for.
Schedule I sets forth a true and complete list of security deposits held
by City Center LLC, respectively, under the Space Leases. Except for the
Space Leases, or as otherwise set forth in this Agreement or in the Asset
Files, to Seller's and City Center LLC's knowledge, no other Persons have
legal agreements to occupy or possess any portion of the relevant
Property, excluding any subtenants, occupants or licensees pursuant to any
of the Space Leases. Notwithstanding anything contained in this subsection
3.2(c), from and after the date of this Agreement until the Closing Date,
Buyer shall notify Seller if Buyer discovers an inconsistency between the
representations and warranties contained in this subsection and any Space
Leases which it deems relevant and Buyer's failure to notify Seller of
such inconsistency prior to the
16
Closing shall constitute a waiver by Buyer of any right or claim Buyer may
have against the Seller and City Center LLC with respect to such
inconsistency, including any claims under Article XII of this Agreement.
(d) Brokerage Commissions. There are no brokerage commissions or
finders' fees payable by the Sellers or City Center LLC with respect to
the current or any renewal term of any of the Space Leases affecting the
Property other than those set forth on Schedule G attached hereto and
neither Sellers nor City Center LLC has any agreement with any broker with
respect to any renewal term of any Space Lease except as set forth in
Schedule G.
(e) Condemnation. There are no pending condemnation, eminent domain
or similar proceedings affecting the Property, and no street widening,
change of grade nor limitations on the use of the street abutting the
Property, nor does such Seller have knowledge that any of the foregoing is
threatened or contemplated.
(f) Litigation. Except as disclosed in Schedule H attached hereto,
there are no actions, suits or proceedings pending against or, to Seller's
or City Center LLC's knowledge, affecting the Asset, the Property, any
Seller or City Center LLC in any court or before or by an arbitration
tribunal or regulatory commission, department or agency which, if
adversely determined, would adversely affect (1) that particular Seller's
ability to consummate the transactions contemplated by this Agreement, (2)
the ownership of the Asset or (3) in a material adverse manner, the
operation or value of the Property. Each Seller represents that except as
disclosed in Schedule H attached hereto, there are no actions, suits or
proceedings pending against or, to its knowledge affecting the Interests
in any court or before or by an arbitration tribunal or regulatory
commission, department or agency.
(g) Environmental Violations. Neither Seller nor City Center LLC has
received written notice of a violation of law with respect to Hazardous
Materials on or about the Property (which has not been cured in accordance
with all applicable federal, state and local laws, statutes, codes,
ordinances, rules, regulation and guidelines).
(h) Loan Documents. The Loan Documents, including all amendments,
modifications and supplements thereto with respect to the NY Life Loan are
set forth on Schedule C attached hereto, and City Center LLC has not
received any notice of default or acceleration under the Loan Documents
17
(which remains uncured) and City Center LLC is current with respect to
payments of principal and interest under the NY Life Loan. The mortgages
and the other Loan Documents which are security documents executed by City
Center LLC, do not secure debt other than the NY Life Loan.
Section III.3 Covenants of the Sellers Prior to Closing. From the
date of this Agreement until the Closing Date, (i) City Center LLC and its
agents shall with respect to the Property, and (ii) the Sellers shall cause the
City Center LLC or its agents, with respect to the Property to:
(a) Insurance. Keep the Property insured against fire and other
hazards covered by the insurance policies maintained by City Center LLC on
the date of this Agreement, and continue to maintain in effect City Center
LLC's comprehensive general liability insurance policy maintained on the
date hereof.
(b) Operation. Operate and maintain the Property in a businesslike
manner and substantially in accordance with the City Center LLC's past and
present practices with respect to the Property.
(c) New Contracts. Not enter into, nor cause City Center LLC to
enter into, third party or other contracts relating to the Property,
without the prior written consent of the Buyer, which consent shall not be
unreasonably withheld, except that no such consent shall be required if
such contract (i) is necessary as a result of an emergency at the Property
(and such contract is not binding post-closing), or (ii) is terminable
without payment of a termination fee upon no more than 30 days prior
written notice and provided that the amount payable under all such
contracts for the 30 day period does not exceed, in the aggregate,
$25,000, unless such contract is terminable at will. If City Center LLC
enters into any third party contracts after the date of this Agreement,
then Sellers shall promptly provide written notice and a copy thereof to
the Buyer and unless such contract required the Buyer's approval pursuant
to this paragraph and such approval was not obtained and subject to
Buyer's right to terminate such contracts in a timely manner as described
above, the Buyer shall assume such contract at Closing, such contract
shall be deemed added to Schedule E attached hereto and Schedule E shall
be deemed amended at the Closing to include such contracts. If a new
contract requires the Buyer's approval and the Buyer does not object
within ten Business Days after receipt of a copy of such contract, then
the Buyer shall be deemed to have approved such contract. Notwithstanding
the foregoing and except in connection with Union Contracts, the Sellers
shall
18
terminate, on or before the Closing Date, any Contracts listed on Schedule
E-1 hereto and the Sellers shall be responsible for any termination fees
and penalties due in connection with such terminations.
(d) New Space Leases. (i) Cause City Center LLC to continue, its
present rental program and efforts at the Property to rent vacant space,
except with respect to Contemplated Leases (which Contemplated Leases are
deemed consented to by the Buyer hereunder) and further provided that
without the prior consent of the Buyer, which consent shall not be
unreasonably withheld, the Seller will not execute, or cause City Center
LLC to execute, any new lease or amend, terminate or accept the surrender
of any existing tenancies or approve any subleases, except that City
Center LLC is authorized to accept the termination of Leases at the end of
their existing terms or the termination of any Space Lease subject to an
existing unilateral termination right exercised by any tenant under any
Space Lease. If a new Space Lease or an amendment, renewal or extension of
an existing Space Lease requires the Buyer's consent and the Buyer does
not object within ten Business Days after receipt of a copy of such lease,
amendment, extension or renewal and financial and credit and other
information relating to the tenant reasonably requested by Buyer, then the
Buyer shall be deemed to have approved such Space Lease.
(ii) If City Center LLC enters into any Space Leases after the date
of this Agreement in accordance with the provisions of clause (i) above,
the Buyer shall assume such Space Lease at Closing, such Space Lease shall
be deemed added to Schedule F attached hereto and Schedule F shall be
deemed amended at the Closing to include such Space Lease.
(e) Litigation. Advise the Buyer promptly of any litigation,
arbitration proceeding or administrative hearing, or upon receipt of any
written notice of an intention to institute same (including condemnation
and eminent domain), before any court or governmental agency which affects
the Asset or the Property in any respect, which is instituted after the
date of this Agreement and which, if adversely determined, would adversely
affect (1) the Sellers' ability to consummate the transactions
contemplated by this Agreement, (2) the ownership of the Asset or the
Property, or (3) in a materially adverse manner, the operation or value of
the Property or the Asset.
(f) Sale of Tangible Personal Property. Not transfer or dispose of,
or permit to be sold, transferred or otherwise disposed of, any item or
group of items constituting Tangible Personal Property
19
associated with the Property, except for the use and consumption of
inventory, office and other supplies and spare parts, and the replacement
of worn out, obsolete and defective tools, equipment and appliances, in
the ordinary course of business.
(g) Performance Under Space Leases. Perform, or cause City Center
LLC, or any of its agents, to perform all material obligations of landlord
or lessor under the Space Leases for the Property.
(h) Updated Estoppel Certificates. Sellers shall, or cause City
Center LLC to, request from tenants under Space Leases and from the City
Center Ground Lessor updated, confirmatory estoppel certificates
confirming the information certified to by said tenants and the City
Center Ground Lessor in the estoppel certificates previously delivered to
Buyer (the "Updated Estoppel Certificates"); provided, however, that the
delivery of any one or more of such Updated Estoppel Certificates shall
not be deemed a condition to Buyer's obligation to Close, and further,
provided that neither the failure by Seller to deliver any one or more of
the Updated Estoppel Certificates, nor the contents of any one or more of
such Updated Estoppel Certificates, shall give Buyer a reason to delay the
Closing or terminate this Agreement.
(i) Loan Documents. City Center LLC will not, and the Sellers will
cause City Center LLC not to enter into any amendment or modification of
any Loan Documents without the Buyer's prior written consent, which
consent will not be unreasonably withheld or delayed.
(j) Security Deposits. Except with respect to the ongoing use and
application of Security Deposits as disclosed on Schedule I, the Seller
shall, or cause City Center LLC to, notify Buyer upon the use or
application by City Center LLC of any security deposit being held by such
City Center LLC in connection with a Space Lease.
(k) Due Diligence Requests. Unless such items have been previously
delivered by or on behalf of Sellers to Buyer, within three Business Days
after written request by facsimile or otherwise, Sellers shall deliver, or
cause City Center LLC to deliver, to Buyer, all leases, operating
statements, loan documents, ground leases, title and survey documentation
and such other documentation related to the Property as Buyer may
reasonably request from time to time.
(l) Updating Information. Sellers and City Center LLC shall make a
good faith effort to deliver to Buyer any information of which Sellers or
City Center LLC become aware concerning material events subsequent to the
date of this Agreement which is necessary to supplement the information
20
contained in or made a part of the representations and warranties
contained herein.
(m) Review of Books and Records. Sellers and City Center LLC shall
cooperate in good faith with Buyer and Buyer's accountants in connection
with Buyer's accountants review of Sellers' and City Center LLC's books,
records and financial statements and information. To enable accountants to
better meet reporting obligations required by Rule 3-14 of the federal
securities laws and in such connection Sellers shall cause City Center LLC
to provide to Buyer's auditors a certification in the form of Exhibit D
attached hereto stating that the statement of revenues and certain
expenses which City Center LLC furnishes to such auditors, with respect to
City Center LLC's property, fairly represents such information as was
contained on the statements, except as noted, and further, City Center LLC
shall provide access to City Center LLC's books and records as is
necessary for Buyer's auditors to do a Rule 3-14 review. Notwithstanding
anything to the contrary contained herein, except for the above-referenced
certification, neither Sellers, nor City Center LLC, shall be obligated to
make any other statement or certification to Buyer's auditors or otherwise
in connection with this Section 3.3(m).
(n) Entity Status. City Center LLC shall preserve, renew and keep in
full force and effect its existence and qualification in the State of
Delaware and, if the absence of such qualification would materially
adversely affect City Center LLC's ownership or ability to convey the
Property or the performance by City Center LLC or the Sellers of their
respective obligations under this Agreement, in the State of Ohio.
(o) Property Management Employees. Seller or City Center LLC shall
permit Buyer, upon notice to Seller to interview employees that Buyer
intends to retain after the Closing.
(p) Tax Returns, Taxes. All federal, state, municipal and other tax
returns and reports required by law to be filed by City Center LLC before
the date hereof have been duly executed and filed and, except with respect
to any real estate taxes, all taxes, levies, imposts, deductions, or
withholdings, and all liabilities with respect thereto, interest and
penalties due thereon have been paid in full. No such returns have been
subject to written requests for material data by, notice for audit by, or
are under audit by any taxing authority.
ARTICLE IV
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER
Section IV.1 Representations, Warranties and Covenants of the Buyer.
The Buyer hereby represents, warrants and covenants to the Sellers as of the
date hereof and as of the Closing Date as follows:
(a) Formation; Existence. Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
(b) Power; Authority. The Buyer has all requisite power and
authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement, the purchase of the
relevant Asset and the consummation of the transactions provided for
herein have been duly authorized by all necessary action on the part of
the Buyer. This Agreement has been duly executed and delivered by the
Buyer and constitutes the legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights and by general
principles of equity (whether applied in a proceeding at law or in
equity).
(c) No Consents. Other than the filing of this Agreement with the
Securities and Exchange Commission, no consent, license, approval, order,
permit or authorization of, or registration, filing or declaration with,
any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, is required to be
obtained or made in connection with the execution, delivery and
performance of this Agreement or any of the transactions required or
contemplated hereby.
(d) No Conflicts. The execution, delivery and compliance with, and
performance of the terms and provisions of, this Agreement, and the
purchase of the Assets, will not (a) conflict with or result in any
violation of its organizational documents, (b) conflict with or result in
any violation of any provision of any bond, note or other instrument of
indebtedness, contract, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party
in its individual capacity, or (c) violate any existing term or provision
of any order, writ, judgment, injunction, decree, statute, law, rule or
regulation applicable to it or its assets or properties.
22
(e) Examination; No Contingencies. In entering into this Agreement,
the Buyer has not been induced by and has not relied upon any written or
oral representations, warranties or statements, whether express or
implied, made by BREA, the Sellers, City Center LLC, any partner of BREA
or the Sellers, or any agent, employee, or other representative of any of
the foregoing or by any broker or any other person representing or
purporting to represent BREA and/or the Sellers or City Center LLC with
respect to the Assets, the Condition of the Assets or any other matter
affecting or relating to the transactions contemplated hereby, other than
those expressly set forth in this Agreement (for purposes of this Section
(e) only the term "Seller" shall include the "City Center LLC" and "Asset"
and "Condition of the Asset" shall include the Property and all
Asset-Related Property with respect to the Property). The Buyer's
obligations under this Agreement shall not be subject to any
contingencies, diligence or conditions except as expressly set forth in
this Agreement. The Buyer acknowledges and agrees that, except as
expressly set forth herein, the Sellers make no representations or
warranties whatsoever, whether express or implied or arising by operation
of law, with respect to the Assets or the Condition of the Assets. The
Buyer agrees that each Asset will be sold and conveyed to (and accepted
by) the Buyer at Closing in the then existing condition of the Asset, AS
IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT ANY WRITTEN OR VERBAL
REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED OR
ARISING BY OPERATION OF LAW, other than representations and warranties of
the Seller expressly set forth in this Agreement or in any closing
documents delivered at Closing. Without limiting the generality of the
foregoing, except for the representations and warranties of the Seller
contained in this Agreement, the transactions contemplated by this
Agreement are without statutory, express or implied warranty,
representation, agreement, statement or expression of opinion of or with
respect to (A) the Condition of the Assets or any aspect thereof,
including, without limitation, any and all statutory, express or implied
representations or warranties related to the suitability for habitation,
merchantability, or fitness for a particular purpose, (B) the nature or
quality of construction, structural design or engineering of the
improvements included in the Property, (C) the quality of labor or
materials included in the improvements included in the Property, (D) the
soil conditions, drainage, topographical features, flora, fauna, or other
conditions of or which affect the Property, (E) any conditions at or which
affect the Property with respect to a particular use, purpose,
development, potential or otherwise, (F)
23
areas, size, shape, configuration, location, access, capacity, quantity,
quality, cash flow, expenses, value, condition, make, model, composition,
accuracy, completeness, applicability, assignability, enforceability,
exclusivity, usefulness, authenticity or amount, (G) any statutory,
express or implied representations or warranties created by any
affirmation of fact or promise, by any description of the Assets, the
Property or by operation of law, (H) any environmental, botanical,
zoological, hydrological, geological, meteorological, structural, or other
condition or hazard or the absence thereof heretofore, now or hereafter
affecting in any manner the Property and (I) all other statutory, express
or implied representations or warranties by the Seller whatsoever. The
Buyer acknowledges that the Buyer has knowledge and expertise in financial
and business matters that enable the Buyer to evaluate the merits and
risks of the transactions contemplated by this Agreement.
(f) For purposes of this Agreement and with respect to each Asset,
the term "Condition of the Asset" means the following matters:
(A) Physical Condition of the Property. The quality, nature
and adequacy of the physical condition of the Property, including,
without limitation, the quality of the design, labor and materials
used to construct the improvements included in the Property; the
condition of structural elements, foundations, roofs, glass,
mechanical, plumbing, electrical, HVAC, sewage, and utility
components and systems; the capacity or availability of sewer,
water, or other utilities; the geology, flora, fauna, soils,
subsurface conditions, groundwater, landscaping, and irrigation of
or with respect to the Property, the location of the Property in or
near any special taxing district, flood hazard zone, wetlands area,
protected habitat, geological fault or subsidence zone, hazardous
waste disposal or clean-up site, or other special area, the
existence, location, or condition of ingress, egress, access, and
parking; the condition of the personal property and any fixtures;
and the presence of any asbestos or other Hazardous Materials,
dangerous, or toxic substance, material or waste in, on, under or
about the Property and the improvements located thereon. "Hazardous
Materials" means (A) those substances included within the
definitions of any one or more of the terms
24
"hazardous substances," "toxic pollutants", "hazardous materials",
"toxic substances", and "hazardous waste" in the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq. (as amended), the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Sections 1801 et seq., the
Resource Conservation and Recovery Act of 1976 as amended, 42 U.S.C.
Section 6901 et seq., Section 311 of the Clean Water Act and any
similar state laws or any regulations issued under any such laws and
(B) petroleum, radon gas, lead based paint, asbestos or asbestos
containing material and polychlorinated biphenyls.
(B) Adequacy of the Asset. The economic feasibility, cash flow
and expenses of the Asset, and habitability, merchantability,
fitness, suitability and adequacy of the Property for any particular
use or purpose.
(C) Legal Compliance of the Asset. The compliance or
non-compliance of the Seller, City Center LLC or the operation of
the Property or any part thereof in accordance with, and the
contents of, (i) all codes, laws, ordinances, regulations,
agreements, licenses, permits, approvals and applications of or with
any governmental authorities asserting jurisdiction over the
Property, including, without limitation, those relating to zoning,
building, public works, parking, fire and police access, handicap
access, life safety, subdivision and subdivision sales, and
Hazardous Materials, dangerous, and toxic substances, materials,
conditions or waste, including, without limitation, the presence of
Hazardous Materials in, on, under or about the Property that would
cause state or federal agencies to order a clean up of the Property
under any applicable legal requirements and (ii) all agreements,
covenants, conditions, restrictions (public or private), condominium
plans, development agreements, site plans, building permits,
building rules, and other instruments and documents governing or
affecting the use, management, and operation of the Property.
(D) Matters Disclosed in the Scheduled Documents and Asset
File. Those matters referred to in this Agreement and the documents
listed on the Schedules attached hereto and the matters disclosed in
the Asset File.
25
(E) Insurance. The availability, cost, terms and coverage of
liability, hazard, comprehensive and any other insurance of or with
respect to the Property.
(F) Condition of Title. The condition of title to the
Property, including, without limitation, vesting, legal description,
matters affecting title, title defects, liens, encumbrances,
boundaries, encroachments, mineral rights, options, easements, and
access; violations of restrictive covenants, zoning ordinances,
setback lines, or development agreements; the availability, cost,
and coverage of title insurance; leases, rental agreements,
occupancy agreements, rights of parties in possession of, using, or
occupying the Property; and standby fees, taxes, bonds and
assessments.
(g) Buyer's Affiliate/Assignee. In the event that Buyer, in
accordance with the terms of, and as permitted by, Section 15.7 hereof,
shall designate an "Affiliate" or an assignee or designee to which the
Asset will be transferred at Closing, the representations and warranties
and all covenants and obligations set forth in this Agreement, including,
without limitation, the provisions of this Section 4.1, shall apply with
respect to Buyer's Affiliate or assignee or designee as if Buyer's
Affiliate or assignee or designee was named as Buyer hereunder, and all
representations and warranties shall be true, complete and accurate as of
the Closing Date. Notwithstanding the foregoing, nothing contained herein
shall be construed as relieving Buyer of any of its obligations or
liabilities under this Agreement.
(h) Like Kind Exchange. In the event that Sellers elect to utilize a
like-kind exchange (within the meaning of Section 1031 of the Internal
Revenue Code of 1986, as amended), Buyer shall reasonably cooperate with
Sellers in connection with Sellers' election and shall execute any and all
documents reasonably requested by Seller in connection therewith.
Notwithstanding anything to the contrary contained herein, including the
representations and covenants regarding this Agreement or similar
understandings on the part of Buyer, the Sellers may enter into
intermediate contracts or other agreements to sell the Interests to the
third party that enters into such contract or agreement with Sellers and
Buyer shall proceed to purchase the Interests from such third party on the
same terms and conditions as set forth in this Agreement, provided,
however, that Buyer shall not incur any cost or liability if Seller elects
to utilize a like-kind exchange as provided for herein.
26
(i) NY Life Loan. Buyer hereby agrees that it will not enter into
any agreement with the Third Party lender or in connection with the NY
Life Loan pursuant to which Buyer agrees to pay an increased prepayment
fee or charge in connection with the prepayment of the NY Life Loan in
exchange for another benefit to Buyer and Buyer shall disclose to Seller
any agreement with the Third Party lender with respect to such NY Life
Loan.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section V.1 Conditions Precedent To Seller's Obligations. The
obligation of each Seller to consummate the transfer of the Asset to the Buyer
on the applicable Closing Date is subject to the satisfaction (or waiver) by the
Seller as of the Closing of the following conditions:
(a) Each of the representations and warranties made by the Buyer in
this Agreement shall be true and correct in all material respects when
made and on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date.
(b) The Buyer shall have performed or complied in all material
respects with each obligation and covenant required by this Agreement to
be performed or complied with by the Buyer on or before the Closing.
(c) No order or injunction of any court or administrative agency of
competent jurisdiction nor any statute, rule, regulation or executive
order promulgated by any governmental authority of competent jurisdiction
shall be in effect as of the Closing which restrains or prohibits the
transfer of the Asset or the consummation of any other transaction
contemplated hereby.
(d) The Sellers shall have received all of the documents required to
be delivered by the Buyer under Article VI.
(e) The Sellers shall have received the Purchase Price in accordance
with subsection 2.2(b) and all other amounts due to the Sellers hereunder.
Section V.2 Conditions to the Buyer's Obligations. (a) The
obligation of the Buyer to purchase and pay for the Asset is subject to the
satisfaction (or waiver) by the Buyer as of each Closing of the following
conditions:
27
(1) Each of the representations and warranties made by the Sellers
in this Agreement, with respect to the Asset and the Property being
conveyed on the Closing Date, shall be true and correct in all material
respects when made and on and as of such Closing Date as though such
representations and warranties were made on and as of the Closing Date.
(2) The Sellers shall have performed or complied in all material
respects with each obligation and covenant required by this Agreement to
be performed or complied with by Sellers with respect to the Asset and the
Property on or before the Closing.
(3) No order or injunction of any court or administrative agency of
competent jurisdiction nor any statute, rule, regulation or executive
order promulgated by any governmental authority of competent jurisdiction
shall be in effect as of the Closing which restrains or prohibits the
transfer of the Asset at Closing or the consummation of any other
transaction scheduled to occur at Closing.
(4) With respect to the Property title shall be, at the time of
Closing, in the form, required under Section 9.1, as evidenced by a
Complying Title Policy;
(5) The Buyer shall have received all of the documents required to
be delivered by the Sellers under Article VI.
(6) The Property shall be in the same material condition as the day
hereof subject to reasonable wear and tear and the provisions of Section
10.2.
ARTICLE VI
CLOSING DELIVERIES
(a) At the Closing, the Buyer shall deliver, the following
documents:
(i) an Assignment and Assumption of Interests substantially in the
form of Exhibit A hereto; and
(ii) amendments to the limited liability company agreement and
articles of organization for City Center LLC reflecting the assignment of
membership Interests.
(iii) such other assignments, instruments of transfer, and other
documents as the Seller may reasonably require in order to complete the
transactions contemplated hereunder or to evidence compliance by the Buyer
with the covenants, agreements,
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representations and warranties made by it hereunder, in each case, duly
executed by the Buyer;
(iv) a duly executed and sworn Secretary's Certificate from the
Buyer (or the managing general partner or the administrative member of the
Buyer, where appropriate) certifying that the Buyer has taken all
necessary action to authorize the execution of all documents being
delivered hereunder and the consummation of all of the transactions
contemplated hereby and that such authorization has not been revoked,
modified or amended;
(v) an executed and acknowledged Incumbency Certificate from the
Buyer (or the managing general partner or administrative member of the
Buyer, where appropriate) certifying the authority of the officers of the
Buyer (or the general partner of the Buyer, where appropriate) to execute
this Agreement and the other documents delivered by the Buyer to the
Seller at the Closing;
(vi0 such other proof as Seller may reasonably request from time to
time to evidence the authority of the Buyer and its officers and directors
to execute all documents being delivered hereunder and consummate the
transactions contemplated hereby;
(vii0 all consents, approvals or waivers listed on Schedule J on
terms satisfactory to the Sellers;
(viii0 all transfer tax returns which are required by law and the
regulations issued pursuant thereto in connection with the payment of all
state or local real property transfer taxes that are payable or arise as a
result of the consummation of the transactions contemplated by this
Agreement, as prepared, determined and apportioned by Sellers and duly
executed by the Buyer;
(ix0 any forms or affidavits required to be filed with respect to
the transfer of the Interests;
(x0 a closing statement prepared by Seller in accordance with the
terms hereof (such delivery may be waived by Seller as to the condition
precedent benefitting it); and
(xi0 with respect to the NY Life Loan being assumed or taken subject
to by Buyer at Closing:
(A) such documents as the holder of such NY Life Loan shall
require in connection with the assumption or retention of such NY
Life Loan by the Buyer, including,
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without limitation, replacement guaranties, letters of credit or
other credit support to the extent such credit support has been
provided by the Seller or their affiliates;
(B) letters of credit necessary in order to obtain the return
of any letters of credit provided with respect to the NY Life Loan
currently being held by or for the benefit of the Third Party
lender; and
(C) releases in the form of Exhibit D, executed by the holders
of the NY Life Loan being assumed by the Buyer at that Closing,
releasing Seller and its affiliates, officers, directors and agents
from all liability which may accrue or arise from and after the
applicable Closing Date with respect to the NY Life Loan or under
any of the Loan Documents (including all guaranties, indemnities and
letters of credit provided by the Sellers).
(b At the Closing, the Sellers shall deliver the following
documents:
(i0 an Assignment and Assumption of Interests substantially in the
form of Exhibit A attached hereto; and
(ii0 a true and complete copy of the Limited Liability Company
Agreement.
(iii0 all keys and keycards to the Property which are in the
Seller's possession;
(iv0 an affidavit that the Sellers are not a "foreign person" within
the meaning of the Foreign Investment in Real Property Tax Act of 1980, as
amended, in substantially the form of Exhibit C hereto;
(v0 copies, or to the extent available originals, of all Ground
Leases, Space Leases, Contracts, Licenses and Asset Files (at Seller's
option such items will be made available at the Property);
(vi0 evidence that each terminated contract has been terminated or
that all actions necessary to terminate such contract have been taken; and
(vii0 a closing statement prepared by Sellers in accordance with the
terms hereof (such delivery may be waived by Buyer, as to the condition
precedent benefitting it);
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(viii0 evidence of termination of Property Management Agreement
affecting the Property;
(ix0 evidence that all steps have been taken by Sellers with respect
to the termination of the employees of the Property other than(i)
employees pursuant to Union Contracts, whose Contracts shall not be
terminated and (ii) those being assumed by Buyer hereunder;
(x0 a legal opinion from Sellers' counsel opining as to the
partnership or corporate power and authority, as the case may be, of each
of the Sellers;
(xi0 such other assignments, instruments of transfer, and other
documents as the Buyer may reasonably require in order to complete the
transactions contemplated hereunder or to evidence compliance by the
Seller with the covenants, agreements, representations and warranties made
by it hereunder;
(xii0 a duly executed certificate from either an officer or a duly
authorized Person of City Center certifying that City Center has taken all
necessary action to authorize the execution of all documents being
delivered hereunder and the consummation of all of the transactions
contemplated hereby and that such authorization has not been revoked,
modified or amended;
(xiii0 an executed unanimous written consent of the Founding Members
of BREA II L.L.C., as general partner of Blackstone Real Estate Management
Associates II L.P., as general partner of Blackstone Real Estate
Associates II L.P., as general partner of Sellers, except Blackstone Real
Estate Investors (City Center) Inc., authorizing the execution of this
Agreement and the other documents delivered by the Seller to the Buyer at
the Closing;
(xiv0 a duly executed unanimous written consent of the Board of
Directors of Blackstone Real Estate Investors (City Center) Inc.
authorizing the execution of this Agreement and the other documents
delivered by Blackstone Real Estate Investors (City Center) Inc. to Buyer
at the Closing; and
(xv0 all transfer tax returns which are required by law and the
regulations issued pursuant thereto in connection with the payment of all
state or local real property transfer taxes that are payable or arise as a
result of the consummation of the transactions contemplated by this
Agreement, in each case, as prepared, and duly executed by the Sellers.
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In the event any Asset-Related Property is not assignable (such as a
letter of credit that is not transferable), the Sellers shall use
commercially reasonable efforts to provide the Buyer, at no cost to the
Sellers, with the economic benefits of such property by enforcing their
rights with respect to such property (solely at the Buyer's direction) for
the benefit and at the expense of the Buyer. Sellers' obligations under
this paragraph only shall survive after Closing and shall be subject to
the provisions of section 12.3 hereof, but not section 12.4.
ARTICLE VII
PURCHASE OPTION
Buyer hereby acknowledges that Sellers have delivered to National
City Bank a notice informing National City Bank of the intent of the Sellers to
sell the Interests and giving National City Bank an option to purchase the
Interests or the Property which letter is attached hereto as Exhibit J and that
National City Bank has executed and delivered to Sellers the waiver letter
attached hereto as Exhibit J. Buyer hereby approves of the form and delivery of
same.
ARTICLE VIII
INSPECTIONS
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Section VIII.1 Right of Inspection. Prior to the Closing Date, the
Buyer and its agents shall have the right to inspect the Property (including
conducting environmental and engineering inspections) at reasonable times agreed
upon by the Sellers and Buyer, upon reasonable notice (at least twenty-four (24)
hours in advance), provided, however, (a) the Buyer shall permit a
representative of City Center LLC to accompany the Buyer and/or its agents
during any such inspection if the Sellers shall cause City Center LLC to make
such a representative available; (b) such inspection or interview shall not
unreasonably impede the normal day-to-day business operations of the Property;
(c) Buyer shall not conduct any testing or inspections with respect to property
or premises of tenants, subtenants, licensees or other occupants of the Property
to the extent not permitted by a Space Lease and without the reasonable prior
consent of the Sellers; (d) Buyer shall not contact, or have discussions, either
directly or indirectly, with any tenants, subtenants, licensees or other users
or occupants of the Property, without the prior written consent of City Center
LLC, which consent shall not be unreasonably withheld; and (e) Buyer shall
obtain from City Center LLC, its prior written consent, which consent will not
be unreasonably withheld, before conducting any invasive testing at the Property
which testing shall be subject to conditions imposed by City Center LLC in its
reasonable discretion. The Buyer's right of inspection of the Property shall be
subject to the rights of tenants, subtenants, licensees or other occupants of
the Property. Prior to entering of the Property, Buyer shall deliver to City
Center LLC certificates satisfactory to City Center LLC evidencing that Buyer
maintains general liability insurance policies acceptable to City Center LLC in
its reasonable discretion, naming the Sellers and City Center LLC as additional
insured and loss payees thereunder. The Buyer hereby indemnifies and agrees to
defend and hold the Sellers and City Center LLC harmless from all loss, cost
(including, without limitation, reasonable attorneys' fees), claim or damage
arising in connection with or from any such inspection by the Buyer or its
agents and any breach of this Article by Buyer. In the event Buyer fails to
purchase the Interests as provided for in this Agreement, upon any Seller's
request, Buyer shall return to such Seller copies of all reports and documents
delivered to Buyer in connection with the transaction or any inspections of the
Property. The provisions of this Article shall survive the Closing or any
earlier termination of this Agreement.
ARTICLE IX
TITLE AND PERMITTED EXCEPTIONS
Section IX.1 Permitted Exceptions. The Asset shall be sold and is to
be conveyed, and the Buyer agrees to purchase the Asset, subject to the
Permitted Exceptions.
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Section IX.2 Title Report, Survey and Searches. (a) The Buyer has
received and/or reviewed a copy of the Existing Title Commitment and the
Existing Survey. If not previously ordered, promptly after the date of this
Agreement the Buyer shall order, if desired, a survey redate and an updated
title commitment with respect to the Property and Seller shall order updated
UCC, federal and state tax lien, judgment and pending litigation searches with
respect to the Sellers and City Center LLC and, in addition, the Buyer shall (a)
instruct Title Associates and surveyor delivering such updated items to furnish
copies of all updated commitments and surveys to Sellers' counsel at the address
set forth in Section 15.9 hereof and (b) within three Business Days after the
later of (i) receipt of any such updated documents and (ii) receipt of the
updated survey, give notice to the relevant Seller specifying all title
exceptions set forth in such updated documents which the Buyer claims are not
Permitted Exceptions. Subject to Section 9.6, Buyer's right to give notice of
objection as set forth above for any such title exception, for all purposes
under this Agreement, including purposes of a Complying Title policy, shall be
limited to the title exceptions which materially interfere with the continued
use of the Property or materially adversely affect the value of the Property
(the "Material Objections"); and any title exceptions contained in the updated
documents which are not Material Objections shall be deemed Permitted
Exceptions.
(b Sellers shall order and deliver, or cause to be delivered, to
Buyer updated UCC, federal, state, judgment and lien, pending litigation and
bankruptcy searches for City Center LLC and the Sellers; however, the delivery
of such searches to Buyer shall not be deemed a condition to Closing.
Section IX.3 Use of Purchase Price to Discharge Title Exceptions.
Subject to the provisions of Section 9.6, if, at the Closing, there are any
title exceptions applicable to the Property which are not Permitted Exceptions
and which the Sellers are obligated by this Agreement or elect to pay and
discharge, the Sellers may use any portion of the Purchase Price to satisfy the
same, provided that the Sellers shall have delivered to the Buyer at the Closing
instruments in recordable form sufficient to satisfy such title exceptions of
record, together with the cost of any applicable recording or filing fees. The
existence of any such liens or encumbrances shall not be deemed objections to
title if the Sellers shall comply with the foregoing requirements. Any unpaid
liens for taxes, water charges and assessments applicable to the period prior to
the applicable Closing Date shall not be objections to title, but the amount
thereof plus any interest and penalties thereon shall be deducted from the
balance of the Purchase Price, subject to the provisions for apportionment of
taxes, water charges and assessments contained in Article XI of this Agreement.
Section IX.4 Inability to Convey. Except as expressly set forth in
Section 9.6, nothing contained in this Agreement
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shall be deemed to require the Sellers to take or bring, or to cause City Center
LLC to take or bring, any legal action or proceeding or any other steps to
remove any title exception or to expend any moneys therefor, nor shall the Buyer
have any right of action against the Sellers or City Center LLC, at law or in
equity, with respect to, and only to the extent that the Sellers have an
interest in the Property, the Sellers', inability to convey title, or to
transfer the Interests, subject only to the Permitted Exceptions.
Section IX.5 Rights in Respect of Inability to Convey. In the event
that Sellers shall be unable to convey the Asset as a result of the existence of
a title exception that Sellers are not required to remove pursuant to this
Agreement, subject only to the Permitted Exceptions and the Buyer shall not, on
or before the Closing Date (as it may have been adjourned in accordance with
this Agreement), give notice to the Sellers that the Buyer is willing to waive
objection to each title exception which is not a Permitted Exception and close
this transaction without abatement of the Purchase Price, credit or allowance of
any kind or any claim or right of action against the Sellers for damages or
otherwise, the Sellers shall have the right, at the Sellers' election, to either
(l) take, or cause City Center LLC to take, such action as the Sellers shall
deem advisable to discharge each such title exception which is not a Permitted
Exception or (2) terminate this Agreement. In the event the Sellers shall elect
to take, or cause the City Center LLC to take, action to discharge each such
title exception which is not a Permitted Exception, the Sellers shall be
entitled to one or more adjournments of the Closing Date for a period not to
exceed 45 days in the aggregate (inclusive of any adjournments made by the
Sellers pursuant to Section 9.6 below) and the Closing shall be adjourned to a
date mutually agreed upon by the Sellers and Buyer not beyond such 45 day
period. If, for any reason whatsoever, the Sellers shall not have succeeded in
discharging each such title exception at the expiration of such adjournment(s)
and if the Buyer shall not, prior to the expiration of the last of such
adjournments, give notice to the Sellers that the Buyer is willing to waive
objection to each such title exception and to close this transaction without
abatement of the Purchase Price, credit or allowance of any kind or any claim or
right of action against the Sellers for damages or otherwise, then this
Agreement shall be deemed to be terminated as of the last date to which the
Closing Date was adjourned by the Sellers pursuant to this Article IX. Upon any
termination of this Agreement pursuant to this Section, (I) the Xxxxxxx Money
shall be refunded to the Buyer and (II) neither party shall have any further
rights or obligations with respect to the Property for which the provisions of
this Agreement are being terminated, except those obligations which expressly
survive the termination of this Agreement. No action taken by the Sellers or
City Center LLC to discharge, or attempt to discharge, or cause the City Center
LLC to discharge or attempt to discharge, any purported title exception shall be
an admission that any such purported title exception is not a
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Permitted Exception. The provisions of this Section 9.5 shall be subject to
Sellers' and Purchaser's rights and obligations with respect to Voluntary/De
Minimis Title Exceptions set forth in Section 9.6. It is understood and agreed
that a discharge of a title exception shall include the elimination of the title
exception itself, the omission of the exception from the Complying Title Policy
or affirmative insurance against any loss due to the existence of such exception
provided such form of affirmative insurance is reasonably approved by Buyer.
Section IX.6 Voluntary/De Minimis Title Exceptions. If, from time to
time prior to the Closing, the Buyer shall become aware of any Voluntary/De
Minimis Title Exceptions, then the Buyer shall promptly notify the Sellers
thereof, which notice shall describe in reasonable detail the Voluntary/De
Minimis Title Exceptions(s). The Sellers shall discharge, or cause the City
Center LLC to discharge, or subject to Buyer's approval, provide title
endorsements over, all Voluntary/De Minimis Title Exceptions on or prior to
Closing. The Seller shall be entitled to one or more adjournments of the Closing
Date not to exceed 45 days in the aggregate (inclusive of any adjournments made
by the Seller pursuant to Section 9.5 hereof) to discharge Voluntary/De Minimis
Title Exceptions.
Section IX.7 The Buyer's Right to Accept Title. Notwithstanding the
foregoing provisions of this Article IX, the Buyer may, by notice given to the
Sellers at any time on or prior to the Closing Date (as it may have been
adjourned by the Sellers pursuant to this Article IX) or within five (5) days
after receipt from Sellers of a notice to terminate this Agreement, elect to
accept such title as the Sellers can convey, notwithstanding the existence of
any title exceptions which are not Permitted Exceptions. In such event, this
Agreement shall remain in effect and the parties shall proceed to Closing but,
except to the extent set forth in Section 9.6, the Buyer shall not be entitled
to any abatement of the Purchase Price, any credit or allowance of any kind or
any claim or right of action against the Sellers or City Center LLC for damages
or otherwise by reason of the existence of any title exceptions which are not
Permitted Exceptions.
Section IX.8 Cooperation. The Buyer and the Sellers shall cooperate
with Title Associates in connection with obtaining title insurance or an update
of title insurance insuring title to the Property subject only to the Permitted
Exceptions and otherwise in the form and of the substance of a Complying Title
Policy. In furtherance and not in limitation of the foregoing, at or prior to
the Closing, the Buyer and the Sellers shall deliver, or cause City Center LLC
to deliver, to Title Associates such affidavits, certificates and other
instruments as are reasonably requested by such title company and customarily
furnished in connection with the issuance of owner's policies of title
insurance, including, without limitation, (i) evidence sufficient to establish
(x) the legal existence of the
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Buyer and the Sellers and City Center LLC and (y) the authority of the
respective signatories of the Sellers and the Buyer to bind the Sellers and the
Buyer, as the case may be, (ii) certificates of good standing of the Sellers,
(iii) necessary affidavits required by Title Associates Inc. to issue a
Non-Imputation Endorsement and (iv) an ALTA Statement and Personal (GAP)
undertakings.
ARTICLE X
TRANSACTION COSTS; RISK OF LOSS
Section X.1 Transaction Costs. The Buyer and the Sellers agree to
comply with, or cause compliance with, all real estate transfer tax laws
applicable to the sale of the Asset. At the Closing, the real property transfer
taxes, deed stamps, conveyance taxes, documentary stamp taxes and other taxes or
charges payable as a result of the conveyance of the Asset being transferred to
Buyer at that Closing pursuant to this Agreement (collectively, the "Transfer
Taxes") shall be paid for entirely by the Buyer. In addition to the foregoing
and their respective apportionment obligations hereunder, (a) the Sellers and
the Buyer shall each be responsible for the payment of the costs of their
respective legal counsel, advisors and other professionals employed thereby in
connection with the sale of the Assets, (b) the Sellers shall be responsible (i)
for the title insurance policy premiums in respect of any fee and leasehold
title insurance, including extended coverage obtained by the Buyer only,
excluding the cost of any endorsements which the Buyer elects to obtain and (ii)
the cost and expense of obtaining UCC searches, federal and state tax lien,
judgment, pending litigation and bankruptcy searches for each Seller and for
City Center LLC and (c) the Buyer shall be responsible for all costs and
expenses associated with (i) the Buyer's due diligence, (ii) title reports or
abstracts with respect to the Property, all title endorsements which Buyer
elects to obtain and all survey and search costs and updates related to title
insurance, in each case commissioned by the Buyer, (iii) the policy premiums in
respect of any mortgage title insurance obtained by the Buyer (if any), (iv)
payment, at the Closing, of the recording charges and fees and recordation taxes
for the documents necessary to transfer the Asset, (v) all costs and expenses of
obtaining any financing the Buyer may elect to obtain, take subject to, and/or
assume from the Sellers (including any fees, financing costs, Repayment Costs,
transfer taxes, mortgage and recordation taxes and intangible taxes in
connection therewith) and (vi) all other costs which are the responsibility
under applicable law for the Buyer to pay (including, without limitation, all
sales and use taxes due as a result of the sale of the Asset). The Buyer and
Sellers shall indemnify the other and their respective successors and assigns
from and against any and all loss, damage, cost, charge, liability or expense
(including court costs and reasonable attorneys' fees) which such other party
may sustain or
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incur as a result of the failure of the indemnifying party to timely pay any of
the aforementioned taxes, fees or other charges for which it has assumed
responsibility under this Section. Although the parties do not believe that any
transfer taxes will be due with respect to the sale of the Interests, the Buyer
hereby agrees to pay any transfer, deed or conveyance taxes if assessed in
connection with the sale of the Interests and the Buyer hereby indemnifies and
holds the Sellers harmless from and against any and all loss, damage, cost,
charge, liability or expense (including court costs and reasonable attorneys'
fees) with respect to any transfer, deed stamp or other conveyance taxes Buyer
is obligated to pay under this Agreement with respect to the Interests as a
result of a determination that the transfer taxes, deed stamp taxes or other
conveyance taxes payable in connection with this transaction that are in excess
of the amount originally determined and paid by the parties hereto. This
indemnification shall survive the Closing.
Section X.2 Risk of Loss. (a) If, on or before the Closing Date, the
Property or any portion thereof shall be (i) damaged or destroyed by fire or
other casualty or (ii) taken or threatened to be taken as a result of any
condemnation or eminent domain proceeding, the Sellers shall promptly notify the
Buyer.
(b As soon as practicable after the occurrence of such casualty or
an actual condemnation, as opposed to a threatened condemnation , Sellers shall
notify Buyer of (i) the estimated cost of restoration of the Property with
respect to any casualty as determined by written estimate of an independent
construction contractor chosen by Sellers or City Center LLC with Buyer's
approval not to be unreasonably withheld or (ii) the estimated loss in value of
the Property as a result of such condemnation as determined by written estimate
of an independent appraisal firm chosen by Sellers or the City Center LLC, with
Buyer's approval not to be unreasonably withheld. If the estimated cost of
restoration arising out of a casualty or estimated loss in value arising out of
a condemnation, shall be $5,000,000 or less, then notwithstanding any provision
in this Agreement to the contrary, the Sellers will credit against the Purchase
Price payable by the Buyer an amount equal to the net proceeds, if any, received
by the Sellers from such casualty or condemnation less any amounts spent by the
Sellers or City Center LLC prior to Closing with respect to a restoration of the
subject Property. If as of the Closing Date, the Sellers or City Center LLC have
not received any such insurance or condemnation proceeds then the parties shall
nevertheless consummate on the Closing Date the conveyance of the Asset (without
any deduction for such insurance or condemnation proceeds) and the Sellers will
at Closing assign to the Buyer all rights of the Sellers, if any, to the
insurance or condemnation proceeds and to all other rights or claims arising out
of or in connection with such casualty or condemnation. If the estimated cost of
restoration arising from a casualty or the loss in value of the Property arising
from a condemnation exceeds $5,000,000, then Buyer shall have the option
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to either (i) terminate this Agreement and the Xxxxxxx Money being held shall be
immediately returned to Buyer, and thereupon this Agreement shall terminate and
be of no further force and effect or (ii) accept the Property "as is" together
with an assignment of the insurance or condemnation proceeds.
ARTICLE XI
ADJUSTMENTS
Unless otherwise provided below, the following are to be adjusted
and prorated between each Seller and the Buyer as of 11:59 P.M. on the day
preceding each Closing Date, based upon a 365 day year, and the net amount
thereof shall be added to (if such net amount is in the Sellers' favor) or
deducted from (if such net amount is in the Buyer's favor) the Purchase Price
payable at Closing:
Section XI.1 Fixed Rents.
(a Fixed rents (collectively, "Fixed Rents") paid or payable by
tenants under the Space Leases in connection with their occupancy of the
Property shall be adjusted and prorated on and if, as and when collected basis.
Any Fixed Rents collected by the Buyer or a Seller after the Closing from any
tenant who owes Fixed Rents for periods prior to the Closing, shall be applied
(i) first, in payment of Fixed Rents owed by such tenant for the month in which
the Closing Date occurs, (ii) second, in payment of Fixed Rents owed by such
tenant for the month prior to the month in which the Closing Date occurs but not
more than 30 days prior to the Closing Date (iii) third, in payment of Fixed
Rents owed by such tenant for the period (if any) after the month in which the
Closing Date occurs and (iv) fourth, in payment of any other Fixed Rents owed by
such tenant for periods more than thirty (30) days prior to the Closing Date.
Each such amount, less any costs of collection (including reasonable counsel
fees) reasonably allocable thereto, shall be adjusted and prorated as provided
above, and the party who receives such amount shall promptly pay over to the
other party the portion thereof to which it is so entitled.
(b The Buyer shall xxxx tenants who owe Fixed Rents for periods
prior to the Closing on a monthly basis for a period of six consecutive months
following the Closing Date and shall use commercially reasonable efforts to
collect such past due Fixed Rents (related to periods of time prior to the
Closing Date). Notwithstanding the foregoing, if the Buyer shall be unable to
collect such past due Fixed Rents within six (6) months after the Closing Date,
any Seller shall have the right, upon prior written notice to the Buyer, to
pursue tenants to collect such delinquencies (including, without limitation, the
prosecution of one or more lawsuits for delinquencies in amounts of not more
than $100,000 with Buyer's prior reasonable consent,
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which consent shall not be unreasonably withheld) but the Seller shall not be
entitled to evict (by summary proceedings or otherwise) any such tenants. Any
payment by a tenant in an amount less than the full amount of Fixed Rents and
Overage Rent (as defined below) then due and payable by such tenant shall be
applied first to Fixed Rents (in the order of priority as to time periods as is
set forth above) to the extent of all such Fixed Rents then due and payable by
such tenant, and thereafter to Overage Rents (in the order of priority as to
time periods as is set forth in Section 11.2 below).
(c Notwithstanding the foregoing, Sellers will consider using any
alternative reasonable proposals offered by Buyer with respect to determining
the adjustment in the collection of any arrearages or delinquencies in fixed
rent, which proposals are designed to achieve the same economic effect as the
formulas provided above.
Section XI.2 Overage Rents.
(a With respect to any Space Lease that provides for (ii) so-called
common area maintenance or "CAM" charges or (iii) so-called "escalation rent" or
additional rent based upon increases in real estate taxes or operating expenses
or labor costs or cost of living or xxxxxx'x wages or otherwise (such percentage
rent, CAM charges, escalation rent and additional rent being collectively called
"Overage Rent"), such Overage Rent shall be adjusted and prorated on an if, as
and when collected basis.
(b As to any Overage Rent in respect of an accounting period that
shall have expired prior to the Closing but which shall be paid after the
Closing, the Buyer agrees that it will pay the entire amount over to the Sellers
upon receipt thereof, less any costs of collection (including reasonable counsel
fees) reasonably allocable thereto. The Buyer agrees that it shall (i) promptly
render bills for any Overage Rent in respect of an accounting period that shall
have expired prior to the Closing but which shall be paid after the Closing,
(ii) xxxx tenants such Overage Rent attributable to an accounting period that
shall have expired prior to the Closing on a monthly basis for a period of six
consecutive months thereafter and (iii) use commercially reasonable efforts to
collect Overage Rent. Notwithstanding the foregoing, if the Buyer shall be
unable to collect such Overage Rent within six (6) months after the Closing
Date, any Seller shall have the right, upon prior written notice to the Buyer,
to pursue tenants to collect such delinquencies (including, without limitation,
the prosecution of one or more lawsuits), but the Seller shall not be entitled
to evict (by summary proceedings or otherwise) any such tenants. The Sellers and
Buyer shall furnish to each other all information relating to the period prior
to the Closing that is reasonably necessary for the billing of such Overage Rent
and the Buyer will deliver to the Seller,
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concurrently with the delivery to tenants, copies of all statements relating to
Overage Rent for the period prior to the Closing. The Buyer shall xxxx tenants
for Overage Rents for accounting periods prior to the Closing in accordance with
and on the basis of such information furnished by the Sellers.
(c If, prior to the Closing, the Sellers shall have received any
installments of Overage Rent attributable to Overage Rent for periods from and
after the Closing Date, such sum shall be apportioned at the Closing. If, after
the Closing, the Buyer shall receive any installments of Overage Rent
attributable to Overage Rent for periods prior to the Closing, such sum (less
any costs and expenses (including reasonable counsel fees) incurred by the Buyer
in the collection of such Overage Rent) shall be paid by the Buyer to the Seller
promptly after the Buyer receives payment thereof.
(d Any payment by a tenant on account of Overage Rent (to the extent
not applied against Fixed Rents due and payable by such tenant in accordance
with subsection 11.1(b) above) shall be applied to Overage Rents then due and
payable in the same order of priority that Fixed Rents are applied under
subsection 11.1(b) above.
(e To the extent that any portion of Overage Rent is required to be
paid monthly by tenants on account of estimated amounts for any calendar year
(or, if applicable, any lease year or tax year or any other applicable
accounting period), and at the end of such calendar year (or lease year, tax
year or other applicable accounting period, as the case may be), such estimated
amounts are to be recalculated based upon the actual expenses, taxes and other
relevant factors for that calendar (lease or tax) year or other applicable
accounting period, with the appropriate adjustments being made with such
tenants, then such portion of the Overage Rent shall be prorated between the
Sellers and the Buyer at the Closing based on such estimated payments actually
paid by tenants (i.e., with the Sellers entitled to retain all monthly or other
periodic installments of such amounts paid by tenants with respect to periods
prior to the calendar month or other applicable installment period in which the
Closing occurs, the Seller to pay to the Buyer at the Closing all monthly or
other periodic installments of such amounts theretofore received by the Sellers
with respect to periods following the calendar month or other applicable
installment period in which the Closing occurs and the Sellers and the Buyer to
apportion as of the Closing Date all monthly or other periodic installments of
such amounts paid by tenants with respect to the calendar month or other
applicable installment period in which the Closing occurs). At the time(s) of
final calculation and collection from (or refund to) each tenant of the amounts
in reconciliation of actual Overage Rent for a period for which estimated
amounts paid by such tenant have been prorated, there shall be a re-proration
between the Seller and the Buyer. Buyer and Sellers agree to cooperate with each
other in connection with preparing such re-
41
proration. If, with respect to any tenant, the recalculated Overage Rent exceeds
the estimated amount paid by such tenant, upon collection from the tenant, (i)
the entire excess shall be paid by the Buyer to the Seller, if the accounting
period for which such recalculation was made expired prior to the Closing and
(ii) such excess shall be apportioned between the Sellers and the Buyer as of
the Closing Date (on the basis described in the first sentence of subsection
11.2 above), if the Closing occurred during the accounting period for which such
recalculation was made, with the Buyer paying to the Seller the portion of such
excess which the Sellers are so entitled to receive. If, with respect to any
tenant, the recalculated Overage Rent is less than the estimated amount paid by
such tenant, (1) the entire shortfall shall be paid by the Sellers to the Buyer
(or, at the Sellers' option, directly to the tenant in question), if the
accounting period for which such recalculation was made expired prior to the
Closing and (2) such shortfall shall be apportioned between the Sellers and the
Buyer as of the Closing Date (on the basis described in the first sentence of
subsection 11.2(c) above), if the Closing occurred during the accounting period
for which such recalculation was made, with the Sellers paying to the Buyer (or,
at the Sellers' option, directly to the tenant in question) the portion of such
shortfall so allocable to the Sellers.
(f Until such time as all amounts required to be paid to the Seller
by the Buyer pursuant to Section 11.1 and this Section 11.2 shall have been paid
in full, the Buyer shall furnish to the Sellers from time to time upon request
of a Seller a reasonably detailed accounting of such amounts payable by the
Buyer. The Sellers shall have the right from time to time following the Closing,
on prior notice to the Buyer, during ordinary business hours on Business Days,
to review the Buyer's rental records with respect to the Property to ascertain
the accuracy of such accountings.
(g With respect to any payments of additional rent based upon a
percentage of the tenant's business during a specified annual or other period
(sometimes referred to as "percentage rent") being made under Space Leases for
either Property, Sellers and Buyer hereby agree to adjust and prorate such
percentage rent as of 11:59 P.M. on the day immediately preceding each Closing
Date, based upon estimates of such percentage rent for the year. Sellers and
Buyer agree to adjust such determination at the end of the year based upon
actual percentage rent collected for the year in which the Closing Date occurs.
Section XI.3 Ground Lease Rents. All rents and other charges payable
by City Center LLC as the tenant under the National City Bank Lease shall be
adjusted and prorated between the Sellers and Buyer as of 11:59 p.m. on the day
preceding each Closing.
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Section XI.4 Taxes and Assessments. Real estate taxes and
assessments payable in the year in which each Closing occurs shall be, with
respect to the Property that is the subject of said Closing, based on (a) the
periods of ownership of the Asset by the Sellers and Buyer during such year and
(b) the amount of real property tax actually payable during that year (i.e., on
a cash basis rather than an accrual or lien year basis). In the event that the
Property or any part thereof shall be or shall have been affected by an
assessment or assessments, whether or not the same become payable in annual
installments, the Sellers shall be responsible at the Closing for any
installments due prior to the Closing and the Buyer shall be responsible for any
installments due on or after the Closing subject to the foregoing proration. In
the event that there is a refund of any real estate taxes and/or assessments
paid by Sellers or City Center hereunder prior to the date hereof, such refund
shall be deemed to be the property of Sellers and if Buyer receives any such
refund, Buyer shall promptly notify Sellers and deliver to Sellers the amount of
such refund less (x) amounts that Buyer is required, pursuant to Space Leases,
to return to tenants of the Property and (y) Buyer's reasonable costs of
collection. Notwithstanding anything to the contrary contained herein, Buyer
shall be responsible for the payment of all real estate taxes which become
payable (in accordance with the determination set forth in this Section 11.4)
any time from or after the Closing Date and Buyer hereby indemnifies and holds
Sellers harmless from and against any and all loss, damage, charge, liability or
expense (including court costs and reasonable attorneys' fees) which the Sellers
may sustain or incur as a result of the failure of Buyer to timely pay the
aforementioned taxes and assessments. Buyer's obligation under the previous
sentence shall survive the applicable Closing Date.
Section XI.5 Water and Sewer Charges. Water rates, water meter
charges, sewer rents and vault charges, if any (other than any such charges,
rates or rents which shall have been paid by tenants of the Property pursuant to
such tenants' Space Leases), shall be adjusted and prorated on the basis of the
fiscal period for which assessed. If there is a water meter, or meters, on the
Property, Sellers agree that they shall at the Closing furnish, or cause to be
furnished, a reading of same to a date not more than 30 days prior to the
Closing and the unfixed meter charges and the unfixed sewer rent thereon for the
time intervening from the date of the last reading shall be apportioned on the
basis of such last reading, and shall be appropriately readjusted after the
Closing on the basis of the next subsequent bills. Unmetered water charges shall
be apportioned on the basis of the charges therefor for the same period of the
preceding calendar year, but applying the current rate thereto. As to any unpaid
water charges or sewer rents payable directly by tenants, the Buyer shall
consummate the Closing subject to such unpaid charges and rents and any lien
resulting therefrom, without credit against the Purchase Price or any claim or
right of action against the Sellers.
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Section XI.6 Utility Charges. Gas, steam, electricity and other
public utility charges (other than any such charges which are payable by tenants
of the Property pursuant to such tenants' Space Leases) will be paid by the
Sellers to the utility company to the Closing Date. Sellers shall arrange for a
final reading of all utility meters (covering gas, water, steam and electricity)
as of the Closing, except meters the charges of which are payable by tenants of
the Property pursuant to such tenants' Space Leases. Sellers' and the Buyer
shall jointly execute a letter to each of such utility companies advising such
utility companies of the termination of the Sellers' responsibility for such
charges for utilities furnished to the Property as of the date of the Closing
and commencement of the Buyer's responsibilities therefor from and after such
date. If a xxxx is obtained from any such utility company as of the Closing, the
Seller shall pay such xxxx on or before the Closing. If such xxxx shall not have
been obtained on or before the Closing, the Seller shall, upon receipt of such
xxxx, pay all such utility charges as evidenced by such xxxx or bills pertaining
to the period prior to the Closing, and the Buyer shall pay all such utility
charges pertaining to the period thereafter. Any xxxx which shall be rendered
which shall cover a period both before and after the date of Closing shall be
apportioned between the Buyer and the Sellers as of the Closing.
Section XI.7 Contracts. Charges and payments under all Contracts
being assumed by Buyer in accordance with the terms of this Agreement, including
the Union Contracts.
Section XI.8 Miscellaneous Revenues. Revenues, if any, arising out
of telephone booths, vending machines, or other income-producing agreements.
Section XI.9 Supplies. Maintenance supplies in unopened containers
based on the Seller's actual cost therefor, including sales and/or use tax.
Section XI.10 Security Deposits. The actual amounts of the security
deposits (including all interest or other amounts earned thereon and required to
be returned to any tenants pursuant to the terms of Space Leases) held by the
Sellers as of the Closing Date shall be assigned to the Buyer by, at the
Sellers' option, (i) payment of the amount thereof to the Buyer or (ii) a credit
to the Buyer against the balance of the Purchase Price. Any such tenants'
securities in form other than cash shall be transferred to the Buyer by way of
appropriate instruments of transfer or assignment.
Section XI.11 Employee Costs. All salaries, wages, vacation pay and
other fringe benefits (including, without limitation, payments and deposits, if
any, with respect to social security, unemployment compensation, employee
health, life and disability insurance, sick pay and welfare and pension fund
44
contributions) of the employees with respect to the Property in connection with
the management, operation or maintenance of the Property under the Union
Contracts shall be adjusted and prorated between the Seller and the Buyer as of
11:59 P.M. on the day preceding the Closing Date. The Buyer acknowledges that
such employees are union employees and agrees to be responsible for all
severance pay and other obligations arising as a result of any termination by
the Buyer of any such employees. Notwithstanding anything to the contrary
contained herein, and except with respect to employees being assumed by Buyer
pursuant to the provisions hereof, including, without limitation, employees
under Union Contracts, Buyer shall not be liable for, and shall not be
responsible any liabilities related to, employees of the Property or Sellers or
City Center LLC.
Section XI.12 Leasing Costs. (a) With respect to Space Leases
entered into after the date of this Agreement in accordance with the terms
hereof, or renewals or expansions of Space Leases after the date of this
Agreement (including any renewals or expansions exercised pursuant to options
contained in existing Space Leases), the Buyer will be responsible for all
Leasing Expenses and shall assume the economic effect of any "free rent" or
other concessions pertaining to the period from and after the Closing Date
relating to such Space Leases (the foregoing, "Buyer's Leasing Costs"). In
addition, Buyer shall be responsible for all Leasing Expenses and Buyer's
Leasing Costs with respect to all Contemplated Leases more particularly set
forth on Schedule F-2 hereto and all deferred tenant improvement work with
respect to existing Space Leases more particularly set forth on Schedule F-3
hereof ("Deferred Tenant Improvements"). To the extent that the Seller has paid
any of the Buyer's Leasing Costs prior to Closing, the Purchase Price will be
increased at Closing by the aggregate amount of such expenditures upon
presentation by Sellers of an invoice therefor and reasonable evidence of
payment thereof. The Buyer will pay all other Buyer's Leasing Costs as and when
the same are due. Notwithstanding the foregoing, it is understood and agreed
that, with respect to that certain that letter of credit (the "Letter of
Credit") in the amount of Two Hundred Seventy Five Thousand Three Hundred Eighty
Six Dollars ($275,386.00) (the "LC Amount") delivered by City Center pursuant to
the terms of that certain Letter of Credit Agreement dated as of February 10,
1998 and executed by City Center (the "LC Agreement") (i) the Letter of Credit
will not be terminated prior to Closing and at Closing, the Purchase Price due
to Sellers shall be increased at Closing by an amount equal to the LC Amount,
and (ii) promptly after the Closing, the parties shall reasonably cooperate with
each other to facilitate the replacement of the Letter of Credit by Buyer and
the return of the Letter of Credit (regardless of whether it was delivered by
City Center or another entity) to Sellers. Upon a return of the Letter of Credit
to Sellers, Sellers shall promptly deliver to Buyer that portion of the LC
Amount that, as of the date said Letter of Credit is returned, has not been
drawn upon, less all expenses, costs and other fees charged to Sellers in
connection
45
with said Letter of Credit after the Closing Date and Sellers reasonable
out-of-pocket costs in connection with the Letter of Credit and the replacement
thereof, including reasonable attorney's fees.
(b Except as otherwise set forth in Clause (a) of this Section and
except with respect to any of the Leases listed on Schedule F-2, Seller shall be
responsible for all Leasing Costs with respect to Space Leases in effect as of
the date of this Agreement, including, without limitation, those set forth on
Schedule F-1, Schedule F-4 and Schedule G, (collectively, "Seller's Leasing
Costs"). To the extent such items are incomplete or not fully paid at Closing,
Seller shall give Buyer a credit against the Purchase Price for such remaining
costs and Buyer shall assume the obligations to pay such costs or perform such
obligations. Notwithstanding the foregoing, however, with respect to that
certain Tenant Improvement Allowance in the amount of $407,440.00 set forth on
Schedule F-1 hereto, if the entire Tenant Improvement Allowance is not collected
by National City Bank from the Landlord or used by Tenant in accordance with the
provisions of its lease relating to said Tenant Improvement Allowance, or if
National City Bank returns any portion of the Tenant Improvement Allowance to
Buyer or notifies Buyer that National City Bank will not demand from Buyer any
portion of the Tenant Improvement Allowance, then Buyer shall promptly deliver
to Sellers the amount of the Tenant Improvement Allowance less such amounts
actually delivered to National City Bank pursuant to Landlord's obligation under
the NCB Space Lease to deliver to National City Bank the Tenant Improvement
Allowance referenced on Schedule F-1, such obligation to survive the Closing or
earlier termination of this Agreement.
Section XI.13 NY Life Loan Escrows. With respect to the NY Life
Loan, all escrows deposited with, or being held by or for the benefit of the
applicable Third Party lender, including, without limitation, all tax and
insurance escrows, shall be adjusted and prorated between Buyer and Sellers by
crediting the balances to Seller as of 11:59 on the day preceding the applicable
Closing.
Section XI.14 Other. If applicable, the Purchase Price shall be
adjusted at Closing in accordance with subsection 11.12 and Section 10.2 and to
reflect the adjustment of any other item which, under the terms of this
Agreement, is to be apportioned at Closing.
Section XI.15 Re-Adjustment. Except for re-adjustments of Overage
Rent to be made pursuant to subsection 11.2(e), if any such items are not
determinable at the Closing, the adjustment shall be made subsequent to the
Closing when the charge is determined. Any errors or omissions in computing
adjustments at the Closing shall be promptly corrected, provided that the party
seeking to correct such error or omission shall have notified the other party of
such error or omission on or
46
prior to the date that is 180 days following the Closing Date. The provisions of
this Article XI shall survive the Closing.
ARTICLE XII
INDEMNIFICATION
Section XII.1 Indemnification by the Seller. With respect to the
Asset and Property, the Seller thereof shall indemnify and hold the Buyer, its
affiliates, members and partners, and the partners, shareholders, officers,
directors, employees, representatives and agents of each of the foregoing
(collectively, "Buyer-Related Entities") harmless from and against any and all
costs, fees, expenses, damages, deficiencies, interest and penalties (including,
without limitation, reasonable attorneys' fees and disbursements) suffered or
incurred by any such indemnified party in connection with any and all losses,
liabilities, claims, damages and expenses ("Losses"), arising out of, or in any
way relating to, (i) any breach of any representation or warranty of the Seller
or City Center LLC contained in this Agreement or in any Schedule, certificate,
instrument or other document delivered pursuant hereto, (ii) any breach of any
covenant of the Seller or City Center LLC contained in this Agreement, and (iii)
matters under any of the Space Leases which arise prior to the Closing Date,
such obligation to survive the Closing subject to Section 12.4.
Section XII.2 Indemnification by the Buyer. The Buyer shall
indemnify and hold the Sellers, their affiliates, members and partners, and the
partners, shareholders, officers, directors, employees, representatives and
agents of each of the foregoing (collectively, "Seller-Related Entities")
harmless from any and all Losses arising out of, or in any way relating to, (i)
any breach of any representation or warranty by the Buyer contained in this
Agreement or in any Schedule, certificate, instrument or other document
delivered pursuant hereto or in connection herewith, (ii) any breach of any
covenant of the Buyer contained in this Agreement, (iii) matters under any of
the Space Leases which arise from and after the Closing Date and (iv) Sellers'
delivery of a notice to prepay the NY Life Loan to the NY Life lender and,
without regard to any other provisions of this Agreement (including, without
limitation, the provisions of Article XIV), Buyer's default under this
Agreement, such obligation to survive the Closing or termination of this
Agreement subject to Section 12.4.
Section XII.3 Limitations on Indemnification. Notwithstanding the
foregoing provisions of Section 12.1, (a) the Sellers, collectively, shall not
be required to indemnify the Buyer or any Buyer-Related Person under this
Agreement unless the aggregate of all amounts for which an indemnity would
otherwise be payable by, collectively, the Sellers, under this Agreement exceeds
the applicable Basket Limitation and, in such event,
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collectively, the Sellers shall be responsible for only the amount in excess of
the applicable Basket Limitation and (b) in no event shall the liability of,
collectively, the Sellers, with respect to the indemnification provided for in
Section 12.1 above exceed in the aggregate the applicable Cap Limitation and (c)
the Sellers shall not be responsible for or indemnify Buyer for any other
matters which accrue or arise with respect to events or occurrences at the
Property from and after the Closing Date.
Section XII.4 Survival. The representations and warranties contained
in this Agreement and the indemnification by Seller with respect to matters
arising under any of the Space Leases prior to the Closing Date shall survive
for a period of 225 days after the Closing (the "Survival Period") provided, any
action, suit or proceeding with respect to the representations and warranties is
properly commenced within the Survival Period. The covenants contained in this
Agreement to the extent to be performed prior to or at Closing shall not survive
after the Closing. All other covenants, indemnities and provisions of this
Agreement shall survive the Closing unless otherwise provided herein.
Notwithstanding anything to the contrary contained herein, Seller's obligation
to indemnify Buyer shall terminate and be null and void unless Buyer files an
action, suit or proceeding against Seller seeking recovery from Seller for its
obligations under this Article 12 if properly commenced by Buyer within the
appropriate survival period more particularly set forth in this subsection 12.4.
Section XII.5 Indemnification as Sole Remedy. If the Closing has
occurred, the sole and exclusive remedy available to a party in the event of a
breach by the other party to this Agreement of any representation, warranty,
covenant or other provision of this Agreement which survives the Closing shall
be the indemnifications provided for under this Article XII.
ARTICLE XIII
TAX CERTIORARI PROCEEDINGS
Section XIII.1 Prosecution and Settlement of Proceedings. If any tax
reduction proceedings in respect of the Property, relating to any fiscal years
ending prior to the fiscal year in which the Closing occurs are pending at the
time of the Closing, the Sellers reserves and shall have the right to continue
to prosecute and/or settle the same in the name of City Center LLC. If any tax
reduction proceedings in respect of the Property, relating to the fiscal year in
which the Closing occurs, are pending at the time of Closing, then the Sellers
reserve and shall have the right to continue to prosecute and/or settle the
same; provided, however, that the Sellers shall not settle any such proceeding
without the Buyer's prior written consent, which consent shall not be
unreasonably withheld or delayed. The Buyer shall reasonably cooperate with the
Sellers
48
in connection with the prosecution of any such tax reduction proceedings and
Sellers shall not, to effectuate a reduction of such taxes, specifically agree
with the relevant authorities to an increase in such taxes for fiscal years
ending after the year during which the Closing occurs. Sellers' obligation set
forth in the preceding sentence shall survive Closing.
Section XIII.2 Application of Refunds or Savings. Any refunds or
savings in the payment of taxes resulting from such tax reduction proceedings
applicable to taxes payable during the period prior to the date of the Closing
(as such period is determined in accordance with Section 11.4 of this Agreement)
shall belong to and be the property of the Sellers, and any refunds or savings
in the payment of taxes applicable to taxes payable from and after the date of
the Closing (as such period is determined in accordance with Section 11.4 of
this Agreement)shall belong to and be the property of the Buyer; provided,
however, that if any such refund creates an obligation to reimburse any tenants
under Space Leases for any rents or additional rents paid or to be paid, that
portion of such refund equal to the amount of such required reimbursement (after
deduction of allocable expenses as may be provided in the Space Lease to such
tenant) shall, at the Sellers' election, either (a) be paid to the Buyer and the
Buyer shall disburse the same to such tenants or (b) be paid by the Sellers or
City Center LLC directly to the tenants entitled thereto, after payment of
Buyer's costs related thereto. All attorneys' fees and other expenses incurred
in obtaining such refunds or savings shall be apportioned between the Sellers
and the Buyer in proportion to the gross amount of such refunds or savings
payable to the Sellers and the Buyer, respectively (without regard to any
amounts reimbursable to tenants).
Section XIII.3 Survival. The provisions of this Article XIII shall
survive the Closing.
ARTICLE XIV
DEFAULT
Section XIV.1 Default. Notwithstanding anything to the contrary
contained in this Agreement, including the provisions of Section 7.1, (a) if the
Buyer shall default (i) in the performance of its obligations under this
Agreement to purchase the Asset on the Closing Date or (ii) the performance of
its obligations under the option agreement entered into between Buyer and
BRE/Wabash L.L.C. (the "Option Agreement") prior to or through the Closing Date,
the Sellers, as their sole and exclusive remedy hereunder (except as set forth
in the last sentence of this subsection (a)), at law or in equity, shall be
entitled to terminate this Agreement and the Option Agreement, to retain the
Xxxxxxx Money as liquidated damages, at which time this Agreement shall be
terminated and of no further force and
49
effect except for the provisions which explicitly survive such termination. The
Buyer agrees that the Seller shall have the right to retain the Xxxxxxx Money as
liquidated damages without the necessity of proving actual damages due to the
difficulty of proving actual damages resulting from the Buyer's default
hereunder, the Xxxxxxx Money being the parties best estimate of Seller's
damages. Nothing in this Section shall be deemed to limit the Seller's remedies
with respect to a breach by the Buyer of any of its obligations which survive
the Closing but such remedies shall be limited as provided in Section 12.5.
(b) If the Seller shall default in the performance of its
obligations under this Agreement to cause the sale of the Asset or the Property
by the Closing Date, the Buyer, as its sole and exclusive remedy, shall be
entitled at its option, either (i) to terminate this Agreement, direct Seller to
deliver the Xxxxxxx Money to the Buyer and retain the Xxxxxxx Money, at which
time this Agreement shall be terminated and of no further force and effect
except for the provisions which explicitly survive such termination or (ii)
specifically enforce the terms and conditions of this Agreement by injunctive
relief or otherwise. Nothing in this Section shall be deemed to limit the
Buyer's remedies with respect to a breach by the Seller of any of the Seller's
obligations which survive the Closing but such remedies shall be limited as
provided in Section 11.5.
ARTICLE XV
MISCELLANEOUS
Section XV.1 Use of Blackstone Name and Address. Subject to the
provisions of Section 15.4 hereof, the Buyer hereby acknowledges and agrees that
neither the Buyer nor any affiliate, successor, assignee or designee of Buyer
shall be entitled to use the name "Blackstone" in any way whatsoever.
Section XV.2 Exculpation of the Seller.
(a) Notwithstanding anything to the contrary contained herein, Buyer
acknowledges that Sellers have jointly executed this Agreement for
administrative efficiency, and Buyer hereby acknowledges and agrees that the
liability of each of the Sellers hereunder shall be several only and nothing
contained herein shall be construed to impose joint liability upon the Sellers.
(b) Notwithstanding anything to the contrary contained herein, the
Seller's shareholders, partners, the partners of such partners, the shareholders
of such partners, and the trustees, officers, directors, employees, agents and
security holders of the Seller and the partners of the Seller assumes no
personal liability for any obligations entered into on behalf of the Seller and
its individual assets shall not be subject to any
50
claims of any person relating to such obligations. The foregoing shall govern
any direct and indirect obligations of the Seller under this Agreement.
Section XV.3 Brokers. (a) Each Seller and the Buyer each represent
and warrant to the other that it has dealt with no broker, salesman, finder or
consultant with respect to this Agreement or the transactions contemplated
hereby other than Eastdil, whose commission shall be paid by Sellers pursuant to
the terms of a separate agreement to which the Purchaser is not a party, if and
only if the Closing occurs. Each Seller agrees to indemnify, protect, defend and
hold the Buyer harmless from and against all claims, losses, damages,
liabilities, costs, expenses (including reasonable attorneys' fees and
disbursements) and charges resulting from the Seller's breach of the foregoing
representation in this subsection (a). The provisions of this subsection (a)
shall survive the Closing and any termination of this Agreement.
(b) The Buyer represents and warrants to the Seller that it has
dealt with no broker, salesman, finder or consultant with respect to this
Agreement or the transactions contemplated hereby other than Eastdil. The Buyer
agrees to indemnify, protect, defend and hold the Seller harmless from and
against all claims, losses, damages, liabilities, costs, expenses (including
reasonable attorneys' fees and disbursements) and charges resulting from the
Buyer's breach of the foregoing representations in this subsection (b). The
provisions of this subsection (b) shall survive the Closing and any termination
of this Agreement.
Section XV.4 Confidentiality; Press Release; IRS Reporting
Requirements. (a) The Buyer and the Sellers shall hold as confidential all
information disclosed in connection with the transaction contemplated hereby and
concerning each other, the Asset, this Agreement and the transactions
contemplated hereby and shall not release any such information to third parties
without the prior written consent of the other parties hereto, except (i) any
information which was previously or is hereafter publicly disclosed (other than
in violation of this Agreement or other confidentiality agreements to which
affiliates of the Buyer are parties), (ii) to their partners, advisers,
underwriters, analysts, employees, affiliates, officers, directors, consultants,
lenders, investors, potential investors, accountants, legal counsel or other
advisors of any of the foregoing, provided that they are advised as to the
confidential nature of such information and are instructed to maintain such
confidentiality, (iii) to comply with any law, rule or regulation, (iv) to
analysts covering Buyer and the REIT industry and (v) to governmental bodies and
regulatory agencies, including the Securities and Exchange Commission or
required by court or other binding order. The foregoing shall constitute a
modification of any prior confidentiality agreement that may have been entered
into by the parties. The provisions of this
51
Section shall survive the Closing or the termination of this Agreement for a
period of 180 days. Notwithstanding the foregoing, Buyer shall be entitled prior
to the Closing(after having provided a copy thereof to Seller at least two
Business Days prior to issuance and having given good faith consideration to
Seller's comments) to file any applicable forms with the Securities and Exchange
Commission that accurately set forth such factual information pertaining to the
Property and the transaction contemplated hereby that Buyer concludes, in good
faith, to be necessary or prudent in order to comply with Buyer's legal
disclosure obligations. Seller shall have no liability whatsoever for the
accuracy of any information contained in such filings or disclosure documents.
(b) Neither Sellers and/or the Buyer may issue a press release with
respect to this Agreement and the transactions contemplated hereby except (i) in
the form of Exhibit K hereto and (ii) as consented to in writing by the other
party to this Agreement (such approval not to be unreasonably withheld or
delayed). In no event shall any press release issued by the Buyer disclose the
identity of the Seller's direct or indirect beneficial owners by name.
(c) For the purpose of complying with any information reporting
requirements or other rules and regulations of the IRS that are or may become
applicable as a result of or in connection with the transaction contemplated by
this Agreement, including, but not limited to, any requirements set forth in
proposed Income Tax Regulation Section 1.6045-4 and any final or successor
version thereof (collectively, the "IRS Reporting Requirements"), the Seller and
the Buyer hereby designate and appoint the Designated Assignor to act as the
"Reporting Person" (as that term is defined in the IRS Reporting Requirements)
to be responsible for complying with any IRS Reporting Requirements. The
Designated Assignor hereby acknowledges and accepts such designation and
appointment and agrees to fully comply with any IRS Reporting Requirements that
are or may become applicable as a result of or in connection with the
transaction contemplated by this Agreement. Without limiting the responsibility
and obligations of the Designated Assignor as the Reporting Person, the Sellers
and the Buyer hereby agree to comply with any provisions of the IRS Reporting
Requirements that are not identified therein as the responsibility of the
Reporting Person, including, but not limited to, the requirement that the Seller
and the Buyer each retain an original counterpart of this Agreement for at least
four (4) years following the calendar year of the Closing.
Section XV.5 Intentionally Omitted.
Section XV.6 Successors and Assigns; No Third-Party Beneficiaries.
The stipulations, terms, covenants and agreements contained in this Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto and
their respective
52
permitted successors and assigns (including any successor entity after a public
offering of stock, merger, consolidation, purchase or other similar transaction
involving a party hereto) and nothing herein expressed or implied shall give or
be construed to give to any person or entity, other than the parties hereto and
such assigns, any legal or equitable rights hereunder.
Section XV.7 Assignment. This Agreement may not be assigned by the
Buyer except: (a) at Closing, provided Buyer designates an Affiliate of Buyer to
which the Asset will be transferred at the Closing; or if not to an Affiliate,
(b) Buyer receives Sellers' prior written consent to the assignment, which
consent shall be in Seller's sole discretion. In addition, Buyer may name a
nominee or designee to whom the Asset will be transferred at Closing, provided
that Buyer does not assign this Agreement to such nominee or designee and Seller
is only required to deal with Buyer in connection with this Agreement and the
transactions contemplated herein. For purposes of this Section 15.7, the term
"Affiliate" shall mean a Person which controls, is controlled by or is under
common control with Buyer. Notwithstanding the foregoing, nothing herein shall
be construed as limiting the liability of Buyer hereunder and Buyer shall remain
primarily liable to Sellers with respect to this Agreement. The word "control"
means, with respect to a Person that is a corporation, the right to exercise the
twenty-five percent of the voting shares of the controlled corporation and, with
respect to a Person that is not a corporation, the possession of a twenty-five
percent ownership interest in the controlled Person. Notwithstanding the
foregoing, nothing herein shall prevent a Buyer from transferring to another
Person, pursuant to requirements under the NY Life Loan or other loan for which
either Property is pledged as security, a nominal one percent interest in such
Affiliate.
Section XV.8 Further Assurances. From time to time, as and when
requested by any party hereto, the other party shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions as such other
party may reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
Section XV.9 Notices. All notices, demands or requests made pursuant
to, under or by virtue of this Agreement must be in writing and shall be (i)
personally delivered, (ii) delivered by express mail, Federal Express or other
comparable overnight courier service, (iii) facsimile or (iv) mailed to the
party to which the notice, demand or request is being made by certified or
registered mail, postage prepaid, return receipt requested, as follows:
53
(a) To the Seller:
c/o Blackstone Real Estate Advisors L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxx
Facsimile: 000-000-0000
with copies thereof to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile: 000-000-0000
(b) To the Buyer:
c/o Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: 000-000-0000; and
Attention: Xxxxx X. Xxxxxxx
Facsimile: 000-000-0000
with copies thereof to:
Xxxxx, Day, Xxxxxx & Xxxxx
00 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: 312-782-8585
All notices (i) shall be deemed effective upon receipt or refusal of delivery in
accordance with the provisions of this Section and (ii) may be given either by a
party or by such party's attorneys. Any party may, from time to time, specify as
its address for purposes of this Agreement any other address upon the giving of
10 days' notice thereof to the other parties.
Section XV.10 Entire Agreement. This Agreement, along with the
Exhibits and Schedules hereto contains all of the terms agreed upon between the
parties hereto with respect to the subject matter hereof, and all understandings
and agreements heretofore had or made among the parties hereto are merged in
this Agreement which alone fully and completely expresses the agreement of the
parties hereto.
Section XV.11 Amendments. This Agreement may not be amended,
modified, supplemented or terminated, nor may any of the
54
obligations of the Seller or the Buyer hereunder be waived, except by written
agreement executed by the party or parties to be charged.
Section XV.12 No Waiver. No waiver by either party of any failure or
refusal by the other party to comply with its obligations hereunder shall be
deemed a waiver of any other or subsequent failure or refusal to so comply.
Section XV.13 Governing Law. With respect to matters affecting the
Property only, this Agreement shall be governed by, interpreted under, and
construed and enforced in accordance with, the laws of the State in which the
Property is located, and with respect to all other matters hereunder, the laws
of the State of New York.
Section XV.14 Submission to Jurisdiction.
(a) Each of the Sellers and Buyer irrevocably submits to the
jurisdiction of (i) the Supreme Court of the State of New York, New York County
and (ii) the United States District Court for the Southern District of New York
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the Sellers and the
Buyer further agrees that service of any process, summons, notice or document by
U.S. registered mail to such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction as set forth
above in the immediately preceding sentence.
(b) Each of the Buyer and each Seller irrevocably and
unconditionally waives trial by jury and agrees that any suit, action or
proceeding with respect to this Agreement or the transactions contemplated
hereby may be brought only in (i) the Supreme Court of the State of New York,
New York County and (ii) the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally waives
any objection that it may have to the venue of such suit, action or proceeding
in any such court or that such suit or proceeding in such court was brought in
an inconvenient court and agrees not to plead or claim same.
Section XV.15 Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
Section XV.16 Section Headings. The headings of the various Sections
of this Agreement have been inserted only for
55
purposes of convenience, are not part of this Agreement and shall not be deemed
in any manner to modify, explain, expand or restrict any of the provisions of
this Agreement.
Section XV.17 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
Section XV.18 Acceptance of Assignment. The acceptance of the
Assignment and Assumption of Interests to the City Center LLC membership
interests by the Buyer shall be deemed full compliance by the Sellers of all of
Sellers' Obligations under this Agreement except for those obligations of
Sellers which are specifically stated to survive the delivery of the Assignment
and Assumption of Interests.
Section XV.19 Payment of Purchase Price. The receipt and
confirmation of receipt by the Sellers of the Purchase Price shall be deemed
full compliance by Buyer of all of Buyer's obligations except for those
obligations of the Buyer which are specifically stated to survive the payment of
the Purchase Price.
Section XV.20 Construction. The parties acknowledge that the parties
and their counsel have reviewed and revised this Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any exhibits or amendments hereto.
Section XV.21 Recordation. Neither this Agreement nor any memorandum
or notice of this Agreement may be recorded by any party hereto without the
prior written consent of the other party hereto. The provisions of this Section
shall survive the Closing or any termination of this Agreement.
Section XV.22 Waiver of Jury Trial. The Seller and the Buyer hereby
waive trial by jury in any action, proceeding or counterclaim brought by any
party against another party on any matter arising out of or in any way connected
with this Agreement.
Section XV.23 Covenants/Simultaneous Closing. With respect to all of
the obligations and covenants which, pursuant to the terms of this Agreement,
are to be complied with prior to or as of the Closing, such obligations and
covenants shall become effective obligations of the Sellers on the date of this
Agreement. In the event that the Closing occurs on the same day as the date of
this Agreement, then, in any event, the obligations and covenants referenced in
the first sentence of this Section 15.23 shall be deemed performed, in every and
all respects, in compliance with the terms of this Agreement.
56
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
BUYER:
PRIME GROUP REALTY, L.P. a Delaware
limited partnership
By: Prime Group Realty Trust, a
Maryland real estate investment
trust, its Managing General Partner
By:___________________________________
Name:
Title:
SELLERS:
BLACKSTONE REAL ESTATE
PARTNERS TWO L.P., a Delaware limited
partnership
By: Blackstone Real Estate
Associates II L.P., a Delaware
limited partnership, general partner
By: Blackstone Real Estate
Management Associates II L.P., a
Delaware limited partnership,
general partner
By: BREA II L.L.C., a Delaware
limited liability company,
general partner
By:________________________________
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
BLACKSTONE REAL ESTATE HOLDINGS II L.P., a
Delaware limited partnership
By: Blackstone Real Estate
Management Associates II L.P., a
Delaware limited partnership,
general partner
By: BREA II L.L.C., a Delaware
limited liability company,
general partner
By: __________________________
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
BLACKSTONE REAL ESTATE
PARTNERS II.TE.1 L.P., a Delaware limited
partnership
By: Blackstone Real Estate
Associates II L.P., a Delaware
limited partnership, general partner
By: Blackstone Real Estate
Management Associates II L.P., a
Delaware limited partnership,
general partner
By: BREA II L.L.C., a Delaware
limited liability company,
general partner
By:______________________
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
BLACKSTONE REAL ESTATE
PARTNERS II.R (City Center), a New York general
partnership
By: Blackstone Real Estate
Associates II L.P., a Delaware limited
partnership, general partner
By: Blackstone Real Estate
Management Associates II L.P., a
Delaware limited partnership, general
partner
By: BREA II L.L.C., a Delaware
limited liability company, general
partner
By: ____________________
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
BLACKSTONE REAL ESTATE
PARTNERS II.TE.3 L.P., a Delaware limited
partnership
By: Blackstone Real Estate
Associates II L.P., a Delaware limited
partnership, general partner
By: Blackstone Real Estate
Management Associates II L.P., a
Delaware limited partnership, general
partner
By: BREA II L.L.C., a Delaware
limited liability company, general
partner
By: __________________________
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
BLACKSTONE REAL ESTATE
PARTNERS II.TE.4 L.P., a Delaware limited
partnership
By: Blackstone Real Estate
Associates II L.P., a Delaware
limited partnership, general partner
By: Blackstone Real Estate
Management Associates II L.P., a
Delaware limited partnership,
general partner
By: BREA II L.L.C., a Delaware
limited liability company,
general partner
By: ___________________________
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
BLACKSTONE REAL ESTATE
PARTNERS II.TE.5 L.P., a Delaware limited
partnership
By: Blackstone Real Estate
Associates II L.P., a Delaware
limited partnership, general partner
By: Blackstone Real Estate
Management Associates II L.P., a
Delaware limited partnership,
general partner
By: BREA II L.L.C., a Delaware
limited liability company,
general partner
By: _________________________
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
BLACKSTONE REAL ESTATE
INVESTORS (City Center) INC.
By: ___________________________________
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
JOINDER
BRE/CITY CENTER L.L.C., a Delaware limited liability company, hereby
joins in the execution of this Agreement and accepts and, to the extent such
provisions are applicable to BRE/City Center L.L.C., agrees to be bound by the
provisions of the following Sections only:
Section 3.1
Section 3.2
Section 3.3
Section 4.1
BRE/CITY CENTER L.L.C.
By:__________________________
Name: Xxxxxx X. Xxxxxx
Title: Authorized Person
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................1
Section 1.1 Defined Terms...............................................1
ARTICLE II.................................7
SALE, PURCHASE PRICE AND CLOSING.............................................7
Section 2.1 Sale of Asset...................................................7
Section 2.2 Purchase Price; Xxxxxxx Money...................................8
Section 2.3 The Closing....................................................10
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER ...........................11
Section 3.1 General Seller Representations and Warranties..................11
(a) Formation; Existence..................................11
(b) Power and Authority...................................11
(c) No Consents...........................................11
(d) No Conflicts..........................................12
(e) Subsidiaries/ Authority to Conduct Business...........12
(f) Limited Liability Company Agreement...................12
(g) Sellers...............................................12
(h) Restrictions upon Acquisition of Interests............13
(i) Transferability of Interests..........................13
(j) Liabilities...........................................13
(k) Financial Statements..................................13
(l) Obligations...........................................14
(m) Income Taxes..........................................14
(n) Foreign Person........................................14
Section 3.2 Representations and Warranties of Sellers as to the Assets ....14
(a) Ownership of the Asset................................14
(b) Contracts.............................................15
(c) Space Leases..........................................15
(d) Brokerage Commissions.................................16
(e) Condemnation..........................................16
(f) Litigation............................................16
(g) Environmental Violations..............................17
(h) Loan Documents........................................17
Section 3.3 Covenants of the Sellers Prior to Closing......................17
(a) Insurance.............................................17
(b) Operation.............................................17
(c) New Contracts.........................................17
(d) New Space Leases......................................18
(e) Litigation............................................18
(f) Sale of Tangible Personal Property....................19
(g) Performance Under Space Leases........................19
(h) Updated Estoppel Certificates.........................19
(i) Loan Documents........................................19
(j) Security Deposits.....................................19
(k) Due Diligence Requests................................20
(l) Updating Information..................................20
-i-
(m) Review of Books and Records...........................20
(n) Entity Status.........................................20
(o) Property Management Employees.........................20
(p) Tax Returns, Taxes....................................21
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BUYER ...............................21
Section 4.1 Representations, Warranties and Covenants of the Buyer ........21
(a) Formation; Existence..................................21
(b) Power; Authority......................................21
(c) No Consents...........................................21
(d) No Conflicts..........................................22
(e) Examination; No Contingencies.........................22
(f) ......................................................23
(g) Buyer's Affiliate/Assignee............................25
(h) Like Kind Exchange....................................26
(i) NY Life Loan..........................................26
ARTICLE V CONDITIONS PRECEDENT TO CLOSING................26
Section 5.1 Conditions Precedent To Seller's Obligations...................26
Section 5.2 Conditions to the Buyer's Obligations..........................27
ARTICLE VI CLOSING DELIVERIES.......................28
ARTICLE VII PURCHASE OPTION........................31
ARTICLE VIII INSPECTIONS.........................32
Section 8.1 Right of Inspection............................................32
ARTICLE IX TITLE AND PERMITTED EXCEPTIONS.................33
Section 9.1 Permitted Exceptions...........................................33
Section 9.2 Title Report, Survey and Searches..............................33
Section 9.3 Use of Purchase Price to Discharge Title Exceptions............33
Section 9.4 Inability to Convey............................................34
Section 9.5 Rights in Respect of Inability to Convey.......................34
Section 9.6 Voluntary/De Minimis Title Exceptions..........................35
Section 9.7 The Buyer's Right to Accept Title..............................35
Section 9.8 Cooperation....................................................35
ARTICLE X TRANSACTION COSTS; RISK OF LOSS.................36
Section 10.1 Transaction Costs.............................................36
Section 10.2 Risk of Loss..................................................37
ARTICLE XI ADJUSTMENTS..........................38
Section 11.1 Fixed Rents...................................................38
Section 11.2 Overage Rents.................................................39
Section 11.3 Ground Lease Rents............................................42
Section 11.4 Taxes and Assessments.........................................42
Section 11.5 Water and Sewer Charges.......................................42
Section 11.6 Utility Charges...............................................43
Section 11.7 Contracts.....................................................43
Section 11.8 Miscellaneous Revenues........................................43
Section 11.9 Supplies......................................................44
Section 11.10 Security Deposits.............................................44
Section 11.11 Employee Costs................................................44
Section 11.12 Leasing Costs.................................................44
Section 11.13 NY Life Loan Escrows..........................................46
Section 11.14 Other.........................................................46
Section 11.15 Re-Adjustment.................................................46
ARTICLE XII INDEMNIFICATION........................46
Section 12.1 Indemnification by the Seller.................................46
Section 12.2 Indemnification by the Buyer..................................46
Section 12.3 Limitations on Indemnification................................47
Section 12.4 Survival......................................................47
Section 12.5 Indemnification as Sole Remedy................................47
ARTICLE XIII TAX CERTIORARI PROCEEDINGS..................48
Section 13.1 Prosecution and Settlement of Proceedings.....................48
Section 13.2 Application of Refunds or Savings.............................48
Section 13.3 Survival......................................................49
ARTICLE XIV DEFAULT............................49
Section 14.1 Default.......................................................49
ARTICLE XV MISCELLANEOUS.........................50
Section 15.1 Use of Blackstone Name and Address ...........................50
Section 15.2 Exculpation of the Seller.....................................50
Section 15.3 Brokers.......................................................50
Section 15.4 Confidentiality; Press Release; IRS Reporting
Requirements..................................................51
Section 15.5 Intentionally Omitted.........................................52
Section 15.6 Successors and Assigns; No Third-Party Beneficiaries..........52
Section 15.7 Assignment....................................................52
Section 15.8 Further Assurances............................................53
Section 15.9 Notices.......................................................53
Section 15.10 Entire Agreement..............................................54
Section 15.11 Amendments....................................................54
Section 15.12 No Waiver.....................................................54
Section 15.13 Governing Law.................................................54
Section 15.14 Submission to Jurisdiction....................................54
Section 15.15 Severability..................................................55
Section 15.16 Section Headings..............................................55
Section 15.17 Counterparts..................................................55
Section 15.18 Acceptance of Assignment......................................55
Section 15.19 Payment of Purchase Price.....................................55
Section 15.20 Construction..................................................56
Section 15.21 Recordation...................................................56
Section 15.22 Waiver of Jury Trial..........................................56
Section 15.23 Covenants/Simultaneous Closing................................56
-iii-
Page
----
-iv-
Page
----
-v-
Exhibits
Exhibit A - Assignment and Assumption of Interests
Exhibit B - Release
Exhibit C - FIRPTA Certificate
Exhibit D - Auditors' Certification
Exhibit E - Press Release
Schedules
Schedule A - City Center Assignors
Schedule A-1 - Description of City Center Fee Parcel
Schedule A-2 - Description of City Center Leasehold Parcel
Schedule B - Existing Title Policy and Survey
Schedule C - NY Life Loan
Schedule C-1 - Instruments Encumbering City Center Interests
Schedule D - Consents
Schedule E - Contracts
Schedule E-1 - Contracts to be Terminated
Schedule F - Space Leases
Schedule F-1 - Landlord's Work in Progress
Schedule F-2 - Contemplated Leases
Schedule F-3 - Deferred Tenant Improvements
Schedule F-4 - Base Building Work
Schedule G - Brokerage Commissions
Schedule H - Litigation
Schedule I - Security Deposits Held By Seller
Schedule J - Buyer Consents
-vi-
AGREEMENT OF PURCHASE AND SALE
among
THE SELLERS NAMED HEREIN
and
PRIME GROUP REALTY, L.P., the BUYER
As of February ____, 1999
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
[OMITTED]
EXHIBIT B
CONSENT, RELEASE AND REACKNOWLEDGEMENT AGREEMENT
[OMITTED]
EXHIBIT C
ENTITY TRNASFEROR FOREIGN INVESTORS
REAL PROPERTY TAX ACT CERTIFICATION AND AFFIDAVIT
[OMITTED]
EXHIBIT D
AUDITORS' CERTIFICATION
[OMITTED]
EXHIBIT E
PRESS RELEASE
[OMITTED]
SCHEDULE A
CITY CENTER ASSIGNORS
Interest
--------
Blackstone Real 000 Xxxx Xxxxxx, 00xx Xxxxx 28.4709%
Estate Partners Xxx Xxxx, Xxx Xxxx 00000
Two X.X.
Xxxxxxxxxx Real 000 Xxxx Xxxxxx, 00xx Xxxxx 10.5093%
Estate Holdings New York, New York 10154
II X.X.
Xxxxxxxxxx Real 000 Xxxx Xxxxxx, 00xx Xxxxx 25.8242%
Estate Partners Xxx Xxxx, Xxx Xxxx 00000
II.TE.1 X.X.
Xxxxxxxxxx Real 000 Xxxx Xxxxxx, 00xx Xxxxx 0.0000%
Xxxxxx Partners Xxx Xxxx, Xxx Xxxx 00000
II.R (City Center)
Blackstone Real 000 Xxxx Xxxxxx, 00xx Xxxxx 0.0000%
Xxxxxx Partners Xxx Xxxx, Xxx Xxxx 00000
II.TE.3 X.X.
Xxxxxxxxxx Real 000 Xxxx Xxxxxx, 00xx Xxxxx 0.0000%
Xxxxxx Partners Xxx Xxxx, Xxx Xxxx 00000
II.TE.4 X.X.
Xxxxxxxxxx Real 000 Xxxx Xxxxxx, 00xx Xxxxx 15.2562%
Estate Partners Xxx Xxxx, Xxx Xxxx 00000
II.TE.5 X.X.
Xxxxxxxxxx Real 000 Xxxx Xxxxxx, 00xx Xxxxx 0.0000%
Xxxxxx Investors Xxx Xxxx, Xxx Xxxx 00000
(City Center) Inc.
SCHEDULE A-1
DESCRIPTION OF FEE PARCEL
[OMITTED]
SCHEDULE A-2
DESCRIPTION OF LEASEHOLD PARCEL
[OMITTED]
SCHEDULE B
EXISTING TITLE POLICY AND SURVEY
[OMITTED]
SCHEDULE C
NY LIFE LOAN DOCUMENTS
[OMITTED]
SCHEDULE C-1
INSTRUMENTS ENCUMBERING CITY CENTER INTERESTS
National City Center Right of First Refusal.
SCHEDULE D
CONSENTS
[OMITTED]
SCHEDULE E
CONTRACTS
[OMITTED]
SCHEDULE E-1
CONTRACTS TO BE TERMINATED
NONE.
SCHEDULE F
SPACE LEASES
[OMITTED]
SCHEDULE F-1
LANDLORD'S WORK IN PROGRESS
TENANT DOCUMENT DESCRIPTION OUTSTANDING AMOUNT
------ -------- ----------- ------------------
National City Bank 4th Expansion Tenant Improvement allowance $407,440
of $20/RSF on 20,372 RSF
SCHEDULE F-2
CONTEMPLATED LEASES
NONE.
SCHEDULE F-3
DEFERRED TENANT IMPROVEMENTS
TENANT DOCUMENT DESCRIPTION OUTSTANDING AMOUNT
------ -------- ----------- ------------------
Xxxxx & Xxxxxxxxx 9th Addendum to Tenant Improvement Payments 1999 $91,794
Lease 2000 $91,794
2001 $91,794
SCHEDULE F-4
BASE BUILDING WORK
NONE.
SCHEDULE G
BROKERAGE COMMISSIONS
NONE.
SCHEDULE H
LITIGATION
[OMITTED]
SCHEDULE I
SECURITY DEPOSITS HELD BY SELLER
[OMITTED]
SCHEDULE J
BUYER CONSENTS
NONE.
