Exhibit 10.1
AGREEMENT FOR PURCHASE AND SALE
OF REAL ESTATE AND RELATED PROPERTY
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE AND RELATED PROPERTY
("Agreement") is made and entered into as of the 30th day of December, 1998, by
and between 33 WEST MONROE ASSOCIATES, L.P., an Illinois limited partnership
("Seller"), and PRIME GROUP REALTY, L.P., a Delaware limited partnership
("Purchaser").
RECITALS
A. American National Bank and Trust Company of Chicago, not personally,
but as Trustee under Trust Agreement dated February 1, 1978 and known as Trust
No. 42198 ("Trust One") holds fee title to a parcel of land located at 00 Xxxx
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx ("Parcel One"). American National Bank and
Trust Company of Chicago, not personally, but as Trustee under Trust Agreement
dated February 1, 1978 and known as Trust No. 42199 ("Trust Two") holds
leasehold title to a parcel of land located adjacent to Parcel One ("Parcel
Two") pursuant to that certain Lease Agreement dated April 1, 1978 between The
Baptist Theological Union, as lessor ("Ground Lessor"), and Trust Two, as
lessee, a short form of which was recorded on April 12, 1978 with the Xxxx
County, Illinois Recorder of Deeds as Document No. 24399609 ("Ground Lease").
Parcel One and Parcel Two are sometimes together referred to herein as the
"Land".
B. Trust One and Trust Two (collectively called the "Trusts") have
constructed a 28 story office building on the Land ("Building"). In connection
with the construction of the Building, on April 7, 1978, Trust One and Ground
Lessor entered into an Agreement pertaining thereto, which was recorded on April
12, 1978 with the Xxxx County, Illinois Recorder of Deeds as Document No.
24399610 ("Adjacent Owners Agreement").
C. Seller is the sole beneficiary under the Trusts.
D. Seller has previously made available to Purchaser the following items
(collectively called the "Information Package") in connection with the Property
(as hereinafter defined): (i) copies of all contracts (including equipment
leases, if any) currently in effect (including amendments thereto and any
guarantees and warranties thereunder) which Seller contemplates assigning to
Purchaser in connection with the Closing of the transaction contemplated hereby
("Service Contracts"), (ii) copies of real estate tax bills for the years 1996
and 1997 for the Building and the Land, (iii) copies of any licenses,
authorizations, approvals, warranties and permits (including the Canopy Permit
from the City of Chicago) issued by any governmental authority currently in
effect and in the possession
of Seller ("Permits and Warranties"), (iv) statements (certified by Seller's
property manager) of income and certain expenses for the years 1996, 1997 and
1998 (to date), (v) copies of the plans and specifications for the Building in
the possession of Seller ("Plans"), (vi) copies of all leases of space (and all
amendments thereto and guarantees thereof) in the Building currently in effect
("Leases"), (vii) copy of the Ground Lease, (viii) current rent roll with
respect to all tenants occupying space in the Building, a copy of which is
attached hereto and made a part hereof as Exhibit A ("Rent Roll"), (ix) copy of
any existing environmental report in the possession of Seller ("Existing
Environmental Report"), (x) copy of the existing survey ("Existing Survey"),
(xi) copies of the Construction Contracts (as hereinafter defined), (xii) copy
of the Tax Contract (as hereinafter defined), and (xiii) 1998 operating and
capital budgets (if any), leasing plans, if any, tenant files and
correspondence.
E. Seller desires to sell, and Purchaser desires to acquire, Parcel One,
the lessee's interest under the Ground Lease, the Building, and certain related
property on an "AS IS, WHERE IS" basis, without any conditions, representations
or warranties of any kind, except as specifically and expressly set forth in
this Agreement.
NOW, THEREFORE, in consideration of and in reliance upon the above
Recitals (which are incorporated in and made a part of this Agreement), and the
mutual covenants, promises and undertakings set forth in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Purchaser agree as follows:
AGREEMENTS
1. PURCHASE AND SALE OF PROPERTY.
A. Seller agrees to sell and convey (or to cause the Trusts to sell and
convey, as the case may be) to Purchaser or Purchaser's assignee in accordance
with Section 13.D below, and Purchaser agrees to purchase and accept all of the
right, title and interest of Seller or the Trusts, as the case may be, in and to
the following described property (all of which is hereinafter collectively
referred to as the "Property"):
1. Fee simple title to Parcel One, as is more specifically described in
Exhibit B attached hereto and made a part hereof, together with all
easements, rights, privileges, tenements, hereditaments and appurtenances
pertaining thereto, and all right, title and interest of Seller in and to
any streets, alleys, passages and other rights-of-way included therein or
adjacent thereto.
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2. The lessee's interest under the Ground Lease which demises Parcel Two,
as Parcel Two is more specifically described in Exhibit C attached hereto
and made a part hereof.
3. The Building, together with all other improvements and all fixtures now
situated on the Land and all systems, facilities, machinery, equipment and
conduits to provide fire protection, security, heat, exhaust, ventilation,
air conditioning, electrical power, light, plumbing, refrigeration, gas,
sewer and water to the Building (including replacements or additions
thereto between the date hereof and the Closing, as that term is
hereinafter defined) (collectively, the "Improvements").
4. All personal property, machinery, apparatus, equipment, fixtures,
furnishings and other personal property situated on the Land or the
Improvements ("Personal Property"). An inventory of the Personal Property
has previously been delivered to Purchaser. The Personal Property
specifically excludes any personal property owned by the Property Manager
(as hereinafter defined) and any personal property owned by tenants under
the Leases. The Personal Property to be conveyed is subject to depletions,
replacements and additions in the ordinary course of the operation, repair
and maintenance of the Land and Improvements.
5. The Leases, the Service Contracts, the Plans, the Permits and
Warranties, the Construction Contracts, the Tax Contract, the Adjacent
Owners Agreement, and copies of any existing books, records, documents and
intangible property (other than accounts, accounts receivable and
proprietary computer software) desired by Purchaser pertaining to the
operation, maintenance, repair and leasing (including information on
computer disks pertaining to tenant xxxxxxxx and escalations) of the
Property in the possession of Seller or the Property Manager.
The Land and Improvements are sometimes together referred to herein as the
"Premises."
B. Except for the express representations and warranties of Seller set
forth in Section 8.A of this Agreement, the Property is being sold in an "AS
IS-WHERE IS" condition and with "ALL FAULTS" as of the date of this Agreement.
Except as specifically and expressly set forth in this Agreement, no promises,
representations or warranties have been made or are made and no responsibility
has been or is assumed by Seller or by any partner, officer, director,
shareholder, beneficiary, affiliate, person, firm, agent or representative
acting or purporting to act on behalf of Seller as to (i) the condition or state
of repair or
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utility of the Property, (ii) the value, expense of operation or income
potential thereof, or (iii) any other fact or condition which has or could
affect the Property or the condition, repair, value, expense of operation or
income potential of the Property or any portion thereof, including, without
limitation, with respect to any environmental matters which could affect the
Property. Purchaser waives (such waiver to be effective from and after the date
which is six months after the Closing hereunder) any rights to contribution for
environmental matters it may now or hereafter have, whether under the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.), or otherwise. The parties acknowledge and agree that the
intent of this Agreement is that Purchaser has previously examined the
Information Package and Purchaser has had an agreed upon time period within
which to investigate and determine all matters pertaining to the Property to its
own satisfaction, including, without limitation, its satisfaction with the
environmental condition of the Property, and compliance with the Americans with
Disabilities Act. Except as specifically and expressly set forth in this
Agreement, Seller shall have no liability for the accuracy of any matters, facts
or data reflected in the Information Package, unless Seller has fraudulently
failed to disclose to Purchaser any actual knowledge Seller had that such
matters, facts or data were not materially correct. The parties acknowledge and
agree that all understandings and agreements heretofore made between them or
their respective agents or representatives regarding the purchase and sale of
the Property are merged into this Agreement and the Exhibits made a part hereof,
which alone fully and completely express their agreement and that neither party
is relying upon any statement, promise or representation by the other unless
such statement, promise or representation is specifically and expressly set
forth in this Agreement or the Exhibits made a part hereof. At Closing and as a
material inducement for Seller to consummate the transaction contemplated
hereby, Purchaser shall execute and deliver a certification in the form of
Exhibit D attached hereto and made a part hereof.
2. PURCHASE PRICE.
The purchase price ("Purchase Price") which Seller agrees to accept and
Purchaser agrees to pay for the Property is ONE HUNDRED MILLION DOLLARS
($100,000,000) U.S., payment of which is to be made as follows:
A. Within one (1) Business Day (as hereinafter defined) after execution of
this Agreement by Purchaser and Seller and Purchaser's receipt of a fully
executed original hereof, Purchaser shall make an xxxxxxx money deposit of THREE
MILLION DOLLARS ($3,000,000) U.S. ("Deposit"). The Deposit shall be held in
escrow by Commonwealth Land Title Insurance Company (sometimes called the
"Deposit Escrowee" or the "Title Company") in an
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interest bearing account pursuant to the terms of a joint order escrow agreement
in the form of Exhibit E attached hereto and made a part hereof ("Deposit Escrow
Agreement"). Any interest earned on the Deposit shall be considered part of the
Deposit. Except as otherwise specifically provided in this Agreement, the
Deposit shall be paid to Seller and applied to the Purchase Price at Closing.
Any escrow cost related to the Deposit shall be equally divided and paid by
Seller and Purchaser.
B. At 10:00 A.M. Central Time on the date of Closing (provided that all
express conditions to Purchaser's obligations contained herein have been
satisfied and all applicable documents required by Section 10.A hereof have been
deposited previously into escrow with Deposit Escrowee), Purchaser shall pay to
Deposit Escrowee an amount equal to the Purchase Price less the Deposit, plus or
minus prorations as provided herein, via wire transfer in immediately available
U.S. funds to a bank account designated by Deposit Escrowee ("Cash Balance").
3. PRIOR TO CLOSING.
A. During the period from the date of Seller's execution of this Agreement
until Closing or the earlier termination of this Agreement, Seller shall and
hereby covenants to:
1. Except as otherwise provided in this Agreement, operate the Property
through its on-site property manager ("Property Manager"), in the normal
course of business and, through the Property Manager, keep the Property in
its existing condition and state of repair, ordinary wear and tear and
loss due to fire or other casualty excepted, subject to Section 11 below.
Notwithstanding the foregoing, Seller shall continue (in accordance with
the terms of the Construction Contracts defined below) with its scheduled
elevator renovation ("Elevator Renovation") and garage repairs ("Garage
Repairs"), if any, in the Building until the Closing. Seller shall assign
to Purchaser at Closing, and Purchaser shall accept and assume, the
contracts previously or hereafter entered into by or on behalf of Seller
which pertain to the Elevator Renovation and Garage Repairs ("Construction
Contracts"); provided, however, that from and after the date hereof,
Seller shall not enter into any Construction Contract unless it has been
approved in writing by Purchaser. Purchaser shall receive a credit against
the Purchase Price payable at Closing with respect to the Elevator
Renovation and Garage Repairs, as is more particularly described in
Sections 9.H and 9.I below.
2. Keep the Premises and Personal Property insured against fire or other
hazards covered by extended coverage endorsement and comprehensive public
liability insurance against claims for bodily injury, death and property
damage
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occurring in, on or about the Premises, on terms no less favorable than
currently existing.
3. Not sell, lease, mortgage, pledge, encumber, hypothecate or otherwise
transfer or dispose of (or grant any interest in) all or any part of the
Property, the beneficial interest in the Trusts, or the general partner
interests in Seller, except that Seller may enter into new Leases (or
amendments, modifications, extensions or expansions of existing Leases)
pursuant to Section 3.B.1 below, and except for depletions and
replacements of Personal Property in the ordinary course of the operation,
repair and maintenance of the Land and Improvements and except as a result
of the exercise of a condemnation (but subject to Section 11 hereof).
4. Promptly give written notice to Purchaser upon obtaining knowledge of
the occurrence of any event which affects the truth or accuracy of any
representations or warranties made by Seller in this Agreement.
5. Perform (or cause to be performed) all of the applicable obligations of
Seller under the Leases and Service Contracts.
6. Not apply or use any portion of any security or other deposits posted
or made by tenants under the Leases.
7. Not pursue any legal or contractual remedies under the Leases without
Purchaser's consent, except in the event (in Seller's reasonable judgment)
of an emergency. In such event, Seller shall advise Purchaser of same as
soon as reasonably possible.
B. During the period from the date hereof until Closing or the earlier
termination of this Agreement, Seller shall and hereby covenants to:
1. Neither enter nor permit the Property Manager to enter into any new
Lease (or amendments, modifications, extensions, terminations or
expansions of existing Leases) without the prior written consent of
Purchaser. In the event Seller desires to enter into a new Lease (or
amendments, modifications, extensions, terminations or expansions of
existing Leases) of any portion of the Premises after the date hereof,
Seller shall submit to Purchaser a lease proposal package describing the
proposed tenant and the economic terms of the proposed new Lease (or
amendments, modifications, extensions, terminations or expansions of
existing Leases) and containing any other material information Seller has
regarding the applicable tenant or reasonably requested by Purchaser
("Lease Proposal"). The Lease Proposal shall consist of financial
information, if any, relating to the tenant under a proposed new Lease,
and a
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written summary of the material lease terms including, without limitation,
the following information (if applicable): (i) rent (including a
description of rent inducements, if any), (ii) lease term, (iii) security
deposit, (iv) leasing commissions, (v) moving allowance, and (vi) tenant
improvement allowance. Purchaser shall have two (2) Business Days after
its receipt of the Lease Proposal to consent to (or disapprove) the terms
of the Lease Proposal (if so approved, an "Approved Lease Proposal"). If
consent to a Lease Proposal is not received within such period, the
Proposal shall be deemed to have not been approved. Prior to executing any
Lease (or amendments, modifications, extensions, terminations or
expansions of existing Leases) prepared in accordance with the terms and
conditions described in an Approved Lease Proposal, Seller shall submit a
draft of such proposed new Lease to Purchaser for Purchaser's approval
("Lease Draft Proposal"). Purchaser shall have two (2) Business Days after
its receipt of the Lease Draft Proposal to consent (or disapprove) the
terms of the Lease Draft Proposal. If consent to a Lease Draft Proposal is
not received within such period, the Proposal shall be deemed to have not
been approved. Purchaser shall bear all costs in connection with new
Leases (or amendments, modifications, extensions or expansions of existing
Leases) entered into pursuant to this Section 3.B.1, including leasing
commissions, tenant improvement costs, moving costs, engineering fees,
rent concessions or inducements, and other tenant incentives (collectively
called the "Leasing Costs"), provided that the transaction contemplated
hereby is consummated.
2. Neither enter nor permit the Property Manager to enter into any new
Service Contract or extend, renew or materially modify or amend any
existing Service Contract, except those that are cancelable on not more
than 30 days' written notice without payment of any termination fee or
penalty.
3. Cooperate with Purchaser and Purchaser's accountants in connection with
such accountant's reasonable review and audit of Seller's books, records
and financial statements (excluding balance sheets) and information. In no
event, however, shall Seller be obligated to give such accountants any
kind of a "representation letter".
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4. INSPECTION OF THE PROPERTY.
During the period commencing on December 10, 1998 and ending on the date
of Closing, Purchaser and its agents and representatives may inspect the
Property (including the Information Package and the books, records and documents
of, and information related to, the Property maintained by either Seller or the
Property Manager with respect to the Property) and conduct such sampling or
non-destructive testing as Purchaser shall reasonably deem necessary during
normal business hours, subject to the following terms and conditions:
A. Purchaser shall give Seller (in care of Xxxxxx Xxxxx (000) 000-0000) at
least one (1) Business Day telephonic notice of its intention to inspect the
Property or conduct any sampling or testing. Purchaser shall only be permitted
to have contact with the tenants under the Leases or the Ground Lessor if
Purchaser has first obtained the prior consent of Seller, which consent shall
not be unreasonably withheld or delayed.
B. If Purchaser desires to conduct any environmental sampling or testing
at the Premises, Purchaser shall first provide Seller with the proposed study
plan therefor ("Plan"). The Plan is subject to the approval of Seller (not to be
unreasonably withheld or delayed) and no environmental sampling or testing shall
be performed until the Plan therefor has been approved by Seller, which approval
shall not be unreasonably withheld or delayed. Purchaser agrees that Seller may
have a representative present at any inspection, sampling or testing, including,
but not limited to, an environmental engineer or consultant designated by Seller
(in connection with any environmental sampling or testing conducted by Purchaser
in accordance with this Section 4). At Seller's request, any sampling or testing
by Purchaser's environmental consultant shall be conducted in a manner so as to
provide "split" samples or data to Seller's environmental consultant. Such
"split" samples shall be at Seller's cost.
C. Purchaser shall maintain commercially reasonable levels of liability
insurance coverage for its officers, employees, agents and representatives
inspecting the Property or conducting sampling or testing and, at Seller's
request, will provide Seller with written evidence of same.
D. Except to the extent otherwise provided herein, any such inspections,
sampling and testing shall be at Purchaser's sole cost and expense, and
Purchaser agrees to keep the Property free and clear of any liens which may
arise as a result of such inspections, sampling and testing.
E. Purchaser shall restore promptly any physical damage caused by the
inspection, sampling or testing of the Property.
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F. Purchaser shall, upon the request of Seller, provide Seller with copies
of written sampling test results and reports prepared by third parties, but
otherwise Purchaser and its officers, directors, employees, agents and
representatives shall keep all such information, sampling and test results and
reports obtained or developed during or as a result of such inspection strictly
confidential, except as provided in Section 13.F below.
G. Purchaser hereby indemnifies and agrees to defend, and hold Seller, the
Trusts and their respective partners, officers, directors, shareholders,
advisors, beneficiaries, agents, employees, representatives and tenants harmless
from and against all loss, cost, liability, lien, damage or expense, including
reasonable attorneys' fees and costs made, sustained, suffered or incurred
against or by Seller, the Trusts and their respective partners, officers,
directors, shareholders, advisors, beneficiaries, agents, employees,
representatives and tenants and attributable to or arising out of a breach of
the foregoing agreements set forth in this Section 4 by Purchaser in connection
with any such inspection, sampling or testing.
5. NO TERMINATION OF AGREEMENT.
As set forth in Section 1.B above, Purchaser has been given a period of
time to conduct an inspection and review of the Information Package and all
aspects of the Property desired by Purchaser. Purchaser has completed such
inspection and review and is prepared to proceed with the purchase of the
Property in accordance with the terms hereof. Accordingly, even though Purchaser
has continuing access to the Property pursuant to Section 4 above, Purchaser
shall not have any rights to terminate this Agreement (whether based upon such
access, or otherwise) unless such termination is expressly provided for
hereunder.
6. TITLE AND SURVEY.
A. The fee interest in Parcel One shall be conveyed to Purchaser at
Closing by a recordable Trustee's Deed in the form of Exhibit F attached hereto
and made a part hereof, and the leasehold interest in Parcel Two shall be
conveyed to Purchaser at Closing by a recordable Assignment of Lease in the form
of Exhibit G attached hereto and made a part hereof. Such Deed and Assignment
shall be subject to (i) the lien of non-delinquent real estate taxes and
assessments, (ii) the rights of tenants, as tenants only, under the Leases,
(iii) acts and deeds of Purchaser, and (iv) the matters described in Schedule B
of the Pro Forma Title Insurance Policy attached hereto as Exhibit H ("Pro Forma
Policy") (all of the foregoing are collectively called the "Permitted
Exceptions").
B. Seller has previously furnished to Purchaser a
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commitment issued by Title Company ("Title Commitment") for an extended coverage
ALTA (1992) Owner's and Leasehold Owner's Title Insurance Policy showing fee
title to Parcel One and leasehold title to Parcel Two in Seller, and proposing
to insure Purchaser in the amount of the Purchase Price. Purchaser has reviewed
the Title Commitment and has approved the Permitted Exceptions.
C. Seller has previously furnished to Purchaser an update of the Existing
Survey ("Updated Survey"), which was certified to Purchaser and the Title
Company by a surveyor registered in the State of Illinois. Purchaser has
reviewed and approved the Updated Survey; provided, however, that such approval
shall not require Purchaser to accept the fee and leasehold title to the Land
subject to any exceptions other than the Permitted Exceptions.
D. If on or prior to Closing any update of the Title Commitment discloses
an exception that is not a Permitted Exception or any update of the Updated
Survey discloses any material new item that is not a Permitted Exception and
Seller fails, at its sole cost, to discharge, remove or cause the Title Company
to insure over (subject to Purchaser's reasonable approval of any applicable
title endorsement) any such exception to title or other item that is not a
Permitted Exception, then Purchaser may elect, in its sole discretion, within
two Business Days after Seller has notified Purchaser that Seller will not
discharge, remove or cause the Title Company to insure over such exception (and
to insure over such exception to future owners and lenders of the Premises): (i)
subject to satisfaction of the other conditions to Closing contained herein, to
close the purchase of the Property, and take title subject to any such
exceptions that have not been discharged, removed or insured over at or before
Closing with no reduction in the Purchase Price, or (ii) to terminate this
Agreement, in which event the Deposit and all interest earned thereon shall be
immediately returned to Purchaser; provided, however, that the provisions of
Sections 4.G, 8.D and 13.F shall survive such termination. Notwithstanding the
foregoing, Seller shall cause to be paid at Closing such amount as is necessary
to discharge the existing mortgage on the Property which is disclosed in the
Title Commitment ("Existing Mortgage"), and Seller shall additionally cause to
be discharged or insured over, at Seller's cost, any liens of a definite amount
which are not Permitted Exceptions (and cause such liens to be insured over to
future owners and lenders of the Premises), provided that such liens were either
created by Seller or were permitted to be created by the direct acts of Seller.
Seller covenants not to intentionally create any unpermitted title exceptions.
E. Seller has delivered to Purchaser UCC, tax lien, bankruptcy, pending
litigation and judgment searches of Seller and its general partners
("Searches"). The Searches covered the
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Illinois Secretary of State's Office, the UCC records of Xxxx County, Illinois,
the U.S. District Court for the Northern District of Illinois and the Circuit
Court of Xxxx County, Illinois; provided, however, that the pending litigation
searches did not cover the general partners of Seller and the UCC searches did
not cover D&K (as hereinafter defined).
F. The cost of the Searches, the Title Commitment and the owner's title
insurance policy (including extended coverages) issued pursuant thereto ("Title
Policy") and the Updated Survey shall be paid by Seller. Any reinsurance or
endorsements for additional title coverage beyond the extended coverage owner's
title insurance policy (including the endorsements, other than an extended
coverage endorsement, contained in the Pro Forma Policy) shall be obtained
solely at Purchaser's own expense.
7. CLOSING.
A. Payment of the Purchase Price and the consummation of the transaction
contemplated by this Agreement ("Closing") shall take place pursuant to an
escrow closing which provides that the Purchase Price shall be paid to Seller
upon satisfaction or waiver of all express conditions contained herein to
Purchaser's obligations to close. The Closing shall occur at 9:00 A.M. Central
Time on January 20, 1999 at the offices of Seller's attorneys in Chicago,
Illinois or at such earlier date or other place as may be mutually agreed upon
in writing by both Seller and Purchaser; provided, however, that Seller, at
Seller's sole discretion, may elect to extend the Closing as necessary (but in
no event more than thirty (30) additional days) in order to satisfy the
requirements of Section 10.D(ii) below. Seller and Purchaser shall meet at the
office of Seller's attorneys and commence preparations for Closing on the day
immediately prior to the date of Closing ("Proration Date"), so that all Closing
documents required hereunder are signed and deposited into escrow with the Title
Company (and all Closing prorations required hereunder are finalized) before the
close of business on the Proration Date. All documents or other deliveries
provided for hereunder to be made by Purchaser or Seller at Closing, and all
transactions provided for hereunder to be consummated concurrently with Closing,
shall be deemed to have been delivered and to have been consummated
simultaneously with all other transactions and all other deliveries, and no
delivery shall be deemed to have been made, and no transaction shall be deemed
to have been consummated, until all deliveries provided for hereunder by
Purchaser and Seller shall have been made, and all concurrent or other
transactions shall have been consummated.
B. Purchaser shall have a one-time right to elect to extend the Closing
until February 2, 1999, upon the following conditions:
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(i) written notice of such extension shall be given to Seller not
later than January 15, 1999.
(ii) Contemporaneously with the giving of such notice, Purchaser
shall increase the amount of the Deposit held by Title Company by
One Million Dollars ($1,000,000).
(iii) Purchaser is not in default hereunder at the time of the
giving of such extension notice.
8. REPRESENTATIONS AND WARRANTIES.
A. Seller represents and warrants to Purchaser that:
1. Seller is a limited partnership, duly organized, validly existing and
in good standing under the laws of the State of Illinois, has duly
authorized the execution, delivery and performance of this Agreement and
such execution, delivery and performance will not violate or create a
default under the Limited Partnership Agreement of Seller or any contract
or agreement by which Seller or the Property are bound. The individuals
signing this Agreement and all documents executed or to be executed
pursuant hereto are and shall be duly authorized to sign same on behalf of
and bind Seller.
2. This Agreement is valid and enforceable against and binding upon Seller
in accordance with its terms and each instrument to be executed by Seller
pursuant to this Agreement will, when executed and delivered, be
enforceable in accordance with its terms, subject to bankruptcy,
insolvency and similar laws affecting creditors' rights generally.
3. To Seller's knowledge, and except with respect to (a) any matters
disclosed in the Existing Environmental Report or in any environmental
report or study obtained by Purchaser pursuant to Section 4 hereof, or (b)
any hazardous material that may be located on the Property in the ordinary
course of any tenant's business which is in compliance with applicable law
and the terms and provisions of such tenant's Lease, neither Seller nor
the Property Manager has received written notice from any governmental
authority of any violation or alleged violation of any environmental,
zoning, building, fire, health or other code regulation, ordinance,
statute, law, act, permit, license, order or decree applicable to the
Property or any portion thereof, that has not heretofore been corrected in
accordance with applicable law.
4. To Seller's knowledge, the Service Contracts contained in the
Information Package are all of the contracts (including amendments) made
by Seller or the Property Manager which affect the Property as of the date
of this Agreement, except
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for the Leases, the Permitted Exceptions and the existing property
management agreement which is to be terminated effective upon Closing.
(Service Contracts entered into pursuant to Section 3.B.2 above shall not
be deemed to be a breach of the foregoing warranty.)
5. To Seller's knowledge, the Rent Roll is true and correct in all
material respects, and the updated Rent Roll to be delivered to Purchaser
at Closing hereunder will (when delivered) be true and correct in all
material respects.
6. There are no delinquencies with respect to real estate taxes affecting
the Premises.
7. The Land constitutes a separate parcel or parcels for real estate tax
purposes, except as may be indicated otherwise in the Title Commitment.
8. To Seller's knowledge, there are no Leases currently in effect executed
by the Trusts, Seller or Property Manager or other rights of occupancy or
use granted by the Trusts, Seller or Property Manager of any portion of
the Property other than the Ground Lease or the Leases and rights of
occupancy described on the Rent Roll.
9. The Ground Lease is in full force and effect, has not been modified
(other than modifications for which Purchaser has been provided a copy) or
terminated, and Seller has not received any written notice from Ground
Lessor alleging any default of Trust Two thereunder. The parties
acknowledge, however, that the procedures for adjusting the Base Period
Rental and for determining the Base Period Annual Tax Equivalent have not
been concluded within the time periods set forth in Section 2.03 of the
Ground Lease ("Rent Adjustment Procedures") and, accordingly, no warranty
is made (or shall be implied) with respect to the consequences arising
therefrom.
10. There is no litigation, arbitration or other proceeding before any
court, arbitrator or regulatory official, body or authority which is
pending or, to Seller's knowledge, threatened, against Seller relating to
the Property, except as may be listed on Exhibit N hereto.
11. To Seller's knowledge, no condemnation or eminent domain proceeding is
pending with respect to all or any part of the Property.
12. Except as set forth in Exhibit O hereto, or as contemplated in the
contract between Seller and the law firm of O'Xxxxx Xxxxxxxx Xxxxx & Xxxx
("Tax Contract"), there are no pending actions or proceedings by the
Trusts or Seller for
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a reduction of real estate taxes applicable to the Property.
13. There are no leasing commissions owed to D&K (as hereinafter defined)
with respect to the Leases and, to Seller's knowledge, there are no
leasing commissions owed to any other broker (except in connection with
the Lease to Merrill, Lynch, Xxxxxx, Xxxxxx & Xxxxx, Inc.) with respect to
the Leases.
14. Seller owns one hundred percent of the beneficial interest in and to,
and the power of direction under, the Trusts, free and clear of liens,
encumbrances, options and restrictions created by Seller, except in
connection with the Existing Mortgage, and no party (other than Seller and
the lender under the Existing Mortgage) has the right to direct the
Trustee under the Trusts.
15. The interest of Seller in the Service Contracts, Leases, Permits and
Warranties and other documents and property described in Section 1.A.5
above has not been assigned by Seller to any other party, except in
connection with the Existing Mortgage.
16. To Seller's knowledge, the Leases provided in the Information Package
constitute all of the agreements between Seller and the current tenants
(except Levy, as hereinafter defined) of the Property.
17. To Seller's knowledge, Seller has not received written notice stating
that the real estate tax exemption for Parcel Two has been revoked, or
that the assessor has assessed or intends to assess real estate taxes on
Parcel Two.
18. Exhibit M attached hereto contains a true and correct description of
the amount of unused tenant improvement allowances that are currently due
and owing to the tenants under the Leases ("Current TI Amount").
B. Purchaser represents and warrants to Seller that:
1. Purchaser is a limited partnership, duly organized, validly existing
and in good standing under the laws of the State of Delaware, is
authorized to do business in the State of Illinois, has duly authorized
the execution, delivery and performance of this Agreement, and such
execution, delivery and performance will not violate its limited
partnership agreement, or any contract or agreement by which it is bound.
The individuals signing this Agreement and all other documents executed or
to be executed pursuant hereto are and shall be duly authorized to sign
the same on behalf of and bind Purchaser.
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2. This Agreement is valid and enforceable against and binding upon
Purchaser in accordance with its terms and each instrument to be executed
by Purchaser pursuant to this Agreement will, when executed and delivered,
be enforceable in accordance with its terms, subject to bankruptcy,
insolvency and similar laws affecting creditors' rights generally.
C. As used in Section 8.A. (or in any other Sections of this Agreement),
Seller's "knowledge" shall mean and be limited to the actual knowledge (as
distinguished from implied, imputed or constructive knowledge) of Xxxxxxx Xxxxxx
(a general partner of Seller), Xxxxxxxxx Xxxx (another general partner of
Seller), Xxxxx Xxxxxx (the manager of the Property for Property Manager), and
Xxxxxx Xxxxx (the asset manager of the Property). Such "knowledge" of the
aforedescribed individuals shall not include a duty to inquire or investigate
any facts or information with respect to the Property or the warranties of
Seller contained herein.
D. Seller and Purchaser mutually represent and warrant to each other that
each has had no dealings, negotiations, or consultations with any broker or
other intermediary in connection with this Agreement or the sale of the
Property, except for Xxxxxx and Xxxxxx, Incorporated ("D&K"). Provided the
transaction contemplated hereby is consummated, Seller shall pay a brokerage
commission to D&K in an amount previously agreed to by such parties. Seller and
Purchaser agree that each will indemnify, defend and hold the other free and
harmless from the claims (including attorneys' fees) of any other broker or
other intermediary claiming to have dealt with Seller or Purchaser,
respectively, in connection with this Agreement or the sale of the Property.
E. It shall be a condition to each party's obligation to close that (i)
the representations and warranties of the other party are true and correct in
all material respects as of Closing, (ii) the other party has timely performed
all material obligations of such party as of the Closing, (iii) all other
conditions precedent set forth in this Agreement have been satisfied or waived
by the other party, and (iv) Seller has obtained all consents from third parties
which are required in order to consummate the transaction contemplated hereby.
F. If prior to Closing Purchaser becomes aware that any of Seller's
representations and warranties is not true and correct, Purchaser shall promptly
notify Seller of same. Seller shall have (at Seller's election) a period of
thirty (30) days ("Warranty Cure Period") in which to attempt to cure any breach
of warranty alleged by Purchaser or any breach of warranty otherwise discovered
by Seller (and the date of Closing shall be extended accordingly); provided,
however, that Seller, at its
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sole option, may elect not to cure (or attempt to cure) the alleged breach. If
Seller does not cure such breach of warranty within the Warranty Cure Period,
Purchaser may within two (2) Business Days after the earlier to occur of (x)
receipt of notice from Seller that Seller does not elect to cure the alleged
breach of warranty, or (y) expiration of the Warranty Cure Period, (i) terminate
this Agreement upon written notice given to Seller, or (ii) elect, upon written
notice given to Seller, to close without any set-off or deduction of any kind
against the Purchase Price or otherwise. If this Agreement is so terminated, the
Deposit Escrowee shall return promptly the Deposit and any interest earned
thereon to Purchaser and neither party shall have any liability to the other
except for the obligations of Purchaser set forth in Section 4.G above and the
obligations of the parties set forth in Sections 8.D and 13.F above, which shall
survive the termination of this Agreement. If Seller does not receive written
notice of Purchaser's election to terminate this Agreement within the two
Business Day period specified above, Purchaser shall be conclusively presumed to
have elected to close notwithstanding the alleged breach of warranty.
G. The representations and warranties set forth in Section 8.D shall
survive the Closing for the full period of the applicable statute of
limitations. All of the other representations, warranties, certifications and
indemnifications of the parties set forth in Sections 8.A and 8.B above, and in
the documents delivered pursuant to Section 10.A below (collectively called the
"Closing Documents") shall survive Closing, provided written notice of any claim
arising from a breach of such representations, warranties, certifications and
indemnifications must be specified and received by the other party not later
than six (6) months after the date of Closing and prosecuted by the filing of a
lawsuit in a court of proper jurisdiction within nine (9) months after the date
of Closing. All other claims for breach of such representations, warranties,
certifications and indemnifications shall be barred and neither party shall have
any liability with respect thereto. In no event shall the aggregate liability of
Seller for a breach of the representations, warranties, certifications and
indemnifications set forth in Section 8.A above or contained in the Closing
Documents exceed Three Million Dollars ($3,000,000). Notwithstanding anything
contained herein to the contrary, Purchaser shall have no right to recover
damages against Seller for the breach of any representation, warranty,
certification or indemnification of Seller contained herein or in the Closing
Documents as to which Purchaser had actual knowledge prior to Closing, but as to
which Purchaser did not give Seller the notification required in Section 8.F
above. Purchaser's actual knowledge shall mean and include the actual knowledge
of Xxxxxxx Xxxxxxxxx, Xxxxx XxXxxxxx, Xxxxxxxx Xxxxxxxxxxx, and Xxxxxxx Xxxxx,
and all facts, information and data contained in any written or oral reports
made to Purchaser or such individuals by
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any outside consultants, engineering firms, environmental firms, attorneys and
accountants retained by Purchaser.
9. CLOSING COSTS AND PRORATIONS.
A. Seller and Purchaser shall share equally the cost of the escrow closing
arrangements. Seller shall pay the State of Illinois and Xxxx County real estate
transfer tax related to the sale of the Premises, and Purchaser shall pay the
City of Chicago real estate transfer tax related to the sale of the Premises.
Except as otherwise specifically provided in this Agreement, each party shall
bear its own costs in performing its obligations under this Agreement including,
without limitation, its own attorneys' fees and, in the case of Purchaser, all
costs and expenses in connection with its inspection of the Property as provided
in Section 4 above. All covenants and obligations contained in this Section 9
shall survive the Closing in accordance with the terms hereof.
B. The following items are to be prorated or adjusted as of the Proration
Date:
1. Rents, percentage rents (if any) and other amounts owed under the
Leases actually received by Seller, rent, percentage rent (if any) and
other payments under the Ground Lease, payments under Service Contracts
assigned to Purchaser, installment payments of special assessment liens
(and Purchaser shall be responsible to pay all installments of special
assessments which are due after the Proration Date), sewer charges and
operating or utility charges actually collected, billed or paid as of the
date of Closing shall be prorated as of the Proration Date and be adjusted
against the Cash Balance due at Closing, provided that within a reasonable
time after Closing, Purchaser and Seller will make a further adjustment
for such rents, payments, or charges which may have been incurred for the
period of time before Closing, but not billed or paid at that time. In
addition, Seller or Purchaser may require a further adjustment of such
rents, payments, or charges following the end of calendar year 1999 after
the actual amount of the applicable items becomes known and available.
Without limiting the generality of the foregoing, Seller shall be entitled
to receive (and Purchaser shall promptly pay to Seller after receipt
thereof from the applicable tenants) all expense reimbursements under the
Leases actually paid by tenants which relate to periods of time prior to
the Closing. Rents and other amounts collected by Purchaser or its agent
under any Lease after Closing attributable to the time period before
Closing shall be paid to Seller, but only after all amounts then due and
payable to Purchaser have been paid. Seller shall have the right after
Closing to pursue all actions (including the commencement of legal
proceedings in
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the name of Seller or Purchaser) against tenants in order to recover
delinquent amounts under (or in connection with) the Leases which are owed
to Seller. In no event, however, shall Seller institute any legal
proceedings against Levy, or in any manner attempt, to recover any amounts
owed under the Lease with Levy. Purchaser shall cooperate with all
reasonable requests of Seller in connection with the recovery of such
amounts (at no cost to Purchaser), provided that no such legal proceeding
shall seek to terminate the tenant's Lease or to evict the tenant from its
demised premises. The amount of any refund or credit due to tenants of the
Property as the result of the collection by or on behalf of Seller prior
to the Closing of contributions by such tenants for operating expenses
and/or taxes which exceed the actual amount of such operating expenses
and/or taxes payable by such tenants with respect to periods prior to the
Closing shall be prorated as soon as such actual operating expenses and/or
taxes are known, and Seller shall promptly pay to Purchaser, upon delivery
to Seller of appropriate documentation, the amount due as a result of such
proration. Purchaser shall assume and timely discharge all obligations
with respect to accrued expenses, prepaid income and security deposits for
which it receives proration credit. Tax and expense escalation,
pass-through and participation payments under Leases including, but
without limitation, amounts due tenants for excess payments thereby of tax
and expense escalation and refunds due tenants for tax abatements,
refunds, credits or other similar amounts for periods prior to the Closing
(collectively, "Tenant Items") shall be prorated as of the Proration Date
on an estimated basis. Seller agrees to cooperate (at no cost to Seller)
with Purchaser in the preparation of the financial statements and other
financial data respecting the ownership and operation of the Property for
calendar year 1998 (if such statements have not been completed by the date
of Closing) and subsequent periods for which such statements and data must
be prepared in order to compute, charge and prorate the Tenant Items. As
soon as reasonably possible after the preparation of the aforesaid
financial statements and data, Purchaser will render statements for the
Tenant Items to the tenants of the Property under their respective Leases.
From time to time as Purchaser receives payment of the Tenant Items from
the tenants, Purchaser will promptly remit to Seller that portion of the
Tenant Items allocable to the Property prior to the date of Closing, but
only after all amounts then due and payable to Purchaser have been paid.
2. Real property taxes will be prorated as of the Proration Date using one
hundred five percent (105%) of the most recent ascertainable tax xxxx
therefor. Purchaser shall receive a credit for the 1998 real estate taxes
payable in 1999 and for the 1999 real estate taxes (from January 1, 1999
through the
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Proration Date) payable in 2000. Such taxes will be reprorated within
ninety (90) days after the issuance of the actual tax xxxx, it being the
intent of the parties that Seller be responsible for real estate taxes for
the Premises attributable to the period before Closing and Purchaser be
responsible for the real estate taxes for the Premises attributable to the
period after Closing. Any refund of real estate taxes for the Premises
attributable to the fiscal year in which the Closing takes place (or any
fiscal year prior to such year) shall be prorated between the parties
within thirty (30) days after such refund has been received (whether in
the form of cash or as a credit against future real estate taxes) by
Seller or Purchaser, as the case may be. Seller shall be entitled to
receive the portion of such refund that pertains to the period of time
prior to the date of Closing and Purchaser shall be entitled to receive
the portion of such refund that pertains to the period of time after the
date of Closing; provided, however, that (a) the out-of-pocket costs to
third parties incurred in obtaining such refund shall be shared by the
parties in the same percentage as they share in the applicable tax refund,
and (b) the tenants under the Leases shall be reimbursed from the net
refund amount (after payment of third party costs as provided above) in
accordance with the applicable terms of the Leases before the remaining
refund amount is paid to Seller and/or Purchaser, as the case may be.
C. The full amount of security deposits paid under the Leases, which have
not been applied (subject to Section 3.A.6 above) by Seller shall be credited to
Purchaser by application against the Cash Balance due at Closing.
D. Seller shall receive a credit at Closing in an amount equal to all
deposits previously made by Seller with Ground Lessor or third parties under the
Ground Lease, including all amounts contained in the tax escrow account held by
the Xxxxxx Bank in Chicago, Illinois. Seller shall assign to Purchaser at
Closing all of Seller's right, title and interest in and to all such deposits
and accounts for which Seller has received a credit at Closing.
E. Seller shall pay for the Leasing Costs currently due and owing in
connection with all Leases entered into prior to the date hereof ("Current
Leases") and any other Lease that has been entered into by Seller that is not in
accordance with Section 3.B.1 hereof. Purchaser shall pay (a) all Leasing Costs
arising out of the exercise by a tenant after the date hereof and prior to the
date of Closing of an extension or expansion option (or the failure of a tenant
to exercise a cancellation option) contained in a Current Lease, (b) all Leasing
Costs in connection with any Leases entered into after the date hereof, in
accordance with Section 3.B.1 hereof ("New Leases"), and (c) all Leasing
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Costs in connection with the exercise by a tenant on or after the date of
Closing of an extension or expansion option (or the failure of a tenant to
exercise a cancellation option) contained in a Current Lease or a New Lease.
Notwithstanding the foregoing, Purchaser shall pay all Leasing Costs in
connection with the 21st floor expansion of the Lease with Merrill, Lynch,
Xxxxxx, Xxxxxx & Xxxxx, Inc., but Seller acknowledges and agrees that no leasing
commission will be due D&K in connection therewith.
F. All prorations and Closing adjustments shall be made on the basis of a
365 day calendar year. All such prorations and adjustments shall be subject to
post-Closing adjustments as necessary to reflect later relevant information not
available at Closing and to correct any errors made at Closing with respect to
such apportionments and the party receiving more than it was entitled to
hereunder shall reimburse the other party hereto in the amount of such
overpayment within thirty (30) days after receiving written demand therefor.
Notwithstanding the foregoing, such apportionments shall be deemed final and not
subject to further post-Closing adjustment, except for reproration of real
estate taxes or tax refunds as provided above, if no such adjustments have been
requested within ninety (90) days after the end of calendar year 1999. Utility
prorations for Closing will be made by utility readings as close to the date of
Closing as practical.
G. Purchaser and Ground Lessor have reached an agreement which provides
(among other things) for the amount of the annual Base Period Rental and the
Base Period Annual Tax Equivalent which will be payable from and after May 1,
1998 ("Settlement Agreement"). A copy of the Settlement Agreement is attached
hereto as Exhibit K. Purchaser shall perform all of its obligations under the
Settlement Agreement (including the entering into of the Ground Lease amendment
described therein) and shall enforce its rights under the Settlement Agreement
to receive the Ground Lessor Estoppel Certificate and Agreement Regarding Ground
Lease described therein (collectively called the "Ground Lessor Estoppel
Certificates") within the time periods provided for therein and in this
Agreement. Purchaser shall receive a credit against the Cash Balance at Closing
with respect to the period commencing on May 1, 1998 and ending on the Proration
Date ("Stub Period") equal to the sum of (i) the difference between $800,000 (as
adjusted to reflect the Stub Period) and the amount of Base Period Rental
previously paid by Seller with respect to the Stub Period, and (ii) the
difference between $737,500 (as adjusted to reflect the Stub Period) and the
amount of Base Period Annual Tax Equivalent previously paid by Seller with
respect to the Stub Period. The amounts credited to Purchaser in accordance with
the preceding sentence shall be repaid by Purchaser to Seller (in accordance
with the provisions of Section 9.B.1 above) if and when collected by Purchaser
from tenants of the Property after Closing, but only after all amounts then due
and payable to Purchaser have been paid.
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H. At Closing, Purchaser shall receive a credit against the Cash Balance
in an amount equal to the difference between (i) $997,000 and (ii) the amount
previously spent by Seller (whether to consultants or otherwise) on the Elevator
Renovation. The parties acknowledge, however, that Seller and Xxxxxx Xxxxxxxx &
Co. ("Xxxxxxxx") have entered into a separate agreement whereby Xxxxxxxx is
obligated to reimburse Seller for a portion of the cost of the Elevator
Renovation over a twenty year period. Seller shall receive a credit from
Purchaser at Closing in the amount of $234,000, which represents a discounted
portion of the amount payable under such agreement with Xxxxxxxx and a
discounted portion of amounts payable by other tenants with respect to the
Elevator Renovation), and Seller shall assign its rights under such agreement
with Xxxxxxxx to Purchaser at Closing.
I. At Closing, Purchaser shall receive a credit against the Cash Balance
in an amount equal to the difference between (i) $110,000 and (ii) the sum of
(i) the amount previously spent by Seller (whether to consultants or otherwise)
on the Garage Repairs, and (ii) the amount of the Garage Repairs payable by
tenants under the Leases (approximately $10,000).
J. Purchaser acknowledges that Levy (Monroe) Limited Partnership ("Levy")
has ceased paying rent under its Lease and, accordingly, is in default
thereunder ("Levy Lease Default"). Purchaser accepts the Levy Lease Default
(without deduction or offset from the Purchase Price), and Seller shall have no
liability or obligation of any kind or nature whatsoever to Purchaser or Levy
with respect to the Levy Lease Default or the Lease with Levy after Closing.
K. At Closing, Seller shall receive a credit from Purchaser in the amount
of $500,000, which represents a portion of the real estate taxes for calendar
year 1998 which are payable in calendar year 1999 under the Lease with Xxxxxxxx.
L. At Closing, Purchaser shall receive a credit against the Cash Balance
in an amount equal to the Current TI Amount. Purchaser shall assume and be
responsible to pay such Amount to the applicable tenants pursuant to the terms
of their Leases.
10. CLOSING DOCUMENTS AND MATTERS.
A. On the Proration Date, Seller shall deliver the following original
documents into escrow, each acknowledged and executed by Seller and/or the
Trusts, as appropriate:
1. A Trustee's Deed to Parcel One in the form of Exhibit F attached hereto
and made a part hereof, subject to the Permitted Exceptions.
2. State of Illinois, Xxxx County and City of Chicago real
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estate transfer tax declarations, and Chicago Water Certification.
3. Assignment of lessee's interest under the Ground Lease in the form of
Exhibit G attached hereto and made a part hereof, subject to the Permitted
Exceptions.
4. A Xxxx of Sale with respect to the Personal Property, in the form of
Exhibit I attached hereto and made a part hereof.
5. An Assignment and Assumption of Leases, Service Contracts, Construction
Contracts, Tax Contract, Adjacent Owners Agreement, Permits and
Warranties, Plans and any other so-called intangible property constituting
the Property in the form of Exhibit J attached hereto and made a part
hereof ("Miscellaneous Assignment").
6. A letter advising tenants under the Leases of the change in ownership
of the Premises, that Purchaser has assumed the Leases, that any security
deposits under the Leases have been transferred to Purchaser, and
directing such tenants to pay rent as Purchaser may direct, to the manager
of the Property.
7. A letter advising the Ground Lessor that the Ground Lease has been
assigned to (and assumed by) Purchaser.
8. The Ground Lease, all Leases and assigned Service Contracts, all
Permits and Warranties, Plans and copies of the intangible property
described in Section 1.A.4 above (including copies of tenant files and
correspondence), all of which shall be delivered to Purchaser or its agent
at the Premises.
9. An Affidavit from Seller pursuant to the Foreign Investment in Real
Property Tax Act.
10. An ALTA Loan and Extended Coverage Statement or the equivalent thereof
reasonably required by the Title Company in connection with the issuance
of the Title Policy, which Statement may disclose the Leases by attaching
a copy of the Rent Roll. Such Statement shall be accompanied by such lien
waivers and contractors statements as the Title Company reasonably
requires in connection with the Construction Contracts.
11. Any evidence of the authority of Seller to consummate the transaction
contemplated hereby that is reasonably requested by the Title Company.
12. Letter of Direction from Seller directing the Trustee of the Trusts to
execute and deliver the applicable Closing Documents provided for herein.
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13. A Disclosure Statement contemplated under the Illinois Responsible
Property Transfer Act, or an Affidavit of Non-Applicability.
14. Ground Lessor Estoppel Certificates from Ground Lessor, substantially
in the form attached to the Settlement Agreement, which Certificates may
be conditioned (as to their effectiveness) on the Closing of the
transaction contemplated hereby.
15. A Closing Statement in accordance with Section 9 hereof.
16. A so-called Gap Undertaking, if required by the Title Company, in form
and substance reasonably acceptable to Seller.
17. Lien waiver from Property Manager.
18. A so-called pay proceeds letter from the Trustee of the Trusts.
19. A Certificate with respect to Seller's representations and warranties
hereunder in the form of Exhibit P attached hereto.
20. Update of the Rent Roll.
21. Bulk Sale Stop Order from the Illinois Department of Revenue.
22. Records for the prior five years with respect to percentage rent owed
under the Ground Lease.
23. The assignment of the tax escrow account contemplated by Section 9.D
above. At the request of Purchaser, Seller shall join in a direction to
the escrowee of such account to disburse to Purchaser (for use at the
Closing) the surplus in such account that is described in the Settlement
Agreement, but such disbursement shall not be a condition of Closing
hereunder.
24. Termination of the existing management agreement with D&K pertaining
to the Property.
B. On the Proration Date, Purchaser shall deliver or cause to be delivered
the following original documents into escrow, each acknowledged and executed (as
appropriate):
1. The Assignment of Ground Lease in the form of Exhibit G hereto.
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2. The Miscellaneous Assignment in the form of Exhibit J hereto.
3. State of Illinois, Xxxx County and City of Chicago real estate transfer
tax declarations.
4. An ALTA Loan and Extended Coverage Statement or the equivalent thereof
reasonably required by the Title Company in connection with the issuance
of the Title Policy.
5. The tenant notification letters described in Section 10.A.6 above.
6. The notification letter to the Ground Lessor described in Section
10.A.7 above.
7. Any evidence of the authority of Purchaser to consummate the
transaction contemplated hereby that is reasonably requested by the Title
Company.
8. The Disclosure Statement described in Section 10.A.13 above, if
applicable.
9. The Certificate in the form of Exhibit D hereto.
10. A Closing Statement in accordance with Section 9 hereof.
11. The assignment described in Section 10.A.23 above.
C. At Closing, upon satisfaction of all express conditions to Purchaser's
obligation to close contained herein, the Deposit shall be paid to Seller and
Purchaser shall cause to be paid to Seller the Cash Balance as required pursuant
to Section 2 above, plus or minus prorations as determined pursuant hereto.
Closing shall be deemed to have occurred (e.g., for purposes of possession and
prorations) at such time as the Deposit and the Cash Balance have been sent by
wire transfer from the Title Company to Seller (and Seller's mortgagee), but in
no event later than noon Central Time. Amounts not sent by such time shall, for
purposes hereof (including all prorations required hereby), be deemed to have
been sent the next Business Day.
D. In addition to the other conditions to Closing expressly set forth in
this Agreement, it shall be a condition to Purchaser's obligation to close the
transaction contemplated hereby that Purchaser receives at Closing:
(i) Executed (by the Title Company) Pro Forma Policy (including all
endorsements and reinsurance contained or described therein).
(ii) Estoppel certificates, substantially in the form of
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Exhibit L attached hereto and made a part hereof, from Xxxxxxxx, D&K,
Gersco (GE Railcar), Xxxxxxx Xxxxx & Co., and either Standard Chartered
Bank or Levenfeld, Eisenberg, Janger & Xxxxxxxxx ("Required Estoppel
Certificates"). Seller shall use reasonable efforts to obtain estoppel
certificates from all tenants leasing space in the Improvements (other
than Levy and tenants leasing parking spaces), including the entity which
occupies a portion of the space leased to Standard Chartered Bank, but if
the Required Estoppel Certificates are not delivered at or prior to
Closing, (an estoppel certificate shall be deemed to satisfy the
requirements of this Section 10.D(ii) even though it may not be in the
form or substance of Exhibit L, provided that the certificate contains the
specific information (as opposed to a general or "catch-all" requirement),
if any, required by the applicable Lease or that the departures therefrom
reflect facts or circumstances that are disclosed in the Information
Package or that were actually known to Purchaser through its inspection of
the Property prior to the date hereof), Purchaser may elect to terminate
this Agreement. If this Agreement is terminated pursuant to this Section,
the Deposit Escrowee shall refund the Deposit and any interest earned
thereon to Purchaser and the parties shall not have any further
obligations hereunder, except pursuant to Sections 4.G, 8.D and 13.F
hereof, which shall survive such termination. Notwithstanding anything to
the contrary contained herein, the Required Estoppel Certificates and the
Ground Lessor Estoppel Certificates described in Section 10.A.14 above
shall be delivered to Purchaser on or before January 18, 1999 (or, by
January 29, 1999, if Purchaser has extended the Closing pursuant to
Section 7.B above). If such delivery is not made, the date of Closing may
be extended, at no cost, by Purchaser for the number of days (not to
exceed 30 days) until delivery of such Estoppel Certificates is made. Such
right to extend the Closing shall not diminish or affect the right of
Seller to extend the Closing pursuant to Section 7.A above. If Seller so
extends, the Closing shall take place on or before five Business Days
after the missing Required Estoppel Certificates have been received by
Purchaser. At Purchaser's request, Seller shall also send to the tenants
of the Property a supplement to the Estoppel Certificate attached hereto
as Exhibit L ("Supplemental Certificates"). The Supplemental Certificates
shall be substantially in the form of Exhibit Q hereto, but, in no event,
shall receipt by Purchaser of executed Supplemental Certificates from the
tenants of the Property be a condition precedent to Purchaser's obligation
to close hereunder. The so-called "cover letter" to the tenants which
accompanies the Estoppel Certificates attached hereto as Exhibit L and the
Supplemental Certificates shall be substantially in the form of the letter
attached hereto as Exhibit R.
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E. Seller shall terminate the existing management agreement with the
Property Manager effective as of the date of Closing. On the date of Closing,
Seller shall also terminate and satisfy all obligations to all employees
employed by Seller or the "property" in the operation of the Property. If
Purchaser notifies Seller in writing prior to the date of Closing that Purchaser
intends to continue the employment of any such employees after the Closing,
Seller shall terminate such employees designated by Purchaser only with regard
to their continued employment by Seller and not with regard to their employment
at the Property. Seller agrees that all obligations with respect to the
termination of all such employees who are not continued by Purchaser, including
termination benefits earned prior to the date of Closing and unfunded
contributions or termination obligations with respect to any employee benefit
plans, agreements and trusts shall be the sole responsibility and expense of
Seller; provided that Seller shall not be responsible for any such obligations
attributable to the employment of such employees by Purchaser or its agents
subsequent to the date of Closing.
F. Purchaser shall be entitled to sole and exclusive possession of the
Property at the conclusion of Closing subject only to the Permitted Exceptions.
G. Effective upon Closing, Seller may notify all contractors and utility
companies serving the Property of the sale of the Property and to (i) return any
deposit or deposits posted by Seller, (ii) terminate Seller's account effective
on noon on the date of Closing, and (iii) direct to Purchaser all bills for
services provided to the Property on and after the date of Closing. Seller and
Purchaser shall coordinate such matters and final meter readings of utilities
prior to Closing.
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11. CASUALTY AND CONDEMNATION.
A. If, prior to Closing, either (i) the Premises are destroyed or
materially damaged by fire or other casualty or (ii) the Premises or a material
part thereof is condemned (or written notice threatening condemnation is
received by Seller from a governmental agency), then Purchaser may elect to
terminate this Agreement. Purchaser shall give written notice of its election to
Seller within ten (10) days after receiving actual notice or actual knowledge of
damage or condemnation. In such event, the Deposit Escrowee shall return the
Deposit and all interest earned thereon to Purchaser and thereupon this
Agreement shall be null and void and neither party shall have any further
obligations under this Agreement except under Sections 4.G, 8.D and 13.F, which
survive such termination. If Purchaser does not give such written notice within
such ten (10) day period, the transaction contemplated by this Agreement shall
be consummated as otherwise provided herein. In such event, Purchaser shall have
the right to participate in any adjustment or settlement of an insurance claim
and Seller will assign to Purchaser at Closing the physical damage proceeds of
any insurance policy payable or paid to Seller or Seller's portion of the
condemnation award and Purchaser shall receive a credit against the Purchase
Price in the amount of the deductible under such policy.
B. As used in Section 11.A(i) above, material damage shall be deemed to
have occurred if the cost of repairing such damage (as estimated by the
applicable insurance carrier for Seller) is in excess of Five Million Dollars
($5,000,000). As used in Section 11.A (ii) above, a condemnation of a material
part of the Premises shall be deemed to have occurred if the portion taken
adversely affects the normal use, access to or income of the Premises, or
involves a value in excess of Five Million Dollars ($5,000,000).
C. If prior to Closing less than a material portion of the Premises is
damaged by fire or other casualty or less than a material part thereof is
condemned, then the transaction contemplated by this Agreement shall be
consummated as otherwise provided herein. In the event of such casualty or
condemnation, Purchaser shall have the right to participate in any adjustment or
settlement of an insurance claim and Seller shall assign to Purchaser at Closing
the physical damage proceeds of any insurance policy payable or paid to Seller
or Seller's portion of the condemnation award and Purchaser shall receive a
credit against the Purchase Price in the amount of the deductible under such
policy.
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12. DEFAULT.
A. If Purchaser shall default under this Agreement prior to Closing, and
such default is not cured within ten (10) days after written notice thereof from
Seller to Purchaser (except for failure to pay the Cash Balance at Closing,
which shall be a default without notice or opportunity to cure), then, as
Seller's sole and exclusive remedy under this Agreement, at law or in equity
(Seller hereby waiving any right to collect additional damages or pursue any
other remedies with respect to such default), the Deposit and interest thereon
shall be paid by the Deposit Escrowee to Seller as liquidated damages, and both
parties shall be relieved of and released from any further liability hereunder,
except for the obligations of Purchaser set forth in Section 4.G. above and the
obligations of the parties set forth in Sections 8.D and 13.F above. Seller and
Purchaser agree that the Deposit and interest thereon is a fair and reasonable
amount to be retained by Seller as agreed and liquidated damages in light of
Seller's removal of the Property from the market and the costs incurred by
Seller and shall not constitute a penalty or a forfeiture.
B. If Seller shall default under this Agreement prior to Closing or refuse
or fail to convey the Property as herein provided, and such default or refusal
is not cured within ten (10) days after written notice thereof from Purchaser to
Seller, Purchaser's sole remedy therefor shall be either (1) to terminate this
Agreement and have the Deposit and all interest earned thereon returned to it,
or (2) to enforce Seller's obligations to convey the Property in accordance with
the terms, provisions, covenants and conditions contained herein, provided that
no such action in specific performance shall seek to require Seller to (a)
change the condition of the Property or restore the Property or any part thereof
following any fire, other casualty or condemnation; (b) expend money or post a
bond to remove a title defect or correct any matter shown on the Updated Survey
in excess of its obligations under Section 6.D above; or (c) secure any permit,
approval or consent with respect to the Property or Seller's conveyance of the
Property.
13. MISCELLANEOUS.
A. No alteration, modification or interpretation of this Agreement or the
Exhibits shall be binding unless in writing and signed by both parties.
B. If any provision of this Agreement or any application to any party or
circumstances shall be determined by any court of competent jurisdiction to be
invalid and unenforceable to any extent, the remainder of this Agreement or the
application of such provision to such person or circumstances, other than those
as to which it is so determined invalid or unenforceable, shall
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not be affected thereby, and each provision hereof shall be valid and shall be
enforced to the fullest extent permitted by law, except that, if as a result
thereof, the consideration to be paid to Seller under this Agreement is
diminished in any material respect Seller shall have the option, upon written
notice to Purchaser, to terminate this Agreement.
C. This Agreement shall be construed and enforced in accordance with the
laws of the State of Illinois.
D. Purchaser may not assign this Agreement without first obtaining
Seller's written consent, which consent may be withheld in Seller's sole
discretion; provided, however, that Seller shall not withhold its consent to an
assignment of this Agreement to an entity which has Purchaser or affiliates
thereof as its managing partners, managing members or controlling shareholders
("Qualified Assignee") so long as the requirements of Section 13.Q below are
satisfied with respect to such assignment. Any assignment in contravention of
this provision shall be void. No assignment (including an assignment to a
Qualified Assignee) shall release the Purchaser herein named from any obligation
or liability under this Agreement. If Purchaser requests Seller's written
consent to any assignment, Purchaser shall (i) notify Seller in writing of the
proposed assignment; (ii) provide Seller with the name and address of the
proposed assignee; (iii) provide Seller with financial information including
financial statements of the proposed assignee (unless the proposed assignee is a
Qualified Assignee); and (iv) provide Seller with a copy of the proposed
assignment.
E. This Agreement shall be binding and inure to the benefit of Purchaser
and Seller and their successors and permitted assigns.
F. Seller shall have the right to review (prior to issuance) any press
release issued by or on behalf of Purchaser (whether before or within six months
after Closing) with respect to the transaction contemplated hereby.
G. The captions in this Agreement are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this Agreement or the scope or content of any of its provisions.
H. In the event of any litigation arising out of this Agreement, in
addition to any other rights or remedies specified herein, the prevailing party
(which term shall mean the party which obtains substantially all of the relief
sought by such party) shall be entitled to its reasonable attorneys' fees and
costs.
I. When used in this Agreement, the term "Business Day"
-29-
shall mean any day when national banks located in Chicago, Illinois are open for
business.
J. Nothing contained in this Agreement shall be construed to create a
partnership or joint venture between the parties or their successors in interest
or any other relationship other than seller and purchaser.
K. Time is of the essence of this Agreement.
L. This Agreement may be executed and delivered in any number of
counterparts, each of which so executed and delivered shall be deemed to be an
original and all of which shall constitute one and the same instrument.
M. Purchaser and Seller agree not to record this Agreement or any
memorandum thereof.
N. No failure or delay by a party to exercise any right it may have by
reason of the default of the other party shall operate as a waiver of default or
as a modification of this Agreement or shall prevent the exercise of any right
by the first party while the other party continues to be so in default.
O. For the purpose of complying with Internal Revenue Service reporting
requirements for this transaction, the Title Company shall be obligated to
prepare and file the 1099-S form (and any necessary supporting documentation)
and Seller and Purchaser shall cooperate with any requests from the Title
Company in connection therewith.
P. Purchaser acknowledges and agrees that the agreements of Seller
contained herein shall only be enforceable (subject to all limitations on
liability contained in this Agreement) against the property of Seller and the
proceeds of sale received by Seller hereunder ("Sale Proceeds"). By executing
this Agreement (i) Purchaser agrees to look solely to the property of Seller and
the Sale Proceeds (subject to all limitations on liability contained in this
Agreement) for the enforcement of its rights hereunder, and (ii) Purchaser
hereby waives any claim or any right to proceed for the enforcement of any of
its rights hereunder against the general and limited partners of Seller, or any
affiliates thereof. Seller covenants that at least Three Million Dollars
($3,000,000) of the Sale Proceeds will be held back from distributions to the
partners of Seller until at least six (6) months have elapsed after the date of
Closing.
Q. To satisfy compliance with the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), Purchaser represents and warrants to Seller that,
as of the date hereof and as of the date of Closing:
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(i) Purchaser's rights under this Agreement do not, and upon its
acquisition by Purchaser the Property shall not, constitute "plan
assets" within the meaning of 29 C.F.R. Section 2510.3-101, because
one or more of the following circumstances is true:
(x) Equity interests in Purchaser are publicly offered securities,
within the meaning of 29 C.F.R. Section 2510.3-101(b)(2); or
(y) Less than twenty-five percent (25%) of all equity interests in
Purchaser are held by "benefit plan investors" within the
meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(z) Purchaser qualifies as an "operating company", "venture
capital operating company", or a "real estate operating
company" within the meaning of 29 C.F.R. Section
2510.3-101(c), (d) or (e).
(ii) Purchaser is not a "governmental plan" within the meaning of Section
3(32) of ERISA and the execution of this Agreement and the purchase
of the Property by Purchaser is not subject to state statutes
regulating investments of and fiduciary obligations with respect to
governmental plans.
Purchaser hereby agrees to execute such documents or provide such information as
Seller may reasonably require in connection with the transaction contemplated
hereby (the "Transaction") or to otherwise assure Seller that: (i) this is not a
prohibited transaction under ERISA, (ii) that the Transaction is otherwise in
full compliance with ERISA, and (iii) that Seller is not in violation of ERISA
by compliance with this Agreement and by closing the Transaction. Seller shall
not be obligated to consummate the Transaction unless and until the Transaction
complies with ERISA and Seller is satisfied that the Transaction complies in all
respects with ERISA. The obligations of Purchaser under this Section shall
survive the Closing and shall not be merged therein.
R. The submission by Seller to Purchaser of this Agreement in unsigned
form shall be deemed to be a submission solely for Purchaser's consideration and
not for acceptance and execution. Such submission shall have no binding force
and effect, shall not constitute an option, and shall not confer any rights or
impose any obligations upon Purchaser, irrespective of any reliance thereon,
change of position or partial performance. The submission by Seller of this
Agreement for execution by Purchaser and the actual execution and delivery
thereof by Purchaser to Seller shall similarly have no binding force and effect
on Seller unless and until Seller shall have executed this Agreement and a
-31-
counterpart thereof shall have been delivered to Purchaser.
S. Seller has advised Purchaser that the Lease with Xxxxxxxx contains a
right of first refusal ("ROFR") in the event Seller receives an offer to
purchase the Property which Seller desires to accept. Seller will send the
requisite notice to Xxxxxxxx pursuant to the ROFR within three (3) Business Days
after the date hereof. If Xxxxxxxx should timely elect to purchase the Property
pursuant to the ROFR, this Agreement shall be terminated without liability to
the parties (except pursuant to Sections 4.G, 8.D and 13.F, which shall survive
termination), and Deposit Escrowee shall return the Deposit and all interest
earned thereon to Purchaser. If Xxxxxxxx does not timely elect to purchase the
Property in accordance with the ROFR, this Agreement shall continue in full
force and effect in accordance with its terms.
T. Seller has advised Purchaser that, pursuant to Seller's Limited
Partnership Agreement, a certain percentage of the limited partners of Seller
are required to consent to a sale of the Property ("Consent"). If Seller does
not advise Purchaser in writing within fourteen (14) days after the date hereof
that the Consent has been obtained, this Agreement shall be terminated
automatically without liability to the parties (except pursuant to Sections 4.G,
8.D and 13.F, which shall survive termination), Deposit Escrowee shall return
the Deposit and all interest earned thereon to Purchaser, and Seller shall
reimburse Purchaser for the bona fide, out-of-pocket costs incurred by Purchaser
to third parties in connection with the transaction contemplated hereby (such
reimbursement not to exceed $100,000). If Seller notifies Purchaser in writing
within such 14 day period that the Consent has been obtained, this Agreement
shall continue in full force and effect in accordance with its terms. In seeking
to obtain the Consent, Seller shall recommend to its other general partners and
to its limited partners, that the transactions contemplated hereby be approved.
14. NOTICES.
Any notices or requests required or permitted to be given hereunder shall
be (i) hand delivered, or (ii) sent by Federal Express or similar nationally
recognized overnight service for next business day delivery, or (iii) sent by
U.S. certified mail, return receipt requested, in all cases addressed to the
parties at their respective addresses as follows:
If to Seller: 33 West Monroe Associates, L.P.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxx and
Xxxxxxx Xxxxxx
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Facsimile No: (000) 000-0000
With a copy to: Xxxxxx Xxxxx, Esq. and
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No: (000) 000-0000
If to Purchaser: Prime Group Realty, L.P.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx and
Xxxxxxx Xxxxx, Esq.
Facsimile No: (000) 000-0000
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With a copy to: Xxxxxxx Xxxxx, Esq.
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No: (000) 000-0000
or in each case to such other address as either party may from time to time
designate by giving notice in writing to the other party. Notices shall be
deemed received (a) upon receipt if hand delivered, (b) one (1) Business Day
after delivery to the overnight courier, (c) two (2) Business Days after
deposited in the mail, or (d) upon receipt if sent by facsimile, provided that a
"hard" copy of such notice is received by the applicable party on the next
Business Day thereafter.
15. WAIVER OF JURY TRIAL.
IN ANY PROCEEDING TO ENFORCE THE TERMS OF THIS AGREEMENT OR OBTAIN ANY
REMEDY PROVIDED FOR HEREIN OR OTHERWISE PERMITTED BY LAW IN CONNECTION WITH THE
SUBJECT MATTER HEREOF, WHETHER BEFORE OR AFTER CLOSING, SELLER AND PURCHASER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TRIAL BY JURY TO THE
FULLEST EXTENT PERMITTED BY LAW.
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this
Agreement as of the date first written above, being the date inserted by Seller
as the date of its execution and delivery hereof to Purchaser.
SELLER: PURCHASER:
33 WEST MONROE ASSOCIATES, L.P., an Illinois PRIME GROUP REALTY, L.P., a
limited partnership Delaware limited partnership
By Xxxxxx and Xxxxxx By: Prime Group Realty Trust,
Incorporated, a general a Maryland real estate
partner investment trust, its
Managing General Partner
By: ________________________ By: ________________________
Its_____________________ Its_____________________
-34-
List of Exhibits
A - Rent Roll
B - Legal Description of Parcel One
C - Legal Description of Parcel Two
D - Purchaser's Certification
E - Deposit Escrow Agreement
F - Trustee's Deed
G - Assignment of Ground Lease
H - Proforma Policy
I - Xxxx of Sale
J - Miscellaneous Assignment
K - Settlement Agreement
L - Tenant Estoppel Certificate
M - Current TI Amount
N - Litigation List
O - Tax Reduction Proceedings
P - Seller's Bring Down Certificate
Q - Supplemental Certificate
R - Cover Letter to Tenants
-35-
EXHIBIT A
RENT ROLL
[OMITTED]
-36-
EXHIBIT B
LEGAL DESCRIPTION OF PARCEL ONE
[OMITTED]
-37-
EXHIBIT C
LEGAL DESCRIPTION OF PARCEL TWO
[OMITTED]
-38-
EXHIBIT D
PURCHASER'S CERTIFICATION
[OMITTED]
-39-
EXHIBIT E
DEPOSIT ESCROW AGREEMENT
[OMITTED]
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EXHIBIT F
TRUSTEE'S DEED
[OMITTED]
-41-
EXHIBIT G
ASSIGNMENT OF GROUND LEASE
[OMITTED]
-42-
EXHIBIT H
PROFORMA POLICY
[OMITTED]
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EXHIBIT I
XXXX OF SALE
[OMITTED]
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EXHIBIT J
MISCELLANEOUS ASSIGNMENT
[OMITTED]
-45-
EXHIBIT K
SETTLEMENT AGREEMENT
[OMITTED]
-46-
EXHIBIT L
TENANT ESTOPPEL CERTIFICATE
[OMITTED]
-47-
EXHIBIT M
CURRENT TI AMOUNT
1. Xxxxxxx Xxxxx & Co. $982,770.00
2. Levenfeld, Eisenberg, Janger & Xxxxxxxxx $176,187.96
-48-
EXHIBIT N
LITIGATION LIST
[OMITTED]
-49-
EXHIBIT O
TAX REDUCTION PROCEEDINGS
[OMITTED]
-50-
EXHIBIT P
SELLER'S BRING DOWN CERTIFICATE
[OMITTED]
-51-
EXHIBIT Q
SUPPLEMENTAL CERTIFICATE
[OMITTED]
-52-
EXHIBIT R
COVER LETTER TO TENANTS
[OMITTED]
-53-
