Exhibit 10.2
Option Agreement
This Option Agreement ("Option Agreement") is made as of the __ day
of February, 1999 between BRE/Wabash L.L.C., a Delaware limited liability
company ("BRE"), and Prime Group Realty, L.P. ("Prime").
Preliminary Statement
A. BRE is the owner of certain property located in Xxxx County,
Illinois which is described in the Agreement of Purchase and Sale attached as
Exhibit A to this Option Agreement (the "Purchase Agreement").
B. BRE is willing to grant to Prime an option to purchase the Asset
(as defined in the Purchase Agreement) in accordance with the terms of this
Option Agreement and the Purchase Agreement.
Agreement
In consideration of the foregoing recitals and the covenants and
agreements of the parties herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, BRE
and Prime agree as follows:
1. Grant of Option. BRE hereby irrevocably grants to Prime a one
time option to purchase the Asset strictly in accordance with the terms of, and
subject to, this Option Agreement (the "Option") and the Purchase Agreement.
2. Term of the Option; Performance Obligations. The term of the
Option shall commence upon the execution of this Option Agreement and the
simultaneous execution of that certain lease agreement (the "Lease
Agreement")between Enterprise Center VII, L.P., as landlord, and, as tenant,
and continue until 5:00 P.M. (E.D.T.) on October 31, 1999 (the "Option Period").
3. Exercise of the Option and Prime's Performance of Obligations.
The Option may be exercised by Prime only by (a) written notice of such
exercise, in accordance with the provisions of Section 14 below, in the form set
forth in Exhibit B Delivered by Prime to BRE prior to the termination of the
Option Period (the "Option Notice") and (b) the deposit by Prime, within one (1)
Business Day after Delivery of Option Notice, with Escrow Agent (as defined in
the Purchase Agreement) of the Xxxxxxx Money (as defined in the Purchase
Agreement).
2
Time shall be of the essence with respect to the Delivery of the Option Notice,
deposit of the Xxxxxxx Money with Escrow Agent and with respect to the
performance by Prime of all of its obligations under this Option Agreement. If
Prime fails to exercise the Option during the Option Period as provided above,
the Option shall terminate and neither BRE nor Prime shall have any further
obligations or liability to each other under this Option Agreement, except with
respect to a default hereunder, in which event if it is Prime which desires to
claim a default (x) Prime's sole and exclusive remedies shall be limited to
those set forth in Section 18(b)(i) below (without limiting Prime's rights under
Section 18(b)(ii) hereof) and (y) such claim must be made by Delivering written
notice thereof to BRE not later than November 10, 1999.
4. BRE's Performance of Obligations. With respect to any of BRE's
obligations under this Option Agreement, upon Delivery of a written notice from
Prime stating specifically the obligations under this Option Agreement that BRE
had failed to perform, BRE shall have an additional fourteen (14) day period to
complete performance of said obligations (the "Fourteen Day Notice Period").
Time shall be of the essence with respect to BRE's performance of any
obligations which are properly included in any such notice within the Fourteen
Day Notice Period; provided, however, that BRE shall not be deemed in breach of
this Option Agreement unless and until the Fourteen Day Notice Period expires
without BRE performing, in accordance with the terms and provisions of this
Option Agreement, the obligations properly included in said notice.
5. The Purchase Agreement. Upon the valid exercise of the Option by
Prime in accordance with Section 3 above, except as otherwise provided in this
Section 5, the Purchase Agreement shall conclusively be deemed to have been
executed and delivered by Prime and BRE and to be in full force and effect
without the need for any further action by either of such parties, except BRE
(and Prime with respect to Schedule E-1 only), shall have the opportunity to
update the Schedules to the Purchase Agreement (the "Updated Schedules") within
three Business Days (as defined in the Purchase Agreement) of the receipt of
such exercise notice and Prime shall have the right within two (2) Business Days
after Delivery of the Updated Schedules (except Schedule E-1)(the "Review
Period") to notify BRE whether it accepts the Updated Schedules. In the event
that Prime notifies BRE in writing within the Review Period that it does not
accept any part of the Updated Schedules, then the Purchase Agreement shall be
deemed null and void, the Xxxxxxx Money (but not the Option Payment) shall be
returned to Prime, Prime shall have no further rights to exercise the Option and
neither party shall have any further rights, duties or obligations under the
Purchase Agreement. In the event that Prime does accept the Updated Schedules in
writing within the Review Period, or in the event that it does not notify BRE
during the Review Period that it
3
rejects the Updated Schedules, then the Purchase Agreement shall conclusively be
deemed to have been executed by Prime and BRE and be in full force and effect,
together with the Updated Schedules as the Schedules thereto. Within two (2)
Business Days of Prime's acceptance of the Updated Schedules, whether by
inaction or by written notice, each of BRE and Prime shall execute and deliver
to the other counterparts of the Purchase Agreement; provided, however, the
failure of either party to execute and deliver counterparts shall not impair the
effectiveness of the Purchase Agreement. In addition to and not in limitation of
the foregoing, BRE shall have the ongoing right, but not the obligation, from
time to time, during the duration of the Option Period, to provide to Prime
Updated Schedules to the Purchase Agreement.
6. Option Payment. The total consideration to be paid by Prime for
the granting of the Option shall be $8,000,000 (the "Option Payment") payable by
Prime to BRE on the date of this Option Agreement in immediately available
funds. Except as expressly provided for in Section 18(b)(i) below (which
exception is limited solely to a violation by BRE of its representations
contained in Section 10(a)(i) hereof), the Option Payment shall not be
refundable under any circumstances, whatsoever, including, without limitation,
any lapse of the Option Period without exercise of the Option and any
termination of the Purchase Agreement, whether arising from a default by BRE
thereunder or otherwise. In the event of a default by BRE under the Purchase
Agreement after the valid exercise by Prime of the Option, Prime shall have
solely the rights and remedies set forth in Section 14.1(b) of the Purchase
Agreement.
7. Purchase Price. The purchase price to be paid by Prime for the
Asset shall be $230,000,000, subject to adjustment as provided in the Purchase
Agreement, to be wired at the Closing (as defined below) in immediately
available funds in accordance with the Purchase Agreement.
8. Closing. The Asset shall be transferred to Prime, and the
Purchase Price shall be paid on the Closing Date (as defined in the Purchase
Agreement) in accordance with, and subject to, the terms, conditions and
provisions set forth in the Purchase Agreement. Time shall be of the essence,
subject to the terms and conditions of the Purchase Agreement, with respect to
Prime's obligations to close on the Closing Date, and any failure by Prime to
comply with such obligations on that date shall, at BRE's option, result in a
termination of the Option, after which Prime shall have no further rights under
this Option Agreement or under the Purchase Agreement.
9. Agreements. BRE shall have the right, in its sole and absolute
discretion, to enter into agreements relating to the Property, including without
limitation, agreements relating to the purchase and sale of the Property and/or
the ground leasing
4
of the Property or any portion thereof, to mortgage the Property or any portion
thereof and to sell the Property or any portion thereof, provided, however, that
with respect to sale agreements and mortgages relating to the Property, and any
rights of first refusal and rights of first offer granted with respect to the
acquisition of the Property, sale/leaseback transactions and new ground leases
relating to the entire Property and options to purchase the Property, all such
sale agreements, mortgages, rights of first refusal, rights of first offer,
sale/leasebacks, ground leases and options to purchase shall specifically and
expressly provide that they are, and all such sale agreements, mortgages, rights
of first refusal, rights of first offer, sale/leaseback agreements, ground
leases and options to purchase shall be specifically entered into, subject and
subordinate to the rights of Prime pursuant to, and in accordance with, this
Option Agreement. BRE shall deliver to Prime written notice of, and evidence of
such statement of subordination with respect to, any sale agreements, mortgages,
rights of first refusal, rights of first offer, sale/leaseback agreements,
ground leases or options to purchase that BRE enters into during the Option
Period
10. Representations; Covenants. (a) BRE hereby represents and
warrants the following:
(i) it has all requisite power and authority to enter into and
deliver this Option Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Option Agreement and the consummation of the
transactions provided for in this Option Agreement have been duly
authorized by all necessary action on its part.
(ii) except for any consent, license, approval, order, permit,
authorization, registration, filing or declaration, the failure of which
to obtain will not adversely affect (A) BRE's ability to consummate the
transactions contemplated by this Option Agreement, (B) BRE's ownership of
the Asset (as defined in the Purchase Agreement) or (C) in a material
adverse manner, the operation or value of the Property to Prime, 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 Option Agreement by BRE.
(iii) the execution, delivery and compliance with, and
performance of the terms and provisions of, this Option Agreement will not
(i) conflict with or result in any violation of BRE's organizational
documents, (ii) to BRE's knowledge, conflict with or result in any
violation of any provision of any bond, note or other instrument of
5
indebtedness, contract, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which BRE 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 BRE or its assets or properties except,
in each case, for any conflict or violation which (A) will not adversely
affect (1) BRE's ability to consummate the transactions contemplated by
this Option Agreement, (2) the ownership of the Asset or Property (3) in a
material manner, the operation by BRE of the Property or value thereof or
(B) arises under the documents evidencing and securing the Cigna Loan (as
defined in the Purchase Agreement) with respect to the sale of the Asset.
(b) Prime hereby represents and warrants the following:
(i) it has all requisite power and authority to enter into and
deliver this Option Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Option Agreement and the consummation of the
transactions provided for in this Option Agreement have been duly
authorized by all necessary action on its part.
(ii) other than the filing of this Option 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 Option Agreement or any of the transactions required
or contemplated hereby.
(iii) the execution, delivery and compliance with, and
performance of the terms and provisions of, this Option Agreement, and the
purchase of the Asset, 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.
(c) Except as expressly set forth in the Purchase Agreement and in
this Option Agreement, BRE is not making, and shall not be deemed to have made,
any covenant, representation or warranty of any nature whatsoever, express or
implied, regarding
6
the Asset or any other matter relating in any way to this Option Agreement or
any of the obligations of BRE under this Option Agreement, including, without
limitation, the condition or status of the Asset. Prime agrees that it is
entering into this Option Agreement, and, if it should exercise the Option, will
be exercising the Option, with the express and specific understanding that no
covenants, representations or warranties are being made by BRE.
(d) Throughout the term of this Option Agreement, BRE shall:
(i) permit Prime to inspect the Property for the sole purpose of
facilitating financing for its acquisition of the Property and in
accordance with the provisions of Article VIII of the Purchase
Agreement, provided further, however, Prime shall only be permitted
to inspect the Property a maximum of twice during the Option Period;
(ii) deliver to Prime, from time to time but not more than once a
calendar month, within ten (10) days after Delivery of a written
request from Prime requesting, with specificity, the documents so
desired, the following: an updated rent roll for the Property,
monthly operating, leasing and delinquency reports, New Leases and
material Lease Modifications regarding the Property (all as prepared
by BRE in its usual course of business), copies of all new material
contracts relating to the Property for which the amount payable
thereunder is in excess of $10,000 annually and any material
modifications, amendments, extensions or terminations of any
material contracts related to the Property and updated litigation
Schedules with respect to the Property. Subject to the provisions of
Section 21(n) relating to confidentiality, Prime shall have the
right to use and deliver any of the foregoing information to its
investors and/or its lender in connection with any investment or
financing of the acquisition of the Property. For purposes of this
Section 10(d)(ii), the term material contracts shall be deemed to
mean contracts relating to the Property for which the amount payable
thereunder is in excess of $10,000 annually. For the avoidance of
doubt, it is understood and agreed that any request by Prime
pursuant to this Section 10(d)(ii) shall include information about
the items so requested reasonably sufficient for BRE to readily
identify the specific contract or other document being sought; and
(iii) not engage in, nor engage a real estate broker or other person
to engage in, broad based marketing with respect to the sale of the
Property, which marketing is in a manner typically utilized by real
estate brokers
7
in connection with the advertising of the sale of office buildings
of similar size and value. Notwithstanding the foregoing, nothing
contained in this Section 10(d)(iii) shall be construed to prevent
or limit BRE from engaging in active discussions and negotiations
with potential buyers and or lenders of the Property, nor shall the
restrictions in this Section 10(d)(iii) be deemed to apply to the
efforts of Eastdil (as hereinafter defined) (A) in connection with
its involvement with this transaction and (B) with respect to
persons with whom Eastdil engages in discussions and negotiations
with as a result of its previous marketing efforts relating to the
Property, provided (with respect to this item (B))such negotiations
are not initiated by BRE.
11. Submission to Jurisdiction. The provisions of Section 15.14 of
the Purchase Agreement governing the Submission to Jurisdiction of the parties
thereto and hereto are incorporated herein by reference and made a part hereof.
12. No Brokers. (a) BRE represents and warrants to Prime that it has
not dealt with any broker, salesman, finder or consultant with respect to this
Option Agreement or the transactions contemplated hereby other than Eastdil
Realty Company, L.L.C. ("Eastdil"). BRE agrees to indemnify, protect, defend and
hold Prime harmless from and against all claims, losses, damages, liabilities,
costs, expenses (including reasonable attorneys' fees and disbursements) and
charges resulting from BRE's breach of the foregoing representation in this
subsection (a). BRE agrees to pay Eastdil any commissions or other fees owing to
Eastdil pursuant to a separate agreement. The provisions of this subsection (a)
shall survive the Closing and any termination of this Option Agreement.
(b) Prime represents and warrants to BRE that it has not dealt with
any broker, salesman, finder or consultant with respect to this Option Agreement
or the transactions contemplated hereby other than Eastdil. Prime agrees to
indemnify, protect, defend and hold BRE harmless from and against all claims,
losses, damages, liabilities, costs, expenses (including reasonable attorneys'
fees and disbursements) and charges resulting from Prime'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 Option
Agreement.
13. Title to Asset. In the event BRE is unable to convey title to
the Asset in the manner required under the Purchase Agreement, Prime shall not
be entitled to a return of the Option Payment and the terms of Article IX of the
Purchase Agreement shall control.
8
14. Management. Prime shall have the right, from time to time, upon
not less than five (5) Business Days notice and not more than once per calendar
month, to meet with members of the staff managing, operating and leasing the
Property for the purpose of updating Prime's due diligence materials with
respect to leasing, operating, managing and maintenance at and of the Property.
15. Leases. (a) During the Option Period, BRE shall (i) continue its
present rental program and efforts with respect to the Property (as defined in
the Purchase Agreement) to rent vacant space and, (ii) except with respect to
any Contemplated Leases listed on Schedule A hereto (which Contemplated Leases
are deemed consented to by Prime), enter into and execute new leases and
extensions, renewals and expansions with respect to the existing tenancies ("New
Leases"), either (a) in accordance with the leasing guidelines set forth on
Exhibit C hereto (the "Leasing Guidelines") or (b) upon receipt from Prime of
Prime's prior written consent to same, which consent shall not be unreasonably
withheld or (c) without the consent of Prime, provided that, notwithstanding
anything to the contrary contained herein, BRE shall act in a commercially
reasonable manner and shall be responsible for all Buyer's Leasing Costs with
respect to such New Lease entered into pursuant to this subsection 15(c). If a
New Lease requires Prime's prior written consent pursuant to subsection 15(b)
hereof, and Prime does not object within ten Business Days (as defined in the
Purchase Agreement) after receipt of a copy of a term sheet containing the
material terms of such New Lease, the financial and credit and other information
relating to the tenant reasonably requested by Prime and copies of all
agreements entered into with the tenant to induce the tenant to execute a New
Lease, then Prime shall be deemed to have approved same. With respect to any
amendments, terminations, modifications, surrender agreements, assignments and
approvals of sublease agreements with respect to existing tenancies ("Lease
Modifications"), BRE shall have the right in its sole discretion and without
regard to the Leasing Guidelines, to execute and approve of any such Lease
Modification, provided that BRE shall act at all times in a commercially
reasonable manner and shall not enter into any Lease Modifications which have a
material adverse affect on the value of the Property and further provided that
such Lease Modifications are not inconsistent with BRE's past practices at the
Property. For the avoidance of doubt, Prime hereby acknowledges and agrees that
(x) BRE in its sole discretion shall have the right to terminate any tenancy,
regardless of whether such termination is pursuant to a New Lease, a Lease
Modification or otherwise if BRE determines in its sole discretion that said
tenant is in default under the terms of its lease and (y) BRE has the right to
enter into New Leases pursuant to and in accordance with subsection 15(c)
without the consent of Prime and BRE's entry into and execution of such New
Leases shall not be deemed a breach of this Option Agreement or the Purchase
Agreement.
9
(b) During the Option Period, if Prime presents to BRE a potential
tenant with respect to the Property whose qualifications and proposed leasing
terms comply with the Leasing Guidelines, including, without limitation, the
credit requirements, then, provided that the negotiation and execution of said
lease will not interfere with any existing obligations of BRE to any other
tenant or potential tenant of the Property, BRE shall not unreasonably withhold
its consent to a lease to such tenant and shall negotiate in good faith with
such tenant a lease in an attempt to reach a lease agreement based upon the
terms proposed by Prime.
(c) With respect to all New Leases entered into after the date of
this Option Agreement in accordance with the Leasing Guidelines or with the
prior written consent of Prime (if required) or with a tenant introduced to BRE
by Prime and all Lease Modifications entered into after the date of this Option
Agreement in accordance with the terms hereof, Prime, provided that it shall
acquire the Asset in accordance with the terms and provisions of the Purchase
Agreement, (i) will be responsible for all capital costs, tenant improvement
costs, relocation costs, temporary leasing costs, brokerage commissions, legal,
design and other professional fees, surrender fees or similar payments made to
an existing tenant, payments made under takeover agreements and any and all
other expenses incurred with respect to the New Leases and Lease Modifications
and allowances granted to tenants in lieu of any of the above ("Leasing
Expenses"), (ii) 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 New Leases and Lease Modifications ((i) and (ii) shall be collectively
referred to as "Buyer's Leasing Costs") and (iii) shall further assume all
takeover obligations or like agreements entered into to induce a tenant to
execute a New Lease or a Lease Modification. To the extent that BRE pays any of
the Buyer's Leasing Costs or Leasing Expenses during the Option Period, the
Purchase Price will be increased at Closing by the aggregate amount of such
expenditures upon presentation by BRE of an invoice therefor and evidence of
payment thereof. Subject to the preceding sentence which provides that BRE shall
receive a credit with respect to the Purchase Price at closing for all Buyer's
Leasing Costs and Leasing Expenses paid by BRE, BRE shall pay all of Buyer's
Leasing Costs and Leasing Expenses that shall become due and payable prior to
Closing. Prime will pay all other Buyer's Leasing Costs as and when the same are
due. If, as of the Closing, there is a dispute with respect to whether BRE
entered into any Lease Modification in compliance with the terms of Section
15(a)of this Option Agreement, the parties shall continue to be obligated to
Close the sale and purchase of the Property in accordance with the terms of the
Purchase Agreement, such dispute shall not be an objection to Closing, nor
provide a basis for delaying the Closing, and Prime, in addition to its payment
of the Purchase Price in accordance
10
with the terms of the Purchase Agreement, shall place in escrow with Escrow
Agent (as defined in the Purchase Agreement), pending resolution of the dispute,
cash in an amount equal to the amount of Buyer's Leasing Costs and Leasing
Expenses paid by BRE prior to Closing in connection with the Lease Modification
that is the subject of the dispute. The aforementioned escrow shall be
maintained by Escrow Agent in accordance with the provisions of an escrow
agreement entered into between BRE and Prime, which escrow agreement shall be
substantially in the form of the escrow provisions contained in the Purchase
Agreement with such appropriate changes necessary or desired to reflect the
purpose of the escrow and to provide for the payment of the escrow monies to
Prime if Prime establishes that BRE entered into the Lease Modification in
dispute in violation of Section 15(a) hereof and otherwise, to BRE.
(d) BRE shall have the right, but not the obligation, from time to
time, to amend and provide Updated Schedules to the Purchase Agreement to
reflect any New Leases and Lease Modifications.
(e) Notwithstanding anything to the contrary contained in this
Section 13, BRE is hereby authorized to accept the termination of any New Leases
or existing leases at the end of their existing term or the termination of any
New Lease or existing lease subject to a unilateral termination right exercised
by any tenant under a New Lease or an existing lease.
16. Notices. Any notice, demand or request shall be given in writing
to the party for whom it is intended, either (i) by personal delivery, (ii) by
registered or certified mail (return receipt requested and postage prepaid),
(iii) by a nationally recognized overnight courier providing for signed receipt
of delivery, or (iv) by facsimile, in each case at the following address, or
such other address as may be designated in writing by notice given in accordance
with this Section:
(a) To BRE:
c/o Blackstone Real Estate Advisors L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. 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
11
(b) To Prime:
c/o The Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxx
Facsimile: 000-000-0000; and
Attention: Xxxxx X. Xxxxxxx, Esq.
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, Esq.
Facsimile: 312-782-8585
All notices (i) shall be deemed to have been given ("Delivered") on the date
that the same shall have been actually delivered in accordance with the
provisions of this Section and (ii) may be Delivered 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'
written notice thereof to the other parties.
17. Assignment. The covenants and agreements of BRE under this
Option Agreement are intended to be, and shall be, covenants running with the
land with respect to the Property, and this Option Agreement shall be binding
upon and inure to the benefit of the heirs, successors, administrators,
executors, and assigns of the respective parties; provided, however, that this
Option Agreement may not be assigned by Prime, in whole or in part, to any other
individual or entity without the express written permission of BRE, which
permission may be withheld in BRE's sole discretion and without regard to any
commercial standard. Any attempted assignment of this Option Agreement shall, at
BRE's option, be deemed a breach of the terms of this Option Agreement which
results in the termination of the Option and all of Prime's rights hereunder.
18. Default. (a) If Prime shall default in its obligations (i) under
this Option Agreement or (ii) under the City Center Purchase Agreement (as
defined in the Purchase Agreement) then BRE may, in its sole discretion,
terminate this Option Agreement (and the Purchase Agreement, if the Option has
been exercised), after which Prime shall have no further rights under this
Option Agreement or under the Purchase Agreement.
12
(b)(i) Notwithstanding anything to the contrary contained herein,
except as provided in the third sentence of this Section 18(b)(i), in the event
that Prime shall assert that BRE is in breach of any provision of this Option
Agreement at any time, whether during or after the Option Period, Prime's
remedies shall be limited to (i) a claim for monetary damages arising from the
alleged breach not to exceed $7,000,000 or (ii) equitable relief to cause
performance of the precise obligation or obligations allegedly unfulfilled, it
being understood that under no circumstances shall Prime be entitled to enjoin
the transfer of the Property, file a lis pendens or similar encumbrance
affecting title to the Property, move for specific performance to cause a
transfer of the Property, make any claim or bring any action or proceeding
against a potential or actual purchaser of the Property or take any other action
whatsoever to enjoin, restrain, delay or rescind or otherwise legally interfere
with or affect the transfer of the Property or title to the Property for any
claim relating to a breach alleged to occur prior to the Delivery of the Option
Notice or prior to the termination of the Option Period. By way of example, if
BRE defaults under this Option Agreement by failing to deliver to Prime a rent
roll after Delivery by Prime of all notices that Prime is required to Deliver
under this Option Agreement requesting such rent roll, and BRE's failure to
deliver same causes a default by BRE of its covenant to deliver the rent roll
pursuant to the terms hereof, Prime shall be permitted to compel delivery of the
rent roll to Prime, but shall not be permitted to compel performance by BRE of
any other obligation under this Option Agreement or under the Purchase
Agreement, including, without limitation, specific performance by BRE of the
transfer of the Property. In the event that it is determined that BRE's breach
of this Option Agreement is a violation of Section 10(a)(i) hereof, then in that
event only, Prime shall be entitled to a return of the Option Payment. In the
event of any violation by Prime of this Section 18(b)(i), Prime shall be liable
to BRE for all damages incurred as a result of Prime's violation, whether
foreseen or unforeseen, actual, consequential or punitive and BRE's recovery
shall not be limited by any amounts previously paid or on deposit. For the
avoidance of doubt, it is understood and agreed that Prime's right to equitable
relief described under clause (ii) above shall be limited to causing performance
of the individual covenants to be fulfilled with respect to BRE's conduct during
the Option Period (which covenants are primarily, but not exclusively, those set
forth in Section 10(d)) and the right to equitable relief described under clause
(ii) above shall not extend in any manner whatsoever to causing specific
performance of the obligation to transfer the Property, to any other relief
affecting title to the Property or to any other similar relief of the type
prohibited above.
(ii) Notwithstanding the foregoing provisions of Section 18(b)(i),
Section 3 or any other provision of this Option Agreement, in the event
that BRE sells or mortgages or enters into an agreement to sell or
mortgage the
13
Property, or a sale/leaseback agreement, a new ground lease of the entire
Property or grants a right of first refusal, a right of first offer or an
option to purchase the Property and such sale or mortgage, or
sale/leaseback, or new ground lease or agreement relating thereto, or
right of first refusal, right of first offer or option to purchase, as the
case may be, is not specifically and expressly made subject and
subordinate to the rights of Prime in the manner prescribed by Section 9
of this Option Agreement, then Prime shall have all of its rights and
remedies at law and equity for such breach, including, all damages as a
result of such breach, whether forseen or unforseen, actual, consequential
or punitive, specific performance of this Option Agreement as a result of
such breach and the right to take action to enjoin, restrain or delay the
transfer of the Property, including, the filing of a lis pendens (in each
case as a result of BRE's breach of the provisions of this Section
18(b)(ii)) and Section 9.
(c) The Delivery of the Option Notice shall be deemed a full and
irrevocable waiver by Prime of any claim relating to a breach alleged to occur
prior to the Delivery of the Option Notice subject to (1) Prime's rights
pursuant to Section 18(b)(ii) hereof and (2) survival of a claim under 18(b)(i)
of Prime with respect to a default by BRE under 18(b)(i) for a failure to
deliver an item specifically requested to be delivered in accordance with the
provisions of Section 10(d)(ii), which item (x) if delivered, would have
changed, in a material manner, the Schedules attached to the Purchase Agreement
or (y) is specifically itemized in such Schedules.
(d) For the avoidance of doubt, Prime hereby understands and
acknowledges that nothing contained in this Section 18 shall be deemed to give
Prime a right to a return of the Option Payment, except as herein provided with
respect to a violation of Section 10(a)(i).
19. Costs and Expenses. Each party shall bear its own legal and
other professional costs and expenses in connection with the preparation,
negotiation and performance of this Option Agreement and, if entered into, the
Purchase Agreement.
20. Jenner & Block Estoppel Certificate. Following the receipt by
BRE of the Option Payment, BRE shall exhibit to Prime a photocopy of proposed
tenant estoppel certificate delivered by Jenner & Block, as a tenant of the
Property, dated as of September 16, 1998. The exhibiting of such tenant estoppel
certificate by BRE to Prime shall not constitute a delivery of the Jenner &
Block tenant estoppel certificate, nor shall Prime have any right to rely upon
said tenant estoppel certificate without BRE's prior written consent.
14
21. Miscellaneous. (a) Prime shall not otherwise record or file this
Option Agreement or the Purchase Agreement or any copy or memorandum of either
with any public agency or land records, and any such recording or filing shall,
at BRE's option, render this Option Agreement and, if entered into, the Purchase
Agreement null and void and shall constitute a default of Prime's obligations
under this Option Agreement resulting in a termination of the Option and all of
Prime's rights under this Option Agreement and the Purchase Agreement.
(b) The acceptance by Prime of the Deed (as defined in the Purchase
Agreement) shall be deemed to constitute full performance and discharge of every
condition, covenant and obligation contained or expressed in this Option
Agreement and in the Purchase Agreement, except such as are, by the express
terms of this Option Agreement or the Purchase Agreement, to survive the
Closing. The receipt and confirmation of receipt by BRE of the Purchase Price
shall be deemed full compliance by Prime of all of Prime's obligations with
respect to the Property, except with respect to those obligations of Prime which
are specifically stated to survive the payment of the Purchase Price.
(c) This Option Agreement, together with the Purchase Agreement,
constitutes the entire agreement between the parties and fully supersedes and
cancels all prior agreements, arrangements or understandings, whether oral or
written, between them relating to the subject matter hereof and no party shall
be bound by any terms, conditions, statements, or representations, oral or
written, not herein contained. No modification of this Option Agreement and, if
entered into, the Purchase Agreement shall be valid or binding unless such
modification is in writing, duly dated and signed by the party or parties
against whom enforcement of such modification is sought.
(d) In the event that any one or more of the provisions of this
Option Agreement or, if entered into, the Purchase Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Option Agreement or, if entered into, the Purchase Agreement, but each
shall be construed as if such invalid, illegal or unenforceable provision had
never been included.
(e) This Option Agreement may be executed in one or more
counterparts, each of which may be an original or telecopy and all of which
taken together shall constitute one and the same instrument.
(f) This Option Agreement shall be governed, construed, interpreted
and enforced in accordance with the laws of the State of New York.
15
(g) Nothing expressed or implied in this Option Agreement or the
Purchase Agreement is intended or will be construed to confer upon or give any
person or entity other than the parties hereto any rights or remedies under or
by reason of this Option Agreement, the Purchase Agreement or any transactions
contemplated by this Option Agreement or the Purchase Agreement.
(h) The headings in this Option Agreement are for purposes of
reference only and shall have no meaning in construing this Option Agreement.
Capitalized terms used in this Option Agreement and not defined shall have the
meanings specified in the Purchase Agreement.
(i) This Option Agreement shall become a binding agreement only at
such time as it shall have been duly executed and delivered by BRE and Prime.
(j) Subject to the provisions of Section 18 hereof, Prime shall not
be entitled to any consequential, speculative, punitive damages or any similar
claim in any action relating to this Option Agreement but shall be entitled to
seek specific performance with respect to BRE hereunder.
(k) Notwithstanding anything to the contrary contained herein, if
the due date of any obligation hereunder (including the exercise of the option)
falls on a day other than a Business Day, then the date for performance of such
obligation shall be extended to the next following Business Day.
(l) In the event of any conflict or inconsistency between the terms
and provisions of this Option Agreement and terms and provisions of the Purchase
Agreement, the terms and provisions of the Purchase Agreement shall, in each
such instance, govern and control.
(m) The terms and provisions of this Option Agreement shall survive
the entry, and shall not merge or be deemed to merge, into the Purchase
Agreement.
(n) The The provisions of Section 15.4(a)and 15.4(b) of the Purchase
Agreement governing the Confidentiality of the parties thereto and hereto are
incorporated herein by reference and made a part hereof.
16
The parties have duly executed this Option Agreement as of the date
first referenced above.
BRE:
BRE/WABASH L.L.C., a Delaware
limited liability company
By:_______________________________________
Name:
Title
PRIME:
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:
17
EXHIBIT A
PURCHASE AGREEMENT
[SEE ATTACHED]
18
AGREEMENT OF PURCHASE AND SALE
AGREEMENT OF PURCHASE AND SALE (this "Agreement"), made as of the
____ day of ______________, 1999 by and between BRE/Wabash L.L.C. ("Seller"), a
Delaware limited liability company, and PRIME GROUP REALTY, L.P., a Delaware
limited partnership ("Buyer").
Background
A.Seller 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 which are owned in fee (collectively, the "Property"). The Property,
together with the Asset-Related Property (as defined below) with respect thereto
shall be referred to as the "Asset".
B.The Seller desires to sell to the Buyer, and the Buyer desires to
purchase from the Seller, 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 schedules attached hereto, as
the same may be amended, restated, supplemented or otherwise modified.
"Asset" shall have the meaning assigned thereto in "Background"
paragraph A.
----------
(1) Date to be completed by Seller, effective as of the exercise of the Option.
19
"Asset File" shall mean the materials with respect to the Asset
previously delivered, or made available at the Property, to the Buyer or its
representatives by or on behalf of the Seller.
"Asset-Related Property" shall have the meaning assigned thereto in
subsection 2.1(b).
"Assignment of Contracts" shall have the meaning assigned thereto in
Article VI.
"Assignment of Leases" shall have the meaning assigned thereto in
Article VI.
"Basket Limitation" shall mean an amount equal to one percent (1%)
of the Purchase Price.
"Blackstone Lease" shall have the meaning assigned thereto in
Article VI.
"Xxxx of Sale" shall have the meaning assigned thereto in Article
VI.
"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.
"Cigna Loan" shall mean the loan from Connecticut General Life
Insurance Company and Xxxxxx Hessen-Thuringen Girozentrale to Seller secured by
the Property.
"Cigna Loan Closing Balance" shall have the meaning assigned thereto
in subsection 2.2(d).
"City Center Purchase Agreement" shall mean that certain Purchase
and Sale Agreement between Prime Group Realty,
20
L.P., as Buyer, and certain of Seller's affiliates, as Sellers, executed on
February ___, 1999.
"Closing" shall have the meaning assigned thereto in Subsection
2.3(a).
"Closing Date" shall have the meaning assigned thereto in Subsection
2.3(a).
"Complying Title Policy" shall have the meaning set forth in Section
2.2(b)(ii).
"Condition of the Asset" 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).
"Deed" shall have the meaning assigned thereto in Article VI.
"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 policy and title
commitment with respect to the Property listed on Schedule B attached hereto.
"Fixed Rents" shall have the meaning assigned thereto in subsection
11.1(a).
"Ground Lease" shall mean the lease entered into between
International Business Machines Corporation, as tenant, and Xxxxxx Ortsteifen
Xxxx and Xxxxxx X. Xxxxx, as trustees, et al., as Landlord, on December 20,
1968, a memorandum of which was filed for record on January 10, 1969, as
document number 20724873, in the Office of the Recorder, Xxxx County, Illinois,
as same was assigned by Assignment, Acceptance and Assumption of Seller's Right,
Title and Interest to Ground Lease and Deed to Improvements, from IBM to Seller
dated August 30, 1996 and filed for record on September 3, 1996, as document
number 96671600, in the Office of the Recorder, Xxxx County, Illinois.
"Hazardous Materials" shall have the meaning assigned thereto in
subsection 4.1(f).
21
"IBM Lease" shall mean that certain lease between Seller, as
landlord, and International Business Machines Corporation, as tenant, dated
August 30, 1996.
"Intangible Personal Property" shall have the meaning assigned
thereto in subsection 2.1(b).
"IRS" shall mean the Internal Revenue Service.
"IRS Reporting Requirements" shall have the meaning assigned thereto
in subsection 15.4(c).
"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.
"Loan Documents" shall mean all documents evidencing and securing
the Cigna Loan.
"Losses" shall have the meaning assigned thereto in subsection 12.1.
"Option Agreement" shall mean that certain Option Agreement dated as
of February__, 1999 by and between Seller and Buyer.
"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 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
22
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) (the matters described in clauses (i) through
(vii) 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 Option" shall have the meaning assigned thereto in the
Option Agreement.
"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).
"Replaced Tenants" shall have the meaning set forth in subsection
3.3(i).
"Replacement Tenants" shall have the meaning assigned thereto in
subsection 3.3(i).
"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.
"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).
23
"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 Estoppel Certificate" shall have the meaning assigned
thereto in subsection 3.3(i).
"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, contracts with Operating Engineering
Local 399 and its branches.
"Voluntary/De Minimis Title Exceptions" shall mean title exceptions
affecting the Property that are (i) knowingly and intentionally created by the
Seller, after the date of this Agreement through the execution by the Seller of
one or more instruments creating or granting such title exceptions, or (ii)
dischargeable by the payment of not more than $400,000 (which $400,000 shall be
the maximum aggregate amount required to be spent by the Seller 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 Seller in connection with Seller'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 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 $400,000 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
$400,000.
24
ARTICLE II
SALE, PURCHASE PRICE AND CLOSING
Section II.1 Sale of Assets. (a) On the Closing Date (as hereinafter
defined) and pursuant to the terms and subject to the conditions set forth in
this Agreement, Seller shall sell to the Buyer, and the Buyer shall purchase
from Seller, 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
the Asset. For purposes of this Agreement, "Asset-Related Property" shall mean
all of Seller's 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 (provided, however, that Seller shall
assign such leases to Buyer, in accordance with this Agreement) which are now,
or may hereafter prior to the Closing Date be, placed in, attached to, situated
in or upon the 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, supply and maintenance contracts including commitments therefor (if
any) held by Seller with respect to the Property, including, without limitation,
those contracts listed on Schedule E attached hereto (collectively, the
"Contracts"), (F) to the extent assignable by Seller, all trade names, logos,
designs, trademarks, service marks, copyrights and other general intangibles and
intellectual property (including any computer software programs used for
purposes of 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 the Article 17 under the IBM
Lease, the name "IBM Plaza" (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 (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 Seller in
25
connection with any such leases, licenses, contracts and other agreements.
Section II.2 Purchase Price; Xxxxxxx Money. (a) The consideration
for the Assets shall be equal to Two Hundred and Thirty Million Dollars
($230,000,000.00) (the "Purchase Price"), subject to the prorations and credits
as hereinafter provided in this Agreement. For avoidance of doubt, Buyer hereby
acknowledges and agrees that no part of the $8,000,000.00 Option Price (as
defined in the Option Agreement) shall be applied to or credited against the
Purchase Price.
(b) The Purchase Price shall be paid to the Seller as follows:
(i) within one Business Day after the delivery by Buyer to Seller of
written notice (the "Option Notice") that it is exercising the Option in
accordance with the terms of the Option Agreement (notwithstanding Buyer's
Review Period (as defined in the Option Agreement)), the Buyer shall deposit
with Title Associates Inc., as escrow agent ("Escrow Agent") cash in an amount
equal to Three Million Five Hundred Thousand Dollars ($3,500,000.00), in
immediately available funds by wire transfer to such account or accounts as
Escrow Agent shall designate to Buyer (such cash, together with any interest
earned thereon, shall be referred to as the "Xxxxxxx Money"); the Xxxxxxx Money
shall be held in escrow in accordance with the provisions of Section 15.5 and
shall be nonrefundable to Buyer except (A) if Buyer does not accept the revised
Schedules in accordance with the terms of the Option Agreement, in which event,
the Option Agreement shall terminate, the Xxxxxxx Money shall be returned to the
Buyer and this Purchase Agreement shall be deemed null and void and (B) as
otherwise set forth in this Agreement. If the Buyer does not deliver the Xxxxxxx
Money to Escrow Agent within one Business Day after the delivery of the Option
Notice, the Seller shall have the right, at its option, to terminate this
Agreement and upon such termination, Seller shall have no further obligations
hereunder.
(ii) on the Closing Date, simultaneously with the delivery by the
Title Company of 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). The Buyer shall deliver to Seller on the Closing
Date, in immediately available funds by wire transfer to such account or
accounts that Seller 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 Purchase Price less the Xxxxxxx Money. The Escrow Agent shall
deliver to Seller on the Closing Date, in immediately available federal funds by
wire transfer to such account or accounts as Seller shall designate, the Xxxxxxx
Money.
26
(c) No adjustment shall be made to the Purchase Price except as
explicitly set forth in this Agreement.
(d) On or before the Closing, the Seller shall repay the outstanding
balance of principal and interest on the Cigna Loan (collectively, the "Cigna
Loan Closing Balance") including, without limitation the prepayment, due on
sale, breakage costs, assumption fees and lender closing costs in connection
with said repayment (the "Repayment Costs"). Notwithstanding the foregoing, or
anything else contained in this Agreement (including, without limitation, the
provisions of Article XIV hereof), Buyer hereby indemnifies and holds Seller
harmless from all Losses (as hereinafter defined) Seller incurs in connection
with Seller's delivery of a notice of prepayment with respect to the Cigna Loan
in the event Buyer defaults in the performance of its obligations contained
herein.
Section II.3 The Closing. (a) The closing of the purchase and sale
of the Asset (the "Closing") shall take place in accordance with the following:
(1) if Buyer exercises the Purchase Option on or prior to October 20, 1999, then
on the day that is sixty (60) calendar days after the date Buyer exercises the
Purchase Option (or if such day is not a Business Day, the first Business Day
immediately succeeding such sixtieth calender day) and (2) if Buyer exercises
the Purchase Option after October 20, 1999 but on or prior to October 31, 1999,
then on December 20, 1999 (the "Closing Date"), Time Being of The Essence with
respect to Buyer's obligations under both clauses (1) and (2) hereof. At the
Closing, subject to the terms and in accordance with the provisions of this
Agreement, including the condition that Buyer deliver to Seller the Purchase
Price, Seller shall convey to the Buyer all of its right, title and interest in
and to the Asset. 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.
(b) 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.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
Section III.1 General Seller Representations and Warranties. 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 by Seller, as follows:
(a) Formation; Existence. It is a limited liability company, duly
formed, validly existing, in good standing
27
under the laws of the state of Delaware and is, or will at Closing be,
qualified to do business in the State of Illinois, unless the absence of
such qualification does not materially adversely affect the Seller's
ownership or ability to convey 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 (each, a "Filing"), the failure of
which to obtain will not adversely affect (A) Seller's ability to
consummate the transactions contemplated by this Agreement, (B) the
Seller's ownership of the Asset or (C) in a material adverse manner, the
operation or value of the Property to Buyer, no Filing 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 by Seller or any of the transactions required or contemplated
hereby, other than (r) the recording of the Deed and the Assignment and
Assumption of Ground Lease conveying Seller's interest in the Property and
any Filing customarily made, or required to be made, in connection
therewith, (s) the release or satisfaction of the Cigna Loan, or any other
loan encumbering or relating to the Property and any additional Filings
customarily made, or required to be made, in connection therewith, (t) a
disclosure statement pursuant to Illinois Responsible Property Transfer
Act, 765 ILSC 90/1, et.seq., (u) any water certificate and/or transfer or
other tax filing to be filed in connection with the transfer of the
Property and the Asset, and (v) any other Filing that is customarily made
in the jurisdiction in which the Property is located, or pursuant to this
Agreement, is required to be made in connection with the transfer of the
Property or the Asset.
(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)
28
conflict with or result in any violation of the Seller's organizational
documents, (ii) except as set forth on Schedule D, to 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 Seller 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 Seller or its
assets or properties except, in each case, for any conflict or violation
which (A) will not adversely affect (1) 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
Seller of the Property or value thereof or (B) arises under the documents
evidencing or securing the Cigna Loan.
(e) 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 Seller as to the
Asset. Seller hereby represents, warrants and covenants to the Buyer as of the
date hereof and as of the Closing Date, with respect to the Asset owned by
Seller as follows:
(a) Ownership of the Asset. (i) Seller is the owner of the Asset
free and clear of any lien, pledge, charge, security interest,
encumbrance, title retention agreement, adverse claim or restriction
except, the Permitted Exceptions and (ii) with respect to the Ground
Lease, it is in full force and effect, Seller has not 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 the Ground Lease, and the Seller has not terminated or modified 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 Buyer to Seller 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 (except for the possible granting of security interests, all of
which will be terminated prior to the Closing).
(b) Contracts. The Contracts affecting the Property are set forth on
Schedule E attached hereto and to Seller's knowledge the same have not
been modified or amended, except as shown in such documents. Seller has
not received any written notice of default under any of the Contracts
affecting the Property (which remains uncured).
29
(c) Space Leases. With respect to the Space Leases listed on
Schedule F, as modified by Schedule 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 landlord and the tenants named therein,
(D) except as set forth in Schedule F and F-2, fixed rent and additional
rent are currently being collected under such Space Leases without offset,
counterclaim or deduction and (E) Seller has not received any written
notice of a default (which remains uncured) and has no 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 and F-3, 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 Seller 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
knowledge, no other Persons have legal agreements to occupy or possess any
portion of the 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 applicable 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 applicable
Closing shall constitute a waiver by Buyer of any right or claim Buyer may
have against the Seller 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 Seller 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 the Seller has no 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 Seller have knowledge that any of the foregoing is
threatened or contemplated.
30
(f) Litigation. Except as disclosed in Schedule H attached hereto,
there are no actions, suits or proceedings pending against or, to Seller's
knowledge, affecting the Asset, the Property or Seller in any court or
before or by an arbitration tribunal or regulatory commission, department
or agency which, if adversely determined, would adversely affect (1)
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.
(g) Environmental Violations. Seller has not 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).
Section III.3 Covenants of the Sellers Prior to Closing. Until
Closing, Seller, or its agents shall:
(a) Insurance. Keep the Property insured against fire and other
hazards covered by the insurance policies maintained by Seller on the date
of this Agreement, and continue to maintain in effect such 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 Seller's past and present
practices with respect to the Property.
(c) New Contracts. Not 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 Seller enters into any third party contracts after the date of
this Agreement, then Seller 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 below, 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
31
have approved such contract. Notwithstanding the foregoing, and except in
connection with the Union Contracts, the Seller's shall terminate on or
before the Closing Date, any Contracts listed on Schedule E-1 hereto and
Seller shall be responsible for any termination fees and penalties due in
connection with such terminations.
(d) New Space Leases. (i) Continue the rental program in accordance
with the terms of Section 15 of the Option Agreement, except that the
provisions of Section 15 that permit Seller to enter into New Leases and
Lease Modifications that neither conform to the Leasing Guidelines, nor
have been consented to by Buyer shall not apply during the time that this
Purchase Agreement is in effect.
(ii) If the Property Owner 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 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 (3) in a materially adverse
manner, the operation or value of 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 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 any of its
agents to perform, all material obligations of landlord or lessor under
the Space Leases for the Property.
(h) Ground Lease Estoppel Xxxxxxxxxxxx.XXX Ground Lease Estoppel
Certificate") substantially in the form attached as Exhibit I-1 or
otherwise certifying to such matters which are required to
32
be certified to by the Garage Lessor pursuant to the Ground Lease from the
Garage Lessor or its agent. TIME SHALL BE OF THE ESSENCE with respect to
Seller's obligations hereunder on the day that is fourteen days after the
Closing Date.
(i) Space Lease Estoppel Certificates. (A) On or prior to the day
before the Closing Date, Seller shall obtain from the following tenants
under Space Leases estoppel certificates (a) substantially in the form
attached hereto as Exhibit I-2 or (b) otherwise certifying only as to
those matters which are required to be certified to by such tenants
pursuant to the provisions of such tenants' Space Leases(each a "Tenant
Estoppel Certificate"): (A) International Business Machines Corporation,
(B) Xxxxxx Xxxxxxxx (C) Xxxxx, Xxxxxx and XxXxx, (D) Xxxxxx & Xxxxxxxxx
and (E) Xxxxxx, White & Xxxxxxx. Notwithstanding the foregoing, Seller may
satisfy the conditions of this subsection 3.3(i)(A) with respect to the
tenants referenced in (B), (C), (D) and (E) (the "Replaced Tenants") by
obtaining Tenant Estoppel Certificates from other tenants under Space
Leases in the Property which are not specifically named in this subsection
3.3(i)(A) or in subsection 3.3(i)(B)(the "Replacement Tenants") provided
the aggregate rentable square feet covered by the Replacement Tenants'
leases either equals or exceeds the number of rentable square feet leased
by the Replaced Tenants. Except with respect to any and all tenants
pursuant to the Jenner & Block Lease ("Jenner") and State Street Bank and
Trust Company Lease ("State Street"), Seller shall make a good faith
effort to obtain from tenants under other Space Leases not referenced
herein Tenant Estoppel Certificates, but the delivery of such Tenant
Estoppel Certificates shall not be deemed a condition to Closing. TIME
SHALL BE OF THE ESSENCE with respect to Seller's obligation to deliver the
Tenant Estoppel Certificates to Buyer in accordance with the provisions of
this Section 3.3(i)(A), such obligation to become TIME OF THE ESSENCE on
the day that is fourteen days after the Closing Date.
(B) (1) Buyer hereby acknowledges and agrees that,
notwithstanding anything else contained in this Agreement or otherwise,
Seller is not required to deliver to Buyer tenant estoppel certificates
from Jenner or State Street (or its agent). Seller, however, (a) shall
deliver to Buyer on the Closing Date tenant estoppel certificates executed
by Seller in the form of Exhibit I-4 with respect to the Jenner and State
Street Space Leases,(each a "Seller Estoppel Certificate") and (b) shall
provide evidence reasonably satisfactory to Buyer that $5,000,000 of the
Purchase Price will be retained by Seller for a six (6) month period after
the Closing as security against any damages and Losses suffered by Buyer
due to the untruthfulness of any statement made by Seller in Seller's
Estoppel Certificate only. For purposes of the preceding sentence, a
guaranty in the form of Exhibit H to Buyer from the members of Seller that
$5,000,000 of the Purchase Price is being retained by Seller
33
shall be deemed reasonably sufficient evidence that such moneys are being
retained by Seller. In the event Seller is aware of any facts which,
unless revealed in the Seller Estoppel Certificate, would render untrue
any of the statements made by Seller in the Seller Estoppel Certificate,
Seller shall have the right to disclose such facts in the Seller Estoppel
Certificate; provided, however that if Seller discloses any such facts in
a Seller Estoppel Certificate, Buyer shall then have the right, on or
before the earlier to occur of (x) three Business Days after delivery of
the relevant Seller Estoppel Certificate or (y) the Closing Date, to
terminate the Purchase Agreement, at which time the Xxxxxxx Money shall be
returned to Buyer and neither Seller nor Buyer shall have any further
obligations hereunder.
(2) Notwithstanding the foregoing, if Seller obtains an estoppel
certificate from either Jenner and/or State Street (or its agent),
respectively, whether before or after the Closing Date, in the relevant
form attached as Exhibit I-3 or otherwise certifying as to any matter
contained in the relevant Seller Estoppel Certificate (and provided, with
respect to (2) and (3) of this subsection, that the relevant party
delivering the estoppel certificate does not disclose facts in the
estoppel certificate that would render untrue any of the statements of
either the relevant form of estoppel certificate attached as Exhibit I-3
or the Seller Estoppel Certificate), then (1) Seller's liability with
respect to the matter so certified to and confirmed by Jenner and/or State
Street (or its agent), respectively, shall be eliminated, and (2) if said
estoppel certificate is provided to Buyer in the form required herein on
or before the Closing Date, Seller shall not be required to certify to
such matters in its Seller Estoppel Certificate and (3) if and when Jenner
and/or State Street (or its agent) delivers an estoppel certificate or
series of estoppel certificates from either Jenner and/or State Street (or
its agent), as applicable, certifying as to all matters certified to by
Seller in the Seller Estoppel Certificate(s)in accordance with the
provisions hereof, then (provided, with respect to (2) and (3) of this
subsection, that the relevant party delivering the estoppel certificate
does not disclose facts in the estoppel certificate that would render
untrue any of the statements of the relevant form of estoppel certificate
attached as Exhibit I-3 or the Seller Estoppel Certificate) Seller's
liability as to all such matters shall be eliminated and the Seller
Estoppel Certificate(s) and the requirement that Seller retain $5,000,000
of the Purchase Price (as more particularly described above) shall be
terminated. For the avoidance of doubt Buyer hereby acknowledges and
agrees that an estoppel certificate delivered by either State Street or
its agent in the form of Exhibit I-3 shall be deemed a complying estoppel
certificate in accordance with the provisions of this subsection
3.3(i)(B). Notwithstanding anything to the contrary contained in this
Agreement, in the event either Jenner or
00
Xxxxx Xxxxxx (or its agent) delivers a tenant estoppel certificate which
discloses the existence of litigation between Seller and Jenner or Seller
and State Street, as applicable, the disclosure of such litigation shall
be deemed to comply with the statements required to be made by Jenner or
State Street (or its agent), as applicable, in the form of estoppel set
forth on Exhibit I-3, provided, however, such litigation does not
materially adversely affect the value of the Property.
(3) TIME SHALL BE OF THE ESSENCE with respect to Seller's
obligations under this Section 3.3(i)(B) on the day that is fourteen days
after the Closing Date.
(j) Security Deposits. Except with respect to the ongoing use and
application of Security Deposits as disclosed on Schedule I, Seller shall
notify Buyer upon the use or application by Seller of any security deposit
being held by such Seller in connection with a Space Lease.
(k) Updating Information. Sellers shall make a good faith effort to
deliver to Buyer any information of which Sellers became aware concerning
material events subsequent to the date of this Agreement which is
necessary to supplement the information contained in or made a part of the
representations and warranties contained herein.
(l) Review of Books and Records. The Seller shall cooperate in good
faith with Buyer and Buyer's accountants in connection with Buyer's
accountants review of Seller'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 Seller shall provide to Buyer's auditors a certification in the
form of Exhibit K hereto stating that the statement of revenues and
certain expenses which Seller furnishes to such auditors, with respect to
Seller's property, fairly represents such information as was contained on
the statements, except as noted, and further, Seller shall provide access
to Seller'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, Seller shall not be
obligated to make any other statement or certification to Buyer's auditors
or otherwise in connection with this Section 3.3(l).
(m) Property Management Employees. Seller shall permit Buyer, upon
notice to Seller, to interview employees that Buyer intends to retain
after the Closing.
35
ARTICLE IV
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 Seller 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
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 Asset, 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.
(e) Examination; No Contingencies. In entering into this Agreement,
the Buyer has not been induced by and has
36
not relied upon any written or oral representations, warranties or
statements, whether express or implied, made by BREA, Seller, any partner
of BREA or Seller, 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 Seller with respect to the Asset, the
Condition of the Asset or any other matter affecting or relating to the
transactions contemplated hereby, other than those expressly set forth in
this Agreement. 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, Seller makes no representations or
warranties whatsoever, whether express or implied or arising by operation
of law, with respect to the Asset or the Condition of the Asset. The Buyer
agrees that the Asset will be sold and conveyed to (and accepted by) the
Buyer at the 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 Asset 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) 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 Asset, 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
37
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 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 "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 relevant Seller or the operation of the
Property or any part thereof in
38
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.
(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
Assets 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
39
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 Seller elects 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
Seller in connection with Seller's 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 Seller may enter into
intermediate contracts or other agreements to sell the Property to the
third party that enters into such contract or agreement with such Seller
and Buyer shall proceed to purchase the Property 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.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section V.1 Conditions Precedent To Seller's Obligations. The
obligation of Seller to consummate the transfer of the Asset to the Buyer on the
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 Seller shall have received all of the documents required to
be delivered by the Buyer under Article VI.
40
(e) The Seller shall have received the Purchase Price in accordance
with subsection 2.2(b) and all other amounts due to the Seller hereunder.
(f) The Buyer shall have closed on the acquisition of the Interests
(as defined in the City Center Purchase Agreement).
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 Closing of the following conditions:
(1) Each of the representations and warranties made by the Seller in
this Agreement 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 Seller 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 Seller 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 or the consummation of any other transaction
scheduled to occur at such Closing.
(4) Title to the Property shall be delivered to the Buyer in the
manner required under Section 9.1 hereof, as evidenced by a Complying
Title Policy;
(5) The Buyer shall have received all of the documents required to
be delivered by the Seller under Article VI.
(6) The Property shall be in the same condition as at the date
hereof subject to reasonable wear and tear and the provisions of Section
10.2.
(7) The Buyer shall have received the IBM Ground Lease Estoppel
Certificate and Tenant Estoppel Certificates (and, if applicable, the
Seller Estoppel Certificates) required under Sections 3.3(h) and(i) above.
41
ARTICLE VI
CLOSING DELIVERIES
(a) At the Closing, the Buyer shall deliver, with respect to the following
documents:
(i) with respect to the Property:
(A) in connection with the Seller's leasehold interests in the
Property, an Assignment and Assumption of Ground Lease substantially in
the form of Exhibit A-1 (with any necessary modifications in order to
conform with local laws for recording in the land records in Xxxx County,
Illinois), duly executed by Seller;
(B) an assignment and assumption of landlord's interest in the Space
Leases (an "Assignment of Leases") duly executed by the Buyer in
substantially the form of Exhibit A hereto;
(C) an assignment and assumption of Contracts (an "Assignment of
Contracts") duly executed by the Buyer in substantially the form of
Exhibit B hereto; and
(D) a lease duly executed by Buyer, as landlord, substantially in
the form of Exhibit D hereto (the "Blackstone Lease").
(ii) with respect to the transactions contemplated hereunder:
(A) 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, representations and warranties made by it
hereunder, in each case, duly executed by the Buyer;
(B) 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;
(C) 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
42
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;
(D) 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;
(E) all consents, approvals or waivers listed on Schedule J on terms
satisfactory to the Sellers;
(F) 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, determined and apportioned by
Seller;
(G) 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).
(b) At the Closing the Seller shall deliver the following documents:
(i) with respect to the Property:
(A) in connection with the Seller's fee interests in the Property, a
special warranty deed ("Deed") in substantially the form of Exhibit E
(with any necessary modifications in order to conform with the local laws
for recording in the land records of Xxxx County, Illinois), duly executed
by the Seller, without recourse, which deed, upon proper recording by the
Buyer, shall be sufficient to transfer and convey to the Buyer whatever
rights in the Property the Seller has acquired subject only to the
Permitted Exceptions;
(B) with respect to the Seller's leasehold interests in the
Property, an Assignment and Assumption of Ground Lease in substantially
the form of Exhibit A-1 (with any necessary modifications in order to
conform with the local laws for recording in the land records of Xxxx
County, Illinois), duly executed by Seller;
(C) an Assignment of Space Leases (in the form of Exhibit A) duly
executed by the Seller, together with certified copies, and if available,
originals of the Space Leases referred to in such assignment;
43
(D) a xxxx of sale (a "Xxxx of Sale") duly executed by the Seller in
substantially the form of Exhibit F hereto, relating to the Tangible
Personal Property owned by the relevant Seller which are currently located
upon or attached to the Property;
(E) an Assignment of Contracts in the form of Exhibit B duly
executed by the Seller;
(F) the Blackstone Lease in the form of Exhibit D, duly executed by
Seller or an affiliate of Seller, as tenant.
(G) notice letters ("Tenant Notices") duly executed by the Seller,
in the form of Exhibit C attached hereto. Such notice letters shall be
retained by the Seller and delivered by the Seller to each tenant and
other such entity, with a copy thereof to Buyer, immediately following
Closing.
(H) a disclosure document from Seller in the form required under the
Illinois Responsible Property Transfer Act, 765 ILSC 90/1, et.seq. or an
affidavit to the effect that to the best of Seller's knowledge, no such
IRPTA disclosure document is required under such act;
(I) a water certificate as required by the applicable governmental
authority;
(J) all keys and keycards to the Property which are in the Seller's
possession;
(K) an affidavit that the Seller is 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 G hereto;
(L) 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);
(M) evidence that each terminated Contract has been terminated or
that all actions necessary to terminate such Contract have been taken; and
(N) a closing statement prepared by Seller in accordance with the
terms hereof (such delivery may be waived by Buyer, as to the condition
precedent benefitting it);
(O) Evidence of termination of Property Management Agreement and a
release of lien executed by the property manager of the Property.
44
(P) Evidence that all steps have been taken by Seller with respect
to the termination of the employees of the Property, other than (i) those
being assumed by Buyer hereunder, (ii) employees under Union Contracts
whose Contracts will not be terminated.
(iii) with respect to the transactions contemplated hereunder:
(A) 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;
(B) a duly executed and sworn Secretary's Certificate from the
Seller (or the managing general partner of the Seller or the
administrative member, where appropriate) certifying that the Seller 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;
(C) an executed and acknowledged Incumbency Certificate from the
Seller (or the managing general partner of the Seller or the
administrative member, where appropriate) certifying the authority of the
officers of the Seller (or the general partner of the Seller, where
appropriate) to execute this Agreement and the other documents delivered
by the Seller to the Buyer at the Closing; and
(D) 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 Seller in
accordance with the First Installment and the Second Installment (as
defined herein).
(iii) In the event any Asset-Related Property is not assignable (such as a
letter of credit that is not transferable), the Seller shall use commercially
reasonable efforts to provide the Buyer, at no cost to the Seller, with the
economic benefits of such property by enforcing its rights with respect to such
property (solely at the Buyer's
45
direction) for the benefit and at the expense of the Buyer. Seller's obligations
under this subsection 6.2(iii) only shall survive after Closing and shall be
subject to the provisions of section 12.3 hereof, but not section 12.4.
(iv) TIME SHALL BE OF THE ESSENCE with respect to Seller's obligations
hereunder on the day that is fourteen days after the Closing Date.
ARTICLE VII
INTENTIONALLY DELETED
ARTICLE VIII
INSPECTIONS
46
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 Seller and Buyer,
upon reasonable notice (at least twenty-four (24) hours in advance), provided,
however, (a) the Buyer shall permit a representative of Seller to accompany the
Buyer and/or its agents during any such inspection if the Seller shall make such
a representative available and (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 Seller; (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 the Seller,
which consent shall not be unreasonably withheld; and (e) Buyer shall obtain
from the Seller, 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 such Seller 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 the Property, Buyer shall deliver to Seller
certificates satisfactory to Seller evidencing that Buyer maintains general
liability insurance policies acceptable to Seller in its reasonable discretion,
naming Seller as additional insured and loss payee thereunder. The Buyer hereby
indemnifies and agrees to defend and hold the Seller 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 VIII by Buyer. In the event Buyer
fails to purchase the Property as provided for in this Agreement, upon Seller's
request, Buyer shall return to 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.
Section IX.2 Title Report, (a) With respect to the Property, 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
47
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 Seller and, in addition, the Buyer shall (a)
instruct Title Associates and the surveyor delivering such updated items to
furnish copies of all updated commitments and surveys to Seller's 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 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, 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) Seller shall order and deliver, or cause to be delivered, to
Buyer updated UCC, federal and state judgment and lien, pending litigation and
bankruptcy searches for Seller.
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 Seller is obligated by this Agreement or elects to pay and discharge,
Seller may use any portion of the Purchase Price to satisfy the same, provided
that Seller 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 Seller
shall comply with the foregoing requirements. Any unpaid liens for taxes, water
charges and assessments applicable to the period prior to the 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 shall be deemed to require
Seller 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 Seller, at law or in equity, for Seller's,
inability to convey title, subject only to the Permitted Exceptions.
Section IX.5 Rights in Respect of Inability to Convey. In the event
that Seller shall be unable to convey the Asset as a result of the existence of
a title exception Seller is not
48
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
Seller 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 Seller for damages or otherwise, Seller shall have the right, at
Seller's sole election, to either (l) take such action as Seller shall deem
advisable to discharge each such title exception which is not a Permitted
Exception or (2) terminate this Agreement. In the event Seller shall elect to
take action to discharge each such title exception which is not a Permitted
Exception, the Seller 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 Seller pursuant to Section 9.6 below) and the
Closing shall be adjourned to a date mutually agreed upon by Seller and Buyer
not beyond such 45 day period. If, for any reason whatsoever, Seller shall not
have succeeded in discharging each such title exception at the expiration of
such adjournment(s) and if Buyer shall not, prior to the expiration of the last
of such adjournments, give notice to Seller that 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 Seller 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 Seller pursuant to this Article IX. Upon any termination of
this Agreement pursuant to this Section, the Xxxxxxx Money shall be returned to
Buyer and neither party shall have any further rights or obligations with
respect to the Property, except those obligations which expressly survive the
termination of this Agreement. No action taken by Seller to discharge, or
attempt to discharge any purported title exception shall be an admission that
any such purported title exception is not a Permitted Exception. The provisions
of this Section 9.5 shall be subject to Seller's and Buyer'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 Seller thereof,
which notice shall describe in reasonable detail the Voluntary/De Minimis Title
Exceptions(s). Seller shall discharge, or subject to Buyer's approval, provide
title endorsements over, all Voluntary/De Minimis Title Exceptions on or prior
to Closing. Seller shall be entitled to one or more adjournments of the Closing
Date not to exceed 45 days in the aggregate (inclusive of
49
any adjournments made by 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, Buyer may, by notice given to Seller at
any time on or prior to the Closing Date (as it may have been adjourned by the
relevant Seller pursuant to this Article IX) or within five (5) days after
receipt from Seller of a notice to terminate this Agreement, elect to accept
such title as Seller 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, 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 Seller for damages or otherwise by reason of
the existence of any title exceptions which are not Permitted Exceptions.
Section IX.8 Cooperation. Buyer and Seller 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, Buyer and Seller shall 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 Buyer and Seller and (y) the
authority of the respective signatories of Seller and Buyer to bind Seller and
Buyer, as the case may be, (ii) a certificate of good standing of Seller, (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.Transfer Taxes"), shall be paid for
entirely by Seller. In addition to the foregoing and their respective
apportionment obligations hereunder, (a) Sellers and 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) Seller shall be responsible (i) for the title insurance policy
50
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 Seller and (iii) any Repayment Costs and (c) Buyer shall
be responsible for all costs and expenses associated with (i) 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
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
(including any fees, financing costs, transfer taxes resulting from the
placement of the lien of a mortgage by Buyer upon the Property, 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). With respect to the Property, Buyer and Seller 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
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.
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, Seller 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 , Seller
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 Seller 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 Seller 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, Seller will credit
against the Purchase Price payable by the Buyer an amount equal to the net
proceeds, if any, received by Seller from such casualty or condemnation
less any amounts spent by Seller prior to Closing with respect to a
restoration of the
51
Property. If as of the Closing Date, Seller has 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 Seller will at
Closing assign to the Buyer all rights of Seller, 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 to either (i) terminate this Agreement 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. Notwithstanding the foregoing, in the event that
a casualty or condemnation had occurred during the Option Period and
Seller has not expended all of the insurance proceeds applicable to such
casualty or the condemnation proceeds in connection with the rebuilding or
restoration of the Property, the parties shall proceed to Closing in
accordance with this Agreement and the Seller shall assign to the Buyer at
Closing all rights of Seller, if any to the insurance or condemnation
proceeds and all other rights or claims arising out of or in connection
with such casualty or condemnation. To the extent that Seller has received
but not expended such insurance proceeds, Seller shall credit to Buyer
such amounts received, less the reasonable costs, if any, of collection
thereof.
ARTICLE XI
ADJUSTMENTS
Unless otherwise provided below, the following are to be adjusted
and prorated between Seller and Buyer as of 11:59 P.M. on the day preceding the
Closing Date, based upon a 365 day year, and the net amount thereof shall be
added to (if such net amount is in Seller's favor) or deducted from (if such net
amount is in 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 Buyer or 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
52
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 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 Buyer shall be unable
to collect such past due Fixed Rents within six (6) months after the
Closing Date, Seller shall have the right, upon prior written notice to
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,
which consent shall not be unreasonably withheld) but 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, Seller will consider using any
alternative reasonable proposals offered by Buyer with respect to
determining the adjustment in the collection of any arrearage 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, Buyer agrees that it will pay the entire amount over to Seller
upon receipt thereof, less any costs of collection (including reasonable
counsel fees) reasonably allocable thereto. Buyer agrees
53
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 Buyer shall be unable to
collect such Overage Rent within six (6) months after the Closing Date,
Seller shall have the right, upon prior written notice to 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. Seller
shall furnish to the Buyer all information relating to the period prior to
the Closing that is reasonably necessary for the billing of such Overage
Rent and Buyer will deliver to Seller, concurrently with the delivery to
tenants, copies of all statements relating to Overage Rent for the period
prior to the Closing. 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 Seller.
(c If, prior to the Closing, Seller 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 relevant Seller and the Buyer at the
Closing based on such estimated
54
payments actually paid by tenants (i.e., with the Seller 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 Seller with respect to periods
following the calendar month or other applicable installment period in
which the Closing occurs and the Seller 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. 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 Seller 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 Seller is 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 Seller to the Buyer (or, at the Seller's 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 Seller 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 Seller paying to the Buyer (or, at
the Seller's option, directly to the tenant in question) the portion of
such shortfall so allocable to the Seller.
(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 Seller from time to time
upon request of Seller a reasonably detailed accounting of such amounts
payable by the Buyer. The Seller 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.
55
(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 Seller 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. Seller 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 Seller as the tenant under the Ground Lease shall be adjusted and
prorated between Seller and Buyer as of 11:59 p.m. on the day preceding each
Closing.
Section XI.4 Taxes and Assessments. Real estate taxes and
assessments payable in the year in which each Closing occurs shall be based on
(a) the periods of ownership of the Asset by Seller 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, Seller shall, at the Closing, be responsible 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. 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 Seller harmless from and against any
and all loss, damage, charge, liability or expense (including court costs and
reasonable attorneys' fees) which Seller 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 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, Seller agrees that it 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
56
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, 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 Seller.
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 Seller
to the utility company to the Closing Date. Seller 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. Seller and Buyer shall jointly
execute a letter to each of such utility companies advising such utility
companies of the termination of the Seller's 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 Seller 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
Seller as of the Closing Date shall be assigned to the Buyer by, at the Seller's
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.
57
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
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 Seller.
Section XI.12 Leasing Costs. (a) With respect to Space Leases
entered into during the Option Period or after the effective date of this
Agreement in accordance with the terms hereof or Option Agreement, as
applicable, or renewals or expansions of Space Leases during the Option Period
in accordance with terms of Option Agreement or after the effective date of this
Agreement (including any renewals or expansions exercised pursuant to options
contained in existing Space Leases), Buyer will be responsible for all Leasing
Expenses and any other costs to be borne under Section 13 of the Option
Agreement 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 deferred tenant improvement work with respect to existing Space
Leases more particularly set forth on Schedule F-3 hereof ("Deferred Tenant
Improvements")and with respect to Schedule F-2. To the extent that 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 Seller 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.
(b) Except as otherwise set forth in Clause (a) of this Section,
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") and Buyer's leasing costs, for
which Seller is expressly obligated to pay in accordance with terms of
Option Agreement. To the extent such items are incomplete or not fully
paid at Closing, Seller shall give Buyer a credit against the Purchase
Price
58
for such remaining costs and Buyer shall assume the obligations to pay
such costs or perform such obligations.
Section XI.13 Cigna Loan Escrows. With respect to the Cigna Loan,
all escrows deposited with, or being held for the benefit of the lenders
thereunder, including, without limitation, all tax and insurance escrows, shall
be the property of Seller.
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 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 Seller shall indemnify and hold 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 Seller
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 contained in this Agreement, (iii) matters under any of the Space Leases
which arise prior to the Closing Date, and (iv) with respect to claims of
creditors arising as a result of Seller's failure to obtain a bulk sale stop
order from the Illinois Department of Revenue, Illinois Department of Employment
Security or the Chicago Department of Revenue in connection with the sale of the
IBM Plaza Property, such obligation to survive the Closing subject to Section
12.4.
Section XII.2 Indemnification by the Buyer. The Buyer shall
indemnify and hold Seller, its affiliates, members and partners, and the
partners, shareholders, officers, directors,
59
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 and (iii)
matters under any of the Space Leases which arise from and after the Closing
Date and (iv) Seller's delivery of a notice to prepay the Cigna Loan to the
Cigna lender and 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) Seller 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
Seller under this Agreement exceeds the applicable Basket Limitation and, in
such event, Seller shall be responsible for only the amount in excess of the
applicable Basket Limitation and (b) in no event shall the liability of the
Seller with respect to the indemnification provided for in Section 12.1 above
exceed in the aggregate the applicable Cap Limitation and (c) Seller 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 (except with respect to any
representations made by Seller in a Seller Estoppel Certificate delivered to
Buyer, then for a maximum period of six (6) months after the Closing (in
accordance with subsection 3.3(i)(B) hereof)) (the "Survival Period") provided,
any action, suit or proceeding with respect to the representations and
warranties is properly commenced within the applicable Survival Period. Seller's
agreement to indemnify Buyer with respect to Seller's failure to obtain a bulk
sale stop order as provided for in Section 12.1 shall survive until such time as
Seller delivers to Buyer a bulk sale stop order as required herein. 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.
60
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 Seller reserves and shall have the right to continue to
prosecute and/or settle the same in its own name. 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 Seller reserves and
shall have the right to continue to prosecute and/or settle the same; provided,
however, that the Seller 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 Seller in connection
with the prosecution of any such tax reduction proceedings and Seller 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. Seller's 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 Seller, 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 Seller's election, either (a) be paid to the Buyer and the
Buyer shall disburse the same to such tenants or (b) be paid by the Seller
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 Seller and the Buyer in
proportion to the gross amount of such refunds
61
or savings payable to the Seller 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. (a) If the Buyer shall default in the
performance of its obligations under this Agreement to purchase the Asset on the
Closing Date or if the Buyer shall default under the City Center Purchase
Agreement prior to the acquisition by Buyer of all of the Interests of Seller in
and to City Center LLC (as defined in the City Center Purchase Agreement),
Seller shall be entitled to (1) terminate this Agreement, (2) to direct Escrow
Agent to deliver the Xxxxxxx Money to Seller,(3) to retain the Xxxxxxx Money and
(4) if Buyer takes any action to enjoin the transfer of the Property, file a lis
pendens or take any other action whatsoever to enjoin, restrain, delay or
rescind or otherwise interfere legally with or [affect the transfer of the
Property or title to the Property], Seller shall have the additional right to
seek all of its rights and remedies at law and in equity and to recover all
damages as a result of Buyer's default hereunder, whether forseen or unforseen,
actual, consequential or punitive, at which time this Agreement shall be
terminated and of no further force and effect except for the provisions which
explicitly survive such termination. 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. It is understood and agreed that the foregoing shall
constitute Seller's sole and exclusive remedies hereunder.
(b If 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 the
Escrow Agent to deliver the Xxxxxxx Money to 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 12.5.
ARTICLE XV
62
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. 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 such parties' individual assets shall not be subject to
any 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) Seller and 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 Seller 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 Seller 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
63
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 Section shall
survive the Closing or the termination of this Agreement for a period of 180
days. Notwithstanding the foregoing and prior to Closing, Buyer shall be
entitled (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 Seller nor Buyer shall issue a press release with
respect to this Agreement and the transactions contemplated hereby except
(i) in the form of Exhibit J 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 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 Escrow Agent 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 Escrow Agent 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
Escrow Agent as the Reporting Person, the
64
Seller 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 Escrow Provisions. (a) The Escrow Agent shall hold the
Xxxxxxx Money in escrow in an interest-bearing bank account at a banking
institution located in New York City, New York (the "Escrow Account").
(b) The Escrow Agent shall hold the Xxxxxxx Money in the Escrow
Account, until the Closing or sooner termination of this Agreement and
shall hold and apply the Xxxxxxx Money in accordance with the terms of
this paragraph (b). The Seller and the Buyer understand that no interest
is earned on the Xxxxxxx Money during the time it takes to transfer into
and out of the Escrow Account. At the Closing, the Xxxxxxx Money shall be
paid by the Escrow Agent to, or at the direction of, the Seller. If for
any reason prior to the date of Closing or if the Closing does not occur
and either party makes a written demand upon the Escrow Agent for payment
of such amount being held by Escrow Agent, the Escrow Agent shall, within
one Business Day give written notice to the other party of such demand. If
the Escrow Agent does not receive a written objection within five Business
Days after the giving of such notice, the Escrow Agent is hereby
authorized to make such payment. If the Escrow Agent does receive such
written objection within such five day period or if for any other reason
the Escrow Agent in good faith shall elect not to make such payment, the
Escrow Agent shall continue to hold such amount until otherwise directed
by joint written instructions from the parties to this Agreement or a
final judgment of a court of competent jurisdiction. However, the Escrow
Agent shall have the right at any time to deposit the Xxxxxxx Money with
the clerk of the court of New York County and to file an action in
interpleader in New York State Supreme Court located in New York County .
The Escrow Agent shall give written notice of such deposit to the Seller
and the Buyer. Upon such deposit the Escrow Agent shall be relieved and
discharged of all further obligations and responsibilities hereunder.
(c) The parties acknowledge that the Escrow Agent is acting solely
as a stakeholder at their request and for their convenience, that the
Escrow Agent shall not be deemed to be the agent of either of the parties,
and the Escrow Agent shall not be liable to either of the parties for any
act or omission on its part, other than for its gross negligence or
willful misconduct. Seller and the Buyer shall jointly and severally
indemnify and hold the Escrow Agent harmless from and against all costs,
claims and expenses, including attorneys' fees and disbursements,
65
incurred in connection with the performance of the Escrow Agent's duties
hereunder.
(d) The Escrow Agent has acknowledged its agreement to these
provisions by signing this Agreement in the place indicated following the
signatures of the Seller and the Buyer.
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 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, to an Affiliate if Buyer designates the Affiliate
to which the Asset will be transferred at the Closing; or if not to an
Affiliate, (b) Buyer receives Seller's prior written consent to the assignment,
which consent shall be in Seller's sole discretion. In addition, Buyer may name,
without obtaining Seller's prior written consent, 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 a loan for which the 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.
66
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:
(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
67
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 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 Buyer and
the Seller 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 Buyer and the Seller 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 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
68
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 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 Deed. The acceptance of the Deed for the
Property by the Buyer shall be deemed full compliance by Seller of all of the
Seller's obligations under this Agreement except for those obligations of the
Seller which are specifically stated to survive the delivery of the Deed to the
Property.
Section XV.19 Payment of Purchase Price . The receipt and
confirmation of receipt by the Seller of the Purchase price, as adjusted, shall
be deemed full compliance by Buyer of all of Buyer's obligations with respect to
the Property, 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.
69
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:
SELLER:
BRE/WABASH L.L.C., a Delaware limited
liability company
By:______________________________________
Name:
Title:
ESCROW AGENT:
TITLE ASSOCIATES INC.
By:______________________________________
Name:
Title:
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS......................................................1
Section 1.1 Defined Terms.............................................1
ARTICLE II. SALE, PURCHASE PRICE AND CLOSING................................7
Section 2.1 Sale of Assets............................................7
Section 2.2 Purchase Price; Xxxxxxx Money.............................8
Section 2.3 The Closing...............................................9
ARTICLE III. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE SELLER.........................................10
Section 3.1 General Seller Representations
and Warranties..................................................10
(a) Formation; Existence.......................................10
(b) Power and Authority........................................10
(c) No Consents................................................10
(d) No Conflicts...............................................11
(e) Foreign Person.............................................11
Section 3.2 Representations and Warranties of the
Seller as to the Asset..........................................11
(a) Ownership of the Asset.....................................11
(b) Contracts..................................................12
(c) Space Leases...............................................12
(d) Brokerage Commissions......................................13
(e) Condemnation...............................................13
(f) Litigation.................................................13
(g) Environmental Violations...................................13
Section 3.3 Covenants of the Sellers Prior to Closing................13
(a) Insurance..................................................13
(b) Operation..................................................13
(c) New Contracts..............................................13
(d) New Space Leases...........................................14
(e) Litigation.................................................14
(f) Sale of Tangible Personal Property.........................15
(g) Performance Under Space Leases.............................15
(h) Ground Lease Estoppel Certificates.........................15
(i) Space Lease Estoppel Certificates..........................15
(j) Security Deposits..........................................16
(k) Updating Information.......................................17
(l) Review of Books and Records................................17
(m) Property Management Employees..............................17
ARTICLE IV. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE BUYER....................................................17
Section 4.1 Representations, Warranties and
Covenants of the Buyer..........................................17
(a) Formation; Existence.......................................17
(b) Power; Authority...........................................17
(c) No Consents................................................18
-i-
Page
----
(d) No Conflicts...............................................18
(e) Examination; No Contingencies..............................18
(g) Buyer's Affiliate/Assignee.................................21
(h) Like Kind Exchange.........................................21
ARTICLE V. CONDITIONS PRECEDENT TO CLOSING..................................22
Section 5.1 Conditions Precedent To Seller's
Obligations.....................................................22
Section 5.2 Conditions to the Buyer's Obligations....................23
ARTICLE VI. CLOSING DELIVERIES..............................................24
ARTICLE VII. INTENTIONALLY DELETED..........................................28
ARTICLE VIII. INSPECTIONS...................................................28
ARTICLE IX. TITLE AND PERMITTED EXCEPTIONS..................................29
Section 9.1 Permitted Exceptions.....................................29
Section 9.2 Title Report.............................................29
Section 9.3 Use of Purchase Price to Discharge Title Exceptions......30
Section 9.4 Inability to Convey......................................30
Section 9.5 Rights in Respect of Inability to Convey.................30
Section 9.6 Voluntary/De Minimis Title Exceptions....................31
Section 9.7 The Buyer's Right to Accept Title........................31
Section 9.8 Cooperation..............................................32
ARTICLE X. TRANSACTION COSTS; RISK OF LOSS..................................32
Section 10.1 Transaction Costs.......................................32
Section 10.2 Risk of Loss............................................33
ARTICLE XI. ADJUSTMENTS.....................................................34
Section 11.1 Fixed Rents.............................................34
Section 11.2 Overage Rents...........................................35
Section 11.3 Ground Lease Rents......................................38
Section 11.4 Taxes and Assessments...................................38
Section 11.5 Water and Sewer Charges.................................38
Section 11.6 Utility Charges.........................................39
Section 11.7 Contracts...............................................39
Section 11.8 Miscellaneous Revenues..................................39
Section 11.9 Supplies................................................39
Section 11.10 Security Deposits......................................39
Section 11.11 Employee Costs.........................................40
Section 11.12 Leasing Costs..........................................40
Section 11.13 Cigna Loan Escrows.....................................41
Section 11.14 Other..................................................41
Section 11.15 Re-Adjustment..........................................41
-ii-
Page
----
ARTICLE XII. INDEMNIFICATION................................................41
Section 12.1 Indemnification by the Seller...........................41
Section 12.2 Indemnification by the Buyer............................41
Section 12.3 Limitations on Indemnification..........................42
Section 12.4 Survival................................................42
Section 12.5 Indemnification as Sole Remedy..........................43
ARTICLE XIII. TAX CERTIORARI PROCEEDINGS....................................43
Section 13.1 Prosecution and Settlement of
Proceedings.....................................................43
Section 13.2 Application of Refunds or Savings.......................43
Section 13.3 Survival................................................44
ARTICLE XIV. DEFAULT........................................................44
Section 14.1 Default.................................................44
ARTICLE XV. MISCELLANEOUS...................................................45
Section 15.1 Use of Blackstone Name and Address.....................45
Section 15.2 Exculpation of the Seller. ............................45
Section 15.3 Brokers................................................45
Section 15.4 Confidentiality; ......................................45
Section 15.5 Escrow Provisions......................................47
Section 15.6 Successors and Assigns; No Third-Party Beneficiaries...48
Section 15.7 Assignment.............................................48
Section 15.8 Further Assurances.....................................49
Section 15.9 Notices................................................49
Section 15.10 Entire Agreement.......................................50
Section 15.11 Amendments.............................................50
Section 15.12 No Waiver..............................................50
Section 15.13 Governing Law..........................................50
Section 15.15 Severability...........................................51
Section 15.16 Section Headings.......................................51
Section 15.17 Counterparts...........................................51
Section 15.18 Acceptance of Deed.....................................51
Section 15.19 Payment of Purchase Price..............................51
Section 15.20 Construction...........................................52
Section 15.21 Recordation............................................52
Section 15.22 Waiver of Jury Trial...................................52
-iii-
Exhibits
Exhibit A - Assignment of Leases
Exhibit A-1 - Assignment and Assumption of Ground Lease
Exhibit B - Assignment of Contracts
Exhibit C - Tenant Notices
Exhibit D - Blackstone Lease
Exhibit E - Special Warranty Deed
Exhibit F - Xxxx of Sale
Exhibit G - FIRPTA Certificate
Exhibit H - Guaranty
Exhibit I-1 - IBM Plaza Ground Lease Estoppel Certificate
Exhibit I-2 - Tenant Estoppel Certificate
Exhibit I-3 - Form of Jenner Estoppel Certificate
Form of State Street Estoppel Certificate
Exhibit I-4 - Form of Seller's Estoppel Certificate
Exhibit J - Form of Press Release
Exhibit K - Form of Auditors' Certification
Schedules
Schedule A-1 - Description of IBM Plaza Fee Parcel
Schedule A-2 - Description of IBM Plaza Leasehold Parcel
Schedule B - Existing Title Policy and Survey
Schedule C - Third Party Loans
Schedule D - Consents
Schedule E - Contracts
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
-iv-
AGREEMENT OF PURCHASE AND SALE
among
BRE/WABASH L.L.C., the SELLER
and
PRIME GROUP REALTY, L.P., the BUYER
As of ______________ __, 1999
-5-
EXHIBIT A
ASSIGNMENT AND ASSUMPTION OF LANDLORD'S INTEREST IN LEASES
[OMITTED]
-6-
EXHIBIT B
ASSIGNMENT AND ASSUMPTION OF CONTRACTS
[OMITTED]
-7-
EXHIBIT C
NOTICE LETTER TO TENANTS
[OMITTED]
-8-
EXHIBIT D
BLACKSTONE LEASE
[OMITTED]
-9-
EXHIBIT E
SPECIAL WARRANTY DEED
[OMITTED]
-10-
EXHIBIT F
XXXX OF SALE
[OMITTED]
-11-
EXHIBIT G
ENTITY TRANSFEROR
FOREIGN INVESTORS REAL PROPERTY
TAX ACT CERTIFICATION AND AFFIDAVIT
[OMITTED]
-12-
EXHIBIT H
GUARANTY
[OMITTED]
-13-
EXHIBIT I-1
FORM OF GROUND LEASE ESTOPPEL CERTIFICATE
[OMITTED]
-14-
EXHIBIT I-2
FORM OF TENANT ESTOPPEL CERTIFICATE
[OMITTED]
-15-
EXHIBIT I-3
FORM OF LEASE ESTOPPEL CERTIFICATE FOR STATE STREET BANK AND
TRUST COMPANY LEASE
[OMITTED]
-16-
EXHIBIT I-3
FORM OF LEASE ESTOPPEL CERTIFICATE FOR JENNER & BLOCK LEASE
[OMITTED]
-17-
EXHIBIT I-4
FORM OF SELLER'S ESTOPPEL CERTIFICATE
[OMITTED]
-18-
EXHIBIT J
PRESS RELEASE
[OMITTED]
-19-
EXHIBIT K
AUDITORS CERTIFICATE
[OMITTED]
-20-
SCHEDULE A-1
DESCRIPTION OF FEE PARCEL
[OMITTED]
-21-
SCHEDULE A-2
DESCRIPTION OF LEASEHOLD PARCEL
[OMITTED]
-22-
SCHEDULE B
EXISTING TITLE POLICY AND SURVEY
[OMITTED]
-23-
SCHEDULE C
CIGNA LOAN
[OMITTED]
-24-
SCHEDULE D
CONSENTS
[OMITTED]
-25-
SCHEDULE E
CONTRACTS
[OMITTED]
-26-
SCHEDULE E-1
CONTRACTS TO BE TERMINATED
NONE.
-27-
SCHEDULE F
SPACE LEASES
[OMITTED]
-28-
SCHEDULE F-1
LANDLORD'S WORK IN PROGRESS
TENANT DESCRIPTION ALLOWANCE PD TO DATE BALANCE
------ ----------- --------- ---------- -------
Coffou Partners Tenant Improvement Allowance 35,240 35,240 0
Xxxxx Xxxxxxx Tenant Improvement 694,806 0 694,806
Allowance - Original Lease
Tenant Improvement Allowance 208,370 0 208,370
Amendment
Xxxxx XxXxxxxxxxx Tenant Improvement Allowance 1,186,875 334,110 852,765
Moving/Drawing Allowance 92,313 78,788 13,525
Feasibility Study 14,836 12,244 2,592
Alonti Cafe Tenant Improvement Allowance 193,480 193,480 0
TOTALS 2,425,920 653,862 1,772,058
-29-
SCHEDULE F-2
CONTEMPLATED LEASES
[OMITTED]
-30-
xxxvi
SCHEDULE F-3
DEFERRED TENANT IMPROVEMENTS
TENANT DESCRIPTION DATE TO BE PERFORMED
------ ----------- --------------------
Aronberg Goldgehn Davis Lease Commitment - Wall Washing 01/01/01
Lease Commitment - Painting 01/01/03
Lease Commitment - Wall Washing 01/01/06
Lease Commitment - Painting 01/01/08
Jenner & Block Replacement of Light Bulbs on Floors On Going
25, 37, 38, 39, 40E, 42, 43, 44, 45, 46
Lease Commitment - Wall Washing 01/01/01
Repaint Premises 01/01/03
Lease Commitment - Wall Washing 01/01/06
Repaint Premises 01/01/08
IBM Corporation Replacement of Light Bulbs on all FloorS On Going
Better Business Bureau Tenant Improvement Allowance 05/01/01
Information Management Group Carpets and Painting 08/01/03
Xxxxxx Xxxxx Xxxxxxx Expansion Buildout 03/15/99
-31-
SCHEDULE F-4
BASE BUILDING WORK
DESCRIPTION ESTIMATED REMAINING COST
----------- ------------------------
Parking Garage Renovation $876,301
Floors 2 & 3 Base Building Work $649,233
-32-
SCHEDULE G
BROKERAGE COMMISSIONS
NONE.
-33-
SCHEDULE H
LITIGATION
[OMITTED]
-34-
SCHEDULE I
SECURITY DEPOSITS HELD BY SELLER
[OMITTED]
-35-
SCHEDULE J
BUYER CONSENTS
NONE.
-36-
EXHIBIT B
FORM OF OPTION NOTICE
[OMITTED]
-37-
EXHIBIT C
LEASING GUIDELINES
[OMITTED]
-38-
