AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 12th
day of December, 1996, by and between ARCHON GROUP, L.P., a Delaware limited
partnership ("Purchaser"), and THIRTEENTH & K STREETS ASSOCIATES LIMITED
PARTNERSHIP, a District of Columbia limited partnership ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Subject to the terms and conditions set forth in this
Agreement, Purchaser agrees to purchase and Seller agrees to sell at the price
of Twenty-Eight Million Three Hundred Thousand And No/100 Dollars
($28,300,000.00) (the "Purchase Price"), that certain land and building
commonly known as 0000 X Xxxxxx, Xxxxxxxxxx, Xxxxxxxx xx Xxxxxxxx, legally
described on Exhibit A attached hereto (the "Property"). Included in the
Purchase Price is all of the personal property set forth on Exhibit B attached
hereto (the "Personal Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of Four Hundred
Thousand and No/100 Dollars ($400,000.00) (the "Xxxxxxx Money") to be held in
escrow by and in accordance with the provisions of the Escrow Agreement
("Escrow Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Near North National Title
Corporation as agent for First American Title Insurance Company (hereinafter
referred to as "Title Insurer") dated August 8, 1996 for the Property (the
"Title Commitment"). Seller and Purchaser shall each pay for one-half of the
costs of the Title Commitment and Title Policy and Purchaser shall pay for the
cost of any endorsements to the Title Policy.
3.2. Purchaser has received a survey of the Property prepared by Kamber
Engineering, Inc. dated October 31, 1985 (the "Existing Survey").
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1, Seller and
Purchaser shall each pay for one-half of the costs of (i) the documentary or
transfer stamps to be paid with reference to the "Deed" (hereinafter defined)
and all other stamps, intangible, transfer, documentary, recording, sales tax
and surtax imposed by law with reference to any other sale documents delivered
in connection with the sale of the Property to Purchaser, (ii) all other
charges of the Title Insurer in connection with this transaction, and (iii) the
cost of the new survey.
5. CONDITION OF TITLE.
5.1. Purchaser shall review the Title Commitment and Existing Survey
during the period between the date of the execution of this Agreement and
December 8, 1996 (the "Title Inspection Period"). Prior to the expiration of
the Title Inspection Period, Purchaser shall provide Seller with a marked-up
copy of the Title Commitment and Existing Survey enumerating its objections to
the Title Commitment and Existing Survey (the "Title and Survey Objections")
and listing those exceptions to title which are acceptable to Purchaser (which
shall include general real estate taxes, association assessments, special
district taxes and related charges not yet due and payable). Seller shall
review the Title and Survey Objections, and respond to Purchaser in writing
prior to the expiration of the Inspection Period (as defined below). If
Purchaser and Seller resolve all Title and Survey Objections, a marked copy of
the Title Commitment and Existing Survey indicating such agreement shall be
initialed by both Purchaser and Seller (hereinafter known as the "Final Title
Commitment" and the "Final Existing Survey") and shall serve as an amendment to
this Agreement. (The exceptions to title set forth on the Final Title
Commitment are hereinafter known as "Permitted Exceptions". All other
exceptions to title shall be referred to as "Unpermitted Exceptions".) If
Purchaser and Seller do not resolve all Title and Survey Objections prior to
the expiration of the Inspection Period, either Purchaser or Seller shall have
the right to terminate this Agreement by delivery of written notice to the
other on or before 5:00 p.m. Chicago time or December 10, 1996, in which event
this Agreement shall terminate, Purchaser shall receive the Xxxxxxx Money
together with all interest earned thereon and neither party shall have any
liability hereunder except as set forth herein.
5.2. If, prior to "Closing" (as hereinafter defined) but after the end of
the Inspection Period, a date-down to the Title Commitment discloses any new
Unpermitted Exception, Seller shall have thirty (30) days from the date of the
date-down to the Title Commitment, at Seller's expense, to (i) cure and/or have
any Unpermitted Exceptions which, in the aggregate, do not exceed $25,000.00,
removed from the Title Commitment or to have the Title Insurer commit to insure
against loss or damage that may be occasioned by such Unpermitted Exceptions,
or (ii) have the right, but not the obligation, to cure and/or have any
Unpermitted Exceptions which, in the aggregate, equal or exceed $25,000.00,
removed from the Title Commitment or to have the Title Insurer commit to insure
against loss or damage that may be occasioned by such Unpermitted Exceptions
with Purchaser's approval which Purchaser may withhold in its sole discretion.
In such event, the time of Closing shall be delayed, if necessary, to give
effect to said aforementioned time periods. If Seller fails to cure or have
said Unpermitted Exception removed or have the Title Insurer commit to insure
as specified above within said thirty (30) day period or if Seller elects not
to exercise its rights under (ii) in the preceding sentence, Purchaser may
terminate this Agreement upon notice to Seller within five (5) days after the
expiration of said thirty (30) day period. Absent notice from Purchaser to
Seller in accordance with the preceding sentence, Purchaser shall be deemed to
have elected to take title subject to said Unpermitted Exception. If Purchaser
terminates this Agreement in accordance with the terms of this Paragraph 5.2,
this Agreement shall become null and void without further action of the parties
and all Xxxxxxx Money theretofore deposited into the escrow by Purchaser
together with any interest accrued thereon, shall be returned to Purchaser, and
neither party shall have any further liability to the other, except for
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in Paragraph 7.
5.3. Seller agrees to convey fee simple title to the Property to
Purchaser by special warranty deed (the "Deed") in recordable form subject only
to the Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the date title is transferred to Purchaser in
accordance with this Agreement. Notwithstanding the foregoing, in the event of
damage to the Property by fire or other casualty prior to the Closing Date,
repair of which would cost less than or equal to $100,000.00 and which would
not have a material and adverse impact upon the use of the Property as it is
currently being operated (as reasonably determined by Seller in good faith),
Purchaser shall not have the right to terminate its obligations under this
Agreement by reason thereof, but Seller shall have the right to elect to either
repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty and pay to Purchaser any uninsured amount. Seller shall promptly
notify Purchaser in writing of any such fire or other casualty and Seller's
determination of the cost to repair the damage caused thereby. In the event of
damage to the Property by fire or other casualty prior to the Closing Date,
repair of which would cost in excess of $100,000.00 (as reasonably determined
by Seller in good faith) or which would have a material and adverse impact upon
the use of the Property as it is currently being operated, then this Agreement
may be terminated at the option of Purchaser, which option shall be exercised,
if at all, by Purchaser's written notice thereof to Seller within five (5)
business days after Purchaser receives written notice of such fire or other
casualty and Seller's determination of the amount of such damages, and upon the
exercise of such option by Purchaser this Agreement shall become null and void,
the Xxxxxxx Money deposited by Purchaser shall be returned to Purchaser
together with interest thereon, and neither party shall have any further
liability or obligations hereunder. In the event that Purchaser does not
exercise the option set forth in the preceding sentence, the Closing shall take
place on the Closing Date and Seller shall assign and transfer to Purchaser on
the Closing Date all of Seller's right, title and interest in and to all
insurance proceeds paid or payable to Seller on account of the fire or
casualty.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impair the use or value of the Property as it is currently being operated
(hereinafter collectively referred to as a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Xxxxxxx Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such five (5) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on the date hereof and ending at 5:00
p.m. Chicago time on December 10, 1996 (said period being herein referred to as
the "Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser, to the extent in Seller's
possession, copies of the current rent roll for the Property, the most recent
tax and insurance bills, utility account numbers, service contracts, structural
reports, environmental reports and unaudited year end 1995 and year-to-date
1996 operating statements. Furthermore, if the following are reasonably
available to Seller, Seller shall deliver to Purchaser plans and specifications
(all documents set forth in this Paragraph 7.1 being known as the "Seller
Documents").
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability, cost
and expense (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) suffered or incurred by Seller or Affiliates of
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property. Purchaser shall undertake its obligation to
defend set forth in the preceding sentence using attorneys selected by Seller,
in Seller's sole discretion.
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
If, for any reason whatsoever or for no reason, Purchaser is dissatisfied
with the results of the tests, studies or investigations performed or
information received pursuant to this Paragraph 7.1, Purchaser shall have the
right to terminate this Agreement by giving written notice of such termination
to Seller at any time prior to the expiration of the Inspection Period. If
written notice is not received by Seller pursuant to this Paragraph 7.1 prior
to the expiration of the Inspection Period, then the right of Purchaser to
terminate this Agreement pursuant to this Paragraph 7.1 shall be waived. If
Purchaser terminates this Agreement by written notice to Seller prior to the
expiration of the Inspection Period: (i) Purchaser shall promptly deliver to
Seller copies of all studies, reports and other investigations obtained by
Purchaser in connection with its due diligence during the Inspection Period;
and (ii) the Xxxxxxx Money deposited by Purchaser shall be immediately paid to
Purchaser, together with any interest earned thereon, and neither Purchaser nor
Seller shall have any right, obligation or liability under this Agreement,
except for Purchaser's obligation to indemnify Seller and restore the Property,
as more fully set forth in this Paragraph 7.1. Notwithstanding anything
contained herein to the contrary, the terms of this Paragraph 7.1, shall
survive the Closing and the delivery of the Deed and termination of this
Agreement.
7.2. Seller acquired title to the Property by foreclosure (or
deed-in-lieu thereof) and, therefore, Seller makes no representations or
warranties relating to the condition of the Property or the Personal Property,
except as expressly set forth in this Agreement. Purchaser acknowledges and
agrees that, except as expressly set forth in this Agreement, it will be
purchasing the Property and the Personal Property based solely upon its
inspections and investigations of the Property and the Personal Property, and
that Purchaser will be purchasing the Property and the Personal Property "AS
IS" and "WITH ALL FAULTS", based upon the condition of the Property and the
Personal Property as of the date of this Agreement, wear and tear and loss by
fire or other casualty or condemnation excepted. Without limiting the
foregoing, Purchaser acknowledges that, except as may otherwise be specifically
set forth elsewhere in this Agreement, neither Seller nor its consultants,
brokers or agents have made any representations or warranties of any kind upon
which Purchaser is relying as to any matters concerning the Property or the
Personal Property, including, but not limited to, the condition of the land or
any improvements comprising the Property, the existence or non-existence of
"Hazardous Materials" (as hereinafter defined), economic projections or market
studies concerning the Property, any development rights, taxes, bonds,
covenants, conditions and restrictions affecting the Property, water or water
rights, topography, drainage, soil, subsoil of the Property, the utilities
serving the Property or any zoning or building laws, rules or regulations or
"Environmental Laws" (hereinafter defined) affecting the Property. Seller
makes no representation or warranty that the Property complies with Title III
of the Americans with Disabilities Act or any fire code or building code.
Purchaser hereby releases Seller and the Affiliates of Seller from any and all
liability in connection with any claims which Purchaser may have against Seller
or the Affiliates of Seller, and Purchaser hereby agrees not to assert any
claims for contribution, cost recovery or otherwise, against Seller or the
Affiliates of Seller, relating directly or indirectly to the existence of
asbestos or Hazardous Materials on, or environmental conditions of, the
Property, whether known or unknown. As used herein, "Environmental Laws" means
all federal, state and local statutes, codes, regulations, rules, ordinances,
orders, standards, permits, licenses, policies and requirements (including
consent decrees, judicial decisions and administrative orders) relating to the
protection, preservation, remediation or conservation of the environment or
worker health or safety, all as amended or reauthorized, or as hereafter
amended or reauthorized, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency Planning and Community
Right-to-Know Act ("Right-to-Know Act"), 42 U.S.C. Section 11001 et seq., the
Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq., the Federal Water
Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section 1251 et seq., the
Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act ("Safe Drinking Water Act"), 42 U.S.C. Section 300f et seq.,
the Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the
Hazardous Materials Transportation Act (the "Transportation Act"), 49 U.S.C.
Section 1802 et seq. As used herein, "Hazardous Materials" means:
(1) "hazardous substances," as defined by CERCLA; (2) "hazardous wastes," as
defined by RCRA; (3) any radioactive material including, without limitation,
any source, special nuclear or by-product material, as defined by AEA; (4)
asbestos in any form or condition; (5) polychlorinated biphenyls; and (6) any
other material, substance or waste to which liability or standards of conduct
may be imposed under any Environmental Laws. Notwithstanding anything
contained herein to the contrary, the terms of this Paragraph 7.2 shall survive
the Closing and the delivery of the Deed and termination of this Agreement.
The terms and provisions of this Paragraph 7.2 are subject to Seller's
representations and warranties set forth in Paragraph 18.2 hereof.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as expressly set forth herein,
Seller makes no representation or warranty that such material is complete or
accurate or that Purchaser will achieve similar financial or other results with
respect to the operations of the Property, it being acknowledged by Purchaser
that Seller's operation of the Property and allocations of revenues or expenses
may be vastly different than Purchaser may be able to attain. Purchaser
acknowledges that it is a sophisticated and experienced purchaser of real
estate and further that Purchaser has relied upon its own investigation and
inquiry with respect to the operation of the Property and releases Seller and
the Affiliates of Seller from any liability with respect to such historical
information. Notwithstanding anything contained herein to the contrary, the
terms of this Paragraph 7.3 shall survive the Closing and the delivery of the
Deed and termination of this Agreement.
7.4. Intentionally deleted.
8. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS. The obligations of
the Purchaser to purchase the Property from the Seller and to perform the other
covenants and obligations to be performed by it on the Closing Date shall be
subject to the following conditions (all or any of which may be waived, in
whole or in part, by the Purchaser):
8.1. Representations and Warranties True. The representations and
warranties made by the Seller in Paragraph 18.2 shall be true and correct on
the date of this Agreement and shall be true and correct on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of such date.
8.2. Title to Real Property. On the Closing Date, the Title Insurer shall
be prepared, subject to the payment by the Seller of the applicable premium, to
issue to the Purchaser, or its designee, at standard rates, an ALTA Form B
owner's title insurance policy or its equivalent covering the Property, in an
amount equal to the Purchaser Price, insuring title to the Property strictly in
the form set forth in the Final Title Commitment, subject only to Permitted
Exceptions, Unpermitted Exceptions waived in writing by Purchaser, and such
other matters caused by the actions of Purchaser.
8.3. Covenants and Agreements. On or before the Closing Date, the Seller
will have performed all covenants and agreements required to be performed by it
pursuant to the terms of this Agreement.
8.4. No Litigation. On or before the Closing Date, Seller shall not have
received notice of any pending action or proceeding adversely affecting
Seller's ability to perform the transaction contemplated by this Agreement or
the Property for which Seller has not assumed all liability therefor.
8.5. Tenant Certificate Condition to Closing.
8.5.1. The following terms have been defined as follows for
convenience of reference:
8.5.1.1. "Tenant Certificate" means a certificate, commonly
known as an estoppel certificate, signed by a tenant with respect to its Lease,
either in the form set forth on Exhibit L hereto or on such other form as is
substantially consistent with the requirements of the tenant's lease for such
certificates.
8.5.1.2. "Seller Tenant Certificate" means a Tenant Certificate
signed by the Seller with respect to a particular Lease for which the Tenant in
question has failed to execute and deliver a Tenant Certificate, in which case
the Seller Tenant Certificate shall be in the form of Exhibit L, provided that
a Seller Tenant Certificate shall in all cases be limited to Seller's knowledge
as defined in paragraph 18.1 above.
8.5.1.3. "Qualification" means any assertion in a Tenant
Certificate or Seller Tenant Certificate (whether in the form of Exhibit L or
otherwise) of (i) a claim, counterclaim, offset or defense against the
landlord, (ii) a default on the part of the landlord, (iii) unpaid credits,
allowances or other sums due from the landlord prior to the date of the
estoppel (other than disclosed on EXHIBIT M, EXHIBIT N or Exhibit O attached
hereto or pursuant to a new lease pursuant to Paragraphs 17.1.4 and 17.2.5
herein), (iv) an unfulfilled construction or other obligation on the part of
the landlord prior to the date of estoppel (other than disclosed on EXHIBIT M,
EXHIBIT N or Exhibit O attached hereto or pursuant to a new lease pursuant to
Paragraphs 17.1.4 and 17.2.5 herein), or (v) information which is contrary (in
an adverse respect to the landlord) (x) to the information contained in the
rent roll attached hereto as Exhibit M, or (y) to the information pertaining to
tenant allowances and concessions and leasing commissions contained on Exhibit
N;
8.5.1.4. "Unacceptable Qualification" means any Qualification
other than the following:
(a) a Qualification which is expressly disclosed on the rent
roll attached hereto as Exhibit M or the schedules attached hereto as Exhibit N
or Exhibit O or a Qualification relating to non-payment of November, 1996 or
December, 1996 rent, provided the same is not as a result of a default by
Seller; or
(b) a Qualification expressly disclosed on the other Exhibits
attached hereto and made a part hereof.
8.5.2. If a Qualification is not an Unacceptable Qualification, it
shall not affect Purchaser's obligations to close hereunder or give rise to any
liability from Seller to Purchaser.
8.5.3. Seller shall promptly request a Tenant Certificate in the
form of Exhibit L from all tenants, and shall in good faith pursue the
collection of the same. Seller shall deliver to Purchaser, upon Seller's
receipt thereof, all Tenant Certificates signed by tenants (whether in the form
of Exhibit L or otherwise).
8.5.4. It shall be a condition to Purchaser's obligations
hereunder (the "Estoppel Condition") that Seller deliver to Purchaser, on or
prior to the Closing Date, (i) a Tenant Certificate from Xxxxx Xxxxx & Xxxxxx,
Cable & Wireless, Inc. and D.C. Housing Finance Agency ("Major Tenant"), and
such other tenants as to make the square footage leased by all tenants subject
to Tenant Certificates, exclusive of Society of the Plastics, Inc., equal to
50% of net rentable area of the Property (the parties hereto agree that the net
rentable area of the Property is 225,660 sq. ft.), and (ii) either a Tenant
Certificate or Seller Tenant Certificate from such other tenants so that
Purchaser receives Tenant Certificates or Seller Tenant Certificates, when
added to those Tenant Certificates required by 8.5.4(i), for tenants occupying
75% of the gross rentable area of the Property. Notwithstanding the foregoing
to the contrary, Seller shall not have satisfied the Estoppel Condition if any
of the Tenant Certificates received by Seller or Seller Tenant Certificates
disclose Unacceptable Qualifications other than Unacceptable Qualifications
with an "Estoppel Qualification Sum" (hereinafter defined) of less than
$100,000 in the aggregate. The "Estoppel Qualification Sum" shall mean the
following:
(i) if the claim asserted arises out of a defect which can be cured,
with the expenditure of money on a one time basis, such as a physical defect,
then such sum shall be calculated by a reasonable estimate of the cost to
repair or remediate said defect subject to the reasonable approval of
Purchaser; and
(ii) if the claim asserted affects a continuing obligation of a
tenant under the lease, such as the payment of rent, then the claim shall be
calculated by (i) determining the amount of the claim on a per annum basis,
(ii) multiplying said amount by the number of years or partial years said claim
would affect the monetary obligations under the lease and (iii) discounting
said product on a present value basis using a discount rate of 10% per annum.
If the Unacceptable Qualifications have an Estoppel Qualification Sum of
less than $100,000 in the aggregate, then Seller shall either (i) grant
Purchaser a credit at Closing for an amount equal to the Estoppel Qualification
Sum, or (ii) cure all conditions giving rise to an Unacceptable Qualification
and obtain written confirmation from the applicable tenant that such condition
has been cured on or before the Closing. The determination to perform the
covenant contained in subparagraphs (i) or (ii) in the preceding sentence shall
be made by Seller in its sole discretion. Provided Seller performs its
covenant in this Paragraph 8.5.4, the disclosure of Unacceptable Qualifications
having an Estoppel Qualification Sum of less than $100,000 in the aggregate
shall not affect Purchaser's obligations to close hereunder or give rise to any
additional liability from Seller to Purchaser.
8.5.5. If Seller delivers any Seller Tenant Certificates, then
upon receipt after Closing by Purchaser of a Tenant Certificate containing the
information herein required from a tenant under a Lease for whom Seller has
executed and delivered a Seller Tenant Certificate at Closing, the Seller
Tenant Certificate executed and delivered by Seller at Closing shall become
null and void and the Tenant Certificate received from the tenant shall be
substituted therefor. Seller's liability under Seller Tenant Certificates
shall be limited pursuant to Paragraph 19 herein.
8.5.6. If Seller has not satisfied the Estoppel Condition on or
before 5:00p.m. Chicago time on December 15, 1996, then Purchaser shall have
the right to terminate this Agreement by delivering written notice to Seller on
or before such date. If Purchaser exercises its rights to terminate in
accordance with the terms of this Paragraph 8.5.6, this Agreement shall be null
and void without further action of the parties and all Xxxxxxx Money
theretofore deposited by Purchaser together with any interest accrued thereon,
shall be returned to Purchaser, and neither party shall have any further
liability to the other, except for Purchaser's obligation to indemnify Seller
and restore the Property, as more fully set forth in Paragraph 7 hereof. If
Purchaser does not terminate this Agreement pursuant to the first sentence of
this Paragraph 8.5.6, the parties shall proceed to Closing and (i) Purchaser
shall receive a credit at Closing equal to the amount of the Estoppel
Qualification Sum of the Unacceptable Qualifications contained in the Tenant
Certificates or Seller Tenant Certificates, up to an aggregate amount of
$100,000 or (ii) Seller shall cure all conditions giving rise to an
Unacceptable Qualification Sum up to an aggregate amount of $100,000 and obtain
written confirmation from the applicable tenant that such condition has been
cured. The determination to perform the covenant contained in subparagraphs
(i) or (ii) in the preceding sentence shall be made by Seller in its sole
discretion.
8.6 Except as specifically set forth in Paragraph 8.5, if any one or more
of the conditions set forth in Paragraph 8 above are not satisfied as of the
date specified for Closing hereunder, then Purchaser shall have the option, in
its sole discretion, exercised by written notice to Seller, to: (i) waive such
condition and complete the Closing under this Agreement in accordance with the
terms and conditions hereof, without any reduction or adjustment in the
Purchase Price as a result of such waived condition; or (ii) terminate this
Agreement and obtain a refund of its Xxxxxxx Money and all interest earned
thereon, whereupon Seller and Purchaser shall be thereupon released from all
further liability or obligation under this Agreement except with respect to the
provisions hereof which are expressly intended to survive the termination of
this Agreement for any reason.
9. CLOSING. The closing of this transaction (the "Closing") shall be on
December 19, 1996 (the "Closing Date"), at the offices of Seller's counsel,
Chicago, Illinois at which xxxx Xxxxxx shall deliver possession of the Property
to Purchaser. This transaction shall be closed through an escrow with Title
Insurer, in accordance with the general provisions of the usual and customary
form of deed and money escrow for similar transactions in the District of
Columbia, or at the option of either party, the Closing shall be a "New York
style" closing at which the Purchaser shall wire the Purchase Price to Title
Insurer on the Closing Date and prior to the release of the Purchase Price to
Seller, Purchaser shall receive the Title Policy or marked up commitment dated
the date of the Closing Date. In the event of a New York style closing, Seller
shall deliver to Title Insurer any customary affidavit in connection with a New
York style closing. All closing and escrow fees shall be divided equally
between the parties hereto.
10. CLOSING DOCUMENTS.
10.1. On or prior to the Closing Date, Seller and Purchaser shall execute
and deliver to one another a joint closing statement. In addition, Purchaser
shall deliver to Seller the balance of the Purchase Price, an assumption of the
documents set forth in Paragraph 9.2.3 and 9.2.4 and such other documents as
may be reasonably required by the Title Insurer in order to consummate the
transaction as set forth in this Agreement.
10.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
10.2.1. the Deed (in the form of Exhibit E attached hereto), subject
to Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser;
10.2.2. a quit claim xxxx of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
10.2.3. assignment and assumption of intangible property (in the
form attached hereto as Exhibit G), including, without limitation, the service
contracts listed in Exhibit H;
10.2.4. an assignment and assumption of leases and security deposits
(in the form attached hereto as Exhibit I);
10.2.5. non-foreign affidavit (in the form of Exhibit J attached
hereto);
10.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession (which shall be delivered at the Property);
10.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
10.2.8. possession of the Property to Purchaser, subject to the
terms of leases;
10.2.9. evidence of the termination of the management agreement;
10.2.10. notice to the tenants of the Property of the transfer of
title and assumption by Purchaser of the landlord's obligation under the leases
and the obligation to refund the security deposits (in the form of Exhibit K);
10.2.11. an updated rent roll certified by the Seller to be true and
correct as of the Closing Date setting forth (i) all past due and uncollected
rent and additional charges, (ii) all prepayments of rent and additional
charges, and (iii) all security deposits (including interest thereon, if any)
held by Seller under all Leases;
10.2.12. all certificates of occupancy in Seller's possession; and
10.2.13. a complete set of the architectural, mechanical, electrical
and structural plans and specifications for the Property in Seller's
possession.
10.3. Notwithstanding anything contained herein to the contrary, on
the Closing Date Purchaser and Seller shall enter into an escrow agreement
("Xxxxxxx Escrow Agreement") with Title Insurer in form reasonably acceptable
to Purchaser and Seller related to payments due under that certain office lease
dated April 1, 1991 (the "Xxxxxxx Lease") with the tenant known as Xxxxxxx,
Xxxxxx, Xxxxxx & Xxxxxxxx or any of its successors or assigns under the Xxxxxxx
Lease ("Xxxxxxx"). On the Closing Date, Purchaser and Seller shall instruct
Xxxxxxx to pay the full amount of the rent and all additional rent due under
the Xxxxxxx Lease to the Title Insurer each month in accordance with the
schedule attached to the Xxxxxxx Escrow Agreement, which schedule shall be
modified by Purchaser and Seller as necessary to reflect any changes in rent or
additional rent payable pursuant to the Xxxxxxx Lease, whether due to changes
in maintenance expenses or a modification to the terms of the Xxxxxxx Lease by
the Purchaser as set forth below (the "Rent"). The Xxxxxxx Escrow Agreement
shall provide that for each month commencing on the first month after the
Closing Date and continuing for an additional fifty-one (51) months after the
Closing Date (the "Xxxxxxx Escrow Period") (i) so long as the Title Insurer
receives the full amount of the Rent due for such month, it shall pay
$29,411.76 less the difference between the monthly Rent due on the date hereof
and the actual Rent due in accordance with the schedule attached to the Xxxxxxx
Escrow Agreement (the "Seller Payment") to the Seller and the balance of the
funds received shall be paid to the Purchaser, (ii) to the extent that the
Title Insurer receives less than 95% of the full Rent due for such month, the
Title Insurer shall pay the entire amount collected to the Purchaser, and (iii)
to the extent that the Title Insurer receives between 95% and 100% of the full
Rent due for such month, the Title Insurer shall pay the following amount to
the Seller and the balance received to the Purchaser: the Seller Payment less
the difference between the full Rent due and the amount actually
collected (the failure to pay the full Rent due as set forth in items (ii) and
(iii) being known collectively as a "Xxxxxxx Default"). Upon the occurrence of
a Xxxxxxx Default, Purchaser shall be obligated to make good faith efforts, as
determined by Purchaser in its reasonable discretion but which shall not
include the commencement of litigation against Xxxxxxx, to collect the unpaid
amounts due from Xxxxxxx for such month (the "Unpaid Amounts"). If the
Purchaser or Title Insurer receives such Unpaid Amounts from Xxxxxxx within 90
days from the date due, Purchaser or Title Insurer, as applicable, shall be
obligated to pay the Seller Payment, or the unpaid portion of the Seller
Payment for such month, to the Seller. If at any time during the Xxxxxxx
Escrow Period (i) Purchaser rightfully terminates the Xxxxxxx Lease, (ii)
Xxxxxxx terminates the Xxxxxxx Lease for any reason, or (iii) the Xxxxxxx Lease
is otherwise terminated as a result of the litigation between Seller and
Xxxxxxx, the obligations set forth in this Section 10.3 and in the Xxxxxxx
Escrow Agreement shall immediately terminate (the "Termination") and all rents
collected in connection with the Xxxxxxx Lease or the premises occupied by
Xxxxxxx shall be the sole possession of Purchaser and Seller shall have no
further rights therein whatsoever. In addition, the Xxxxxxx Escrow Agreement
shall provide that in all events and circumstances, including the event of a
dispute between Purchaser and Seller, Title Insurer will in any event disburse
to Purchaser all Rent received by Title Insurer in excess of the Seller Payment
on a monthly basis. In the event the Purchaser sells the Property during the
Xxxxxxx Escrow Period, it shall require that such new owner of the Property
assume the obligations set forth in this Section 10.3. Purchaser hereby
covenants that (i) neither Purchaser nor any agent or employee of Purchaser
shall disclose the terms of this Paragraph 10.3 or the Xxxxxxx Escrow Agreement
to Xxxxxxx or any of Xxxxxxx'x agents or employees and (ii) Purchaser shall
modify or restructure the Xxxxxxx Lease only for business reasons, not in bad
faith or solely for the purpose of reducing amounts payable to Seller.
Notwithstanding anything contained in this Agreement to the contrary, in the
event that the Xxxxxxx Lease is terminated for any reason and Purchaser fails
to commence any action against Xxxxxxx within 120 days of such termination,
then in such event, Purchaser hereby agrees to subrogate its rights in
connection with remedies under the Xxxxxxx Lease to Seller. The terms of this
Paragraph 10.3 shall survive Closing and the delivery of the Deed.
11. PURCHASER'S DEFAULT. ALL XXXXXXX MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT AFTER THE EXPIRATION OF THE INSPECTION PERIOD,
SELLER SHALL RETAIN ALL OF THE XXXXXXX MONEY AND THE INTEREST THEREON AS
SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY, EXCEPT FOR PURCHASER'S
OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH IN
PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN
THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE
PARTIES ACKNOWLEDGE THAT THE XXXXXXX MONEY HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
12. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL XXXXXXX MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE CLOSING DOCUMENTS SET
FORTH IN PARAGRAPH 10.2 HEREOF, THEN PURCHASER WILL BE ENTITLED TO XXX FOR
SPECIFIC PERFORMANCE.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S
DEFAULT IS (I) ITS (AND NOT AN UNRELATED THIRD PARTY'S) AFFIRMATIVE ACTION
WHICH RESULTS IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY AND WHICH
GIVES RISE TO A RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO PARAGRAPH 5.2
HEREOF; (II) ITS MISREPRESENTATION OF ANY ITEM SET FORTH IN PARAGRAPH 18.2
HEREOF; OR (III) ITS WILLFUL REFUSAL TO DELIVER ANY OF THE CLOSING DELIVERIES
SET FORTH IN PARAGRAPH 10.2 HEREOF, THEN PURCHASER WILL BE ENTITLED TO DEMAND
THE RETURN OF ALL XXXXXXX MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND
THIS AGREEMENT SHALL THEN BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES
SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR
PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET
FORTH MORE FULLY IN PARAGRAPH 7 AND PURCHASER'S RIGHT TO RECEIVE FROM SELLER
ITS ACTUAL, DOCUMENTED THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS
DUE DILIGENCE HEREUNDER AND THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED
$175,000 IN THE AGGREGATE.
13. CLOSING PRORATIONS.
13.1. The items described in this Paragraph shall be prorated between
the parties on a per diem basis (on the basis of actual calendar days and a
366-day year) so that credits and charges preceding or on 11:59 P.M. on the
Closing Date shall be allocated to Seller and credits and charges for the
period after 11:59 P.M. on the Closing Date and all days thereafter shall be
allocated to Purchaser. As of May 1, 1997, Seller and Purchaser shall jointly
prepare a final proration statement in accordance with the provisions of this
Paragraph 13 and a final adjusting payment shall then be made, as provided in
Paragraph 13.3 hereof.
13.1.1. Real estate taxes (on the basis of allowable discounts for
early payment, to the extent the adjustment is made during the discount
period), general and special assessments and the like ("Taxes") for 1996, as
such Taxes may be increased or decreased after the Closing, shall be prorated
as of the Closing Date based on the most recent ascertainable amount.
Purchaser shall promptly xxxx tenants making annual payments for Taxes, if any,
and other tenants which are obligated to make payments for taxes other than on
a monthly basis and which remain liable for Taxes for a period of Seller's
ownership (said annual paying tenants and non-monthly paying tenants are
hereinafter collectively referred to as "Non-Monthly Tax Payors") in accordance
with their respective Leases. Upon Purchaser's receipt of the payment of Taxes
by each Non-Monthly Tax Payor, said payment shall be prorated as of the Closing
Date and Purchaser shall promptly pay to Seller the prorated portion of the
collected Taxes pertaining to the period prior to the Closing Date.
13.1.2. Minimum rent (exclusive of delinquent rents, but including
prepaid rents) and other fixed charges for operational expenses and taxes paid
under the Leases ("Minimum Rent") shall be prorated as of the Closing Date.
13.1.3. Certain of the Leases provide for reimbursement to landlord
of maintenance and operation charges, taxes, insurance and other expenses
(herein collectively referred to as "Maintenance Expenses"). Some Leases
provide for a determination of the tenant's share of Maintenance Expenses on an
annual basis but provide that an estimated amount thereof (either in the
aggregate or for specified components thereof) shall be paid by tenant to
landlord monthly during the course of the year with a final adjustment to be
made after the close of the year when such costs and expenses have been finally
determined. Seller and Purchaser agree as follows with respect to Maintenance
Expenses:
13.1.3.1. Except as hereinafter provided, Seller shall be
responsible for the payment of all Maintenance Expenses attributable to periods
of time through the Closing Date and shall be entitled to receive and retain
all reimbursements thereof collected from tenants on account thereof with
respect to the period through the Closing Date; and Purchaser shall be
responsible for the payment of all Maintenance Expenses attributable to periods
of time after the Closing Date and shall be entitled to receive and retain from
the tenants all reimbursements thereof collected from tenants on account
thereof with respect to the Closing Date and thereafter. At the Closing,
Seller shall pay to Purchaser the amount of ascertainable Maintenance Expenses
incurred but unpaid at the Closing and Seller shall receive as a credit an
amount equal to all Maintenance Expenses prepaid by Seller for periods after
the Closing Date and not yet incurred.
13.1.3.2. As a part of the final proration referred to in
Section 13.3 hereof:
(i) Seller shall pay to Purchaser the amounts (if any) received by
Seller from tenants on account of Maintenance Expenses with respect to the
period prior to the Closing Date in excess of amounts incurred by Seller during
such period on account of such Maintenance Expenses with respect to such
period; and
(ii) Purchaser shall pay to Seller the amount (if any) received by
Purchaser on account of Maintenance Expenses paid by tenants with respect to
said year which are attributable to Maintenance Expenses incurred by Seller
prior to Closing Date and not theretofore reimbursed.
13.1.4. Insurance charges payable under the Leases shall be
adjusted in the same manner as provided in 13.1.3.2(i) and (ii) above with
respect to Maintenance Expenses.
13.1.5. To the extent not covered by Paragraph 13.1.3, utility and
fuel charges, including, without limitation, charges for water, electricity,
gas, gasoline, steam, oil and telephones used in connection with the heating,
cooling, lighting, maintenance and operation of the Property and any personal
property included therein or used in connection therewith shall be prorated as
of the Closing Date. Seller shall endeavor to obtain readings of all utility
meters as close to the Closing Date as practicable.
13.1.6. To the extent not covered by Paragraph 13.1.3 annual fees
for permits and licenses required in connection with the operation of the
Property shall be prorated as of the Closing Date.
13.1.7. Personal property taxes, if any, for any personal property
transferred to Purchaser shall be prorated as of the Closing Date.
13.1.8. Purchaser shall cause a reconciliation of the Maintenance
Expenses and Taxes to occur with the tenants no later than February 15, 1997
and shall use diligent efforts in collecting from the tenants any
under-payments for Taxes and Maintenance Expenses for 1996.
13.2. The following amounts, if any (the "Adjustments"), without
duplication shall be made:
13.2.1. All security deposits held by Seller as of the Closing Date
shall be paid to Purchaser at the Closing.
13.2.2. Purchaser shall receive a credit at Closing for all
brokerage commissions and tenant improvement obligations of Seller listed on
Exhibit O attached hereto to the extent not paid by Seller prior to Closing.
Purchaser assumes all obligations for brokerage commissions and tenant
obligations set forth on such Exhibit O and set forth on Exhibit N attached
hereto. Purchaser assumes all obligations of the Association of Flight
Attendants ("AFA") with respect to all premises leased by AFA in the ALPA
Building at 0000 Xxxxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, X.X.
13.2.3. All other reasonable expenses normal to the operation and
maintenance of the Property which require payments either in advance or in
arrears for periods which begin prior to the Closing Date or end thereafter
shall be apportioned between Seller and Purchaser as of 11:59 P.M. on the
Closing Date. The obligations under any contract continuing after the Closing
Date as provided within this Agreement shall be apportioned between Seller and
Purchaser as of the Closing Date.
13.3. In connection with the prorations and the Adjustments herein and
as provided, there shall be prepared the following statements, schedules and
certificate:
13.3.1. Seller shall prepare or cause to be prepared statements in
reasonable detail showing separately each item prorated or adjusted pursuant to
this Agreement and a detailed reconciliation showing separately each item
prorated or adjusted pursuant to this Agreement and a detailed reconciliation
of the Prorations and Adjustments, such statements to be delivered two (2)
business days prior to the Closing and adjusted as necessary at the Closing.
The parties shall mutually agree that said closing statement accurately
reflects the method of proration set forth in this Agreement.
13.3.2. Purchaser, in cooperation with Seller, shall prepare, not
later than May 1, 1997, a final proration statement as of the Closing Date,
presenting correctly the final Prorations and Adjustments in accordance with
the terms of this Agreement and a statement of "Overdue Amounts" (hereinafter
defined). Upon issuance of such final proration statement the parties shall
make a final proration payment as appropriate (including, without limitation, a
settlement of Overdue Amounts). For purposes of preparation of the foregoing
statements and at all reasonable times thereafter, the parties agree to allow
the other party and the other party's accountants and representatives, to
examine so much of the books and records in the possession and control of the
other party as relate to such statements and final reconciliations with tenants
on Taxes, Maintenance Expenses and other charges at the place or places where
they are then regularly maintained. Seller and Purchaser shall retain such
books and records for three (3) years from the Closing Date.
13.4. Minimum Rent owed by tenants which are due but unpaid as of the
Closing Date shall not be adjusted, but after the Closing Date the Purchaser
shall xxxx, in accordance with the terms of the tenants' Leases, the Minimum
Rent payable by tenants which are accrued but unpaid on the Closing Date
(collectively, "Overdue Amounts"). The Purchaser shall pay to the Seller in
accordance with the priority established in the immediately following sentence
the Overdue Amounts collected from each tenant attributable to the portion of
calendar year 1996 (the "Current Calendar Year") ending at 11:59 P.M. on the
Closing Date, within 15 days after the end of the month in which such Overdue
Amounts are collected. All Overdue Amounts collected by the Purchaser after
the Closing Date from tenants which, on the Closing Date, are not more than 30
days in arrears in the payment of the Minimum Rent shall be applied in the
following order of priority: (i) first to the month preceding the month in
which the Closing Date occurs; (ii) then to the month in which the Closing Date
occurs; and (iii) then to any month or months following the month in which the
Closing Date occurs. All Overdue Amounts collected by the Purchaser after the
Closing Date from tenants which, on the Closing Date, are more than 30 days in
arrears in the payment of Minimum Rent shall be applied in the following order
of priority: (i) first to the month in which the payment is received; and (ii)
then to any month or months preceding the month in which the payment is
received with such payment being applied to the Overdue Amounts in the inverse
order of their due dates.
13.5. The Purchaser shall use diligent efforts to collect all Overdue
Amounts and in no event shall Purchaser waive any Overdue Amounts. The
Purchaser shall not have any obligation or liability under this Paragraph to
pay any Overdue Amount or any Minimum Rent to the Seller except if, and to the
extent that, such Overdue Amount or Minimum Rent is collected from tenants of
the Property after the Closing Date. After the Closing has occurred, Seller
shall have no right to commence litigation or any other collection proceedings
to collect such Overdue Amounts.
14. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
15. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 11 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller to any entity affiliated with Purchaser, or the principals of
Purchaser, or to any fund sponsored by Purchaser or the principals of
Purchaser, provided that the assignee assumes liability for all obligations of
Purchaser hereunder including the obligations of Purchaser first arising prior
to the effective date of the assignment and Purchaser remains liable as set
forth in the following sentence (and said assignor shall be released from all
other obligations hereunder). If any assignee of Purchaser under this
Agreement petitions or applies for relief in bankruptcy or said assignee is
adjudicated as a bankrupt or insolvent, or said assignee files any petition,
application for relief or answer-seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other statute,
law, code or regulation relating to bankruptcy, insolvency, or other relief for
debtors (collectively, a "Bankruptcy Filing") on or before the Closing Date,
said Bankruptcy Filing shall be a default under this Agreement and Purchaser
shall indemnify Seller for all costs, attorney's fees and expenses of Seller
resulting from Seller's efforts to obtain the Xxxxxxx Money as liquidated
damages and to clear title to the Property from any encumbrance resulting from
the Bankruptcy Filing.
16. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Insignia Management Co. (to be paid by Seller). Seller's
commission to Insignia Management Co. shall only be payable out of the proceeds
of the sale of the Property in the event the transaction set forth herein
closes. Purchaser and Seller shall indemnify, defend and hold the other party
hereto harmless from any claim whatsoever (including without limitation,
reasonable attorney's fees, court costs and costs of appeal) from anyone
claiming by or through the indemnifying party any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated other than to Insignia Management Co. The indemnifying party
shall undertake its obligations set forth in this Paragraph 15 using attorneys
selected by the indemnifying party and reasonably acceptable to the indemnified
party. The provisions of this Paragraph 15 will survive the Closing and
delivery of the Deed.
17. SELLER COVENANTS.
17.1. Affirmative Covenants. Between the date of this Agreement and
the Closing Date, the Seller agrees that it will:
17.1.1. manage and operate the Property in the same manner that it
has managed, operated and maintained the Property during the period of Seller's
ownership, subject to reasonable wear and tear and casualty; and
17.1.2. deliver the Property on the Closing Date in substantially
the same condition it is in on the date of this Agreement, reasonable wear and
tear and damage by fire or other casualty excepted;
17.1.3. deliver to the Purchaser, promptly after receipt by the
Seller, copies of all notices of violation issued by any governmental
authorities with respect to the Property received by the Seller after the date
of this Agreement; and
17.1.4. prior to the expiration of the Inspection Period, deliver to
Purchaser three (3) days prior to the execution thereof, any new Leases.
17.2. Negative Covenants. Between the date of this Agreement and the
Closing Date, the Seller agrees that, without the Purchaser's written consent
in each case, it will not:
17.2.1. voluntarily grant or create any mortgage, lien, encumbrance,
easement, covenant, condition, right-of-way or restriction upon the Property
other than the Permitted Exceptions;
17.2.2. alter or amend any of the Contracts or become a party to any
new similar agreement unless the same is terminable without penalty to the
then-owner of the Property upon not more than 30 days' notice;
17.2.3. alter, amend, renew, extend, or consent to the assignment of
any Lease (or sublease of any related premises), except for renewals pursuant
to renewal options contained in such Lease and described in the Rent Roll;
17.2.4. terminate any Lease, or accept a surrender of the leased
premises thereunder, except for non-payment of rent or breach of non-monetary
covenants which causes default under other Leases; or
17.2.5. after the expiration of the Inspection Period, execute any
new lease affecting the Property without Purchaser's prior written consent,
which consent shall not be unreasonably withheld. Upon requesting Purchaser's
consent, Seller shall deliver a complete copy of said lease to Purchaser
together with a statement of leasing commissions and tenant improvements
payable by the landlord under such lease. Purchaser's consent shall be deemed
given if Purchaser has not responded to the contrary within five (5) business
days after receipt of Seller's written request and the complete copy of said
lease. If approved by Purchaser, a complete copy of any such lease shall be
delivered to Purchaser within ten (10) days of the full execution thereof. All
leasing costs and commissions, tenant improvements and contributions, and up to
$1,000 in reasonable attorneys' fees in the aggregate, incurred in connection
with any new lease, including all new leases executed prior to the expiration
of the Inspection Period ("New Lease Costs"), shall be paid by Purchaser or
credited to Seller at Closing if already paid by Seller. Notwithstanding
anything contained herein to the contrary, Purchaser hereby approves the terms
of the transactions set forth as "Potential Deals" on Exhibit N and agrees to
pay all New Lease Costs associated therewith or credit Seller for any amounts
paid as of the Closing.
17.2.6. fail to comply with any written notices to Seller received
by Seller prior to Closing of violations of law or municipal ordinances, orders
or requirements issued by any governmental authority against or affecting the
Property (the "Violations"). If Seller has knowledge prior to the Closing of
an assertion by any governmental authority of any Violations, Seller shall
comply with any such assertion prior to Closing. If any Violations remain
uncured on the Closing Date, Purchaser shall receive a credit against the
Purchase Price equal to the estimated cost of curing the same, as estimated by
an architect or engineer selected by Purchaser and reasonably satisfactory to
Seller. Notwithstanding the foregoing, in the event the cost to cure the
Violation exceeds Fifty Thousand Dollars ($50,000.00), then Purchaser at its
election, may as its sole remedy in respect thereof either (A) terminate this
Agreement, in which event the parties shall direct the Escrow Agent to return
the Xxxxxxx Money Deposit with any interest accrued thereon to Purchaser and
neither party hereto will have any further obligations except for those which
specifically survive the termination hereof or (B) accept the Property subject
to the Violation and receive a credit equal to $50,000.
18. REPRESENTATIONS AND WARRANTIES.
18.1. Any reference herein to Seller's knowledge or notice of any matter
or thing shall only mean such knowledge or notice that has actually been
received by Xxxxx Xxxxxxxxx and/or Xxx Xxxxxx (together, the "Seller's
Representative"), and any representation or warranty of the Seller is based
upon those matters of which the Seller's Representative has actual knowledge.
Any knowledge or notice given, had or received by any of Seller's agents,
servants or employees shall not be imputed to Seller, the general partner or
limited partners of Seller, the subpartners of the general partner or limited
partners of Seller or Seller's Representative.
18.2. Subject to the limitations set forth in Paragraph 18.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge:
(i) Except as disclosed on Exhibit P attached hereto, Seller
has no knowledge of any pending or threatened litigation, claim, cause of
action or administrative proceeding concerning the Property;
(ii) Seller has the power to execute and deliver this Agreement
and consummate the transactions contemplated herein;
(iii) the rent roll attached hereto as Exhibit M which
Seller will update as of the Closing Date is accurate as of the date set forth
thereon;
(iv) The operating statements delivered by Seller to Purchaser
as part of the Seller Documents are the actual operating statements used by
Seller in connection with the day-to-day operation of the Property and were
prepared in accordance with Seller's customary practice in the ordinary course
of business;
(v) Annexed hereto as Exhibit M is a true and complete list of
all of the leases, amendments, and other related documents (the "Leases")
affecting the tenancies at the Property and there are no leases or other
tenancies for any space in the Property other than the Leases. Except as
otherwise disclosed on Exhibit M, the Seller has not received from any tenant
under a Lease nor given to any tenant under a Lease a written notice of default
by the Seller or tenant in performing any of its obligations under such Lease
which has not been cured;
(vi) Contracts. The contracts (the "Contracts") listed on
Exhibit H are all of the contracts disclosed to Purchaser by Seller as part of
the Seller Documents and there are no service or other contracts affecting the
Property other than as set forth on Exhibit H or which are Permitted
Exceptions. The Seller has performed all obligations required to be performed
by it, and is not in default, under any of the Contracts;
(vii) Reports. The Seller has delivered to Purchaser the
most current environmental report on the Property in its possession;
(viii) Condemnation. The Seller has not received written
notice of, and the Seller has no knowledge of, pending or contemplated
condemnation proceedings affecting the Property, or any part thereof;
(ix) Compliance with Laws. Seller has not received a written
notice of uncured violation of any Environmental Laws, statute, rule, law,
obligation, ordinance, or other legal regulation or requirement pertaining to
the use, maintenance, ownership, or operation of the Property;
(x) Brokerage Commissions/Tenant Improvements. There will be
no brokerage commissions or tenant improvement allowances due on the Closing
Date or at any time thereafter in connection with any of the Leases or any
renewals or extensions thereof other than as disclosed in Exhibit N or Exhibit
O; and
(xi) Seller's Representative. Xxxxx Xxxxxxxxx is a senior vice
president of The Balcor Company. Xxx Xxxxxx is the asset manager at The Balcor
Company responsible for the operations of the Property.
(x) Annual Reconciliation. All Leases contain provisions which
provide for the reconciliation of Maintenance Expenses on a calendar year
basis; provided, however, that Purchaser's sole remedy in the event of a breach
of this representation shall be a reproration between Seller and Purchaser in
accordance with Paragraph 13 hereof with respect to any Lease that does not
provide for a calendar year reconciliation promptly following the
reconciliation with the tenant under such Lease.
18.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute and deliver this
Agreement and consummate the transactions contemplated herein.
18.4. If at any time after the execution of this Agreement, either
Purchaser or Seller becomes aware of information which makes a representation
and warranty contained in this Agreement to become untrue in any material
respect, said party shall promptly disclose said information to the other party
hereto. Provided the party making the representation or warranty did not take
any deliberate actions to cause the representation or warranty in question to
become untrue in any material respect, said party shall not be in default under
this Agreement and the sole remedy of the other party shall be to terminate
this Agreement. Notwithstanding anything contained herein to the contrary, if
the status of any of the tenancies changes from the date of the rent roll
attached hereto and the date of the rent roll delivered at Closing, provided
the change in status is not caused by a breach of Seller's covenants contained
in Paragraph 17 herein, then Purchaser shall not have the right to terminate
this Agreement or make any claim for a breach of a representation or warranty
hereunder involving the rent roll or tenancies thereunder. Purchaser and
Seller are prohibited from making any claims against the other party hereto
after the Closing with respect to any breaches of the other party's
representations and warranties contained in this Agreement that the claiming
party has actual knowledge of prior to the Closing.
18.5. The parties agree that the representations contained herein
shall survive Closing for a period of nine (9) months (i.e., the claiming party
shall have no right to make any claims against the other party for a breach of
a representation or warranty after the expiration of nine (9) months
immediately following Closing).
19. LIMITATION OF LIABILITY. Neither Seller, nor any Affiliate of Seller, nor
any of their respective beneficiaries, shareholders, partners, officers,
directors, agents or employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to xxx or recover on account of any such
alleged personal liability.
19.1. Notwithstanding anything contained herein to the contrary,
Purchaser hereby agrees that the maximum liability of Seller after the Closing,
in connection with, arising out of or in any way related to a breach by Seller
under this Agreement or any document or conveyance agreement in connection with
the transaction, shall be $2,287,500.
19.2. Seller further agrees not to distribute $2,287,500 of the
proceeds of the Purchase Price to its partners for the longer of (i) nine (9)
months after the Closing and (ii) final resolution of any claims by Purchaser
and asserted in writing against Seller prior to the expiration of the nine (9)
months after the Closing in accordance with the terms of this Agreement
("Claims"); provided, however, that if any Claims are disputed by Seller,
Seller shall have the right, by written notice to Purchaser, to require
Purchaser to file suit in a court of competent jurisdiction within ninety (90)
days after such notice to Purchaser. If no suit is filed by such date, said
notice with respect to the Claim in question shall no longer prevent Seller
from distributing the proceeds.
20. TIME OF ESSENCE. Time is of the essence of this Agreement.
21. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, or by facsimile transmission addressed as follows:
TO SELLER: x/x Xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxx Xxxx Xxxxxx Xxxxx
0000 Xxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
0000 Xxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
(000) 000-0000
(000) 000-0000 (FAX)
and to: Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
(000) 000-0000
(000) 000-0000 (FAX)
TO PURCHASER: c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
(000) 000-0000
(000) 000-0000 (FAX)
and one copy to: Arent Fox Xxxxxxx Xxxxxxx & Xxxx
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
(000) 000-0000
(000) 000-0000 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by overnight courier or by facsimile transmission as
aforesaid shall be deemed to be given, delivered or made upon receipt of the
same by the party to whom the same is to be given, delivered or made. Copies
of all notices shall be served upon the Escrow Agent.
22. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Xxxxxxx Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Xxxxxxx Money;
(B) One (1) fully executed copy of this Agreement; and
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
23. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the District of Columbia, except that with respect to the retainage of
the Xxxxxxx Money as liquidated damages the laws of the State of Illinois shall
govern.
24. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
25. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
26. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
27. NO UNINTENDED ASSUMPTION OF LIABILITIES. Except as expressly provided in
this Agreement or in any document to be executed and delivered on the Closing
Date, the Purchaser is not assuming any of the debts, liabilities, taxes or
obligations of, or claims against, the Seller of any kind or character, whether
direct or contingent and whether known or unknown. The only transactions
contemplated by this Agreement are the sale and purchase of the Property. The
Seller is not selling a business. Except as expressly provided in this
Agreement or in any document to be executed and delivered on the Closing Date,
the parties intend that the Purchaser shall not be deemed to be a successor of
the Seller with respect to any of the Seller's liabilities or obligations to
third parties arising before the Closing Date.
28. EXECUTION BY THE BALCOR COMPANY. The Balcor Company executes this
Agreement solely for the purpose of assuring to Purchaser that if the Seller
fails to withhold or pay the sums required of Seller pursuant to Paragraph 19
and if Purchaser is successful in any claims asserted against the Seller for a
breach of a representation or warranty, then The Balcor Company shall pay to
Purchaser the amount of such claim(s), the total of which shall not exceed
$2,287,500.00. Purchaser may name The Balcor Company in any suit against
Seller, provided that Purchaser may not name The Balcor Company in any suit
unless Seller is also named therein. So long as Seller is determined to be
liable for the amounts due hereunder, Purchaser shall have no obligations to
exhaust its remedies against Seller prior to suing and collecting from The
Balcor Company, so long as Purchaser complies with the provisions of the
preceding sentence.
29. FURTHER ASSURANCES. The Seller agrees that it will, at any time and from
time to time after the Closing Date, upon request of the Purchaser, do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances and assurances as may reasonably be required for the
better assigning, transferring, granting, assuring and confirming to the
Purchaser, or to its successors and assigns, or for aiding and assisting in
collecting and reducing to possession, any or all of the assets or property
being sold to the Purchaser pursuant to this Agreement.
30. INDEMNITY. From and after the Closing Date, Seller and The Balcor Company
hereby agree to indemnify and defend (using attorneys selected by Seller and
reasonably acceptable to Purchaser) Purchaser from any liability arising from
the litigation disclosed as Item 1 on Exhibit P with the result that Purchaser
will not be liable with respect to such claims for any actual loss, costs or
damages in connection therewith, including litigation costs and expenses.
Notwithstanding the foregoing, such indemnification does not cover any damages
incurred by Purchaser in connection with any modification or termination of the
Xxxxxxx, Xxxxxx and Xxxxxx lease. The terms of this Paragraph 30 shall survive
the Closing and the delivery of the Deed.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
ARCHON GROUP, L.P., a Delaware limited
partnership
By: /s/ Xxxxx Xxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx Xxxxxxx
-----------------------------------
Its: Sr. Vice President
-----------------------------------
SELLER:
THIRTEENTH & K STREETS ASSOCIATES LIMITED
PARTNERSHIP, a District of Columbia limited
partnership
By: Labroc II Limited Partnership, an Illinois
limited partnership, a general partner
By: Balcor Equity Partners-II, an Illinois
general partnership, its general
partner
By: The Balcor Company, a Delaware
corporation, its general partner
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxxx
-----------------------------
Its: Sr. V.P.
-----------------------------
JOINDER
The undersigned executes this joinder solely for the purposes of
effectuating its obligations arising under Paragraphs 28 and 30 of this
Agreement.
THE BALCOR COMPANY, a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
----------------------------------
Its: Sr. V.P.
----------------------------------
of ("Seller's Broker") executed this Agreement in
its capacity as a real estate broker and acknowledges that the fee or
commission due it from Seller as a result of the transaction described in this
Agreement is as set forth in that certain Listing Agreement, dated __, 199_
between Seller and Seller's Broker (the "Listing Agreement"). Seller's Broker
also acknowledges that payment of the aforesaid fee or commission is
conditioned upon the Closing and the receipt of the Purchase Price by the
Seller. Seller's Broker agrees to deliver a receipt to the Seller at the
Closing for the fee or commission due Seller's Broker and a release, in the
appropriate form, stating that no other fees or commissions are due to it from
Seller or Purchaser.
_____________________________
By:
---------------------------------
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Xxxx of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Tenant Certificate
M - Rent Roll
N - Tenant Allowances and Leasing Commissions To Be Paid by Purchaser
O - Tenant Allowances and Leasing Commissions To Be Paid by Seller
P - Litigation
