AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the
5th day of March, 1996, by and between STORAGE TRUST PROPERTIES, L.P., a
Delaware limited partnership ("Purchaser"), and BALCOR/COLONIAL STORAGE INCOME
FUND - 86, an Illinois limited partnership ("Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE.
1.1. Purchaser agrees to purchase and Seller agrees to sell at the price
of Sixty Seven Million One Hundred and and No/100 Dollars ($67,100,000.00) (the
"Purchase Price"), those certain twenty-five (25) mini-warehouse facilities
commonly described in Exhibit A attached hereto and legally described in
Exhibit B attached hereto (collectively, the "Real Properties" and individually
a "Real Property") and the "Personal Property" (hereinafter defined), together
with the personal property located on the Real Properties. Each Real Property
shall include all of Seller's right, title and interest in and to all of the
following:
a. all easements, covenants and other rights appurtenant, and all right,
title and interest of Seller, if any, in and to any land lying in the bed
of any street, road, avenue or alley, open or closed, in front of or
adjoining the Real Property;
b. to the extent they may be transferred under applicable law, all
licenses, permits and authorizations presently issued in connection with
the Real Property;
c. all leases and security deposits, if any, in respect of any Real
Property in which Seller holds an interest as a landlord for the use and
occupancy of all or any part of the Real Property ("Leases");
d. all "Service Contracts" (as hereinafter defined); and
e. all engineering reports, surveys and architectural plans, if any.
1.2. Included in the Purchase Price are all signs, signage, gates,
fences, alarms, other security devices, machinery, equipment, desks, chairs,
office furniture, furnishings, computers, books, records (other than computer
software), computer data bases, appliances, utility deposits, tools, lawn
mowers, personal property warranties and other personalty (excluding any
automobiles and trucks) located on each Real Property and used or useable in
the operation and maintenance of the Property which is now owned or which is
hereafter acquired by the Seller between the date of the execution of this
Agreement and the Closing Date (the "Personal Property"). Seller shall deliver
to Purchaser within thirty (30) days after the date hereof a schedule of the
Personal Property on a per Property basis and Seller shall have the right to
exclude from the Personal Property any such Personal Property that becomes
obsolete in the ordinary course of business. Each Real Property and the
Personal Property located at such Real Property shall be referred to
individually as a "Property" and all of such real property and personal
property shall be collectively referred to as the "Properties".
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Upon the execution of this Agreement, the sum of Three Million Three
Hundred Fifty Thousand and No/100 Dollars ($3,350,000.00) (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 E; 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.
2.3. Within ten (10) days after the date hereof, Purchaser and Seller
shall agree upon an allocation of the Purchase Price among each Property (the
"Schedule Price") and an allocation of the Schedule Price for each Property
among the following categories: (i) land, (ii) improvements, (iii) Personal
Property, (iv) intangibles and (v) Leases and plans and specifications (the
"Property Breakdown Schedule"). The parties agree that the Schedule Price for
each Property will not be below Seller's federal tax basis for each Property
nor will the amount to be allocated to land and improvements be below Seller's
federal tax basis assigned to land and improvements for each Property. The
parties agree not to take an income tax reporting position inconsistent with
the Schedule Price and Property Breakdown Schedule and such covenant shall
survive the Closing and recording of the Deeds. The parties to this Agreement
further acknowledge that the Schedule Price of each Property shall be used for
determining any transfer, filing, deed, stamp, documentary and other such fees
and taxes.
3. TITLE COMMITMENT AND SURVEY.
3.1. Seller has ordered 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") for each Real Property (the "Title Commitments"). Seller shall
deliver the Title Commitments and copies of all documents of record creating
exceptions to coverage to Purchaser within twenty-one (21) days after the date
hereof. For purposes of this Agreement, "Permitted Exceptions" as to each of
the Real Properties shall mean: (a) general real estate taxes, association
assessments, special district taxes and related charges not yet due and payable
(which shall be prorated as hereinafter specified); (b) matters caused by the
actions of Purchaser; (c) the Leases; and (d) those matters affecting title to
the Real Properties which are not established as "Unpermitted Exceptions" (as
hereinafter defined) by Purchaser pursuant to Paragraph 5.2 herein. The Title
Commitments shall be conclusive evidence of good title as therein shown as to
all matters to be insured by the title policy for the respective Real Property,
subject only to the exceptions therein stated. On the Closing Date, Title
Insurer shall deliver to Purchaser a standard title policy for the Real
Properties in amounts equal to the Schedule Price of each Real Property in
conformance with the Title Commitments, subject to Permitted Exceptions and
Unpermitted Exceptions waived by Purchaser (the "Title Policy"). If available
in the applicable jurisdiction, Purchaser shall receive from the Title Insurer
the following endorsements to each Title Policy: (i) extended coverage; (ii)
ALTA restrictions endorsement No. 1; (iii) ALTA zoning endorsement No. 3, which
shall include a certification of the number of legal parking spaces and the
fact that the Property may be used in its present zoning as a self-storage
(mini-warehouse); (iv) an access endorsement; and (v) a contiguity endorsement
(if applicable). Notwithstanding the foregoing sentence, to the extent any of
the foregoing endorsements are available in the applicable jurisdiction and
Title Insurer is not able to issue such an endorsement as a result of the
condition of title or zoning, the failure of the Title Insurer to issue such an
endorsement shall not be the default of Seller or a failure of a condition to
Closing, but should instead be treated in accordance with the terms of
Paragraph 5 herein. Purchaser shall pay for costs of the Title Commitments and
Title Policies and for the cost of any endorsements to, or extended coverage
on, the Title Policies.
3.2. Purchaser has received a survey of each of the Real Properties, such
surveys being described in Exhibit H attached hereto (the "Existing Surveys").
Seller has ordered an updated survey of the Existing Surveys (the "Updated
Surveys") and Seller has requested the survey standards set forth on Exhibit C
and the surveyor's certificate also attached to Exhibit C. The failure of
Seller to deliver an Updated Survey in accordance with the standards set forth
in Exhibit C and containing the surveyor's certificate set forth in Exhibit C
shall not be a default of Seller or a failure of a condition to Closing. To
the extent an Updated Survey raises an Unpermitted Exception, then the
Unpermitted Exception shall be dealt with in accordance with the terms of
Paragraph 5 herein. Purchaser shall pay for the costs of preparing the Updated
Surveys and Seller shall deliver the Updated Surveys to Purchaser within
28 days after the date hereof.
3.3. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS.
In addition to the costs set forth in Paragraphs 3.1 and 3.2, Purchaser
shall pay for the costs of the documentary or transfer stamps to be paid with
reference to the "Deeds" (hereinafter defined) and all other stamps,
intangible, transfer, documentary, recording, sales tax, personal property tax
and surtax imposed by law with reference to any other sale documents delivered
in connection with the sale of the Properties to Purchaser or otherwise imposed
in connection with the sale of the Properties to Purchaser and all other
charges of the Title Insurer in connection with this transaction.
5. CONDITION OF TITLE.
5.1. Seller agrees to convey to Purchaser fee simple title to each Real
Property and, subject to the terms of Paragraphs 5.3, 5.4 and 5.5, without
defect and free and clear of all liens, encumbrances, easements, tenancies,
covenants, restrictions, reservations, conditions and other exceptions to title
by a special warranty deed (individually a "Deed" and collectively the "Deeds")
in recordable form (and in the form set forth in Exhibit J attached hereto
except for those modifications necessary for compliance with state
requirements), subject to the respective Permitted Exceptions waived or
accepted by Purchaser in accordance with the terms hereof.
5.2. Purchaser shall have until 5:00 p.m. Chicago time of the tenth
(10th) day after Purchaser's receipt of the last to be received of the Title
Commitments, Updated Surveys and documents of record, to examine the Title
Commitments, Updated Surveys and the documents of record (the "Title Review
Period"). Purchaser shall notify Seller ("Unpermitted Exception Notice") in
writing no later than 5:00 p.m. Chicago time on the last day of the Title
Review Period whether any "Unpermitted Exceptions" (as hereinafter defined) are
disclosed in the Title Commitments or Updated Surveys as determined by
Purchaser in its commercially reasonable discretion. Failure to raise any
Unpermitted Exceptions on or before 5:00 p.m. Chicago time on the last day of
the Title Review Period shall be deemed a waiver of any such matter by
Purchaser. Purchaser shall use commercially reasonably efforts to raise
Unpermitted Exceptions on a Real Property by Real Property basis within ten
(10) days after receipt of the last to be received of the Title Commitment,
Updated Survey and recorded documents as to each Real Property, but Purchaser
shall not waive its rights to raise Unpermitted Exceptions prior to the
expiration of the Title Review Period. As used herein, the term "Unpermitted
Exception" shall mean with respect to any Real Property (provided the same is
not caused by the actions of Purchaser):
(a) Any building encroachment or sign encroachment (i) on real estate not
owned by Seller, (ii) on a setback line, or (iii) in violation of a
binding easement burdening the Real Property;
(b) Any defect in the Seller's chain of title which prevents Seller from
being able to convey title to any Real Property in fee simple at Closing
under the laws of the state in which the Real Property is located;
(c) Any easement which burdens a Real Property such that access or use is
materially compromised;
(d) Any lack of access or easements necessary to operate a Real Property
as a self-storage facility in the manner in which said Real Property has
been operated by Seller prior to Closing; and
(e) Any liens for the payment of money other than those matters set forth
in Paragraph 3.1(a) herein; provided, however, mortgages and
deeds-of-trust shall not be the subject of Paragraph 5.3 and 5.4 but shall
be addressed in Paragraph 5.5 herein;
(f) Lack of contiguity of any parcels constituting a Real Property; and
(g) (i) the failure to be in conformance with the then applicable local
zoning codes, (ii) the failure to be a non-conforming use or have the
status equivalent to a "non-conforming use" and (iii) the existence of an
order by the applicable local jurisdiction which would cause a material
interference with its existing use (other than disclosed in Paragraph 18
herein).
5.3. If Purchaser establishes any Unpermitted Exception in accordance with
the terms set forth in Paragraph 5.2 herein, Seller shall have ten (10) days
from receipt of the Unpermitted Exception Notice to cure said Unpermitted
Exception at Seller's sole cost and expense. If Seller is unable to cure all
Unpermitted Exceptions (the parties agreeing that Seller shall not be required
to cure any Unpermitted Exceptions with the payment of money) on or before the
expiration of said ten (10) days, then within the next ten (10)-day period
Seller shall determine the "Title Costs" (hereinafter defined) with respect to
the Unpermitted Exceptions which Seller has been unable to cure. If the Title
Insurer is unwilling to insure over the Unpermitted Exceptions and the
Unpermitted Exceptions cannot be cured with the payment of money, Seller shall
notify Purchaser of same and Purchaser shall, by written election given to
Seller within five (5) days after Purchaser's receipt of such notice from
Seller, either accept title subject to said Unpermitted Exceptions which cannot
be cured with the payment of money without a reduction in the Purchase Price or
terminate this Agreement. If Purchaser fails to make an election within said
five (5) day period, then Purchaser shall be deemed to have elected to accept
title subject to said Unpermitted Exceptions which cannot be cured with the
payment of money without a reduction in the Purchase Price. If Purchaser
elects to terminate, the Xxxxxxx Money together with all interest earned
thereon shall be immediately returned to Purchaser and thereupon neither party
shall have any rights against the other or any further liability to the other,
except for Purchaser's obligations pursuant to Paragraph 7.1 hereof and as
otherwise specifically set forth in this Agreement. If the Title Insurer is
willing to insure over the Unpermitted Exceptions or if the Unpermitted
Exceptions can be cured with the payment of money, then the amount required to
cure or remove the Unpermitted Exceptions or to cause the Title Insurer to
insure over the Unpermitted Exceptions shall be referred to as the "Title
Costs".
5.4. In the event the Title Costs aggregate a sum that is less than or
equal to $100,000.00, then, at Closing, the parties shall allocate
responsibility for the aggregate Title Costs as follows: (i) Purchaser shall
bear the responsibility for the initial $25,000.00 of Title Costs; (ii) then
Seller shall bear the responsibility for any Title Costs in excess of
$25,000.00 but which do not exceed $50,000.00; (iii) then Purchaser shall bear
the responsibility for any Title Costs in excess of $50,000.00 but which do not
exceed $75,000.00; and (iv) then Seller shall bear the responsibility for any
Title Costs in excess of $75,000.00 but which do not exceed $100,000.00. If
the Title Costs aggregate a sum that is less than or equal to $100,000.00,
then, at Closing, Purchaser shall receive a credit to the Purchase Price equal
to that portion of the Title Costs for which Seller bears responsibility
pursuant to the preceding sentence and Purchaser shall take title to the
Property subject to those Unpermitted Exceptions for which Purchaser receives a
credit or bears responsibility for under this Paragraph 5.4 and those
Unpermitted Exceptions insured over. For example, assuming for illustrative
purposes only, if the Title Costs equal $30,000.00, then Purchaser would only
receive a $5,000.00 credit at Closing (i.e., $30,000.00 less $25,000.00 =
$5,000.00). If instead, the Title Costs equal $60,000.00, then Purchaser would
only receive a $25,000.00 credit at Closing. If instead, the Title Costs equal
$80,000.00, then Purchaser would only receive a $30,000.00 credit at Closing.
If the aggregate Title Costs are greater than $100,000.00, then Seller shall
have the right to elect, by written notice given to Purchaser within five (5)
days after the determination of the aggregate Title Costs, to either (i)
terminate this Agreement (a "Title Termination Notice") in which case this
Agreement shall be terminated and the Xxxxxxx Money shall be immediately
returned to Purchaser together with all interest earned thereon and thereupon
neither party shall have any rights against the other or any further liability
to the other, except for Purchaser's obligations pursuant to Paragraph 7.1
hereof and as otherwise specifically set forth in this Agreement, or (ii) give
Purchaser a credit, at Closing, against the Purchase Price equal to the Title
Costs less $50,000.00 (a "Title Credit Notice"). The failure of Seller to
deliver a Title Termination Notice or a Title Credit Notice within the time
period above provided shall be deemed delivery of the Title Termination Notice
as of the last day of the aforesaid five (5) day period. If Seller delivers or
is deemed to deliver a Title Termination Notice, then Purchaser shall have the
right to negate the Title Termination Notice (in which case the Title
Termination Notice shall be null and void and this Agreement shall remain in
full force and effect), by delivering to Seller, on or before five (5) days
after Purchaser's receipt of the Title Termination Notice or deemed receipt of
the Title Termination Notice, a statement agreeing to purchase the Property
with a $50,000.00 credit to the Purchase Price, in which event Seller shall
have no obligation to remove or cause the Title Insurer to insure over such
Unpermitted Exceptions and Seller shall give Purchaser a credit, at the
Closing, equal to $50,000.00.
5.5. Notwithstanding anything contained in this Agreement to the contrary,
Seller agrees to cause any mortgages or deeds-of-trust securing an obligation
for the payment of money set forth in the Commitments to be released from the
Real Properties at or prior to the Closing at Seller's own cost and expense and
Purchaser agrees that the proceeds of the Purchase Price may be used at the
Closing for such purpose. With respect to any liens evidencing an obligation
for the payment of money placed against a Real Property after the effective
date of its respective Title Commitment (other than those set forth in
Paragraph 3.1(b)) ("New Monetary Lien"), Seller shall not be obligated to
convey title free and clear of such New Monetary Liens and close the
transaction set forth herein, unless such New Monetary Liens were placed on the
Real Property by reason of Seller's affirmative act (e.g., failure to pay just
debts or obligations when due). If Seller elects not to remove such New
Monetary Liens that are not required to be removed, Purchaser shall have the
right to elect to terminate this Agreement by written notice to Seller within
five (5) business days after receipt of Seller's determination respecting said
New Monetary Lien. If Purchaser delivers written notice to Seller of its
election to terminate in accordance with the preceding sentence, then this
Agreement shall terminate and the Xxxxxxx Money together with all interest
earned thereon shall be immediately returned to Purchaser and thereupon neither
party shall have any rights against the other or any further liability to the
other, except for Purchaser's obligations pursuant to Paragraph 7.1 and as
otherwise specifically set forth in this Agreement. If Purchaser fails to
deliver written notice of its election to terminate on or before the expiration
of the aforesaid five (5) business day period, Purchaser shall be obligated to
consummate the transaction contemplated herein and take title to the Properties
subject to the New Monetary Liens Seller was not required to remove without a
reduction in the Purchase Price.
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 earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to any
Property by fire or other casualty prior to the Closing Date, 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. Seller covenants to
maintain at all times full replacement cost, all risk casualty insurance
covering each of the Real Properties.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated or threatened which
might result in the taking of any part of any Property or the taking or closing
of any right of access to any Property, Seller shall immediately notify
Purchaser of such occurrence. If between the date of this Agreement and the
Closing Date, any condemnation or eminent domain proceedings are initiated,
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. Notwithstanding anything contained herein to the contrary, if
Seller delivers notice of condemnation or eminent domain proceedings which are
initiated or threatened between the date of this Agreement and the Closing
Date, Purchaser shall have the right to participate in settlement discussions
and other conferences relating thereto.
7. INSPECTION AND AS-IS CONDITION.
7.1. Purchaser and the agents, engineers, employees, contractors and
surveyors retained by Purchaser may enter upon each of the Properties, at any
reasonable time and upon reasonable prior notice to Seller, to inspect the
Properties, including a review of Leases located at each of the Properties, and
to conduct and prepare such studies (including, without limitation, the
"Environmental Reports" [hereinafter defined]), tests and surveys (the
"Investigations") as Purchaser may deem reasonably necessary and appropriate.
Since Purchaser has conducted certain of its investigations and tests prior to
the execution of this Agreement, the definition of "Investigations" includes,
without limitation, any and all tests and studies conducted by Purchaser or
Purchaser's agents, architects, engineers, employees, contractors or surveyors
prior to the execution of this Agreement at the Property. Seller has
delivered, or shall deliver, as applicable, to Purchaser (a) a unit dimension
report for the Properties, (b) unaudited year end 1994 and 1995 income
statements and pro-formas for 1996 for the Properties, (c) a rent roll for all
Leases as described in Exhibit Q, (d) a representative sample of the Leases
(including all form exhibits, addenda, or attachments thereto, all form
amendments thereof, all form guarantees thereof, (e) all utility bills for the
twelve (12) months preceding this Agreement, if available, (f) all governmental
licenses, permits, and approvals relating to the Properties, including, without
limitation, all certificates of occupancy, each to the extent in the possession
of Seller, and (g) all construction plans and specifications, to the extent in
the possession of Seller.
All of the foregoing tests, investigations and studies to be conducted
under Paragraphs 7.1 and 7.2 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Properties 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 Properties. 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.
Although Seller is permitting Purchaser to perform the Investigations,
under no circumstances whatsoever shall Purchaser have any right to terminate
this Agreement or seek any adjustment in the Purchase Price or vary any terms
of this Agreement based upon the findings of the Investigations, except solely
as contained in Paragraphs 7.3 and 7.4.
7.2. Seller has ordered a Phase I Environmental Report pursuant to ASTM
Standard E1527-94 for each Property from Law Engineering (the "Environmental
Reports") and Seller shall provide to Purchaser such Environmental Reports to
Purchaser no later than twenty-eight (28) days after the date hereof.
Purchaser agrees to pay for the costs of the Phase I Environmental Reports when
such costs come due and Purchaser's obligation for said costs shall survive the
Closing and delivery of the Deeds or termination of this Agreement. Seller
makes no representation or warranty concerning the accuracy or completeness of
the Environmental Reports. Purchaser hereby releases Seller and the Affiliates
of Seller from any liability whatsoever with respect to the Environmental
Reports, or, including, without limitation, the matters set forth in the
Environmental Reports, and the accuracy and/or completeness of the
Environmental Reports. Furthermore, Purchaser acknowledges that it will be
purchasing the Properties with all faults disclosed in the Environmental
Reports. Notwithstanding anything contained herein to the contrary,
Purchaser's obligations, as more fully set forth in this Paragraph 7.2 shall
survive the Closing and the delivery of the Deeds and termination of this
Agreement.
7.3. Based on Purchaser's review of the Environmental Reports, if on or
prior to fifteen (15) days after Purchaser's receipt of the Environmental
Reports, Purchaser delivers to Seller the Notice (hereinafter defined)
establishing, in accordance with Paragraph 7.5, any Environmental Material
Defects (hereinafter defined) and the Aggregate Cost (hereinafter defined) of
remedying the Environmental Material Defects is less than or equal to
$500,000.00, then, at Closing, the parties shall allocate responsibility for
the Aggregate Cost as follows: (i) Purchaser shall bear the responsibility for
the initial $125,000.00 of Aggregate Cost; (ii) then Seller shall bear the
responsibility for any Aggregate Cost in excess of $125,000.00 but which does
not exceed $250,000.00; (iii) then Purchaser shall bear the responsibility for
any Aggregate Cost in excess of $250,000.00 but which does not exceed
$375,000.00; and (iv) then Seller shall bear the responsibility for any
Aggregate Cost in excess of $375,000.00 but which does not exceed $500,000.00.
At a Closing where the Aggregate Cost equals a sum that is less than or equal
to $500,000.00, then, at Closing, Purchaser shall receive a credit to the
Purchase Price equal to that portion of the Aggregate Cost for which Seller
bears responsibility pursuant to the preceding sentence and Purchaser shall
purchase the Properties subject to any and all Environmental Material Defects.
For example, assuming for illustrative purposes only, the Aggregate Cost of all
Environmental Material Defects is $200,000.00, then Purchaser would only
receive a $75,000.00 credit at Closing (i.e., $200,000.00 less $125,000.00
equals $75,000.00). If instead, the Aggregate Cost of all Environmental
Material Defects is $300,000.00, then Purchaser would only receive a
$125,000.00 credit at Closing. If instead, the Aggregate Cost of all
Environmental Material Defects is $400,000.00, then Purchaser would only
receive a $150,000.00 credit at Closing.
7.4. If on or prior to fifteen (15) days after Purchaser's receipt of the
Environmental Reports, Purchaser delivers to Seller the Notice establishing, in
accordance with Paragraph 7.5, the Aggregate Cost of remedying the
Environmental Material Defects is greater than $500,000.00, then Seller shall
have the right to elect, by written notice within twenty (20) days after
receipt of the Notice, to either (a) terminate this Agreement (the "Termination
Notice") in which case the Xxxxxxx Money deposited by Purchaser shall be
immediately returned to Purchaser together with all interest earned thereon and
thereupon neither party shall have any rights against the other or any further
liability to the other, except for Purchaser's obligations pursuant to
Paragraph 7.1 and as otherwise specifically set forth in this Agreement, or (b)
give Purchaser a credit, at Closing, to the Purchase Price equal to the
difference between the Aggregate Cost for the Environmental Material Defects
and $250,000.00 (the "Credit Notice") and Purchaser shall purchase the
Properties subject to all the Environmental Material Defects. Failure of
Seller to deliver a Termination Notice to Purchaser within the time period
above provided shall be deemed delivery of a Termination Notice as of the last
day of the aforesaid twenty (20) day period. If Seller delivers or is deemed
to deliver the Termination Notice, then Purchaser shall have the right to
negate the Termination Notice (in which case the Termination Notice shall be
null and void and this Agreement shall remain in full force and effect), by
delivering to Seller, on or before five (5) days after receipt of the
Termination Notice or deemed receipt of the Termination Notice, a statement
agreeing to purchase the Property with a $250,000.00 credit to the Purchase
Price for all the Environmental Material Defects and Purchaser shall purchase
the Property subject to all Environmental Material Defects. For example,
assuming for illustrative purposes only, the Aggregate Cost of the
Environmental Material Defects is $800,000.00, and Seller elects not to
terminate this Agreement, Seller shall give Purchaser at the Closing a credit
equal to $550,000.00 (i.e., $800,000.00 less $250,000.00 equals $550,000.00).
If in the example contained in the preceding sentence, Seller delivered a
Termination Notice and Purchaser elected to negate it, Purchaser's credit at
Closing would be $250,000.00.
7.5. In order to establish an Environmental Material Defect, Purchaser
shall be required to deliver to Seller on or prior to fifteen (15) days after
Purchaser's receipt of the Environmental Reports: (a) as to each Real Property
a copy of the Environmental Report detailing an Environmental Material Defect,
and (b) as to each Real Property a binding written proposal from a responsible
licensed contractor selected by Purchaser setting forth the cost of remedying
the Environmental Material Defect (the "Real Property Cost") reflected in the
Environmental Report (the "Purchaser Estimate"). If the Purchaser Estimate or
"Seller Estimate" (hereinafter defined) includes a cost range for remedying the
particular Environmental Material Defect, the Real Property Cost shall be the
lowest cost set forth in the estimate for the particular Environmental Material
Defect. "Aggregate Cost" shall mean the aggregate of all Real Property Costs.
The Environmental Report and the Purchaser Estimate shall be referred to
collectively hereinafter as the "Notice". If Seller agrees with the Purchaser
Estimate then the Real Property Cost shall equal the amount of the Purchaser
Estimate. If Seller does not agree with the Purchaser Estimate, then Seller
shall deliver to Purchaser, within fifteen (15) days after receipt of the
Notice, a binding written proposal from a responsible licensed contractor
selected by Seller setting forth the costs such contractor will charge for
remedying the applicable defect (the "Seller Estimate"), and the Real Property
Cost shall equal the average of the Purchaser Estimate and the Seller Estimate.
7.6. The term "Environmental Material Defect" shall mean "Hazardous
Materials" (hereinafter defined) located in, on or under the Real Property in
violation of any Environmental Laws (hereinafter defined).
7.7. If this Agreement is terminated in accordance with Paragraph 7.4,
the Xxxxxxx Money together with all interest earned thereon shall be
immediately returned to Purchaser and thereupon neither party shall have any
rights against the other or any further liability to the other, except for
Purchaser's obligations pursuant to Paragraph 7.1 and except as otherwise
specifically set forth in this Agreement. Notwithstanding anything contained
herein to the contrary, Purchaser's obligation to indemnify Seller and restore
the Properties, as more fully set forth in Paragraphs 7.1, shall survive the
termination of this Agreement and the Closing and the delivery of the Deeds.
7.8. To the extent there exists an Environmental Material Defect for which
a third party (other than Purchaser or Seller) is liable, Purchaser and Seller
shall jointly pursue a claim against such liable third party to receive
compensation for any damages suffered by each party hereto as a result thereof.
In the event either party hereto declines by notice to the other to participate
in the joint claim, then the non-declining party shall have the right to pursue
a separate claim against the liable third party to receive compensation
suffered by the non-declining party. Notwithstanding anything contained in
this Paragraph 7 to the contrary, in the event that the Environmental Report,
with respect to any Property, reveals a potential Environmental Material Defect
for which additional testing is required to determine whether an actual
Environmental Material Defect exists and such additional testing cannot be
completed on or before the end of the fifteen (15) day period described in
Paragraph 7.3 or the Environmental Report reveals an Environmental Material
Defect but Purchaser is unable to determine the magnitude of the Real Property
Cost associated with such Environmental Material Defect and such information is
not available and additional testing cannot be accomplished on or before the
end of the fifteen (15) day period described in Paragraph 7.3, then Seller
shall deposit into an escrow established at Title Insurer to be held pursuant
to an escrow agreement in form mutually acceptable to Seller and Purchaser, an
amount equal to $250,000.00 less that portion of the Aggregate Costs for which
Seller has given Purchaser a credit at Closing pursuant to Paragraph 7.3. In
no event shall Seller be required to deposit into said escrow an amount in
excess of $250,000 in the aggregate. Purchaser shall determine the Real
Property Cost with respect to the proposed or actual Environmental Material
Defect which is the subject of the escrow as soon as commercially reasonable,
but in no event later than ninety (90) days after the Closing. In the event
that Purchaser does not determine such Real Property Cost on or before the end
of such ninety (90) day period, then all amounts held in such escrow shall be
returned to Seller including all interest earned thereon and Seller shall have
no further liability for such potential or actual Environmental Material
Defect. Upon delivery of the Purchaser Estimate, Seller shall have the right
to submit a Seller Estimate and the last two (2) sentences of Paragraph 7.5
shall apply. Purchaser grants Seller a license to enter the applicable
Property to determine Seller's Estimate. At such time as the Real Property
Cost with respect to the proposed or actual Environmental Material Defect which
is the subject of the escrow is determined, Title Issuer shall disburse to
Purchaser an amount equal to the additional credit Purchaser would have been
entitled to had such Real Property Costs been included in the Aggregate Costs
prior to Closing (not to exceed the amount of the escrowed funds) and any
remaining balance shall be disbursed to Seller. In no event shall Seller be
liable for any costs related to such potential or actual Environmental Material
Defects which are the subject of the escrow in excess of the amounts deposited
in such escrow. In all events, Seller shall receive any interest earned on the
escrowed funds and such interest shall be disbursed upon the closing of such
escrow.
7.9. Seller makes no representations or warranties relating to the
condition of the Properties other than expressly set forth herein. Purchaser
acknowledges and agrees that it will be purchasing the Properties based solely
upon its inspections and investigations of the Properties, and that Purchaser
will be purchasing the Properties "AS IS" and "WITH ALL FAULTS", based upon the
condition of the Properties as of the date of this Agreement, subject to the
disclosures contained in Exhibit D attached hereto ("Liabilities"), 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
Properties, including, but not limited to, the condition of the land or any
improvements comprising the Properties, the existence or non-existence of
Hazardous Materials, economic projections or market studies concerning the
Properties, any development rights, taxes, bonds, covenants, conditions and
restrictions affecting the Properties, water or water rights, topography,
drainage, soil, subsoil of the Properties, the utilities serving the Properties
or any zoning or building laws, rules or regulations or Environmental Laws
affecting the Properties. Seller makes no representation or warranty that the
Properties comply with Title III of the Americans with Disabilities Act or any
fire code or building code. Purchaser agrees to indemnify and hold Seller and
the Affiliates of Seller harmless from any and all loss, cost and expense
arising out of or in any way related to the Liabilities. 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, including in connection with the Liabilities, 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 Properties, 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, Purchaser's
obligations, as more fully set forth in this Paragraph 7.9 shall survive the
Closing and the delivery of the Deed and termination of this Agreement.
7.10. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Properties relating to certain periods of
time in which Seller owned the Property and a pro-forma for 1996. Seller and
Purchaser hereby acknowledge that such information has been provided to
Purchaser at Purchaser's request solely as illustrative material. 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 Properties, it being acknowledged by Purchaser that
Seller's operation of the Properties 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 mini-warehouse facilities and further that Purchaser has relied upon
its own investigation and inquiry with respect to the operation of the
Properties and releases Seller and the Affiliates of Seller from any liability
with respect to such historical information. Notwithstanding anything
contained herein to the contrary, Purchaser's obligations, as more fully set
forth in this Paragraph 7.10 shall survive the Closing and the delivery of the
Deeds and termination of this Agreement.
8. CONDITION PRECEDENT TO CLOSING. See insert on pages 21(i) through
21(vi).
9. CLOSING. The closing of this transaction (the "Closing") shall be on May
15, 1996, subject to the terms of Paragraph 8 herein (the "Closing Date"), at
the office of Title Insurer, Chicago, Illinois at which xxxx Xxxxxx shall
deliver possession of the Properties to Purchaser. This transaction shall be
closed in accordance with the escrow instructions attached hereto as Exhibit K
(the "Closing Escrow Instructions"). The Purchase Price shall be paid and all
documents necessary for the consummation of this transaction shall be delivered
through escrow on or prior to the Closing Date. The parties shall close by a
"New York style closing", the escrow instructions shall be conformed with such
circumstance and Seller shall execute any gap undertaking required by the Title
Insurer. The escrow costs and fees, including the fees for the New York style
closing, shall be paid by Purchaser.
10. CLOSING DOCUMENTS.
10.1. On the Closing Date, Seller and Purchaser shall execute and deliver
to one another a joint closing statement for each Property. In addition,
Purchaser shall deliver to Seller the balance of the Purchase Price, an
assumption of the documents set forth in Paragraph 10.2.3 and 10.2.4, an
opinion of Xxxxx Xxxxx & Xxxxx in form satisfactory to Seller stating that the
transaction contemplated by this Agreement is not subject to filing or
notification requirements of the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act
of 1976, as amended ("HSR Act"), 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 Deeds, subject to Permitted Exceptions and those
Unpermitted Exceptions waived by Purchaser;
10.2.2. a special warranty xxxx of sale for each Property
conveying the Personal Property (in the form of Exhibit L attached hereto);
10.2.3. assignment and assumption of intangible property for each
Property (in the form attached hereto as Exhibit M), including, without
limitation, the Service Contracts;
10.2.4. an assignment and assumption of leases and security deposits
for each Property (in the form attached hereto as Exhibit N);
10.2.5. non-foreign affidavit (in the form of Exhibit O attached
hereto);
10.2.6. original, and/or copies of, the Leases in Seller's
possession (which deliveries may be made at the respective Properties);
10.2.7. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policies;
10.2.8. possession of the Properties to Purchaser;
10.2.9. evidence of the termination of the management agreement for
each Property;
10.2.10. notice to the tenants of each 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 P);
and
10.2.11. an updated rent roll for each Property.
11. DEFAULT BY PURCHASER. 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, 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, EXCEPT AS HEREAFTER SPECIFIED IN THIS PARAGRAPH, 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 REFUSAL TO DELIVER
THE CLOSING DOCUMENTS CONTAINED IN PARAGRAPH 10 HEREIN, THEN PURCHASER WILL BE
ENTITLED TO XXX FOR SPECIFIC PERFORMANCE.
13. PRORATIONS.
13.1. Rents (exclusive of delinquent rents, but including prepaid rents);
prepaid associations dues, refundable security deposits (which will be assigned
to and assumed by Purchaser and credited to Purchaser at Closing); fuels;
prepaid operating expenses; management fees in the amount of 6% of prorated
rents credited to Purchaser; real and personal property taxes prorated on a
"net" basis (i.e. adjusted for all tenants' liability, if any, for such items);
operating expenses which are reimbursable by the tenants for the period prior
to the Closing Date less any amount previously paid by the tenants shall be
credited to Seller; and other similar items shall be adjusted ratably as of
11:59 p.m. on the Closing Date, and credited to the balance of the cash due at
Closing. Utilities, including water, sewer, electric, and gas shall be
prorated at Closing based on the most recent ascertainable data. Seller shall
pay at Closing the bills therefor for the period to and including the Closing,
and the Purchaser shall pay the utility bills therefor for all periods
subsequent thereto. If the utility company will not issue separate bills, the
Purchaser shall receive a credit against the Purchase Price for Seller's
portion and shall pay the entire utility xxxx after Closing. If Seller has
pre-paid any such utilities (so long as no more than thirty (30) days in
advance in the ordinary course of business), then Purchaser shall be charged
its portion of such payment at Closing. No proration shall be made for utility
expenses that are separately metered to and paid directly by tenants and for
which Seller has no obligation to pay. Furthermore, the Purchaser and the
Seller may accomplish the transfer of utility accounts by arranging for a
change of address on utility billing accounts to the Purchaser's address, if
such a procedure is possible and convenient and mutually acceptable to
Purchaser and Seller. Seller shall be reimbursed at Closing for any utility
deposits which the Seller has deposited with any utility company and which will
be assigned to the Purchaser at Closing. Assessments payable in installments
which are due subsequent to the Closing Date shall be paid by Purchaser. If
the amount of any of the items to be prorated is not then ascertainable, the
adjustments thereof shall be on the basis of the most recent ascertainable
data. The Purchaser shall assume Seller's obligations under the Seller's
existing real estate tax consulting agreements with respect to the Properties,
i.e., those agreements which Seller has entered into with firms who are
entitled to a commission based on services rendered and the extent to which
they are able to achieve a reduction in the real estate taxes otherwise payable
with respect to the Properties. The fees or commissions payable to said
consultants (if any) shall be treated as a portion of the real estate tax
liability to be pro-rated as of the Closing Date. All costs associated with
telephone directory listings and any other prepaid advertisements shall be
prorated as of the Closing Date so that Seller shall be responsible for any
costs associated therewith prior to the Closing Date and Purchaser shall be
responsible for any costs associated therewith arising from and after the
Closing Date. All prorations described in this Agreement (except prorations
for real and personal property taxes which shall be deemed final as prorated on
the Closing Date) shall be subject to post-closing adjustments as necessary to
reflect later relevant information not available at the Closing and to correct
any errors made at the Closing with respect to such prorations; provided,
however, that such prorations shall be deemed final and not subject to further
post-closing adjustments at 5:00 PM Chicago time on the day which is thirty
(30) days following Closing, at which time all prorations shall be deemed final
and not subject to further post-closing adjustment. The provisions of the
preceding sentence shall survive the Closing.
13.2. Rents which are delinquent as of the Closing Date shall not be
prorated. Instead, to the extent that Purchaser is able to collect said
delinquencies, the Purchaser shall be entitled to receive such delinquent rent
attributable to a tenant's occupancy of a portion of the Real Property for any
period prior to the date of Closing, free from any claim thereon by the Seller.
Seller may use whatever lawful means are available to Seller to collect any
delinquencies up to and until the day prior to the Closing Date, provided that
Seller shall not agree to reduce rents for any period of time after Closing in
order to induce any tenants to pay delinquent rents. Seller shall not have the
right subsequent to Closing to seek (by legal action or otherwise) the
collection of any rents delinquent for any period prior to Closing unless the
tenant has vacated the premises under the pertinent Lease before the Closing
Date and said Lease is not assigned to the Purchaser. Furthermore, the Seller
shall not have the right to retain any portion of any security deposit held by
Seller (if any) with respect to any Lease which will remain effective
subsequent to Closing, even though the tenant is delinquent in paying rent as
of the Closing Date.
13.3. To the extent it is reasonably possible for the Seller to do so,
the Seller shall grant (or shall arrange for the owner thereof to grant) to
Purchaser at Closing a temporary license and right to use the logos currently
used by the Property which are the property of an Affiliate of Seller, in place
advertising, telephone directory listings and advertisements, and telephone
numbers, at each of the Properties pursuant to the following terms and
conditions:
(a) The temporary license granted by this paragraph shall commence on the
Closing Date and shall expire on the day which is one hundred eighty (180)
days subsequent to the date when the public telephone directory pertaining
to each Property is published subsequent to the Closing Date. During such
period, Purchaser shall have the right to use the existing logos, in place
advertising, telephone directory listings and advertisements, and
telephone numbers, with respect to each Property without additional
compensation to the Seller except as set forth in Paragraph 13.1 herein.
Purchaser shall not use the existing logos or trade name on stationery,
business cards, contracts or other documents, and shall not use the
existing trade name in responding to oral inquiries regarding the
Properties except to identify a Property as formerly owned by the Seller.
(b) The Seller stipulates that there is full and adequate consideration
for the license herein granted.
(c) Purchaser shall make arrangements with the pertinent telephone
companies so that all existing telephone directory listings and
advertisements and signs can be replaced in due course and within the
license period specified above. In the event that the publication close
date for any publication in which Seller currently has a telephone
directory listing and/or advertisement occurs after the date hereof but
before the Closing Date, Purchaser shall have the right to place a listing
and/or advertisement in such publication at Purchaser's sole cost and
expense. Such listing and/or advertisement may list the Purchaser's name
and telephone number. Seller may also place a listing and/or
advertisement in such publication, and in the event that Seller decides to
place such a listing and/or advertisement, Seller shall be entitled to a
pro-rata credit for such portion of the cost of such listing and/or
advertisement attributable to the period after Closing.
(d) In the event any third party (such as telephone company or billboard
company) makes a separate charge for the use of such listings or
advertising subsequent to the Closing Date, then Purchaser shall be
responsible to pay same subsequent to the Closing Date (but no such
payment shall accrue to the benefit of the Seller or constitute a credit
against a debt otherwise owed by the Seller to said third party).
(e) Purchaser's temporary license set forth in this paragraph shall
expire on the date(s) set forth above. If Purchaser continues to use the
name currently being used by the Property subsequent to the expiration
date of this temporary license set forth above, then Purchaser shall be
liable for and shall pay to the owner of said rights a license fee equal
to One Hundred Dollars ($100.00) for each day after the permitted date set
forth above for each Property for which Purchaser continues to use the
existing trade name. In no event, however, shall such extended license
period exceed ninety (90) additional days.
(f) If Purchaser continues to use said logos or trade names beyond the
period allowed above for which a temporary license has been granted, then
Seller (or the owner of said rights) shall have all legal and equitable
remedies authorized by federal law or the laws of the state where such
Property is located to prevent such unauthorized use or to recover any
damages authorized by such laws.
14. SERVICE CONTRACTS. Within thirty (30) days after the date hereof, Seller
shall deliver to Purchaser a copy of all service contracts and advertising
agreements affecting the Properties (the "Delivered Contracts"). Any and all
Delivered Contracts terminable upon thirty (30) days notice without a
termination fee, all advertisement agreements and all other Delivered Contracts
which have not been objected to by Purchaser within ten (10) days after
Purchaser's receipt thereof shall be deemed "Service Contracts." Seller shall
assign the Service Contracts to Purchaser at Closing, and Purchaser shall
assume responsibility and obligations under the Service Contracts. Seller
agrees to terminate any and all management agreements affecting the Properties
as of the Closing Date. Notwithstanding anything contained herein to the
contrary, (a) to the extent any of the Service Contracts are not assignable and
with respect to Delivered Contracts which are not Service Contracts, Seller
shall terminate said agreements as of the Closing Date and Seller shall pay any
and all termination fees required as a result thereof and (b) to the extent any
of the Service Contract requires the consent of the service supplier or product
supplier and, if Seller is unable to obtain such consent, Seller shall
terminate such agreement as of the Closing Date and Seller shall pay any
termination fee required as a result thereof. Seller shall not be required to
pay any fees in connection with obtaining consents for the assignment of a
Service Contract.
15. 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 11 hereof.
16. 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 direct Seller in writing at least five (5) days prior
to the Closing Date to convey the Properties located in Tennessee to an
affiliate of Purchaser without Seller's consent.
17. BROKER. Purchaser and Seller shall each 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. The indemnifying party shall undertake its obligations set forth
in this Paragraph 17 using attorneys selected by the indemnifying party and
reasonably acceptable to the indemnified party. The provisions of this
Paragraph 17 will survive the Closing and delivery of the Deed. The parties
acknowledge that various affiliates of the general partners of Seller will earn
a disposition fee in connection with the sale of the Properties.
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 Xxxxxxx Xxxxxxxxx (referred to as 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 and which shall
not survive Closing: (i) except as described on Exhibit D attached hereto,
Seller has no knowledge of any pending or threatened litigation, claim, cause
of action or administrative proceeding concerning the Property; (ii) subject to
the provisions contained in Paragraph 8.1 herein, Seller has the power to
execute this Agreement and consummate the transactions contemplated herein; and
(iii) the rent rolls which Seller has submitted to the Purchaser as described
in Exhibit Q attached hereto and updated as of the Closing Date are accurate as
of the date set forth thereon.
18.3. Purchaser hereby represents and warrants to Seller that
(i) Purchaser has the full right, power and authority to execute this Agreement
and consummate the transactions contemplated herein, (ii) neither Purchaser nor
any of Purchaser's affiliates is a "party in interest" (as defined in Section
406 of the Employee Retirement Income Security Act of 1974, as amended and
supplemented) to Seller or any general partner or limited partner of Seller,
and (iii) the transaction contemplated in this Agreement is not subject to any
filing notification requirements of the HSR Act.
19. LIMITATION OF LIABILITY.
(a) Neither Seller, nor any of its respective beneficiaries,
shareholders, partners, officers, 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.
(b) Any obligation or liability whatsoever of Purchaser which may arise
at any time under this Agreement or any obligation or liability which may
be incurred by it pursuant to any other instrument, transaction or
undertaking contemplated hereby, shall be satisfied, if at all, out of the
Purchaser's assets only. No such obligation or liability shall be
personally binding upon, nor shall resort for the enforcement thereof be
had to, the trustees, directors, shareholders, officers, employees or
agents of Purchaser, regardless of whether such obligation or liability is
in the nature of contract, tort or otherwise.
20. TIME OF ESSENCE. Time is of the essence of this Agreement. If the final
day of any period which is set forth in this Agreement falls on a Saturday,
Sunday, or legal holiday under the laws of the United States or the State of
Illinois, then in such event, the duration of such period shall be extended to
the next day which is not a Saturday, Sunday, or other legal holiday. Any
reference to a time of day (e.g., 12:00 noon) shall refer to Chicago, Illinois
time.
21. RADON GAS. RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT
HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT HEALTH
RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED
FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA.
ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE OBTAINED FROM
YOUR COUNTY PUBLIC HEALTH UNIT. THIS PARAGRAPH IS PROVIDED FOR INFORMATIONAL
PURPOSES PURSUANT TO SECTION 404.056(8), FLORIDA STATUTES, (1988).
22. CONSIDERATION. On or before the execution of this Agreement, Purchaser
shall deliver to Seller One Hundred And No/100 Dollars ($100.00) cash (the
"Independent Contract Consideration"), which amount has been bargained for and
agreed to as consideration for Purchaser's right to purchase the Properties
pursuant to this Agreement and for Seller's execution and delivery of this
Agreement. The Independent Contract Consideration is in addition to and
independent of all other consideration provided in this Agreement, and is
nonrefundable in all events.
23. WAIVER OF DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT. Purchaser
waives its rights under the Texas Deceptive Trade Practices-Consumer Protection
Act ("TDTPA"), Section 17.41 et seq., Business & Commerce Code, a law that
gives consumers special rights and protections. After consultation with an
attorney/legal counsel of Purchaser's own selection, Purchaser voluntarily
consents to this waiver. Purchaser covenants, represents and warrants that
such attorney/legal counsel was not directly or indirectly identified,
suggested, or selected by Seller or an agent of Seller.
24. 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, by facsimile transmission or made by United States
registered or certified mail 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: Xxxx Xxxxxxxxx
(000) 000-0000
(000) 000-0000 (FAX)
and to: Colonial Storage 86, Inc.
0000 Xxxxx Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
(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)
and to: Novakov, Davidson & Xxxxx
000 Xxxxx Xx. Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(000) 000-0000
(000) 000-0000 (FAX)
and one copy to: Xxxxx X. Xxx Xxxxx, P.C.
0000 Xxxx Xxxxxxxx
Xxxxx 000
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxx Xxxxx, 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 or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, 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.
25. 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.
26. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, AND THE RIGHTS AND
OBLIGATIONS OF SELLER AND PURCHASER HEREUNDER DETERMINED, IN ACCORDANCE WITH
THE SUBSTANTIVE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES.
27. 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.
28. 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.
29. 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.
30. PROPERTY MANAGERS. Purchaser and the agents and employees of Purchaser
shall have the right, at any reasonable time and upon reasonable prior notice
to Seller, to contact the on-site managers of each Property to discuss the
Property and each manager's employment at the Property. Seller shall direct
the on-site manager of each Property to answer the reasonable questions of
Purchaser regarding the operation of each Property.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
STORAGE TRUST PROPERTIES, L.P., a Delaware
limited partnership
By: Storage Trust Realty, a Maryland Real Estate
Investment Trust, Sole General Partner
By: /s/Xxxxx X. Xxx Xxxxx
----------------------------
Name: Xxxxx X. Xxx Xxxxx, Esq.
Its: Attorney-In-Fact
SELLER:
BALCOR/COLONIAL STORAGE INCOME FUND - 86, an
Illinois limited partnership
By: Balcor Storage Partners - 86, an Illinois
general partnership, a General Partner
By: The Balcor Company, a Delaware corporation,
its General Partner
By: /s/Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
-----------------------------
Its: Senior V.P.
-----------------------------
By: Colonial Storage 86, Inc., a Texas
corporation, a General Partner
By: /s/Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
------------------------------
Its: President
------------------------------
ACKNOWLEDGMENT OF COUNSEL FOR PURCHASER
The undersigned has represented Purchaser in connection with the
transaction contemplated by this Agreement and executes this Agreement for the
sole purpose of complying with Section 17.42(a)(3) of the TDTPA, as same
applies to the waiver and release contained in this Agreement.
/s/Xxxxx X. Xxx Xxxxx
Xxxxx X. Xxx Xxxxx
Exhibits
A - Common Description of Real Property
B - Legal Description of Real Property
C - Survey Standards and Surveyor's Certificate
D - Pending or Threatened Claims
E - Xxxxxxx Money Escrow
F - Intentionally Deleted
G - Intentionally Deleted
H - Description of Existing Surveys
I - Intentionally Deleted
J - Deed
K - Closing Escrow Instructions
L - Xxxx of Sale
M - Assignment and Assumption of Intangible Property
N - Assignment and Assumption of Leases and Security Deposits
O - Non-Foreign Affidavit
P - Notice to Tenants
Q - Master Rent Roll
8. CONDITION PRECEDENT TO CLOSING.
8.1 INTENTIONALLY DELETED.
8.2 Acquisition Proposals. Unless and until this Agreement shall have
been terminated in accordance with its terms, Seller agrees and covenants (a)
that neither it nor its General Partners shall, and each of them shall direct
and use its commercially reasonable and good faith efforts to cause its
respective officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by them) not to, directly or indirectly, initiate, solicit or
encourage any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its partners)
with respect to a merger, acquisition, tender offer, exchange offer,
consolidation or similar transaction involving, or any purchase of the
Properties or any equity securities or partnership interests of, Seller, other
than the transactions contemplated by this Agreement (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations concerning, or provide any confidential information or data
to, to have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; (b) that Seller will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing and will take
the necessary steps to inform the individuals or entities referred to above of
the obligations undertaken in this Section 8.2; and (c) that Seller will notify
Purchaser immediately if any such inquiries or proposals are received by, any
such information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it; provided, however, that nothing
contained in this Section 8.2 shall prohibit the General Partners of Seller,
from (i) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited bona fide
Acquisition Proposal, if, and only to the extent that, (A) the General
Partners, after consultation with and based upon the advice of Xxxxxx Xxxxxx &
Zavis, or another nationally recognized law firm selected by Seller, determines
in good faith that such action is required for the General Partners to comply
with their fiduciary duties to their partners under applicable law, (B) prior
to furnishing such information to, or entering into discussions or negotiations
with, such person or entity, Seller provides written notice to Purchaser to the
effect that it is furnishing information to, or entering into discussion or
negotiations with, such person or entity, and (C) Seller keeps Purchaser
informed of the status of any such discussions or negotiations; and (ii) to the
extent applicable, complying with Rule 14e-2 and Rule 14a-9 and any other
applicable provisions or rules promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with regard to an Acquisition Proposal.
Notwithstanding anything to the contrary set forth herein, nothing in this
Section 8.2 shall permit Purchaser or Seller to terminate this Agreement except
as specifically provided in Section 8.4 hereof.
8.3 Consent Solicitation. Seller will take all actions reasonably
necessary in accordance with applicable law and its Partnership Agreement to
solicit and seek to obtain the requisite consent of the limited partners of the
Seller as required by the terms of its Partnership Agreement as promptly as
practicable to consider and vote upon the approval of this Agreement and the
transactions contemplated hereby, subject to the provisions of Section 8.2.
The General Partners of Seller shall recommend that the limited partners of
Seller approve this Agreement and the transactions contemplated hereby, subject
to the provisions of Section 8.2, and shall use its commercially reasonable and
good faith efforts to seek to obtain such approval, including, without
limitation, by having the Consent Solicitation (as hereafter defined) cleared
by the Commission (as hereafter defined) for mailing to partners as promptly as
practicable and by timely mailing the Consent Solicitation to its limited
partners. If, at any time after the Closing Date, any further action is
reasonably necessary or desirable to carry out the purpose of this Agreement,
the proper officers, directors, trustees or partners of the Seller, the General
Partners and Purchaser shall take all such necessary action. Seller shall
promptly prepare and file with the Securities and Exchange Commission (the
"Commission") as soon as practicable a consent solicitation statement (the
"Consent Solicitation") with respect to the solicitation by the General
Partners of the consent of their partners to this Agreement and the
transactions contemplated hereby. Seller and the General Partners will cause
the Consent Solicitation to comply as to form in all material respect with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder.
8.4 Termination. This Agreement may be terminated and abandoned at any
time prior to the Closing Date:
(a) by mutual written consent of Seller and Purchaser;
(b) by Purchaser if (i) Seller shall have failed to file the Consent
Solicitation with the Commission by April 10, 1996; (ii) Seller shall have
failed as soon as practicable after the Commission has indicated that it
has no further comment thereon to mail the Consent Solicitation to its
partners or to include the recommendation of the General Partners of this
Agreement and the transactions contemplated hereby in the Consent
Solicitation or to otherwise comply with its covenant in Section 8.3;
(iii) the General Partners of Seller shall have recommended that the
partners of Seller accept or approve an Acquisition Proposal by a person
other than Purchaser (or Seller or the General Partners shall have
resolved to do such); or (iv) the General Partners of Seller shall have
withdrawn, amended, modified or changed their approval or recommendation
of this Agreement or any of the transactions contemplated hereby;
(c) by Seller, if the General Partners of Seller recommend to Seller's
partners approval or acceptance of an Acquisition Proposal by a person
other than Purchaser but only in the event that the General Partners of
Seller, after consultation with and based upon the advice of Xxxxxx Xxxxxx
& Zavis or another nationally recognized law firm, has determined in good
faith that such action is necessary for the General Partners of Seller to
comply with their fiduciary duties to their partners under applicable law;
or
(d) by either Seller or Purchaser, if the limited partners of Seller do
not consent to the transaction set forth in this Agreement in accordance
with the terms of its Partnership Agreement on or before June 15, 1996
(other than due to the failure of the party seeking to terminate this
Agreement to perform its obligations under this Agreement required to be
performed by it at or prior to June 15, 1996); provided that either
Purchaser or Seller may extend such date from June 15, 1996 until July 15,
1996. Notwithstanding anything contained herein to the contrary, the
Closing Date shall occur on the later of May 15, 1996 or 2 business days
after receipt of the approval of the transaction contemplated herein by
the limited partners of Seller in accordance with the terms of Seller's
partnership agreement.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.4 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective partners, employees,
officers, directors, trustees, agents, representatives or advisors, whether
prior to or after the execution of this Agreement.
8.5 Effect of Termination.
(a) In the event of the termination and abandonment of this Agreement
pursuant to Section 8.4 hereof, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party hereto
and all rights and obligations of any party hereto shall cease (i) except
that Purchaser shall receive the Xxxxxxx Money and all interest thereon,
(ii) except for Purchaser's obligation to indemnify Seller and restore the
Properties, as more fully set forth in Paragraph 7, and (iii) except as
otherwise specifically set forth herein; provided, however, that nothing
contained in this Section 8.5 shall relieve Seller from any liability
under Section 8.5(b).
(b) If this Agreement terminates (i) as a result of Section 8.4(b) or
(c), and within 150 days of such termination Seller consummates a
transaction which was the subject of an Acquisition Proposal or enters
into a definitive agreement with respect to a transaction which was the
subject of an Acquisition Proposal, or (ii) as a result of Section 8.4(d)
and at the time of such termination an Acquisition Proposal was
outstanding and within 150 days of such termination Seller consummates a
transaction pursuant to any Acquisition Proposal (whether or not
outstanding at the time of such termination) or enters into a definitive
agreement with respect to a transaction pursuant to any Acquisition
Proposal (whether or not outstanding at the time of such termination), in
either such case, upon consummation of such transaction, Seller shall pay
Purchaser an amount (the "Termination Amount") in cash equal to the sum of
(i) $1,342,000, plus (ii) one-half of Purchaser's out-of-pocket costs and
expenses solely relating to any cancellation fee due and payable to Title
Insurer or in connection with the Updated Surveys and the Environmental
Reports (excluding any related fees and disbursements of legal counsel).
For purposes of this Section 8.5(b), an Acquisition Proposal that is in
the form of a tender offer shall be deemed to be consummated only if such
tender offer is accepted by 40% or more of the outstanding limited
partnership interests.
(c) If this Agreement terminates as a result of Section 8.4(b), (c) or
(d), at any time prior to or within 150 days after termination of this
Agreement, Seller shall not enter into any agreement relating to an
Acquisition Proposal with a person other than Purchaser unless such
agreement provides that such person shall be obligated to pay any
Termination Amount due Purchaser under this Section 8.5.
(d) The parties acknowledge and agree that the provisions for payment of
the Termination Amount are included herein in order to induce Purchaser to
enter into this Agreement and to reimburse Purchaser for incurring costs
and expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement. The parties hereto agree
that Purchaser's rights to payment of the Termination Amount shall be in
addition to any other rights or remedies pursuant to Paragraph 12.
(e) Notwithstanding any provision to the contrary herein, the aggregate
amount of the Termination Amount payable to Purchaser pursuant to this
Section 8.5 shall be subject to the limitations set forth in Section 8.6.
8.6 Payment of Termination Amount.
(a) In the event that Seller is obligated to pay Purchaser the
Termination Amount pursuant to Section 8.5, Seller (or any other person to
the extent provided by Section 8.5(c)) shall pay to Purchaser from the
Termination Amount deposited into escrow in accordance with the next
sentence, an amount equal to the lesser of (m) the Termination Amount and
(n) the sum of (1) the maximum amount that can be paid to Purchaser
without causing Purchaser to fail to meet the requirements of Sections
856(c)(2) and (3) of the Internal Revenue Code of 1986, as amended (the
"Code"), determined as if the payment of such amount did not constitute
income described in Sections 856(c)(2)(A)-(H) or 856(c)(3)(A)-(I) of the
Code ("Qualifying Income"), as determined by Purchaser's certified public
accountants, plus (2) in the event that Purchaser receives either (X) a
letter from Purchaser's counsel as described in Section 8.6(b)(ii), an
amount equal to the Termination Amount less the amount payable under
clause (1) above. To secure Seller's obligation to pay these amounts,
Seller shall deposit into escrow an amount in cash equal to the
Termination Amount with an escrow agent selected by Purchaser and on such
terms (subject to Section 8.6(b)) as shall be agreed upon by Purchaser and
the escrow agent. The payment or deposit into escrow of the Termination
Amount pursuant to this Section 8.6(a) shall be made on or prior to the
date of the event which gives rise to the payment of the Termination
Amount by wire transfer or bank check.
(b) The escrow agreement shall provide that the Termination Amount in
escrow (including any applicable interest thereon) or any portion thereof
shall not be released to Purchaser unless the escrow agent receives any
one or combination of the following: (i) a letter from Purchaser's
certified public accountants indicating the maximum amount that can be
paid by the escrow agent to purchaser without causing Purchaser to fail to
meet the requirements of Sections 856(c)(2) and (3) of the Code determined
as if the payment of such amount did not constitute Qualifying Income or a
subsequent letter from Purchaser's accountants revising that amount, in
which case the escrow agent shall release such amount to Purchaser, or
(ii) a letter from Purchaser's counsel indicating that Purchaser received
a ruling from the IRS holding that the receipt by Purchaser of the
Termination Amount (including any applicable interest thereon) would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code (or
alternatively, Purchaser's legal counsel has rendered a legal opinion to
the effect that the receipt by Purchaser of the Termination Amount
(including any applicable interest thereon) would either constitute
Qualifying Income or would be excluded from gross income within the
meaning of Sections 856(c)(2) and (3) of the Code), in which case the
escrow agent shall release the remainder of the Termination Amount
(including any applicable interest thereon) to Purchaser. Seller agrees
to amend this Section 8.6 at the request of Purchaser in order to (x)
maximize the portion of the Termination Amount (including any applicable
interest thereon) that may be distributed to Purchaser hereunder without
causing Purchaser to fail to meet the requirements of Sections 856(c)(2)
and (3) of the Code, (y) improve Purchaser's chances of securing a
favorable ruling described in this Section 8.6(b) or (z) assist Purchaser
in obtaining a favorable legal opinion from its counsel as described in
this Section 8.6(b); provided that Purchaser's legal counsel has rendered
a legal opinion to Purchaser to the effect that such amendment would not
cause Purchaser to fail to meet the requirements of Section 856(c)(2) or
(3) of the Code. The escrow agreement shall also provide that any portion
of the Termination Amount (including any applicable interest thereon) held
in escrow for five years shall be released by the escrow agent to Seller.
Seller shall not be a party to such escrow agreement and shall not bear
any cost of or have any liability resulting from the escrow agreement.
(c) Notwithstanding anything to the contrary set forth in this Agreement,
in the event Purchaser is required to file suit to seek all or a portion
of the Termination Amount (including any applicable interest thereon), it
shall be entitled to all expenses, including reasonable attorneys' fees
and expenses, which it has incurred in enforcing its rights hereunder;
provided that payment of such expenses shall be subject to the limitations
of Section 8.6(a) (determined as if such expenses were included in the
Termination Amount).
8.7 Exception. The provisions of this Paragraph 8 shall not apply in any
respect to the offer by Public Storage, Inc. to purchase partnership interests
of Seller as set forth in the Schedule 14d-1 of Public Storage, Inc. and the
related offer to purchase as such documents have been amended or supplement and
are in effect on the date hereof.
March 13, 1996
VIA TELECOPIER
Xxxxxx X. Xxxxxxxx, Esq.
Xxx Xxxxx Law Firm
0000 Xxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Re: Balcor/Colonial - Sale to Storage Trust Realty
Dear Xxx:
As we discussed, my client has agreed to extend the time for agreeing on
the Schedule Price and the Property Breakdown Schedule (both as defined in the
Agreement of Sale between Storage Trust Properties, L.P. and Balcor/Colonial
Storage Income Fund-86 dated as of March 5, 1996), until March 22, 1996.
Please acknowledge your agreement with this extension by signing a copy of this
letter and returning same to me by telecopier, with original to follow by mail.
Thank you for your attention to this matter. Please feel free to call
should you have any questions.
Very truly yours,
/s/Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
cc: Xx. Xxxxxxx Xxxxxxxxx
Xxxxxx X. Xxxxxxx, Esq.
The undersigned hereby acknowledges and accepts the foregoing terms and
conditions,
Storage Trust Properties, L.P.
By: /s/Xxxxxx X. Xxxxxxxx Attorney-in-fact
--------------------------
