Exhibit 2.1
AGREEMENT OF PURCHASE AND SALE
Among
THE ▇▇▇▇▇ COMPANY OF NEVADA, LLC, and
THE ▇▇▇▇▇ COMPANY OF NEW JERSEY, LLC
(collectively "Seller"),
and
PR CHERRY HILL LIMITED PARTNERSHIP ("Buyer"),
March 7, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I Defined Terms...........................................................................................2
1.1 Certain Defined Terms.......................................................................2
ARTICLE II Purchase and Sale of Membership Interests.............................................................10
2.1 Sale of Membership Interests in Owner Entity...............................................10
2.2 Purchase Price.............................................................................13
2.3 Sale of Stock of Cherry Hill Beverage, Inc.................................................13
ARTICLE III Deposits, Assumption of Liabilities; Adjustments and Prorations......................................16
3.1 Deposits...................................................................................16
3.2 Assumption of Liabilities..................................................................17
3.3 Debt Restructure...........................................................................18
3.4 Adjustments and Prorations.................................................................19
ARTICLE IV Failure to Close......................................................................................19
4.1 Buyer's Default............................................................................19
4.2 Seller's Default...........................................................................20
4.3 Disposition of Deposit upon Termination and Lack of Satisfaction of Conditions.............21
ARTICLE V Closing; Deliveries at Closing.........................................................................22
5.1 Closing....................................................................................22
5.2 Deliveries to be Made on the Closing Date..................................................22
ARTICLE VI Employment Matters....................................................................................26
6.1 Employees..................................................................................26
6.2 Vesting....................................................................................29
6.3 Indemnity..................................................................................29
6.4 No Third Party Beneficiaries...............................................................30
ARTICLE VII Buyer Inspections....................................................................................30
7.1 Document and Property Inspection..........................................................30
7.2 Feasibility Period.........................................................................32
7.3 Survey Contingency.........................................................................33
7.4 Title Contingency..........................................................................34
7.5 Property Financial Statements..............................................................35
ARTICLE VIII Conditions to Closing...............................................................................35
8.1 Conditions to Obligations of Seller........................................................35
8.2 Conditions to Obligations of Buyer.........................................................37
TABLE OF CONTENTS (CONT.)
ARTICLE IX Maintenance, Improvement and Leasing of the Property..................................................39
9.1 Maintenance and Improvement................................................................40
9.2 Leasing....................................................................................40
9.3 Service and Maintenance Contracts..........................................................42
9.4 Additional Covenants of Seller.............................................................43
9.5 Management Agreements......................................................................44
9.6 Estoppels and Consent and SNDAs............................................................45
9.7 Existing Debt..............................................................................45
ARTICLE X Representations and Warranties of Seller...............................................................45
10.1 Formation and Authority....................................................................46
10.2 No Conflict................................................................................48
10.3 Consents and Approvals.....................................................................48
10.4 Personal Property..........................................................................49
10.5 Litigation.................................................................................50
10.6 Compliance with Laws.......................................................................50
10.7 Taxes......................................................................................50
10.8 Real Property..............................................................................52
10.9 Environmental, Health and Safety Matters...................................................52
10.10 Insurance..................................................................................53
10.11 Material Contracts.........................................................................54
10.12 Rent Roll..................................................................................55
10.13 Knowledge..................................................................................57
10.14 Ownership of Owner Entity..................................................................57
10.15 Employment Matters.........................................................................57
10.16 Limitations on Representations and Warranties..............................................59
10.17 Schedules..................................................................................61
ARTICLE XI Representations and Warranties of Buyer...............................................................61
11.1 Formation and Authority....................................................................62
11.2 No Conflict................................................................................63
11.3 Consents and Approvals.....................................................................63
11.4 Litigation.................................................................................64
11.5 Knowledge of Buyer.........................................................................64
ARTICLE XII Broker...............................................................................................64
ARTICLE XIII Survival; Indemnification...........................................................................65
13.1 Survival of Warranties.....................................................................65
13.2 Indemnification by Seller..................................................................65
13.3 Indemnification by Buyer...................................................................68
13.4 Indemnity - General........................................................................69
13.5 Survival...................................................................................71
ARTICLE XIV Assignment...........................................................................................71
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TABLE OF CONTENTS (CONT.)
ARTICLE XV Notices...............................................................................................72
ARTICLE XVI Expenses.............................................................................................73
ARTICLE XVII Casualty and Condemnation...........................................................................74
17.1 Casualty...................................................................................74
17.2 Condemnation...............................................................................74
17.3 Material Casualty or Condemnation..........................................................75
ARTICLE XVIII Like Kind Exchange.................................................................................76
18.1 Like Kind Exchange.........................................................................76
ARTICLE XIX Miscellaneous........................................................................................77
19.1 Successors and Assigns.....................................................................77
19.2 Gender.....................................................................................77
19.3 Captions...................................................................................77
19.4 Not Construed against Drafter..............................................................77
19.5 Entire Agreement...........................................................................78
19.6 Recording..................................................................................78
19.7 Time of Essence............................................................................78
19.8 Original Document..........................................................................78
19.9 Governing Law..............................................................................79
19.10 Post-Closing Inspection....................................................................79
19.11 Non Compete................................................................................79
19.12 Joint and Several Liability................................................................80
19.13 Other Closings.............................................................................80
ARTICLE XX Confidentiality.......................................................................................82
20.1 Confidentiality Agreement..................................................................82
20.2 Public Announcements.......................................................................82
ARTICLE XXI Further Undertakings.................................................................................82
21.1 Further Assurances.........................................................................82
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TABLE OF CONTENTS (CONT.)
LIST OF EXHIBITS AND SCHEDULES
------------------------------
Exhibits Description
-------- -----------
Exhibit A-1 Description of Owned Land
Exhibit A-2 Description of Lease Land (None)
Exhibit B Assumed Debt Loan Documents
Exhibit C Personal Property
Exhibit C-1 GE Capital Equipment
Exhibit D Excluded Personal Property
Exhibit E Due Diligence Documents and Information
Exhibit F Ground Leases (None)
Exhibit G Service Contracts
Exhibit H Permitted Encumbrances
Exhibit I Ground Lessor Estoppel (None)
Exhibit J ▇▇▇▇▇ Estoppel
Exhibit K Lender Estoppel and Consent
Exhibit L Transfer Tax Indemnity (None)
Exhibit M Guaranty by the ▇▇▇▇▇ Company L.P.
Exhibit N Guaranty by PREIT Associates, L.P.
Exhibit O Anchor Tenant Estoppels
Schedules Description
--------- -----------
Schedule 1.1A Intentionally Omitted
Schedule 1.1B Anchor Department Stores
Schedule 3.4 Adjustments and Prorations
Schedule 6.1 Property Employees[Note: Not attached to Contract].
Schedule 8.2 Anchor Tenants
Schedule 9.7 Terms of New Assumed Debt
Schedule 10.1(c) Organizational Documents of Owner
.. Entities and Predecessors
Schedule 10.1(d) Lists Predecessor Entities
Schedule 10.3(a) Government Consents - Seller
Schedule 10.3(b) Third Party Consents - Seller
Schedule 10.4 Leases of Personal Property to be assigned
Schedule 10.5 Litigation, Bankruptcies
Schedule 10.6 Compliance with Laws
Schedule 10.7 Taxes
Schedule 10.7(a) All Tax Returns Filed
All Refunds due to Tenants or
▇▇▇▇▇ parties for prior years
Schedule 10.8(b) Condemnations
Schedule 10.9 Environmental Reports
Schedule 10.10 Insurance in Place
Schedule 10.11(a) Material Contracts - ▇▇▇▇▇▇
Schedule 10.11(b) Material Contracts - Developer Agreements
Schedule 10.11(c) Other Material Contracts
Schedule 10.11(d) Material Contract Exceptions
Schedule 10.12(a) Leases - Rent Roll
Schedule 10.12(b) Claimed Lessor Defaults
Schedule 10.12(c) Tenant Defaults
Schedule 10.12(d) Security Deposits/Construction Deposits
Schedule 10.15(d) Collective Bargaining Agreements
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AGREEMENT OF PURCHASE AND SALE
CHERRY HILL MALL
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made and entered
into as of the 7th day of March, 2003, (the "Effective Date") by and between THE
▇▇▇▇▇ COMPANY OF NEVADA, LLC, a Nevada limited liability company and THE ▇▇▇▇▇
COMPANY OF NEW JERSEY, LLC, a New Jersey limited liability company (collectively
"Seller"), and PR CHERRY HILL LIMITED PARTNERSHIP, a Pennsylvania limited
partnership ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns directly or indirectly all of the membership
interests in Cherry Hill Center, LLC, a Maryland limited liability company
("Owner Entity"), and Owner Entity is the owner of certain real property located
in Cherry Hill, New Jersey and known as Cherry Hill Mall; and
WHEREAS, Seller desires to sell, convey, transfer and assign to Buyer,
and Buyer desires to purchase and acquire from Seller, all of the ownership
interests in the Owner Entity pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Seller and Buyer agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Certain Defined Terms.
As used in this Agreement, the following terms shall have the following
meanings:
"Access Agreement" means the Access Agreement dated January 31, 2003
between The ▇▇▇▇▇ Company, an Affiliate of Seller, and PREIT Associates, L.P.
"Additional Matters Objection" is defined in Section 7.3.
"Adjusted Purchase Price" is defined in Section 2.2.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
"Affiliated Contracts" is defined in Section 19.13(a).
"Agreement" means this Agreement of Purchase and Sale, including,
without limitation, the Schedules and Exhibits hereto, as the same may be
amended pursuant to the terms hereof.
"Anchors" means the Anchor Tenants and Anchor Department Stores
collectively.
"Anchor Department Stores" means those department stores that are
adjacent to the Real Property and are identified on Schedule 1.1.B.
"Anchor Tenant" is defined in Section 8.2(a)(iv).
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"Ancillary Agreements" means the agreements and documents to be
executed at Closing as specified in this Agreement, including the Loan
Assumption Documents.
"Assumed Debt" means the existing secured mortgage debt on the
Property, as evidenced and secured by the Assumed Debt Loan Documents which are
listed on Exhibit B, the outstanding balance of which as of April 1, 2003 will
be approximately the amount set forth on Exhibit B.
"Assumed Debt Loan Documents" means the documents listed on Exhibit B.
"Assumed Property Liabilities" means liabilities arising pursuant to
(a) the Assumed Debt Loan Documents, (b) the Leases, (c) the Permitted
Encumbrances (other than the Assumed Debt Loan Documents), (d) the Assumed
Service Contracts, (e) intentionally omitted, (f) the Material Contracts and (g)
any other obligation, contract or agreement that Buyer has expressly agreed in
writing to assume.
"Assumed Service Contracts" is defined in Section 9.3.
"Bertucci's" is defined in Section 2.3(c).
"▇▇▇▇▇▇▇▇ Documents" is defined in Section 2.3(c).
"Business Day" means a day other than a Saturday, Sunday or National
holiday or state holiday in the state in which the Property Assets are located
or in which Closing is to occur.
"Buyer's Deliveries" is defined in Section 5.2(b).
"CHB" is defined in Section 2.3(a).
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"CHB Purchase Price" is defined in Section 2.3(a).
"Christiana Contract" is defined in Section 19.13.
"Claim" means any claim, demand, suit, action, litigation,
investigation, arbitration, administrative hearing or other proceedings of any
nature.
"Closing" is defined in Section 5.1.
"Closing Date" is defined in Section 5.1.
"Concurrent Contracts" is defined in Section 19.13(a).
"Confidentiality Agreement" means those certain confidentiality
agreements dated May 30, 2002, January 2, 2003 and January 29, 2003 between
Pennsylvania Real Estate Investment Trust ("PREIT") and The ▇▇▇▇▇ Company.
"Contract" means contract, agreement, lease, sublease, purchase or sale
order, license, permit, franchise, instrument, undertaking, commitment and other
binding arrangement.
"▇▇▇▇▇▇" means the documents listed on Schedule 10.11(a).
"Covenants Surviving Termination" means the indemnification or other
obligations of Seller or Buyer that survive the termination of this Agreement as
contained in Section 3.1(a)(iii), Section 7.1 or Article XII or the Access
Agreement.
"Deposit" is defined in Section 3.1.
"Developer Agreements" is defined in Section 10.11(b)
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"Due Diligence Expense" mean the reasonable and documented third party
expenses incurred by Buyer with respect to its contemplated acquisition of the
Property Assets, including but not limited to attorneys' fees (including fees
and expenses incurred in negotiating this Agreement), engineering fees, title
and survey charges, lender fees, and all other reasonable and documented third
party expenses related to this transaction. In no event shall Due Diligence
Expenses payable hereunder exceed $400,000.
"Effective Date" is defined in the preamble of this Agreement.
"Employment Period" is defined in Section 6.1.
"Encumbrance" means any lien, superlien, security interest, pledge,
right of first refusal, mortgage, covenant, restriction, reservation,
conditional sale, prior assignment or other encumbrance, Claim, burden or charge
of any nature.
"Environmental Law" means any Law relating to pollution or protection
of the environment, health, safety or natural resources from Hazardous
Materials, including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials.
"Equitable" means Equitable Prime Property Fund.
"ESA" is defined in Section 10.9.
"Exchange Agreement" is defined in Section 18.1.
"Exchanges" is defined in Section 18.1.
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"GE Capital Equipment" is defined in Section 2.2.
"Ground Lease" means the ground lease or leases described on Exhibit F.
"Ground Lessor" means the landlord under the Ground Lease.
"Hazardous Materials" means (a) petroleum and petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials and polychlorinated biphenyls and (b) any other chemicals, materials
or substances that are regulated as to disposal, storage, use or quantity or
identified as toxic or hazardous or as a pollutant, contaminant or waste under
any applicable Environmental Law.
"Hired Employees" is defined in Section 6.1.
"Improvements" is defined in Section 2.1(b).
"Interests" is defined in Section 2.1(a).
"Intermediary" or "Intermediaries" is defined in Section 18.1.
"Knowledge of Seller" or "Seller's Knowledge" means the actual
knowledge, without any duty of investigation or inquiry whatsoever, of ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Knowledge of Buyer" means the actual knowledge, without any duty of
investigation or inquiry whatsoever, of ▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇.
"Land" is defined in Section 2.1(b).
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"Law" means any federal, state, local or foreign statute, law
(including common law), ordinance, regulation, rule, code, order, judgment or
decree, and any judicial or administrative interpretation thereof, and any other
requirement or rule of law.
"Leases" is defined in Section 2.1(b).
"Lender" shall mean the holder of the Assumed Debt.
"Liabilities" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law or any Contract.
"License #012" is defined in Section 2.3(c).
"Liquor License" is defined in Section 2.3(a).
"Loan Assumption Documents" is defined in Section 3.2.
"Losses" of a Person means any and all losses, liabilities, damages,
claims, awards, judgments, costs and expenses (including, without limitation,
reasonable attorneys' fees) actually suffered or incurred by such Person.
"Material Contracts" is defined in Section 10.11.
"Material Loss" is defined in Section 17.3.
"New Castle" means New Castle Associates, a Pennsylvania limited
partnership.
"New Leases" is defined in Section 9.2(a).
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"Non Transferred Employees" is defined in Section 6.1.
"Permitted Encumbrances" means those items listed on Exhibit H (except
those marked "Remove"), plus (a) inchoate mechanic, construction and materialmen
liens for completed construction or construction in progress not contracted for
by Owner Entity or Seller, or their respective Affiliates; (b) all Leases and
New Leases and leases not listed on the rent roll attached as Schedule 10.12(a)
but executed before the Effective Date of this Agreement and previously
disclosed to Buyer; (c) building restrictions and zoning and other regulations,
resolutions and ordinances and any amendments thereto in effect on the date of
this Agreement or hereafter adopted; (d) any state of facts that a survey would
show (other than matters covered by an Additional Matters Objection); (e) liens
for any unpaid real estate tax, water charge, sewer rent and assessment,
provided the same are adjusted at the Closing; (f) liens or encumbrances
encumbering the Real Property as to which Seller shall deliver to either Buyer,
or to the Title Company, at or prior to the Closing, proper instruments, in
recordable form, canceling such liens or encumbrances, together with any other
instruments necessary thereto and the cost of recording and canceling the same,
or causing the Title Company to insure over such lien or encumbrance (but only
if the Title Company insures over such lien or encumbrance at no expense to
Buyer and only if Buyer agrees to accept the same in Buyer's commercially
reasonable discretion); (g) any matter that is the responsibility of any tenant
under any Lease of the Real Property but only if limited to such tenant's
leasehold interest and does not affect the interest of Owner Entity; (h) any
matter that is the responsibility of any party other than Owner Entity (which
responsibility of Owner Entity shall be fully complied with as of Closing and
insured as such by Title Company) to any reciprocal easement agreement affecting
the Real Property; (i) all ▇▇▇▇▇▇ described in Schedule 10.11(a), and (j)
matters created by or with the written consent of Buyer.
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"Person" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, any governmental authority, and any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.
"Personal Property" is defined in Section 2.1(c).
"Predecessor Entities" means the entities listed on Schedule 10.1(d).
"Property Assets" is defined in Section 2.1(d).
"Property Employees" is defined in Section 6.1.
"Purchase Price" is defined in Section 2.2.
"Real Property" means the Land and Improvements together.
"Rent Roll" is defined in Section 10.12(a).
"Seller's Deliveries" is defined in Section 5.2(a).
"Service Contracts" is defined in Section 9.3.
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind whatsoever (together with any
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any federal, state, local or foreign governmental or
taxing authority, including, without limitation, taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
occupancy, personal property, intangible property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
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compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs duties, tariffs and similar
charges; and any deficiency, interest or penalty imposed with respect to any of
the foregoing.
"Tax Return" means any return, form or other report required to be
filed with respect to Taxes, including any declaration of estimated tax and
information return.
"Threshold Amount" is defined in Section 13.2(b).
"Title Company" means First American Title Insurance Company.
"Venture Contracts" is defined in Section 19.13(a).
ARTICLE II
PURCHASE AND SALE OF MEMBERSHIP
INTERESTS
2.1 Sale of Membership Interests in Owner Entity.
(a) At Closing, subject to the provisions hereof, Seller hereby agrees
to sell, convey, transfer, assign and deliver to Buyer, free and clear of
Encumbrances, and Buyer hereby agrees to acquire and purchase from Seller, one
hundred percent (100%) of the membership interests in the Owner Entity (the
"Interests");
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(b) It shall be a condition to the obligations of Buyer to consummate
the transactions contemplated by this Agreement, unless such condition is waived
in writing by Buyer, that the Owner Entity at Closing shall be the sole owner of
all right, title and interest in and to: (i)(A) the fee interest in the land
described in Exhibit A-1, (the "Land"), (B) intentionally omitted and (C) all
buildings and other improvements located on the Land (collectively, the
"Improvements"), (ii) to the extent in effect at Closing, all presently existing
tenant leases listed on Schedule 10.12(a) together with all New Leases as
defined in Section 9.2(a) hereof (collectively the "Leases" and individually a
"Lease"), together with all amounts payable thereunder with respect to periods
from and after Closing and security deposits, (iii) all licenses, parking and
other occupancy agreements relating to the Improvements that are Permitted
Encumbrances, and (iv) all easements, if any, benefiting the Land or any part of
the Real Property and all rights and appurtenances pertaining thereto.
(c) At Closing and transfer of the Interests to Buyer, Buyer shall also
indirectly obtain all rights of Owner Entity in and to the following: (i) all
fixtures, equipment, and other personal property (both tangible and intangible),
owned or leased (directly or indirectly) by the Owner Entity as of the Effective
Date, located on or in the Improvements and exclusively used for the operation
of the Real Property, and specifically including the items listed on Exhibit C
(the "Personal Property")(1); provided that the Personal Property shall not
include the items listed on Exhibit D and the interest in any leased personal
property shall be transferred only if permitted by the lessor thereof; (ii) the
-----------
(1) Personal Property -if property of the Merchants Association at the Property
is also scheduled, this is for Buyer's information only. Seller does not own
such property.
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name "Cherry Hill Mall" and all trademarks associated with such name; and (iii)
all other property and property rights (both tangible and intangible), if any,
used in connection with the operation of the Real Property owned by the Owner
Entity (directly or indirectly) as of the Effective Date and related to the Real
Property including without limitation, (A) water and other riparian rights, (B)
air rights, (C) development rights, (D) permits, licenses and other governmental
approvals, (E) casualty insurance or condemnation proceeds as set forth in
Section 17.1 and 17.2 hereof, (F) real estate records and tenant files located
at the Real Property (including sepias, drawings, surveys, plans and
specifications), and all licenses, permits, certificates of occupancy to the
extent the foregoing are not excluded by Exhibit D, and (G) claims filed by
Owner Entity pursuant to a voluntary recall program by Central Sprinkler
Company, for which Seller filed a claim dated September 3, 2002 to have
replacements made by Central Sprinkler Company in accordance with the procedures
established for the voluntary recall program as the same are outlined at
▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. Seller agrees to cooperate with Buyer's
reasonable requests after Closing to produce other real estate records not
located at the Real Property but that are in Seller's possession or control.
(d) All of the properties and things described in this Section to be
owned by Owner Entity at Closing and to be transferred and sold to Buyer through
Seller's assignment to Buyer of its entire Interests are sometimes referred to
herein collectively as the "Property Assets".
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2.2 Purchase Price.
In consideration of the Interests to be sold to Buyer as described
herein, Buyer agrees to pay to Seller at Closing, in cash or other immediately
available funds, the purchase price (the "Purchase Price") of $201,600,000.00
less the amount of the Assumed Debt outstanding as of the Closing Date, subject
to further adjustments pursuant to Sections 3.4 and 9.2(b) of this Agreement or
as elsewhere expressly provided in this Agreement. Seller has advised Buyer that
certain of the Personal Property to be owned by Owner Entity at Closing,
currently listed on Exhibit C-1 (the "GE Capital Equipment") is leased from
General Electric Capital. Before Closing Seller agrees to acquire the GE Capital
Equipment listed on Exhibit C-1 from GE Capital, and if Seller is successful,
the Purchase Price to Seller shall be increased by the amount Seller or Owner
Entity pays to GE Capital for acquiring the GE Capital Equipment, which amount
shall be approximately the amount set forth on Exhibit C-1. The Purchase Price
as adjusted for all of the foregoing or as elsewhere expressly provided in this
Agreement shall be the "Adjusted Purchase Price".
2.3 Sale of Stock of Cherry Hill Beverage, Inc.
(a) In addition to the purchase of the Interests, Buyer, on its behalf
or through its designee, agrees to purchase all of the outstanding stock of
Cherry Hill Beverage, Inc. ("CHB"), a Maryland corporation wholly-owned by ▇▇▇▇
▇▇▇▇▇, an officer of Seller, for a purchase price of (i) One Dollar ($1) ("CHB
Stock Price") plus (ii) a payment of One Million One Hundred Seventy Thousand
Dollars ($1,170,000) ("RPMI Payment") to ▇▇▇▇▇ Property Management,
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Inc. in satisfaction of indebtedness owed by CHB (the CHB Stock Price and the
RPMI Payment are hereinafter, collectively, the "CHB Purchase Price"). CHB's
sole assets are two State of New Jersey Class C Retail Plenary Consumption
Liquor Licenses, License #'s 0409-33-012-007 and 0409-32-026-005 (herein
collectively the "Liquor Licenses"), held for the benefit of Cherry Hill Mall.
The CHB Purchase Price is in addition to and is not to be deemed part of the
base Purchase Price stated in Section 2.2. CHB is indebted to ▇▇▇▇▇ Property
Management, Inc. ("RPMI"), an affiliate of Seller, by reason of Judgement Notes
dated December 29, 2000 and February 27, 2001, in the principal amounts of
$590,000 and $565,000, respectively, (hereinafter, collectively, the "RPMI
Notes"). The RPMI Notes are secured by two Pledges of Corporate Stock executed
by ▇▇▇▇ ▇▇▇▇▇, both dated August 28, 2001 (hereinafter, collectively, the "RPMI
Stock Pledges"). Seller represents that, as of the date of execution of this
Agreement, the aggregate amount due and owing by CHB to RPMI under the RPMI
Notes is equal to the amount of the RPMI Payment.
(b) At the Closing under this Agreement, Seller shall cause ▇▇▇▇ ▇▇▇▇▇
to transfer, assign and sell all of the outstanding stock of CHB to Buyer or its
designee, free and clear of all Encumbrances, except for the RPMI Stock Pledges.
Immediately after the transfer of CHB stock to Buyer or its designee and, upon
payment to RPMI by Buyer or its designee of the RPMI Payment, Seller shall cause
RPMI to ▇▇▇▇ as "satisfied" the original RPMI Notes and return both the original
RPMI Notes and the RPMI Stock Pledges to Buyer or its designee, as the case may
be.
(c) Buyer also acknowledges that, in connection with a Lease Agreement
dated December 18, 2002 between Cherry Hill Center, LLC and ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇
▇▇▇▇, LLC t/a Bertucci's ("Bertucci's"), and pursuant to an Agreement for the
Sale and Purchase of Liquor License #0409-33--012-007 ("License #012") dated
January 8, 2003, between CHB and Bertucci's ("License Sale Agreement"), CHB has
agreed to sell and Bertucci's has agreed to buy License #012 for the purchase
price of $605,000.00, to be paid at closing by an initial down payment of
$50,000.00 and a corresponding Note for $555,000.00. In connection with the
closing on the sale of License #012 to Bertucci's, Bertucci's has delivered to
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, CHB's counsel, in escrow, the following documents
(collectively, the "Bertucci Documents"):
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(i) a Note by ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇ Hill, LLC in favor of Cherry
Hill Beverage, Inc. for $555,000;
(ii) a Guaranty of ▇▇▇▇▇▇▇▇'▇ Corporation for Note related to
purchase of Plenary Retail Consumption License No. 0409-33-012-007;
(iii) a Pledge of Interests and Security Agreement between
▇▇▇▇▇▇▇▇'▇ Corporation and Cherry Hill Beverage, Inc.;
(iv) an Irrevocable Option Agreement between Cherry Hill
Beverage, Inc. and ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇ ▇▇▇▇, LLC; and
(v) a Right of First Refusal Agreement between Cherry Hill
Beverage, Inc. and ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇ ▇▇▇▇, LLC.
Upon transfer of the stock in CHB to Buyer (or its designee), the
transferee shall be obligated to perform under the terms of the License Sale
Agreement pursuant to the terms thereof, and (A) Buyer shall indemnify and hold
harmless Seller and ▇▇▇▇ ▇▇▇▇▇ from and against any and all obligations of CHB
pursuant to the License Sale Agreement or the Bertucci Documents arising from
and after Closing, and (B) Seller shall indemnify and hold harmless Buyer and
Owner Entity from and against any and all obligation of CHB pursuant to the
License Sale Agreement or Bertucci Documents arising prior to Closing.
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ARTICLE III
DEPOSITS, ASSUMPTION OF LIABILITIES; ADJUSTMENTS AND PRORATIONS
3.1 Deposits.
(a) Buyer shall deposit with the Title Company the sum of $800,000
referred to hereinafter as the "Deposit." Title Company shall hold and/or apply
the Deposit as provided for elsewhere in this Agreement.
(i) Title Company, by signing this Agreement at the end hereof
where indicated, signifies its agreement to hold the Deposit for the purposes
contained in this Agreement. Title Company shall hold the Deposit in an interest
bearing bank account (or other investment agreed to by the parties) and the
interest thereon shall become part of the Deposit. Title Company shall not incur
any liability by reason of any action or non-action taken by it in good faith
and in accordance with this Agreement or pursuant to the judgment or order of a
court of competent jurisdiction. Title Company shall have the right to rely upon
the genuineness of all signatures, certificates, notices and instruments
delivered to it pursuant to this Article III.
(ii) Title Company shall not deliver the Deposit to any party
unless written demand is made therefor and a copy of such written demand is
delivered to the other party. If Title Company does not receive a written
objection from the other party to the proposed payment or delivery within three
(3) Business Days after such demand is served by personal delivery on such
party, Title Company is hereby authorized and directed to make such payment or
delivery. If Title Company does receive such written objection within such three
(3) Business Day period, Title Company shall forward a copy of the objections to
the other party and continue to hold the Deposit unless otherwise directed by
joint written instructions from the parties to this Agreement or by a judgment
of a court of competent jurisdiction.
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(iii) If a dispute arises as to the Deposit pursuant to this
Article III, Buyer and Seller shall each be responsible to reimburse Title
Company, upon demand, for one-half of the reasonable costs and expenses incurred
by Title Company in connection with acting in its capacity as escrow agent under
this Article III. In the event of litigation relating to the Deposit, whichever
of Seller or Buyer is not the prevailing party shall reimburse the prevailing
party for the costs and fees paid by the prevailing party on its own behalf.
(b) At Closing, Title Company shall return the Deposit to Buyer in cash
or immediately available funds. The Deposit shall be non-refundable except as
provided in Sections 4.2 and 4.3 hereof or as otherwise expressly provided in
this Agreement.
3.2 Assumption of Liabilities.
(a) Subject to the terms and conditions of this Agreement and except as
otherwise expressly provided herein, Buyer shall, on the Closing Date (either
directly or by virtue of acquiring the interests in the Owner Entity), assume
and agree to pay, perform, fulfill, and discharge when due the Assumed Property
Liabilities (except for Claims for which Seller is obligated to indemnify Buyer
pursuant to this Agreement) with respect to the Property Assets sold and
transferred (directly or indirectly) to Buyer.
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(b) From the Effective Date until the Closing, Seller and Buyer shall
cooperate and use commercially reasonable efforts to obtain releases of Seller,
and if applicable, any of its Affiliates from liabilities pursuant to the
Assumed Debt Loan Documents arising out of or caused by any act or omission
occurring at anytime from and after the Closing Date. At the Closing, Buyer or
an Affiliate of Buyer acceptable to the Lender shall assume and/or be
substituted for Seller or its Affiliates as guarantor or indemnitor, and Buyer
or such Affiliate shall execute such assumption or other documentation
reasonably requested by the holder of the Assumed Debt (and agreed to with Buyer
no later than five (5) days prior to the Closing Date) to effectuate the
aforesaid release of Seller or its Affiliates and to evidence the assumption
("Loan Assumption Documents"). Notwithstanding the foregoing, Buyer shall not be
obligated to pay any fee or charge or to provide any additional collateral in
order to obtain such releases from the holder of the Assumed Debt.
3.3 Debt Restructure.
If Buyer desires to place any mortgages on the Property Assets (other
than the Assumed Debt), in order to facilitate a like-kind exchange, provided
that such financing would not create adverse tax consequences for Seller, Seller
shall on request of Buyer cooperate with Buyer and take reasonable steps to
accommodate such request, including without limitation, execution of documents
to accomplish the same, and assistance with the estoppels referenced in Section
9.6 provided that Seller shall have no liability for any such financing or by
executing any such documents.
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3.4 Adjustments and Prorations.
At Closing, Seller and Buyer shall make adjustments and prorations in
the manner set forth in Schedule 3.4.
ARTICLE IV
FAILURE TO CLOSE
4.1 Buyer's Default.
If Seller and/or its Affiliates have complied with all of the covenants
and conditions contained herein and in the Concurrent Contracts and is ready,
willing and able to (directly or indirectly) sell and transfer the Interests to
Buyer in accordance with this Agreement and Buyer or its Affiliates or New
Castle for any reason fails to consummate this Agreement in breach of its or
Buyer's Affiliates' or New Castle's obligations to do so hereunder or under the
Concurrent Contracts, then the parties hereto agree as follows:
SELLER MAY, BY WRITTEN NOTICE TO BUYER AND TITLE COMPANY, AS ITS SOLE
REMEDY TERMINATE THIS AGREEMENT AND RECEIVE THE DEPOSIT AS SELLER'S LIQUIDATED
DAMAGES AND AS SELLER'S SOLE AND EXCLUSIVE REMEDY FOR THE BREACH OF THIS
AGREEMENT BY BUYER. IT IS EXPRESSLY UNDERSTOOD AND AGREED BETWEEN SELLER AND
BUYER THAT SELLER'S ACTUAL DAMAGES FOR ANY SUCH BREACH BY BUYER HEREUNDER WOULD
BE SUBSTANTIAL BUT EXTREMELY DIFFICULT TO ASCERTAIN.
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Thereafter, neither party shall have any further rights or obligations
with respect to the other under this Agreement, except for Buyer's or its
Affiliates' indemnification obligations under the Covenants Surviving
Termination. The parties agree that the Deposit amount bears a reasonable
relationship to the potential injury likely to be sustained in the event of such
a breach and that such amount is intended by the parties to provide just
compensation in the event of such a breach and is not intended to compel
performance or to constitute a penalty for nonperformance.
4.2 Seller's Default.
If Buyer and its Affiliates and New Castle have complied with all of
the covenants and conditions contained herein and in the Concurrent Contracts
and is ready, willing and able to pay the Purchase Price to Seller and
consummate the transactions contemplated hereunder in accordance with this
Agreement and Seller or its Affiliates for any reason fails to consummate this
Agreement or any of the Concurrent Conflicts in breach of its obligations to do
so, Buyer may as its sole remedy terminate this Agreement whereupon the Deposit
shall be promptly returned to Buyer and Seller shall promptly reimburse Buyer
for its Due Diligence Expense and any and all costs and expenses incurred in
recovering the Deposit and the Due Diligence Expense, including without
limitation legal fees and court costs. Buyer shall not be entitled to the remedy
of specific performance. Upon termination of this Agreement and the payment to
Buyer of the Deposit and its Due Diligence Expense (and costs of recovery) as
provided above, neither party shall have any further rights or obligations with
respect to the other under this Agreement, except for the Covenants Surviving
Termination.
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4.3 Disposition of Deposit upon Termination and Lack of Satisfaction of
Conditions.
If Seller terminates this Agreement as a result of the lack of
satisfaction of any one or more of the conditions to Seller's obligations set
forth in Section 8.1 or elsewhere in this Agreement and the lack of satisfaction
of a condition is not related to Buyer's or Buyer's Affiliates' or New Castle's
breach or default hereunder or under any of the Concurrent Contracts, or Buyer
terminates this Agreement as a result of the lack of satisfaction of any one or
more of the conditions to Buyer's obligations set forth in Section 7.2, 7.3, 7.4
or Section 8.2 or elsewhere in this Agreement, and the lack of satisfaction of a
condition is not related to Buyer's or Buyer's Affiliates' or New Castle's
breach or default hereunder or under any of the Concurrent Contracts, then the
Deposit shall be promptly returned to Buyer.
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ARTICLE V
CLOSING; DELIVERIES AT CLOSING
5.1 Closing.
Subject to the terms of this Agreement, closing of the transaction
contemplated by this Agreement (the "Closing") shall take place at the offices
of ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at
10:00 a.m., eastern time, on (i) April 24, 2003, time being of the essence, or
(ii) such earlier date as is agreed to in writing by Seller and Buyer (the
"Closing Date").
5.2 Deliveries to be Made on the Closing Date.
(a) Seller's Deliveries: Seller shall deliver or cause to be delivered
to Buyer on the Closing Date the following documents (collectively, "Seller
Deliveries"):
(i) Assignment. An assignment by Seller of all the Interests
in the Owner Entity to Buyer, with warranties against Encumbrances, in form
reasonably acceptable to Buyer, and a resignation of the officers and managers
of the Owner Entity.
(ii) FIRPTA Affidavit. The affidavit referred to in Section
1445 of the Code with all pertinent information confirming that Seller and, as
appropriate, the Owner Entity are not a foreign person, trust, estate,
corporation or partnership.
(iii) Termination Agreements. Executed termination agreements
for any and all management contracts then in existence with respect to the Real
Property.
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(iv) Seller's Authority. Such proof and evidence of Seller's
authority and authorization to enter into the transactions contemplated hereby,
and such proof of the power and authority of the individual(s) executing and/or
delivering any instruments, documents or certificates on behalf of any entity to
act for and bind such entity, as may be reasonably required by the Title Company
or Buyer, including, without limitation, any and all consents of any members,
directors, partners, limited partners or other persons whose consent to the
transactions contemplated hereby is required.
(v) Good Standing Certificates. Good standing certificates (or
analogous documents) with respect to the Owner Entity and Seller from the
Secretary of State or state taxing authority of the state in which each such
entity is organized and authorized to conduct business.
(vi) Tenant Notices. Notices to tenants, in form reasonably
acceptable to Buyer, advising them of the transfer and directing payment of rent
and other charges to a designated representative of Buyer.
(vii) Possession. Possession of the Property Assets, subject
only to the Permitted Encumbrances and possessory rights of tenants under
Leases, with all keys, combinations, passes, and codes to all locks and security
devices.
(viii) Documents. Original signed instruments of all Leases
and Service Contracts, and to the extent in the possession and control of Seller
or its Affiliates, all records and files relating to the operation and
maintenance of the Property Assets, including real estate records, tenant files,
permits, licenses, sepias, drawings, plans and specifications, tenant
correspondence, current tax and utility bills, billing records, repair and
maintenance records, and other documents, records and personal property included
within Property Assets.
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(ix) COREA Notices. Such notice to the other parties to the
▇▇▇▇▇▇ reflecting the change in ownership and such other matters as may be
required by the ▇▇▇▇▇ or as Buyer may otherwise reasonably request. Buyer shall
prepare the notices and submit them to Seller for signature.
(x) Title Certification. Such certificates and/or indemnities
as may be reasonably required by the Title Company in order to insure title to
the Real Property as required by this Agreement provided such certificates do
not expand or increase Seller's liability hereunder, including, but not limited
to, title Affidavits customary in similar transactions.
(xi) Warranty Certificate. The certificate required by Section
8.2(a)(i) and (ii).
(xii) Rent Roll. A Rent Roll updated to within five (5) days
of the date of Closing and certified by Seller to be true and correct and
complete.
(xiii) Intentionally Omitted.
(xiv) Organizational Documents. Originals (or if not
available, copies) certified by Seller to be complete and correct, of all
organizational documents of Owner Entity and of any entity that may be deemed a
predecessor of Owner Entity (including, but not limited to, certificates of
formation or incorporation, operating agreements, by-laws and articles of
merger).
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(xv) Guaranty Agreement. If the Seller is not The ▇▇▇▇▇
Company, L.P., A Guaranty Agreement, in the form of that attached as Exhibit M,
duly executed by The ▇▇▇▇▇ Company L.P.
(xvi) Other Documents and Deliveries. Such other documents or
instruments as may be reasonably required by Buyer or the Title Company to
effectuate the Closing, provided such documents or instruments shall not expand
or increase Seller's liability hereunder.
(b) Buyer's Deliveries. Buyer shall deliver or cause to be delivered to
Seller on the Closing Date the following documents (collectively, "Buyer's
Deliveries"):
(i) Purchase Price. At Closing, Buyer shall pay the Adjusted
Purchase Price to Seller by wire transfer in the manner directed by Seller.
(ii) Buyer's Authority. Such proof and evidence of Buyer's
authority and authorization to enter into the transaction contemplated hereby,
and such proof of the power and authority of the individual(s) executing and/or
delivering any instruments, documents or certificates on behalf of any entity to
act for and bind such entity, as may be reasonably required by the Title Company
or Seller, including, without limitation, any and all consents of any members,
directors, partners, limited partners or other persons whose consent to the
transactions contemplated hereby is required in accordance with Buyer's internal
organizational structure.
(iii) Good Standing Certificates. Good standing Certificates
(or analogous documents) of Buyer from the Secretary of State or state taxing
authority of the state in which such entity is organized and authorized to
conduct business.
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(iv) Loan Assumption Documents. Executed copies of the Loan
Assumption Documents.
(v) Warranty Certificate. The certificates required by Section
8.1(a) and (b).
(vi) Intentionally Omitted.
(vii) Guaranty Agreement. A Guaranty Agreement, in the form of
that attached as Exhibit N, duly executed by PREIT Associates, L.P.
(viii) Other Documents and Deliveries. Such other documents or
instruments as may be reasonably required by Seller, the Lender, or the Title
Company to effectuate Closing, provided such documents or instruments shall not
expand or increase Buyer's or Owner Entity's liability hereunder.
ARTICLE VI
EMPLOYMENT MATTERS
6.1 Employees.
As used in this Agreement, the term "Property Employees" shall mean all
employees of Owner Entity, all employees of Seller, and all employees of one or
more Affiliates of Seller working at or for the Real Property. Seller has
provided Buyer with Schedule 6.1 and the parties have initialed the same,
showing all Property Employees as of the date of this Agreement together with
their current salaries, their years of service, and certain other information
including severance payable pursuant to Seller's policies as of the anticipated
Closing Date. From and after the Effective Date, Seller shall cooperate with
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Buyer so that Buyer may review the personnel files and records of the current
Property Employees and conduct personal interviews and background checks of such
Property Employees. Except for those Property Employees who do not satisfy
Buyer's customary criminal history, credit and right to work investigations, and
except for those Property Employees identified by Seller or Buyer in writing
before the Effective Date ("Non-Transferred Employees"), Buyer or its Affiliate
shall make an offer to employ all Property Employees in comparable positions to
those held by the Property Employees in accordance with Buyer's or its
Affiliates customary terms of employment, except that Buyer shall offer to
employ such Property Employees at the same salary or wage rate (without regard
to benefits) that they are presently paid by Seller or its Affiliates as shown
on Schedule 6.1 and with the same employee benefits as are customarily provided
by Buyer to its own employees in comparable positions. All current Property
Employees to whom Buyer or its Affiliate makes an offer of employment and who
accept Buyer's offer are referred to herein as the "Hired Employees." With
respect to Hired Employees who have been identified as bonus eligible under
Seller's policies on a Schedule initialed by the parties ("Bonus Employee"),
such employees shall be hired at their current salary and with the same bonus
potential for calendar year 2003 only but shall not be entitled to a vehicle.
Effective at midnight on the Date of Closing, Seller and its Affiliates shall
terminate the employment by Seller or its Affiliates of all Property Employees
and Buyer or its Affiliates shall hire all Hired Employees so there is no gap in
such employees' employment. Seller hereby agrees to pay in full or to cause to
be paid in full to all Property Employees, all accrued wages, vacation pay,
bonuses, notice pay, severance pay and other benefits, entitlements and expenses
owed to the Property Employees as a result of their employment by Seller and its
Affiliates including 2002 year bonuses to the Bonus Employees, in accordance
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with Seller's policies and any applicable federal, state or local laws, provided
that Seller's position is that no severance pay or notice pay is due to any
Hired Employee. Seller shall be responsible for any benefit claims of Property
Employees made with respect to treatments, expenses, covered services and/or
benefits rendered or received by or with respect to Property Employees prior to
the Date of Closing under Seller's Flexible Spending Account Plan. Buyer or its
Affiliates shall continue to employ all Hired Employees for at least six (6)
months after the Date of Closing ("Employment Period"), and for Bonus Employees,
through the 2003 calendar year ("Bonus Period"), provided that Buyer or its
Affiliates shall be entitled to terminate the employment of any such Hired
Employee (including a Bonus Employee) for cause as determined in accordance with
Buyer's policies and any applicable state or federal law in the reasonable
discretion of Buyer or its Affiliates. With respect to any Bonus Employees,
Seller shall pay or credit to Buyer at Closing an amount equal to the average
annual bonus paid to each of such employees for calendar years 2000 through 2002
as shown on the schedule initialed by the parties (the "Average Bonus")
multiplied by one-third, and unless such Bonus Employee is terminated for cause,
Buyer shall, with respect to any such employee who meets his or her performance
goals, targets and objectives for 2003 established by Seller and approved by
Buyer (which approval shall not be withheld except in extraordinary
circumstances), pay to such employees, in the first quarter of 2004, a bonus at
least equal to the Average Bonus for such employees. As of January 1, 2004,
Buyer and its Affiliates may in their sole discretion establish bonus objectives
and potentials for the Bonus Employees in accordance with Buyer's policies. If
Buyer or its Affiliates terminate the employment of a Hired Employee other than
for cause before the end of the Employment Period, or terminates the employment
of a Bonus Employee other than for cause before the end of the Bonus Period,
Buyer shall be obligated to indemnify Seller and its Affiliates from and against
any Claim by such Hired Employee (i) for severance pay in the amount shown on
Schedule 6.1 and (ii) as to Bonus Employees, also for the amount of such
Employee's Average Bonus, together with Seller's costs of defense, including
attorney's fees incurred in defending against any such claim.
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Notwithstanding the foregoing, Buyer acknowledges that certain
employees are covered by the collective bargaining agreement listed on Schedule
10.15(d) and Buyer hereby agrees to employ all such employees under the terms
and conditions of the collective bargaining agreement, or if the collective
bargaining agreement permits, cause such employees to be employed.
6.2 Vesting.
To the extent that service is relevant for purposes of eligibility or
vesting under any employee 401(k) plan or health insurance plan or other
employee benefit plan established or maintained by Buyer or its Affiliates for
the benefit of Buyer's employees on or after the Closing Date, such plan shall
credit the Hired Employees with a period of service equal to that shown as the
"years or service" for such Hired Employee on Schedule 6.1.
6.3 Indemnity.
Notwithstanding any provision contained in this Agreement to the
contrary, Seller and Buyer shall indemnify, reimburse and hold harmless each
other and their respective Affiliates and any of their respective directors,
officers, agents and employees from and against any and all Losses arising out
of or otherwise in respect of any failure of Seller or Buyer or their respective
Affiliates to discharge its obligations under this Article VI. The provisions of
this Article VI shall survive the Closing.
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6.4 No Third Party Beneficiaries.
Seller and Buyer do not intend that any Property Employees or Hired
Employees be third party beneficiaries or entitled to enforce the provisions of
this Agreement.
ARTICLE VII
BUYER INSPECTIONS
7.1 Document and Property Inspection.
Seller has provided certain materials concerning the Property Assets to
Buyer and has made and shall make available at the Real Property or at Seller's
offices in Columbia, Maryland for Buyer's inspection or review and copying the
leases, the tenant files, and other documents and other items relating to the
Property Assets as shown on the attached Exhibit E. Seller has also made its
environmental files available for review by Buyer's environmental consultants.
Seller has made and shall make the Property Assets available for
inspection by Buyer and Buyer has and shall, at Buyer's risk, conducted such
engineering and/or market and economic feasibility studies of the Property and
undertaken such physical inspections of the Property Assets as Buyer has deemed
appropriate.
Buyer agrees to comply with the Confidentiality Agreement and the
Access Agreement with respect to the foregoing materials and further agrees that
if for any reason the Closing is not consummated, Buyer will immediately return
to Seller all materials furnished to Buyer by Seller and its Affiliates pursuant
to the Confidentiality Agreement or this Section 7.1.
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Except for the warranties expressly set forth in this Agreement, Seller
makes no representations or warranties as to the truth, accuracy or completeness
of any materials, data or other information supplied to Buyer in connection with
Buyer's inspection of the Property Assets (e.g., that such materials are
complete, accurate or the final version thereof, or that all such materials are
in Seller's possession). It is the parties' express understanding and agreement
that such materials are provided only for Buyer's convenience in making its own
examination and determination concerning the Property Assets, and, in doing so,
except as expressly set forth in this Agreement, Buyer has relied exclusively on
its own independent investigation and evaluation of every aspect of the Property
Assets and not on any materials supplied by Seller or its Affiliates. Except as
expressly set forth in this Agreement, Buyer expressly disclaims any intent to
rely on any such materials provided to it by Seller or its Affiliates in
connection with its inspection other than the warranties set forth in this
Agreement and agrees that it shall rely solely on its own independently
developed or verified information.
In connection with any entry by Buyer or its agents or contractors on
the Real Property prior to Closing, Buyer agrees to indemnify Seller, Owner
Entity, and their Affiliates as provided in the Access Agreement.
Buyer acknowledges that notwithstanding Buyer's continuing feasibility
studies, Buyer shall not have the right to terminate this Agreement as a result
thereof except as provided in this Agreement.
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7.2 Feasibility Period.
In the event that Buyer's environmental consultants have determined in
their reasonable judgment before the Effective Date that there is a need for a
Phase II Environmental Site Assessment ("Phase II ESA") of the Real Property,
and Buyer has notified Seller thereof together with the reasons therefor, then
subject to the provisions of the Access Agreement, Buyer shall be permitted
until March 20, 2003 to conduct its Phase II ESA (the "Feasibility Period"). On
or before the last day of the Feasibility Period, if, but only if, (a) the Phase
II ESA discloses evidence of any one or more "Releases" (as such term is defined
by Environmental Law) of Hazardous Materials or a recognized environmental
condition on or affecting the Real Property in violation of Law, for which the
cost to Buyer of remediation would exceed $100,000 in the aggregate and (b) the
Release is not described in the ESAs and information provided to Buyer and
listed on Schedule 10.9, Buyer may terminate this Agreement by providing a
written notice to Seller so stating together with a copy of the Phase II ESA and
an estimate of the remediation costs. Upon receipt of such notice, unless Seller
nullifies the termination as described below, this Agreement shall terminate and
the Deposit shall be returned to Buyer and, neither party shall have any
obligation to the other, except for the Covenants Surviving Termination. If
Buyer fails to provide such notice of termination on or before the last day of
the Feasibility Period, Buyer shall be deemed to have waived its right to
terminate this Agreement pursuant to this Section 7.2 and this Agreement shall
remain in full force and effect. If Buyer terminates this Agreement in
accordance with this Section 7.2, Seller shall be able to nullify such
termination by notifying Buyer on or before March 31, 2003, that Seller shall
either (1) reduce the Purchase Price by the estimated remediation cost, or (2)
together with The ▇▇▇▇▇ Company, L.P. agree with Buyer and Buyer's lenders (A)
to pay for the remediation if, as and when it is performed, and (B) to provide
guarantees or other assurance reasonably acceptable to such lenders with respect
to such remediation.
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7.3 Survey Contingency.
Seller has provided to Buyer a copy of the existing Survey for the Real
Property (the "Existing Survey"). Buyer may, but shall not be obligated to
obtain, at its own expense, an updated survey of the Real Property. If the
updated survey discloses matters affecting title to the Real Property not shown
on the Existing Survey, not part of the Permitted Encumbrances and not readily
apparent from a physical inspection of the Real Property that are objectionable
to Buyer ("Additional Matters Objection"), Buyer shall notify Seller of such
objection, in writing, on or before March 20, 2003. This contingency shall be
deemed satisfied or waived if Seller has not received written notice of Buyer's
Additional Matters Objection on or before March 20, 2003. Any such written
notice shall state all of Buyer's objections with specificity and shall be
limited to matters that currently or in the future may materially interfere with
the operation or development of the Real Property as a shopping mall. Upon
receipt of such notice, Seller may, but shall not be obligated to, if curable,
elect to cure any such objections by giving notice of such election to Buyer
within ten (10) Business Days after receipt of Buyer's notice. Failure of Seller
to give such notice shall mean Seller has elected not to cure. If Seller cures
such obligation before Closing, this Agreement shall continue in full force and
effect. If Seller elects to cure such objections and if such objections are
curable but not cured on or before Closing, this Agreement shall nevertheless
continue in force and effect, and if the Closing shall take place Seller shall
agree in writing with Buyer to continue such cure after the Closing. If Seller
chooses not to cure such objections, Buyer may elect to terminate this Agreement
by written notice given within ten (10) Business Days after Seller notifies (or
is deemed to have notified) of its election not to cure, in which event the
Deposit shall be returned to Buyer, and neither party shall have any further
obligations hereunder except for the Covenants Surviving Termination.
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If requested by Seller, Buyer will confirm in writing whether this
survey contingency has been satisfied and, if so, the date on which it was
satisfied.
7.4 Title Contingency.
At Closing, Owner Entity's title to the Real Property shall be good and
marketable and subject only to the Permitted Encumbrances. Seller shall
cooperate with Buyer and Title Company and take all actions reasonably necessary
to induce Title Company to issue a title insurance policy in accordance with the
foregoing but Seller shall not be obligated to incur any additional liability as
result thereof. Except for equipment leases to be assigned, Seller agrees to
remove or discharge prior to Closing any Encumbrance created by Seller or Owner
Entity or imposed against the Property Assets (or any of them) which is not a
Permitted Encumbrance or at Seller's option (and with Buyer's approval in
Buyer's reasonable judgment), cause the Title Company to insure over such
Encumbrance. If title to the Real Property is not as required above, Buyer shall
have the option of accepting such title as exists and abating the Purchase Price
to the extent of Encumbrances of an ascertainable amount, or if the Encumbrance
is of a nature that it would materially interfere with the use, development or
value of the Real Property as a shopping mall, or with Buyer's ability to obtain
financing with respect thereto of terminating this Agreement, whereupon the
Deposit shall be returned to Buyer, Seller shall pay Buyer the Due Diligence
Expenses, and neither party shall have any obligation to the other except for
the Covenants Surviving Termination.
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7.5 Property Financial Statements.
Seller has delivered to Buyer prior to the Effective Date such audited
separate property financial statements with respect to the Property as are
sufficient to satisfy the requirements of SEC Regulation S-X ss.210.3-14 as may
be in Seller's possession. To the extent Seller does not have such audited
financial statements, Seller shall cooperate with Buyer to facilitate the
preparation at Buyer's sole expense, prior to Closing (or at Buyer's election
thereafter) of such financial statements as are necessary in order for Buyer to
satisfy the requirements of SEC Regulation S-X ss.210.3-14.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to Obligations of Seller.
The obligations of Seller to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction or written waiver by
Seller, at or prior to the Closing, of each of the following conditions, and if
any of such conditions are not satisfied or waived in writing by Seller at or
prior to Closing, Seller may terminate this Agreement:
(a) Representations and Warranties. The representations and warranties
of Buyer contained in this Agreement that are qualified as to materiality shall
be true and correct as of the Closing Date (other than such representations and
warranties made as of a certain date, which shall be true and correct as of such
certain date) and those that are not so qualified shall be true and correct in
all material respects as of the Closing Date (other than such representations
and warranties as are made as of a certain date, which shall be true and correct
in all material respects as of such certain date), and Seller shall have
received a certificate of Buyer to such effect signed by a duly authorized
officer of Buyer;
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(b) Covenants. All covenants contained in this Agreement to be complied
with by Buyer on or before the Closing shall have been complied with in all
material respects, and Seller shall have received a certificate of Buyer to such
effect signed by a duly authorized officer of Buyer;
(c) No Order. No governmental authority or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and has the effect of making the
transactions contemplated by this Agreement illegal or otherwise restraining or
prohibiting consummation of such transactions;
(d) Ancillary Agreements. Buyer shall have duly executed and delivered
to Seller counterparts of each Ancillary Agreement described in Section 5.2(b)
and any other agreement, document or certificate it is required to execute and
deliver by this Agreement;
(e) Consents. Seller shall have received the consents to transfer the
Interests described in Schedules 10.3(a) and 10.3(b); and
(f) Intentionally Omitted.
(g) New Castle shall have satisfied the conditions set forth in Section
8.2(a)(viii) of the Christiana Contract.
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8.2 Conditions to Obligations of Buyer.
(a) The obligations of Buyer to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction or written
waiver by Buyer, at or prior to the Closing, of each of the following
conditions, and if any of such conditions are not satisfied or waived in writing
by Buyer at or prior to Closing, Buyer may terminate this Agreement:
(i) Representations and Warranties. The representations and
warranties of Seller contained in this Agreement that are qualified as to
materiality shall be true and correct as of the Closing Date (other than such
representations and warranties which are made as of a certain date, which shall
be true and correct as of such certain date), and the representations and
warranties of Seller contained in this Agreement that are not so qualified shall
be true and correct in all material respects as of the Closing Date (other than
such representations and warranties made as of a certain date, which shall be
true and correct in all material respects as of such certain date), and Buyer
shall have received a certificate of Seller to such effect signed by a duly
authorized officer thereof;
(ii) Covenants. All covenants contained in this Agreement to
be complied with by Seller or the Seller Affiliates on or before the Closing
shall have been complied with in all material respects, and Buyer shall have
received a certificate of Seller to such effect signed by a duly authorized
officer thereof;
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(iii) No Order. No governmental authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and has the effect of
making the transactions contemplated by this Agreement, illegal or otherwise
restraining or prohibiting consummation of such transactions;
(iv) Consents and Estoppels. Buyer shall have received the
following: (A) (intentionally omitted), (B) a duly executed Estoppel Certificate
in the form attached as Exhibit K from the holder(s) of the Assumed Debt; (C)
duly executed Estoppel Certificates substantially in the form attached as
Exhibit O from all tenants listed on Schedule 8.2 (the "Anchor Tenants") and (D)
duly executed Estoppel Certificates substantially in the form attached as
Exhibit J from the parties to any ▇▇▇▇▇; and (E) consents or waivers in form
reasonably satisfactory to Buyer from the parties to the documents identified on
Schedules 10.3(a) and 10.3(b). Notwithstanding the reference to the forms
attached as Exhibits I, J, K and O, if the party from whom the estoppel is
sought submits an estoppel in the form customarily used by such party, then the
fact that the referenced form is not used shall not, in itself, cause such
estoppel to fail to satisfy this condition, provided that such estoppels shall,
at a minimum, confirm that the Ground Lease, loan documents, lease or ▇▇▇▇▇
which is the subject of the estoppel has not been modified or amended in any
material respect other than as heretofore disclosed by Seller to Buyer and, that
there is no material default by Owner Entity (or its Affiliates) or such party
pursuant to such Ground Lease, loan documents, lease or ▇▇▇▇▇ unless, as to any
such default, if such default is capable of cure, Seller agrees with Buyer prior
to Closing to promptly remedy the same at Seller's sole cost and expense, which
obligation shall survive Closing.
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(v) Intentionally Omitted.
(vi) Seller Deliveries. Seller shall have made all of the
Seller Deliveries set forth in Section 5.2(a) hereof or required by other
provisions of this Agreement.
(vii) Ancillary Agreements. Seller shall have duly executed
and delivered to Buyer counterparts of any Ancillary Agreements as required
under Section 5.2.
(viii) New Castle. New Castle shall have satisfied the
conditions set forth in Section 8.2(a)(viii) of the Christiana Contract.
(ix) May Company Waiver. Seller shall have delivered to Buyer
a written waiver by the May Company of any rights of first refusal that they
hold to purchase the Real Property as a result of the transaction contemplated
by this Agreement (including the Exchanges contemplated by Section 18.1) in form
sufficient to induce the Title Company to affirmatively insure Buyer against the
exercise of such rights for the transaction contemplated by this Agreement.
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ARTICLE IX
MAINTENANCE, IMPROVEMENT AND LEASING OF THE PROPERTY
9.1 Maintenance and Improvement.
Between the Effective Date and the Closing Date, Seller or the Owner
Entity shall maintain the Real Property and Personal Property in the same state
as it currently exists, reasonable wear and tear excepted, and subject to the
provisions of Section 9.2 hereof, shall comply with and perform all work
required to be done under the terms of any lease or agreement or requirement of
Law relating to the Real Property, and shall timely make all necessary repairs,
maintenance and replacements of equipment the same as though Seller were not
entering into the transactions contemplated hereby and shall keep the Real
Property fully insured against fire and such other risks as are customarily
insured by extended coverage (which insurance shall be cancelled at Closing at
Seller's expense). The Owner Entity shall not enter into any new contract
relating to the operation or maintenance of the Real Property or modify the
terms of any such existing contract without Buyer's consent, which consent shall
not be unreasonably withheld or delayed, unless the same may be canceled without
penalty or cost on thirty days' or less notice, in which event no Buyer consent
shall be required provided a copy thereof is given to Buyer before the same is
signed and a fully executed counterpart is delivered to Buyer within five (5)
days after signing but no later than three (3) Business Days prior to Closing.
9.2 Leasing.
(a) Approval. From the Effective Date until the Closing, Seller shall
keep Buyer informed of the terms and conditions of any proposed new leases to be
entered into after the Effective Date hereof or modifications or extensions to
Leases, shall seek Buyer's input regarding the feasibility and structure of the
proposed lease arrangements and any leasing commissions payable as a result
thereof, and
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shall provide copies of all such documents to Buyer when executed. From the
Effective Date, the Owner Entity shall not enter into any new leases or
modifications or extensions to Leases with terms of more than three (3) months
without the prior written approval of Buyer, which approval shall not be
unreasonably withheld or delayed. The essential business terms thereof shall be
reviewed and approved or rejected by Buyer within five (5) Business Days after
receipt thereof by Buyer. Failure to approve or reject such proposed lease terms
within such period shall be deemed approval by Buyer. "New Leases" is defined as
leases (or modifications or extensions) executed after the Effective Date that
have been approved or deemed approved by Buyer as provided in this Section
9.2(a). When submitting any lease or document to Buyer for approval or
information pursuant to this Section 9.2(a), Seller shall submit together with
such lease or document all available and relevant tenant information together
with all leasing commission obligations and an itemization of all tenant
improvement costs and concessions applicable thereto.
(b) Tenant Improvements and Commissions.
(i) If Closing is consummated, Buyer shall assume the
obligation for all tenant improvement costs, tenant allowances and unrelated
third party leasing commissions with regard to any New Leases, and (b) the
modification, extension or renewal of any Lease on or after the Effective Date,
provided that with regard to any modification or extension not required by the
terms of the Lease, the same shall have been approved by Buyer to the same
extent as would be required pursuant to Section 9.2(a); and provided further,
that to the extent Seller receives prior to Closing lease payments for the
Leases giving rise to such tenant improvement costs, tenant allowances or third
party leasing commissions, such tenant improvement costs, tenant allowances and
third party leasing commissions shall be shared pro rata by Seller and Buyer
based upon the ratio that the base rent received by Seller bears to the
aggregate base rent payable during the original lease term (and if Seller's
share is not paid prior to Closing, the Purchase Price shall be reduced by the
amount thereof). In the event Seller or the Seller Affiliates have paid prior to
Closing any such tenant improvement costs, tenant allowances or leasing
commissions which are the obligation of Buyer under this Section or Section
9.2(b)(ii), then the Purchase Price hereto shall be increased by such amount at
Closing.
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(ii) Except as provided in Section 9.2(b)(i) above, Seller
shall be responsible for the payment of all tenant improvement costs, tenant
allowances and leasing commissions due under any Lease or modification,
extension or renewal of any Lease; provided however, if Closing is consummated
and a tenant improvement cost, tenant allowance or unrelated third party leasing
commission is not then currently due and the obligation to pay such cost,
allowance or commission shall arise only as the result of a tenant foregoing an
option to terminate its Lease or a tenant exercising a right to extend the Lease
or expand the premises subject to the Lease, then such tenant improvement costs,
tenant allowance or unrelated third party leasing commission shall be Buyer's
obligation (but only to the extent allocable to a Lease term subsequent to
Closing). The provisions of this Section 9.2(b)(ii) shall survive Closing
hereunder.
9.3 Service and Maintenance Contracts.
Seller represents and warrants to Buyer that (a) attached hereto as
Exhibit G is a list of all service and maintenance contracts applicable to the
Property, and (b) true, correct and complete copies of such contracts have been
provided to Buyer (the "Service Contracts"). On or before March 15, 2003 Buyer
shall identify to Seller which of such contracts Buyer desires to assume and
which of such contracts Buyer desires, if possible, to have terminated prior to
Closing. Without being obligated to incur any liability, Seller shall use
diligent efforts to have terminated prior to Closing or as soon thereafter as
may be effected in accordance with the terms thereof, all Service Contracts that
Buyer identifies for termination. As part of the Assumed Property Liabilities,
the Buyer shall assume the obligations under all Service Contracts which (i)
Buyer does not identify for termination and (ii) even if so identified,
nevertheless cannot be terminated prior to Closing in accordance with their
terms (collectively the "Assumed Service Contracts"). Notwithstanding the
foregoing, Seller shall terminate all Service Contracts with a Seller Affiliate
at Seller's sole cost and expense, and no such Service Contract shall be or
become an Assumed Service Contract.
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9.4 Additional Covenants of Seller.
Except as otherwise provided in Sections 9.1 and 9.2(a) and 9.3:
(a) after the Effective Date, Seller and the Owner Entity shall (i) not
terminate or amend or modify any Leases, Service Contracts or Material Contracts
in any material respect, including waiving any material rights of Seller or the
Owner Entity or granting any material consents or approvals under Leases,
Service Contracts or Material Contract without the prior written consent of
Buyer, which consent shall not be unreasonably withheld; provided that, if Buyer
has failed to respond within five (5) Business Days after receipt of a request
therefor by Buyer, then Buyer's consent shall be deemed to have been given and
further provided that Seller and the Owner Entity shall be entitled without
Buyer's consent in the ordinary course of business to enforce any of their
rights under the Leases and Service Contracts in the event of a default
thereunder, provided that Seller and Owner Entity shall not terminate any Lease
of over 10,000 square feet without Buyer's prior written consent, which consent
shall not be unreasonably withheld; and
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(b) after the Effective Date, Seller and the Owner Entity shall (i) not
sell or otherwise dispose of any part of the Property Assets, provided that
items of Personal Property may be replaced by assets of equal value; (ii) not
consent to any changes in zoning or land use classification; (iii) not market
the Property Assets for sale or enter into discussions or negotiations with
respect to the sale of the Property Assets; (iv) within five (5) Business Days
from the receipt thereof, send Buyer copies of all notice of violations of law
received with respect to the Property Assets from any governmental authority,
all default notices received from any tenant or party to a Material Contract in
connection with the Property Assets, and all written notices of claims, actions,
proceedings or investigations pending or threatened against Seller or the Owner
Entity related to the Property Assets; and (v) concurrently with the giving
thereof by Seller, send Buyer copies of any default notice given by the Owner
Entity to any tenant or party to a Material Contract in connection with the
Property Assets.
9.5 Management Agreements.
At or prior to Closing, Seller shall cause to be terminated and
canceled any property management agreement relating to the Real Property.
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9.6 Estoppels and Consent and SNDAs.
Seller shall endeavor to obtain and deliver to Buyer, no later than
five Business Days prior to the Closing Date, the estoppel certificates
specified in Sections 8.2(a)(iv)(A)(B),(C), (D) and (E) hereof. Seller shall
assist Buyer in endeavoring to obtaining prior to Closing, at Buyer's expense,
any estoppel certificates and subordination, non-disturbance and attornment
agreements that Buyer desires or is required to obtain in connection with any
financing that Buyer desires to obtain.
9.7 Existing Debt.
Between the date hereof and the Closing Date, Seller shall not modify
the Assumed Debt Loan Documents or the ▇▇▇▇▇ or place any further Encumbrances
against the Property Assets without the prior written consent of Buyer. Buyer
hereby agrees to the addition of a Second or Third Mortgage encumbering the Real
Property and securing existing debt of the Seller in the principal amount of
$60,000,000 and on terms as set forth on Schedule 9.7 and such indebtedness
shall be assumed by Buyer as part of the Assumed Debt and Buyer shall receive a
credit against the Purchase Price in an amount equal to the principal amount of
such Assumed Debt.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof and as of
Closing as follows:
10.1 Formation and Authority.
(a) The ▇▇▇▇▇ Company of Nevada, LLC is, and will at Closing be, a
limited liability company duly formed, validly existing and in good standing
under the laws of the State of Nevada, The ▇▇▇▇▇ Company of New Jersey, LLC is
and will at
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Closing be, a limited liability company duly formed, validly existing and in
good standing under the laws of the State of New Jersey, and Owner Entity is,
and will at Closing be, a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Maryland, and
Seller has, and will at Closing have, all necessary power and authority to enter
into this Agreement and each Ancillary Agreement to which it is to be a party,
to carry out its obligations hereunder and thereunder and to consummate or cause
to be consummated, as applicable, the transactions contemplated hereby and
thereby. The execution and delivery by Seller of this Agreement and each
Ancillary Agreement to which it is to be party, the performance by Seller of its
obligations hereunder and thereunder and the consummation by Seller of the
transactions contemplated hereby and thereby have been approved by all necessary
action of the Board of Directors or similar governing body of Seller. Owner
Entity is, and will at Closing be, duly qualified or registered to do business
in the State where the Real Property is located and in good standing in such
State.
(b) This Agreement is and, at Closing, each Ancillary Agreement
delivered at Closing to which Seller is a party will be, duly executed and
delivered by such party, and (assuming due authorization, execution and delivery
by Buyer of this Agreement and of each Ancillary Agreement) this Agreement and
such Ancillary Agreements constitute or will constitute, as the case may be,
legal, valid and binding obligations of Seller enforceable against Seller each
in accordance with their respective terms and, subject as to enforceability to
the effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
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(c) True, correct and complete copies of the organizational documents
of Owner Entity and of any entity that may be deemed a predecessor of Owner
Entity have been delivered to Buyer and are listed on Schedule 10.1(c)
(including, but not limited to, all certificates of formation or incorporation,
operating agreements, by-laws and articles of merger).
(d) Except as set forth on Schedule 10.1(d), Owner Entity does not, and
will not at Closing, own any securities of any corporation or any interest in
any Person. Except as set forth on Schedule 10.1(d), Owner Entity has not, and
will not at Closing, have acquired or succeeded to all or any portion of the
assets or business of any other Person, and, except as set forth on Schedule
10.1(d), there is no other Person that may be deemed a predecessor of Owner
Entity.
(e) Owner Entity has not, and will not have at Closing, ever elected to
treat itself as an association taxable as a corporation for federal income tax
purposes.
(f) For federal income tax purposes, Owner Entity has been and will
from the Effective Date through Closing be treated as a disregarded entity.
(g) As of the Effective Date and as of the date of Closing, all
offerings, sales and issuances of membership interests or other securities in
Owner Entity or any of its predecessors have been and will have been conducted
in compliance with all applicable federal and state securities laws and all
other applicable laws.
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10.2 No Conflict.
Assuming that all consents, approvals, authorizations and other actions
described in Schedules 10.3(a) and (b) have been obtained and all filings and
notifications listed in Schedule 10.3(a) and (b) have been made, and except as
may result from any facts or circumstances relating solely to Buyer, the
execution, delivery and performance of this Agreement and each Ancillary
Agreement by Seller do not and at Closing will not (a) violate or conflict with
the organizational documents of Seller or the Owner Entity, (b) conflict with or
violate any Law applicable to Seller, Owner Entity or the Real Property, or (c)
result in any breach of, or constitute a default (or event that, with the giving
of notice or lapse of time, or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of any Encumbrance on the Real Property pursuant to any
contract relating to the Real Property to which Seller or Owner Entity is a
party or by which the Real Property is bound.
10.3 Consents and Approvals.
(a) The execution and delivery of this Agreement and each Ancillary
Agreement by Seller does not or will not, as the case may be, and the
performance of this Agreement and each Ancillary Agreement by Seller will not,
require any consent, approval, authorization or other action by, or filing with
or notification to, any governmental authority, except (i) as described in
Schedule 10.3(a), (ii) where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification (I) would not
have a material adverse effect on Buyer or the value of the Real Property, or
the Leases, or with Buyer's ability to obtain financing with respect thereto,
and (II) would not have a material adverse effect on the ability of Seller to
consummate or cause to be consummated the transactions contemplated by this
Agreement or the Ancillary Agreements or to perform or cause to be performed any
of Seller's material obligations hereunder or thereunder, or (iii) as may be
necessary as a result of any facts or circumstances relating solely to Buyer.
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(b) The execution and delivery of this Agreement and each Ancillary
Agreement by Seller does not or will not, as the case may be, and the
performance of this Agreement and each Ancillary Agreement by Seller will not,
require any third-party consents, approvals, authorizations or actions, except
as described in Schedule 10.3(b).
(c) There are no attachments, executions, assignments for the benefit
of creditors or voluntary or involuntary proceedings under the laws or statutes
of any jurisdiction relating to bankruptcy, insolvency, reorganization, debt
adjustment, arrangement, receivership, dissolution, fraudulent conveyance or
liquidation pending, contemplated or, to Seller's Knowledge, threatened by or
against Seller or Owner Entity.
10.4 Personal Property.
At Closing, the Owner Entity will own, lease or have the legal right to
use all Personal Property free and clear of all Encumbrances, except
Encumbrances in connection with the Assumed Debt created by the Assumed Debt
Loan Documents and leases of personal property to be assigned to Seller which
are identified on Schedule 10.4.
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10.5 Litigation.
As of the Effective Date, except as described in Schedule 10.5, there
are no claims, actions, proceedings or investigations pending or, to the
Knowledge of Seller, threatened against Seller relating to the Property Assets
or against Owner Entity. There is no order, writ, judgment, injunction, decree,
determination or award to which the Owner Entity is subject or to the Knowledge
of Seller which relates to the Property Assets.
10.6 Compliance with Laws.
Except as described in Schedule 10.6 or in the Environmental Site
Assessments and documents described in Section 10.9 of this Agreement or
obtained by Buyer as part of the due diligence conducted by Buyer with respect
to the Property Assets, neither Seller nor Owner Entity has received written
notice of the failure to comply with any Laws of any governmental authority
pertaining to the ownership, use or occupancy of any Property Assets which
notice has not been complied with, or if not currently complied with is in the
process of being complied with as of the date hereof (and which shall be
completed promptly at Seller's expense), such obligation to survive Closing.
10.7 Taxes.
(a) Schedule 10.7(a) contains an accurate and complete list of all
state and local Tax Returns that Owner Entity or any of its predecessors were
required to file with respect to any state and local Taxes for Owner Entity's
(and any such predecessor's) last three fiscal years. Accurate and complete
copies of such state and local Tax Returns have been or will be provided to
Buyer.
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(b) Except as described in Schedule 10.7, (a) Seller and the Owner
Entity have filed or will file all Tax Returns required to be filed with respect
to Taxes pertaining to the ownership or operation of the Property Assets and the
Owner Entity for periods prior to Closing, (b) all Taxes due with respect to the
Property Assets and Owner Entity for periods prior to Closing have been or will
be paid prior to Closing and those payable but not due which relate to Owner
Entity the Property Assets shall be adjusted at Closing, (c) neither Seller nor
the Owner Entity has received from any governmental authority any written notice
of proposed adjustment, deficiency or underpayment of any Taxes pertaining to
the ownership or operation of the Property Assets or Owner Entity, which notice
has not been satisfied by payment or been withdrawn, and to the Knowledge of
Seller, there are no claims with respect thereto that have been asserted or
threatened against, or which may be owing by, Seller, or the Owner Entity, (d)
there are no agreements for the extension of time for the assessment of any such
Taxes, (e) there are no pending audits or appeals of any Taxes, nor any levies,
fines, liens or other encumbrances relating to such Taxes, and (f) no Tenant or
party under a ▇▇▇▇▇ is entitled to any refund of any tax or other payment by
reason of tax reduction proceedings affecting current or prior years.
(c) Owner Entity has and will at Closing have no liability for the
Taxes of any Person as a transferee or successor, by contract or otherwise.
(d) Seller and Buyer shall fully cooperate with each other both before
and after Closing so that tax returns for Taxes (other than real estate taxes
and realty transfer taxes) for the applicable fiscal years in which Closing
occurs for the Owner Entity may be timely filed, and Seller shall pay all such
Taxes accruing with respect to periods prior to Closing, Buyer shall pay all
such Taxes accruing with respect to periods from and after Closing, and Seller
and Buyer shall each pay one-half of the charges of the accountants for
preparation of the returns for such Taxes.
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(e) Seller will file any required final tax returns for the Owner
Entity for the period ending on the Closing Date.
10.8 Real Property.
(a) The Owner Entity presently owns and at Closing shall own, free of
all Encumbrances other than the Permitted Encumbrances, and other than those
Encumbrances to be satisfied by Seller at Closing, all right, title and interest
in and to: (i) the fee interest in the Land described in Exhibit A-1, and (ii)
all Improvements. Except as disclosed on Schedule 10.3(b), no Person has or will
at Closing have the right or option to purchase any interest in any of the Real
Property.
(b) Except as described in Schedule 10.8(b), no proceeding is pending
or, to the Knowledge of Seller, threatened for the taking or condemnation of all
or any part of any Property.
10.9 Environmental, Health and Safety Matters.
Seller has provided Buyer with copies of the Environmental Site
Assessments and information described in Schedule 10.9 ("ESAs") concerning the
Real Property and Buyer or its agents have been permitted access to inspect the
Real Property and to review Seller's environmental files with respect to the
Real Property. Seller has not intentionally withheld from Buyer any information
pertaining to environmental matters that would materially affect the value of
the Real Property.
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Seller makes no representations or warranties with respect to the
accuracy or completeness, methodology of preparation or otherwise concerning the
contents of the ESA's. To the Knowledge of Seller there are no Hazardous
Materials in, on, under, about or migrating from or to the Real Property not
disclosed in the ESA's or other information disclosed on Schedule 10.9.
Subject to the provisions of Section 13.2 hereof, Buyer hereby waives
and releases Seller and its Affiliates from any present or future claims arising
out of matters disclosed by the ESA's or other information disclosed on Schedule
10.9.
The terms and provisions of this Section 10.9 shall survive Closing or
any termination of this Agreement.
10.10 Insurance.
Insurance policies or binders of insurance or programs of
self-insurance in the types and amounts listed in Schedule 10.10 are valid and
currently in effect. Seller, the Seller Affiliates or the Owner Entity have
paid, or caused to be paid, all premiums due under such policies and to the
Knowledge of Seller, Seller, the Seller Affiliates and the Owner Entity are not
in default with respect to their obligations under any such policies in any
material respect.
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10.11 Material Contracts.
(a) As of the date of Closing, the Assumed Service Contracts, the
Assumed Debt Loan Documents, the Construction, Operation and Easement Agreements
listed on Schedule 10.11(a) ("▇▇▇▇▇▇"), the Developer Agreements and the other
contracts listed on Schedule 10.11(c) (collectively, the "Material Contracts")
and any Permitted Encumbrances will be the only contracts and agreements that
will be binding upon Owner Entity from and after Closing, except for any
agreements entered into by Buyer. All applicable ▇▇▇▇▇▇ and all modifications
and supplements thereto are listed on Schedule 10.11(a); and to the extent not
of record, complete copies of the same have been delivered by Seller to Buyer.
The Assumed Debt Loan Documents listed on Exhibit B to this Agreement constitute
all the written agreements with Lender relating to the Assumed Debt.
(b) All material agreements with governmental authorities or material
agreements with civic organizations, neighborhood associations or similar
groups, and all amendments, modifications and supplements thereto binding the
Property or the Owner Entity (the "Developer Agreements") are listed on Schedule
10.11(b). All construction, improvement and contribution obligations under the
Developer Agreements have been fully completed and paid for and all other
obligations under the Developer Agreements through the Closing will have been
fully performed by the Date of Closing.
(c) All other material agreements of Owner Entity with third parties
are listed on Schedule 10.11(c).
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(d) True and complete copies of the Material Contracts have been given
to Buyer or produced to Buyer by the Title Company. Except as disclosed in
Schedule 10.11(d), each Material Contract is valid and binding on the respective
parties thereto and is in full force and effect. Upon consummation of the
transactions contemplated by this Agreement, except to the extent that any
consents set forth in Schedule 10.3(b) are not obtained, and assuming consents
are obtained to assignments of certain contracts listed on Schedule 10.11(c)
each Material Contract shall continue in full force and effect without penalty
or other adverse consequence. Except as disclosed in Schedule 10.11(d) Seller
and the Owner Entity have not received a written notice of default with respect
to any Material Contract. Seller and Owner Entity have not delivered a written
notice of default to any other party to a Material Contract.
10.12 Rent Roll.
(a) Seller has delivered to Buyer rent rolls for the Real Property
dated as of February 1, 2003, February 21, 2003, and February 27, 2003, copies
of which are attached to Schedule 10.12(a) (collectively, the "Rent Roll"). To
the Knowledge of Seller the information on the Rent Roll is true and correct in
all material respects. As of the date of the Rent Roll, all of the leases
reflected in the Rent Roll are in full force and effect except as specifically
identified in the Rent Roll or on Schedule 10.12(a). Seller has made available
to Buyer, for Buyer's inspection, true, correct and complete copies of all
Leases and amendments to such Leases and guarantees of Leases executed before
the Effective Date. The Leases identified on the Rent Roll and on Schedule
10.12(a) constitute all of the leases, licenses and occupancy agreements for the
Real Property.
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(b) Except as disclosed in Schedule 10.12(b) or in the tenant lease
files made available to Buyer for inspection, no tenant has delivered written
notice (not heretofore substantially complied with in all material respects or
withdrawn) asserting any material claim or basis for any reduction, deduction,
or set-off against the rent under any Lease and to the Knowledge of Seller, the
Owner Entity is not in default under any Leases.
(c) As of the date of the Rent Roll, except as disclosed in the Rent
Roll, in the Aged Account Receivable Reports attached to Schedule 10.12(c) or in
copies of default notices provided to Buyer and listed on Schedule 10.12(c), to
the Knowledge of Seller, there is no material default by any tenant in the
performance of any material obligations under any Lease.
(d) No tenant under any Lease has prepaid any rent or other sums due
under such Lease for more than one (1) month in advance. Schedule 10.12(d) shows
the amounts of all security deposits paid by any tenant under a Lease or
construction deposits paid by a tenant or its contractor, and the amount
currently held by Owner Entity.
(e) Except as may be set forth in any Lease or ▇▇▇▇▇ with an Anchor, no
Person has an option, right of refusal or other contractual right to purchase
all or any portion of Real Property, except that a tenant under a pad site Lease
may have an option, right of first refusal or other contractual right to
purchase its own demised premises and related easement rights.
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10.13 Knowledge.
The persons listed in the definition of the term "Knowledge of Seller"
are the persons most likely to have knowledge of the matters relating to the
Property addressed in this Agreement.
10.14 Ownership of Owner Entity.
Seller owns and will at Closing own all the Interests free and clear of
all Encumbrances of any type or nature. No Person has or will at Closing have
any right or option to acquire the Interests. The Interests have been issued in
compliance with Laws. Other than Seller, no Person has or will at Closing have
any right to receive any distributions from Owner Entity or have allocated any
profits or losses thereof. There are and will at Closing be no rights,
subscriptions, warrants, options, rights of first refusal, conversion rights or
agreements of any kind to purchase or otherwise acquire any Interests or other
securities or participation interests convertible into any Interests. Owner
Entity has and will at Closing have no subsidiaries and does not and will not at
Closing own an interest in any other entity except as set forth on Schedule
10.1(d).
10.15 Employment Matters.
(a) All accrued wages, accrued vacation pay, bonuses, and other accrued
employee benefit expenses, except for severance pay and notice pay, due to any
of the Property Employees as of the Date of Closing have been or will be paid in
full by Seller or its Affiliates.
(b) Other than those liabilities incurred in the ordinary course of
business and for which Seller will remain solely responsible post closing, as of
the Date of Closing, neither Seller nor Owner Entity nor any of their respective
Affiliates shall have any liability, whether contingent, liquidated or
unliquidated, to any pension or other benefit plan, including, but not limited
to any bonus, deferred compensation, pension, profit sharing, retirement, stock
option, group insurance, health benefit, welfare, or other fringe benefit plan,
including, but not limited to, plans defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), respecting the Property
Employees.
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(c) Other than those liabilities incurred in the ordinary course of
business and for which Seller will remain solely responsible post closing, as of
the Date of Closing, Seller and Owner Entity and their respective Affiliates in
all material respects shall have satisfied any and all obligations existing as
of the Closing Date regarding the Property Employees imposed on them under
applicable law, including but not limited to, any statute or regulation of
either the State of New Jersey or its political subdivisions but excluding any
obligations relating to severance pay or notice pay arising out of or relating
to the termination of the employment of the Hired Employees.
(d) All Property Employees other than those subject to a collective
bargaining agreement are employees at will. Other than those identified in
Schedule 10.15(d) there are no collective bargaining agreements to which Seller
or Owner Entity or any of their respective Affiliates area party, covering the
Property Employees.
(e) No liability to the Pension Benefit Guaranty Corporation, or to any
multi-employer pension plan, exists as of the Effective Date, or will exist as
of the Closing Date, against Seller or Owner Entity or any of their respective
Affiliates on account of any termination, partial termination, suspension, or
freezing of benefits of any employee pension benefit plan covering the Property
Employees that is subject to Title IV of ERISA, or on account of any withdrawal
from a multi-employer pension plan covering the Property Employees that is
subject to Title IV of ERISA.
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(f) Seller and Owner Entity and their respective Affiliates are and
will at Closing be in compliance with all federal, state and local laws and
regulations respecting the employment of the Property Employees, including
employment practices, the terms and conditions of employment, the payment of
wages, plant closings and the governance of pension and employee welfare benefit
plans, including, but not limited to, the Worker Adjustment and Retraining
Notification Act, the Consolidated Omnibus Budget Reconciliation Act, the
Employee Retirement Income Security Act, the Multi-Employer Pension Plan
Amendments Act, the Philadelphia Plant Closing Ordinance and any other laws
referred to above, except where failure to comply would not have a material
adverse effect on their business, operations or financial condition.
10.16 Limitations on Representations and Warranties.
Buyer hereby agrees and acknowledges that, except as set forth in
Sections 10.1 through 10.15 above, or elsewhere in this Agreement specifically
provided, neither Seller nor its Affiliates nor any agent, attorney, employee or
representative of Seller or its Affiliates has made any representation
whatsoever regarding the subject matter of this transaction, or any part
thereof, including (without limiting the generality of the foregoing)
representations as to the physical nature or physical or environmental condition
of the Property Assets or the capabilities thereof, and that Buyer, in
executing, delivering and/or performing this Agreement, does not rely upon any
statement and/or information to whomever made or given, directly or indirectly,
orally or in writing, by any individual, firm or corporation unless such
statement or information is expressly incorporated in this Agreement. Buyer
agrees that except as expressly set forth in this Agreement, its purchase of the
Property Assets shall be "as is, where is" as of the date hereof, reasonable
wear and tear excepted.
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EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES AS TO THE PHYSICAL CONDITION OF THE PROPERTY
ASSETS OR THE SUITABILITY THEREOF FOR ANY PURPOSE. EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, SELLER HEREBY EXPRESSLY DISCLAIMS ANY WARRANTIES OF
MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE AND EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, SELLER DISCLAIMS ANY OTHER WARRANTIES OR
REPRESENTATIONS AS TO THE PHYSICAL CONDITION OF THE PROPERTY ASSETS. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER, BY EXECUTION OF THIS AGREEMENT AND
THE ANCILLARY AGREEMENTS AGREES THAT IT HAS INSPECTED THE PROPERTY ASSETS AND
THAT BUYER SHALL ACCEPT SAME "AS IS" AND "WITH ALL FAULTS".
Buyer understands that, except as may otherwise be expressly provided
in this Agreement, any financial statements and data, including, without
limitation, gross rental income, operating expenses and cash flow statements
made, or to be made available by Seller or Seller's Affiliates to Buyer have
been and will be unaudited financial statements and data or abstracts not
prepared or reviewed by independent public accountants, and that except as
expressly set forth in this Agreement, Seller makes no representation as to the
accuracy or completeness thereof.
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Buyer acknowledges that this Agreement has been entered into after full
investigation, or with Buyer's satisfaction with the opportunity afforded for
investigation. The terms and provisions of this Section 10.16 shall survive
Closing or any termination of this Agreement. Seller shall not be considered to
have breached a representation or warranty hereunder if Seller in good faith
discovers additional information after the full execution and delivery hereof
and not less than ten (10) days prior to the Closing supplements the Schedules
or updates the representations and warranties made herein immediately upon such
discovery, provided that such additional information does not have in the
context of the subject transaction a material adverse effect upon the value of
the Property Assets, title to the Real Property or upon Buyer's ability to
acquire and finance the Property Assets.
10.17 Schedules.
A disclosure of a particular item, fact or circumstance (e.g.,
contract, default, required consent, violation of law, etc.) on any Schedule
attached to this Agreement shall not be limited in its application to a
particular representation or warranty hereunder but shall be deemed to be
disclosure of such item, fact or circumstance to Buyer for all purposes in
satisfaction of all of Seller's disclosure obligations under this Agreement.
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ARTICLE XI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
11.1 Formation and Authority.
Buyer is, and will at Closing be, a limited partnership, duly formed,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has, and will at Closing have, all necessary power and
authority to enter into this Agreement and each Ancillary Agreement to which it
is to be a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by Buyer of this Agreement and each Ancillary Agreement to which it is
to be a party, the performance by Buyer of its obligations hereunder and
thereunder and the consummation by Buyer of the transactions contemplated hereby
and thereby have been approved by all necessary action of the partners of Buyer
and the Board of Directors, or similar governing body of PREIT Associates L.P.
This Agreement has been, and, at Closing, each Ancillary Agreement delivered at
such Closing be, duly executed and delivered by Buyer, and (assuming due
authorization, execution and delivery by Seller of this Agreement and of such
Ancillary Agreements and all other parties thereto other than Buyer) this
Agreement and such Ancillary Agreements constitute or will constitute, as the
case may be, legal, valid and binding obligations of Buyer enforceable against
Buyer in accordance with their respective terms, and subject, as to
enforceability to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
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11.2 No Conflict.
Except as may result from any facts or circumstances relating solely to
Seller or the Owner Entity, the execution, delivery and performance by Buyer of
this Agreement and by Buyer of the respective Ancillary Agreements to which it
is a party do not and at Closing will not (a) violate or conflict with the
organizational documents of Buyer, (b) conflict with or violate any Law
applicable to Buyer, or (c) result in any breach of, or constitute a default (or
event which, with the giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any Encumbrance
on, any of the assets or properties of Buyer pursuant to, any contract relating
to such assets or properties to which Buyer is a party or by which any of such
assets or properties is bound.
11.3 Consents and Approvals.
(a) The execution and delivery by Buyer of this Agreement and each
Ancillary Agreement to which it is to be a party does not or will not, as the
case may be, and the performance by Buyer of this Agreement and each Ancillary
Agreement to which it is to be a party will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental authority, except (i) as described in Schedules 10.3(a) or (b), or
(ii) as may be necessary as a result of any facts or circumstances relating
solely to Seller or the Owner Entity.
(b) The execution and delivery by Buyer of this Agreement and the
Ancillary Agreements to which it is to be a party do not or will not, as the
case may be, and the performance by Buyer of this Agreement and the Ancillary
Agreements to which it is to be a party will not, require any third-party
consents, approvals, authorizations or actions, except as described in Schedules
10.3(a) or (b).
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11.4 Litigation.
As of the Effective Date, there are no claims, actions, proceedings or
investigations pending or, to the Knowledge of Buyer, threatened against Buyer
or its Affiliates that seek to delay or would delay, if adversely determined, or
prevent the consummation of the transactions contemplated by this Agreement or
the Ancillary Agreements to which it is a party or which would materially
adversely affect the ability of Buyer to consummate the transactions
contemplated hereby or thereby or to perform any of its material obligations
hereunder or thereunder.
11.5 Knowledge of Buyer.
The persons listed in the definition of the term "Knowledge of Buyer"
are the persons most likely to have Knowledge of the matters relating to Buyer
addressed in this Agreement.
ARTICLE XII
BROKER
Buyer and Seller represent to each other that, other than ▇▇▇▇▇ ▇.
▇▇▇▇▇ who will receive a finders fee upon the Closing, and whose fee is provided
in a separate written agreement signed by the parties to this Agreement, they
have dealt with no agent or broker who in any way has participated as a
procuring cause of the sale or the entering into of the transactions
contemplated hereby. Buyer and Seller each agree to defend, indemnify and hold
harmless the other for any and all judgments, costs of suit, attorneys' fees,
and other reasonable expenses which the other may incur by reason of any action
or claim against the other by any other broker, agent, or finder with whom the
indemnifying party has dealt arising out of this Agreement in violation of the
foregoing representation and warranty. The provisions of this Article XII shall
survive the Closing and any termination of this Agreement.
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ARTICLE XIII
SURVIVAL; INDEMNIFICATION
13.1 Survival of Warranties.
The representations and warranties set forth in Section 10.8 shall not
survive the Closing. The representations and warranties contained in Sections
10.1, 10.5, 10.7, and 10.14 shall survive the Closing forever, subject to the
applicable statute of limitations. All other representations and warranties of
Seller or Buyer set forth in this Agreement shall survive the Closing for a
period of one year, provided that written notice of a breach thereof is provided
to the breaching party within one year from the date of Closing.
13.2 Indemnification by Seller.
(a) Seller shall indemnify, hold harmless and defend Buyer, Buyer's
Affiliates, Owner Entity and their respective partners, members, shareholders,
owners, officers, directors, employees and agents and their respective personal
representatives, successors and assigns, from and against any Losses arising out
of or caused by:
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(i) the breach by Seller of any representation or warranty
made by Seller in this Agreement; or
(ii) any liability for Taxes of Owner Entity or any Person
other than Owner Entity for whom Owner Entity has liability as a transferee or
successor, by contract or otherwise, for periods on or prior to the Closing
(subject to the provisions of the Realty Transfer Tax Indemnity with respect to
realty transfer taxes); or
(iii) any Claim by any third Person against the Property
Assets or Buyer or Owner Entity arising out of or caused by, directly or
indirectly, any act or omission of the Seller or its respective members,
managers, officers, directors, employees, agents or representatives in
connection with operation or ownership of the Property Assets occurring at any
time on or before the Closing Date or any acts or omissions of Owner Entity or
any Predecessor Entity or and of their respective members, managers, officers,
directors, employees, agents or representatives occurring at any time on or
before the Closing Date excluding (A) Claims arising out of the ▇▇▇▇▇▇, the
Leases and the Assumed Property Liabilities (except for Claims for which Seller
is obligated to indemnify Buyer pursuant to this Agreement other than pursuant
to this Section 13.2(a)(iii)), (B) Claims for which a specific adjustment or
apportionment was made between Seller and Buyer at Closing, and (C) Claims based
on obligations expressly assumed in writing by Buyer other than the Assumed
Property Liabilities; or
(iv) any Claim by any Property Employee arising out of such
Property Employee's employment by Owner Entity, Seller or their respective
Affiliates through the Date of Closing or the termination of such Property
Employee's employment by Owner Entity, Seller or their respective Affiliates in
accordance with Section 6.1, including, without limitation, any Claim for
severance pay, notice pay or pension or other employee benefits (subject to
Buyer's indemnification obligations pursuant to Sections 6.1 or 6.3); or
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(v) any Claim by the Lender with respect to the Assumed Debt
Loan Documents arising out of or caused by any act or omission by Seller, Owner
Entity or their respective Affiliates occurring at any time prior to the Closing
Date; or
(vi) any Claim by any tenant pursuant to a Lease alleging an
overpayment or overcharge of rent or additional rent to the extent relating to
periods prior to Closing, including, without limitation, the Claims identified
on Schedule 10.12(b), or any Claim by a party to the ▇▇▇▇▇ alleging overpayment
or overcharge of amounts due under the ▇▇▇▇▇ to the extent relating to periods
prior to closing.
(b) Notwithstanding the foregoing, the indemnification obligations of
Seller pursuant to Section 13.2(a) (i) shall not be paid except to the extent
the aggregate dollar amount of Losses that would otherwise be indemnified
pursuant to Section 13.2(a)(i) exceeds one percent (1%) of the Purchase Price
(the "Threshold Amount"). In calculating the amount of Losses, such amount shall
be an amount net of any insurance proceeds, indemnity payments or similar
payments actually received by Buyer (or any of its Affiliates) or (after
transfer to Buyer) the Owner Entity from any third parties, provided Buyer shall
not have any obligation to pursue collection of any amounts from any third
parties, nor shall Seller's obligation hereunder be suspended or delayed pending
efforts to collect from third parties. Buyer shall cooperate with Seller, at no
expense to the Buyer, in Seller's efforts to collect payments from third parties
on account of any Losses.
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13.3 Indemnification by Buyer.
Buyer shall indemnify, hold harmless and defend Seller, Seller's
Affiliates and their respective partners, members, shareholders, owners,
officers, directors, employees and agents and their respective personal
representatives, successors and assigns, from and against any Losses arising out
of or caused by, (a) the breach or failure of any representation or warranty
made by Buyer contained in this Agreement, and (b) any Claim by a third Person
against Seller arising out of or caused by, directly or indirectly, any act or
omission of the Owner Entity or Buyer, or their respective Affiliates, or any of
their respective members, managers, officers, directors, employees, agents or
representatives in connection with the operation or ownership of the Property
Assets occurring at any time after the Closing Date or actions or omissions of
the Owner Entity occurring at any time after the Closing Date, including, but
not limited to, (i) Claims arising out of the Assumed Property Liabilities
(except for Claims for which Seller is obligated to indemnify Buyer pursuant to
this Agreement), and (ii) Claims based on any obligations expressly assumed in
writing by Buyer other than the Assumed Property Liabilities. Notwithstanding
the foregoing, the indemnification obligations of Buyer pursuant to Section
13.3(a) shall not be paid except to the extent the aggregate dollar amount of
Losses that otherwise would be paid pursuant to Section 13.3(a) exceeds the
Threshold Amount.
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13.4 Indemnity - General.
The following provisions shall apply to any claim for
indemnification made by a party ("Indemnified Party") of another ("Indemnitor").
(a) An Indemnified Party shall give Indemnitor written notice of any
claim, assertion, event or proceeding by or in respect of a third party as to
which such Indemnified Party may request indemnification hereunder or as to
which the Threshold Amount may be applied as soon as is practicable and in any
event within sixty (60) days of the time that such Indemnified Party learns of
such claim, assertion, event or proceeding; provided, however, that the failure
to so notify Indemnitor shall not affect rights to indemnification hereunder
except to the extent that Indemnitor is actually prejudiced by such failure.
(b) Indemnitor shall have the right by notice given to the Indemnified
Party within sixty (60) days of receipt of notice of the claim to direct,
through counsel of its own choosing reasonably acceptable to the Indemnified
Party, the defense or settlement of any such claim or proceeding at its own
expense, provided that Indemnitor shall not settle any such claim or proceeding
without arranging for the release of the Indemnified Party and the partners,
members, shareholders or other owners of the Indemnified Party. If Indemnitor
elects to assume the defense of any such claim or proceeding, Indemnitor shall
consult with the Indemnified Party and the Indemnified Party may participate in
such defense, but in such case the expenses of the Indemnified Party shall be
paid by the Indemnified Party. The Indemnified Party shall provide Indemnitor
with access to its records and personnel relating to any such claim, assertion,
event or proceeding during normal business hours and shall otherwise cooperate
with Indemnitor in the defense or settlement thereof, and Indemnitor shall
reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in
connection therewith. If Indemnitor elects to direct the defense of any such
claim or proceeding, the Indemnified Party shall not pay, or permit to be paid,
any part of any claim or demand arising from such asserted liability unless
Indemnitor consents in writing to such payment or unless a final judgment from
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which no appeal may be taken by or on behalf of Indemnitor is entered against
the Indemnified Party for such liability. If Indemnitor fails to defend or if,
after commencing or undertaking any such defense, Indemnitor fails to diligently
prosecute or withdraws from such defense, the Indemnified Party shall have the
right to undertake the defense or settlement thereof, at Indemnitor's expense
and in that event the Indemnified Party may settle such claim or proceeding
prior to a final judgment thereon or elect to forego any appeal with respect
thereto.
(c) All amounts owed by the Indemnitor to the Indemnified Party shall
be paid in full within ten (10) Business Days after a final judgment (without
further right of appeal) determining the amount owed is rendered, or after a
final settlement or agreement as to the amount owed is executed. If the amounts
owed by the Indemnitor to the Indemnitee are not paid when due, interest shall
accrue on such amount at the rate of ten percent (10%) per annum compounded
until paid in full.
(d) Anything herein to the contrary notwithstanding, no breach of any
representation, warranty, covenant or agreement contained herein shall give rise
to any right on the part of any party, after the consummation of the
transactions contemplated hereby, to rescind this Agreement or any of the
transactions contemplated hereby.
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13.5 Survival.
The indemnification obligations of Seller and Buyer set forth in this
Article XIII shall survive the Closing forever, subject to the applicable
statute of limitations, provided that nothing in this Section 13.5 is intended
to modify the provisions of Section 13.1.
ARTICLE XIV
ASSIGNMENT
This Agreement may not be assigned or transferred by Seller except to
an Affiliate of Seller or as contemplated by Article XVIII, provided however
that no such assignment shall relieve Seller of any of its obligations under
this Agreement. This Agreement may be assigned or transferred by Buyer to an
Affiliate of Buyer or to New Castle or as contemplated by Article XVIII;
provided however that no such assignment shall relieve Buyer of any of its
obligations under this Agreement. Other than as set forth above, neither this
Agreement nor the obligations arising under or as a result of this Agreement may
be assigned.
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ARTICLE XV
NOTICES
All notices hereunder or required by law shall be sent via facsimile,
United States Mail, postage prepaid, certified mail, return receipt requested,
or via any nationally recognized commercial overnight carrier with return
receipt requested, charges prepaid, addressed to the parties hereto at their
respective addresses set forth below or as they have theretofore specified by
written notice delivered in accordance herewith:
Buyer:
c/o PREIT-▇▇▇▇▇, Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Blank Rome LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: G. ▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Seller:
c/o The ▇▇▇▇▇ Company
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
c/o The ▇▇▇▇▇ Company
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
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Notices shall be deemed served when actually evidenced by a signed
receipt or rejected. Notwithstanding the foregoing provisions of this Section,
notices served by facsimile shall be deemed given upon receipt if received at or
prior to 5:00 P.M. on a Business Day and on the next Business Day if received
after 5:00 P.M. on a Business Day or at any time on a non-Business Day.
ARTICLE XVI
EXPENSES
Except as specifically set forth herein each party shall pay its own
attorney's fees and expenses in connection with this transaction. The parties
shall split any transfer taxes and sales taxes evenly. Buyer shall pay its
survey costs, engineering and expert fees, and any title insurance policy
premium for Buyer, the Owner Entity or any lender of Buyer or the Owner Entity
and any other of its own costs and expenses. All costs and expenses of obtaining
approval of the transfer of the Interests by the holder of the Assumed Debt
shall be paid by Seller, provided that Seller shall not be obligated to expend
more than one percent (1%) of the outstanding principal balance of the Assumed
Debt in order to obtain such approval from the holder of the Assumed Debt. All
costs and expenses of placing any new debt on the Real Property including
lender's attorneys fees, Seller's attorney's fees, application fees, and any
other fees, costs or expenses shall be the responsibility of Buyer, except that
Seller and Buyer shall each pay one-half of any fees and expenses of the Lender
for the Second or Third Mortgage on the Cherry Hill Mall referenced in Section
9.7.
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ARTICLE XVII
CASUALTY AND CONDEMNATION
17.1 Casualty.
Except as otherwise provided in Section 17.3 hereof, in the event of
any damage or destruction with respect to any portion of the Real Property,
occurring on or after the Effective Date and prior to Closing, (a) Buyer may not
terminate this Agreement; (b) the Purchase Price shall not be adjusted to
reflect the damage or destruction except that the Purchase Price shall be
reduced by the amount of any loss not covered by casualty insurance or as to
which coverage is denied by any insurance company; and (c) Seller and/or the
Owner Entity shall pay to Buyer proceeds received and assign to Buyer at the
Closing all insurance proceeds or awards not yet received by Seller and/or the
Owner Entity in respect of such damage or destruction net of any proceeds or
awards or used by Seller and/or the Owner Entity to rebuild or protect the Real
Property and shall pay to Buyer the amount of any deductible or self-insured
retention not applied towards such rebuilding or protection.
17.2 Condemnation.
Except as otherwise provided in Section 17.3 hereof, in the event of
any condemnation with respect to any portion of the Real Property, occurring on
or after the Effective Date and prior to Closing, (a) Buyer may not terminate
this Agreement; (b) the Purchase Price shall not be adjusted to reflect the
condemnation; and (c) Seller and/or the Owner Entity shall assign to Buyer at
the Closing all condemnation proceeds or awards received by Seller and/or the
Owner Entity in respect of such condemnation (and any rights to receive same)
net of any costs incurred by Seller and/or the Owner Entity in obtaining such
proceeds or awards or used by Seller and/or the Owner Entity to restore the Real
Property or to integrate the balance of the Real Property into a functional
unit.
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17.3 Material Casualty or Condemnation.
In the case of a casualty or condemnation which results in a Material
Loss with respect to the Real Property occurring on or after the Effective Date
and prior to Closing, Buyer may at its sole discretion elect to terminate this
Agreement in which event the Deposit shall be returned to Buyer and neither
party shall have any further obligations hereunder except for the Covenants
Surviving Termination. A "Material Loss" is a casualty that results, as of the
Closing Date, in the termination or announced termination of a Lease for an
Anchor Tenant, or the cessation or announced cessation of business by an Anchor
Department Store with no plans to reopen, or the termination of other Leases
aggregating more than twenty percent (20%) of leasable area of the Real Property
(excluding for these purposes space covered by Leases for Anchor Tenants), or a
condemnation or taking which materially and adversely affects access to or from
the Real Property on a permanent basis or results in the permanent loss of more
than five percent (5%) of the existing leasable area of the Real Property or
which will result in the termination of any Lease for an Anchor Tenant.
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ARTICLE XVIII
LIKE KIND EXCHANGE
18.1 Like Kind Exchange.
Seller and Buyer intend to structure the purchase and sale of the
ownership interests in the Owner Entity as a transfer of property in an exchange
of like-kind property under Section 1031 of the Internal Revenue Code of 1986,
as amended (the "Exchanges"), which will be accomplished pursuant to the terms
of separate exchange agreements (the "Exchange Agreements") between Seller and
Buyer and qualified intermediaries to be engaged by Seller and Buyer,
respectively (each an "Intermediary" and collective, the "Intermediaries"). Each
party agrees to cooperate promptly and reasonably with the other (without
liability or cost to the other) and the other's Intermediary in structuring the
transfer and conveyance of the Interests as part of the Exchange. Such
cooperation shall include, but not be limited to, (i) consent to the assignment
of all of a party's rights (but not its obligations) under this Agreement to
Intermediary, and the acknowledgment of such assignment, (ii) the delivery of
the net purchase price for the Interests by Buyer to the Seller's Intermediary
in accordance with the joint instructions of the Seller and its Intermediary,
(iii) the transfer of the Interests pursuant to a written direction of the
Buyer's Intermediary and (iv) the reassignment of a party's rights under this
Agreement from its Intermediary to the original assignor immediately following
the completion of the Exchanges, and the acknowledgment by the other party of
such reassignments. Each party agrees to fully indemnify the other from any
resulting liability to third parties (including, but not limited to, the
Intermediaries) arising out of its cooperation with the Exchanges for the
benefit of the other party, which indemnity shall be effective from and after
the date of this Agreement and shall survive the Closing of the transactions
contemplated hereunder.
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ARTICLE XIX
MISCELLANEOUS
19.1 Successors and Assigns.
All of the terms and conditions of this Agreement are hereby made
binding upon the executors, heirs, administrators, successors and assigns of the
respective parties hereto, subject to the provisions of Article XIV.
19.2 Gender.
Words of any gender used in this Agreement shall be held and construed
to include any other gender, and words in the singular number shall be held to
include the plural, and vice versa, unless the context requires otherwise.
19.3 Captions.
The captions in this Agreement are inserted only for the purpose of
convenient reference and in no way define, limit or prescribe the scope or
intent of this Agreement or any part hereof.
19.4 Not Construed against Drafter.
No provision of this Agreement shall be construed by any court or other
judicial authority against any party hereto by reason of such party's being
deemed to have drafted or structured such provisions.
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19.5 Entire Agreement.
This Agreement, the Access Agreement, the Confidentiality Agreement and
the Exhibits and Schedules attached hereto constitute the entire contract
between the parties hereto and there are no other oral or written promises,
conditions, representations, understandings or terms of any kind as conditions
or inducements to the execution hereof and none have been relied upon by either
party.
19.6 Recording.
The parties agree that this Agreement shall not be recorded in any
office for the recording of real property records. Except in connection with a
lawful lis pendens action filed by Buyer, if Buyer causes this Agreement or any
notice or memorandum thereof to be recorded in any office for the recording of
real property records, this Agreement shall be null and void at the option of
Seller.
19.7 Time of Essence.
Time is of the essence in this transaction. If any of the dates
contemplated herein shall not fall on a Business Day, such deadline or
expiration date shall be deemed to fall upon the next Business Day.
19.8 Original Document.
This Agreement may be executed by the parties in counterparts in which
event each shall be deemed an original, but all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of
this Agreement by facsimile shall be effective as delivery of an original.
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19.9 Governing Law.
This Agreement shall be construed, and the rights and obligations of
the parties hereto, shall be determined in accordance with the laws of the State
where the Real Property is located.
19.10 Post-Closing Inspection.
Following Closing, each party shall, upon request, give the other party
or cause its Affiliates to give the other party access to books and records with
respect to the operation of the Property for the calendar year in which Closing
occurs, for the previous calendar year and for any earlier periods for which
Seller or Buyer is obligated to have financial statements for the Property, for
purposes of verifying collections and remittances and the preparation by the
parties of financial statements and reports (including audited financial
statements) with respect to the Property. Such books and records shall be made
available to the parties at reasonable times and upon reasonable advance notice
to the other party and without any expense to the other party. This Section
19.10 shall survive the Closing.
19.11 Non Compete.
For a period of five (5) years from and after Closing, neither The
▇▇▇▇▇ Company nor Seller nor any Affiliate of either of them shall directly or
indirectly develop or construct any property which consists (in part or in
whole) of an enclosed mall primarily being used for retail sales and which is
located within five (5) miles of the Property. Seller and Buyer agree that Buyer
shall be entitled to seek temporary and injunctive relief without the necessity
of proving actual damages. If any of the provisions of Section 19.11 are deemed
invalid in part, it shall be curtailed as to time, location or scope, to the
minimum extent required for its validity under the Law and will be binding on
The ▇▇▇▇▇ Company, Seller and their Affiliates as so curtailed. The parties
acknowledge that no part of the Purchase Price is allocated to this covenant by
Seller.
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19.12 Joint and Several Liability.
The liability pursuant to this Agreement of each of the parties
comprising the Seller shall be joint and several.
19.13 Other Closings.
(a) Seller or Seller's Affiliates have entered into certain
other contracts of even date herewith for the transfer of other properties in
the Philadelphia area or interests in such properties, such properties being
[Moorestown Mall, Plymouth Meeting Mall, the Gallery at Market East, Exton Mall
and Echelon Mall], to Buyer or Buyer's Affiliates ("Affiliated Contracts"), and
Seller or Seller's Affiliate has contracted to purchase Christiana Mall from New
Castle ("Christiana Contract", and together with the Affiliated Contracts, the
"Concurrent Contracts"). Furthermore, with regard to the Christiana Mall, Seller
or its Affiliate are negotiating agreements for the ownership, operation and
management of the Christiana Mall with New Castle's lender, Equitable ("Venture
Contracts").
(b) Unless the Concurrent Contracts (other than Plymouth and
Echelon) also close at the same time as this Agreement and the Venture Contracts
shall have been fully negotiated at the time of Closing, Seller may, provided
that the failure to close the Concurrent Contracts (other than Plymouth and
Echelon) at the same time does not result from the breach by Seller or its
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Affiliates of any of their respective obligations pursuant to such Concurrent
Contracts, terminate this Agreement and unless the failure is caused by the
breach of Buyer or Buyer's Affiliate or New Castle pursuant to a Concurrent
Contract, neither party shall have any further obligation to the other except
for the Covenants Surviving Termination and except as provided in Section 4.3.
(c) It shall be a condition of Buyer's obligation to close on
this Agreement that the Concurrent Contracts (other than the Contracts for
Plymouth and Echelon) also close at the same time, provided that the failure to
close the Concurrent Contracts at the same time does not result from the breach
by Buyer or its Affiliates or New Castle of any of their respective obligations
pursuant to such Concurrent Contracts.
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ARTICLE XX
CONFIDENTIALITY
20.1 Confidentiality Agreement.
Buyer and Seller agree to comply with the Confidentiality Agreement
which shall remain in full force and effect until the Closing at which time it
shall terminate. In the event this Agreement is terminated prior to Closing, the
Confidentiality Agreement shall remain in full force and effect in accordance
with its terms.
20.2 Public Announcements.
Except as required by Law or the rules of any securities
exchange on which the securities of either party hereto may be traded or upon
advice of counsel to a party (in which case the disclosing party shall use all
reasonable efforts to provide prior notification to the other party), no party
to this Agreement shall make any public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without obtaining the prior consent of the other party, and the
parties shall each consult with the other as to the timing and contents of any
such announcement.
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ARTICLE XXI
FURTHER UNDERTAKINGS
21.1 Further Assurances.
Each of the parties hereto shall acting in good faith, use its
commercially reasonable efforts to take or cause to be taken all appropriate
action, do or cause to be done all things necessary, proper or advisable, and
execute and deliver such documents and other papers, as may be required to carry
out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement. Such efforts shall include the
parties' execution of such amendments to this Agreement as may be necessary in
order to effectuate the overall intent of this Agreement, and to clarify the
parties' respective rights and obligations hereunder with regard to a specific
item, event, or circumstance.
[signatures appear on the next page]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement
effective as of the date first written above.
ATTEST: SELLER:
THE ▇▇▇▇▇ COMPANY OF NEVADA, LLC
/s/ [Signature Illegible] By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Executive Vice President
THE ▇▇▇▇▇ COMPANY OF NEW JERSEY, LLC
/s/ [Signature Illegible] By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Executive Vice President
ATTEST: BUYER:
By:
---------------------------------
Vice President
The undersigned hereby executes this Agreement for the purpose of
agreeing to act as Escrow Agent for the Deposit as provided in Article III.
First American Title Insurance Company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 3/10/03
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior
Underwriting Counsel
PR CHERRY HILL LIMITED PARTNERSHIP, a
Pennsylvania limited partnership
By: PR CHERRY HILL LLC, its general partner
By: PREIT Associates, L.P., its sole member
By: Pennsylvania Real Estate Investment
Trust, its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President