PURCHASE AND SALE AGREEMENT
by and between
COLONIAL REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
as Seller
and
PREIT-▇▇▇▇▇, INC.,
a Pennsylvania corporation
as Buyer
Property Name: Gadsden Mall
Location: Gadsden, Alabama
Effective Date: March 31, 2005
TABLE OF CONTENTS
PAGE
ARTICLE 1. - -CERTAIN DEFINITIONS................................................................................1
ARTICLE 2. - - SALE OF PROPERTY..................................................................................6
ARTICLE 3. - PURCHASE PRICE......................................................................................6
3.1 Deposit Money. [Not Applicable].................................................................6
3.2 Letter of Credit................................................................................6
3.3 Cash at Closing.................................................................................6
ARTICLE 4. - TITLE MATTERS.......................................................................................7
4.1 Title to Real Property..........................................................................7
4.2 Title Defects...................................................................................7
4.3 Title Insurance.................................................................................9
ARTICLE 5. - BUYER'S DUE DILIGENCE/CONDITION OF THE PROPERTY.....................................................9
5.1 Buyer's Inspections and Due Diligence...........................................................9
5.2 As-Is Sale.....................................................................................10
5.3 Termination of Agreement During Due Diligence Period...........................................10
5.4 Buyer's Certificate............................................................................11
ARTICLE 6. - ADJUSTMENTS AND PRORATIONS.........................................................................11
6.1 Lease Rentals..................................................................................11
6.2 Reimbursable Lease Expenses....................................................................12
6.3 Real Estate and Personal Property Taxes........................................................13
6.4 Other Property Operating Expenses..............................................................14
6.5 Closing Costs..................................................................................15
6.6 Apportionment Credit...........................................................................15
6.7 Cash Security Deposits.........................................................................15
6.8 Gift Certificate Program.......................................................................15
6.9 Improvement Allowance Credit...................................................................15
6.10 Delayed Adjustment; Delivery of Operating and Other Financial Statements.......................16
ARTICLE 7. - CLOSING............................................................................................16
7.1 Closing Date...................................................................................16
7.2 Title Transfer and Payment of Purchase Price...................................................16
7.3 Seller's Closing Deliveries....................................................................16
7.4 Buyer's Closing Deliveries.....................................................................20
ARTICLE 8. - CONDITIONS TO CLOSING..............................................................................21
8.1 Conditions to Seller's Obligations.............................................................21
8.2 Conditions to Buyer's Obligations..............................................................21
8.3 Waiver of Failure of Conditions Precedent......................................................22
8.4 Approvals not a Condition to Buyer's Performance...............................................22
ARTICLE 9. - REPRESENTATIONS AND WARRANTIES.....................................................................22
9.1 Buyer's Representations........................................................................22
9.2 Seller's Representations.......................................................................23
9.3 General Provisions.............................................................................26
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ARTICLE 10. - COVENANTS.........................................................................................28
10.1 Buyer's Covenants..............................................................................28
10.2 Seller's Covenants.............................................................................29
10.3 Mutual Covenants...............................................................................33
10.4 Survival.......................................................................................34
ARTICLE 11. - FAILURE OF CONDITIONS; DEFAULT....................................................................34
11.1 To Seller's Obligations........................................................................34
11.2 To Buyer's Obligations.........................................................................35
ARTICLE 12. - CONDEMNATION/CASUALTY.............................................................................35
12.1 Condemnation...................................................................................35
12.2 Destruction or Damage..........................................................................36
12.3 Insurance......................................................................................37
12.4 Effect of Termination..........................................................................37
12.5 Waiver.........................................................................................37
ARTICLE 13. - ESCROW............................................................................................37
ARTICLE 14. - MISCELLANEOUS.....................................................................................38
14.1 Buyer's Assignment.............................................................................38
14.2 Designation Agreement..........................................................................38
14.3 Survival/Merger................................................................................39
14.4 Integration; Waiver............................................................................39
14.5 Governing Law..................................................................................39
14.6 Captions Not Binding; Exhibits.................................................................40
14.7 Binding Effect.................................................................................40
14.8 Severability...................................................................................40
14.9 Notices........................................................................................40
14.10 Counterparts...................................................................................41
14.11 No Recordation.................................................................................41
14.12 Additional Agreements; Further Assurances......................................................41
14.13 Construction...................................................................................41
14.14 Special Provisions.............................................................................42
14.15 Maximum Aggregate Liability....................................................................51
14.16 WAIVER OF JURY TRIAL...........................................................................51
14.17 Facsimile Signatures...........................................................................52
EXHIBITS
Exhibit A-1 Legal Description for Mall Property
Exhibit A-2 Legal Description for Office Property
Exhibit B List of Contracts (listed separately for Mall and Office Properties)
Exhibit C Form of As-Is Certificate And Agreement
Exhibit D Excluded Personal Property
Exhibit E Form of Special Warranty Deed
Exhibit F Form of ▇▇▇▇ of Sale
Exhibit G Form of Assignment of Leases
Exhibit H Form of Assignment of Intangible Property
Exhibit I Form of FIRPTA Affidavit
Exhibit J Employee Provisions
Exhibit K Litigation Notices, Contract Defaults and Governmental Violations
Exhibit L Rent Roll (listed separately for Mall and Office Properties)
Exhibit M Form of Tenant Estoppel Certificate
Exhibit N New Leases Exclusions
Exhibit O Details on Easement for Wildlife Park Walkway
Exhibit P Vacant Land
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made to be effective as of
March 31, 2005, by and between COLONIAL REALTY LIMITED PARTNERSHIP, a Delaware
limited partnership ("Seller"), and PREIT-▇▇▇▇▇, INC., a Pennsylvania
corporation ("Buyer").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements set forth herein the
parties hereto do hereby agree as follows:
ARTICLE 1. - - CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
"Broker" shall mean Granite Partners, L.L.C.
"Business day" shall mean any day other than a Saturday, Sunday or any
federal or State of Alabama holiday. If any period hereunder expires on
a day that is not a business day, or any event or condition is required
by the terms of this Agreement to occur or be fulfilled on a day that
is not a business day, such period shall expire or such event or
condition shall occur or be fulfilled, as the case may be, on the next
succeeding business day.
"Buyer's Representatives" shall mean those employees of Buyer who have
specific responsibility for performing investigations and analysis of
the Property, or who are charged with executive responsibility for the
acquisition of the Property.
"Closing" shall mean the closing of the Transaction.
"Closing Date" shall mean March 31, 2005 (as the same may be extended
pursuant to the express terms of this Agreement.
"Colonial" shall mean Colonial Realty Limited Partnership, a Delaware
limited partnership.
"Contracts" shall mean all service, supply, maintenance, utility and
commission agreements, all equipment leases, and all other contracts,
subcontracts and agreements relating to the Real Property and the
Personal Property (including all contracts, subcontracts and agreements
relating to the construction of any unfinished tenant improvements),
all of which are described in EXHIBIT B attached hereto and
incorporated herein by this reference, and any additional contracts,
subcontracts and agreements entered into in accordance with the terms
of Subsection 10.2.1 hereof.
"Confidential Materials" shall mean any books, computer software,
records or files that consist of or contain appraisals, the capital
budgets for calendar year 2005 or any future period, the operating
budgets for calendar year 2005 or any future period, strategic plans
for the Real Property, internal analyses, information regarding the
marketing of the Property for sale, submissions relating to obtaining
internal authorization for the sale of the Property by Seller, attorney
and accountant work product, attorney-client privileged documents,
internal correspondence of Seller and its affiliates and correspondence
between or among such parties, or other information in the possession
or control of Seller or Seller's property manager which such party
reasonably deems proprietary or confidential; provided that (i) no
files or records related to the historical leasing, operation and
maintenance of the Property, the payment of rent, defaults by tenants
or relationships with tenants shall be deemed Confidential Materials,
and (ii) capital budgets or operating budgets for the year 2005 shall
not be deemed to be Confidential Materials.
"Deemed to know" (or words of similar import) shall have the following
meaning: (a) Buyer shall be "deemed to know" of the existence of a fact
or circumstance to the extent that any Buyer's Representative actually
knows of such fact or circumstance, or such fact or circumstance is
expressly disclosed by this Agreement, or expressly disclosed in any
studies, tests, reports, or analyses prepared specifically by Buyer, or
prepared specifically for Buyer by a third party, or delivered Buyer by
Seller or its agents accompanied with a transmittal letter
conspicuously referencing the matter for which Buyer is to be put on
notice; and (b) Buyer shall be "deemed to know" that any Seller's
warranty is untrue, inaccurate or incorrect to the extent that any
Buyer's Representative has actual knowledge of information which is
inconsistent with such Seller's Warranty.
"Designated Employees" shall mean ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ Light.
"Documents" shall mean the documents and instruments applicable to the
Property or any portion thereof that Seller or any of the other Seller
Parties deliver or make available to Buyer prior to Closing or
otherwise allow Buyer access to prior to Closing, including, but not
limited to, the Title Commitment, the Survey, the Title Documents, and
the Property Documents, together with the documents and items delivered
by Seller pursuant to Section 7.3.
"Due Diligence" shall mean examinations, inspections, investigations,
tests, studies, analyses, appraisals, evaluations and/or investigations
with respect to the Property, the Documents, and other information and
documents regarding the Property, including, without limitation,
examination and review of title matters, applicable land use and zoning
Laws and other Laws applicable to the Property, the physical condition
of the Property, and the economic status of the Property.
"Due Diligence Period" shall mean the period commencing on the
Effective Date, and expiring on March 31, 2005.
"Effective Date" shall mean the date first set forth in this Agreement,
which shall be the date on which both Buyer and Seller have executed
and delivered this Agreement.
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"Escrow Agent" shall mean Chicago Title Insurance Company, in its
capacity as escrow agent.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Hazardous Materials" shall mean any substance, chemical, waste or
material that is or becomes regulated by any federal, state or local
governmental authority because of its toxicity, infectiousness,
radioactivity, explosiveness, ignitability, corrosiveness or
reactivity, including, without limitation, asbestos or any substance
containing more than 0.1 percent asbestos, the group of compounds known
as polychlorinated biphenyls, flammable explosives, oil, petroleum or
any refined petroleum product.
"Laws" shall mean all municipal, county, state or federal statutes,
codes, ordinances, laws, rules or regulations.
"Leases" shall mean all leases of tenants of the Property as of the
date hereof, and any New Leases.
"Liabilities" shall mean, collectively, any and all problems,
conditions, losses, costs, damages, claims, liabilities, expenses,
demands or obligations of any kind or nature whatsoever.
"New Leases" shall mean, collectively, any lease for space at the
Property entered into between the date hereof and the Closing Date,
excluding, however, the Leases scheduled on Exhibit N hereto.
"Other Property Rights" shall mean, collectively, Seller's interest in
and to all of the following, if and to the extent the same are
assignable by Seller: (a) any licenses, permits and other written
authorizations necessary for the use, operation or ownership of the
Real Property, (b) those guaranties and warranties in effect with
respect to any portion of the Property, (c) all rights of Seller (if
any) to the name "Gadsden Mall" and "P&S Building" and similar names
and derivations thereof (it being acknowledged by Buyer that Seller may
not have exclusive rights to use such name and that Seller has not
registered the same in any manner), and (d) the Contracts and
Documents, except for Contracts to be terminated as herein set forth,
and (e) plans and specifications, development approvals and rights,
utility allocations, escrow accounts, unpaid awards for taking by
condemnation or any damage (subject to the further provisions of this
Agreement as to condemnation awards), and other intangibles relating to
the Mall Property or the Office Property. Specifically excluded from
the Other Property Rights being transferred herein are the names
"Colonial", "Colonial Plaza", "Colonial Center", "Colonial Realty",
"Colonial Village", "Colonial Grand", "Colonial Shoppes", "Colonial
Mall", "Colonial Promenade" or "Where You Live, Work and Shop", or any
variation thereof (collectively, the "Colonial Marks"), along with any
tradename, trademark or trade dress of Seller (collectively, the
"Excluded Names & Marks"), or any signs containing the Excluded Names &
Marks or any tradename, trademark or trade dress of Seller; provided
that this Agreement shall not exclude any tradenames, trademarks or
trade dress, other than the Colonial Marks, which are reasonably
associated with "Gadsden Mall" or the "P & S Building". Seller shall
have the right to remove all such signage within forty five (45) days
of closing. Should Seller remove such signage, the remaining portion
shall be repaired to a usable condition or, at Buyer's option, the
removal shall be performed in conjunction with the installation of
Buyer's new signage.
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"Owner's Policy" shall mean an ALTA-B (1970/1984) Owner's Form of title
insurance policy in the amount of the Purchase Price (or separate title
policies for the Mall Property and the Office Property).
"Permitted Exceptions" shall mean and include all of the following
(except to the extent any matters included in clauses (b), (c), (d) and
(j) are objected to by Buyer as provided in Section 4.2 hereof): (a)
applicable zoning and building ordinances and land use regulations,
provided that the same shall not be violated in any material manner,
(b) [Not Applicable], (c) such exceptions to title as are listed on
Schedule B of the Title Commitment, (d) such state of facts as
disclosed in the Survey, (e) [Not Applicable], (f) the lien of taxes
and assessments not yet due and payable, subject to the apportionment
provisions of this Agreement (it being agreed by Buyer and Seller that
if any tax or assessment is levied or assessed with respect to the
Property after the date hereof and the owner of the Property has the
election to pay such tax or assessment either immediately or under a
payment plan with interest, Seller may elect to pay under a payment
plan, which election shall be binding on Buyer), (g) any exceptions
caused by Buyer, its agents, representatives or employees, (h) such
other exceptions as the Title Company shall commit to insure over,
without any additional cost to Buyer, whether such insurance is made
available in consideration of payment, bonding, indemnity of Seller or
otherwise, provided the such commitment to insure over covers all
liability, marketability and defense costs, includes a commitment to
provide such insurance over to any future grantees of Buyer without
additional cost, and is otherwise reasonably satisfactory to Buyer and
any lender of Buyer furnishing purchase money financing for the
Property, (i) the rights of the tenants under the Leases, solely as
tenants and not as to any ownership rights or options in the Property,
(j) [Not Applicable], and (k) any matters deemed to constitute
additional Permitted Exceptions under Subsection 4.2.1 hereof.
"Personal Property" shall mean, collectively, (a) all tangible personal
property owned by Seller that is located on the Real Property and used
in the ownership, operation and maintenance of the Real Property,
including without limitation gift certificate equipment and supplies,
(b) all books, records and files relating to the Property or the
Leases, and the historical net income of the Property but specifically
excluding: (i) any Confidential Materials any computer software that is
licensed to Seller or Seller's property manager, and (ii) the Excluded
Names and Marks.
"Plans" shall mean employee benefit plans, as defined in Section 3(3)
of ERISA.
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"Property" shall mean, collectively, (a) the Real Property, (b) the
Personal Property, (c) Seller's interest as landlord in all Leases; (d)
if and to the extent assignable by Seller without any material expense
to Seller, the Contracts, and (e) the Other Property Rights.
"Property Documents" shall mean, collectively, (a) the Leases, (b) the
Contracts, and (c) any other documents or instruments which constitute
or otherwise pertain to any portion of the Property.
"Real Property" shall mean those certain parcels of real estate located
in the City of Gadsden, Etowah County, Alabama, and legally described
in Exhibit A-1 and Exhibit A-2 attached hereto and incorporated herein
by this reference, together with all buildings, improvements and
fixtures located thereon (other than fixtures, equipment and personal
property owned by Tenants under the terms of their Leases) and all
rights, privileges and appurtenances pertaining thereto including all
of Seller's right, title and interest in and to all rights-of-way, open
or proposed streets, alleys, easements, strips or gores of land
adjacent thereto. The parcel described on Exhibit A-1, together with
Seller's rights in associated Property, is known as the "Mall Property"
and comprises an enclosed regional mall of approximately 477,399 square
feet known as the "Gadsden Mall" including an outparcel across the road
from the Gadsden Mall upon which the Arby's fast-food restaurant
exists. The parcel described on Exhibit A-2, together with Seller's
rights in associated Property, is known as the "Office Property" and
comprises a two story office building containing approximately 39,560
square feet which is known as the "P & S Building". The Mall Property
and the Office Property together comprise the Property.
"Reimbursable Lease Expenses" shall mean, collectively, any and all
costs, expenses and fees paid by Seller prior to Closing or costs,
expenses and fees incurred by Seller prior to Closing arising out of or
in connection with any New Lease entered into between the Effective
Date and the Cut-Off Date which has been approved or deemed approved by
Buyer and which is for space which is then vacant and unleased
(collectively, "New Leasing Documents"). Reimbursable Lease Expenses
shall include, without limitation, (i) brokerage commissions and fees
to effect any such leasing transaction, provided the same are in
accordance with a rate schedule and terms reasonably approved by Buyer,
(ii) expenses reasonably incurred for repairs, improvements, equipment,
painting, decorating, partitioning, other tenant improvement costs, and
other items to satisfy the tenant's requirements with regard to such
leasing transaction, and (iii) reasonable legal fees for services in
connection with the preparation of documents and other services
rendered in connection with the effectuation of the leasing
transaction.
"Seller Parties" shall mean and include, collectively, (a) Seller; and
(b) Seller's counsel.
"Seller's Warranties" shall mean Seller's representations and
warranties set forth in Section 9.2 and any documents executed by
Seller for the benefit of Buyer in connection with Closing, as such
representations and warranties may be deemed modified or waived by
Buyer as herein provided.
5
"Survey" shall mean a current survey of the Property prepared by a
surveyor licensed in the State of Alabama.
"Tax Year" shall mean the period commencing on October 1 of each
calendar year and ending on September 30 of each calendar year, being
the real estate tax assessment year for the county in which the
Property is located.
"Title Commitment" shall mean a commitment to issue an ALTA Owner's
Policy of Title Insurance issued by the Title Company.
"Title Company" shall mean Chicago Title Insurance Company.
"Title Documents" shall mean all recorded documents referred to on
Schedule B of the Title Commitment as exceptions to coverage and for
which legible copies are delivered to Buyer.
"Transaction" shall mean the transaction contemplated by this
Agreement.
ARTICLE 2. - - SALE OF PROPERTY
Seller agrees to sell, transfer and assign, and Buyer agrees to purchase, accept
and assume, subject to the terms and conditions set forth in this Agreement and
the Exhibits attached hereto, all of Seller's right, title and interest in and
to the Property. The parties hereto acknowledge that this Agreement has been
signed on the Closing Date and that, notwithstanding the reference in various
portions of this Agreement to actions, approvals or reviews to be taken between
the Effective Date and the Closing Date as a condition of Closing, all such
conditions have been satisfied (including without limitation Buyer's due
diligence reviews), except to the extent otherwise expressly set forth herein;
provided that this sentence shall not apply to actions to be taken or documents
to be delivered at the Closing itself nor to any conditions to be determined
immediately prior to Closing.
ARTICLE 3. - PURCHASE PRICE
The total purchase price to be paid by Buyer for the purchase of the Property is
the sum of Sixty Million Dollars ($60,000,000) in immediately available funds
(the "Purchase Price"). The Purchase Price is allocated One Million Five Hundred
Thousand Dollars ($1,500,000) to the Office Property, and Fifty Eight Million
Five Hundred Thousand Dollars ($58,500,000) to the Mall Property, and shall be
paid in the following manner:
3.1 Deposit Money. [Not Applicable].
3.2 Letter of Credit. [Not Applicable].
3.3 Cash at Closing. On the Closing Date, Buyer shall pay to Seller an
amount equal to the Purchase Price, subject to the prorations and
adjustments set forth in Article 6 or as otherwise provided under this
Agreement, in immediately available federal funds by wire transfer as
more particularly set forth in Section 7.2.
6
ARTICLE 4. - TITLE MATTERS
4.1 Title to Real Property. Buyer shall use good faith and reasonable
efforts to obtain (a) the Title Commitment, (b) copies of all of the
Title Documents, and (c) the Survey, as soon as reasonably practicable
after the Effective Date. Upon receipt, Buyer shall furnish Seller's
counsel with copies of such items.
4.2 Title Defects.
4.2.1 Buyer's Objections to Title.
(a) Prior to the end of the Due Diligence Period, Buyer
shall have the right to object in writing to any
title matters that appear on the Title Commitment or
Survey or any other title matters which are
specifically disclosed to Buyer by Seller in writing
at least ten (10) days prior to the end of the Due
Diligence Period. Any exceptions which are timely
objected to by Buyer shall be herein collectively
called the "Title Objections."
(b) If this Agreement is not terminated by Buyer in
accordance with the provisions hereof, Seller shall,
at Closing, remove or cause to be removed any Title
Objections to the extent (and only to the extent)
that (i) such Title Objections have not been caused
by Buyer or any Buyer Representatives, and (ii) such
Title Objections are either (A) liens evidencing
monetary encumbrances (other than liens for
non-delinquent general real estate taxes for the
current year which are to be apportioned between
Buyer and Seller), or (B) liens created or suffered
to exist by Seller or its agents and affiliates but
only to the extent such liens are created after the
date of this Agreement in violation of Section 4.2.3
(collectively, the "Required Exceptions"). In
addition, Seller shall remove such Title Objections
as Seller may elect to remove, or elect to cause to
be removed at its expense, as set forth in subsection
(c) below.
(c) To the extent that the same do not constitute
Required Exceptions, Seller shall notify Buyer in
writing within fifteen (15) business days after
receipt of Buyer's notice of Title Objections (but in
any event, prior to the Closing Date) whether Seller
elects to remove the same. If Seller elects not to
remove one or more of such Title Objections, then
within five (5) business days after Seller's election
(but in any event, prior to the Closing Date) , Buyer
may elect in writing to either (i) terminate this
Agreement, in which event the Deposit shall be paid
to Buyer, and thereafter, the parties shall have no
further rights or obligations hereunder except for
obligations that expressly survive the termination of
this Agreement, or (ii) waive the Title Objections
which Seller has elected not to remove, in which
event the Closing shall occur as herein provided
without any reduction of or credit against the
Purchase Price on account of such Title Objections.
Any such Title Objection so waived (or deemed waived)
by Buyer shall be deemed to constitute an additional
Permitted Exception.
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(d) If Seller is unable, after using good faith,
commercially reasonable efforts, to remove any
Required Exceptions or other Title Objections (other
than monetary liens or encumbrances, which Seller
shall in all events be obligated to remove) that it
has previously elected to remove prior to the
Closing, Buyer may at Closing elect either to (a)
terminate this Agreement, in which event the Deposit
shall be paid to Buyer together with all of Buyer's
reasonable and verified costs and expenses, including
without limitation legal, environmental, title and
other fees incurred in connection with this Agreement
and proceeding with the transactions covered by this
Agreement, but not more than $50,000 (the
"Termination Expenses") and thereafter, the parties
shall have no further rights or obligations hereunder
except for obligations which expressly survive the
termination of this Agreement, or (b) waive such
Title Objections, in which event the Closing shall
occur as herein provided without any reduction of or
credit against the Purchase Price (except that Buyer
shall be entitled to a credit against the Purchase
Price for any monetary liens plus any additional sums
required by the Title Company to be escrowed for
satisfaction of same). Upon notice to Buyer at least
ten (10) days prior to the scheduled Closing, Seller
shall be entitled to a reasonable adjournment of the
Closing (not to exceed thirty (30) days) for the
purpose of the removal of any Required Exceptions or
other Title Objections (other than monetary liens),
which removal may be effected by the issuance of
title insurance eliminating or insuring against the
effect of the Title Objections as provided in Section
4.2.2.
4.2.2 Discharge of Title Objections. If on the Closing Date there
are any Required Exceptions or any other Title Objections
which Seller has elected to pay and discharge, Seller may use
any portion of the Purchase Price to satisfy the same,
provided Seller shall either (a) deliver to Buyer at the
Closing instruments in recordable form and sufficient to cause
such Title Objections to be released of record, together with
the cost of recording or filing such instruments, or (b) cause
the Title Company to insure over the same, without any
additional cost to Buyer, whether such insurance is made
available in consideration of payment, bonding, indemnity of
Seller or otherwise, provided that any such insurance over any
matter other than a monetary lien shall be subject to Buyer's
approval, which shall not be unreasonably withheld,
conditioned or delayed, and which shall be subject to the
other requirements for insuring over as provided in the
definition of "Permitted Exceptions" in Article 1 above.
8
4.2.3 No New Exceptions. From and after the date hereof, Seller
shall not execute any deed, easement, restriction, covenant or
other matter affecting title to the Property unless Buyer has
received a copy thereof and has approved the same in writing.
If Buyer fails to object in writing to any such proposed
instrument within ten (10) business days after receipt of such
instrument together with all applicable information and data
as is reasonably appropriate to the evaluation of Seller's
request, Buyer shall be deemed to have approved the proposed
instrument. Buyer shall not unreasonably withhold, condition
or delay its approval with respect to any such instrument;
provided that such instrument involves no financial burden to
Buyer.
4.3 Title Insurance. At Closing, the Title Company shall issue to Buyer the
Owner's Policy insuring that fee simple title to the Real Property is
vested in Buyer, subject only to the Permitted Exceptions, and with
extended coverage over the standard general exceptions. Buyer shall be
entitled to request that the Title Company provide such endorsements
(or amendments) to the Owner's Title Policy as Buyer may reasonably
require, provided that (a) such endorsements (or amendments) shall be
at no cost to, and shall impose no additional liability on, Seller, (b)
Buyer's obligations under this Agreement shall not be conditioned upon
Buyer's ability to obtain such endorsements and, if Buyer is unable to
obtain such endorsements, Buyer shall nevertheless be obligated to
proceed to close the Transaction without reduction of or set off
against the Purchase Price and (c) the Closing shall not be delayed as
a result of Buyer's request for endorsements.
ARTICLE 5. - BUYER'S DUE DILIGENCE/CONDITION OF THE PROPERTY
5.1 Buyer's Inspections and Due Diligence. During the Due Diligence Period,
Seller shall provide Buyer and Buyer's representatives access to the
Property and all files and records related to the leasing, operation
and maintenance of the Property, the payment of rent, defaults by
tenants and relationships with tenants (but specifically excluding
Confidential Materials), including without limitation all existing
physical and environmental reports, plans and specifications in
Seller's possession or control. Seller shall also provide Buyer and
Buyer's representatives access to financial records of the Property
(excluding Confidential Materials) to the extent reasonably necessary
for Buyer to confirm that the income from the Property meets the REIT
tests for federal income tax purposes. Buyer shall complete its Due
Diligence at its sole cost and expense. Buyer shall independently
inspect and investigate the Property and verify such information with
respect to the Property as and to the extent that Buyer deems necessary
or desirable to evaluate fully the Transaction and the physical
condition and economic status of the Property. Such Due Diligence may
include, without limitation, Buyer's review and approval, in its sole
and absolute discretion, of all title matters, applicable land use and
zoning laws and regulations, the physical condition of the Property,
leases and contracts affecting the Property and such other items
related to the Property as Buyer may deem relevant. Seller agrees to
make employees of Seller's property manager available to Buyer and
Buyer's Representatives during the Due Diligence Period as reasonably
requested by Buyer. Buyer shall immediately return the Property to its
condition existing prior to any tests and inspections performed by
Buyer's Representatives or consultants. By Buyer's execution of this
Agreement, Buyer hereby confirms its agreement to indemnify, defend and
hold each of the Seller Parties free and harmless from and against any
and all Liabilities (including reasonable attorneys' fees and expenses)
arising out of or resulting from the entry on the Property and/or the
conduct of any Due Diligence by Buyer's Representatives or consultants
at any time prior to Closing, to the extent caused by Buyer, Buyer's
Representatives or consultants; provided, however, that Buyer's
obligations under the foregoing indemnity shall not apply to the mere
discovery or non-negligent disturbance of a pre-existing environmental
or physical condition at the Property; and provided, further, that
Seller and Buyer waive against each other any loss or damage to the
extent covered by casualty or liability insurance maintained by the
other. Buyer's investigatory rights shall continue beyond the Due
Diligence Period until Closing or any earlier termination of this
Agreement, but without the contingency applicable to the Due Diligence
Period.
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5.2 As-Is Sale. Buyer acknowledges and agrees that during the Due Diligence
Period, Buyer shall conduct such Due Diligence as Buyer deems necessary
or appropriate. In addition, Buyer acknowledges and agrees that (a)
except for Seller's Warranties and except as otherwise expressly set
forth in this Agreement, the Property shall be sold, and Buyer shall
accept possession of the Property on the Closing Date, "AS IS, WHERE
IS, WITH ALL FAULTS," with no right of setoff or reduction in the
Purchase Price; (b) except for Seller's Warranties or as otherwise
expressly set forth in this Agreement, none of the Seller Parties have
or shall be deemed to have made any verbal or written representations,
warranties, promises or guarantees (whether express, implied, statutory
or otherwise) to Buyer with respect to the Property, any matter set
forth, contained or addressed in the Documents (including without
limitation the accuracy and completeness thereof) or the results of
Buyer's Due Diligence; and (c) Buyer shall independently confirm to its
satisfaction all information that it considers material to its purchase
of the Property or the Transaction. Buyer expressly understands and
acknowledges that it is possible that unknown Liabilities may exist
with respect to the Property, and that Buyer explicitly took such
possibility into account in determining and agreeing to the Purchase
Price.
5.3 Termination of Agreement During Due Diligence Period. If Buyer, in its
sole and absolute discretion, is not satisfied with the results of its
Due Diligence during the Due Diligence Period, Buyer may terminate this
Agreement by written notice to Seller given in accordance with the
provisions of Section 16.9 hereof at any time prior to 5:00 p.m.
Eastern Time on the first business day following the expiration of the
Due Diligence Period, and, in the event of such termination, neither
Seller nor Buyer shall have any liability hereunder except for those
obligations which expressly survive the termination of this Agreement,
and Buyer shall be entitled to the return of the Deposit. In the event
Buyer fails to terminate this Agreement prior to 5:00 p.m. Eastern Time
on the first business day following the expiration of the Due Diligence
Period, Buyer shall be deemed to have waived its rights to terminate
this Agreement in accordance with this Article 5.
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5.4 Buyer's Certificate. Buyer shall deliver to Seller, at the Closing, a
certificate in the form of Exhibit C attached hereto and incorporated
herein by this reference.
ARTICLE 6. - ADJUSTMENTS AND PRORATIONS
The following adjustments and prorations shall be made at Closing:
6.1 Lease Rentals.
6.1.1 Definition of "Rent". For purposes of this Article 6, the term
"Rent" shall mean all base rents, percentage rents, additional
rent, common area maintenance charges and any tax and
operating expense reimbursements and escalations due from the
tenants under the Leases.
6.1.2 Rents. All collected Rents shall be prorated between Seller
and Buyer as of 12:01 a.m. on the Closing Date. Seller shall
be entitled to all Rents attributable to the period up to but
not including the Closing Date. Buyer shall be entitled to all
Rents attributable to any period on and after the Closing
Date. Rents not collected as of the Closing Date (including
percentage rents) shall not be prorated at the time of
Closing. After Closing, Buyer shall make a good faith effort
for a period not less than twelve (12) months to collect any
Rents not collected as of the Closing Date on Seller's behalf
and to tender the same (or Seller's share thereof computed in
accordance with the provisions of this Agreement) to Seller
upon receipt, net of any adjustments due to Buyer (which
obligation of Buyer shall survive the Closing and not be
merged therein); provided, however, that all Rents collected
by Buyer on or after the Closing Date shall first be applied
to all amounts due under the Leases at the time of collection
(i.e., current Rents and sums due Buyer as the current owner
and landlord) with the balance (if any) payable to Seller, but
only to the extent of amounts delinquent and actually due
Seller. Seller agrees that the invoicing of delinquent tenants
on a monthly basis shall constitute a good faith effort and
Buyer shall not be obligated to enforce its rights under the
Leases, or threaten such enforcement, or to bring any
proceedings in a court of law or equity. Buyer shall not have
an exclusive right to collect the sums due Seller under the
Leases, and Seller hereby retains its rights to pursue any
tenant under the Leases for sums due Seller for periods
attributable to Seller's ownership of the Property (including,
without limitation, any percentage rent that may be due with
respect to any period of time prior to Closing, regardless of
when the same is to be paid to the owner of the Property
pursuant to the terms of the applicable Lease); provided,
however, that Seller (i) shall be required to notify Buyer in
writing of its intention to commence or pursue such legal
proceedings; (ii) shall only be permitted to commence or
pursue any legal proceedings after the date which is three (3)
months after Closing and shall commence such proceeding, if at
all, prior to the 1st anniversary of the Closing Date; and
(iii) shall not be permitted to commence or pursue any legal
proceedings against any tenant seeking eviction of such tenant
or the termination of the underlying lease. The terms of the
immediately preceding sentence shall survive the Closing and
not be merged therein.
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6.1.3 Other Revenues. Revenues from Property operations other than
Rents (which shall be prorated as provided in Subsection
6.1.2), and security deposits (which will be apportioned as
provided in Section 6.7), that are actually collected, shall
be prorated between Buyer and Seller as of 12:01 a.m. on the
Closing Date. Seller shall be entitled to all such revenues
attributable to any period to but not including the Closing
Date, and Buyer shall be entitled to all such revenues
attributable to any period on and after the Closing Date.
After Closing, Buyer shall make a good faith effort for a
period not less than six (6) months to collect any such
revenues not collected as of the Closing Date on Seller's
behalf and to tender the same to Seller upon receipt, net of
any adjustments due to Buyer (which obligation of Buyer shall
survive the Closing and not be merged therein); provided,
however, that all such other revenues collected by Buyer on or
after the Closing Date shall first be applied to all amounts
that may be due from such payor to Buyer at the time of
collection with the balance (if any) payable to Seller, but
only to the extent of amounts delinquent and actually due to
Seller. Seller agrees that the invoicing of delinquent payors
on a monthly basis shall constitute a good faith effort and
Buyer shall not be obligated to enforce its rights under the
agreements pursuant to which such revenues are due, or
threaten such enforcement, or to bring any proceedings in a
court of law or in equity. Buyer shall not have an exclusive
right to collect such revenues, and Seller hereby retains its
rights to pursue any parties for sums due Seller for periods
attributable to Seller's ownership of the Property; provided,
however, that Seller (i) shall be required to notify Buyer in
writing of its intention to commence or pursue such legal
proceedings; (ii) shall only be permitted to commence or
pursue any legal proceedings after the date which is three (3)
months after Closing and shall commence such proceeding, if at
all, prior to the 1st anniversary of the Closing Date; and
(iii) to the extent any such delinquent payor is a tenant at
the Property, shall not be permitted to commence or pursue any
legal proceedings against such tenant seeking eviction of such
tenant or the termination of the underlying lease. The terms
of the immediately preceding sentence shall survive the
Closing and not be merged therein. Notwithstanding anything
contained herein to the contrary, Buyer and Seller acknowledge
and agree that Seller shall be entitled to ▇▇▇▇ and collect
all reconciliations for 2004 common area maintenance charges
and taxes owed by tenants to Seller.
6.1.4 Marketing Funds. Advertising and marketing funds collected by
Seller prior to Closing and not expended will be credited
against the Purchase Price.
6.2 Reimbursable Lease Expenses. At Closing, Buyer shall reimburse Seller
for the Reimbursable Lease Expenses to the extent required by the terms
of Section 10.2.5.
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6.3 Real Estate and Personal Property Taxes. 6.3.1 Proration of Ad Valorem
Taxes. Subject to the terms of Section 6.3.4 below, Buyer and Seller
shall only prorate ad valorem real estate and personal property taxes
for the Property that are assessed for the Tax Year in which Closing
occurs. There shall be no proration of ad valorem real estate or
personal property taxes other than as set forth hereinabove, and, as
between Buyer and Seller, Buyer agrees that it shall be solely
responsible for all such ad valorem real estate and personal property
taxes due and payable after the Closing and Seller shall be solely
responsible for all such ad valorem real estate and personal property
taxes attributable to periods prior to the Closing. The proration of
the ad valorem real estate and personal property taxes assessed for the
Tax Year in which Closing occurs shall be calculated as follows:
(a) Seller shall be responsible for that portion of such taxes
equal to (i) the total such taxes assessed for the Tax Year in
which Closing occurs, multiplied by (ii) a fraction, the
numerator of which shall be the number of days in such Tax
Year prior to the Closing Date, and the denominator of which
shall be 365; and
(b) Buyer shall be responsible for that portion of such taxes
equal to (i) the total such taxes assessed for the Tax Year in
which Closing occurs, multiplied by (ii) a fraction, numerator
of which shall be the number of days in such Tax Year
subsequent to and including the Closing Date, and the
denominator of which shall be 365.
Notwithstanding anything herein to the contrary, Seller agrees to
collect and remit to the appropriate taxing authority all sales and use
taxes, if any, required by Law to be collected by Seller prior to the
Closing Date, and Buyer agrees to collect and remit to the property
taxing authorities all sales and use taxes, if any, required by Law to
be collected by Buyer on or after the Closing Date. Each party hereby
agrees to indemnify and hold the other party harmless from and against
any and all liability such party may incur, including interest,
penalties and costs, by reason of the failure of the other party to
collect and remit to the appropriate taxing authorities all sales and
use taxes required to be collected by such party during its period of
ownership. The provisions of this paragraph shall survive Closing and
shall not be merged therein. Seller's indemnity obligation under this
Section 6.3.1 shall not be subject to, and shall be in addition to, the
cap on Seller's liability provided for in Section 16.15 of this
Agreement.
6.3.2 Insufficient Information. If, at Closing, the real estate
and/or personal property tax rate and assessments have not
been set for the taxes assessed for the Tax Year in which
Closing occurs, then the proration of such taxes shall be
based upon the rate and assessments for the preceding Tax
Year, and such proration shall be adjusted between Seller and
Buyer after Closing upon presentation of written evidence that
the actual taxes assessed for the Tax Year in which Closing
occurs differ from the amounts used at Closing and in
accordance with the provisions of Section 6.8.
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6.3.3 Special Assessments. Seller shall pay all installments of
special assessments due and payable prior to the Closing Date,
and Buyer shall pay all installments of special assessments
due and payable on and after the Closing Date. Special
assessments, if any, for the month of Closing will be
prorated.
6.3.4 Tenant Reimbursements. Seller and Buyer acknowledge that real
estate taxes are due without penalty on December 31 for the
preceding October 1 - September 30 fiscal period and in that
regard they agree that, notwithstanding any provision in any
of the Leases to the contrary, the tax reimbursement payments
to be paid by tenants of the Property during the Tax Year in
which Closing occurs are to be applied to pay the real estate
taxes assessed for such Tax Year and, therefore, Buyer shall
not receive a credit at Closing for any amounts due and
payable by tenants of the Property prior to the Closing as
real estate tax reimbursements (other than real estate tax
reimbursements actually received by Seller prior to Closing
which are applicable to the month in which Closing occurs or
to periods thereafter, which reimbursements shall be prorated
between Buyer and Seller.)
6.4 Other Property Operating Expenses. Operating expenses for the Property
shall be prorated as of 12:01 a.m. on the Closing Date. Seller shall
pay all utility charges and other operating expenses attributable to
the Property to, but not including the Closing Date (except for those
utility charges and operating expenses payable by tenants in accordance
with the Leases), and Buyer shall pay all utility charges and other
operating expenses attributable to the Property on or after the Closing
Date. To the extent that the amount of actual consumption of any
utility services is not determined prior to the Closing Date, a
proration shall be made at Closing based on the last available reading,
and post-closing adjustments between Buyer and Seller shall be made
within twenty (20) days of the date that actual consumption for such
pre-closing period is determined, which obligation shall survive the
Closing and not be merged therein. Seller shall endeavor to obtain
final meter readings as of the date prior to Closing. If any utility
charges are paid in advance or in arrears, appropriate prorations shall
be made as of the Closing Date. Seller shall not assign to Buyer any
deposits which Seller has with any of the utility services or companies
servicing the Property. Buyer shall arrange with such services and
companies to have accounts opened in Buyer's name beginning at 12:01
a.m. on the Closing Date. Notwithstanding the foregoing terms of this
section, Seller shall have no obligation to pay (and Buyer shall not
receive a credit at Closing for) any operating expenses to the extent
that (x) Buyer is entitled after Closing to reimbursement of operating
expenses from tenants, or the recovery of any increase in operating
expenses, from the tenants under the Leases (including payments due
from tenants for the month in which Closing occurs but which are not
actually received by Seller prior to Closing), (y) the tenants from
whom reimbursement is due are not at Closing in default under their
Leases, and such reimbursements from tenants under the Leases are not
more than thirty (30) days past due as of the Closing Date, and (z) the
amount of such reimbursement from the tenants is capable of reasonably
precise determination as of the Closing, regardless of whether Buyer
actually collects such reimbursement or increased operating expenses
from such tenants after Closing, it being understood and agreed by
Buyer and Seller that (a) as between Buyer and Seller, Buyer shall be
responsible for payment of all of such operating expenses to the extent
of the reimbursements due from tenants as aforesaid, and (b) the burden
of collection such reimbursements shall be solely on Buyer.
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6.5 Closing Costs. Buyer shall pay the following costs: (a) one-half of all
premiums and charges in connection with the Owner's Title Policy
(provided any endorsements shall be solely the responsibility of Buyer)
issued to Buyer, (b) the cost of preparing the Survey, (c) all
recording and filing charges in connection with the instrument by which
Seller conveys the Property, (d) one-half of the Title Company escrow
and closing charges, (e) one-half of all documentary stamp taxes,
transfer taxes, deed taxes, sales taxes and similar charges applicable
to the transfer of the Property to Buyer ("Transfer Taxes"), (f) all
costs of Buyer's Due Diligence, including fees due its consultants and
attorneys, and (g) all lenders' fees related to any financing to be
obtained by Buyer. Seller shall pay the following costs: (a) one-half
of the Title Company escrow and closing charges, (b) all fees due its
attorneys, (c) one-half of the premiums for the Owner's Title Policy,
excluding Buyer's endorsements, and (d) one-half of the Transfer Taxes.
The obligations of the parties under this Section 6.5 shall survive the
Closing (and not be merged therein) or any earlier termination of this
Agreement.
6.6 Apportionment Credit. In the event the apportionments to be made at the
Closing result in a credit balance (a) to Buyer, such sum shall be paid
(at Seller's option) at the Closing by giving Buyer a credit against
the Purchase Price in the amount of such credit balance, or (b) to
Seller, Buyer shall pay the amount thereof to Seller at the Closing by
wire transfer of immediately available funds to the account or accounts
to be designated by Seller for the payment of the Purchase Price.
6.7 Cash Security Deposits. At Closing, Seller shall give Buyer a credit
against the Purchase Price in the aggregate amount of any unapplied
cash security deposits then held by Seller under the Leases less any
administrative or similar charges to which Seller may be entitled under
applicable Law.
6.8 Gift Certificate Program. Buyer acknowledges that Seller's gift
certificate program is a company-wide plan. Therefore, no credit will
be given at Closing for issued and unused gift certificates. Seller
hereby agrees to honor all gift certificates as they are redeemed,
however, no transfer of the gift certificate program shall be made.
Included in this sale is all gift certificate equipment (check-issuing
equipment) presently used for the gift certificate program.
6.9 Improvement Allowance Credit. At Closing, Seller shall give Buyer a
credit against the Purchase Price in an amount equal to the aggregate
tenant improvement allowances provided for in the Tenant Leases that
have not been paid to tenants, to the extent that such allowances arise
under Tenant Leases other than New Leases (which are the responsibility
of Buyer). In calculating the undisbursed allowances, Seller shall be
entitled to rely upon the statements made by the tenants with respect
thereto in their respective tenant estoppel certificates.
15
6.10 Delayed Adjustment; Delivery of Operating and Other Financial
Statements. If at any time following the Closing Date, the amount of an
item listed in any section of this Article 6 shall prove to be
incorrect (whether as a result in an error in calculation or a lack of
complete and accurate information as of the Closing), the party in
whose favor the error was made shall promptly pay to the other party
the sum necessary to correct such error upon receipt of proof of such
error, provided that such proof is delivered to the party from whom
payment is requested on or before one (1) year after Closing (such
period being referred to herein as the "Post Closing Adjustment
Period"). In order to enable Seller to determine whether any such
delayed adjustment is necessary, Buyer shall provide to Seller the
relevant operating and financial statements for the Property no later
than the date one (1) month prior to the expiration of the Post-Closing
Adjustment Period or as soon thereafter as practicable, but in such
case the Post Closing Adjustment Period shall be extended until 1 month
after delivery of such statements. The provisions of this Section 6.11
shall survive the Closing and not be merged therein.
ARTICLE 7. - CLOSING
Buyer and Seller hereby agree that the Transaction shall be consummated as
follows:
7.1 Closing Date. Subject to Seller's right to extend the Closing as
provided in this Agreement, Closing shall occur on the Closing Date.
Time is of the essence with respect to the Closing Date.
7.2 Title Transfer and Payment of Purchase Price. Provided all conditions
precedent to Seller's obligations hereunder have been satisfied, Seller
agrees to convey the Property to Buyer upon confirmation of receipt of
the Purchase Price by the Escrow Agent as set forth below. Provided all
conditions precedent to Buyer's obligations hereunder have been
satisfied, Buyer agrees to pay the amount specified in Article 3 by
timely delivering the same to the Escrow Agent no later than 2:00 p.m.
Eastern Time on the Closing Date and unconditionally directing the
Escrow Agent to deposit the same in Seller's designated account by 3:00
p.m. Eastern Time on the Closing Date. For each full or partial day
after 3:00 p.m. Eastern Time on the Closing Date that Seller has not
received in its account the payment specified in Article 3, Buyer shall
pay to Seller one (1) day's interest on the unpaid funds at the rate
per annum equal to the "prime rate" as such rate is reported in the
"Money Rates" section of The Wall Street Journal, as published and
distributed in New York, New York, in effect from time to time.
7.3 Seller's Closing Deliveries. At Closing, Seller shall deliver or cause
to be delivered the following (separately for each of the Mall Property
and the Office Property):
16
(a) Deed. A special warranty deed in the form of Exhibit E
attached hereto and incorporated herein by this reference
("Special Warranty Deed") executed and acknowledged by Seller.
(b) ▇▇▇▇ of Sale. A ▇▇▇▇ of sale in the form of Exhibit F attached
hereto and incorporated herein by this reference ("▇▇▇▇ of
Sale") executed by Seller.
(c) Assignment of Tenant Leases. An assignment and assumption of
tenant leases, in the form of Exhibit G attached hereto and
incorporated herein by this reference ("Assignment of Leases")
executed by Seller.
(d) Assignment of Intangible Property. An assignment and
assumption of the Contracts and the Other Property Rights less
the Excluded Names and Marks (to the extent the same are not
transferred by the Special Warranty Deed, Ground Leasehold
Assignments, ▇▇▇▇ of Sale or Assignment of Leases) in the form
of Exhibit H attached hereto and incorporated herein by this
reference ("Assignment of Intangible Property") executed by
Seller.
(e) Non-Foreign Status Affidavit. A non-foreign status affidavit
in the form of Exhibit I attached hereto and incorporated
herein by this reference, as required by Section 1445 of the
Internal Revenue Code, executed by each party comprising
Seller.
(f) Other Documents. Such other documents as may be reasonably
required by the Title Company or as may be agreed upon by
Seller and Buyer to consummate the Transaction.
(g) Tax Returns. Duly completed and signed real estate transfer
tax and sales tax declarations.
(h) Letters of Credit as Tenant Security Deposits. With respect to
any security deposits which are letters of credit, Seller
shall, whether or not the same are assignable, (i) deliver to
Buyer at the Closing such letters of credit, (ii) execute and
deliver such other instruments, at and after Closing, as the
issuers of such letters of credit shall reasonably require,
and (iii) cooperate with Buyer at and after Closing, to change
the named beneficiary under such letters of credit to Buyer so
long as Seller does not incur any additional liability or
expense in connection therewith.
(i) Closing Statement. A closing statement, setting forth the
prorations and adjustments to the Purchase Price to be made
pursuant to Article 6 (the "Closing Statement") executed by
Seller. Seller shall deliver to Buyer a draft Closing
Statement for Buyer's review at least five (5) business days
prior to the Closing Date; provided, however, that if Seller
fails to timely deliver to Buyer a draft Closing Statement as
required herein, Buyer's sole remedy shall be to extend the
Closing Date to the date that is five (5) business days after
the date on which Seller delivers the initial draft Closing
Statement to Buyer, which remedy shall be exercised, if at
all, by giving Seller written notice of such election on or
before the date that is two (2) business days before the
originally-scheduled Closing Date.
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(j) Occupancy Tenant Estoppel Certificates. Executed estoppel
certificates from the Required Tenants dated not more than 45
days prior to the Closing, each of which shall be
substantially in the form which such tenant is required to
provide pursuant to the terms of its Lease or, if no form is
specified in such Lease, substantially in the form of Exhibit
M attached hereto and incorporated herein by this reference.
Seller shall deliver each such estoppel certificate to Buyer
and Buyer's counsel following Seller's receipt thereof and,
unless Buyer shall deliver to Seller (in the manner required
by Section 16.9 below) a written objection to the substance of
any such estoppel within five (5) business days after receipt
of same, Buyer shall be deemed to have approved such estoppel
certificate, and such estoppel certificate shall be deemed to
confirm in all material respects the information contained in
the Documents. "Required Tenants" means each Tenant occupying
10,000 or more square feet of space, ▇▇▇▇▇'▇ Kids, and
(separately as to the Mall Property and the Office Property)
Tenants occupying an aggregate of at least seventy five
percent (75%) of the remaining space in the Property in
question. Notwithstanding the foregoing, Seller shall use good
faith efforts to obtain estoppel certificates from all of the
Tenants.
(i) Any adverse claim or matter set forth in a Tenant
estoppel certificate (i.e., an exception or assertion
which is adverse to the interests of the landlord or
is contrary to the representations herein) is
referred to as an "Adverse Claim."
(ii) For any tenancy in which an Adverse Claim has been
asserted, the Seller agrees to be responsible for any
such pre-closing Adverse Claim and use its good faith
efforts to have the same satisfied before Closing. If
such Adverse Claim(s), which relate to periods of
time prior to Closing, cannot be satisfied before
Closing, Seller shall remain responsible for such
Adverse Claim(s), such responsibility to survive
Closing, and Seller shall have the reasonable right
to control any contest and/or negotiations relating
thereto, in cooperation with Buyer. Seller's
responsibility for such Adverse Claim(s) shall be in
addition to, and shall not be included in, Seller's
maximum liability as established under Section 14.15
below.
18
(k) Evidence of Authority. Documentation to establish to the
reasonable satisfaction of Buyer and the Title Company the due
authorization of execution by the parties comprising Seller of
all documents contemplated by this Agreement.
(l) Letter to Tenants. A letter to Tenants under the Leases and to
the vendors under Contracts which are assumed by Buyer
advising that future rent payments and invoices under
Contracts are to be sent to Buyer at the address specified in
Section 15.9 hereof or to such other address as Buyer shall
specific prior to the Closing Date.
(m) Termination of Leasing and Management Agreement. A termination
of the Leasing and Management Contract with the existing
management and leasing agent for the Property, including a
certification by Seller and Seller's agent that such agent has
been paid all management and leasing fees due and payable to
it on or before the Closing Date, and that no management or
leasing fees or commissions are thereafter payable to it (or
to any other real estate or leasing agent or broker with whom
it has dealt) by Buyer except with respect to New Leases
approved by Buyer. The certifications in such agreement shall
survive Closing.
(n) Termination of Other Affiliate Contracts. A certification
executed by Seller and its management and leasing agent, on
behalf of themselves and all affiliated entities
(collectively, the "Colonial Parties") to the effect that the
Colonial Parties have terminated, without liability to Buyer,
all contracts and arrangements which any of them have had with
respect to the Property and with respect to any fees,
commissions, reimbursements or other compensation to the
Colonial Parties, for any services whatsoever whether past,
present or future, except as otherwise expressly provided
under this Agreement. Such certification shall survive
Closing.
(o) Updated Rent Roll. An updated Rent Roll of the Property,
certified to be accurate by a financial officer of Seller.
(p) Title Affidavits. Such reasonable and customary affidavits,
resolutions and other documents as the Title Company may
require for the issuance of the Title Policy.
(q) Keys and Original Documents. Keys to all locks on the Real
Property in Seller's or Seller's property manager's possession
and originals or, if originals are not available, copies, of
all of the Property Documents, to the extent not previously
delivered to Buyer (including without limitation complete
Tenant lease/correspondence files).
The items to be delivered by Seller in accordance with the terms of
Subsections (a) through (p) of this Section 7.3 shall be delivered to
Escrow Agent no later than 5:00 p.m. Eastern Time on the last business
day prior to the Closing Date, and the items to be delivered by Seller
in accordance with the terms of Subsection (q) of this Section 7.3
shall be delivered outside of escrow and shall be deemed delivered if
the same are located at the Property on the Closing Date.
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7.4 Buyer's Closing Deliveries. At the Closing, Buyer shall deliver or
cause to be delivered to the following:
(a) Purchase Price. The Purchase Price, as adjusted for
apportionments and other adjustments required under this
Agreement, plus any other amounts required to be paid by Buyer
at Closing.
(b) Assignment of Leases. The Assignment of Leases executed by
Buyer.
(c) Assignment of Intangible Property. The Assignment of
Intangible Property executed by Buyer.
(d) Buyer's As-Is Certificate. The certificate of Buyer required
under Article 5 hereof.
(e) Buyer's ERISA Certificate. The certificate of Buyer
substantially in the form of Exhibit J attached hereto and
incorporated herein by this reference and any other
certificate or other information reasonably required by Seller
to satisfy Seller that the Transaction does not constitute a
non-exempt prohibited transaction under ERISA and that the
Transaction complies with ERISA in all respects.
(f) Evidence of Authority. Documentation to establish to Seller's
reasonable satisfaction the due authorization of Buyer's
acquisition of the Property and Buyer's delivery of the
documents required to be delivered by Buyer pursuant to this
Agreement (including, but not limited to, the organizational
documents of Buyer, as they may have been amended from time to
time, resolutions of Buyer and incumbency certificates of
Buyer).
(g) Other Documents. Such other documents as may be reasonably
required by the Title Company or may be agreed upon by Seller
and Buyer to consummate the Transaction.
(h) Tax Returns. Duly completed and signed real estate transfer
tax and sales tax declarations.
(i) Closing Statement. The Closing Statement, executed by Buyer.
The Purchase Price shall be paid in accordance with the terms of
Section 7.2 hereof, and the items to be delivered by Buyer in
accordance with the terms of Subsections (b) through (i) of this
Section 7.4 shall be delivered to Escrow Agent no later than 5:00 p.m.
Eastern Time on the last business day prior to the Closing Date.
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ARTICLE 8. - CONDITIONS TO CLOSING
8.1 Conditions to Seller's Obligations. Seller's obligation to close the
Transaction is conditioned on all of the following, any or all of which
may be waived by Seller by an express written waiver, at its sole
option:
(a) Representations True. All representations and warranties made
by Buyer in this Agreement shall be true and correct in all
material respects on and as of the Closing Date, as if made on
and as of such date except to the extent they expressly relate
to an earlier date;
(b) Buyer's Financial Condition. No petition has been filed by or
against Buyer under the Federal Bankruptcy Code or any similar
state or federal Law, whether now or hereafter existing;
(c) Buyer's Deliveries Complete. Buyer shall have delivered the
funds required hereunder and all of the documents to be
executed by Buyer set forth in Section 7.4 and shall have
performed all other covenants, undertakings and obligations,
and complied with all conditions required by this Agreement,
to be performed or complied with by Buyer at or prior to the
Closing; and
(d) Compliance with Covenants. Buyer shall have complied in all
material respects with Buyer's covenants and agreements set
forth in this Agreement.
8.2 Conditions to Buyer's Obligations. Buyer's obligation to close the
Transaction is conditioned on all of the following, any or all of which
may be expressly waived by Buyer in writing, at its sole option:
(a) Representations True. Subject to the provisions of Section
9.3, all representations and warranties made by Seller in this
Agreement, as the same may be amended as provided in Section
9.3, shall be true and correct in all material respects on and
as of the Closing Date, as if made on and as of such date,
except to the extent that they expressly relate to an earlier
date;
(b) Title Conditions Satisfied. At the time of the Closing, title
to the Property shall be as provided in Article 4 of this
Agreement;
(c) Seller's Deliveries Complete. Seller shall have delivered all
of the documents and other items required pursuant to Section
7.3 and shall have performed all other covenants, undertakings
and obligations, and complied with all conditions required by
this Agreement, to be performed or complied with by Seller at
or prior to the Closing; and
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(d) Compliance with Covenants. Seller shall have complied in all
material respects with Seller's covenants and agreements set
forth in this Agreement.
8.3 Waiver of Failure of Conditions Precedent. At any time or times on or
before the date specified for the satisfaction of any condition, Seller
or Buyer may elect in writing to waive the benefit of any such
condition set forth in Section 8.1 or Section 8.2, respectively. By
closing the Transaction, Seller and Buyer shall be conclusively deemed
to have waived the benefit of any remaining unfulfilled conditions set
forth in Section 8.1 and 8.2, respectively except that such closing
shall not waive the rights of Buyer or Seller under any covenants,
warranties or representations which survive Closing. In the event any
of the conditions set forth in Sections 8.1 or 8.2 are neither waived
nor fulfilled, Seller or Buyer (as appropriate) may exercise such
rights and remedies, if any, that such party may have pursuant to the
terms of Article 11 hereof.
8.4 Approvals not a Condition to Buyer's Performance. Subject to Buyer's
right to terminate this Agreement prior to the expiration of the Due
Diligence Period in accordance with the terms of Article 5 hereof,
Buyer acknowledges and agrees that its obligation to perform under this
Agreement is not contingent upon Buyer's ability to obtain any (a)
governmental or quasi-governmental approval of changes or modifications
in use or zoning, or (b) modification of any existing land use
restriction, or (c) consents to assignments of any service contracts,
management agreements or other agreements which Buyer requests, or (d)
except to the extent specifically set forth in this Agreement,
endorsements to the Owner's Title Policy.
ARTICLE 9. - REPRESENTATIONS AND WARRANTIES
9.1 Buyer's Representations. Buyer represents and warrants to, and
covenants with, Seller as follows:
9.1.1 Buyer's Authorization. Buyer (a) is duly organized (or
formed), validly existing and in good standing under the laws
of its State of organization, (b) is authorized to consummate
the Transaction and fulfill all of its obligations hereunder
and under all documents contemplated hereunder to be executed
by Buyer, and (c) has all necessary power to execute and
deliver this Agreement and all documents contemplated
hereunder to be executed by Buyer and to perform all of its
obligations hereunder and thereunder. This Agreement and all
documents contemplated hereunder to be executed by Buyer have
been duly authorized by all requisite partnership, corporate
or other required action on the part of Buyer and are the
valid and legally binding obligation of Buyer enforceable in
accordance with their respective terms. Neither the execution
and delivery of this Agreement and all documents contemplated
hereunder to be executed by Buyer, nor the performance of the
obligations of Buyer hereunder or thereunder will result in
the violation of any Law or any provision of the
organizational documents of Buyer or will conflict with any
order or decree of any court or governmental instrumentality
of any nature by which Buyer is bound. Notwithstanding the
foregoing, Buyer's obligation and authority to proceed with
the Transaction is subject to the approval thereof by the
Board of Trustees of Pennsylvania Real Estate Investment Trust
on or before the expiration of the Due Diligence Period; and
if such approval is not obtained Buyer may terminate this
Agreement as in the case of a termination on account of
Buyer's Due Diligence reviews, by notice given not later than
the expiration of the Due Diligence Period.
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9.1.2 Buyer's Financial Condition. No petition has been filed by or
against Buyer under the Federal Bankruptcy Code or any similar
state or federal Law.
9.2 Seller's Representations. Seller represents and warrants to Buyer as
follows:
9.2.1 Seller's Authorization. Seller: (a) is duly organized (or
formed), validly existing and in good standing under the laws
of its State of organization and the State in which the
Property is located, (b) is authorized to consummate the
Transaction and fulfill all of its obligations hereunder and
under all documents contemplated hereunder to be executed by
Seller, and (c) has all necessary power to execute and deliver
this Agreement and all documents contemplated hereunder to be
executed by Seller and to perform all of its obligations
hereunder and thereunder. This Agreement and all documents
contemplated hereunder to be executed by Seller have been duly
authorized by all requisite partnership, corporate or other
required action on the part of Seller and are the valid and
legally binding obligation of Seller, enforceable in
accordance with their respective terms. Neither the execution
and delivery of this Agreement and all documents contemplated
hereunder to be executed by Seller, nor the performance of the
obligations of Seller hereunder or thereunder will result in
the violation of any Law or any provision of the
organizational documents of Seller or will conflict with any
order or decree of any court or governmental instrumentality
of any nature by which Seller is bound.
9.2.2 Other Seller's Representations.
(a) Except as set forth on Exhibit K, there is no current
pending or to Seller's knowledge, threatened
litigation against Seller relating to the Property of
which Seller has received written notice except for
litigation matters which are covered by, and being
defended by, liability insurers (without reservation
of rights) and which will continue to be defended by
such insurers to completion without liability on the
part of Buyer. Said Exhibit K includes, specifically,
details on certain litigation, and the actions to be
taken by Seller in connection therewith.
(b) As of the date of this Agreement, except for (A)
contracts, subcontracts and agreements set forth on
Exhibit B (collectively, the "Contracts"), (B) leases
with tenants of the Property as set forth on Exhibit
L, and (C) matters, agreements and instruments of
record, Seller has not entered into any contracts,
subcontract or agreements affecting the Property that
will be binding upon Buyer after the Closing. All
Contracts with affiliates of Seller, including
without limitation any management or leasing
contracts, shall be terminated at or prior to Closing
without further obligation on the part of Buyer.
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(c) Except as disclosed on Exhibit K, Seller has not
received any written notice of default from any
parties to the Contracts, or any agreements or
instruments of record, which has not been cured by
Seller.
(d) As of the date of this Agreement, the only tenants
under leases or other occupancy agreements at the
Property are the tenants disclosed on the Rent Roll
of Exhibit L. Said Exhibit L accurately sets forth,
with respect to each Lease, the commencement and
expiration dates and current minimum rent, future
stepped or fixed rent increases, tax and common area
contributions, and the amount of any security deposit
(if any) paid by the tenant, and any options to renew
or expand. Except as set forth on said Exhibit, each
of the Leases is in full force and effect and Seller
has not received written notice which is still
outstanding from any Tenant under a Lease (a) that
Seller has defaulted in performing any of its
material obligations under such Lease or (b) that
such Tenant is entitled to any reduction in, refund
of or counterclaim or offset against, or is otherwise
disputing, any rents or other sums paid, payable or
to become payable by such tenant or is deeming it is
entitled to cancel or terminate such Lease to be
released of any of its material obligations
thereunder. Except as set forth on said Exhibit, no
Tenant is paying rent or additional rent which is
reduced or discounted from the amount specified in
its Lease (meaning its Lease without taking into
account any agreement with Seller whereby the rent or
additional rent is reduced or discounted). Seller has
not collected rent more than thirty (30) days in
advance of when the same is due for any Lease. Seller
has completed all construction and other work
required to be performed under the Leases, except as
otherwise indicated under said Exhibit L (other than
repairs, replacements or maintenance, not currently
required, which may be the obligation of the landlord
as expressly set forth in a Lease). Except as set
forth on said Exhibit L, to Seller's knowledge, there
are no currently pending challenges by any Tenant to
the accuracy or validity of any charges to such
Tenant for common area maintenance, taxes or other
items of rent or additional rent under such Tenant's
Lease. No Tenant or other party has a right of first
refusal, purchase option or other preferential right
to acquire title to the Property, except for Arby's,
which has irrevocably waived such right in connection
with the acquisition under this Agreement by separate
documentation to be delivered to Buyer at Closing.
All inducements, allowances or other incentives
payable by Seller in connection with the execution of
the Leases or any amendment or modification of the
Leases have been paid in full, except as disclosed on
said Exhibit L.
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(e) Except as disclosed on Exhibit L, as of the date of
this Agreement, Seller has not received any written
notice from any governmental authority with respect
to the violation of any law or ordinance applicable
to the Property which has not been cured by Seller.
(f) The Property is not (1) to Seller's knowledge,
subject to any unpaid special assessments for public
improvements, nor has Seller received written notice
of any such proposed assessment, or (2) the subject
of any outstanding commitment or agreement with any
municipal or governmental authority wherein any work
remains to be performed or payment remains to be
made.
(g) The Documents contain true, correct and complete
copies of all Leases and any notices of landlord
default given by tenants at the Property.
(h) The financial statements for the Property which are
included in the Documents are correct and complete in
all material respects. For a period of three (3)
years following Closing, Seller shall, at Buyer's
expense, provide to Buyer's designated independent
auditor access to the books and records of the
Property regarding the period for which Buyer is
obligated to have audited financial statements as
required by the Securities and Exchange Commission
and/or Buyer's auditors, to the extent that such
books, records and related information are now or
hereafter in Seller's possession or control and
relate to the period during which Seller had title to
the Property. Further, Seller agrees to provide such
auditor with a representation letter regarding the
books and records of the property, which
representation letter shall be in such form and
substance as is reasonably acceptable to Seller.
(i) To the knowledge of Seller, no condemnation
proceeding is pending or threatened against or
relating to the Property other than the easement
being negotiated with the City of Gadsden for the
Wildlife Park walkway. Exhibit, the relevant details
of which are set forth on Exhibit O hereto.
(j) Seller is not a party to nor bound by any collective
bargaining agreement covering employees assigned to
the Property. Seller agrees to work with Buyer in
connection with hiring property-level personnel
including, to the extent the same may be done
lawfully, making records available for property-level
employees so that Buyer can conduct interviews and
background checks. For those employees hired by Buyer
or Buyer's managing agent, Seller and Buyer agree to
reasonably cooperate in the equitable apportionment
of accrued vacation, bonuses and other benefits.
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(k) Seller has received no written notice of a threatened
or proposed curtailment or limitation on the
availability of all utility services for the proper
and efficient conduct of business at the Property.
(l) Except as set forth on Exhibit K hereto, there are no
current or outstanding real estate tax appeals
pending with respect to the Property. If any such
appeals are pending, said Exhibit indicates the
manner in which the parties have agreed to the
post-Closing handling of such appeals, the costs
thereof and any refunds which may be received.
(m) The Personal Property is owned free and clear of all
liens and encumbrances, subject to any lien or
security interest created pursuant to existing
financing documents which will be released and
satisfied at Closing. Except as set forth on Exhibit
D hereto, all machinery, equipment, artwork,
furniture, furnishings, management office equipment
and supplies and other personal property which is
located on the Real Property and used in connection
with the operation, upkeep, repair and operation
thereof is included in this sale and Seller owns
title thereto.
9.2.3 Delivery of Documents. Seller has requested that the current
manager of the Property give or otherwise make available to
Buyer or Buyer's Representatives all books, records, and other
writings in such manager's possession related in any material
way to the use, ownership or operation of the Property, other
than those books, records and writings that are Confidential
Materials.
9.2.4 Designated Employees. The Designated Employees are the
individuals who have been primarily responsible for the
management of the Property on behalf of Seller for the three
(3) year period immediately prior to the date hereof.
9.3 General Provisions.
9.3.1 No Representation as to Leases. Seller does not represent or
warrant that the Leases will be in force or effect on the
Closing Date or that the tenants will have performed their
obligations thereunder; provided that as a condition of
Buyer's obligations hereunder, estoppel certificates from the
Required Tenants shall be delivered as set forth hereunder.
9.3.2 Definition of "Seller's Knowledge". All references in this
Agreement to "Seller's knowledge" or words of similar import
shall refer only to the actual knowledge of the Designated
Employees and shall not be construed to refer to the knowledge
of any other officer, director, shareholder, employee, agent
or representative of Seller or its members, or any affiliate
of any of the foregoing, or to impose or have imposed upon the
Designated Employees any duty to investigate the matters to
which such knowledge, or the absence thereof, pertains,
including, but not limited to, the contents of the files,
documents and materials made available to or disclosed to
Buyer or the contents of files maintained by the Designated
Employees. There shall be no personal liability on the part of
the Designated Employees arising out of any representations or
warranties made herein. Seller represents that the Designated
Employees are the senior management personnel for the Property
(▇▇. ▇▇▇▇ being the Senior Vice President for the overall
Retail Division, and Mr. Light being the Executive Vice
President, Retail Division, with responsibility for the Mall
Property.)
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9.3.3 Seller's Representations Deemed Modified. To the extent that
Buyer knows or is deemed to know prior to the expiration of
the Due Diligence Period that Seller's representations and
warranties are inaccurate, untrue or incorrect in any way,
such representations and warranties shall be deemed modified
to reflect Buyer's knowledge or deemed knowledge, as the case
may be. In addition, the representation and warranty set forth
in clause (d) of Section 9.2.2 shall be null and void and of
no further force or effect if and to the extent that Buyer
receives estoppel certificates from tenants under the Leases
that confirm the truth of said representation and warranty.
9.3.4 Notice of Breach; Seller's Right to Cure. If after the
expiration of the Due Diligence Period but prior to the
Closing, Buyer or any Buyer's Representative obtains actual
knowledge that any of Seller's Warranties are untrue,
inaccurate or incorrect in any material respect, Buyer shall
give Seller written notice thereof within ten (10) business
days of obtaining such knowledge that the same, individually
or collectively, are material (as defined below) (but, in any
event, prior to the Closing). If at or prior to the Closing,
Seller obtains actual knowledge that any of Seller's
Warranties are untrue, inaccurate or incorrect in any material
respect, Seller shall give Buyer written notice thereof within
ten (10) business days of obtaining such knowledge the same,
individually or collectively, are material (as defined below)
(but, in any event, prior to the Closing). In either such
event, Seller shall have the right to cure such
misrepresentation or breach and shall be entitled to a
reasonable adjournment of the Closing (not to exceed thirty
(30) days) for the purpose of such cure. If Seller is unable
to so cure any misrepresentation or breach, then Buyer, as its
sole remedy for any and all such materially untrue, inaccurate
or incorrect material representations or warranties, shall
elect either (a) to waive such misrepresentations or breaches
of representations and warranties and consummate the
Transaction without any reduction of or credit against the
Purchase Price (except for the deduction from the Purchase
Price of monetary liens as elsewhere provided herein, and for
the deduction from the Purchase Price of any other
ascertainable damages resulting from the breach of Seller's
Warranties in an amount not to exceed $75,000), or (b) to
terminate this Agreement by written notice given to Seller on
the Closing Date, in which event this Agreement shall be
terminated, the Deposit shall be returned to Buyer, and,
thereafter, neither party shall have any further rights or
obligations hereunder except as provided in the immediately
following sentence and in any section hereof that by its terms
expressly provides that it survives any termination of this
Agreement. If any such Seller's Warranty was, to Seller's
knowledge, materially untrue, inaccurate or incorrect at the
time such Seller's Warranty was made, and as a result thereof,
Buyer elects to terminate this Agreement, then Seller shall
reimburse Buyer for its Termination Expenses as defined in
Section 4.2.1 (d) above. The untruth, inaccuracy or
incorrectness of a Seller's Warranty shall be deemed material
only if Buyer's aggregate damages resulting from the untruth,
inaccuracy or incorrectness of the representations or
warranties, individually or collectively, are reasonably
estimated to exceed $75,000.00.
27
9.3.5 Survival; Limitation on Seller's Liability. Seller's
Warranties in Section 9.2 shall survive the Closing and not be
merged therein for a period of twelve (12) months, and Seller
shall only be liable to Buyer hereunder for a breach of a
Seller's Warranty made herein or in any of the documents
executed by Seller at the Closing with respect to which a
written claim is made by Buyer against Seller on or before the
expiration of twelve (12) months after the date of the
Closing. Anything in this Agreement to the contrary
notwithstanding, the maximum aggregate liability of Seller for
breaches of Seller's Warranties herein or in any documents
executed by Seller at Closing shall be limited as set forth in
Section 14.14 hereof. Notwithstanding the foregoing, however,
if the Closing occurs, Buyer hereby expressly waives,
relinquishes and releases any right or remedy available to it
at law, in equity, under this Agreement or otherwise to make a
claim against Seller for damages that Buyer may incur, or to
rescind this Agreement and the Transaction, as the result of
any of Seller's Warranties being untrue, inaccurate or
incorrect if (a) Buyer knew or is deemed to know that such
representation or warranty was untrue, inaccurate or incorrect
at the time of the Closing, or (b) Buyer receives a confirming
estoppel certificate as set forth in Section 9.3.3, or (c)
Buyer's damages as a result of such representations or
warranties being untrue, inaccurate or incorrect are
reasonably estimated to aggregate less than $100,000.00.
ARTICLE 10. - COVENANTS
10.1 Buyer's Covenants. Buyer hereby covenants as follows:
10.1.1 Buyer's Indemnity; Delivery of Reports. To the extent provided
in Section 5.1 above, Buyer hereby agrees to indemnify,
defend, and hold Seller and each of the other Seller Parties
free and harmless from and against any and all Liabilities
(including reasonable attorneys' fees and expenses) arising
out of or resulting from the entry on the Real Property and/or
the conduct of any Due Diligence by Buyer or any of Buyer's
Representatives or consultants at any time prior to the
Closing, which indemnity shall survive the Closing (and not be
merged therein) or any earlier termination of this Agreement.
If this Agreement is terminated for any reason other than
Seller's default, Buyer shall deliver promptly to Seller
copies of all third party reports commissioned by or on behalf
of Buyer or Buyer's Representatives evidencing the results of
its Due Diligence and which do not contain confidential or
proprietary information relating to Buyer or Buyer's
affiliates.
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10.1.2 Limit on Government Contacts. Notwithstanding any provision in
this Agreement to the contrary, except in connection with the
preparation of a so-called "Phase I" environmental report with
respect to the Property, or as otherwise mandated by
applicable law, Buyer shall not contact any governmental
official or representative regarding Hazardous Materials or
the environmental condition of the Property without Seller's
prior written consent thereto, which consent shall not be
unreasonably withheld, conditioned or delayed. In addition, if
Seller's consent is obtained by Buyer, Seller shall be
entitled to receive at least five (5) days' prior written
notice of the intended contact and to have a representative
present when Buyer has any such contact with any governmental
official or representative; provided that if such five (5) day
notice is given, Buyer shall have the right to extend the Due
Diligence Period by five (5) additional days.
10.2 Seller's Covenants. Seller hereby covenants as follows:
10.2.1 Contracts.
(a) Without Buyer's prior consent, which consent shall
not be unreasonably withheld, between the date hereof
and the Closing Date, Seller shall not extend, renew,
replace or modify any Contract or enter into any new
service contract or agreement unless such contract or
agreement (as so extended, renewed, replaced or
modified) can be terminated by the owner of the
Property without penalty on not more than thirty (30)
days' notice. Seller shall provide Buyer not less
than five (5) business days' prior written notice to
provide its consent to any such contract, extension,
renewal, replacement or modification. If Buyer fails
to object in writing to any such proposed action
within such five (5) business day period, Buyer shall
be deemed to have approved the proposed action.
Buyer's consent shall not be unreasonably withheld,
conditioned or delayed.
(b) On or before the Closing, Seller shall terminate any
management and exclusive leasing agreements currently
in effect with respect to the Property at the sole
cost and expense of Seller.
10.2.2 Maintenance of Property. Except to the extent Seller is
relieved of such obligations by Article 12 hereof, between the
date hereof and the Closing Date, Seller shall maintain and
keep the Property in a manner consistent with Seller's past
practices with respect to the Property; provided, however,
that subject to Buyer's right to terminate this Agreement
prior to the expiration of the Due Diligence Period in
accordance with the terms of Article 5 hereof, and subject to
Buyer's right of termination respecting a breach of Seller's
warranties in Article 9 hereof, Buyer hereby agrees that
Seller shall have no obligation to cure any violations of
Laws, and any physical conditions which would give rise to
violations (collectively, a "Violation"), (a) if the aggregate
cost of such cure is estimated to exceed $500,000 or (b) if
and to the extent that the cost of curing such Violation is
definitively chargeable to the tenants at the Property
pursuant to the terms of their respective leases. Between the
date hereof and the Closing Date, Seller will advise Buyer of
any written notice Seller receives from any governmental
authority of the violation of any Laws regulating the
condition or use of the Property and if the aggregate cost of
such cure is estimated to be $500,000 or less, then to the
extent such cost cannot be charged to tenants as aforesaid,
Seller agrees to grant Buyer a credit at Closing in the amount
of such cost. If (A) Seller does not cure any such Violation,
(B) Seller received notice of such Violation after the
expiration of the Due Diligence Period, (C) the aggregate cost
to cure such Violation is estimated to exceed $500,000, and
(D) the cost of curing such Violation may not be charged to
the tenants at the Property pursuant to the terms of their
respective leases, then Buyer shall have the right, by written
notice given to Seller, to terminate this Agreement on or
before the Closing Date. If Buyer terminates this Agreement
pursuant to this Section 10.2.2, then the Deposit shall be
returned to Buyer and this Agreement shall terminate.
Following such termination, neither party to this Agreement
shall have any further rights or obligations hereunder other
than any arising under the immediately preceding sentence or
in any section herein which expressly provides that it
survives the termination of this Agreement.
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10.2.3 Access to Property. Between the date hereof and the Closing
Date Seller shall allow Buyer or Buyer's Representatives
access to the Property upon reasonable prior notice at
reasonable times provided (a) such access does not interfere
with the operation of the Property or the rights of tenants;
(b) Buyer shall coordinate with Seller and Seller's property
manager prior to and during each visit (c/o Mr. ▇▇▇▇ ▇▇▇▇,
Telephone (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇, Email:
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇); (d) Seller or its designated
representative shall have the right to pre-approve and be
present during any physical testing of the Property; and (e)
Buyer shall return the Property to the condition existing
prior to such tests and inspections. Prior to such time as
Buyer or any of Buyer's Representatives or consultants enter
the Property, Buyer shall (i) obtain policies of general
liability insurance which insure Buyer and Buyer's
Representatives and consultants with liability insurance
limits of not less than $1,000,000 combined single limit for
personal injury and property damage and name Seller and
Seller's property manager as additional insureds and which are
with such insurance companies, provide such coverages and
carry such other limits as Seller shall reasonably require,
and (ii) provide Seller with certificates of insurance
evidencing that Buyer has obtained the aforementioned policies
of insurance. Notwithstanding the foregoing, no consent from
or coordination with Seller or Seller's property manager shall
be required for contact or communications with tenants of the
Property by Buyer or Buyer's representatives.
10.2.4 Termination of Certain Contracts. If Buyer notifies Seller in
writing prior to the Closing Date that Buyer elects to have
any Contracts terminated prior to Closing, Seller shall use
good faith and reasonable efforts to terminate the Contracts
so designated by Buyer effective as of the Closing Date;
provided, however, that in no event shall Seller be required
by the foregoing to pay any sums (or incur any other
liability) to the other parties to said Contracts on account
of such termination (but Buyer may at its option advance such
sums as may be required for such purpose). If Seller is unable
to so terminate the aforementioned Contracts effective as of
the Closing Date, then Seller shall assign and Buyer shall
assume the same at Closing in accordance with the terms of
this Agreement and the Assignment of Intangible Property.
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10.2.5 New Leases; Lease Modifications.
(a) Subject to the terms of this Section 10.2.5, Seller
shall continue to lease the Property in accordance
with Seller's past practices with respect to the
Property. From and after the expiration of the Due
Diligence Period, Seller shall not, without Buyer's
prior written consent (which shall not be
unreasonably withheld, conditioned or delayed), (a)
enter into a New Lease; (b) modify or amend any Lease
(except pursuant to the exercise by a tenant of a
renewal, extension or expansion option or other right
contained in such tenant's Lease); or (c) consent to
any assignment or sublease in connection with any
Lease. (Prior to the expiration of the Due Diligence
Period, Seller shall consult in good faith with Buyer
on any proposed transaction as mentioned in
subclauses (a), (b) or (c) immediately preceding).
Seller shall furnish Buyer with a written notice of
the proposed action, which shall contain information
regarding the proposed action that Seller believes is
reasonably necessary to enable Buyer to make informed
decisions with respect to the advisability of the
proposed action. If Buyer fails to object in writing
to any such proposed action within five (5) business
days after receipt of the aforementioned information,
Buyer shall be deemed to have approved the proposed
action. If any Lease requires that the landlord's
consent be given under the applicable circumstances
(or not be unreasonably withheld), then if Seller
certifies in good faith that it is required to give
consent, Buyer shall be deemed ipso facto to have
approved such action. Any notice from Buyer rejecting
the proposed action shall include a description of
the reasons for Buyer's rejecting the proposed action
shall include a description of the reasons for
Buyer's rejection. If Buyer rejects the proposed
action, Seller nevertheless retains full right, power
and authority to execute such documents as are
necessary to effect such action, and Seller shall
promptly advise Buyer of the same. The foregoing
notwithstanding, in the event that Buyer has rejected
the proposed action but Seller nonetheless proceeds
to carry out such action, Buyer shall have the right,
within five (5) business days after receipt of
Seller's notice that Seller has taken such action, to
elect to terminate this Agreement by the delivery to
Seller of a written notice of termination, in which
case the Deposit shall be paid to Buyer, Seller shall
reimburse Buyer for its Termination Expenses and
thereafter, the parties shall have no further rights
or obligations hereunder other than any arising under
this sentence and any section of this Agreement that
expressly provides that it shall survive the
termination of this Agreement. If Buyer fails to
notify Seller within such time period, Buyer shall be
deemed to have fully waived any rights to terminate
this Agreement pursuant to this Section 10.2.5 with
respect to such action. Seller shall deliver to Buyer
a true and complete copy of each such New Lease,
renewal or extension agreement, modification or
amendment, as the case may be, promptly after the
execution and delivery thereof.
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(b) Lease Enforcement. Seller shall have the right, but
not the obligation (except to the extent that
Seller's failure to act shall constitute a waiver of
such rights or remedies), to enforce the rights and
remedies of the landlord under any Lease by summary
proceedings or otherwise (including, without
limitation, the right to remove any tenant), and to
apply all or any portion of any security deposits
then held by Seller toward any loss or damage
incurred by Seller by reasons of any defaults by
tenants, and the exercise of any such rights or
remedies shall not affect the obligations of Buyer
under this Agreement in any manner or entitle Buyer
to a reduction in, or credit or allowance against,
the Purchase Price or give rise to any other claim on
the part of Buyer. Notwithstanding the foregoing
after the expiration of the Due Diligence Period, and
prior thereto if Seller has not notified Buyer of the
matter in question, (a) Seller shall take no action
against any Tenant which leases more than 10,000
square feet without the prior written consent of
Buyer which may be withheld in its sole discretion
(but which shall be given or denied within five (5)
business days after request therefor), (b) Seller can
so apply security deposits only if a lease is
terminated, and (c) to the extent any security
deposits are so applied, Seller shall pay over to
Buyer any excess between (x) the amounts so applied,
and (y) rents and other charges which had accrued and
would have been due and payable up to the Closing
Date.
(c) Lease Expenses. At Closing, Buyer shall reimburse
Seller for any and all Reimbursable Lease Expenses to
the extent that the same have been paid by Seller
prior to Closing. In addition, at Closing, Buyer
shall assume Seller's obligations to pay, when due
(whether on a stated due date or accelerated) any
Reimbursable Lease Expenses unpaid as of the Closing,
and Buyer hereby agrees to indemnify and hold Seller
harmless from and against any and all Liabilities
(including reasonable attorneys' fees and expenses)
with respect to such Reimbursable Lease Expenses
which remain unpaid for any reason at the time of
Closing, which obligations of Buyer shall survive the
Closing and shall not be merged therein. Each party
shall make available to the other all records, bills,
vouchers and other data in such party's control
verifying Reimbursable Lease Expenses and the payment
thereof. Notwithstanding anything contained herein to
the contrary, Seller shall be responsible for a
portion of the Reimbursable Lease Expenses calculated
by multiplying the aggregate Reimbursable Lease
Expenses for any tenant by a fraction, the numerator
of which is the total base rents actually collected
by Seller under the New Leasing Document giving rise
to the Reimbursable Lease Expenses, the denominator
of which is the aggregate base rent due under such
New Leasing Document; provided, however, that if
Seller's share of the Reimbursable Lease Expenses
with respect to any such New Leasing Document exceeds
the base rent actually received by Seller pursuant to
such New Leasing Document, then Seller's
responsibility for such Reimbursable Lease Expenses
shall be limited to the base rents actually received
by Seller.
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10.3 Mutual Covenants.
10.3.1 Publicity. Seller and Buyer each hereby covenant and agree
that (a) prior to the Closing neither Seller nor Buyer shall
issue any Release (as hereinafter defined) with respect to the
Transaction without the prior consent of the other, except to
the extent required by applicable Law or the rules or
regulations of any governmental agency or securities exchange,
and (b) after the Closing, any Release issued by either Seller
or Buyer shall be subject to the review and approval of both
parties (which approval shall not be unreasonably withheld),
except to the extent required by applicable Law or the rules
or regulations of any governmental agency or securities
exchange. If either Seller or Buyer is required by applicable
Law or the rules or regulations of any governmental agency or
securities exchange to issue a Release, such party shall, at
least one (1) business day prior to the issuance of the same,
deliver a copy of the proposed Release to the other party for
its review. As used herein, the term "Release" shall mean any
press release or public statement with respect to the
Transaction or this Agreement.
10.3.2 Broker. Seller and Buyer expressly acknowledge that Broker has
acted as the exclusive broker with respect to the Transaction
and with respect to this Agreement, and that Seller shall pay
any brokerage commission due to Broker in accordance with the
separate agreement between Seller and Broker. Seller agrees to
hold Buyer harmless and indemnify Buyer from and against any
and all Liabilities (including reasonable attorneys' fees and
expenses) suffered or incurred by Buyer as a result of any
claims by Broker or any other party claiming to have
represented Seller as broker in connection with the
Transaction. Buyer agrees to hold Seller harmless and
indemnify Seller from and against any and all Liabilities
(including reasonable attorneys' fees and expenses) suffered
or incurred by Seller as a result of any claims by any party
(other than Broker) claiming to have represented Buyer as
broker in connection with the Transaction.
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10.3.3 Tax Protests; Tax Refunds and Credits. Seller shall have the
right to continue and to control the progress of and to make
all decisions with respect to any contest of the real estate
taxes and personal property taxes for the Property assessed
for the Tax Year in which the Closing occurs and all prior Tax
Years. Buyer shall have the right to control the progress of
and to make all decisions with respect to any tax contest of
the real estate taxes and personal property taxes for the
Property assessed for all Tax Years subsequent to the Tax Year
in which the Closing occurs. All real estate and personal
property tax refunds an credits received after Closing with
respect to the Property shall be applied in the following
order of priority: first, to pay the costs and expenses
(including reasonable attorneys' fees and expenses) incurred
in connection with obtaining such tax refund or credit;
second, to pay any amounts due to any past or present tenant
of the Property as a result of such tax refund or credit to
the extent required pursuant to the terms of the Leases; and
third, apportioned between Buyer and Seller as follows:
(a) with respect to any refunds or credits attributable
to real estate and personal property taxes assessed
for the Tax Year in which the Closing occurs, such
refunds and credits shall be apportioned between
Buyer and Seller in the manner provided for in
Section 6.3;
(b) with respect to any refunds or credits attributable
to real estate and personal property taxes assessed
for any period prior to the Tax Year in which the
Closing occurs, Seller shall be entitled to the
entire refunds and credits: and
(c) with respect to any refunds or credits attributable
to real estate and personal property taxes assessed
for any period after the Tax Year in which the
Closing occurs, Buyer shall be entitled to the entire
refunds and credits.
10.4 Survival. The provisions of this Article 10 shall survive the Closing
(and not be merged therein) or earlier termination of this Agreement.
ARTICLE 11. - FAILURE OF CONDITIONS; DEFAULT
11.1 To Seller's Obligations. If, on or before the Closing Date, (i) Buyer
is in default of any of its obligations hereunder, or (ii) the Closing
otherwise fails to occur by reason of Buyer's failure or refusal to
perform its obligations hereunder in a prompt and timely manner, then
Seller may elect to (a) terminate this Agreement by written notice to
Buyer; or (b) waive the condition and proceed to close the Transaction.
If this Agreement is so terminated, then Seller shall be entitled to
retain, as its sole and exclusive remedy, the Deposit as agreed upon
and liquidated damages for all loss, damages and expenses suffered by
Seller, it being agreed that Seller's damages are impractical or
extremely difficult to ascertain and the amount of the Deposit
represents a reasonable estimate of the damages which Seller will
sustain in the event of a default hereunder by Buyer, and thereafter
neither party to this Agreement shall have any further rights or
obligations hereunder other than any arising under any section herein
which expressly provides that it survives the termination of this
Agreement.
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11.2 To Buyer's Obligations. If, at the Closing, (i) Seller is in default of
any of its obligations hereunder, or (ii) the Closing otherwise fails
to occur by reason of Seller's failure or refusal to perform its
obligations hereunder in a prompt and timely manner, Buyer shall have
the right to elect, as its sole and exclusive remedy, to (a) terminate
this Agreement by written notice to Seller, promptly after which the
Deposit shall be returned to Buyer, or (b) waive the condition and
proceed to close the Transaction, or (c) seek specific performance of
this Agreement by Seller; provided that in case (a) above Buyer shall
be entitled to reimbursement of its Termination Expenses if and only to
the extent elsewhere specifically provided in this Agreement, and in
cases (b) or (c), Buyer shall be entitled to a credit against the
Purchase Price if and to the extent elsewhere specifically provided in
this Agreement. As a condition precedent to Buyer's exercise of any
right it may have to bring an action for specific performance
hereunder, Buyer must commence such an action within ninety (90) days
after the scheduled Closing. Buyer agrees that its failure timely to
commence such an action for specific performance within such ninety
(90) day period shall be deemed a waiver by Buyer of its right to
commence an action for specific performance, as well as a waiver by it
of any right it may have to file or record a notice of lis pendens or
notice of pendency of action or similar notice against any portion of
the Property.
ARTICLE 12. - CONDEMNATION/CASUALTY
12.1 Condemnation.
12.1.1 Right to Terminate. If, prior to the Closing Date, all or any
significant portion (as hereinafter defined) of the Property
is taken by eminent domain (or is the subject of a pending
taking which has not yet been consummated), Seller shall
notify Buyer in writing of such fact promptly after obtaining
knowledge thereof, and, thereafter, either Buyer or Seller
shall have the right to terminate this Agreement by giving
written notice to the other no later than ten (10) days after
the giving of Seller's notice, and the Closing Date shall be
extended, if necessary, to provide sufficient time for Buyer
or Seller to make such election. The failure by Buyer and
Seller to so elect in writing to terminate this Agreement
within such ten (10) day period shall be deemed an election
not to terminate this Agreement. For purposes hereof, a
"significant portion" of the Property shall mean such a
portion as shall have a value, as reasonably determined by
Seller, in excess of Three Million Dollars ($3,000,000.00), or
a condemnation by which an Adverse Lease Condition shall
occur. An "Adverse Lease Condition" means a right on the part
of one or more Tenants, as a result of casualty or
condemnation, to terminate its or their Lease, if more than
10,000 square feet or more of space in the aggregate would be
affected, or if as a result of a condemnation there was a
failure of the Property to comply with the parking or other
zoning requirements of applicable law or the requirements of
any of the Leases. If either party elects to terminate this
Agreement as aforesaid, the provisions of Section 12.4 shall
apply.
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12.1.2 Assignment of Proceeds. If (a) neither Seller nor Buyer elects
to terminate this Agreement as aforesaid if all or any
significant portion of the Property is taken, or (b) a portion
of the Property not constituting a significant portion of the
Property is taken or becomes subject to a pending taking, by
eminent domain, there shall be no abatement of the Purchase
Price; provided, however, that, at the Closing, Seller shall
pay to Buyer the amount of any award for or other proceeds on
account of such taking which have been actually paid to Seller
prior to the Closing Date as a result of such taking (less all
costs and expenses, including attorneys' fees and expenses,
incurred by Seller as of the Closing Date in obtaining payment
of such award or proceeds) and, to the extent such award or
proceeds have not been paid, Seller shall assign to Buyer at
the Closing (without recourse to Seller) the rights of Seller
to, and Buyer shall be entitled to receive and retain, all
awards for the taking of the Property or such portion thereof.
12.2 Destruction or Damage. In the event any of the Property is damaged or
destroyed prior to the Closing Date, Seller shall notify Buyer in
writing of such fact promptly after obtaining knowledge thereof. If any
such damage or destruction (a) is an insured casualty, (b) would cost
less than Three Million Dollars ($3,000,000.00) to repair or restore,
and (c) does not involve an Adverse Lease Condition, then this
Agreement shall remain in full force and effect, and Buyer shall
acquire the Property upon the terms and conditions set forth herein. In
such event, Buyer shall receive a credit against the Purchase Price
equal to the deductible amount applicable under Seller's casualty
policy less all costs and expenses, including attorneys' fees and
expenses, incurred by Seller as of the Closing Date in connection with
the negotiation and/or settlement of the casualty claim with the
insurer (the "Realization Costs"), and Seller shall assign to Buyer all
of Seller's right, title and interest in and to all proceeds of
insurance on account of such damage or destruction. In the event the
Property is damaged or destroyed prior to the Closing Date and the cost
of repair would equal or exceed Three Million Dollars ($3,000,000.00)
or the casualty is an uninsured casualty or involves an Adverse Lease
Condition, then, notwithstanding anything to the contrary set forth
above in this section, Buyer shall have the right, at its election, to
terminate this Agreement. Buyer shall have thirty (30) days after
Seller notifies Buyer that a casualty has occurred to make such
election by delivery to Seller of a written election notice (the
"Election Notice") and the Closing Date shall be extended, if
necessary, to provide sufficient time for Buyer to make such election.
The failure by Buyer to deliver the Election Notice within such thirty
(30) day period shall be deemed an election not to terminate this
Agreement. In the event Buyer does not elect to terminate this
Agreement as set forth above, this Agreement shall remain in full force
and effect, Seller shall assign to Buyer all of Seller's right, title
and interest in and to any and all proceeds of insurance on account of
such damage or destruction, if any, and, if the casualty was an insured
casualty, Buyer shall receive a credit against the Purchase Price equal
to the deductible amount (less the Realization Costs) under Seller's
casualty insurance policy.
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12.3 Insurance. Seller shall maintain the property insurance coverage
currently in effect for the Property through the Closing Date.
12.4 Effect of Termination. If this Agreement is terminated pursuant to
Section 12.1 or Section 12.2, the Deposit shall be returned to Buyer.
Upon such refund, this Agreement shall terminate and neither party to
this Agreement shall have any further rights or obligations hereunder
other than any arising under any section herein which expressly
provides that it shall survive the termination of this Agreement.
12.5 Waiver. The provisions of this Article 12 supersede the provisions of
any applicable Laws with respect to the subject matter of this
Article 12.
ARTICLE 13. - ESCROW
The Deposit (if any) and any other sums which the parties agree shall be held in
escrow, and any interest earned thereon (herein collectively called the "Escrow
Deposits"), shall be held by the Escrow Agent, in trust, and disposed of only in
accordance with the following provisions:
(a) The Escrow Agent shall invest the Escrow Deposits, if in cash,
in government insured interest-bearing instruments reasonably
satisfactory to both Buyer and Seller or in a mutual fund with
assets in excess of One Billion Dollars which invests in
government-issued interest bearing instruments reasonably
satisfactory as aforesaid, shall not commingle the Escrow
Deposits with any funds of the Escrow Agent or others, and
shall promptly provide Buyer and Seller with confirmation of
the investments made.
(b) If the Closing occurs, the Escrow Agent shall deliver the
Escrow Deposits to, or upon the instructions of, Seller on the
Closing Date and the Escrow Deposits shall be credited on
account of the Purchase Price. If in the form of a letter of
credit, such letter of credit shall be surrendered to Buyer.
(c) If for any reason the Closing does not occur, the Escrow Agent
shall deliver the Escrow Deposits to Seller or Buyer only upon
receipt of a written demand therefor from such party, subject
to the following provisions of this Subsection (c). If for any
reason the Closing does not occur and either party makes a
written demand upon the Escrow Agent for payment of the Escrow
Deposits, the Escrow Agent shall give written notice to the
other party of such demand. If the Escrow Agent does not
receive a written objection from the other party to the
proposed payment within ten (10) days after the giving of such
notice, the Escrow Agent is hereby authorized to make such
payment. If the Escrow Agent does receive such written
objection within such period, the Escrow Agent shall continue
to hold such amount until otherwise directed by written
instructions signed by Seller and Buyer or a final judgment of
a court.
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(d) The parties acknowledge that the Escrow Agent is acting solely
as a stakeholder at their request and for their convenience,
that the Escrow Agent shall not be deemed to be the agent of
either of the parties, and that the Escrow Agent shall not be
liable to either of the parties for any action or omission on
its part taken or made in good faith, and not in disregard of
this Agreement, but shall be liable for its negligent acts and
for any Liabilities (including reasonable attorneys' fees and
expenses) incurred by Seller or Buyer resulting from the
Escrow Agent's mistake of law respecting the Escrow Agent's
scope or nature of its duties. Seller and Buyer shall jointly
and severally indemnify and hold the Escrow Agent harmless
from and against all Liabilities, including reasonable
attorneys' fees and expenses, incurred in connection with the
performance of the Escrow Agent's duties hereunder, except
with respect to actions or omissions taken or made by the
Escrow Agent in bad faith, in disregard of this Agreement or
involving negligence on the part of the Escrow Agent.
(e) Buyer shall pay any income taxes on any interest earned on the
Escrow Deposits. Buyer represents and warrants to the Escrow
Agent that its taxpayer identification number is
______________________.
(f) The Escrow Agent has executed this Agreement in the place
indicated on the signature page hereof in order to confirm
that the Escrow Agent shall hold the Escrow Deposits, in
escrow, and shall disburse the Escrow Deposits, pursuant to
the provisions of this Article 13.
ARTICLE 14. - MISCELLANEOUS
14.1 Buyer's Assignment. Buyer shall not assign this Agreement or its rights
hereunder to any individual or entity without the prior written consent
of Seller, which consent Seller may grant or withhold in its sole
discretion, and any such assignment shall be null and void ab initio.
In the event of any permitted assignment by Buyer, any assignee shall
assume any and all obligations and liabilities of Buyer under this
Agreement but, notwithstanding such assumption, Buyer shall thereupon
be released from any further liability hereunder except for indemnity
liability relating to its access onto the Property as theretofore
incurred. Seller hereby consents to the assignment by Buyer of this
contract to any partnership, limited partnership or limited liability
company directly or indirectly controlled by Buyer or by Pennsylvania
Real Estate Investment Trust.
14.2 Designation Agreement. Section 6045(e) of the United States Internal
Revenue Code and the regulations promulgated thereunder (herein
collectively called the "Reporting Requirements") require an
information return to be made to the United States Internal Revenue
Service, and a statement to be furnished to Seller, in connection with
the Transaction. Escrow Agent is either (x) the person responsible for
closing the Transaction (as described in the Reporting Requirements) or
(y) the disbursing title or escrow company that is most significant in
terms of gross proceeds disbursed in connection with the Transaction
(as described in the Reporting Requirements). Accordingly:
38
(a) Escrow Agent is hereby designated as the "Reporting Person"
(as defined in the Reporting Requirements) for the
Transaction. Escrow Agent shall perform all duties that are
required by the Reporting Requirements to be performed by the
Reporting Person for the Transaction.
(b) Seller and Buyer shall furnish to Escrow Agent, in a
timely manner, any information requested by Escrow
Agent and necessary for Escrow Agent to perform its
duties as Reporting Person for the Transaction.
(c) Escrow Agent hereby requests Seller to furnish to
Escrow Agent Seller's correct taxpayer identification
number. Seller acknowledges that any failure by
Seller to provide Escrow Agent with Seller's correct
taxpayer identification number may subject Seller to
civil or criminal penalties imposed by law.
Accordingly, Seller hereby certifies to Escrow Agent,
under penalties of perjury, that Seller's correct
taxpayer identification number is
_________________________________.
(d) Each of the parties hereto shall retain this
Agreement for a period of four (4) years following
the calendar year during which Closing occurs.
14.3 Survival/Merger. Except for the provisions of this Agreement which are
explicitly stated to survive the Closing, (a) none of the terms of this
Agreement shall survive the Closing, and (b) the delivery of the
Special Warranty Deed, and other Closing documents and instruments by
Seller and the acceptance thereof by Buyer shall effect a merger, and
be deemed the full performance and discharge of every obligation on the
part of Buyer and Seller to be performed hereunder.
14.4 Integration; Waiver. This Agreement, together with the Exhibits hereto,
embodies and constitutes the entire understanding between the parties
with respect to the Transaction and all prior agreements,
understandings, representations and statements, oral or written, are
merged into this Agreement. Neither this Agreement nor any provision
hereof may be waived, modified, amended, discharged or terminated
except by an instrument signed by the party against whom the
enforcement of such waiver, modification, amendment, discharge or
termination is sought, and then only to the extent set forth in such
instrument. No waiver by either party hereto of any failure or refusal
by the other party to comply with its obligations hereunder shall be
deemed a waiver of any other or subsequent failure or refusal to so
comply.
14.5 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of Alabama.
39
14.6 Captions Not Binding; Exhibits. The captions in this Agreement are
inserted for reference only and in no way define, describe or limit the
scope or intent of this Agreement or of any of the provisions hereof.
All Exhibits attached hereto shall be incorporated by reference as if
set out herein in full.
14.7 Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
permitted assigns.
14.8 Severability. If any term or provision of this Agreement or the
application thereof to any persons or circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement or
the application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable shall
not be affected thereby, and each term and provision of this Agreement
shall be valid and enforced to the fullest extent permitted by law.
14.9 Notices. Any notice, request, demand, consent, approval and other
communications under this Agreement shall be in writing, and shall be
deemed duly given or made at the time and on the date when received by
facsimile if such date is a business day (provided that the sender of
such communication shall orally confirm receipt thereof by the
appropriate parties and send a copy of such communication to the
appropriate parties within one (1) business day of such facsimile) or
when personally delivered if such date is a business day as shown on a
receipt therefor (which shall include delivery by a nationally
recognized overnight delivery service) or three (3) business days after
being mailed by prepaid registered or certified mail, return receipt
requested, to the address for each party set forth below. Any party, by
written notice to the other in the manner herein provided, may
designate an address different from that set forth below.
IF TO BUYER: Preit-▇▇▇▇▇, Inc.
The Bellevue, Third Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Executive Vice
President
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy #: (▇▇▇) ▇▇▇-▇▇▇▇
COPIES TO: Pennsylvania Real Estate Investment Trust
The Bellevue, Third Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice
President
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy #: (▇▇▇) ▇▇▇-▇▇▇▇
And
40
Blank Rome LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone#: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy #: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO SELLER: Colonial Realty Limited Partnership
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy #: (▇▇▇) ▇▇▇-▇▇▇▇
COPY TO: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy #: (▇▇▇) ▇▇▇-▇▇▇▇
14.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original and all of which counterparts taken together
shall constitute one and the same agreement.
14.11 No Recordation. Seller and Buyer each agrees that neither this
Agreement nor any memorandum or notice hereof shall be recorded, and
Buyer agrees (a) not to file any notice of pendency or other instrument
(other than a judgment) against the Property or any portion thereof in
connection herewith and (b) to indemnify Seller against all
Liabilities, including, without limitation, reasonable attorneys' fees
and expenses, incurred by Seller by reason of the filing by Buyer of
such notice of pendency or other instrument.
14.12 Additional Agreements; Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto shall execute
and deliver such documents as the other party shall reasonably request
in order to consummate and make effective the Transaction; provided,
however, that the execution and delivery of such documents by such
party shall not result in any additional liability or cost to such
party.
14.13 Construction. The parties acknowledge that each party and its counsel
have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation
of this Agreement or any amendment hereof or Exhibit hereto.
41
14.14 Special Provisions. The following special provisions shall be
applicable to this Agreement and shall supersede any other provisions
of this Agreement which are inconsistent herewith:
14.14.1 Assignment to Affiliates. Buyer intends to assign this
Agreement, with respect to the Mall Property, to PREIT Gadsden
Mall LLC, and with respect to the Office Property to PREIT
Gadsden Office LLC, both Delaware limited partnerships; and
(without limiting any other provisions applicable to
assignments) from and after such assignment the provisions of
this Agreement shall be binding upon and shall inure to the
benefit of said assignees and their respective successors and
assigns. Seller intends to assign certain rights under this
Agreement to an intermediary in connection with a tax-free
exchange, and no such assignment shall relieve Seller of any
obligation under this Agreement.
14.14.2 Certain Vacant Land.
(a) Seller or its affiliates owns three vacant pieces of
land in the immediate vicinity of the Mall Property,
one of which is an easement parcel, as generally
described or outlined on Exhibit "P" hereto
(collectively, the "Vacant Land"). Seller desires
that Buyer acquire the Vacant Land as part of its
acquisition of the Mall Property and, subject to
Buyer's satisfaction with due diligence reviews for
the Vacant Land, Buyer desires to acquire same at a
date subsequent to the Closing Date. Buyer shall
proceed with its due diligence reviews of the Vacant
Land promptly following the Closing Date, and in such
connection Seller shall promptly deliver to Buyer any
plans, descriptions, title documents and other
materials relating to the Vacant Land which are in
Seller's possession.
(b) Buyer shall acquire the Vacant Land following the
completion of Buyer's due diligence and upon at least
ten (10) days advance notice to Seller, but in any
event within ninety (90) days following the Closing
Date, for a price of ONE DOLLAR ($1.00) for each
parcel acquired; provided, however, that Buyer shall
have the absolute right, in its sole discretion, to
decline to acquire any one or more of the parcels
comprising the Vacant Land if Buyer is unsatisfied
for any reason with the results of its due diligence
investigations. Buyer will have the right to acquire
one or more of the parcels comprising the vacant land
in the name of affiliated entities.
(c) As a further condition of Buyer's obligation to
acquire the Vacant Land, the state of title to the
Vacant Land shall be good and marketable and
insurable as such, subject only to such title
exceptions as Buyer may reasonably approve (it being
understood that exceptions in the general nature of
those applicable to the Mall Property, other than
leases, would be deemed acceptable), and the Vacant
Land shall be free of all leases, occupancy rights
and contracts, brokerage commissions, and the like
(other than recorded easement and utility
agreements); and, generally, the provisions of the
this Agreement shall apply to the Vacant Land
(including without limitation applicable closing
apportionments), and the closing documents will be
the same as set forth herein, in all cases limited
accordingly due to the fact that the property
conveyed is vacant land and except as applicable the
Vacant Land will be sold to Buyer in its "as is"
condition.
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14.14.3 Arby's Parcel.
(a) A portion of the Mall Property is an Arby's
Restaurant on an outlot located across the street
from the Mall Property. Adjacent to the Arby's parcel
is a twenty (20) foot section of road which serves as
access to the Arby's parcel, and immediately
adjoining that, to the south, is a thirty (30) foot
section of road which is owned by Seller and which
adjoins a McDonald's parcel. Seller believes that the
twenty (20) foot section of the road was intended to
be conveyed to Seller but, through, inadvertence, was
retained by a predecessor affiliate of Seller. Buyer
has not yet obtained title and survey review of the
Arby's parcel and the adjoining twenty (20) foot
easement. Further, Arby's has a first right of
refusal in its lease to purchase the Arby's parcel.
The aforesaid 20 feet and 30 feet widths are
approximate.
(b) Arby's has not waived its first right of refusal
prior to the date hereof. Accordingly, Buyer and
Seller acknowledge and agree that a portion of the
purchase price attributable to the Mall Property
equal to One Million One Hundred Fifty Three Thousand
Seventy Three Dollars ($1,153,073), shall be withheld
from the Purchase Price at Closing. In the event
Arby's exercises first right of refusal, Seller shall
be permitted to convey the Arby's parcel and any
rights to the adjoining road easement areas to Arby's
for the purchase price of $1,153,073 in accordance
with the terms and provisions of the Arby's Lease and
such amount shall constitute a permanent reduction of
the purchase price for the Mall Property as between
Buyer and Seller.
(c) If, following Closing, Arby's fails to exercise its
first right of refusal or such right of first refusal
lapses (in either case such that the Title Company
issues to Buyer an affirmative endorsement to such
effect), then upon ten (10) days notice thereof to
Buyer, Buyer shall purchase the Arby's parcel,
together with the twenty (20) foot easement adjacent
thereto and the 30 foot portion of the road owned by
Seller, for the purchase price of $1,153,073. Seller
has heretofore initiated the necessary notice to
Arby's. The conveyance documents will be the same as
attached to this Agreement and the provisions of this
Agreement shall continue to apply to the Arby's
parcel. Buyer shall have the right to acquire title
to the Arby's parcel in the name of an affiliate.
Notwithstanding the foregoing, Buyer's obligation to
acquire the Arby's parcel is contingent upon (i)
there having occurred no material adverse change in
circumstances applicable to the Arby's parcel from
the circumstances in effect as of the date hereof,
and (ii) the Title Company issuing affirmative
coverage reasonably satisfactory to Buyer for
irrevocable and perpetual easement rights over and
across the aforesaid 20 foot portion of the roadway
for the use of the Arby's parcel, at no additional
premium charge to Buyer, and (iii) Buyer being
reasonably satisfied with the results of its title
and survey review of the Arby's parcel (and in such
connection Buyer agrees to register any objections
with Seller within ten (10) days after Buyer's
receipt of the relevant title and survey
information).
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(d) The thirty (30) foot parcel referenced in Paragraph 3
above is currently owned by Seller. The aforesaid
twenty (20) feet of this access road, which
immediately adjoins the Arby's parcel and over which
Seller currently claims easement rights, is currently
the subject to a quiet title action filed in Etowah
County, Alabama. Seller agrees to proceed with the
defense and counterclaims under the quiet title
action at Seller's sole cost through conclusion in
order to obtain title to the twenty (20) foot portion
and Seller shall indemnify and hold Buyer harmless
from any liability relating thereto. In the event
Seller obtains title to the twenty (20) foot portion
of the road and if Buyer acquires the Arby's parcel,
Seller agrees to convey the same to Buyer for One and
No/100 Dollars ($1.00). Otherwise, the property
comprised in the approximately twenty (20) feet of
the easement parcel shall be conveyed or owned
pursuant to the court order under the quiet title
action but (if Buyer acquires the Arby's parcel)
Buyer does not thereby agree to any limitation on its
easement rights to said portion of the easement
parcel.
14.14.4 P & S Building Fund. On the Closing Date, $400,000.00 of the
purchase price for the Office Property (sometimes also
referred to herein as the "P & S Building" and such fund being
referred to herein as the "P & S Environmental Cost Fund)
shall be held and retained by Buyer, without interest, and
shall be disbursed to Seller on a monthly basis (or with such
other reasonable frequency as Seller desires) as Seller incurs
charges for the completion of the environmental work on the P
& S Building as set forth below (the "P & S Building
Obligations", it being understood that such fund shall not
stand as security for Seller's obligations relating to the
other portions of the Property); provided that such
disbursements shall be made only upon the furnishing from
Seller to Buyer of reasonable evidence of the incurring of
charges and of performance of the work to which the charges
properly apply. As Seller has agreed to be responsible for the
P & S Building Obligations, Buyer and Seller acknowledge and
agree that the retention of this P & S Environmental Cost Fund
is being established in order to provide additional assurance
to Buyer that Seller will complete the P & S Building
Obligations and also for any indemnification obligations of
Seller that may arise prior to Seller's completion of the P &
S Building Obligations. To the extent that the charges for
completion of the P & S Building Obligations, and any other
obligations or liabilities of Seller under this Agreement, are
in excess of the P & S Environmental Cost Fund, Seller
acknowledges and agrees that it shall be fully responsible for
such costs and charges; it being the understanding that the
P&S Environmental Cost Fund is security only and is not
intended to limit any liability of Seller. Upon the completion
by Seller of the P & S Building Obligations in accordance with
the requirements of this Agreement, any then remaining balance
of the P&S Environmental Cost Fund shall be disbursed to
Seller.
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14.14.5 Environmental Obligations. Buyer has concerns with respect to
certain environmental conditions (collectively referred to as
the "Environmental Conditions") existing on the Mall Property
and the P & S Building (as set forth in subsections (a)
through (e) in this Paragraph). The following sets forth the
agreement of both Buyer and Seller regarding Seller's
obligation to investigate and remediate the Environmental
Conditions, and further sets forth Seller's obligations
regarding third-party claims related to or arising from the
Environmental Conditions, and Seller's obligation to be
legally responsible for any and all penalties, supplemental
environmental projects, or similar financial obligations
prepared for, imposed by, ordered or issued by a local, state
or federal regulatory agency for any and all existing
violations of law existing on the Mall Property and/or the P &
S Building prior to Closing. All investigative and remedial
actions to be taken by Seller as set forth herein shall be
known as "Seller's Work".
(a) The Mall Property contains a Lease with ▇▇▇▇▇'▇
Department Stores. Effective on or about March 18,
2005, Seller removed an underground storage tank
("UST") from the ▇▇▇▇▇'▇ parcel. Upon such removal,
Seller's environmental consultant, ▇▇▇▇▇
Environmental ("▇▇▇▇▇") discovered that there were
releases of fuel from the tank into the environment.
A portion of the soil was excavated upon the tank
removal, and Seller's consultant is undertaking an
investigation of the Mall Property to determine the
scope and extent of the contamination from the tank
in order to determine what remedial actions are
required in accordance with the: applicable Alabama
Department of Environmental Management's ("ADEM")
statutes and regulations; applicable ADEM guidance
documents and directives; applicable federal
environmental statutes and regulations and guidance
documents; and applicable local ordinances and
regulations (hereinafter referred to collectively, as
may be amended from time to time, as the "Applicable
Standards"). Seller shall be solely obligated to
undertake and implement all investigative and
remedial actions with respect to the UST referred to
in this Paragraph, or any other non-compliant USTs
that may be located on the Mall Property, in
accordance with the Applicable Standards and Seller's
Work shall be conducted by an Alabama Registered
Professional Engineer ("Seller's Consultant")
experienced in soil and groundwater investigations,
and remedial work. Seller shall be required to obtain
a No Further Action ("NFA") letter from ADEM and
Seller will use its best efforts to have ADEM issue a
NFA which will be to the benefit of both Seller and
Buyer.
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(b) A portion of the Mall Property contains a Sears TBA
store, and Sears has rented a portion of the Mall
Property to conduct all operations related to the TBA
store ("the Sears TBA Site"). The Sears TBA Site was
the location of a prior release from five USTs which
occurred in approximately 1988. In approximately
1998, Seller received a NFA letter from ADEM although
the NFA letter did not specifically identify the
tanks that were covered. Moreover, Seller has been
unable to provide Buyer with all documentation that
was submitted to ADEM to support ADEM's issuance of
the NFA letter. Buyer has conducted environmental due
diligence at the Sears TBA Site and has discovered
residual contamination from a prior release is
located on the Mall Property. Buyer has further
determined that there are two in-service and five
out-of-service/former hydraulic vehicle lifts with
subsurface reservoirs inside the Sears TBA Building
and Seller's Consultant has previously identified a
release from one of the in-service lifts. Seller
shall be solely obligated to undertake and implement
all investigative and remedial actions with respect
to the Environmental Conditions at the Sears TBA Site
referred to in this Paragraph in accordance with
Applicable Standards which shall be conducted by an
Alabama Registered Professional Engineer ("Seller's
Consultant") experienced in soil and groundwater
investigations. Seller shall conduct all Work
required to obtain a NFA letter from ADEM and Seller
will use its best efforts to have ADEM issue a NFA
which will be to the benefit of both Seller and
Buyer.
(c) Buyer's Consultant has conducted a dye test at the
Sears TBA Site and has determined that the floor
drains may not be connected to a sanitary sewer
system notwithstanding that they are connected to a
storm water system. Seller shall conduct an
investigation to determine the status of the
connection and whether any remediation is required
under the Applicable Standards should Seller
determine that the floor-drain system is not
connected to a sanitary sewer system. If required in
accordance with Applicable Standards, Seller shall
either properly close and seal all floor drains
located in the Sears TBA building or shall cause
connection to be made to a sanitary system with all
applicable permits and approvals. Seller shall also
ensure that any remedial actions, if required under
the Applicable Standards, are conducted in order to
obtain an unconditional "Letter of Concurrence" from
ADEM and Seller shall use its best efforts to obtain
such which will be to the benefit of Seller and
Buyer.
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(d) During the conduct of Buyer's Environmental Due
Diligence activities at the P & S Building, Buyer
discovered certain Environmental Conditions which
Seller has agreed to investigate and remediate in
accordance with all Applicable Standards. Buyer and
Seller further acknowledge and agree that Seller will
prepare an operation and maintenance plan ("O& M
Plan") in connection with the presence of
asbestos-containing materials ("ACM") and lead-based
paint at the P & S Building, at Seller's cost and
expense, although Buyer will be responsible for the
implementation of all activities required under such
O & M Plans.
(e) Seller's Work at the P & S building shall include the
following actions:
(i) Fuel Oil Storage Tank. There is currently a
heating oil UST located on the east end of
the parking lot. Seller's Environmental
Consultant is currently in the process of
closing the UST in accordance with the
Applicable Standards. Seller shall obtain an
NFA letter for this UST from ADEM and Seller
will use its best efforts to have ADEM issue
a NFA which will be to the benefit of both
Seller and Buyer.
(ii) ACM. Seller's Environmental Consultant has
identified ACM located within the three
levels of the P & S Building. ACM sampling
and analytical results are provided in a
reported dated February 14, 2005, which has
been provided to Buyer's Environmental
Consultant for its review. Seller's
Environmental Consultant will conduct an
additional investigation and sampling events
to document the presence of ACM insulation
on piping or other items in the plenum space
between the suspended ceiling and the
upper-floor decking or roof. Samples will be
taken to assess the materials through
appropriate laboratory analysis. Seller
agrees to conduct all investigative,
abatement and/or remedial activities in
accordance with the Applicable Standards.
Seller will conduct all activities required
by the Applicable Standards during
non-business hours to avoid disruption to
Buyer's business.
(iii) Lead-Based Paint. Seller's Environmental
Consultant has identified lead-based paint
within the P & S Building and sampling and
analytical results are provided in a report
dated February 14, 2005, which has been
provided to Buyer's Environmental Consultant
for its review. Seller's Environmental
Consultant will conduct an additional
investigation and sampling events to
document the presence of lead-based paint or
dust in the P & S Building to determine
whether Seller is obligated to conduct
abatement activities, including removal or
encapsulation, of lead-based paint coated
surfaces pursuant to the Applicable
Standards. Seller agrees to conduct all
investigative, abatement and/or remedial
activities in accordance with the Applicable
Standards. Seller will conduct all
activities required by the Applicable
Standards during non-business hours to avoid
disruption to Buyer's business.
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(iv) Interior Elevator Pit. Seller's
Environmental Consultant conducted sampling
of the elevator pit and provided a report to
the Buyer dated February 14, 2005. Seller's
Environmental Consultant has determined that
there is a high groundwater table beneath
the P & S Building and that there is
groundwater seepage into the pit. A sump
pump removes the collected groundwater from
the pit which is discharged to the sewer
system. The hydraulic cylinder associated
with the elevator leaks hydraulic fluid that
mixes with the water in the pit. Seller
shall be required to conduct sampling around
the elevator pit to determine whether there
has been a release that requires remediation
pursuant to the Applicable Standards and
shall conduct such remedial action pursuant
to the Applicable Standards to obtain an
unconditional "Letter of Concurrence" from
ADEM and Seller shall use its best efforts
to obtain such which will be to the benefit
of Seller and Buyer. Moreover, Seller shall
obtain any applicable permits that are
required to discharge the oil-contaminated
groundwater into the sewer system from the
applicable regulatory authority.
(v) Former TBA Floor/Drain System. Seller shall
conduct a dye test of the floor-drain system
associated with the former auto repair area
of the P & S Building to determine the
location of the discharge of the floor-drain
system. Seller shall conduct an
investigation to determine the status of the
connection and whether any remediation is
required under the Applicable Standards
should Seller determine, as a result of the
dye test, that the floor-drain system is not
connected to a sanitary sewer system. If
required in accordance with Applicable
Standards, Seller shall either properly
close and seal all floor drains located in
the P & S Building or shall cause connection
to be made to a sanitary system with all
applicable permits and approvals. Seller
shall also ensure that all investigative and
remedial actions are conducted pursuant to
the Applicable Standards in order to obtain
an unconditional "Letter of Concurrence"
from ADEM and Seller shall use its best
efforts to obtain such which will be to the
benefit of Seller and Buyer.
(vi) Potential Interior Oil/Water Separator.
Seller shall conduct an investigation
related to the presence of a potential
oil/water separator associated with the
former auto repair area of the P & S
Building to determine whether a separator
was previously used and whether remediation
of any releases is required pursuant to the
Applicable Standards. Seller shall further
undertake all actions required to remediate
any releases and shall ensure that all
remedial actions are conducted pursuant to
the Applicable Standards in order to obtain
an unconditional "Letter of Concurrence"
from ADEM and Seller shall use its best
efforts to obtain such which will be to the
benefit of Seller and Buyer.
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14.14.6 General Provisions.
(a) Seller's Work referenced in Paragraphs 14.14.5 (a)
through (e) herein, shall be the sole responsibility,
obligation, and liability of Seller and will be
effected in accordance with all Applicable Standards
(whether now existing or enacted after the date
hereof), and in accordance with necessary tenant
consents (it being understood that Buyer and Seller
will cooperate in good faith in any interactions with
tenants as may be necessary). Seller and Buyer agree
and acknowledge that should there be ongoing
investigative and/or remedial activities required by
any local, state or federal regulatory authority
pursuant to the Applicable Standards with respect to
Seller's Work and/or its obligations as set forth in
Paragraphs 14.14.5 (a) through (e), that Seller has
the sole legal obligation to comply with such. Seller
shall keep Buyer and its Environmental Consultant
advised as to its progress on, and the status of,
Seller's Work and shall promptly provide copies of
all tests and samples obtained by Seller's
Environmental Consultant during the investigative and
remediation activities to Buyer for its review and
comment. Seller shall also afford Buyer and its
Environmental Consultant the opportunity to conduct
confirming tests and take split samples (which shall
be at Buyer's sole cost and expense). Seller shall
promptly provide copies of all Work Plans or
Environmental Reports of any kind for all
investigative and remedial activities to Buyer, in
advance of providing such to ADEM, and Buyer's
Environmental Consultant shall have a reasonable
opportunity to provide comments which shall be
considered by Seller's Environmental Consultant in
good faith. Seller and Buyer shall be fully
authorized and entitled to communicate in any manner
with governmental authorities regarding environmental
issues as deemed necessary to (a) comply with any
legal requirement, (b) obtain any environmental
permit, or (c) respond to any inquiry from or provide
any information requested by such governmental
authority. Seller and Buyer agree to cooperate in
their communications to governmental authorities.
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(b) Seller's Work shall be performed with all due haste
and in a diligent and professional manner in order to
provide the least possible disruption to Buyer's, and
its tenants', operations and business conducted at
the Mall Property and the P & S Building. Seller
understands that it may be necessary to obtain
authorization from Buyer's tenants to conduct
Seller's Work and, upon notice from Seller, Buyer
shall notify any tenant that may be affected by
Seller's Work of the schedule and the scope of all
activities to be undertaken by Seller. Further,
Seller's Work shall be conducted during non-business
hours, with respect to the Work set forth in
subsections (e)(ii) and (iii), and for any other
Seller's Work if reasonably requested by Buyer or an
affected tenant to avoid disruption, and Seller shall
maintain sufficient liability insurance with respect
to all Work with limits of no less than Ten Million
Dollars ($10,000,000), and Buyer and its managing
agent shall be named as additional insureds on all
insurance policies. All contractors contracted by
Seller or its Environmental Consultant shall be
required to maintain liability insurance with limits
of no less than One Million Dollars ($1,000,000) and
all contractors shall rely solely upon Seller for
payment for all services performed and shall, to the
fullest extent permitted, waive the right to file any
mechanic's liens against Buyer. Seller shall further
defend, indemnify and hold harmless Buyer from any
and all claims related to Seller's Work that may be
filed by any contractor or third party, and any
claims or liability for personal injury or property
damage. In the event that Seller fails and refuses,
after reasonable notice, to conduct any required
Seller's Work, and Buyer provides a reasonable
opportunity to cure and complete any such Work, Buyer
shall have the option, but not the obligation, to
complete such Work and Seller shall indemnify and
properly reimburse Buyer for all reasonable costs and
expenses incurred in completing such Work.
14.14.7 Disagreement Relating to Sears TBA Site. Should Seller's
Consultant and Buyer's Consultant disagree as to whether
Seller's Work at the Sears TBA Site was conducted in
accordance with the Applicable Standards, then Seller and
Buyer agree to select a neutral Alabama Registered
Professional Engineer ("Independent Engineer") with relevant
environmental experience, such selection to occur no later
than ten (10) days following written notification by either
Party as to the disagreement, and the Independent Engineer
will be responsible for reviewing all relevant documentation
related to Seller's Work to reach an independent decision,
which shall be binding upon both Seller and Buyer, as to
whether Seller's Work was conducted in accordance with the
Applicable Standards. If the Independent Engineer decides that
additional or different Work must be conducted by the Seller
in order to comply with the Applicable Standards, Seller
agrees to conduct all such required Work, and if the
Independent Engineer decides that no additional or different
Work is required, then Seller shall be entitled to abide by
such decision.
50
14.14.8 Indemnification. Seller agrees to defend, hold harmless, and
indemnify Buyer and its managing agent and their respective
principals, officers and directors (with counsel reasonably
satisfactory to Buyer) from any and all Environmental Claims
(hereinafter defined) asserted by or filed against Buyer after
the Closing Date for the Mall Property and/or the P & S
Building, or any portions thereof, by third parties,
including, related to or arising from or in connection with
any of the Environmental Conditions referred to or identified
herein. "Environmental Claims" shall include all losses,
costs, damages, allegations, demands, claims (including,
without limitation, claims for personal injury or real or
personal property damage), liabilities, expenses, judgments,
and orders or investigations or remediation measures required.
Seller further agrees to be solely responsible for any and all
penalties issued by ADEM (or other governmental authorities)
in connection with, the Environmental Conditions referred to
in Paragraphs 14.14.5(a) through (e). Seller further agrees to
be solely responsible for any Natural Resources Damages that
the State of Alabama or the United States of America imposes
and/or attempts to recover related to the Environmental
Conditions referred to or identified herein. All obligations
of Seller set forth in this Paragraph as well as the other
portions of this Section 14.14 shall survive Closing and there
shall be no dollar limitation on Seller's obligations under
this Section 14.14.
14.14.9 Release. To the extent that Seller satisfactorily completes
all investigation and remediation activities and Seller's Work
required by this Section 14.14 pursuant to the Applicable
Standards, Buyer acknowledges and agrees that Buyer shall
thereupon be deemed to release Seller, its principals,
officers and directors, from all liability associated with the
Environmental Conditions set forth herein, except that this
release does not apply to Seller's obligations set forth in
Section 14.14.8; and upon request of Seller such release shall
be confirmed by supplemental written documentation.
14.15 Maximum Aggregate Liability. Notwithstanding any provision to the
contrary contained in this Agreement or any documents executed by
Seller pursuant hereto or in connection herewith, the maximum aggregate
liability of Seller and the Seller Parties to Buyer, and the maximum
aggregate amount which may be awarded to and collected by Buyer from
Seller, in connection with the Transaction, the Property, under this
Agreement and under any and all documents executed pursuant hereto or
in connection herewith (including, without limitation, in connection
with the breach of any of Seller's Warranties for which a claim is
timely made by Buyer) shall not exceed Seven Hundred Fifty Thousand and
No/100 Dollars ($750,000.00); provided that such limit shall not apply
to (i) Seller's responsibility for Adverse Claims, if any, or (ii)
Seller's obligations under Section 14.14 above, or (iii) Seller's
obligations under the Assignment of Intangibles and the Assignment of
Leases. The provisions of this section shall survive the Closing (and
not be merged therein) or any earlier termination of this Agreement.
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14.16 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY
PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION WITH ANY MATTER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS
AGREEMENT, THE PROPERTY OR THE RELATIONSHIP OF BUYER AND SELLER
HEREUNDER.
14.17 Facsimile Signatures. Signatures to this Agreement transmitted by
telecopy shall be valid and effective to bind the party so signing.
Each party agrees to promptly deliver an execution original to this
Agreement with its actual signature to the other party, but a failure
to do so shall not affect the enforceability of this Agreement, it
being expressly agreed that each party to this Agreement shall be bound
by its own telecopied signature and shall accept the telecopied
signature of the other party to this Agreement.
14.18 Section 1031 Exchange. Buyer acknowledges that Seller may sell the
Property pursuant to the terms of the Internal Revenue Code Section
1031, and Seller acknowledges that Buyer may use the Property as a
replacement property pursuant to the terms of said Section. Buyer and
Seller shall cooperate with one another and execute documents
reasonably hereunder for the other to conduct a like-kind exchange. In
no event will Buyer be required to take title to any real property
other than the Property by conveyed herein. [signature page follows]
52
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed as of the date(s) set forth below to be effective as of
the day and year first above written.
SELLER:
COLONIAL REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: COLONIAL PROPERTIES TRUST, an Alabama Real
Estate Investment Trust
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Title: Senior Vice President-Retail
------------------------------------
Date: March 31, 2005
------------------------------------
BUYER:
PREIT-▇▇▇▇▇, Inc.,
a Pennsylvania corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Title: Executive Vice President-Acquisitions
--------------------------------------------
Date: March 31, 2005
--------------------------------------------
53