SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) January 5, 1998
(December 19,1997)
THE MACERICH COMPANY
(Exact Name of Registrant as Specified in Charter)
Maryland 1-12504 95-4448705
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
233 Wilshire Boulevard, Suite 700, Santa Monica, CA 90401
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (310) 394-6911)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets
------------------------------------
On December 19, 1997, a majority owned subsidiary of The
Macerich Company (the "Registrant")acquired The Citadel, in Colorado Springs,
Colorado, a super regional mall containing approximately 1,094,000 square feet.
The seller of the asset was TriState Joint Venture ("Seller"), a Maryland joint
venture partnership, comprised of an affiliate of Teachers Insurance and Annuity
Association and an affiliate of The Rouse Company. The assets acquired include,
among other things, real property, the buildings and improvements located
thereon, certain lease interests, tangible and intangible personal property and
rights related thereto.
The purchase price was approximately $108 million, and was
determined in good faith arms length negotiations between Registrant and the
Seller. In negotiating the purchase price the Registrant considered, among other
factors, the mall's historical and projected cash flow, the nature and term of
existing tenancies and leases, the current operating costs, the expansion
availability, the physical condition of the property, and the terms and
conditions of available financing. No independent appraisals were obtained by
the Registrant. The purchase price was funded by a concurrently placed loan of
$75.6 million plus $32.4 million in cash. The Registrant intends to continue
operating the mall as currently operated and leasing the space therein to
national and local retailers.
Earnings before interest, taxes, depreciation and amortization
for the mall for 1996 was approximately $8.7 million.
The description contained herein of the transaction described
above does not purport to be complete and is qualified in its entirety by
reference to the Purchase Agreement which is filed as Exhibit 2.1 hereto.
2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial Statements of Stonewood Mall
Report of Independent Accountants F-1
Statement of Revenues and
Certain Expenses for the year
ended December 31, 1996 and for the
six months ended June 30, 1997 and 1996 F-2
Notes to Financial Statements F-3 thru F-6
(b) Pro Forma Financial Information
Condensed Combined Statements of Operations for
of the Macerich Company for the year ended
December 31, 1996 F-7
Condensed Combined Statements of Operations
of the Macerich Company for the nine months ended
September 30, 1997 F-8
Condensed Combined Balance Sheet as of
September 30, 1997 F-9
(c) Exhibits
2.1 Agreement of Purchase and Sale dated November 12, 1997 between MR
Citadel Limited Partnership and TriState Joint Venture
3
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, The Macerich Company has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized, in the City of Santa
Monica, State of California, on January 5, 1998.
THE MACERICH COMPANY
By: /s/Thomas E. O'Hern
Thomas E. O'Hern
Senior Vice President and
Chief Financial Officer
4
EXHIBIT INDEX
Exhibit No. Document Page
2.1 Agreement of Purchase and Sale dated
November 12, 1997, between TriState Joint
Venture and MR Citadel Limited Partnership
5
STONEWOOD CENTER MALL
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STATEMENT OF REVENUES AND CERTAIN EXPENSES For The Year Ended
December 31, 1996
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REPORT OF INDEPENDENT ACCOUNTANTS
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To the Directors of The Macerich Company
We have audited the accompanying statement of revenues and certain expenses of
Stonewood Center Mall (the "Mall") for the year ended December 31, 1996. This
statement is the responsi- bility of the Mall's management. Our responsibility
is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the statement. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission (for inclusion
in the Form 8-K of The Macerich Company) described in Note 2 and is not intended
to be a complete presentation of the Mall's revenues and expenses.
In our opinion, the statement referred to above presents fairly, in all material
respects, the revenues and certain expenses described in Note 2 of the Mall for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
Newport Beach, California
September 30, 1997
F-1
STONEWOOD CENTER MALL
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
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Year Ended
December 31, Six Months Ended June 30,
1996 1997 1996
(Unaudited)
Revenues:
Minimum rents $8,491,205 $4,321,963 $3,940,281
Percentage rents 468,528 235,604 238,582
Tenant recoveries 2,868,260 1,428,417 1,358,427
Other incomec 234,738 71,895 77,089
------------ ----------- ---------
12,062,731 6,057,879 5,614,379
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Certain expenses:
Operating expenses 1,948,483 911,006 778,941
Property taxes 925,452 468,087 471,427
General and administrative 328,350 130,758 162,297
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3,202,285 1,509,851 1,412,665
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Revenues in excess of certain expenses $8,860,446 $4,548,028 $4,201,714
========= ========= =========
The accompanying notes are an integral part of this statement.
F-2
STONEWOOD CENTER MALL
NOTES TO FINANCIAL STATEMENTS
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1. Description Of The Property:
The statements of revenues and certain expenses relate to the operations of
Stonewood Center Mall (the "Mall") located in Downey, California which is a
926,823-square foot (unaudited) regional shopping mall. The Mall was acquired on
August 6, 1997 by Macerich Partnership, L.P. (the "Operating Partnership") from
Stonewood Center Limited Partnership (a California Limited Partnership) (the
"Prior Owners" or the "Company") for an aggregate purchase price of $92 million.
The Macerich Company, a Maryland Corporation, owns 68% of the Operating
Partnership.
2. Significant Accounting Policies:
Basis Of Presentation:
Operating revenues and expenses are presented on the accrual basis of
accounting. Retail spaces rented under operating leases generally range
from 2 to 10 years. Minimum rent revenues are recognized as rents
become due according to the lease agreement for which amounts
approximate revenues had they been recorded on a straight-line basis.
Some tenants are also charged for certain operating expenses that are
subject to recovery by the Mall, including real estate taxes, insurance
and common area costs.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
these estimates.
There are owners and developers of real estate that compete with the
Company in its trade areas. This results in competition for tenants to
occupy space. The existence of competi- tion could have a material
impact on the Company's ability to lease space and on the level of rent
that can be achieved.
The accompanying statements of revenues and certain expenses is not
representative of the actual operations for the year ended December 31,
1996 because certain expenses, which may not be comparable to those
expected to be incurred by the Operating Partner- ship in the proposed
future operations of the Mall, have been excluded. Expenses excluded
consist of mortgage interest, depreciation and amortization, management
fees and other legal and administrative costs not directly related to
future operations of the property.
F-3
STONEWOOD CENTER MALL
NOTES TO FINANCIAL STATEMENTS - Continued
2. Significant Accounting Policies, Continued:Interim Statements:
The interim financial data for the six-month periods ended June 30,
1997 and 1996 are unaudited; however, in the opinion of management, the
interim data includes all adjust- ments, consisting of normal recurring
adjustments and eliminations necessary for a fair presentation of the
results of the periods under the basis of presentation described above.
The results of revenues and direct operating expenses for the six-month
periods ended June 30, 1997 and 1996 are not necessarily indicative of
the results for the full year.
3. Operating Leases:
The minimum lease payments, excluding average rents, on noncancelable
operating leases to be received in future years as of December 31, 1996
are as follows:
1997 $8,397,623
1998 8,418,265
1999 8,005,299
2000 7,328,469
2001 5,288,820
Thereafter 21,044,183
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$58,482,659
In addition to minimum rents, certain leases provide for contingent
rent payments based on a percent of base income, as defined. This
additional rent was approximately $468,528 in 1996.
F-4
STONEWOOD CENTER MALL
NOTES TO FINANCIAL STATEMENTS - Continued
4. Ground Lease:Under an existing noncancellable operating ground lease
agreement, the Company is committed to pay the following minimum rents:
Years Ending December 31,
1997 $129,954
1998 129,954
1999 129,954
2000 129,954
2001 129,954
Thereafter 12,198,078
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$12,847,848
Rent expense associated with the ground lease was $129,954 in 1996. The
annual ground rent expense is adjusted every five years by the
proportionate change in CPI. On January 1, 2008, the base rent then in
effect shall be increased by 50%. The lease expires on December 31,
2051.
F-5
STONEWOOD CENTER MALL
NOTES TO FINANCIAL STATEMENTS - Continued
5. Related Party Transaction:
Hughes/Purcell (the "Company") which, through common ownership is
related to the Prior Owners of the Mall, is reimbursed for certain
leasing fees for services performed by the Company on behalf of the
Mall. During 1996, the Company was reimbursed approximately $44,123 for
such leasing fees. In addition, although not reflected in the
accompanying financial statement, the Company was also reimbursed
$522,757 for management fees.
F-6
The following unaudited pro forma statement of operations has been
prepared for the year ended December 31, 1996. This statement gives
effect to the acquisitions of South Towne Center , Stonewood Mall
and the Citadel (the "Acquisition Centers")
as if the acquisitions were completed on January 1, 1996. This
statement does not purport to be indicative of the results of
operations that actually would have resulted if the Registrant had
owned those malls throughout the period presented. This statement
should be read in conjunction with the financial statements and notes
thereto included elsewhere herein.
The Macerich Company
Unaudited Pro Forma
Condensed Combined Statement of Operations
(all amounts in thousands)
Company results Pro forma Pro forma Pro forma
for the year ended South Towne Center Stonewood Mall Citadel Mall
December 31, 1996 Acquisition Acquisition Acquisition
(A)
Revenues:
Minimum Rents 99,061 5,220 8,491 8,052
Percentage Rents 6,142 1,400 469 585
Tenant Recoveries 47,648 2,022 2,868 3,265
Other 2,208 996 235 696
--------- -------- ------ -------
Total revenues 155,059 9,638 12,063 12,598
Shopping center expenses 50,792 3,099 3,202 3,933
REIT general and administrative expenses 2,378
Depreciation and amortization (B) 32,591 1,885 1,769 2,077
Interest expense 42,353 6,615 (c) 6,210 (c) (E) 7,873
--------- -------- ------ -------
Net income (loss) before minority interest,
extraordinary items and
uncombined joint ventures and management companies 26,945 (1,961) 882 (1,285)
Minority interest (D) (10,975) 720 (324) 472
Income from uncombined joint
ventures and management companies 3,256 0 0
Extraordinary loss on early extinguishment of debt (315)
--------- -------- ------ -------
Net income 18,911 (1,241) 558 (813)
--------- -------- ------ -------
--------- -------- ------ -------
Net income per share - before extraordinary items $0.92
---------
---------
Net income per share $0.91
---------
---------
Weighted average number of shares of common stock outstanding 20,781
Pro Forma Results
(Including the
Acquisition Malls)
December 31, 1996
Revenues:
Minimum Rents 120,824
Percentage Rents 8,596
Tenant Recoveries 55,803
Other 4,135
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Total revenues 189,358
Shopping center expenses 61,026
REIT general and administrative expenses 2,378
Depreciation and amortization (B) 38,322
Interest expense 63,051
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Net income (loss) before minority interest,
extraordinary items and
uncombined joint ventures and management companies 24,581
Minority interest (D) (10,107)
Income from uncombined joint
ventures and management companies 3,256
Extraordinary loss on early extinguishment of debt (315)
--------
Net income 17,415
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---------
Net income per share - before extraordinary items $0.85
---------
---------
Net income per share $0.84
---------
---------
Weighted average number of shares of common stock outstanding 20,781
(A) This information should be read in conjunction with The Macerich
Company's (the "Company") report on Form 10-K for the period ended
December 31, 1996.
(B) Depreciation on the Acquisition malls is computed on the straight-line method over the estimated useful life of 39 years.
(c) Interest expense is calculated assuming the entire purchase price was debt at a rate of LIBOR plus 1.25% .
(D) Minority interest represents the limited partners ownership interest in
the Operating Partnership.
(E) Interest expense is calculated based on a property loan of $75,600 at 7.2% plus other debt of $32,400 at LIBOR plus 1.5%
F-7
The following unaudited pro forma statement of operations has been
prepared for the nine months ended September 30, 1997 . This
statement gives effect to the acquisitions of South Towne Center,
Stonewood Mall and Citadel Mall (the "Acquisition Centers")
as if the acquisitions were completed on January 1, 1997. This
statement does not purport to be indicative of the results of
operations that actually would have resulted if the Registrant had
owned those malls throughout the period presented. This statement
should be read in conjunction with the financial statements and notes
thereto included elsewhere herein.
The Macerich Company
Unaudited Pro Forma
Condensed Combined Statement of Operations
(all amounts in thousands)
Company results Pro forma Pro forma Pro forma
for the nine Adjustment- Adjustment- Adjustment-
months ended South Towne Center Stonewood Mall Citadel Mall
Sept. 30, 1997 Acquisition Acquisition Acquisition
(A) (B) (B) (C)
Revenues:
Minimum Rents 101,228 1,419 5,182 5,770
Percentage Rents 6,434 92 59 226
Tenant Recoveries 49,558 508 1,713 2,751
Other 2,465 19 86 97
-------- ------- ----- ------
Total revenues 159,685 2,038 7,040 8,844
Shopping center expenses 51,830 728 1,732 3,260
REIT general and administrative expenses 2,099
Depreciation and amortization 29,815 471 (D) 1,179 (D) 1,558 (D)
Interest expense 47,402 1,654 (E) 4,447 (E) 5,905 (G)
-------- ------- ----- ------
Net income (loss) before minority interest, uncombined
joint ventures and extraordinary loss 28,539 (815) (318) (1,879)
Gain on sale of asset 1,620
Minority interest (F) (7,195) 260 104 615
Income (loss) from uncombined joint
ventures and management companies (7,608)
Extraordinary loss on early retirement of debt (563)
-------- ------- ----- ------
Net income 14,793 (555) (214) (1,264)
-------- ------- ----- ------
-------- ------- ----- ------
Net income per share before extraordinary items $0.59
----------
----------
Net income per share $0.57
----------
----------
Weighted average number of shares outstanding 25,886
Pro forma Result
(Including the
Acquisition Centers)
for the nine
months ended
Sept. 30, 1997
Revenues:
Minimum Rents 113,599
Percentage Rents 6,811
Tenant Recoveries 54,530
Other 2,667
-------
Total revenues 177,607
Shopping center expenses 57,550
REIT general and administrative expenses 2,099
Depreciation and amortization 33,023
Interest expense 59,408
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Net income (loss) before minority interest, uncombined
joint ventures and extraordinary loss 25,527
Gain on sale of asset 1,620
Minority interest (F) (6,216)
Income (loss) from uncombined joint
ventures and management companies (7,608)
Extraordinary loss on early retirement of debt (563)
--------
Net income 12,760
--------
--------
Net income per share before extraordinary items $0.51
--------
--------
Net income per share $0.49
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--------
Weighted average number of shares outstanding 25,886
(A) This information should be read in conjunction with The Macerich
Company's (the "Company") report on Form 10-Q for the period ended
September 30, 1997.
(B) Reflects results of operations on South Towne Center from January 1 to
March 26, 1997. The mall was acquired on March 27, 1997. Stonewood Mall
was acquired on August 6, 1997. The pro forma results above include
Stonewood Mall from January 1 to
to August 6, 1997.
(C) Reflects Citadel Mall for the period of January 1 to September 30, 1997. The Company acquired the mall on December 19, 1997.
(D) Depreciation on the Acquisition malls is computed on the straight-line method over the estimated useful life of 39 years.
(E) Interest expense is calculated assuming the entire purchase price was debt at a rate of LIBOR plus 1.25% .
(F) Minority interest represents the 38% ownership interest in the Operating Partnership not owned by the Company
(G) Interest expense is calculated based on a property loan of $75,600 at 7.2% plus other debt of $32,400 at LIBOR plus 1.5%
F-8
The Macerich Company
Unaudited Pro Forma
Condensed Combined Balance Sheet
(all amounts in thousands)
Pro forma Condensed
Pro forma Balance Sheet
The Macerich Adjustment- (Including Stonewood,
Company Citadel Citadel and South Towne
as reported Mall Mall Acquisitions)
Sept. 30, 1997 Acquisition Sept. 30, 1997
Gross property 1,476,325 108,000 1,584,325
Total assets 1,366,282 108,000 1,474,282
Mortgages and loans 988,936 108,000 1,096,936
Minority interest 102,996 102,996
Common stock 257 257
Additional paid in capital 219,850 219,850
Total liabilities and shareholder equity 1,366,282 108,000 1,474,282
F-9
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") dated as of November
12, 1997, is between TRISTATE JOINT VENTURE, a Maryland general partnership (the
"Seller") and MR CITADEL LIMITED PARTNERSHIP, a California limited partnership
(the "Purchaser").
RECITALS
A. Citadel Mall. Seller owns that certain shopping center known as
Citadel Mall and Citadel Convenience Center in Colorado Springs, Colorado,
located on the land more particularly described on Schedule A-1, attached hereto
(the "Land") and all related improvements located thereon and certain personalty
associated therewith as described in this Agreement (the "Citadel Mall").
Schedule A-1 shall be revised as necessary prior to Closing (defined herein) in
order to accurately reflect the Seller's interest in the Citadel Mall and the
Citadel Convenience Center.
B. Sale and Transfer. Seller desires to sell and transfer the Citadel
Mall to Purchaser and Purchaser desires to purchase and acquire the same from
Seller.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Seller and Purchaser covenant and
agree as follows:
ARTICLE I
SALE OF PREMISES AND CLOSING
. Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, at
the price and upon the terms and conditions set forth in this Agreement:
(a) the fee simple interest in the Land more particularly
described on Schedule A-1;
(b) all buildings, parking areas, fixtures and improvements
situated on the Land ("Improvements");
(c) all right, title and interest of Seller, if any, in and to
the land lying in the bed of any street or highway in front of or adjoining the
Land and to any unpaid award for any taking by condemnation or any damage to the
Land by reason of a change of grade of any street or highway;
(d) the easements and appurtenances belonging to or for
benefit of Seller pertaining to the Land and Improvements;
(e) all right, title and interest of Seller in the personal
property set forth on Schedule B-1 attached hereto (collectively the "Personal
Property"); provided however, that the following are specifically excluded from
the Personal Property notwithstanding their inclusion on Schedule B-1: (i) items
of personal property owned by Tenants and pursuant to which the Tenants have the
right to remove the same from the Premises; (ii) items leased by Seller (as
noted on Schedule B-1) and which cannot be assigned by Seller pursuant to the
terms of the applicable lease documents or for which acceptable terms cannot be
agreed to between the Purchaser and the leasing company; and (iii) proprietary
materials of Seller or The Rouse Company or any of its affiliates or
subsidiaries, which are listed on Schedule B-2 attached hereto;
(f) all right, title and interest, if any, of Seller in and to
all transferable warranties and guarantees with respect to the Improvements, the
Personal Property and any repairs or renovations to the Improvements and/or the
Personal Property;
(g) all right, title and interest, if any, of Seller in and to
any contract rights and general intangibles in connection with the Land, the
Improvements and the Personal Property, including, without limitation, rights to
telex and telephone numbers and listings and rights to use any graphic designs,
trademarks, trade names, slogans, logos or insignias, including, without
limitation, the Trade Names, if any, set forth and defined on Rider 2, attached
hereto; however, in no event will such trademarks, trade names, slogans, logos
or insignias include those of Seller, the general partners of Seller, Seller's
or its general partners' parent companies or affiliates unless such trade names
are used solely in connection with the operation of the Premises;
(h) all plans, specifications, sepias, architect's drawings
and renderings, development materials, maps, surveys, studies and the like
relating to the Premises and in the possession of Seller or Seller's property
manager, excluding, however, Seller's closing binders and the materials therein
relating to Seller's acquisition or financing of the Land or any portion thereof
and the transaction contemplated hereby;
(i) all right, title and interest, if any, of Seller in and to
all rights, permits, licenses or agreements relating to the ownership, use or
operation of the Land, the Improvements and the Personal Property, if any;
(j) all of Seller's right, title and interest in any water and
water rights, and rights to water, whether appropriated or not, and whether
adjudicated or not, used on or in connection with the Land, together with all
appurtenances thereto;
(k) all lettings, licenses, leases, rents, royalties, profits,
revenues, incomes and other benefits of and from the Land, the Improvements and
the Personal Property, and all of the estate, right, title and interest of every
nature whatsoever of Seller in and to the same and every part and parcel thereof
after the date of Closing (as defined below); and
2
(l) all of Seller's right, title and interest in and to any
and all reciprocal easement agreements, supplemental or separate agreements,
development agreements, indemnity agreements, escrow agreements, purchase
agreements and the like of or pertaining to the "Anchor Stores" and the "Limited
Parties" (as defined on Rider 2) with respect to the Premises, all as amended
(each an "Operating Agreement" and collectively the "Operating Agreements").
All of the property and rights described in clauses (a) through (l)
above are hereinafter collectively referred to as the "Premises."
. Seller's right, title and interest in and to the Premises is being sold in an
"AS IS" condition as of the date of this Agreement, except as specifically
provided in this Agreement. Except as specifically set forth in this Agreement
and in the deed to be delivered by Seller at Closing pursuant to Section 0, no
representations have been made or are made and no liability under any statutory
or common law theory or basis, whether premised in warranty or otherwise, has
been or is assumed by Seller or by any partner, officer, person, firm or agent
acting or purporting to act on behalf of Seller as to the title to or the
condition or repair of the Premises or the value, expense of operation, or
income potential thereof or as to any other fact or condition which has or might
affect the Premises or the condition, repair, value, expense of operation or
income potential of the Premises or any portion thereof.
. Seller agrees to convey, and Purchaser agrees to accept, title to the Land by
special warranty deed, all in the condition described in this Article 0 (subject
to the provisions of Sections 0 and 0 below), and title to the Personal
Property, by bill of sale in the form of Exhibit B attached hereto, without
warranty as to the condition of such personalty, but with a warranty that the
Personal Property is free and clear of all liens, claims and encumbrances
created by Seller during the time of Seller's ownership of the Personal
Property.
I.4 Closing. Unless extended as specifically provided for in this
Agreement, the closing pursuant to this Agreement ("Closing"), shall take place
on the scheduled date and time of closing specified and at the place specified
in Rider 2. In no event shall the Closing be later than December 30, 1997.
ARTICLE II
PURCHASE PRICE, ACCEPTABLE FUNDS, DOWNPAYMENT
. The purchase price ("Purchase Price") to be paid by Purchaser to Seller for
the Premises is provided in Rider 1, attached hereto.
3
. All moneys payable under this Agreement, unless otherwise specified in this
Agreement, shall be paid in full by Purchaser to Seller at the Closing by wire
transfer (in immediately available federal funds) to a bank account or accounts
designated by Seller, subject to adjustments as provided herein.
. II.3 Downpayment
(a) The Downpayment (as set forth and defined on Rider 1),
together with any other sums paid on account of the Purchase Price prior to the
Closing shall be delivered to the Escrow Company (as set forth and defined on
Rider 2) to be held in escrow. The Escrow Agent shall hold the Downpayment in
escrow in a special bank account (or as otherwise agreed in writing by Seller,
Purchaser and Escrow Agent) until the Closing or as provided below in this
Section 0 and shall pay over or apply the Downpayment in accordance with the
terms of this Section 0 and elsewhere in this Agreement. Escrow Agent will hold
the Downpayment in an interest-bearing account, and such interest shall be paid
to the same party entitled to the escrowed proceeds. The party receiving such
interest shall pay any income taxes thereon. The tax identification numbers of
the parties are set forth in Rider 2 or shall be furnished to Escrow Agent upon
request. At the Closing, the Downpayment and the interest thereon, if any, shall
be paid by Escrow Agent to Seller, and both the escrowed proceeds and interest
thereon shall be credited to Purchaser and applied against the Purchase Price.
If either party makes a written demand upon Escrow Agent for payment of the
escrowed proceeds, Escrow Agent shall give written notice to the other party of
such demand. If Escrow Agent does not receive a written objection from the other
party to the proposed payment within ten (10) business days after the giving of
such notice, Escrow Agent is hereby authorized to make such payment. If Escrow
Agent does receive such written objection within such ten (10) day period or if
for any other reason Escrow Agent in good faith shall elect not to make such
payment, Escrow Agent shall continue to hold such amount until otherwise
directed by written instructions from the parties to this Agreement or a final
judgment of a court. However, Escrow Agent shall have the right at any time to
file an interpleader action in the District Court of El Paso County, Colorado,
and deposit the escrowed proceeds and interest thereon with such court. Escrow
Agent shall give written notice of such deposit to Seller and Purchaser. Upon
such deposit Escrow Agent shall be relieved and discharged of all further
obligations and responsibilities hereunder.
(b) The parties acknowledge that Escrow Agent is acting solely
as a stakeholder at their request and for their convenience, that Escrow Agent
shall not be deemed to be the agent of either of the parties, and that Escrow
Agent shall not be liable to either of the parties for any act or omission on
its part unless taken or suffered in bad faith, in willful disregard of this
Agreement or involving gross negligence. Seller and Purchaser shall jointly and
severally indemnify and hold Escrow Agent harmless from and against all costs,
claims and expenses, including reasonable attorneys' fees, incurred in
connection with the performance of Escrow Agent's duties hereunder, except with
respect to actions or omissions taken or suffered by Escrow Agent in bad faith,
in willful disregard of this Agreement or involving gross negligence on the part
of Escrow Agent.
4
(c) Escrow Agent has acknowledged agreement to these
provisions by signing in the place indicated on the signature page of this
Agreement.
(d) For its services hereunder, Escrow Agent shall receive the
fee, if any, set forth on Rider 2 and payable as set forth thereon.
ARTICLE III
CONTINGENCIES AND CONDITIONS PRECEDENT TO CLOSING AND TERMINATION
. III.1 Title Contingency
(a) Title Documents. Seller has delivered to Purchaser a
current commitment to issue an owner's policy of title insurance on the Premises
in an amount equal to the Purchase Price (as defined in Section 0), together
with legible copies of all instruments referred to in section 2 of Schedule B of
such commitment and a certificate of taxes due covering the Land (the "Title
Documents"). Title to the Premises shall be subject to those matters to which
Purchaser does not timely object pursuant to Section 0 and Section 0 hereof, and
those additional matters shown on the Title Documents or Survey (defined herein)
to which Purchaser does not object or to which such objection has been waived
pursuant to subsection 0 and Section 0 below (the "Permitted Exceptions"). Title
to the Premises will be conveyed subject to the Permitted Exceptions. Seller
agrees to discharge or bond over any existing monetary lien against the Premises
prior to Closing, other than any tax lien that is not delinquent as of the date
of Closing. It shall be a condition to Closing that each of the Title Companies
(as defined on Rider 2) has committed to issue identical ALTA 1970 Form B-1970
owner's policies (collectively, "Title Policy") for Purchaser at Closing,
subject to the Permitted Exceptions. At Closing, Seller shall pay the premium
for the Title Policy, and Purchaser shall pay for any and all endorsements
Purchaser may require, as owner.
(b) Purchaser's Title Objections. On or before November 21,
1997 (the "Contingency Expiration Date"), Purchaser shall provide written notice
to Seller of any objections to title or the Operating Agreements which it
determines are unsatisfactory ("Purchaser's Title Objections"); provided,
however, Purchaser shall not be entitled to object to title based on any matter
related to the failure of The May Department Store Company ("May") to execute
Amendment No. 2 or the Escrow Agreement (as those terms are defined in Section 0
hereof). Failure to provide Purchaser's Title Objections on or before the date
specified in the first sentence of this subsection 0 shall constitute a waiver
of any defects or objections shown in the Title Documents or Operating
Agreements.
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(c) Seller's Option to Cure. Upon Seller's receipt of
Purchaser's Title Objections, Seller may provide written notice to Purchaser on
or before November 25, 1997 of any objections it will cure prior to Closing.
Provided however, except as provided in Section 0 hereof, Seller shall have no
obligation to cure or otherwise address objections contained in Purchaser's
Title Objections. If Seller elects to cure or otherwise address Purchaser's
Title Objections, but is unable to do so prior to Closing, Seller shall have the
right to unilaterally extend the Closing by written notice thereof to Purchaser
for up to an additional thirty (30) days, but not later than December 30, 1997.
In the event Seller does not provide notice that it will cure or otherwise
address Purchaser's Title Objections, or if Seller does not cure or otherwise
address Purchaser's Title Objections in a manner reasonably satisfactory to
Purchaser prior to Closing, as the same may be extended by Seller, Purchaser may
elect either (and only): (i) to terminate this Agreement pursuant to Section 0
provided such termination occurs by November 26, 1997, or if Seller has given
notice that it will cure or address Purchaser's Title Objections, but does not
do so, three (3) business days after receiving notice that Seller has not cured
or addressed the objections; or (ii) to proceed to Closing notwithstanding
Purchaser's Title Objections, in which case Purchaser shall be deemed to have
waived Purchaser's Title Objections.
(d) Seller Inability to Convey. If Seller shall be unable to
convey title to the Premises at the Closing in accordance with the provisions of
this Agreement, Purchaser, nevertheless, may elect to accept such title as
Seller may be able to convey, but without any credit or liability on the part of
Seller. If Purchaser shall not so elect, Purchaser may terminate this Agreement
pursuant to Section 0.
. III.2 Survey Contingency
(a) Survey. Seller has delivered to Purchaser a current survey
of the Land (the "Survey"). On or before the Contingency Expiration Date,
Purchaser shall provide written notice to Seller of any conditions on the Land
or Improvements that it determines are unsatisfactory ("Purchaser's Survey
Objections"). Failure to provide Purchaser's Survey Objections on or before the
date specified in the second sentence of this subsection 0 shall constitute a
waiver of any such conditions shown on the Survey. Seller shall be responsible
for the costs associated with the Survey.
(b) Seller's Option to Cure. Upon Seller's receipt of
Purchaser's Survey Objections, Seller may provide written notice to Purchaser on
or before November 25, 1997 of any objections it will cure prior to Closing.
Provided, however, Seller shall have no obligation to cure or otherwise address
any conditions contained in Purchaser's Survey Objections. If Seller elects to
cure or otherwise address Purchaser's Survey Objections, but is unable to do so
prior to Closing, Seller shall have the right to unilaterally extend the Closing
by written notice thereof to Purchaser for up to an additional thirty (30) days,
but not later than December 30, 1997. In the event Seller does not provide
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notice that it will cure or otherwise address Purchaser's Title Objections, or
if Seller does not cure or otherwise address Purchaser's Survey Objections in a
manner reasonably satisfactory to Purchaser prior to Closing, as the same may be
extended by Seller, Purchaser may elect either (and only): (i) to terminate this
Agreement pursuant to Section 0 provided such termination occurs by November 26,
1997, or if Seller has given notice that it will cure or address Purchaser's
Survey Objections but does not do so, three (3) business days after receiving
notice that Seller has not cured or addressed the objections; or (ii) to proceed
to Closing notwithstanding Purchaser's Survey Objections, in which case
Purchaser shall be deemed to have waived Purchaser's Survey Objections.
. III.3 Engineering Contingency
(a) Engineering Report. Seller has provided Purchaser with a
copy of the draft engineering report prepared by Merrit & Harris, Inc., dated
August 12, 1997 (the "Engineering Report"). By execution of this Agreement,
Purchaser acknowledges its receipt (but not approval) of the Engineering Report
and all information contained therein. On or before the Contingency Expiration
Date, Purchaser shall provide written notice to Seller of any information in the
Engineering Report or any other reports it receives concerning engineering
matters that it determines are unsatisfactory ("Purchaser's Engineering
Objections"). Failure to provide Purchaser's Engineering Objections on or before
the Contingency Expiration Date shall constitute a waiver of the Engineering
Contingency.
(b) Seller's Option to Cure. Upon Seller's receipt of
Purchaser's Engineering Objections, Seller may provide written notice to
Purchaser within five (5) business days of receipt of Purchaser's Engineering
Objections of any objections it will cure prior to Closing. Provided, however,
Seller shall have no obligation to cure or otherwise address any condition
contained in Purchaser's Engineering Objections. If Seller elects to cure or
otherwise address Purchaser's Engineering Objections, but is unable to do so
prior to Closing, Seller shall have the right to unilaterally extend the Closing
by written notice thereof to Purchaser for up to an additional thirty (30) days,
but not later than December 30, 1997. If Seller does not cure or otherwise
address Purchaser's Engineering Objections in a manner reasonably satisfactory
to Purchaser prior to Closing, as the same may be extended by Seller, Purchaser
may elect either (and only): (i) to terminate this Agreement pursuant to Section
0 provided such termination occurs within three (3) business days of receipt of
Seller's response to Purchaser's Engineering Objections, or if Seller has given
notice that it will cure Purchaser's Engineering Objections, but does not do so,
three (3) business days after receiving notice that Seller has not cured the
objections; or (ii) to proceed to Closing notwithstanding Purchaser's
Engineering Objections, in which case Purchaser shall be deemed to have waived
Purchaser's Engineering Objections.
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. III.4 Environmental Contingency
(a) Environmental Review. Seller (i) has provided Purchaser
with the reports listed in Rider 3, attached hereto, (ii) will make available to
Purchaser the other final reports and communications with third-parties in
Seller's files relating to Environmental Conditions (defined herein) on and
adjacent to the Premises, promptly after execution of this Agreement by all
parties hereto, at the property management office located at the Premises, upon
prior notice to Seller, and (iii) encourages Purchaser to review the same.
Purchaser may review and inspect the Premises with regard to any and all
information contained on Rider 3, pursuant to the terms of Section 0. In the
event Purchaser desires to do any testing at the Premises, Purchaser shall give
Seller prior written notice and a reasonable opportunity to approve or
disapprove such testing before Purchaser enters the Premises, which approval
shall not be unreasonably withheld. On or before the Contingency Expiration
Date, Purchaser shall provide written notice to Seller of any specific
Environmental Conditions it determines are unsatisfactory ("Purchaser's
Environmental Objections"). Failure to provide Purchaser's Environmental
Objections on or before the Contingency Expiration Date shall constitute a
waiver of the Environmental Contingency.
(b) Environmental Conditions. As used in this Agreement, the
term "Environmental Conditions" means those conditions at, on, under, or
affecting the Premises that pertain to human health or the environment and that
may give rise to claims under common law or under federal, state, or local
statutes, regulations or ordinances.
(c) Seller's Option to Cure. Upon Seller's receipt of
Purchaser's Environmental Objections, Seller may provide written notice to
Purchaser within five (5) business days of receipt of Purchaser's Environmental
Objections of any objections it will cure prior to Closing. Provided, however,
Seller shall have no obligation to cure or otherwise address any condition
contained in Purchaser's Environmental Objections. If Seller elects to cure or
otherwise address Purchaser's Environmental Objections, but is unable to do so
prior to Closing, Seller shall have the right to unilaterally extend the Closing
by written notice thereof to Purchaser for up to an additional thirty (30) days,
but not later than December 30, 1997. If Seller does not cure or otherwise
address Purchaser's Environmental Objections in a manner reasonably satisfactory
to Purchaser prior to Closing, as the same may be extended by Seller, Purchaser
may elect either (and only): (i) to terminate this Agreement pursuant to Section
0 provided such termination occurs within three (3) business days of receipt of
Seller's response to Purchaser's Environmental Objections, or if Seller has
given notice that it will cure Purchaser's Environmental Objections, but does
not do so, three (3) business days after receiving notice that Seller has not
cured the objections; or (ii) to proceed to Closing notwithstanding Purchaser's
Environmental Objections, in which case Purchaser shall be deemed to have waived
Purchaser's Environmental Objections.
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. III.5 Estoppel Contingency
(a) Anchor Stores and Tenants. Seller has directed Rockwood
Realty Associates, LLC (i) to submit to each of the Anchor Stores and Limited
Parties estoppel certificates substantially in the form attached hereto as
Exhibit F-1, accompanied by a written request that the certificate be executed
by the respective Anchor Store and returned to Seller's property manager; and
(ii) to submit to each of the Tenants (as defined in Section 0 hereof),
excluding any tenants in occupancy pursuant to Short Term Agreements (as defined
in Section 0 hereof), a tenant estoppel certificate in the form which is
attached hereto as Exhibit F-2, accompanied by a written request that the
certificate be executed by the respective Tenant and returned to Seller's
property manager. Notwithstanding the foregoing, if a Lease provides that a
Tenant is only required to execute a certain form of estoppel certificate (or
provide specified statements), and a Tenant delivers a substitute estoppel
certificate which complies with such Tenant's Lease in place of an estoppel
certificate in the form of Exhibit F-2, such substitute estoppel certificate
shall qualify as a Tenant estoppel certificate for purposes of this Agreement.
(b) Delivery of Estoppels. Seller shall use its commercially
reasonable efforts to obtain such estoppel certificates. It shall be a condition
precedent to Purchaser's obligation to close the sale and purchase of the
Premises hereunder that, promptly after they are received by Seller, but no
later than Closing, Seller delivers to Purchaser tenant estoppel certificates in
the form prescribed in subsection 0 from (i) all Anchor Stores, (ii) all
Tenant's occupying space in excess of 7,500 feet of gross leasable area, and
(iii) from at least seventy percent (70%) of the remaining Tenants, excluding in
such calculation any Tenants in occupancy pursuant to Short Term Agreements.
Notwithstanding anything to the contrary contained herein, Seller shall not be
required to obtain an estoppel from May, which is one of the Anchor Stores;
provided, however, Seller shall use reasonable efforts to obtain such estoppel.
(c) Seller Estoppel. If Seller is unable to obtain tenant
estoppel certificates as described above from seventy percent (70%) of the
remaining Tenants, excluding any tenants in occupancy pursuant to Short Term
Agreements, or from any Tenant occupying space in excess of 7,500 feet of gross
leasable area, Seller, at its sole option may substitute for any unsigned
estoppel certificate, an estoppel certificate in the form of Exhibit F-2 or if
applicable, the form prescribed by the applicable Lease and with fill-in
information consistent with the terms of such Lease, signed by Seller to the
Seller's Knowledge for such space, to achieve such requirement. Seller's
estoppel certificates shall survive the Closing, provided that any claim
Purchaser may have against Seller for a breach of any statement in Seller's
estoppel certificate will be barred if not asserted within nine (9) months of
Closing unless such claim relates to apportionments under Article 0 in which
case the time period provided for in Article 0 shall apply. Further, Seller's
liability under all estoppels it signs shall be limited to an aggregate amount
of Three Hundred Thousand and NO/100 Dollars ($300,000.00),
9
excluding liability pursuant to Article 0. Any claim which Purchaser may have
which is not so asserted within such nine (9) month period shall not be valid or
effective and Seller shall have no liability with respect thereto. In the event
that, following the Closing, Seller obtains an estoppel certificate with respect
to any Lease for which Seller self-certified and such estoppel certificate
complies with this Section and with fill-in information consistent with the
terms of such Lease, then Seller shall deliver such estoppel certificate to
Purchaser and, upon such delivery, Seller shall be automatically released from
any further obligations to Purchaser with respect to such Lease. Any claim that
may be asserted against Seller under this Section 0 may not be asserted against
Seller under Section 0 hereof.
(d) Extension of Closing; Termination. If Seller is unable to
obtain and deliver the estoppel certificates as required under subsection (a)
through (c) above, or if the certificates that Seller elects to provide under
subsection (c) above materially differ from the form attached hereto as Exhibit
F-2, or the form prescribed in the applicable lease, or contains fill-in
information not consistent with the terms of the applicable Lease, then Seller
shall not be in default by reason thereof, and Seller or Purchaser by written
notice to the other party may extend the Closing in order to provide additional
time for Seller to obtain the necessary estoppel certificates, but in no event
shall the Closing be extended beyond December 30, 1997. If the required
certificates are not delivered by Seller at the Closing, Purchaser may elect
either (and only) (i) to waive said conditions and proceed with the Closing in
which case Seller shall have no further obligations with respect to the
certificates, other than as set forth in subsection (c) above; or (ii) to
terminate this Agreement pursuant to the provisions of Section 0.
. This Agreement is contingent and subject to the approval of the board of
directors or similar governing body of the two general partners of Seller, RTV
and AIC (as defined in Section 0). AIC shall advise Purchaser within three (3)
business days of the date this Agreement is executed by both parties as to
whether it has obtained such approval. RTV shall advise Purchaser on or before
the Contingency Expiration Date as to whether it has obtained approval from its
governing body to enter into this Agreement, or, alternatively, the approval to
transfer RTV's interest in the Premises and Seller to AIC prior to Closing. In
the event RTV elects to transfer its interests in Seller and the Premises to AIC
prior to the Closing, AIC covenants to buy such interests prior to the Closing.
This Agreement shall automatically terminate pursuant to Section 0 if Seller
does not timely advise Purchaser that it has obtained such approvals.
. III.7 Additional Conditions Precedent to Closing
(a) The following conditions precedent for Purchaser's benefit
must be satisfied as of the date of Closing, as the same may be extended herein:
(i) Anchors Remain Open. All of the Anchor
Stores must be open and operating; provided, however, that if one or more of the
Anchor Stores has completely closed, this condition precedent shall
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be deemed satisfied if in Purchaser's reasonable determination, such Anchor
Store(s) will reopen within sixty (60) days of such closing;
(ii) Occupancy of the Citadel Mall. Seventy-five
percent (75%) of the Tenants in the Citadel Mall, excluding the Anchor Stores
and the Citadel Convenience Center, must be open and operating.
(iii) Representations. Seller has performed its
obligations hereunder and the representations of Seller under Article 0 are
still in full force and effect.
In the event the above conditions precedent (i) through (iii)
are not satisfied, Purchaser may terminate this Agreement pursuant to the terms
of Section 0.
(b) The following condition precedent for Seller's benefit
must be satisfied as of the date of Closing: Purchaser has performed its
obligations hereunder and the representations of Purchaser under Article 0 are
still in full force and effect. In the event the condition precedent in this
subparagraph 0 is not satisfied, Seller may terminate this Agreement pursuant to
the terms of Section 0.
. III.8 Termination of Agreement
(a) In the event Purchaser or Seller elect to terminate this
Agreement, or in the event this Agreement automatically terminates, pursuant to
the provisions of this Article 0, the terminating party shall deliver a written
notice of termination, in accordance with Article 0 (Notices) (a "Termination
Notice") to the other party.
(b) In the event of a termination in accordance with this
Article 0, the Downpayment shall immediately be refunded to Purchaser by the
Escrow Agent and the sole liability of Seller hereunder shall be to refund the
Downpayment to Purchaser. Upon such refund, this Agreement shall be null and
void and the parties hereto shall be relieved of all further obligations and
liability, except any arising under Sections 0, 0 and Article 0.
In the event Purchaser terminates this Agreement, Seller shall have the
right to all third party surveys, title reports and commitments and other
reports or products of any due diligence performed at the Premises for
Purchaser, and Purchaser shall promptly deliver to Seller any such documents or
copies of same in Purchaser's possession, except that Seller shall reimburse
Purchaser for any reports or products it desires, that Purchaser paid for.
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ARTICLE IV
REPRESENTATIONS OF SELLER
IV.1 ORGANIZATION. Seller represents to Purchaser that Seller is a general
partnership organized under the laws of the State of Maryland; that Seller may
consummate the transactions contemplated by this Agreement in the State of
Colorado; that Seller has duly authorized the execution and performance of this
Agreement and such execution and performance will not violate any term of its
partnership agreement; that the sole constituent general partners of Seller are
Rouse Tristate Venture, Inc. ("RTV"), which is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas, and
AIC Properties, Inc. ("AIC"), which is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware; and,
that, subject to Section 0 hereof, each of RTV and AIC is authorized to
consummate the transactions contemplated by this Agreement, has duly authorized
the execution and performance of this Agreement, in the name and as general
partners and on behalf of Seller, and such execution and performance will not
violate any term of their respective certificates of incorporation or by-laws.
IV.2 SPACE LEASES. Seller represents to Purchaser that to Seller's Knowledge (as
defined in Section 0), the schedule attached hereto as Schedule D-1 contains a
complete and accurate list of: (i) all tenants occupying the Premises pursuant
to written leases with an original term of more than one (1) year (collectively,
the "Tenants"); (ii) all written leases or similar rental or occupancy
agreements (but excluding subleases), with an original term of more than one (1)
year, and all amendments thereto (collectively, the "Leases"); and (iii) all
Tenants to whom Seller or its agent has given or received notices of default
(which are uncured as of the date hereof). Purchaser acknowledges that Schedule
D-1 does not contain any information as to any Leases with an original term of
one year or less, or Leases with a term of less than one year that terminate by
January 31, 1998, if any (collectively "Short Term Agreements").
To Seller's Knowledge, Seller has given to Purchaser true and correct
copies of all Leases. By execution of this Agreement, Purchaser acknowledges its
receipt of copies of the Leases and its approval of the Leases and the Tenants.
At Closing, Purchaser shall assume the obligations under the Leases and the
Short Term Agreements thereafter accruing pursuant to Section 0.
IV.3 SERVICE CONTRACTS. Seller represents to Purchaser that to Seller's
Knowledge, the schedules attached hereto as Schedule E-1 contain a complete and
accurate list of all service, maintenance and supply contracts (collectively the
"Service Contracts") affecting the Premises. By execution of this Agreement,
Purchaser acknowledges its receipt and approval of the Service Contracts. At
Closing, Purchaser shall assume the obligations accruing after the Closing under
the Service Contracts listed on Schedule E-1 that are
12
assignable unless Purchaser has given written notice to Seller, on or before
seven (7) business days of the date hereof, of the Service Contracts that
Purchaser will not be assuming.
IV.4 CERTIFICATE OF OCCUPANCY; PERMITS. Seller represents to Purchaser that to
Seller's Knowledge, Seller has not received any written notice from any federal,
state, municipal or other governmental body ("Governmental Entity"), of (i) any
uncured violation of law, (ii) any intention by any Governmental Entity to
change the zoning of the Premises or to revoke any certificate of occupancy,
license, or permit issued by such Governmental Entity in connection with the use
of the Premises, (iii) any pending condemnation or special assessment, or (iv)
any uncured violation of any building codes or laws relating to the construction
or design of the Improvements, including, without limitation, fire, safety,
handicapped access, or seismic design, unless specifically disclosed to
Purchaser in writing.
IV.5 LITIGATION. Seller represents to Purchaser that to Seller's Knowledge, the
schedule attached hereto as Schedule F-1 is a complete and accurate list of all
current litigation affecting the Premises. Seller acknowledges and agrees that
all litigation instituted prior to Closing shall remain the responsibility of
Seller, and that Seller is responsible for all litigation shown on Schedule F-1,
and, subject to Article 0, Seller shall be entitled to the benefits of all
litigation instituted prior to Closing.
IV.6 OPERATING AGREEMENTS. To Seller's Knowledge, the schedule attached hereto
as Schedule H-1 contains: (i) a complete and accurate list of all Operating
Agreements, and (ii) a list of any notices of default (which are uncured as of
the date hereof) given or received by Seller or its agents with respect to the
Anchor Stores and the Limited Parties, excluding May. At Closing Seller shall
assign and Purchaser shall assume all obligations of Seller under the Operating
Agreements thereafter accruing.
IV.7 SURVIVAL. The representations set forth in this Article 0 shall survive for
a period of nine (9) months from the date hereof, and in no event shall Seller's
liability with respect to such representations exceed an aggregate amount of
Five Hundred Thousand and NO/100 Dollars ($500,000.00). Any claim asserted
against Seller under this Section 0 may not be asserted against Seller under
Section 0 hereof. Seller shall not be liable for any breach of the
representation regarding the accurate description of the Operating Agreements if
a document is not listed on Schedule H-1, but is listed on the Title Policy, or
if a default is notreferenced on Schedule H-1 but is listed in the estoppel
certificates.
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ARTICLE V
ACKNOWLEDGMENTS AND REPRESENTATIONS OF PURCHASER
Purchaser acknowledges that:
V.1 AS IS.
Purchaser will have the opportunity to inspect or examine the Premises
pursuant to the terms of Section 0, and, on or before the Contingency Expiration
Date, shall be fully familiar with the physical condition and state of repair of
the Premises and the operation, income and expenses thereon and all other
matters affecting or relating to the transactions contemplated by this
Agreement, and, subject to the provisions of this Agreement, shall accept the
Premises "AS IS" and in their present condition, subject to reasonable use,
wear, tear and natural deterioration between now and the Closing, without any
reduction in the Purchase Price for any change in such condition by reason
thereof subsequent to the date of this Agreement. At Closing, Purchaser shall
accept the Premises subject to the Environmental Conditions, the Engineering
Report, all engineering matters, all common law claims and all federal, state,
county and municipal laws, requirements, rules, orders, ordinances, regulations
and claims relating in any manner thereto.
V-2. NO RELIANCE.
In entering into this Agreement, Purchaser has not been induced by and has not
relied upon any representations, warranties or statements, whether express or
implied, made by Seller or any agent, employee or other representative of Seller
or by any broker or any other person representing or purporting to represent
Seller, which are not expressly set forth in this Agreement, whether or not any
such representations, warranties or statements were made in writing or orally.
Purchaser further agrees that Seller shall not be liable or bound in any manner
by any express or implied warranties, guarantees, promises, statements,
representations or information pertaining to the Premises made or furnished by
any real estate broker, agent, employee, servant or other person representing or
purporting to represent Seller unless such warranties, guarantees, promises,
statements, representations or other information pertaining to the Premises are
expressly and specifically set forth in this Agreement which alone fully and
completely expresses the agreement between the parties.
V-3. INSECTIONS.
Purchaser, or Purchaser's representative, may inspect the Premises (including a
structural, environmental and asbestos inspection), all Operating Agreements,
Leases, Service Contracts, books and records, files and correspondence relating
to the Premises and located on site at the Premises and may continue its
inspections of the Premises, but only pursuant to the terms of the Site Access
Agreement, attached hereto as Exhibit G. In connection with such review and
inspections, Purchaser agrees (a) that Seller may have a representative present
at any inspection; (b) to maintain adequate liability insurance coverage for its
employees and agents inspecting the Premises; (c) that any inspections will be
at Purchaser's sole cost and expense; (d) to keep the Premises free and clear of
any liens which could arise as a consequence of such inspections; (e) to restore
14
promptly any physical damage caused by such inspections; and (f) as more fully
provided in Exhibit H, to keep confidential any information obtained or
developed during or as a consequence of such inspections or review, except as
provided in Exhibit H. Purchaser hereby indemnifies and agrees to hold Seller
free and harmless from and against all loss, liability, cost, damage, lien,
claim or expense (including attorneys' fees and costs) made, sustained, suffered
or incurred against or by Seller and attributable to or arising out of any
breach of the foregoing agreements by Purchaser or any of its officers,
directors, members, managers, partners, invitees, agents or other parties
related to or hired by Purchaser in connection with any such entry or
inspection, even if such inspections were performed prior to the date of this
Agreement which indemnity shall survive the Closing.
V.4. ORGANIZATION
Purchaser represents to Seller that Purchaser is a limited partnership
organized under the laws of the State of California; that Purchaser may
consummate the transaction contemplated by this Agreement in the State of
Colorado; that the Purchaser has duly authorized the execution and performance
of this Agreement and such execution and performance will not violate any terms
of its limited partnership agreement; that the sole general partner of Purchaser
is Macerich Citadel GP Corp. ("Macerich GP") which is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; that Macerich GP is authorized to consummate the transaction
contemplated by this Agreement, has duly authorized the execution and
performance of this Agreement, in the name, and as general partner, and on
behalf of Purchaser, and such execution and performance will not violate any
terms of Macerich GP's certificate of incorporation or by-laws.
ARTICLE VI
SELLER'S OBLIGATIONS AS TO LEASES, CONTRACTS AND
OPERATING AGREEMENTS
V1.1 EXISTING LEASES, CONTRACTS AND OPERATING AGREEMENTS. Between the date of
this Agreement and the Closing, Seller shall continue its present rental program
and efforts at the Premises to rent vacant space; provided, however, Seller
shall not, without Purchaser's prior written consent, which consent shall be
given or denied within three (3) business days of Seller's request for such
consent and which consent shall not be unreasonably withheld ("Purchaser's
Operating Consent") (a) amend any Lease in any respect, unless required by law;
(b) grant a written lease to any tenant occupying space (other than pursuant to
a renewal provision in an existing Lease); (c) terminate any Lease except by
reason of a default by the Tenant thereunder; (d) effect any change in any
existing Operating Agreement, Service Contract, or any other documents or
agreements affecting the Premises that extend beyond Closing; or (e) enter into
any new agreement or conveyance affecting the Premises that extends beyond
Closing, except as permitted in this Agreement. Purchaser's Operating Consent
shall not be required for any Short Term Agreements. In the event Purchaser's
Operating Consent is not received within such three (3) business day period,
Purchaser's consent shall be deemed to have been given.
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V1.2 NEW LEASES.
Unless otherwise provided on Schedule I-1 attached hereto and excepting new
leases entered into by Seller that will expire by their terms before January 31,
1998, between the date of this Agreement and Closing, Seller shall not, without
first obtaining Purchaser's Operating Consent, permit occupancy of, or enter
into any lease for space in the Improvements which is presently vacant or which
may hereafter become vacant. Concurrently with Seller's request for Purchaser's
Operating Consent, which shall be delivered to Eric Salo, Vice President of
Acquisitions, The Macerich Company, 13455 Noel Road, Suite 1480, Dallas, Texas
75240, Seller shall provide Purchaser with written notice of the identity of the
proposed tenant, together with (a) either a copy of the proposed lease or a
summary of the terms thereof in reasonable detail and (b) a statement of the
amount of the brokerage commission, if any, payable in connection therewith and
the terms of payment thereof. As to those proposed leases set forth on Schedule
I-1, Purchaser hereby approves the proposed leases and Seller agrees to give
Purchaser a credit at closing in the amount of Two Hundred Twenty Thousand and
NO/100 Dollars ($220,000.00) for a portion of the tenant allowances, tenant
improvements and/or rent abatements under new leases, which credit shall be
given to Purchaser whether or not the new leases listed on Schedule I-1, are
executed.
V1.3 VACANCIES.
If any space is vacant on the day of Closing, Purchaser shall, subject to the
provisions of this Agreement, accept the Premises subject to such vacancy,
provided that the vacancy was not permitted or created by Seller in violation of
any restrictions contained in this Agreement.
V1.4 NO WARRANTY.
Seller does not warrant that any particular Lease will be in force or effect at
the Closing or that the Tenants will have performed their obligations
thereunder. The termination of any Lease prior to the Closing by reason of the
Tenant's default shall, subject to the provisions of this Agreement, not affect
the obligations of Purchaser under this Agreement in any manner or entitle
Purchaser to an abatement of or credit against the Purchase Price or give rise
to any other claim on the part of Purchaser.
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ARTICLE VII
DESTRUCTION OR DAMAGE
VII.1 Risk of Loss.
(a) In the event that the Premises or any portion thereof is
damaged or destroyed prior to the Closing by fire or other casualty, and if, in
the reasonable exercise of the judgment of the Seller, the damage or destruction
will require the expenditure of more than Two Million Five Hundred Thousand and
NO/100 Dollars ($2,500,000.00) to repair the Premises, then Purchaser shall have
the right to terminate this Agreement by providing a Termination Notice to
Seller on or before the expiration of three (3) business days following Seller
giving Purchaser written notice of such damage and the cost to repair such
damage; or
(b) In the event that the Premises or any portion thereof is
damaged or destroyed prior to the Closing by fire or other casualty, and if, in
the reasonable exercise of the judgment of Seller the damage or destruction will
require the expenditure of Two Million Five Hundred Thousand and NO/100 Dollars
($2,500,000.00), or less, or if this Agreement is not terminated by Purchaser
within three business (3) days of Seller giving notice thereof pursuant to the
provisions of subsection 0 above, then this Agreement shall remain in full force
and effect, and at Closing, Purchaser shall receive a credit against the
Purchase Price for (i) the amount of the deductible under any insurance policies
covering the loss; and (ii) any uninsured loss, and Seller shall assign to the
extent assignable all of its right, title and interest in and to the insurance
proceeds, including rental loss insurance proceeds, to the Purchaser, less any
reasonable amounts required to reimburse Seller for expenses of repair or
restoration, and/or attorneys' fees and costs associated with such loss;
provided, however, in the event of a fire or other casualty, Purchaser shall pay
to Seller an amount equal to twelve and one-half percent (12.5%) of the amount
of proceeds received for rental loss insurance in order to account for Seller's
increase in premiums as a result of the claim within 30 days of Seller's request
for such payment. If this Agreement is terminated by Seller or Purchaser
pursuant to the provisions of subsection 0 above, then Seller's sole obligation
will be to refund to Purchaser the Downpayment; Purchaser shall deliver to
Seller the items described in Section 0; and neither party shall have any
further rights or obligations hereunder except those which expressly survive
termination contained in Sections 0, 0 and Article 0.
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ARTICLE VIII
CONDEMNATION
VIII.1 Risk of Loss.
(a) In the event there is a taking of any portion of the
Premises by eminent domain or if Seller receives a written notice of any such
proposed taking from a Governmental Entity prior to Closing and if in the
reasonable exercise of the judgment of the Seller, (i) such taking is likely to
result in an award of Two Million Five Hundred Thousand and NO/100 Dollars
($2,500,000.00) or more; or (ii) such taking will cause the parking at the
Premises to be in violation of applicable zoning regulations or Operating
Agreements affecting the Premises and such taking materially adversely affects
the use or operation of the Premises, and such violation cannot be cured by
Seller prior to Closing, then Purchaser shall have the right to terminate this
Agreement by providing a Termination Notice to Seller on or before the
expiration of three (3) business days following Seller giving Purchaser written
notice of such taking or proposed taking and the likely amount of the award; or
(b) In the event there is a taking of any portion of the
Premises by eminent domain or if Seller receives a written notice of any such
proposed taking from a Governmental Entity prior to Closing and if in the
reasonable judgment of Seller such taking is likely to result in an award of Two
Million Five Hundred Thousand and NO/100 Dollars ($2,500,000.00), or less, or if
this Agreement is not terminated by the Purchaser within three (3) business days
of Seller giving notice thereof pursuant to the provisions of subsection 0
above, then this Agreement shall remain in full force and effect, and at Closing
the Seller shall assign all of its right, title and interest in and to the
condemnation awards to the Purchaser, less any amounts required to reimburse
Seller for expenses of repair or restoration, and/or reasonable attorneys' fees
and costs associated with such award. If this Agreement is terminated by Seller
or Purchaser pursuant to the provisions of subsection 0 above, then Seller's
sole obligation will be to refund to Purchaser the Downpayment; Purchaser shall
deliver to Seller the items described in Section 0; and neither party shall have
any further rights or obligations hereunder except those which expressly survive
termination contained in Sections 0, 0 and Article 0.
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ARTICLE IX
COVENANTS OF SELLER
Seller covenants that between the date of this Agreement and the
Closing:
IX.1 OPERATION OF PREMISES.
Seller shall use commercially reasonable efforts to operate and maintain the
Premises in substantially the same manner as prior hereto in accordance with
Seller's past practices, subject to Articles 0 and 0; provided that Seller's
maintenance obligations under this Section 0 shall not include any obligation to
make capital expenditures or any other expenditures not incurred in Seller's
normal course of business.
IX.2 INSURANCE.
Seller shall maintain in full force and effect until Closing the insurance
policies currently covering the Premises.
IX.3 PERSONAL PROPERTY.
Personal Property included in this sale (as described in Section 0) shall not
be removed from the Premises unless the same are replaced with similar items of
at least equal quality prior to the Closing.
IX.4 TAX PROTEST.
After the Contingency Expiration Date, Seller shall not withdraw, settle or
otherwise compromise any protest or reduction proceeding affecting real estate
taxes assessed against the Premises for the year in which the Closing is to
occur or any subsequent year without obtaining Purchaser's Operating Consent.
Real estate tax refunds and credits received after Closing which are
attributable to the tax year during which Closing occurs shall, after
distribution of any portion thereof required to be distributed to Tenants under
the Leases, be apportioned between Seller and Purchaser, after deducting the
expenses of collection thereof, which obligation shall survive the Closing.
IX.5 PURCHSER ACCESS.
Seller shall allow Purchaser or Purchaser's representatives access to the
Premises, the Leases and other documents required to be delivered under this
Agreement upon reasonable prior notice at reasonable times, subject to the
conditions set forth in Section 0.
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ARTICLE X
SELLER'S CLOSING OBLIGATIONS
. X.1 Deliveries Prior to Closing
(a) Seller has delivered the Title Documents, the Survey, the
Engineering Report, copies of the Leases, copies of the Service Contracts and
copies of the environmental reports listed on Rider 3 covering the Premises.
Seller shall promptly after execution hereof deliver to Purchaser copies of all
the Operating Agreements.
(b) After the Contingency Expiration Date, Purchaser shall be
able to inspect and review the following on site at the Premises pursuant to the
conditions set forth in Section 0: Any other information in the possession of
the Seller relating to the operation or maintenance of the Premises, except
proprietary information of Seller or The Rouse Company or its affiliates or
subsidiaries, including all personnel files, computer software and databases and
other confidential or privileged information located at the Premises, prior to
Closing.
X.2 DELIVERIES AT CLOSING.
At Closing, Seller shall deliver the following documents to Purchaser, which
documents shall be duly executed and acknowledged, as appropriate:
(a) A special warranty deed for the Premises, properly
executed and in proper form for recording so as to convey the title required by
this Agreement in the form attached hereto as Exhibit A.
(b) A bill of sale to the Personal Property in the form of
Exhibit B attached hereto.
(c) All Leases and Short Term Agreements in Seller's
possession, together with an Assignment and Assumption of Leases, Short Term
Agreements, and Security Deposits in the form attached hereto as Exhibit C which
includes a schedule of all cash security deposits and prepaid rents and a credit
to Purchaser in the amount of such security deposits including any interest
thereon, held by or on behalf of Seller on the Closing under the Leases,
together with an assignment of such deposits and prepaid rents to Purchaser.
(d) All Service Contracts and permits in Seller's possession
which are in effect on the day of Closing and which are not terminable by Seller
on or before Closing together with an Assignment and Assumption of Service
Contracts and Permits in the form attached hereto as Exhibit D.
(e) An assignment of all transferable warranties and
guarantees then in effect, if any, with respect to the Premises or any repairs
or renovations to such Improvements and Personal Property being conveyed
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hereunder together with an assignment of any contract rights, general
intangibles, transferable permits and licenses and Trade Names owned by or
inuring to the benefit of Seller in connection with the Premises other than
trademarks, trade names, slogans, logos, insignias, including those of Seller,
the general partners of Seller, Seller's or its general partners' parent
companies or affiliates unless such trade names are used solely in connection
with the operation of the Premises, in the form of the Assignment of Intangibles
and Trade Names attached hereto as Exhibit E.
(f) To the extent they are then in Seller's possession and not
posted at the Premises, any permits issued for or with respect to the Premises
by governmental and quasi-governmental authorities having jurisdiction.
(g) The Tenant Estoppels received by Seller pursuant to
Section 0.
(h) A statement of the Seller's nonforeign status pursuant to
Section 1445 of the Internal Revenue Code.
(i) All Tenant files and records on site at the Premises,
excluding proprietary information of Seller.
(j) A form letter drafted by Purchaser, reasonably approved
and executed by Seller or by its agent, advising the Tenants of the sale of the
Premises, and transfer of security deposits, to Purchaser and directing that
rents and other payments thereafter be sent to Purchaser or as Purchaser may
direct.
(k) A form letter drafted by Purchaser, reasonably approved
and executed by Seller or by its agent, advising the vendors under the Service
Contracts of the sale of the Premises.
(l) An assignment and assumption of all Operating Agreements,
in the form attached hereto as Exhibit I.
(m) Any other documents required by this Agreement to be
delivered by Seller or reasonably required in order to consummate the
transactions contemplated hereby, including closing instructions and a
settlement statement.
X.3 POSSESSION.
Seller shall deliver to Purchaser at Closing, possession of the Premises in the
condition required by this Agreement (subject to the Leases) and keys therefor.
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ARTICLE XI
PURCHASER'S CLOSING OBLIGATIONS
XI.1 DELIVERIES. At the Closing, Purchaser shall:
(a) Deliver to Seller or Escrow Agent payment of the portion
of the Purchase Price payable at Closing, as adjusted for apportionments under
Article 0 and deliver to Escrow Agent any other amounts required to be paid by
Purchaser pursuant to Section 0.
(b) Deliver any other documents required by this Agreement to
be delivered by Purchaser, or reasonably required in order to consummate the
transactions contemplated hereby, including, without limitation executed copies
of Exhibits C, D and I, closing instructions and a settlement statement.
. Purchaser shall cause the deed to be recorded, and Purchaser shall pay all
title insurance charges for any endorsements Purchaser requires as owner,
documentary fees and taxes, abstract fees, use and transfer taxes, and all other
charges except for the fees and costs of Seller's attorneys and consultants and
except for those items specified in Article 0 and this Section 0. Seller and
Purchaser shall divide evenly the costs of the escrow of the Downpayment and the
closing fee, if any, to the Escrow Agent. Seller shall pay the costs of the
Survey and the Title Policy.
ARTICLE XII
APPORTIONMENTS
XII.1 GENERAL.
Seller shall be entitled to all income produced from the operation of the
Premises which is allocable to the period through the day immediately prior to
the date of Closing except as set forth below and shall be responsible for all
expenses allocable to that period. Purchaser shall be entitled to all income and
responsible for all expenses for the period beginning at 12:01 a.m. (Eastern
Standard Time) on the date of Closing, except as set forth below. At the
Closing, all items of income and expense for the month of Closing shall be
prorated on an estimated basis based on the most current previous month's
operating statements, with adjustments to be made after the Closing, in
accordance with the rules for specific items set forth hereafter. Any funds
received by Purchaser will be paid pursuant to this Article 0. Any payments
received by Seller after the date of the Closing for the period through the date
of the Closing will be delivered by Seller to Purchaser for distribution as
provided below. Any payments received by Seller after the date of the Closing
for the period following the date of the Closing shall be delivered to Purchaser
for distribution as provided below.
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XII.2 SPECIFIC APPORTIONMENTS.
The following apportionments shall be made between the parties to be estimated
at the Closing as of 12:01 a.m. (Eastern Standard Time) on the date of Closing
on a per diem basis unless otherwise stated with actual amounts determined after
the Closing and paid to the respective parties as provided herein:
(a) All fixed minimum and basic rents and all other fixed
occupancy charges payable under the Leases with respect to the Premises and any
other fixed charges of any nature payable by Tenants to the Seller as landlord
under the Leases, including common area expense payments and other pass-throughs
made by tenants to Seller, whether on a rent inclusion basis or otherwise (all
of which are herein collectively referred to as "Fixed Rent") shall be prorated
using an accrual basis, between Seller and Purchaser as of the date of Closing.
(b) All percentage and other similar contingent rent (herein
collectively "Percentage Rent") paid or payable by Tenants under the Leases
shall be prorated between Seller and Purchaser as of the date of Closing. Any
Percentage Rent that cannot be determined as of the date of Closing, shall be
estimated as of the date of Closing and reprorated when the actual Percentage
Rent can be determined. Purchaser shall collect and pay the Percentage Rent due
Seller as provided in Section 0.
(c) Real estate taxes, based upon the most recent levy and
most recent assessment and other public or governmental charges or assessments
payable on an annual basis (including special district charges, assessments,
liens or encumbrances for public improvements) if any, on the basis of the
fiscal period for which assessed shall be prorated as of the date of Closing.
(d) All security deposits under the Leases (together with any
accrued interest thereon as may be required by law or contract) shall be
credited to Purchaser to the extent such security deposits have not been applied
or credited against past rent, permitted administrative charges or other charges
due pursuant to the terms of the Leases under which such security deposits are
held, and pursuant to applicable law.
(e) All operating expenses and common area maintenance charges
of the Premises shall be prorated between Seller and Purchaser as of the date of
Closing (except that the prorations shall be made as of the day after Closing if
the Purchaser Price is not received by Seller as of 2:00 p.m. Eastern Standard
Time), including, without limitation:
(i) heating, ventilation and air conditioning
charges and other utility charges and
deposits (which may be based on the most
recent bills if and to the extent that
utility meters are not read within one (1)
week prior to the date of Closing);
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(ii) charges and deposits under any transferrable
and assumed Service Contracts or permitted
renewals or replacements thereof;
(iii) charges for sprinkler systems, trash and snow
removal;
(iv) personal property taxes, if any;
(v) pre-paid permit, license and inspection
fees, if any;
(vi) wages, benefits, vacation allowances,
severance payments, pension and welfare benefits, payroll taxes, including
employer's contributions applicable to F.I.C.A., worker's compensation and
unemployment insurance and other fringe benefits of employees of Seller, The
Rouse Company, and its affiliates engaged for operation of the Premises. Seller
will not terminate Seller's employees as of Closing, and such employees shall be
offered probationary employment by Purchaser. On or before the date which is
forty-five (45) days after the Closing, Purchaser shall provide Seller with a
list of any employees it has terminated. If Purchaser terminates any such
employee at any time after Closing, then Seller shall be responsible for all
severance pay owed to such terminated employees (whether accruing before or
after the Closing) and all other benefits which have accrued as of Closing
(including, without limitation, sick time, vacation time and the like) due
pursuant to Seller's employment agreements or policies. It is the intent of the
parties that Seller shall be responsible for all pre-closing liability and all
severance payments due pursuant to Seller's employment agreements or policies
(whether accruing before or after the Closing) associated with all employees and
all other benefits which have accrued as of Closing (including, without
limitation, sick time, vacation time and the like). The provisions of this
subsection (vi) shall survive until any claim by an employee is terminated by
the applicable statute of limitations.
(f) As an obligation which shall survive the Closing, Seller
shall remain liable for any refunds or credits, net of other receivables owed by
such Tenant or party, which may be due to Tenants or other parties with respect
to overpayments made prior to the Closing of any pass-through expenses or other
amounts payable to the landlord or developer (as applicable) under any of the
Leases or the Operating Agreements.
(g) Seller's contribution, if any, to the
Premises' merchants' 24
associations or advertising fees shall be prorated between Seller and Purchaser
as of the date of Closing.
(h) Any portion of bankruptcy distributions or payments
pursuant to settlement agreements or lease termination agreements applicable to
the time period prior to the date of Closing but payable after the date of
Closing shall be prorated as of the date of Closing. Further, in the event of
the filing of a bankruptcy proceeding after the date of Closing. Purchaser shall
be responsible for filing any proofs of claim on behalf of both Seller and
Purchaser.
(i) All other items which are customarily prorated in
transactions similar to the transaction contemplated hereby, except as otherwise
provided in this Agreement.
For Leases which contain provisions relating to rental
payments using a fixed percentage of sales or a flat rate rental amount for
payment of all amounts due under such lease with no additional, separate amounts
charged by landlord to such Tenant as "Additional Rent" for operating expenses,
taxes, insurance or other expenses under such Lease, the entire rental payment
for purposes of this Section will be treated as if all amounts paid were
allocated to only Fixed Rent or Percentage Rent thereunder and none of the
payments received by Seller or Purchaser shall be allocated to taxes, insurance
or other expenses of the Premises, notwithstanding any provisions in such Lease
that would allow the landlord thereunder to apply such rental to those costs.
The provisions of this Section shall survive the Closing to
the extent any monies may be payable pursuant to this Section to either party
subsequent to the transfer of title to the Premises to Purchaser and with
respect thereto a monthly accounting shall be given promptly by the party
initially receiving such monies (herein the "Receiving Party") to the party to
whom any such monies are payable pursuant to this Section (herein the "Entitled
Party"), together with the payment simultaneously therewith to the Entitled
Party of monies received by the Receiving Party during such accounting period.
It is agreed that billables to tenants for operating expenses, common area
maintenance charges, taxes and insurance premiums shall be adjustment billed for
the accounting year in which the Closing occurs and shall be adjusted between
Seller and Purchaser based upon the respective percentages that the respective
payments made by Seller and Purchaser bear to the aggregate of such expenses for
the entire accounting year; such adjustment shall be done post-Closing.
All items that are not subject to an exact determination shall
be estimated by the parties based on current operating statements effective
through October 31, 1997 with all receipts to be current as of two days prior to
the date of Closing. When any item which is so estimated becomes capable of
exact determination, the party in possession of the facts necessary to make the
determination shall send the other party a detailed report which adjusts the
proration to exact amounts and the parties shall adjust the prior estimate
within thirty (30) days after both parties have received said reports.
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For purposes of determining the amount of some of the payments
owed to Seller by Purchaser subsequent to the Closing, pursuant to the terms of
this Article 0, aged accounts receivable reports dated as of October 31, 1997,
are attached hereto as Schedule G-1 and made a part hereof (which shall be
updated by Seller two (2) days prior to the Closing).
XII.3 TENANT ARREARAGES.
If any Tenant is in arrears in the payment of Fixed Rent, Percentage Rent or
any other charges ("collectively "Rent") due from such Tenant as of the date of
Closing for any periods prior thereto, or if any Tenant subsequently is in
arrears then any amounts received from such Tenant subsequent to the date of
Closing shall be applied in the following order of priority to past-due Rent
whether received by Seller or Purchaser (except that any amounts specifically
designated as Fixed Rent, Percentage Rent, or other charges, as the case may be,
by the Tenant shall be specifically applied to such category of Rent, in the
following order of priority and if no category is specified, first to Fixed
Rent, then to Percentage Rent, then to other charges):
(a) first, to the month in which the Closing occurs or the
months following the month in which the Closing occurred (except that no Rent
may be prepaid);
(b) second, to the month preceding the month in which the
Closing occurred; and
(c) third, to all months prior to the month preceding the
month in which the Closing occurred.
In the event such amounts are received by Purchaser after the Closing,
Purchaser shall promptly pay those amounts to Seller and deliver them to Seller
with the monthly accounting described in Section 0.
Arrearages of Percentage Rent shall be determined by multiplying the
annual Percentage Rent to be paid by a Tenant for its lease year or annual
accounting period pursuant to the terms of such Tenant's Lease by the fraction,
the numerator of which is the number of days in such Tenant's lease year or
annual accounting period which occurred through the date of Closing and the
denominator of which shall be the actual number of days in such lease year or
accounting period. This calculation shall be applicable to Percentage Rent
calculations to determine the amount actually owed by each Tenant for such
Tenant's Percentage Rent and adjustments shall be made after the date of Closing
in the priority set forth in this Section 0 regardless of whether such Tenant
paid estimates of Percentage Rent monthly during its lease year or accounting
period, or after any breakpoint or sales threshold was reached under such
Tenant's Lease.
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XII.4 BASIS FOR PRORATIONS.
All prorations shall be made on the basis of a three hundred sixty-five (365)
day calendar year and the actual number of days elapsed in such calendar year
and shall be made on the basis of a written statement or statements delivered to
Purchaser by Seller prior to Closing and approved by Purchaser. Purchaser shall
provide Seller with monthly reconciliation statements on or before the tenth
(10th) day of each succeeding month and the appropriate adjustment payment shall
be made by the debtor party on or before the twentieth (20th) day of such month
unless by such date Seller notifies Purchaser of its objection to such
statement, in which case Seller shall have a right to audit the records of
Purchaser to verify the information on such monthly statement and Purchaser
shall promptly resolve such objection by mutual agreement and the debtor party
shall make the appropriate adjustment payment promptly following such
resolution. In the event any prorations, apportionments, adjustments, or
computation shall prove to be incorrect for any reason, then either party shall
be entitled to an adjustment to correct the same, provided that it makes written
demand on the other party within the later of fourteen (14) months after the
Closing or one (1) year after the date the incorrect adjustment payment has been
made.
XII.5 PURCHASER'S BEST EFFORTS.
Purchaser shall use commercially reasonable efforts, during the fourteen (14)
month period immediately following the Closing, to collect, and shall, subject
to the provisions of this Article 0, promptly remit to Seller, any rents or
other amounts due Seller for the period prior to the Closing.
XII.6 SELLER'S COLLECTION RIGHTS.
Seller shall be entitled to undertake action (expressly excluding, however, any
unlawful detainer or other eviction proceeding) to collect any rents or other
amounts due Seller for the period prior to the Closing so long as the rents are
applied in accordance with this Article 0.
XII.7 ADDITIONAL SELLER PAYMENT AND PERFORMANCE OBLIGATIONS.
As an obligation that shall survive the Closing, Seller shall be responsible
for:
(a) Completing, at its sole cost and expense, all of the work
related to the erection of the May escalators (which work is currently in
progress);
(b) Promptly paying, at its sole cost, all of the costs and
expenses relating to the acquisition and transfer of the properties to be
acquired and transferred by the developer, as contemplated in Amendment No. 2
(hereinafter defined) including, without limitation, acquisition costs, sales
costs, closing costs and expenses, transfer taxes and title, survey and
subdivision costs; and
(c) Promptly paying, at its sole cost, all leasing commissions
and tenant improvement costs and allowances owed by landlord thereunder, arising
or accruing in connection with any: (x) Leases executed prior to the date hereof
provided such liability is a current obligation as of the date of this
Agreement), or (y) Leases executed after the date hereof which are not approved
27
(or deemed approved pursuant to the terms hereof) by Purchaser. Seller shall not
be responsible for any rent abatement under any Leases if such rent abatement is
reflected in the Leases delivered to Purchaser.
XII.8 SURVIVAL. The provisions of this Article 0 shall survive the Closing.
ARTICLE XIII
FAILURE TO PERFORM
If Purchaser shall default in the performance of its obligation under
this Agreement to purchase the Premises, the sole remedy of Seller shall be to
retain the Downpayment as liquidated damages for all loss, damage and expense
suffered by Seller, including without limitation the loss of its bargain, except
that Seller shall have the right to enforce the provisions of Sections 0, 0 and
Article 0. If Seller shall default in the performance of its obligations under
this Agreement to sell the Premises, the sole remedy of Purchaser shall be to
terminate this Agreement, after giving a five (5) day notice of default and
right to cure to Seller, and receive a refund of the Downpayment or to sue for
specific performance of Seller's obligations under Section 0, except that if
Seller's failure to close is willful and intentional, Purchaser may also recover
its out-of-pocket expenses incurred in connection with this Agreement, as
damages for Seller's breach, up to one hundred thousand dollars ($100,000.00)
and Purchaser shall have the right to enforce the provisions of Section 0 and
Article 0. If Purchaser shall default in the performance of its obligations
under this Agreement, Seller shall give Purchaser a five (5) day notice of
default and right to cure before it retains the Downpayment, except that no such
notice need be given if Purchaser fails to close pursuant to Section 0.
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ARTICLE XIV
BROKER
Seller and Purchaser mutually represent to each other that the brokers
set forth in Rider 2 are the only brokers with whom they have dealt in
connection with this Agreement and that neither Seller nor Purchaser knows of
any other broker who has claimed or may have the right to claim a commission in
connection with this transaction, unless otherwise indicated in Rider 2. The
commission of such brokers shall be paid pursuant to a separate agreement by the
party specified in Rider 2. Seller and Purchaser each agree to indemnify, defend
and hold harmless each other against any costs, claims, judgments or, expenses
including attorneys' fees, which the other may incur by reason of any action or
claim against the other by any broker, agent or finder in addition to any claims
against the other by the Brokers listed on Rider 2 that exceed the commission
described on Rider 2, (i) with whom the indemnifying party has dealt arising out
of this Agreement or any subsequent sale of the Premises to Purchaser, (ii) and
whose claim results from the actions of the indemnifying party, except for the
commissions described on Rider 2. The representations and obligations under this
Article 0 shall survive the Closing or, if the Closing does not occur, the
termination of this Agreement.
ARTICLE XV
NOTICES
All notices, demands, requests, consents, approvals or other
communication (for the purpose of this Article 0 collectively called "Notices")
required or permitted to be given hereunder or which are given with respect to
this Agreement shall be in writing and shall be personally delivered or sent by
registered or certified United States mail, return receipt requested, postage
prepaid, or by Federal Express or other similar, nationally recognized overnight
courier, or by telecopy or hand delivered by messenger addressed as set forth on
Rider 2 or to such other address as such party shall have specified more
recently by written notice given pursuant to this Article 0. Any Notice
personally delivered shall be effective upon the date of delivery. Notice mailed
as provided herein shall be deemed given on the third (3rd) business day
following the date so mailed and Notice sent by overnight courier shall be
deemed given on the next business day following the day delivered to the
courier. Notice given in any other manner shall be effective upon receipt by the
party for whom the same is intended. Any faxed or personally delivered notices
must be received by 5:00 p.m. Eastern Standard Time on the applicable day.
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ARTICLE XVI
LIMITATIONS ON SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND OTHER OBLIGATIONS
Except as expressly stated in this Agreement, no representations,
warranties, covenants or other obligations of Seller set forth in this Agreement
shall survive the Closing, and no action based thereon shall be commenced after
the Closing. The delivery of the deed by Seller, and the acceptance thereof by
Purchaser, shall be deemed the full performance and discharge of every
obligation on the part of Seller to be performed hereunder, except those
obligations of the parties which expressly survive the Closing or the
termination of this Agreement as provided herein.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
XVII.1 NO ASSIGNMENT.
Purchaser shall not assign this Agreement or its rights hereunder without the
prior written consent of Seller, which consent may be granted or withheld in
Seller's sole discretion except as provided in Section 0. No permitted
assignment of Purchaser's rights under this Agreement shall be effective against
Seller unless and until an executed counterpart of the instrument of assignment
shall have been delivered to Seller and Seller shall have been furnished with
the name and address of the assignee. The term "Purchaser" shall be deemed to
include the assignee under any such effective assignment. Notwithstanding the
foregoing, the original Purchaser shall remain jointly and severally liable with
any permitted assignee for any obligations hereunder of Purchaser accruing
before Closing and any surviving the Closing under Sections 0, 0 and Article 0.
Seller shall not assign this Agreement or it rights hereunder without the prior
written consent of Purchaser (except as provided in Section 0 hereof) which may
be withheld in the Purchaser's sole discretion, except that Seller may assign
this Agreement or its rights hereunder to an affiliate, or its partners may
assign to affiliates without the consent of Purchaser. No such assignment shall
release Seller.
XVII.2 ENTIRE AGREEMENT.
This Agreement embodies and constitutes the entire understanding between the
parties with respect to the transaction contemplated herein, 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.
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XVII.3 SELLER'S KNOWLEDGE.
Whenever the term "Seller's Knowledge" is used in this Agreement, such
knowledge shall be the current, actual personal knowledge of (i) B. Owen
Williams; (ii) Joseph A. Romano; and (iii) Robert Taylor.
XVII.4 GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the law
of the State of Colorado without regard to principles of conflict of laws.
XVII.5 CAPTIONS.
The captions in this Agreement are inserted for convenience of reference only
and in no way define, describe or limit the scope or intent of this Agreement or
any of the provisions hereof.
XVII.6 BINDING AGREEMENT.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
XVII.7 NO AGREEMENT.
This Agreement shall not be binding or effective until properly executed and
delivered by Seller and Purchaser.
XVII.8 CONSTRUCTION.
As used in this Agreement, the masculine shall include the feminine and neuter,
the singular shall include the plural and the plural shall include the singular,
as the context may require.
XVII.9 CONFLICT.
If the provisions of any schedule or rider to this Agreement are inconsistent
with the provisions of this Agreement, the provisions of such schedule or rider
shall prevail.
XVII.10 COUNTERPARTS AND FACSIMILE SIGNATURE.
This Agreement may be executed and delivered in any number of counterparts,
each of which so executed and delivered shall be deemed to be an original and
all of which shall constitute one and the same instrument. This Agreement may be
executed by facsimile signature, provided the original signatures are delivered
to the other party or its counsel the next business day.
XVII.11 NO RECORDING.
This Agreement shall not be recorded on the land records of the Town or County
in which any of the Land is located, or elsewhere, by either party. Seller and
Purchaser agree that the recording of this Agreement shall constitute a default
under this Agreement by the recording party and, in addition, this Agreement may
be terminated, at the option of the non-recording party.
XVII.12 CONFIDENTIALITY.
Seller and Purchaser and their respective agents, accountants, attorneys and
consultants shall treat this Agreement and all information obtained or exchanged
in connection herewith as confidential pursuant to the terms of the
Confidentiality Agreement attached hereto as Exhibit H.
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XVII.13 INCORPORATION.
All Riders, Schedules and Exhibits attached hereto are hereby incorporated by
reference into this Agreement.
XVII.14 STATEMENT REGARDING THE MAY COMPANY.
Purchaser acknowledges that it has been informed that as of January 2, 1983,
Aetna Life Insurance Company, a Connecticut corporation ("Aetna"), J. C. Penney
Properties, Inc., a Delaware corporation ("Penney"), Adcor Realty Corporation, a
New York corporation ("Adcor"), The May Department Stores Company, a New York
corporation ("May"), Bank Building Corporation, a Colorado corporation
("Citadel") and 740 Citadel, Ltd., a California limited partnership ("740")
entered into that certain Third Amendment and Restatement of Operating Agreement
(the "Third Amendment"), which Third Amendment was recorded in the Office of the
Recorder of El Paso County, Colorado (the "Recorder's Office") in Book 5150 at
Page 952, and which Third Amendment encumbers the Premises. As of October 13,
1989, Seller, as successor to Aetna, Penney, Mervyn's, as successor to Adcor,
May, Citadel and 740 entered into that certain Amendment No. 1 to Third
Amendment and Restatement of Operating Agreement ("Amendment No. 1"), which
Amendment No. 1 was recorded in the Recorder's Office, in Book 5775 at Page 548.
On May 3, 1996, Seller, Penney, Mervyn's, Condev West, Inc., an Arizona
corporation ("Condev"), and the Citadel Bank, a Colorado corporation, entered
into that certain Escrow Agreement dated May 3, 1996 (the "Escrow Agreement").
Among other things, the Escrow Agreement deposited with the Escrow Agent, as
defined therein, a copy of Amendment No. 2 to the Third Amendment and
Restatement of Operating Agreement ("Amendment No. 2"). Other than May, every
other party to Amendment No. 2, including Seller, Penney, Mervyn's, Condev and
the Citadel Bank has executed Amendment No. 2, which executed Amendment No. 2
has been deposited with the Escrow Agent. The Escrow Agreement provides that the
Escrow Agreement will not terminate on the Expiration Date of September 30,
1997, if Seller and at least one of Penney, Mervyn's or Condev has executed
Amendment No. 2. The Escrow Agreement further provides that Amendment No. 2
shall be a binding agreement as to the matters contained therein among the
parties who have executed Amendment No. 2. As of the date of this Agreement, May
has not executed the Escrow Agreement or Amendment No. 2.
SVII.15 LOAN.
The loan from Teachers Insurance and Annuity Association of America ("TIAA
Loan") shall close simultaneously with the Closing under this Agreement;
provided, however, if the TIAA Loan cannot close simultaneously, Purchaser shall
have the right to unilaterally extend the Closing until December 15, 1997 in
order to close the TIAA Loan, or until December 30, 1997 to enable Purchaser to
obtain alternate financing or alternate funds. TIAA shall agree in its loan
commitment that the loan shall not be conditioned on obtaining May's execution
of Amendment No. 2 or the Escrow Agreement.
XVII.16 PURCHASER'S NAME.
Seller acknowledges that immediately prior to Closing, Purchaser's name shall
be changed to Macerich Citadel Limited Partnership, a California limited
partnership. This name change shall not in any manner affect the terms hereof,
and MR Citadel Limited Partnership and Macerich Citadel Limited Partnership
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shall be deemed to be one and the same.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SELLER:
TRISTATE JOINT VENTURE, a
Maryland general partnership
By: Rouse Tristate Venture, Inc.
a Texas corporation
Its: General Partner
By: /s/ B. Owen Williams
Name: B. Owen Williams
Its: Vice President
By: AIC Properties, Inc.,
a Delaware corporation
Its: General Partner
By: /s/ Joseph Romano
Name: Joseph Romano
Its: Assistant Secretary
PURCHASER:
MR Citadel Limited Partnership,
a California limited partnership
By: Macerich Citadel GP Corp.,
a Delaware corporation
Its: General Partner
By: /s/ Richard A. Bayer
Name: Richard A. Bayer
Its: General Counsel
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RECEIPT BY ESCROW AGENT
The undersigned Escrow Agent, hereby acknowledges receipt of
$1,000,000.00, to be held in escrow pursuant to Section 0
COMMONWEALTH LAND TITLE COMPANY
By: ___/s/ Don Hallman______________
Escrow Agent
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