EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") made as of this
______ day of March, 2004, between OFFICE DEPOT, INC., a Delaware corporation,
having an address at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("PURCHASER") and TOYS "R" US, INC., a Delaware corporation, and its affiliated
companies identified on EXHIBIT A-5 annexed hereto, each having an office at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, "SELLER").
PRELIMINARY STATEMENT
A. Seller is the owner of the subdivided real property identified on
EXHIBIT A-1.1 attached hereto and hereby made a part hereof (individually an
"OWNED PROPERTY" and collectively, the "OWNED PROPERTIES"), together with the
improvements thereon. Purchaser desires to purchase the Owned Properties from
Seller.
B. Seller is also the owner of the real property identified on EXHIBIT
A-1.2 attached hereto and hereby made a part hereof. Purchaser desires to
purchase a portion of the real property identified on EXHIBIT A-1.2, which
portion shall be established in accordance with Section 2.4 hereof, conditioned
upon Seller successfully subdividing the real property identified on EXHIBIT
A-1.2. (Such portions are herein individually called a "SIDE BY SIDE OWNED
PROPERTY" and collectively, the "SIDE BY SIDE OWNED PROPERTIES").
C. Seller is the lessee or sublessee of the real property identified on
EXHIBIT A-2.1 attached hereto and hereby made a part hereof, together with the
improvements thereon (individually a "LEASED PROPERTY" and collectively, the
"LEASED PROPERTIES"), pursuant to the leases and ancillary documents set forth
on EXHIBIT A-2.1 for each Leased Property (individually an "A-2.1 LEASE" and
collectively, the "A-2.1 LEASES"). Purchaser desires to acquire by assignment
all of Seller's leasehold estate, right, title and interest in and to the Leased
Properties under the A-2.1 Leases.
D. Seller is also the lessee or sublessee of the real property
identified on EXHIBIT A-2.2 attached hereto and hereby made a part hereof,
together with the improvements thereon, pursuant to the leases and ancillary
documents set forth on EXHIBIT A-2.2 (individually, an "A-2.2 LEASE" and
collectively, the "A-2.2 LEASES"). Purchaser desires to take an assignment of
the A-2.2 Leases with respect to a portion of the real property described on
EXHIBIT A-2.2, which portion shall be established in accordance with Section 2.4
hereof, conditioned upon Seller successfully bifurcating the A-2.2 Leases in
accordance with Section 2.4 hereof. (Such portions are herein individually
called a "SIDE BY SIDE LEASED PROPERTY" and collectively the "SIDE BY SIDE
LEASED Properties").
E. Seller is also the lessee or sublessee of the real property
identified on EXHIBIT A-3 attached hereto and hereby made a part hereof,
together with the improvements thereon (individually a "RENTAL RATE PROPERTY"
and collectively, the "RENTAL RATE PROPERTIES"), pursuant to the leases and
ancillary documents set forth on EXHIBIT A-3 for each Rental Rate Property
(individually an "A-3 LEASE" and collectively, the "A-3 LEASES"). (The A-2.1
Leases, the A-2.2 Leases and the A-3 Leases are sometimes herein individually
referred to as a "LEASE" and collectively referred to as the "LEASES".)
NOW, THEREFORE, Seller and Purchaser hereby covenant and agree as
follows:
ARTICLE 1. DEFINITIONS
1.1 For purposes of this Agreement, unless the context shall otherwise
indicate, the terms set forth below shall be defined as follows:
(a) "ENCUMBRANCES" -shall mean, subject to Section 4.3 hereof,
taxes and assessments which are a lien but not yet due and payable (subject to
proration in accordance with Section 5.4 hereof); any applicable laws, rules,
regulations, statutes, ordinances, orders or other legal requirements affecting
the "Properties" (hereinafter defined), including, without limitation, those
relating to zoning and land use; liens, mortgages, deeds of trust or other
instruments to secure debt and judgments ("MONETARY ENCUMBRANCES"); easements,
encumbrances, matters, exceptions and state of facts affecting the Properties,
of record or disclosed to Purchaser, or which would be revealed to Purchaser by
a current survey or inspection of the Properties or of "Seller's Records"
(hereinafter defined) relating thereto; and the terms, covenants, restrictions
and conditions set forth in the Leases.
(b) "PROPERTIES" - shall mean collectively the Owned
Properties, the Side by Side Owned Properties, the Leased Properties, the Side
by Side Leased Properties and the Rental Rate Properties. "SIDE BY SIDE
PROPERTY" shall mean, individually and collectively, the Side by Side Owned
Properties and the Side By Side Leased Properties. The term "PROPERTY" shall
mean individually, each of the Owned Properties, Side by Side Owned Properties,
Leased Properties, Side by Side Leased Properties and Rental Rate Properties.
(c) "CLOSING" - shall mean the date provided in Section 5.1 or
such other date as the parties may mutually designate for delivery of the deeds
to the Owned Properties (and any Side By Side Owned Properties which become
subdivided), Pre-Paid Leases (or under the circumstances described in Section
2.3(c), a "Building Lease", hereinafter defined) for the Side by Side Owned
Properties, and delivery of the "Assignment and Assumption Agreement"
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(hereinafter defined) for the Leased Properties and the Rental Rate Properties
(and any Side By Side Leased Properties, the leases for which have been
bifurcated), and Pre-Paid Subleases for the Side by Side Leased Properties and
the payment of the "Consideration" (hereinafter defined).
(d) "GOVERNING AGREEMENTS" - shall mean the Encumbrances and
such other documents, instruments and agreements contained in Seller's Records,
or delivered to Purchaser in accordance with the terms of this Agreement.
(e) "MAXIMUM EXPENDITURE" - With respect to any Owned Property
Leased Property, Side by Side Owned Property or Side by Side Leased Property
which is not subject to the rights of a third party to acquire Seller's interest
therein (a "RECAPTURE RIGHT"), "MAXIMUM EXPENDITURE" shall mean the sum of Two
Million One Hundred Fifty-Three Thousand Three Hundred Seventy Dollars
($2,153,370.00). With respect to any Owned Property, Leased Property, Side by
Side Owned Property or Side by Side Leased Property which is subject to a
Recapture Right which requires payment by a third party to Seller upon the
exercise of such Recapture Right ("RECAPTURE PAYMENT") which exceeds the sum of
Two Million One Hundred Fifty-Three Thousand Three Hundred Seventy Dollars
($2,153,370.00), "MAXIMUM EXPENDITURE" shall mean (x) Two Million One Hundred
Fifty-Three Thousand Three Hundred Seventy Dollars ($2,153,370.00), less (y) the
positive difference between the Recapture Payment less Two Million One Hundred
Fifty-Three Thousand Three Hundred Seventy Dollars ($2,153,370.00). If the
resulting difference is a negative amount, then the Maximum Expenditure as to
that Property shall be zero. With respect to any Owned Property, Leased
Property, Side by Side Owned Property or Side by Side Leased Property which is
subject to a Recapture Right which requires a Recapture Payment less than Two
Million One Hundred Fifty-Three Thousand Three Hundred Seventy Dollars
($2,153,370.00), "MAXIMUM EXPENDITURE" shall mean the sum of Two Million One
Hundred Fifty-Three Thousand Three Hundred Seventy Dollars ($2,153,370.00). With
respect to any Rental Rate Property, "MAXIMUM EXPENDITURE" shall mean fifty
percent (50%) of the positive difference between the net current value of the
rental payable by Purchaser to Seller for the remainder of the currently
existing term of the applicable Lease, less the net current value of the rental
payable by Seller as lessee or sublessee for the remainder of the currently
existing term of the applicable Lease. "NET CURRENT VALUE" shall be determined
by discounting at a discount rate equal to eight percent (8%) per annum.
(f) "EXPENDITURE OBLIGATIONS" shall mean only those amounts
expended by Seller in the performance of its obligations with respect to a
Property under Section 4.1(b) (other than for discharge of Monetary
Encumbrances), Section 4.2(b) and obtaining the documents required to be
delivered at Closing pursuant to paragraphs (j), (k), (l), (m), (n), (o) and (p)
of Section 5.2 of this Agreement. In addition, with respect to Rental Rate
Properties only, Expenditure Obligations for a Property shall also include those
amounts expended by Seller in performance of its obligations under Section
2.3(a) of this Agreement.
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ARTICLE 2. PURCHASE AND SALE.
2.1 Seller agrees to sell and convey the Owned Properties and the Side
by Side Owned Properties (or, in certain events more fully set forth
hereinafter, lease the Side by Side Owned Properties), to convey by assignment
all of Seller's leasehold (or subleasehold) estate, right, title and interest in
and to the Leased Properties and the Side by Side Leased Properties (or, in
certain events more fully set forth hereinafter, sublease the Side by Side
Leased Properties) and to assign and convey Seller's leasehold estate, right,
title and interest in and to the Rental Rate Properties to Purchaser (or, with
respect to the Virginia Beach, Virginia Rental Rate Property, convey a
subleasehold estate pursuant to a Building Lease with Purchaser), and Purchaser
agrees to purchase the Owned Properties (or lease as to the Side by Side Owned
Properties), to assume (or sublease as to the Side by Side Leased Properties)
Seller's leasehold (or subleasehold) estate, right, title, interest and
obligations under the A-2.1 Leases and A-2.2 Leases, and to assume Seller's
leasehold (or subleasehold) estate, right, title, interest and obligations under
the A-3 Leases (except with respect to the Virginia Beach, Virginia Rental Rate
Property, as set forth above) for the Consideration on the terms and conditions
hereinafter set forth. Said sales and conveyances, leases, subleases and
assignments shall include all of the Seller's right, title and interest in and
to all improvements (including, without limiting the generality of the
foregoing, leasehold improvements) fixtures and equipment of every kind and
description attached to, erected upon, situated in or upon, forming a part of,
or appurtenant to each of the Owned Properties, the Side by Side Owned
Properties, the Leased Properties, the Side by Side Leased Properties and the
Rental Rate Properties.
2.2 The aggregate consideration to be paid by Purchaser to Seller at
Closing for the Owned Properties and the Leased Properties (the "CONSIDERATION")
shall be One Hundred Ninety-Seven Million Three Hundred Thousand Dollars
($197,300,000.00), payable as follows:
(a) Within three (3) business days after Purchaser receives
this Agreement fully executed by Seller and Purchaser, Purchaser shall deposit
with the title insurance company designated by Purchaser (the "TITLE COMPANY")
the sum of Nineteen Million Seven Hundred Thirty Thousand Dollars
($19,730,000.00) (as reduced by application to the Consideration at Closing in
accordance with Section 5.1 hereof, the "DEPOSIT"), to be held in escrow by the
Title Company pursuant to conditions reasonably established and agreed upon by
the parties and disbursed in accordance with the terms of this Agreement. The
Deposit shall be applied to the Consideration at Closing unless required to be
otherwise delivered to Purchaser or Seller pursuant to the terms of this
Agreement. Except as otherwise provided in this Agreement, the Deposit, together
with interest accrued thereon, shall be non-refundable, and, unless applied to
the Consideration or required to be delivered to Purchaser pursuant to the terms
of this Agreement, shall become the sole and exclusive property of Seller. The
Deposit shall be held in an interest bearing account of a federally insured
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banking institution. All interest earned on the Deposit shall either (i) at the
time of Closing, be delivered to Seller and credited toward the Consideration or
(ii) paid to Purchaser if this Agreement terminates and, in accordance with the
terms of this Agreement, the Deposit is refunded to Purchaser, or (iii) paid to
Seller if this Agreement terminates and, in accordance with the terms of this
Agreement, the Deposit is paid to Seller.
(b) The balance of the Consideration shall be paid by
Purchaser to Seller at Closing by wire transfer of immediately available funds.
2.3 (a) If this Agreement is terminated with respect to any Owned
Property, Side by Side Owned Property, Leased Property or Side by Side Leased
Property, the Consideration shall be reduced by the sum of Two Million One
Hundred Fifty-Three Thousand Three Hundred Seventy Dollars ($2,153,370.00) for
each such Property.
(b) If this Agreement is terminated with respect to less than
five (5) of the Rental Rate Properties, there shall be no adjustment in the
Consideration. If this Agreement is terminated with respect to five (5) or more,
but less than eleven (11) of the Rental Rate Properties, the Consideration shall
be reduced by One Million Eight Hundred Thirty-Three Thousand Three Hundred
Thirty-Three Dollars ($1,883,333.00). If this Agreement is terminated with
respect to eleven (11) or more, but less than seventeen (17) of the Rental Rate
Properties, the Consideration shall be reduced by an additional One Million
Eight Hundred Thirty-Three Thousand Three Hundred Thirty-Three Dollars
($1,883,333.00). If this Agreement is terminated with respect to seventeen (17)
or more of the Rental Rate Properties, the Consideration shall be reduced by an
additional One Million Eight Hundred Thirty-Three Thousand Three Hundred
Thirty-Three Dollars ($1,883,333.00). Notwithstanding the foregoing, if prior to
the date of final Closing under this Agreement (i) Purchaser obtains, or Seller
obtains for the benefit of Purchaser, a restrictive covenant, for a period of
not less than ten (10) years, against use of a Rental Rate Property with respect
to which this Agreement has been terminated for an Office Supply Use (as defined
in Section 4.3(a) hereof), such Rental Rate Property shall not be included for
purposes of determining any reduction in the Consideration in accordance with
this Section 2.3(b), or (ii) Purchaser obtains, or Seller obtains for the
benefit of Purchaser, a right of first refusal, reasonably satisfactory to
Purchaser, to enter into a direct lease between Purchaser and the owner or
underlying lessee of such Rental Rate Property with respect to which this
Agreement has been terminated for the first occupancy of such Rental Rate
Property after termination of the applicable A-3 Lease, such Rental Rate
Property shall not be included for purposes of determining any reduction in the
Consideration in accordance with this Section 2.3(b), or (iii) if Seller, at or
prior to Closing, and prior to conveyance of Seller's right, title and interest
as lessee or sublessee under such A-3 Lease to a third party, executes and
records, a restrictive covenant, for the then remaining term of the applicable
A-3 Lease, as same may be extended (but in no event exceeding ten (10) years),
against use of a Rental Rate Property with respect to which this Agreement has
been terminated for an Office Supply Use (but with respect to which Seller
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remains lessee), such Rental Rate Property shall not be included for purposes of
determining any reduction in the Consideration in accordance with this Section
2.3(b), or (iv) Purchaser, prior to the date of final Closing under this
Agreement, enters into an agreement for use or occupancy of a Rental Rate
Property with respect to which this Agreement has been terminated, such Rental
Rate Property shall not be included for purposes of determining any reduction in
the Consideration in accordance with this Section 2.3(b). If this Agreement is
terminated with respect to a Rental Rate Property Seller agrees to use good
faith efforts to obtain, prior to date of the final Closing under this
Agreement, either the restrictive covenant described in clause (i) above, or the
right of first refusal described in clause (ii) above.
(c) If Seller is prohibited by any state, county, municipal or
other governmental statute, ordinance, rule or regulation from conveying
leasehold title to the building existing thereon and at least the land
thereunder with respect to any Side by Side Owned Property which has not been
legally subdivided prior to Closing, the Consideration shall be reduced by the
sum of Two Million One Hundred Fifty-Three Thousand Three Hundred Seventy
Dollars ($2,153,370.00) for each such Side by Side Owned Property, and Seller
and Purchaser shall, at Closing, execute and deliver a "Building Lease" in the
form annexed hereto as EXHIBIT G. The fixed rent payable under the Building
Lease for any Side by Side Owned Property shall be the amount of Two Hundred
Fifteen Thousand Three Hundred Seventy Dollars ($215,370.00) per annum which
shall be increased by ten percent (10%) every ten (10) years. The Building Lease
may be terminated by the tenant thereunder as of the date of the next increase
in fixed rent by giving at least one hundred eighty (180) days prior notice of
termination. If, subsequent to Closing, the Side by Side Owned Property is
subdivided pursuant to the provisions of the Building Lease then such Side by
Side Owned Property shall be conveyed to Purchaser in accordance with the terms
of this Agreement for the Purchase Price of Two Million One Hundred Fifty Three
Thousand Three Hundred Seventy Dollars ($2,153,370.00) less the total of fixed
rent previously paid under the Building Lease.
2.4 Within fifteen (15) days after the Execution Date, Purchaser and
Seller shall mutually and reasonably agree upon subdivision lines establishing
the Side by Side Properties (the "LOT LINES"), which shall, in each instance,
include the building constructed on such Side by Side Property, the loading dock
and appurtenant facilities thereto and land sufficient for the operation of
Purchaser's retail business thereon and the continued operation of Seller's
retail business on the remaining portion of such property owned by Seller. If,
in Seller's reasonable judgment, the platting or subdivision required to legally
separate any Side by Side Owned Property from adjacent property owned by Seller
is not obtainable in a timely manner prior to Closing except as provided to the
contrary in Section 2.3(c) above, Seller and Purchaser shall, at Closing, enter
into a "Pre-Paid Lease" in the form annexed hereto as EXHIBIT D so as to convey
to Purchaser leasehold title to any Side by Side Owned Properties which are not
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legally subdivided from adjacent property owned by Seller. If any Lease for a
Side by Side Leased Property cannot be reasonably bifurcated in a manner
reasonably acceptable to Seller and Purchaser in a timely manner prior to
Closing, except as provided to the contrary in Section 2.3(c) above, Seller and
Purchaser shall, at Closing, enter into a "Pre-Paid Sublease" in the form
annexed hereto as EXHIBIT E, so as to convey to Purchaser subleasehold title to
any Side by Side Leased Properties the Leases for which are not capable of being
bifurcated in a manner reasonably acceptable to Seller and Purchaser.
2.5 If Seller is unable to obtain a recognition agreement as required
by Section 5.2(p) with respect to any Side by Side Leased Property (the Lease
for which has not yet been bifurcated and therefore is not being assigned to
Purchaser), Purchaser may elect to terminate this Agreement with respect to the
subject Side by Side Leased Property, or proceed to Closing with respect to the
subject Side by Side Leased Property without the benefit of a recognition
agreement, in which event a portion of the Consideration in the amount of Two
Million One Hundred Fifty-Three Thousand Seven Hundred Dollars ($2,153,700.00)
for each such Side by Side Leased Property shall be paid to Seller, commencing
on the date of Closing for such Side By Side Leased Property, in equal monthly
installments over the then current term of the applicable A-2.2 Lease, which
obligation shall survive Closing.
ARTICLE 3. REPRESENTATIONS.
3.1 Seller represents, warrants and covenants to Purchaser that the
following statements are now, and will, in all material respects (except as
modified by the performance of Seller's obligations under this Agreement) on the
date of Closing be, true and accurate:
(a) Each Seller is a corporation or limited liability company,
as indicated, organized and existing under the laws of the State set forth on
EXHIBIT A-5 annexed hereto and, collectively, hold title to the entire leasehold
and fee estates being conveyed hereunder. Each Seller has the full capacity,
right, power and authority to execute, deliver and perform this Agreement and
all documents to be executed by such Seller pursuant hereto, and all required
actions and approvals therefor have been, or prior to the date of Closing will
be, duly taken and obtained. The individuals signing this Agreement and all
other documents executed or to be executed pursuant hereto on behalf of Seller
are and shall be duly authorized to sign the same on Seller's behalf and to bind
Seller thereto. The provisions hereof shall survive Closing.
(b) This Agreement and all documents to be executed pursuant
hereto by Seller are and shall be binding upon and enforceable against Seller in
accordance with their respective terms. The provisions hereof shall survive
Closing.
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(c) Seller has not (i) made a general assignment for the
benefit of creditors, (ii) filed any involuntary petition in bankruptcy or
suffered the filing of any involuntary petition by Seller's creditors, (iii)
suffered the appointment of a receiver to take possession of all or
substantially all of Seller's assets, (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of Seller's assets, (v) admitted
in writing its inability to pay its debts as they come due, or (vi) made an
offer of settlement, extension or compromise to its creditors generally, and has
no intention to do so in the foreseeable future.
(d) With the exception of this Agreement, and any other rights
granted under the Governing Agreements, there is no outstanding option or right
to purchase any of the Properties, or any part thereof.
(e) Seller has not received any notices of violations of law
or municipal ordinances, laws governing "Hazardous Substances" (as defined in
Section 14.1), orders or requirements noted in or issued by any governmental
department having authority with respect to the Properties, other than those
contained in Seller's Records, if any, or of which Seller has otherwise notified
Purchaser in writing not less than fifteen (15) days prior to the "Environmental
Investigation Deadline" (as hereinafter defined).
(f) Until the Closing, Seller agrees to maintain the
Properties and all mechanical equipment used in the operation of the Properties
so that the Properties shall be in the same condition at the Closing as they
were on the date of execution and delivery of this Agreement by Purchaser and
Seller (the "EXECUTION DATE"), except for normal use, wear and tear, the effects
of fires or other casualty and the acts of governmental authority.
(g) Seller has not received notice of any takings or
condemnations, actions, suits or proceedings pending or threatened against or
affecting Seller or the Properties, at law or in equity, or before any federal,
state or municipal governmental or quasi-governmental department, commission,
board, bureau, body, authority, official, agency or instrumentality which, if
determined adversely to Seller, would materially adversely affect the Properties
or the operation thereof.
(h) As of the Execution Date, Seller has made and/or shall
make available originals or true copies of all leases, subleases, title
documents, surveys, environmental reports and other documents in Seller's
possession or control relating to the Properties ("SELLER'S RECORDS"). The
provisions hereof shall survive Closing.
(i) Seller has not received notice of any application for any
zoning change or pending zoning ordinance amendment which would materially
adversely affect any of the Properties, except as contained in Seller's Records.
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(j) To the best of Seller's knowledge, the Properties and the
present use and condition thereof do not violate any applicable deed
restrictions or other covenants, restrictions or agreements, site plan
approvals, zoning regulations or subdivision regulations applicable to the
Properties, as modified by any duly issued variances.
(k) Intentionally Omitted.
(l) Seller has no knowledge of any material physical defect
with respect to the buildings located on the Properties, except as set forth on
Schedule 1 annexed hereto.
(m) Seller has no knowledge of any assessments that are liens
against the Properties which are not shown in the official records of the taxing
authorities of the jurisdiction in which the Properties are located, except as
set forth on Schedule 2 annexed hereto; and Seller has not been notified of any
possible future improvements that might create an assessment against any part of
the Properties, except as set forth on Schedule 2 annexed hereto.
(n) To the best of Seller's knowledge, no part of the
Properties have been used by Seller for storage or disposal (whether pursuant to
law or otherwise) of any Hazardous Substances and Seller has no knowledge that
any part of the Properties have been contaminated by Hazardous Substances,
except as disclosed by Seller's Records.
(o) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated herein, will violate any
provision of the certificate of incorporation or by-laws of Seller or any law,
rule, regulation, writ, judgment, injunction, decree, determination, award or
other order of any court, government, or governmental agency or instrumentality,
domestic or foreign, or conflict with or result in any breach of any of the
terms of or the creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance of any nature pursuant to
the terms of any contract or agreement to which Seller is a party or by which
Seller or any of the assets of Seller is bound.
(p) Except as disclosed by the Governing Agreements, the
Properties are free of any right of possession or claim of right of possession
of any party other than Seller. Seller will not further sell, encumber, convey,
assign, pledge, lease or contract to sell, convey, assign, pledge, encumber or
lease all or any part of the Properties, nor restrict the use of all or any part
of the Properties, nor take or cause or allow to be taken any action in conflict
with this Agreement at any time between the Execution Date and (i) Closing, or
(ii) the earlier termination of this Agreement pursuant to its terms.
The foregoing representations and warranties, whether stated to be to
Seller's knowledge, to the best of Seller's knowledge or otherwise, are limited
to the actual current knowledge, as of the Execution Date, without duty of
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investigation or inquiry, of (x) ▇▇▇▇▇ ▇▇▇▇▇, - Seller's Vice President of Real
Estate, Design and Construction, (y) ▇▇▇▇▇ ▇▇▇ -Seller's Executive Vice
President - Operations, (z) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ -Seller's Vice President - Real
Estate Counsel, (xx) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ -Seller's Director of Asset Management,
and (yy) ▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - each a Director of Real Estate for
Seller, without imputation of knowledge of matters not within the actual current
knowledge of such person.
3.2 Purchaser acknowledges that, except as expressly set forth in
Section 3.1, Seller has not made and does not make any representations or
warranties, expressed or implied, concerning the Properties which have induced
Purchaser to execute this Agreement, including, without limitation, as to the
physical condition, income, rents, leases, expenses, operations, value of the
Properties, adequacy or fitness for use or any other matter or thing affecting
or related to the Properties or this transaction that might be pertinent in
considering the acquisition of the Properties, or Seller's estate, right, title
and interest therein. Seller shall not be liable or bound by any express or
implied warranties, guaranties, promises, statements, representations or
information pertaining to the Properties, made or furnished by any real estate
broker, agent, employee, servant, officer, director, partner, shareholder or
other person representing or purporting to represent Seller, unless such
warranties, guaranties, promises, statements, representations or information are
set forth in this Agreement.
3.3 Purchaser represents to Seller that the following statements are
now, and will on the date of Closing be, true and accurate:
(a) Purchaser is a corporation organized and existing under
the laws of the State of Delaware and has the full capacity, right, power and
authority to execute, deliver and perform this Agreement and all documents to be
executed by Purchaser pursuant hereto, and all required actions and approvals
therefor have been, or prior to the date of Closing will be, duly taken and
obtained. The individuals signing this Agreement and all other documents
executed or to be executed pursuant hereto on behalf of Purchaser are and shall
be duly authorized to sign the same on Purchaser's behalf and to bind Purchaser
thereto.
(b) This Agreement and all documents to be executed pursuant
hereto by Purchaser are and shall be binding upon and enforceable against
Purchaser in accordance with their respective terms.
(c) The execution and performance of this Agreement by
Purchaser will not violate its certificate of incorporation or governing
documents, or any other agreement to which Purchaser is a party.
(d) Purchaser has not (i) made a general assignment for the
benefit of creditors, (ii) filed any involuntary petition in bankruptcy or
suffered the filing of any involuntary petition by Purchaser's creditors, (iii)
suffered the appointment of a receiver to take possession of all or
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substantially all of Purchaser's assets, (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of Purchaser's assets, (v)
admitted in writing its inability to pay its debts as they come due, or (vi)
made an offer of settlement, extension or compromise to its creditors generally,
and has no intention to do so in the foreseeable future.
ARTICLE 4. "AS IS" PURCHASE.
4.1 (a) Purchaser shall have the right, until April 15, 2004 (the
"TITLE REVIEW PERIOD"), to (i) examine title to, and surveys of, each of the
Properties and to (ii) investigate other issues for the purpose of discovering
matters which in Purchaser's reasonable opinion, would materially interfere with
the operation of the Property for a retail business such as, but not limited to
those relating to parking and/or access (individually an "OTHER MATTER" and
collectively, "OTHER MATTERS").
(b) If Purchaser determines during the Title Review Period
that title with respect to a particular Property is not reasonably satisfactory
to Purchaser or that Other Matters exist, Purchaser shall give Seller written
notice to that effect, together with, as to a title objection, a copy of the
document or instrument to which Purchaser objects, prior to the expiration of
the Title Review Period. If such notice of objection is not delivered prior to
expiration of the Title Review Period, title and Other Matters relating to the
particular Properties for which notice of objection is not given shall be deemed
approved by Purchaser. Seller shall, at or prior to Closing, pay and discharge
of record any mortgages or deeds of trust encumbering the Properties and cure
any other Monetary Encumbrances (such other Monetary Encumbrances are
hereinafter called "OTHER MONETARY ENCUMBRANCES"), and use "reasonable efforts"
to cure or remove at or prior to Closing all other title matters to which
Purchaser has objected during the Title Review Period. A title objection shall
be deemed "cured" if the Title Company is willing to (i) omit (without further
exception or exclusion from coverage, and without additional cost to Purchaser)
the objectionable lien, covenant, restriction or encumbrance, or (ii)
affirmatively insure on terms reasonably acceptable to Purchaser against
collection of a Monetary Encumbrance out of the subject Property, or (iii)
affirmatively insure on terms reasonably acceptable to Purchaser against
enforcement of the objectionable covenant, restriction or encumbrance against
Purchaser or the subject Property. If Seller is unable to cure an Other Monetary
Encumbrance then Seller shall be required to pay and discharge same of record.
Purchaser and Seller agree that affirmative insurance against enforcement of the
terms of a Lease shall not be acceptable to Purchaser. Seller may, at Closing,
authorize the Title Company to use a portion of the Consideration to pay
Monetary Encumbrances in which event the existence of any such Monetary
Encumbrances shall not be deemed objections to title. If Seller is unable, at or
prior to Closing, to cure any title objections or Other Matter, Seller is
required by the terms of this Agreement to use reasonable efforts to cure,
Purchaser may accept title to and may accept Other Matters affecting, the
applicable Property as it is and proceed to Closing on the applicable Property
without reduction of the Consideration, or terminate this Agreement with respect
to the applicable Property and there shall be no further obligations hereunder
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with respect to said Property. If Seller does not, at or prior to Closing, (i)
satisfy any mortgages or deeds of trust that it is required to satisfy, or (ii)
cure or satisfy any Other Monetary Encumbrances that it is required to satisfy,
then Purchaser may at Closing satisfy same and deduct the cost thereof from the
Consideration. Notwithstanding anything to the contrary, Seller has no
obligation to satisfy any mortgages or liens which have not been created by or
have not been imposed or filed against Seller. Seller shall also use "reasonable
efforts" to correct and cure any Other Matter. Notwithstanding anything to the
contrary contained in this Agreement, although certain documents are listed in
the Exhibits attached to this Agreement, Purchaser shall not be deemed to have
waived its right to object to any matter of title or Other Matters with respect
to such documents.
4.2 (a) Seller shall, after the Execution Date, through the date of
Closing, make Seller's Records available to Purchaser, at reasonable times, at
Seller's offices, on reasonable advance notice from Purchaser to Seller.
Purchaser shall have the right to obtain and examine the missing documentation
set forth on EXHIBIT F annexed hereto and made a part hereof which has not been
disclosed by Purchaser's current title search (the "OMITTED INFORMATION"), and
any additional Omitted Information disclosed by Purchaser's examination of
title, or by any Omitted Information obtained by Purchaser, or by Purchaser's
continuing review of Seller's Records.
(b) If Purchaser determines that the Omitted Information with
respect to a particular Property is reasonably unsatisfactory to Purchaser,
Purchaser may, within fifteen (15) days after the later of the Execution Date,
or the date on which an item of Omitted Information is provided to or obtained
by Purchaser, but in no event later than the date of Closing, give Seller
written notice to that effect. Purchaser is deemed to have objected to the
Omitted Information set forth on EXHIBIT F. If such notice of objection is not
delivered prior to the date specified above, the Omitted Information shall be
deemed approved by Purchaser. Seller shall use "reasonable efforts" to correct,
cure or remove at or prior to Closing any conditions or circumstances disclosed
by Omitted Information of which Purchaser has timely given notice to Seller
(which cure may include, among other things, the delivery of an estoppel
certificate, reasonably acceptable to Purchaser, or other document or instrument
at Closing), or (y) agreeing to credit the Consideration at Closing by an amount
necessary to cure, correct or remove the specified condition(s). If Seller is
unable, at or prior to Closing, to correct, cure or remove any condition or
circumstance disclosed by the Omitted Information which is not reasonably
satisfactory to Purchaser, Purchaser may proceed to Closing on the applicable
Property without reduction of the Consideration, or terminate this Agreement
with respect to the applicable Property and there shall be no further
obligations hereunder with respect to said Property.
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4.3 (a) A matter of title (including, without limitation, matters
disclosed by a survey), or an item of Omitted Information will be reasonably
unsatisfactory if, and only of, the examination of the Omitted Information or
title matter, as applicable, discloses: (i) any matters which would render title
unmarketable, (ii) any matters (including, without limitation, exclusives and/or
use restrictions) which would materially interfere with Purchaser's use or
enjoyment of the particular Property for retail purposes or as an "Office Supply
Use" (as hereinafter defined) or the primary use of a "Permitted Designee"
(hereinafter defined) designated prior to the date which is ten (10) days after
the Execution Date to acquire Purchaser's interest in the subject Property under
this Agreement, or (iii) any Omitted Information the nature of which indicates
same could materially interfere with Purchaser's use or enjoyment of the
particular Property for retail purposes or as an Office Supply Use or the
primary use of the Permitted Designee designated prior to the date which is ten
(10) days after the Execution Date to acquire Purchaser's interest in the
subject Property under this Agreement, (iv) any Monetary Encumbrances which
Seller is not required to satisfy, the foreclosure of which, or any underlying
leases, the termination of which, would extinguish Purchaser's rights to
possession, or (v) any discrepancies between the legal descriptions of any of
the Properties annexed hereto and Purchaser's surveys of the Properties and site
plans for such Properties. The term "OFFICE SUPPLY USE" as used herein shall
mean an office supply superstore (which includes, without limitation, the sale
of office supplies; office equipment/technology; office furniture; computer
hardware and software; cellular telephones; and photocopy, facsimile, printing,
shipping and related services).
(b) Except as otherwise expressly required by this Agreement,
in no event shall Seller be required to bring any action or institute any
proceeding, or to otherwise incur any costs or expenses in order to attempt to
eliminate any matters of title or to otherwise cause title in the Properties to
be in accordance with the terms of this Agreement on the date of Closing, or to
obtain any Omitted Information, or to cure, correct or remove any condition or
circumstance not reasonably acceptable to Purchaser disclosed by any Omitted
Information.
(c) Seller agrees, at or prior to Closing, to use good faith
to satisfy the conditions precedent to Closing on Seller's part to be performed,
including, without limitation, obtaining the documents required to be delivered
to Purchaser at Closing.
4.4 For purposes of this Agreement, "reasonable efforts" shall include,
without limitation, (i) the payment of money (or offer of payment) and (ii) a
requirement that, to the extent Seller has a defensible claim and will not be
subject to any sanctions for improper use of the courts, Seller commence and
diligently prosecute judicial proceedings (not including appeals); for the
purpose of obtaining, in all such instances, delivery of the documents and
instruments included within the Expenditure Obligations and the expenditure of
money to cure title objections and/or Other Matters. For purposes of this
Agreement, "reasonable efforts" shall require the expenditure of up to (but not
exceeding), in the aggregate for all Expenditure Obligations as to a Property,
the Maximum Expenditure for the subject Property. If, after using "reasonable
efforts" to satisfy Seller's obligations under this Agreement with respect to a
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Property, the conditions precedent to Purchaser's obligation to proceed to
Closing with respect to such Property have not been satisfied or the title
objection or Other Matter not cured, Seller may give notice thereof to
Purchaser. Within ten (10) business days after receipt of such notice from
Seller, Purchaser may (i) advise Seller that Purchaser will proceed to Closing
on the applicable Property on the Closing date without reduction of the
Consideration, (ii) terminate this Agreement with respect to the applicable
Property in which event there shall be no further obligations hereunder with
respect to said Property, or (iii) advise Seller that it disputes Seller's
contention that it has exercised reasonable efforts. If Purchaser disputes
Seller's contention that it has exercised reasonable efforts then the parties
will use good faith efforts to resolve said dispute. Seller and Purchaser agree
to coordinate their efforts in negotiating with landlords and other third
parties having an interest in the subject Properties for the purpose of
obtaining the satisfaction of the conditions precedent with respect to Closing.
Seller and Purchaser agree that neither party, nor their respective
representatives, shall undertake any substantive discussions or negotiations
with landlords or other third-parties having an interest in the subject
Properties for the purpose of obtaining satisfaction of the conditions precedent
to Closing without the participation or prior consent of the other. Each party
will advise the other from time to time of the names and contact information for
their respective representatives who are authorized to participate in such
discussions and negotiations.
4.5 Purchaser and Purchaser's employees, agents, representatives and
contractors, shall have the right to enter upon the Properties for purposes of
making such surveys, engineering studies, feasibility studies, environmental
assessments, general inspections and other customary and reasonable studies,
inspections and tests as Purchaser deems necessary, provided all entry shall be
at the sole risk and expense of Purchaser and its employees, agents,
representatives and contractors, and Purchaser (i) shall defend indemnify and
hold Seller harmless from and against any and all claims, actions, losses,
costs, damages, expenses (including reasonable attorneys' fees) resulting
directly or indirectly from or arising out of Purchaser's entry upon the
Properties, the conduct of any tests, studies or other investigations thereon,
and/or the acts or omissions of Purchaser, its agents, contractors or employees;
provided however, such indemnification shall not serve to relieve Seller of any
liability which Seller might otherwise have, by law, arising out of Seller's
negligent acts or omissions, (ii) repairs any damage to the Properties resulting
from the performance of such tests and investigations; and (iii) procures and
continues in force from and after the date of entry upon the Properties or any
Property and continuing throughout the term of this license, comprehensive
general liability insurance having a combined single limit of liability of Two
Million Dollars ($2,000,000.00) for bodily injury, personal injury and property
damage, arising out of any one occurrence. Such insurance policy shall be issued
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in the names and for the benefit of Seller and Purchaser, by an insurance
company licensed to do business in the State in which the subject Property is
located. Purchaser shall deliver to Seller certificates of insurance evidencing
such insurance prior to the date Purchaser enters a Property. Notwithstanding
the foregoing, provided Purchaser has a net worth of at least One Hundred
Million Dollars ($100,000,000.00), Purchaser may "self insure" the insurance
coverages required by this Section 4.5. Upon request, Purchaser shall deliver to
Seller a statement of Purchaser's net worth in its last fiscal year as certified
by an independent certified public accountant and computed in accordance with
generally accepted accounting principles consistently applied. For so long as
Purchaser is a publicly traded company, Purchaser's most recent annual report
shall be deemed sufficient evidence of Purchaser's net worth. The minimum limits
of the insurance coverage to be maintained by Purchaser hereunder shall not
limit Purchaser's liability. The term of this license shall commence on the date
of receipt by Seller of the insurance certificate required hereinabove, and
shall terminate with respect to each Property upon termination of this Agreement
with respect to such Property by either party pursuant to any provisions hereof.
The indemnification provisions of this Section 4.5 shall survive Closing and/or
the earlier termination of this Agreement. Purchaser shall deliver to Seller a
copy of any and all tests, studies and reports prepared by or for Purchaser
which relate to the physical aspects of the Properties.
4.6 (a) Purchaser may, prior to March 31, 2004 (which date shall be
extended to April 15, 2004 with respect to the Properties identified on SCHEDULE
3 annexed hereto), deliver notice to Seller (which notice shall include a copy
of any report or study obtained by Purchaser, and, not later than ten (10) days
thereafter, a bona fide fixed price bid for correction of the condition from a
qualified contractor) ("DEFECT NOTICE") of (i) any heating, ventilating or air
conditioning system located on a Property which is not in good working order,
(ii) any roof on a building constructed on any Property which is in a state of
substantial disrepair, (iii) any asbestos containing materials within the
building constructed on any Property which will require removal or remediation
in connection with Purchaser's intended alterations to such Property, or (iv)
any structural defects of any building constructed on a Property. Except to the
extent correction of the condition is the obligation of a lessor or other
third-party under the Governing Agreements, Purchaser shall receive a credit
against the Consideration equal to the lesser of (x) the amount of the fixed
price bid submitted with Purchaser's Defect Notice, or (y) the amount of a bona
fide fixed price bid of a qualified contractor obtained by Seller (which may be
obtained within the same time period Purchaser is permitted to obtain its bids),
provided however, the amount of such credit in connection with removal or
remediation of asbestos containing materials shall be further limited to fifty
percent (50%) of the incremental additional cost of removal, remediation,
transportation and disposal of such asbestos containing materials.
(b) If any violations of governmental codes, rules and
regulations with respect to property owned by Seller adjacent to a Side-By-Side
Property (i) existing on the Execution Date or (ii) discovered later and which
could not have been reasonably discovered during Purchaser's due diligence (but
not later than three hundred sixty-five (365) days after Closing of the
particular Property) would prohibit the issuance of a building or construction
15
permit for renovation of the subject Property and have been caused by Seller's
acts or omissions, Purchaser may deliver notice to Seller (which notice shall
include a copy of the notice of violation, and a bona fide fixed price bid for
correction of the condition from a qualified contractor) (also a "DEFECT
NOTICE"), and, except to the extent correction of the condition is the
obligation of a lessor or other third-party under the Governing Agreements,
Purchaser shall receive a credit against, or partial reimbursement of, the
Consideration equal to the lesser of (x) the amount of the fixed price bid
submitted with Purchaser's Defect Notice, or (y) the amount of a bona fide fixed
price bid of a qualified contractor obtained by Seller. Seller's obligations
under this Section 4.6(b) shall survive Closing. If Seller is not obligated to
cure any such later discovered violation, then Seller shall cure same if
Purchaser agrees to pay the reasonable cost thereof.
(c) If the fire suppression system serving a Side by Side
Property consists of a single system, Seller, at its sole cost and expense,
shall prior to Closing, if practicable under the circumstances, or, promptly
after Closing with respect to the subject Property, re-zone the fire suppression
system to provide separate protection to such Side by Side Property. Except as
hereinafter provided, Seller's obligation with respect to such re-zoning shall
be limited to the installation of a dedicated control valve with a flow and
tamper switch on the existing riser for the system, and the connection of the
existing system serving the Side by Side Property to the newly dedicated control
valve. Purchaser shall be solely responsible for any other modifications to the
existing system serving the Side by Side Property necessary to meet Purchaser's
requirements or the requirements of Applicable Law.
Anything contained herein to the contrary notwithstanding, in the event
that the fire rating for the retail business to be conducted by Purchaser on
such Side by Side Property (i) exceeds the fire rating for the retail business
conducted by Seller or its affiliates in the property adjacent to such Side by
Side Property, and (ii) as a result of such fire rating for Purchaser's
business, the fire suppression system serving such Side by Side Property is
required to be upgraded and/or a fire-rated wall is required to be installed
within the Side by Side Property in order to meet the requirements of Applicable
Law (the "UPGRADE WORK"), Purchaser shall deliver notice to Seller, which notice
shall include documentation reasonably satisfactory to Seller evidencing the
determination of such fire rating and the requirement for performance of the
Upgrade Work, together with a bona fide fixed price bid for the performance of
the Upgrade Work from a qualified contractor ("UPGRADE NOTICE"). Purchaser shall
receive a credit against the Consideration in an amount equal to fifty percent
(50%) of the lesser of (x) the amount of the fixed price bid submitted with
Purchaser's Upgrade Notice, or (y) the amount of a bona fide fixed price bid for
the performance of the Upgrade Work from a qualified contractor obtained by
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Seller, provided however, that if the parties have not determined the amount of
such credit prior to Closing, then Seller shall pay the amount of such credit to
Purchaser from time to time, within ten (10) days after demand, as incurred by
Purchaser. The provisions of this Section 4.6(c) shall survive the Closing.
4.7 Seller warrants and represents to Purchaser that it will deliver
the Properties to Purchaser on the date of Closing broom clean, but, except as
otherwise expressly provided in this Agreement, otherwise "AS-IS" as of the date
of Closing. Purchaser acknowledges and agrees that, except as otherwise
expressly provided in this Agreement, it is purchasing the Properties "AS-IS" as
of the date of Closing and based on its own inspection, investigation and
evaluation.
ARTICLE 5. CLOSING.
5.1 An initial "Closing" shall occur at the offices of the Title
Company or such other location as shall be mutually agreed upon by Seller and
Purchaser on or before April 30, 2004, or such earlier date as agreed to by the
parties, provided that the conditions precedent to Closing for Properties are
satisfied in accordance with the terms of this Agreement. From time to time, but
not more frequently than bi-weekly, after the initial Closing, additional
Closings shall occur at the offices of the Title Company or such other location
as shall be mutually agreed upon by Seller and Purchaser as conditions precedent
to Closing for Properties are satisfied in accordance with the terms of this
Agreement. At any Closing of less than all of the Properties, the Consideration
(as reduced pursuant to Section 2.3(a) hereof) to be paid at such Closing, and
the amount of the Deposit to be applied to the Consideration at such Closing,
shall be equal to Two Million, One Hundred Fifty-Three Thousand, Three Hundred
Seventy ($2,153,370.00) Dollars multiplied by the number of Owned Properties,
Side by Side Owned Properties, Leased Properties and Side By Side Leased
Properties, and the amount of the Deposit to be applied against the
consideration shall be Two Hundred Fifteen Thousand, Three Hundred Thirty-Seven
($215,337.00) Dollars multiplied by the number of Owned Properties, Side by Side
Owned Properties, Leased Properties and Side By Side Leased Properties which are
the subject of such Closing, plus all interest accrued on the Deposit to the
date of Closing. At the last closing of all Properties which are to be conveyed
pursuant to the terms of this Agreement, the unpaid Consideration (taking into
account reductions of the Consideration contemplated by this Agreement) shall be
paid to Seller and the undisbursed remaining balance of the Deposit, together
with all undisbursed accrued interest, shall be paid to Purchaser.
5.2 At Closing, and as a condition precedent to Purchaser's obligations
which may be waived in writing by Purchaser (and Seller's obligations with
respect to the matters in paragraphs (l) and (n) of this Section 5.2) to Close,
Seller shall deliver to Purchaser:
(a) a limited warranty deed (or local equivalent) executed in
recordable form by Seller, so as to convey to Purchaser fee simple to the Owned
Properties and the Side by Side Owned Properties which are or have been legally
subdivided from other property owned by Seller, subject to the Encumbrances and
17
the Restriction set forth on EXHIBIT B-1 hereto; and subject to and together
with the benefits and burdens of those matters (including, without limitation,
reciprocal easement agreements, subject to the provisions of Article 4).
(b) a "Pre-Paid Lease" in the form annexed hereto as EXHIBIT
D, executed by Seller, so as to convey to Purchaser leasehold title to the Side
by Side Owned Properties which are not legally subdivided from adjacent property
owned by Seller;
(c) the Assignment and Assumption Agreement annexed hereto as
EXHIBIT C-1, executed in recordable form by Seller, so as to convey to
Purchaser, subject to the Encumbrances and the Restriction set forth on EXHIBIT
B-1 hereto, Seller's leasehold (or subleasehold) estate, right, title and
interest in and to the Leased Properties and under the A-2.1 Leases and in and
to the Side by Side Leased Properties (which have been bifurcated) and under the
A-2.2 Leases which are or have been bifurcated from leases for adjacent property
leased by Seller;
(d) a "Pre-Paid Sublease" in the form annexed hereto as
EXHIBIT E , executed by Seller, so as to convey to Purchaser subleasehold title
to any Side by Side Leased Properties the Leases for which have not been
bifurcated in a manner reasonably acceptable to Seller and Purchaser from leases
for adjacent property leased by Seller;
(e) the Assignment and Assumption Agreement annexed hereto as
EXHIBIT C-2, executed in recordable form by Seller, so as to convey to Purchaser
Seller's leasehold (or subleasehold) estate, right, title and interest in and to
the Rental Rate Properties (other than the Rental Rate Property located in
Virginia Beach, VA for which Seller shall deliver a sublease form of the
Building Lease) subject to the Encumbrances and the Restriction set forth on
EXHIBIT B-1 hereto;
(f) with respect to any Owned Property or Side by Side Owned
Property which is adjacent to other property owned by Seller (which is or has
been, operated as an integrated retail complex with such Owned Property or Side
by Side Owned Property), a Reciprocal Easement Agreement annexed hereto as
EXHIBIT I, executed in recordable form by Seller;
(g) executed originals of the Leases and other documents and
instruments relating to the Properties ("ANCILLARY DOCUMENTS") in Seller's
possession, if available, or, if not available, copies thereof;
(h) physical possession of the Properties, free of all
occupants, with Seller's furniture, fixtures, equipment and personal property
removed;
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(i) a "non-foreign person" affidavit in the form annexed
hereto as EXHIBIT J;
(j) an estoppel certificate, executed by the lessor under each
Lease, certifying that the Lease is in full force and effect; that the Lease has
not been modified (except as set forth on EXHIBIT A-2.1, EXHIBIT A-2.2 or
EXHIBIT A-3 attached hereto); the amount and dates to which minimum rent and
additional rent have been paid; the commencement and expiration date of the
Lease; the number and term of any option(s) to extend the Lease remaining
unexercised; that, to such lessor's knowledge, Seller is not in default in the
performance of any obligation under the Lease on Seller's part to be performed;
that, to such lessor's knowledge, it is not in default in the performance of any
obligation under the Lease on the lessor's part to be performed; the use
permitted under the Lease; the terms of any existing exclusive use restrictions
and/or so called "primary" use restrictions not disclosed or determinable by
Seller's Records; and the amount of security deposit (if any), or, if the terms
of the applicable Lease specify a form of estoppel certificate, and the lessor
does not execute the form of estoppel certificate prescribed above within seven
(7) days after its receipt of request therefor, then containing such information
as may be required to be provided therein by such Lease or, if such estoppel
certificate is not provided by the lessor on or before the date of Closing,
despite Seller's request and reasonable efforts to obtain same, a certificate by
Seller containing such information based on Seller's knowledge, together with
its indemnity against any damages suffered by Purchaser arising from any
misrepresentation by Seller in such certificate, which indemnification shall
survive for a period of one (1) year after Closing, provided however, Seller's
estoppel shall not be sufficient to establish existing exclusive use
restrictions not disclosed by Seller's Records (but Seller's estoppel, which is
not qualified as being to the best of Seller's knowledge, shall be sufficient to
establish so-called "primary" use restrictions), in which event Seller shall
obtain a consent as specified by Section 5.2(m), whether or not otherwise
required by the terms of the applicable Governing Agreement;
(k) to the extent Purchaser is not the beneficiary of an
agreement in effect as of the date of Closing pursuant to which the holder of a
mortgage encumbering a Leased Property, Side by Side Leased Property or Rental
Rate Property has agreed that in the event of a foreclosure of the mortgage or
should such holder obtain title by deed in lieu thereof, or otherwise, that the
subject Lease will continue in full force and effect in accordance with the
terms and provisions of the Lease, a Subordination, Non-Disturbance and
Attornment Agreement, in favor of Purchaser from holders of mortgage(s)
encumbering each such Leased Property, Side by Side Leased Property, or Rental
Rate Property the foreclosure of which would extinguish Purchaser's rights to
possession, substantially in the form of EXHIBIT K annexed hereto, or another
form mutually and reasonably acceptable to Purchaser and the holder of such
mortgage;
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(l) if required, written consents from lessors under each of
the applicable Leases to an assignment of the applicable Leases to Purchaser.
If, however, Purchaser designates to Seller a "Permitted Designee" (as
hereinafter defined) of the applicable Leased Properties, Side by Side Leased
Properties or Rental Rate Properties prior to the date which is ten (10) days
after the Execution Date) Seller shall obtain written consent from lessors under
each of the applicable Leases to an assignment of the applicable Leases to such
Permitted Designee;
(m) if required, written consents from lessors and/or third
parties under each of the applicable Leases and other Governing Agreements to a
change in use of the applicable Owned Properties, Side By Side Owned Properties,
Leased Properties, Side by Side Leased Properties or Rental Rate Properties to
Purchaser's Intended Use ("PURCHASER'S INTENDED USE" shall mean an Office Supply
Use). If, however, Purchaser designates to Seller a Permitted Designee of the
applicable Owned Properties, Side By Side Owned Properties, Leased Properties,
Side by Side Leased Properties or Rental Rate Properties prior to the date which
is ten (10) days after the Execution Date, Seller shall obtain consent from
lessor under each of the applicable Leases and/or third parties under the
Governing Agreements to a change in use to the primary use of the Permitted
Designee;
(n) written waivers of any valid and effective rights of first
refusal, rights of offer or repurchase rights affecting any of the Owned
Properties or Side by Side Owned Properties, provided however, Seller shall have
no obligation to obtain such waiver with respect to any right to repurchase a
Property in the event of discontinuance of operations at the subject Property if
(i) such right will not accrue within one (1) year after the date of Closing, or
(ii) Seller has obtained a written agreement to extend the applicable time
period so that such right will not accrue within one (1) year after the date of
Closing;
(o) written waivers of any recapture or other termination
rights under each of the applicable Leases with respect to the applicable Leased
Properties, Side by Side Leased Properties and Rental Rate Properties, provided
however, Seller shall have no obligation to obtain such waiver with respect to
any right to terminate a Lease or recapture a Property if (i) such right will
not accrue within one (1) year after the date of Closing, or (ii) Seller has
obtained a written agreement to extend the applicable time period so that such
right will not accrue within one (1) year after the date of Closing;
(p) with respect to each Pre-Paid Sublease (and the Rental
Rate Property in Virginia Beach, VA) a recognition agreement, executed by the
applicable lessor under the Lease (and the lessor under any underlying lease
superior to the Lease) in the form prescribed by the terms of the applicable
Lease, if any, or substantially in the form annexed hereto as EXHIBIT L, or
other form mutually and reasonably acceptable to Purchaser and the lessor under
the applicable Lease;
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(q) a ▇▇▇▇ of Sale, substantially in the form attached hereto
as EXHIBIT H, so as to convey to Purchaser all of Seller's right, title and
interest in and to any improvements owned by Seller on Properties owned or
leased by Seller;
(r) a statement of the then current book value of any
improvements, fixtures or equipment owned by Seller on the Properties and
conveyed to Purchaser;
(s) Seller's certification that, except as modified by the
performance of Seller's obligations under this Agreement, the representations,
covenants and warranties made by it herein are true and accurate as of the
Closing in all material respects;
(t) with respect to all Properties where Seller or its
affiliate owns, leases or subleases space adjacent to the applicable Property,
or within the same shopping center as the applicable Property, an agreement, in
the form annexed hereto as EXHIBIT B-2; and
(u) subject to Section 2.4 hereof, evidence of Seller's
receipt of final subdivision approval from the applicable governmental authority
if necessary, to convey fee title to a Side by Side Owned Property to Purchaser;
(v) an affidavit that either Seller has paid for all labor,
materials, architectural services, supplies and equipment, and utilities serving
the Properties for which a lien could arise, or that no such labor, materials,
architectural services, supplies and equipment, and utilities have been provided
to the Properties during the applicable period preceding Closing for which a
lien could be filed in the event of non-payment;
(w) corporate authority documentation, corporate merger
documents, a standard owner's affidavit of title, and such other documentation
reasonably requested by the Title Company (not requiring any indemnification or
undertaking by Seller) to permit the Title Company to issue a policy of title
insurance to Purchaser, subject only to the Encumbrances not objected to by
Purchaser (or with respect to which Purchaser has waived, or is deemed to have
waived, such objection) pursuant to Section 4.1; and
(x) if Seller is required to remove or remediate Hazardous
Substances in accordance with Section 14.2, evidence from applicable
governmental authorities or a certification from a licensed, reputable
consultant indicating that such Hazardous Substances have been removed or
remediated in accordance with Applicable Laws, provided however, if continuing
remediation or monitoring is required, Purchaser and Seller shall proceed to
Closing and enter into a mutually and reasonably acceptable agreement for
establishment of a cash escrow (not exceeding the limits of Seller's obligation
under Section 14.2) assuring completion of remediation and/or continued
treatment and monitoring until completion;
(y) with respect to any reciprocal easement agreement or
similar agreement to which Seller is a party (other than with respect to a Side
by Side Owned Property or Side by Side Leased Property) a written notice, if
21
required or permitted under such agreement, giving notice of the conveyance and
designating Purchaser or if requested by Purchaser, a Permitted Designee, as a
party thereunder;
(z) with respect to each Side by Side Owned Property and Side
by Side Leased Property, Seller shall have caused to be prepared, by a surveyor
or civil engineer licensed in the jurisdiction in which the Property is located,
a metes and bounds legal description conforming to the Lot Lines; and
(aa) for any Side by Side Owned Property, with respect to
which Seller is prohibited by Applicable Law from conveying leasehold title as
described in Section 2.3(c), a "Building Lease" in the form annexed hereto as
EXHIBIT G, executed by Seller.
5.3 At Closing, Purchaser shall deliver to Seller:
(a) the Consideration to be paid by Purchaser under Article 2,
less the Deposit and all interest earned thereon;
(b) a "Pre-Paid Lease" in the form annexed hereto as EXHIBIT
D, executed by Purchaser for the Side by Side Owned Properties which are not
legally subdivided from adjacent property owned by Seller;
(c) the Assignment and Assumption Agreement annexed hereto as
EXHIBIT C-1, executed in recordable form by Purchaser, for the Leased Properties
and A-2 Leases which are or have been bifurcated from leases for adjacent
property leased by Seller;
(d) a "Pre-Paid Sublease" in the form annexed hereto as
EXHIBIT E , executed by Purchaser for the Side by Side Leased Properties the
Leases for which have not been bifurcated in a manner reasonably acceptable to
Seller and Purchaser from leases for adjacent property leased by Seller;
(e) for any Side by Side Owned Property with respect to which
Seller is prohibited by Applicable Law from conveying leasehold title as
described in Section 2.3(c), a "Building Lease" in the form annexed hereto as
EXHIBIT G executed by Purchaser;
(f) the Assignment and Assumption Agreement annexed hereto as
EXHIBIT C-2, executed in recordable form by Purchaser with respect to the Rental
Rate Properties (provided however, with respect to the Virginia Beach, VA Rental
Rate Property, Purchaser shall deliver a sublease form of the Building Lease
executed by Purchaser) subject to the Encumbrances and the Restriction set forth
on EXHIBIT B-1 hereto; and
22
(g) with respect to any Owned Property or Side by Side Owned
Property which is or has been legally subdivided from other property owned or
leased by Seller adjacent to the subject Property, a Reciprocal Easement
Agreement annexed hereto as EXHIBIT I, executed in recordable form by Purchaser.
5.4 The Properties listed on EXHIBIT A-4 are Properties with respect to
which (i) the fee title is to be conveyed or the Lease assigned to Purchaser and
(ii) there exists a lease, more particularly described on EXHIBIT A-4, to a
third party for premises other than the Kids R Us Store (the "THIRD PARTY
LEASE"). Purchaser agrees that it shall lease to Seller, at Closing, the
premises leased under the Third Party Leases pursuant to the terms of the
Pre-Paid Lease annexed hereto as EXHIBIT D with reasonable modifications that
are requested by either party to take into account the different circumstances,
substituting Purchaser, as landlord, and Seller, as tenant, thereunder, for a
term equal to the longer of ten (10) years, or the term of the respective Third
Party Lease as same may be renewed by the tenant thereunder pursuant to the
provisions of the Third Party Lease. Seller shall not extend the term of any
Third Party Lease beyond the term thereof and any existing options. If the
Seller party under such Pre-Paid Lease is not Toys "R" Us-Delaware, Inc., Toys
"R" Us-Delaware, Inc. will execute and deliver to Purchaser a Guaranty
substantially in the form annexed hereto as EXHIBIT N, with such modifications
as shall reasonably be required to conform same to the facts and circumstances
of such Guaranty.
5.5 The following shall be apportioned between the parties on the basis
of a three hundred sixty-five (365) day year, as of the day prior to Closing:
(a) All real, personal property and other taxes, including
water and sewer charges, imposed upon the Properties or Seller as owner or
lessee of the Properties. If Closing shall occur before the tax rate is fixed
for any of such taxes, then the apportionment thereof shall be on the basis of
the tax rate for the preceding year applied to the latest valuation and an
adjustment shall be made after Closing, if necessary, promptly after the tax
rate is determined for the year in which Closing occurs. If as of the date of
Closing any one or more of the Properties shall be affected by any special or
general assessments (including the amounts of any unpaid installments of each
assessment), such assessments shall be paid in full at Closing, unless Purchaser
agrees to take subject thereto in which case a credit for such unpaid amount
shall be made against the Consideration to be paid at Closing.
(b) All rent, additional rent (other than percentage rent) and
other charges payable under the Leases. If Closing shall occur before any
component of rent, additional rent or other charges is determinable for the
payment period during which the date of Closing shall occur then the
apportionment thereof shall be on the basis of the payment thereof for the
preceding payment period, and readjusted after Closing between Purchaser and
Seller when the actual amount has been determined. Seller and Purchaser shall
each pay percentage rent due under a Lease attributable to its own gross sales.
If percentage rent is due for the year in which Closing occurs and percentage
rent payable under a Lease is based upon gross sales of both Seller and
Purchaser, then an adjustment shall be made by the parties after Closing so that
Purchaser and Seller shall each pay only its "Percentage Rent Share" (as
hereinafter defined). Purchaser's Percentage Rent Share shall be the product
23
arrived at by multiplying (i) the percentage rent due under the applicable Lease
by (ii) a fraction, the numerator of which is the gross sales of Purchaser and
the denominator of which is the total gross sales at the applicable Leased
Property, Side by Side Leased Property or Rental Rate Property for the reporting
period in which Closing occurs. Seller's Percentage Rent Share shall be the
difference between the percentage rent due under the applicable Lease and
Purchaser's Percentage Rent Share.
(c) The provisions of this Section 5.5 shall survive Closing.
5.6 Purchaser shall pay all normal recording costs. Each party shall be
responsible for one-half (1/2) of any tax stamps, realty transfer tax, fee or
other similar charge imposed by any applicable governmental statute, rule or
regulation by reason of the transfer of title to the Owned Properties and the
Side by Side Owned Properties, assignment of the Leases (or recording of an
Assignment and Assumption Agreement), execution of a Pre-Paid Lease, Pre-Paid
Sublease or Building Lease (or the recording of a memorandum thereof) for each
Property. Purchaser and Seller shall each be responsible for their respective
legal fees, except as otherwise provided in Section 13.4 hereof.
ARTICLE 6. CONDEMNATION.
6.1 (a) In the event of a taking of a substantial portion of any one or
more of the Properties prior to the date of Closing, Purchaser shall have the
right, at its option, to either (a) terminate this Agreement with respect to the
affected Property by giving Seller written notice to such effect, or (b) proceed
to Closing, in which event (i) the Consideration shall be abated by the amount
of the condemnation award allowed to Seller (either as owner or lessee in
accordance with the terms of the applicable Lease) in respect of the affected
Property, or (ii) to the extent the proceeds of any condemnation award have not
been collected, the Consideration shall not be abated, but Seller shall assign
to Purchaser all of Seller's right, title and interest in and to the
condemnation proceeding and/or the condemnation award.
(b) If a Lease is subject to termination by the lessor
thereunder by reason of a taking occurring after the Execution Date and prior to
Closing, and this Agreement has not been terminated with respect to such
Property in accordance with Section 6.1(a), an allocable portion of the
Consideration (as determined by Section 2.3(a) hereof) and all Closing documents
(including any assignment of the condemnation award pursuant to Section 6.1(a)
above) for the subject Property, shall be deposited in escrow with the Title
Company and Closing shall be postponed until expiration of such lessor's right
to terminate the subject Lease. In the event of termination of a Lease by the
24
lessor thereunder as a result of a taking of the applicable Property this
Agreement shall terminate with respect to the affected Property and the
Consideration for such Property shall be released from escrow and returned to
Purchaser.
ARTICLE 7. RISK OF LOSS.
7.1 (a) In the event of loss or damage to one or more of the
Properties, this Agreement and the Consideration to be paid hereunder shall be
unaffected and Seller and Purchaser shall proceed to Closing thereon (subject to
Section 7.1(b) below), in which event Seller shall (a) assign to Purchaser and
Purchaser shall have the right to make a claim for and to retain any casualty
insurance proceeds received or to be received under the casualty insurance
policies in effect with respect to the affected Property, and Purchaser shall
receive a credit from the Consideration due at Closing for the amount of the
deductible on such casualty insurance policy (which includes the amount for
which Seller maintains self-insurance) or (b) if with respect to a Leased
Property or Rental Rate Property for which the lessor under the Lease maintains
insurance and has the obligation to restore the Property, Seller shall use good
faith efforts to cause the lessor to restore the applicable Property pursuant to
the applicable Lease.
(b) If a Lease is subject to termination by the lessor
thereunder by reason of loss or damage to a Property occurring after the
Execution Date and prior to Closing, an allocable portion of the Consideration
(as determined by Section 2.3(a) hereof) and all Closing documents (including
any assignment of casualty insurance proceeds pursuant to Section 7.1(a) above)
for the subject Property, shall be deposited in escrow with the Title Company
and Closing shall be postponed until expiration of such lessor's right to
terminate the subject Lease. In the event of termination of a Lease by the
lessor thereunder as a result of loss or damage to the applicable Property this
Agreement shall terminate with respect to the affected Property and the
Consideration for such Property shall be released from escrow and returned to
Purchaser.
ARTICLE 8. BROKERAGE.
8.1 Purchaser and Seller each represent that it has dealt with no
broker or brokers with respect to the Properties or the negotiation, execution
or delivery of this Agreement, other than DJM Asset Management, LLC. Seller
shall pay any brokerage commission payable to DJM Asset Management, LLC in
connection with this transaction. Each party shall indemnify, defend and hold
each other harmless from and against any claims or demands for brokerage
commissions, finder's fees or other compensation resulting from a breach by it
of the foregoing representations. The within indemnity shall survive Closing.
ARTICLE 9. REMEDIES
9.1 Notwithstanding any law, rule of court or custom to the contrary,
if Seller shall default in any of its obligations to be performed under this
Agreement and such default shall continue for thirty (30) days after receipt of
25
notice thereof by Seller (which thirty (30) day period shall be extended if the
default cannot reasonably be cured within said thirty (30) day period, provided
Seller is proceeding with due diligence to cure same), Purchaser's sole remedies
for Seller's failure to perform its obligations under this Agreement shall be:
(a) the right to terminate this Agreement, whereupon the
Deposit and all interest earned thereon shall be refunded to Purchaser, and to
seek and collect from Seller an amount equal to the actual, out-of-pocket costs
and expenses incurred by Purchaser in connection with this Agreement, and,
except with respect to those matters expressly stated to survive termination of
this Agreement, neither party shall have any further liability hereunder, or
(b) the right to seek to obtain specific performance of
Seller's obligations hereunder, provided that any action for specific
performance shall be commenced within three hundred sixty-five (365) days after
such default, or
(c) if Seller's default is willful then, in addition to the
foregoing, Purchaser may pursue any and all other remedies available to
Purchaser at law or in equity.
9.2 IF PURCHASER SHALL DEFAULT IN ANY OF ITS OBLIGATIONS TO BE
PERFORMED UNDER THIS AGREEMENT AND SUCH DEFAULT SHALL CONTINUE FOR THIRTY (30)
DAYS AFTER RECEIPT OF NOTICE THEREOF BY PURCHASER (WHICH THIRTY (30) DAY PERIOD
SHALL BE EXTENDED IF THE DEFAULT CANNOT REASONABLY BE CURED WITHIN SAID THIRTY
(30) DAY PERIOD, PROVIDED PURCHASER IS PROCEEDING WITH DUE DILIGENCE TO CURE
SAME), SELLER SHALL, AS ITS SOLE AND EXCLUSIVE REMEDY, HAVE THE RIGHT TO
TERMINATE THIS AGREEMENT AND RETAIN ALL OR PORTION OF THE DEPOSIT AS LIQUIDATED
DAMAGES, AND NOT AS A PENALTY (WHICH LIQUIDATED DAMAGES SHALL BE EQUAL TO THE
PRODUCT OF THE DEPOSIT, MULTIPLIED BY A FRACTION, THE NUMERATOR OF WHICH SHALL
BE THE CONSIDERATION AS ADJUSTED PURSUANT TO SECTION 2.3 AND THE DENOMINATOR OF
WHICH SHALL BE THE CONSIDERATION SET FORTH IN SECTION 2.2(a) HEREOF), AND
THEREAFTER, EXCEPT WITH RESPECT TO THOSE MATTERS EXPRESSLY STATED TO SURVIVE
TERMINATION OF THIS AGREEMENT, NEITHER PARTY SHALL HAVE ANY FURTHER LIABILITY
HEREUNDER. SELLER AND PURCHASER ACKNOWLEDGE AND AGREE THAT THE DAMAGES BY REASON
OF PURCHASER'S DEFAULT WILL BE EXTREMELY DIFFICULT AND IMPRACTICABLE TO
ASCERTAIN. THEREFORE, SELLER AND PURCHASER AGREE THAT THE DEPOSIT, AS ADJUSTED
HEREBY, REPRESENTS A REASONABLE ESTIMATE OF SELLER'S DAMAGES.
26
----------------- --------------------
Seller's Initials Purchaser's Initials
ARTICLE 10. SURVIVAL.
10.1 Except as to those matters expressly stated to survive closing of
title hereunder, delivery and acceptance of the deed and/or Assignment and
Assumption Agreement, Pre-Paid Lease, Building Lease and/or Pre-Paid Sublease at
Closing shall be deemed to constitute full compliance by Seller with all of the
terms, covenants and conditions on Seller's part to be performed.
10.2 To the extent of any conflict between the terms of this Agreement
which survive Closing and the terms of the Pre-Paid Lease, Building Lease or
Pre-Paid Sublease or other closing document, the terms of this Agreement shall
control.
ARTICLE 11. NOTICES.
11.1 Subject to the further provisions of this Article 11, whenever it
is provided herein that any notice, demand, request, consent, approval or other
communication shall or may be given to either of the parties by the other, it
shall be in writing and, any law or statute to the contrary notwithstanding,
shall not be effective for any purpose unless same shall be given or served by
registered or certified mail, postage prepaid, return receipt requested, or by a
recognized overnight mail carrier (public or private) addressed as follows, or
by personal delivery to the following addresses:
If to Seller: TOYS "R" US, INC.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President -
Real Estate, Design and Construction
with a copy to: TOYS "R" US, INC.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President -
Real Estate Counsel
If to Purchaser: OFFICE DEPOT, INC.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President - Real Estate
27
with a copy to: OFFICE DEPOT, INC.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Real Estate - Legal Department
or at such other address as either party may from time to time designate by
notice to the other as herein provided.
11.2 Any notice hereunder shall be deemed to have been given or served
on the date on which such notice is delivered to the party intended; delivered
to the then designated address of the party intended; rejected at the then
designated address of the party intended; or upon inability to deliver because
of changed address of which no notice was given. Notices may be given by a
party's attorney or other representative.
ARTICLE 12. ASSIGNABILITY.
12.1 This Agreement may not be assigned by Purchaser without Seller's
prior consent, provided, however, that Purchaser may (i) designate, without
consent by Seller, Office Depot of Texas, L.P., a Delaware limited partnership
and/or Office Depot of Indiana, L.P., a Delaware limited partnership as
assignee, lessee or purchaser at Closing with respect to any Property, provided
Purchaser executes a Guaranty in the form of EXHIBIT N attached hereto, or (ii)
designate, without consent by Seller, the entities identified on EXHIBIT M
annexed hereto ("PERMITTED DESIGNEES") as assignees, lessees or purchasers at
Closing with respect to any Property, so that, in either event, the Deed,
Assignment and Assumption Agreement, Pre-Paid Lease, Building Lease or Pre-Paid
Sublease, as the case may be, for such Property may be delivered to, or entered
into with, Purchaser's designees.
ARTICLE 13. MISCELLANEOUS.
13.1 This Agreement may be executed in counterparts, each of which
shall be deemed an original. The signature of a party to any counterpart may be
attached to any other counterpart. Any counterpart to which is attached the
signatures of all parties shall constitute an original of this Agreement.
13.2 This Agreement, the Preliminary Statement and Exhibits annexed
hereto and hereby made a part hereof constitute the entire understanding between
the parties hereto and all prior agreements between the parties with respect to
the subject matter hereof are deemed to be merged herein.
13.3 This Agreement and the rights and obligations of the parties
hereunder shall be governed by and construed, interpreted and enforced in
accordance with the internal laws of the State of New Jersey (without giving
effect to the principles thereof relating to conflicts of law), except to the
28
extent the laws of the State where a Property is located are required to apply.
Any legal action or proceeding with respect to this Agreement may be brought in
the courts of the State of New Jersey or of the United States sitting in the
State of New Jersey.
13.4 If either party brings an action at law or in equity to enforce or
interpret this Agreement, the prevailing party in such action shall be entitled
to recover reasonable attorney's fees and court costs for all stages of
litigation, including, but not limited to, appellate proceedings, in addition to
any other remedy granted.
13.5 The rule of strict construction shall not apply to this Agreement.
This Agreement has been prepared by Seller and its professional advisors and
reviewed and modified by Purchaser and its professional advisors. Seller,
Purchaser and their separate advisors believe that this Agreement is the product
of all of their efforts, that it expresses their agreements, and that it should
not be interpreted in favor of or against either Seller or Purchaser merely
because of their efforts in preparing it.
13.6 If any clause or provision of this Agreement is held to be
illegal, invalid or unenforceable, or the application thereof to any person or
circumstance shall to any extent be illegal, invalid or unenforceable, under
present or future laws effective during the term hereof or of any provisions
hereof which survive Closing, then and in any such event, it is the express
intention of the parties hereto that the remainder of this Agreement, or the
application of such clause or provision other than to those as to which it is
held illegal, invalid or unenforceable, shall not be affected thereby, and each
clause or provision of this Agreement and the application thereof shall be
legal, valid and enforceable to the fullest extent permitted by law.
13.7 Each party agrees that at any time or from time to time upon
written request of the other party, it will execute and deliver all such further
documents and do all such other acts and things as may be reasonably required to
confirm or consummate the within transaction.
13.8 Seller agrees at all times to reasonably cooperate with
Purchaser's efforts to obtain any permits, licenses variances and/or approvals
with respect to Purchaser's operation and/or occupation of any Property and to
promptly execute and/or file any application, request, consent or other document
reasonably requested by Purchaser and/or to appear at any public hearings, if
required. Purchaser shall, except as otherwise provided in this Agreement,
reimburse Seller any reasonable out-of-pocket costs and expenses incurred by
Seller in cooperating with Purchaser in accordance with this Section 13.8. The
provisions hereof shall survive Closing.
13.9 This Agreement shall apply to, inure to the benefit of and be
binding upon and enforceable against the parties hereto and their respective
successors, permitted assigns, heirs, executors, administrators and legal
representatives to the same extent as if specified at length throughout this
Agreement.
29
13.10 The term "DAYS" shall be deemed to mean calendar days. If the
date for performance of any action or for the expiration of any time period
shall fall on a weekend or a holiday honored by the federal government, such
date of performance or expiration shall be extended until the next business day.
13.11 The headings inserted at the beginning of each paragraph are for
convenience of reference only and shall not limit or otherwise affect or be used
in the construction of any of the terms or provisions hereof. The plural shall
include the singular and the singular, the plural, wherever the context so
requires. The use of any one gender shall include all others.
13.12 This Agreement shall not be modified or amended unless such
amendment is set forth in writing and executed by both Seller and Purchaser with
the formalities hereof.
13.13 Between the Execution Date and the date of Closing, except as
otherwise expressly provided herein, neither Seller nor Purchaser shall (and
each party shall cause its respective agents, employees, attorneys and advisors
including, without limitation, financial institutions to not) disclose, make
known, divulge, disseminate or communicate the Consideration or any of the terms
of this Agreement or this transaction or any agreement, document or
understanding pertinent to the transaction contemplated by this Agreement or the
Properties, except (a) as required by law, (b) to the applicable party's
employees and advisors involved in the subject transaction, and (c) by
Purchaser, the non-financial terms hereof to Permitted Designees. The provisions
of this Section 13.13 shall survive the termination of this Agreement.
13.14 Any public statements, announcements or press releases relating
to this Agreement or the transaction contemplated herein shall be jointly
prepared by Seller and Purchaser prior to any public statements, announcements
or press releases being made.
13.15 The parties hereto acknowledge that Seller may elect to exchange
any Property qualifying for tax-free exchange under Section 1031 of the Internal
Revenue Code of 1986 (the "CODE"). Purchaser hereby agrees to take such steps as
Seller may reasonably require in order to complete a tax-deferred exchange,
including, without limitation, paying all or a portion of the Consideration to a
third party. In connection herewith, Purchaser shall not be obligated to incur
any costs or expenses greater than those Purchaser would have incurred had
Seller not elected to effect an exchange. In no event shall Purchaser be
obligated to acquire title to any other property, whether by deed, lease or
contract right, for the benefit of Seller or its assignee, and in no event shall
any such tax-free exchange delay Closing, otherwise adversely affect Purchaser,
or be a condition precedent to the Closing.
30
ARTICLE 14. ENVIRONMENTAL
14.1 DEFINITIONS.
(a) "APPLICABLE LAW" means any and all federal, state,
municipal or other governmental statutes, laws, rules, regulations, legally
enforceable guidelines and case law.
(b) "DISCHARGED" means released, leaked, discharged or
emitted.
(c) "HAZARDOUS SUBSTANCES" means any substance, waste or
material defined by Applicable Law as hazardous or toxic, or as pollution, a
pollutant, contamination or a contaminant (other than asbestos containing
materials which is addressed in Section 4.6(a) hereof).
14.2 Purchaser may, prior to March 31, 2004, deliver notice to Seller
(which notice shall include a copy of any report or study obtained by Purchaser)
of Hazardous Substances discovered on the Properties in concentrations requiring
removal or remediation in accordance with Applicable Laws related to Hazardous
Substances. Except to the extent removal or remediation of such Hazardous
Substances is the obligation of a lessor or other third-party under the
Governing Agreements, Seller shall, prior to Closing, remove or remediate such
Hazardous Substances, in accordance with Applicable Law, and in such manner as
will not materially interfere with Purchaser's ability to use the subject
Property for retail use, provided however, if the cost to remove or remediate
Hazardous Substances at any one Property (including any costs or expenses Seller
has incurred, or is obligated to incur, to remove or remediate asbestos
containing materials in accordance with Section 4.6(a) hereof), is estimated by
a qualified environmental engineer, consultant or contractor to cost in excess
of Five Hundred Thousand Dollars ($500,000.00), Seller may, by notice to
Purchaser (accompanied by a reasonably detailed estimate from such engineer,
consultant or contractor), terminate this Agreement with respect to such
Property and neither party shall have any further obligations hereunder with
respect to said Property. Purchaser may supersede and void Seller's notice of
termination if, within ten (10) days after receipt of Seller's notice of
termination, Purchaser agrees in writing, by notice to Seller, that Purchaser
shall pay the reasonable costs and expenses of such removal or remediation
actually incurred by Seller in excess of Five Hundred Thousand Dollars
($500,000.00) to Seller from time to time, within ten (10) days after demand, as
incurred by Seller. If removal or remediation of such Hazardous Substances is
the obligation of a lessor or other third party, Seller will make demand and use
good faith efforts to cause such lessor or third party to perform such removal
or remediation prior to Closing (however, failure of such lessor or third party
to complete such removal or remediation prior to Closing shall not delay Closing
hereunder).
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14.3 Seller shall indemnify, defend and hold Purchaser and its
officers, directors, shareholders, employees and affiliates harmless against any
liabilities, losses, claims, expenses or costs (including, without limitation,
legal fees) of any nature arising from, or related to, Hazardous Substances
discharged on any of the Properties by Seller, its agents, employees or
contractors during the time same were owned or operated by Seller or any of its
affiliates.
14.4 Seller shall, at Purchaser's option, assign, transfer or otherwise
do whatever is necessary to permit Purchaser to enforce any rights which Seller
or any of its affiliates has under any of the Leases for any of the Properties
which address third-party liability for Hazardous Substances or a violation by
third-parties of any Applicable Law related to Hazardous Substances, including,
without limitation, the right of Seller or any of its affiliates to enforce any
indemnity or any breach of such Leases, including any representations and
warranties.
14.5 Notwithstanding anything to the contrary contained herein, the
terms of this Article 14 shall survive the Closing or termination of this
Agreement.
[Balance of page intentionally left blank]
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[SIGNATURE PAGE ATTACHED TO PURCHASE AND SALE AGREEMENT DATED MARCH ___, 2004
BETWEEN OFFICE DEPOT, INC. AND TOYS "R" US, INC. AND ITS AFFILIATED COMPANIES]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
PURCHASER: OFFICE DEPOT, INC.
By:
---------------------------------
Name:
----------------------------
Title:
----------------------------
SELLER: TOYS "R" US, INC.
By:
---------------------------------
Name:
----------------------------
Title:
----------------------------
TOYS "R" US-PENN, INC. TOYS "R" US-NY LLC
By: Toys "R" Us -Delaware, Inc.
its managing member
By: By:
------------------------------- ---------------------------------
Name: Name:
-------------------------- ----------------------------
Title: Title:
-------------------------- ----------------------------
TOYS "R" US-MASS., INC. TOYS "R" US-TEXAS LLC
By: Toys "R" Us -Delaware, Inc.
its managing member
By: By:
------------------------------- ---------------------------------
Name: Name:
-------------------------- ----------------------------
Title: Title:
-------------------------- ----------------------------
TOYS "R" US-OHIO, INC. TOYS "R" US-DELAWARE, INC.
By: By:
------------------------------- ---------------------------------
Name: Name:
-------------------------- ----------------------------
Title: Title:
-------------------------- ----------------------------
33
LIST OF EXHIBITS
Exhibit A-1.1 - Owned Properties
Exhibit A-1.2 - Side by Side Owned Properties
Exhibit A-2.1 - Leases and Leased Properties
Exhibit A-2.2 - Leases and Side by Side Leased Properties
Exhibit A-3 - Leases and Rental Rate Properties
Exhibit A-4 - Surplus Property Locations
Exhibit A-5 - Seller Entities
Exhibit B-1 - Toys "R" Us Restriction
Exhibit B-2 - Office Depot Restrictions
Exhibit C-1 - Assignment and Assumption Agreement (Leased Properties)
Exhibit C-2 - Assignment and Assumption Agreement (Rental Rate Properties)
Exhibit D - Pre-Paid Lease
Exhibit E - Pre-Paid Sublease
Exhibit F - List of Omitted Information
Exhibit G - Building Lease
Exhibit H - ▇▇▇▇ of Sale
Exhibit I - Reciprocal Easement Agreement
Exhibit J - Non-Foreign Person Affidavit
Exhibit K - Subordination, Non-disturbance and Attornment Agreement
Exhibit L - Recognition Agreement
Exhibit M - Permitted Designees
Schedule 3-1
Exhibit N - Guaranty
LIST OF SCHEDULES
Schedule 1 - Material Physical Defects
Schedule 2 - Assessments
Schedule 3 - Delayed Due Diligence Properties
Exhibits and Schedule omitted - considered confidential and
proprietary
Schedule 3-2
