Exhibit 10.1
PURCHASE AND SALE
AGREEMENT
[Marquette Mall, Michigan City,
Indiana]
THIS PURCHASE AND SALE AGREEMENT
(this “Agreement”) is made as of the
day of
, 2004 by and between FIRST CAPITAL INCOME PROPERTIES, LTD. –
SERIES XI, an Illinois limited partnership (“Seller”)
and CANNON COMMERCIAL, INC., a California corporation
(“Purchaser”).
RECITALS :
A. Seller is the owner of certain
real estate in the County of LaPorte, State of Indiana, which
parcel is more particularly described on Exhibit A
attached hereto (the “Land”) upon which is located a
retail shopping center and office building commonly known as
Marquette Mall (the “Improvements”). The Land and the
Improvements are collectively referred to as the “Real
Property.”
B. Seller desires to sell, and
Purchaser desires to purchase, the Property (as such term is
hereinafter defined), each in accordance with and subject to the
terms and conditions set forth in this Agreement.
THEREFORE, in consideration of the
above Recitals, the mutual covenants and agreements herein set
forth and the benefits to be derived therefrom, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Purchaser and Seller agree as
follows:
Subject to and in accordance with
the terms and conditions set forth in this Agreement, Seller shall
convey to Purchaser (i) the Real Property together with any and all
of Seller’s rights, easements and privileges presently
thereon or appertaining thereto, (ii) all buildings and
improvements owned by Seller and located on the Real Property,
(iii) the leases of the Real Property as of the date hereof and
other leases entered into in accordance with this Agreement, and
all amendments thereto (the “Leases”) and all security
or other deposits held by Seller under the Leases; (iv) the
tangible personal property set forth on Exhibit B
attached hereto (subject to ordinary depletion) (the
“Tangible Personal Property”); (v) to the extent
assignable, any and all of the agreements and equipment leases set
forth on Exhibit C attached hereto and other
agreements entered into in accordance with this Agreement, and all
amendments thereto (the “Service Contracts”); and (vi)
(A) to the extent assignable, the right (if any) to use the name
“Marquette Mall”; and (B) to the extent assignable and
obtained, all certificates of occupancy and other permits, licenses
and certificates held by Seller with respect to the Property
(collectively, “Permits and Licenses”); (items (i)
through (vi) above are collectively referred to in this Agreement
as the “Property”). All of the foregoing expressly
excludes all property owned by the tenants or other users or
occupants of the Property and any refund of taxes or payment of
condemnation awards applicable to the period prior to the Closing
Date (as defined in Section 4.A hereof).
The purchase price to be paid by
Purchaser to Seller for the Property is Six Million Nine Hundred
Fifty Thousand and No/100 Dollars ($6,950,000.00) (the
“Purchase Price”). The Purchase Price shall be paid as
follows:
A. Earnest Money .
Purchaser shall, within two (2) Business Days from the date of this
Agreement, deliver to Chicago Title Insurance Company
(“Escrowee”) pursuant to the fully executed escrow
agreement attached as Exhibit J the amount of Two
Hundred Thousand and No/100 Dollars ($200,000.00) (“Earnest
Money”). If the transaction closes in accordance with the
terms of this Agreement, at Closing, the Earnest Money shall be
delivered by Escrowee to Seller as part payment of the Purchase
Price. If the transaction fails to close due to a default on the
part of Purchaser, the Earnest Money shall be delivered by Escrowee
to Seller as liquidated damages in accordance with Section 7.A
below. If the transaction fails to close due to a default on the
part of Seller, or if Purchaser terminates the Agreement in
accordance with the terms of Sections 3.B or 4.B (i)(k) or Article
10 of this Agreement, the Earnest Money shall be delivered by
Escrowee to Purchaser, subject to the provisions of Section 7.B
below. Interest earned on the Earnest Money shall be deemed as part
of the Earnest Money for purposes of this Agreement.
B. Cash at Closing .
At Closing, Purchaser shall pay to Seller, by wire transferred
current federal funds, an amount (the “Cash Payment”)
equal to the Purchase Price minus the Earnest Money, and plus or
minus, as the case may require, the closing prorations and
adjustments to be made pursuant to Section 4.C. below.
A. Title Examination;
Commitment for Title Insurance . Seller has delivered to
Purchaser a title insurance commitment (the “Title
Commitment”) with respect to the Real Property from Chicago
Title Insurance Company (the “Title Insurer”). Seller
has instructed the Title Insurer to deliver to Purchaser and Seller
copies of the Title Commitment and all instruments referenced in
Schedule B thereof.
B. Survey .
During the Review Period (as defined
in Article 10 below), Purchaser may employ a surveyor or surveying
firm to prepare a survey (the “Survey”) of the
Property. Purchaser shall instruct said surveyor to deliver a copy
of the Survey to Purchaser Seller and the Title Insurer. The cost
of the Survey shall be divided equally between Purchaser and
Seller, whether or not the transaction contemplated by this
Agreement closes. The provisions of the immediately preceding
sentence shall survive the termination of this
Agreement.
C. Title Objections; Cure of
Title Objections .
If the Title Commitment or Survey
discloses exceptions other than those exceptions which are listed
on Exhibit D , then, by the earlier of (i) expiration
of the Review Period or (ii) seven (7) Business Days after its
receipt of the same, Purchaser shall notify Seller of any such
exceptions to which it objects. Any such exceptions not objected to
by Purchaser as aforesaid shall become “Permitted
Exceptions”. If Purchaser objects to any such
exceptions,
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Seller shall have ten (10) days after it
receives notice of Purchaser’s objections to notify Purchaser
of which, if any, such exceptions Seller shall cause to be removed
by waiver or endorsement by the Title Insurer. If Seller fails to
notify Purchaser within said ten (10) day period that Seller will
remove such exceptions, Purchaser shall have the option, as its
sole and exclusive remedy, by written notice given no later than
five (5) Business Days after expiration of such ten (10) day
period, to either (a) waive the unsatisfied objections and close,
or (b) terminate this Agreement and obtain a return of the Earnest
Money. If Purchaser does not elect to terminate this Agreement,
Purchaser shall consummate the Closing and accept title to the
Property subject to all such exceptions, in which event, all such
exceptions shall be deemed Permitted Exceptions.
A. Closing Date . The
“Closing” of the transaction contemplated by this
Agreement (that is, the payment of the Purchase Price, the transfer
of title to the Property and the satisfaction of all other terms
and conditions of this Agreement) shall occur at the Chicago office
of the Title Insurer at 10:00 a.m. on the twentieth (20
th
) Business Day
(hereinafter defined) after the expiration of the Review Period.
The “Closing Date” shall be the date of Closing,
provided the Cash Payment has been wired to Title Insurer by 12:00
noon Central Time on that day; otherwise the Closing Date shall be
deemed to be the next Business Day. If the date for Closing above
provided for falls on a Saturday, Sunday or legal holiday, then the
Closing Date shall be the next Business Day.
B. Closing
Documents
(i) Seller . In
addition to the other items and documents required elsewhere under
this Agreement to be delivered to Purchaser at Closing, Seller
shall also execute and/or deliver (or cause to be delivered) to
Purchaser the following at Closing:
(a) a limited recordable warranty
deed (the “Deed”) of the Real Property to Purchaser, in
form acceptable to the Title Insurer, and as attached hereto as
Exhibit L , duly acknowledged, in proper form for
recording and subject only to the Permitted Exceptions as set forth
on Exhibit D-2 ;
(b) a bill of sale with respect to
the Tangible Personal Property in the form attached as
Exhibit E ;
(c) a letter advising tenants under
the Leases, service providers under the Service Contracts, and (x)
JT Marquette, L.L.C. (“JT”), successor-in-interest to
RCW, Inc. of Illinois, under that certain Common Area Agreement
dated as of December 1, 1992, recorded at the LaPorte County,
Indiana Recorder’s Office (the “County Recorder”)
as Document No. 92-21636, by and between Seller and JT, as amended
by that certain First Amendment to Common Area Agreement dated as
of March 30, 1999, recorded at the County Recorder as Document No.
99-07614 (as amended, the “Walgreens REA”), and (y)
Sears, Roebuck and Co. (“Sears”, and together with JT,
sometimes hereinafter referred to individually as an “REA
Party,” and, collectively, as the “REA Parties”),
under that certain Grant and Declaration of Easements and Covenants
dated as of May 5, 1999, by and between Seller and Sears, recorded
at the County Recorder as Document No. 99-18689 (the “Sears
REA”, and together with the Walgreen’s REA, sometimes
hereinafter referred to individually as the “REA,” and,
collectively, as the “REAs”), of the change in
ownership of the property in form attached as Exhibit
F-1 , Exhibit F-2 and Exhibit
F-3 (the “Notices”), respectively;
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(d) an Assignment and Assumption of
Leases and an Assignment and Assumption of Service Contracts, in
the forms attached as Exhibits G and H ;
(e) (i) the originals (or if not
available, copies) of the Leases and the Service Contracts and
amendments thereto, (ii) the originals (or if not available,
copies) of any Permits and Licenses, and (iii) all keys to the
Property in Seller’s possession;
(f) A Non-Foreign Certification in
the form attached as Exhibit I ;
(g) a closing statement to be
prepared by Seller and executed by Seller and Purchaser, setting
forth the prorations and adjustments to the Purchase Price as
required by Section 4.C. below;
(h) the updated schedule of past-due
rents for the Property, if any, as described in Section 4.C.(i)(b)
below;
(i) evidence of a termination of any
management agreement to which Seller is a party affecting the
Property;
(j) an affidavit of title,
containing such reasonable terms and conditions as may be required
by Title Insurer to enable Title Insurer to insure
Purchaser’s title to the Property in conformity with Section
3 of this Agreement;
(k) a written statement of Seller
setting forth, to Seller’s Knowledge (hereafter defined), any
changes in Seller’s representations and warranties which have
occurred since the effective date of such representations and
warranties. In the event Seller is unable to certify that there
have been no material adverse changes in Seller’s
representations and warranties, Purchaser shall have the right as
its sole remedy to terminate this Agreement, in which event the
Earnest Money shall be returned to Purchaser, and neither party
shall have any further obligations hereunder except for those
obligations which by their terms survive the termination of this
Agreement;
(l) Sales Disclosure Form (State
Form 46021);
(m) Responsible Property Transfer
Law Statement;
(n) All existing surveys,
blueprints, drawings, plans and specifications for or with respect
to the Property or any part thereof, to the extent the same are
owned by Seller and in Seller’s possession;
(o) Copies of all financial
information, rent rolls, operating expense and tax information and
history (in order to perform reconciliations at the end of the
existing year), tenant correspondence, repair logs, complaint logs
and other books and records relating to the tenants of the
Property, but excluding internal correspondence, analyses,
appraisals, projections or similar items, in each case to the
extent in Seller’s possession;
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(p) Such further instruments as may
be necessary to record the Deed; and
(q) Evidence reasonably satisfactory
to the Title Company respecting the due organization of Seller and
the due authorization and execution by Seller of this Agreement and
the documents required to be delivered hereunder.
(ii) Purchaser . At
Closing, Purchaser shall deliver or cause to be delivered to Seller
the following:
(a) the Cash Payment;
(b) the Assignment and Assumption of
Leases and Assignment and Assumption of Service Contracts, in the
forms attached as Exhibits G and H ;
(c) the closing statement referred
to in Section 4.B.(i)(g) above;
(d) a written statement of Purchaser
setting forth, to Purchaser’s Knowledge (hereafter defined),
any changes in Purchaser’s representations and warranties
which have occurred since the effective date of such
representations and warranties. In the event Purchaser is unable to
certify that there have been no material adverse changes in
Purchaser’s representations and warranties, Seller shall have
the right to terminate this Agreement, in which event the Earnest
Money shall be delivered to Seller, and neither party shall have
any further obligations hereunder except for those obligations
which by their terms survive the termination of this
Agreement;
(e) Sales Disclosure Form (State
Form 46021);
(f) Responsible Property Transfer
Law Statement.
(g) The Notices;
(h) Such further instruments as may
be necessary to record the Deed; and
(i) Evidence reasonably satisfactory
to Seller and the Title Company respecting the organization of
Purchaser and the due authorization and execution by Purchaser of
this Agreement and documents required to be delivered
hereunder.
C. Closing Prorations and
Adjustments
(i) The following items are to be
prorated or adjusted (as appropriate) as of 11:59 p.m. on the day
before the Closing Date and reprorated (if necessary) pursuant to
Section 4.C.(ii) below, it being understood that for purposes of
prorations and adjustments, Seller shall be deemed the owner of the
Property on the day before the Closing Date, and Purchaser shall be
deemed the owner of the Property on the Closing Date:
(a) real estate and personal
property taxes shall be prorated (on a per diem basis) on a cash
basis based on the calendar year of Closing (on the basis of the
most recent ascertainable tax or assessment bill if the current
bill is not then available). ù
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(b) the “minimum” or
“base” rent and estimated payments of “Percentage
Rent” (hereafter defined) collected from tenants under the
Leases; provided, however, that rent and all other sums which are
due and payable to Seller as of Closing by any tenant but
uncollected as of the Closing shall not be adjusted, but Purchaser
shall cause the rent and other sums for the period prior to Closing
to be remitted to Seller if, as and when collected, but only if
there is no deficiency in the then current rent. At Closing, Seller
shall deliver to Purchaser a schedule of all such past due but
uncollected rent and other sums owed by tenants. Purchaser shall
include the amount of such rent and other sums in the bills
thereafter submitted to the tenants in question after the Closing.
Purchaser shall not be obligated to commence a lawsuit to collect
any such sums or to evict any tenant for the failure to pay any
such sums but Seller shall retain the right to do so after the
Closing provided Seller may not seek to terminate any Lease or
evict any tenant.
(c) to the extent not set forth on
the schedule of uncollected rent described in Section 4.C.(i)(b)
above, “percentage” or “overage” rent
(“Percentage Rent”) that is (1) attributable to any
Percentage Rent lease year in which the Closing Date falls and (2)
not yet determinable as of the Closing Date (collectively,
“Current Year Percentage Rent”), shall be prorated as
follows: promptly upon receipt by Purchaser, Purchaser shall
furnish to Seller copies of all sales reports from tenants relative
to Current Year Percentage Rent, including, without limitation, all
sales reports with respect to any tenants whose Percentage Rent
lease years have expired as of the Closing but whose sales reports
were not delivered to Seller as of the Closing Date and sales
reports of any tenants whose Percentage Rent lease years expire
after the Closing, and the amount of any Current Year Percentage
Rent shall be payable in accordance with such tenant’s Lease
as existing as of the Closing Date, and Purchaser shall (to the
extent not paid to Seller by way of estimated payments from the
tenant prior to Closing) pay to Seller a portion of such rent based
upon the apportionment being made as of the Closing Date (in
proportion to the relative number of days in the subject Percentage
Rent Lease year occurring prior and subsequent to the Closing
Date), promptly after the date when such rent is received from the
tenant;
(d) Seller, as landlord under the
Leases, is currently collecting from tenants additional rent to
cover taxes, insurance, utilities, maintenance and other operating
costs and expenses incurred by Seller (such expenses, collectively
“Expenses” and such collections, collectively
“Collections”). Non-delinquent Collections for the
month in which Closing occurs shall be prorated in the same manner
as other rents. Within sixty (60) days after the Closing occurs,
Seller shall calculate the Expenses incurred and Collections
received for the year of Closing by Seller and shall prepare and
present to Purchaser for its review and approval, which approval
shall not be unreasonably withheld or delayed, a calculation of the
Collections received and Expenses incurred by Seller. Seller shall
make any necessary adjusting payment to Purchaser, due to any
over-collection by Seller, within forty five (45) days after
presentment to, and approval by, Purchaser of Seller’s
calculation and Purchaser shall make any necessary adjusting
payment to Seller, due to any under-collection by Seller, within
thirty (30) days after presentment to, and approval by Purchaser of
Seller’s calculation. Either party may inspect the
other’s books and records related to the Property to confirm
the calculation.
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(e) Seller is currently collecting
from JT an annual payment to cover JT’s share of common area
charges under the Walgreens REA (the “JT CAM”).
Non-delinquent JT CAM for the calendar year in which Closing occurs
shall be prorated based upon the number of days Seller and
Purchaser each own the Property during the calendar year in which
the Closing occurs. Any JT CAM which is due and payable to Seller
as of Closing but which is uncollected as of Closing shall not be
adjusted, but Purchaser shall cause any such delinquent JT CAM and
other sums attributable to the period prior to Closing to be
promptly remitted to Seller if, as and when collected. At Closing,
Seller shall retain the right to commence a lawsuit for the failure
of JT to pay any of the sums described in this clause (e) after
Closing, provided Seller may not seek to terminate the Walgreens
REA.
(f) If Closing occurs, Purchaser
shall be responsible for the payment of all Tenant Inducement Costs
(as hereinafter defined) and leasing commissions which become due
and payable after Closing (A) as a result of any renewal option or
expansion option with respect to existing Leases, which option has
not been exercised as of the date hereof, (B) under any new Leases
entered into after the date hereof to the extent such new Lease is
approved or deemed approved by Purchaser in accordance with Section
5.A hereof, or (C) which are set forth in a Lease, have not accrued
prior to Closing and are due and payable after Closing. Seller
shall be responsible for the payment of all Tenant Inducement Costs
and leasing commissions which are not described in clause (A), (B)
or (C) of the preceding sentence. If, as of the date of Closing,
Seller shall have paid any Tenant Inducement Costs or leasing
commissions for which Purchaser is responsible pursuant to the
foregoing provisions, Purchaser shall reimburse Seller therefor at
Closing. If, as of the Closing, Seller shall not have paid any
Tenant Inducement Costs or leasing commissions for which Seller is
responsible, Purchaser shall receive a credit at Closing in such
amounts. For purposes hereof, the term “Tenant Inducement
Costs” shall mean any out-of-pocket payments required under a
Lease to be paid by the landlord thereunder to or for the benefit
of the tenant thereunder which is in the nature of a tenant
inducement, including, specifically, without limitation, tenant
improvement costs, signage costs, lease buyout costs, and moving,
design, refurbishment and club membership allowances (but excluding
legal fees incurred in connection with the preparation and
negotiation of the lease). The term “Tenant Inducement
Costs” shall not include loss of income resulting from any
free rental period, it being agreed that Seller shall bear the loss
resulting from any free rent period until the date of Closing and
Purchaser shall bear such loss from and after the date of
Closing.
(g) the amount of all security
deposits held by Seller under the Leases shall be credited to
Purchaser at Closing;
(h) to the extent not paid directly
by tenants, gas, water, electric, telephone and all other utility
and fuel charges, fuel on hand (at cost plus sales tax), and any
deposits with utility companies assigned to Purchaser (to the
extent possible, utility prorations will be handled by final meter
readings obtained from the utility providers at least two (2)
Business Days preceding the Closing Date);
(i) amounts due and prepayments
under the Service Contracts assigned to Purchaser under this
Agreement;
(j) assignable license and permit
fees;
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(k) other similar items of income
and expenses of operation if and to the extent not paid or
reimbursed by Tenants.
(ii) If any item of income or
expense set forth in this Section 4.C. is subject to final
adjustment after Closing, then Seller and Purchaser shall make, and
each shall be entitled to, an appropriate reproration to each such
item promptly when accurate information becomes available. Any such
reproration shall be paid promptly in cash to the party entitled
thereto.
(iii) The terms of this Section
4.C., to the extent they call for adjustments, prorations or
payments after Closing (collectively, “Post-Closing
Adjustments”), shall survive the Closing.
(iv) Purchaser shall indemnify,
defend (with counsel reasonably acceptable to Seller) and hold
Seller and its employees and agents, and each of them, harmless
from and against any and all losses, claims, damages and
liabilities (including, without limitation, reasonable
attorneys’ fees incurred in connection therewith) arising out
of or accruing under the Sears REA and/or the Walgreens REA from
and after the date of Closing, and such indemnity shall survive the
Closing.
D. Transaction
Costs
Purchaser and Seller shall equally
divide any escrow fees. Seller shall pay the cost of the base title
insurance premium and any transfer tax fee or similar charge.
Purchaser shall pay any recording fee or similar charge, the cost
of any endorsements to the title insurance policy (including for
extended coverage), the cost of any loan policy, and the cost of
the Survey, if any. Seller and Purchaser shall, however, be
responsible for the fees of their respective attorneys.
E.
Possession
Upon Closing, Seller shall deliver
to Purchaser possession of the Property in accordance with the
terms of this Agreement.
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5.
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OPERATION
OF PROPERTY PRIOR TO CLOSING
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Notwithstanding anything to the
contrary contained herein:
A. Prior to the expiration of the
Review Period, Seller may modify, extend, renew, cancel or
terminate any Lease or Service Contract, and may enter into any new
lease or service contract without prior notice to, or consent of,
Purchaser; provided, however, Seller shall promptly notify
Purchaser after Seller’s execution of any such document.
After expiration of the Review Period, Seller may not modify,
extend, renew, cancel or terminate any Lease or Service Contract,
or enter into any proposed lease or service contract which is not
terminable as of Closing without Purchaser’s consent. Should
Seller seek in writing Purchaser’s consent for any such
action, Purchaser shall respond in writing to Seller (therein
giving consent or specifying the precise nature of
Purchaser’s objection to the action) within five (5) Business
Days of receipt of Seller’s request. If Purchaser does not
respond within said five (5) Business Day period, Purchaser shall
be deemed conclusively to have consented to the action requested by
Seller.
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B. From the date hereof until the
Closing or earlier termination of this Agreement, Seller shall not
remove (or direct the removal of) any item of Tangible Personal
Property except as may be required for repair or replacement or to
retire obsolete property.
A. Seller’s
Representations and Warranties : Seller represents and
warrants to Purchaser, that as of the date of this Agreement
(unless otherwise stated below):
(i) Seller is a duly formed and
validly existing limited partnership under the laws of
Illinois.
(ii) Seller has the full legal
right, power and authority to execute and deliver this Agreement
and all documents now or hereafter to be executed by it pursuant
hereto (collectively, the “Seller’s Documents”),
to consummate the transaction contemplated in this Agreement, and
to perform its obligations under this Agreement and the
Seller’s Documents. The person signing this Agreement on
behalf of Seller is authorized to do so.
(iii) Seller has not been served
with any litigation which is still pending with respect to the
Property that would adversely affect Seller’s ability to
perform its obligations under this Agreement, or that would
materially and adversely affect the financial condition or
operation of the Property, nor to Seller’s Knowledge, has any
such litigation been filed.
(iv) (a) To Seller’s Knowledge
as of the date hereof, (1) the information contained in the
schedule of leases attached to and made a part of this Agreement as
Exhibit L (the “Lease Schedule”) is
complete and accurate; and (2) there are
