-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OfF7NpFByQgEGOAb8ccCDqzn+SkkdbvEC/txwt5mYMP3SBm/Kurtp02Tzjpu+oTD lSXHfI+6pjfhtAhXXNjBLQ== 0000911708-02-000006.txt : 20020809 0000911708-02-000006.hdr.sgml : 20020809 20020808174850 ACCESSION NUMBER: 0000911708-02-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20020930 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 20020809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIME RETAIL INC/BD/ CENTRAL INDEX KEY: 0000911708 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 382559212 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13301 FILM NUMBER: 02723525 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST STREET 2: 1900 FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4102340782 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET STREET 2: 1900 FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 8-K 1 a8kdoc.txt FORM 8-K PERIOD ENDING 9/30/2002 - -------------------------------------------------------------------------------- United States Securities and Exchange Commission Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) July 26, 2002 PRIME RETAIL, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 0-23616 38-2559212 - ------------------------------- -------------------- ------------------- (State or other jurisdiction of (Commission File No.) (I.R.S. Employer incorporation or organization) Identification No.) 100 East Pratt Street Nineteenth Floor Baltimore, Maryland 21202 - ----------------------------------------------- --------------------- (Address of principal executive offices) (Zip Code) (410) 234-0782 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) No Change - -------------------------------------------------------------------------------- (Former name, former address, or former fiscal year, if changed since last report) - -------------------------------------------------------------------------------- PRIME RETAIL, INC. ITEM 2: Acquisition or Disposition of Assets On July 26, 2002, we completed the sale of six outlet centers for aggregate consideration of approximately $118.7 million to wholly-owned affiliates of PFP Venture LLC, a joint venture (the "PFP Venture") (i) 29.8% owned by PWG Prime Holdings LLC ("PWG") and (ii) 70.2% owned by FP Investment LLC ("FP"). FP is a joint venture between FRIT PRT Bridge Acquisition LLC ("FRIT"), a Delaware limited liability company, and us. Through FP, FRIT and us indirectly have ownership interests of 50.4% and 19.8%, respectively, in the PFP Venture. The six outlet centers (collectively, the "Bridge Loan Properties") that were sold are located in Anderson, California; Calhoun, Georgia; Gaffney, South Carolina; Latham, New York; Lee, Massachusetts and Lodi, Ohio and contain an aggregate of approximately 1,304,000 square feet of gross leasable area. Under the terms of the transaction, for a five-year period we will continue to manage, market and lease the Bridge Loan Properties for a fee on behalf of the PFP Venture. Reference is made to (i) the real estate sale agreement related to the Bridge Loan Properties attached hereto as Exhibit 10.1, and the first and second amendments to the real estate sale agreement which are attached hereto as Exhibit 10.2 and Exhibit 10.3, respectively, and, in each case, is incorporated by reference herein and (ii) the Press Release dated July 31, 2002 attached hereto as Exhibit 99.1 and incorporated by reference herein. Pro forma financial information, pursuant to the requirements of Article 11 of Regulation S-X, are included in this Current Report on Form 8-K under Item 7, "Financial Statements and Exhibits." ITEM 7: Financial Statements and Exhibits The following unaudited pro forma financial information and exhibits are filed as part of this report: B. Unaudited pro forma financial information. PAGE Pro Forma Consolidated Balance Sheet as of March 31, 2002 3 Pro Forma Consolidated Statement of Operations for the Three Months Ended March 31, 2002 4 Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2001 5 Notes to Pro Forma Consolidated Financial Statements 6 Pro Forma Consolidated Balance Sheet Prime Retail, Inc. As of March 31, 2002 (in thousands) (Unaudited)
Pro Forma Adjustments ------------------------------------------------------------------ Sale of Sale of Sale of Sale of Prime Bridge Loan Edinburgh Bellport Outlet Western Prime Retail, Properties Center Center Plaza Financings Retail, Inc. Inc.[G] [A], [H] [D], [H] [E], [H] [F], [H] & Other Pro Forma ------------ ----------- ----------- -------------- ----------- ------------ ----------- Assets Investment in rental property, net $ 1,053,981 $ (126,838) $ (7,370) $ 919,773 Cash and cash equivalents 6,090 (149) $ (306) 6 $ 17,523 [I] 5,641 (17,523)[J] Restricted cash 33,936 (3,076) (597) (1,161) 29,102 Accounts receivable, net 2,492 (950) 12 (96) 1,458 Deferred charges, net 9,350 (291) (305) 8,754 Assets held for sale 26,709 (26,709) Investment in partnerships 27,667 $ (1,471) 6,762 [J] 32,958 Other assets 3,263 (42) (4) 3,217 ----------- ---------- --------- -------- -------- -------- ---------- Total assets $ 1,163,488 $ (131,346) $ (27,604) $ (1,471) $ (8,926) $ 6,762 $1,000,903 =========== ========== ========= ======== ======== ======== ========== Liabilities and Shareholders' Equity Bonds payable $ 31,975 $ (7,000) $ 24,975 Notes payable 834,356 $ (111,225) $ (16,317) (2,972) $(10,341)[J] 693,501 Accrued interest 8,118 (834) (112) (183) 6,989 Real estate taxes payable 5,770 (810) (287) (52) 4,621 Accounts payable and other liabilities 23,661 (2,421) (382) (359) (420)[J] 20,079 ----------- ---------- --------- -------- -------- -------- ---------- Total liabilities 903,880 (115,290) (17,098) (10,566) (10,761) 750,165 Minority interests 1,487 1,487 Shareholders' equity: Series A preferred stock 23 23 Series B preferred stock 78 78 Common stock 436 436 Additional paid-in capital 709,373 709,373 Partners' capital (16,056) (10,506) $ (1,471) 1,640 26,393 [K] Distributions in excess of earnings (451,789) (8,870)[L] (460,659) ----------- ---------- --------- -------- -------- -------- ---------- Total shareholders' equity 258,121 (16,056) (10,506) (1,471) 1,640 17,523 249,251 ----------- ---------- --------- -------- -------- -------- ---------- Total liabilities and shareholders' equity $ 1,163,488 $ (131,346) $ (27,604) $ (1,471) $ (8,926) $ 6,762 $1,000,903 =========== ========== ========= ======== ======== ======== ========== ====================================================================================================================================
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements. Pro Forma Consolidated Statement of Operations Prime Retail, Inc. For the Three Months Ended March 31, 2002 (Amounts in thousands, except per share information) (Unaudited)
Pro Forma Adjustments -------------------------------------------------------------------------- Sale of Sale of Sale of Sale of Bellport Sale of Prime Prime Bridge Loan Hagerstown Edinburgh Outlet Western Retail, Retail, Properties Center Center Center Plaza Financings Inc. Inc. [M] [A], [N] [C], [N] [D], [N] [E], [N] [F], [N] and Other Pro Forma ------------- ------------ ------------ ---------- ---------- -------- ---------- --------- Revenues Base rents $ 31,198 $ (3,738) $ (202) $ (884) $ (286) $ 26,088 Percentage rents 1,660 (167) (114) (81) (9) 1,289 Tenant reimbursements 14,734 (1,808) (76) (389) (86) 12,375 Interest and other 3,058 (460) (129) (29) $ (218) (6) 761 [O] 2,977 -------- -------- ------ ------- ------ ------ ------- -------- Total revenues 50,650 (6,173) (521) (1,383) (218) (387) 761 42,729 Expenses Property operating 12,405 (1,501) (37) (291) (81) 10,495 Real estate taxes 4,639 (611) (33) (59) (52) 3,884 Depreciation and amortization 12,223 (1,637) (346) (60) 10,180 General and administrative 3,419 3,419 Interest 20,661 (3,624) (57) (378) (277) (433)[P] 15,892 Other charges 2,792 (393) (8) (61) 3 2,333 -------- -------- ------ ------- ------ ------ ------- -------- Total expenses 56,139 (7,766) (135) (1,135) (467) (433) 46,203 -------- -------- ------ ------- ------ ------ ------- -------- Loss before gain on sale of real estate (5,489) 1,593 (386) (248) (218) 80 1,194 (3,474) Gain on sale of real estate, net 7,170 (16,795) 9,625 -------- -------- ------ ------- ------ ------ ------- -------- Income (loss) from continuing operations 1,681 1,593 (17,181) 9,377 (218) 80 1,194 (3,474) Income allocated to preferred shareholders (5,668) (5,668) -------- -------- ------ ------- ------ ------ ------- -------- Net loss applicable to common shares $ (3,987) $ 1,593 (17,181) $ 9,377 $ (218) $ 80 $ 1,194 $ (9,142) ======== ======== ======= ======= ======= ====== ======= ======== Basic and diluted loss per share $ (0.09) $ (0.21) ======== ======== Weighted average common shares outstanding 43,578 43,578 ======== ======== ====================================================================================================================================
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements. Pro Forma Consolidated Statement of Operations Prime Retail, Inc. For the Year Ended December 31, 2001 (Amounts in thousands, except per share information) (Unaudited)
Pro Forma Adjustments -------------------------------------------------------------------------------- Foreclosure Sale of Sale of Sale of Sale of Sale of Bellport Sale of Prime Prime Bridge Loan Conroe Hagerstown Edinburgh Outlet Western Retail, Retail, Properties Center Center Center Center Plaza Financings Inc. Inc. [M] [A], [N] [B], [N] [C], [N] [D], [N] [E], [N] [F], [N] and Other Pro Forma ---------- ----------- ---------- ----------- ----------- --------- ----------- ---------- ---------- Revenues Base rents $ 141,116 $ (15,577) $ (2,607) $ (7,422) $ (3,475) $ (1,052) $ 110,983 Percentage rents 4,220 (313) (45) (296) (132) (27) 3,407 Tenant reimbursements 67,323 (8,120) (1,474) (3,377) (1,483) (406) 52,463 Interest and other 13,421 (1,616) (223) (745) (67) $ (661) (55) $ 2,502 [O] 12,556 --------- --------- -------- -------- -------- ------ -------- ------- --------- Total revenues 226,080 (25,626) (4,349) (11,840) (5,157) (661) (1,540) 2,502 179,409 Expenses Property operating 54,451 (6,485) (1,190) (2,211) (1,218) (330) 43,017 Real estate taxes 19,283 (2,468) (583) (1,099) (200) (205) 14,728 Depreciation and amortization 56,918 (7,426) (905) (2,825) (1,502) (331) 43,929 General and administrative 14,290 14,290 Interest 92,859 (14,567) (1,110) (3,436) (1,308) (791) (3,239)[P] 68,408 Other charges 22,646 (1,688) (270) (252) (210) (248) 19,978 Provision for asset impairment 63,026 63,026 --------- --------- -------- -------- -------- ------ -------- ------- --------- Total expenses 323,473 (32,634) (4,058) (9,823) (4,438) (1,905) (3,239) 267,367 --------- --------- -------- -------- -------- ------ -------- ------- --------- Loss before loss on sale of real estate and minority interests (97,393) 7,008 (291) (2,017) (719) (661) 365 5,741 (87,967) Loss on sale of real estate (1,063) (1,063) --------- --------- -------- -------- -------- ------ -------- ------- --------- Loss before minority interests (98,456) 7,008 (291) (2,017) (719) 365 (89,030) Loss allocated to minority interests 408 408 --------- --------- -------- -------- -------- ------ -------- ------- --------- Loss from continuing operations (98,048) 7,008 (291) (2,017) (719) (661) 365 5,741 (87,559) Income allocated to preferred shareholders (22,672) (22,672) --------- --------- -------- -------- -------- ------ -------- ------- --------- Net loss applicable to common shares $(120,720) $ 7,008 $ (291) $ (2,017) $ (719) $ (661) $ 365 $ 5,741 $(110,231) ========= ========= ======== ======== ======== ====== ======== ======= ========= Basic and diluted loss per share $ (2.77) $ (2.53) ========= ========= Weighted average common shares outstanding 43,578 43,578 ========= ========= ====================================================================================================================================
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements. Notes to Unaudited Pro Forma Consolidated Financial Statements Prime Retail, Inc. (in thousands) Basis of Presentation: The unaudited pro forma consolidated financial statements contained herein are based on the unaudited historical consolidated financial statements of Prime Retail, Inc. after giving effect to (i) the sale of six outlet centers (collectively, the "Bridge Loan Properties") on July 26, 2002, (ii) the disposition of other properties during 2002 and (iii) certain adjustments as described in the notes below. Unless the context otherwise requires, all references to "we," "us," "our," or the "Company" herein mean Prime Retail, Inc. and those entities owned or controlled by Prime Retail, Inc. [A] On July 26, 2002, we completed the sale of six outlet centers for aggregate consideration of $118,650 to wholly-owned affiliates of PFP Venture LLC, a joint venture (the "PFP Venture") (i) 29.8% owned by PWG Prime Holdings LLC ("PWG") and (ii) 70.2% owned by FP Investment LLC ("FP"). FP is a joint venture between FRIT PRT Bridge Acquisition LLC ("FRIT"), a Delaware limited liability company, and us. Through FP, FRIT and us indirectly have ownership interests of 50.4% and 19.8%, respectively, in the PFP Venture. The six outlet centers (collectively, the "Bridge Loan Properties") that were sold are located in Anderson, California; Calhoun, Georgia; Gaffney, South Carolina; Latham, New York; Lee, Massachusetts and Lodi, Ohio and contain an aggregate of approximately 1,304,000 square feet of gross leasable area ("GLA"). Under the terms of the transaction, for a five-year period we will continue to manage, market and lease the Bridge Loan Properties for a fee on behalf of the PFP Venture. Commencing on the date of sale, we will account for our ownership interest in the Bridge Loan Properties in accordance with the equity method of accounting. During the second quarter of 2002, we expect to record a non-recurring loss on disposition of $10,289 related to the write-down of the carrying value of the Bridge Loan Properties to their net realizable value based on the terms of the sale agreement. [B] Effective January 1, 2002, New York Life Investment LLC ("New York Life") foreclosed on Prime Outlets at Conroe (the "Conroe Center") and its related assets and liabilities, including $554 of cash and $15,467 of principal outstanding under a non-recourse mortgage loan, were transferred from our subsidiary that owned the Conroe Center to New York Life. No gain or loss was recorded in connection with the foreclosure action. The foreclosure of the Conroe Center did not have a material impact on our results of operations or financial condition because during 2001 all excess cash flow from the operations of the Conroe Center was utilized for debt service on its non-recourse mortgage loan. Our historical unaudited consolidated balance sheet as of March 31, 2002 already reflects the January 1, 2002 foreclosure sale of the Conroe Center and our historical unaudited consolidated statements of operations include the operating results of the Conroe Center through the date of disposition. Notes to Unaudited Pro Forma Consolidated Financial Statements Prime Retail, Inc. (in thousands) [C] On January 11, 2002, we completed the sale of Prime Outlets at Hagerstown (the "Hagerstown Center"), an outlet center located in Hagerstown, Maryland consisting of approximately 487,000 square feet of GLA, for $80,500 to an existing joint venture partnership (the "Prime/Estein Venture") between one of our affiliates and an affiliate of Estein & Associates USA, Ltd. ("Estein"), a real estate investment company. Estein and we have 70% and 30% ownership interests, respectively, in the Prime/Estein Venture. In connection with the sale transaction, the Prime/Estein Venture assumed first mortgage indebtedness of $46,862 on the Hagerstown Center (the "Assumed Mortgage Indebtedness"); however, our guarantee of the Assumed Mortgage Indebtedness remains in place. The net cash proceeds from the sale, including the release of certain funds held in escrow, were $12,113 after (i) a pay-down of $11,052 of mortgage indebtedness on the Hagerstown Center and (ii) closing costs. The net proceeds from this sale were used to prepay $11,647 of principal outstanding under our mezzanine loan (the "Mezzanine Loan"). In connection with the sale of the Hagerstown Center, we recorded a non-recurring gain on disposition of $16,795 in our historical operating results during the first quarter of 2002. Our historical unaudited consolidated balance sheet as of March 31, 2002 already reflects the January 11, 2002 sale of the Hagerstown Center. Additionally, our historical unaudited consolidated statements of operations include the operating results of the Hagerstown Center through the date of disposition. Effective on the date of disposition, we have accounted for our 30% ownership interest in the Hagerstown Center in accordance with the equity method of accounting. We are obligated to refinance the Assumed Mortgage Indebtedness on behalf of the Prime/Estein Venture on or before June 1, 2004, the date on which such indebtedness matures. Additionally, the Prime/Estein Venture's cost of the Assumed Mortgage Indebtedness and any refinancing of it are fixed at an annual rate of 7.75% for a period of 10 years. If the actual cost of such indebtedness should exceed 7.75% at any time during the ten-year period, we will be obligated to pay the difference to the Prime/Estein Venture. However, if the actual cost of such indebtedness is less than 7.75% at any time during the ten-year period, the Prime/Estein Venture will be obligated to pay the difference to us. The actual cost of the Assumed Mortgage Indebtedness is currently 30-day LIBOR plus 1.50%. The weighted-average interest rate of the Assumed Mortgage Indebtedness was approximately 3.62% and 5.83%, respectively, during the three months ended March 31, 2002 and the year ended December 31, 2001. [D] On April 1, 2002, we completed the sale of Prime Outlets at Edinburgh (the "Edinburgh Center"), an outlet center located in Edinburgh, Indiana consisting of approximately 305,000 square feet of GLA. The Edinburgh Center was sold to CPG Partners, L.P. for cash consideration of $27,000. The net cash proceeds from the sale were $9,551, after (i) repayment in full of $16,317 of existing first mortgage indebtedness on the Edinburgh Center and (ii) closing costs and fees. We used these net proceeds to make a mandatory principal payment of $9,178 on the Mezzanine Loan. Notes to Unaudited Pro Forma Consolidated Financial Statements Prime Retail, Inc. (in thousands) During the first quarter of 2002, we recorded a non-recurring loss on disposition of $9,625 in our historical operating results related to the write-down of the carrying value of the Edinburgh Center to its net realizable value based on the terms of the sales agreement. Effective March 31, 2002, the aggregate carrying value of the Edinburgh Center of $26,709 was reclassified to assets held for sale in our historical unaudited consolidated balance sheet. [E] On April 19, 2002, we completed the sale of Phases II and III of Bellport Outlet Center (the "Bellport Outlet Center"), an outlet center located in Bellport, New York consisting of approximately 197,000 square feet of GLA. We had a 51% ownership interest in the joint venture partnership that owned the Bellport Outlet Center. The Bellport Outlet Center was sold to Sunrise Station, L.L.C., an affiliate of one of our joint venture partners, for cash consideration of $6,500. At closing, recourse first mortgage indebtedness of $5,500, which was scheduled to mature on May 1, 2002, was repaid in full. To date we have received $522 of cash proceeds from the sale, which were used to make a mandatory principal payment of $502 on the Mezzanine Loan. Prior to the sale, we accounted for our ownership interest in the Bellport Outlet Center in accordance with the equity method of accounting. As of March 31, 2002, the carrying value of our investment in the Bellport Outlet Center was $1,471, which is classified as investments in unconsolidated partnerships in the historical unaudited consolidated balance sheet. In connection with the sale of the Bellport Outlet Center, we expect to incur a non-recurring loss on the sale of real estate of approximately $703 in our historical operating results during the second quarter of 2002. [F] On June 17, 2002, we completed the sale of the Shops at Western Plaza ("Western Plaza"), a community center located in Knoxville, Tennessee, consisting of approximately 205,000 square feet of GLA. Western Plaza was sold to WP General Partnership for cash consideration of $9,500. The net cash proceeds from the sale were $688, after (i) repayment of $9,467 (of which $2,467 was scheduled to mature on October 31, 2002) of existing recourse mortgage indebtedness on Western Plaza, (ii) payment of closing costs and fees and (iii) release of certain escrowed funds. We used these net proceeds to make a mandatory principal payment of $661 on our Mezzanine Loan. In connection with the sale of Western Plaza, we expect to record a non-recurring gain on disposition of $2,122 in our historical operating results during the second quarter of 2002. [G] Represents our historical unaudited consolidated balance sheet as of March 31, 2002. [H] Represents the elimination of the historical unaudited balance sheets of the indicated property as of March 31, 2002. Our historical unaudited consolidated balance sheet as of March 31, 2002 already reflects (i) the foreclosure sale of the Conroe Center on January 1, 2002 (see Note [B]) and (ii) the sale of a 70% ownership interest in the Hagerstown Center on January 11, 2002, including application of the net cash proceeds to pay down our Mezzanine Loan (see Note [C]). Notes to Unaudited Pro Forma Consolidated Financial Statements Prime Retail, Inc. (in thousands) [I] Represents our aggregate net cash proceeds from the disposition of properties after March 31, 2002 consisting of the following: Bridge Loan Properties (Note [A]) $ 6,762 Edinburgh Center (Note [D]) 9,551 Bellport Outlet Center (Note [E]) 522 Western Plaza (Note [F]) 688 ------- Total $17,523 ======= [J] Represents the application of the net cash proceeds from the disposition of properties subsequent to March 31, 20002 (see Note [I]) to (i) make mandatory principal payments on our Mezzanine Loan aggregating $10,341, (ii) make a $6,762 contribution to FP which was used to purchase an ownership interest in PFP Venture and (iii) pay other costs and fees of $420. [K] Reflects the reversal of the elimination of the historical partners' capital (see Note [E]) as of March 31, 2002 consisting of the following properties disposed subsequent to March 31, 2002: Bridge Loan Properties (Note [A]) $ 16,056 Edinburgh Center (Note [D]) 10,506 Bellport Outlet Center (Note [E]) 1,471 Western Plaza (Note [F]) (1,640) -------- Total $ 26,393 ======== [L] In connection with the disposition of properties (except for the Edinburgh Center) subsequent to March 31, 2002, we expect to incur a non-recurring loss on disposition of approximately $8,870 in our historical operating results during the three months ended June 30, 2002. Our historical operating results for the three months ended March 31, 2002 reflect a non-recurring gain of $16,795 and a non-recurring loss of $9,625 related to the dispositions of the Hagerstown Center (see Note [C]) and the Edinburgh Center (see Note [D]), respectively. The non-recurring loss on disposition of $8,870 is comprised of the following: Bridge Loan Properties (Note [A]) $(10,289) Bellport Outlet Center (Note [E]) (703) Western Plaza (Note [F]) 2,122 -------- Total $ (8,870) ======== [M] Represents our historical unaudited consolidated statement of operations for the period indicated. [N] Represents the elimination of the historical operating results of the indicated property through its date of disposition. Our historical unaudited consolidated statement of operations for the three months ended March 31, 2002 already reflects the impact of (i) the foreclosure sale of the Conroe Center on January 1, 2002 (see Note [B]) and (ii) the sale of the Hagerstown Center on January 11, 2002 (see Note [C]). Notes to Unaudited Pro Forma Consolidated Financial Statements Prime Retail, Inc. (in thousands) [O] Increase reflects the following:
Three Months Ended Year Ended Interest and Other Income March 31, 2002 December 31, 2001 ----------------------- ------------------------ Management fee income (i) $197 $1,144 Equity earnings in investment partnership (ii) 510 457 Interest subsidy income (iii) 54 901 ---- ------ Total $761 $2,502 ==== ======
Notes: (i) We are entitled to receive fees equivalent to 4% and 3.5% (as to the latter, annual maximum of $700 subject to certain conditions) of rental revenues collected in exchange for providing management services to the Hagerstown Center and the Bridge Loan Properties, respectively. These pro forma adjustments reflect what our management fees for these properties would have been if the dispositions had occurred at the beginning of the period indicated and are based on estimated rental revenues collected for these properties during the periods indicated. (ii) Commencing on their respective dates of disposition, we account for our ownership interests in the joint venture partnerships that own the Hagerstown Center and the Bridge Loan Properties in accordance with the equity method of accounting. These pro forma adjustments reflect what our equity earnings in these properties would have been if the dispositions had occurred at the beginning of the period indicated. (iii) We have guaranteed a 7.75% interest rate on the $46,862 of mortgage indebtedness assumed by the Prime/Estein Venture in connection with the January 11, 2002 sale of the Hagerstown Center (see Note [C]). In connection with such guarantee we are obligated to pay the difference if the actual interest rate exceeds 7.75% or entitled to receive the difference if the actual interest rate is less than 7.75%. These pro forma adjustments represent the interest subsidy income we would have received if the disposition of the Hagerstown Center had occurred at the beginning of the period presented. [P] Decrease reflects the pro forma interest expense savings resulting from the repayment of our Mezzanine Loan with certain of the net cash proceeds from the disposition of assets, assuming all dispositions had occurred at the beginning of the period indicated. For the three months ended March 31, 2002, the interest expense savings was calculated as follows: Principal repayments on Mezzanine Loan (Note [J]) $10,341 Weighted average interest rate 14.75% ------- Annual interest savings $ 1,525 Multiply by 25% ------- Interest savings $ 381 Add: Hagerstown Center interest savings (i) 52 ------- Total interest savings $ 433 ======= Notes to Unaudited Pro Forma Consolidated Financial Statements Prime Retail, Inc. (in thousands) For the year ended December 31, 2001, the interest expense savings was calculated as follows: Principal repayments on Mezzanine Loan (ii) $21,988 Weighted average interest rate 14.73% ------- Interest savings $ 3,293 ------- Notes: (i) Represents interest savings assuming the Mezzanine Loan repayment of $11,647 made on January 11, 2002 with net proceeds from the sale of the Hagerstown Center had (see Note [C]) occurred on January 1, 2002. (ii) Includes $10,341 of principal repayments on the Mezzanine Loan made with net proceeds from the disposition of assets subsequent to March 31, 2002 (see Note [J]) and a $11,647 principal repayment on the Mezzanine Loan made on January 11, 2002 with the net proceeds from the sale of the Hagerstown Center (see Note [C]). PRIME RETAIL, INC. C. Exhibits 10.1 Real Estate Sale Agreement, dated January 9, 2002, by and between (i) Shasta Outlet Center Limited Partnership, The Prime Outlets at Calhoun Limited Partnership, Carolina Factory Shops Limited Partnership, Latham Factory Stores Limited Partnership, The Prime Outlets at Lee Limited Partnership, Prime Lee Development Limited Partnership and Buckeye Factory Shops Limited Partnership, collectively, as sellers and (ii) PWG Capital, LLC, as purchaser. 10.2 First Amendment to Real Estate Sale Agreement dated March 27, 2002. 10.3 Second Amendment to Real Estate Sale Agreement dated April 5, 2002. 99.1 Press Release issued by the Company on July 31, 2002 regarding completion of sale of six outlet centers on July 26, 2002. 99.2 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.3 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. PRIME RETAIL, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PRIME RETAIL, INC. --------------------- (Registrant) Date: August 8, 2002 By: /s/ Robert A. Brvenik -------------------------------- Name: Robert A. Brvenik Title: Executive Vice President, Chief Financial Officer and Treasurer PRIME RETAIL, INC. INDEX TO EXHIBITS Number Description 10.1 Real Estate Sale Agreement, dated January 9, 2002, by and between (i) Shasta Outlet Center Limited Partnership, The Prime Outlets at Calhoun Limited Partnership, Carolina Factory Shops Limited Partnership, Latham Factory Stores Limited Partnership, The Prime Outlets at Lee Limited Partnership, Prime Lee Development Limited Partnership and Buckeye Factory Shops Limited Partnership, collectively, as sellers and (ii) PWG Capital, LLC, as purchaser. 10.2 First Amendment to Real Estate Sale Agreement dated March 27, 2002. 10.3 Second Amendment to Real Estate Sale Agreement dated April 5, 2002. 99.1 Press Release issued by the Company on July 31, 2002 regarding completion of sale of six outlet centers. 99.2 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.3 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. EX-10 3 ex101.txt EXHIBIT 10.1 REAL ESTATE SALE AGREEMENT REAL ESTATE SALE AGREEMENT FOR SIX COMMERCIAL RETAIL PROPERTIES LOCATED IN ANDERSON, CALIFORNIA, known as PRIME OUTLETS AT ANDERSON CALHOUN, GEORGIA, known as PRIME OUTLETS AT CALHOUN, GAFFNEY, SOUTH CAROLINA, known as PRIME OUTLETS AT GAFFNEY, LATHAM, NEW YORK, known as PRIME OUTLETS AT LATHAM, LEE, MASSACHUSETTS, known as PRIME OUTLETS AT LEE, and LODI, OHIO, known as PRIME OUTLETS AT LODI, BY AND BETWEEN SHASTA OUTLET CENTER LIMITED PARTNERSHIP, a Delaware limited partnership (doing business in California as Anderson Outlet Center Limited Partnership) THE PRIME OUTLETS AT CALHOUN LIMITED PARTNERSHIP, a Delaware limited partnership, CAROLINA FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership LATHAM FACTORY STORES LIMITED PARTNERSHIP, a Delaware limited partnership THE PRIME OUTLETS AT LEE LIMITED PARTNERSHIP, a Delaware limited partnership, PRIME LEE DEVELOPMENT LIMITED PARTNERSHIP, a Delaware limited partnership BUCKEYE FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership, COLLECTIVELY, AS SELLERS AND PWG CAPITAL, LLC, a Delaware limited liability company, AS PURCHASER REAL ESTATE SALE AGREEMENT THIS REAL ESTATE SALE AGREEMENT ("Agreement") is made and entered into as of the 9th day of January, 2002 (the "Effective Date"), by and between Shasta Outlet Center Limited Partnership, a Delaware limited partnership doing business in the State of California as Anderson Outlet Center Limited Partnership (the "Anderson Seller"), The Prime Outlets at Calhoun Limited Partnership, a Delaware limited partnership, (the "Calhoun Seller"), Carolina Factory Shops Limited Partnership, a Delaware limited partnership(the "Gaffney Seller"), Latham Factory Stores Limited Partnership, a Delaware limited partnership (the "Latham Seller"), The Prime Outlets at Lee Limited Partnership, and Prime Lee Development Limited Partnership, both Delaware limited partnerships, (together, the "Lee Seller") and Buckeye Factory Shops Limited Partnership, a Delaware limited partnership, "Lodi Seller") (the Anderson Seller, the Calhoun Seller, the Gaffney Seller, the Latham Seller, the Lee Seller and the Lodi Seller are collectively referred to herein as "Seller") and PWG Capital, LLC, a Delaware limited liability company (the "Purchaser"). RECITALS: A. The Anderson Seller owns legal title in fee simple real property consisting of approximately 18.9 acres of land legally described in Exhibit A-1 hereto (the "Anderson Site") located at 1699 State Highway 273 in the City of Anderson, County of Shasta, State of California. B. The Calhoun Seller owns legal title in fee simple real property consisting of approximately 37.8 acres of land legally described in Exhibit A-2 (the "Calhoun Site") located at 455 Outlet Road (Interstate 75 and Route 53) in the City of Calhoun, County of Gordon, State of Georgia. C. The Gaffney Seller is the ground lessee under that certain Lease Agreement dated December 19, 1996 by and between Cherokee County, South Carolina, as ground lessor, and Gaffney Seller, as ground lessee, as amended by First Amendment to that Certain Lease Agreement between Cherokee County, South Carolina and Carolina Factory Shops Limited Partnership dated December 19, 1996 (as amended, the "Gaffney Ground Lease"), which pertains to real property consisting of approximately 53.3 acres of land legally described in Exhibit A-3 (the "Gaffney Site") located at Interstate 85 and Route 105 in the City of Gaffney, County of Cherokee, State of South Carolina. D. The Latham Seller owns legal title in fee simple real property consisting of approximately 6 acres of land legally described in Exhibit A-4 (the "Latham Site") located at 400 Old Loundon Road in the Town of Latham, County of Albany, State of New York. E. The Lee Seller owns legal title in fee simple real property consisting of approximately 218 acres of land legally described in Exhibit A-5 (the "Lee Site") located at 50 Water Street in the City of Lee, County of Berkshire, State of Massachusetts. F. The Lodi Seller owns legal title in fee simple real property consisting of approximately 48.17 acres of land legally described in Exhibit A-6 (the "Lodi Site") located at Interstate 71 and State Route 83 in the City of Lodi, County of Medina, State of Ohio. G. Seller is interested in selling, and Purchaser is interested in purchasing, the Anderson Site, the Calhoun Site, the Latham Site, the Lee Site, the Lodi Site and the Gaffney Seller's ground lease interest in the Gaffney Site (each of which, a "Site") in accordance with and subject to the terms of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties set forth in this Agreement, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Sale and Purchase. Subject to the terms and provisions of this Agreement, Seller agrees to sell, convey, and assign unto Purchaser, and Purchaser agrees to purchase from Seller all of the Anderson Site, the Calhoun Site, the Latham Site, the Lee Site and the Lodi Site, each of the foregoing in fee simple, as well as Gaffney Seller's ground lease interest in the Gaffney Site (collectively, the "Land"), together with all rights, privileges, easements, tenements, hereditaments, rights of way and appurtenances which belong or appertain to the Land, including, without limitation, Seller's rights (if any) to all minerals, oil, gas and other hydrocarbon substances on and under the Land, as well as all development rights, air rights, water, water rights and water stock, if any, relating to the Land (collectively, the "Appurtenances"), and all tangible and intangible property located at the Land and owned or held by Seller in connection with the Land or with the use thereof, including, without limitation, permits, authorizations, approvals, maps, surveys, plans, leases, licenses, rental contracts and agreements (collectively, the "Personal Property"). The Land and Appurtenances are hereinafter collectively referred to as the "Real Property". The Real Property and the Personal Property are hereinafter collectively referred to as the "Property". 2. Purchase Price: Earnest Money A. Total Purchase Price. The price to be paid for the Property (the "Purchase Price") is One Hundred Twenty Million Two Hundred Fifty Thousand and No/ 100 Dollars ($120,250,000.00) payable at Closing (as defined herein) in cash or wired funds, subject to adjustments and prorations. For purposes of transfer taxes, sales taxes and title insurance only, the Purchase Price shall be allocated among the Anderson Site, the Calhoun Site, the Gaffney Site, the Latham Site, the Lee Site and the Lodi Site in the manner set forth on Exhibit B. B. Earnest Money. Within five (5) days after the Effective Date of this Agreement, Purchaser shall deposit the sum of One Million and 00/100 Dollars ($1,000,000.00) (including any interest earned and accrued, the "Earnest Money"), in immediately available funds, into an escrow (the "Earnest Money Escrow") established with the National Business Unit of Chicago Title Insurance Company located in Washington, D.C. (the "Escrow Holder"), in accordance with the escrow agreement (the "Escrow Agreement") substantially in the form attached hereto as Exhibit C. In addition, provided that this Agreement has not been terminated on or before the conclusion of the Feasibility Period (defined below), Purchaser shall deposit an additional Five Hundred Thousand and No/100 Dollars ($500,000.00) with the Escrow Holder no later than three (3) business days after the expiration of the Feasibility Period (hereinafter defined), which, once deposited, shall also constitute Earnest Money for purposes hereof. All sums delivered to the Escrow Holder as Earnest Money shall be invested in a money market fund or in such other investment instrument or account designated by Purchaser and reasonably approved by Seller, and as more specifically addressed in the Escrow Agreement. At the Closing, the Earnest Money shall be applied to the Purchase Price. If the Earnest Money is returned to Purchaser pursuant to Section 3(C) or applied against the Purchase Price pursuant to Section 16, all interest earned on the Earnest Money shall be deemed to be income of Purchaser. 3. Feasibility Period. A. This Agreement shall be contingent upon Purchaser's satisfaction with the Property and the condition thereof and its suitability for Purchaser's intended use, as well as Purchaser's ability to finance the Property, as determined in Purchaser's sole and absolute discretion and judgment during the period commencing on the Effective Date and ending upon the later of (i) thirty-five days after the Effective Date or (ii) the date which is five (5) days after Seller shall have delivered to Purchaser Tenant Estoppels (as hereinafter defined) in compliance with the requirements of Section 8(E) hereof from Tenants representing at least fifty percent (50%) of the aggregate leased and occupied leasable area located in the Property, as defined in Section 8(E) hereof (the "Feasibility Period"). B. During the Feasibility Period, Purchaser shall have the right to obtain appraisals and physically inspect the condition of the Property and to conduct various studies and tests with respect to the Property that Purchaser, in its sole discretion, deems desirable, including, but not limited to, financing availability, economic feasibility studies, entitlement reviews and investigations, title and survey reviews, drainage and wetlands reviews and investigations, soil tests, engineering and structural tests and inspections, other physical site inspections, environmental and hazardous and toxic waste tests, and hydrology tests, as well as any other tests, studies or investigations it desires, but subject to the following: (1) Purchaser shall notify Seller not less than forty-eight (48) hours in advance of any entry, inspection, or test on the Property, and permit Seller to accompany Purchaser on any such entry, inspection, or test. (2) Purchaser shall promptly after completion of any entry, inspection or test, restore the Property, at its sole cost, to the condition which existed immediately prior thereto. (3) Purchaser assumes any risk of damage or destruction to property or injury to persons resulting from its surveys, studies, tests, engineering, structural and other investigations and environmental assessments of the Property , and agrees to defend, indemnify and save Seller harmless from and against all claims or demands, liabilities, costs, losses, damages, suits, proceedings and similar obligations (including without limitation, reasonable attorneys fees and costs) incurred directly on account of any loss, damage or injury to any person or property by reason of any act or omission of Purchaser, its consultants, agents, contractors, representatives and employees in conducting such surveys, studies, tests, investigations and assessments. (4) Purchaser agrees that if the need arises to notify under applicable laws any federal, state or local public agencies of any conditions on the Property, as a result of any findings in the environmental assessment or any other test, investigation or study performed by or for Purchaser, Purchaser shall immediately notify Seller and, to the extent consistent with applicable law, Seller, not Purchaser, shall make such disclosure as Seller deems appropriate. In no event shall this subsection require Purchaser to violate any obligation, duty or requirement of applicable law, and if Seller does not so notify such public agency in a timely manner after such notice, Purchaser may do so if required. (5) Purchaser shall take no action which would permit the imposition of a mechanic's or material man's lien against the Property, and Purchaser, by execution of this Agreement, hereby indemnifies and holds harmless Seller from and against any and all liability, cost or expense (including reasonable counsel fees and court costs) imposed upon or asserted against Seller as a result of any activity on the Property by Purchaser, its agents, representatives, contractors or employees. C. At any time during the Feasibility Period, Purchaser, in Purchaser's sole and absolute discretion, may, upon written notice to Seller, terminate this Agreement, in which event, all of the rights, duties, and obligations of the parties shall immediately terminate, and this Agreement shall be null, void and of no further force or effect, except that any obligations of Purchaser under this Section 3 or elsewhere in this Agreement to either restore the Property or to indemnify and hold harmless Seller shall survive the termination of this Agreement. If, in Purchaser's sole judgment and discretion, Purchaser decides that it does not wish to proceed with the purchase, Purchaser may give Seller written notice of such fact on or before the end of the Feasibility Period and in accordance with the provisions of this Agreement. Upon termination prior to the end of the Feasibility Period in accordance with the provisions of this Agreement, the Escrow Holder shall immediately return the Earnest Money to Purchaser. D. The parties acknowledge that the six Sites shall be conveyed to Purchaser as a single "all or nothing" transaction, and Purchaser shall have no ability to terminate this Agreement as to a particular Site. E. If Purchaser does not notify Seller in accordance with the provisions of this Agreement, on or before the end of the Feasibility Period, of Purchaser's election to proceed to Closing, this Agreement shall automatically terminate, and the Earnest Money shall be refunded to Purchaser promptly following the expiration of the Feasibility Period. F. Seller shall cooperate reasonably with Purchaser and Purchaser's agents, employees, and representatives in connection with Purchaser's inspections, tests, surveys and studies of the Property, but shall not be obligated to incur any costs or liability in connection therewith, except as expressly set forth to the contrary in this Agreement. G. Before entering onto the Property to conduct physical tests pursuant to this Agreement, Purchaser or its testing agent shall provide to Seller a certificate of insurance evidencing a policy of commercial general liability insurance, in form and content satisfactory to Seller in its reasonable opinion, naming Seller as an additional insured, insuring Purchaser against any liability arising out of any injury to or death of any person, or damage to any property, proximately caused by Purchaser, its agents, representatives, contractors or employees. Such policy shall have limits of at least $500,000 as to personal injury or death, and $2,000,000 as to property damage, and shall have deductible amounts of no more than $10,000 for each occurrence. 4. Closing. A. "Closing" Defined. The term "Closing" shall mean the date on which the Property is conveyed to the Purchaser and the Purchaser makes payment of the Purchase Price to Seller. For purposes hereof, the conveyance shall be made by: (i) a grant deed substantially in the form attached hereto as Exhibit D-1 (the "Anderson Deed") of the Anderson Site recorded in the Official Records of Shasta County, California; (ii) a limited warranty deed substantially in the form attached hereto as Exhibit D-2 (the "Calhoun Deed") of the Calhoun Site recorded in the Official Records of Gordon County, Georgia; (iii)an assignment of the Gaffney Seller's leasehold interest pursuant to the Gaffney Ground Lease and quitclaim deed, substantially in the form attached hereto as Exhibit D-3 (the "Gaffney Ground Lease Assignment") in the Gaffney Site recorded in the Official Records of Cherokee County, South Carolina; (iv) a special warranty deed substantially in the form attached hereto as Exhibit D-4 (the "Latham Deed") of the Latham Site recorded in the Official Records of Albany County, New York; (v) a special warranty deed substantially in the form attached hereto as Exhibit D-5 (the "Lee Deed") of the Lee Site recorded in the Official Records of Berkshire County, Massachusetts; (vi) a special warranty deed substantially in the form attached hereto as Exhibit D-6 (the "Lodi Deed") of the Lodi Site recorded in the Official Records of Medina County, Ohio (the Anderson Deed, the Calhoun Deed, the Gaffney Ground Lease Assignment, the Latham Deed, the Lee Deed and the Lodi Deed shall collectively be referred to herein as the "Deeds"); (vii)a bill of sale relating to all Personal Property substantially in the form attached hereto as Exhibit E (the "Bill of Sale"). B. Closing Date. The Closing shall take place on a date mutually agreed upon by the parties, which date shall be no later than thirty (30) days following the conclusion of the Feasibility Period (the "Outside Closing Date"). Notwithstanding the foregoing, Purchaser shall have the right to extend the Outside Closing Date for an additional thirty (30) days; provided, however, that in order to extend the Outside Closing Date, Purchaser must give Seller written notice of its intent to do so at least five (5) days prior to the original Outside Closing Date. So long as Seller has posted with the Escrow Holder all executed documents required by Section 16(A) hereof and has otherwise satisfied its Closing requirements hereunder (except for the execution and delivery of a closing statement, which the parties agree shall be agreed upon and executed immediately prior to Closing) on or before the original Outside Closing Date, Purchaser shall post additional Earnest Money in the amount of Five Hundred Thousand and No/100 Dollars ($500,000.00) in addition to the Earnest Money in the amount of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) to be posted by Purchaser pursuant to Section 2(B) hereof, all of which shall be non-refundable to Purchaser after the conclusion of the Feasibility Period, except in the case of a Seller default hereunder or as otherwise specifically set forth herein. If, at any time after the conclusion of the Feasibility Period, Seller posts with the Escrow Holder all executed documents required by Section 16(A) hereof and has otherwise satisfied its Closing requirements hereunder (except for the execution and delivery of a closing statement, which the parties agree shall be agreed upon and executed immediately prior to Closing), all Earnest Money shall be delivered to Seller by the Escrow Holder to be applied against the Purchase Price at Closing or to be refunded to Purchaser if Seller fails to close hereunder. 5. Title Commitments and Policies; Surveys. A. Title Commitments. Within twenty (20) days after the Effective Date, Seller shall obtain an ALTA title commitment pertaining to each Site dated on or after the Effective Date, which will subsequently be brought forward and dated to the date of Closing, together with copies of documents of record and all exceptions to title to the Property as indicated therein and a judgment search and UCC search of each Seller (collectively the "Commitments"), prepared by the National Business Unit of Chicago Title Insurance Company located in Washington, D.C. (the "Title Company"). The Title Company shall also deliver to Purchaser a copy of the Commitments. If requested by Purchaser, the Title Company shall provide for reinsurance by another title insurer of a certain portion of the Purchase Price, as mutually agreed by Seller, Purchaser and the Title Company. (1) The "Permitted Title Exceptions" shall be defined as (a) matters set forth in the Official Records that affect any Property to which Purchaser does not object as provided below, but excluding any liens (other than a lien or charge caused by Purchaser, its agents, representatives, contractors or employees), (b) non-delinquent real estate taxes for the current tax year and subsequent years, (c) zoning and other restrictions and prohibitions imposed by governmental authorities, (d) rights of tenants under leases and occupancy agreements, (e) the Gaffney Ground Lease, (f) matters of title related to those certain Special Source Revenue Bonds issued by Cherokee County, South Carolina (the "Gaffney Development Bonds"), (g) two life estates granted to certain individuals who currently reside on a portion of the Lee Site, (h) a utility easement to be granted by Gaffney Seller or its ground lessor to Piedmont Natural Gas, or any affiliate thereof, which easement will be granted after the date of this Agreement but prior to Closing and which does not materially and adversely affect the improvements located on the Gaffney Site, and (i) any other title matter related to any particular Site set forth in the Commitments to which Purchaser does not object within ten (10) business days of receipt of the Commitment for such Site. Purchaser shall notify Seller in writing ("Purchaser's Title Objection Notice") of any defects to title with respect to each Site within ten (10) business days of Purchaser's receipt of the Commitment related to such Site. Upon receipt of Purchaser's Title Objection Notice, Seller shall undertake to remedy all defects by the following: (i) If the Property or any part thereof shall be subject to any judgment, mortgage or mechanics lien that is not a Permitted Title Exception, Seller shall pay the same at or prior to Closing or make other arrangements reasonably satisfactory to Purchaser to remove such lien as an exception to the Title Policy. (ii) If any other title defects shall exist on the Property, other than a Permitted Title Exception, Seller shall have ten (10) business days after receipt of Purchaser's Title Objection Notice to notify Purchaser in writing ("Seller's Title Response Notice") of Seller's election to either (a) use commercially reasonable efforts (provided that the aggregate cost therefore shall not exceed $10,000 per property) to remedy the defects within thirty (30) days following the date of Seller's Title Response Notice (the "Title Cure Period") (in which case Closing shall, if necessary, be extended to accommodate such thirty (30) day Title Cure Period), or (b ) not remedy the defects. (2)(a) If Seller elects to remedy the title defects, but is unable to remedy such defects (despite exercising commercially reasonable efforts so to do (subject to the cost limitation set forth in the immediately preceding paragraph)) within the thirty (30) day Title Cure Period, Purchaser shall have the option, exercisable by written notice to Seller within five (5) days following expiration of the Title Cure Period, of the following: (i) Proceeding to Closing, taking such title as Seller can deliver, without reduction of the Purchase Price, or (ii) Terminating this Agreement, in which event the Escrow Holder shall immediately return to Purchaser the Earnest Money, whereupon all rights, liabilities and obligations of the parties hereto shall terminate and this Agreement shall be null, void and of no further force or effect, except as otherwise expressly set forth to the contrary in this Agreement. (b) If Seller elects not to remedy the title defects, Purchaser shall have the option, exercisable by written notice to Seller within ten (10) business days following the date of Seller's Title Response Notice, of the following: (i) Proceeding to Closing, taking such title at Closing as Seller can deliver, without reduction of the Purchase Price, or (ii) Terminating this Agreement, in which event the Escrow Holder shall immediately return to Purchaser the Earnest Money, whereupon all rights, liabilities and obligations of the parties hereto shall terminate and this Agreement shall be null, void and of no further force or effect, except as otherwise expressly set forth to the contrary in this Agreement. (3) At Closing, Seller and Purchaser shall deliver all instruments and assurances as may be reasonably required by the Title Company to induce the Title Company to omit from its insurance policy any defect in or objection or exception to title other than the Permitted Title Exceptions, but in no event will Seller or Purchaser be obligated to deliver or provide any affidavits or indemnifications to the Title Company, except for a FIRPTA affidavit, standard owner's affidavit and GAP indemnity, to the extent required by the Title Company. Seller shall also deliver all documents which it, during the Title Cure Period, affirmatively agreed in writing to deliver, and any failure by Seller to deliver any such document which Seller agreed to deliver during the Title Cure Period shall constitute a default hereunder, notwithstanding anything to the contrary contained in Section 5(A)(2)(a)(ii) above. B. Surveys. Within thirty (30) days after the Effective Date, Seller shall obtain an ALTA survey of each of the Anderson Site, the Calhoun Site, the Gaffney Site, the Latham Site, the Lee Site and the Lodi Site (the "Surveys") which shall have such detail as reasonably required by Purchaser and the Title Company. Purchaser shall include all objections to matters of survey in its Title Objection Notice made pursuant to Section 5(A) hereof; provided, however, that, to the extent Purchaser makes such objections based on existing surveys (delivered pursuant to Section 7 below) rather than current Surveys (to be delivered pursuant to this Section 5(B)) because a current Survey is not yet available at the time the Title Objection Notice is delivered, Purchaser may deliver additional objections to "newly discovered survey matters" related to any Site within ten (10) business days of receipt of the new Survey related to such Site, and Purchaser shall respond to such objections in the same manner as Seller shall respond to title objections pursuant to Section 5(A) . For purposes hereof, "newly discovered survey matters" shall mean any matter disclosed on a Survey delivered pursuant to this Section 5(B) which does not appear on any existing survey delivered pursuant to Section 7 hereof. 6. Title Policy. In connection with the disbursement by Title Company of the Purchase Price at Closing, if required by Purchaser, Title Company shall deliver to Purchaser, in connection with the disbursement by the Title Company of the Purchase Price, an ALTA Owner's Policy of Title Insurance pursuant to the Commitments, with a liability limit equal to the allocated Purchase Price for each of the six Sites, subject, however, to the Permitted Title Exceptions, showing fee simple title to each of the Anderson Site, the Calhoun Site, the Latham Site, the Lee Site and the Lodi Site and a valid ground lessee's interest in the Gaffney Ground Lease, all vested in Purchaser (the "Title Policy"). 7 . Seller's Deliveries: Inspection. To the extent within Seller's possession or reasonable control and to the extent that Seller has not already done so, Seller shall make available the following to Purchaser no later than five (5) days after the Effective Date: A. Copies of all existing title insurance policies which relate to the Property; B. Copies of all existing surveys of the Property; C. Copies of operating statements for the years 1999, 2000 and year-to-date 2001 (through September, 2001) for each Property (the "Operating Statements"); D. Copy of the most recent real property and personal property tax bills related to each Property; E. Rent roll for each Property as of November 1, 2001 (the "Rent Roll"); F. Aging report with respect to each Property as of October 31, 2001 (the "Aging Report"); G. Copies of the leases for retail space with respect to each Property, along with any amendments, exhibits or letter agreements (including, without limitation, any agreement confirming the commencement date and/or expiration date of any such lease) executed with respect thereto (the "Tenant Leases"); H. Copy of the Gaffney Ground Lease; I. Copy of documents related to the Gaffney Development Bonds; J. Copies of equipment leases related to any Property; and K. Environmental Site Assessments related to any Property. Notwithstanding any other provision of this Agreement to the contrary, all of such items and documents shall be returned to Seller forthwith upon termination of this Agreement for any reason. 8. Seller's Covenants. Between the Effective Date and the date of the Closing, Seller shall: A. Except as needed to cause the Property to remain in compliance with all laws, ordinances, or other requirements, not alter any Property in any material manner without first obtaining Purchaser's prior written consent, which Purchaser may not unreasonably withhold, condition or delay. B. Maintain the Property in a manner generally consistent with the manner that Seller has maintained the Property prior to the Effective Date hereof. C. After the Feasibility Period expires, and assuming Purchaser has not terminated this Agreement prior to the expiration of the Feasibility Period, not enter into any leases, contracts or agreements that will bind Purchaser or affect or encumber the Property after Closing without first obtaining Purchaser's prior written consent, which Purchaser shall not unreasonably withhold, condition or delay. Prior to the expiration of the Feasibility Period, Seller may enter into (i) leases without Purchaser's consent, provided it gives Purchaser notice of the new leases at least ten (10) calendar days prior to Landlord's execution, and (ii) contracts and other agreements needed to operate the Property ("Contracts"), provided such contracts and other agreements are terminable on no more than thirty (30) days notice. To the extent that Purchaser specifically requests that a Contract be terminated prior to Closing, Seller shall make commercially reasonable efforts to do so but shall incur no monetary liability in conjunction therewith. D. Deliver to Purchaser each and every notice or communication Seller receives from any governmental body relating to the Property from and after the Effective Date upon Seller's receipt of the same. E. Procure from tenants leasing space at any property pursuant to a Tenant Lease (the "Tenants"), representing at least eighty percent (80%) of the aggregate leased and occupied leasable area located on the Property, an estoppel certificate substantially in the form set forth on Exhibit S hereto (the "Tenant Estoppels"). For purposes of this Section 8(E), a Tenant Estoppel shall count toward the foregoing eighty percent (80%) requirement so long as the Tenant Estoppel confirms that the applicable lease is in full force and effect and alleges no material defaults by the Seller, and for purposes hereof, a Tenant Estoppel shall count toward the eighty percent (80%) requirement notwithstanding (a) any dispute regarding CAM reconciliations, prorations or disbursements or (b) disputes regarding minor maintenance issues. For purposes of determining aggregate leased and occupied leasable area, "Temporary Tenants" whose entire lease term is for a period of less than one (1) year shall be excluded; however, Tenants whose entire lease term is longer than one year, but who may have less than one (1) year remaining on their lease terms or who may be month-to-month Tenants following the expiration of a lease term of more than one (1) year, shall not be considered Temporary Tenants. Seller shall deliver each Tenant Estoppel to Purchaser promptly upon receipt. If Purchaser concludes that any Tenant Estoppel should not be counted toward the eighty percent (80%) target for the reasons set forth above, Purchaser shall make such objection in writing and deliver it to Seller within seventy-two (72) hours following its receipt thereof. In the event that Seller is not able to deliver the required eighty percent (80%) of Tenant Estoppels on or before the Closing Date for any reason (and Seller shall not be obligated to expend funds in order to satisfy this requirement), Purchaser may terminate this Agreement, and Purchaser's sole remedy for Seller's failure to fulfill its obligations pursuant to this Section 8(E) shall be to receive the return of its Earnest Money, which, if so terminated, shall be refunded to Purchaser. F. Cause Prime Retail, L.P. to enter into a master lease agreement, which shall be delivered to Purchaser at Closing, to be executed by both Prime Retail, L.P. and Purchaser at closing, in form and substance reasonably acceptable to both Seller and Purchaser, related to approximately 19,712 square feet of space in the shopping center located on the Anderson Tract formerly occupied by Vanity Fair. Such master lease agreement shall be substantially on the same terms and conditions as the lease with Vanity Fair, provided, however, that such master lease shall contain all of the following terms and conditions: (a) Prime Retail, L.P.'s base rental obligation (exclusive of additional rent) shall be $8.90 per square foot of space, or $175,436.80 per year; (b) to the extent that the Vanity Fair lease contains limits or caps on the amount of additional rent to be paid by the tenant thereunder, all such limits and caps shall be included in the master lease agreement; (c) Prime Retail, L.P. shall have the ability to assign or sublet such space to any tenant not reasonably objectionable to Purchaser; (d) all tenant upfitting costs or leasing commissions related to any such assignment or subletting shall be entirely at Prime Retail, L.P.'s expense; (e) Prime Retail, L.P. shall deliver a security deposit in the amount of $175,436.80 to Purchaser at Closing; and (f) the master lease shall have a term of five (5) years, commencing on the Closing Date. Purchaser and Seller shall use commercially reasonable efforts to agree upon the terms of the master lease agreement on or before the conclusion of the Feasibility Period. 9. Representations and Warranties. To induce Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser that as of the Effective Date and through the date of Closing: A. Anderson Seller's Due Organization. The Anderson Seller is a duly organized limited partnership, validly subsisting under the laws of the State of Delaware, and the Anderson Seller is duly qualified and authorized to transact business in the State of California. B. Calhoun Seller's Due Organization. The Calhoun Seller is a duly organized limited partnership, validly subsisting under the laws of the State of Delaware, and the Calhoun Seller is duly qualified and authorized to transact business in the State of Georgia. C. Gaffney Seller's Due Organization. The Gaffney Seller is a duly organized limited partnership, validly subsisting under the laws of the State of Delaware, and the Gaffney Seller is duly qualified and authorized to transact business in the State of South Carolina. D. Latham Seller's Due Organization. The Latham Seller is a duly organized limited partnership, validly subsisting under the laws of the State of Delaware, and the Latham Seller is duly qualified and authorized to transact business in the State of New York. E. Lee Seller's Due Organization. The Lee Seller is a duly organized limited partnership, validly subsisting under the laws of the State of Delaware, and the Lee Seller is duly qualified and authorized to transact business in the State of Massachusetts. F. Lodi Seller's Due Organization. The Lodi Seller is a duly organized limited partnership, validly subsisting under the laws of the State of Delaware, and the Lodi Seller is duly qualified and authorized to transact business in the State of Ohio. G. Capacity and Authority. Each Seller has the right, power, legal capacity and authority to enter into and perform its obligations under this Agreement and the documents, instruments and certificates made or delivered by it pursuant to this Agreement, and the consummation by Seller of the transactions contemplated hereunder and thereunder have been, or will prior to Closing be, duly authorized by all necessary partnership or limited liability company action on the part of Seller. H. Legally Binding Obligations. The terms and provisions of this Agreement and all documents, instruments and certificates made or delivered from time to time by any Seller hereunder constitute valid and legally binding obligations of such Seller enforceable against such Seller in accordance with the terms hereof and thereof. I. Foreign Persons. No Seller is a "foreign person" (as defined under the Foreign Investment in Real Property Tax Act and the regulations promulgated thereunder). J. Tenant Leases; Contracts; Tenant Improvement Costs. Seller represents and warrants that, to Seller's knowledge, except as indicated on Exhibit H hereto, it has kept, observed and performed all of the material obligations to be performed on a timely basis by Seller as landlord under the Tenant Leases, as ground lessee under the Gaffney Ground Lease and, except as indicated on Exhibit J hereto, and as owner under the Contracts. All individual repair or maintenance work orders for individual tenants required under written agreements made by Seller with any tenant (other than their respective Leases) and all tenant improvement costs in connection with the Tenant Leases, which Purchaser shall assume in conjunction herewith are also set forth in Exhibit H attached hereto (the "Assumed Tenant Improvement Costs"), for which Purchaser shall receive a credit against the Purchase Price at Closing in the manner and to the extent set forth in Section 17(h) hereof. Notwithstanding the foregoing, Purchaser agrees that Seller shall not have breached this representation and warranty with respect to any matter disclosed to Purchaser in a Tenant Estoppel delivered to Purchaser prior to Closing. K. Contracts. Seller has heretofore delivered to Purchaser true, correct and complete copies of all of the Contracts (including all amendments thereto). Except for the Contracts set forth on Exhibit I hereto, there exist no written management, maintenance, operating, service, commission or other similar contracts affecting the Property which will survive the Closing and be binding on Purchaser. To Seller's knowledge, no material default or breach exists on the part of Seller or any service contractor under any Contract, except as set forth on Exhibit J . Seller shall use commercially reasonable efforts to obtain any consents required from the applicable contract parties with respect to the assignment to Purchaser of each Contract and if any such consent cannot be obtained and the applicable contracting party refuses to perform for Purchaser, then Seller shall remain liable for such contract and with respect to Contracts covering motor vehicles shall be entitled to retain or have returned to Seller any motor vehicles covered by such Contact. L. Obligations Under Contracts. Seller represents and warrants that it has not entered into any written or oral service, management, maintenance or any other agreement affecting the Property that has not been fully performed and paid by Seller except as indicated on Exhibit J, or terminated by Seller (without cost to Purchaser) on or before the Closing Date, other than the Contracts. M. Records. Except to the extent governed by the Management Agreement described in Section 39 hereof, Seller covenants that, for a period of one (1) year after the Closing Date, on Purchaser's request and with reasonable notice, Seller shall make all of its records relating to the Property available to Purchaser for inspection and copying, provided that Purchaser shall reimburse Seller for its reasonable out-of-pocket expenses in connection therewith. N. Gaffney Ground Lease. Seller represents and warrants that it has not entered into, terminated, altered, amended or otherwise modified, supplemented or granted consent under the Gaffney Ground Lease, except as otherwise disclosed to Purchaser in writing. Seller has delivered true, correct and complete copies of the Gaffney Ground Lease, and, to Seller's knowledge, there are no breaches or violations under such document by the Gaffney Seller (or the applicable ground lessee thereunder) or the Ground Lessor, or any conditions which, with notice or the passage of time could ripen into a default thereunder. O. Utilities. Seller has not received written notice, nor is Seller aware of, of any pending or threatened reduction or elimination of any utility service. P. No Insurance or Fire Code Violations. Except as set forth in Schedule 9(P) hereto, Seller has not received any written notices from any insurance company or board of fire underwriters alleging any defects or inadequacies in the Property or any part thereof, nor is Seller aware of any such allegations. Q. Leasing Commissions. All leasing commissions or referral fees attributable to the primary term of all Tenant Leases have been or will, by Closing, be paid in full. No brokerage or similar fee shall be due or payable on account of the exercise of, without limitation, any renewal, extension or expansion options arising under any Tenant Leases, except for the leasing commissions set forth in Exhibit K , the obligations for which shall be Purchaser's responsibility upon Closing. R. Unpaid Bills. All bills and claims for water and sewer service and for labor performed or materials furnished to or for the benefit of the Property, or assessments for street or other improvements or any other service or labor which could give rise to a lien for the period on or prior to the Closing Date have been paid in full on or prior to the Closing Date. There are no liens for unpaid water and sewer service charges, mechanics' or materialmen's liens, brokers' liens, or assessments for street or other improvements or for any other service or labor which could give rise to a lien (whether or not perfected) on or affecting the Property, except for the Permitted Exceptions. S. Compliance with Other Agreements. Except as to those matters for which consents are to be sought pursuant to the provisions hereof, neither this Agreement nor anything provided to be done hereunder, including, without limitation, the transfer, assignment and sale of the Property violates any written or oral contract, agreement or instrument which affects Seller or the Property or any part thereof and which will become binding on Purchaser after the Closing Date, except as otherwise set forth in Schedule 9(S) hereto. T. Litigation. There are no actions or proceedings pending in which Seller is a named party or are, to the best of Seller's knowledge, threatened against Seller or the Property before any court or administrative agency or arbitrator or mediator, which do or will materially adversely affect the Property, except as disclosed on Exhibit L attached hereto. U. Seller's Deliveries. To Seller's knowledge, the documents delivered by Seller pursuant to Section 7 hereof are accurate in all material respects as of the date set forth thereon, except as otherwise set forth herein. V. Streets; Eminent Domain. Except as set forth on Exhibit M, Seller has received no notice or any existing, proposed or contemplated plans to widen, modify or realign any street or highway, or any existing or proposed or contemplated eminent domain proceedings which would affect the Property in any way whatsoever, or the present use, size, alignment or location of any streets adjacent to the Property, or any planned public improvements which may be constructed on the surface of or underneath the streets in the vicinity of the any buildings located on the Property. W. Environmental. Seller will deliver to Purchaser, pursuant to Section 7 hereof, true and correct copies of all environmental reports and environmental site assessments prepared by or on behalf of Seller (or in Seller's possession) in connection with the Property. Except as disclosed to Purchaser in writing or in the documents delivered by Seller pursuant to Section 7 hereof, Seller has not received, nor is Seller aware of, any written complaint, order, citation or notice with regard to air emissions, water discharges, noise emissions, or the release or threatened release of any Hazardous Materials, or with respect to any other environmental, health or safety matters affecting the Property, or any part thereof, and except as disclosed to Purchaser, has no notice of any such air emissions, water discharges, noise emissions or Hazardous Materials in, on, over, under or adjacent to the Property. Except as disclosed to Purchaser in writing or in the documents delivered by Seller pursuant to Section 7 hereof, Seller has not filed any notice under any federal or state law indicating past or present treatment, storage or disposal of any Hazardous Material on the Property, or into the indoor or outdoor environment of the Property. The foregoing representations and warranties do not cover the presence of Excluded Materials (hereafter defined) from whatever the source on, in or under the Property. "Excluded Materials" shall mean (x) Hazardous Materials, other than asbestos containing materials, which may be present in lawful amounts and stored in accordance with applicable Laws as components of paints (excluding lead-based paints), glues, fuels, photocopy equipment supplies, janitorial supplies, cleaning agents and solvents in quantities stored, found or maintained for similar uses in retail shopping centers similar to the Buildings, and (y) mastic containing asbestos and asbestos containing materials in floor or ceiling tile that are not friable. X. Personal Property. The Personal Property is free and clear of liens and encumbrances other than those set forth on Exhibit N. There is no personal property, including without limitation furniture, fixtures or supplies, owned by Seller and used by Seller on a substantially exclusive basis in connection with the use and operation of the Property except for the Personal Property and those items expressly excluded from the Property hereunder. Seller covenants that any such additional personal property discovered by Purchaser or Seller after Closing shall be transferred to Purchaser at no additional cost hereunder free and clear of all liens, claims and encumbrances other than the Permitted Exceptions and liens and encumbrances relating to those equipment leases and equipment financing security interests constituting part of the Contracts. Y. Tenant Leases. All existing Tenant Leases are listed in the Rent Roll. Seller has delivered, prior to the date hereof, to Purchaser true and complete copies of all Tenant Leases including, but not limited to all amendments and notices of commencement and renewal and all correspondence related thereto. To Seller's knowledge, the Rent Roll and Aging Report are accurate as to the information set forth therein in all material respects as of the date set forth therein. Except as set forth in the Rent Roll and the Tenant Leases or matters of record disclosed in the Title Commitments, Seller has not entered into any oral or written Tenant Leases, nor has Seller given any person (other than the Tenants named in the Rent Roll) any right of possession to the Property or any part thereof, and there are no other Tenant Leases or rights of possession. Except as set forth in the Rent Roll and the Tenant Leases, Seller has not given any concessions of any kind or character (including, without limitation, free or reduced rent, free or reduced parking, buy-out, finish out, moving, refurbishment, Tenant equity in the Property, cash payments to Tenants, lease assumptions and other concessions or allowances granted to induce a Tenant to enter into a lease, or expand or renew a lease, (collectively, "Concessions") to any Tenant. No rent under any Tenant Lease has been paid more than thirty (30) days in advance of its due date by any Tenant. Except as set forth in Exhibit H, no tenant has any defense or offset against enforcement of the Lease by the landlord thereunder accruing after the Closing Date. The Tenant Leases described in the Rent Roll are in full force and effect (except as to tenants in bankruptcy who may assume or reject such Tenant Leases) and, except as set forth on the Rent Roll and the Aging Report, to Seller's knowledge, no breach exists in the payment of rents except as shown on the Rent Roll and Aging Report, no other default or breach exists on the part of any tenant thereunder except as disclosed to Purchaser in writing or identified on the Rent Roll and the Aging Report, and except as set forth in Exhibit H, Seller has not received any notice of any alleged default or breach on the part of Seller thereunder. A list of all security deposits (and a statement as to whether interest is payable thereon in accordance with the terms of the applicable Tenant Lease) shall be supplied along with the Rent Roll. Notwithstanding the foregoing, Purchaser agrees that Seller shall not have breached this representation and warranty with respect to any matter disclosed to Purchaser in a Tenant Estoppel delivered to Purchaser prior to Closing. Z. No Options. No commitment, obligation or agreement relating to the purchase, sale or transfer of the Property, including without limitation any right of first refusal, purchase option or redemption right, which would or could prevent Seller from completing the transfer of the Property hereunder or which would bind Purchaser subsequent to the Closing Date, except as set forth in Schedule 9(Z) hereto, has been granted to any Tenant or any other party (other than transfers of leasehold estates under the Tenant Leases and equipment leases constituting part of the Contracts). AA. Underlying Title Documents. To Seller's knowledge, there are no material violations by any party under any restrictions, easement or operating agreements, or similar reciprocal easement or operating agreements, with respect to any portion of the Property. BB. Gaffney Development Bonds. Seller has delivered true, correct and complete copies of all documents relating to the Gaffney Development Bonds. There are no breaches or violations under any of such documents by Gaffney Seller (or the applicable borrower thereunder), or any conditions which, with notice or the passage of time could ripen into a default thereunder. CC. Labor Issues. To Seller's knowledge, (1) no strikes or other material labor disputes are pending or threatened with respect to any portion of the Property; (2) there is no organizing activity involving the employees of Seller pending or threatened by any labor union or group of employees; (3) there are no representation proceedings pending or threatened, with the National Labor Relations Board; and (4) no labor organization or group of employees has made a pending demand for recognition. There are no complaints or charges against Seller pending with any governmental authority or arbitrator based on, arising out of, in connection with or otherwise relating to, the employment or termination of employment by Seller of any individual, except as set forth on Exhibit O. All employees of any Seller working at the Property (or any portion thereof) shall, at Closing, become employees of the manager of the applicable Property, and Purchaser shall not assume such employment contracts or liabilities relating to such employment at Closing. DD. Insurance Policies. All of Seller's insurance policies covering the Property, together with the name, title and phone numbers of all appropriate contacts, are listed on Exhibit P attached hereto. No notice has been received by Seller from the insurance company which issued any of such policies stating that any of such policies is not in full force and effect. The representations and warranties set forth in this Section 9 shall be true and correct as of the date of this Agreement, and shall be true and correct in all material respects on the date of Closing as if restated in full as of the date of Closing. The representations and warranties set forth in this Section 9 shall survive the Closing for a period of nine (9) months as to the status of facts as they exist on the Closing Date, it being understood that Seller makes no representations and warranties which would apply to changes occurring after the Closing. The words "to Seller's knowledge" as used in this Agreement means the actual knowledge of the following individual(s): Mark Hertz, Robert Brvenik, Frederick Meno and C. Allen Schroeder (only as to the representations and warranties made in Section 9(T) hereof), it being understood that the foregoing individuals shall not personally be liable for any inaccurate or incomplete statement or information. 10. Disclaimer of Certain Representations or Warranties by Seller. A. Except as otherwise expressly provided in this Agreement, Seller does not make any representations, guaranties, promises, statements, assurances or warranties of any kind or nature whatsoever, express or implied, as to the financial condition, business, operations, assets, liabilities or prospects of the Property or any of its operations, of any kind or nature whatsoever. B. Without limiting the generality of the foregoing, except as expressly set forth in this Agreement, Purchaser hereby acknowledges and agrees that it is purchasing the Property in its present "AS IS/WHERE IS" condition and with all defects and neither Seller nor any employee or agent of Seller has made or will make, either express or implied, any representations, guaranties, promises, statements, assurances or warranties of any kind concerning any of the following matters (collectively referred to herein as the "Property Conditions"): (i) the suitability or condition of the Property for any purpose or its fitness for any particular use, (ii) the profitability and/or feasibility of owning, developing, operating, financing, and/or improving the Property, (iii) the physical condition of the Property, (iv) the rentals, income, costs or expenses thereof, (v) water or utility availability or use restrictions, (vi) geologic/seismic conditions, soil and terrain stability, or drainage, (vii) sewer, septic, and well systems and components, or (viii) or any other past, present or future matter relating to the Property which may affect the Property or its current or future use, habitability, value or desirability. C. Purchaser is strongly encouraged to conduct its own inspection and investigation of the Property Conditions referred to above and is further encouraged to obtain, at its expense, expert advice as to such matters from professional inspectors and others. Purchaser acknowledges that as of Closing, pursuant to Section 3 above, it has been given the full opportunity to inspect and investigate such Property Conditions to its own satisfaction or cause such an inspection and investigation by experts engaged by Purchaser. 11. Purchaser's Representations and Warranties. Purchaser hereby represents and warrants to Seller as follows: A. Due Organization and Authorization to Do Business. Purchaser is a duly organized limited liability company, validly subsisting under the laws of Delaware, and either (a) Purchaser is, or prior to the Closing will be, duly qualified and authorized to transact business in the States of California, Georgia, South Carolina, New York, Massachusetts, and Ohio; or (b) if Purchaser elects to have each Site transferred to a separate affiliate (which Purchaser shall be authorized to do, to the extent permitted by Section 25 hereof), that the affiliate acquiring the Anderson Site shall be duly qualified and authorized to do business in the State of California; that the affiliate acquiring the Calhoun Site shall be duly qualified and authorized to do business in the State of Georgia; the affiliate acquiring the Gaffney Site shall be duly qualified and authorized to do business in the State of South Carolina; the affiliate acquiring the Latham Site shall be duly qualified and authorized to do business in the State of New York; the affiliate acquiring the Lee Site shall be duly qualified and authorized to do business in the State of Massachusetts; and the affiliate acquiring the Lodi Site shall be duly qualified and authorized to do business in the State of Ohio. B. Legal Capacity and Authority. Purchaser and any affiliate of Purchaser which will acquire title to any Property pursuant hereto has the right, power, legal capacity and authority to enter into and perform its obligations under this Agreement and the documents, instruments and certificates made or delivered by it pursuant to this Agreement, and the consummation by Purchaser of the transactions contemplated hereunder and thereunder have been, or will prior to Closing be, duly authorized by all necessary action. The parties signing this Agreement on behalf of the Purchaser are authorized officers of the respective entities and the respective entities will be bound by the terms of this Agreement. C. Validly Binding Obligations. The terms and provisions of this Agreement and all documents, instruments and certificates made or delivered from time to time by Purchaser hereunder constitute valid and legally binding obligations of Purchaser enforceable against Purchaser in accordance with the terms hereof and thereof. All representations and warranties of Purchaser contained in this Section 11 or in any other provision of this Agreement shall be true and correct as of the date of this Agreement, and shall be true and correct in all material respects on the date of Closing as if restated in full as of the date of Closing. The representations and warranties set forth in this Section 11 shall survive the Closing for a period of six (6) months as to the status of facts as they exist on the Closing Date, it being understood that Purchaser makes no representations and warranties which would apply to changes occurring after the Closing. 12. Brokers. Purchaser represents and warrants to Seller that in connection with the purchase and sale of the Property, Purchaser and its affiliates have not dealt with any parties other than Seller or its affiliates, with the sole exception of Pearson Partners, Inc., and Purchaser shall be solely responsible for payment of any fees owed Pearson Partners, Inc. in conjunction herewith. Seller represents and warrants that in connection with the sale of the Property, other than Granite Partners, L.L.C. ("Seller's Broker"), Seller and its affiliates have not dealt with any parties other than Purchaser and its affiliates. Seller will be responsible for the payment of a commission to Seller's Broker, and no other party, pursuant to a separate written agreement between Seller and Seller's Broker if and when Closing occurs pursuant to this Agreement. Each party agrees to indemnify and hold the other harmless from and against the claims of any other person, firm, or corporation claiming any brokerage commission, finder's fee, or similar compensation based on any alleged negotiations or dealings with that party contrary to the representations set forth in this Section 12. The representations and warranties as well as the indemnification and other agreements in this Section shall survive Closing and conveyance of title to the Property by deed or any earlier termination of this Agreement. 13. Joinder in Applications. Prior to Closing, Seller shall, at Purchaser's expense, reasonably cooperate and to the extent reasonably feasible, cause others to cooperate reasonably with Purchaser, in obtaining site plan approval or modification, building or other appropriate permits and other appropriate government approvals in connection with any contemplated renovation of the Property, including the taking of any appeals or such proceedings that may be necessary and appropriate in connection therewith; provided, however, that under no circumstances will any such approvals, permits and proceedings be binding on the Seller, or on the Property until after Closing. 14. Conditions to Purchaser's Obligation to Close. The obligations of Purchaser to close the transactions contemplated by this Agreement and to pay the Purchase Price are conditioned upon and subject to the satisfaction as of the date of Closing or such other date as may be specified below (or waiver by Purchaser) of each of the following conditions: A. Seller shall have materially performed and complied with all agreements, covenants, and conditions to be performed or complied with prior to the date of the Closing. B. All of Seller's representations and warranties set forth in this Agreement shall be true and correct in all material respects as of the date of the Closing. C. Purchaser shall not have terminated this Agreement during the Feasibility Period. If all of the aforementioned conditions have not been satisfied as of the date of Closing, or waived by Purchaser on or before the date of Closing, Purchaser may, in Purchaser's sole and absolute discretion (i) within five (5) days thereafter, terminate this Agreement, in which event the Earnest Money, shall promptly be returned to Purchaser and all rights, obligations, and liabilities under this Agreement shall terminate except as otherwise expressly set forth to the contrary in this Agreement; or (ii) waive such conditions and proceed to Closing. 15. Conditions to Seller's Obligations to Close. The obligations of Seller to close the transactions contemplated by this Agreement and to transfer the Property are conditioned upon and subject to satisfaction as of the date of Closing or such other date as may be specified below (or waiver by Seller) of each of the following conditions: A. Purchaser shall have performed and complied with all agreements, covenants and conditions to be performed or complied with prior to the date of Closing. B. All of Purchaser's representations and warranties set forth in this Agreement shall be true and correct in all material respects as of the date of the Closing. C. Seller shall have obtained the approval of the Board of Directors of Prime Retail, Inc. to the transaction described herein. Seller expects to obtain such approval at a meeting of said Board of Directors which is scheduled to take place January 9, 2001. Seller shall promptly notify Purchaser, after said meeting, as to whether such approval is obtained. If all of the aforementioned conditions have not been satisfied as of the date of Closing, or waived by Seller on or before the date of Closing, Seller may, in Seller's sole and absolute discretion (i) within five (5) days thereafter, terminate this Agreement in which event the Earnest Money, shall be paid to Seller as liquidated damages (and not as a penalty), and all rights, obligations and liabilities under this Agreement shall terminate except as otherwise expressly set forth to the contrary in this Agreement; (ii) one time only, extend, for an additional thirty (30) days, the period during which the conditions must be satisfied; or (iii) waive such conditions and proceed to Closing. 16. Provisions with Respect to Closing. A. Prior to Closing, and provided that all conditions precedent to Seller's obligations under this Agreement are satisfied or waived in writing, Seller shall deliver to the Title Company the following: (1) the Anderson Deed duly executed and acknowledged by the Anderson Seller, conveying to Purchaser fee simple title to the Property, in proper form for recording and subject only to the Permitted Title Exceptions; (2) the Calhoun Deed duly executed and acknowledged by the Calhoun Seller, conveying to Purchaser fee simple title to the Property, in proper form for recording and subject only to the Permitted Title Exceptions; (3) the Gaffney Ground Lease Assignment (counterpart to be executed by Purchaser) duly executed and acknowledged by the Gaffney Seller, conveying to Purchaser fee simple title to the Property, in proper form for recording and subject only to the Permitted Title Exceptions; (4) the Latham Deed duly executed and acknowledged by the Latham Seller, conveying to Purchaser fee simple title to the Property, in proper form for recording and subject only to the Permitted Title Exceptions; (5) the Lee Deed duly executed and acknowledged by the Lee Seller, conveying to Purchaser fee simple title to the Property, in proper form for recording and subject only to the Permitted Title Exceptions; (6) the Lodi Deed duly executed and acknowledged by the Lodi Seller, conveying to Purchaser fee simple title to the Property, in proper form for recording and subject only to the Permitted Title Exceptions; (7) the Bill of Sale duly executed and acknowledged by each applicable Seller, conveying to Purchaser title to the Personal Property; (8) the Assignment and Assumption of Tenant Leases (counterpart to be executed by Purchaser) substantially in the form attached hereto as Exhibit F; (9) the Assignment and Assumption of Contracts (counterpart to be executed by Purchaser) substantially in the form attached hereto as Exhibit G; (10) An affidavit, in the form attached hereto as Exhibit Q executed each Seller, stating each Seller's U.S. Taxpayer identification number and that no Seller is not a "foreign person" (as defined under the Foreign Investment in Real Property Tax Act and the regulations promulgated thereunder) and that Purchaser is not required to withhold any portion of the Purchase Price under the provisions of such Act; (11) The Tenant Estoppels received from Tenants as required hereunder (to the extent not already delivered to Purchaser); (12) Such proof of each Seller's authority and authorization to enter into this Agreement and consummate the transaction contemplated hereby, and such proof of the authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Seller to act for and bind Seller, as may be reasonably required by Title Company; (13) An estoppel generally in the form of the Tenant Estoppel attached hereto as Exhibit S; executed by the lessor pursuant to the Gaffney Ground Lease, alleging no defaults thereunder, or other assurance, reasonably satisfactory to Purchaser, that the Gaffney Ground Lease is in full force and effect; and (14) Letters addressed to all Tenants stating that, after the Closing, all Tenants shall pay rent pursuant to the Tenant Leases to Purchaser or its designee. B. On the date of the Closing, and provided that all conditions precedent to Purchaser's obligations under this Agreement are satisfied or waived in writing, Purchaser shall deposit with the Title Company the amount of the Purchase Price (less credits, adjustments, and prorations in accordance with this Agreement) by wire transfer or other immediately available funds. In addition, on the date of Closing, Purchaser shall deliver to the Title Company counterparts of the documents listed in Section (A)(3), (8) and (9) above, such proof of Purchaser's authority and authorization to enter into this Agreement and consummate the transaction hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Purchaser to act for and bind Purchaser as may be reasonably required by the Title Company. C. On the date of Closing, the Title Company shall disburse the Purchase Price (inclusive of the Earnest Money to be delivered to the Title Company by the Escrow Holder), as adjusted by prorations and credits and Seller's closing costs, to Seller, and Seller shall deliver possession of the Property to Purchaser in the same condition as provided for in this Agreement, ordinary wear and tear excepted. D. Seller shall pay: (i) one half of the title premiums (including title search fees, but not including costs of endorsements) related to the Anderson Site, the Calhoun Site and Lodi Site; (ii) one half of the Survey costs related to Anderson Site, the Calhoun Site and Lodi Site; (iii) the cost of recording matters of title clearance by Seller to the extent required pursuant to Section 5 above, (iv) the costs of having the Property released from any existing financing of the Property, (v) one half of all transfer taxes or sales taxes; (vi) one half of any escrow fees charged by Escrow Holder and (vii) Seller's legal fees. Purchaser shall pay for (i) one half of the title premiums related to the Anderson Site, the Calhoun Site and Lodi Site (including title search fees), (ii) all title premiums related to the Gaffney Site, the Latham Site and the Lee Site, (iii) all fees related to endorsements to any title policy, (iv) one half of the Survey costs related to the Anderson Site, the Calhoun Site and Lodi Site, (v) all Survey costs related to the Gaffney Site, the Latham Site and the Lee Site, (vi) the cost of recording the Deeds, (vii) one half of all transfer taxes or sales taxes, (viii) the costs and expenses associated with any financing needed by Purchaser, (ix) one half of any escrow fees charged by Escrow Holder and (x) Purchaser's legal fees. If, as a result of no fault of Purchaser or Seller, Closing shall fail to occur, Purchaser and Seller shall each bear one-half of Escrow Holder's fees and charges. 17. Closing Adjustments; Prorations. Adjustments shall be made between Seller and Purchaser for the following items in the manner described below: (a) All rentals (including all CAM, tax, insurance, trash charges, all marketing and promotional charges but excluding all percentage rentals, but including percentage rental if paid in lieu of base rent) and all other income related to the Property shall be prorated between Seller and Purchaser on a per diem basis, as of 11:59 p.m. of the day preceding the date of the Closing (the "Proration Time"). All rentals received by Seller prior to the Closing Date for months after the Closing Date shall be credited to Purchaser at Closing. (b) Percentage rentals under each Tenant Lease shall be adjusted between Seller and Purchaser based on the lease year or other applicable annual period used to compute percentage rent under the Tenant Lease (the "Lease Year") with Seller being entitled to a fraction of the total percentage rent paid by the Tenant for the Lease Year determined by dividing the number of days in such Lease Year through the Proration Time by the total number of days in the Lease Year, with Purchaser being entitled to the balance. For instance, if the Proration Time is 11:59 p.m. on December 21, 2001, the Lease Year for a particular tenant expires on January 31, 2002, and the total percentage rent paid by the Tenant is $10,000, Seller would be entitled to $8,876.71 (314/365 x $10,000). To the extent information necessary to determine percentage rent is available, the adjustment for percentage rentals shall occur on the Closing Date; if such information becomes available post-Closing, the parties shall re-prorate thereafter, provided that prorations of percentage rentals shall occur no later than two (2) months after each applicable lease year expires. (c) Rents payable under the Gaffney Ground Lease shall be prorated as of the Proration Time, and income received from and/or payments required pursuant to the Gaffney Development Bonds shall also be prorated as of the Proration Time. Seller shall pay in full all invoices, bills and other obligations relating to any Property for the period prior to the Closing Date, regardless of whether the invoices, bills and evidences of other obligations are received prior to, on or after the Closing Date. To the extent practicable, utility meters (other than those payable directly by Tenants to the public utilities) shall be read as soon as practicable prior to the Closing Date. Seller shall assign to Purchaser all of Seller's right, title and interest in all utility security deposits, and Seller shall receive a credit therefor. (d) All deposits made by tenants under any Tenant Lease as security for rent, cleaning or any other purpose (whether identified as refundable or non-refundable) that have not been applied in accordance with the terms of the Tenant Leases prior to the Closing Date shall be paid to Purchaser as of the Closing Date, together with, if applicable, the amount of interest then accrued at the interest rate payable with respect thereto in accordance with the terms of the applicable Tenant Lease. If any Deposit is in the form of a letter of credit, such letter of credit shall be transferred by Seller to Purchaser on the Closing Date if it is transferable, or if such letter of credit is not transferable, Seller shall make commercially reasonable efforts to cause the Tenant to deliver a replacement letter of credit, or, at Purchaser's option, Seller and Purchaser shall execute and deliver on the Closing Date a mutually acceptable agreement pursuant to which the benefits of such letter of credit are made available to Purchaser. (e) No prorations shall be made for delinquent rentals under the Tenant Leases. Seller reserves the right to use reasonable efforts to collect or attempt to collect such delinquent rentals with respect to those tenants set forth on Exhibit R. Seller agrees that no security deposits will be applied against any Tenant's obligation under any Tenant Lease, except in instances in which (i) the applicable Tenant is in default under its Tenant Lease and (ii) either the applicable Tenant Lease has been terminated, or the Tenant has vacated the applicable premises. In the event any security deposit is so applied, Seller shall make commercially reasonable efforts to have such tenant replace such funds or such security deposit, but Purchaser shall not be entitled to any credit at closing in the event that Seller is unsuccessful in obtaining replacement funds or a replacement security deposit. With respect to all other tenants, Purchaser shall use reasonable efforts to for the benefit of Seller but shall not be required to spend more than nominal sums or to declare a tenant in default to do so. Purchaser agrees, for a period of one (1) year after the Closing Date, to include in its billing to Tenants, invoices for these delinquent rents prepared by Seller and provided to Purchaser, and agrees to refer Tenants having questions as to their invoices to a designated contact person of Seller. Purchaser shall not have the right to forgive the delinquent rentals. Seller shall have no right to attempt to collect delinquent rents (except as specifically provided above) on or after the Closing Date and shall not bring any actions against any tenants with respect thereto, except that Seller may (i) file and prosecute claims for pre-closing rents in a Tenant bankruptcy, (ii) bring any claim or counter-claim relating to pre-closing events against any such tenant who files a legal action against Seller and (iii) if Seller, acting as manager of the Property pursuant to the Property Management Agreement, takes any action to pursue a Tenant for post-Closing rental obligations, Seller may include in such action all unpaid Pre-Closing rent. To the extent that a judgment is obtained prior to Closing with respect to any Tenant, nothing herein shall limit Seller's ability to enforce said judgment, and such judgment shall not be assigned to Purchaser at Closing. (f) Rents (exclusive of percentage rentals) collected after the Closing Date shall be applied first to current rents, second to rents past due after the Closing Date, and third to rents past due prior to the Closing Date, all on a tenant by tenant basis. (g) Purchaser shall be entitled to a credit at Closing for any unpaid leasing commissions which relate to the period prior to the Closing Date. All leasing commissions which relate to a time after the Proration Time, all of which are listed on Exhibit K hereto, shall be Purchaser's responsibility. (h) Purchaser shall be entitled to a credit at Closing for any tenant improvement allowances to which Seller agreed but which have not been paid to such Tenant on or before the Closing Date; provided, however, that Purchaser shall not be entitled to any such credit with respect to a tenant improvement allowance agreed to in conjunction with any Tenant Lease signed after the Effective Date hereof, which Tenant Lease was executed with the approval of the Purchaser. (i) At Closing, Seller shall deposit with Purchaser an amount equal to all CAM, tax, trash and insurance (collectively, "Additional Charges") reconciliations for the year in which the Closing occurs which are due tenants under Tenant Leases and not previously paid or credited to tenants. Purchaser and Seller agree to cooperate in good faith post-Closing to reconcile such Additional Charges. Seller shall reimburse Purchaser for any overpayments of Additional Charges attributable to the period of Seller's ownership under the Tenant Leases (such that, after taking into account the prorations elsewhere in this Section, neither Seller nor Purchaser shall have retained Additional Charges in excess of what each spent). Similarly, Purchaser shall reimburse Seller promptly after receipt of same from tenants for any shortages attributable to the period of Seller's ownership to the extent Purchaser receives reimbursement from Tenants under Tenant Leases. (j) All general and special real property, personal property and other ad valorem taxes and assessments, including special assessments, for the Property and all other governmental taxes, fees, charges and assessments affecting the Property or any part thereof shall be prorated as of the Proration Time, on the basis of the most recent reliable information available (which, in the case of real property taxes and assessments, shall be the most current real property tax bill available). Purchaser shall receive a credit in an amount equal to all of such taxes which are due and payable as of the Closing Date (and are unpaid), and Seller shall receive a credit in an amount equal to all such taxes paid by Seller for periods after the Proration Time. Prorations of these amounts shall take into account the rental amounts which are prorated in accordance with Section 17(a) hereof. (k) All payments due under the Contracts shall be prorated as of the Proration Time. 18. Condemnation. If between the Effective Date and the date of the Closing any condemnation or eminent domain proceedings are initiated, or Seller receives written notice that any condemnation or eminent domain proceedings are threatened, which will result in the taking of any material part of the Property: A. Either Purchaser or Seller may terminate this Agreement, in which event, the Earnest Money shall promptly be returned to Purchaser and all of the rights, duties and obligations of the parties under this Agreement shall immediately terminate and this Agreement shall be null, void and of no further force or affect, except as otherwise expressly set forth to the contrary in this Agreement; or B. If neither party terminates this Agreement in accordance with (A) above, the parties shall consummate the transactions contemplated by this Agreement, without reduction of the Purchase Price, in which event Seller shall assign to Purchaser all of Seller's right, title, and interest in and to any award made with respect to the Property in connection with such condemnation or eminent domain proceedings. Seller shall immediately notify Purchaser in writing of the threat or the occurrence of any condemnation or eminent domain proceedings for any material part of the Property. Purchaser shall then notify Seller within fifteen (15) business days after the date of Purchaser's receipt of Seller's notice of such condemnation or eminent domain proceedings or the threat of such proceedings whether Purchaser elects to exercise its right under Subparagraph A. or B. of this Section. For purposes of this Section 18, a "material part of the Property" shall mean a portion of the Property which, once taken, reduces the value of the Property by the greater of five percent (5%) or Two Million and No/100 Dollars ($2,000,000). 19. Damage or Destruction. If between the Effective Date and the date of the Closing, all or any material portion of the Property is damaged or destroyed by fire or other casualty or natural disaster, Seller shall immediately notify Purchaser in writing of such occurrence, and: A. Either Purchaser or Seller may terminate this Agreement, in which event the Earnest Money shall promptly be returned to Purchaser and all rights and obligations of the parties hereunder shall immediately terminate and this Agreement shall be null, void, and of no further force or effect, except as otherwise expressly set forth to the contrary in this Agreement; or B. If neither party terminates this Agreement in accordance with (A) above, the parties shall consummate the transactions contemplated by this Agreement, without reduction of the Purchase Price, in which event Seller shall assign to Purchaser all of Seller's right, title and interest in any insurance proceeds payable as a result of such fire or casualty. For purposes of this Section 19, a "material portion of the Property" shall mean a portion of the Property which, once taken, reduces the value of the Property by the greater of five percent (5%) or Two Million and No/100 Dollars ($2,000,000). 20. Remedies. A. Except as otherwise specifically set forth herein, if Seller fails to consummate the sale of the Property due to a default by Seller hereunder, Purchaser (a) may cancel this Agreement and have the Earnest Money immediately refunded to Purchaser, and (b) shall be entitled to a "Break-Up Fee" of One Million and No/100 Dollars ($1,000,000.00) from Seller, which Break-Up Fee the parties agree constitutes liquidated damages (and not a penalty) in the event of default by Seller (provided, however, that Seller shall remain liable for its indemnification obligations contained in this Agreement). The aforementioned remedies shall be Purchaser's sole and exclusive remedies in the event of a default by Seller, except as set forth in Section 20 (C.) below. B. If Purchaser fails to consummate the sale of the Property due to a default by Purchaser, Seller may cancel this Agreement and retain the Earnest Money, which sum the parties agree constitutes liquidated damages (and not a penalty) in the event of default by Purchaser (provided, however, that Purchaser shall remain liable for its indemnification obligations contained in this Agreement). The aforementioned remedies shall be Seller's sole and exclusive remedies in the event of a default by Purchaser, except as set forth in Section 20 (C.) below C. If either Purchaser or Seller brings an action to enforce its rights under this Agreement, the successful party shall be reimbursed by the unsuccessful party for all costs of enforcement, including reasonable attorneys' fees and court costs. Tender of deed or purchase money shall not be necessary where the other party has defaulted. 21. Notices. All notices, demands, requests, and other communications under this Agreement shall be in writing and shall be deemed properly served on the date of delivery if delivered by hand to the party to whose attention it is directed, three (3) days after being sent if mailed postage prepaid, by registered or certified mail, return receipt requested, the next day if sent by private receipt courier guaranteeing next day delivery, delivery charges prepaid, or the same date if transmitted by facsimile transmission, provided receipt of the notice is confirmed, orally or in writing by a representative of Seller or Purchaser, as the case may be, addressed as follows: If intended for any Seller to: Prime Retail, L.P . 100 East Pratt Street, 19th Floor Baltimore, Maryland 21202 Attn.: Mr. Mark Hertz Facsimile No.: (410) 347-0357 with copies to: Prime Retail, L.P . 100 East Pratt Street, 19th Floor Baltimore, Maryland 21202 Attn.: C. Alan Schroeder, Esquire Facsimile No.: (410) 234-1761 and Foley & Lardner Three First National Plaza 70 West Madison, Suite 4100 Chicago, Illinois 60602 Attn: Michael P. Morrison, Esquire Facsimile No.: (312) 558-6676 If intended for Purchaser, to: PWG Capital, LLC 610 Fifth Avenue, Suite 506 New York, New York 10020 Attn: Mr. Paul A. Pearson Facsimile No.: (212) 332-2755 with a copy to: Herrick, Feinstein LLP 2 Park Avenue New York, New York 10016 Attn: Richard J. Brown, Esquire Facsimile No.: (212) 592-1500 or at such other address or to such other party which any party entitled to receive notice designates to the others in writing. Counsel for each party is authorized to serve notices hereunder for the party whom he represents. 22. Governing Law. This Agreement and the validity, meaning and effect of this Agreement, shall be determined in accordance with the laws of the State of New York, applicable to contracts made and to be performed in that state. 23. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 24. Captions. The captions of this Agreement are inserted for convenience of reference only and in no way define, describe, or limit the scope or intent of this Agreement or any of the provisions of this Agreement. 25. Assignability. This Agreement and any of the Purchaser's rights under this Agreement may not be assigned by Purchaser, without the consent of Seller, which consent may be withheld in the sole discretion of Seller. Notwithstanding the foregoing, Seller's consent shall not be required in the event of an assignment by Purchaser of this Agreement to a joint venture, partnership, limited liability company or other form of business organization in which Purchaser owns an interest and regarding which Purchaser or its principals shall, directly or indirectly, exercise primary control, so long as such assignment does not release Purchaser from its obligations hereunder. If the event of any assignment, such assignment shall be expressly conditioned on (i) Purchaser remaining primarily liable following any such assignment, (ii) a transfer and written assignment of Purchaser's interest in the Earnest Money Escrow to the permitted assignee, and (iii) the permitted assignee assuming in writing all of the Purchaser's obligations. 26. Binding Effect. Subject to the provisions of Section 25 above, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns. 27. Partial Invalidity. If any provision or provisions, or any portion of any provision or provisions, of this Agreement is found by a court of law to be in violation of any applicable local, state, or federal ordinance, statute, law, administrative or judicial decision, or public policy, and if such court should declare such portion, provision or provisions of this Agreement to be illegal, invalid, unlawful, void, or unenforceable as written, then it is the intent both of Seller and Purchaser that any portion, provision, or provisions shall be given force to the fullest possible extent that they are legal, valid, and enforceable, that the remainder of this Agreement shall be construed as if such illegal, invalid, unlawful, void, or unenforceable portion, provision, or provisions were not contained in this Agreement and that the rights, obligations, and interest of Seller and Purchaser under the remainder of this Agreement shall continue in full force and effect. 28. Time is of the Essence. Time is of the essence of this Agreement. 30. Acceptance of Offer. The offer to purchase the Property made by Purchaser by the delivery of a copy of this Agreement as executed on behalf of Purchaser shall automatically terminate and expire at 5:00 p.m. E.S.T. on the Effective Date, unless the offer is accepted earlier by Seller's execution of this Agreement, or a counterpart hereof, and by the return to Purchaser of a fully executed copy of this Agreement on or before the date and time aforementioned. Either party's facsimile transmission of a fully-executed counterpart of this Agreement to the other shall constitute conclusive evidence of execution and delivery of this Agreement, so long as receipt of the facsimile is confirmed, orally or in writing by a representative of Seller and Purchaser, and so long as fully executed originals of this Agreement are executed and deposited with a private receipt courier on the Effective Date guaranteeing next business day delivery. 31. Entire Agreement. This Agreement contains the final agreement for the purchase and sale of the Property between the parties, and supersedes all prior written or verbal agreements and communications, and neither they nor their agents shall be bound by any terms, conditions, or representations not contained in this Agreement. Any modification shall not be effective unless set forth in writing and executed by both parties. The term "Agreement" when used in any of the documents defining the agreement of the parties for the purchase of the Property shall mean the Agreement with all exhibits, and any written amendments to those documents which are signed by authorized representatives of the parties. 32. Arbitration; Consent to Jurisdiction. The parties, as a material part of the consideration rendered pursuant to this Agreement, hereby waive any and all rights to the arbitration of disputes arising under the terms of this Agreement. Furthermore, the parties hereto hereby consent to the jurisdiction of the Supreme Court of the State of New York, County of New York and agree that said court may hear any grievance related to this Agreement brought by any party hereto. 33. Representation by Counsel. Each party to this Agreement represents that it has been represented or had the opportunity to be represented in the signing of this Agreement by independent counsel selected freely, and it has had an opportunity to discuss this Agreement with counsel. 34. Dates. If any dates hereunder fall on a Saturday, Sunday or legal holiday, such date shall, for purposes of this Agreement, be the next following business day. 35. No Obligations to Third Parties. Except as otherwise expressly provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the parties hereto, to any person or entity other than the parties hereto. 36. Waiver. The waiver or failure to enforce any provision of this Agreement shall not operate as a waiver of any future breach of any such provision or any other provision hereof. 37. Fees and Other Expenses. Except as otherwise provided herein, each of the parties shall pay its own fees and expenses in connection with this Agreement. 38. Construction. The parties hereto hereby acknowledge and agree that (i) each party hereto is of equal bargaining strength, (ii) each such party has actively participated in the drafting, preparation and negotiation of this Agreement, (iii) each such party has consulted with such party's own independent counsel, and such other professional advisors as such party has deemed appropriate, relating to any and all matters contemplated under this Agreement, (iv) each such party and such party's counsel and advisors have reviewed this Agreement, (v) each such party has agreed to enter into this Agreement following such review and the rendering of such advice and (vi) any rule of construction to the effect that ambiguities are to be resolved against the drafting parties shall not apply in the interpretation of this Agreement, or any portions hereof, or any amendments hereto. 39. Management Agreement; Trademark License Agreement. Notwithstanding anything to the contrary set forth herein, Seller and Purchaser expect that an affiliate of Seller shall act as property manager of each Property beginning immediately after the Closing, pursuant to a management agreement substantially in the form attached hereto as Exhibit T (the "Management Agreement"). The parties agree, however, that the form attached hereto as Exhibit T shall be modified to accommodate any lockbox arrangement which may be required by Purchaser's lender. So long as an affiliate of Seller continues to serve as property manager of each Property pursuant to a Management Agreement, Seller shall grant a license to Purchaser permitting Purchaser to continue to use its trademark name, "Prime Outlets", in conjunction with the Property substantially in the form attached hereto as Exhibit U (the "Trademark License Agreement"). 40. Indemnity. Prime Realty, L.P., the general partner of each Seller, shall defend, indemnify and save Purchaser and its respective successors and assigns, harmless from any cost, loss damage or expense, including without limitation, reasonable attorneys' fees, incurred as a result of the Pending Litigation identified on Exhibit L hereto, unless such cost, loss, damage or expense results from the Purchaser's action or inaction. This indemnity shall survive Closing. [The remainder of this page has intentionally been left blank. Signature pages follow.] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date the last party signs. ANDERSON SELLER: SHASTA OUTLET CENTER LIMITED PARTNERSHIP, a Delaware limited partnership (doing business in California as Anderson Outlet Center Limited Partnership) By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: ___________________________________(SEAL) Name: _______________________________________ Title: ______________________________________ Date: _______________________________________ CALHOUN SELLER: THE PRIME OUTLETS AT CALHOUN LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: ___________________________________(SEAL) Name: _______________________________________ Title: ______________________________________ Date: _______________________________________ GAFFNEY SELLER: CAROLINA FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: ___________________________________(SEAL) Name: _______________________________________ Title: ______________________________________ Date: _______________________________________ LATHAM SELLER: LATHAM FACTORY STORES LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: ___________________________________(SEAL) Name: _______________________________________ Title: ______________________________________ Date: _______________________________________ LEE SELLERS: THE PRIME OUTLETS AT LEE LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: ___________________________________(SEAL) Name: _______________________________________ Title: ______________________________________ Date: _______________________________________ PRIME LEE DEVELOPMENT LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: ___________________________________(SEAL) Name: _______________________________________ Title: ______________________________________ Date: _______________________________________ LODI SELLER: BUCKEYE FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: ___________________________________(SEAL) Name: _______________________________________ Title: ______________________________________ Date: _______________________________________ PURCHASER: PWG CAPITAL, LLC, a Delaware limited liability company By: ___________________________________(SEAL) Name: _______________________________________ Title: ______________________________________ Date: _______________________________________ EX-10 4 ex102.txt EXHIBIT 10.2 1ST AMENDMENT TO R E SALE AGREEMENT FIRST AMENDMENT TO REAL ESTATE SALE AGREEMENT THIS FIRST AMENDMENT TO REAL ESTATE SALE AGREEMENT ("Agreement") is made and entered into as of the 27th day of March, 2002 by and between Shasta Outlet Center Limited Partnership, a Delware limited partnership doing business in the State of California as Anderson Outlet Center Limited Partnership (the "Anderson Seller"), The Prime Outlets at Calhoun Limited Partnership, a Delaware limited partnership, (the "Calhoun Seller"), Carolina Factory Shops Limited Partnership, a Delaware limited partnership (the "Gaffney Seller"), Latham Factory Stores Limited Partnership, a Delaware limited partnership (the "Latham Seller"), The Prime Outlets at Lee Limited Partnership, and Prime Lee Development Limited Partnershikp, both Delaware limited partnerships, (together, the "Lee Seller") and Buckeye Factory Shops Limited Partgnership, a Delaware limited partnership, ("Lodi Seller") (the Anderson Seller, the Calhoun Seller, the Gaffney Seller, the Latham Seller, the Lee Seller and the Lodi Seller are collectively referred to herein as "Seller") and PWG Capital, LLC. a Delaware limited liability company the ("Purchaser"). RECITALS: 1. The Seller and the Purchaser entered into a Real Estate Sale Agreement (the "Agreement") dated the 9th day of January, 2002. 2. The Seller and the Purchaser now desire to amend the Agreement. NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties set forth in this Agreement, and for the other good and valuable consideration, the receipt and legal sufficiency fo which are hereby acknowledged, the parties agree as follows: 1. All terms capitalized herein, shall have the same meanings as provided in the Agreement. 1. The words "thirty five days after the Effective Date" contained in the fifth line of Section 3(A) of the Agreement shall be deemed deleted and the date "April 5, 2002" shall be substituted therefor. 2. Except as modified hereby all of terms, covenants and conditions set forth in the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties here to have executed this Amendment as of the date set forth above. ANDERSON SELLER: SHASTA OUTLET CENTER LIMITED PARTNERSHIP, a Delaware limited partnership (doing business in California as Anderson Outlet Center Limited Partnership) By: Prime Retail, L.P., a Delaware limited partnership. its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke (SEAL) Name: GLENN D. RESCHKE Title: PRESIDENT, CHIEF EXECUTIVE OFFICER Date: CALHOUN SELLER: THE PRIME OUTLETS AT CALHOUN LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: \s\ Glenn D. Reschke (SEAL) Name: GLENN D. RESCHKE Title: PRESIDENT, CHIEF EXECUTIVE OFFICER Date: GAFFNEY SELLER: CAROLINA FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke (SEAL) Name: GLENN D. RESCHKE Title: PRESIDENT, CHIEF EXECUTIVE OFFICER Date: LATHAM SELLER: LATHAM FACTORY STORES LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke (SEAL) Name: GLENN D. RESCHKE Title: PRESIDENT, CHIEF EXECUTIVE OFFICER Date: LEE SELLERS: THE PRIME OUTLETS AT LEE LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke (SEAL) Name: GLENN D. RESCHKE Title: PRESIDENT, CHIEF EXECUTIVE OFFICER Date: PRIME LEE DEVELOPEMENT LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke (SEAL) Name: GLENN D. RESCHKE Title: PRESIDENT, CHIEF EXECUTIVE OFFICER Date: LODI SELLER: BUCKEYE FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke (SEAL) Name: GLENN D. RESCHKE Title: PRESIDENT, CHIEF EXECUTIVE OFFICER Date: PURCHASER: PWG CAPITAL, LLC, a Delaware limited liability company By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: \s\ David A. Pearson (SEAL) Name: DAVID A. PEARSON Title: AUTHORIZED SIGNATORY Date: 3-27-02 EX-10 5 ex103.txt EXHIBIT 10.3 2ND AMENDMENT TO R E SALE AGREEMENT SECOND AMENDMENT TO REAL ESTATE SALE AGREEMENT THIS SECOND AMENDMENT TO REAL ESTASTE SALE AGREEMENT ("Agreement") is made and entered into as of the 5th day of April, 2002 by and between Shasta Outlet Center Limited Partnership, a Delware limited partnership doing business in the State of California as Anderson Outlet Center Limited Partnership (the "Anderson Seller"), The Prime Outlets at Calhoun Limited Partnership, a Delaware limited partnership, (the "Calhoun Seller"), Carolina Factory Shops Limited Partnership, a Delaware limited partnership (the "Gaffney Seller"), Latham Factory Stores Limited Partnership, a Delaware limited partnership (the "Latham Seller"), The Prime Outlets at Lee Limited Partnership, and Prime Lee Development Limited Partnershikp, both Delaware limited partnerships, (together, the "Lee Seller") and Buckeye Factory Shops Limited Partgnership, a Delaware limited partnership, ("Lodi Seller") (the Anderson Seller, the Calhoun Seller, the Gaffney Seller, the Latham Seller, the Lee Seller and the Lodi Seller are collectively referred to herein as "Seller") and PWG Capital, LLC. a Delaware limited liability company the ("Purchaser"). RECITALS: A. The Seller and the Purchaser entered into a Real Estate Sale Agreemnt date the 9th day of January, 2002, as amended by a First Amendment to Real Estate Sale Agreement dated the 27th day of March 2002 (the Agreement, as amended, is hereinafter referred to as the "Agreement"). B. The Seller and the Purchaser now desire to further amend the Agreement. NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties set forth in this Agreement, and for the other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties agree as follows: 1. All terms capitalized herein shall have the same meaning as provided in the Agreement. 2. The Purchase Price set forth in Section 2(A) of the Agreement is hereby reduced from $120,250,000 to $118,650,000. 3. The date "April 5, 2002" contained in Section 3(A) of the Agreement shall be deemed deleted, and the date "April 26, 2002" shall be substituted therefor. 4. Section 4(B) shall be deleted in its entirety, and the following shall be substituted therefor: "The Closing shall take place on a date mutually agreed upon by the parties, which date shall be no later than May 6, 2002." 5. $100,000 of the Earnest Money shall be released to the Saller by the Escrow Holder immediately following the full execution and delivery of this Amendment. Said $100,000 will be non-refundable to the Purchaser unless Seller fails to close title in accordance with the Agreement. 6. An additional $100,000 of the Earnest Money shall be released to the Seller by the Escrow Holder on April 22, 2002 unless Purchaser terminates the Agreement on or before April 19, 2002. Said additional $100,000 will be non-refundable to the Purchaser unless Seller fails to close title in accordance with the Agreement. 7. Within three (3) business days of the full execution and delivery hereof, Purchaser shall deposit an additional $500,000 with the Escrow Holder so that the Earnest Money shall then total $1,500,000. Said additional $500,000 (like the original $1,000,000 but for the $100,000 now being released) shall also be refundable to Purchaser if Purchaser does not elect to proceed with the transaction at the end of the Feasibility Period. 8. Exhibit T to the Agreement (Form of Management Agreement) shall be modified by adding a provision stating that, if the overall occupancy of the portfolio of Properties falls below 75% of the gross leasable square footage of the portfolio of Properties for a period of six (6) consecutive months, the Owner may thereafter terminate the Management Agreement on ten (10) days' prior written notice to Agent, at anytime before the occupancy shall once again exceed 75% of the gross leasable square footage, said termination being without the payment of any premium or penalty. 9. Exhibit T to the Agreement (Form of Management Agreement) shall be further modified as follows: In Article VI; Early Termination in Section 6.1 (b) the sentence "Owner sells all, or substantially all, of the Project." shall be deleted and the sentence "Owner elects in its sole discretion to terminate this Agreement on 10 days' prior written notice." shall be substituted therefor. 10. The following sentence shall be added to Section 39" "The affiliate of Seller that shall act as property manager of each Property shall enter into an Assignment of Management Agreement and Subordination of Management Fees Agreement with Purchaser's lender, in form and substance reasonably acceptable to Seller." 11. The parties furthermore agree to enter into a mutually acceptable escrow agreement at Closing, the terms and conditions of which shall be agreed upon by Seller and Purchaser on or before the conclusion of the Feasibility Period, which shall generally provide for the creation of an escrow account at Closing, to be funded by the Seller, into which account will be deposited the sum of $650,000 and which will be held by Purchaser's counsel Herrick, Feinstein LLP. Such escrow shall be for the purpose of implementing the Optimization Plan agreed upon by Seller and Purchaser and related to "most favored nation" clauses contained in various tenant leases. 12. Except as modified hereby all of the terms, covenants and conditions set forth in the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth above. ANDERSON SELLER: SHASTA OUTLET CENTER LIMITED PARTNERSHIP, a Delaware limited partnership (doing business in California as Anderson Outlet Center Limited Partnership) By: Prime Retail, L.P., a Delaware limited partnership. its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Robert A. Brvenik (SEAL) Name: ROBERT A. BRVENIK Title: EXECUTIVE VICE PRESIDENT Date: 4/5/02 CALHOUN SELLER: THE PRIME OUTLETS AT CALHOUN LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: \s\ Robert A. Brvenik (SEAL) Name: ROBERT A. BRVENIK Title: EXECUTIVE VICE PRESIDENT Date: 4/5/02 GAFFNEY SELLER: CAROLINA FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Robert A. Brvenik (SEAL) Name: ROBERT A. BRVENIK Title: EXECUTIVE VICE PRESIDENT Date: 4/5/02 LATHAM SELLER: LATHAM FACTORY STORES LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Robert A. Brvenik (SEAL) Name: ROBERT A. BRVENIK Title: EXECUTIVE VICE PRESIDENT Date: 4/5/02 LEE SELLERS: THE PRIME OUTLETS AT LEE LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Robert A. Brvenik (SEAL) Name: ROBERT A. BRVENIK Title: EXECUTIVE VICE PRESIDENT Date: 4/5/02 PRIME LEE DEVELOPEMENT LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Robert A. Brvenik (SEAL) Name: ROBERT A. BRVENIK Title: EXECUTIVE VICE PRESIDENT Date: 4/5/02 LODI SELLER: BUCKEYE FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Robert A. Brvenik (SEAL) Name: ROBERT A. BRVENIK Title: EXECUTIVE VICE PRESIDENT Date: 4/5/02 PURCHASER: PWG CAPITAL, LLC, a Delaware limited liability company By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: \s\ David A. Pearson (SEAL) Name: DAVID A. PEARSON Title: AUTHORIZED SIGNATORY Date: 4-5-02 CAROLINA FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke Name: GLENN D. RESCHKE Title: President and Chief Executive Officer LATHAM FACTORY STORES LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke Name: GLENN D. RESCHKE Title: President and Chief Executive Officer BUCKEYE FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke Name: GLENN D. RESCHKE Title: President and Chief Executive Officer THE PRIME OUTLETS AT CALHOUN LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke Name: GLENN D. RESCHKE Title: President and Chief Executive Officer PRIME RETAIL, L.P., a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke Name: GLENN D. RESCHKE Title: President and Chief Executive Officer THE PRIME OUTLETS AT LEE LIMITED PARTNERSHIP, a Delaware limited partnership By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke Name: GLENN D. RESCHKE Title: President and Chief Executive Officer SHASTA OUTLET CENTER LIMITED PARTNERSHIP, a Delaware limited partnership (doing business in California as Anderson Outlet Center Limited Partnership) By: Prime Retail, L.P., a Delaware limited partnership, its general partner By: Prime Retail, Inc., a Maryland corporation, its general partner By: \s\ Glenn D. Reschke Name: GLENN D. RESCHKE Title: President and Chief Executive Officer EX-99 6 ex991.txt EXHIBIT 99.1 PRESS RELEASE FOR IMMEDIATE RELEASE FOR MORE INFORMATION CALL July 31, 2002 Investors: Robert A. Brvenik Chief Financial Officer (410) 234-1750 Media: Steven A. Sless Public Relations (410) 234-8333 PRIME RETAIL COMPLETES SALE OF SIX OUTLET CENTERS FOR $118.7 MILLION Transaction Results in Repayment of $111.0 Million of Recourse Indebtedness Company Retains 20% Ownership Interest in Sold Properties BALTIMORE - Prime Retail, Inc. (the "Company") (OTC Bulletin Board: PMRE, PMREP, PMREO) today announced the completion on July 26, 2002 of the sale of six outlet centers for aggregate consideration of $118.7 million to wholly-owned affiliates of PFP Venture LLC, a joint venture (the "PFP Venture") (i) 30% owned by PWG Prime Holdings LLC ("PWG") and (ii) 70% owned by FP Investment LLC ("FP"). FP is a joint venture between FRIT PRT Bridge Acquisition LLC ("FRIT"), a Delaware limited liability company, and the Company. Through FP, FRIT and the Company indirectly have ownership interests of 50% and 20%, respectively, in PFP Venture. The six outlet centers (collectively, the "Bridge Properties") that were sold are located in Anderson, California; Calhoun, Georgia; Gaffney, South Carolina; Latham, New York; Lee, Massachusetts and Lodi, Ohio and contain an aggregate of 1.3 million square feet of gross leasable area ("GLA"). Under the terms of the transaction, the Company will continue to manage, market and lease the Bridge Properties on behalf of PFP Venture for a fee over a five-year period. In connection with the sale, $111.0 million of recourse mortgage indebtedness, which bore an interest rate of 13% and was scheduled to mature on December 31, 2003, on the Bridge Properties was repaid in full. The Company's net cash proceeds of approximately $6.8 million from the sale were contributed to FP. FP used these proceeds along with a $17.2 million capital contribution from FRIT to purchase a 70% ownership interest in PFP Venture. Financing for PFP Venture's purchase of the Bridge Properties was provided by GMAC Mortgage in the form of a $90.0 million, four-year, non-recourse mortgage loan, of which $74.0 million bears interest at LIBOR plus 4.25% (minimum of 7.00% for first three years and 7.25% thereafter) and $16.0 million bears interest at LIBOR plus 4.50% (minimum of 7.75%). Furthermore, subject to satisfaction of certain conditions, the maturity of the $74.0 million portion of the loan may be extended by PFP Venture for one additional year and the minimum interest rate during the extension period would be 7.25%. Pursuant to certain venture-related documents, the Company has guaranteed FRIT (i) a 13% return on its $17.2 million of invested capital and (ii) the full return of its invested capital (the "Mandatory Redemption") by December 31, 2003. The Company's guarantee is secured by junior security interests in collateral similar to that pledged to the Company's current mezzanine lenders. FP will be entitled to receive a 15% preferred return (approximately $3.6 million on an annual basis) on its invested capital of $24.0 million in PFP Venture. From the preferred return, FRIT will first receive the 13% return on its invested capital with the remainder applied to the Mandatory Redemption. Upon satisfaction of the Mandatory Redemption, the Company will be entitled to a preferred return until such time as it has been repaid in full, including a 13% return on its invested capital. Thereafter, the Company and FRIT will share any cash flow due to FP on an equal basis. Prime Retail is a self-administered, self-managed real estate investment trust engaged in the ownership, leasing, marketing and management of outlet centers throughout the United States and Puerto Rico. Prime Retail currently owns or manages 43 outlet centers totaling approximately 12.2 million square feet of GLA. The Company also owns one community shopping center totaling 27,000 square feet of GLA and 154,000 square feet of office space. Prime Retail has been an owner, operator and a developer of outlet centers since 1988. For additional information, visit Prime Retail's web site at www.primeretail.com. FRIT, indirectly through affiliates, was the owner of the $111.0 million recourse mortgage debt that was repaid in full in connection with the sale of the Bridge Properties and is a 50% owner of the Company's mezzanine loan which has a current outstanding principal balance of $34.8 million. PWG, a Delaware limited liability company, was formed for the acquisition of its ownership interest in the Bridge Properties. PWG is a joint venture, which through affiliates, is comprised of principals of Pearson Partners, Inc., SAM Group, LLC and Sunset Realty Services LLC. Some of the statements contained herein which are not statements of historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management's current views with respect to future events and financial performance. The words "believes," "expects," "anticipates," "estimates" and similar words or expressions are generally intended to identify forward-looking statements. Actual results may differ materially from those expected because of various risks and uncertainties, including, but not limited to, changes in general economic conditions, adverse changes in real estate markets as well as other risks and uncertainties included from time to time in the Company's filings with the Securities and Exchange Commission. Prime Retail accepts no responsibility for updating forward-looking statements. EX-99 7 ex992.txt EXHIBIT 99.2 CEO CERTIFICATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the filing of the Current Report on Form 8-K (the Report) by Prime Retail, Inc. (the Company), the undersigned, as the Chief Executive Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 8, 2002 /s/ Glenn D. Reschke -------------------- --------------------- Glenn D. Reschke President and Chief Executive Officer EX-99 8 ex993.txt EXHIBIT 99.3 CFO CERTIFICATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the filing of the Current Report on Form 8-K (the Report) by Prime Retail, Inc. (the Company), the undersigned, as the Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 8, 2002 /s/ Robert A. Brvenik -------------------- ---------------------- Robert A. Brvenik Executive Vice President, Chief Financial Officer and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----