Adjusted Consideration; Risk of Loss. (a) At the Closing, (i) real estate taxes and assessments (including special assessments and, personal property taxes, if any), (ii) rental income (including base rents, additional rents, escalation charges, common area maintenance charges, imposition charges, heating and cooling charges, insurance charges, charges for utilities, percentage rent, and all other rents, charges and commissions paid by tenants to the Participating Entities), (iii) interest payable under loans secured by Permitted Liens, (iv) insurance premiums, (v) utilities serving the Properties, (vi) property management fees, (vii) prepaid charges, payment and accrued charges under any contracts entered into by Holdings or any Participating Entity with respect to the Properties, and (viii) all other items of income and expense with respect to the Properties shall be prorated between the Contributor, on the one hand, and the Operating Partnership, on the other hand, with all such items attributable to the period prior to the Closing Date (as defined in Section 2.2) to be credited or charged to Contributor, and all such items attributable to the period commencing on the Closing Date to be credited or charged to the Operating Partnership. Except as otherwise provided in this Section 1.3, income and expenses shall be prorated on the basis of a 30-day month and on the basis of the accrual method of accounting. In addition, at Closing, the Contributor shall receive a credit equal to the amount of any reserves (other than any cash reserves established with the lender with respect to the Allocated Debt (the “Lender Reserves”)) established by Holdings or any Participating Entity with respect to the Properties (the “Reserves”). Notwithstanding the generality of the foregoing, to the extent that any tenant of a Property pays any of the expenses described in clauses (i), (iv), (v), (vi), (vii) or (viii) above directly to an applicable third party (and not as a reimbursement to a Participating Entity), such amounts shall not be prorated at Closing. The prorations to be performed hereunder shall be completed by the Company based on the parties’ estimates as of the Closing, shall be evidenced by a closing statement prepared by the Company, shall be reconciled based on actual amounts when available, but in all events within ninety (90) days of Closing (the “Reconciliation Period”) and shall be implemented through a cash payment from the Operating Partnership to the Contributor to the extent the prorations ...
Adjusted Consideration; Risk of Loss. The risk of loss relating to the Participating Entity Interests and the underlying Properties prior to Closing shall be borne by the Contributors to the extent set forth in this Section 1.3. If, prior to the Closing, any Property is destroyed or materially damaged by fire or other casualty, or is taken by eminent domain or through condemnation proceedings, which casualty or taking allows a tenant of such Property to terminate its Lease (as defined in Section 3.2(m)) and such right has not been waived in writing or a tenant does in fact terminate its Lease with respect to such Property (such casualty or taking, a “Termination Event”), then the Company may, at its option, determine to cause the Operating Partnership not to acquire the applicable Contributor’s direct or indirect interests in the Participating Entity that owns such Property. After the occurrence of any such Termination Event, the Company may also, at its option, elect to (i) cause the Operating Partnership to acquire the Participating Entity Interests (including, the applicable Contributor’s direct or indirect interests in any such Participating Entity that owns the affected Property), (ii) direct the applicable Contributor to cause the Participating Entity or Participating Entities, as applicable, to pay or cause to be paid to the Operating Partnership any sums collected under any policies of insurance relating to such casualty or condemnation and otherwise assign to the Operating Partnership all rights to collect such sums as may then be uncollected (except to the extent that such sums are paid directly to the tenant of such Property and such tenant continues to be obligated to pay rent to the Participating Entity that owns such Property pursuant to the Lease for such Property), and (iii) adjust or settle any insurance claim or condemnation proceeding. Under such circumstances, the Unit Consideration relating to such Participating Entity Interest shall be reduced by the pro rata share of the amount of any deductibles or shortfalls (including lack of insurance) under the applicable insurance policies or award (except to the extent such deductibles or shortfalls are the responsibility of tenants under Leases), plus all reasonable costs of collection. If Properties constituting more than 25% of the total value of the Properties are partially or totally damaged or condemned prior to the Closing, the Company may elect, by notice to the Contributors given within 20 days after the date of such dama...
