EXHIBIT 10.9
SUPPLEMENTAL REPRESENTATIONS AND
WARRANTIES AGREEMENT
THIS SUPPLEMENTAL REPRESENTATIONS AND WARRANTIES AGREEMENT (this
"Agreement") is made and entered into as of _______, 1997 by and among Xxxxxxx
X. Xxxxx, Hippomenes Associates, LLC, 64-36 Realty Associates, 673 First
Associates L.P., Green 6th Avenue Associates, L.P., [X.X. Xxxxx Realty, Inc.],
X.X. Xxxxx Properties, Inc. and EBG Midtown South Corp. (the "Indemnitors"), XX
Xxxxx Operating Partnership, L.P., a Delaware limited partnership (the
"Operating Partnership") and XX Xxxxx Realty Corp., a Maryland corporation (the
"Company").
WHEREAS, in connection with an initial public offering of shares of
common stock of the Company (the "Offering"), the closing of which is occurring
on the date hereof, (a) direct or indirect interests in certain properties owned
by the Indemnitors or entities of which the Indemnitors or affiliates of the
Indemnitors are general partners or managing members (the "General Partners")
are being contributed to the Operating Partnership pursuant to the omnibus
contribution agreement (the "Omnibus Contribution Agreement"), the Contract of
Sale regarding 000 Xxxx Xxxxxx Xxxxx and the Contract of Sale regarding 00 Xxxx
00xx Xxxxxx (together with the Omnibus Contribution Agreement, the "Contribution
Agreements"), (b) non-voting stock representing 95% of the economic interest in
each of the construction, management and leasing businesses (collectively, the
"Service Businesses"), respectively, of Emerald City Construction Corp., a New
York corporation, X.X. Xxxxx Management Corp., a New York corporation and X.X.
Xxxxx Realty, Inc., a New York corporation (collectively, the "Service
Companies") are being contributed to the Operating Partnership pursuant to the
Omnibus Contribution Agreement, and (c) the Indemnitors own units of partnership
interest ("Units") in the Operating Partnership (all of the foregoing being
collectively referred to herein as the "Transactions"); and
WHEREAS, in order to induce the Company to consummate the Offering and
to cause the foregoing transfers to occur, the Indemnitors have agreed to make
the representations and warranties
1
contained in this Agreement for the benefit of the Company and the Operating
Partnership on the condition that the liability of the Indemnitors hereunder be
limited as provided in Section 4 hereof.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
1. Representations and Warranties with Respect to the Properties and
the Entities. The Indemnitors hereby represent and warrant to the Company and
the Operating Partnership, with respect to (i) each of the properties listed on
Exhibit "A" (the "Properties"), and (ii) each of the partnerships and limited
liability companies that currently own the Properties (the "Entities") which are
listed on Exhibit "B-1" , as follows:
1.1. Organization, Power and Authority, and Qualification. Each Entity is duly
formed and organized, validly existing and in good standing under the laws of
the jurisdiction of its organization. Each Entity has the requisite power and
authority to carry on its business as it is now being conducted. The general
partner or managing member of each Entity has made available to the Operating
Partnership complete and correct copies of such Entity's organizational
documents, with all amendments as in effect on the date of this Agreement (the
"Entity Agreements"). Each Entity is qualified to do business and is in good
standing in each jurisdiction where the character of its property owned or
leased or the nature of its activities make such qualification necessary, except
where the failure to be so qualified and in good standing would not have a
material adverse effect on the business or financial condition of such Entity.
Except as set forth on Schedule 1.1, none of the execution and
delivery of the Omnibus Contribution Agreement by the Contributors (as defined
therein), the consummation by the Contributors of the contribution of the
Interests (as that term is defined in the Omnibus Contribution Agreement) or
compliance by the Contributors with any of the provisions of the Omnibus
Contribution Agreement will (i) conflict with or result in any breach of any
provisions of any of the Entity Agreements; (ii) result in a violation or breach
of, or constitute (with or without due notice
2
or lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which any Entity is a party or by which any
Entity may be bound; or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to any Partnership or its property;
except in the case of clauses (ii) or (iii) above, for violations, breaches or
defaults that would not in the aggregate have a material adverse effect on the
business or financial condition of any Entity and that will not impair the
effectiveness of the contributions pursuant to the Omnibus Contribution
Agreement and, except in the case of clauses (i), (ii) and (iii) above, for
which waivers or consents have been obtained on or prior to the date hereof.
1.2. Compliance with Entity Agreements and Contracts. None of
the Entities are (i) in violation of its Entity Agreements or (ii) to the
knowledge of the Contributor, in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease, partnership agreement, joint
venture or other instrument or agreement to which the Entity is a party or by
which the Entity or its assets are or may be bound, except for a default which
would not have a material adverse effect on the business or financial condition
of the Entity.
1.3. Title. Each Entity owns marketable, legal and beneficial
title to the Property owned by it subject to the leases described on Schedule
1.4 (the "Leases") and the matters set forth on Schedule 1.3 (the "Permitted
Exceptions").
1.4. Leases. With respect to each Property, the Leases, are
the only leases, licenses, tenancies, possession agreements and occupancy
agreements affecting that Property on the date hereof in which that Entity holds
the lessor's, licensor's or grantor's interest thereunder and there are no other
leases, licenses, tenancies, possession agreements or occupancy agreements
affecting the Property (other than subleases, licenses, tenancies or other
possession or occupancy agreements which may have been entered into by the
tenants, or their predecessors in interest, under such Leases); a true and
complete copy of all such Leases have been made available to the Operating
Partnership; such Leases,
3
are in full force and, except as indicated otherwise on Schedule 1.4, the
Entities, as lessor under such Leases, has not received any notice that it is in
default of any of its obligations under such Leases beyond any applicable grace
period which has not been cured; fixed rent and additional rent are being billed
to the tenants in accordance with the schedule set forth on Schedule 1.4; no
tenant is entitled to "free" rent, rent concessions, rebates, rent abatements,
set-offs, or offsets against rent except as set forth in the Lease with such
tenant and no tenant claims a right to any of the foregoing, except as set forth
on Schedule 1.4; except as set forth on Schedule 1.4, the Entities has received
no written notice that any tenant contests its pro rata shares of tax increases
as required by its Lease or that any tenant contests its pr rata shares of tax
increases as required by its Lease or that any tenant contests any rent,
escalation or other charges billed to it; no assignment of the Entities' rights
under any Lease is in effect on the date hereof other than collateral
assignments to secure mortgage indebtedness; and, except as set forth on
Schedule 1.4, with respect to any Leases entered into by the Entities, no
brokerage commissions will be due upon the failure of any tenant to exercise any
cancellation right granted in its Lease or upon any extension or renewal of such
Leases.
1.5. Tax Bills. The copies of the real property tax bills for
each Property for the current tax year which have been furnished to the
Operating Partnership are true and correct copies of all of the tax bills for
such tax year actually received by the Entities or the Entities' agents for the
Property.
1.6. Employees and Contracts. There are no (a) employees of
any Entity, nor (b) service or maintenance contracts affecting any Property
which are not cancelable upon thirty (30) days notice or less or which are for a
contract amount greater than $50,000 per annum, except as shown on Schedule 1.6;
all persons who regularly perform services at any Property are employees of the
Service Companies, or other independent contractors; true and correct copies of
the service, supply, utility or maintenance agreements relating to any Property
(the "Service Contracts") have been delivered to the Operating Partnership and
the same are in full force and effect and have not been modified or amended.
1.7. Governmental Proceedings. There is no governmental action
or governmental proceeding (zoning or
4
otherwise) or governmental investigation pending or threatened in writing
against or relating to any Property or the transactions contemplated by this
Agreement other than tax certiorari proceedings which have been commenced by an
Entity.
1.8. No Agreements. Except as set forth in the partnership or
operating agreements of the Entities or as set forth on Schedule 1.8, other than
the Leases, no Property is subject to any outstanding agreement of sale or
lease, option to purchase or other right of any third party to acquire any
interest therein.
1.9. Litigation. Except as set forth in Section 1.7 or on
Schedule 1.9 and except for actions covered (less any deductibles thereunder) by
the policies of insurance described in Section 1.18, there is no litigation or
proceedings pending against any Entity or with respect to any Entity or any
Entity's interest therein (including, but not limited to, landlord-tenant
proceedings). Neither any Entity nor any Property is subject to any order,
judgment, injunction or decree of any court, tribunal or other governmental,
regulatory or other authority or body, that individually or collectively would
have a material adverse effect on the business or financial condition of the
Entity or the business, financial or other condition of the Property.
1.10. Violations. To the knowledge of the Contributors, the
only violations of law or municipal ordinances, orders or requirements noted in
or issued by the department of buildings, fire, labor, health or other Federal,
State, County, City, Town or other departments and governmental agencies having
jurisdiction against or affecting any Property ("Violations") against or
affecting any Property on the date hereof are set forth on Schedule 1.10.
1.11. Hazardous Substances. To the knowledge of the
Contributors, no Hazardous Substances (hereinafter defined) exist or have been
disposed of in, on or under any Property other than (i) as described in the
reports listed on Schedule 1.11 hereof, or (ii) Hazardous Substances the
presence of which is not prohibited by any applicable law, or which have been
addressed in accordance with applicable law, (iii) Hazardous Substances which
are commonly used by owners in the day to day operation and maintenance of
office buildings and by tenants in the day to day conduct of their businesses.
As used herein, "Hazardous
5
Substances" shall mean any toxic, radioactive or otherwise hazardous material,
substance or waste the presence, use or handling of which is prohibited, limited
or regulated by any applicable Federal, New York State or New York City law
rule, ordinance or regulation.
1.12. Capital Improvements; Condition of Property. To the
knowledge of the Contributors, there is no material defect in the condition of
any Property, the improvements thereon, the structural elements thereof, or the
mechanical systems therein, nor any material damage from uninsured casualty or
other cause, nor any soil condition of any such Property that will not support
all of the improvements thereon without the need for unusual or new subsurface
excavations, fill, footings, caissons or other installations, except for (i) any
such defect, damage or condition that has been corrected or will be corrected in
the ordinary course of the business of such Property as part of its scheduled
annual maintenance and improvements program and (ii) as described in the reports
listed on Schedule 1.12 hereof.
1.13. Debt. As of the date hereof, each Property is subject to
mortgage debt (the "Mortgage Debt") in the approximate outstanding principal
balance set forth on Schedule 1.13. To the knowledge of the Contributors,
except as set forth on Schedule 1.13, there exists no default with respect to
any Mortgage Debt that has not been cured. No Entity has received any notice of
such a default.
1.14. Financial Statements. The combined financial statements
included in the Registration Statement or Form S-11 of the Company with respect
to certain of the Entities (the "Financial Statements") have been prepared from
the books and records of such Entities in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
specified. The balance sheets in the Financial Statements fairly present the
financial condition of such Entities as of the dates shown, and the income
statements in the Financial Statements fairly present the results of operations
for the periods indicated.
1.15. Financial Condition. Since the date of the Financial
Statements and except as set forth on Schedule 1.15, there has been no material
adverse change in the business or financial condition of any Entity or any
Property.
6
1.16. Permits. To the knowledge of the Contributors, each
Entity has all permits as are necessary for the ownership, use and operation of
the Property, except for such permits for which the failure to possess would not
have a material adverse effect on the business or financial condition of the
Entities and except for such permits as are required to be obtained by tenants
pursuant to the terms of the Leases. To the knowledge of the Contributors, each
Entity is not in violation of any permit in any material respect.
1.17. Taxes. (a) all taxes or information returns required to
be filed on or before the date hereof by or on behalf of the partnerships have
been filed through the date hereof in accordance with all applicable laws; (b)
there is no action, suit or proceeding pending against, or with respect to, any
Entity or any Property for any tax, nor has any claim for additional tax been
asserted by any authority; and (c) except as set forth on Schedule 1.17, all
taxes (including any related penalties, interest and additional amounts) imposed
upon any Entity and required to be reflected upon a return required to be filed
(without regard to any applicable extensions) on or before the date hereof have
been paid or will be paid on or before the date hereof.
1.18. Insurance. Each Entity currently has in place public
liability, casualty and other insurance coverage with respect to its Property in
customary amounts for projects similar to the Properties in the markets in which
such Properties are located, and in all cases in compliance with the Mortgage
Debt. Each of such policies is in full force and effect, and all premiums due
and payable thereunder have been fully paid when due. No notice of cancellation
has been received or to the knowledge of the Contributors threatened with
respect thereto.
2. Representations and Warranties with Respect to the Service
Businesses. The Indemnitors hereby represent and warrant to the Company and the
Operating Partnership with respect to the Service Businesses, as follows:
2.1. Title to Transferred Assets. To the knowledge of the
Indemnitors, the applicable Indemnitor has good and valid title to the Service
Businesses. To the knowledge of the Indemnitors, the Service Businesses are not
subject to any imperfections in title, liens, encumbrances, pledges, claims,
7
chargers, options, defects, preferential purchase rights, or other encumbrances
(collectively referred to herein as "Liens") except for liens which are not
material in character, amount, or extent and do not materially detract from the
value or interfere with the operation of the Service Businesses ("Permitted
Liens").
2.2. Management Agreements, etc. Annexed hereto as Schedule
2.2 are the only agreements pursuant to which the Service Companies provide
management and/or leasing services with respect to any property (the "Management
Agreements"). Each of the Management Agreements is valid and binding on the
applicable Service Company and is in full force and effect in all material
respects. Except as set forth in Schedule 2.2, neither the Service Companies
nor, to the knowledge of the applicable Service Company, any other party thereto
has breached or defaulted under the terms of any of the Management Agreements,
except for such breaches or defaults that would not have a material adverse
effect on the Transactions or the Service Businesses. A true and correct copy
of each of the Management Agreements has been delivered to or made available to
the Operating Partnership.
2.3. Permits. To the knowledge of the applicable Service
Company, each Service Company has all permits as are necessary for the
ownership, use and operation of its Service Business, except for such permits
for which the failure to possess would not have a material adverse effect on
such Service Business. To the knowledge of the applicable Service Company, such
Service Company is not in violation of any such permit in any material respect.
2.4. Litigation. Except as set forth in Schedule 2.4 hereto,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of the applicable Service Company, threatened against such
Service Company, or any properties or rights of such Service Company, before any
court or administrative, governmental or regulatory authority or body, domestic
or foreign, that would have a material adverse effect on the Service
Businesses. Neither the Service Companies nor the Service Businesses are
subject to any order, judgment, injunction or decree of any court, tribunal or
other governmental authority (other than generally applicable laws, rules and
regulations) that would have a material adverse effect on the Service
Businesses.
8
2.5. Compliance with Laws. [Except as set forth in Schedule
2.5 hereto,] the Service Companies have not received any written or other actual
notice from any governmental authority having jurisdiction over the Service
Companies of any violation of any applicable regulation or ordinance, or of andy
employment or other regulatory law, order, regulation or requirement relating to
the Service Businesses that remains uncured, and, to the knowledge of the
applicable Service Company, there are no such violations that, individually or
in the aggregate, would have a material adverse effect on the Service
Businesses.
2.6. Insurance. The Service Companies have insurance coverage
with respect to the Service Businesses as is appropriate to the nature of the
business. Each of such policies is in full force and effect, and all premiums
due and payable thereunder have been fully paid when due.
3. Additional Representations and Warranties with Respect to the
Indemnitors. The Indemnitors hereby represent and warrant to the Company and
the Operating Partnership, as follows:
3.1. Authority Relative to this Agreement. All action of the
Indemnitors necessary to authorize the execution, delivery and performance of
this Agreement by the Indemnitors has been taken, and no other proceedings on
the part of the Indemnitors are necessary to authorize the execution and
delivery by the Indemnitors of this Agreement and the consummation by the
Indemnitors of the transactions hereunder.
Neither the execution and delivery of this Agreement by the
Indemnitors nor compliance by the Indemnitors with any of the provisions of this
Agreement will (i) result in a violation or breach of, or constitute with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which an Indemnitor is
a party or by which an Indemnitor may be bound, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to an Indemnitor,
except for violations, breaches or defaults that would not in the aggregate have
a material adverse effect on the business or financial condition of the
Indemnitors or the obligations of the Indemnitors hereunder
9
and, except for which waivers or consents have been obtained on or prior to the
date hereof.
3.2. Binding Obligations. This Agreement has been duly and
validly executed and delivered by the Indemnitors and constitutes a valid and
binding agreement of the Indemnitors, enforceable against the Indemnitors in
accordance with its terms, except as such enforcement may be subject to
bankruptcy, conservatorship, receivership, insolvency, moratorium or similar
laws affecting creditors' rights generally and to general principles of equity.
4. Indemnity; Limitations on Liability. Subject to the terms
hereof, the Indemnitors hereby agree to indemnify and hold harmless the
Company and the Operating Partnership from any damage, expense, loss, cost,
claim or liability (each a "Claim") suffered or incurred by the Company or
the Operating Partnership as a result of any inaccuracy in any representation
or warranty contained in Sections 1, 2 and 3 herein. Notwithstanding
anything to the contrary contained herein, (a) the liability of the
Indemnitors shall hereunder be joint and several and (b) the maximum
liability of the Indemnitors collectively shall not exceed $20,000,000 and
shall be satisfied exclusively from, and recourse of the Company and the
Operating Partnership shall be limited exclusively to, the rights of the
Indemnitors to the Units pledged by the Indemnitors pursuant to a Pledge
Agreement (the "Pledge Agreement") in the form of Exhibit A attached hereto.
The Indemnitors shall not have any personal liability to the Company or the
Operating Partnership under the terms of this Agreement and the Indemnitors
shall not have any liability resulting from any Claims or other assertion of
liability under this Agreement unless and until such damages shall exceed in
the aggregate $250,000. The liability of the Indemnitors hereunder is
expressly limited to the actual out-of-pocket expenses, damages, losses,
costs or liabilities suffered or incurred by the Company or the Operating
Partnership (after application of any insurance proceeds (including, without
limitation, reasonable attorney's fees and expenses and other costs incurred
in defending any claims) as a result of a breach by an Indemnitor of any of
the representations and warranties set forth in Sections 1, 2 or 3 hereof and
with respect to which a claim is made in accordance with Section 5 hereof,
and the Indemnitors shall not be liable to the Company or the Operating
Partnership under this Agreement for any indirect, special, consequential,
loss of
10
profits, loss of value or other similar speculative damages asserted or claimed
by the Company or the Operating Partnership.
5. Survival. It is the express intention and agreement of the
parties hereto that the representations and warranties of the Indemnitors set
forth in this Agreement. Shall survive the consummation of the Transactions for
the period ending one (1) year from the date hereof and shall expire and be
terminated and extinguished forever at such time, except with respect to claims
asserted against the Indemnitors in good faith pursuant hereto by written notice
from the Company, the Operating Partnership or the Services Company to the
indemnitor at any time within the one (1) year period following the date
hereof. Any written notice given within such one (1) year period must set
forth the nature and details of the claim with specificity in order to
constitute a valid notice pursuant to the preceding sentence.
6. Pledge of Units by Indemnitors. As security for the full and
timely performance of their obligations hereunder, the Indemnitors shall execute
and deliver the Pledge Agreement and make the deliveries and perform the
obligations required thereunder.
7. Miscellaneous.
7.1. Notices. All notices, demands, requests or other
communications which may be or are required to be given or made by the
Indemnitors or by the Company or the Operating Partnership pursuant to this
Agreement shall be in writing and shall be hand delivered or transmitted by
certified mail, express overnight mail or delivery service, telegram, telex or
facsimile transmission to the parties at the following addresses:
If to an Indemnitor: c/o XX Xxxxx Realty Corp.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
11
With a copy to: Greenberg, Traurig, Hoffman,
Lipoff, Xxxxx & Quentel
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Ivanhoe, Esq.
If to the Operating XX Xxxxx Operating
Partnership or the Partnership, L.P.
Company, to: 00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to: Xxxxx & Xxxx LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request or communication which shall be given or
made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is deliver ed to the addressee (with the
delivery receipt, the affidavit of a messenger or (with respect to a telex) the
answer back being deemed conclusive but not exclusive evidence of such delivery)
or at such time as delivery is refused by the addressee upon presentation.
7.2. Benefit and Assignment. No party hereto shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of the Indemnitors (if the assignor is the
Operating Partnership, the Company or the Service Companies) or the Operating
Partnership, the Company and the Service Companies (if the assignor is the
Indemnitors), which consent shall not be unreasonably withheld; and any
purported assignment contrary to the terms hereof shall be null, void and of no
force and effect.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors
12
and assigns as permitted hereunder. No person or entity other than the parties
hereto is or shall be entitled to bring any action to enforce any provision of
this Agreement against any of the parties hereto, and the covenants and
agreements set forth in this Agreement shall be solely for the benefit of, and
shall be enforceable only by, the parties hereto or their respective successors
and assigns as permitted hereunder.
7.3. Entire Agreement; Amendment. This Agreement, the Pledge
Agreement and the Schedules hereto contain s the final and entire agreement
between the parties hereto with respect to the subject matter hereof and is
intended to be an integration of all prior negotiations and understandings. The
parties of this Agreement shall not be bound by any terms, conditions,
statements, warranties or representations, oral or written, relating to the
subject matter hereof not contained or referred to herein or therein. No change
or modification of this Agreement shall be valid unless the same is in writing
and signed by the parties hereto.
7.4. No Waiver. No delay or failure on the part of any party
hereto in exercising any right, power or privilege under this Agreement or under
any other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise of such right, power or privilege. No waiver shall be valid against
any party hereto unless made in writing and signed by the party against whom
enforcement of such waiver is sought and then only to the extent expressly
specified therein.
7.5. Governing Law. This Agreement, the rights and obligations
of the parties hereto and any claims or disputes relating thereto shall be
governed by and construed under the laws of the State of New York (but not
including the choice of law rules thereof).
7.6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
13
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed and delivered on its
behalf as of the date first above written.
___________________________
XXXXXXX X. XXXXX
HIPPOMENES ASSOCIATES, LLC
By: ________________________
64-36 REALTY ASSOCIATES
By: ________________________
673 FIRST ASSOCIATES L.P.
By: ________________________
GREEN 0XX XXXXXX ASSOCIATES, L.P.
By: ________________________
[X.X. XXXXX REALTY, INC.]
By: ________________________
X.X. XXXXX PROPERTIES, INC.
By: ___________________________
14
EBG MIDTOWN SOUTH CORP.
By: ___________________________
15
XX XXXXX OPERATING PARTNERSHIP, L.P.
By: ___________________________
XX XXXXX REALTY CORP.
By: ___________________________
16
