EXHIBIT 10.8
CONTRIBUTION AGREEMENT
RELATING TO
THE CAPITALIZATION
OF
MAR MAR REALTY TRUST
BY
AND
AMONG
MAR MAR REALTY TRUST,
MAR MAR REALTY L.P.
AND
VARIOUS CONTRIBUTORS IDENTIFIED HEREIN
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
TABLE OF CONTENTS
Page
ARTICLE 1: DEFINITIONS...................................................................................1
1.1 Definitions............................................................................1
ARTICLE 2: CONTRIBUTION PROVISIONS................................................................................8
2.1 [Intentionally Omitted]................................................................8
2.2 [Intentionally Omitted]................................................................8
2.3 Property Contributors..................................................................8
2.4 Partnership Interest Contributors......................................................8
2.5 Title Insurance........................................................................9
2.6 Survey................................................................................10
2.7 Access to Information; Environmental Audits...........................................11
2.8 Investigation.........................................................................11
ARTICLE 3: COVENANTS AND OTHER AGREEMENTS...............................................................12
3.1 Implementing Agreement................................................................12
3.2 Preservation of Business..............................................................12
3.3 Consents and Approvals................................................................12
3.4 Maintenance of Insurance..............................................................12
3.5 Exclusivity...........................................................................13
3.6 New Contracts and Liens...............................................................13
3.7 Leasing Arrangements..................................................................13
3.8 Obligation to Supplement Information..................................................13
3.9 TI and Repair Contracts...............................................................13
3.10 Damage................................................................................14
3.11 Condemnation..........................................................................14
3.12 Material Agreements...................................................................14
3.13 Completion of IPO.....................................................................14
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF CONTRIBUTORS...............................................15
4.1 Due Organization......................................................................15
4.2 Due Authorization.....................................................................15
4.3 Conflicts.............................................................................16
4.4 Litigation............................................................................16
4.5 Contractors and Suppliers; Service, TI and Repair Contracts...........................16
4.6 Leases and Rent Roll..................................................................17
4.7 Operating Statements..................................................................17
4.8 Permits, Legal Compliance and Notice of Defects.......................................17
4.9 Environmental.........................................................................18
4.10 [Intentionally Omitted]...............................................................19
4.11 Ownership of the Title Holding Partnerships and Properties............................19
4.12 Distributions and Payments............................................................19
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4.13 Securities............................................................................20
4.14 No Brokers............................................................................20
4.15 Solvency..............................................................................20
4.16 Certain Tax Matters...................................................................21
ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE PARTNERSHIP..........................................................................22
5.1 Due Organization......................................................................22
5.2 Due Authorization.....................................................................22
5.3 Conflicts.............................................................................23
5.4 Litigation............................................................................23
5.5 Solvency..............................................................................23
5.6 Written Materials.....................................................................24
5.7 No Brokers............................................................................24
5.8 Financial Statements..................................................................24
5.9 REIT and Partnership Status...........................................................24
ARTICLE 6: CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
AND THE PARTNERSHIP..........................................................................24
6.1 Representations and Warranties........................................................24
6.2 Compliance with Agreements and Covenants..............................................25
6.3 Tenant Estoppels......................................................................25
6.4 Other Contracts.......................................................................25
6.5 Legal Proceedings.....................................................................25
6.6 IPO Closing...........................................................................26
6.7 Representation Letter. ..............................................................26
6.8 Consents and Approvals................................................................26
6.9 Other Conditions......................................................................26
ARTICLE 7: CONDITIONS PRECEDENT TO OBLIGATIONS OF CONTRIBUTORS..........................................26
7.1 Representations and Warranties........................................................26
7.2 Compliance with Agreements and Covenants..............................................26
7.3 Legal Proceedings.....................................................................27
7.4 IPO Closing...........................................................................27
7.5 Minimum Asset Size....................................................................27
7.6 Consents and Approvals................................................................27
7.7 Release of Liability..................................................................27
7.8 Tax Related Agreement.................................................................27
7.9 Other Conditions......................................................................27
ARTICLE 8: CLOSING......................................................................................28
8.1 Closing...............................................................................28
8.2 Deliveries by Contributors............................................................28
8.3 Deliveries by the Company and the Partnership.........................................30
ARTICLE 9: COOPERATION ON TAX MATTERS...................................................................31
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ARTICLE 10: POST-CLOSING COVENANTS OF CONTRIBUTOR........................................................32
ARTICLE 11: PRORATIONS AND ADJUSTMENTS...................................................................32
11.1 Prorations............................................................................32
11.2 Tenant Reconciliations and Post-Closing Adjustments...................................35
11.3 Leasing Commissions...................................................................35
11.4 TI Contracts, Tenant Allowances and Capital Improvements..............................35
11.5 Repair Contracts......................................................................37
11.6 Tenant Deposits.......................................................................37
11.7 Wages.................................................................................37
11.8 Utility Deposits......................................................................37
11.9 Sales Commissions.....................................................................37
11.10 [Intentionally Omitted]......................................................37
ARTICLE 12: TERMINATION AND REMEDIES.....................................................................38
12.1 Termination...........................................................................38
12.2 Effect of Termination.................................................................38
12.3 Termination as to Specific Properties.................................................38
ARTICLE 13: INDEMNIFICATION..............................................................................39
13.1 Contributors' Indemnity...............................................................39
13.2 Partnership's Indemnity...............................................................39
13.3 Company's Indemnity...................................................................40
13.4 Environmental Excluded................................................................40
13.5 Procedure.............................................................................40
13.6 Limitation on Liability...............................................................40
13.7 Exclusivity...........................................................................41
ARTICLE 14: MISCELLANEOUS................................................................................41
14.1 Survival.............................................................................41
14.2 Expenses.............................................................................41
14.3 Additional Actions and Documents.....................................................41
14.4 Remedies Cumulative..................................................................42
14.5 Entire Agreement; Amendment..........................................................42
14.6 Notices..............................................................................42
14.7 Waivers..............................................................................42
14.8 Counterparts.........................................................................42
14.9 Governing Law........................................................................42
14.10 Assignment.............................................................................43
14.11 No Third Party Beneficiaries...........................................................43
14.12 Confidentiality........................................................................43
14.13 Severability...........................................................................45
14.14 Company Access to Information..........................................................45
14.15 Information and Audit Cooperation......................................................45
14.16 Binding Effect.........................................................................45
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14.17 Headings...............................................................................45
14.18 Limitation of Liability................................................................45
14.19 Waiver of Jury Trial...................................................................46
EXHIBITS
A - Form of Partnership Agreement
B - Form of Registration Rights and Lock-Up Agreement
E - Certificate of Advance Stores Company, Incorporated
F - Form of Tenant Estoppel
G - Joint Escrow Instruction Letter - New Title Insurance
H - Form of Xxxx of Sale and Assignment and Assumption of Leases,
Contracts and Intangible Property
K - Form of Audit Letter
L - Tax Information
M - Form of Tax-Related Agreement
N - Title Holding Partnerships Tax Returns
SCHEDULES
A - Properties, Descriptions and Contribution Amounts per Contributor
1.2 - Assumed Mortgage Debt
1.3 - Current Title Policies
2.3 - Property Contributors
2.4 - Partnership Interest Contributors and Title Holding Partnerships
4.5 - Service Contracts, TI Contracts and Repair Contracts
4.9 - Environmental Reports
10.1 - Contributor Maintenance Obligations
11.3 - Leasing Commissions
X - Disclosures
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT ("Agreement") is made and entered into as
of the ____ day of July, 1998, among the parties set forth on the signature
pages hereto that are designated as a Contributor (together, the "Contributors"
and, individually, a "Contributor"), Mar Mar Realty Trust, a Maryland real
estate investment trust (the "Company"), and Mar Mar Realty L. P., a Delaware
limited partnership (the "Partnership"), under the following circumstances:
RECITALS:
1. Each Contributor owns, either directly or indirectly, the properties
or leasehold interests therein (such properties or leasehold interests, together
with all other rights, privileges, hereditaments and interests appurtenant
thereto constituting Real Property, and all Improvements, Leases, Personal
Property and Intangible Property (each as defined herein) relating thereto, the
"Properties" and, individually, a "Property") listed opposite its name on
Schedule A.
2. The Contributors, the Partnership and the Company desire, subject to
the terms and conditions hereinafter set forth, that the Contributors will
contribute the Properties, directly or indirectly, to the Partnership in
exchange for LP Units (as defined herein), pursuant to a partnership agreement
("Partnership Agreement") substantially in the form of Exhibit A in which the
Contributors shall be limited partners and the Company shall be the sole general
partner, as determined according to the Contribution Amount for, and net equity
in, each Property, all as provided for herein.
3. The Company and the Contributors will, contemporaneously with the
IPO Closing Date (as defined herein), enter into a registration rights and
lock-up agreement substantially in the form of Exhibit B (the "Registration
Rights Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
ARTICLE 1: DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
"Adjusted Contribution Amount" means, with respect to each
Contributor, the aggregate Contribution Amount for all Properties
contributed, directly or indirectly, by such Contributor increased or
decreased as follows: first, by deducting the principal amount of all
then-outstanding mortgage indebtedness encumbering the Properties owned
by such Contributor as of the Final Allocation Date; second, by
deducting the amount (determined by the Company in good faith and
agreed to by such Contributor) of all liabilities, claims,
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demands, losses or damages arising from any breaches by such
Contributor of its representations and warranties in Article 4 which
are known prior to the Final Allocation Date; third, at the election of
a Contributor (which election must be made by written notice to the
Company prior to the Final Allocation Date), by deducting any Net
Proration Amount which is due to the Partnership from such Contributor
(any Net Proration Amount due to such Contributor from the Partnership
shall be made in cash in accordance with Article 11); fourth, to the
extent provided in Section 3.10, by deducting the amount of any damage
(determined by the Company in good faith and agreed to by such
Contributor) to a Property owned by such Contributor as determined
prior to the Final Allocation Date; fifth, by deducting the amount of
any other known and determinable liabilities (determined by the Company
in good faith and agreed to by such Contributor) relating to a Property
owned by such Contributor as determined prior to the Final Allocation
Date; sixth, by deducting the Contribution Amount (and not making any
adjustments pursuant to clauses "first" through "fifth" above) for any
Properties which, subsequent to the date hereof and prior to the
Determination Time, have been excluded from the Consolidation pursuant
to Section 12.3; and seventh, by deducting the amount of any deed
transfer tax relating to the contribution of any of the Properties
located in the Commonwealth of Pennsylvania. If any of the items
discussed in clauses "second," "third," "fourth" and "fifth" above have
occurred, but there has not been agreement between the Company and the
applicable party on or before the required adjustment date as set forth
above, then, to the extent of such disagreement, such item shall not
result in an adjustment to the Contribution Amount of such party,
provided, that no party shall be deemed to have waived any of its other
rights or remedies with respect to such item.
"Assignment" has the meaning set forth in Section 8.2(b).
"Assumed Mortgage Debt" means the existing mortgage
indebtedness as set forth on Schedule 1.2 which encumbers certain of
the Properties to be contributed, directly or indirectly, by
Contributors to the Partnership and which indebtedness will be assumed
by the Partnership at the Closing.
"Business Day" means any day of the year other than
Saturday, Sunday or any other day on which banks located in New York,
New York generally are closed for business.
"Closing" has the meaning set forth in Section 8.1.
"Closing Date" has the meaning set forth in Section 8.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Shares" means common shares of beneficial interest,
par value $0.01 per share, of the Company.
"Company" has the meaning set forth in the Preamble.
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"Consolidation" means the consolidation of the Properties as
contemplated by this Agreement.
"Consolidation Expenses" means all costs and expenses
incurred by the Company and the Partnership in structuring and
consummating the Consolidation, including, but not limited to, legal
fees, advisory fees, accounting fees, environmental audit and
engineering fees, transfer taxes (except for those respecting the
Properties located in the Commonwealth of Pennsylvania and being
contributed hereunder), title insurance and survey fees, lender fees
and all other costs and expenses in connection with (a) the formation
and organization of the Partnership and the Company, (b) the
structuring of the terms and conditions of the Consolidation, (c) the
offering and issuance of Common Shares and Units, (d) all steps taken
to conduct the transaction in compliance with applicable Federal and
state corporate, partnership, securities and other laws, (e) the
receipt of all necessary consents and approvals, including those
required from regulatory bodies on or before (and remaining in effect
at the consummation of) the Consolidation, (f) the solicitation of the
Contributors to participate in the Consolidation and (g) the
acquisition by the Partnership in the Consolidation of the assets and
the assumption of the Assumed Mortgage Debt. All environmental audit
and engineering fees, transfer taxes (except for those respecting the
Properties located in the Commonwealth of Pennsylvania and being
contributed hereunder) and title insurance and survey fees incurred
specifically in connection with the Consolidation shall be paid by the
Company and the Partnership and shall be considered "Consolidation
Expenses". "Consolidation Expenses", however, do not include costs and
expenses which have been incurred by the Contributors in the ordinary
course of business which are not related to the Consolidation, costs
related to the Consolidation as to which the Contributors have agreed
separately to bear directly, or costs related to the independent review
of the Consolidation by the Contributors or their own individual
investment advisors and legal counsel.
"Contributed Capital" means, as of the Closing, the sum of
(a) the aggregate Adjusted Contribution Amount of all Contributors and
other persons who are contributing their properties to the Partnership
for cash using a formula equivalent to the definition of Adjusted
Contribution Amount and (b) the product of the IPO Share Price and the
number of Common Shares issued to the public in the IPO.
"Contribution Amount" means, with respect to each
Contributor, the dollar amount assigned individually to each Property,
and in the aggregate to all Properties to be contributed, directly or
indirectly, by such Contributor as set forth on Schedule A.
"Contributors" has the meaning set forth in the Preamble.
"Determination Time" means the time at which the Form S-11
registration statement of the Company for the IPO is declared effective
by the Securities and Exchange Commission.
"Environmental Laws" has the meaning set forth in Section
4.9.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Fair Market Value" means, with respect to any Common Shares
or Units, the closing sales price if the Common Shares are listed on a
national securities exchange, or if not so listed, as reported on the
NASDAQ National Market System, or if there have been no sales on any
such exchange or the NASDAQ National Market System on any day, the
average of the highest bid and lowest asked prices at the end of such
day, or if on any day the Common Shares are not so listed, the average
of the representative bid and asked prices quoted in the NASDAQ System
as of 4:00 P.M., New York time, on such day, or if on any day the
Common Shares are not so quoted, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a
period of 21 days consisting of the day as of which "Fair Market Value"
is being determined and the 20 consecutive business days prior to such
day; provided that, if the Common Shares are listed on any national
securities exchange, the term "business days" as used in this sentence
means business days on which such exchange is open for trading. If at
any time the Common Shares are not listed on any national securities
exchange or the NASDAQ National Market System or quoted in the NASDAQ
System or the domestic over-the-counter market, the "Fair Market Value"
shall be the fair value thereof determined in good faith by the
Company's Board of Trustees.
"Final Allocation Date" means the last day of the calendar
month first preceding the month in which the final preliminary
prospectus generally distributed to prospective purchasers in
connection with the IPO is dated.
"GP Units" means partnership units issued to the Company as
general partner evidencing ownership in the Partnership as provided in
the Partnership Agreement.
"Hazardous Materials" has the meaning set forth in Section
4.9.
"Improvement" has the meaning set forth in the definition of
Real Property.
"Intangible Property" means, with respect to each Property,
all intangible property now or on the Closing Date owned by the
Contributors or the Title Holding Partnerships (or in which the
Contributors or the Title Holding Partnerships have any interest, but
only to the extent of such interest) and used in connection with the
Real Property or the Personal Property, to the extent assignable in
accordance with its terms or under applicable law, including, without
limitation, all right, title and interest in and to all: licenses,
approvals, applications and permits issued or approved by any
governmental authority and relating to the use, operation, ownership,
occupancy and/or maintenance of the Real Property or the Personal
Property; TI Contracts, Repair Contracts and Service Contracts; utility
arrangements; indemnities; claims against third parties; plans;
drawings; specifications; surveys; maps; engineering reports and other
technical descriptions; books and records;
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insurance proceeds and condemnation awards; and all other intangible
rights used in connection with or relating to the Real Property or the
Personal Property, including rights, if any, to current and past names
of the Real Property.
"IPO" means the initial public offering of Common Shares of
the Company.
"IPO Closing Date" means the date on which the IPO is
consummated.
"IPO Filing Date" means the date on which the Form S-11
registration statement relating to the IPO is first filed with the
Securities and Exchange Commission.
"IPO Proceeds" means, with respect to each Contributor, an
amount equal to the product obtained by multiplying the Ownership Units
issued to such Contributor by the IPO Share Price.
"IPO Share Price" means the initial public offering price of
the Common Shares in the IPO.
"Landlord Default" has the meaning set forth in Section 6.3.
"Leases" means, with respect to each Property, all leases
and other agreements granting the right to occupy or use the
Improvements, including leases which may be made by the Contributors or
the Title Holding Partnerships after the date hereof and before the
Closing as permitted by this Agreement.
"Lien" means any mortgage, lien (statutory or other),
charge, restriction, pledge, security interest, option, lease or
sublease, claim, right of any third party, easement, encroachment or
other encumbrance.
"LP Units" means partnership units issued to a limited
partner evidencing ownership in the Partnership as provided in the
Partnership Agreement.
"Net Proration Amount" means, with respect to each
Contributor in relation to the Company and the Partnership, an amount
equal to the sum of all the credits and debits between such parties
with respect to the items to be prorated under Article 11 of this
Agreement.
"Operating Expense Pass-Throughs" has the meaning set forth
in Section 11.1(c).
"Ownership Units" means, with respect to each Contributor, a
number of LP Units as provided in Article 2, equal to the Adjusted
Contribution Amount for such Contributor as the case may be, divided by
(ii) the IPO Share Price.
"Partnership" has the meaning set forth in the Preamble.
5
"Partnership Agreement" has the meaning set forth in the
Recitals.
"Partnership Interest Contributor" means each Contributor
which owns an interest in a Title Holding Partnership, as set forth on
Schedule 2.4.
"Permitted Exceptions" means (a) those exceptions contained
on Schedule "B" of the title policy currently held by the applicable
Contributor or Title Holding Partnership, a list of which title
policies is set forth on Schedule 1.3 (excluding Liens securing or
evidencing indebtedness other than Assumed Mortgage Debt), (b) such
additional encumbrances as do not adversely affect the use, value or
marketability of the Property affected thereby, (c) those additional
matters that may be specifically approved in writing by the Company
(which approval shall not be unreasonably withheld), (d) the Leases,
(e) Liens for taxes which are not yet due and payable and (f) Liens
evidencing or securing Assumed Mortgage Debt to the extent and in the
manner such Liens are in existence on the date hereof.
"Person" means any individual, corporation, partnership,
limited liability company, trust, unincorporated organization,
association or other entity.
"Personal Property" means, with respect to each Property,
all tangible property owned by the Contributor or the Title Holding
Partnership (or in which the Contributors and the Title Holding
Partnerships have any interest, but only to the extent of such
interest) now or on the Closing Date and used in conjunction with the
operation, maintenance, ownership and/or occupancy of the Real Property
including, without limitation: furniture; furnishings; art work;
sculptures; paintings; office equipment and supplies; landscaping;
plants; lawn equipment; and whether stored on or off the Real Property,
tools and supplies, maintenance equipment, materials and supplies used
in connection with the operation, maintenance, ownership or occupancy
of the Real Property, shelving and partitions and any construction and
finish materials and supplies not incorporated into the Improvements
and held for repairs and replacements thereto, wherever located. The
Personal Property does not include tools, supplies and equipment owned
by the property manager.
"Private Offering Materials" means the private offering
materials distributed to the Contributors from the Company, together
with any amended or supplemental materials regarding the Consolidation
distributed prior to the date of this Agreement by the Company to all
Contributors.
"Property" has the meaning set forth in the Recitals and
each Property is described on Schedule A.
"Real Property" means, with respect to each Property, the
fee simple absolute estate (or other estate set forth on Schedule A) in
and to the real property described or referred to on Schedule A,
together with all rights, privileges, hereditaments and interests
appurtenant thereto including, without limitation: any water and
mineral rights, development rights, air
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rights, easements and any and all rights of the Contributors and the
Title Holding Partnerships in and to any streets, alleys, passages and
other rights of way; and all buildings and other improvements located
on or affixed to such real property and all replacements and additions
thereto (collectively, "Improvements").
"Registration Rights Agreement" has the meaning set forth in
the Recitals.
"Rent Roll" means the rent roll(s) specified in Section 4.6.
"Repair Contracts" has the meaning set forth in Section 3.9.
"Securities Act" has the meaning set forth in Section 4.13.
"Service Contracts" means, with respect to each Property,
all management, service, supply, equipment rental and other contracts
related to the operation of the Real Property or the Personal Property.
"Tax" or "Taxes" means all taxes, however, denominated,
imposed by any federal, state, local or foreign government or any
agency or political subdivision of any government, which taxes shall
include, without limiting the generality of the foregoing, all income
or profits taxes (including any interest, penalties or additions
attributable to or imposed on or with respect to any such taxes), real
property gain taxes, payroll and employee withholding taxes,
unemployment insurance taxes, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other government charges, and other
obligations of the same or of a similar nature to any of the foregoing.
"Tax Return" means any return, report, information return or
schedule or other document (including, without limitation, any related
or supporting information or schedule, such as self-employment
schedules and returns, federal Tax Form 1099's for all applicable
transactions, property tax filings, sales and use tax returns, federal
and state payroll reports and federal Tax Form 5500's) filed or
required to be filed with any federal, state, local or foreign
governmental entity or other authority in connection with the
determination, assessment or collection of any Tax or the
administration of any laws, regulations or administrative requirements
relating to any Tax.
"TI Contracts" has the meaning set forth in Section 3.9.
"Title Company" means, at the Company's option, (a) with
respect to each Property, the title insurance company which issued the
owner's policy currently held by the applicable Contributor or Title
Holding Partnership covering such Property, or (b) a nationally
recognized title insurance company acceptable to the Company.
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"Title Holding Partnership" means an entity holding title to
a property which is organized under state law as a general or limited
partnership and is treated as a partnership for U.S. federal income tax
purposes and not as an association taxable as a corporation.
"Underlying Shares" has the meaning set forth in Section
4.13.
"Units" means partnership units evidencing ownership in the
Partnership as provided in the Partnership Agreement, whether LP Units
or GP Units.
ARTICLE 2: CONTRIBUTION PROVISIONS
Upon the terms and subject to the conditions of this Agreement, the
events set forth in this Article 2 shall be effected as of the IPO Closing Date.
The contribution of the Properties to the Partnership pursuant to this Article 2
shall constitute "Capital Contributions" pursuant to Section 4.1 of the
Partnership Agreement and are intended to be governed by Section 721 of the
Code.
2.1 [Intentionally Omitted]
2.2 [Intentionally Omitted]
2.3 Property Contributors. Each Contributor listed on Schedule 2.3
hereby agrees to convey and transfer each of the Properties listed on Schedule
2.3 opposite its name, subject to no Liens other than Permitted Exceptions, and
the Partnership agrees to accept such Properties and to issue to such
Contributor on the IPO Closing Date a number of LP Units equal to its Ownership
Unit amount.
2.4 Partnership Interest Contributors. Each Partnership Interest
Contributor hereby agrees to sell, transfer and assign to the Partnership all
right, title and interest in and to the partnership interest it holds in the
Title Holding Partnership listed on Schedule 2.4 opposite its name, free and
clear of all Liens, and the Partnership hereby agrees to purchase such
partnership interest and to issue to such Partnership Interest Contributor on
the IPO Closing Date a number of LP Units equal to its Ownership Unit amount
relating to such Title Holding Partnership (determined as provided in clause (b)
of the definition of "Adjusted Contribution Amount" and in the definition of
"Ownership Units").
2.5 Title Insurance.
(a) Each of the Properties is currently covered by an owner's or
lender's policy of title insurance held by the applicable Contributor or Title
Holding Partnership.
(b) The Company or the Partnership shall obtain (or cause to be
obtained) from the Title Company at Closing an owner's or lender's title
insurance policy issued by the Title Company in favor of the Partnership, (i)
dated the Closing Date, (ii) in the full amount of the Contribution Amount with
respect to the applicable Property, (iii) in the form of an American Land Title
8
Association Owner's Policy, Standard Form B (or such other form as is acceptable
to the Company, if such ALTA form is not available in the state in which the
applicable Property is located), (iv) subject only to the standard exclusions
from coverage contained in such policy and the Permitted Exceptions, with full
extended coverage over all standard and general exceptions (where available),
and (v) which policy shall contain the following endorsements, if available in
such state:
(A) an ALTA 3.1 zoning endorsement;
(B) a non-imputation endorsement;
(C) an owner's comprehensive endorsement;
(D) an access endorsement;
(E) a contiguity endorsement, if applicable;
(F) a survey endorsement; and
(G) such other endorsements as the Company shall
reasonably require after review of the survey, title
insurance commitment and Leases.
(c) The transactions contemplated by this Article 2 shall be closed by
means of a New York style closing, with the concurrent delivery of the documents
of title and transfer of interests, delivery of the title policy and/or
endorsements, and delivery of the applicable Ownership Units. The Company and/or
the Partnership shall provide any undertaking to the Title Company reasonably
necessary to effectuate the New York style closing.
(d) At the Company's request, each Contributor or Title Holding
Partnership shall promptly deliver to the Company a copy of its existing title
insurance policy. Each Contributor and Title Holding Partnership shall, at or
prior to Closing, deliver or cause to be delivered such commercially reasonable
affidavits, certificates, information and customary instruments of
indemnification, such as lien indemnitees, as shall be reasonably required to
induce the Title Company to issue the title insurance policies contemplated by
this Section 2.5.
2.6 Survey.
(a) Prior to the Closing, the Company shall obtain a survey of each
Property, prepared by a land surveyor licensed to perform surveys in the state
in which such Property is located, that either:
(i) meets the "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys" as adopted by the American Land Title
Association/American Society and American Congress on Surveying and
Mapping in 1992 (or equivalent in the state in which such Property is
located), and is certified by such surveyor as of a date not earlier
than six
9
months prior to the Closing Date in favor of the Company and the
appropriate Title Company and any lender(s) designated by the Company,
and contains and discloses, subject to reasonable exceptions that do
not materially adversely affect the use, value or marketability of such
Property, the following:
(A) The boundaries of the Real Properties
conforming to the legal description
contained in Schedule A, which boundaries
enclose a contiguous and uninterrupted area;
(B) The location of all Improvements thereon;
(C) That all Improvements are within lot lines
and applicable side-yard, rear-yard, and
building line or set-back requirements;
(D) The location of all streets and public ways;
(E) No encroachment of the Improvements on the
Real Properties onto adjacent premises or
onto any public way and no encroachment of
any building or improvement on adjacent
premises onto the Real Properties;
(F) The area of the Real Property, expressed in
square feet;
(G) The location of all easements and
rights-of-way, recorded or visible; and
(H) Whether the Properties are located in an
area designated by an agency of the United
States as being subject to flood hazards; or
(ii) is otherwise in such form (and accompanied by such
certificates, affidavits or undertakings) as shall be required by the
Title Company to issue the so-called comprehensive endorsement
contemplated by Section 2.5 and to delete the so-called standard survey
exceptions in the applicable title insurance policy.
(b) At the Company's request, each Contributor and Title Holding
Partnership shall promptly deliver to the Company a copy of the surveys of its
Properties in its possession.
2.7 Access to Information; Environmental Audits. At all times before
the Closing Date, each Contributor and Title Holding Partnership shall provide
the Company and its affiliates, their respective agents, employees, consultants
and representatives, with continuing and reasonable access to all files, books,
records and other materials in the possession or control of such Contributor or
Title Holding Partnership relating to the Properties and to the operations,
assets and liabilities of such Contributor or Title Holding Partnership and the
right to examine, inspect and make copies of such materials as appropriate.
During such period, each Contributor and Title Holding Partnership
10
shall also provide for such parties to have reasonable physical access to the
Properties for the purpose of conducting surveys, architectural, engineering,
geotechnical and environmental inspections and tests (including sampling and
invasive testing for the presence of Hazardous Materials performed in connection
with Phase I environmental audits and, if necessary and with the prior written
approval of the Contributor, Phase II environmental audits), feasibility studies
and any other inspections, studies or tests reasonably required by them. If such
prior written approval of a Contributor or Title Holding Partnership to perform
such a Phase II environmental audit is not provided, such Property shall not be
contributed, directly or indirectly, to the Partnership unless the Company shall
agree. The Company may conduct a "walk-through" of tenant spaces upon reasonable
and appropriate notice to tenants and subject to the rights of tenants. In the
course of its investigations, the Company may make inquiries to third parties
including, without limitation, contractors, property managers, parties to TI
Contracts, Repair Contracts or Service Contracts, if any, lenders, tenants and
municipal, local and other governmental officials and representatives.
2.8 Investigation.
Notwithstanding any other provision of this Agreement, the Company
shall have a period expiring at the close of business on the 60th day following
the date hereof to perform such examinations, inspections, testing, studies
and/or investigations of the condition of the title to each Property and the
environmental condition of each Property. If, at the conclusion of such 60-day
period, the Company shall, in its sole and absolute discretion, be dissatisfied
with the condition of title or environmental condition of one or more Properties
(a "Disqualified Property") it shall so notify the applicable Contributor in
writing and may exclude such Disqualified Property or Properties from the
Consolidation, in which event the Contribution Amount of such Contributor shall
be adjusted accordingly. If the Company shall not have provided such notice as
to any Disqualified Property, the Company shall not be entitled to assert a
breach of any representation or warranty for any purpose hereunder including,
without limitation, Section 12.3 (except as a result of actions by the
Contributor occurring after conclusion of such 60-day period).
ARTICLE 3: COVENANTS AND OTHER AGREEMENTS
3.1 Implementing Agreement. Subject to the terms and conditions hereof,
each party hereto shall use its commercially reasonable efforts to take all
action required of it to fulfill its obligations under the terms of this
Agreement and to facilitate the consummation of the transactions contemplated
hereby. The covenants of the Contributors made in this Article 3 are made by
each Contributor severally solely with respect to itself, and the covenants with
respect to Properties are made by each Contributor solely with respect to each
Property in which such Contributor has an ownership interest.
3.2 Preservation of Business. From the date of this Agreement until the
Closing Date, the Contributors shall cause the Properties to be operated only in
the ordinary and usual course of business and consistent with past practice and
maintained in good working condition and repair (ordinary wear and tear
excepted), shall preserve the goodwill and advantageous relationships of the
Contributors and the Title Holding Partnerships with customers, suppliers,
independent contractors,
11
employees and other Persons material to the operation of the Properties, shall
perform their material obligations under the Leases and other material
agreements affecting the Properties and shall not take or permit any action or
omission which would cause any of the representations or warranties of the
Contributors contained herein to become inaccurate or any of the covenants of
the Contributors herein to be breached. Notwithstanding the foregoing, the Title
Holding Partnerships shall be permitted to make distributions of items to its
partners (other than the Properties owned by it as of the date hereof) prior to
Closing so long as such distributions would not cause any of the representations
or warranties of the Contributors contained hereto to become inaccurate or any
of the covenants of the Contributors herein to be breached.
3.3 Consents and Approvals. The Contributors shall use their
commercially reasonable efforts to obtain all consents, approvals, certificates
and other documents required in connection with the performance by them of this
Agreement and the consummation of the transactions contemplated hereby prior to
the Final Allocation Date. The Contributors and the Title Holding Partnerships,
as the case may be, shall make all filings, applications, statements and reports
to all governmental authorities and other Persons which are required to be made
prior to the Closing Date by or on behalf of the Contributors, the Title Holding
Partnerships or any of their respective affiliates pursuant to any applicable
law or contract in connection with this Agreement and the transactions
contemplated hereby. The Company and the Partnership shall make all filings,
applications, statements and reports to all governmental authorities and other
Persons which are required to be made prior to the Closing Date by or on behalf
of the Company and the Partnership or any of their affiliates pursuant to any
applicable law or contract in connection with this Agreement and the
transactions contemplated hereby.
3.4 Maintenance of Insurance. The Contributors shall, or shall cause
the Title Holding Partnerships to, continue to carry their existing or
equivalent insurance with respect to the Properties through the Closing Date and
shall use their commercially reasonable efforts not to allow any material
breach, default, termination or cancellation of such insurance policies or
agreements to occur or exist.
3.5 Exclusivity. Without the Company's prior written consent which will
not be unreasonably withheld or delayed, the Contributors shall not provide,
except as may be required to be disclosed pursuant to a law or an order of any
court, any Confidential Material (as defined in Section 14.12(b)) concerning the
Properties to, solicit offers for, or participate in any discussions or
negotiations with, any Person other than the Company and the Partnership and the
Contributors' consultants and advisors and holders of debt currently encumbering
the Properties concerning any sale, financing, merger or other similar
transaction involving the Properties.
3.6 New Contracts and Liens. Without the Company's prior written
consent in each instance which will not be unreasonably withheld or delayed, the
Contributors, directly or indirectly, shall not, except as permitted by Section
3.7, grant, enter into, or amend, terminate or grant concessions regarding any
Liens affecting title to any Property or any contract or agreement that will be
an obligation affecting the Properties or binding on the Company or the
Partnership after the Closing except contracts entered into in the ordinary
course of business that are terminable without
12
cause on 30 days' notice (and the Contributors, as the case may be, agree, or to
cause the Title Holding Partnerships, to terminate any such contracts by the
Closing Date if the Company or the Partnership gives any such party notice at
least 30 days before the Closing Date).
3.7 Leasing Arrangements. The Contributors, directly or indirectly,
shall not enter into, amend, terminate or grant concessions regarding any Lease
unless the Company has given its written consent, which consent shall not be
unreasonably withheld or delayed. The Contributors shall provide the Company
with all material information related to each request for consent, including,
without limitation, lease form, lease terms, leasing commissions, tenant
improvement obligations and other lease procurement costs, description of
tenant's business and tenant's financial statements or a Xxxx & Bradstreet
credit report.
3.8 Obligation to Supplement Information. From time to time prior to
the Closing, the Contributors, the Company and the Partnership, shall promptly
disclose in writing to each other party to this Agreement any matter hereafter
arising or discovered which, to its knowledge, (a) would be reasonably likely to
have a material adverse effect on the condition, value, use or marketability of
a Property, or (b) if existing, occurring or known at the date of this Agreement
would have been required to be disclosed to the other parties or which would
render inaccurate in a material way any representation or warranty by the
disclosing party. No information provided pursuant to this Section 3.8 shall be
deemed to cure any inaccuracy in or breach of any representation, warranty or
covenant made in this Agreement.
3.9 TI and Repair Contracts. At least 10 days before the Closing Date,
the Contributors shall notify the Company in a written progress report as to
those contracts for tenant improvements under Leases ("TI Contracts"), if any,
and for repairs or restoration being performed on the Properties ("Repair
Contracts"), if any, that will not be completed by the Closing Date. Adjustments
for TI Contracts and Repair Contracts, if any, shall be made according to
Article 11. At the Closing, the Contributors shall assign or cause to be
assigned to the Partnership all of their, or the Title Holding Partnership's,
rights under, and the Partnership shall assume all of the Contributors' or Title
Holding Partnership's obligations under, any TI Contracts, Repair Contracts and
Service Contracts relating to the Properties.
3.10 Damage. The Contributors shall promptly after learning of the same
give the Company and the Partnership written notice of any material damage to
one or more of their, or the Title Holding Partnership's, respective Properties,
describing such damage, whether such damage is covered by insurance and the
estimated cost of repairing such damage. In the event of any such damage to one
or more of the Properties which under the applicable lease is not the Tenant's
responsibility to repair, (a) the Contributor or Title Holding Partnership
owning such damaged Property shall, to the extent practicable, begin repairs
prior to the Closing out of any insurance proceeds received by such Contributor
or Title Holding Partnership for the damage, (b) at the Closing, all insurance
proceeds due to such Contributor or Title Holding Partnership and not yet
received and all proceeds received by such Contributor or Title Holding
Partnership but not expended prior to the Closing shall be assigned or given, as
the case may be, to the Partnership (including rent loss insurance applicable to
any period from and after the Closing Date), (c) any
13
uninsured damage or deductible and any post-closing rent abatement not covered
by rent loss insurance proceeds delivered to such Contributor or Title Holding
Partnership, as reasonably estimated by the Company and reasonably approved by
such Contributor, shall be credited to the Partnership at Closing and (d) the
Partnership shall assume the responsibility for the repair after the Closing.
The appropriate Contributor shall be entitled to any excess of the insurance
proceeds received for the damage over and above the actual cost of repair and
restoration.
3.11 Condemnation. The Contributors shall promptly after learning of
the same give the Company and the Partnership written notice of any eminent
domain proceedings that are contemplated, threatened or instituted by any body
having the power of eminent domain with respect to one or more of their, or the
Title Holding Partnership's, respective Properties. By notice to the applicable
Contributor after the Company and the Partnership receive notice of such
contemplated, threatened or instituted proceedings, the Company and such
Contributor shall have the joint right during the pendency of this Agreement to
negotiate and otherwise deal with the condemning authority in respect of such
matter and shall cooperate in good faith in doing so. At the Closing, the
Contributor or the Title Holding Partnership shall assign to the Partnership its
entire right, title and interest in and to any condemnation award.
3.12 Material Agreements. The Contributors and the Title Holding
Partnerships shall not materially amend, modify or terminate any material
agreement except such agreements that may terminate pursuant to their own terms
prior to the Closing, except with the consent of the Company and the
Partnership, which will not be unreasonably withheld or delayed.
3.13 Completion of IPO. The Company shall use its commercially
reasonable efforts to complete the IPO (subject to the terms and conditions of
this Agreement) and to cause the proceeds of the IPO to be contributed to the
Partnership in accordance with the terms of the Partnership Agreement.
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF CONTRIBUTORS
Each Contributor hereby represents and warrants severally to the
Company and the Partnership as follows, except as set forth in a disclosure
letter delivered to each other party to this Agreement on or prior to the date
of this Agreement and attached as Schedule X. Representations and warranties
with respect to Properties are made by each Contributor solely with respect to
each Property in which such Contributor, or such Contributor's Title Holding
Partnerships, has an ownership interest. Each representation by a Contributor
with respect to a "Contributor" is made only with respect to such Contributor
and not to any other Contributor, unless otherwise specifically provided herein.
4.1 Due Organization. Each Contributor or Title Holding Partnership,
other than a Contributor who is a natural person, has been duly organized and is
validly existing and in good standing under the laws of its jurisdiction of
organization, and is qualified to do business and in good standing in all other
jurisdictions where such qualification is necessary to carry on its business as
14
now conducted except where the failure to so qualify would not have a material
adverse effect on the ability of such Contributor to perform its obligations
under this Agreement.
4.2 Due Authorization. Each Contributor, or such Contributor's Title
Holding Partnership, has full power and authority to own, lease, operate and
sell the Properties owned by it, and to enter into this Agreement and the other
documents to be executed by it pursuant to this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
such Contributor of this Agreement have been, and the documents to be executed
by it pursuant to this Agreement shall be, duly and validly approved by all
necessary applicable action and no other actions or proceedings on the part of
such Contributor or Title Holding Partnership are necessary to authorize this
Agreement and the transactions contemplated hereby and thereby. Each
Contributor, or such Contributor's Title Holding Partnership, has complied with
applicable law and valid agreements binding upon it in connection with its
solicitation of any necessary approvals or consents related to this transaction
and obtaining appropriate authorization. No consent, waiver, approval or
authorization of, or filing, registration or qualification with, or notice to,
any governmental instrumentality or any other Person is required to be made,
obtained or given by such Contributor or Title Holding Partnership in connection
with the execution, delivery and performance of this Agreement and the documents
executed by such Contributor or such Title Holding Partnership pursuant to this
Agreement. The joinder of no entity or Person other than such Contributor or
Title Holding Partnership will be necessary to perform its obligations
hereunder. Such Contributor has duly and validly executed and delivered this
Agreement. This Agreement constitutes, and the documents executed by such
Contributor pursuant to this Agreement when executed will constitute, legal,
valid and binding obligations of such Contributor enforceable against it in
accordance with their respective terms, subject to (a) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and transfer and
other similar laws of general application, heretofore or hereafter enacted or in
effect, affecting the rights and remedies of creditors generally, and (b) the
exercise of judicial or administrative discretion in accordance with general
equitable principles, particularly as to the availability of the remedy of
specific performance or other injunctive relief. Such Contributor represents and
warrants that the assets to be contributed by it to the Company or the
Partnership pursuant to the terms of this Agreement do not constitute "plan
assets" (within the meaning of 29 C.F.R. ss.2510.3-101) of any "employee benefit
plan" subject to Title I of ERISA or a "governmental plan" as defined in Section
3(32) of ERISA.
4.3 Conflicts. The execution and delivery of this Agreement and the
other documents to be executed by such Contributor or Title Holding Partnership
pursuant to this Agreement do not and will not conflict with or result in a
breach of (with or without the passage of time or notice or both) the terms of
any of the constituent documents of such Contributor or Title Holding
Partnership, any judgment, order or decree of any court, governmental authority
or arbitrator binding on such Contributor or Title Holding Partnership, and, to
such Contributor's knowledge, do not and will not breach or violate any
applicable law, rule or regulation of any governmental authority. Except with
respect to the terms of any Assumed Mortgage Debt and any ground leases for
which the Contributor will, or which the Contributor will cause its Title
Holding Partnership to, use commercially reasonable efforts to obtain the
consents of the other parties to allow the Contributor and Title Holding
Partnership to perform its obligations under this Agreement, the execution and
15
delivery of, and performance by such Contributor or Title Holding Partnership
under, this Agreement and the documents executed by such Contributor or Title
Holding Partnership pursuant to this Agreement will not result in a breach or
violation of (with or without the passage of time or notice or both) the terms
or provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which such
Contributor or Title Holding Partnership is a party or by which such Contributor
or Title Holding Partnership is bound or to which any of the Properties owned by
it are subject.
4.4 Litigation. There is no action, suit or proceeding pending or, to
such Contributor's knowledge, threatened against such Contributor, Title Holding
Partnership or the Properties owned by it which, if adversely determined, would
have a material adverse effect on the financial condition or results of
operations of such Contributor, Title Holding Partnership or the Properties
owned by it or which challenges or impairs the ability of such Contributor to
execute or deliver, or perform its obligations under, this Agreement and the
documents executed by it pursuant to this Agreement or to consummate the
transactions contemplated herein.
4.5 Contractors and Suppliers; Service, TI and Repair Contracts. Except
as otherwise provided in this Agreement with respect to Service Contracts, TI
Contracts and Repair Contracts, if any, to be assumed by the Partnership, all
contractors, subcontractors, suppliers, architects, engineers and others who
have performed services or labor or supplied material in connection with such
Contributor's, or such Contributor's Title Holding Partnership's, acquisition,
development, ownership or management of the Properties owned by it, other than
those incurred in the ordinary course of business for the accounts payable
period immediately prior to the Closing and those engaged directly by tenants,
shall, at the Closing Date, have been paid in full and all Liens arising
therefrom (or claims which with the passage of time or notice or both, could
mature into Liens) shall, at the Closing Date, have been satisfied and released.
Such Contributor or Title Holding Partnership has performed its obligations
under the Service Contracts, TI Contracts and Repair Contracts, if any, and, to
such Contributor's knowledge, no other party is in material default under the
Service Contracts, TI Contracts or Repair Contracts, if any, affecting the
Properties owned by it. Schedule 4.5 sets forth a complete and accurate list of
Service Contracts, TI Contracts and Repair Contracts with respect to each
Property owned by Contributor.
4.6 Leases and Rent Roll. The documents constituting the Leases that
are delivered to the Company pursuant to this Agreement are true, correct and
complete, in all material respects, copies of all of the Leases affecting the
Properties owned by such Contributor or such Contributor's Title Holding
Partnership including all amendments and guarantees. Except as set forth in the
Leases, there are no material leasing or other fees or commissions due, nor will
any become due, pursuant to the terms of any Lease or any renewal or extension
or expansion of any Lease, and no understanding or agreement with any party
exists as to payment of any leasing commissions or fees regarding future leases
or as to the procuring of tenants which are due and payable prior to the Closing
Date other than commissions set forth in the commission schedule contemplated in
Section 11.3 which may become due by reason of renewals of existing Leases. To
such Contributor's knowledge, except as disclosed in the Leases, no tenants have
asserted in writing that there are any defenses or offsets to rent accruing
after the Closing Date and no material default or breach exists
16
on the part of any tenant. Such Contributor or Title Holding Partnership has not
received any notice of any default or breach on the part of the landlord under
any Lease, nor, to such Contributor's knowledge, does there exist any such
default or breach on the part of the landlord. Except as set forth in the Leases
and with respect to the property located in Troy, Ohio which is still under
construction, all of the landlord's obligations to construct tenant improvements
or reimburse the tenants for tenant improvements under the Leases through the
date of this Agreement have been paid and performed in full and all concessions
(other than any unexpired rent abatement set forth in the Leases) from the
landlord under the Leases have been paid and performed in full.
4.7 Operating Statements. The unaudited financial operating statements
of the Title Holding Partnership delivered to the Company and any updates
thereof requested by the Company prior to the Closing show or will show all
material items of income and expense (operating and capital) incurred by such
Title Holding Partnership in connection with the ownership, operation, and
management of the Properties owned by it for the last two full fiscal years and
any subsequent fiscal quarters (or such other period to which the Company may
have agreed) and are or will be true, correct and complete in all material
respects
4.8 Permits, Legal Compliance and Notice of Defects. Such Contributor,
or such Contributor's Title Holding Partnership, has not applied to or entered
into any agreement with any governmental official, agency or body or with any
other Person or entity with respect to any modification, variance or exception
regarding zoning, building codes and similar laws and regulations that
materially and adversely affects the value, use or operation of the Properties
owned by it. Such Contributor, or such Contributor's Title Holding Partnership,
has all licenses, permits and certificates necessary for the use and operation
of the Properties owned by it (as presently used and operated), including,
without limitation, all certificates of occupancy necessary for the occupancy of
such Properties, except where the failure to have such licenses, permits and
certificates would not materially and adversely affect the value, use or
operation of the Property affected thereby. To such Contributor's knowledge,
neither the Properties owned by it or its Title Holding Partnership nor the
current use thereof violates any governmental law or regulation (exclusive of
any Environmental Laws, which are addressed in Section 4.9) or any covenants or
restrictions encumbering such Properties, except such violations which would not
materially and adversely affect the value, use or operation of the Property
affected thereby. Either such Contributor, or such Contributor's Title Holding
Partnership or, if required by the terms of their respective Leases, the tenants
of the Properties owned by it, now have in force insurance policies relating to
such Properties covering such risks and with policy limits and deductibles in
such amounts as would be maintained by prudent operators of properties similar
in use and configuration to such Properties and located in the locality in which
such Properties are located. Such Contributor, or such Contributor's Title
Holding Partnership, has not received any written notice from any insurance
company or underwriter of any defect that would materially adversely affect the
insurability of the Properties owned by it or cause an increase in insurance
premiums over current levels. Such Contributor, or such Contributor's Title
Holding Partnership, has not received any written notice of violations or
alleged violations of any laws, rules, regulations or codes with respect to the
Properties owned by it which have not been corrected to the satisfaction of the
issuer of the notice or which, if uncorrected, would have a material adverse
effect on the value, use or operation of the Property
17
affected thereby. To such Contributor's knowledge, there is no pending or
contemplated condemnation or other eminent domain proceeding affecting all or
any part of the Properties owned by it or its Title Holding Partnership.
4.9 Environmental. Such Contributor has no knowledge, without
independent investigation, of any violation of Environmental Laws related to the
Properties owned by it or its Title Holding Partnership or the presence or
release of Hazardous Materials on or from such Properties, except as reflected
in the environmental reports listed on Schedule 4.9. Schedule 4.9 is a list of
written environmental reports and results of environmental inspections and tests
in the possession of such Contributor or such Contributor's Title Holding
Partnership, which list is complete in all material respects. To such
Contributor's knowledge, without independent investigation, such Contributor or
such Contributor's Title Holding Partnership has not used the Properties owned
by it for the generation, treatment, storage, handling or disposal of any
Hazardous Materials in violation of any Environmental Laws. The term
"Environmental Laws" includes, without limitation, the Resource Conservation and
Recovery Act and the Comprehensive Environmental Response Compensation and
Liability Act and other federal laws governing the environment as in effect on
the date of this Agreement together with their implementing regulations and
guidelines as of the date of this Agreement, and all state, regional, county,
municipal and other local laws, regulations and ordinances that are equivalent
or similar to the federal laws recited above or that purport to regulate
Hazardous Materials. The term "Hazardous Materials" includes petroleum,
including crude oil or any fraction thereof, natural gas, natural gas liquids,
liquefied natural gas or synthetic gas usable for fuel (or mixtures of natural
gas or such synthetic gas), and any substance, material waste, pollutant or
contaminant listed or defined as hazardous or toxic under any Environmental Law.
4.10 [Intentionally Omitted]
4.11 Ownership of the Title Holding Partnerships and Properties.
(a) The outstanding partnership interests in each Title Holding
Partnership listed on Schedule 2.4 are owned by the Contributors thereof as
shown on Schedule 2.4, free and clear of all Liens. Each Partnership Interest
Contributor owns the partnership interest in the Title Holding Partnership shown
as owned by it on Schedule 2.4, free and clear of all Liens. Each Contributor
and Title Holding Partnership has good and marketable or indefeasible title to
each Real Property shown as owned by it on Exhibit A, free and clear of all
Liens other than Permitted Exceptions.
(b) The partnership interest owned by each Partnership Interest
Contributor in each Title Holding Partnership shown as owned by it on Schedule
2.4 were validly issued, fully paid and non-assessable, and, together with the
partnership interest of any other Partnership Interest Contributor shown on
Schedule 2.4 as owning a partnership interest in such Title Holding Partnership,
constitutes all of the issued and outstanding partnership interests of such
Title Holding Partnership; all such partnership interests were not issued in
violation of any preemptive rights. The partnership interests owned by each
Partnership Interest Contributor in such Title Holding Partnership were issued
in compliance with applicable law and the relevant organizational
18
documents (as then in effect). There are no enforceable rights, subscriptions,
warrants, options, conversion rights, preemptive rights or agreements of any
kind outstanding to purchase or to otherwise acquire any of the interests in any
Title Holding Partnership or any securities or obligations of any kind
convertible into any interests in any Title Holding Partnership or other equity
interests or profit participations of any kind.
(c) Each Title Holding Partnership listed on Schedule 2.4 is, and as of
the Closing Date will be, subject to no liabilities, whether matured or
contingent, whether disclosed or undisclosed, except for (i) such liabilities
which are subject to proration under Article 9 or have been taken into account
in determining the Adjusted Contribution Amount of such Title Holding
Partnership, (ii) any Assumed Mortgage Debt or other mortgage debt to be repaid
as of the Closing Date and (iii) any other liabilities which have arisen in the
ordinary course of business (which are the responsibility of such Contributor or
Title Holding Partnership under Section 11.1).
4.12 Distributions and Payments. All material obligations and
disclosures and all distributions in connection with the contribution of the
Properties owned by such Contributor or its Title Holding Partnership that under
applicable law or any applicable, valid and binding agreements are required to
be performed, given or made with respect to any Person that directly or
indirectly holds an interest in such Contributor shall, at the Closing Date,
have been performed, given and made.
4.13 Securities.
(a) Such Contributor will acquire the LP Units and the Common Shares
exchangeable therefor (the "Underlying Shares") for its own account and not with
a view to or for sale in connection with any public distribution thereof within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"),
except that any such securities may be sold pursuant to registration or any
exemption therefrom (which may include a distribution to the equity holders of
such Contributor provided such distribution is made pursuant to an exemption
from registration under the Securities Act).
(b) Such Contributor has sufficient knowledge and experience in
financial and business matters to enable it to evaluate the merits and risks of
an investment in the LP Units (together with the Underlying Shares). Such
Contributor has the ability to bear the economic risk of acquiring the LP Units.
(c) Such Contributor has been furnished with a copy of the Private
Offering Materials and has had a full opportunity to ask questions of and
receive answers from the Company or any person or persons acting on behalf of
the Company concerning the Company, the Partnership, the Consolidation and the
terms and conditions of the acquisition of the LP Units (together with the
Underlying Shares).
19
(d) Such Contributor hereby acknowledges that the LP Units and the
Underlying Shares are not registered under the Securities Act or any state
securities laws and cannot be resold without registration thereunder or an
exemption therefrom. Such Contributor agrees that it will not transfer all or
any portion of the LP Units (together with the Underlying Shares) unless such
transfer has been registered or is exempt from registration under the Securities
Act and any applicable state securities laws (which may include a distribution
to the equity holders of such Contributor provided such distribution is made
pursuant to an exemption from registration under the Securities Act). The LP
Units (together with the Underlying Shares) shall, unless registered, contain a
prominent legend with respect to the restrictions on transfer under the
Securities Act and other applicable state securities laws.
(e) Such Contributor (and, if applicable, each equity holder of such
Contributor) is an "accredited investor" as such term is defined in Regulation D
promulgated under the Securities Act.
4.14 No Brokers. Neither such Contributor nor any of its officers,
partners, directors or employees has employed or made any agreement with any
broker, finder or similar agent or any Person or firm which will result in the
obligation of the Company or the Partnership or any of their affiliates to pay
any finder's fee, brokerage fees or commissions or similar payment in connection
with the transactions contemplated by this Agreement.
4.15 Solvency. Such Contributor or such Contributor's Title Holding
Partnership is solvent as of the date hereof and will be solvent immediately
following the Consolidation.
4.16 Certain Tax Matters.
(a) Each Partnership Interest Contributor represents and warrants that:
(i) Such Title Holding Partnership whose interest is being
contributed by such Partnership Interest Contributor has timely filed
(or has had timely filed on its behalf) or will timely file or cause to
be timely filed, all Tax Returns required by applicable law to be filed
by it prior to or as of the Closing Date. All such Tax Returns and
amendments thereto are or will be true, complete and correct in all
respects;
(ii) There has been no audit by a Tax authority with respect
to any Tax Returns filed by, or Taxes due from, such Title Holding
Partnership. No issue has been raised by any Tax authority in any audit
of such Title Holding Partnership that if raised with respect to any
other period not so audited could be expected to result in a material
proposed deficiency for any period not so audited. No deficiency or
adjustment for any Taxes has been threatened, proposed or asserted
against such Title Holding Partnership. There are no liens for Taxes
upon the assets of such Title Holding Partnership, except liens for
current Taxes not yet due;
(iii) Such Title Holding Partnership has not given or been
requested to give any waiver of statutes of limitation relating to the
payment of Taxes or has executed powers of attorney with respect to Tax
matters, which will be outstanding as of the Closing Date;
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(iv) There are no changes in the tax accounting methods
subject to Section 481(a) of the Code which have an ongoing effect to
such Title Holding Partnership;
(v) Such Partnership Interest Contributor is not a foreign
person, foreign corporation, foreign partnership, foreign trust or
foreign estate within the meaning of Section 1445 of the Code;
(vi) The general partner of each Title Holding Partnership
shall be responsible for filing the final Tax Return for 1998 for each
of the respective Title Holding Partnerships;
(vii) Attached as Exhibit N are true, correct and complete
copies of the federal Tax Returns filed by the Title Holding
Partnerships for 1995, 1996 and 1997, including any and all amendments
thereto;
(viii) Such Title Holding Partnership whose interest is
being contributed by such Partnership Interest Contributor is, and has
been since its formation, classified as a partnership and not as an
association taxable as a corporation for Federal income tax purposes
for any period up to and including the Closing. The Internal Revenue
Service has not challenged or, to the knowledge of such Partnership
Interest Contributor, threatened to challenge the status of such Title
Holding Partnership as a partnership and not as an association taxable
as a corporation for Federal income tax purposes. All Tax Returns and
other filings have been filed on a basis consistent with such position
for Federal income tax purposes.
(b) Each Contributor represents and warrants that:
(i) such Contributor is not a foreign person, foreign
corporation, foreign partnership, foreign trust or foreign estate
within the meaning of Section 1445 of the Code;
(ii) Attached hereto as Exhibit L is a statement acceptable
to the Partnership of (i) the Contributor's adjusted tax basis in the
Property, (ii) remaining depreciable life of such Property for federal
income tax purposes, and (iii) initial recovery period and depreciable
method applicable to the Property or any depreciable component thereof;
(iii) None of the Property contributed by such Contributor
constitutes tax-exempt bond financed property or tax-exempt use
property within the meaning of Section 168 of the Code, and none of the
Property contributed by such Contributor is subject to a lease, safe
harbor lease or other arrangement as a result of which such Contributor
is not treated as the owner for federal income tax purposes; and
(iv) Contributor has received no notice of liens for Taxes
on the Property contributed by such Contributor, except liens for
current Taxes not yet due and payable.
21
ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PARTNERSHIP
The Company and the Partnership hereby represent and warrant to the
Contributors as follows.
5.1 Due Organization. Each of the Company and the Partnership has been
duly organized and is validly existing and in good standing under the laws of
its jurisdiction of organization, and is qualified to do business in all other
jurisdictions where such qualification is necessary to carry on its business as
now conducted and as proposed to be conducted except where the failure to so
qualify would not have an adverse effect on the ability of such party to perform
its obligations under this Agreement.
5.2 Due Authorization. Each of the Company and the Partnership has full
power and authority to enter into this Agreement and the other documents to be
executed by it pursuant to this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by each of the
Company and the Partnership of this Agreement have been, and the other documents
to be executed by it pursuant to this Agreement shall be, duly and validly
approved by all necessary corporate or other applicable action and no other
consent or approval on the part of the Company or the Partnership is necessary
to authorize this Agreement and the other documents to be executed by it
pursuant to this Agreement and the transactions contemplated hereby. No consent,
waiver, approval or authorization of, or filing, registration or qualification
with, or notice to, any governmental instrumentality (including, without
limitation, any filing required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended), or any other entity or Person (including
without limitation, its shareholders or partners) is required to be made,
obtained or given by the Company or the Partnership in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, except for such consents as have been
obtained or will be obtained by the Closing. Each of the Company and the
Partnership has duly and validly executed and delivered this Agreement. This
Agreement constitutes, and the documents executed by the Company and the
Partnership, as the case may be, pursuant to this Agreement when executed will
constitute, legal, valid and binding obligations of the Company and the
Partnership, as the case may be, enforceable against such party in accordance
with their respective terms, subject to (a) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and transfer and other similar
laws of general application, heretofore or hereafter enacted or in effect,
affecting the rights and remedies of creditors generally, and (b) the exercise
of judicial or administrative discretion in accordance with general equitable
principles, particularly as to the availability of the remedy of specific
performance or other injunctive relief.
5.3 Conflicts. The execution and delivery of this Agreement and the
other documents to be executed by it pursuant to this Agreement, and the
performance by each of the Company and the Partnership under this Agreement and
such other documents, do not and will not conflict with or result in a breach of
(with or without the passage of time or notice or both) the terms of any of the
constituent documents of the Company or the Partnership or any judgment, order
or decree of
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any court, governmental authority or arbitrator binding on the Company or the
Partnership and, to the Company's knowledge, do not breach or violate any
applicable law, rule or regulation of any governmental authority. The execution
and delivery of, and performance by the Company and the Partnership under, this
Agreement will not result in a breach or violation of (with or without the
passage of time or notice or both) the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which either the Company or the Partnership is a
party or by which either the Company or the Partnership is bound.
5.4 Litigation. There is no action, suit or proceeding pending or, to
the Company's knowledge, threatened against the Company or the Partnership
which, if adversely determined, would have a material adverse effect on the
financial condition or results of operations of the Company or the Partnership
or which challenges or impairs the ability of the Company or the Partnership to
execute or deliver, or perform its obligations under, this Agreement and the
documents executed by it pursuant to this Agreement or to consummate the
transactions contemplated herein.
5.5 Solvency. Each of the Company and the Partnership has been solvent
at all times prior to and will be solvent immediately following the
Consolidation.
5.6 Written Materials. As of the date of this Agreement and the IPO
Filing Date, the Private Offering Materials do not contain an untrue statement
of a material fact or omit to state a material fact in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading.
5.7 No Brokers. Neither the Company nor any of its officers, directors,
trustees or employees has used any investment banker, broker, trader or similar
agent or any Person or firm which will result in the obligation of the Company
or the Partnership to pay any finder's fee, brokerage fees or commissions or
similar payment in connection with the transactions contemplated by this
Agreement.
5.8 Financial Statements. The financial statements of the Company, and
the notes related thereto, included in the Private Offering Materials present
fairly the consolidated financial position of the Company as of the dates
indicated and the results of the operations and changes in consolidated cash
flows for the periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis.
5.9 REIT and Partnership Status. The Company has been organized in
conformity with the requirements for qualification as a "real estate investment
trust" under the Code, and its proposed method of operation is expected to
enable it to continue to satisfy the requirements for taxation as a "real estate
investment trust" under the Code. The Company will file all tax elections
necessary in order to qualify as a "real estate investment trust" under the
Code. The Partnership will be treated for Federal income tax purposes as a
partnership, and not as an association taxable as a corporation.
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ARTICLE 6: CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
AND THE PARTNERSHIP
The obligation of the Company and the Partnership to consummate the
Closing is subject to the fulfillment, at or prior to the Closing, of each of
the following conditions, and failure to satisfy any such condition shall excuse
and discharge all obligations of the Company and the Partnership to carry out
the provisions of this Agreement unless such failure is waived in writing by the
Company and the Partnership. Promptly after becoming aware that any of the
following conditions has not been or cannot be satisfied at or prior to the
Closing, the Company and the Partnership shall so notify all other parties to
this Agreement.
6.1 Representations and Warranties. The representations and warranties
made by the Contributors in Article 4 of this Agreement and the statements
contained in any document furnished by the Contributors in connection with the
Closing pursuant to this Agreement shall be true, correct and complete when made
and on and as of the Closing Date as though such representations and warranties
were made on and as of such date (except to the extent any such representation
and warranty is limited to a specific date by its express terms), except for
inaccuracies which, individually or in the aggregate for all parties, would not
have a material adverse effect on the financial condition or results of
operations of the Company and the Partnership taken as a whole.
6.2 Compliance with Agreements and Covenants. All parties other than
the Company and the Partnership shall have performed and complied with all of
their covenants, obligations and agreements contained in this Agreement to be
performed and complied with by them on or prior to the Closing Date, except for
failures to perform or comply which, individually or in the aggregate for all
parties, would not have a material adverse effect on the financial condition or
results of operations of the Company and the Partnership taken as a whole.
6.3 Tenant Estoppels. With respect to each Property, the appropriate
Contributor or its Title Holding Partnership shall (a) obtain a tenant estoppel,
substantially in the form of Exhibit F, from all tenants, or, (b) with the prior
consent of the Company, which consent shall not be unreasonably withheld,
provide a certificate from an officer of such Contributor or its Title Holding
Partnership (or from a duly authorized agent or representative of such
Contributor) setting forth substantially the same factual information as is
contained in Exhibit F with respect to such leased premises. In the event that
any tenant estoppel or any certificate reflects any claims, offsets or defenses
against enforcement of the Lease against the tenant thereunder, or any other
obligations owing to the tenant by such Contributor or Title Holding Partnership
(any of the foregoing, a "Landlord Default"), such Contributor shall pay to the
Company, at the Closing, the amount, as determined by the Company in its
reasonable good faith business judgment necessary to correct or cure such
Landlord Default; provided, however, that if such Contributor contests the
existence of a Landlord Default, then such Contributor shall escrow with the
applicable Title Company (or other financial institution mutually agreed to by
such Contributor and the Company) at the Closing either (i) cash in an amount
determined by the Company in its reasonable good faith business judgment which
is required to correct the Landlord Default if it is ultimately determined to
exist or (ii) a number of Ownership Units issued to such Contributor having a
value (based on the IPO Share
24
Price) equal to the amount determined by the Company as aforesaid. If such
Contributor contests the existence of a Landlord Default, and if such matter is
not resolved to the reasonable satisfaction of such Contributor and the Company,
or otherwise resolved by a final judgment from a court of competent jurisdiction
within 180 days after Closing, the funds, or the Ownership Units, as the case
may be, held in escrow shall be paid to the Company.
6.4 Other Contracts. As of the Closing Date, there shall exist no
material default under any material agreement to be assumed by the Partnership.
6.5 Legal Proceedings. As of the Closing Date, no action or proceeding
by or before any governmental authority shall have been instituted or threatened
(and not subsequently dismissed, settled or otherwise terminated) which is
reasonably expected to restrain, prohibit or invalidate the transactions
contemplated by this Agreement, other than an action or proceeding instituted or
threatened by the Company or the Partnership.
6.6 IPO Closing. The closing of the IPO of the Company shall occur
simultaneously with the Closing.
6.7 Representation Letter. The Company shall have received a
representation letter from Advance Stores Company, Incorporated substantially in
the form of Exhibit E.
6.8 Consents and Approvals. All parties to this Agreement shall have
obtained all necessary consents and approvals, required in connection with the
performance by them of this Agreement and the consummation of the transactions
contemplated hereby, including those required in connection with any Assumed
Mortgage Debt and ground leases, except for such consents and approvals the
failure of which to obtain, individually or in the aggregate for all parties,
would not have a material adverse effect on the financial condition or results
of operations of the Company and the Partnership taken as a whole. If any
Contributor or Title Holding Partnership has not obtained a necessary consent or
approval with respect to any Property at or prior to the Closing, such Property
shall not be contributed, directly or indirectly, to the Company or the
Partnership unless the Company shall agree.
6.9 Other Conditions. All other conditions to the obligations of the
Company and the Partnership set forth in this Agreement shall have been
satisfied as of the dates required.
ARTICLE 7: CONDITIONS PRECEDENT TO OBLIGATIONS OF CONTRIBUTORS
The obligation of each Contributor to consummate the Closing is subject
to the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of such Contributor to carry out the provisions of this
Agreement unless such failure is waived in writing by such Contributor. Promptly
after becoming aware that any of the following conditions has not been or cannot
be satisfied at or prior to the Closing, such Contributor shall so notify all
other parties to such Agreement.
25
7.1 Representations and Warranties. The representations and warranties
made by the Company and the Partnership in Article 5 of this Agreement and by
the other Contributors in Article 4 of this Agreement and the statements
contained in any document furnished by the Company or the Partnership or any
other Contributor or such Contributor's Title Holding Partnership in connection
with the Closing pursuant to this Agreement shall be true, correct and complete
when made and on and as of the Closing Date as though such representations and
warranties were made on and as of such date (except to the extent any such
representation and warranty is limited to a specific date by its express terms),
except for inaccuracies which, individually or in the aggregate for all parties,
would not have a material adverse effect on the financial condition or results
of operations of the Company and the Partnership taken as a whole.
7.2 Compliance with Agreements and Covenants. All parties hereto other
than such Contributor shall have performed and complied with all of their
covenants, obligations and agreements contained in this Agreement to be
performed and complied with by them on or prior to the Closing Date, except for
failures to perform or comply which, individually or in the aggregate for all
parties, would not have a material adverse effect on the financial condition or
results of operations of the Company and the Partnership taken as a whole.
7.3 Legal Proceedings. No action or proceeding by or before any
governmental authority shall have been instituted or threatened (and not
subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions contemplated by
this Agreement, other than an action or proceeding instituted or threatened by
such Contributor.
7.4 IPO Closing. The closing of the IPO of the Company shall occur
simultaneously with the Closing.
7.5 Minimum Asset Size. As of the Closing Date (after giving effect to
the IPO and the transactions contemplated hereby), the Company shall have
Contributed Capital of not less than $75 million.
7.6 Consents and Approvals. All parties to this Agreement shall have
obtained all necessary consents and approvals required in connection with the
performance by them of this Agreement and the consummation of the transactions
contemplated hereby except for such consents and approvals the failure of which
to obtain, individually or in the aggregate for all parties, would not have a
material adverse effect on the financial condition or results of operations of
the Company and the Partnership taken as a whole. If any Contributor or its
Title Holding Partnership has not obtained a necessary consent or approval
listed on its disclosure letter with respect to any Property at or prior to the
Closing, such Property shall not be contributed, directly or indirectly, to the
Company or the Partnership unless such Contributor and the Company shall
mutually agree.
7.7 Release of Liability. Each Contributor or any party related thereto
has been released from all personal liability in connection with all of the
Assumed Mortgage Debt to be incurred as of the Closing Date and thereafter,
including, without limitation, liability for payments of principal,
26
interest and liability for any type of indemnification under customary
nonrecourse carveouts to the extent the act or omission, unless fraudulent or
committed in bad faith before the Closing Date, giving rise to any such
liability occurs on or after the Closing Date.
7.8 Tax Related Agreement. The Company, the Partnership and the
Contributors, as applicable, shall have entered into and delivered one or more
Tax-Related Agreements substantially in the form attached hereto as Exhibit M.
7.9 Other Conditions. All other conditions to the Contributors'
obligations set forth in this Agreement shall have been satisfied as of the
dates required.
ARTICLE 8: CLOSING
8.1 Closing. The consummation of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Parker, Poe, Xxxxx &
Xxxxxxxxx, which shall occur on the same date as the IPO Closing Date (the
"Closing Date"). A pre-closing conference shall commence at least three days
before the Closing Date, during which all deliveries (other than any delivery of
cash) shall be made into an escrow with the Title Company, or, at the option of
the parties, such deliveries may be made in such other manner as the parties may
determine. All deliveries made during the pre-closing period shall be deemed
deliveries made at the Closing, and the transfers described herein and all
closing deliveries, and the consummation of the IPO, shall be deemed concurrent
for all purposes. The deliveries set forth in this Article 8 shall be conditions
precedent to the Closing. Upon completion of the deliveries set forth in this
Article 8 and satisfaction of the other conditions to the Closing herein set
forth, the parties shall direct the Title Company to make such deliveries and
disbursements according to the terms of this Agreement and under an escrow
instruction letter, if any, substantially in the form of Exhibit G.
8.2 Deliveries by Contributors. At the Closing, in addition to any
other documents or agreements required under any other provision of this
Agreement, each Contributor shall make the following deliveries and performance
solely with respect to each Property in which such Contributor or such
Contributor's Title Holding Partnerships has an ownership interest:
(a) Deed. For each Property contributed, a deed containing a
special warranty of title, in statutory form or if the applicable
jurisdiction does not promulgate such a form, in such form as is
customary in the applicable jurisdiction which the Title Company shall
require in order to issue the title policies which are consistent with
the requirements of Section 2.5, executed and acknowledged by the
Contributor or such Contributor's Title Holding Partnership, conveying
to the Partnership indefeasible fee simple title to such Property
subject only to Permitted Exceptions. The deeds shall be delivered, in
escrow, to agents of the Title Company located in the appropriate
counties for recording the deeds, so that the deeds can be recorded on
the Closing Date;
(b) Assignment and Assumption of Leases, etc. For each
Property, a Xxxx of Sale and Assignment and Assumption of Leases,
Contracts and Intangible Property in the form
27
of Exhibit H (the "Assignment"), executed and acknowledged by the
applicable Contributor or Title Holding Partnership, vesting in the
Partnership good title to the assets and property described therein
free of any Liens, except, to the extent applicable, Permitted
Exceptions;
(c) Title Searches, Surveys and Tenant Estoppels. The
requirements in Section 2.5 (Title Insurance), Section 2.6 (Survey),
and Section 6.3 (Tenant Estoppels) shall have been complied with,
provided such failure to comply with Section 2.5 or Section 2.6 is not
caused by the Company's or the Partnership's failure to use
commercially reasonable efforts to obtain a title policy or survey;
(d) Payoff Letters. A loan payoff letter in a form
reasonably satisfactory to the Title Company with respect to all
mortgage indebtedness other than Assumed Mortgage Debt;
(e) Partnership Agreement. The Partnership Agreement,
executed by such Contributor;
(f) Registration Rights Agreements. The Registration Rights
Agreement, executed by such Contributor;
(g) Assumed Mortgage Documents. The documents evidencing the
assumption of the Assumed Mortgage Debt executed by such Contributor or
Title Holding Partnership, if necessary, and all deliveries of such
Contributor or Title Holding Partnership required thereunder;
(h) Notice to Tenants. A notice to each tenant in form
reasonably satisfactory to the parties hereto, notifying tenants of
transfers of ownership and directing payment of all rents occurring
after the Closing Date to be made to the Partnership or at its
direction;
(i) State Law Disclosures. Such disclosures and reports as
are required by applicable state and local law in connection with the
conveyance of real property;
(j) FIRPTA. A Foreign Investment in Real Property Tax Act
("FIRPTA") affidavit executed by such Contributor. If such Contributor
fails to provide the necessary affidavit and/or documentation of
exemption on the Closing Date, the Company may proceed in accordance
with the withholding provisions as provided in FIRPTA;
(k) Affidavits. A gap undertaking and such owner's affidavit
or other documents as are customarily provided by transferors of real
estate in the applicable jurisdiction;
(l) Tax-Related Agreement. Executed Tax-Related Agreements
substantially in the form attached hereto as Exhibit M;
28
(m) Delivery of Certificates. Delivery to the Partnership of
the indicia of ownership in each Title Holding Partnership held by the
Partnership Interest Contributors assigned or endorsed in blank;
(n) Authority. Evidence of the existence, organization and
authority of such Contributor or Title Holding Partnership and of the
authority of the persons executing documents on behalf of such
Contributor or Title Holding Partnership reasonably satisfactory to the
Title Company and the Company;
(o) Possession. Possession of the Properties, subject only
to the applicable Permitted Exceptions;
(p) Delivery of Books and Records. Delivery to the offices
of the Partnership: the original Leases or certified true copies
thereof; copies or originals of all books and records of account;
contracts; copies of correspondence with tenants and suppliers;
receipts for deposits; unpaid bills and other papers or documents which
pertain to the Properties; all advertising materials, booklets, keys
and other items, if any, used in the operation of the Properties; and,
if in the possession or control of such Contributor or Title Holding
Partnership, the original "as-built" plans and specifications and all
other available plans and specifications; each Contributor shall
cooperate with the Partnership after the Closing to provide to the
Partnership any such information stored electronically;
(q) Consents. Copies of consents or other appropriate
documentation, executed by or on behalf of all Contributors or Title
Holding Partnerships who are not natural persons approving the entering
into of this Agreement and the other documents contemplated herein by
such Contributor or Title Holding Partnership and agreeing, among other
things, to be bound by the indemnification obligations set forth in
Article 13; and
(r) Other. Such other documents and instruments as may
reasonably be required by the Company, its (or its underwriters')
counsel or the Title Company that may be necessary to consummate the
transaction and to otherwise effect the agreements of the parties under
this Agreement.
8.3 Deliveries by the Company and the Partnership. At the Closing, the
Company and the Partnership shall make the following deliveries and performance:
(a) Partnership Agreement. The Partnership Agreement,
executed by the Company, together with any filings with any
governmental authority or agency required to be made by or on behalf of
the Partnership;
(b) Partnership Ratification. The Partnership's written
ratification of this Agreement and agreement to perform the obligations
of the Partnership that are to be performed after the Closing;
29
(c) Tax-Related Agreement. One or more executed Tax-Related
Agreement substantially in the form attached hereto as Exhibit M;
(d) LP Units. Issuance by the Partnership to the
Contributors of that number of LP Units equal to the Ownership Units
applicable to such party and reasonably satisfactory evidence of such
issuance;
(e) Payment of Consolidation Expenses; Reimbursement of
Costs. At or promptly after the Closing, the Partnership shall pay all
Consolidation Expenses;
(f) Registration Rights Agreement. The Registration Rights
Agreement, executed by the Company;
(g) Authority. Evidence of existence, organization and
authority of the Company and the Partnership and the authority of the
person executing documents on behalf of each of the Company and the
Partnership;
(h) Assignment and Assumption of Leases. The Assignment,
executed by the Partnership;
(i) State Law Disclosures. Such disclosures and reports as
are required by applicable state and local law in connection with the
conveyance of real property;
(j) Assumed Mortgage Debt. The documents evidencing the
assumption of the Assumed Mortgage Debt and any other liabilities to be
assumed by the Partnership (all of which such other liabilities are
subject to proration under Article 13), executed by the Partnership,
and all deliveries of the Partnership required thereunder;
(k) Legal Opinions. Usual and customary legal opinions from
counsel to the Company and the Partnership, which opinions may be
relied on by the Contributors, which shall be substantially the same in
scope as the opinions delivered to the underwriters at the Closing of
the IPO, including with respect to the matters addressed in Section
5.9;
(l) Title Insurance and Survey. The requirements of Section
2.5 (Title Insurance), Section 2.6 (Survey), and Section 6.3 (Tenant
Estoppels) shall have been complied with, provided such failure to
comply with Section 2.5 or Section 2.6 is not caused by the Company's
or the Partnership's failure to use commercially reasonable efforts to
obtain a title policy or survey; and
.
(m) Other. Such other documents and instruments as may
reasonably be required by the Contributors, or their respective counsel
that may be necessary to consummate the transaction and to otherwise
effect the agreement of the parties under this Agreement.
ARTICLE 9: COOPERATION ON TAX MATTERS
30
(a) Contributor and Partnership agree to furnish or cause to
be furnished to the other, upon request, as promptly as practicable,
such information (including access to books and records) and assistance
relating to the Property contributed by such Contributor as is
reasonably necessary for (i) the filing of any Tax Return, the
preparation for any Tax audit, and the prosecution or defense of any
claim, suit and proceeding relating to any proposed Tax adjustment
which may affect the prorations under this Agreement and (ii) the
performance by Contributor and Partnership of their respective
obligations under this Agreement. Contributor and Partnership shall
keep all such information and documents received by them confidential
unless otherwise required to be disclosed by law or by the order of a
court.
(b) Contributor and Partnership agree to give the other
reasonable notice prior to transferring, discarding or destroying any
such books and records relating to Tax matters of the Property
contributed by such Contributor and, if so requested, Contributor and
Partnership shall allow the requesting party to take possession of such
books and records.
(c) Contributor and Partnership shall cooperate with each
other in the conduct of any audit or other proceedings with respect to
the Property contributed by such Contributor for any Tax purposes.
ARTICLE 10: POST-CLOSING COVENANTS OF CONTRIBUTOR
Contributor covenants and agrees that from and after the Closing:
(a) Contributor does not, and shall not at any time own,
directly or indirectly (actually or by applying constructive ownership
rules set forth in Section 856(d)(5) of the Code) ten percent (10%) or
more in value of the shares of the Company.
(b) Contributor is not and will not be a "tax-exempt entity"
(within the meaning of Section 168(h)(2) of the Code), and no person
holding an interest in Contributor is or will be a person that causes
all or any portion of the Property to be treated as "tax-exempt use
property" (within the meaning of Section 168(h)(l) of the Code).
(c) For a period of one year following the Closing Date,
Primax Properties, LLC will, at its sole expense, perform those
maintenance, repair and replacement obligations with respect to the
properties set forth on Schedule 10.1 attached hereto to the extent
such repairs are required under Leases or consistent with the
respective landlord's historic actions.
ARTICLE 11: PRORATIONS AND ADJUSTMENTS
11.1 Prorations. Before the Closing, the Contributors shall provide to
the Company such information and verification reasonably necessary to support
the prorations and adjustments under this Article 11. Subject to paragraph (a)
below, the items in paragraphs (a) through (f) of this Section 11.1, as well as
any amount of damage to be credited to the Partnership to the extent provided in
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Section 3.10, shall be prorated as between the Partnership and each Contributor
as of the close of the day immediately preceding the Closing Date, the Closing
Date being a day of income and expense to the Partnership. Except as provided in
clauses "second" through "fifth" of clause (a) of the definition of "Adjusted
Contribution Amount," all prorations shall be in cash and shall not affect the
number of Ownership Units to be delivered to the Contributors; provided, however
that any Contributor may elect to make its proration payments to the Company in
cash or in Ownership Units valued at their Fair Market Value at the time of
payment.
(a) Taxes and Assessments. Except as provided in the last
sentence of this Section 11.1(a) or as covered by Section 11.1(c), the
Partnership shall receive a credit for any unpaid real estate taxes
(and any assessments imposed by private covenant), whether or not then
due or payable, imposed in respect of the Properties and applicable for
the portion of the current year or other applicable tax period which
has elapsed before the Closing Date (and to the extent unpaid, for
prior years or tax periods) and the Contributors shall receive a credit
for any real estate taxes (and any assessments imposed by private
covenant) previously paid by them or their Title Holding Partnership in
respect of the Properties and relating to periods after the Closing
Date. If the amount of any such taxes have not been determined as of
the Closing, such credit shall be based on the most recent
ascertainable taxes which proration shall be final and shall not be
reprorated upon issuance of the final tax xxxx. The Partnership shall
receive a credit for the total amount of any special assessments or
similar charges which are levied or charged against the Properties
before the Closing, whether or not then due and payable, except to the
extent such assessments were deducted in determining the Contribution
Amount. Notwithstanding the foregoing provisions of this Section
11.1(a), no credit shall be given to the Partnership for any accrued
and unpaid real estate taxes, private covenant assessments, special
assessments or similar charges, to the extent that (i) any tenant is
responsible for the direct or indirect payment of such amounts or (ii)
such amounts are, or will be, collectible from Operating Expense
Pass-Throughs.
(b) Collected Rent. The Partnership shall receive a credit
for any rent and other income (and any applicable state or local tax on
rent) under Leases, collected by the Contributors or their Title
Holding Partnership before the Closing and applicable to any period of
time after the Closing. After the Closing, the Partnership shall apply
all rent and income collected by the Partnership from a tenant, unless
the tenant properly identifies the payment as being for a specific
item, first to such tenant's monthly rental for the month in which the
Closing occurred and then to arrearages in the reverse order in which
they were due, remitting to the Contributors, after deducting
collection costs, any rent properly allocable to the Contributor's or
its Title Holding Partnership's period of ownership. The Partnership
shall xxxx and attempt to collect such rent arrearages in the ordinary
course of business, but shall not be obligated to engage a collection
agency or take legal action to collect any rent arrearages. Any rent or
other income received by the Contributors after Closing which are owed
to the Partnership shall be held in trust and remitted to the
Partnership within 30 days after receipt. Any rent or other income
received by the Partnership after Closing (including, without
limitation, percentage rents), which are owed,
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in whole or in part, to a Contributor or a Title Holding Partnership
shall be held in trust and remitted to the Contributor within 30 days
after receipt.
(c) Operating Expense Pass-Throughs. In certain
circumstances, the Contributors or the Title Holding Partnerships, as
landlords under the Leases, may collect from tenants under the Leases
additional rent to cover all or portions of taxes, insurance,
utilities, maintenance and other operating costs and expenses
(collectively, "Operating Expense Pass-Throughs") incurred by the
Contributors or Title Holding Partnerships in connection with the
ownership, operation, maintenance and management of the Properties. If
the Contributors or Title Holding Partnerships collected estimated
prepayments of Operating Expense Pass-Throughs in excess of any
tenant's share of such expenses and had not previously repaid those
amounts to the appropriate tenants, then if the excess can be
determined by the Closing, the Partnership shall receive a credit for
the excess or, if the excess cannot be determined at Closing, the
Partnership shall receive a credit based upon an estimate, and the
parties shall make an adjustment payment between them when the correct
amount can be determined. In either event, the Partnership shall be
responsible for crediting or repaying those amounts to the appropriate
tenants. If the Contributors or Title Holding Partnerships collected
estimated prepayments of Operating Expense Pass-Throughs attributable
to any period after the Closing, the Contributors shall pay or credit
any such amounts to the Partnership at the Closing. At the Closing, the
Partnership shall receive a credit equal to the amount, if any, by
which payments made by tenants in respect of Operating Expense
Pass-Throughs for the period prior to the Closing exceed the amount
paid or accrued during this same period of time for Operating Expense
Pass-Throughs. To the extent that any tenant is obligated to pay taxes
or assessments at year end, then no proration of such amounts shall be
made and the Partnership shall have the sole right to collect such
amounts from the applicable tenant. To the extent that the Contributors
or the Title Holding Partnerships have paid any taxes, insurance,
utilities, maintenance or other operating costs and expenses prior to
the receipt from a tenant of Operating Expense Pass-Throughs due or to
be due from the tenant or in excess of any amount paid by tenant
(provided such tenant is obligated to reimburse the Company such
deficit amount upon periodic reconciliation or otherwise), the
Contributors shall receive a credit for any amount so paid.
(d) Service Contracts. The Contributors or the Partnership,
as the case may be, shall receive a credit for regular charges under
Service Contracts, if any, assumed by the Partnership pursuant to this
Agreement paid and applicable to the Partnership's period of ownership
or payable and applicable to the Contributors' or Title Holding
Partnerships' period of ownership. Notwithstanding the foregoing, no
payment or credit shall be due from the Contributors to the extent that
such amounts, if any, are, or will be, due from tenants as Operating
Expense Pass-Throughs but have not yet been collected from tenants.
(e) Utilities. The Contributors shall cause the meters, if
any, for utilities to be read on the Closing Date and shall pay the
bills rendered on the basis of such readings, except for utilities paid
directly by tenants. If any such meter reading for any utility is not
available, then adjustment therefor shall be made on the basis of the
most recently issued
33
bills therefor which are based on meter readings no earlier than 30
days before the Closing Date. Notwithstanding the foregoing, no payment
or credit shall be due from the Contributors to the extent that such
amounts are, or will be, due from tenants as Operating Expense
Pass-Throughs but have not yet been collected from tenants.
(f) Accrued Interest on Assumed Mortgage Debt. The
Partnership shall receive a credit for any interest accrued on Assumed
Mortgage Debt, whether or not then due and payable, for the portion of
the applicable interest period which has elapsed before the Closing
Date (and to the extent unpaid, for prior periods).
11.2 Tenant Reconciliations and Post-Closing Adjustments. After
year-end (or other applicable period) adjustments with tenants under Leases for
Operating Expense Pass-Throughs and receipt of final tax, other bills and lease
payments, the Partnership shall prepare and present to the Contributors a
calculation of the reproration of such Operating Expense Pass-Throughs, taxes
(to the extent provided herein) and other items including lease payments, based
upon the actual amount of such items charged to or received by the parties for
the year or other applicable fiscal period. The parties shall make the
appropriate adjusting payment between them within 30 days after presentment to
the Contributors of the Partnership's calculation. The Contributors may inspect
the Partnership's books and records related to the Properties to confirm the
calculation. Appropriate post-Closing reconciliations and adjustments shall be
made for any incorrect proration or adjustment. All post-Closing reconciliations
and adjustments between the parties shall be paid in cash. No expense related to
the ownership or operation of the Property shall be charged to or paid or
assumed by the Partnership, whether allocable to any period before or after
Closing, other than those obligations expressly assumed by the Partnership.
11.3 Leasing Commissions. The Partnership shall receive a credit at the
Closing equal to all leasing commissions, if any, due to leasing or other agents
for the current remaining term of each Lease (determined without regard to any
unexercised termination or cancellation right), discounted to present value
using a discount rate of 11 percent per year. The Partnership shall assume in
writing the obligation to pay any such leasing commissions due thereunder after
the Closing Date up to the amount of said credit, but only to the extent such
leasing commissions are identified in Schedule 11.3 hereto. At the Closing, the
Partnership shall assume leasing commissions expressly identified in the
commission schedule delivered to the Company and the Partnership on or prior to
the date hereof which may become due as a result of the renewal, extension or
expansion of any Lease which renewal or extension term or expansion commences
after the date of this Agreement.
11.4 TI Contracts, Tenant Allowances and Capital Improvements. Tenant
improvement expenses (including all hard and soft construction costs, whether
payable to the contractor or the tenant), tenant allowances, rent abatement,
moving expenses and other out-of-pocket costs, if any, which are the obligation
of the landlord under Leases shall be allocated between the parties according to
whether such obligations arise in connection with (a) Leases in place (the rent
commencement date falls before the date of execution of this Agreement)
("Existing TI Obligations") other than with respect to renewal or expansion
rights under Leases executed before
34
the date of execution of this Agreement and properly exercised after the date of
this Agreement, or (b) Leases for which the rent commencement date falls after
the date of this Agreement or (c) Leases or amendments entered into during the
pendency of this Agreement and approved by the Partnership or otherwise
permitted pursuant to Section 3.7 or renewals or expansion rights existing under
Leases executed before the date of execution of this Agreement and properly
exercised after the date of this Agreement ("New TI Obligations"):
(i) Existing TI Obligations. Except to the extent that the
Contribution Amount has been determined by deducting the amount of any
Existing TI Obligations, if any, as of the date of determination of
such amount, if, by the Closing, the Contributors or the Title Holding
Partnerships have not completed and paid in full Existing TI
Obligations, if any, then such costs as are reasonably agreed by the
Partnership and the Contributors shall be charged against the
Contributors and credited to the Partnership, and the Partnership shall
be responsible for completing such Existing TI Obligations, if any. If
the amount charged against the Contributors and credited to the
Partnership exceeds the Partnership's cost to complete such Existing TI
Obligations, such excess shall be paid in cash to the Contributors; but
if the credit is insufficient for such purpose, the Contributors shall
reimburse the Partnership in cash for such deficiency within 10 days
after the Partnership's presentment of a final written reconciliation
supported by evidence reasonably satisfactory to the Contributors.
(ii) New TI Obligations. At the Closing, the Partnership
shall credit the Contributors for the cost of New TI Obligations, if
any, properly performed and paid for by the Contributors or the Title
Holding Partnerships to the extent such obligations were expressly
approved in writing by the Partnership or otherwise permitted under
Section 3.7, or if not performed and paid and relating to Leases which
are permitted under the terms of this Agreement, the Partnership shall
assume the obligation to perform and pay for such New TI Obligations,
if any. If the rent commencement date under any Lease amendment,
renewal, extension or expansion of a Lease subject to New TI
Obligations, if any, falls before the Closing Date, then the cost of
the New TI Obligation under such Lease, amendment, renewal or expansion
shall be apportioned between the parties in the proportion that the
length of the portion of the noncancellable primary term after such
rent commencement date to the Closing Date bears to the length of the
portion of the noncancellable primary term falling after the Closing
Date.
(iii) Change Orders. The Contributors and the Title Holding
Partnerships shall not agree to any change orders or additions to
tenant improvements or changes in the scope of work or specifications
with respect to Existing TI Obligations, if any, or New TI Obligations,
if any, which exceed 10% of the approved costs without the Company's
prior written approval, which shall not be unreasonably withheld or
delayed.
(iv) Evidence of Payment. At the Closing, the Contributors
shall provide lien waivers, payment affidavits, certificates of
completion, Tenant Estoppels and other evidence reasonably necessary to
confirm the Contributors' and the Title Holding Partnerships'
35
compliance with their obligations pursuant to this Section 11.4, if
any, and, to the extent such coverage is available, shall provide such
indemnity or other assurance to enable the Title Company to insure
against any claims against the Properties arising from work performed
before the Closing.
11.5 Repair Contracts. At the Closing, the Contributors shall pay or
provide for payment in a manner reasonably satisfactory to the Company for all
work under Repair Contracts, if any, that has been performed through the Closing
Date, and, subject to the Partnership's reasonable requirements with respect to
the selection of contractor, mechanic's lien protection and insurance, the
Contributors and the Title Holding Partnerships shall at their sole cost and
expense complete the remaining work to be performed under such Repair Contracts,
if any, after the Closing Date. Any insurance proceeds covering work under the
Repair Contracts, if any, shall be paid to the Contributors for the cost of the
work covered by such insurance. Warranties related to work under TI Contracts
and Repair Contracts, if any, shall be included in the warranties described as
Intangible Property related to the applicable Properties. The Contributors and
their Title Holding Partnerships shall provide assurance to the Title Company to
enable it, to the extent permitted by applicable title insurance regulations, to
issue the Title Policy without exception for mechanics' and materialmens' liens
related to work performed by the Contributors and the Title Holding Partnership
under Repair Contracts, if any. Notwithstanding the foregoing, the Contributors
shall not be responsible for costs payable pursuant to Repair Contracts, if any,
to the extent such costs are, or will be, due from tenants as Operating Expense
Pass-Throughs, if any.
11.6 Tenant Deposits. All unapplied tenant security deposits (and
interest thereon if required by law or contract to be earned thereon) shall be
transferred or credited to the Partnership at the Closing.
11.7 Wages. The Partnership shall not be liable for any wages, fringe
benefits, payroll taxes, unemployment insurance contributions, accrued vacation
pay, accrued pay for unused sick leave, accrued severance pay and other
compensation accruing prior to the Closing for employees of the Properties.
11.8 Utility Deposits. The Contributors shall receive a credit for the
amount of deposits, if any, with utility companies that are transferable and
that are properly assigned to the Partnership at the Closing.
11.9 Sales Commissions. In the event of any claim for broker's or
finder's fees or commissions in connection with the negotiation, execution or
consummation of this Agreement or the transactions contemplated hereby, each
party hereto shall indemnify and hold harmless each other party hereto from and
against any such claim based upon any statement, representation or agreement of
such party.
11.10 [Intentionally Omitted]
36
ARTICLE 12: TERMINATION AND REMEDIES
12.1 Termination. This Agreement may be terminated:
(a) As to the Company, the Partnership and any particular
Contributor, at any time prior to the Closing Date, between the Company
and a Contributor, with the joint written consent of the Company and
such Contributor; or
(b) By the Company or any Contributor, if the IPO has not
occurred by December 31, 1998 or if the Form S-11 registration
statement of the Company for the IPO has not been filed with the
Securities and Exchange Commission by July 31, 1998.
12.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 12.1, all obligations of the parties hereunder (or of the terminated
Contributor, in the case of terminations pursuant to Section 12.1(a)) shall
terminate, except for the obligations that expressly survive the termination of
this Agreement. If this Agreement is terminated pursuant to Section 12.1, no
party (or no terminated Contributor, in the case of terminations pursuant to
Section 12.1(a)) shall have any continuing liability for any inaccuracy in or
breach of any representation or warranty or covenant under this Agreement, and
if any Property is excluded from the Consolidation in accordance with the
election of the Company pursuant to Section 2.8 or Section 12.3, any Contributor
having an ownership interest in such Property shall not have any continuing
liability for any inaccuracy in or breach of any representation or warranty or
covenant with respect to such Property under this Agreement.
12.3 Termination as to Specific Properties. At any time prior to the
Closing Date, if there shall have been a material breach of any covenant,
representation or warranty of any Contributor hereunder with respect to any
Property or Properties, or failure of any condition to the Company's obligation
to close with respect to one or more Properties which is not or cannot be cured
prior to five Business Days before the Closing Date or there shall have occurred
a material adverse change or development affecting the condition, value or
utility of any Property which is not or cannot be cured prior to five Business
Days before the Closing Date, the Company may elect by written notice to such
Contributor to exclude such Property or Properties from the Consolidation, which
notice shall be given by the Company within 30 days after becoming aware of such
material breach, failure or material adverse change or development or such
longer period to which such Contributor may agree, in which event the
Contribution Amount of such Contributor shall be adjusted accordingly. For
purposes of this Section 12.3, a material adverse change or development
respecting the condition, value or utility of a Property (A) shall have occurred
if (i) any as-built survey which Contributor obtained shows a building setback
violation, shows the building sitting on top of an underground utility easement
or indicates a boundary dispute; (ii) the holder of any mortgage which is to be
assumed does not consent; (iii) the holder of any ground lease does not consent;
(iv) Advance Stores Company, Incorporated gives an estoppel which indicates that
a lease is in material default, or cure period has lapsed, or that Advance
Stores Company, Incorporated intends to terminate a lease or otherwise pursue
remedies against the landlord; or (v) an act of God occurs which would render
the Property unsuitable for its intended use; and (B) shall have occurred if
such
37
breach of a covenant, representation or condition or failure of condition would
be likely to result in a diminution in the condition, value or utility of the
Property in an amount equal to at least 10% of the Contribution Amount of such
Property, determined without taking into account any change in local economic
conditions. In the event that the Company and the applicable Contributor cannot
agree on the dollar amount of such diminution, such parties shall select a
mutually agreeable third party (at the Company's expense) to determine such
amount. The decision of such third party shall be final.
ARTICLE 13: INDEMNIFICATION
13.1 Contributors' Indemnity. Each Contributor agrees, severally but
not jointly, to indemnify, defend and hold the Company and the Partnership
harmless from any liability, claim, demand, loss or damage (for the survival
period provided in Section 14.1) (a) asserted by any person or entity against
any such indemnitee arising from any act or omission of such Contributor, its
agents, employees or contractors occurring on or before the Closing except for
matters covered by the representations and warranties in Article 4 or relating
to the Properties owned by it, which shall be governed, if at all, by clause (b)
or (e) below; (b) arising from any breach by such Contributor of any contractual
obligation related to the Properties owned by it other than those obligations
which by this Agreement, or any closing delivery, specifically become the
obligations of the Partnership; (c) for proration payments under Article 11; (d)
liabilities arising prior to the Closing with respect to the Properties, whether
or not asserted or due, except for (i) liabilities subject to proration under
Article 11, (ii) Assumed Mortgage Debt or (iii) matters covered by the
representations and warranties in Article 4 or relating to the Properties owned
by it, which shall be governed, if at all, by clause (b) above or clause (e)
below; or (e) arising from any breach by such Contributor of its representations
and warranties in Article 4, except to the extent previously adjusted in
calculating the Adjusted Contribution Amount for such Contributor. In the event
the Company or the Partnership is entitled to receive any amount from a
Contributor pursuant to this Section 13.1 as an indemnification payment, in lieu
of receiving a cash payment from such Contributor, such Contributor may elect to
satisfy such indemnification amount by delivery to the Company or the
Partnership, as the case may be, of Ownership Units that it holds, free and
clear of all liens, with each such Ownership Unit having a value equal to the
Fair Market Value of the Common Shares as of the first date that payment of such
indemnification amount is due to the Company or the Partnership, as the case may
be. Notwithstanding the foregoing, no Contributor shall have any liability
hereunder for the first $25,000 in costs, damages and expenses for which they
would otherwise be liable under this Section 13.1 but for this provision.
13.2 Partnership's Indemnity. The Partnership agrees to indemnify,
defend and hold the Contributors harmless from and against any liability, claim,
demand, loss or damage (for the survival period provided in Section 14.1, except
with respect to clauses (a) and (d) below, which shall not be so limited) (a)
asserted by any person or entity against any of them with respect to the
Properties or otherwise arising from any act or omission of the Partnership, its
agents, employees or contractors occurring on or after the Closing; (b) arising
from any breach by the Partnership of any obligation of the Partnership under
this Agreement; (c) for proration payments under Article 11; (d) arising from
events occurring after the Closing with respect to the Properties, except for
liabilities subject
38
to proration under Article 11; or (e) arising from any breach by the Partnership
of its representations and warranties in Article 5.
13.3 Company's Indemnity. The Company agrees to indemnify, defend and
hold the Contributors harmless from any liability, claim, demand, loss or damage
suffered by any of them (for the survival period provided in Section 14.1) (a)
asserted by any person or entity against any such indemnitee arising from any
act or omission of the Company, its agents, employees or contractors occurring
on or before the Closing, except for any such items which are subject to
proration under Article 11; or (b) arising from any breach by the Company of its
representations and warranties in Article 5.
13.4 Environmental Excluded. The indemnities set forth in this Article
13 do not cover indemnification relating to environmental conditions or claims
including, without limitation, asbestosis, with the exception of a breach by the
Contributors of their representation and warranty in Section 4.9. Each party
explicitly reserves all rights with respect to such claims under any other
provision of this Agreement and under applicable law.
13.5 Procedure. The following provisions govern all actions for
indemnity under this Article 13 and any other provision of this Agreement.
Promptly after receipt by an indemnitee of notice of any claim, such indemnitee
shall, if a claim in respect thereof is to be made against the indemnitor,
deliver to the indemnitor written notice thereof and the indemnitor shall have
the right to participate in and, if the indemnitor agrees in writing that it
shall be responsible for any costs, expenses, judgments, damages and losses
incurred by the indemnitee with respect to such claim, to assume the defense
thereof, with counsel mutually satisfactory to the parties; provided, however,
that an indemnitee shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnitor, if the indemnitee reasonably believes
that representation of such indemnitee by the counsel retained by the indemnitor
would be inappropriate due to actual or potential differing interests between
such indemnitee and any other party represented by such counsel in such
proceeding. The failure of an indemnitee to deliver written notice to the
indemnitor within a reasonable time after the indemnitee receives notice of any
such claim shall relieve such indemnitor of any liability to the indemnitee
under this indemnity only if and to the extent that such failure is prejudicial
to the indemnitor's ability to defend such action. If an indemnitee settles a
claim without the prior written consent of the indemnitor, then the indemnitor
shall be released from liability with respect to such claim unless the
indemnitor has unreasonably withheld such consent.
13.6 Limitation on Liability. Notwithstanding any other provision in
this Article 13, (a) the aggregate liability of each Contributor, respectively,
with respect to any and all liabilities, claims, demands, losses or damages
effected under Section 13.1 shall not exceed its IPO Proceeds and (b) the
liability of any Contributor, respectively, with respect to any and all
liabilities, claims, demands, losses or damages effected under Section 13.1 with
respect to any particular Property (including any breach of Section 4.7 with
respect to any particular Property) shall not exceed its Contribution Amount
with respect to such Property, as adjusted for any adjustments provided in the
definition of "Adjusted Contribution Amount" which specifically relate to such
Property with a pro rata adjustment for any such other adjustments in the
definition of "Adjusted Contribution Amount"
39
which relate to such Contributor, in general, based on its Contribution Amount
with respect to each of its Properties; provided, however, that if any such
Contributor has elected pursuant to Section 13.1 to deliver Ownership Units to
satisfy its indemnification amount and has previously delivered all Ownership
Units received by it in the Consolidation to the Company or the Partnership
pursuant to Section 13.1, then such Contributor shall have no further liability
under this Article 13.
13.7 Exclusivity. The parties hereto agree that, from and after the
Closing Date, with respect to any breach or violation of any representation or
warranty or any covenant, obligation or other term set forth in this Agreement
or the other documents delivered in connection herewith, the only relief and
remedy available to a party in respect of such breach shall be (a) damages, but
only to the extent properly claimable hereunder pursuant to this Article 13 as
may be limited pursuant to Section 13.1 or Section 13.6, (b) specific
performance, if a court of competent jurisdiction in its discretion grants the
same, or (c) injunctive or declaratory relief, if a court of competent
jurisdiction in its discretion grants the same.
ARTICLE 14: MISCELLANEOUS
14.1 Survival. The representations and warranties contained in this
Agreement and the indemnification obligations and other provisions of this
Agreement that contemplate performance after the Closing shall survive the
Closing for a period of one year from the Closing Date and shall not be deemed
to be merged into or waived by the instruments of the Closing; provided,
however, that the representations in Section 4.16 shall survive the closing
until 30 days after the applicable statute of limitations period has expired.
Notice of a good faith claim for indemnification under Article 13 must be given
in writing by an indemnitee pursuant to Section 13.5 within one year after the
date of this Agreement if a claim in respect thereof is to be made against the
indemnitor (other than claims arising out of a breach of the representations and
warranties in Section 4.16, for which claims for indemnification shall be given
during the applicable survival period).
14.2 Expenses. Except as otherwise expressly provided herein, each
party hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated hereby, including all legal and accounting fees and
disbursements.
14.3 Additional Actions and Documents. Each of the parties hereto
hereby agrees to use its commercially reasonable efforts to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents, and to obtain such
consents, as may be necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this Agreement. The
obligations of the parties set forth in this Section 14.3 shall survive the
Closing and shall not be deemed to be merged into or waived by any instrument of
conveyance delivered at Closing.
14.4 Remedies Cumulative. The remedies provided in this Agreement shall
be cumulative and, except as otherwise expressly provided, shall not preclude
the assertion or exercise of any other rights or remedies available by law, in
equity or otherwise.
40
14.5 Entire Agreement; Amendment. This Agreement, including the
exhibits, schedules and other documents referred to herein or therein or
furnished pursuant hereto or thereto, constitutes the entire agreement among the
parties hereto with respect to the transactions contemplated herein, and
supersedes all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein. No amendment, modification or
discharge of this Agreement shall be valid or binding unless set forth in
writing and duly executed and delivered by the party against whom enforcement of
the amendment, modification or discharge is sought.
14.6 Notices. All notices, demands, requests or other communications
which may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
facsimile, telegram, telecopy or telex, addressed as set forth on the signature
pages hereto. Each party may designate by notice in writing a new address or
additional addresses to which any notice, demand, request or communication may
thereafter be so given, served or sent. Each notice, demand, request or
communication which shall be hand delivered, sent, mailed, faxed, telecopied or
telexed in the manner described above, or which shall be delivered to a
telegraph company, shall be deemed sufficiently given, served, sent, received or
delivered for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the confirmation receipt (with
respect to a facsimile) or the answer-back (with respect to a telecopy or telex)
being deemed conclusive, but not exclusive, evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
14.7 Waivers. 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
documents furnished 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, or the exercise of any other 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.
14.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
14.9 Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claim or disputes relating thereto, shall be governed by
and construed in accordance with the laws of the State of Delaware (excluding
the choice of law rules thereof) except for actions affecting title to real
property, in which case the laws of the state in which the real property is
located shall apply.
14.10 Assignment. No party hereto shall assign its rights and/or
obligations under this Agreement, in whole or in part, whether by operation of
law or otherwise, without the prior written consent of the other parties hereto;
provided, that the Company, the Partnership or a Partnership
41
Interest Contributor may assign their rights and/or obligations under this
Agreement to any Affiliate; provided, further, that a Contributor who is a
natural person may assign his rights and/or obligations under this Agreement, in
whole or in part, whether by operation of law or otherwise, without the prior
written consent of the other parties hereto, to his or her spouse, siblings,
parents or any natural or adopted children or other descendants or to any
personal trust in which such family members or such Contributor retains the
entire beneficial interest, provided, however, that in the case of any such
assignment, the transfers shall each be effected pursuant to a bona fide
exemption under the Securities Act; provided, further, that no Contributor shall
be obligated to receive any securities except LP Units of the Partnership which
are convertible into Common Shares of the Company. For the purposes of this
paragraph, the term "Affiliate" means (a) an entity that directly or indirectly
controls, is controlled by or is under common control with the Company or (b) an
entity at least a majority of whose economic interest is owned by the Company;
and the term "control" means the power to direct the management of such entity
through voting rights, ownership or contractual obligations.
14.11 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto, and no provision of this Agreement shall be
deemed to confer any benefit on any third party.
14.12 Confidentiality.
(a) Before the Closing Date, no Contributor, directly or indirectly,
shall make any public announcement or disclosure of this Agreement or any
information related to this Agreement to third parties, other than their
respective auditors and accountants, legal counsel, tenants and lenders without
the prior written consent of the Company. The Company and the Partnership shall
not make any public disclosure of the name of any Contributor or Title Holding
Partnership, except as required by law , as ordered by a court of competent
jurisdiction or as provided in paragraph (d) below.
(b) As used herein, "Confidential Material" means, with respect to each
party hereto (the "Providing Party"), all information, whether oral, written or
otherwise, furnished to any other party hereto (the "Receiving Party") or such
Receiving Party's directors, officers, partners, affiliates, employees, agents
or representatives (collectively, "Representatives"), by the Providing Party and
all reports, analyses, compilations, studies and other material prepared by the
Receiving Party or its Representatives (in whatever form maintained, whether
documentary, computer storage or otherwise) containing, reflecting or based
upon, in whole or in part, any such information. The term "Confidential
Material" does not include information which (i) is or becomes generally
available to the public other than as a result of a disclosure by the Receiving
Party, its Representatives or anyone to whom the Receiving Party or any of its
Representatives transmit any Confidential Material in violation of this
Agreement, (ii) is or becomes known or available to the Receiving Party on a
non-confidential basis from a source (other than the Providing Party or another
Receiving Party or one of their Representatives) who is not, to the knowledge of
the Receiving Party after reasonable inquiry, prohibited from transmitting the
information to the Receiving Party or its Representatives by a contractual,
legal, fiduciary or other obligation or (iii) is subsequently disclosed in the
Form
42
S-11 registration statement relating to the IPO or other public disclosure
permitted under this Section 14.12.
(c) Subject to paragraph (d) below or except as required by law or as
ordered by a court of competent jurisdiction, the Confidential Material will be
kept confidential and will not, without the prior written consent of the
Providing Party, be disclosed by the Receiving Party or its Representatives, in
whole or in part, and will not be used by the Receiving Party or its
Representatives, directly or indirectly, for any purpose other than in
connection with this Agreement, the Consolidation or the conducting, negotiating
or advising with respect to a transaction contemplated herein. Moreover, each
Receiving Party agrees to transmit Confidential Material to its Representatives
only if and to the extent that such Representatives need to know the
Confidential Material for purposes of such transaction and are informed by such
Receiving Party of the confidential nature of the Confidential Material and of
the terms of this Section 14.12. In any event, each Receiving Party will be
responsible for any actions by its Representatives which are not in accordance
with the provisions hereof.
(d) In the event that any Receiving Party, its Representatives or
anyone to whom such Receiving Party or its Representatives supply the
Confidential Material, are requested (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand, any
informal or formal investigation by any government or governmental agency or
authority or otherwise in connection with legal process) to disclose any
Confidential Material, such Receiving Party agrees (i) to immediately notify the
Providing Party of the existence, terms and circumstances surrounding such a
request, (ii) to consult with the Providing Party on the advisability of taking
available legal steps to resist or narrow such request and (iii) if disclosure
of such information is required, to furnish only that portion of the
Confidential Material which, in the opinion of such Receiving Party's counsel,
such Receiving Party is legally compelled to disclose and to cooperate with any
action by the Providing Party to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be accorded the Confidential
Material (it being agreed that the Providing Party shall reimburse the Receiving
Party for all reasonable out-of-pocket expenses incurred by the Receiving Party
in connection with such cooperation). Notwithstanding anything to the contrary
contained herein, the Company and the Partnership may disclose Confidential
Material received from any Providing Party in the Form S-11 registration
statement and otherwise in connection with the IPO as they believe necessary or
appropriate to comply with federal and state securities laws, requests by the
Securities and Exchange Commission or state securities commissions for
additional information or as otherwise deemed necessary by them, the
underwriters and their respective counsel in connection with the IPO.
(e) The provisions of this Section 14.12 shall terminate upon the
Closing. In the event of the termination of this Agreement in accordance with
its terms, promptly upon request from a Providing Party, each Receiving Party
shall, except to the extent prevented by law, redeliver to such Providing Party
or destroy all tangible Confidential Material and will not retain any copies,
extracts or other reproductions thereof in whole or in part. Any such
destruction shall be certified in writing to such Providing Party by an
authorized officer of the Receiving Party supervising the same. Notwithstanding
the foregoing, each Receiving Party and one Representative designated by each
43
Receiving Party shall be permitted to retain one permanent file copy of each
document constituting Confidential Material.
14.13 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
14.14 Company Access to Information. Upon the Company's reasonable
request, at any time before or after the Closing Date, each Contributor shall
provide the Company and the Partnership reasonable access to the books and
records of the Properties and all related information in order for the Company
and the Partnership to verify any payments or receipts from tenants, suppliers,
service providers and any other party.
14.15 Information and Audit Cooperation. At the Company's request, at
any time before or after the Closing Date, the Contributors shall provide to the
Company's designated independent auditor access to the books and records of the
Properties and all related information regarding the period for which the
Company or its affiliates is required to have the Properties audited under the
regulations of the Securities and Exchange Commission, and a representation
letter regarding the books and records of the Properties substantially in the
form of Exhibit K in connection with the normal course of auditing the
Properties in accordance with generally accepted auditing standards.
14.16 Binding Effect. This Agreement shall insure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns.
14.17 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.18 Limitation of Liability. Any obligation or liability whatsoever
of the Company which may arise at any time under this Agreement or any
obligation or liability which may be incurred by it pursuant to any other
instrument, transaction or undertaking contemplated hereby shall be satisfied,
if at all, out of the Company's assets only. No such obligation or liability
shall be personally binding upon, nor shall resort for the enforcement thereof
be had to, the property of any of its shareholders, trustees, officers,
employees or agents, regardless of whether such obligation or liability is in
the nature of contract, tort or otherwise.
14.19 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE CONTRIBUTION
AGREEMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE PROVISIONS
OF THIS SECTION 14.19 SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT.
44
IN WITNESS WHEREOF, the parties hereto have caused this Contribution
Agreement to be duly executed on their behalf as of the date first above
written.
MAR MAR REALTY TRUST
By: /s/Xxxxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
MAR MAR REALTY L.P.
By: MAR MAR REALTY TRUST, its general partner
By: /s/Xxxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
CONTRIBUTORS:
SONIC FINANCIAL CORPORATION
address:
Attention:
Facsimile No.:
By: /s/ Xxxxxxx X. Xxxxxx, Vice President
----------------------------------------------
Name:
Title:
TOWN AND COUNTRY FORD, INC.
address:
Attention:
Facsimile No.:
By: /s/ O. Xxxxxx Xxxxx
---------------------------------------------
Name:
Title:
O. XXXXXX XXXXX
address:
Facsimile No.:
/s/ O. Xxxxxx Xxxxx
----------------------------------------------
PRIMAX PROPERTIES, LLC
address:
Attention:
Facsimile No.:
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------------
Name:
Title: Manager
XXXXXXX X. XXXXXXX
address:
Facsimile No.:
/s/ Xxxxxxx Xxxxxxx
---------------------------------------------
XXXX X. XXXXXXX
address:
Facsimile No.:
/s/ Xxxx Xxxxxxx
---------------------------------------------
