Exhibit 10-3
CONTRIBUTION AGREEMENT
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THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of April, 1998, between AMERICAN REAL ESTATE
INVESTMENT, L.P., a Delaware limited partnership ("Acquiror"), AMERICAN REAL
ESTATE INVESTMENT CORPORATION, a Maryland corporation (the "REIT") and the
other parties listed on the signature pages hereto. The entities which are to
contribute Properties or the Additional Properties (as each such term is
defined below) to Acquiror by deed transfer or by assignment of XXX Lease
Agreement (as defined below) pursuant to this Agreement are hereinafter
sometimes referred to individually as a "Deed Contributor" and collectively
as the "Deed Contributors" (each of which potential Deed Contributors are set
forth on Schedule B attached to this Agreement); the parties or entities
which are to contribute Properties or the Additional Properties to Acquiror
by Partnership Interest Assignment (as defined below) pursuant to this
Agreement are hereinafter sometimes referred to individually as an "Interest
Contributor" and collectively as the "Interest Contributors" (each of which
potential Interest Contributors are set forth on Schedule B attached to this
Agreement); and the party which is to contribute the Management Contracts (as
defined below) to Acquiror by Assignment of Management Contracts (as defined
below) pursuant to this Agreement is hereinafter referred to as the
"Management Contributor" (which such Management Contributor is set forth on
Schedule B attached to this Agreement). The Deed Contributors, the Interest
Contributors and the Management Contributor are hereinafter sometimes
referred to individually and collectively, as the context requires, as
"Contributor."
RECITALS
A. The Owners (as defined below) are the owners of certain fee or
other interests (as more fully described in Section 1A) in (i) fourteen (14)
office and industrial buildings known as 0000 Xxxxxxxxxx Xxxxx, Xxxx
Xxxxxxxx, Xxx Xxxx; 0000 Xxxxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxx; 0000
Xxxxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxx; 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx; 000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx; 000 Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx; 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx; 0000 Xxxxx
Xxxxxx, Xxxxxxxx, Xxx Xxxx; 00-00 Xxxxxxxxx Xxxxxxxxx (Xxxxxxxxxx X),
Xxxxxxx, Xxx Xxxx; Xxx Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxx Xxxx; 0000 Xxxxxxxxxx
Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxx; 000-000 Xxxxxx Xxxxx Xxxxx, Xxxxxx, Xxx Xxxx;
Xxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx; and Xxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxx (each individually, a "Property" and all of which are herein
collectively referred to as, the "Properties"), (ii) one office building
known as 00 XxXxxxxxx Xxxxx (Xxxxxxxxxx XX), Xxxxxxx, Xxx Xxxx ("Waterfront
II") and (iii) two (2) office buildings known as Xxx Xxxx Xxxxxx-Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx ("One City Centre") and Three City Centre (180
South Clinton Street), Rochester, New York ("Three City Centre"); and the
Management Contributor is a party to those certain management contracts set
forth in Schedule A (the "Management Contracts"). Waterfront II, One City
Centre and
Three City Centre are hereinafter sometimes referred to individually as an
"Additional Property" and collectively as the "Additional Properties."
B. The Deed Contributors shall contribute and convey to Acquiror all
of their interests relating to those Properties or Additional Properties
which will be contributed to Acquiror by deed transfer or assignment of XXX
Lease Agreement pursuant to this Agreement (the "Deed Properties"); the
Interest Contributors shall contribute and convey to Acquiror all of their
partnership interests (the "Partnership Interests") in the entities which
will be contributed to Acquiror by Partnership Interest Assignment pursuant
to this Agreement (each, a "Contributed Entity" and collectively, the
"Contributed Entities") (each of which potential Partnership Interests are
listed next to each potential Contributed Entity on Schedule B attached to
this Agreement, each of which Contributed Entity owns fee or leasehold title
to the Property, Properties or Additional Properties, as the case may be, set
forth next to such Contributed Entity on Schedule B (the "Partnership
Properties")); and Management Contributor shall contribute and convey to
Acquiror all of its interest in the Management Contracts; and Acquiror
desires to acquire and accept same from Contributor, each upon and subject to
the terms and conditions of this Agreement. Each Deed Contributor and
Contributed Entity is sometimes hereinafter referred to as an "Owner" and the
Deed Contributors and the Contributed Entities are sometimes hereinafter
referred to collectively as the "Owners."
THEREFORE, in consideration of and in reliance upon the terms,
covenants, conditions and representations contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Contributor and Acquiror agree as follows:
1. CONTRIBUTION
Subject to and upon the terms and conditions contained in
this Agreement, Acquiror and Contributor agree that ownership in and to the
following shall be, directly (i.e., by deed transfer by the Owner owning the
following or by assignment of XXX Lease Agreement by the lessee thereunder)
or indirectly (i.e., by Partnership Interest Assignment of the Contributed
Entity owning the following), transferred by Contributor to Acquiror at the
Closing (as defined below) with respect to the Properties, at the Second
Closing (as defined below) with respect to Waterfront II, and at the Option
Closing (as defined below) with respect to One City Centre and Three City
Centre, as contemplated by this Agreement:
A. All of the following described items related to
the Properties or the Additional Properties, as the case may be:
(i) other than with respect to those Properties or the
Additional Properties which are subject to XXX Lease Agreements, those
certain parcels of real estate more particularly described in Exhibit A
attached to this Agreement; together with all and singular the
easements, rights of way, covenants, agreements, rights, tenements,
hereditaments and appurtenances thereunto now or hereafter belonging or
appertaining (collectively, the "Land"), and any development or other
rights associated with any Property or Additional Properties, as the
case may be;
(ii) other than with respect to those Properties or
Additional Properties which are subject to XXX Lease Agreements, all
rights, if any, in any land lying in the bed of any street, alley, road
or avenue (either open, closed or proposed) within, in front of, behind
or otherwise adjoining the Land; and any and all insurance proceeds or
condemnation awards received by or for the benefit of, or if not so
received, for which the rights thereto have accrued for the benefit of
Contributor, which on the Closing Date (as defined below), the Second
Closing Date (as defined
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below), or the Option Closing Date (as defined below), as the case may
be, have not been expended to restore or repair the applicable
Property or Additional Property, as the case may be (all of the
foregoing being included within the term "Land");
(iii) other than with respect to those Properties or
Additional Properties which are subject to XXX Lease Agreements and to
be conveyed subject to the XXX Lease Agreements, all of the buildings,
structures, fixtures, facilities, installations and other improvements
of every kind and description now or hereafter in, on, over and under
the Land, including, without limitation, (i) the fourteen (14) office
and industrial buildings known as 0000 Xxxxxxxxxx Xxxxx, Xxxx Xxxxxxxx,
Xxx Xxxx; 0000 Xxxxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxx; 0000
Xxxxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxx; 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx; 000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx; 000 Xxxxxxx
Xxxxxx, Xxxxxxxx, Xxx Xxxx; 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxx; 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx; 00-00 Xxxxxxxxx Xxxxxxxxx
(Xxxxxxxxxx X), Xxxxxxx, Xxx Xxxx; Xxx Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxx
Xxxx; 0000 Xxxxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxx; 000-000 Xxxxxx
Xxxxx Xxxxx, Xxxxxx, Xxx Xxxx; Xxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx; and
One Clinton Square, Syracuse, New York, (ii) Waterfront II, (iii) One
City Centre (if Acquiror has delivered the Additional Property Notice
(as defined below) with respect to One City Centre) and (iv) Three City
Centre (if Acquiror has delivered the Additional Property Notice with
respect to Three City Centre); each together with any and all
structures and facilities, plumbing, air conditioning, heating,
ventilating, air conditioning, mechanical, electrical and other utility
systems, water and sewage facilities (including xxxxx and septic
systems), parking lots, landscaping, sidewalks, signs and light
fixtures, which are not owned by tenants under the Leases (as defined
below) (collectively, the "Improvements");
(iv) all furniture, furnishings, fixtures, equipment,
machinery, supplies, tools, parts, and other tangible personalty of
every kind and description situated in, on, over or under the
Properties, Additional Properties or any part thereof or used in
connection therewith that are not owned by tenants under the Leases,
together with all replacements and substitutions therefor
(collectively, the "Personal Property"), including, without limitation,
those items more particularly described in Exhibit B attached to this
Agreement, and excluding those items listed on Exhibit B as "Excluded
Personal Property";
(v) all existing surveys, blueprints, drawings, plans
and specifications (including, without limitation, structural, HVAC,
mechanical and plumbing, water and sewer plans and specifications) and
other documentation for or with respect to the Properties, Additional
Properties or any part thereof, all available tenant lists and data,
correspondence with past, present and prospective tenants, vendors,
suppliers, utility companies and other third parties in Contributor's
possession or control, booklets, manuals and promotional and
advertising materials concerning the Properties, Additional Properties
or any part thereof; and such other existing books, records and
documents (including, without limitation, those relating to ad valorem
taxes) used in connection with the operation of the Properties,
Additional Properties or any part thereof;
(vi) all intangible personal property now or hereafter
owned by Contributor and used in connection with or arising from the
business now or hereafter conducted on or from the Properties,
Additional Properties or any part thereof, including, without
limitation, claims, choses in action, contract rights and telephone
exchange numbers; provided, that, notwithstanding anything contained
herein to the contrary, the parties hereto hereby acknowledge and agree
that Contributor is not, pursuant to the terms of this Agreement,
transferring any of its right, title and interest in and
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to the name, or the use of the name, "Pioneer," except that (i) for so
long as Acquiror shall, directly or indirectly, hold fee or leasehold
title to any of the Properties located in Pioneer Business Park in
East Syracuse, New York and Acquiror has the right to name such office
park, Acquiror shall continue to name such office park "Pioneer
Business Park" and (ii) Acquiror shall have the right to continue to
use the name "Pioneer" to the extent such name is part of the name of
a Contributed Entity but only for so long as it takes Acquiror (but in
no event to exceed sixty (60) days from the date of Closing) to change
the name of such Contributed Entity;
(vii) all currently effective purchase, service and
maintenance agreements, equipment leases and any other agreements,
contracts, licenses and permits, including, without limitation, cable
television and satellite master antenna television system agreements,
affecting or pertaining in any way to the Properties, Additional
Properties or any part thereof, including those agreements and
understandings listed on Schedule 8A(xii) (collectively, the "Service
Contracts"), a list of which is attached to this Agreement as Exhibit C
(other than those agreements and understandings listed on Schedule
8A(xii));
(viii) each Owner's interest, as landlord, in all leases
for portions of the Properties or Additional Properties, as the case
may be. A schedule of all current leases affecting the Properties,
Additional Properties or any part thereof (collectively, the "Leases,"
with such schedule being referred to in this Agreement as the "Rent
Roll"), including each tenant's name, a description of the space
leased, the amount of annual fixed rent due and the amount of security
deposit paid, if any, the term of each Lease, and a description of any
right to renew or extend, is attached to this Agreement as Exhibit D;
and
(ix) With respect to Properties or Additional Properties
transferred subject to XXX Lease Agreements, Owner's interest, as
tenant, in all XXX Lease Agreements (as defined below).
Notwithstanding anything contained herein to the contrary, the parcel of vacant
land adjacent to Xxx Xxxx Xxxxxx xxx Xxxxx Xxxx Xxxxxx which is owned by Pioneer
Properties Company of Rochester (the "Vacant Land") shall not be transferred to
Acquiror, but shall be transferred by Pioneer Properties Company of Rochester to
another entity designated by Contributor, prior to the Option Closing, free of
any rights of Acquiror (other than with respect to the rights granted to
Acquiror pursuant to Section 3G following the Option Closing, if applicable).
B. With respect to Properties or Additional Properties
to be contributed to Acquiror by Partnership Interest Assignment, all right,
title and interest in and to the Partnership Interests.
C. All of the Management Contracts.
D. Nothing herein shall be deemed to prevent
Contributor from distributing cash from a Contributed Entity at or prior to
the applicable closing.
2. XXXXXXX MONEY
Within three (3) business days after the execution of this
Agreement by Contributor and Acquiror, Acquiror shall deliver to First American
Title Insurance Company located in Philadelphia, Pennsylvania ("Escrowee") a
check payable to Escrowee or wire transferred federal funds in the amount of
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Five Hundred Thousand Dollars ($500,000) (the "Initial Xxxxxxx Money"). Within
three (3) business days after the expiration of the Inspection Period (as
defined below) (including any extension thereof), if Acquiror has not delivered
a Termination Notice (as defined below) to Contributor prior to the expiration
of the Inspection Period pursuant to Section 9, Acquiror shall deliver to
Escrowee a check payable to Escrowee or wire transferred federal funds in the
amount of Five Hundred Thousand Dollars ($500,000) (the "Additional Xxxxxxx
Money"). The Initial Xxxxxxx Money, together with any and all interest earned
thereon (net of any investment costs), and the Additional Xxxxxxx Money, if
applicable, together with any and all interest earned thereon (net of any
investment costs), shall hereinafter be referred to as the "Xxxxxxx Money." The
Xxxxxxx Money shall be invested and applied in accordance with the terms and
conditions of the Escrow Agreement attached hereto as Exhibit E. The Escrow
Agreement shall be executed and delivered by Contributor, Acquiror and Escrowee
contemporaneously with the execution and delivery of this Agreement. Upon the
Closing, the Xxxxxxx Money shall be returned to Acquiror.
3. CONTRIBUTION CONSIDERATION; OP UNITS; OTHER AGREEMENTS
A. General. Acquiror's sole general partner is the
REIT. The REIT is a real estate investment trust whose common stock is listed on
the American Stock Exchange (the "AMEX").
B. Contribution Consideration. (i) The aggregate
consideration to be paid to Contributor by Acquiror at the Closing (the
"Contribution Consideration") shall be as follows (subject to adjustment
pursuant to Sections 3L, 3P and 10):
(a) for the Deed Properties and for the Partnership
Interests related to the Contributed Entities (other than with
respect to Additional Properties), the aggregate consideration
shall consist of:
(1) that number of OP Units (as defined below) equal
to (i) 2,182,113 OP Units; minus (ii) the amount of
OP Units equal to (a) the aggregate amount of any
prorations described in Section 6E ("Prorations")
with respect to the Properties credited, as of the
Closing Date, to Acquiror divided by (b) $16.50; plus
(iii) the amount of OP Units equal to (x) the
aggregate amount of any Prorations with respect to
the Properties credited, as of the Closing Date, to
Contributor divided by (y) $16.50; and
(2) Seventy Nine Million Two Hundred Thirty One
Thousand Three Hundred Eighty Nine and 00/100 Dollars
($79,231,389.00) (as such amount may be increased
pursuant to Section 3B(v) below, the "Cash Amount");
minus the sum of all of the indebtedness (as set
forth on Exhibit F attached hereto) of Contributor
(including unpaid principal and interest, and any and
all prepayment penalties and other expenses incurred
as a result of any prepayment of such indebtedness by
Acquiror at Closing, other than with respect to the
Assumed Indebtedness), as of the Closing Date, on, or
relating to, the Properties (the "Existing
Indebtedness"); minus the amount reimbursed to
Contributor pursuant to Section 3M relating to the
Properties.
(b) for the Management Contracts relating to the
Properties, the aggregate
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contribution consideration shall consist of 284,592 OP Units.
Notwithstanding the foregoing sentence, as mutual incentive
to consummate the Second Closing, only 260,483 OP Units
allocable to the Management Contracts relating to the
Properties shall be delivered at the Closing and 24,109
OP Units allocable to the Management Contracts relating to
the Properties shall be delivered if and when the Second
Closing occurs.
(ii) The aggregate consideration to be paid to the
Contributor of Waterfront II by Acquiror at the Second Closing
(the "Waterfront II Consideration") for Waterfront II shall
consist of (subject to adjustment pursuant to Sections 3L, 3P
and 10):
(a) that number of OP Units equal to (i)
139,388 OP Units; minus (ii) the amount of OP Units
equal to (a) the aggregate amount of any Prorations
with respect to Waterfront II credited, as of the
Second Closing Date, to Acquiror divided by (b)
$16.50; plus (iii) the amount of OP Units equal to
(x) the aggregate amount of any Prorations with
respect to Waterfront II credited, as of the Second
Closing Date, to Contributor divided by (y) $16.50;
and
(b) Eight Million and 00/100 Dollars
($8,000,000.00) (as such amount may be increased
pursuant to Section 3B(v) below, the "Waterfront II
Cash Amount"); minus the sum of all of the
indebtedness (as set forth on Exhibit F attached
hereto) of Contributor (including unpaid principal
and interest, and any and all prepayment penalties
and other expenses incurred as a result of any
prepayment of such indebtedness by Acquiror at the
Second Closing), as of the Second Closing Date, on,
or relating to, Waterfront II (the "Waterfront II
Indebtedness"); minus the amount reimbursed to
Contributor pursuant to Section 3M relating to
Waterfront II.
(iii) If Acquiror has delivered the Additional
Property Notice and Contributor has not exercised its option
under Section 3L(iii) to delete One City Centre from this
Agreement, the aggregate consideration to be paid to the
Contributor of One City Centre by Acquiror at the Option
Closing (the "One City Centre Consideration") for One City
Centre shall consist of (subject to adjustment pursuant to
Sections 3L, 3P and 10):
(a) that number of OP Units equal to (i)
103,132 OP Units; minus (ii) the amount of OP Units
equal to (a) the aggregate amount of any Prorations
with respect to One City Centre credited, as of the
Option Closing Date, to Acquiror divided by (b)
$16.50; plus (iii) the amount of OP Units equal to
(x) the aggregate amount of any Prorations with
respect to One City Centre credited, as of the Option
Closing Date, to Contributor divided by (y) $16.50;
and
(b) Six Million Four Hundred Sixty One
Thousand Five Hundred Thirty Five and 00/100 Dollars
($6,461,535)(as such amount may be increased pursuant
to Section 3B(v) below, the "One City Centre Cash
Amount"); minus the sum of all of the indebtedness
(as set forth on Exhibit F attached hereto) of
Contributor (including unpaid principal and interest,
and any and all prepayment penalties and other
expenses incurred as a result of any prepayment of
such indebtedness by Acquiror at the Option Closing),
as of the Option Closing Date, on, or relating to,
Xxx Xxxx Xxxxxx (xxx "Xxx Xxxx Xxxxxx Xxxxxxxxxxxx");
minus the amount reimbursed to Contributor pursuant
to Section 3M relating to One City Centre; and
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(c) for the Management Contract relating to
One City Centre, the aggregate contribution
consideration shall consist of 8,555 OP Units.
(iv) If Acquiror has delivered the Additional
Property Notice, the aggregate consideration to be paid to the
Contributor of Three City Centre by Acquiror at the Option
Closing (the "Three City Centre Consideration") for Three City
Centre shall consist of (subject to adjustment pursuant to
Sections 3L, 3P and 10):
(a) that number of OP Units equal to (i)
247,369 OP Units; minus (ii) the amount of OP Units
equal to (a) the aggregate amount of any Prorations
with respect to Three City Centre credited, as of the
Option Closing Date, to Acquiror divided by (b)
$16.50; plus (iii) the amount of OP Units equal to
(x) the aggregate amount of any Prorations with
respect to Three City Centre credited, as of the
Option Closing Date, to Contributor divided by (y)
$16.50; and
(b) Seventeen Million Seventeen Thousand Two
Hundred Ninety Six and 00/100 Dollars ($17,017,296)
(as such amount may be increased pursuant to Section
3B(v) below, the "Three City Centre Cash Amount");
minus the sum of all of the indebtedness (as set
forth on Exhibit F attached hereto) of Contributor
(including unpaid principal and interest, and any and
all prepayment penalties and other expenses incurred
as a result of any prepayment of such indebtedness by
Acquiror at the Option Closing), as of the Option
Closing Date, on, or relating to, Three City Centre
(the "Three City Centre Indebtedness"); minus the
amount reimbursed to Contributor pursuant to Section
3M relating to Three City Centre; and
(c) for the Management Contract relating to
Three City Centre, the aggregate contribution
consideration shall consist of 22,112 OP Units.
(v) (a) Contributor may deliver a written notice (the
"Cash Notice") to Acquiror not later than June 1, 1998
electing to increase the Cash Amount, Waterfront II Cash
Amount, One City Centre Cash Amount and Three City Centre Cash
Amount by up to $19,289,780 in the aggregate (the "Additional
Cash Amount"), with a resulting decrease in the number of OP
Units under Section 3B(i)(a)(1), Section 3B(ii)(a), Section
3B(iii)(a) and Section 3B(iv)(a), respectively, equal to the
Additional Cash Amount allocable to each Property and
Additional Property (pursuant to a revised Schedule 3B(i) to
be delivered by Contributor concurrently with the Cash
Notice), divided by $16.50. Whether or not a Cash Notice is
delivered, Contributor will deliver to Acquiror not later than
June 1, 1998 a revised Schedule 3B(i) setting forth the amount
of cash and OP Units comprising the Contribution Consideration
for each Property and Additional Property.
(b) If, after the Closing, the Additional
Cash Amount is less than $19,289,780 in the
aggregate, Contributor may deliver a written notice
(each, an "Increase Notice") to Acquiror (1) not
later than 15 business days prior to the Second
Closing Date electing to increase the Waterfront II
Cash Amount (the "Second Increase"), and (2) not
later than 15 business days prior to the Option
Closing Date electing to increase the One City Centre
Cash Amount and/or Three City Centre Cash Amount (the
"Option Increase"), with a resulting decrease in the
number of OP Units under Section 3B(ii)(a), Section
3B(iii)(a) and/or Section 3B(iv)(a), respectively,
equal to the Second Increase allocable to Waterfront
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II and the Option Increase allocable to One City
Centre and/or Three City Centre (pursuant to a
revised Schedule 3B(i) to be delivered by Contributor
concurrently with an Increase Notice), divided by
$16.50; provided, however, that the sum of the Second
Increase and the Option Increase may not exceed
$500,000 in the aggregate, and the sum of the
Additional Cash Amount, the Second Increase and the
Option Increase may not exceed $19,289,780 in the
aggregate.
The Waterfront II Consideration, One City Centre Consideration, if any,
and Three City Centre Consideration, if any, are hereinafter sometimes
referred to individually and collectively as the "Additional
Consideration." If the calculation of the Contribution Consideration,
or the Additional Consideration, as the case may be, in accordance with
the foregoing provisions would result in a fraction of an OP Unit being
delivered to a Contributor, then such fraction shall be rounded to the
nearest whole number. The Properties are to be contributed to Acquiror
(directly or indirectly) subject to all Existing Indebtedness, which is
not to exceed the Cash Amount; minus the amount reimbursed to
Contributor pursuant to Section 3M relating to the Properties; minus
the amount of Existing Indebtedness which any Properties which become
Deleted Properties (as defined below), Contributor Deleted Properties
(as defined below) or Eliminated Properties (as defined below) are
subject to. Waterfront II is to be contributed to Acquiror (directly or
indirectly) subject to the Waterfront II Indebtedness, which is not to
exceed the Waterfront II Cash Amount minus the amount reimbursed to
Contributor pursuant to Section 3M relating to Waterfront II. One City
Centre is to be contributed to Acquiror (directly or indirectly)
subject to the One City Centre Indebtedness, which is not to exceed the
One City Centre Cash Amount; minus the amount reimbursed to Contributor
pursuant to Section 3M relating to One City Centre. Three City Centre
is to be contributed to Acquiror (directly or indirectly) subject to
the Three City Centre Indebtedness, which is not to exceed the Three
City Centre Cash Amount; minus the amount reimbursed to Contributor
pursuant to Section 3M relating to Three City Centre. The Contribution
Consideration and Additional Consideration are allocated amongst (i)
the Properties and Additional Properties in proportion to each
Property's and Additional Property's aggregate value, as set forth in
Schedule 3B(i), and (ii) the Management Contracts in proportion to each
Management Contract's aggregate value, as set forth in Schedule 3B(ii).
C. Issuance of OP Units. Units of limited partnership interest
in Acquiror (the "OP Units") shall be issued at the Closing (with respect to the
Properties), the Second Closing (with respect to Waterfront II) or the Option
Closing (with respect to One City Centre and Three City Centre) in the names of
and delivered to those recipients identified by Contributor to Acquiror who have
executed and delivered to Acquiror at Closing, the Second Closing or the Option
Closing, as the case may be, the OP Unit Recipient Agreement (as defined below)
(the "OP Unit Recipients"). At least 10 business days prior to the Closing, the
Second Closing or the Option Closing, as the case may be, Contributor shall
deliver to Acquiror Exhibit G to be attached hereto, listing such OP Unit
Recipients and the number of OP Units allocated to each of them. With respect to
the first Partnership Record Date (as defined below) on or after the Closing,
the Second Closing and the Option Closing, as the case may be, for distributions
by Acquiror as contemplated by the Partnership Agreement (as defined below),
distributions payable with respect to the OP Units issued pursuant to this
Agreement shall be made to the OP Unit Recipients on a pro rata basis based upon
the number of days during the calendar quarter preceding such Partnership Record
Date that the OP Unit Recipients held such OP Units. "Partnership Record Date"
shall mean the record date established by the REIT, as general partner of
Acquiror, for any particular distribution of Net Operating Cash Flow (as defined
in and pursuant to the Partnership Agreement). The REIT hereby covenants and
agrees that the first Partnership Record Date on or after the Closing, the
Second Closing and the Option Closing, as the case
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may be, will be the same as the record date for distributions to the
stockholders of the REIT.
After the applicable Lock-up Period (as defined below) the OP
Units issued at the Closing, the Second Closing and the Option Closing, as the
case may be, shall be convertible at any time or from time to time for shares
("Conversion Shares") of the common stock, par value $.001 per share, of the
REIT ("Stock") on a one-for-one basis (subject to the anti-dilution provisions
set forth in the Partnership Agreement), or for cash as provided in and subject
to the conditions and restrictions contained in the Acquiror's Amended and
Restated Agreement of Limited Partnership dated as of December 12, 1997 (the
"Partnership Agreement"); provided, however, that notwithstanding the foregoing,
the OP Units may not be converted into Conversion Shares that in the aggregate
represent more than 19.9% of the total number of shares of Stock that are issued
and outstanding on the date on which the OP Units are issued to the OP Unit
Recipients until and unless the requisite approval from the REIT's stockholders
is obtained prior to such conversion. The REIT agrees that it will use its
commercially reasonable efforts to obtain such stockholder approval, including
presenting such matter, with management's endorsement, to the REIT's
stockholders at the next annual or special meeting of stockholders following the
Closing, and to present such matter at each subsequent meeting for at least
three years from the Closing Date if the necessary stockholder approval is not
obtained. If such stockholder approval is not obtained by the end of the Lock-Up
Period (as defined below), each OP Unit Recipient may exercise its Conversion
Right (as defined in the Partnership Agreement) for those OP Units which are no
longer restricted pursuant to Section 3E, and shall be entitled to receive cash,
but not Conversion Shares, pursuant to the Partnership Agreement (without regard
to the second sentence in Section 12.6 of the Partnership Agreement).
D. Transfer Restrictions. Each OP Unit Recipient, by his
execution and delivery of the OP Unit Recipient Agreement, agrees that he may
only offer, sell, offer or contract to sell, transfer, assign, grant any option
for the sale of, pledge or encumber, or otherwise convey, any or all of the OP
Units issued and delivered to him in connection with this transaction and, if
applicable, any Conversion Shares (any of the foregoing, a "Transfer") in strict
compliance with this Agreement, the Partnership Agreement, the OP Unit Recipient
Agreement, the charter documents of the REIT, the registration and other
provisions of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), any state securities
laws, and the rules of the AMEX, in each case as may be applicable
(collectively, the "Transfer Requirements"). Each OP Unit Recipient shall have
the registration rights with respect to the Conversion Shares issuable in
respect of its OP Units set forth in the OP Unit Recipient Agreement. The OP
Unit Recipient Agreement shall reflect the foregoing.
E. Lock-Up Period. Each OP Unit Recipient agrees by his
execution of the OP Unit Recipient Agreement that for a period of twelve (12)
months following the Closing (the "First Anniversary") with respect to OP Units
issued at the Closing, and for a period of six (6) months following the Second
Closing or Option Closing (or until the First Anniversary, whichever is later)
with respect to OP Units issued at the Second Closing or Option Closing (each as
applicable, the "Lock-Up Period") he shall not, nor shall he seek to, in any way
or to any extent, directly or indirectly exchange or convert (pursuant to the
Partnership Agreement or otherwise), or effect or seek to effect a Transfer of
any or all of the OP Units delivered to the OP Unit Recipient at the Closing,
the Second Closing or the Option Closing, respectively; provided that the
foregoing transfer restrictions shall not apply to (i) pledges of, or
encumbrances on, OP Units in favor of institutional lenders or other financial
institutions with assets in excess of Five Billion Dollars, provided that such
OP Unit Recipient shall promptly notify Acquiror of such pledge of, or
encumbrance on, such OP Units, stating the details thereof, or (ii) Transfers
made, subject to the restrictions hereof, to Permitted Transferees (as defined
below) who shall remain subject to the restrictions hereunder. In addition, each
OP Unit Recipient further agrees that following the expiration of the Lock-Up
Period, not
9
more than twenty-five percent (25%) of the OP Units delivered to such OP Unit
Recipient at the Closing, the Second Closing or the Option Closing, as the case
may be, or Conversion Shares in respect thereof may be sold in the three-month
period following the initial Lock-Up Period, and an additional twenty-five
percent (25%) of such OP Units and Conversion Shares (plus any OP Units or
Conversion Shares which could have previously been sold pursuant to the
provisions hereof but were not) may be sold in each three-month period
thereafter (so that all OP Units and Conversion Shares may be sold after the
ninth (9th) month after the Lock-Up Period following, as applicable, the Closing
Date, with respect to OP Units issued at the Closing, the Second Closing Date,
with respect to OP Units issued at the Second Closing, or the Option Closing
Date, with respect to OP Units issued at the Option Closing). Notwithstanding
the foregoing, if all of the OP Units received by an OP Unit Recipient, directly
or indirectly, at the Closing, Second Closing and Option Closing is less than
30,000 OP Units, then such OP Unit Recipient shall be entitled to sell all of
his remaining OP Units at any time following the expiration of the Lock-Up
Period. The term "Permitted Transferee" with respect to any OP Unit Recipient
shall mean such recipient's spouse; a parent or lineal descendant (including an
adopted child) of a parent, or the parent or spouse of a lineal descendant of a
parent; a trustee, guardian or custodian for, or an executor, administrator or
other legal representative of the estate of, such recipient, or a trustee,
guardian or custodian for a Permitted Transferee of such recipient; the trustee
of a trust (including a voting trust) for the benefit of such recipient; a
corporation, partnership or other entity of which such recipient and Permitted
Transferees of such recipient are the beneficial owners of a majority in voting
power of the equity; other OP Unit Recipients or Permitted Transferees thereof;
any direct or indirect equity owners of an OP Unit Recipient; and any public
charity, private foundation or charitable institution as defined in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), but
only in each case, who (a) is an Accredited Investor (as defined in Rule 501
under the Securities Act); and (b) agrees in writing in an instrument reasonably
acceptable to Acquiror to be bound by the restrictions on transfer of the OP
Units and Conversion Shares contained in this Agreement. The OP Unit Recipient
Agreement shall reflect the foregoing. Notwithstanding the provisions of Section
9.3(a) of the Partnership Agreement, by its execution and delivery of this
Agreement, the REIT, as general partner of Acquiror, hereby consents to
Transfers of OP Units during and after the Lock-Up Period as permitted in this
Agreement during the Lock-Up Period, subject to the provisions of Section
9.3(b)-(d) and Section 9.6 of the Partnership Agreement.
F. Right of First Refusal/First Offer on Sale of OP Units.
Each OP Unit Recipient will agree that Acquiror shall have a right of first
refusal with respect to unsolicited offers to purchase OP Units from such OP
Unit Recipient and a right of first offer with respect to OP Units that such OP
Unit Recipient seeks to sell (other than Transfers to Permitted Transferees), as
provided in an agreement to be delivered by each OP Unit Recipient at Closing,
the Second Closing or the Option Closing, as the case may be, substantially in
the form of Exhibit H attached hereto (the "OP Unit Recipient Agreement"). Any
Permitted Transferee will be required to agree to be bound by the provisions of
this Section 3F.
G. Right of First Offer/First Refusal on Development,
Sale and Acquisition of Buildings.
(i) Development Projects. During the period from and
after the Closing Date through and continuing up to and including the
fifth (5th) anniversary thereof (the "Option Period"), Acquiror shall
have a continuing right of first offer on development opportunities of
the Xxxxxxx Group (as defined below) in the Standard Metropolitan
Statistical Areas of Albany, Buffalo, Rochester and Syracuse in the
State of New York (the "SMSAs") for the construction of office or
industrial buildings (excluding medical
10
office buildings) on undeveloped land or the demolition of existing
improvements and the construction of office or industrial buildings
(excluding medical office buildings) on a parcel of land (each, a
"Development Project") in accordance with the following procedures: If
during the Option Period the Xxxxxxx Group desires to develop a
Development Project in any of the SMSAs and desires to use a
third-party equity capital partner (other than key executives or
employees of Pioneer Development Company, LLC making minority
investments)(a "Development Partner"), the Xxxxxxx Group shall provide
written notice (a "Development Offer Notice") to Acquiror (i)
specifying the terms and conditions upon which the Xxxxxxx Group would
be willing to develop such Development Project with a Development
Partner including the terms of payment or capital contributions, as the
case may be, the identity of the Development Project and other material
terms and conditions (collectively, the "Development Offer Terms"); and
(ii) offering Acquiror the opportunity to become the Development
Partner for such Development Project upon the Development Offer Terms.
Acquiror or its nominee shall be entitled, for a period of fifteen (15)
days after the date of receipt of a Development Offer Notice (the
"Development Exercise Period"), to exercise its rights hereunder by
written notice to the Xxxxxxx Group (a "Development Acceptance Notice")
to become a Development Partner for the Development Project, in
accordance with the Development Offer Terms. If during the Development
Exercise Period Acquiror delivers a Development Acceptance Notice to
the Xxxxxxx Group, Acquiror and the Xxxxxxx Group shall use
commercially reasonable efforts to enter into appropriate documentation
for Acquiror to become a Development Partner upon the Development Offer
Terms with regard to the Development Project within sixty (60) days
after the date of receipt of the Development Offer Notice by Acquiror.
If (i) Acquiror fails to timely deliver a Development Acceptance Notice
to the Xxxxxxx Group, (ii) Acquiror notifies the Xxxxxxx Group that it
does not desire to become a Development Partner, or (iii) a Development
Acceptance Notice is timely given but after all commercially reasonable
efforts have been made by the Xxxxxxx Group, appropriate documentation
is not entered into within the sixty (60) day period noted above, then
the Xxxxxxx Group shall have the right to seek and enter into an
agreement with another Development Partner for the Development Project
upon terms which would not be materially more favorable to Acquiror
than the Development Offer Terms; provided, however, that if the
Xxxxxxx Group does not enter into a binding contract for a third-party
to become a Development Partner for such Development Project within 180
days of the later of (x) the expiration of the Development Exercise
Period (e.g. if Acquiror failed to timely exercise, or declined its
right to exercise, its option hereunder) or (y) the end of the
applicable time period relating to clause (iii) above, or the Xxxxxxx
Group desires to offer a third-party the right to become a Development
Partner for such Development Project on terms which would be materially
more favorable to Acquiror than the Development Offer Terms, then
Acquiror shall again have its right of first offer to become a
Development Partner for the development of the Development Project as
set forth in this paragraph, and the Xxxxxxx Group and Acquiror shall
again comply with the requirements hereof; provided, however, that if
the Xxxxxxx Group desires to enter into an agreement with another
Development Partner on terms which would be materially more favorable
to Acquiror than the Development Offer Terms, Acquiror shall only have
five (5) calendar days after receipt of the revised Development Offer
Terms to deliver the Development Acceptance Notice. Notwithstanding the
foregoing, this subsection (i) shall not apply to third-party
financing.
(ii) Sale Projects.
--------------
(a) During the Option Period, if the Xxxxxxx Group
shall decide to sell (whether by transfer of fee simple
interest or a leasehold interest, sale of an interest in an
entity which owns an interest in, an installment sale, or
otherwise) one or more office or industrial buildings and
related land and facilities (excluding medical office
buildings)
11
directly or indirectly owned or controlled by the Xxxxxxx
Group and located in any of the SMSAs (each, an "Offer
Project"), then prior to offering any Offer Project to a
third-party purchaser, the Xxxxxxx Group shall provide written
notice (an "Offer Project Notice") to Acquiror (i) specifying
the purchase price, terms of payment, identity of the Offer
Project and other material terms and conditions which the
Xxxxxxx Group proposes for the sale of the Offer Project
(collectively, the "Offer Project Terms") and (ii) offering to
sell to Acquiror the Offer Project on the Offer Project Terms.
Acquiror or its nominee will have the option, to be exercised
by written notice (an "Offer Project Acceptance Notice") to
the Xxxxxxx Group within fifteen (15) days after Acquiror's
receipt of the Offer Project Notice (the "Offer Exercise
Period") to accept the Offer Project Terms. The Xxxxxxx Group
and Acquiror shall use commercially reasonable efforts to
enter into a purchase and sale agreement relating to the Offer
Project upon the Offer Project Terms within sixty (60) days
after receipt by Acquiror of the Offer Project Notice and the
Xxxxxxx Group and Acquiror shall consummate the transaction
contemplated by the Offer Project Notice within the time
period specified in such agreement. If (i) Acquiror fails to
timely deliver the Offer Project Acceptance Notice to the
Xxxxxxx Group, (ii) Acquiror notifies the Xxxxxxx Group that
it does not desire to accept the Offer Project Terms, (iii) an
Offer Project Acceptance Notice is timely given but after all
commercially reasonable efforts have been made by the Xxxxxxx
Group, a purchase and sale agreement is not entered into
within the sixty (60) day period noted above, or (iv) the
transaction contemplated by the Offer Project Notice is not
consummated within time period set forth in the purchase and
sale agreement, unless such consummation is delayed for
reasons beyond the reasonable control of Acquiror, then the
Xxxxxxx Group shall have the right to sell the Offer Project
to a third-party purchaser upon terms which would not be
materially more favorable to Acquiror than the Offer Project
Terms; provided, however, if a binding agreement with regard
to the Offer Project is not entered into by the Xxxxxxx Group
and a third-party purchaser within 180 days of the later of
(x) the expiration of the Offer Exercise Period (if Acquiror
failed to timely exercise, or declined its right to exercise,
its option hereunder) or (y) the end of the applicable time
period relating to clauses (iii) or (iv) above, or the Xxxxxxx
Group desires to offer to sell the Offer Project to a
third-party purchaser on terms which would be materially more
favorable to Acquiror than the Offer Project Terms, then the
Xxxxxxx Group shall, prior to offering the Offer Project to a
third-party, again be obligated to offer to sell to Acquiror
the Offer Project by delivering a revised Offer Project Notice
to Acquiror reflecting the revised Offer Project Terms the
Xxxxxxx Group would be willing to accept for the Offer Project
and the Xxxxxxx Group and Acquiror shall again comply with the
requirements hereof; provided, however, that if the Xxxxxxx
Group desires to offer to sell the Offer Project to a
third-party purchaser on terms which would be materially more
favorable to Acquiror than the Offer Project Terms, Acquiror
shall only have five (5) calendar days after receipt of the
revised Offer Project Terms to deliver the Offer Project
Acceptance.
(b) During the Option Period, if the Xxxxxxx Group
receives from a third-party an unsolicited offer to purchase
(whether by transfer of fee simple interest or a leasehold
interest, an interest in an entity which owns an interest in,
an installment sale, or otherwise) one or more office or
industrial buildings and/or related land and facilities
(excluding medical office buildings) directly or indirectly
owned or controlled by the Xxxxxxx Group and located in any of
the SMSAs (each, a "Refusal Project"), then prior to accepting
such unsolicited offer, the Xxxxxxx Group shall provide
written notice (a "Refusal Project Notice") to Acquiror
specifying (i) the purchase price, terms of payment, identity
of the
12
Refusal Project and other material terms and conditions
offered to the Xxxxxxx Group relating to the sale of the
Refusal Project (collectively, the "Refusal Project Terms")
and (ii) offering to sell to Acquiror the Refusal Project on
the Refusal Project Terms. Acquiror or its nominee will have
the option, to be exercised by written notice (a "Refusal
Project Acceptance Notice") to the Xxxxxxx Group within
fifteen (15) days after Acquiror's receipt of the Refusal
Project Notice (the "Refusal Exercise Period") to accept the
Refusal Project Terms. The Xxxxxxx Group and Acquiror shall
use commercially reasonable efforts to enter into a purchase
and sale agreement relating to the Refusal Project upon the
Refusal Project Terms within sixty (60) days after receipt by
Acquiror of the Refusal Project Notice and the Xxxxxxx Group
and Acquiror shall consummate the transaction contemplated by
the Refusal Project Notice within the time period specified in
such agreement. If (i) Acquiror fails to timely deliver the
Refusal Project Acceptance Notice to the Xxxxxxx Group, (ii)
Acquiror notifies the Xxxxxxx Group that it does not desire to
accept the Refusal Project Terms, (iii) a Refusal Project
Acceptance Notice is timely given but after all commercially
reasonable efforts have been made by the Xxxxxxx Group, a
purchase and sale agreement is not entered into within the
sixty (60) day period noted above, or (iv) the transaction
contemplated by the Refusal Project Notice is not consummated
within the time period set forth in the purchase and sale
agreement, unless such consummation is delayed for reasons
beyond the reasonable control of Acquiror, then the Xxxxxxx
Group shall have the right to sell the Refusal Project on
terms which would not be materially more favorable to Acquiror
than the Refusal Project Terms to the third-party purchaser
which offered to buy the Refusal Project; provided, however,
if a binding agreement with regard to the Refusal Project is
not entered into by the Xxxxxxx Group and such third-party
purchaser within 180 days of the later of (x) the expiration
of the Refusal Exercise Period (if Acquiror failed to timely
exercise, or declined its right to exercise, its option
hereunder) or (y) the end of the applicable time period
relating to clauses (iii) or (iv) above, or the Xxxxxxx Group
desires to sell the Refusal Project to such third-party
offeror on terms which would be materially more favorable to
Acquiror than the Refusal Project Terms, then the Xxxxxxx
Group shall, prior to selling the Refusal Project to such
third-party, again be obligated to offer to sell to Acquiror
the Refusal Project by delivering a revised Refusal Project
Notice to Acquiror reflecting the revised Refusal Project
Terms the Xxxxxxx Group would be willing to accept for the
Refusal Project and the Xxxxxxx Group and Acquiror shall again
comply with the requirements hereof; provided, however, that
if the Xxxxxxx Group desires to offer to sell the Refusal
Project to a third-party purchaser on terms which would be
materially more favorable to Acquiror than the Refusal Project
Terms, Acquiror shall only have five (5) calendar days after
receipt of the revised Refusal Project Terms to deliver the
Refusal Project Acceptance.
This subsection (ii) of Section 3G shall not apply to any
Deleted Properties and shall apply to any Contributor Deleted
Properties. With respect to any Contributor Deleted
Properties, the rights of Acquiror in this subsection (ii) of
Section 3G shall be subject to the existing rights of partners
or required offerees of the Xxxxxxx Group which are contained
in the partnership agreement of the relevant Owner, and shall
not apply if the Xxxxxxx Group is a minority partner in an
Owner of a Contributor Deleted Property on the date of this
Agreement and the other partners in such Owner elect to sell
or otherwise dispose of such Contributor Deleted Property to a
third party.
(iii) Notwithstanding the foregoing right of first offer
and right of first refusal,
13
such rights shall not apply to Development Projects, Offer Projects or
Refusal Projects in instances where the Xxxxxxx Group either receives
bona fide offers from, or proposes to develop or acquire with,
potential purchasers or potential developers who would also be, or
whose affiliate would be, the sole tenant in the existing building(s)
or the building(s) proposed to be built pursuant to such projects.
(iv) Acquisition Buildings.
----------------------
(a) During the Option Period, the Xxxxxxx Group shall
not, directly or indirectly, acquire, solicit, seek to acquire
or solicit, or otherwise pursue any opportunities to acquire
(whether by transfer of fee simple interest, a leasehold
interest or an interest in any entity owning any such
interest, an installment sale, or otherwise) any office or
industrial buildings or related land and facilities (excluding
medical office buildings) located in any of the SMSAs other
than for or on behalf of Acquiror.
(b) During the Option Period, if the Xxxxxxx Group
receives from a third-party an unsolicited offer to sell to
the Xxxxxxx Group (whether by transfer of fee simple interest,
a ground lease, an installment sale, or otherwise) one or more
office or industrial buildings and related land and facilities
(excluding medical office buildings) located in any of the
SMSAs, then the Xxxxxxx Group shall promptly provide written
notice to Acquiror of such offer and shall refer such
third-party offeror to Acquiror.
(v) The Xxxxxxx Group. The "Xxxxxxx Group" shall mean
Xxxxxxx X. Xxxxxxx and his spouse, Xxxxxxx X. Xxxxxxx and his spouse,
and lineal descendants of Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx
(the "Xxxxxxx Family") and each entity that directly or indirectly,
through one or more intermediaries, is controlled by the Xxxxxxx
Family. For purposes of this definition, control of an entity means the
power, direct or indirect, to direct or cause the direction of
management and policies of such person or entity whether by contract or
otherwise.
(vi) Confidentiality. Acquiror agrees to keep strictly
confidential the terms and existence of any Development Project, Offer
Project or Refusal Project unless and until it has been accepted by
Acquiror.
H. Tax Matters.
------------
(i) No Property Disposition. (a) In the case of those
Properties or Additional Properties set forth on Schedule 3H attached
hereto, during the period commencing on the Closing Date and expiring
on the earlier to occur of (I) the seventh (7th) anniversary of the
Closing Date (with respect to the Properties), the Second Closing (with
respect to Waterfront II) or the Option Closing Date (with respect to
One City Centre and Three City Centre), or (II) the sale or disposition
in a taxable transaction, or conversion by each OP Unit Recipient who
received OP Units in respect of such Property (or Additional Property,
as the case may be) of OP Units representing 70% of the OP Units
delivered to such OP Unit Recipient at the Closing, the Second Closing
and the Option Closing in respect of such Property (or Additional
Property, as the case may be) (the "70% Condition"); and (b) in the
case of the remaining Properties, during the period commencing on the
Closing Date and expiring on the first (1st) anniversary of the
Closing Date, Acquiror shall not sell or make any other voluntary
disposition (including, without limitation, by way of a deed in lieu of
foreclosure, a foreclosure action, or an act of eminent domain) of any
of the Properties or
14
Additional Properties in a transaction that causes Contributor to
recognize taxable income in excess of "book" income under Section
704(c) of the Code with respect to such sale or other disposition
without the consent of the affected Contributor. Thereafter,
Acquiror shall use all commercially reasonable efforts in disposing
of any of the Properties or Additional Properties during the period
expiring on the earlier to occur of (x) the tenth (10th) anniversary
of the Closing Date (with respect to the Properties), the Second
Closing Date (with respect to Waterfront II) or the Option Closing
Date (with respect to One City Centre and Three City Centre), or (y)
the achievement of the 70% Condition, to structure such disposition
as a transaction that will not result in a material gain to the
Contributors, whether by means of an exchange contemplated under
Code Sections 351, 354, 355, 368, 721, 1031, 1033 or otherwise,
provided that if such disposition were not so structured the affected
Contributor would recognize taxable income in excess of "book" income
with respect to such disposition.
(ii) Debt Maintenance and Guaranty Requirements. At
Closing, or at any time subsequent thereto in accordance with the terms
hereof, Acquiror will permit Contributor at Contributor's option to
guarantee the "bottom" portion (i.e., the least risky portion) of
available indebtedness of Acquiror or indemnify the REIT, Acquiror or
any of their subsidiaries for liabilities in respect thereof. Subject
to this Section 3H(ii), Acquiror agrees to maintain at all times an
amount of indebtedness equal to $57,000,000 (reduced by the amount of
indebtedness Contributor no longer requires due to the Additional Cash
Amount) (the "Debt Amount") for only Contributor (as allocated by
Contributor among Contributor) to guarantee (or indemnify the REIT,
Acquiror or any of their subsidiaries for such indebtedness). The
provisions of this Section 3H(ii) shall apply until the earlier to
occur of (a) the seventh (7th) anniversary of the Closing Date or (b)
the achievement of the 70% Condition. Notwithstanding the foregoing, if
any OP Unit Recipient (i) obtains a tax-free step-up in the basis of
their OP Units for federal income tax purposes; (ii) sells, transfers
or otherwise disposes of their OP Units in a taxable transaction; or
(iii) receives an allocation under Treasury Reg. Section 1.704-3(b)
using the traditional method without curative allocations that reduces
the amount of Built-in-Gain (as defined below), then the Debt Amount
shall be commensurately reduced. For purposes of this Agreement,
"Built-in-Gain" shall mean, with respect to each Property or Additional
Property, the amount of taxable income in excess of "book" income that
would be allocated to Contributor if such Property or Additional
Property, as the case may be, were disposed of in a fully taxable
transaction. After the seventh (7th) anniversary of the Closing Date
and until the achievement of the 70% Condition, Acquiror will use
commercially reasonable efforts to permit Contributor to guarantee
available indebtedness of Acquiror or indemnify the REIT, Acquiror or
any of their subsidiaries for liabilities in respect thereof, up to an
amount equal to what the reduced Debt Amount would have been under this
Section 3H(ii) if it were still applicable.
(iii) Allocation Method. Pursuant to Section 5.4 of the
Partnership Agreement, Acquiror shall elect to use the "traditional
method" without curative allocations set forth in Regulation Section
1.704-3(b) with respect to the Properties.
I. Board Seat. The REIT shall take all actions necessary to
appoint Xxxxxxx X. Xxxxxxx to the Board of Directors of the REIT at Closing,
with an initial term to last until the next annual meeting of the REIT's
stockholders. At such annual meeting, Xxxxxxx X. Xxxxxxx shall be nominated to
serve as a Class I director of the REIT (i.e., with an initial term of three (3)
years).
J. Allocation of Contribution Consideration. Prior to the
Closing, the Second
15
Closing and the Option Closing, as the case may be, and if requested by
Acquiror, Acquiror and Contributor shall use commercially reasonable efforts to
agree in writing upon the allocation of the Contribution Consideration and the
Additional Consideration, as the case may be, among the Land and the
Improvements. Acquiror and Contributor agree that the Personal Property has no
separate value except in connection with the Properties and Additional
Properties. No part of the Contribution Consideration is attributable to the
Personal Property.
K. Further Assurances. Each party hereto will execute such
further documents and instruments and take such further actions as may be
reasonably requested by one or more of the others to consummate the transactions
contemplated hereby, to vest Acquiror with full right, title and interest in and
to the Properties, Additional Properties, the Partnership Interests and the
Management Contracts or to effect the other purposes of this Agreement.
L. Assumption of Debt; Deletion of Property. Contributor shall
use all commercially reasonable efforts to renegotiate the prepayment penalties
payable in respect of that portion of the Existing Indebtedness encumbering, or
related to, those Properties known as Xxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx, and
0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx, and the Additional Property known as One
City Centre. If Contributor is unable to renegotiate such prepayment penalties
to Contributor's reasonable satisfaction, Contributor shall have the following
options:
(i) If Contributor is unable to renegotiate the
prepayment penalties payable (and to renegotiate with the lender to
allow for prepayment) in respect of that portion of the Existing
Indebtedness encumbering, or related to, Xxx Xxxx Xxxxx, Xxxxxxxx, Xxx
Xxxx (the "Park Place Indebtedness"), Contributor shall have the
option, exercisable upon written notice to Acquiror not less than five
(5) business days prior to the Closing Date, to (i) delete and
eliminate Xxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx from this Agreement or
(ii) contribute such Property to Acquiror subject to the Park Place
Indebtedness and Acquiror shall assume the Park Place Indebtedness (the
"Assumed Park Place Indebtedness"); provided, however, that on the
Closing Date the Park Place Indebtedness shall not exceed the aggregate
principal sum of $11,200,000 plus current interest. If Acquiror assumes
the Park Place Indebtedness pursuant to this Section 3L(i), the
Contribution Consideration shall be adjusted pursuant to the formula
set forth in Schedule 3L.
(ii) If Contributor is unable to renegotiate the
prepayment penalties payable in respect of that portion of the Existing
Indebtedness encumbering, or related to, 0000 Xxxxx Xxxxxx, Xxxxxxxx,
Xxx Xxxx (the "Xxxxx Street Indebtedness"), Contributor shall have the
option, exercisable upon written notice to Acquiror not less than five
(5) business days prior to the Closing Date, to (i) delete and
eliminate 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx from this Agreement or
(ii) to contribute such Property to Acquiror subject to the Xxxxx
Street Indebtedness and Acquiror shall assume the Xxxxx Street
Indebtedness (the "Assumed Xxxxx Street Indebtedness" and together with
the Assumed Park Place Indebtedness, the "Assumed Indebtedness");
provided, however, that on the Closing Date the Xxxxx Street
Indebtedness shall not exceed the aggregate principal sum of $3,427,259
plus current interest. If Acquiror assumes the Xxxxx Street
Indebtedness pursuant to this Section 3L(ii), the Contribution
Consideration shall be adjusted pursuant to the formula set forth in
Schedule 3L.
(iii) If Contributor is unable to renegotiate the
prepayment penalties payable in respect of that portion of the Existing
Indebtedness encumbering, or related to, One City Centre, Contributor
shall have the option, exercisable upon written notice to Acquiror on
or prior to the date
16
which is five (5) business days prior to the Option Closing Date, to
delete and eliminate One City Centre from this Agreement.
If Contributor exercises its option pursuant to this Section 3L to delete one or
more of the properties set forth in this Section 3L (each a "Contributor Deleted
Property," and together the "Contributor Deleted Properties"), this Agreement
shall, without further action of the parties, be deemed to have been
automatically and ipso facto amended to eliminate each Contributor Deleted
Property herefrom. Upon such amendment of this Agreement, (a) all references to
the Properties or Additional Properties, as the case may be, shall automatically
exclude the Contributor Deleted Properties and no obligations of Contributor (or
Acquiror's Conditions Precedent) set forth herein shall apply to the Contributor
Deleted Properties, (b) all references to Contributor and Owner shall
automatically exclude the Contributor(s) and Owner(s) appurtenant to the
Contributor Deleted Properties, (c) the Contribution Consideration or Additional
Consideration shall be reduced by the amount allocated to the Contributor
Deleted Properties and their related Management Contracts pursuant to Schedule
3B(i) and Schedule 3B(ii), and (d) Acquiror shall promptly return to Contributor
all documents, records and studies relating to the Contributor Deleted
Properties. Notwithstanding the foregoing, no such amendment shall modify any
indemnity or other obligation of a party regarding the Contributor Deleted
Properties which expressly survives the deletion of the Property or Additional
Property, or the termination of this Agreement.
In addition, if Frontier Corporation (a tenant at Three City
Centre) timely exercises its right of first refusal to purchase Three City
Centre, then Three City Centre shall be deemed a Contributor Deleted Property
for all purposes under this Agreement.
M. Reimbursement for Capital Expenditures. At the Closing, the
Second Closing and the Option Closing, Acquiror shall reimburse or pay
Contributor for those capital expenditures made or incurred by Contributor with
respect to the Properties (in the case of the Closing), Waterfront II (in the
case of the Second Closing) or One City Centre and Three City Centre (in the
case of the Option Closing) during the twenty four (24) month period preceding
the Closing Date, the Second Closing Date or the Option Closing Date, as the
case may be, (which capital expenditures shall be identified in writing by
Contributor at least three (3) business days prior to the Closing Date, the
Second Closing Date or the Option Closing Date, as the case may be); provided,
however, that the amount reimbursed under this Section 3M shall not exceed the
amount of cash payable to Contributor pursuant to Section 3B(i), Section 3B(ii),
Section 3B(iii) or Section 3B(iv), respectively (including the Additional Cash
Amount), in each case prior to any adjustment for this Section 3M. Acquiror
shall disburse the amounts payable pursuant to this Section 3M at the Closing,
the Second Closing and the Option Closing, as the case may be, to those people
specified by Contributor in writing at least three (3) business days prior to
the Closing Date, the Second Closing Date or the Option Closing Date,
respectively.
17
N. Notification if Representations and Warranties Untrue.
Prior to the Closing Date (with respect to the Properties), the Second Closing
Date (with respect to Waterfront II) or the Option Closing Date (with respect to
Xxx Xxxx Xxxxxx xxx Xxxxx Xxxx Xxxxxx), Xxxxxxxx shall notify Contributor upon
discovery that any representation or warranty of Contributor contained in this
Agreement is untrue or incorrect, and Contributor shall notify Acquiror upon
discovery that any representation or warranty of Acquiror contained in this
Agreement is untrue or incorrect. Contributor shall have thirty (30) days from
the date it receives such notification from Acquiror to cure such inaccuracy. If
the expiration of such thirty (30) day period occurs after the applicable
closing date and if Contributor is unable to cure such inaccuracy prior to the
closing date with respect to any property, then the applicable closing shall
occur for all unaffected properties and an additional closing shall occur for
the affected properties as soon as practicable thereafter, but in no event later
than the end of such thirty (30) day period. If an additional closing occurs,
the properties acquired at such additional closing shall be treated as if they
were acquired at the applicable closing for purposes of determining applicable
post-closing time periods under this Agreement.
O. Excepted Holder Limit. If at the time any OP Unit Recipient
exercises its Conversion Right the REIT elects to deliver Conversion Shares, and
the delivery of such Conversion Shares would violate the Ownership Limit (as
defined in the REIT's charter), then the REIT hereby covenants and agrees that
it will (i) create an Excepted Holder Limit (as defined in the REIT's charter)
for such OP Unit Recipient; or (ii) pay cash in lieu of Conversion Shares for
such OP Units (the cash amount to be determined as provided in the Partnership
Agreement).
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P. Certain Partner Consents. With respect to the properties
known as 00-00 Xxxxxxxxx Xxxxxxxxx (Waterfront I), One City Centre, Three City
Centre and One Park Place, Contributor shall use its best efforts to obtain,
within 20 days of the date of this Agreement, all consents and approvals as may
be required to consummate the transactions contemplated by this Agreement from
each partner of the respective Contributed Entity. If, after using such best
efforts, Contributor is unable to obtain such consents and approvals within such
period of time with respect to any one or more of the properties known as 00-00
Xxxxxxxxx Xxxxxxxxx (Waterfront I) or One Park Place, then Contributor shall
promptly notify Acquiror, and Acquiror shall have the option either to terminate
this Agreement upon delivery to Contributor of a Termination Notice (in which
case, Section 14 shall not apply) or to consummate the transactions contemplated
by this Agreement; provided, however, that Contributor may delete One Park Place
and Acquiror may not then deliver a Termination Notice due to the failure to
obtain such consents and approvals with respect to Xxx Xxxx Xxxxx, xxx Xxx Xxxx
Xxxxx will thereafter be treated as a Contributor Deleted Property under this
Agreement. If, after using such best efforts, Contributor is unable to obtain
such consents and approvals within such period of time with respect to any one
or more of the properties known as One City Centre or Three City Centre, then
Contributor shall promptly notify Acquiror. If Acquiror elects to consummate the
transactions with respect to the Properties or does not elect to terminate its
option with respect to One City Centre and Three City Centre, then Contributor
will continue to use its best efforts to obtain such consents and approvals
until the Closing Date or the end of the Additional Property Option Period with
respect to One City Centre and Three City Centre, respectively. If, at such
time, Contributor is still unable to obtain such consents and approvals, then
this Agreement shall, without further action of the parties, be deemed to have
been automatically and ipso facto amended to eliminate each such property
herefrom (together, the "Eliminated Properties"). Upon such amendment of this
Agreement, (a) all references to the Properties or Additional Properties shall
automatically exclude the Eliminated Properties and no obligations of
Contributor (or Acquiror's Conditions Precedent) set forth herein shall apply to
the Eliminated Properties, (b) all references to Contributor and Owner shall
automatically exclude the Contributor(s) and Owner(s) appurtenant to the
Eliminated Properties, (c) the Contribution Consideration or Additional
Consideration shall be reduced by the amount allocated to the Eliminated
Properties and their related Management Contracts pursuant to Schedule 3B(i) and
Schedule 3B(ii), and (d) Acquiror shall promptly return to Contributor all
documents, records and studies relating to the Eliminated Properties.
Notwithstanding the foregoing, no such amendment shall modify any indemnity or
other obligation of a party regarding the Eliminated Properties which expressly
survives the deletion of the Property or Additional Property, or the termination
of this Agreement.
X. Xxxxxxx Net Worth. Xxxxxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxxxx hereby agree that, (i) at all times from and after the Closing Date and
up to and including the date which is the 18 month anniversary of the Closing
Date (or such later date as a claim for indemnification made by Acquiror is
resolved, provided that Acquiror made such claim in a timely manner as provided
in Sections 8E and 15), they will maintain a combined personal net worth of at
least $50,000,000; and (ii) at all times from and after the date which is the 18
month anniversary of the Closing Date and up to and including the date which is
the 18 month anniversary of the later of the Second Closing Date or the Option
Closing Date (or such later date as a claim for indemnification made by Acquiror
is resolved, provided that Acquiror made such claim in a timely manner as
provided in Sections 8E and 15), they will maintain a combined personal net
worth of at least $9,000,000 plus the amount of all timely claims for
indemnification made by Acquiror; provided, however, that in no event will they
be required to maintain a combined personal net worth exceeding $50,000,000.
19
R. Employees. Attached hereto as Exhibit N is a list of
employees who Acquiror will hire at Closing, the Second Closing or the Option
Closing, as applicable.
S. Industrial Development Authorities. To the extent required
by the terms of an XXX Lease Agreement, Acquiror and Contributor shall each use
their commercially reasonable efforts to obtain the consent of each applicable
XXX (the "XXX Consents") to the, direct or indirect, transfer of the leasehold
estate to Acquiror. Acquiror and Contributor shall each bear its own costs of
obtaining the XXX Consents. If Acquiror and Contributor are unable to obtain the
XXX Consent for any Property or Additional Property which is subject to an XXX
Lease Agreement by the Closing Date, the Second Closing Date or the Option
Closing Date, as the case may be, then Contributor shall take all necessary
steps to terminate the applicable XXX Lease Agreement and related XXX documents
and obtain the reconveyance of the applicable Property or Additional Property to
Contributor and Contributor shall transfer such Property or Additional Property
to Acquiror at the Closing, the Second Closing or the Option Closing, as the
case may be, pursuant to the terms and conditions of this Agreement applicable
to those properties to be transferred to Acquiror by deed transfer or
partnership assignment, without any reduction of the Contribution Consideration
or the Additional Consideration.
T. Additional Property Option. Acquiror shall have the option,
exercisable upon written notice to Contributor (the "Additional Property
Notice") during the period (the "Additional Property Option Period") beginning
on the date of this Agreement and ending on the date which is ninety (90) days
from the date of this Agreement, to purchase both One City Centre and Three City
Centre at the Option Closing as follows:
(i) If Acquiror delivers the Additional Property Notice,
subject to the terms and conditions contained in this Agreement
(including Contributor's right under Section 3L(iii) to delete One City
Centre from this Agreement), ownership in and to One City Centre and
Three City Centre shall be, directly or indirectly, transferred by
Contributor to Acquiror at the Option Closing.
(ii) If Acquiror delivers the Additional Property Notice
and Contributor has exercised its option to delete One City Centre from
this Agreement pursuant to Section 3L(iii), subject to the terms and
conditions contained in this Agreement, ownership in and to Three City
Centre shall be, directly or indirectly, transferred by Contributor to
Acquiror at the Option Closing.
U. Graphic Controls Corporation Lease. If Graphic Controls
Corporation is entitled to an initial abatement of fixed rent on the date
Acquiror acquires Waterfront II, Contributor will pay to Acquiror (on the first
of each month until Graphic Controls Corporation's initial obligation to pay
rent commences), an amount equal to (i) the monthly fixed rent Graphic Controls
Corporation would have paid on such first of the month but for the abatement
(each, a "Monthly Rent Payment"), minus (ii) the present value (calculated on
the date each Monthly Rent Payment is made) of an amount equal to the Monthly
Rent Payment twenty years into the future discounted at the rate of 10% per
annum.
V. Management Contracts. Acquiror hereby covenants and agrees
that neither it nor its Permitted Designees (as defined below) will sell or
otherwise dispose of the Management Contracts; provided, however, that Acquiror
or its Permitted Designees may cancel or otherwise terminate the Management
Contracts. Acquiror hereby covenants and agrees that, if the Management
Contracts are cancelled or otherwise terminated, neither it nor its Permitted
Designees will take the position that such cancellation or termination results
in an allocation of income to the Management Contributor.
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W. One Park Place Lobby Renovations. Contributor and Acquiror
agree that certain renovation work (the "Renovation") to the building lobby of
One Park Place is necessary. Contributor has delivered to Acquiror the budget
for the Renovation and plans therefore (totaling $475,000). Contributor agrees
to perform (or cause to be performed) the Renovation promptly, in a good and
workmanlike manner, consistent with the budget and plans for the Renovation,
whether completed prior to or subsequent to the Closing. Acquiror agrees to pay
Contributor for the Renovation in accordance with the budget. Prior to Closing,
costs incurred in performing the Renovation shall be paid by Contributor but
shall be reimbursed by Acquiror at Closing in cash and in addition to all other
amounts which may be owed to Contributor at Closing. Subsequent to Closing,
costs incurred in performing the Renovation shall be paid by Contributor and
reimbursed by Acquiror within ten (10) business days of submission by
Contributor (not more frequently than monthly) to Acquiror of a reimbursement
request. Any request made by Contributor for reimbursement of costs incurred in
performing the Renovation, whether at Closing or pursuant to a reimbursement
request thereafter, shall be accompanied by invoices, receipts or other evidence
reasonably substantiating that such costs were incurred by Contributor or are
then due and owing in connection with the Renovation. If the Renovation is not
completed by the Closing, Acquiror shall allow Contributor access to One Park
Place as shall be necessary for Contributor to complete the Renovation. If Xxxxx
& XxXxxxxx, Inc. ("M&M") is entitled to receive free parking at One Park Place
pursuant to the terms of that certain letter agreement from Pioneer Development
Company, LLC to M&M regarding the Renovation, then Contributor shall pay to
Acquiror, on or prior to the date such amount would otherwise have been due and
payable by M&M, the amount which would have been paid by M&M but for M&M's right
to receive such free parking; provided, however, that Contributor shall not be
obligated to pay such amounts to the extent, but only the extent, the Renovation
would have been completed but for the fault of Acquiror. The provisions of this
Section 3W shall be deemed null and void if One Park Place is, or the
partnership interests of the owners thereof are, not conveyed to Acquiror at
Closing in accordance with the terms of this Agreement.
4. OPERATION OF PROPERTIES AND CONDUCT THROUGH CLOSING
A. Through the Closing Date (with respect to the Properties)
and through the Option Closing Date (with respect to One City Centre and Three
City Centre), each Owner shall:
(i) Except as otherwise provided for in this Agreement,
manage and operate the Properties and One City Centre and Three City
Centre, as the case may be, only in and shall not take any actions
except in accordance with each Owner's usual and ordinary course of
business consistent with past practices and keep the Land, the
Improvements and the tangible Personal Property in their current
condition and repair, ordinary wear and tear excepted.
(ii) Not enter into any new lease, service contract or
management contract or extend, modify, amend or renew any Lease,
Service Contract or Management Contract without the prior written
consent of Acquiror, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, each Owner may enter into
new leases which pertain to less than 5,000 rentable square feet, or
new service contracts with a duration of less than one year, or
extensions, modifications, amendments or renewals of Leases which
pertain to less than 5,000 rentable square feet or Service Contracts
with a duration of less than one year, upon prior notice to, but
without the consent of, Acquiror so long as such new lease or service
contract or extension, modification, amendment or renewal of a Lease or
Service Contract is on market terms with bona fide third
22
parties and is the type of transaction which each Owner currently
enters into in the normal course of its business.
(iii) Not cancel any Lease, Service Contract or Management
Contract without the prior written consent of Acquiror, which consent
shall not be unreasonably withheld, conditioned or delayed.
(iv) Pursuant to the provisions of Section 9, provide
Acquiror with access to the Properties for it to inspect same to assure
that each Owner is complying with the requirements of this Section 4.
(v) Have the right to commence or continue to assert,
whether before or after Closing, any proceedings or applications for
reduction in the real estate tax assessment of any of the Properties or
Additional Properties set forth in Schedule 4A(v) (a "Tax Reduction
Proceeding") for any real estate tax year during which Acquiror or its
Permitted Designee was not the fee or leasehold title holder of any of
such Properties or Additional Properties, as the case may be. Have the
right to commence, whether before or after Closing, a Tax Reduction
Proceeding for any of the Properties or the Additional Properties for a
real estate tax year in which both Owner and Acquiror or its Permitted
Designee each held fee or leasehold title to any such Property, but
only if (i) Acquiror notifies Contributor that Acquiror will not
commence a Tax Reduction Proceeding for such real estate tax year or
(ii) there remains thirty (30) days or less in which to institute a Tax
Reduction Proceeding for such real estate tax year and Acquiror has not
commenced a Tax Reduction Proceeding for such real estate tax year. To
the extent Contributor commences any Tax Reduction Proceeding pursuant
to this Section 4A(v), Contributor will notify Acquiror in writing of
such commencement and provide copies of all documentation in connection
therewith to Acquiror, and Contributor will use counsel it customarily
uses (at their customary fee arrangement) with regard to Tax Reduction
Proceedings. To the extent any Tax Reduction Proceeding is required to
be brought in the name of Acquiror and Contributor has the right to
commence such a proceeding hereunder, then Contributor shall have the
right to commence such proceeding in the name of Acquiror. Acquiror
agrees to cooperate with Contributor at no expense to Acquiror,
including without limitation, executing any required documents, in
connection with Contributor's commencement of a Tax Reduction
Proceeding. To the extent any award or refund is paid to Contributor or
Acquiror for any real estate tax year during which both parties owned
fee or leasehold title to a Property, such party receiving such award
or refund shall promptly deliver to the other party such party's
allocable share of the award or refund after subtracting any required
reimbursement to tenants and the out-of-pocket costs of obtaining such
award or refund therefrom, including without limitation, the fees owed
to certiorari counsel (which fees shall be paid by the party receiving
the award or refund). To the extent any award or refund is paid to
Acquiror for any real estate tax year during which only Contributor
owned fee or leasehold title to a Property, Acquiror shall promptly
deliver to Contributor the award or refund after subtracting any
required reimbursement to tenants and the out-of-pocket costs of
obtaining such award or refund therefrom, if any.
(vi) Promptly deliver to Acquiror copies of any operating
statements for the Properties that come into the possession or control
of Contributor for any period(s) including the period between the date
of this Agreement and the Closing Date and for Xxx Xxxx Xxxxxx xxx
Xxxxx Xxxx Xxxxxx that come into the possession or control of
Contributor for any period(s) including the period between the date of
this Agreement and the Option Closing Date.
22
(vii) Not sell, grant any security interest in, pledge,
encumber, dispose of, finance or refinance any indebtedness in respect
of any of the Properties without the prior written consent of Acquiror,
which consent shall not be unreasonably withheld, conditioned or
delayed, except that the loan with respect to Three City Centre may be
modified pursuant to the terms Contributor previously disclosed to
Acquiror.
(viii) Not sell, assign, grant any security interest in,
pledge, encumber, dispose of, or otherwise transfer all or any part of
any of the Partnership Interests with respect to the Properties except
to another Contributor or its affiliate.
If Acquiror does not timely deliver the Additional Property Notice, the above
shall not apply to One City Centre and Three City Centre from and after
expiration of the Additional Property Option Period.
B. Through the Second Closing Date the Owner of
Waterfront II shall:
(i) Complete the expansion of Waterfront II in
accordance with the construction plans relating thereto and keep the
Land, the Improvements and the tangible Personal Property at Waterfront
II in their current condition and repair, ordinary wear and tear
excepted, other than in connection with such expansion.
(ii) Not enter into any new lease, service contract or
management contract or extend, modify, amend or cancel the Lease with
Graphic Controls Corporation or the XXX Lease Agreements relating to
Waterfront II (except that the XXX Lease Agreement may be amended
pursuant to the terms Contributor previously disclosed to Acquiror or
is consistent with the Graphic Controls Corporation lease and the new
financing described in Section 4B(vi)), or extend, modify, amend or
renew any Service Contract or Management Contract relating to
Waterfront II, without the prior written consent of Acquiror.
(iii) Not cancel any Lease, Service Contract or Management
Contract pertaining to Waterfront II without the prior written consent
of Acquiror.
(iv) Pursuant to the provisions of Section 9, provide
Acquiror with access to Waterfront II for it to inspect same.
(v) Promptly deliver to Acquiror copies of any operating
statements for Waterfront II that come into the possession or control
of Contributor for any period(s) including the period between the date
of this Agreement and the Second Closing Date.
(vi) Not sell, grant any security interest in, pledge,
encumber, dispose of, finance or refinance any indebtedness in respect
of Waterfront II without the prior written consent of Acquiror, which
consent shall not be unreasonably withheld, conditioned or delayed,
except that the current financing may be replaced with the new
financing which Contributor previously disclosed to Acquiror.
(vii) Not sell, assign, grant any security interest in,
pledge, encumber, dispose of, or otherwise transfer all or any part of
any of the Partnership Interests with respect to Waterfront II, except
to another Contributor or its affiliate.
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5. STATUS OF TITLE TO PROPERTIES
A. State of Title. The Deed Contributors shall convey the Deed
Properties to Acquiror or Acquiror's Permitted Designee by bargain and sale
deeds with covenants against grantor's acts in recordable form (the "Deeds"),
the Interest Contributors shall contribute their Partnership Interests to
Acquiror or Acquiror's Permitted Designee by the Partnership Interest
Assignments (as defined below) and the Management Contributor shall contribute
its interest in the Management Contracts to Acquiror or Acquiror's Permitted
Designee by an Assignment of Management Contracts (as defined below); provided,
however, that in the case of the Properties and Additional Properties that are
subject to lease agreements ("XXX Lease Agreements") with an Industrial
Development Authority ("XXX"), the Deed Contributor which holds the leasehold
interest in such Property or Additional Properties shall (subject to Section 3S
above) convey to Acquiror (in lieu of the foregoing) all leasehold right, title
and interest of such Deed Contributor in and to such Properties or Additional
Properties. Title to the Properties and Additional Properties shall be good,
marketable and insurable fee simple title, free and clear of all liens and
encumbrances and shall be subject only to: (i) those covenants, conditions,
liens, encumbrances, easements, assessments, restrictions, water and sewer
charges, related payment in lieu of taxes agreements ("PILOT Agreements") and
other title exceptions of record which are disclosed on each Title Commitment,
UCC Search and Survey (each as defined below) and are not objected to by
Acquiror within the Inspection Period (as defined below), (ii) rights of tenants
under the Leases, as tenants only (except with respect to tenants having a
purchase option or similar rights as disclosed in this Agreement), (iii) the
lien of the Existing Indebtedness, if any, on those Properties encumbered by the
Existing Indebtedness as of the date hereof and (iv) general real estate taxes
for the year in which the Closing, Second Closing or Option Closing, as the case
may be, occurs and subsequent years, not yet due and payable (the above
enumerated exceptions being hereinafter collectively referred to as the
"Permitted Exceptions"); provided, however, that in the case of the Properties
and Additional Properties that are subject to XXX Lease Agreements, the Deed
Contributor which holds the leasehold interest in such Property or Additional
Properties shall (subject to Section 3S above) convey to Acquiror all leasehold
right, title and interest of such Deed Contributor in and to such Properties and
Additional Properties, free and clear of all liens and encumbrances and subject
only to the Permitted Exceptions. The Partnership Interests shall be contributed
to Acquiror free and clear of all liens, claims and encumbrances.
B. Preliminary Evidence of Title. As specified below, Acquiror
shall obtain at Acquiror's expense the following documents to evidence the
condition of Contributor's title to the Properties and Additional Properties:
(i) Acquiror shall obtain for each of the Properties and
Additional Properties, at Acquiror's expense, a commitment (the "Title
Commitment") for an ALTA 1992 Owner's Title Insurance Policy proposing
to insure Acquiror or Acquiror's Permitted Designee and committing to
insure title to the Properties and Additional Properties in such
amounts as Acquiror deems appropriate, issued through a title insurer
to be selected by Acquiror (the "Title Insurer"), and irrevocable for
at least six (6) months. Acquiror shall direct the Title Insurer to
deliver to Contributor and to Contributor's counsel copies of each
Title Commitment at the same time the Title Insurer delivers each Title
Commitment to Acquiror. The Title Commitment shall show fee simple
title to the Properties and Additional Properties vested in Owner or
the XXX, as the case may be. The Owner's Title Insurance Policy
(collectively, the "Title Policies") to be issued to Acquiror at the
Closing, the Second Closing or the Option Closing, as the case may be,
pursuant to the
24
corresponding Title Commitment shall contain an extended coverage
endorsement over the so-called general or standard exceptions that are
a part of the printed form of the policy, an ALTA Form 103.7 access
endorsement, coverage insuring any easements for utilities servicing
the Properties or Additional Properties that do not connect to the
Properties or Additional Properties, as the case may be, from a public
street, and such other endorsements as counsel for Acquiror shall
reasonably deem appropriate, all at Acquiror's sole cost and expense.
(ii) Acquiror, at its sole option and expense, may order
and obtain written results of searches (the "UCC Searches") conducted
by a private service reasonably acceptable to Acquiror of the records
of the County Recorder of the County and Secretary of State of the
State in which the Properties and Additional Properties are located for
Uniform Commercial Code Financing Statements, tax liens and the like in
the name of Contributor, the Properties, Additional Properties and any
other name or location reasonably requested by Acquiror.
(iii) Acquiror may obtain, at its sole option and expense,
a current "as-built" plat of survey (the "Survey") for each of the
Properties and Additional Properties dated after the date of this
Agreement, certified to Acquiror, the REIT and the Title Insurer (and
such other persons or entities as Acquiror may designate) by a surveyor
registered in the State in which the Properties and Additional
Properties are located as having been prepared (i) in accordance with
the "Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys," jointly established and adopted by the American Land Title
Association ("ALTA") and the American Congress on Surveying and Mapping
("ACSM") in 1992, and including items 1 through 5 (excluding for Table
A5 any information with respect to elevations), 6-11 and 13 of Table A
thereof, and (ii) pursuant to the Accuracy Standards (as adopted by
ALTA and ACSM and in effect on the date of such certification) of an
"Urban" Survey (as defined therein). Each Survey shall also contain the
surveyor's certification that, among other things, neither the
Properties nor Additional Properties are located in any area designated
by any governmental agency or authority as being a flood-prone or
flood-risk area (whether pursuant to the Flood Disaster Act of 1973, as
amended, or otherwise), and that the requirements of the National Flood
Insurance Program are not applicable to the Properties or Additional
Properties.
25
C. Title Defects. If the Title Commitment, the UCC Searches or
any Survey (or any revision or update of any of them) discloses exceptions to
title to any of the Properties (including Additional Properties), other than
Permitted Exceptions, or any other title or survey matter which does not conform
to the requirements of this Agreement with respect to any of the Properties or
Additional Properties, Acquiror shall so notify Contributor and Contributor may,
at its election, undertake to eliminate such unacceptable defects, objections or
exceptions, it being agreed that other than (i) final, unappealable judgments
against an Owner, (ii) mortgages or other liens which can be satisfied by
payment of a liquidated amount, other than the mortgages securing the Existing
Indebtedness, (iii) defects, objections or exceptions which can be removed by
payments not to exceed $25,000 for each Property including each Additional
Property and not to exceed $100,000 in the aggregate for all title defects, and
(iv) payments to the mortgagees which are currently required pursuant to
existing loan documents in order to cause the mortgagees to consent to Acquiror
assuming the Assumed Indebtedness, and except as provided below, Contributor
shall have no obligation to incur any expense or bring any action in connection
with curing such defects, objections or exceptions. Other than the items
described in (i) through (iv) above, which Contributor agrees to cure at its
sole cost and expense without regard to the cost thereof (other than as
expressly set forth in item (iii)), if after complying with the foregoing
requirements, Contributor is unable to or elects not to eliminate all
unacceptable defects, objections or exceptions in accordance with the terms of
this Agreement on or before the date which is at least two (2) business days
prior to the Closing Date, the Second Closing Date or the Option Closing Date,
as the case may be, Acquiror may elect either to (x) terminate this Agreement by
giving written notice to Contributor (a "Termination Notice") and, upon such
election, Acquiror shall immediately receive from Escrowee the Xxxxxxx Money, in
which event this Agreement, without further action of the parties hereto, shall
become null and void and neither party shall have any further rights or
obligations under this Agreement, except with respect to the indemnities
contained in Section 9B (the "Surviving Indemnities"); (y) accept title subject
to such unacceptable defects, objections or exceptions and receive no credit
against or reduction of the consideration to be given to Contributor hereunder;
or (z) pursuant and subject to Section 10, delete and eliminate from this
Agreement any or all of the affected Properties or Additional Properties, at
Acquiror's sole election, and with respect to such Properties or Additional
Properties not so deleted, elect to accept title subject to such unacceptable
defects, objections or exceptions and receive no credit against or reduction of
the consideration to be given to Contributor hereunder. If Acquiror fails to
make any such election, and elects not to pursue its other rights and remedies
as aforesaid, Acquiror shall be deemed to have elected option (x) above.
6. CLOSING
A. Closing Date. The closing with respect to the Properties
contemplated by this Agreement (the "Closing") shall occur at the offices of
Xxxxxx & Xxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the basis of a
"New York Style" closing at 10:00 a.m. on (i) the fifteenth (15th) day after the
expiration of the Inspection Period or (ii) such other time and at such other
place as Contributor and Acquiror shall agree upon in writing. The "Closing
Date" shall be the date of the Closing.
B. Closing Documents.
------------------
(i) Contributor. Contributor shall deliver or cause to
be delivered to Acquiror at or before Closing, to the extent
applicable, each of the following items with respect to the Properties:
(a) the Deeds for each of the Deed Properties (other
than the Deed Properties
26
to be contributed by the assignment of an XXX Lease
Agreement), substantially in the form of Exhibit I-1 attached
hereto, such Deeds to be duly executed by the Deed
Contributors;
(b) a xxxx of sale for each of the Deed Properties,
substantially in the form of Exhibit I-2 attached hereto, such
xxxx of sale to be duly executed by the Deed Contributors
(although the xxxx of sale for Deed Properties to be
contributed by assignment of an XXX Lease Agreement shall not
include any building or improvements);
(c) a letter advising tenants under the Leases of the
change in ownership of the Deed Properties or of the address
and contact person of the Contributed Entities and directing
them to pay rent to Acquiror or as Acquiror may direct, in
form and substance to be mutually agreed upon by Acquiror and
Contributor;
(d) any and all affidavits, certificates or other
documents reasonably required by the Title Insurer in order to
cause it to issue at the Closing an Owner's Title Insurance
Policy for each of the Properties (or marked-up commitment
therefor) in the form and condition required by this Agreement
(it being understood that Contributor will provide any
customary certificates or undertakings required in order to
induce the Title Insurer to insure over any "gap" period
resulting from any delay in recording of documents or
later-dating the title insurance file);
(e) an assignment and assumption of the Leases for
each of the Deed Properties in substantially the form of
Exhibit J-1 attached hereto (the "Assignment of Leases")
(including an updated Rent Roll certified by Contributor as of
the Closing Date as being true, accurate and complete in all
material respects and all security deposits thereunder), an
assignment of those Service Contracts that Acquiror elects to
assume or which may not be terminated prior to Closing as set
forth in Exhibit C attached hereto in substantially the form
of Exhibit J-2 attached hereto for each of the Deed Properties
(the "Assignment of Service Contracts"), and, subject to
Section 3S above, an assignment and assumption of the
leasehold estates granted to a Deed Contributor under the XXX
Lease Agreements and related PILOT Agreements in substantially
the form of Exhibit J-3 attached hereto (the "Assignment of
XXX Lease Agreements");
(f) an assignment and assumption of the Management
Contracts in substantially the form of Exhibit J-4 attached
hereto (the "Assignment of Management Contracts");
(g) the delivery of all necessary and appropriate
consents and approvals in connection with the assignment of
the Partnership Interests and an assignment and assumption of
Partnership Interests from each Interest Contributor in
substantially the form of Exhibit J-5 attached hereto (the
"Partnership Interest Assignments");
(h) all of the original Leases, XXX Lease Agreements
and Management Agreements, all written Service Contracts
assigned to Acquiror, and any and all building plans, surveys,
site plans, engineering plans and studies, utility plans,
landscaping plans, development plans, blueprints,
specifications, drawings and other documentation concerning
the Properties and in the possession or control of
Contributor;
27
(i) for the Deed Properties, an assignment, in form
and substance reasonably satisfactory to Acquiror and
Contributor, pursuant to which Contributor transfers all items
of intangible personal property referred to in Section 1A(vi)
above;
(j) any existing bonds, warranties or guaranties
which are in any way applicable to the Properties or any part
thereof which are in the possession or subject to the control
of Contributor;
(k) the delivery of all necessary consents and
approvals of lenders under the Assumed Indebtedness, if any,
and a pay-off letter (the "Pay-Off Letter") issued by each
lender under the Existing Indebtedness (other than the Assumed
Indebtedness, if any), setting forth the amount of principal
and interest outstanding on the Closing Date, and the amount
of any prepayment fees and other related charges;
(l) to the extent not previously delivered to
Acquiror, copies of the most currently available tax bills for
the Properties;
(m) an affidavit stating, under penalty of perjury,
Contributor's United States taxpayer identification number and
that Contributor is not a "foreign person" as defined in
Section 1445(f)(3) of the Code, and otherwise in the form
prescribed by the Internal Revenue Service;
(n) the OP Unit Recipient Agreement and such other
documents as may be required under the Partnership Agreement
in connection with the admission of each OP Unit Recipient as
an additional limited partner of Acquiror, such OP Unit
Recipient Agreement and other documents to be duly executed by
each of the OP Unit Recipients;
(o) a certificate, dated the Closing Date and signed
by Xxxxxxx X. Xxxxxxx, certifying to Acquiror that the
representations and warranties of Xxxxxxx X. Xxxxxxx contained
in this Agreement are true and correct in all material
respects as of the Closing Date;
(p) For each Property subject to an XXX Lease
Agreement for which XXX Consents have been obtained pursuant
to Section 3S or for which no consent is required, an estoppel
certificate from each XXX that is a party to an XXX Lease
Agreement stating that which the XXX is obligated to state
under the XXX Lease Agreement. Each estoppel certificate shall
be in form and substance reasonably satisfactory to Acquiror;
(q) a leasing agreement (the "Leasing Agreement") in
form and substance reasonably satisfactory to Contributor and
Acquiror, the material terms of which are set forth in Exhibit
K attached to this Agreement, such Leasing Agreement to be
duly executed by Acquiror and Pioneer Management Services
Company, LLC;
(r) notices to parties to Service Contracts that are
being assigned pursuant to the Assignment of Service Contracts
(the "Service Contracts Notices");
(s) a duly completed, executed and acknowledged (i)
Combined Real Estate Transfer Tax Return and Credit Line
Mortgage Certificate for New York State ("TP-584"),
28
(ii) any transfer tax returns required by local law, (iii) the
New York State Real Property Transfer Report ("RP-5217"), and
(iv) any other documents required to record the Deeds or the
Assignment of XXX Lease Agreements;
(t) if any letter of credit constitutes a security
deposit under any Lease, Contributor will assign the same to
Acquiror at Closing, or if not assignable, Contributor will
cause the tenant to replace the same with a comparable
instrument;
(u) an assignment and assumption of the Assumed
Indebtedness, if necessary;
(v) an estoppel certificate from each lender under
the Assumed Indebtedness, if any, in form and substance
reasonably satisfactory to Acquiror; and
(w) all other necessary or appropriate documents
reasonably required by Acquiror in order to consummate the
transaction contemplated hereby (including, without
limitation, the currently effective certificate(s) of
occupancy for the Properties, and such other governmental or
regulatory approvals issued to Contributor with respect to the
Properties).
(ii) Acquiror. Acquiror shall deliver or cause to be
delivered to Contributor at or before Closing each of the following
items with respect to the Properties:
(a) (1) for the Deed Properties, the Assignment of
Leases, the Assignment of Service Contracts, and, for the Deed
Properties to be contributed by assignment of XXX Lease
Agreement, the Assignment of XXX Lease Agreements, (2) the
Assignment of Management Contracts and (3) for the Contributed
Entities, the Partnership Interest Assignments;
(b) the OP Unit Recipient Agreement and such other
documents as may be required under the Partnership Agreement
in connection with the admission of each OP Unit Recipient as
an additional limited partner of the Acquiror;
(c) the Leasing Agreement;
(d) the Service Contracts Notices;
(e) a certificate of the REIT duly executed by an
authorized officer of the REIT in such capacity, on the REIT's
behalf and in its capacity as general partner of Acquiror, as
the case may be, certifying that annexed thereto (i) is a true
and correct copy of (x) the Partnership Agreement and any and
all amendments thereto, and (y) the certificate of limited
partnership of the Acquiror and all amendments thereto, if
any, as filed in the State of Delaware; and the same have not
been otherwise modified or amended, and are in full force and
effect; (ii) are duly adopted resolutions authorizing the
consummation of the transactions contemplated by this
Agreement; and (iii) is a true and correct copy of the REIT's
Certificate of Incorporation and by-laws and all amendments
thereto and that the same have not been otherwise modified or
amended, and are in full force and effect;
29
(f) a certificate of Acquiror, certifying that each
OP Unit Recipient has been admitted as a limited partner of
Acquiror, effective on the Closing Date, and that Acquiror's
books and records will, as of the Closing, indicate that each
OP Unit Recipient is the holder of the number of OP Units
designated in Exhibit G;
(g) a certificate, dated the Closing Date and signed
by the President or any Vice President of the REIT, certifying
to Contributor that the representations and warranties of
Acquiror and the REIT contained in this Agreement are true and
correct in all material respects as of the Closing Date;
(h) a Surrender Agreement relating to the surrender
of a portion of space leased on the second floor of 000 X.
Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx, which space is shown
hatched in Exhibit L, in form and substance reasonably
satisfactory to Acquiror and Contributor;
(i) a receipt for security deposits transferred to
Acquiror substantially in the form of Exhibit M attached
hereto;
(j) a duly executed and acknowledged (i) TP-584, (ii)
any transfer tax returns required by local law, (iii) RP-5217,
and (iv) any other documents required to record the Deeds or
the Assignment of XXX Lease Agreements;
(k) a good standing certificate dated the most recent
practicable date for each of the REIT and Acquiror or its
Permitted Designee which takes title to a Property or an
assignment of Partnership Interests with respect thereto;
(l) an incumbency certificate of the REIT, in form
and substance reasonably satisfactory to Acquiror and
Contributor;
(m) an assignment and assumption of the Assumed
Indebtedness, if necessary, or such other documents as may
reasonably be requested by the lender under any Assumed
Indebtedness in order to reflect the assumption of such
Assumed Indebtedness by Acquiror;
(n) resolutions of the REIT's Board of Directors
appointing Xxxxxxx X. Xxxxxxx to the Board of Directors of the
REIT; and
(o) all other necessary or appropriate documents
reasonably required by Contributor in order to consummate the
transaction contemplated hereby.
(iii) Form. Except to the extent attached to this
Agreement, all documents and instruments required hereby shall be in
form and substance reasonably acceptable to Contributor and Acquiror.
C. Additional Closing Dates
------------------------
(i) Second Closing Date. The closing with respect to
Waterfront II contemplated by this Agreement (the "Second Closing")
shall occur at the offices of Xxxxxx & Xxxxx LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, on the basis of a "New York Style"
30
closing at 10:00 a.m. on (i) the fifth (5th) business day after all
conditions precedent to the respective obligations of the parties with
regard to Waterfront II have been satisfied or waived or (ii) such
other time and at such other place as Contributor and Acquiror shall
agree upon in writing. The "Second Closing Date" shall be the date of
the Second Closing.
(ii) Option Closing Date. The closing with respect to One
City Centre and Three City Centre contemplated by this Agreement (the
"Option Closing") shall occur at the offices of Xxxxxx & Xxxxx LLP, 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the basis of a "New York
Style" closing at 10:00 a.m. on the earlier to occur of (i) the
thirtieth (30th) day after delivery of the Additional Property Notice,
(ii) the fifteenth (15th) day after the XXX Consents with respect to
One City Centre and Three City Centre are obtained, or (iii) such other
time and at such other place as Contributor and Acquiror shall agree
upon in writing. The "Option Closing Date" shall be the date of the
Option Closing.
D. Additional Closing Documents.
-----------------------------
(i) Contributor. Contributor shall deliver or cause to
be delivered to Acquiror at or before the Second Closing or the Option
Closing, as the case may be, each of the following items, where
applicable, relating to Additional Properties:
(a) if by deed transfer, the Deed for each Additional
Property, substantially in the form of Exhibit I-1 attached
hereto, such Deed to be duly executed by the Deed Contributor;
(b) if by deed transfer, a xxxx of sale,
substantially in the form of Exhibit I-2 attached hereto, such
xxxx of sale to be duly executed by the Deed Contributor;
(c) a letter advising the tenant under the Leases of
the change in ownership of Additional Properties, if
applicable, or change in the address and contact person of the
Contributed Entity relating to each Additional Property, if
applicable, and directing them to pay rent to Acquiror or as
Acquiror may direct;
(d) any and all affidavits, certificates or other
documents reasonably required by the Title Insurer in order to
cause it to issue at the Second Closing or the Option Closing,
as the case may be, an Owner's Title Insurance Policy for each
Additional Property (or marked-up commitment therefor) in the
form and condition required by this Agreement (it being
understood that Contributor will provide any customary
certificates or undertakings required in order to induce the
Title Insurer to insure over any "gap" period resulting from
any delay in recording of documents or later-dating the title
insurance file);
(e) if by deed transfer, the Assignment of Leases for
each Additional Property in substantially the form of Exhibit
J-1 attached hereto (including an updated Rent Roll for
Additional Properties certified by Contributor as of the
Second Closing Date or Option Closing Date, as the case may
be, as being true, accurate and complete in all material
respects and all security deposits thereunder), the Assignment
of Service Contracts that Acquiror elects to assume or which
may not be terminated prior to the Second Closing or Option
Closing, as the case may be, as set forth in Exhibit C
attached hereto in substantially the form of Exhibit J-2
attached hereto, and, subject to Section 3S above, the
Assignment
31
of XXX Lease Agreement and related PILOT Agreement in
substantially the form of Exhibit J-3 attached hereto;
(f) the delivery of all necessary and appropriate
consents and approvals in connection with Partnership Interest
Assignments;
(g) the original Lease, XXX Lease Agreement and
Management Agreements, all written Service Contracts assigned
to Acquiror, and any and all building plans, surveys, site
plans, engineering plans and studies, utility plans,
landscaping plans, development plans, blueprints,
specifications, drawings and other documentation concerning
Additional Properties and in the possession or control of
Contributor;
(h) if by deed transfer, an assignment, in form and
substance reasonably satisfactory to Acquiror and Contributor,
pursuant to which Contributor transfers all items of
intangible personal property referred to in Section 1A(vi)
above;
(i) any existing bonds, warranties or guaranties
which are in any way applicable to the Additional Properties
or any part thereof which are in the possession or subject to
the control of Contributor;
(j) the delivery of a Pay-Off Letter issued by each
lender under the Waterfront II Indebtedness, the One City
Centre Indebtedness, if any, and the Three City Centre
Indebtedness, if any, setting forth the amount of principal
and interest outstanding on the Second Closing Date or Option
Closing Date, as the case may be, and the amount of any
prepayment fees and other related charges;
(k) to the extent not previously delivered to
Acquiror, copies of the most currently available tax bills for
the Additional Properties;
(l) an affidavit stating, under penalty of perjury,
Contributor's United States taxpayer identification number and
that Contributor is not a "foreign person" as defined in
Section 1445(f)(3) of the Code, and otherwise in the form
prescribed by the Internal Revenue Service;
(m) the OP Unit Recipient Agreement and such other
documents as may be required under the Partnership Agreement
in connection with the admission of each OP Unit Recipient as
an additional limited partner of Acquiror, such OP Unit
Recipient Agreement and other documents to be duly executed by
each of the OP Unit Recipients;
(n) a certificate, dated the Second Closing Date or
Option Closing Date, as the case may be, and signed by Xxxxxxx
X. Xxxxxxx, certifying to Acquiror that the representations
and warranties of Xxxxxxx X. Xxxxxxx contained in this
Agreement (except as they relate to the properties or the
Owners or Contributors with respect thereto not the subject of
the Second Closing or the Option Closing, as the case may be)
are true and correct in all material respects as of the Second
Closing Date or Option Closing Date, as the case may be;
(o) for each Additional Property subject to an XXX
Lease Agreement for
32
which XXX Consents have been obtained pursuant to Section 3S
or for which no consent is required, an estoppel certificate
from each XXX that is a party to an XXX Lease Agreement
stating that which the XXX is obligated to state under the XXX
Lease Agreement. Each estoppel certificate and consent shall
be in form and substance reasonably satisfactory to Acquiror;
(p) the Service Contracts Notices;
(q) a duly completed, executed and acknowledged (i)
TP-584, (ii) any transfer tax returns required by local law,
(iii) RP-5217, and (iv) any other documents required to record
the Deed or Assignment of XXX Lease Agreements;
(r) if any letter of credit constitutes a security
deposit under any Lease, Contributor will assign the same to
Acquiror at the Second Closing or Option Closing, as the case
may be, or if not assignable, Contributor will cause the
tenant to replace the same with a comparable instrument;
(s) with respect to the Option Closing, an agreement
pursuant to which (i) Acquiror agrees to be liable for 50% of
the costs, allocated to Pioneer Management Services Company,
LLC for the Corporate Xxxxx, Rochester lease, wherein Pioneer
Management Services Company, LLC has its Rochester office and
(ii) Contributor agrees to grant Acquiror the right to have
two employees of Acquiror share the use of the space shown on
Exhibit Q in said leased premises; and
(t) all other necessary or appropriate documents
reasonably required by Acquiror in order to consummate the
transaction contemplated hereby (including, without
limitation, the currently effective certificate(s) of
occupancy for the Additional Properties and such other
governmental or regulatory approvals to be issued to
Contributor with respect to the Additional Properties).
(ii) Acquiror. Acquiror shall deliver or cause to be
delivered to Contributor at or before the Second Closing or Option
Closing, as the case may be, each of the following items, where
applicable, with respect to the Additional Properties:
(a) (1) if by deed transfer, the Assignment of
Leases, the Assignment of Service Contracts, and, if
contributed by assignment of XXX Lease Agreement, the
Assignment of XXX Lease Agreements, (2) the Assignment of
Management Contracts and (3) if by assignment of partnership
interests, the Partnership Interest Assignments;
(b) the OP Unit Recipient Agreement and such other
documents as may be required under the Partnership Agreement
in connection with the admission of each OP Unit Recipient as
an additional limited partner of the Acquiror;
(c) the Service Contracts Notices;
(d) a certificate of the REIT duly executed by an
authorized officer of the REIT in such capacity, on the REIT's
behalf and in its capacity as general partner of Acquiror, as
the case may be, certifying that annexed thereto (i) is a true
and correct copy
33
of (x) the Partnership Agreement and any and all amendments
thereto, and (y) the certificate of limited partnership of the
Acquiror and all amendments thereto, if any, as filed in the
State of Delaware; and the same have not been otherwise
modified or amended, and are in full force and effect; (ii)
are duly adopted resolutions authorizing the consummation of
the transactions contemplated by this Agreement; and (iii) is
a true and correct copy of the REIT's Certificate of
Incorporation and by-laws and all amendments thereto and that
the same have not been otherwise modified or amended, and are
in full force and effect;
(e) a certificate of Acquiror, certifying that each
OP Unit Recipient has been admitted as a limited partner of
Acquiror, effective on the Second Closing Date or Option
Closing Date, as the case may be, and that Acquiror's books
and records will, as of the Second Closing or the Option
Closing, as the case may be, indicate that each OP Unit
Recipient is the holder of the number of OP Units designated
in Exhibit G;
(f) a certificate, dated the Second Closing Date or
Option Closing Date, as the case may be, and signed by the
President or any Vice President of the REIT, certifying to
Contributor that the representations and warranties of
Acquiror and the REIT contained in this Agreement are true and
correct in all material respects as of the Second Closing Date
or Option Closing Date, as the case may be;
(g) a receipt for security deposits transferred to
Acquiror substantially in the form of Exhibit M attached
hereto;
(h) a duly executed and acknowledged (i) TP-584, (ii)
any transfer tax returns required by local law, (iii) RP-5217,
and (iv) any other documents required to record the Deeds or
Assignment of XXX Lease Agreements;
(i) a good standing certificate dated the most recent
practicable date for each of the REIT and Acquiror or the
Permitted Designee which takes title to Additional Properties
or an assignment of Partnership Interests with respect
thereto;
(j) an incumbency certificate of the REIT, in form
and substance reasonably satisfactory to Acquiror and
Contributor;
(k) with respect to the Option Closing, the agreement
described in Section 4D(i)(s) above; and
(l) all other necessary or appropriate documents
reasonably required by Contributor in order to consummate the
transaction contemplated hereby.
(iii) Form. Except to the extent attached to this
Agreement, all documents and instruments required hereby shall be in
form and substance reasonably acceptable to Contributor and Acquiror.
E. Closing Prorations and Adjustments.
-----------------------------------
(i) A statement of prorations and adjustments shall be
prepared by Acquiror
34
in conformity with the provisions of this Agreement and submitted to
Contributor for review not less than three (3) business days prior to
each of the Closing Date (with respect to the Properties), the Second
Closing Date (with respect to Waterfront II) and the Option Closing
Date (with respect to One City Centre and Three City Centre). For
purposes of prorations, Acquiror shall be deemed the owner of the
Properties on the Closing Date, the owner of Waterfront II on the
Second Closing Date and the owner of One City Centre and Three City
Centre on the Option Closing Date. In addition to prorations and
adjustments that may otherwise be provided for in this Agreement, the
following items are to be prorated or adjusted (as the case requires)
with respect to the Properties and Additional Properties, as of the
Closing Date, the Second Closing Date or the Option Closing Date, as
the case may be:
(a) The full amount of the cash security and other
cash deposits paid under the Leases, together with interest
thereon if required by law or under the Leases, shall be
credited to Acquiror, except to the extent any security
deposits have been applied, after the date of this Agreement,
to the curing of a default under the Lease and have not been
replenished. No such security deposits have been applied to
the curing of a default under the Lease and have not been
replenished as of the date of this Agreement;
(b) To the extent such charges are not billed
directly to Tenants, water, electricity, sewer, gas, telephone
and other utility charges shall be prorated based, to the
extent practicable, on final meter readings and final
invoices, or, if final readings and invoices are not
available, based on the most currently available billing
information, and reprorated upon issuance of final utility
bills;
(c) Amounts paid or payable under any Service
Contracts being assigned to Acquiror shall be prorated based,
to the extent practicable, on final invoices or, if final
invoices are not available, based on the most currently
available billing information, and reprorated upon issuance of
final invoices;
(d) For Properties which are not subject to XXX Lease
Agreements, all real estate, personal property and ad valorem
taxes applicable to the Properties or Additional Properties
and levied with respect to calendar year 1998 or the
appropriate fiscal year shall be prorated on an accrual basis,
as of the Closing Date, the Second Closing Date or the Option
Closing Date, as the case may be, utilizing the actual final
Tax Bills for the properties for 1997 (or 1998 if available)
adjusted for any announced changes in rates of taxation or
assessed valuation of the properties. Prior to or at the
Closing, Second Closing or Option Closing, as the case may be,
Contributor shall pay or have paid all Tax Bills that are due
and payable prior to or on the Closing Date, Second Closing
Date or Option Closing Date, as the case may be, and shall
furnish evidence of such payment to Acquiror and the Title
Insurer. For the Properties and Additional Properties, which
are subject to XXX Lease Agreements, taxes will be adjusted
pursuant to the applicable PILOT Agreement;
(e) All assessments, general or special, shall be
prorated as of the Closing Date, the Second Closing Date and
the Option Closing Date, as the case may be, on a "due date"
basis such that the Contributor shall be responsible for any
installments of assessments which are first due or payable
prior to the Closing Date, the Second Closing Date and the
Option Closing Date, respectively, and Acquiror shall be
responsible for any
35
installments of assessments which are first due or payable on
or after the Closing Date, the Second Closing Date and the
Option Closing Date, as the case may be;
(f) Except as set forth in Section 6(E)(i)(h),
commissions of leasing and rental agents for any Lease entered
into as of or prior to the Closing Date with respect to the
Properties, the Second Closing Date with respect to Waterfront
II or the Option Closing Date with respect to One City Centre
and Three City Centre, as the case may be, that are due and
payable at or prior to the Closing Date, the Second Closing
Date or the Option Closing Date, as the case may be, whether
with respect to base lease term, future expansions, renewals,
or otherwise, shall be paid in full at or prior to the
Closing, the Second Closing or the Option Closing, as the case
may be, by the Contributor, without contribution or proration
from Acquiror;
(g) All Base Rents (as defined below) and other
charges actually received, including, without limitation, all
Additional Rent (as defined below), shall be prorated at
Closing with respect to the Properties, the Second Closing
Date with respect to Waterfront II or the Option Closing Date
with respect to One City Centre and Three City Centre. At the
time(s) of final calculation and collection from tenants of
Additional Rent for 1998 (or for 1999 with respect to
Additional Properties, if applicable), there shall be a
re-proration between Acquiror and the Contributor as to
Additional Rent adjustments, which re-proration shall be paid
upon Acquiror's presentation of its final accounting to the
Contributor, certified as to accuracy by Acquiror. The party's
respective obligations to reprorate Additional Rent shall
survive the Closing, the Second Closing and the Option
Closing, as the case may be, and shall not merge into any
instrument of conveyance delivered at the Closing, the Second
Closing or the Option Closing, as the case may be. At the
Closing, the Second Closing and the Option Closing, as the
case may be, no "Delinquent Rents" (rents or other charges
which are due and owing as of the Closing, the Second Closing
or the Option Closing, as the case may be) shall be prorated
in favor of the Contributor. Notwithstanding the foregoing,
Acquiror shall use reasonable efforts after the Closing Date
with respect to the Properties, the Second Closing Date with
respect to Waterfront II and the Option Closing Date with
respect to One City Centre and Three City Centre, to collect
any Delinquent Rents due to the Contributor from tenants.
Further, after the Closing Date with respect to the
Properties, the Second Closing Date with respect to Waterfront
II or the Option Closing Date with respect to One City Centre
and Three City Centre, the Contributor shall continue to have
the right, enforceable at its sole expense, to pursue legal
action against any tenant (and any guarantors) who owe any
Base Rent or additional rent to Contributor for the period
prior to the Closing Date, the Second Closing Date or the
Option Closing Date, as the case may be, under a Lease;
provided, however, that the Contributor gives Acquiror advance
written notice of its intent to pursue such action and further
provided that the Contributor shall have no right to terminate
any Lease (or any right to dispossess any tenant thereunder).
All rents and other charges received from any tenant after the
Closing, the Second Closing or the Option Closing, as the case
may be, by and for the benefit of Acquiror shall be applied,
first, against current and past due rental obligations owed
to, or for the benefit of, Acquiror with respect to those
rental obligations accruing subsequent to the Closing Date,
the Second Closing Date or the Option Closing Date, as the
case may be (including, but not limited to, obligations to
replenish any security deposit withdrawal by the Contributor
or Acquiror), or any obligations accruing prior to the Closing
Date, the Second Closing Date or the Option
36
Closing Date, as the case may be, that the Contributor does
not pay or for which Acquiror does not receive a credit at the
Closing, the Second Closing or the Option Closing, as the case
may be, and second, any excess shall be delivered to the
Contributor, but only to the extent of Delinquent Rents owed
to, and for the benefit of, the Contributor for the period
prior to the Closing Date, the Second Closing or the Option
Closing Date, as the case may be (in no event, however, shall
any sums be paid to the Contributor to the extent it has been
previously reimbursed for such default out of any security
deposit);
(h) The Leases set forth in Schedule 6E(i)(h)
attached to this Agreement are referred to herein as "New
Leases." The Contributor and Acquiror acknowledge that various
of the Properties may contain certain vacancies as of the date
of this Agreement and all such current vacancies are reflected
on the Rent Roll (the "Vacancies"). For any new lease for any
such Vacancy ("Vacancy Lease") that is executed prior to
Closing, if the terms of such Vacancy Lease have been approved
by Acquiror (or were not approved, but approval is not
required pursuant to this Agreement), and for any New Leases,
the applicable Contributor and Acquiror shall each bear a pro
rata share, of the tenant improvement costs and brokerage
commission attributable to the Vacancy Lease and the New
Leases (the "Vacancy Lease Costs"). The Contributor's
proportionate share of the Vacancy Lease Costs shall be based
on that portion of the Vacancy Lease's or New Lease's term
that elapses after the rent commencement date and prior to
Closing and Acquiror's proportionate share shall be the
balance of the Vacancy Lease Costs. If this Agreement is
terminated prior to Closing, then Acquiror shall have no
liability or obligation with respect to any Vacancy Lease, any
New Lease or any Vacancy Lease Costs;
(i) Award or refunds in connection with a Tax
Reduction Proceeding pursuant to Section 4(A)(v); and
(j) Such other items that are customarily prorated in
transactions of this nature shall be ratably prorated.
(ii) For purposes of calculating prorations, Acquiror
shall be deemed to be in title to the Properties and Additional
Properties, as the case may be, and therefore entitled to the income
therefrom and responsible for the expenses thereof, for the entire
Closing Date, the Second Closing Date or the Option Closing Date, as
the case may be, Second Closing Date and Option Closing Date, as the
case may be. All such prorations shall be made on the basis of the
actual number of days of the year and month that shall have elapsed as
of the Closing Date. Except with respect to general real estate and
personal property taxes that are to be reprorated as aforesaid, any
proration which must be estimated at the Closing, the Second Closing or
the Option Closing, as the case may be, shall be reprorated and finally
adjusted within ninety (90) days after the Closing Date, the Second
Closing Date or the Option Closing Date, as the case may be, otherwise
all prorations shall be final.
(iii) Any errors in calculations or adjustments shall be
corrected or adjusted as soon as practicable after the Closing, the
Second Closing or the Option Closing, as the case may be; such
adjustments shall be made in cash or OP Units at the election of
Acquiror.
(iv) To the extent Acquiror receives a credit at the
Closing, the Second Closing or the Option Closing, as the case may be,
for any of the items set forth in this Section 6E, then such
37
item shall be the post-closing obligation of Acquiror.
F. Closing Costs. All transfer taxes, documentary stamps,
intangible taxes and similar taxes or charges shall be paid by Contributor. All
title insurance premiums, search fees, survey costs and recording charges shall
be paid by Acquiror. Contributor and Acquiror shall each pay for one-half (1/2)
of the escrow fees charged by the Escrowee, if any. Each party shall pay its own
attorney's fees and all of its other expenses, except as otherwise expressly set
forth herein.
G. Possession. Upon consummation of the Closing, the Second
Closing and the Option Closing, Contributor shall deliver to Acquiror full and
complete possession of the Properties and Additional Properties, as the case may
be, subject only to the Permitted Exceptions and other matters accepted by
Acquiror.
7. CASUALTY, LOSS AND CONDEMNATION
A. If, prior to the Closing, any single Property or any part
thereof shall be condemned, or destroyed or materially damaged by fire or other
casualty (that is, damage or destruction in excess of Two Hundred Fifty Thousand
and 00/100 Dollars ($250,000.00) to a Property), Contributor shall immediately
so notify Acquiror and Acquiror shall be entitled to (i) pursuant and subject to
Section 10, delete and eliminate from this Agreement such Property affected by
such damage or destruction, at Acquiror's sole discretion, or (ii) subject to
the rights of holders of the Existing Indebtedness related to such Property,
receive the condemnation proceeds at Closing or settle the loss under all
policies of insurance applicable to the destruction or damage to such Property
if not deleted pursuant to Section 10, and receive the proceeds of insurance
applicable thereto at Closing, and Contributor shall, at the Closing and
thereafter as necessary, execute and deliver to Acquiror all required proofs of
loss, assignments of claims and other similar items. If, prior to the Closing,
two or more Properties or any part thereof shall be condemned, or destroyed or
materially damaged by fire or other casualty (that is, damage or destruction in
excess of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) to a
Property), Contributor shall immediately so notify Acquiror and Acquiror shall
have the option either to terminate this Agreement upon delivery to Contributor
of a Termination Notice or to consummate the transaction contemplated by this
Agreement notwithstanding such condemnation, destruction or material damage. If
Acquiror elects to consummate the transaction contemplated by this Agreement,
Acquiror shall be entitled to (i) pursuant and subject to Section 10, delete and
eliminate from this Agreement any one Property affected by such damage or
destruction, at Acquiror's sole discretion, and (ii) with respect to the
Properties not so deleted, subject to the rights of holders of the Existing
Indebtedness related to such Property, receive the condemnation proceeds or
settle the loss under all policies of insurance applicable to the destruction or
damage to such Properties, and receive the proceeds of insurance applicable
thereto, and Contributor shall, at the Closing and thereafter as necessary,
execute and deliver to Acquiror all required proofs of loss, assignments of
claims and other similar items. If Acquiror elects to terminate this Agreement,
the Xxxxxxx Money shall be returned to Acquiror by Escrowee, in which event this
Agreement shall, without further action of the parties, become null and void and
neither party shall have any rights or obligations under this Agreement. If
there is any other damage or destruction (that is, damage or destruction of Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) or less) to a Property
or any part thereof, Acquiror shall have the right to (i) require Contributor to
repair such damage prior to the Closing, or (ii) require Contributor to assign
(subject to the rights of holders of the Existing Indebtedness related to such
Property) all insurance claims pertaining to such damage or destruction to
Acquiror by executing and delivering to Acquiror at the Closing and thereafter
as necessary all required proofs of loss, assignments of claims and other
similar items. If Acquiror elects to take an
38
assignment of all insurance claims as aforesaid, Acquiror shall receive at the
Closing a credit against the Contribution Consideration in an amount equal to
any deductible(s) applicable thereto.
B. If, prior to the Second Closing (with respect to Waterfront
II) or the Option Closing (with respect to One City Centre and Three City
Centre), any such property or any part thereof shall be condemned, or destroyed
or materially damaged by fire or other casualty (that is, damage or destruction
in excess of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)),
Contributor shall immediately so notify Acquiror and Acquiror shall have the
option either to terminate this Agreement with respect to such Additional
Property upon delivery to Contributor of a Termination Notice or to consummate
the transaction contemplated by this Agreement with respect to such Additional
Property notwithstanding such condemnation, destruction or material damage. If
Acquiror elects to consummate the transaction contemplated by this Agreement,
Acquiror shall be entitled to receive the condemnation proceeds or settle the
loss under all policies of insurance applicable to the destruction or damage to
the Additional Property, and receive the proceeds of insurance applicable
thereto, and Contributor shall, at the Second Closing, the Option Closing and
thereafter as necessary, execute and deliver to Acquiror all required proofs of
loss, assignments of claims and other similar items. If Acquiror elects to
terminate this Agreement with respect to the Additional Property, this Agreement
shall, without further action of the parties, be deemed to have been
automatically and ipso facto amended to eliminate the Additional Property
herefrom. If there is any other damage or destruction (that is, damage or
destruction of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) or
less) to an Additional Property or any part thereof, Acquiror shall have the
right to (i) require Contributor to repair such damage prior to the Second
Closing or Option Closing, as the case may be, or (ii) subject to the rights of
holders of the Existing Indebtedness related to such Additional Property,
require Contributor to assign all insurance claims pertaining to such damage or
destruction to Acquiror by executing and delivering to Acquiror at the Second
Closing and Option Closing, as the case may be, and thereafter as necessary all
required proofs of loss, assignments of claims and other similar items. If
Acquiror elects to take an assignment of all insurance claims as aforesaid,
Acquiror shall receive at the Second Closing or Option Closing, as the case may
be, a credit against the Additional Consideration in an amount equal to any
deductible(s) applicable thereto.
8. REPRESENTATIONS AND WARRANTIES
A. Xxxxxxx X. Xxxxxxx and no other signatory hereto represents
and warrants to Acquiror that the following are true, complete and correct as of
the date of this Agreement:
(i) Each Owner is a general partnership duly organized
and validly existing under the laws of the State of New York and has
all requisite partnership power and authority to own, lease and operate
its properties and assets as they are now owned, leased and operated
and to carry on its business as now conducted and presently proposed to
be conducted. Each Owner is duly qualified, licensed or admitted to do
business in those jurisdictions in which the ownership, use, or leasing
of its assets and properties, or the conduct or nature of its business
makes such qualification, licensing or admission necessary, except for
failures to be so qualified, licensed or admitted that individually or
in the aggregate for all Owners would not materially adversely affect
the Properties, Management Contracts, assets, business, operations or
condition (financial or otherwise) of an Owner, individually or taken
together with all Owners as a whole, or the ability of an Owner,
individually or taken together with all Owners as a whole, to perform
its obligations under this Agreement (an "Owner Material Adverse
Effect"). Such jurisdictions are listed on Schedule 8A(i).
39
(ii) No Contributor or Owner has made a general
assignment for the benefit of creditors, filed any voluntary petition
in bankruptcy or suffered the filing of any involuntary petition by its
creditors, suffered the appointment of a receiver to take possession of
all, or substantially all, of its assets (except as disclosed on
Schedule 8A(xxii)(1)), suffered the attachment or other judicial
seizure of all, or substantially all, of its assets, admitted in
writing its inability to pay its debts as they come due or made an
offer of settlement, extension or composition to its creditors
generally.
(iii) Each person or entity (other than Acquiror or the
REIT) listed on the signature pages hereto (each, a "Signatory") has
full requisite power and authority to enter into, execute and deliver
this Agreement and to perform fully its obligations hereunder. The
execution, delivery and performance by each Signatory of this Agreement
and the execution, delivery and performance of the other documents to
be delivered by each Signatory or other Contributor at Closing, the
Second Closing, and the Option Closing, and the consummation by each
Signatory and other Contributor of the transactions contemplated hereby
and thereby have been (or will be with respect to documents to be
delivered at the Closing, the Second Closing or the Option Closing)
duly and validly authorized by all necessary action on the part of such
Signatory or other Contributor and no other proceedings on the part of
any Signatory, including of its partners, members or otherwise are
necessary to authorize the execution, delivery and performance by such
Signatory of this Agreement and the other documents to be delivered by
such Signatory at the Closing, the Second Closing or the Option
Closing, as the case may be, and the consummation by such Signatory of
the transactions contemplated hereby and thereby, and no other
proceedings on the part of any other Contributor, including of its
partners, members or otherwise will be necessary (at the Closing, the
Second Closing or the Option Closing, as the case may be) to authorize
the execution, delivery and performance by such Contributor of the
other documents to be delivered by such Contributor at the Closing, the
Second Closing or the Option Closing, as the case may be, and the
consummation by such Contributor of the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered
by each Signatory and is a valid and binding obligation of each
Signatory, enforceable against each Signatory in accordance with its
terms.
(iv) Except as set forth in Schedule 8A(iv), neither the
execution and delivery of this Agreement by any Signatory nor the
performance by any Signatory or other Contributor or Contributed Entity
of the transactions contemplated hereby will: (a) violate or conflict
with any of the provisions of the partnership agreement or certificates
of limited partnership, if any, (or similar organizational and
governing documents) of any Contributor or Contributed Entity; (b)
except as would not have an Owner Material Adverse Effect, violate,
result in a breach of, conflict with, result in the acceleration of, or
entitle any party to accelerate the maturity or the cancellation of the
performance of any obligation under, or result in the creation or
imposition of any lien, encumbrance, pledge, claim, security interest,
demand, easement, covenant, condition, restriction and encroachment of
any kind or nature (collectively, "Liens") in or upon any of the
Properties or Additional Properties or assets of any Contributor or
Contributed Entity or constitute a default (or an event which might,
with the passage of time or the giving of notice, or both, constitute a
default) under any mortgage, indenture, deed of trust, lease, contract
(including any Service Contract), loan or credit agreement, license or
other instrument to which any Contributor or Contributed Entity is a
party or by which it or any of its assets may be bound or affected; or
(c) except as would not have an Owner Material Adverse Effect, violate
or conflict with any provision of any statute, law, rule, regulation,
code or ordinance or any judgment, decree, order, writ, permit or
license (collectively, "Laws or Orders") applicable to any Contributor,
Contributed Entity, the Properties, Additional
40
Properties or the assets of any Contributor or Contributed Entity.
Other than those which have been obtained or made prior to the date
hereof, or as set forth in Schedule 8A(iv) attached to this Agreement,
no consent or approval or action of, filing with or notice to any
Governmental or Regulatory Authority (as defined below), any creditor,
investor, member, partner, shareholder, or tenant-in-common of any
Contributor, Contributed Entity or other party is necessary or required
for the execution, delivery and performance by each Contributor of this
Agreement, or the consummation of the transactions contemplated hereby,
other than such consents, approvals, actions, filings and notices which
the failure to obtain or make, individually or in the aggregate, would
not reasonably be expected to have an Owner Material Adverse Effect.
(v) To the best of each Owner's knowledge, it is not (a)
in violation of its partnership agreement (or similar organizational
and governing documents), (b) except as set forth in Schedules
8A(xxii)(1) and 8A(vi) in default, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan or credit agreement, lease, contract (including any Service
Contract) or other material agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or
assets is subject or by which it, or any of them, may be materially
affected, or (c) in violation or in conflict with any provision of any
Laws or Orders applicable to it or its properties or assets, except in
the case of clauses (b) and (c) for such defaults, violations or
conflicts that individually or in the aggregate would not reasonably be
expected to have an Owner Material Adverse Effect. To the best of each
Owner's knowledge, (x) it is not in default under any of the documents,
recorded or unrecorded, referred to in the Title Commitments for the
Properties or Additional Properties, and (y) no Owner or any of the
Properties or Additional Properties is in default under any
certificates of occupancy, licenses, permits, authorizations and
approvals required by law or by any Governmental or Regulatory
Authority having jurisdiction thereof in respect of any Owner or its
assets, the Properties or Additional Properties, occupancy of the
Properties or Additional Properties or any present use thereof, except
in the case of clauses (x) and (y), for such defaults that individually
or in the aggregate would not reasonably be expected to have an Owner
Material Adverse Effect.
(vi) The Owners are the sole owners of fee simple title
to the Properties that are not subject to XXX Lease Agreements. With
respect to each of the Properties and Additional Properties subject to
XXX Lease Agreements disclosed on Schedule B, such XXX is the sole
lessor under the applicable XXX Lease Agreement for such Property or
Additional Properties, as the case may be, and the respective Owner is
the sole owner of the leasehold estate in and to such Property or
Additional Property, as the case may be. Except as set forth in
Schedule 8A(vi), each of the XXX Lease Agreements and the related PILOT
Agreements are in full force and effect, and has not been modified,
amended, or altered, in writing or otherwise and no Owner has received
any notice of a default thereunder that remains outstanding. Each Owner
has complied with (and, prior to the Closing, the Second Closing or the
Option Closing, as the case may be, shall continue to comply with) in
all material respects the terms of all XXX Lease Agreements, and all
notices or correspondence received from the XXX. Except as set forth in
Schedule 8A(vi), each Owner has paid (and, at all times prior to the
Closing, the Second Closing or the Option Closing, as the case may be,
shall pay), when and as due, all sums due under the XXX Lease
Agreements. Each Owner has delivered to Acquiror true, complete and
accurate copies of all XXX Lease Agreements. No Owner has received any
notice alleging that it is in default in compliance with the terms and
provisions of any of the covenants, conditions, restrictions,
rights-of-way or easements constituting
41
one or more of the Permitted Exceptions. To the best of each Owner's
knowledge, there are no development or other rights associated with any
Property or Additional Property which are not being transferred to
Acquiror under this Agreement or the documents contemplated by this
Agreement other than the Vacant Land.
(vii) Each Interest Contributor has or will have at the
Closing, the Second Closing or the Option Closing, as the case may be,
legal and beneficial title to one-hundred (100%) percent of their
respective interest in the Contributed Entities to be contributed
hereunder, free and clear of all Liens. The Partnership Interests
represent all of the equity interests in the Contributed Entities. Each
Interest Contributor has the power and authority to own its respective
Partnership Interests, and the contribution of such Partnership
Interests pursuant to this Agreement is or will be, to the extent
necessary, authorized and within the power of each Interest Contributor
on or prior to the Closing, the Second Closing or the Option Closing,
as the case may be. At the Closing, the Second Closing or the Option
Closing, as the case may be, Acquiror will receive legal and beneficial
title to one-hundred (100%) percent of the Partnership Interests, free
and clear of all Liens. Each partnership agreement of the Contributed
Entities has been duly authorized, executed and delivered by each party
thereto and constitutes a valid and binding obligation of those
parties, enforceable in accordance with its terms. True and complete
copies of such partnership agreements have been delivered to Acquiror,
and have not been amended since their respective dates.
(viii) Each Owner has obtained and paid for (or caused to
be obtained and paid for) all permits and certificates (including,
without limitation, permits and certificates for water, plumbing,
sewers and sewage treatment, electric, heating, ventilating, air
conditioning, drainage and occupancy) required under any Federal, state
or local law, ordinance, rule or regulation or by any governmental or
quasi-governmental agency having jurisdiction over the Properties and
Additional Properties, and all of the same are in good standing. To the
best of each Owner's knowledge, the Properties and Additional
Properties and each part thereof contain not less than the minimum
number of parking spaces required under applicable law.
(ix) The schedule of insurance policies to be furnished
to Acquiror pursuant to Section 11(iii) below will be true, complete
and correct in all material respects, all such policies are in full
force and effect and no Owner is in default with respect to any
material provisions contained in any such policy. Neither any Owner
nor, to the best of each Owner's knowledge, any agent of any Owner, has
received from any insurer any notice with respect to any defects or
inadequacies affecting all or any part of the Properties
or Additional Properties, any notice of cancellation or non-renewal of
any such policy, or any notice that any insurance premiums will be
materially increased in the future or that any insurance coverage under
such policies will not be available in the future on substantially the
same terms as now in effect.
(x) Except as set forth in Schedule 8A(x) attached to
this Agreement, there is no judicial, municipal or administrative
action, suit, arbitration, proceeding or investigation pending or, to
the best of each Owner's knowledge, threatened against, relating to or
affecting any Owner, its assets, the Properties, Additional Properties
or any part thereof before any court or governmental department,
commission, board, agency or instrumentality, of the United States or
any state, county, city or other political subdivision (a "Governmental
or Regulatory Authority"), including, without limitation, proceedings
for or involving collections (other than collections in the ordinary
course of business), condemnation, eminent domain, alleged building
code or environmental or zoning violations, or personal injuries or
property damage alleged to have occurred at any of the Properties
42
or Additional Properties or by reason of the condition, use of, or
operations on, such property. No attachments, execution proceedings,
assignments for the benefit of creditors, insolvency, bankruptcy or
other similar proceedings are pending or, to the best of each Owner's
knowledge, threatened against any Owner.
(xi) Except as set forth in Schedule 8A(xi) attached to
this Agreement, no Owner has received from any Governmental or
Regulatory Authority any written notice of, nor is any Owner aware of,
zoning, building, fire, health code, environmental or other violations
of applicable laws, rules, ordinances codes and regulations with
respect to the Properties, Additional Properties, or any part thereof.
(xii) The Service Contracts (which include the agreements
set forth on Schedule 8A(xii)) and the Management Contracts comprise
every contract, agreement, relationship and commitment, oral or
written, other than the Leases, the XXX Lease Agreements, the Existing
Indebtedness, the Waterfront II Indebtedness, the One City Centre
Indebtedness and the Three City Centre Indebtedness, that affect the
Properties or Additional Properties and to which any Owner is a party
or by which it is bound, including, without limitation, all agreements
relating to the management, construction, operation, maintenance or
repair of any Property or Additional Property, the purchase of
materials, supplies, equipment, machinery parts, products and services,
and the lease of any property, real or personal. The Service Contracts
are in full force and effect and have not been modified, amended or
altered, in writing or otherwise. Neither any Owner nor, to the best of
each Owner's knowledge, any other party is in default under the terms
of any Service Contract. Except as otherwise noted on Exhibit C, each
Service Contact is cancelable by Owner (or its assignees or successors)
without payment of any penalty upon not more than thirty (30) days
prior notice. Except as otherwise noted on Exhibit C or on Schedule
8A(xii), no Service Contract is with an affiliate of Contributor.
(xiii) No Contributor or Contributed Entity has any
patents, trademarks, servicemarks or trade names used in connection
with the Properties or Additional Properties, except for the names
"Pioneer Development Company, LLC" and "Pioneer Management Services
Company, LLC." To the best of each such person's knowledge, the use of
such names does not conflict with any rights of others with respect
thereto. There is no claim pending or, to the best of each such
person's knowledge, threatened against any Contributor or any
Contributed Entity with respect to alleged infringement of any patent,
trademark, servicemark or trade name related to the Properties or
Additional Properties.
(xiv) (a) Except as set forth on Schedule 8A(xiv), there
is no proceeding, plan, study or effort by any governmental authority
or agency pending, or to the best of each Owner's knowledge,
threatened, which in any way affects or would affect the present use,
improvements on, size or zoning of any of the Properties or Additional
Properties (and no Owner has received any notice from any governmental
authority of any such plan, study or effort), and there is no existing,
or to the best of each Owner's knowledge, proposed or contemplated plan
to widen, modify or realign any street or highway or any existing, or
to the best of each Owner's knowledge, proposed or contemplated eminent
domain proceedings that would affect any of the Properties or
Additional Properties in any way whatsoever (and no Owner has received
any notice from any governmental authority of any such existing,
proposed or contemplated plan or proceedings); and
(b) To the best of each Owner's knowledge, all laws,
ordinances, codes, rules
43
and regulations of any Governmental and Regulatory Authority, bearing
on the construction, maintenance, repair or operation of each of the
Properties and Additional Properties have been complied with by each
Owner, except the non-compliance with which would not reasonably be
expected to have an Owner Material Adverse Effect.
(xv) The Rent Roll is true, complete and correct in all
material respects. With respect to the Leases:
(a) Except as set forth on the Rent Roll, each of the
Leases is in full force and effect, and has not been modified,
amended, or altered, in writing or otherwise. No Owner has
received any notice of any material claim of any sort that has
been asserted by anyone adverse to the rights of any Owner
under any of the Leases, or affecting or questioning the
rights of any Owner of the continued possession of the leased
or subleased premises under any such Lease;
(b) Except as set forth on the Rent Roll, all
obligations of the lessor under the Leases that accrue to the
date hereof have been performed, including, but not limited
to, all required tenant improvements, cash or other
inducements, rent abatements or moratoria, installations and
construction (for which payment in full has been made or will
be made prior to Closing (with respect to the Properties), the
Second Closing (with respect to Waterfront II) or the Option
Closing (with respect to One City Centre and Three City
Centre) or subject to proration hereunder in all cases), and,
to the best of each Owner's knowledge, no tenant has
conditionally accepted lessor's performance of such
obligations. Except as set forth on the Rent Roll, no tenant
has asserted in writing any offsets, defenses or claims
available against rent payable by it or other performance or
obligations otherwise due from it under any Lease, which
assertion remains outstanding;
(c) Except as set forth on the Rent Roll, no tenant
is currently in default under or is in arrears (for more than
30 days) in the payment of any sums or in the performance of
any monetary obligations required of it under its Lease, and
no Owner has any knowledge of any other default under any such
Lease;
(d) Except as set forth in the Rent Roll, during the
12-month period immediately preceding the date hereof: (i) no
tenant has, on two or more occasions, been more than 30 days
delinquent in its respective payment of any and all sums due
under the terms of its respective Lease; (ii) no tenant has
requested in writing that any Owner provide that tenant with
any reduction in the tenant's monetary obligations under its
Lease; (iii) no tenant has requested that any Owner, in its
capacity as landlord, permit the tenant to terminate its Lease
on an accelerated basis; (iv) no Owner has "written off" any
delinquent sums owed by any tenant to satisfy its obligation
to contribute to the payment of real estate taxes, common area
maintenance charges, and insurance premiums; and (v) no Owner
has had (nor is it currently engaged in) any dispute (whether
of a formal or an informal nature) with any tenant concerning
that tenant's obligations to make payments under the terms of
its Lease toward real estate taxes, insurance premiums and
common area maintenance charges or other charges imposed under
its Lease;
(e) Except as set forth on the Rent Roll, no Owner
has received any written notice from any tenant stating that,
or has knowledge that, a petition in bankruptcy has been
44
filed or is threatened to be filed by or against such tenant;
(f) Except with respect to security deposits and as
set forth on the Rent Roll, neither base rent ("Base Rent"),
nor regularly payable estimated tenant contributions or
operating expenses, insurance premiums, real estate taxes,
common area charges, and similar or other "pass through" or
non-base rent items including, without limitation,
cost-of-living or so-called "C.P.I." or other such adjustments
(collectively, "Additional Rent"), nor any other material item
payable by any tenant under any Lease has been heretofore
prepaid for more than one month;
(g) To the best of each Owner's knowledge, no
guarantor(s) of any Lease has been released or discharged,
partially or fully, voluntarily or involuntarily, or by
operation of law, from any obligation under or in connection
with any Lease or any transaction related thereto;
(h) Except as set forth on the Rent Roll, there are
no brokers' commissions, finders' fees, or other charges
payable or to become payable to any third party on behalf of
any Owner in connection with any Lease, including, but not
limited to, any exercised option(s) to expand or renew;
(i) The Rent Roll sets forth all security deposits
paid by tenants under the Leases. (i) No tenant or any other
party has asserted any claim in writing (other than for
customary refund at the expiration of a Lease) to all or any
part of any security deposit and (ii) no Owner has applied any
portion of any security deposit to the payment of any sums due
from any tenant under a Lease, which sums have not been
reimbursed by such tenant;
(j) Except as set forth on the Rent Roll, no tenant
has, by virtue of its Lease or any other agreement or
understanding, any purchase option with respect to any of the
Properties or Additional Properties, or any portion thereof,
or any right of first refusal to purchase any of the
Properties or Additional Properties, or a portion thereof,
whether triggered by the transactions contemplated by this
Agreement or by a subsequent sale of any of the Properties or
Additional Properties or a portion thereof. Except as set
forth on the Rent Roll or due to a default by landlord or in
connection with a casualty or condemnation, no tenant has, by
virtue of its Lease or any other agreement or understanding
any of the following (i) the option to terminate its Lease
prior to the stated expiration date and (ii) the option to
reduce the rentable space at any of the Properties or
Additional Properties that such tenant is currently occupying;
and
(k) Except as set forth on the Rent Roll: (i) to the
best of each Owner's knowledge, no tenant has sublet its
leased premises; and (ii) there are no outstanding written
requests from any tenant to any Owner, requesting any consent
to an assignment of the tenant's Lease or to a sublease of all
or some portion of a tenant's leased premises.
(xvi) Except as set forth in Schedule 8A(xvi) attached to
this Agreement, to the best of each Owner's knowledge, there are no
general or special assessments applicable to the Properties or
Additional Properties or any part thereof. The xxxx or bills issued for
the years 1995, 1996, 1997 and 1998, for all real estate taxes and
personal property taxes and copies of any and all notices pertaining to
real estate taxes or assessments applicable to the Properties and
Additional
45
Properties (the "Tax Bills") (and to each Owner's knowledge, the only
real estate tax bills applicable to the Properties or Additional
Properties) have been delivered to Acquiror. Except as set forth in
Schedule 8A(xvi) attached to this Agreement, no Owner has received any
notice of any proposed or actual increase in the assessed valuation of
or rate of taxation of any or all of the Properties or Additional
Properties from that reflected in the most recent Tax Bills or PILOT
Agreements. Except as set forth in Schedule 8A(xvi) attached to this
Agreement, there is not now pending any proceeding or application for a
reduction in the real estate tax assessment of any of the Properties or
any other relief for any tax year. Other than the amounts disclosed by
the Tax Bills, no other real estate taxes have been, or to each Owner's
knowledge, will be, assessed against the Properties, or Additional
Properties or any portion thereof, in respect of the year 1997 or any
prior year, and no special assessments of any kind (special, bond or
otherwise) are or have been levied against the Properties or Additional
Properties, or any portion thereof, that are outstanding or unpaid,
and, to each Owner's knowledge, none will be levied prior to the
Closing, the Second Closing or the Option Closing, as the case may be.
No Owner has entered into any agreements with attorneys or consultants
or other parties with respect to real estate taxes applicable to any of
the Properties that will be binding on Acquiror after the Closing, the
Second Closing or the Option Closing, as the case may be, other than
agreements entered into in connection with a Tax Reduction Proceeding
permitted pursuant to Section 4(A)(v).
(xvii) Each Owner has prepared and timely filed all tax
returns required to be filed on or before the date hereof with respect
to its Properties and Additional Properties, which tax returns are
true, correct and complete in all material respects. Except as set
forth on Schedule 8A(xvii), each Owner has paid or made provision for
the payment of all taxes with respect to its Properties and Additional
Properties that are due or claimed to be due from it on or before the
date hereof by any governmental taxing authority. Other than as set
forth on Schedule 8A(xvii), no federal, state, local or foreign taxing
authority has given written notice to any Owner of any tax deficiency,
lien, interest or penalty or other assessment against the Properties or
Additional Properties or any Owner which has not been paid and no audit
or written inquiry has been commenced or, to the best of each Owner's
knowledge, threatened by any federal, state, local or foreign tax
authority relating to the Properties or Additional Properties or any
Owner that may be expected to result in a tax deficiency, lien interest
or other assessment against the Properties or Additional Properties.
(xviii) To the best of each Owner's knowledge, the Personal
Property and the Excluded Personal Property is substantially all of the
personal property owned by such Owner and used in the operation of its
Properties and Additional Properties. Each Owner has good title to its
Personal Property, free and clear of any Liens.
(xix) The financial information regarding the Properties
and Additional Properties furnished by the Owners to Acquiror is true,
complete and correct in all material respects and accurately set forth
in all material respects the results of the operations of the
Properties and Additional Properties for the periods covered.
(xx) The Management Contracts are the only management
contracts pertaining to the Properties or Additional Properties and may
be terminated by Acquiror following the advance notice specified in
Schedule A, at no cost or expense to Acquiror.
(xxi) All utilities (including, without limitation, gas,
electricity, telephone, water
46
and sanitary and storm sewers) are connected to the Improvements as
necessary, and all connection, hook-up, tap fees and the like have been
paid.
(xxii) Except for the Existing Indebtedness, the Waterfront
II Indebtedness, the One City Centre Indebtedness and the Three City
Centre Indebtedness, there are no mortgages or deeds of trust presently
encumbering the Properties or Additional Properties or any portion
thereof. Except as set forth on Schedule 8A(xxii)(1), each Owner is in
compliance with (and, prior to the Closing, the Second Closing or the
Option Closing, as the case may be, shall continue to comply with) in
all material respects the terms of, and all notices or correspondence
received from the holder of, the promissory notes evidencing the loans
secured by the Existing Indebtedness, the Waterfront II Indebtedness,
the One City Centre Indebtedness and the Three City Centre Indebtedness
(the "Existing Notes"). Except as set forth on Schedule 8A(xxii)(1),
each Owner is current in the payment of (and, at all times prior to the
Closing, the Second Closing or the Option Closing, as the case may be,
shall pay, when and as due), all sums due under the Existing
Indebtedness, the Waterfront II Indebtedness, the One City Centre
Indebtedness or the Three City Centre Indebtedness, the Existing Notes
and all other loan documents securing the Existing Notes (the "Other
Loan Documents"). The Existing Notes, the Existing Indebtedness, the
Waterfront II Indebtedness, the One City Centre Indebtedness and the
Three City Centre Indebtedness and the Other Loan Documents are in full
force and effect, and no Owner has received any notice of a default
thereunder that remains outstanding except as may be related to a
non-compliance set forth in Schedule 8A(xxii)(1) attached to this
Agreement. Each Owner has delivered to Acquiror true, complete and
accurate copies of the Existing Notes, the Existing Indebtedness, the
Waterfront II Indebtedness, the One City Centre Indebtedness and the
Three City Centre Indebtedness and the Other Loan Documents. Except as
set forth in Schedule 8A(xxii)(2) attached to this Agreement, the
indebtedness evidenced by the Existing Notes may be prepaid, in full,
on the Closing Date.
(xxiii) No representation or warranty made by any
Contributor or Contributed Entity in this Agreement, no exhibit
attached hereto with respect to the Properties, and no schedule
contained in this Agreement contains any untrue statement of a material
fact, or omits to state a material fact necessary in order to make the
statements contained therein not misleading (taking into account any
knowledge, materiality or other similar qualifier contained therein).
All items delivered by or on behalf of any Owner pursuant to this
Agreement are true, accurate, correct and complete in all material
respects, and fairly present the information set forth in a manner that
is not misleading. The copies of all documents and other agreements
delivered or furnished and made available by or on behalf of any Owner
to Acquiror pursuant to this Agreement constitute all of and the only
Leases and other agreements to which any Owner is presently a party
relating to or affecting the ownership, leasing, management and
operation of the Properties and Additional Properties, there being no
"side" or other agreements, written or oral, in force or effect, to
which any Owner is a party or to which any Property or Additional
Property is subject.
(xxiv) Except as set forth in (x) Schedule 8A(xxiv)
attached to this Agreement; (y) any environmental report delivered to
Acquiror by Contributor prior to the date of this Agreement; or (z) any
environmental report procured by Acquiror regarding any of the
Properties or the Additional Properties:
(a) The Properties and Additional Properties are
owned and operated by each Owner in compliance with all
Environmental Laws, except for instances of non-compliance as
would not individually or in the aggregate reasonably be
expected to have an Owner
47
Material Adverse Effect.
(b) No Owner has received in the past and there are
no pending or, to the knowledge of each Owner, threatened (in
writing) claims, complaints, notices, correspondence or
requests for information with respect to any violation or
alleged violation of any Environmental Law or Environmental
Permit or with respect to any corrective or remedial action
for or cleanup of the Properties or Additional Properties or
any portion thereof.
(c) To the best of each Owner's knowledge, there have
been no Releases of a Hazardous Material at, on, under, in or
about any of the Properties or Additional Properties or any
portion thereof during any period that any Owner owned or
leased such Property or Additional Property or prior thereto.
None of the Properties or Additional Properties is listed, or
to the best of each Owner's knowledge, proposed for listing,
on the National Priorities List promulgated pursuant to CERCLA
(the "NPL") or on any similar state or other list of sites
that require or may require corrective or remedial action.
(d) To the best of each Owner's knowledge, no
conditions exist at, on, under, in or about the Properties or
Additional Properties or any portion thereof that, with the
passage of time or the giving of notice or both, would give
rise to any claim, liability or obligation under any
Environmental Law or Environmental Permit, except for those
which would not individually or in the aggregate have an Owner
Material Adverse Effect.
(e) Each Owner has been issued all Environmental
Permits required for the operation of the Properties or
Additional Properties. All such Environmental Permits are in
full force and effect and each Owner is in compliance in all
material respects with the terms and conditions of such
Environmental Permits.
(f) No Owner has transported, disposed of or treated,
or arranged for the transportation, disposal or treatment of,
any Hazardous Material from the Properties or Additional
Properties or any portion thereof to any location that is: (i)
listed, or to the best of each Owner's knowledge, proposed or
nominated for listing, on the NPL or on any other similar list
or (ii) the subject of any pending, or to the best of each
Owner's knowledge, threatened, Federal, state or local
enforcement action or other investigation under any
Environmental Law.
(g) There are no underground storage tanks at, on or
under the Properties or Additional Properties or any portion
thereof. No Owner has removed, closed or abandoned any
underground storage tanks at any of the Properties or
Additional Properties, and no Owner has any knowledge of the
existence, abandonment, closure or removal of underground
storage tanks at any of the Properties or Additional
Properties.
(h) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted
by, or which are in the possession of, any Owner in relation
to any Property or Additional Property which have not been
delivered to Acquiror prior to the execution of this
Agreement.
For purposes of this item (xxiv), the following terms shall have the
meanings ascribed to them
48
below.
(1) "Environmental Law" or "Environmental Laws" shall mean all
applicable Federal, state and local statutes, regulations, directives,
ordinances, rules, guidelines, court orders, judicial or administrative
decrees, arbitration awards and the common law, which pertain to the
environment, soil, water, air, flora and fauna, or health and safety
matters to the extent related to Hazardous Materials, as such have been
amended, modified or supplemented from time to time (including all
amendments thereto and reauthorizations thereof). Environmental Laws
include, without limitation, those relating to: (i) the manufacture,
processing, use, distribution, treatment, storage, disposal, generation
or transportation of Hazardous Materials; (ii) air, soil, surface,
subsurface, groundwater or noise pollution; (iii) Releases; (iv)
protection of endangered species, wetlands or natural resources; (v)
the operation and closure of underground storage tanks; (vi) health and
safety of employees and other persons to the extent related to
Hazardous Materials; and (vii) notification and reporting requirements
relating to the foregoing. Without limiting the above, Environmental
Law also includes the following: (i) the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Sections. 9601 et
seq.), as amended ("CERCLA"); (ii) the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act (42 U.S.C.
Sections. 6901 et seq.), as amended ("RCRA"); (iii) the Emergency
Planning and Community Right to Know Act of 1986 (42 U.S.C. Sections.
11001 et seq.), as amended; (iv) the Clean Air Act (42 U.S.C.
Sections. 7401 et seq.), as amended; (v) the Clean Water Act
(33 U.S.C. Sections. 1251 et seq.), as amended; (vi) the Occupational
Safety and Health Act (29 U.S.C. Sections. 651 et seq.), as amended,
to the extent applicable to Hazardous Materials; (vii) any state,
county, municipal or local statutes, laws or ordinances similar
or analogous to (including counterparts of) any of the statutes
listed above; and (viii) any rules, regulations, guidelines,
directives, orders or the like adopted pursuant to or implementing
any of the above.
(2) "Environmental Permit" or "Environmental Permits" shall
mean licenses, certificates, permits, directives, requirements,
registrations, government approvals, agreements, authorizations, and
consents which are required under or are issued pursuant to an
Environmental Law.
(3) "Hazardous Material" or "Hazardous Materials" shall mean
any compound, pollutant, contaminant, pesticide, petroleum or petroleum
product or by product, radioactive substance, hazardous or extremely
hazardous solid waste, special, dangerous or toxic waste, hazardous or
toxic substance regulated, listed, limited or prohibited under any
Environmental Law, including without limitation: (i) friable or damaged
asbestos, asbestos-containing material, polychlorinated biphenyls,
solvents and waste oil; (ii) any "hazardous substance" as defined under
CERCLA; and (iii) any "hazardous waste" as defined under RCRA or
comparable state or local law.
(4) "Release" means any spill, discharge, leak, migration,
emission, escape, injection or dumping of any Hazardous Material into
the environment, whether or not notification or reporting to any
governmental authority was or is required. Release includes, without
limitation, the meaning of Release as defined under CERCLA.
(xxv) At the Closing Date, the Second Closing Date and the
Option Closing Date, as the case may be, the only assets of the
Contributed Entities will be the Partnership Properties listed on
Schedule B and the related Personal Property, and the only liabilities
of the
49
Contributed Entities will be the Assumed Indebtedness, if any, and
liabilities incurred in the ordinary course of business with respect to
the operation of the Partnership Properties prior to the Closing Date,
the Second Closing Date or the Option Closing Date, as the case may be.
(xxvi) (a) Except as set forth in Schedule 8A(xxvi), at
Closing (with respect to the Properties), the Second Closing (with
respect to Waterfront II) and the Option Closing (with respect to One
City Centre and Three City Centre), all gross income of the Contributed
Entities and all gross income generated by the Deed Properties will be
derived pursuant to the Leases and from no other sources, and (b) other
than the Personal Property, the Service Contracts and the items
specified in Section 1A(v) and (vi), all of the assets held by the
Contributed Entities and all of the Deed Properties, at the Closing
(with respect to the Properties), the Second Closing (with respect to
Waterfront II) and the Option Closing (with respect to One City Centre
and Three City Centre), will be assets described in Section
856(c)(4)(A) of the Code.
(xxvii) Each Partnership Interest contributed by the
Interest Contributors is an interest in a partnership that has been
organized and at all times classified as a partnership for federal
income tax purposes and for the applicable state income tax purposes
and not as a corporation or an association taxable as a corporation.
(xxviii) Attached to this Agreement as Exhibit C and Schedule
8A(xii) is a true and complete list of all the Service Contracts. There
are no currently effective employment and union agreements affecting or
pertaining in any way to the Properties, Additional Properties or any
part thereof.
B. Xxxxxxx X. Xxxxxxx represents and warrants to Acquiror
that, as of the Closing (with respect to the Properties), the Second Closing
(with respect to Waterfront II) and the Option Closing (with respect to One City
Centre and Three City Centre), each of the representations and warranties set
forth in Section 8A above shall be true, complete and correct in all material
respects except for changes in the operation of the Properties or Additional
Properties occurring prior to the Closing, the Second Closing or the Option
Closing, as the case may be, that are specifically permitted by or pursuant to
this Agreement.
C. Acquiror and the REIT represent and warrant to Contributor
that the following are true, complete and correct as of the date of this
Agreement:
(i) Acquiror is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite partnership power and authority to own,
lease and operate its properties and assets as they are now owned,
leased and operated and to carry on its business as now conducted and
presently proposed to be conducted. Acquiror is duly qualified,
licensed or admitted to do business and is in good standing in those
jurisdictions in which the ownership, use, or leasing of its assets and
properties, or the conduct or nature of its business makes such
qualification, licensing or admission necessary, except for failures to
be so qualified, licensed or admitted and in good standing that
individually or in the aggregate would not materially adversely affect
the assets, business, operations or condition (financial or otherwise)
of Acquiror or the ability of Acquiror to perform its obligations under
this Agreement (an "Acquiror Material Adverse Effect").
(ii) Acquiror has full partnership power and authority to
enter into, execute and deliver this Agreement and to perform fully its
obligations hereunder. The execution, delivery
50
and performance by Acquiror of this Agreement and the other documents
to be delivered by Acquiror at Closing, the Second Closing and the
Option Closing, as the case may be, and the consummation by Acquiror of
the transactions contemplated hereby and thereby are permitted under
the Partnership Agreement, and at Closing, the Second Closing and the
Option Closing, as the case may be, will have been duly and validly
authorized by all necessary partnership action on the part of Acquiror,
and no other partnership proceedings on the part of Acquiror, including
of its partners, are necessary to authorize the execution, delivery and
performance by Acquiror of this Agreement and the other documents to be
delivered by Acquiror at Closing, the Second Closing and the Option
Closing, as the case may be, and the consummation by Acquiror of the
transactions contemplated hereby and thereby. This Agreement has been
duly executed and delivered by Acquiror and is a valid and binding
obligation of Acquiror, enforceable against Acquiror in accordance with
its terms.
(iii) Neither the execution and delivery of this Agreement
by Acquiror and the REIT nor the performance by Acquiror and the REIT
of the transactions contemplated hereby will: (a) violate or conflict
with any of the provisions of the Partnership Agreement or the REIT's
Certificate of Incorporation or bylaws; or (b) except as would not have
an Acquiror Material Adverse Effect or a REIT Material Adverse Effect
(as defined below), violate or conflict with any Laws or Orders
applicable to Acquiror, the REIT or their assets.
(iv) To the best of Acquiror's knowledge, it is not (a)
in violation of the Partnership Agreement, (b) in default, and no event
has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan or credit agreement, lease,
contract or other material agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or
assets is subject or by which it, or any of them, may be materially
affected, or (c) in violation or in conflict with any provision of any
Laws or Orders applicable to Acquiror or its assets, except in the case
of clauses (b) and (c) for such defaults, violations or conflicts that
individually or in the aggregate would not reasonably be expected to
have an Acquiror Material Adverse Effect.
(v) The Partnership Agreement is in full force and
effect and has not been further amended or modified.
(vi) The OP Units to be issued to the OP Unit Recipients,
when issued, sold and paid for pursuant to this Agreement and the
Partnership Agreement, will be duly authorized, validly issued,
fully-paid and free of all Liens.
(vii) There is no existing or, to Acquiror's knowledge,
threatened, legal action or governmental proceedings of any kind
involving Acquiror, any of its assets or the operation of any of the
foregoing, which, if determined adversely to Acquiror or its assets,
would have an Acquiror Material Adverse Effect.
(viii) The REIT is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland
and has all requisite corporate power and authority to own, lease and
operate its properties and assets as they are now owned, leased and
operated and to carry on its business as now conducted and presently
proposed to be conducted. The REIT is duly qualified, licensed or
admitted to do business and is in good standing in those jurisdictions
in
51
which the ownership, use, or leasing of its assets and properties, or
the conduct or nature of its business makes such qualification,
licensing or admission necessary, except for failures to be so
qualified, licensed or admitted and in good standing that individually
or in the aggregate would not materially adversely affect the assets,
business, operations or condition (financial or otherwise) of the REIT
and its subsidiaries taken together as a whole (a "REIT Material
Adverse Effect"). The REIT is the sole general partner of Acquiror.
(ix) The REIT has all requisite corporate power and
authority to enter into, execute and deliver this Agreement,
individually and in its capacity as general partner of Acquiror and to
perform fully its obligations hereunder individually and in its
capacity as general partner of Acquiror. The execution, delivery and
performance by the REIT of this Agreement and the other documents to be
delivered by the REIT at Closing, the Second Closing and the Option
Closing, as the case may be, and the consummation by the REIT of the
transactions contemplated hereby and thereby at Closing, the Second
Closing and the Option Closing, as the case may be, will have been duly
and validly authorized by all necessary corporate action on the part of
the REIT. This Agreement has been duly executed and delivered by the
REIT and is a valid and binding obligation of the REIT, enforceable
against the REIT in accordance with its terms.
(x) To the best of the REIT's knowledge, it is not (a)
in violation of its Certificate of Incorporation or by-laws, (b) in
default, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any obligation, agreement, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan or
credit agreement, lease, contract or other material agreement or
instrument to which it is a party or by which it is bound or to which
any of its properties or assets is subject or by which it, or any of
them, may be materially affected, or (c) in violation or in conflict
with any provision of any Laws or Orders applicable to the REIT or its
assets, except in the case of clauses (b) and (c) for such defaults,
violations or conflicts that individually or in the aggregate would not
reasonably be expected to have a REIT Material Adverse Effect.
(xi) The Conversion Shares will be duly authorized and
reserved for issuance and, to the extent delivered upon exchange of the
OP Units, when issued, sold and paid for pursuant to this Agreement and
the Partnership Agreement, will be validly issued, fully-paid and
nonassessable, free of all Liens and upon official notice of issuance
will be listed on the AMEX (or such other exchange or national
quotation system as the Common Stock is then traded on).
(xii) The REIT, beginning with its taxable year ended
December 31, 1993 and through December 31, 1997 (i) has been subject to
taxation as a "real estate investment trust" (a "REIT Entity") within
d the meaning of the Code and has complied with all requirements
contained in the Code to qualify as a REIT Entity for such years, and
(ii) has operated, and currently intends to continue to operate, in
such a manner as to qualify as a REIT Entity for the tax year ending
December 31, 1998 and thereafter.
(xiii) There is no existing, or, to the REIT's knowledge,
threatened legal action or governmental proceedings of any kind
involving the REIT, any of its assets or the operation of any of the
foregoing, which, if determined adversely to the REIT or its assets,
would have a REIT Material Adverse Effect.
(xiv) The REIT has filed all forms, reports, schedules,
proxy materials,
52
registration statements and related prospectuses and supplements and
other documents required to be filed by the REIT with the Securities
and Exchange Commission (the "SEC") pursuant to the Securities Act or
the Securities Exchange Act of 1934, as amended, for the year ended
December 31, 1997 and from December 31, 1997 up to the date hereof
(collectively, the "SEC Documents") and will cause to be delivered to
Contributor copies of such additional documents as may be filed with
the SEC by the REIT between the date hereof and the Closing Date. The
SEC Documents were, and those additional documents filed between the
date hereof and the Closing will be, prepared and filed in all material
respects in compliance with the rules and regulations promulgated by
the SEC, and do not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein in order
to make the statements contained therein, in light of the circumstances
under which they were made, not misleading. Except as set forth on
Schedule 8C(xiv), no material event has occurred between the date of
the REIT's most recent report filed with the SEC and the date of this
Agreement which would be required to be disclosed in a document filed
with the SEC.
(xv) The consolidated financial statements included in
the SEC Documents have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
period involved (except as may be indicated in the notes thereto or, in
the case of the unaudited statements, as permitted by Form 10-QSB) and
present fairly (subject, in the case of the unaudited statements, to
normal, recurring year-end audit adjustments) the consolidated
financial position of Acquiror or the REIT, as applicable, and their
respective Subsidiaries (as defined below) at the dates thereof and the
consolidated results of operations and cash flows for the periods then
ended. "Subsidiaries" means (i) any entity of which Acquiror or the
REIT (or other specified entity), as applicable, shall own directly or
indirectly through a subsidiary, a nominee arrangement or otherwise (x)
at least a majority of the outstanding capital stock (or other shares
of beneficial interest) or (y) at least a majority of the partnership,
joint venture or similar interests, and (ii) any entity in which
Acquiror or the REIT (or other specified entity), as applicable, is a
general partner or joint partner, including without limitation in the
case of the REIT, Acquiror.
(xvi) As of April 27, 1998, (A) the authorized shares of
stock of all classes of the REIT consists of 65,000,000 shares of
capital stock, par value $.001 per share, and all of such shares are
initially classified as "Common Stock"; (B) the issued and outstanding
shares of the REIT consists of 5,487,386 shares of Stock; and (C) no
shares of preferred stock of the REIT are outstanding.
(xvii) As of April 27, 1998, 9,459,743 OP Units are issued
and outstanding.
(xviii) Neither the REIT nor Acquiror has made a general
assignment for the benefit of creditors, filed any voluntary petition
in bankruptcy or suffered the filing of any involuntary petition by
either of the REIT's or Acquiror's creditors, suffered the appointment
of a receiver to take possession of all, or substantially all, of the
REIT's or Acquiror's assets, suffered the attachment or other judicial
seizure of all, or substantially all, of the REIT's or Acquiror's
assets, admitted in writing its inability to pay its debts as they
come due or made an offer of settlement, extension or composition to
its creditors generally.
(xix) Attached hereto as Schedule 8C(xix) is a listing
(the "REIT Rent Roll") of the following as of March 31, 1998, which is
true, complete and correct in all material respects for all properties
in which the REIT holds an interest (collectively, the "REIT
Property"): (i) the name
53
of each tenant; (ii) the fixed rent required to be paid; (iii) the
expiration date of each lease; and (iv) any arrearages of any tenant
beyond thirty (30) days.
(xx) Acquiror was not and is not a publicly traded
partnership within the meaning of Section 7704 of the Code and the
regulations promulgated thereunder. In addition, no subsidiary of
Acquiror or the REIT has taken the position, for federal income tax
purposes, that it is a publicly traded partnership within the meaning
of Section 7704 of the Code or the regulations promulgated thereunder.
D. Acquiror represents and warrants to Contributor that, as of
the Closing, the Second Closing and the Option Closing, as the case may be, each
of the representations and warranties set forth in Section 8C above shall be
true, complete and correct in all material respects.
E. Except as hereinafter provided, all representations and
warranties made in this Section 8 by Xxxxxxx X. Xxxxxxx and by Acquiror and the
REIT (i) which pertain to the Properties or the ownership, operation or status
of the Properties or the Owners thereof, shall survive the Closing until the
eighteen (18) month anniversary of the Closing Date, (ii) which pertain to
Waterfront II or the ownership, operation or status of Waterfront II or the
Owner thereof, shall survive the Second Closing Date until the eighteen (18)
month anniversary of the Second Closing Date, and (iii) which pertain to One
City Centre or Three City Centre or the ownership, operation or status of One
City Centre or Three City Centre or the Owners thereof, shall survive the Option
Closing Date until the eighteen (18) month anniversary of the Option Closing
Date, and shall not merge into any instrument of conveyance delivered at the
Closing, the Second Closing or the Option Closing, as the case may be; provided,
however, that the foregoing limitation shall not apply to the extent any claim
for indemnification is made under this Agreement with respect to any
representation, warranty, covenant or agreement that would otherwise terminate
pursuant to this Section 8E and a notice for indemnification shall have been
timely given under Section 15 on or prior to such termination date, in which
case such survival period will be extended as it relates to such related claims
until the related claim for indemnification has been satisfied or otherwise
resolved as provided in Section 15. This Section shall not limit in any way the
survival and enforceability of any covenant or agreement of the parties hereto
which by its terms contemplates performance after the Closing Date, the Second
Closing Date or the Option Closing Date, as the case may be, which shall survive
for the respective periods set forth herein. Notwithstanding the foregoing, the
representations and warranties contained in Section 8A (xxv) shall survive until
the seventh (7th) anniversary of (i) the Closing Date with respect to the
Contributed Entities relating to the Properties; (ii) the Second Closing Date
with respect to the Contributed Entity relating to Waterfront II; and the Option
Closing Date with respect to the Contributed Entities relating to One City
Centre and Three City Centre.
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F. Contributor shall provide to Acquiror and its auditors (i)
during the Inspection Period and following the Closing, the Second Closing or
the Option Closing, as the case may be, access at all reasonable times to all
financial and other information relating to the Properties and Additional
Properties necessary for Acquiror and its auditors to prepare audited, and if
necessary, pro forma, financial statements in conformity with Regulations S-X of
the SEC or other materials required for any registration statement, report or
other disclosure to be filed with the SEC or necessary to comply with any SEC
rule or regulation, and (ii) at the Closing, the Second Closing or the Option
Closing, as the case may be, (or prior thereto if required by Acquiror's
auditors) an executed representations letter, in form and substance reasonably
satisfactory to Acquiror, as required by Generally Accepted Auditing Standards
as promulgated by the Auditing Standards Division of the American Institute of
Public Accountants, which representation is required to enable an independent
public accountant to render an opinion on such financial statements; provided,
however, that Acquiror shall pay for any actual reasonable costs incurred by
Contributor in connection with its obligations under this Section 8F. The
obligation of Contributor to provide such access and representation letter shall
survive the Closing, the Second Closing or the Option Closing, as the case may
be, for a period of eighteen (18) months.
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9. ACQUIROR'S INSPECTION OF THE PROPERTIES
A. Subject to the provisions of Section 9B, during the period
extending to and including the 60th day from the date of this Agreement (the
"Inspection Period"), Acquiror and Acquiror's employees, agents, engineers,
surveyors, consultants, appraisers, auditors and other representatives
(collectively, "Representatives") will, upon reasonable advance notice to and
approval from Contributor, be given the right to enter upon the Properties and
Additional Properties and perform nondestructive physical tests and to conduct
any and all necessary engineering, environmental and other surveys, tests and
inspections at the Properties and Additional Properties and to examine and
evaluate any books and records, agreements and documents within the possession
of Contributor or subject to its control (whether or not located at the
Properties or Additional Properties), as Acquiror or Acquiror's Representatives
may reasonably request. Subject to Section 8F, Contributor shall cooperate fully
with the inspections hereunder by Acquiror and its Representatives, and shall
furnish to Acquiror and its Representatives all such books, records, information
(financial or otherwise), data and agreements that Acquiror or Acquiror's
Representatives may reasonably request in connection with the investigations
hereunder, including but not limited to, copies of all leases, Services
Contracts, insurance policies, environmental reports, working drawings, plans
and specifications, surveys, appraisals, engineering and architect reports, real
estate tax bills and receipts, operating statements and related documents.
Acquiror shall have the right, at its sole cost and expense, to perform a Phase
One environmental assessment of each of the Properties and Additional
Properties. Upon Acquiror's receipt of any such Phase One assessment, it shall
promptly provide a copy thereof to Contributor (at no cost to Contributor). If
such Phase One assessment should recommend further inspections and testing at
the Properties or Additional Properties, Acquiror shall have the option, to be
exercised by written notice given to Contributor prior to the expiration of the
Inspection Period, to extend the Inspection Period for one (1) additional period
of thirty (30) days; any such further inspections or testings shall be conducted
at the sole cost and expense of Acquiror. Except as otherwise provided herein,
Acquiror's obligations under this Agreement shall be contingent, only during the
Inspection Period, upon Acquiror being satisfied in its sole discretion with the
results of its investigation and evaluation of the Properties or Additional
Properties (the "Inspection Condition"). If the Inspection Condition is not so
satisfied, Acquiror, prior to the expiration of the Inspection Period, in its
sole discretion, may deliver to Contributor a Termination Notice; provided that
if the Inspection Condition is not satisfied with respect to the results of any
environmental, survey or engineering investigation and evaluation, then, at
Acquiror's sole election (pursuant to and subject to the terms of Section 10),
rather than delivering to Contributor a Termination Notice, Acquiror may delete
and eliminate from this Agreement any or all of the Properties, or Additional
Properties, for which the results of such environmental, survey or engineering
investigation and evaluation does not meet Acquiror's satisfaction. If Acquiror
shall give the Termination Notice to Contributor prior to the expiration of the
Inspection Period, the Xxxxxxx Money shall be promptly returned to Acquiror and
all parties hereto shall be released from all further obligations and
liabilities hereunder, except with respect to the indemnity set forth in Section
9B. If Acquiror does not give the Termination Notice or the Property Deletion
Notice (as defined below) to Contributor prior to the expiration of the
Inspection Period, Acquiror shall be deemed to have waived the Inspection
Condition and Acquiror's right to terminate this Agreement or to delete and
eliminate properties, pursuant to and subject to the terms of this Section 9 and
Section 10, shall be deemed deleted from this Agreement and, subject to all
other conditions and provisions contained in this Agreement, the parties shall
proceed to Closing without any credit against or reduction of the Contribution
Consideration.
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B. Acquiror acknowledges and agrees that all physical damage
resulting from any test, survey inspection and/or examination done by Acquiror
or its Representatives at any of the Properties or Additional Properties shall
be repaired by Acquiror at its sole cost and expense. Acquiror shall hold
Contributor harmless and indemnify Contributor for any Losses (as defined below)
resulting from Acquiror's inspection of the Properties or Additional Properties
described in Section 9A and which would not have been incurred but for the acts
or omissions of Acquiror or its Representatives, provided that if any claim
relating thereto is asserted against Contributor, Contributor shall promptly
give written notice thereof to Acquiror and allow Acquiror a reasonable
opportunity to defend same, and provided further that Acquiror shall have no
liability to Contributor for any Losses for which Contributor receives proceeds
from its existing insurance, and Contributor waives any right of recovery
against Acquiror for the amount of such insurance proceeds (it being agreed that
Contributor shall have no obligation to make a claim with its insurance carrier
as a condition to proceeding against Acquiror).
10. DELETION OF PROPERTIES
A. Deletion of Properties. If Acquiror does not exercise its
unilateral right to deliver a Termination Notice pursuant to Sections 5C, 7, or
9, Acquiror may nevertheless elect to proceed with the acquisition of less than
all of the Properties or the Additional Properties, and to delete and eliminate
from this Agreement those certain Properties (or Additional Properties) that
Acquiror, in its sole discretion (but subject to the limitations set forth in
this Agreement with respect to acceptable reasons for Acquiror to so delete a
Property or Additional Property), elects not to acquire (the "Deleted
Properties"), pursuant to the delivery to Contributor, not later than fifteen
(15) days prior to the Closing Date (unless otherwise provided for in this
Agreement), of written notice describing the Deleted Properties and the reasons
for such deletion (the "Property Deletion Notice"), under which Acquiror may
exercise the foregoing partial termination option and designate those specific
Properties (or Additional Properties), that shall constitute Deleted Properties
under this Agreement. Upon the delivery by Purchaser of a Property Deletion
Notice, this Agreement shall, without further action of the parties, be deemed
to have been automatically and ipso facto amended to eliminate the Deleted
Properties herefrom. Upon such amendment of this Agreement, (a) all references
to the Properties or Additional Properties, as the case may be, shall
automatically exclude the Deleted Properties and no obligations of Contributor
(or Acquiror's Conditions Precedent) set forth herein shall apply to the Deleted
Properties, (b) all references to Contributor and Owner shall automatically
exclude the Contributor(s) and Owner(s) appurtenant to the Deleted Properties
with respect to such Properties, (c) the Contribution Consideration or
Additional Consideration shall be reduced by the amount allocated to the Deleted
Properties and their related Management Contracts pursuant to Schedule 3B(i) and
Schedule 3B(ii), and (d) Acquiror shall promptly return to Contributor all
documents, records and studies relating to the Deleted Properties.
Notwithstanding the foregoing, no such amendment shall modify any indemnity or
other obligation of a party regarding the Deleted Properties which expressly
survives the deletion of the Property or Additional Property, or the termination
of this Agreement. In all events, however, Acquiror's rights under this Section
10A are expressly subject to the specific limitations imposed under Section 10B
below.
B. Maximum Deletion. In the aggregate with respect to Sections
5C and 9, Acquiror may deliver Property Deletion Notices pursuant to Section 10A
with respect to either (i) any single Property or Additional Property; or (ii)
one or more Deleted Properties which, in the aggregate, represent no more than
$15,000,000 of the total aggregate Contribution Consideration. In addition, in
connection with Section 7, Acquiror may deliver a Property Deletion Notice
pursuant to Section 10A with respect to any single Property or Additional
Property.
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11. SCHEDULES
Within five (5) business days after the date of this
Agreement, to the extent not previously delivered, Contributor shall furnish to
Acquiror:
(i) a true, correct and complete copy of each written
Service Contract and a true, correct and complete summary of each oral
Service Contract;
(ii) true, correct and complete copies of all of the
Leases;
(iii) a schedule of all insurance certificates owned by or
on behalf of Contributor with respect to the Properties and the
coverage amounts thereunder;
(iv) copies of all audited, where available, or unaudited
financial statements for 1995, 1996 and 1997, and all available
financial statements for 1998; and
(v) copies of the most recent survey of and title policy
or commitment for each of the Properties in the possession or control
of Contributor.
12. CONDITIONS PRECEDENT
A. Acquiror's obligation to acquire the Properties shall be
subject to and contingent upon the following conditions precedent with respect
to the Properties, any or all of which Acquiror may waive only by a notice
delivered in accordance with Section 16G:
(i) The willingness of the Title Insurer to issue to
Acquiror at the Closing the Title Policies in accordance with Section
5B(i), upon the sole condition of the payment of the applicable
premiums.
(ii) Contributor shall have obtained and delivered to
Acquiror original executed tenant estoppel certificates (the "Tenant
Estoppel Certificates") in substantially the form of Exhibit O attached
hereto, dated not more than thirty (30) days before Closing, and
executed by tenants under Leases leasing not less than eighty-five
percent (85%) of the total aggregate gross rental income for all of the
Properties, including, without limitation, those particular tenants of
the Properties listed in Exhibit P attached hereto ("Required Estoppel
Tenants"). Contributor shall use its reasonable, good faith and
diligent efforts to obtain the Tenant Estoppel Certificates from all
tenants under the Leases. With respect to tenants who have signed
Leases but not yet taken occupancy, the Tenant Estoppel Certificate
shall appropriately identify the full and complete Lease but will omit
certifications that are inappropriate.
(iii) The delivery of a notice of termination, on or
before the Closing Date, which notice is sufficient to terminate all of
the Service Contracts that Acquiror has a right to and has elected to
terminate by written notice given to Contributor prior to the
expiration of the Inspection Period.
(iv) The representations and warranties made by Xxxxxxx
X. Xxxxxxx in this
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Agreement shall be true and correct in all material respects on the
Closing Date as if made on the Closing Date.
(v) The delivery by Contributor of all documents
(executed by parties other than Acquiror, where required) required
under Section 6B(i).
(vi) The delivery by Contributor of all consents and
approvals as may be required to consummate the transactions
contemplated by this Agreement.
(vii) The delivery of all consents and approvals set forth
on Schedule 8A(iv) to this Agreement other than the XXX Consents.
(viii) Contributor not being otherwise in default of any of
its material obligations under this Agreement.
(ix) Contributor shall have delivered pay-off letters
with respect to the Existing Indebtedness (other than the Assumed
Indebtedness, if any).
(x) Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx shall have
delivered to Acquiror a net worth statement, in form and substance
reasonably satisfactory to Acquiror, stating a combined personal net
worth of at least $50,000,000.
Notwithstanding anything contained in Section 14B herein to
the contrary, if the condition precedent set forth in Section 12A(i) is not
satisfied or waived on or prior to the Closing Date, Acquiror shall only have
the rights and remedies set forth in Section 5C. Notwithstanding anything
contained in Section 14B herein to the contrary, if the condition precedent set
forth in Sections 12A(ii) is not satisfied or waived on or prior to the Closing
Date, Acquiror shall only have the right to terminate this Agreement upon
written notice to Contributor, and in which event Escrowee shall immediately
return the Xxxxxxx Money to Acquiror and this Agreement, without further action
of the parties, shall become null and void and neither party shall have any
further rights or obligations under this Agreement except with respect to the
Surviving Indemnities. If any of the conditions precedent set forth in Sections
12A(iii), (iv), (v), (vi), (vii), (viii), (ix) and (x) is not satisfied or
waived on or prior to the Closing Date, then Acquiror shall have the rights and
remedies provided in Section 14B.
B. Contributor's obligation to contribute and convey the
Properties shall be subject to and contingent upon the following conditions
precedent with respect to the Properties, any or all of which Contributor may
waive by a notice delivered in accordance with Section 16G:
(i) The representations and warranties made by Acquiror
in this Agreement shall be true and correct in all material respects on
the Closing Date as if made on the Closing Date.
(ii) The delivery by Acquiror of all documents (executed
by Acquiror, where required) required under Section 6B(ii).
(iii) Between the date of this Agreement and the Closing
Date, Acquiror and the REIT shall not have entered into a line of
business substantially different from its current business.
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`
(iv) Acquiror not being otherwise in default of any of
its material obligations under this Agreement.
(v) The delivery by Acquiror of all consents and
approvals as may be required for Acquiror to consummate the
transactions contemplated by this Agreement.
If any of the conditions precedent set forth in Section 12B is
not satisfied or waived on or prior to the Closing Date, then Contributor shall
have the rights and remedies provided in Section 14A.
C. Acquiror's obligation to acquire the Additional Properties
shall be subject to and contingent upon the following conditions precedent at
the Second Closing or the Option Closing, as the case may be, with respect to
the applicable Additional Property, any or all of which Acquiror may waive only
by a notice delivered in accordance with Section 16G:
(i) The willingness of the Title Insurer to issue to
Acquiror at the Second Closing or the Option Closing, as the case may
be, the Title Policies in accordance with Section 5B(i), upon the sole
condition of the payment of the applicable premiums.
(ii) With respect to Waterfront II, Contributor shall
have obtained and delivered to Acquiror an original executed Tenant
Estoppel Certificate, dated not more than thirty (30) days before the
Second Closing, and executed by Graphic Controls Corporation, the sole
tenant under the Lease related to Waterfront II. Such Tenant Estoppel
Certificate shall appropriately identify the full and complete Lease
but will omit certifications that are inappropriate. With respect to
One City Centre and Three City Centre (if Acquiror has delivered the
Additional Property Notice), Contributor shall have obtained and
delivered to Acquiror original executed Tenant Estoppel Certificates in
substantially the form of Exhibit O attached hereto, dated not more
than thirty (30) days before the Option Closing, and executed by
tenants under Leases leasing not less than eighty-five percent (85%) of
the total aggregate gross rental income for all of each such property,
including, without limitation, the Required Estoppel Tenants listed in
Exhibit P attached hereto with respect to One City Centre and Three
City Centre. Contributor shall use its reasonable, good faith and
diligent efforts to obtain the Tenant Estoppel Certificates from all
tenants under the Leases with respect to the Additional Properties.
With respect to tenants who have signed Leases but not yet taken
occupancy, the Tenant Estoppel Certificate shall appropriately identify
the full and complete Lease but will omit certifications that are
inappropriate.
(iii) The delivery of a notice of termination, on or
before the Second Closing Date or the Option Closing, as the case may
be, which notice is sufficient to terminate all of the Service
Contracts with respect to Additional Properties that Acquiror has a
right to and has elected to terminate by written notice given to
Contributor.
(iv) The representations and warranties made by Xxxxxxx
X. Xxxxxxx in this Agreement (as they relate to the transactions to be
consummated at the Second Closing or the Option Closing, as the case
may be) shall be true and correct in all material respects on the
Second Closing Date or the Option Closing, as the case may be, as if
made on the Second Closing Date or the Option Closing, as the case may
be.
(v) The delivery by Contributor of all documents
(executed by parties other than Acquiror, where required) required
under Section 6D(i).
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(vi) The delivery by Contributor of all consents and
approvals as may be required to consummate the transactions
contemplated by this Agreement with respect to the Second Closing or
the Option Closing, as the case may be.
(vii) The delivery of all consents and approvals set forth
on Schedule 8A(iv) to this Agreement other than the XXX Consents with
respect to Additional Properties.
(viii) Contributor not being otherwise in default of any of
its material obligations under this Agreement.
(ix) Contributor shall have delivered pay-off letters
with respect to the Waterfront II Indebtedness, the One City Centre
Indebtedness and the Three City Centre Indebtedness.
(x) With respect to Waterfront II, Graphic Controls
Corporation has taken possession of Waterfront II and Contributor has
obtained a permanent certificate of occupancy for the space covered by,
and the use contemplated by, the related Lease.
(xi) Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx shall have
delivered to Acquiror a net worth statement, in form and substance
reasonably satisfactory to Acquiror, stating a combined personal net
worth of at least $9,000,000 plus the amount of all timely claims for
indemnification made by Acquiror; provided, however, that in no event
will such statement be required to state a combined personal net worth
exceeding $50,000,000.
Notwithstanding anything contained in Sections 14D or 14F
herein to the contrary, if any of the conditions precedent set forth in Sections
12C(i) or (ii) is not satisfied or waived on or prior to the Second Closing Date
or the Option Closing, as the case may be, Acquiror shall only have the right to
terminate this Agreement with respect to the applicable Additional Properties
upon written notice to Contributor, and this Agreement, without further action
of the parties, shall become null and void with respect to such Additional
Properties and neither party shall have any further rights or obligations under
this Agreement with respect to Additional Properties except with respect to the
Surviving Indemnities. If any of the conditions precedent set forth in Xxxxxxx
00X (xxx), (xx), (x), (xx), (xxx), (xxxx), (xx), (x) and (xi) is not satisfied
or waived on or prior to the Second Closing Date or the Option Closing, as the
case may be, then Acquiror shall have the rights and remedies provided in
Section 14D.
D. Contributor's obligation to contribute and convey
Additional Properties shall be subject to and contingent upon the following
conditions precedent with respect to Additional Properties, any or all of which
Contributor may waive by a notice delivered in accordance with Section 16G:
(i) The representations and warranties made by Acquiror
in this Agreement shall be true and correct in all material respects on
the Second Closing Date or the Option Closing Date, as the case may be,
as if made on the Second Closing Date or the Option Closing Date, as
the case may be.
(ii) The delivery by Acquiror of all documents (executed
by Acquiror, where required) required under Section 6D(ii).
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(iii) Acquiror not being otherwise in default of any of
its material obligations under this Agreement.
(iv) The delivery by Acquiror of all consents and
approvals as may be required for Acquiror to consummate the
transactions contemplated by this Agreement with respect to the Second
Closing or the Option Closing, as the case may be.
If any of the conditions precedent set forth in Section 12D is
not satisfied or waived on or prior to the Second Closing Date or the Option
Closing, as the case may be, then Contributor shall have the rights and remedies
provided in Section 14C.
13. BROKERAGE
Contributor and Acquiror represent and warrant to each other
that neither they nor their affiliates have dealt with any broker, finder or the
like in connection with the transaction contemplated by this Agreement. Acquiror
and Contributor each agrees to indemnify, defend and hold the other harmless
from and against all loss, expense (including reasonable attorneys' fees and
court costs), damage and liability resulting from the claims of any other broker
or finder (or anyone claiming to be a broker or finder) on account of any
services claimed to have been rendered to the indemnifying party in connection
with the transaction contemplated by this Agreement.
14. DEFAULT AND REMEDIES
A. If, prior to the Closing, Acquiror is in default with
respect to, or breaches, or fails to perform one or more of the representations,
warranties, covenants or other terms of this Agreement, and such default, breach
or failure is not cured or remedied within five (5) business days prior to the
Closing Date, or otherwise waived by Contributor, Contributor may terminate this
Agreement and, as its sole remedy, receive the Xxxxxxx Money from the Escrowee,
as liquidated damages, in which event this Agreement shall be deemed null and
void and the parties shall be released from all further obligations and
liabilities under this Agreement, except with respect to the Surviving
Indemnities. It is recognized by Contributor and Acquiror that the damages
Contributor will sustain by reason of Acquiror's default, breach or failure will
be substantial, but difficult, if not impossible, to ascertain. The Xxxxxxx
Money has been determined by the parties as a reasonable sum for damages and is
intended not as a penalty, but as full liquidated damages.
B. If, prior to the Closing, Contributor is in default with
respect to, or breaches, or fails to perform one or more of the representations,
covenants, warranties or other terms of this Agreement, and such default, breach
or failure is not cured or remedied within five (5) business days prior to the
Closing Date, or otherwise waived by Acquiror, Acquiror as its sole remedy may
either (a) terminate this Agreement, in which event the Xxxxxxx Money shall be
returned by the Escrowee to Acquiror and Contributor shall reimburse Acquiror
for its reasonable out-of-pocket expenses incurred by Acquiror pursuant to this
Agreement and, upon such return and reimbursement, the parties shall be released
from all further obligations and liabilities under this Agreement, except with
respect to the Surviving Indemnities, or (b) xxx for specific performance. If
Acquiror elects the remedy set forth in (a) above, Contributor shall reimburse
Acquiror for such expenses within fifteen (15) days after Contributor's receipt
of written notice from Acquiror accompanied by copies of invoices detailing such
expenses or such other documentation that reasonably substantiates such
expenses; provided, however, that in no event shall Contributor be required to
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reimburse Acquiror for any such expenses in excess of (i) if prior to the end of
the Inspection Period, $500,000; and (ii) if after the Inspection Period,
$1,000,000.
C. If, after the Closing has occurred, but prior to the Second
Closing, Acquiror is in default with respect to, or breaches, or fails to
perform one or more of the representations, warranties, covenants or other terms
of this Agreement related to Waterfront II, and such default, breach or failure
is not cured or remedied within five (5) business days prior to the Second
Closing Date or otherwise waived by Contributor, Contributor may terminate this
Agreement with respect to Waterfront II and, as its sole remedy, receive
$100,000 from Acquiror, as liquidated damages, and, upon such payment, the
parties shall be released from all further obligations and liabilities under
this Agreement with respect to Waterfront II, except with respect to the
Surviving Indemnities. It is recognized by Contributor and Acquiror that the
damages Contributor will sustain by reason of Acquiror's default, breach or
failure will be substantial, but difficult, if not impossible, to ascertain. The
payment stated above has been determined by the parties as a reasonable sum for
damages and is intended not as a penalty, but as full liquidated damages.
D. If, after the Closing has occurred, but prior to the Second
Closing, Contributor is in default with respect to, or breaches, or fails to
perform one or more of the representations, covenants, warranties or other terms
of this Agreement related to Waterfront II, and such default, breach or failure
is not cured or remedied within five (5) business days prior to the Second
Closing Date or otherwise waived by Acquiror, Acquiror as its sole remedy may
either (a) terminate this Agreement with respect to Waterfront II, in which
event Contributor shall pay Acquiror $100,000 and, upon such payment, the
parties shall be released from all further obligations and liabilities under
this Agreement with respect to Waterfront II, except with respect to the
Surviving Indemnities, or (b) xxx for specific performance. If Acquiror elects
the remedy set forth in (a) above, Contributor shall make such payment within
fifteen (15) days after Contributor's receipt of written notice from Acquiror.
It is recognized by Contributor and Acquiror that the damages Acquiror will
sustain by reason of Contributor's default, breach or failure will be
substantial, but difficult, if not impossible, to ascertain. The payment stated
above has been determined by the parties as a reasonable sum for damages and is
intended not as a penalty, but as full liquidated damages. It is understood and
agreed that if, due to no fault of Contributor, Graphic Controls Corporation
terminates its Lease, then notwithstanding the provisions of this Section 14D,
Acquiror shall not be entitled to receive liquidated damages from Contributor.
E. If, after the Closing has occurred, but prior to the Option
Closing, Acquiror is in default with respect to, or breaches, or fails to
perform one or more of the representations, warranties, covenants or other terms
of this Agreement related to One City Centre and Three City Centre, and such
default, breach or failure is not cured or remedied within five (5) business
days prior to the Option Closing Date or otherwise waived by Contributor,
Contributor may terminate this Agreement with respect to One City Centre and
Three City Centre and, as its sole remedy, receive $100,000 from Acquiror, as
liquidated damages, and, upon such payment, the parties shall be released from
all further obligations and liabilities under this Agreement with respect to One
City Centre and Three City Centre, except with respect to the Surviving
Indemnities. It is recognized by Contributor and Acquiror that the damages
Contributor will sustain by reason of Acquiror's default, breach or failure will
be substantial, but difficult, if not impossible, to ascertain. The payment
stated above has been determined by the parties as a reasonable sum for damages
and is intended not as a penalty, but as full liquidated damages.
F. If, after the Closing has occurred, but prior to the Option
Closing, Contributor is in default with respect to, or breaches, or fails to
perform one or more of the representations, covenants, warranties or other terms
of this Agreement related to One City Centre and Three City Centre, and such
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default, breach or failure is not cured or remedied within five (5) business
days prior to the Option Closing Date or otherwise waived by Acquiror, Acquiror
as its sole remedy may either (a) terminate this Agreement with respect to One
City Centre and Three City Centre, in which event Contributor shall pay Acquiror
$100,000 and, upon such payment, the parties shall be released from all further
obligations and liabilities under this Agreement with respect to One City Centre
and Three City Centre, except with respect to the Surviving Indemnities, or (b)
xxx for specific performance. If Acquiror elects the remedy set forth in (a)
above, Contributor shall make such payment within fifteen (15) days after
Contributor's receipt of written notice from Acquiror. It is recognized by
Contributor and Acquiror that the damages Acquiror will sustain by reason of
Contributor's default, breach or failure will be substantial, but difficult, if
not impossible, to ascertain. The payment stated above has been determined by
the parties as a reasonable sum for damages and is intended not as a penalty,
but as full liquidated damages.
15. INDEMNIFICATION
A. Indemnification by Contributor. Subject to Section 15D of
this Agreement, after Closing (with respect to the Properties), the Second
Closing (with respect to Waterfront II), or the Option Closing (with respect to
One City Centre and Three City Centre), Xxxxxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxxxx, jointly and severally, agree to indemnify Acquiror and its respective
shareholders, directors, employees, agents, partners and affiliates in respect
of, and hold each of them harmless from and against, any and all losses,
liabilities (including punitive or exemplary damages, fines or penalties and
interest thereon), expenses (including reasonable fees and disbursements of
counsel and expenses of investigation and defense), claims or other obligations
of any value whatsoever (collectively, "Losses") suffered, incurred or sustained
by any of them or to which any of them becomes subject, resulting from, arising
out of or relating to (i) any breach of or inaccuracy in any representation or
warranty of Xxxxxxx X. Xxxxxxx or any other Contributor contained in this
Agreement, or failure to perform or breach of any covenant or agreement on the
part of any Contributor contained in this Agreement, (ii) any dispute set forth
in Schedule 8A(x) attached to this Agreement, and (iii) any matters disclosed on
Schedules 8A(vi), (xvii), and (xxii)(1) attached to this Agreement in respect of
Waterfront II.
B. Indemnification by Acquiror. Subject to Section 15D of this
Agreement, after Closing, Acquiror agrees to indemnify the Contributor and its
partners, members, officers, directors, employees, agents and affiliates in
respect of, and hold each of them harmless from and against, any and all Losses
suffered, incurred or sustained by any of them or to which any of them becomes
subject, resulting from, arising out of or relating to any breach of or
inaccuracy in any representation or warranty, or failure to perform or breach of
any covenant or agreement on the part of Acquiror contained in this Agreement.
C. Method of Asserting Claims. All claims for indemnification
by any Indemnified Party under this Section 15 will be asserted and resolved as
follows:
(i) If any claim or demand in respect of which an
Indemnified Party might seek indemnity under this Section 15 is
asserted against or sought to be collected from such Indemnified Party
by a person or entity other than Contributor, Acquiror or any Affiliate
of the Contributor or Acquiror (a "Third Party Claim"), the Indemnified
Party shall deliver a Claim Notice (as defined below) with reasonable
promptness to the Indemnifying Party. If the Indemnified Party fails to
provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the
Indemnifying Party will not be obligated to indemnify the Indemnified
Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced
by such failure of the Indemnified Party.
64
The Indemnifying Party will notify the Indemnified Party as soon as
practicable within the Dispute Period (as defined below) whether the
Indemnifying Party disputes its liability to the Indemnified Party
under this Section 15 and whether the Indemnifying Party desires, at
its sole cost and expense, to defend the Indemnified Party against such
Third Party Claim.
(a) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Indemnified Party
with respect to the Third Party Claim pursuant to this Section
15C(i), then the Indemnifying Party will have the right to
defend, with counsel reasonably satisfactory to the
Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously and
diligently prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides
for any relief other than the payment of monetary damages or
that provides for the payment of monetary damages as to which
the Indemnified Party will not be indemnified in full pursuant
to this Section 15). The Indemnifying Party will have full
control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that the
Indemnified Party, at the sole cost and expense of the
Indemnified Party, at any time prior to the Indemnifying
Party's delivery of the notice referred to in the first
sentence of this clause (a), may file any motion, answer or
other pleadings or take any other action that the Indemnified
Party reasonably believes to be necessary or appropriate to
protect its interests; and provided further, that if requested
by the Indemnifying Party, the Indemnified Party, at the sole
cost and expense of the Indemnifying Party, will provide
reasonable cooperation to the Indemnifying Party in contesting
any Third Party Claim that the Indemnifying Party elects to
contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this clause
(a), and except as provided in the preceding sentence, the
Indemnified Party will bear its own costs and expenses with
respect to such participation. Notwithstanding the foregoing,
the Indemnified Party may take over the control of the defense
or settlement of a Third Party Claim at any time if it
irrevocably waives its right to indemnity under this Section
15 with respect to such Third Party Claim.
(b) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party Claim
pursuant to Section 15C(i), or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently
or settle the Third Party Claim, or if the Indemnifying Party
fails to give any notice whatsoever within the Dispute Period,
then the Indemnified Party will have the right to defend, at
the sole cost and expense of the Indemnifying Party, the Third
Party Claim by all appropriate proceedings, which proceedings
will be prosecuted by the Indemnified Party in a reasonable
manner and in good faith or will be settled at the discretion
of the Indemnified Party (with the consent of the Indemnifying
Party, which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof;
provided, however, that if requested by the Indemnified Party,
the Indemnifying Party will, at the sole cost and expense of
the Indemnifying Party, provide reasonable cooperation to the
Indemnified Party and its counsel in contesting any Third
Party Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this
65
clause (b), if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the
Indemnifying Party disputes its liability hereunder to the
Indemnified Party with respect to such Third Party Claim and
if such dispute is resolved in favor of the Indemnifying Party
in the manner provided in clause (c) below, the Indemnifying
Party will not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this clause (b) or
of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party will
reimburse the Indemnifying Party in full for all reasonable
costs and expenses incurred by the Indemnifying Party in
connection with such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to this clause
(b), and the Indemnifying Party will bear its own costs and
expenses with respect to such participation.
(c) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability to
the Indemnified Party with respect to the Third Party Claim
under this Section 15 or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party
disputes its liability to the Indemnified Party with respect
to such Third Party Claim, the Loss in the amount specified in
the Claim Notice will be conclusively deemed a liability of
the Indemnifying Party under this Section 15 and the
Indemnifying Party shall pay the amount of such Loss to the
Indemnified Party on demand. If the Indemnifying Party has
timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in
good faith to negotiate a resolution of such dispute, and if
not resolved through negotiations within the Resolution
Period, such dispute shall be resolved by arbitration in
accordance with paragraph (iii) of this Section 15C.
(ii) If any Indemnified Party should have a claim under
this Section 15C against any Indemnifying Party that does not involve a
Third Party Claim, the Indemnified Party shall deliver an Indemnity
Notice (as defined below) with reasonable promptness to the
Indemnifying Party. The failure by any Indemnified Party to give the
Indemnity Notice shall not impair such party's rights hereunder except
to the extent that an Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such
Indemnity Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the claim
described in such Indemnity Notice, the Loss in the amount specified in
the Indemnity Notice will be conclusively deemed a liability of the
Indemnifying Party under this Section 15 and the Indemnifying Party
shall pay the amount of such Loss to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its liability with
respect to such claim, the Indemnifying Party and the Indemnified Party
will proceed in good faith to negotiate a resolution of such dispute,
and if not resolved through negotiations within the Resolution Period,
such dispute shall be resolved by arbitration in accordance with
paragraph (iii) of this Section 15C.
(iii) Any dispute submitted to arbitration pursuant to
this Section 15C shall be finally and conclusively determined by the
decision of a board of arbitration consisting of three (3) members
(hereinafter sometimes called the "Board of Arbitration") selected as
hereinafter provided. Each of the Indemnified Party and the
Indemnifying Party shall select one (1) member and the third member
shall be selected by mutual agreement of the other members, or if the
other members fail to reach agreement on a third member within twenty
(20) days after their selection, such third member shall thereafter be
selected by the American Arbitration Association upon application made
to it for
66
such purpose by the Indemnified Party. The Board of Arbitration shall
meet in New York City, New York or such other place as a majority of
the members of the Board of Arbitration determines more appropriate,
and shall reach and render a decision in writing (concurred in by a
majority of the members of the Board of Arbitration) with respect to
the amount, if any, which the Indemnifying Party is required to pay to
the Indemnified Party in respect of a claim filed by the Indemnified
Party. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow such rules and procedures as a
majority of the members of the Board of Arbitration deems necessary or
appropriate. To the extent practical, decisions of the Board of
Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board
of Arbitration shall cause its written decision to be delivered to the
Indemnified Party and the Indemnifying Party. Any decision made by the
Board of Arbitration (either prior to or after the expiration of such
thirty (30) calendar day period) shall be final, binding and conclusive
on the Indemnified Party and the Indemnifying Party and entitled to be
enforced to the fullest extent permitted by law and entered in any
court of competent jurisdiction. Each party to any arbitration shall
bear its own expense in relation thereto, including but not limited to
such party's attorneys' fees, if any, and the expenses and fees of the
member of the Board of Arbitration appointed by such party, provided,
however, that the expenses and fees of the third member of the Board of
Arbitration and any other expenses of the Board of Arbitration not
capable of being attributed to any one member shall be borne in equal
parts by the Indemnifying Party and the Indemnified Party.
For purposes of this Section 15, the following terms shall have the meanings
ascribed to them below:
(1) "Claim Notice" shall mean written notification of a Third
Party Claim, pursuant to Section 15C(i), as to which indemnity under Section 15
is sought by an Indemnified Party, enclosing a copy of all papers served, if
any; and specifying the nature of and basis for such Third Party Claim and for
the Indemnified Party's claim against the Indemnifying Party under Section 15,
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such Third Party Claim.
(2) "Dispute Period" shall mean the period ending thirty (30)
calendar days following receipt by an Indemnifying Party of either a Claim
Notice or Indemnity Notice.
(3) "Indemnified Party" shall mean any person or entity
claiming indemnification under any provision of Section 15.
(4) "Indemnifying Party" shall mean any person or entity
providing indemnification under any provision of Section 15.
(5) "Indemnity Notice" shall mean written notification
pursuant to Section 15C(ii) of a claim for indemnity under Section 15 by an
Indemnified party, specifying the nature of and basis for such claim, together
with the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such claim.
D. Except as otherwise provided in this Agreement, (i) neither
Contributor, on the one hand, nor Acquiror and the REIT, on the other hand,
shall have the right to bring a claim against the other by virtue of any of the
representations or warranties set forth herein being false or misleading unless
(a) such claim is brought on or prior to the date through which such
representation or warranty survives, (b)
67
until notice of the false or misleading representation or warranty has been
given to the other party and such other party has had a reasonable period of
time to cure such false or misleading representation or warranty and (c) the
aggregate damages to the party bringing the claim for such false or misleading
representation or warranty are expected to exceed $750,000, but thereafter such
party may bring a claim against the other for the entire amount of its aggregate
damages not to exceed the Damages Cap (as defined below); and (ii) in no event
shall either Contributor, on the one hand, or Acquiror and the REIT, on the
other hand, have a liability to the other for any breach, inaccuracy,
incompleteness or non-fulfillment of any of the representations, warranties,
covenants or agreements set forth in this Agreement relating to such party in
excess of $50,000,000 in the aggregate (the "Damages Cap"). Notwithstanding the
foregoing, neither the limitation set forth in Section 15D(i)(c) nor the Damages
Cap shall apply to any liability arising from a breach of the representation and
warranty contained in Section 8A(xxv) and any such liability shall not be
aggregated with any other liabilities for the purpose of determining whether the
Damages Cap has been reached.
E. The indemnification provisions of this Section 15 shall,
notwithstanding anything contained herein to the contrary, be the sole and
exclusive remedy of Acquiror and Contributor, as against each other, with
respect to all matters or Losses arising under or relating to this Agreement,
including, without limitation, all Losses incurred under or relating to
Environmental Laws, under any form or theory of action whatsoever, whether in
contract, tort, statute or otherwise, including without limitation CERCLA and
comparable state and local statutes.
16. MISCELLANEOUS
A. Except as otherwise expressly set forth herein, this
Agreement shall not be cancelled or merged upon consummation of the Closing, the
Second Closing or the Option Closing, as the case may be. Each and every
representation and warranty of Contributor contained in this Agreement shall be
deemed to have been relied upon by Acquiror notwithstanding any investigation
Acquiror or its Representatives may have made with respect thereto or any
information developed by or made available to Acquiror prior to the Closing, the
Second Closing or the Option Closing, as the case may be. Each and every
representation and warranty of Acquiror and the REIT contained in this Agreement
shall be deemed to have been relied upon by Contributor notwithstanding any
investigation Contributor or its Representatives may have made with respect
thereto or any information developed by or made available to Contributor prior
to the Closing, the Second Closing or the Option Closing, as the case may be.
B. Neither this Agreement nor any interest hereunder shall be
assigned or transferred by Contributor. Acquiror may direct Contributor to
convey the Properties, Additional Properties or any part thereof to any party
designated by Acquiror, provided notice of such designation is given to
Contributor in writing at least ten (10) business days prior to Closing, the
Second Closing or the Option Closing, as the case may be, and that any such
designee is a directly or indirectly wholly-owned partnership subsidiary of
Acquiror or the REIT (a "Permitted Designee"). Subject to the foregoing, this
Agreement shall inure to the benefit of and shall be binding upon Contributor
and Acquiror and their respective successors and assigns.
C. This Agreement constitutes the entire agreement between
Contributor and Acquiror with respect to the Properties and Additional
Properties and shall not be modified or amended except in a written document
signed by Contributor and Acquiror. Any prior agreement or understanding between
Contributor and Acquiror concerning the Properties or Additional Properties is
hereby rendered null and void.
D. This Agreement constitutes an offer by Acquiror to
Contributor and shall not be
68
effective until executed by each of Acquiror and Contributor. The date of this
Agreement shall be the date on which Acquiror signs this Agreement as indicated
below the signature line for Acquiror.
E. In the computation of any period of time provided for in
this Agreement or by law, the day of the act or event from which the period of
time runs shall be excluded, and the last day of such period shall be included,
unless it is a Saturday, Sunday or legal holiday, in which case the period shall
be deemed to run until the end of the next day which is not a Saturday, Sunday
or legal holiday.
F. This Agreement shall be governed and interpreted in
accordance with the laws of the State of New York, without giving effect to the
conflicts of laws principles thereof.
G. All notices, requests, demands or other communications
required or permitted under this Agreement shall be in writing and delivered
personally (including delivery by overnight courier such as Federal Express) or
by certified mail, return receipt requested, postage prepaid or by facsimile
transmission to the fax number shown below and simultaneously mailed by
first-class mail of the United States Postal Service, addressed as follows:
1. If to Contributor:
Pioneer Development Company, LLC
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
With a copy to:
Pioneer Development Company, LLC
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
With a copy to:
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
2. If to Acquiror:
American Real Estate Investment Corporation
Plymouth Meeting Executive Campus
69
000 Xxxx Xxxxxxxxxx Pike, Suite 200
Plymouth Xxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
With a copy to:
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Xx., Esq.
Unless otherwise specified, notices shall be deemed given when received, but if
delivery is not accepted, on the earlier of the date delivery is refused or the
third day after the same is deposited with the United States Postal Service.
Either party hereto may change its address for receiving notices, requests,
demands or other communications by notice sent in accordance with the terms of
this Section 16G.
H. Contributor acknowledges that (i) the computation of
taxable income of Acquiror is crucial in the determination of the taxable income
of REIT, (ii) REIT needs to be able to prepare accurate estimates of its taxable
income in order to monitor compliance with the requirement that it distribute
95% of its taxable income to its shareholders, and (iii) the depreciation of the
Properties and Additional Properties and the required depreciation allocations
under Section 704(c) of the Code will materially impact the computation of
Acquiror's and REIT's taxable income. Accordingly, Contributor agrees that (i)
prior to the expiration of the Inspection Period, Contributor shall provide
Acquiror with tax basis computations and historical tax depreciation schedules
updated through December 31, 1997 for each Property and each Additional
Property; and (ii) prior to the expiration of the Inspection Period, Contributor
shall provide Acquiror with all data in their possession or control required to
perform depreciation allocations (as contemplated by Section 704(c) of the Code)
with respect to each Property, each Additional Property and each OP Unit
Recipient. Such data shall include the tax basis allocable to each OP Unit
Recipient for each Property and each Additional Property. In addition,
Contributor acknowledges that, if repayment of any of the Existing Indebtedness
other than Assumed Indebtedness triggers discharge of indebtedness income under
the Code (and particularly Section 61(a)(12) thereof), the Acquiror's
Partnership Agreement shall be amended to specially allocate all such income to
Contributor.
I. Except as otherwise required by law or the rules of any
applicable securities exchange or national market system, so long as this
Agreement is in effect, neither Acquiror nor Contributor will, and will not
permit any of their respective Representatives to, issue or cause the
publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other, which consent shall not be unreasonably withheld. Acquiror and
Contributor will cooperate with each other in the development and distribution
of all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the other
with drafts of any such releases and announcements as far in advance as
practicable.
J. This Agreement may be executed in any number of identical
counterparts, any or all of which may contain the signatures of fewer than all
of the parties but all of which shall be taken
70
together as a single instrument. Execution copies of this Agreement may also be
exchanged by facsimile, and facsimile signatures shall be treated as originals.
K. When the context so requires, the singular number shall
include the plural and the plural the singular, and the use of any gender shall
include all genders.
L. This Agreement may not be modified, discharged or changed
in any respect whatsoever, except by a further agreement in writing duly
executed by Contributor and Acquiror. However, any consent, waiver, approval or
authorization shall be effective if signed by the party granting or making such
consent, waiver, approval or authorization.
M. The invalidation or unenforceability in any particular
circumstance of any of the provisions of this Agreement shall in no way affect
any of the other provisions hereof, which shall remain in full force and effect.
N. The Properties and Additional Properties being acquired by
Acquiror pursuant to this Agreement shall be transferred and conveyed on an
"AS-IS" and "WHERE-IS" basis, and WITH ALL FAULTS, except as otherwise expressly
set forth in this Agreement or in any document delivered by Contributor at the
Closing, the Second Closing or the Option Closing, as the case may be. Except as
expressly set forth in this Agreement or in any document delivered by
Contributor at the Closing, the Second Closing or the Option Closing, as the
case may be, Contributor has not made any representation or warranty as to the
present or future physical condition, value, presence/absence of hazardous or
toxic materials, financing status, leasing, operations, use, tax status, income
and expense or any other matter pertaining to the Properties and Additional
Properties.
71
IN WITNESS WHEREOF, the parties have executed this Agreement
on the 30th day of April, 1998:
ACQUIROR:
AMERICAN REAL ESTATE INVESTMENT, L.P.,
a Delaware limited partnership
BY: American Real Estate Investment
Corporation, a Maryland
corporation, its sole general partner
By: /s/ Xxxxxxx X. Butte
---------------------------------------
Name: Xxxxxxx X. Butte
Title: Vice President
AMERICAN REAL ESTATE INVESTMENT CORPORATION,
a Maryland corporation
By: /s/ Xxxxxxx X. Butte
------------------------------------------------
Name: Xxxxxxx X. Butte
Title: Vice President
CONTRIBUTOR:
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
PIONEER PROPERTIES COMPANY OF CLINTON SQUARE,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
WATERFRONT ASSOCIATES,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
PIONEER INDIGO ONE COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
PIONEER FRANKLIN SQUARE COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
0000 XXXXX XXXXXX COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
PIONEER APOLLO DRIVE COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
PIONEER PARK ONE COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
PIONEER CLINTON STREET COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
PIONEER XXXXXXX COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
5010 CAMPUSWOOD COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
5015 CAMPUSWOOD COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
000 XXXX XXXXXXXX XXXXXXX,
x Xxx Xxxx general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
PIONEER DAYCARE COMPANY,
a New York general partnership
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
MANAGEMENT CONTRIBUTOR:
PIONEER MANAGEMENT SERVICES COMPANY, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
