Exhibit 10-2
EXECUTION COPY
Columbia Circle and Airline Drive
CONTRIBUTION AGREEMENT
between
AMERICAN REAL ESTATE INVESTMENT, L.P., ACQUIROR
and
THE OTHER PARTIES LISTED ON
THE SIGNATURE PAGES OF THIS AGREEMENT, CONTRIBUTOR
Dated as of February 4, 1998
THE PARTIES TO THIS AGREEMENT OTHER THAN ACQUIROR WILL BE DEEMED TO BE MAKING A
DECISION TO INVEST IN UNITS OF LIMITED PARTNERSHIP INTEREST IN ACQUIROR AND IN
THE SECURITIES FOR WHICH THOSE UNITS ARE EXCHANGEABLE. IN MAKING THAT INVESTMENT
DECISION, THOSE PERSONS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUERS OF
THOSE SECURITIES AND THE TERMS OF THE INVESTMENT, INCLUDING THE MERITS OF THE
INVESTMENT AND THE RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE,
THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISK OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and entered into
as of the 4th day of February, 1998, between AMERICAN REAL ESTATE INVESTMENT,
L.P., a Delaware limited partnership ("Acquiror"), and the parties reflected on
the signature pages hereto as "Contributor and other OP Unit Recipients" (such
entities are sometimes referred to in this Agreement, individually and
collectively, as the context requires, as "Contributor").
RECITALS
A. Contributor is the owner of certain fee and other interests in six
(6) buildings known as 1, 3, 9, 13, 15 and 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx,
and one (1) building known as 0 Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx (collectively,
the "Properties").
B. Contributor desires to contribute and convey to Acquiror all of its
interests relating to the Properties to Acquiror, and Acquiror desires to
acquire and accept same from Contributor, each upon and subject to the terms and
conditions of this Agreement.
C. Acquiror has entered into that certain Contribution Agreement, dated
the date hereof, with the other parties listed on the signature pages thereto,
with respect to three buildings known as 8, 21 and 00 Xxxxxxxxxxxx Xxxxxxxxxx
Xxxx (the "Northeastern Contribution Agreement").
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, Contributor agrees to contribute and convey to Acquiror and Acquiror
agrees to accept and assume, all of Contributor's right, title and interest
(whether now or hereafter existing) in and to all of the following described
properties (all of which is herein collectively referred to as the
"Properties"):
A. those certain parcels of real estate comprising
approximately __________________________________ (_____) acres, located in
[Albany] County, New York and more particularly described in Exhibit A attached
to this Agreement; together with all and singular the easements, covenants,
agreements, rights, tenements, hereditaments and appurtenances thereunto now or
hereafter belonging or appertaining (collectively, the "Land"):
B. 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 award made or to be made as a result of or
in lieu of condemnation affecting the Properties or any part thereof, and any
award for damage to the Properties or any part thereof by reason of casualty
(all of the foregoing being included within the term "Land");
C. 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, the six (6) buildings known as 1, 3, 9, 13, 15 and 00
Xxxxxxxx Xxxxxx ("Xxxxxxxx Properties") and one (1) building known as 0 Xxxxxxx
Xxxxx ("Airline Property"), 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");
D. 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 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;
E. 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 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, booklets, manuals
and promotional and advertising materials concerning the 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 or any part thereof;
F. 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 or any part thereof, including,
without limitation, claims, choses in action, lease and other contract rights,
names and telephone exchange numbers. A list of all material employment, union,
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 or any part thereof
(collectively, the "Service Contracts") is attached to this Agreement as Exhibit
C; and
G. Seller's interest, as fee and landlord, in all leases for
portions of the Properties. A summary of all current leases affecting the
Properties or any part thereof (collectively, the "Leases," with such summary
being referred to in this Agreement as the "Rent Roll"), including each tenant's
name, a description of the space leased, the amount of rent due and the amount
of security deposit paid, the term of each Lease, and a description of any right
to renew or extend, is attached to this Agreement as Exhibit D.
2. XXXXXXX MONEY
Within three (3) business days after the execution of this
Agreement by Contributor and Acquiror, Acquiror shall deliver to TitleServNY
located in New York, New York ("Escrowee") a check payable to Escrowee or wire
transferred federal funds in the amount of One Hundred Thousand and 00/100
Dollars ($100,000.00) (the "Xxxxxxx Money"). The Xxxxxxx Money, 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 (as defined below),
the Xxxxxxx Money shall be returned to Acquiror.
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3. CONTRIBUTION CONSIDERATION; OP UNITS; OTHER AGREEMENTS
A. General. Acquiror's sole general partner is American Real
Estate Investment Corporation, a Maryland corporation (the "REIT"). The REIT is
a real estate investment trust whose common stock is traded on the American
Stock Exchange (the "AMEX").
B. Contribution Consideration. The aggregate consideration to
be paid to Contributor by Acquiror for the Properties (the "Contribution
Consideration") shall consist of (a) that number (the "Total OP Unit Amount") of
OP Units (as defined below) having an aggregate value (based upon a market price
of $16.50 per share for the common stock of the REIT) of the sum of the amounts
described in clauses (i) and (ii) below (the "Total OP Unit Value"):
(i) For the Columbia Properties, (a) Thirty-Three
Million Six Hundred Fifty-Three Thousand One Hundred Ninety-Eight and
00/100 Dollars ($33,653,198.00); minus (b) the sum of all of the
indebtedness of Contributor relating to the Columbia Properties
(including unpaid principal and interest and any prepayment fees and
related charges), as of the Closing Date (as defined below), under
those certain mortgage loans more particularly described in Exhibit F
attached to this Agreement (the "Columbia Existing Indebtedness");
minus (c) any prorations described in Section 6C ("Prorations") and
credited, as of the Closing Date, to Acquiror; plus (d) any Prorations
credited, as of the Closing Date, to Contributor.
(ii) For the Airline Property, (a) Six Million Four
Hundred Ninety Thousand One Hundred Sixty One and 00/100 Dollars
($6,490,161.00), minus (b) the sum of all of the indebtedness of
Contributor relating to the Airline Property (including unpaid
principal and interest and any prepayment fees and related charges), as
of the Closing Date, under those certain mortgage loans more
particularly described in Exhibit F attached to this Agreement (the
"Airline Existing Indebtedness," and together with the Columbia
Existing Indebtedness, the "Existing Indebtedness"); minus (c) any
Prorations credited, as of the Closing Date, to Acquiror; plus (d) any
Prorations credited, as of the Closing Date, to Contributor.
(iii) Notwithstanding the foregoing clauses (i) and (ii),
the number of OP Units to be paid by Acquiror, without giving effect to
any adjustment for Prorations discussed in clauses (i)(c), (i)(d),
(ii)(c) and (ii)(d) above, shall not exceed 797,892 OP Units. If the
calculation of the Contribution Consideration in accordance with the
foregoing provisions would result in a fraction of an OP Unit being
delivered to Contributor, then such fraction shall be rounded to the
nearest whole number. The Properties are to be contributed to Acquiror
subject to the corresponding items of Existing Indebtedness, which will
either be assumed, refinanced or paid off by Acquiror immediately
following the Closing.
C. Issuance of OP Units. Units of limited partnership interest
in Acquiror (the "OP Units") shall be issued and delivered in the names of and
for distribution to those recipients set forth in Exhibit G attached hereto (the
"OP Unit Recipients"). After the first anniversary of the Closing the OP Units
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, 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 (together
with the OP Units issued pursuant to the Northeastern Contribution Agreement)
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
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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.
Acquiror agrees that it will use its commercially reasonable efforts to cause
the REIT to seek such stockholder approval, including presenting the issue, with
management's endorsement, to the REIT's, stockholders at the next annual or
special meeting of stockholders following the Closing, and to present the issue
at the next subsequent meeting if the necessary stockholder approval is not
obtained.
D. Transfer Restrictions. Each OP Unit Recipient, by his
execution and delivery of this Agreement, agrees that he may only sell,
transfer, assign, 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 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 (as defined below). The provisions of this paragraph shall survive the
Closing.
E. Lock-Up Period. Each OP Unit Recipient agrees that for a
period of twelve (12) months following the Closing (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), offer, sell, offer or contract to sell, transfer, assign, grant any
option for the sale of, pledge (without Acquiror's consent which will not be
unreasonably withheld, and except for pledges to those pledgees listed in
Schedule 3E) or encumber, or otherwise transfer, convey, or dispose of, any or
all of the OP Units delivered to the OP Unit Recipient at the Closing or the
Conversion Shares in respect thereof; provided that transfers may be made,
subject to the restrictions hereof and under the Partnership Agreement, 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 more than twenty-five
percent (25%) of the OP Units delivered to such OP Unit Recipient at the Closing
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 may be sold in each three-month
period thereafter (so that all OP Units and Conversion Shares may be sold after
the second (2nd) anniversary of the Closing Date). The term "Permitted
Transferee" with respect to any OP Unit Recipient shall mean any other OP Unit
Recipient or such recipient's spouse; a parent or lineal descendant (including
an adopted child) of a parent, or the 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; and 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; but only in each of the foregoing cases, 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 and by the obligations contained in the indemnification provisions
contained in Section 14 of this Agreement. The provisions of this paragraph
shall survive the Closing. Each OP Unit Recipient shall execute and deliver to
Acquiror at Closing a letter to the effect of the foregoing, in form and
substance reasonably satisfactory to Acquiror.
F. Right of First Refusal/First Offer on Sale of OP Units.
Each OP Unit Recipient agrees that Acquiror shall have a right of first refusal
and a right of first offer with respect to OP Units that
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such OP Unit Recipient seeks to sell, as provided in an agreement to be
delivered by each OP Unit Recipient at Closing substantially in the form of
Exhibit H attached hereto (the "OP Unit Recipient Agreement").
G. Right of First Refusal/First Offer on Sale of Future
Development at Airline Drive.
(i) From and after the Closing Date and continuing up to
and including the fifth (5th) anniversary thereof, Acquiror shall have
a continuing right of first refusal to purchase any building(s)
developed or acquired by Contributor and/or any of the OP Unit
Recipients (collectively, "Owner") after the date hereof and located at
Airline Drive, subject to Section 3G(iii) below, as follows: In the
event Owner receives a bona fide third party offer to purchase (whether
by transfer of fee simple interest, a ground lease, sale of an interest
in Owner, an installment sale, or otherwise) one or more buildings and
related land and facilities located at Airline Drive (the "First
Refusal Buildings"), and Owner desires to accept such offer, Owner
shall provide written notice to Acquiror within ten (10) days after
Owner's receipt of such offer, including a copy of the offer and
specifying the purchase price, terms of payment, identity of the First
Refusal Building(s) and other material terms and conditions of such
third party offer. Acquiror or its nominee shall be entitled for a
period of fifteen (15) days after the date of receipt of such notice of
a third party offer to exercise its right to purchase such First
Refusal Building(s) in accordance with the terms and conditions
specified in the offer as set forth in Owner's written notice to
Acquiror. Acquiror shall not have the right of first refusal for less
than all of the First Refusal Building(s) identified in a third party
offer for two or more of the First Refusal Building(s) unless such
third party offeror shall have alternative rights to purchase less than
all of the First Refusal Building(s) identified in the offer at prices
and pursuant to terms set forth in the offer, in which case, Acquiror's
right of first refusal shall correspond to the third party offeror's
alternative rights. Any elimination of First Refusal Buildings from the
original offer or addition of one or more First Refusal Buildings to
the original offer shall constitute a new offer for purposes of this
paragraph, for which Acquiror shall have the corresponding right of
first refusal, provided that the terms for such elimination or addition
were not part of the original offer submitted to Acquiror for right of
first refusal consideration. If Acquiror exercises its right to
purchase the interest offered for sale, Owner and Acquiror shall
consummate the purchase and sale within a period of ninety (90) days
after the date Acquiror provides written notice to Owner exercising its
right to purchase, unless such closing is delayed for reasons beyond
the reasonable control of the parties. In the event Acquiror fails to
exercise its right of first refusal as set forth in this paragraph,
Owner shall be free to sell the First Refusal Building(s) to such third
party offer pursuant to the terms and conditions of the offer;
provided, however, that in the event a binding contract of sale for
such First Refusal Building(s) is not executed between Owner and such
third party offeror within 180 days after the expiration of Acquiror's
fifteen-day right of first refusal period, or the purchase price is
reduced by 3% or more or the other terms and conditions of such third
party offer are modified in any other material respect, then Acquiror
shall again have its right of first refusal to acquire such First
Refusal Building(s) as set forth in this paragraph, and Owner and
Acquiror shall again comply with the requirements hereof. For purposes
of this paragraph, a bona fide third party offer shall include, without
limitation an executed letter of intent so long as such letter of
intent specifies the purchase price, terms of payment, identity of the
First Refusal Building(s) and other material terms and conditions.
(ii) From and after the Closing Date and continuing up to
and including the fifth (5th) anniversary thereof, Acquiror shall have
a continuing right of first offer to purchase any building(s) developed
or acquired by Owner after the date hereof and located at Airline
Drive, subject to Section 3G(iii) below, as follows: In the event Owner
desires to sell or seeks to sell
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(whether by transfer of fee simple interest, a ground lease, sale of
an interest in Owner, an installment sale, or otherwise) one or more
buildings and related land and facilities located at Airline Drive
(the "First Offer Buildings"), Owner shall provide written notice to
Acquiror specifying the purchase price, terms of payment, identity of
the First Offer Building(s) and other material terms and conditions of
the offer or sale (the "Sale Notice"). Acquiror or its nominee shall
have the option (the "Purchase Option"), to be exercised by written
notice given to Owner within thirty (30) days after Acquiror's receipt
of the Sale Notice (the "Exercise Period"), to purchase the First
Offer Buildings from Owner on the terms specified in the Sale Notice.
If Acquiror exercises its Purchase Option, Owner and Acquiror shall
consummate the purchase and sale within a period of ninety (90) days
after the date Acquiror provides written notice to Owner exercising
its right to purchase, unless such closing is delayed for reasons
beyond the reasonable control of the parties. In the event Acquiror
fails to exercise its Purchase Option as set forth in this paragraph,
Owner shall be free to sell the First Offer Building(s) to third
parties pursuant to the terms and conditions of the offer to Acquiror;
provided, however, that in the event a binding contract of sale for
such First Offer Building(s) is not executed between Owner and such
third party offeror within 180 days after the expiration of the
Exercise Period, or the purchase price is reduced by 3% or more or the
other terms and conditions of such third party offer are modified in
any other material respect, then Acquiror shall again have its right
of first offer to acquire such First Offer Building(s) as set forth in
this paragraph, and Owner and Acquiror shall again comply with the
requirements hereof. For purposes of this paragraph, a bona fide third
party offer shall include, without limitation an executed letter of
intent so long as such letter of intent specifies the purchase price,
terms of payment, identity of the First Offer Building(s) and other
material terms and conditions.
(iii) Notwithstanding the foregoing right of first refusal
and right of first offer, such rights shall not apply to First Refusal
Buildings or First Offer Buildings in instances where Owner either
receives bona fide offers from, or proposes to sell to, potential
purchasers or potential developers who would also be, or whose
affiliate would be, the tenant in the building(s) proposed to be built
on such land.
H. Tax Matters. 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 (other than through a
deed in lieu of foreclosure, a foreclosure action, or an act of eminent domain)
of any of the Properties. Thereafter, during the period expiring on the earlier
of (i) the seventh (7th) anniversary of the Closing Date, or (ii) the sale or
conversion by the OP Unit Recipients of OP Units representing in the aggregate
70% of all OP Units delivered to them at the Closing: in connection with the
sale of any or all of the Properties, Acquiror shall use commercially reasonable
efforts to enter into a transaction that will qualify for non-recognition of
gain under the Internal Revenue Code of 1986, as amended (the "Code"), whether
by means of an exchange contemplated under Code Sections 351, 354, 355, 368,
721, 1031, 1033 or otherwise. Notwithstanding the foregoing, in the event of
catastrophic damage to any or all of the Properties by an act of God (e.g.,
hurricane or tornado), Acquiror shall have the right to sell any or all of the
Properties affected thereby without regard to the foregoing. Pursuant to Section
5.4 of the Partnership Agreement, Acquiror shall elect to use the "traditional
method" set forth in Regulation Section 1.704-3(b) with respect to the
Properties.
I. Board Seat. Acquiror shall take all such actions necessary
to cause the nomination of Xxxxxxxxx Xxxxxx for election to the Board of
Directors of the REIT, with an initial term of not less than two (2) years nor
more than three (3) years, at the REIT's next annual or special meeting of the
REIT's stockholders, such nominee to take office effective upon such election.
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J. Allocation of Contribution Consideration. Prior to the
Closing and if requested by Acquiror, Acquiror and Contributor shall use
commercially reasonable efforts to agree in writing upon the allocation of the
Contribution Consideration among the Land, the Improvements and the tangible
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 or to effect the other purposes of this Agreement.
L. Notification if Representations and Warranties Untrue.
During the Inspection Period (as defined below), Acquiror 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.
4. OPERATION OF PROPERTIES THROUGH CLOSING
Through the Closing Date, Contributor shall:
A. Except as otherwise provided for in this Agreement, manage
and operate the Properties only in and shall not take any actions except in
accordance with Contributor'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.
B. Not extend or otherwise renew any Lease or Service Contract
without the prior written consent of Acquiror, which consent shall not be
unreasonably withheld.
C. Not cancel, modify or amend any Lease or Service Contact or
institute any rent increases without the prior written consent of Acquiror,
which consent shall not be unreasonably withheld.
D. Not enter into any new Lease or new Service Contract
without the prior written consent of Acquiror, which consent shall not be
unreasonably withheld.
E. Neither take any action nor omit to take any action that
would render or allow title to the Properties to be nonconforming to the
requirements of this Agreement.
F. Provide Acquiror, upon reasonable advance notice, with such
access to the Properties as is reasonably necessary for it to inspect same to
assure that Contributor is complying with the requirements of this Section 4.
G. 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.
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H. Not sell, lease, 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.
5. STATUS OF TITLE TO PROPERTIES
A. State of Title. Contributor shall convey the Properties to
Acquiror or Acquiror's designee subsidiary by bargain and sale deeds without
covenants against grantor's acts in recordable form (the "Deeds"), and title to
the Properties shall be free and clear of all liens and encumbrances and shall
be subject only to: (i) those covenants, conditions and restrictions of record
which are reviewed and approved by Acquiror within the Inspection Period, (ii)
rights of tenants under the Leases, as tenants only, (iii) general real estate
taxes for the year in which the Closing occurs and subsequent years, not yet
delinquent and (iv) those certain mortgages securing payment of the Existing
Indebtedness and more particularly described in Exhibit I attached to this
Agreement (the "Existing Mortgages") (the above enumerated exceptions being
hereinafter collectively referred to as the "Permitted Exceptions").
B. Preliminary Evidence of Title. As specified below,
Contributor shall furnish Acquiror with or Acquiror shall obtain at Acquiror's
expense the following documents to evidence the condition of Contributor's title
to the Properties:
(i) Acquiror shall obtain for each of the 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 designee and committing to insure title to the 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. The Title Commitment shall
show fee simple title to the Properties vested in Contributor. The
Owner's Title Insurance Policy to be issued to Acquiror at the Closing
pursuant to the corresponding Title Commitment shall be at regular
rates and 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 that do not
connect to the Properties from a public street, and such other
endorsements as counsel for Acquiror shall reasonably deem appropriate.
(ii) Within fifteen (15) days after the date of this
Agreement, Contributor shall furnish to Acquiror, at Acquiror's
expense, 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 are located for Uniform Commercial Code
Financing Statements, tax liens and the like in the name of
Contributor, the Properties and any other name or location reasonably
requested by Acquiror.
(iii) Acquiror shall obtain, at Acquiror's expense, a
current "as-built" plat of survey (the "Survey") for each of the
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 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-
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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, the Properties are not 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.
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 other than Permitted Exceptions or any other title or survey matter which
does not conform to the requirements of this Agreement, Acquiror shall so notify
Contributor and Contributor shall have fifteen (15) days after the date of
Contributor's receipt of such notice to have each such unpermitted exception to
title removed or to correct each such other matter, in each case to the
reasonable satisfaction of Acquiror. If within the time specified Contributor
fails to have each such unpermitted exception removed or to correct each such
other matter as aforesaid, Acquiror may, at its option, which option must be
selected by Acquiror within ten (10) days after the expiration of Contributor's
fifteen (15) day cure period described above, either (i) terminate this
Agreement upon written notice to Contributor and immediately receive from
Escrowee the Xxxxxxx Money, in which event this Agreement, without further
action of the partes, 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 Sections 12 and 15B (the "Surviving Indemnities")
or (ii) elect to accept title to the Properties as it then is with the right to
deduct from the Purchase Price a sum equal to the amount required to discharge
liens or encumbrances of a definite or ascertainable amount. If Acquiror fails
to make either such election, and elects not to pursue its other rights and
remedies as aforesaid, Acquiror shall be deemed to have elected option (i)
above.
6. CLOSING
A. Closing Date. The closing contemplated by this Agreement
(the "Closing") shall occur at the offices of Xxxxxx & Xxxxx, 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 earlier to occur of the fifteenth (15th) day after the
expiration of the Inspection Period and the fifth (5th) business day after all
conditions precedent to the respective obligations of the parties have been
satisfied or waived, (ii) such earlier date as the Acquiror may elect, provided
that reasonable prior notice is given to Contributor, or (iii) such other time
and at such other place as Contributor and Acquiror shall agree upon in writing,
and, in any event, will occur on the same day as the closing specified in the
Northeastern Contribution Agreement. The "Closing Date" shall be the date of the
Closing.
B. Closing Documents.
(i) Contributor. Not less than five (5) business days
prior to the Closing Date, Contributor shall deliver to Acquiror a copy
of each of the following items (the original of each to be executed if
necessary and delivered to Acquiror at the Closing):
(a) the Deeds, in form and substance reasonably
satisfactory to Acquiror, subject only to the Permitted
Exceptions, sufficient to transfer and convey to Acquiror or
Acquiror's designee fee simple title to the Properties as
required by this Agreement;
(b) a general warranty xxxx of sale, in form and
substance reasonably satisfactory to Acquiror, sufficient to
transfer to Acquiror or Acquiror's designee title to the
9
tangible Personal Property and containing appropriate
warranties of title and condition as required by this
Agreement;
(c) a letter advising tenants under the Leases of the
change in ownership of the Properties and directing them to
pay rent to Acquiror or as Acquiror may direct, in form and
substance reasonably satisfactory to Contributor;
(d) any and all affidavits, certificates or other
documents 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 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, in form and
substance reasonably satisfactory to Acquiror, of the Leases
(the "Assignment of Leases") (including an updated Rent Roll
certified by Contributor as of the Closing Date as being true,
accurate and complete and all security deposits thereunder),
and an assignment, in form and substance reasonably
satisfactory to Acquiror, of those Service Contracts that
Acquiror elects to assume (the "Assignment of Service
Contracts");
(f) all of the original Leases, 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;
(g) an assignment, in form and substance reasonably
satisfactory to Acquiror, pursuant to which Contributor
transfers all items of intangible personal property referred
to in Section 1F above;
(h) any existing bonds, warranties or guaranties
which are in any way applicable to the Properties or any part
thereof;
(i) a pay-off letter (the "Pay-Off Letter") issued by
the holder of each Existing Note (as defined below), setting
forth the amount of principal and interest outstanding on the
Closing Date, and the amount of any prepayment fees and other
related charges;
(j) to the extent not previously delivered to
Acquiror, copies of the most currently available tax bills for
the Properties;
(k) 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;
(l) 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
10
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;
(m) a certificate, dated the Closing Date and signed
by the general partner or managing member, as the case may be,
of each Contributor, certifying to Acquiror that the
representations and warranties of Contributor contained in
this Agreement are true and correct as of the Closing Date;
(n) notices to parties to Service Contracts that are
being assigned pursuant to the Assignment of Service Contracts
(the "Service Contracts Notices");
(o) a fully executed master lease for the Airline
Property in form and substance reasonably satisfactory to
Acquiror, if necessary; and
(p) 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. Not less than five (5) business days prior
to the Closing Date, Acquiror shall deliver to Contributor a copy of
each of the following items (the original of each to be executed if
necessary and delivered to Contributor at the Closing):
(a) the Assignment of Leases and the Assignment of
Service Contracts;
(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; and
(d) 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. Closing Prorations and Adjustments.
(i) A statement of prorations and adjustments shall be
prepared by Acquiror in conformity with the provisions of this
Agreement and submitted to Contributor for review not less than three
(3) business days prior to the Closing Date. For purposes of
prorations, Acquiror shall be deemed the owner of the Properties on the
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) as of the Closing Date:
(a) the full amount of the security and other
deposits paid under the Leases,
11
together with interest thereon if required by law or under
the Leases, shall be credited to Acquiror;
(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, in the event 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, in the event
final invoices are not available, based on the most currently
available billing information, and reprorated upon issuance of
final invoices;
(d) All real estate, personal property and ad valorem
taxes applicable to the Properties and levied with respect to
calendar year 1998 shall be prorated on an accrual basis, as
of the Closing Date, utilizing the actual final Tax Bills for
the Properties for 1997 (or 1998 if available) adjusted for
any announced changes in rates of taxation. Prior to or at
Closing, Contributor shall pay or have paid all Tax Bills that
are due and payable prior to or on the Closing Date and shall
furnish evidence of such payment to Acquiror and the Title
Company. Each party's respective obligations to reprorate real
estate taxes shall survive the Closing and shall not merge
into any instrument of conveyance delivered at Closing. The
taxes to be prorated (i.e., county, school, city) for each
Property and the billing and accrual schedule for each such
tax are set forth in Exhibit J;
(e) All assessments, general or special, shall be
prorated as of the Closing Date 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 and Acquiror shall be responsible for any
installments of assessments which are first due or payable on
or after the Closing Date;
(f) Commissions of leasing and rental agents for any
Lease entered into as of or prior to the Closing Date that are
due and payable at or prior to the Closing Date, whether with
respect to base lease term, future expansions, renewals, or
otherwise, shall be paid in full at or prior to Closing 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. At the time(s) of final calculation and collection
from tenants of Additional Rent for 1998, 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 and shall not merge into any instrument of
conveyance delivered at Closing. At the Closing, no
"Delinquent Rents" (rents or other charges which are due and
owing as of the Closing) shall be prorated in favor of the
Contributor. Notwithstanding the foregoing, Acquiror shall use
reasonable efforts after the Closing Date to collect any
Delinquent Rents due to the Contributor from tenants. Further,
after the Closing Date, the Contributor shall
12
continue to have the right, enforceable at its sole expense,
to pursue legal action against any tenant (and any
guarantors) who have defaulted, prior to the Closing Date,
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 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 (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 that the Contributor does not pay
or for which Acquiror does not receive a credit at Closing,
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 (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 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"). If a new lease
for any such Vacancy ("Vacancy Lease") is executed prior to
Closing and the terms of such Vacancy Lease have been approved
by Acquiror, then 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 (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 term that elapses prior
to Closing and Acquiror's proportionate share shall be based
on that portion of the Vacancy Lease's term that remains
unexpired as of the Closing Date. The Contributor shall pay
all Vacancy Lease Costs and Acquiror shall reimburse the
Contributor for its proportionate share of such Vacancy Lease
Costs by way of an adjustment in the Contribution
Consideration. In the event that this Agreement is terminated
prior to Closing, then Acquiror shall have no liability or
obligation with respect to any Vacancy Lease or any Vacancy
Lease Costs.
(i) 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 therefore
entitled to the income therefrom and responsible for the expenses
thereof, for the entire Closing Date. 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 shall be reprorated and finally adjusted within ninety (90)
days after the Closing Date; otherwise all prorations shall be final.
The provisions of the foregoing sentence shall survive the Closing.
D. Closing Costs. All transfer taxes, documentary stamps,
intangible taxes and similar taxes or charges and cure expenses 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. Each party
shall pay its own attorney's fees and all of its other expenses, except as
otherwise expressly set forth herein.
13
E. Possession. Upon consummation of the Closing, Contributor
shall deliver to Acquiror full and complete possession of the Properties,
subject only to the Permitted Exceptions.
7. CASUALTY, LOSS AND CONDEMNATION
If, prior to the Closing, the 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 One Hundred Thousand and 00/100
Dollars $100,000.00), Contributor shall immediately so notify Acquiror and
Acquiror shall have the option either to terminate this Agreement upon written
notice to Contributor 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 receive the condemnation proceeds or settle the
loss under all policies of insurance applicable to the destruction or damage 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 One Hundred Thousand and 00/100
Dollars $100,000.00 or less) to the Properties or any part thereof, Contributor
shall either repair such damage prior to the Closing or, at Acquiror's option,
assign 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 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.
8. REPRESENTATIONS AND WARRANTIES
A. Each Contributor represents and warrants, jointly and
severally, to Acquiror that the following are true, complete and correct as of
the date of this Agreement:
(i) Each Contributor is a general partnership or limited
liability company duly organized, validly existing and in good standing
under the laws of the state of its formation and has all requisite
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
Contributor 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 Properties, assets, business,
operations or condition (financial or otherwise) of such Contributor or
the ability of Contributor to perform its obligations under this
Agreement (a "Contributor Material Adverse Effect").
(ii) Contributor has full partnership or limited
liability company, as the case may be, power and authority and each OP
Unit Recipient has full legal right, capacity and power to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder. The execution, delivery and performance by Contributor of
this Agreement and the other documents to
14
be delivered by Contributor at Closing, and the consummation by
Contributor of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary partnership or
limited liability company, as the case may be, action on the part of
Contributor and no other proceedings on the part of Contributor,
including of its partners or members, as the case may be, are
necessary to authorize the execution, delivery and performance by
Contributor of this Agreement and the other documents to be delivered
by Contributor at Closing and the consummation by Contributor of the
transactions contemplated hereby and thereby. This Agreement has been
duly executed and delivered by Contributor and each OP Unit Recipient
and is a valid and binding obligation of Contributor and each OP Unit
Recipient, enforceable against Contributor and each OP Unit Recipient
in accordance with its terms.
(iii) Neither the execution and delivery of this Agreement
by Contributor nor the performance by Contributor or the OP Unit
Recipients of the transactions contemplated hereby will: (a) violate or
conflict with any of the provisions of the partnership agreement,
operating agreement or similar governing documents of Contributor; (b)
except as would not have a Contributor 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 (as defined below) in or upon
any of the Properties or assets of Contributor 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 Contributor
is a party or by which it or any of its assets may be bound or
affected; or (c) except as would not have a Contributor 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 Contributor, the Properties or assets of Contributor.
Other than those which have been obtained or made prior to the date
hereof, or as set forth in Schedule 8A(iii) 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, partner, shareholder, or tenant-in-common of Contributor, or
other party is necessary or required for the execution, delivery and
performance by 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 a Contributor Material Adverse Effect.
(iv) To the best of Contributor's knowledge, it is not
(a) in violation of its partnership agreement or operating agreement,
as the case may be, (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 (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 Contributor, the Properties or assets of
Contributor, 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 Contributor Material Adverse
Effect. To the best of Contributor'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, and (y) Contributor nor
any of the 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 Contributor or
15
its assets, the Properties, occupancy of the 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 a Contributor Material Adverse Effect.
(v) Contributor is or at Closing will be the sole owner
of, and has or will have good and marketable title to, the Properties
free and clear of all liens, encumbrances, pledges, claims, security
interests, demands, easements, covenants, conditions, restrictions and
encroachments of any kind or nature (collectively, "Liens") other than
Permitted Exceptions and liens that will be discharged or otherwise
provided for at or prior to the Closing. The Contributor has not
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 one or more of
the Permitted Exceptions. There are no development or other rights
associated with any Property which are not being transferred to
Acquiror under this Agreement or the documents contemplated by this
Agreement.
(vi) To the best of Contributor's knowledge, the
Improvements were constructed in a good, workmanlike and substantial
manner, and in conformity with all rules, regulations, laws and
ordinances applicable at the time of construction. Contributor has
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
all of the same are in good standing. To the best of Contributor's
knowledge, except as set forth in Schedule 8A(vi) attached to this
Agreement, the Improvements and the tangible Personal Property are free
from material defects; and the Properties and each part thereof have
adequate drainage and contain not less than the minimum number of
parking spaces required under applicable law. Except as set forth in
Schedule 8A(vi) attached to this Agreement, each of the Properties
abuts a public right-of-way, and the rights of ingress and egress with
respect thereto as they currently exist are not restricted or limited
in any manner.
(vii) All of Contributor's insurance policies are in full
force and effect and Contributor is not in default with respect to any
material provisions contained in any such policy. Neither Contributor,
nor to the best of Contributor's knowledge, any agent of Contributor,
has received from any insurer any notice with respect to any defects or
inadequacies affecting all or any part of the 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.
(viii) Except as set forth in Schedule 8A(viii) attached to
this Agreement, there is no judicial, municipal or administrative
action, suit, arbitration, proceeding or investigation pending or, to
the best of Contributor's knowledge, threatened against, relating to or
affecting Contributor, its assets, the 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 or by reason of the condition,
use of, or operations on, such Property. No attachments, execution
16
proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy or other similar proceedings are pending or, to the best of
Contributor's knowledge, threatened against Contributor or any of the
OP Unit Recipients.
(ix) Except as set forth in Schedule 8A(ix) attached to
this Agreement, Contributor has not received from any Governmental
Authority any written notice of zoning, building, fire, health code,
environmental or other violations of applicable laws, rules, ordinances
codes and regulations with respect to the Properties, or any part
thereof.
(x) The Service Contracts comprise every contract,
agreement, relationship and commitment, oral or written, other than the
Leases and the Existing Mortgages that affect the Properties or to
which Contributor 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, 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
Contributor nor, to the best of Contributor'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
Contributor (or its assignees or successors) without payment of any
penalty upon not more than thirty (30) days prior notice.
(xi) Contributor has no patents, trademarks, servicemarks
or trade names used in connection with the Properties, except for the
name "Columbia Circle". To the best of Contributor'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 Contributor's
knowledge, threatened against Contributor with respect to alleged
infringement of any patent, trademark, servicemark or trade name
related to the Properties.
(xii) Without limiting any other warranty or
representation of Contributor:
(a) there is no proceeding, plan, study or effort by
any governmental authority or agency pending, or to the best
of Contributor's knowledge, threatened, which in any way
affects or would affect the present use, improvements on, size
or zoning of any of the Properties (and Contributor has
received no notice from any governmental authority of any such
plan, study or effort), and there is no existing, or to the
best of Contributor's knowledge, proposed or contemplated plan
to widen, modify or realign any street or highway or any
existing, or to the best of Contributor's knowledge, proposed
or contemplated eminent domain proceedings that would affect
any of the Properties in any way whatsoever (and Contributor
has received no notice from any governmental authority of any
such existing, proposed or contemplated plan or proceedings);
(b) all laws, ordinances, codes, rules and
regulations of any Governmental and Regulatory Authority,
bearing on the construction, maintenance, repair or operation
of each of the Properties have been complied with by
Contributor at its sole cost, except the non-compliance with
which would not reasonably be expected to have a Material
Adverse Effect; and
(c) none of the Properties is located in any area
designated by any governmental authority or agency as being a
flood prone or flood risk area (whether
17
pursuant to the Flood Disaster Act of 1973, as amended, or
otherwise) and the requirements of the National Flood
Insurance Program are not applicable to the Properties or
any part thereof.
(xiii) Except as set forth in Schedule 8A(xiii) attached to
this Agreement, Contributor is not in default in respect of any of its
obligations or liabilities pertaining to the Properties (including,
without limitation, Contributor's obligations under any of the Leases),
and there is no state of facts or circumstances or condition or event
which, after notice or lapse of time, or both, would constitute or
result in any such default.
(xiv) 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. Contributor has
not received any notice of any material claim of any sort that
has been asserted by anyone adverse to the rights of
Contributor under any of the Leases, or affecting or
questioning the rights of Contributor of the continued
possession of the leased or subleased premises under any such
Lease. Except as set forth on the Rent Roll, each tenant is
legally required to pay all sums and perform all of its
obligations set forth in the Lease, without concessions,
abatements, offsets or other bases for relief or adjustment;
(b) Except as set forth on the Rent Roll, all
material obligations of the lessor under the Leases that
accrue to the date of Closing 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, or subject to proration
hereunder in all cases), and, to the best of Contributor's
knowledge, each tenant has unconditionally accepted lessor's
performance of such obligations. Except as set forth on the
Rent Roll, no tenant has asserted 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
Contributor has no 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, at any time, 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 that
Contributor provide that tenant with any reduction in the
tenant's monetary obligations under its Lease; (iii) no tenant
has requested that Contributor, in its capacity as landlord,
permit the tenant to sublease its leased premises, or assign
its Lease, or terminate its Lease on an accelerated basis;
(iv) Contributor has not "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) Contributor has not
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
18
charges imposed under its Lease;
(e) Except as set forth on the Rent Roll, Contributor
has not received any written notice from any tenant stating
that a petition in bankruptcy has been filed or is threatened
to be filed by or against it;
(f) Except with respect to security deposits, 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) Except as set forth in the Rent Roll, to the best
of Contributor'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
Contributor in connection with any Lease, including, but not
limited to, any exercised option(s) to expand or renew;
(i) Each security deposit set forth on the Rent Roll
shall be assigned to Acquiror at the Closing (or Acquiror
shall receive a credit therefor). Except as set forth on the
Rent Roll, (i) no tenant or any other party has asserted any
claim (other than for customary refund at the expiration of a
Lease) to all or any part of any security deposit and (ii)
Contributor has not applied any portion of any security
deposit to the payment of any sums due from any tenant under a
Lease;
(j) Contributor shall pay (or Acquiror shall receive
a credit therefor), and retains sole and exclusive
responsibility for, all expenses due on or before the Closing
Date connected with or arising out of the negotiation,
execution and delivery of the Leases, including, without
limitation, brokers' commissions (including those applicable,
if any, to future expansions or renewals by a tenant), leasing
fees and recording fees (as well as the cost of all tenant
improvements not required to be paid for by tenants);
(k) 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 any portion thereof, or any right of first
refusal to purchase any of the 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 a portion thereof. Except as set forth on the
Rent Roll, 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 that such tenant is currently occupying; and
(l) Except as set forth on the Rent Roll: (i) to the
best of Contributor's
19
knowledge, no tenant has sublet its leased premises; and
(ii) there are no outstanding requests from any tenant to
Contributor, 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.
(xv) Except as set forth in Schedule 8A(xv) attached to
this Agreement, the Properties have been fully valued and assessed for
property tax purposes. Except as set forth in Schedule 8A(xv) attached
to this Agreement, there are no general or special assessments
applicable to the Properties or any part thereof. The xxxx or bills
issued for the years 1994, 1995, 1996 and 1997, 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 (the "Tax Bills") (and to Contributor's knowledge, the only
real estate tax bills applicable to the Properties) have been delivered
to Acquiror. Except as set forth in Schedule 8A(xv) attached to this
Agreement, Contributor has not 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 from that reflected in the most recent Tax
Bills. Except as set forth in Schedule 8A(xv) attached to this
Agreement, there is not now pending, and Contributor agrees that it
will not, without the prior written consent of Acquiror (which consent
shall not be unreasonably withheld or delayed), institute prior to the
Closing Date, 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 Contributor's knowledge, will
be, assessed against the 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 any portion thereof, that are outstanding or unpaid,
and, to Contributor's knowledge, none will be levied prior to Closing.
Contributor has not 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.
(xvi) Contributor has prepared and timely filed all tax
returns required to be filed on or before the date hereof with respect
to the Properties, which tax returns are true, correct and complete in
all material respects. Contributor has paid or made provision for the
payment of all taxes with respect to the Properties that are due or
claimed to be due from it on or before the date hereof by any
governmental taxing authority. No federal, state, local or foreign
taxing authority has asserted any tax deficiency, lien, interest or
penalty or other assessment against the Properties or Contributor which
has not been paid and there is no pending audit or inquiry from any
federal, state, local or foreign tax authority relating to the
Properties or Contributor that may be expected to result in a tax
deficiency, lien interest or other assessment against the Properties.
(xvii) The Personal Property is all of the personal
property owned by Contributor and used in the operation of the
Properties. Except as set forth in Schedule 8A(xvii) attached to this
Agreement, Contributor has or at Closing will have good title to the
Personal Property, free and clear of any Liens. All such Personal
Property is in good working condition, free of material defects, normal
wear and tear excepted.
(xviii) This Agreement and all other documents and
agreements executed by Contributor in connection with the transaction
that is the subject of this Agreement (collectively, the "Contributor's
Documents") are binding on Contributor and enforceable against
Contributor in accordance with their respective terms, subject to
bankruptcy and similar laws affecting the remedies or recourse of
creditors generally and general principles of equity.
20
(xix) All financial information regarding the Properties
furnished by Contributor to Acquiror is true, complete and correct; has
been compiled in accordance with generally accepted accounting
principles and accurately set forth in all material respects the
results of the operations of the Properties for the periods covered.
(xx) Contributor has no employees. All management
contracts pertaining to the Properties will be terminated as of the
Closing.
(xxi) All utilities (including, without limitation, gas,
electricity, telephone, water and sanitary and storm sewers) have been
completed to the lot lines of the Land, are connected to the
Improvements as necessary, and all connection, hook-up, tap fees and
the like have been paid.
(xxii) The Existing Mortgages constitute all of the
mortgages or deeds of trust presently encumbering the Properties or any
portion thereof. Contributor has complied with (and, prior to Closing,
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 Mortgages
(the "Existing Notes"). Contributor has paid (and, at all times prior
to Closing, shall pay), when and as due, all sums due under the
Existing Mortgages, the Existing Notes and all other loan documents
securing the Existing Notes (the "Other Loan Documents"). The Existing
Notes, the Existing Mortgages and the Other Loan Documents are in full
force and effect, and Contributor has not received any notice of a
default thereunder that remains outstanding. Contributor has delivered
to Acquiror true, complete and accurate copies of the Existing Notes,
the Existing Mortgages and the Other Loan Documents. Except as set
forth in Schedule 8A(xxii) attached to this Agreement, the indebtedness
evidenced by the Existing Notes may be prepaid, in full, on the Closing
Date without imposition of any penalty or premium.
(xxiii) No representation or warranty made by Contributor 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. All items delivered by or on behalf of Contributor 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
Contributor to Acquiror pursuant to this Agreement constitute all of
and the only Leases and other agreements to which Contributor is
presently a party relating to or affecting the ownership, leasing,
management and operation of the Properties, there being no "side" or
other agreements, written or oral, in force or effect, to which
Contributor is a party or to which any Property is subject.
(xxiv) The OP Units are being acquired by each of the OP
Unit Recipients with the present intention of holding the OP Units for
purposes of investment and not with a view towards sale or any other
distribution. Each of the OP Unit Recipients recognizes that he may be
required to bear the economic risk of an investment in the OP Units for
an indefinite period of time. Each OP Unit Recipient is an Accredited
Investor. Each OP Unit Recipient has such knowledge and experience in
financial and business matters so as to be fully capable of evaluating
the merits and risks of an investment in the OP Units. Each OP Unit
Recipient has received and reviewed the following documents: (A) the
Form 10-K for the year ended December 31, 1996 for the REIT and
Acquiror; (B) the annual proxy statement of the REIT for the 1997
annual meeting and the proxy statement of the REIT for the special
meeting of stockholders which was held on December 12, 1997; (C) the
Form 10-Q for the REIT and Acquiror for the quarters ended March 31,
1997,
21
June 30, 1997, and September 30, 1997, respectively; (D) the Form 8-Ks
filed by the REIT and Acquiror since December 31, 1996 and (E) the
Partnership Agreement. Each OP Unit Recipient has been afforded the
opportunity to ask questions of those persons he considers appropriate
and to obtain any additional information he desires in respect of the
OP Units and the business, operations, conditions (financial and
otherwise) and current prospects of Acquiror and the REIT. Each OP
Unit Recipient has consulted his own financial, legal and tax advisors
with respect to the economic, legal and tax consequences of delivery
of the OP Units and has not relied on Acquiror, the REIT or any of
their officers, directors, affiliates or professional advisors for
such advice as to such consequences.
(xxv) Except as set forth in Schedule 8A(xxv) attached to
this Agreement:
(a) The Properties are owned and operated by
Contributor in compliance with all Environmental Laws, except
for instances of non-compliance as would not individually or
in the aggregate reasonably expected to have a Contributor
Material Adverse Effect.
(b) There have been no past and there are no pending
or, to the knowledge of Contributor, threatened (in writing)
claims, complaints, notices, correspondence or requests for
information received by Contributor 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 any
portion thereof.
(c) There have been no Releases of a Hazardous
Material at, on, under, in or about any of the Properties or
any portion thereof during any period that Contributor owned
or leased such Property, or to the best of Contributor's
knowledge, prior thereto. None of the Properties is listed, or
to the best of Contributor'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 Contributor's knowledge, no
conditions exist at, on, under, in or about the 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.
(e) Contributor has been issued all Environmental
Permits required for the operation of the Properties. All such
Environmental Permits are in full force and effect and
Contributor is in compliance in all material respects with the
terms and conditions of such Environmental Permits.
(f) The Properties are not listed, or to the
knowledge of Contributor, proposed or nominated for listing on
the NPL or on any other similar state or other list of sites
that require or may require corrective or remedial action.
(g) Contributor has not transported, disposed of or
treated, or arranged for the transportation, disposal or
treatment of, any Hazardous Material from the Properties or
any portion thereof to any location that is: (i) listed, or to
the best of Contributor'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 Contributor's
knowledge, threatened, Federal, state or local enforcement
action or other investigation under any Environmental Law.
22
(h) There are no underground storage tanks at, on or
under the Properties or any portion thereof. Contributor has
not removed, closed or abandoned any underground storage tanks
at any of the Properties, and Contributor has no knowledge of
the existence, abandonment, closure or removal of underground
storage tanks at any of the Properties.
(i) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted
by, or which are in the possession of, Contributor in relation
to any Property which have not been delivered to Acquiror
prior to the execution of this Agreement.
For purposes of this item (xxv), the following terms shall have the
meanings ascribed to them 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, 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; 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. section 6901 et
seq.), as amended ("RCRA"); (iii) the Emergency Planning and
Community Right to Know Act of 1986 (42 U.S.C. section 11001 et
seq.), as amended; (iv) the Clean Air Act (42 U.S.C. section 7401 et
seq.), as amended; (v) the Clean Water Act (33 U.S.C. section 1251 et
seq.), as amended; (vi) the Occupational Safety and Health Act (29
U.S.C. section 651 et seq.), as amended; (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 chemical, pollutant, contaminant, pesticide, petroleum or petroleum
product or by product, radioactive substance, hazardous or extremely
hazardous solid waste, special, dangerous or toxic waste, substance,
chemical or material 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.
23
(4) "Release" means any spill, discharge, leak, migration,
emission, escape, injection, dumping or other release or threatened
release 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.
B. Contributor represents and warrants to Acquiror that, as of
the Closing, each of the representations and warranties set forth in Section 8A
above shall be true, complete and correct except for changes in the operation of
the Properties occurring prior to the Closing that are specifically permitted by
or pursuant to this Agreement.
C. Acquiror represents and warrants 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 all partnership power and authority to
enter into, execute and deliver this Agreement and to perform fully its
obligations hereunder. The execution, delivery and performance by
Contributor of this Agreement and the other documents to be delivered
by Acquiror at Closing, and the consummation by Acquiror of the
transactions contemplated hereby and thereby are permitted under the
Partnership Agreement, and at Closing will have been duly and validly
authorized by all necessary partnership action on the part of Acquiror.
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) 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 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 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.
(iv) The Partnership Agreement is in full force and
effect and has not been further amended or modified.
24
(v) 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, and
fully-paid.
(vi) 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.
(vii) 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 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
(a "REIT Material Adverse Effect"). The REIT is the sole general
partner of the Acquiror.
(viii) The REIT has all requisite corporate power and
authority to enter into, execute and deliver this Agreement in its
capacity as general partner of Acquiror and to perform fully its
obligations hereunder 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, and the
consummation by the REIT of the transactions contemplated hereby and
thereby at Closing 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.
(ix) 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.
(x) 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.
(xi) The REIT is organized and operates as a "real estate
investment trust" under Sections 856 through 860 of the Code. The REIT
has elected to be taxed as a "real estate
25
investment trust" under the Code.
(xii) 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 material adverse effect on the financial condition,
business or operations of the REIT or its assets and which would
interfere with the REIT's ability to perform its obligations under the
REIT Documents.
D. Acquiror represents and warrants to Contributor that, as of
the Closing, each of the representations and warranties set forth in Section 8C
above shall be true, complete and correct.
E. Except as hereinafter provided, all representations and
warranties made in this Section 8 by Contributor and/or the OP Unit Recipient
(collectively, the "Contributor Party") and by Acquiror shall survive the
Closing until the second (2nd) anniversary of the Closing Date and shall not
merge into any instrument of conveyance delivered at the Closing; 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 14 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 14. 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, which shall
survive for the respective periods set forth herein. Notwithstanding the
foregoing, the representations and warranties contained in Section 8A(xv), (xvi)
and (xxv) shall survive until the expiration of the statute of limitations
applicable thereto.
F. Contributor shall provide to Acquiror and its auditors (i)
during the Inspection Period and following the Closing, access at all reasonable
times to all financial and other information relating to the 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
Securities and Exchange Commission ("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 (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 and Contributor
shall indemnify and hold Acquiror harmless from and against any losses, costs,
expenses (including, without limitation, reasonable attorneys' fees and
expenses) and liabilities arising from Contributor's failure to comply with
these obligations. This indemnity shall survive the Closing for a period of two
(2) years.
26
9. ACQUIROR'S INSPECTION OF THE PROPERTIES
Subject to the provisions of Section 15B, during the period
extending to and including the 45th day from the date of this Agreement (the
"Inspection Period"), Acquiror and Acquiror's agents, engineers, surveyors,
consultants, appraisers, auditors and other representatives (collectively,
"Representatives") will, upon reasonable advance notice, be given the right to
enter upon the 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 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), as Acquiror
or Acquiror's agents may reasonably request. 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, plan and
specifications, surveys, appraisals, engineering and architect reports, real
estate tax bills and receipts, operating statements and related documents.
Acquiror shall have the right to perform a Phase One environmental assessment of
each of the Properties. Upon Acquiror's receipt of any such Phase One
assessment, it shall 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, 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. 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 (the "Inspection Condition"). In
the event the Inspection Condition is not so satisfied, Acquiror shall notify
Contributor in writing (the "Termination Notice") prior to the expiration of the
Inspection Period that it is terminating this Agreement. 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 15B. In the event that
Acquiror does not give the Termination Notice 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 pursuant
to this Section 9 shall be deemed deleted from this Agreement.
10. SCHEDULES
Within three (3) 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) copies of all operating statements for the
Properties that are in the possession or control of Contributor for any
time during the period commencing with the first day of the second full
calendar year preceding the date of this Agreement and ending on the
date of this Agreement; and
(iv) copies of the most recent survey of and title policy
or commitment for each
27
of the Properties in the possession or control of Contributor.
11. CONDITIONS PRECEDENT
A. Acquiror's obligation to acquire the Properties shall be
subject to and contingent upon the following conditions precedent, any or all of
which Acquiror may waive only by a notice delivered in accordance with Section
15H:
(i) The issuance to Acquiror at the Closing of the Title
Policies in accordance with Section 5B(i).
(ii) Contributor shall have obtained and delivered to
Acquiror original executed tenant estoppel certificates (the "Tenant
Estoppel Certificates") in substantially the form of Exhibit K attached
hereto, dated not more than thirty (30) days before Closing, and
executed by tenants under Leases leasing not less than ninety-five
percent (95%) of the total aggregate gross rental income for all of the
Properties, including, without limitation, those particular tenants
listed in Exhibit L attached hereto ("Required Estoppel Tenants").
Contributor shall use its reasonable, good faith and diligent efforts
to obtain the Tenant Estoppel Certificates. To the extent that the
Tenant Estoppel Certificate obtained from a tenant contains less than
all of the Exhibit K information, or to the extent that, after
satisfying the above condition, Contributor is unable to obtain Tenant
Estoppel Certificates from all of the remaining tenants, then, at
Closing, Contributor shall execute a Tenant Estoppel Certificate with
respect to those Leases for which no or an insufficient Tenant Estoppel
Certificate has been obtained (provided that in the case of an
insufficient Tenant Estoppel Certificate the certification from
Contributor shall be limited to the insufficient matters). 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 termination, on or before the Closing Date, of
all of the Service Contracts that Acquiror 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
Contributor in this 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 of all necessary consents and approvals
of lenders under Existing Indebtedness to be assumed by Acquiror, and
the consents and approvals set forth on Schedule 11A(vi) to this
Agreement.
(vii) Contributor not being otherwise in default of its
obligations under this Agreement.
(viii) All conditions precedent set forth in Section 11A of
the Northeastern Contribution Agreement shall have been satisfied or,
if permissible, waived.
If the condition precedent set forth in Section 11A(i) is not
satisfied or waived on or prior
28
to the Closing Date, Acquiror shall have the rights and remedies set forth in
Section 5C. If any of the conditions precedent set forth in Section 11A(ii) or
Section 11A(viii) (to the extent a condition under the Northeastern Contribution
Agreement is not satisfied or, if permissible, waived which allows for a similar
termination right without the right to receive costs and expenses) is not
satisfied or waived on or prior to the Closing Date, Acquiror shall 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 11A(iii), (iv), (v), (vi) or (vii) or
Section 11A(viii) (to the extent a condition under the Northeastern Contribution
Agreement is not satisfied or, if permissible, waived which allows for a similar
termination right with the right to receive costs and expenses) is not satisfied
or waived on or prior to the Closing Date, then Acquiror shall have the rights
and remedies provided in Section 13B.
B. Contributor's obligation to contribute and convey the
Properties shall be subject to and contingent upon the following conditions
precedent, any or all of which Contributor may waive by a notice delivered in
accordance with Section 15H:
(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) Acquiror not being otherwise in default of its
obligations under this Agreement.
(iv) All conditions precedent set forth in Section 11B of
the Northeastern Contribution Agreement shall have been satisfied or,
if permissible, waived.
If any of the conditions precedent set forth in Section 11B is
not satisfied or waived on or prior to the Closing Date, then Contributor shall
have the rights and remedies provided in Section 13A.
12. 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 other
than Xxxx Xxxxxxxx (the "Broker"). At the Closing, Acquiror shall pay a
commission to the Broker pursuant to a separate agreement between Acquiror and
the Broker; provided, however, that no commission shall be deemed earned unless
and until the Closing shall have occurred as provided in this Agreement and
title to the Properties shall have been conveyed to Acquiror. 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. The provisions of this Section shall
survive the Closing or the sooner termination of this Agreement.
29
13. DEFAULT AND REMEDIES
A. If the Closing does not occur due to Acquiror's default
hereunder, or the breach of the representations, warranties, covenants or other
terms of this Agreement, and such default or breach is not cured or remedied
within ten (10) business days after receipt of written notice thereof given by
Contributor to Acquiror, 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
indemnity set forth in Section 15B. 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 ten (10) business days after receipt
of written notice thereof given by Acquiror to Contributor, 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 (not to exceed $50,000 in the
aggregate) 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 (except in such case where such default, breach or failure
to perform is the result of the good faith failure despite best efforts by
Contributor to obtain the consent of Manufacturers, Traders & Trust Company and
Xxxxxx & Xxxxxx, Inc.). In the event 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.
14. INDEMNIFICATION
A. Indemnification by Contributor. Contributor agrees 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
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, or nonfulfillment of or failure to
perform or breach of any covenant or agreement on the part of Contributor
contained in this Agreement, or (ii) any default or dispute set forth in
Schedule 8A(iii) attached to this Agreement.
B. Indemnification by Acquiror. Acquiror agrees to indemnify
the Contributor and its shareholders, officers, directors, employees, agents,
partners, members 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
nonfulfillment of or failure to perform or breach of any
30
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 14 will be asserted and resolved as
follows:
(i) In the event any claim or demand in respect of which
an Indemnified Party might seek indemnity under this Section 14 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. 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 14 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 14C(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 14). 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 14 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 14C(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
31
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
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 14 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 14 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 14C.
(ii) In the event any Indemnified Party should have a
claim under this Section 14C 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 14 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 14C.
(iii) Any dispute submitted to arbitration pursuant to
this Section 14C 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
32
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 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 14, 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 14C(i), as to which indemnity under Section 14
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 14,
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 14.
(4)"Indemnifying Party" shall mean any person or entity
providing indemnification under any provision of Section 14.
(5)"Indemnity Notice" shall mean written notification pursuant
to Section 14C(ii) of a claim for indemnity under Section 14 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.
15. MISCELLANEOUS
A. This Agreement shall not be cancelled or merged upon
consummation of the
33
Closing. 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 agents may have made with
respect thereto or any information developed by or made available to Acquiror
prior to the Closing.
B. Between the date of this Agreement and the Closing Date,
Acquiror and its agents or representatives shall have the right to enter upon
the Properties for the purpose of examining, inspecting and testing the
Properties. Acquiror shall hold Contributor harmless for damages resulting
therefrom and which would not have been incurred but for the negligent acts of
Acquiror or its agents or 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.
C. Neither this Agreement nor any interest hereunder shall be
assigned or transferred by Contributor. Acquiror may direct Contributor to
convey the Properties or any part thereof to any party designated by Acquiror
which is wholly-owned by Acquiror. 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.
D. This Agreement constitutes the entire agreement between
Contributor and Acquiror with respect to the 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 is hereby rendered null and void.
E. This Agreement constitutes an offer by Acquiror which must
be accepted by Contributor within three (3) business days after the date
execution copies of this Agreement are submitted by Acquiror to Contributor for
execution. If this Agreement is not so accepted and returned to Acquiror within
said three (3) business day period, this offer shall be deemed revoked. The date
of this Agreement shall be the date on which Acquiror signs this Agreement as
indicated below the signature line for Acquiror.
F. 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.
G. 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.
H. 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:
34
1. If to Contributor:
Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxxxxx 0
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxxxxx 0
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
2. If to Acquiror:
American Real Estate Investment Corporation
Plymouth Meeting Executive Campus
000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
With a copy to:
Xxxxxx & Xxxxx
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 15H.
I. 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 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
35
depreciation schedules updated through the Closing Date for each Property; and
(ii) prior to the expiration of the Inspection Period, Contributor shall provide
Acquiror with all data required to perform depreciation allocations (as
contemplated by Section 704(c) of the Code) with respect to each Property and
the OP Unit Recipient. Such data shall include the tax basis allocable to the OP
Unit Recipient for each Property. In addition, Contributor acknowledges that, in
the event repayment of any 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.
J. 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, Contributor will not, and will not permit any of its
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 Acquiror, 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.
K. 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 together as a single instrument.
Execution copies of this Agreement may also be exchanged by facsimile, and
facsimile signatures shall be treated as originals.
L. 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.
M. 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.
N. 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.
O. The 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 Closing. Except as expressly set
forth in this Agreement or in any document delivered by Contributor at Closing,
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.
36
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the respective dates set forth below:
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
Date: February 4, 1998
CONTRIBUTOR:
Columbia Executive I Assoc., a New York general
partnership
By: Washington Avenue Ventures, Inc., a New York
corporation, its general partner
By:/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
Columbia Executive II Assoc., a New York general
partnership
By: Rotterdam Ventures, Inc., a New York
corporation, its general partner
By:/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
37
Columbia Executive III Assoc., a New York general
partnership
By: Rotterdam Ventures, Inc., a New York
corporation, its general partner
By:/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
Columbia Executive V Assoc., a New York general
partnership
By: Equinox Equities, Inc., a Vermont
corporation, its general partner
By:/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
Columbia Executive VI Assoc., a New York general
partnership
By: Equinox Equities, Inc., a Vermont
corporation, its general partner
By:/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
Columbia Executive VII Assoc., a New York general
partnership
By: Equinox Equities, Inc., a Vermont
corporation, its general partner
By:/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
38
Columbia Executive VIII Assoc., a New York limited
liability company
By: Eastwick Development Corp., a New York
corporation, a member
By:/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
Date: February 4, 1998
39
OP UNIT RECIPIENTS:
The undersigned each hereby (i) agrees to be bound
by all obligations of the OP Unit Recipients arising
under this Contribution Agreement and (ii) confirm
the accuracy of all representations and warranties
made by Contributor with respect to such OP Unit
Recipient:
/s/ Xxxxxx X. Led Xxxx
Name: Xxxxxx X. Led Duke
/s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
/s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
/s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
/s/Xxxxxx Xxxxxxxxxx, Xx.
Name: Xxxxxx Xxxxxxxxxx, Xx.
/s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
/s/Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
/s/Xxxxxxxxxxx Xxxxx
Name: Xxxxxxxxxxx Xxxxx
/s/Xxxx Xxxxx
Name: Xxxx Xxxxx
SWF, L.P.
By:/s/Xxxxxx Led Duke
Name: Xxxxxx Led Xxxx
Title: General Partner
Date: February 4, 1998
40
