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EXHIBIT 10.34
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CONTRIBUTION AGREEMENT
between
Vornado Realty Trust
Vornado Realty L.P.
and
The Contributors Signatory
to this Agreement
Merchandise Mart Properties, Inc. (DE)
Merchandise Mart Enterprises, Inc.
Dated as of January 23, 1998
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TABLE OF CONTENTS
Page
ARTICLE I - CONTRIBUTION TRANSACTION..................................... 1
1.1 Contribution of Interests....................................... 1
1.2 Consideration and Related Matters............................... 3
1.2.1 Consideration........................................ 3
1.2.2 Further Provisions Regarding the MM
Contributor Units................................... 5
1.3 Real Property Adjustments....................................... 5
1.3.1 Property and Real Estate Taxes....................... 5
1.3.2 Water and Sewer Taxes; Other Taxes................... 5
1.3.3 Utilities............................................ 5
1.3.4 Fuel................................................. 6
1.3.5 Service Contracts.................................... 6
1.3.6 Rents................................................ 6
1.3.7 Tax Protests......................................... 6
1.3.8 Other Income and Expenses. ......................... 6
1.4 Management Company Adjustment Based on Working Capital.......... 7
1.5 Closing......................................................... 7
1.6 Closing Documents............................................... 7
1.6.1 Documents to be Delivered at Closing by the
MM Contributors.............................. 7
A. Deeds.......................................... 7
B. Xxxx of Sale................................... 7
C. Assignment and Assumption Agreements........... 7
D. Assignment and Assumption of Ground Leases..... 7
E. Management Company Shares...................... 7
F. Insurance Policies............................. 8
G. FIRPTA......................................... 8
H. Certificate.................................... 8
I. Opinion of the MM Contributors' Counsel........ 8
J. Estoppels. .................................... 8
K. Representations and Warranties................. 9
L. Registration Rights Agreement.................. 9
M. Security Deposits.............................. 9
N. Title Affidavit................................ 9
O. Employment Agreements.......................... 9
P. Transfer Tax Declaration....................... 9
Q. Pledge Agreement............................... 9
R. Incumbency..................................... 9
S. Other Documents and Instruments................ 9
T. Trust Agreement................................ 10
1.6.2 Documents to be Delivered at Closing by the
Vornado Group............................... 10
A. The MM Contributor Units....................... 10
B. Service Contracts Assignment................... 10
C. Lease Assignment............................... 10
D. Certificates and Organizational Documents...... 00
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X. Xxxxxxx of the Vornado Realty Group's Counsel.... 10
F. Mortgage Loan Assumption and Indemnity Agreement. 10
G. Representations and Warranties................... 10
H. Certification as to MM Contributor Unit Issuances 11
I. Registration Rights Agreement.................... 11
J. Employment Agreements............................ 11
K. Incumbency....................................... 11
L. Transfer Tax Declarations........................ 11
M. Pledge Agreement................................. 11
N. Other Documents and Instruments.................. 11
1.7 Closing Costs; Other Payments at Closing..................... 11
1.7.1 Transfer Taxes, etc............................... 11
1.7.2 Reimbursement for Capital Expenditures............ 11
1.8 "As Is"; Non-reliance........................................ 12
1.9 Market Price Adjustment...................................... 13
1.10 Land Trust Joinder........................................... 13
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE MM CONTRIBUTORS......... 13
2.1 Organization................................................. 13
2.2 Authority.................................................... 14
2.3 Consents and Approvals; No Violations........................ 14
2.4 Litigation................................................... 15
2.5 Bankruptcy, etc.............................................. 15
2.6 Investment Representations................................... 16
2.7 Broker....................................................... 16
2.8 Collective Bargaining Agreements; Multiemployer Plans........ 16
2.9 Employee Benefits............................................ 17
2.10 Leases...................................................... 19
2.11 Intentionally Omitted....................................... 20
2.13 Condemnation Notices........................................ 20
2.14 Violations.................................................. 20
2.15 Leasing Commissions......................................... 20
2.16 Personal Property........................................... 20
2.17 Environmental Matters....................................... 20
2.18 Employees................................................... 21
2.19 Material Repairs............................................ 21
2.20 Tax Information............................................. 21
2.21 Capitalization.............................................. 21
2.22 Title to Assets............................................. 22
2.23 Tax Matters................................................. 22
2.24 Material Contracts.......................................... 23
2.25 Subsidiaries................................................ 24
2.26 MM Stockholders: Valid Title; Power to Act................. 24
2.27 Intellectual Property....................................... 24
2.28 Investment Company Act of 1940.............................. 25
2.29 Real Property Matters....................................... 25
2.30 Insurance................................................... 25
2.31 Intentionally Omitted....................................... 25
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2.32 Tax Bills................................................... 25
2.33 Bankruptcies of Tenants..................................... 25
2.34 Financial Statements........................................ 26
2.35 To Be Acquired Company Liabilities.......................... 26
2.36 Limitations on Representations and Warranties............... 26
2.37 Disclosure Schedule......................................... 26
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE
VORNADO REALTY GROUP..................................... 27
3.1 Organization; Standing; Etc.................................. 27
3.2 Authority.................................................... 27
3.3 Consents and Approvals; No Violations........................ 27
3.4 MM Contributor Units, VOI Stock and Vornado Common Shares.... 28
3.5 Intentionally Omitted........................................ 28
3.6 SEC Documents and Financial Statements....................... 28
3.7 Investment Company Act of 1940............................... 28
3.8 Intentionally Omitted........................................ 28
3.9 Litigation................................................... 29
3.10 Subsidiaries................................................ 29
3.11 Capitalization.............................................. 29
3.12 Tax Matters................................................. 29
3.13 Compliance with Organizational Documents.................... 30
3.14 Bankruptcy, etc............................................. 31
3.15 Broker...................................................... 31
3.16 Compliance with Laws........................................ 31
3.17 Investment Representations.................................. 31
3.18 Limitation on Representations and Warranties................ 31
3.19 Disclosure Schedule......................................... 32
ARTICLE IV - COVENANTS OF THE MM CONTRIBUTORS.............................. 32
4.1 Reasonable Efforts........................................... 32
4.2 Conduct of Business Pending Closing.......................... 32
4.2.1 Ordinary Course of Business....................... 32
4.2.2 Insurance Policies................................ 34
4.2.3 Liens............................................. 34
4.2.4 Leases............................................ 34
4.2.5 Personal Property................................. 35
4.3 The Vornado Realty Group's Inspection Right.................. 35
4.4 Estoppel Certificates........................................ 36
4.5 Intentionally Omitted........................................ 36
4.6 Financial Information........................................ 36
4.7 Notice of Violation of Environmental Laws or Discharge....... 36
4.8 Certain Payments............................................. 36
4.9 Unitholder Lock-Up........................................... 37
ARTICLE V - COVENANTS OF THE VORNADO REALTY GROUP.......................... 37
5.1 Reasonable Efforts........................................... 37
5.2 Inspection Obligations....................................... 38
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5.3 Reports, Tests, Etc.......................................... 38
5.4 Met Life Loans; Vornado Bridge Loan.......................... 38
5.5 Avoidance of Publicly Traded Partnership Status.............. 38
ARTICLE VI - ADDITIONAL COVENANTS OF THE PARTIES........................... 39
6.1 Survival..................................................... 39
6.2 Leasing Commissions and Tenant Improvement Obligations....... 39
6.3 Intentionally Omitted........................................ 39
6.4 Tax Deferral and Gain Recognition............................ 39
6.4.1 Debt Maintenance and Guaranty Requirements........ 40
6.4.2 No Property Disposition........................... 41
6.4.3 Representatives................................... 41
6.5 Allocation Method............................................ 42
6.6 Tax Matters.................................................. 42
6.7 Past Due Rents............................................... 42
6.8 Survey and Title Commitment.................................. 42
6.9 Employment and Employee Benefit Arrangements................. 44
6.9.1 Employment........................................ 44
6.9.2 Retirement Plans.................................. 44
6.9.3 Other Benefit Plans............................... 45
6.9.4 Share Option Pool................................. 45
6.9.5 Severance......................................... 45
6.9.6 Vornado Realty Group Guarantee and Indemnification
Obligations....................................... 45
6.10 Notice to Tenants and Banks ................................ 46
6.11 1997 Employee Bonuses....................................... 46
6.12 Cooperation................................................. 46
6.13 Casualty, Condemnation, and Environmental Law Violations.... 46
6.14 Designees of Vornado Realty Group........................... 50
6.15 Certain Assignments......................................... 50
ARTICLE VII - CONDITIONS TO CLOSING........................................ 50
7.1 Intentionally Omitted........................................ 50
7.2 Conditions to the MM Contributors' Obligations to Close...... 51
7.2.1 Representations and Warranties.................. 51
7.2.2 Full Performance................................ 51
7.2.3 Closing Documents............................... 51
7.2.4 Employment Agreement............................ 51
7.2.5 Payment for Common Stock of Management Companies 51
7.2.6 Intentionally Omitted........................... 51
7.2.7 Issuance of Common Units, Preferred Units, and
VOI Stock....................................... 51
7.2.8 REIT Election................................... 51
7.2.9 Amendment to OP Agreement....................... 52
7.2.10 Absence of Litigation........................... 52
7.2.11 Approval of Transaction......................... 52
7.2.12 No Injunction or Restraints..................... 52
7.2.13 HSR Act......................................... 52
7.2.14 Mortgage Loan Assumption and Indemnity Agreement 52
7.2.15 Wolf Point Agreement; River West North
Agreement; Dacap
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Assignment and Florida Assignment............... 52
7.3 Conditions to the Obligations of the Members of the Vornado
Group and the Subsidiaries............................... 52
7.3.1 Representations and Warranties.................. 53
7.3.2 Full Performance................................ 53
7.3.3 Closing Documents............................... 53
7.3.4 Title Policy.................................... 53
7.3.5 Absence of Litigation........................... 53
7.3.6 Approval of Transaction......................... 53
7.3.7 No Injunction or Restraints..................... 53
7.3.8 HSR Act......................................... 53
7.3.9 Estoppel Certificates........................... 54
7.3.10 Wolf Point Agreement; River West North Agreement;
Dacap Assignment and Florida Assignment......... 54
7.3.11 Common Stock of Management Companies............ 54
7.3.12 Zoning Opinion.................................. 54
ARTICLE VIII - SURVIVAL, INDEMNIFICATION, LIMITATIONS ON LIABILITY......... 54
8.1 Survival..................................................... 54
8.2 The MM Contributors' Indemnification Obligations............. 55
8.3 The Indemnification Obligations of the Members of the Vornado
Realty
Group and the Subsidiaries............................... 56
8.4 Claims....................................................... 56
8.5 Limitations on Liability and Amounts......................... 57
ARTICLE IX - TERMINATION................................................... 58
9.1 Termination as a result of Casualty, Condemnation, Environmental
Law Violation or Title Defect............................ 58
9.2 Termination by the MM Contributors for the Default of the Members
of the Vornado Realty Group.............................. 58
9.3 Termination by the Members of the Vornado Group and the
Subsidiaries for the MM Contributors' Default............. 59
ARTICLE X - DEFINITIONS AND TERMS.......................................... 60
10.1 Specific Definitions........................................ 60
10.2 Other Definitions........................................... 66
10.3 Singular and Plural; Exhibits and Disclosure Schedules; Etc. 74
ARTICLE XI - MISCELLANEOUS TERMS AND ADDITIONAL AGREEMENTS................. 74
11.1 Amendment and Modification.................................. 74
11.2 Extension; Waiver........................................... 74
11.3 Entire Agreement............................................ 75
11.4 Assignment.................................................. 75
11.5 Validity.................................................... 75
11.6 Notices..................................................... 75
11.7 Governing Law............................................... 76
11.8 Descriptive Headings........................................ 76
11.9 Counterparts................................................ 76
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11.10 Costs and Expenses........................................ 76
11.11 Parties in Interest....................................... 77
11.12 No Waivers................................................ 77
11.13 Further Assurances........................................ 77
11.14 Jurisdiction.............................................. 77
11.15 Intentionally Omitted..................................... 77
11.16 Publication............................................... 77
11.17 Confidentiality Agreement................................. 78
11.18 No Recordation of Contract................................ 78
11.19 Wolf Point Easement....................................... 78
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EXHIBITS
Exhibit 1.6.1(C)(i) Form of Lease Assignment
Exhibit 1.6.2(C)(ii) Form of Service Contracts Assignment
Exhibit 1.6.1(I) Form of Opinion of MM Contributors' Counsel
Exhibit 1.6.1(L) Form of Registration Rights Agreement
Exhibit 1.6.1(Q) Form of Pledge Agreement
Exhibit 1.6.2(E) Form of Opinion of Vornado Group's Counsel
Exhibit 1.6.2(F) Form of Mortgage Loan Assumption and Indemnity Documents
Exhibit 4.4 Form of Estoppel Certificate
Exhibit 6.8(c) List of Current Title Objections
Exhibit 7.2.7 Form of Exhibit to VRLP OP Agreement
Exhibit 7.2.15(a) Form of Wolf Point Agreement
Exhibit 7.2.15(b) Form of River West Agreement
Exhibit 7.2.15(c) Form of Stardial Assignment
Exhibit 7.2.15(d) Form of BB&E Assignment
Exhibit 11.16 Form of Press Release
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CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT, dated as of January 23, 1998 (the
"Agreement"), by and between (i) Vornado Realty Trust, a Maryland real estate
investment trust ("Vornado"), (ii) Vornado Realty L.P., a Delaware limited
partnership ("VRLP" and, together with Vornado, the "Vornado Realty Group"),
(iii) the persons and entities signatory hereto and identified as contributors
in Section 1.1(a) of the Disclosure Schedule with respect to (a) interests in
the real property described in Section 1.1(a) of the Disclosure Schedule
(collectively, the "MM Property Contributors"), and (b) shares of capital stock
of Merchandise Mart Properties, Inc. (DE), a Delaware corporation ("MMPI"), and
Merchandise Mart Enterprises, Inc., a Delaware corporation ("MMEI" and together
with MMPI, the "Management Companies") (collectively, the "MM Stockholders" and
together with the MM Property Contributors, the "MM Contributors"), (iv) MMPI
and (v) MMEI. The MM Contributors and the Management Companies are collectively
referred to herein as the "MM Group." Certain capitalized terms used in this
Agreement are defined in Article X hereof.
RECITALS
A. The respective MM Contributors own certain interests in real and
personal property and certain equity interests, as more particularly described
in Section 1.1.
B. The MM Contributors desire to contribute, exchange or sell such
interests to the members of the Vornado Realty Group or their designees, in
exchange for the consideration set forth in Section 1.2.
C. The respective members of the Vornado Realty Group desire to
accept the contribution of such interests in exchange for the consideration to
be delivered by each of them to the respective MM Contributors or their
designees hereunder.
NOW, THEREFORE, in consideration of these premises and the
respective representations, warranties and covenants herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
CONTRIBUTION TRANSACTION
1.1 Contribution of Interests. Upon the terms and subject to the
conditions of this Agreement, and in consideration of the Vornado Realty Group's
payment of the Consideration specified in Section 1.2 below, the respective MM
Contributors and the Land Trusts shall contribute or otherwise transfer to the
Vornado Realty Group or its designees, and such transferees shall acquire and
accept all of the MM Contributors' and the Land Trusts' respective right, title
and interest in and to the following:
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(a) each of the parcels of real property more particularly described
in Section 1.1(a) of the Disclosure Schedule (each, a "Parcel" and,
collectively, the "Land"), and all of the improvements located on each Parcel
(individually, a "Building" and collectively, the "Improvements");
(b) all rights, privileges, grants and easements appurtenant to the
Land and Improvements, including, without limitation, all land lying in the bed
of any public street, road or alley, all mineral and water rights and all
easements, licenses, covenants and rights-of-way or other appurtenances used in
connection with the beneficial use and enjoyment of the Land and Improvements
(the Parcels, together with the Improvements thereon and all such rights,
privileges, easements, grants and appurtenances, are referred to herein as the
"Real Property");
(c) all personal property, fixtures, equipment and inventory owned
by the MM Property Contributors and used predominantly in connection with the
sale, management, leasing, promotion, ownership, maintenance, use or occupancy
of the Real Property (collectively, the "Personal Property");
(d) all leases, subleases, licenses and other agreements with
respect to the use and/or occupancy of the Real Property (other than Ground
Leases), together with all amendments and modifications thereto and any
guaranties provided thereunder (collectively, the "Leases"), including leases
for office space and related uses (the "Office Leases"), leases for the ongoing
use of show room space and related uses (the "Show Room Leases"), licenses for
the temporary use of space, including, without limitation, space used for
temporary trade shows, in each case having a term of not more than four (4)
months, (collectively, the "Temporary Space Licenses"), and leases of space for
retail and related uses (the "Retail Leases"), and all rents, additional rents,
reimbursements, profits, income, receipts therefrom and the amount, if any,
deposited (the "Security Deposits") under each Lease in the nature of security
for the performance of a tenant's or licensee's (each a "Tenant" and,
collectively, the "Tenants") obligations under such Lease;
(e) all permits and licenses (other than Temporary Space Licenses)
(collectively, the "Permits") and third party guaranties, approvals,
certificates and warranties (collectively, the "Guaranties") relating to the
Real Property and the Personal Property, and all those contracts and agreements
for the servicing, maintenance and operation of the Real Property (the "Service
Contracts" and together with the Permits and Guaranties, collectively, the
"Intangible Property");
(f) all rights, if any, of the MM Property Contributors or any of
them to the tradenames identified in Section 2.27 of the Disclosure Schedule and
any trademarks applicable thereto;
(g) all books, records, promotional material, brochures, prints
and/or pictures of the Land and Improvements, tenant data, leasing material and
forms, current rent rolls, keys, plans, specifications, reports, tests and other
materials of any kind, if any, owned by and in the possession of the MM Property
Contributors on the Closing Date which are used by the MM Property Contributors
in the use and operation of the Real Property or Personal Property
(collectively, the "Books and Records");
(h) all issued and outstanding shares of non-voting common stock of
each of MMPI (the "MMPI Shares") and MMEI (the "MMEI Shares" and together with
the MMPI Shares, the "Management Company Shares");
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(i) all rights and interests of the lessor and lessee in and to the
ground leases described in Section 1.1(i) of the Disclosure Schedule (together,
the "Ground Leases") and the easements and other agreements and interests
related thereto; and
(j) all other rights, privileges and appurtenances owned by the MM
Contributors, if any, and in any way related to the rights and interests
described above in this Section 1.1.
The Real Property, the Personal Property, the Intangible Property, the
Books and Records and the other property interests relating to the Real Property
being conveyed hereunder are hereinafter collectively referred to as the
"Property."
1.2 Consideration and Related Matters.
1.2.1 Consideration. (a) At the Closing, and in consideration of the
transfer and assignment of the Property, the Management Company Shares and the
other rights and interests set forth in Section 1.1 above (collectively, the
"Contributed Interests"), VRLP agrees to pay or cause to be paid an aggregate
amount of Six Hundred Twenty-One Million Ninety-Three Thousand and Seven Hundred
Fifty Dollars ($620,517,375), plus the amount provided for in Section 1.2.1(c)
and as may be further adjusted as provided in this Agreement (collectively, the
"Consideration"), payable as follows:
(i) $181,426,581 in cash (increased by the amount equal to the
amortization on the loans described in Section 1.2.1(a)(iii) below
actually paid by the applicable member of the MM Group from and after
January 1, 1998, and decreased by the amount to be reimbursed to the MM
Contributors pursuant to Section 1.7.2 below) (the "Cash Payment"), as the
MM Contributors shall direct in writing in accordance with Section
1.2.1(d) hereof;
(ii) by issuing (x) 299,079 Class A common units of limited
partnership interest of VRLP (the "Common Units"), redeemable for cash or
Vornado Common Shares as provided in the OP Agreement, in such amounts and
to certain of the MM Contributors, in each case, as specified in Section
1.2.1(a)(ii) of the Disclosure Schedule (the "Common Unitholders"), and
(y) 1,960,000 Preferred Units to the MM Contributors specified in Section
1.2.1(a)(ii) of the Disclosure Schedule (the "Preferred Unitholders" and
together with the Common Unitholders, the "Unitholders"); in each case, as
such number of Units may be adjusted upward as provided for in Section
1.9. The Common Units and Preferred Units are collectively referred to
herein as the "MM Contributor Units;"
(iii) (a) by (x) accepting title to (i) the Apparel Center subject
to the Pru- Apparel Loan described in Section 1.2.1(a)(iii) of the
Disclosure Schedule, and (ii) accepting title to the Washington Office
Center Property subject to Pru-Office Center Loan described in Section
1.2.1(a)(iii) of the Disclosure Schedule and (y) causing the designee that
acquires the Office Center Property to assume the obligations of the
borrower under the documents evidencing and securing the Pru-Office Center
Loan described in Section 1.2.1(a)(iii) of the Disclosure Schedule
pursuant to the Mortgage Loan Assumption and Indemnity Agreement, and
executing the assumption agreement and environmental indemnity required
under, and in accordance with their terms of, the loan documents for the
Pru-Office Center Loan as shall be reasonably acceptable to the Vornado
Realty Group and the applicable lender; and
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(b) by (i) accepting title to the Mart Property subject to the Met
Life Loans described in Section 1.2.1(a)(iii) of the Disclosure Schedule,
which Mart Property Loans will then be repaid in full by the Vornado
Realty Group immediately thereafter, and (ii) accepting title to the
Design Center subject to the Design Center Loans described in Section
1.2.1(a)(iii) of the Disclosure Schedule, which Design Center Loans will
then be repaid in full by the Vornado Group immediately thereafter.
Further, to the extent that there is any prepayment penalty due under the
Met Life Loan and/or the Design Center Loan, the MM Group shall be liable
for paying such amount, but the MM Group may direct VRLP to pay such
prepayment penalty out of the proceeds that the MM Group is to receive
pursuant to Section 1.2.1(a)(i). Further, VRLP's obligation to assume the
MetLife Loan and the Design Center Loan are subject to the MM Group's
delivering to VRLP at Closing satisfactions of such loans and the loan
documents evidencing and securing same in form reasonably satisfactory to
VRLP. The provisions of this subsection (b) shall not result in any
additional expenses, direct or indirect, to the Vornado Realty Group, and
the MM Group agrees to pay for all such additional expenses.
(iv) if prior to the Closing, Vornado and/or VRLP has distributed
(the "VOI Distribution") the then-outstanding shares of common stock, par
value $0.01 per share, of VOI (the "VOI Stock") as described in VOI's
Registration Statement on Form S-11, first filed with the SEC on November
20, 1997, as amended (the "VOI Registration Statement"), then at Closing
VRLP shall issue to the Common Unitholders a number of additional Common
Units, to be allocated among the Common Unitholders, having an aggregate
value (based on a Common Unit assumed value of $45.5875 per Common Unit
equal to the quotient of (i) the product of: (A) the percentage of the
Common Units that the Common Unitholders would have owned if the Closing
occurred at the effective time of the VOI Distribution, expressed as a
decimal fraction, multiplied by (B) the stockholders' equity of VOI as of
the effective time of the VOI Distribution and (ii) the remainder of (C)
one less (D) the percentage of the Common Units that the Common
Unitholders would have owned if the Closing occurred at the effective time
of the VOI Distribution, expressed as a decimal fraction.
(b) The Consideration shall be allocated among the Contributed
Interests as set forth in Section 1.2.1(b) of the Disclosure Schedule (the
"Allocated Property Values").
(c) The Consideration shall be increased by an amount (which shall
be paid in cash at Closing) equal to the product of (x) the Cash Payment,
multiplied by (y) interest at a rate equal to 7% per annum, multiplied by (z)
(i) the number of elapsed days from January 1, 1998 through and including the
Closing Date divided by (ii) 365.
(d) The Cash Payment to be paid at the Closing shall be paid to the
respective MM Contributors in accordance with a letter of direction (the
"Consideration Direction Letter") to be provided by the MM Contributors to the
Vornado Realty Group identifying each MM Contributor and their allocable amounts
of the Consideration, together with complete wire instructions for each payment,
at least five (5) Business Days prior to the Closing Date. No member of the
Vornado Realty Group shall have any liability or responsibility in any way with
the Consideration Direction Letter or the allocations described therein and each
member of the Vornado Realty Group shall be entitled to rely on the
Consideration Direction Letter in full and without inquiry.
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1.2.2 Further Provisions Regarding the MM Contributor Units. The
Unitholders shall receive distributions payable with respect to the MM
Contributor Units as if they had been Unitholders as of the Adjustment Date,
except with respect to any distributions of VOI Stock. In addition, to the
extent the holders of Series A preferred shares of Vornado or the holders of a
series A Preferred Units of VRLP are provided the right to receive VOI Stock or
any other direct benefits in connection with the VOI Distribution, then such
rights shall also be provided to the Preferred Unitholders, in their capacity as
such.
1.3 Real Property Adjustments. The following items related to the Real
Property shall, unless otherwise provided, be apportioned between the MM
Contributors and the Vornado Realty Group as of 11:59 p.m. (New York City time)
on December 31, 1997 (the "Adjustment Date") as follows and any net amount owing
to either party shall be paid to such party in the manner set forth in the last
paragraph of this Section 1.3:
1.3.1 Property and Real Estate Taxes. Property and real estate taxes
shall be adjusted as follows: (i) real estate taxes for the Parcels located in
Chicago, Illinois and which are payable during the period prior to the
Adjustment Date shall be the responsibility of the MM Property Contributors, and
the Vornado Realty Group shall be responsible for all such taxes payable during
the period subsequent to the Adjustment Date; and (ii) real estate taxes for the
Parcels located in Washington, D.C. which are accrued in respect of the period
prior to the Adjustment Date shall be the responsibility of the MM Property
Contributors, and the Vornado Realty Group shall be responsible for all real
estate taxes accrued in respect of the period subsequent to the Adjustment Date.
1.3.2 Water and Sewer Taxes; Other Taxes. Water and sewer taxes,
personal property taxes and other similar taxes (other than real estate taxes)
shall be adjusted as of the Adjustment Date and all amounts accrued in respect
of the period prior to the Adjustment Date shall be the responsibility of the MM
Group and all amounts accrued in respect of the period subsequent to the
Adjustment Date shall be the responsibility of the Vornado Realty Group. If the
apportionment of water and sewer taxes is not based on an actual current
reading, then upon the taking of a subsequent actual reading such apportionment
shall be readjusted as of the Adjustment Date.
1.3.3 Utilities. Charges for electricity, steam, gas and any other
utilities (collectively, "Utilities") made by the utility companies servicing
the Property shall be determined as of the Adjustment Date and all amounts
accrued in respect of the period prior to the Adjustment Date shall be the
responsibility of the MM Group and all amounts accrued in respect of the period
after the Adjustment Date shall be the responsibility of the Vornado Realty
Group. Utility deposits actually transferred to the Vornado Realty Group or its
designee's account (to the extent and at such time as such transfer is confirmed
in writing by the respective utility company), if any, shall be credited or paid
to the MM Contributors. All amounts refundable under unassignable utility
agreements on account of expenses attributable to the period prior to the
Adjustment Date shall remain the property of the MM Contributors.
1.3.4 Fuel. Fuel, if any, shall be apportioned as estimated by the
supplier of fuel to the MM Contributors as of the Adjustment Date, at the then
current cost, together with any sales taxes payable in connection therewith, if
any. A letter from the MM Contributors' fuel supplier shall be conclusive
evidence as to the quantity of fuel on hand and the current cost therefor.
1.3.5 Service Contracts. Amounts payable under Service Contracts,
regardless of whether same are being assumed by the Vornado Realty Group or its
designee, shall be apportioned as of the Adjustment Date, and all amounts
accrued in respect of the period prior to the Adjustment Date shall be
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the responsibility of the MM Group and all amounts accrued in respect of the
period after the Adjustment Date shall be the responsibility of the Vornado
Realty Group.
1.3.6 Rents. All rents, license fees and any other amounts including
all payments in respect of charges, reimbursements and monetary concessions of
any kind (including escalation payments, tax payments and electricity charges)
payable under the Leases (collectively, the "Rents") which are accrued for the
period from the Adjustment Date until the Closing Date (less any receivables in
respect of such Rents for the period prior to the Closing Date) shall be
credited to the Vornado Realty Group and all Rent received by any party after
Closing shall be applied in accordance with the provisions of Section 6.7
hereof. All prepaid rents (whether received prior to or after the Adjustment
Date) which are applicable to any period after the Adjustment Date shall be
credited to the Vornado Realty Group.
1.3.7 Tax Protests. Property tax refunds associated with Tax
Protests and the costs of collecting same shall be apportioned over the
applicable tax period being challenged.
1.3.8 Other Income and Expenses. All other income and expense items
and other payments (such as capital expenditures) relating to the Property which
are not expressly provided for in this Agreement shall be similarly adjusted as
of the Adjustment Date, with the Vornado Realty Group being entitled to all
income and responsible for all expenses and payments attributable to the period
after the Adjustment Date and the MM Group being entitled to all income and
responsible for all expenses and payments attributable to the period prior to
the Adjustment Date.
All amounts which are the subject of any adjustments under this Agreement
(whether pursuant to this Section 1.3 or elsewhere herein) shall be netted
against each other to arrive at a net amount owing to either the MM Contributors
or the Vornado Realty Group, as the case may be. At Closing any net amounts
payable to the MM Contributors under this Section 1.3 or elsewhere herein as a
closing adjustment shall be paid to the MM Contributors in cash or Common Units,
at the MM Contributors' option, and any net amounts owed by the MM Contributors
under this Section 1.3 and elsewhere herein as a closing adjustment shall be
paid by the MM Contributors in cash or Common Units, at the MM Contributors'
option. Additional amounts which are owed to or by either party hereto after
Closing in respect of such adjustments shall be payable on a quarterly basis, in
cash, and the parties shall perform a final reconciliation of all adjustments
two years after the Closing Date. Each Common Unit shall have a value equal to
the Current Market Value Per Unit as of the close of the Business Day
immediately preceding the date hereof. The provisions of this Section 1.3 shall
survive until the second anniversary of the Closing Date.
1.4 Management Company Adjustment Based on Working Capital. At least
ten (10) Business Days prior to the Closing, the MM Stockholders shall deliver
to the Vornado Realty Group an audited balance sheet of each of the Management
Companies dated as of the Adjustment Date, setting forth in reasonable detail
the current assets less the current liabilities of each of the Management
Companies as of the Adjustment Date (in each case, the "Working Capital"). If
the Working Capital is (i) a positive number, at the Closing the Vornado Realty
Group shall pay to the MM Stockholders contributing the MMEI Shares and/or the
MM Stockholder contributing the MMPI Shares, as the case may be, in cash, Common
Units, or Preferred Units at the election of the applicable MM Stockholder, an
amount equal to the applicable calculation of Working Capital, or (ii) a
negative number in any case, at the Closing the Cash Payment referred to in
Section 1.2.1(a)(i) shall be reduced by the absolute value of such negative
number.
1.5 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Battle Xxxxxx LLP,
00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
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10022, on April 1, 1998, subject to the right of the MM Contributors, on the one
hand, and the Vornado Realty Group, on the other hand, to extend such date as
may be expressly set forth in this Agreement (the "Closing Date").
1.6 Closing Documents. At the Closing, the following certificates,
documents, instruments and agreements (the "Closing Documents") shall be
executed and/or delivered, subject to the terms of this Agreement, by the
parties as set forth below:
1.6.1 Documents to be Delivered at Closing by the MM Contributors.
At the Closing, the MM Contributors shall deliver (or cause to be delivered in
the case of the Trustee's Deeds referred to in Section 1.6.1(A)(ii)) to the
Vornado Realty Group the following:
A. Deeds. (i) A Special Warranty Deed for each Parcel located in
Washington, D.C. and (ii) a Trustee's Deed for each Parcel located in Illinois
(each, a "Deed"), so as to convey to VRLP good and indefeasible fee simple title
to each such Parcel free and clear of all Liens, except for Permitted
Encumbrances.
B. Xxxx of Sale. A duly executed xxxx of sale conveying the Personal
Property, the Guarantees, the Permits and the Books and Records.
C. Assignment and Assumption Agreements. (i) A duly executed instrument of
assignment and assumption of the Leases, substantially in the form of Exhibit
1.6.1(C)(i) (the "Lease Assignment") and (ii) a duly executed instrument of
assignment and assumption of Service Contracts, substantially in the form of
Exhibit 1.6.1(C)(ii) (the "Service Contracts Assignment").
D. Assignment and Assumption of Ground Leases. A duly executed assignment
and assumption of the Ground Leases, in recordable form and effective to assign
each Ground Lease and each agreement and instrument relating thereto. The
assignment and assumption of ground leases will be in a form reasonably
acceptable to VRLP and the MM Contributors.
E. Management Company Shares. Certificates evidencing all of the
Management Company Shares, duly endorsed in blank for transfer or accompanied by
stock powers, duly endorsed in blank, together with evidence of the payment of
any applicable stock transfer taxes and any other applicable fees.
F. Insurance Policies. To the extent in the MM Property Contributors'
possession, original insurance policies or certificates thereof required to be
maintained by each Tenant.
G. FIRPTA. An executed Affidavit of Non-Foreign Status, in form reasonably
acceptable to VRLP, certifying that each MM Contributor is not a "foreign
person" pursuant to Section 1445 of the Code.
H. Certificate. (a) A certificate of each of the MM Contributors, in each
case signed by an authorized officer or other comparable authorized signatory of
such contributor, certifying that annexed thereto are true and correct copies of
(i) each such MM Contributor's organizational and governance documents and all
amendments thereto and that the same have not been otherwise modified or
amended, and are in full force and effect, (ii) duly adopted resolutions of the
corporate general partner or managing member, as applicable, of each MM
Contributor authorizing the execution and delivery of this Agreement and each of
the other Transaction Documents to which it is a party and the consummation of
the transactions
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contemplated herein and therein, (iii) evidence of the consent of the members,
partners, directors and shareholders, as the case may be, authorizing the
contribution of the Property, to the extent required by such organizational and
governance documents and (iv) good standing certificates for each MM Contributor
issued by the secretary of state or other applicable office of the jurisdiction
in which each such entity is organized and dated as of the most recent
practicable date.
(b) A certificate of the MM Stockholders certifying that annexed
thereto is a true and correct copy of (i) each of the applicable organizational
and governance documents of each To Be Acquired Company, respectively, and all
amendments thereto and that the same have not been otherwise modified or
amended, and are in full force and effect, (ii) duly adopted resolutions of the
board of directors, corporate general partner or managing member, as applicable,
of each such entity authorizing the execution and delivery of this Agreement and
each of the other Transaction Documents (to the extent it is a party hereto or
thereto) and the consummation of the transactions contemplated herein and
therein, (iii) evidence of the consent of the directors and shareholders of each
of MMEI and MMPI authorizing the contribution of the MMPI and MMEI Shares,
respectively, to the extent required by such organizational and governance
documents, and (iv) good standing certificates for each To Be Acquired Company
and MM Contributor issued by the secretary of state or other applicable office
of the jurisdiction in which each such entity is organized and dated as of the
most recent practicable date.
I. Opinion of the MM Contributors' Counsel. Opinions of counsel of the MM
Contributors (including local counsel, as applicable), with respect to those
matters described generally on Exhibit 1.6.1(I) and in form and substance
reasonably satisfactory to the Vornado Realty Group.
J. Estoppels. Original Estoppel Certificates (as defined in Section 4.4)
to the extent received from any Tenant by the MM Contributors prior to Closing
and not previously delivered to the Vornado Realty Group. The MM Property
Contributors and VRLP agree to cooperate with each other and to use good faith
efforts for up to three (3) months after the Closing to obtain any required
Estoppel Certificates not received prior to the Closing.
K. Representations and Warranties. A certificate of the MM Contributors
certifying (i) that the representations and warranties contained in this
Agreement are true and correct in all material respects as of the Closing Date
as if made on the Closing Date, except to the extent that they expressly relate
to an earlier date, or, if not, identifying in reasonable detail any and all
variances or deviations from such representations and warranties and (ii) that
the MM Contributors have performed or complied in all material respects with all
of its agreements herein contained and required to be performed or complied with
by it hereunder.
L. Registration Rights Agreement. A duly executed registration rights
agreement substantially in the form of Exhibit 1.6.1(L) (the "Registration
Rights Agreement").
M. Security Deposits. A list of all cash Security Deposits and all
non-cash Security Deposits (including letters of credit) delivered by Tenants
under the Leases and an instrument of assignment, transfer or consent as may be
necessary to transfer to VRLP, and to permit the Vornado Realty Group or its
designee to own and, where applicable, realize upon, all non-cash Security
Deposits. All cash Security Deposits will be retained by the MM Property
Contributors, but the Vornado Realty Group will receive a credit at Closing in
an amount equal to the amount of such cash Security Deposits.
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N. Title Affidavit. Title affidavits, and such other documents or
instruments which are customary for similar transactions and are reasonably
required by the Title Company (such as "gap indemnities"), executed by the
applicable MM Property Contributors.
O. Employment Agreements. Duly executed employment agreements
(collectively, the "Employment Agreements") for those Persons identified in
Section 1.6.1(O) of the Disclosure Schedule, having the material terms agreed to
in writing by such respective Persons and the applicable member of the Vornado
Realty Group on or prior to the date hereof.
P. Transfer Tax Declaration. All transfer tax forms and declarations
required to be filed with the applicable State, County and City Governmental
Authorities in each of Illinois and Washington, D.C. in connection with the
transactions contemplated hereby (collectively, the "Tax Declarations"), which
Tax Declarations shall be prepared by the MM Property Contributors and approved
by the Vornado Realty Group prior to Closing.
Q. Pledge Agreement. A duly executed pledge agreement, substantially in
the form of Exhibit 1.6.1(Q) (the "Pledge Agreement").
R. Incumbency. Incumbency certificates of the managing member, general
partner or other comparable authorized signatory of each MM Entity that is a
party to this Agreement or any other Transaction Document, in each case
certifying as to the authority of each officer or other duly appointed
representative that executes this Agreement or any other Transaction Document on
behalf of such MM Entity.
S. Other Documents and Instruments. Such other certificates, documents,
instruments and agreements as the Vornado Realty Group shall deem necessary in
its reasonable discretion in order to effectuate the transactions contemplated
herein, in form and substance reasonably satisfactory to the Vornado Realty
Group.
T. Trust Agreement. A copy of the Trust Agreement for each Land Trust
certified by the Land Trustee to be a true, correct and complete copy thereof,
together with certified copies of the letters of direction to the Land Trustee
under each Land Trust, directing the execution and delivery of the Trustees'
Deeds in respect of the Mart Property, the Apparel Property and the River West
South Property.
1.6.2 Documents to be Delivered at Closing by the Vornado Group. At
the Closing, the Vornado Realty Group shall deliver to the MM Contributors the
following:
A. The MM Contributor Units. Certificates duly executed and issued in the
names of the respective Unitholders evidencing the issuance of the MM
Contributor Units, together with the duly adopted amendment to the OP Agreement
described in Section 7.2.9.
B. Service Contracts Assignment. A duly executed Service Contracts
Assignment.
C. Lease Assignment. A duly executed Lease Assignment.
D. Certificates and Organizational Documents. (a) A certificate of Vornado
duly executed by an authorized officer of Vornado in such capacity, on Vornado's
behalf and in its capacity as general partner of VRLP, as the case may be,
certifying that annexed thereto (i) is a true and correct copy of (x) the
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First Amended and Restated Agreement of Limited Partnership of VRLP dated as of
April 15, 1997 and any and all amendments thereto (the "OP Agreement"), and (y)
the certificate of limited partnership of VRLP and all amendments thereto, if
any, as filed in the State of Delaware; and the same have not been otherwise
modified or amended, and are in full force and effect; (ii) are duly adopted
resolutions authorizing the consummation of the transactions contemplated by
this Agreement; (iii) is a true and correct copy of Vornado's certificate of
incorporation and by-laws and all amendments thereto and that the same have not
been otherwise modified or amended, and are in full force and effect; and (iv)
are good standing certificates dated as of the most recent practicable date for
each of Vornado and VRLP.
(b) A certificate of VOI, duly executed by an authorized officer of
VOI in such capacity, certifying that annexed thereto (i) is a true and correct
copy of (x) the certificate of incorporation, dated as of October 30, 1997, and
any and all amendments thereto, and (y) the bylaws of VOI and all amendments
thereto, if any; and the same have not been otherwise modified or amended, and
are in full force and effect, (ii) are duly adopted resolutions authorizing the
consummation of the transactions contemplated by this Agreement; and (iii) is a
good standing certificate dated as of the most recent practicable date for VOI.
E. Opinion of the Vornado Realty Group's Counsel. An opinion of the
Vornado Realty Group's counsel with respect to the matters described generally
on Exhibit 1.6.2(E) and in form and substance reasonably satisfactory to the MM
Contributors.
F. Mortgage Loan Assumption and Indemnity Agreement. An assumption and
indemnity agreement with respect to the Pru-Office Center Loan in the form of
Exhibit 1.6.2(F) (the "Mortgage Loan Assumption and Indemnity Agreement").
G. Representations and Warranties. A certificate from VRLP and Vornado to
the MM Contributors certifying (i) that the representations and warranties of
the Vornado Group contained in this Agreement are true and correct in all
material respects as of the Closing Date as if made on the Closing Date, except
to the extent that they expressly relate to an earlier date, or, if not,
identifying in detail any and all variances or deviations from said
representations and warranties and (ii) that the Vornado Realty Group has
performed or complied in all material respects with all of its agreements herein
contained and required to be performed or complied with by it hereunder.
H. Certification as to MM Contributor Unit Issuances. A certificate of
VRLP, certifying that each Unitholder has been admitted as a limited partner of
VRLP in respect to the applicable MM Contributor Units, effective on the Closing
Date, and that VRLP's books and records will, as of the Closing, indicate that
each Unitholder is the holder of the number of MM Contributor Units which is
called for pursuant to Section 1.2.1(a)(ii) of the Disclosure Schedule.
I. Registration Rights Agreement. A duly executed Registration Rights
Agreement.
J. Employment Agreements. Duly executed Employment Agreements.
K. Incumbency. Incumbency certificates of the Vornado Group certifying the
authority of the officers of Vornado, on its own behalf and as general partner
of VRLP, and VOI to execute and deliver this Agreement and all applicable
Transaction Documents.
L. Transfer Tax Declarations. The Tax Declarations.
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M. Pledge Agreement. A duly executed Pledge Agreement.
N. Other Documents and Instruments. The Vornado Group shall deliver such
other certificates, documents, instruments and agreements as the MM Contributors
shall deem necessary in their reasonable discretion in order to effectuate the
transactions contemplated herein in form and substance reasonably satisfactory
to the MM Contributors.
1.7 Closing Costs; Other Payments at Closing.
1.7.1 Transfer Taxes, etc. Based on each Parcel's Allocated Property
Value, all transfer or transaction taxes under applicable state, county and
local statutes and ordinances in connection with the transfer of the Parcels
shall be divided equally between the Vornado Realty Group and the MM
Contributors. The parties hereto, as appropriate, shall file all such necessary
tax returns and other documentation with respect to all such transfer and
similar taxes and fees. This provision shall survive the Closing.
1.7.2 Reimbursement for Capital Expenditures. At the Closing, the
Vornado Realty Group shall reimburse or pay the MM Contributors for those
capital expenditures made or incurred by the MM Contributors with respect to the
Real Property during the twenty four (24) month period preceding the Closing
Date (which capital expenditures shall be identified in writing by the MM
Contributors at least two (2) Business Days prior to Closing); provided,
however, that the amount reimbursed under this Section 1.7.2 shall not exceed
the amount of cash payable to the MM Contributors pursuant to Section 1.2.1(i)
prior to any adjustment for this Section 1.7.2. The Vornado Realty Group shall
disburse the amounts payable pursuant to this Section 1.7.2 by wire transfer of
immediately available federal funds to the name(s) and account(s) specified by
the MM Contributors in writing prior to the Closing Date. Any reimbursement to
the MM Contributors pursuant to this Section 1.7.2 shall be in addition to, and
not in lieu of, any amounts that the Vornado Realty Group shall be responsible
in respect of capital expenditures incurred during the period after the
Adjustment Date (i.e., as an adjustment pursuant to Section 1.3 or otherwise as
provided herein).
1.8 "As Is"; Non-reliance.
A. The Vornado Realty Group acknowledges and agrees that, except as
expressly set forth in this Agreement or any other transaction agreement or
document executed between members of the MM Group and the Vornado Realty Group
concurrently herewith or at Closing pursuant to this Agreement, VRLP is
acquiring the Property in its "as is" condition and specifically and expressly
without any warranties, representations or guarantees, either express or
implied, of any kind, nature, or type whatsoever from or on behalf of the MM
Contributors. The Vornado Realty Group acknowledges that it has completed its
due diligence investigation and, except as set forth in this Agreement or any
other transaction agreement or document executed between members of the MM Group
and the Vornado Realty Group concurrently herewith or at Closing pursuant to
this Agreement, the Vornado Realty Group has not relied and is not relying on
any information, document, reports, sales brochure or other literature, maps or
sketches, financial information, projections, pro formas or statements, that may
have been given by or made by or on behalf of the MM Contributors. The Vornado
Realty Group further acknowledges that, except as set forth in this Agreement or
any other Transaction Document, all materials relating to the Property which
have been provided or made available by the MM Contributors (the "MM
Contributors' Documents") have been provided without any warranty or
representation, expressed or implied as to their content, suitability for any
purpose, accuracy, truthfulness or completeness and the Vornado Realty Group
shall not have any
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recourse against the MM Contributors or its counsel, advisors, agents, officers,
members or employees of any information in the event of any errors therein or
omissions therefrom.
B. The Vornado Realty Group hereby acknowledges and agrees that,
except as expressly set forth in this Agreement or any other Transaction
Document, they are not entitled to, and do not, rely on the MM Contributors or
their agents as to (i) the quality, nature, adequacy or physical condition,
whether latent or patent, of the Property including, but not limited to, the
structural elements, foundation, roof, appurtenances, access, landscaping,
parking facilities or the electrical, mechanical, HVAC, plumbing, sewage or
utility system, facilities or appliances at or in connection with the Real
Property, if any; (ii) the existence, quality, nature, adequacy, physical
condition, or location of any utilities serving the Real Property; (iii) the
development potential of the Real Property, its habitability, merchantability or
fitness, suitability or adequacy of the Property for any particular purpose;
(iv) the zoning or other legal status of the Real Property or the potential use
of the Property; (v) the Real Property's or its operations' compliance with any
applicable codes, laws, building codes, fire codes, regulations, statutes,
ordinances, covenants, conditions or restrictions of, or agreements with any
governmental or quasi-governmental entity or of any other person or entity; (vi)
the quality of any labor or materials relating in any way to the Real Property;
or (vii) the condition of title to the Real Property or the nature, status and
extent of any right, encumbrance, license, reservation, covenant, condition,
restriction or any other matter affecting title to the Real Property. Without
limiting the foregoing, no representation or warranty is made with respect to
any forecasts, budgets or any and all other materials in the nature of pro
formas or projections of future results or expenses, in each case, delivered to
the Vornado Realty Group by the Xxxxxx Capital Group, the MM Contributors or
others except insofar as are expressly set forth elsewhere in this Agreement or
any other Transaction Document.
1.9 Market Price Adjustment. If the Closing Date Market Value Per Unit is
less than $38.7494 (such lesser amount being referred to herein as the "Floor
Amount"), then the number of Common Units issuable pursuant to Section
1.2.1(a)(ii) prior to the adjustment (i.e., 299,079) shall be increased so that
the number of Common Units issuable pursuant thereto after adjustment as
provided herein shall equal the product of (x) 299,079 times (y) the quotient
resulting from dividing the Floor Amount by the Closing Date Market Value Per
Unit. In addition, in such event, the conversion premium and conversion ratio
with respect to the Preferred Units shall likewise be adjusted as may be agreed
by the Vornado Realty Group and the MM Contributors. In the event such parties
do not mutually agree on an appropriate and equitable adjustment to the terms of
the Preferred Units and said disagreement cannot be resolved by such parties in
a timely manner, then each such party shall have the right to deliver written
notice to the other party that the parties hereto shall each select a nationally
recognized investment banking firm with offices located in New York City for
resolution of such dispute. To the extent such investment banking firms jointly
resolve the dispute, which resolution shall be evidenced by written notification
to each of the MM Group and the Vornado Realty Group prior to the Closing Date,
such decision shall be final, conclusive and binding on the MM Group and the
Vornado Realty Group; provided, however, to the extent such investment banking
firms are unable to so resolve said dispute, they shall select a third
nationally recognized investment banking firm (with offices located in New York
City) which has no affiliation with either the MM Group or the Vornado Realty
Group. The resolution of said disagreement by the three investment banking firms
so selected shall be effected by the agreement of at least two of such three
firms and shall be made in writing and delivered to each of the MM Contributors
and the Vornado Realty Group as promptly as practicable, but in no event later
than the Business Day prior to the Closing Date (which writing shall set forth
the nature and amount of the adjustment, if any, as finally determined) and
shall be final, conclusive and binding on the MM Group and the Vornado Realty
Group. The MM Group and the Vornado Realty Group shall each pay one-half of the
aggregate amount of fees and expenses incurred by such investment banking firms
engaged in connection with this Section 1.9.
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1.10 Land Trust Joinder. The MM Contributors have caused the Land
Trustee to execute a Joinder to this Agreement, by which the Land Trustee on
behalf of each of the Land Trusts agrees, upon the written direction of the
respective beneficiaries of the Land Trusts, to convey the respective Parcels
held by the Land Trusts in accordance with the terms of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE MM CONTRIBUTORS
The MM Contributors represent and warrant, jointly and severally, to
the Vornado Realty Group as follows:
2.1 Organization. As of the date hereof, (i) each of MMPI, MMPI Sub,
MMEI, Mart Franchise Venture, L.L.C., a Delaware limited liability company and a
subsidiary of MMEI ("MFV"), Mart Franchise Center, Inc., an Illinois corporation
and a subsidiary of MMPI Sub, and Xxxxx Development Corporation, a Florida
corporation and a subsidiary of MMEI (each, a "To Be Acquired Company" and
collectively, the "To Be Acquired Companies"), (ii) each of the MM Contributors
that is a corporation, partnership, limited liability company, trust or other
entity, as applicable (each, a "MM Contributor Entity") and (iii) each general
partner or managing member of any MM Contributor Entity that is itself a
corporation, partnership, limited liability company, trust or other entity
(each, a "GP/MM"), is, and at the time of Closing will be, duly organized and
validly existing as a corporation, partnership, limited liability company, trust
or other entity, as applicable, and in good standing under the laws of the State
where such entity was incorporated or otherwise organized. Except as set forth
in Section 2.1 of the Disclosure Schedule, each To Be Acquired Company, each MM
Contributor Entity and each Land Trust (collectively, the "MM Entities") is duly
qualified or licensed and in good standing to do business as a corporation,
partnership, limited liability company, trust or other entity, as applicable, in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except in each case where the failure to be so qualified or licensed would not
individually or in the aggregate materially and adversely restrict the ability
of such entity to conduct business as presently conducted by it in such
jurisdiction; each jurisdiction in which each respective To Be Acquired Company
is so qualified is listed in Section 2.1 of the Disclosure Schedule. The MM
Contributors have heretofore delivered to the Vornado Realty Group accurate and
complete copies of the initial certificate of incorporation and all amendments
thereto, the bylaws, corporate minutes and stock transfer records, or, in the
case of MFV, the certificate of formation and certificate of limited liability
company agreement, or other similar constituent documents, as applicable, of
each of the To Be Acquired Companies, which documents are identified in Section
2.1 of the Disclosure Schedule (collectively, the "Organizational Documents").
Notwithstanding anything herein to the contrary, certain portions of the
corporate minutes delivered to the Vornado Realty Group have been or may be
redacted by the MM Contributors.
2.2 Authority. Each MM Entity and each GP/MM acting on behalf of any
MM Entity has all requisite power and authority to execute and deliver this
Agreement and each of the other agreements and instruments being executed and
delivered concurrent herewith and each of the other agreements and instruments
to be executed in connection with the transactions contemplated by this
Agreement (the "Transaction Documents") and consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and each of the Transaction Documents and the consummation of the transactions
contemplated herein and therein have been duly and validly authorized by all
requisite action and no other action on the part of any MM Entity or GP/MM or
any shareholder, partner, member,
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beneficial owner or other affiliate thereof (except for customary letters of
direction on behalf of Land Trust beneficiaries to the Land Trustees) is
necessary to authorize the execution, delivery and performance of any such MM
Entity of its obligations under this Agreement or any other Transaction Document
or to consummate the transactions contemplated hereby or thereby. This Agreement
and each Transaction Document being executed and delivered concurrent herewith,
has been duly and validly executed and delivered by each of the MM Entities
signatory hereto and, assuming this Agreement and each such other Transaction
Document has been duly authorized, executed and delivered by each member of the
Vornado Realty Group, constitutes a valid and binding agreement of each of the
applicable MM Entities, enforceable against each such Person in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar rights of creditors generally and by
general principles of equity.
2.3 Consents and Approvals; No Violations. Except as set forth in
Section 2.3(a) of the Disclosure Schedule, no filing with, and no permit,
authorization, consent or approval of, any Person or Governmental Authority is
necessary or required to be made or obtained by any of the MM Entities for the
execution of this Agreement or the consummation of the transactions contemplated
by this Agreement by such entity. None of the execution and delivery of this
Agreement or any Transaction Document by any MM Entity, or the consummation by
any MM Entity of the transactions contemplated hereby or thereby or compliance
by any MM Entity with any of the provisions hereof or thereof will (i) conflict
with or result in any breach of any provision of the organizational documents of
any such MM Entity; (ii) except as set forth in Section 2.3(b) of the Disclosure
Schedule, result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any Material Contract (as defined below) or any other material
indenture, license, contract, agreement or other instrument or obligation to
which any MM Entity is a party or by which any MM Entity or any of its
properties or assets may be bound; or (iii) to the knowledge of the MM
Contributors, violate in any material respect any order, writ, injunction,
decree, statute, rule or regulation applicable to any MM Entity or any of the MM
Entities' properties or assets (including the properties and/or assets of any
direct or indirect subsidiary of any such entity).
2.4 Litigation. (a) Except as set forth in Section 2.4(a) of the
Disclosure Schedule, no action, suit, claim, investigation or proceeding,
whether legal or administrative or in mediation or arbitration or otherwise, is
pending or, to the knowledge of the MM Contributors, threatened, at law or in
equity, against any MM Entity which, if determined adversely to any MM Entity,
could reasonably be expected to interfere in any material respect with the
ability of such MM Entity to perform its obligations pursuant to this Agreement
or any Transaction Document or materially and adversely affect the value of the
To Be Acquired Companies, taken as a whole, or any of the Real Properties. There
are no judgments, decrees or orders entered on any suit or proceeding against
any MM Entity which, if determined adversely to any such MM Entity, could
reasonably be expected to restrain, prohibit, invalidate, set aside, rescind,
prevent, make unlawful or otherwise interfere in any material respect with the
execution, delivery or consummation of the transactions contemplated under this
Agreement or the Transaction Documents or materially and adversely affect the
value of the To Be Acquired Companies, taken as a whole, or any of the Real
Properties.
(b) Except as set forth on 2.4(b), there are no actions,
suits, labor disputes, litigations or other proceedings currently pending or, to
the knowledge of the MM Contributors, threatened against any of the MM Entities
or relating to all or any portion of any of the Properties or the occupancy, use
or operation thereof which, if determined adversely to any such MM Entity, could
reasonably be expected to restrain, prohibit, invalidate, set aside, rescind,
prevent, make unlawful or otherwise interfere in any material respect with the
execution, delivery or consummation of the transactions contemplated under
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this Agreement or the Transaction Documents or materially and adversely affect
the value of the To Be Acquired Companies, taken as a whole, or any of the Real
Properties.
2.5 Bankruptcy, etc. No MM Entity or any GP/MM is presently
insolvent (after taking into account any capital contributions made or to be
made by the applicable entity's parent or equityholders) or has made a general
assignment for the benefit of creditors, filed any voluntary petition in
bankruptcy or suffered the filing of any involuntary petition in bankruptcy or
suffered the filing of any involuntary petition by any of its creditors,
suffered the appointment of a receiver to take possession of all, or
substantially all, of its assets, suffered the attachment or other judicial
seizure of all, or substantially all, of its assets, admitted in writing its
inability to pay its debts as they come due or made an offer of settlement,
extension or composition to its creditors generally.
2.6 Investment Representations. In order to induce VRLP to issue the
MM Contributor Units required to be issued hereunder, each Unitholder hereby
acknowledges and confirms its understanding that the issuance by VRLP of the MM
Contributor Units is intended to be exempt from registration under the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "1933 Act"). In furtherance thereof, the MM Contributors represent and
warrant to the Vornado Realty Group as of the date hereof and as of the Closing
Date as follows:
(a) Each Unitholder is acquiring its MM Contributor Units
solely for its own account for the purpose of investment and not as a nominee or
agent for any other person and not with a view to, or for offer or sale in
connection with, any distribution of any thereof. Each Unitholder acknowledges
and agrees that it is not permitted to offer, transfer, sell, assign, pledge,
encumber, hypothecate or otherwise dispose of any of its MM Contributor Units
except as permitted in (i) this Agreement or (ii) the OP Agreement.
(b) Each Unitholder is knowledgeable, sophisticated and
experienced in business and financial matters; each Unitholder fully understands
the limitations on transfer described in this Agreement and the OP Agreement.
Each Unitholder is able to bear the economic risk of holding the MM Contributor
Units for an indefinite period and is able to afford the complete loss of its
investment in the MM Contributor Units.
(c) Each Unitholder has been advised that (i) unless the MM
Contributor Units are transferred or redeemed pursuant to the OP Agreement or
subsequently registered under the 1933 Act or an exemption from such
registration is available, the MM Contributor Units must be held indefinitely
and each Unitholder will continue to bear the economic risk of its investment in
the MM Contributor Units during the period of ownership; (ii) it is not
anticipated that there will be any public market for the MM Contributor Units at
any time; (iii) Rule 144 promulgated under the 1933 Act may not be available
with respect to the sale of any securities of VRLP and VRLP has made no
covenant, and makes no covenant, to make Rule 144 available with respect to the
sale of any securities of VRLP (although Vornado has agreed to register the
Vornado Common Shares issuable upon redemption of the MM Contributor Common
Units for sale pursuant to the Registration Rights Agreement); and (iv) a
notation shall be made in the appropriate records of VRLP indicating that the MM
Contributor Units are subject to the restrictions on transfer set forth in this
Agreement and the OP Agreement.
(d) Each of the Unitholders is an "accredited investor" (as
such term is defined in Rule 501 (a) of Regulation D under the 1933 Act).
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2.7 Broker. Except for the $3,906,250 fee payable by VRLP to Xxxxxx
Capital on the Closing Date, no MM Entity has entered into any agreement,
written or otherwise, with any broker, finder, salesperson or other Person for
the payment of any broker's, finder's or other similar fee in connection with
the transactions contemplated herein.
2.8 Collective Bargaining Agreements; Multiemployer Plans. Set forth
in Section 2.8 of the Disclosure Schedule is a complete list of the collective
bargaining agreements to which Merchandise Mart Properties, Inc., an Illinois
corporation and a wholly-owned subsidiary of MMPI ("MMPI Sub"), is a party or is
otherwise bound and which cover employees at the Real Property and MMPI. Copies
of such collective bargaining agreements have been made available to the Vornado
Realty Group. Neither MMPI nor any ERISA Affiliate (as defined below) has in the
past six (6) years withdrawn from any "multiemployer plan," as defined in
Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Multiemployer Plan") and does not expect to incur any withdrawal
liability payable under Section 4219 of ERISA with respect to such multiemployer
plan under subtitle E of Title IV of ERISA. The withdrawal liability of MMPI and
its subsidiaries under each Multiemployer Plan to which MMPI, any of its
subsidiaries or an ERISA Affiliate has contributed during the preceding 12
months, determined as if a "complete withdrawal," within the meaning of Section
4203 of ERISA, had occurred as of the date hereof, does not exceed $11,000,000.
Except for the MMPI Sub collective bargaining agreements referred to in Section
2.8 of the Disclosure Schedule, none of the To Be Acquired Companies is a party
to or otherwise bound by any collective bargaining agreements. At Closing, none
of the To Be Acquired Companies (other than MMPI Sub) will have any employees
subject to collective bargaining agreements or Multiemployer Plans.
2.9 Employee Benefits.
(a) Schedule and Documents. Section 2.9(a) of the Disclosure
Schedule sets forth a list of each employee benefit plan, policy, program or
contract including, but not limited to, "employee benefit plans" as defined in
Section 3(3) of ERISA and including deferred compensation, stock option, stock
purchase, stock appreciation right, stock based, incentive and bonus plans,
severance plans, and any agreements providing supplemental retirement, medical
or life insurance benefits ("Plans"), which are maintained or contributed to by
MMPI or MMPI Sub for the benefit of, or pursuant to which MMPI Sub or an ERISA
Affiliate (as hereinafter defined) has any liability with respect to, any
current or former employees or directors (or dependents or beneficiaries
thereof) of MMPI, MMPI Sub or any ERISA Affiliate other than a Multiemployer
Plan (an "MMPI Employee Plan") and any trust (including a trust intended to
qualify under Section 501(c)(9) of the Code) or other funding vehicle related
thereto and any Multiemployer Plan to which MMPI, MMPI Sub or any ERISA
Affiliate has any current obligation to contribute. Except for the MMPI Employee
Benefit Plans, none of the To Be Acquired Companies maintains any Plans. For
purposes of this Agreement ERISA Affiliate shall mean any business or entity
which is a member of a "controlled group" or an "affiliated service group" with
MMPI, within the meaning of any of Sections 414(b), (c), (m), or (o) of the
Code, or is under common control with MMPI, within the meaning of Section 4001
of ERISA. With respect to each MMPI Employee Plan and each management,
employment, severance, consulting or similar agreement or contract (an
"Employment Contract") between MMPI Sub and any current employee (an "MMPI Sub
Employee Agreement"), MMPI Sub has provided to the Vornado Realty Group (i) true
and complete copies (or, to the extent no such copy exists, an accurate
description) thereof, including any trust agreements and insurance contracts
forming a part of any MMPI Employee Plan and all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each MMPI Employee Plan; and (iii) the two most recent annual
reports (Series 5500 and all schedules thereto), if any, required under ERISA in
connection with each MMPI
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Employee Plan or related trust. Except for the MMPI Sub Employee Agreements,
none of the To Be Acquired Companies is a party to an Employment Contract.
(b) Employee Plan Compliance. (i) MMPI and MMPI Sub have
performed in all material respects the obligations required to be performed by
them under the MMPI Employee Plans and each such Plan and MMPI Sub Employee
Agreement has been established and maintained in all material respects in
accordance with its terms and in compliance with all applicable laws, including,
but not limited to, ERISA and the Code; (ii) each MMPI Employee Plan intended to
qualify under Section 401 of the Code is so qualified and a favorable
determination letter has been issued by the Internal Revenue Service with
respect to each such MMPI Employee Plan and there are no circumstances likely to
result in the revocation of such determination letter; (iii) there are no
actions, suits or claims pending (other than routine claims for benefits)
against any MMPI Employee Plan or against the assets of any MMPI Employee Plan;
(iv) no reportable event, within the meaning of Section 4043 of ERISA (other
than with respect to which the 30-day notice requirement has been waived), and
no event described in Section 4062 or 4063 of ERISA, has occurred with respect
to any MMPI Employee Plan with respect to which there could be any material
liability; and (v) neither MMPI, MMPI Sub nor any ERISA Affiliate has engaged in
a transaction with respect to an MMPI Employee Plan which, assuming the taxable
period of such transaction expires as of the date hereof, could subject such
entity to a material tax or penalty imposed by either Section 4975 of the Code
or Section 502(i) of ERISA.
(c) Pension Plans. With respect to each MMPI Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA and which is subject to Title IV of ERISA (a "Pension Plan"), the
present value of all accrued benefits, determined on a plan termination basis
using the actuarial assumptions established by the Pension Benefit Guaranty
Corporation ("PBGC") as in effect on the date of determination, does not as of
the date hereof and will not on the Closing Date exceed the fair market value of
the assets (which for this purpose shall not include any accrued but unpaid
contributions) of such MMPI Employee Plan. No liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by MMPI or MMPI Sub or
any ERISA Affiliate with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them. All material contributions
required to be made under any MMPI Employee Plan have been timely made. Neither
any Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. Neither MMPI nor MMPI Sub has provided, or is
required to provide, security to any Pension Plan or to any single-employer plan
of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(d) No Post-Employment Obligations. Except as set forth in
Section 2.9(a) of the Disclosure Schedule, neither MMPI nor MMPI Sub maintains
or contributes to any plan which provides, or has any liability to provide, life
insurance, medical or other employee welfare benefits to any current employee
upon their retirement or termination of employment, except as may be required by
law.
(e) Effect of Transaction. (i) The execution of, and
performance of the transactions contemplated in this Agreement will not (either
alone or upon the occurrence of any additional or subsequent events) constitute
an event under any MMPI Employee Plan or MMPI Sub Employee Agreement which will
or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any current or former
employee or director and will not result in any breach or violation of, or
default under, any such Plan or Arrangement.
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(ii) No payment or benefit which will or may be made by MMPI
Sub will be characterized as an "excess parachute payment" within the meaning of
Section 280G(b)(1) of the Code.
2.10 Leases. (a)(i) The rent rolls and reports which are set forth
in Section 2.10(a)(1) of the Disclosure Schedule (the "Rent Rolls"), are true
and correct schedules of all Leases (other than Temporary Space Licenses)
affecting any Real Property as of January 15, 1998 and contain with respect to
each such Lease the following information: name of tenant, space leased, expiry
date of existing term, whether unit is vacant, any security deposits and the
monthly base rent; (ii) the Leases identified on the Rent Rolls, the Temporary
Space Licenses and the Ground Leases (each of which Ground Leases shall be
assigned to VPLP or its designee in accordance with Section 1.6.1(D)) constitute
all of the leases, licenses, tenancies or occupancies affecting any Property as
of January 15, 1998, and each of the Leases identified on the Rent Rolls and
each of the Temporary Space Licenses is a valid and enforceable obligation of
the landlord or licensor thereunder, as the case may be (all references to
landlord under this Agreement shall, as the context may require, also include
the licensor under any Temporary Space Licenses) and, to the knowledge of the MM
Contributors, each of the other parties thereto; (iii) except as set forth in
the Rent Rolls or otherwise identified in the delinquency report set forth in
Section 2.10(a)(2) of the Disclosure Schedule, as of January 15, 1998 none of
the MM Entities has received notice of any default by the landlord under any
Lease; (iv) except as set forth in the Rent Rolls or in Section 2.10(a)(2) of
the Disclosure Schedule, effective as of January 15, 1998 no Tenant shown on the
Rent Rolls is in arrears for the payment of rent under its Lease; and (v) none
of the Leases contains, nor does any Tenant otherwise have, a purchase option or
any right of first offer or first refusal to purchase (or any other similar
right, as distinguished from rights to lease additional space or to extend the
term of a Lease) with respect to any Real Property or any portion thereof.
Attached to the Disclosure Schedule as Section 2.10(a)(3) is a list of all
Temporary Space Licenses, or binding commitments for Temporary Space Licenses,
affecting the Real Property in effect on January 15, 1998, and said list is
true, correct and complete in all material respects as of such date.
(b) Except as set forth in Section 2.10(b)(1) of the
Disclosure Schedule, to the best of the MM Contributors' knowledge, each of the
MM Contributors and each of the To Be Acquired Companies has performed all of
the obligations and observed all of the covenants required of the landlord to
have been performed on or prior to the Adjustment Date (and as of the date which
is fifteen (15) days prior to the Closing Date) under the terms of the Leases to
the extent same would require a payment in excess of $10,000 with respect to any
Lease. Except as set forth in Section 2.10(b)(1) of the Disclosure Schedule, all
work, alterations, improvements or installations required to be made by the
landlord on or prior to the Adjustment Date (and as of the date which is fifteen
(15) days prior to the Closing Date) for or on behalf of Tenants under the
Leases have in all respects been carried out, performed and complied with to the
extent same would require a payment in excess of $10,000 with respect to any
Lease, and there is no agreement with any Tenant under any such Lease for the
performance of any work to be done in the future other than that which is
required pursuant to its Lease. Except as set forth in Section 2.10(b)(1) of the
Disclosure Schedule, no work has been performed by the landlord (or, to the
knowledge of the MM Contributors, any Tenant) at any Real Property which would
require an amendment to the certificate of occupancy for the Improvements on
such Real Property for which an amendment has not been obtained, and any and all
work performed at the Real Property prior to the date hereof and to the Closing
Date has been and will be in all material respects in accordance with the rules,
laws and regulations of all applicable authorities.
2.11 Intentionally Omitted.
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2.12 Service Contracts. Section 2.12 of the Disclosure Schedule sets
forth all material Service Contracts. True, accurate and complete copies of the
Service Contracts have been made available to the Vornado Realty Group. None of
the Service Contracts has been modified in any material respect and each of the
Service Contracts is in full force and effect without any material default or
claim by any Person of any material default by any MM Contributor.
2.13 Condemnation Notices. Except as set forth in Section 2.13 of
the Disclosure Schedule as of the date hereof, no MM Contributor has received
any written notice of and no MM Contributor has knowledge of any pending
condemnation proceeding affecting or which may affect the Real Property or any
part thereof.
2.14 Violations. Except as set forth in Section 2.14 of the
Disclosure Schedule, and except for environmental problems and conditions which
are addressed separately in Section 2.17 below, no MM Contributor has received
any written notices relating to, or has knowledge of, any material violations of
any Laws affecting any To Be Acquired Company or any portion of the Real
Property.
2.15 Leasing Commissions. Section 2.15 of the Disclosure Schedule is
a schedule of all unpaid or outstanding leasing commission obligations which are
in excess of $20,000 with respect to any individual Lease and which are owed to
third parties (other than MMPI Sub) pursuant to agreements (written or
otherwise) made on or prior to the date hereof (whether or not payable after the
date hereof) on or in connection with the Leases.
2.16 Personal Property. Except as set forth in Section 2.16 of the
Disclosure Schedule, all Personal Property is now owned by one or more MM
Entities, and will on the Closing Date be owned by such MM Entities, in each
case free and clear of any conditional bills of sale, chattel mortgages,
security agreements, financing statements or other security interests of any
kind other than Liens created by any member of the Vornado Realty Group or any
affiliate thereof.
2.17 Environmental Matters. Except (a) as set forth in the
environmental reports prepared for the MM Property Contributors, which are
described in Section 2.17 of the Disclosure Schedule (the "MM Environmental
Reports"), (b) as set forth in the environmental reports and studies prepared
for the Vornado Realty Group, which are described in Section 2.17 of the
Disclosure Schedule (the "Vornado Environmental Reports" and, together with the
MM Environmental Reports, the "Environmental Reports") and (c) for the other
items described in Section 2.17 of the Disclosure Schedule, as of the date
hereof, (i) there is no work currently being performed at any Parcel in order to
bring the Property specifically into compliance with Environmental Laws (other
than ACM abatement in accordance with established protocols for the applicable
MM Entity); (ii) there are, to the knowledge of the MM Contributors, no Above
Ground Storage Tanks or Underground Storage Tanks at any Parcel, (iii) none of
the MM Entities has received notice from any Tenant or any Governmental
Authority (state or federal) to the effect that a Hazardous Substance
(including, without limitation, any Above Ground Storage Tanks or Underground
Storage Tanks) exists on any Parcel and that same is a violation of any existing
Environmental Law or requires remediation pursuant to applicable Environmental
Laws; (iv) none of the MM Entities has knowledge of any asbestos or
asbestos-containing material at any Parcel that is not in compliance with all
applicable requirements of Environmental Laws; (v) none of the MM Entities has
knowledge of any Hazardous Materials on, under, at, emanating from or otherwise
affecting any portion of any Parcel which it knows to be a violation of any
existing Environmental Laws or knows to require remediation pursuant to
applicable Environmental Laws; and (vi) to the knowledge of the MM Contributors,
as of the date hereof, none of the MM Entities nor any To Be Acquired Company
has caused or permitted the Discharge of any Hazardous Materials on, under or
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at any Parcel or any part thereof which it knows to have been a violation of
then applicable Environmental Laws. At Closing, the MM Property Contributors
shall confirm the representations set forth in this Section 2.17 subject however
to any information set forth in the Certificate provided for in Section
1.6.1(K), but the facts so disclosed in such Certificate shall not be deemed to
constitute a misrepresentation or a representation that is not true and correct
as of the Closing Date pursuant to Section 7.3.1, and the Vornado Realty Group's
only rights with respect to the facts so disclosed in such Certificate shall be
as set forth in Section 6.13.
(b) As of the date hereof, the MM Entities have (i) made
available to the Vornado Realty Group true, correct and complete copies of all
Environmental Documents concerning the Real Property that were generated by or
on behalf of, or are otherwise in the possession of, any of the MM Entities
(including, without limitation, the Environmental Documents listed on Section
2.17 of the Disclosure Schedule) and (ii) provided to the Vornado Realty Group
true, correct and complete copies of the MM Environmental Reports, and on or
prior to the Closing Date the MM Entities shall have delivered to the Vornado
Realty Group, promptly upon receipt by any of them, true and correct copies of
any Environmental Documents that become available to the MM Entities after the
date hereof (other than Environmental Documents relating to ACM abatement).
2.18 Employees. Section 2.18 of the Disclosure Schedule sets forth a
true, correct and complete list of all employees presently employed by any MM
Entity or any direct or indirect Affiliate thereof working at or otherwise
employed in connection with the management or operation of any of the Properties
as of January 14, 1998, the entity or entities by which each such person is
employed and their respective base salaries for 1998 (excluding certain
executives for which such data previously has been provided) and union
affiliations (if any).
2.19 Material Repairs. Except as set forth in Section 2.19 of the
Disclosure Schedule, no MM Contributor has knowledge of any outstanding
requirement or recommendation by (i) any insurance company currently insuring
any of the Properties; (ii) any board of fire underwriters or other body
exercising similar functions with respect to any of the Properties; or (iii) the
holder of any mortgage or other similar lien encumbering any MM Entity's
interest in any of the Properties which, in each such case, require or recommend
any repairs or work of any material nature be performed on such Property.
2.20 Tax Information. Annexed to the Disclosure Schedule as Section
2.20 is a listing of the following, which are true, complete and correct in all
material respects for each Parcel: (i) its adjusted basis for federal income tax
purposes as of December 31, 1996; (ii) the date placed in service; (iii) the
depreciation method; and (iv) the remaining useful life for federal income tax
purposes. On or prior to February 28, 1998, the respective MM Contributors
covenant and agree to provide to the Vornado Realty Group a schedule
supplementing and updating the information in this Section 2.20 as of December
31, 1997.
2.21 Capitalization. (a) As of the Closing, the capitalization of
each To Be Acquired Company will be as set forth in Section 2.21(a) of the
Disclosure Schedule. As of the Closing, except as set forth in Section 2.21(a)
of the Disclosure Schedule, the outstanding capital stock or other equity
interests of each To Be Acquired Company will be free and clear of any mortgage,
pledge, Lien, encumbrance, security interest, claim or other right or interest
of any third party of any nature whatsoever, and will have been duly authorized,
validly issued and fully paid and will be nonassessable and free of any
preemptive rights.
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(b) As of the Closing, the shares of capital stock and other
equity interests described in clause (a) above for each of the respective To Be
Acquired Companies will represent all of the issued and outstanding capital
stock or other equity interests, as applicable, of each such entity. Other than
the current plan to recapitalize and restructure the Management Companies to
effect the capital structure set forth in Section 2.21(a) above and otherwise in
favor of the Vornado Realty Group or its Affiliates as contemplated by this
Agreement, there are no (and as of the Closing there will be no) subscriptions,
options, warrants, calls, rights, convertible securities or other agreements or
commitments of any character, whether oral or written, relating to the issuance,
transfer, sale, delivery, voting or redemption (including any right of
conversion or exchange under any outstanding security or other instrument) of
any of the capital stock or other equity interests of any of the To Be Acquired
Companies. Except as set forth in Section 2.21(b) of the Disclosure Schedule,
there are no (and as of the Closing there will be no) voting trusts, stockholder
agreements, proxies or other agreements or understandings in effect with respect
to the voting or transfer of the capital stock or other equity interests of any
of the To Be Acquired Companies to which any of such entities or any MM Entity
is a party or is bound.
2.22 Title to Assets. The assets owned or leased by each of the To
Be Acquired Companies having a book value in excess of $25,000 are correctly
identified in Section 2.22 of the Disclosure Schedule (the "Management Company
Assets"). Except as disclosed in Section 2.22 of the Disclosure Schedule, as of
the date hereof and as of the Closing Date there are no Liens on the Management
Company Assets. The To Be Acquired Companies have good and valid title to the
Management Company Assets identified in Section 2.22 of the Disclosure Schedule
as being owned or leased by them.
2.23 Tax Matters. Except as set forth in Section 2.23 of the
Disclosure Schedule:
(a) All Tax Returns required to be filed by the To Be Acquired
Companies have been timely filed with the appropriate taxing authority (giving
effect to extensions granted with respect thereto), and all such Tax Returns are
true, correct, and complete in all material respects. The To Be Acquired
Companies have timely paid all Taxes due or claimed to be due from them by any
federal, state, local, foreign or other taxing authority and no deficiency for
any Taxes has been proposed, asserted or assessed against the To Be Acquired
Companies that has not been resolved and paid in full. There are no Liens for
Taxes (except for Liens for Taxes not yet due and payable) upon any of the
Property or upon any of the assets of the To Be Acquired Companies.
(b) None of the To Be Acquired Companies is a party to any
material pending action or proceeding by any taxing authority for assessment or
collection of any Tax, and no material claim for assessment or collection of any
Tax has been asserted against it. None of the To Be Acquired Companies has
executed or filed (or has been asked to execute or file) with the Internal
Revenue Service or any other taxing authority any agreement now in effect
extending the period for assessment or collection of any Tax. No claim has been
made by any Governmental Authority in a jurisdiction where any To Be Acquired
Company does not file Tax Returns that it is or may be subject to taxation by
the jurisdiction. There is no pending dispute or claim concerning any tax
liability of any To Be Acquired Company (x) claimed or raised by any taxing
authority in writing or (y) as to which any MM Contributor has knowledge, and no
To Be Acquired Company has entered into or intends to enter into any agreement
with any taxing authority, including but not limited to any closing agreements,
which could reasonably be expected to have a Material Adverse Effect on the To
Be Acquired Companies, taken as a whole.
(c) The To Be Acquired Companies have not filed any elections
to be "S Corporations" within the meaning of Section 1362(a) of the Code, or
under any analogous provision of state
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or local law. The To Be Acquired Companies are not subject to any joint venture,
partnership or other arrangement or contract that is treated as a partnership
for U.S. federal income tax purposes. The To Be Acquired Companies are not party
to and are not bound by or have any obligation under any tax sharing allocation
or indemnity agreement or similar contract or arrangement.
(d) The To Be Acquired Companies have complied with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes and have, within the time and the manner prescribed by law, withheld
from employee wages and paid over to the proper governmental authorities all
amounts required to be so withheld and paid over under applicable laws.
(e) No power of attorney granted by the To Be Acquired
Companies with respect to any Taxes is currently in force.
2.24 Material Contracts. (a) Section 2.24(a) of the Disclosure
Schedule sets forth a true, correct and complete list (including the title,
date, and parties), as of the date hereof, of each of the following contracts,
arrangements or understandings (other than Service Contracts, Leases and
contracts to perform obligations under Leases) to which any of the MM Entities
is a party with respect to the Property (collectively, the "Material
Contracts"):
(i) each employment, severance, management, consulting, change in
control and other agreement involving compensation for services rendered
or to be rendered;
(ii) each credit agreement, loan agreement, indenture, note,
mortgage, security agreement, loan commitment, evidence of indebtedness or
other contract relating to indebtedness for borrowed money;
(iii) each contract, agreement or other arrangement granting any
person or entity any preferential right to purchase any of the material
assets of any of the To Be Acquired Companies;
(iv) each collective bargaining or similar agreement with any labor
union or association representing employees of any To Be Acquired Company;
(v) each employee benefit or other similar plan currently in
existence with respect to employees of any To Be Acquired Company;
(vi) each contract, agreement, arrangement or understanding with any
stockholder, partner, director or officer of any of the To Be Acquired
Companies; and
(vii) each other contract, agreement or understanding (whether
written or oral), (A) entered into in the Ordinary Course of Business
which involves the payment or receipt by any member of the MM Group of an
amount in excess of $50,000 per annum or (B) that was entered into or now
is outside of the Ordinary Course of Business.
(b) The MM Group has delivered or made available to the
Vornado Realty Group true, correct and complete copies of all Material Contracts
(or representative forms thereof). All of the Material Contracts are valid,
binding and enforceable obligations of the members of the MM Group and the To Be
Acquired Companies that are parties thereto in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar rights of
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creditors generally and by general principles of equity. Except as set forth in
Section 2.24(b) of the Disclosure Schedule, to the knowledge of the members of
the MM Group none of the MM Entities is in material breach of or default under
any of the Material Contracts.
(c) Section 2.24(c) of the Disclosure Schedule sets forth a
complete list as of the date hereof of all bank and savings accounts,
certificates of deposit, safe deposit boxes and credit cards relating to the
Contributed Interests and established by or for the benefit of any of the MM
Entities or the To Be Acquired Companies or their respective directors, officers
or employees, in their capacities as such. Non-employee directors shall deliver
to the applicable To Be Acquired Company on or prior to the Closing Date all
credit cards for the account of the To Be Acquired Companies and relating to the
Contributed Interests.
2.25 Subsidiaries. No To Be Acquired Company owns, directly,
indirectly, beneficially or otherwise, capital stock or any other beneficial or
equity interest in any other Person (other than an interest in another To Be
Acquired Company).
2.26 MM Stockholders: Valid Title; Power to Act. The MM Stockholders
collectively own, and will own at the Closing, 100% of the outstanding capital
stock of each of MMPI and MMEI, and MMPI owns and will own at Closing 100% of
the outstanding capital stock of MMPI Sub, and each MM Stockholder and MMPI has
and will have at Closing good and valid title to 100% of the shares of each such
entity to be contributed by such MM Stockholder or MMPI, as applicable, free and
clear of any mortgage, pledge, Lien, encumbrance, security interest or claim of
right or interest of any third party of any nature whatsoever, except as set
forth in Section 2.26 of the Disclosure Schedule with respect to Liens which
will be released at Closing.
2.27 Intellectual Property. The tradenames and trademarks listed in
Section 2.27 of the Disclosure Schedule as "registered tradenames" (the
"Registered Tradenames") identifies all tradenames and trademarks used in the
business of the MM Entities which are registered. The tradenames and trademarks
listed in Section 2.27 of the Disclosure Schedule as "unregistered tradenames"
(the "Unregistered Tradenames", and together with the Registered Tradenames, the
"Intellectual Property") identifies all tradenames and trademarks used in the
business of the MM Entities which are not registered. No MM Entity has received
written notification from any Person of infringement of any Intellectual
Property owned or otherwise being used by it other than as provided in Section
2.27 of the Disclosure Schedule.
2.28 Investment Company Act of 1940. No To Be Acquired Company is at
the date of this Agreement, or will be at the Closing, an entity that is
required to be registered with the SEC as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act").
2.29 Real Property Matters. Complete and correct copies of each of
the Leases (other than Temporary Space Licenses) have been furnished or made
available to Vornado. Except as disclosed in Section 2.29 of the Disclosure
Schedule, no unrepaired damage or destruction has occurred and, to the knowledge
of the MM Contributors, no condemnation or rezoning proceeding has been
threatened or commenced, with respect to any of the Real Property that would
constitute a Material Event under Section 6.13(d) or that individually or in the
aggregate materially impair the continued use or operation of the affected Real
Property. As of the date hereof, none of the MM Entities has made any claim
under any title insurance policy insuring any such entity's interest in any of
the Real Property since 1980. None of the MM Contributors nor any To Be Acquired
Company has received any written notice that there is any material uncured
violation of a condition or agreement contained in any easement, restrictive
covenant or any similar
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instrument or agreement affecting the Real Property or any portion thereof other
than as set forth in Section 2.29 of the Disclosure Schedule. The parties hereby
confirm and acknowledge that the MM Entities are retaining all rights and claims
under any title insurance policies issued prior to the date hereof.
2.30 Insurance. Section 2.30 of the Disclosure Schedule lists all
insurance policies (other than title insurance policies) presently affording
coverage with respect to each Property and each To Be Acquired Company and, to
the knowledge of the MM Contributors, the information contained therein is
accurate in all material respects as of the date hereof. The MM Contributors
have previously delivered or made available to the Vornado Realty Group true,
correct and complete copies of each of the insurance policies identified in
Section 2.30 of the Disclosure Schedule. At all times since the later of January
1, 1988 or the date on which any applicable entity was organized or formed, the
MM Entities have continuously maintained liability insurance on, and now
maintain liability insurance on, each of the Properties and, in the case of the
To Be Acquired Companies, on the assets, business and personnel of each of the
To Be Acquired Companies. As of the Closing, the MM Entities shall have
continuously maintained, since the date hereof, such insurance coverage as is
provided by the insurance policies identified in Section 2.30 of the Disclosure
Schedule.
2.31 Intentionally Omitted.
2.32 Tax Bills. As of the date hereof, Section 2.32 of the
Disclosure Schedule identifies the real property tax statements for Real
Property that have been furnished by the MM Contributors. to the Vornado Realty
Group and such deliveries are true and correct copies of the most recent tax
statements for each Parcel. Except as is included in the tax statements
identified in Section 2.32 of the Disclosure Schedule, none of the members of
the MM Group has received written notice of any special assessment or
reassessment affecting any of the Parcels.
2.33 Bankruptcies of Tenants. To the knowledge of the MM
Contributors, as of the date hereof, none of the MM Entities has received notice
of the filing by any Tenant occupying any part of any of the Properties of a
bankruptcy, reorganization, insolvency or similar proceeding, except as set
forth in Section 2.33 of the Disclosure Schedule.
2.34 Financial Statements. The MM Contributors have furnished to the
Vornado Realty Group the financial statements set forth in Section 2.34 of the
Disclosure Schedule (collectively, the "Financial Statements"). Other than as
set forth in Section 2.34 of the Disclosure Schedule, to the knowledge of the MM
Contributors, the audited Financial Statements (including the related notes and
schedules thereto) have been prepared in accordance with GAAP consistently
applied throughout the periods presented. Each of the audited Financial
Statements of each such entity, and the interim financial statements identified
on Section 2.34 of the Disclosure Schedule with respect to the Office Center
Property, fairly presents, in all material respects, the financial position and
results of operations of the applicable entity at or as of the date(s) or
period(s) specified therein.
2.35 To Be Acquired Company Liabilities. Except (i) to the extent
reflected or reserved against in the balance sheets included in the Financial
Statements, (ii) to the extent specifically set forth in Section 2.35 of the
Disclosure Schedule, and/or (iii) for obligations of each such entity arising in
the Ordinary Course of Business after the dates of the applicable Financial
Statements under any Material Contracts or any agreement which is not a Material
Contract because it does not meet the minimum conditions identified in Section
2.24(a)(vii), as of the date hereof, no To Be Acquired Company has any material
liabilities or obligations of any nature, whether liquidated, unliquidated,
accrued, absolute,
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contingent or otherwise which would be required to be reported on the financial
statements of such entity to properly reflect the financial condition or results
of operations of such entity or which individually or in the aggregate would
have a material adverse effect on the financial condition of the To Be Acquired
Companies, taken together as a whole.
2.36 Limitations on Representations and Warranties. If any Estoppel
Certificate received by the Vornado Realty Group indicates that, or if to the
knowledge of the Vornado Realty Group, any of the representations or warranties
set forth in this Agreement are not true as of the Closing and the Vornado
Realty Group elects nonetheless to close, the Vornado Realty Group shall be
deemed to have waived any claim for breach of such representation or warranty.
This limitation shall be in addition to, and not in substitution for, any other
limitations of the Vornado Realty Group's remedies or damages set forth in
Article VIII and Article IX. Nothing in this Section 2.36 shall limit the
responsibility of the MM Contributors pursuant to Section 1.3, Article IV or
Article VI.
2.37 Disclosure Schedule. Any event, fact or circumstance described
in any section of the Disclosure Schedule shall be deemed a disclosure for
purposes of all other portions of the Disclosure Schedule, provided that the
relevance of the disclosure to such other portions can be reasonably discerned
from the applicable section of the Disclosure Schedule.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE VORNADO REALTY GROUP
The Vornado Realty Group hereby represents and warrants to the MM
Contributors as follows:
3.1 Organization; Standing; Etc. (a) Vornado is a real estate
investment trust duly organized, validly existing and in good standing under the
laws of the State of Maryland.
(b) VRLP is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(c) VOI is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(d) Each member of the Vornado Group has the power and
authority to own its properties and is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the conduct of its
business or the nature of its properties requires such registration,
qualification, authorization or license.
3.2 Authority. Each member of the Vornado Group has all requisite
authority and power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all requisite corporate or partnership action, as
applicable, on the part of each member of the Vornado Group and no other
proceedings on the part of any member of the Vornado Realty Group are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by each
member
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of the Vornado Group and, assuming this Agreement has been duly authorized,
executed and delivered by each other party hereto, constitutes a valid and
binding agreement of each member of the Vornado Realty Group, enforceable
against each of them in accordance with its terms except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar rights
of creditors generally and by general principals of equity.
3.3 Consents and Approvals; No Violations. Except as set forth in
Section 3.3 of the Disclosure Schedule, no filing with, and no permit,
authorization, consent or approval of, any Governmental Authority is required to
be obtained by any member of the Vornado Realty Group for the consummation of
the transactions contemplated by this Agreement, other than any filings required
under the 1933 Act, the 1934 Act, the HSR Act, state securities laws, and any
filings required to be made with the Office of the Maryland Department of
Taxation and Assessment, the Secretary of State of Delaware and the NYSE, except
where the failure to so make same or obtain would not have a material adverse
affect on such entity's ability to execute and deliver, or perform its
obligations under, this Agreement. Neither the execution and delivery of this
Agreement by any member of the Vornado Group nor the consummation by any of them
of the transactions contemplated hereby nor compliance by each of them with any
of the provisions hereof will (i) conflict with or result in any breach of any
provision of the organizational documents of any member of the Vornado Group;
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any indenture, license, contract, Agreement or other instrument
or obligation to which any member of the Vornado Group is a party or by which
any of them or any of their respective properties or assets may be bound; or
(iii) to the knowledge of the Vornado Realty Group violate any order, writ,
injunction, decree, statute, rule or regulation applicable to any member of the
Vornado Realty Group or any of its properties or assets.
3.4 MM Contributor Units, VOI Stock and Vornado Common Shares. (a)
The MM Contributor Units to be issued to the Unitholders at Closing will be duly
authorized and, when issued by VRLP, will be validly issued in accordance with
the terms of VRLP's OP Agreement and Delaware law, and free of any preemptive
rights. The Vornado Common Shares, if any, issuable upon redemption of the MM
Contributor Units will be duly authorized and listed on the New York Stock
Exchange (assuming at such time any Vornado Common Shares are so listed), and,
upon such issuance, will be validly issued, fully paid and non-assessable, and
free of any preemptive rights. As of the date on which the last dividend on the
Vornado Common Shares was paid, the amount of the dividend payable with respect
to one Vornado Common Share was equivalent to the distribution payable on one
Common Unit.
(b) The VOI Stock, if any, to be issued pursuant to the VOI
Purchase Agreement will at Closing be duly authorized. Upon issuance of the VOI
Stock, the VOI Stock will be validly issued, fully paid, non-assessable, and
free of any preemptive rights.
3.5 Intentionally Omitted.
3.6 SEC Documents and Financial Statements. Vornado has delivered to
the MM Contributors true and correct copies of Vornado's (i) Annual Report on
Form 10-K for the fiscal year ending December 31, 1996, (ii) quarterly reports
on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and September
30, 1997 and (iii) all current reports on Form 8-K filed at any time subsequent
to December 31, 1996 through the date hereof, all of which have been filed by
Vornado with the Securities and Exchange Commission (the "SEC") (collectively,
the "Vornado Reports"). The Vornado Reports were prepared and filed in
compliance with the 1934 Act and the rules and regulations promulgated by the
SEC
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thereunder, and did not, as of their respective dates, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made or will be made, not misleading. The consolidated
financial statements and the interim consolidated financial statements of
Vornado included in the Vornado Reports were prepared in accordance with GAAP
(except as may be indicated in the notes thereto) and fairly presented the
consolidated financial condition and results of operations of Vornado and its
subsidiaries as at the dates thereof and for the periods then ended, subject, in
the case of the interim consolidated financial statements, to normal year-end
adjustments and any other adjustments described therein.
3.7 Investment Company Act of 1940. No member of the Vornado Realty
Group is at the date of this Agreement, or will be at the Closing, required to
be registered with the SEC as an investment company under the 0000 Xxx.
3.8 Intentionally Omitted.
3.9 Litigation. No action, suit, claim, investigation or proceeding,
whether legal or administrative or in mediation or arbitration, is pending or,
to the knowledge of the Vornado Realty Group, threatened, at law or in equity,
against any member of the Vornado Realty Group before or by any Governmental
Authority which if determined adversely to any member of the Vornado Realty
Group, could reasonably be expected to interfere in any material respect with
the ability of such member of the Vornado Realty Group to perform its
obligations pursuant to this Agreement or any Transaction Document or have a
Material Adverse Effect. There are no judgments, decrees or orders entered on a
suit or proceeding against any member of the Vornado Realty Group which, if
determined adversely to any such member of the Vornado Realty Group, could
reasonably be expected to materially adversely affect any member of the Vornado
Realty Group's ability to perform its respective obligations pursuant to this
Agreement, or which seeks to restrain, prohibit, invalidate, set aside, rescind,
prevent or make unlawful this Agreement or the carrying out of this Agreement or
the Transaction Documents or have a Material Adverse Effect.
3.10 Subsidiaries. As of December 31, 1997, VOI did not have any
subsidiaries and neither Vornado nor VRLP had any active Subsidiaries other than
those identified in the Vornado Reports or in Section 3.10 of the Disclosure
Schedule. Each Subsidiary of any member of the Vornado Realty Group listed in
the Vornado Reports or in Section 3.10 of the Disclosure Schedule, has been duly
organized, is validly existing and in good standing under the laws of the
jurisdiction of its organization, has the power and authority to own its
properties and to conduct its business and is duly registered, qualified and
authorized to transact business and is in good standing in each jurisdiction in
which the conduct of its business or the nature of its properties requires such
registration, qualification or authorization, except where the failure to be in
good standing, to have such power and authority or to be so qualified or
authorized and in good standing could not reasonably be expected to have a
Material Adverse Effect on the Vornado Group, taken as a whole. All of the
outstanding capital stock, beneficial interests or other equity interests of
Vornado, VRLP, VOI and each Subsidiary listed in the Vornado Reports or in
Section 3.10 of the Disclosure Schedule have been duly authorized and validly
issued, are fully paid and, in the case of corporate stock only, non-assessable
except for such failures as could not reasonably be expected to have a Material
Adverse Effect.
3.11 Capitalization. (a) As of December 31, 1997, the issued and
outstanding shares of capital stock of each of Vornado and VOI were as set forth
in Section 3.11(a) of the Disclosure Schedule.
(b) As of December 31, 1997, the issued and outstanding units
of limited partnership interest of VRLP are as set forth in Section 3.11(b) of
the Disclosure Schedule.
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3.12 Tax Matters.
(a) REIT Status. Vornado, beginning with its taxable year
ended December 31, 1993 and through December 31, 1997 (i) has been subject to
taxation as a REIT within the meaning of the Code and has satisfied all
requirements to qualify as a REIT within the meaning of the Code for such years,
(ii) has operated, and intends to continue to operate, in such a manner as to
qualify as a REIT for the tax year ending December 31, 1998, and (iii) has not
taken or omitted to take any action which could reasonably be expected to result
in a challenge to its status as a REIT, and to the knowledge of the Vornado
Realty Group, no such challenge is pending or threatened. No member of the
Vornado Realty Group or the Subsidiaries holds any asset that is subject to a
consent filed pursuant to Section 341(f) of the Code and the regulations
thereunder.
(b) Tax Returns. To the knowledge of the Vornado Group, each
member of the Vornado Realty Group and each Subsidiary has (A) timely filed with
the appropriate taxing authority all Tax Returns required to be filed by it
(after giving effect to any filing extension granted by any Governmental
Authority) and such Tax Returns were complete and accurate in all material
respects and (B) has paid all Taxes shown as owed by each member of the Vornado
Realty Group or any of the Subsidiaries on any Tax Return other than Taxes being
contested in good faith and for which adequate reserves have been taken except,
in each case, for such failures as could not reasonably be expected to have a
Material Adverse Effect on the financial condition of Vornado and its
Subsidiaries taken as a whole. No member of the Vornado Realty Group or any of
the Subsidiaries has executed or filed with the Internal Revenue Service or any
other taxing authority any agreement now in effect extending the period for
assessment or collection of any Tax. Except as set forth in Section 3.12(b) of
the Disclosure Schedule, no member of the Vornado Realty Group or any of the
Subsidiaries is a party to any material pending action or proceedings by any
taxing authority for assessment or collection of any Tax, and no material claim
for assessment or collection of any Tax has been asserted against it. No claim
has been made by an authority in a jurisdiction where a member of the Vornado
Realty Group or any of the Subsidiaries does not file Tax Returns that it is or
may be subject to taxation by the jurisdiction. Except as set forth in Section
3.12(b) of the Disclosure Schedule, there is no material dispute or claim
concerning any Tax liability of a member of the Vornado Realty Group or any of
the Subsidiaries, (x) claimed or raised by any taxing authority in writing or
(y) as to which a member of the Vornado Realty Group or any of the Subsidiaries
has knowledge, and no member of the Vornado Realty Group or the Subsidiaries has
entered into or intends to enter into any agreements with any taxing authority,
including but not limited to closing agreements, which could reasonably be
expected to have a Material Adverse Effect on the Vornado Realty Group and its
subsidiaries, taken as a whole.
(c) Certain Tax Liabilities. Since January 1, 1997, no member
of the Vornado Realty Group or the Subsidiaries has incurred (i) any material
liability for Taxes under Sections 856(b), 860(c) or 4981 of the Code which
could reasonably be expected to have a Material Adverse Effect on the financial
condition of Vornado and its Subsidiaries taken as a whole, or (ii) a material
liability for Taxes other than Taxes incurred in connection with the ordinary
course of business and such other liability for Taxes as could not be reasonably
expected to have a Material Adverse Effect on the financial condition of Vornado
and its Subsidiaries taken as a whole. Except as described in Section 3.12(c) of
the Disclosure Schedule, to the knowledge of the Vornado Realty Group, no event
has occurred, and no condition or circumstances exists, which presents a
material risk that any material Tax described in the preceding sentence with
respect to the period described in said sentence will be imposed upon a member
of the Vornado Realty Group or the Subsidiaries.
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(d) Tax Status of Subsidiaries. VRLP was not a publicly traded
partnership within the meaning of Section 7704 of the Code and the regulations
promulgated thereunder for any taxable year ending before January 1, 1998. In
addition, no Subsidiary has taken the position, for federal income tax purposes,
that it is a publicly traded partnership within the meaning of Section 7704 of
the Code and the regulations promulgated thereunder for any taxable year ending
before January 1, 1998.
3.13 Compliance with Organizational Documents. Vornado is not in
violation of any provision of its declaration of trust or by-laws, in each case
as in effect on the date hereof; VRLP is not in violation of any provisions of
its certificate of limited partnership or partnership agreement, in each case as
in effect on the date hereof; and VOI is not in violation of any provision of
its certificate of incorporation or bylaws, in each case as in effect on the
date hereof.
3.14 Bankruptcy, etc. No member of the Vornado Realty Group has made
a general assignment for the benefit of creditors, filed any voluntary petition
in bankruptcy or suffered the filing of any involuntary petition by any of its
creditors, suffered the appointment of a receiver to take possession of all, or
substantially all, of the assets of any member of the Vornado Realty Group,
suffered the attachment or other judicial seizure of all, or substantially all,
of the assets of any member of the Vornado Realty Group, admitted in writing its
inability to pay its debts as they come due or made an offer of settlement,
extension or composition to its creditors generally.
3.15 Broker. No member of the Vornado Realty Group has entered into
any Agreement, written or otherwise, with any broker, finder or salesperson in
connection with the transaction contemplated hereunder except Xxxxxx Capital
Group, whose fee shall be paid by Vornado as contemplated by Section 2.7. The
provisions of this Section shall survive Closing or the earlier termination of
this Agreement.
3.16 Compliance with Laws. To the knowledge of the Vornado Realty
Group, as of the date hereof and except as disclosed in the Vornado Reports,
none of Vornado, VRLP, VOI or any of Vornado's Subsidiaries is in violation of
any statute, law, ordinance, regulation, rule, judgment, decree or order of any
Governmental Authority applicable to its business, properties, or operations,
except for such violations and failures to comply as could not, in the
aggregate, reasonably be expected to have a material adverse affect on such
entity's ability to perform its obligations under this Agreement or any
Transaction Document or have a Material Adverse Effect.
3.17 Investment Representations. VRLP is acquiring the Management
Company Shares solely for its own account for the purpose of investment and not
as a nominee or agent for any other person and not with a view to, or for offer
or sale in connection with, any distribution of any thereof, and VRLP
acknowledges and agrees that the Management Shares have not been registered
under the 1933 Act, in reliance upon an exemption therefrom, and that the
Management Company Shares have not been approved or disapproved by the SEC or by
any federal or state agency, (iii) VRLP is able to bear the economic risk of
holding the Management Company Shares for an indefinite period and is able to
afford the complete loss of its investment therein, (iv) VRLP has been advised
that unless the Management Company Shares are registered under the 1933 Act or
an exemption from such registration is available, the Management Company Shares
must be held indefinitely and VRLP will continue to bear the economic risk of
its investment in the Management Shares during the period of ownership; and (v)
VRLP is an "accredited investor" (as such term is defined in Rule 501 (a) of
Regulation D under the 1933 Act).
3.18 Limitation on Representations and Warranties. If, to the MM
Contributors' knowledge, any of the Vornado Realty Group's representations or
warranties in this Agreement are not true
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as of the Closing and the MM Contributors elect nonetheless to close, the MM
Contributors shall be deemed to have waived any claim for breach of such
representation or warranty. This limitation shall be in addition to, and not in
substitution for, any other limitations of the MM Contributors' remedies or
damages set forth in Article VIII and Article IX.
3.19 Disclosure Schedule. Any event, fact or circumstance described
in any Disclosure Schedule attached hereto or made a part hereof shall be deemed
a disclosure for purposes of all other portions of the Disclosure Schedule,
provided that the relevance of the disclosure to such other portions can be
reasonably discerned from the applicable Disclosure Schedule.
ARTICLE IV
COVENANTS OF THE MM CONTRIBUTORS
The MM Contributors covenant and agree with the Vornado Realty Group
as follows:
4.1 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, the MM Contributors shall use all commercially reasonable efforts
(but without obligating the MM Contributors to incur costs and expenses in
excess of the Maximum MM Expenditure Amount) to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations, to cause the conditions to the
Vornado Realty Group's obligation to close specified in Article VII to be
satisfied and otherwise to consummate and make effective the transactions
contemplated by this Agreement.
4.2 Conduct of Business Pending Closing. During the period from the
date hereof through and until the Closing, except as set forth in Section 4.2 of
the Disclosure Schedule or as otherwise contemplated by this Agreement or agreed
to in writing by the Vornado Realty Group:
4.2.1 Ordinary Course of Business. Each member of the MM Group
covenants and agrees that it will, and will cause its direct and indirect
subsidiaries to, operate its business and Real Estate holdings in the Ordinary
Course of Business and maintain its business and real estate holdings that
relate to the Contributed Interests in substantially the same condition as
exists on the date hereof, subject to reasonable wear and tear, casualty and
taking by eminent domain and, subject to the remaining provisions of this
Section 4.2.1, will keep available the services of its officers and employees
and preserve their relationships with Tenants, customers, suppliers, managers
and others having on-going relationships with the Real Property and the
Management Companies to the end that their goodwill and going business shall be
maintained following the Closing. Without limiting the generality of the
foregoing, without the prior written consent of the Vornado Realty Group, such
consent not to be unreasonably withheld or delayed, each member of the MM Group
covenants and agrees that it will not do, or agree to do, on or after the date
hereof, any of the following with respect to the Contributed Interests or any of
the To Be Acquired Companies on or before the Closing:
(a) amend its certificate of incorporation or bylaws, or its
certificate of limited partnership or partnership agreement, or its certificate
of formation or limited liability company agreement, as applicable;
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(b) rescind, modify, amend or otherwise change or affect any
of the resolutions of the board of directors recommending adoption of this
Agreement and authorization of the transactions contemplated hereby;
(c) sell, assign, lease (other than with respect to Leases) or
otherwise transfer or dispose of any assets, except in the Ordinary Course of
Business or in an aggregate amount not in excess of $100,000, unless the same
shall be replaced with assets of equal or greater value and utility;
(d) issue, sell, transfer, assign, pledge, convey or dispose
of any security or equity interest or any security convertible into or
exchangeable or exercisable for any security or equity interest, including,
without limitation, any subscriptions, options, warrants, calls, conversions or
other rights, agreements, commitments, arrangements or understandings of any
kind obligating any To Be Acquired Company, as the case may be, contingently or
otherwise, to issue or sell, or cause to be issued or sold, any security or
equity interest of any To Be Acquired Company, as the case may be, or any
security convertible into or exchangeable or exercisable for any such security
or equity interest;
(e) split, combine or reclassify any shares of any class of
its capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any class of its capital stock, or redeem or otherwise acquire any shares of
such capital stock;
(f) write off any receivables accrued after December 31, 1997;
(g) (i) except (a) in the Ordinary Course of Business
consistent with past practice under existing lines of credit and, (b) for
inter-company or Affiliated indebtedness to be paid off at or prior to Closing,
create, incur or assume any liability, including obligations in respect of
capital leases or make or commit to make capital expenditures in excess of
$100,000 each or $250,000 in the aggregate, or create, incur, assume, maintain
or permit to exist any indebtedness in an aggregate amount greater than $250,000
for members of the MM Group and their respective subsidiaries combined; (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person,
except for assumptions, guarantees or endorsements by a Management Company of
the obligations of MMPI Sub in the Ordinary Course of Business consistent with
past practice; (iii) except as set forth in Section 4.2.1(g) of the Disclosure
Schedule, make any loans, advances or capital contributions to, or investments
in, any other Person (other than customary loans or advances in the Ordinary
Course of Business consistent with past practice to employees and extensions of
credit made to customers on a trade receivable basis in the Ordinary Course of
Business consistent with past practice); or (iv) create, assume or permit to
exist any Lien upon their assets, except for those in existence on the date of
this Agreement and except for those additional Liens created in the Ordinary
Course of Business consistent with past practice which, if they encumber any of
the Real Property, constitute Permitted Encumbrances hereunder;
(h) except as set forth in Section 4.2 of the Disclosure
Schedule or as contemplated by this Agreement, (i) increase or modify or agree
to increase or modify the compensation, bonuses or other benefits or perquisites
of any employee of MMPI Sub, MMEI or any of their respective direct or indirect
subsidiaries, except for salary increases granted in the Ordinary Course of
Business or pursuant to employment agreements or arrangements existing on the
date hereof, or (ii) pay or commit to pay any compensation, bonus, pension or
other benefit not required by the terms of any existing Plan, policy
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or collective bargaining agreement as in effect on the date hereof or otherwise
in the Ordinary Course of Business;
(i) fail to use reasonable efforts to maintain their books and
records in accordance with GAAP;
(j) other than in the Ordinary Course of Business, cancel or
materially amend or modify any agreements (other than Leases, which are
addressed separately below) with customers or tenants;
(k) enter into any written employment or severance agreements
with, any director, officer or other employees, except to the extent
contemplated by any written agreement existing on the date hereof and identified
in Section 2.24(a) of the Disclosure Schedule;
(l) establish, adopt, or amend (except as required by law),
any collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees or terminate in whole or in part or curtail
or permanently discontinue contributions to any MMPI Employee Plan; provided,
however, nothing herein shall prevent (x) (1) the adoption of a defined benefit
plan for the benefit of employees of MMPI Sub whose employment will be
transferred to an entity not party to the transactions contemplated by this
Agreement (the "Unrelated Entity") and the transfer of assets thereto by the
MMPI Sub Pension Plan (as defined in Section 6.9.2(b) or (2) the adoption of a
defined contribution plan for the benefit of employees of MMPI Sub whose
employment will be transferred to an Unrelated Entity and the transfer of
account balances or assets thereto by the MMPI Sub Savings Plan), (y) the
transfer of the New York Life life insurance plan from MMPI to the Unrelated
Entity, and (z) the adoption of any other plans by the Unrelated Entity.
(m) enter into any new agreements (except for Leases and
Temporary Space Licenses) with any customers or other third parties with a
duration of more than one year unless each such agreement is cancellable by the
party hereto (or its subsidiary) upon no more than thirty (30) days' notice, is
entered into in the Ordinary Course of Business and the terms of such agreement
are otherwise commercially reasonable.
4.2.2 Insurance Policies. The MM Property Contributors and the
Management Companies and their subsidiaries shall each maintain and keep the
insurance policies set forth in Section 2.30 of the Disclosure Schedule in full
force and effect through the Closing.
4.2.3 Liens. The MM Property Contributors shall not create,
grant permission to create, or otherwise authorize any Lien with respect to any
interest in the Property or the property of any Management Company or any
subsidiary thereof except for such Lien as shall be satisfied or otherwise
released at the Closing (or assumed as permitted by the terms of this Agreement)
and except for the Permitted Encumbrances.
4.2.4 Leases. The MM Property Contributors shall not enter
into, terminate, or modify or amend in any material respect any Lease for
greater than 10,000 square feet without the prior written consent of the Vornado
Realty Group, which consent shall not be unreasonably withheld or delayed, and
shall be deemed given if Vornado does not object to any written request by the
MM Group to do any of the foregoing before 5:30 p.m. (New York City time) on the
second Business Day following receipt by
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Vornado of such request, provided that any such request shall: (i) be addressed
to the attention of Xxxx Xxxxxxx and Xxxxxx Xxxxxx, (ii) include a summary, in
reasonable detail, of the terms of any proposed new lease, lease termination or
lease amendment, and (iii) include in bold and all capital letters the following
heading: WARNING: FAILURE TO RESPOND TO THIS COMMUNICATION WITHIN TWO (2)
BUSINESS DAYS WILL BE DEEMED CONSENT TO THE ACTION(S) FOR WHICH YOUR CONSENT IS
REQUESTED HEREIN. Further, the MM Property Contributors shall not enter into,
terminate, or modify or amend in any material respect any other Lease unless
same is in the Ordinary Course of Business.
4.2.5 Personal Property. The MM Property Contributors shall not
remove any material portion of the Personal Property located in or on the
Property, except as may be required for repair and replacement in the Ordinary
Course of Business. All replacements shall be free and clear of Liens except to
the extent the original Personal Property was so encumbered and shall be of
quality at least equal to the replaced items and shall be deemed included in
this sale, without cost or expense to VRLP other than as expressly provided
herein.
4.3 The Vornado Realty Group's Inspection Right. (a) Subject to the
provisions of this Section 4.3, the Vornado Realty Group and the Vornado Realty
Group's agents and representatives shall have the right, without the obligation,
to enter upon the Real Property including, without limitation, any and all of
the Improvements, at all reasonable times during normal business hours to
inspect the Real Property and conduct reasonably necessary tests. Such tests may
include, without limitation, soil sampling, borings and investigation,
groundwater sampling and groundwater investigation and engineering studies. The
Vornado Realty Group shall notify the MM Contributors of its intention, or the
intention of its agents or representatives, to enter the Real Property at least
forty-eight (48) hours prior to such intended entry. If the Vornado Realty Group
intends to conduct any physical testing or sampling of the Real Property, the
Vornado Realty Group shall describe such testing and sampling in its notice and
shall obtain the prior written consent of the MM Contributors thereto, which
consent shall not be unreasonably withheld. The Vornado Realty Group shall bear
the cost of all inspections and tests. The MM Contributors may, at their option,
be present for any inspection or test.
(b) The MM Contributors have delivered or made available to the
Vornado Realty Group the MM Contributor Documents and the MM Contributors shall
permit the Vornado Realty Group to review any other documents and information,
including, without limitation, the Environmental Documents, regarding the
Property that the Vornado Realty Group may reasonably request, at the applicable
MM Contributors' offices subject to the same conditions as set forth in
subsection 4.3(a) above. The Vornado Realty Group shall, at its own cost and
expense, have the right to make photocopies of all of the MM Contributors
Documents provided or made available to the Vornado Realty Group, subject to
confidentiality restrictions as may be reasonably required by the MM
Contributors, including the confidentiality agreement described in Section
11.17. The MM Contributors shall also permit the Vornado Realty Group to inspect
and copy all files and records relating to the Land Trusts and shall give
appropriate direction to the Land Trustee to permit such investigation.
(c) The Vornado Realty Group acknowledges and agrees that its rights
under this Section are conditioned on and subject to the observance by the
Vornado Realty Group of its covenants set forth in Section 5.2 hereof.
4.4 Estoppel Certificates. Commencing promptly after the date hereof, the
MM Property Contributors agree to deliver to all Tenants, except Tenants under
Temporary Space Licenses, an estoppel
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certificate in the form annexed hereto as Exhibit 4.4 (the "Estoppel
Certificates") for such Tenant's execution, completed to reflect such Tenant's
particular Lease status and addressed to both VRLP and the applicable MM
Contributor. To the extent any such Tenant returns its Estoppel Certificate in
substantially such form, the Vornado Realty Group shall be obligated to accept
such Estoppel Certificate for purposes of determining whether the condition to
closing set forth in Section 7.3.9 has been satisfied. For purposes of this
Section 4.4, an Estoppel Certificate shall be substantially in the form of
Exhibit 4.4 notwithstanding that such Tenant has qualified any statements set
forth therein regarding a landlord's default under such Lease to the "best of
its knowledge" or by other like qualifier.
4.5 Intentionally Omitted.
4.6 Financial Information. Following the Closing, each member of the MM
Group agrees to provide the Vornado Realty Group's auditors or financial
advisors with access to all financial information in the MM Contributors'
possession reasonably deemed necessary by said auditors or financial advisors
relating to the Property for purposes of preparing such audited financial
statements for the Property as are required by law or any agreement by which the
Vornado Realty Group is bound.
4.7 Notice of Violation of Environmental Laws or Discharge. The MM
Contributors shall promptly notify the Vornado Realty Group of any violation of
any Environmental Law (or any condition at any Real Property that requires
remediation under any Environmental Law) that it has knowledge of, and promptly
deliver to the Vornado Realty Group, a certified true and complete copy of any
Notice the MM Contributors may receive, on or before the Closing Date, from any
Governmental Authority, concerning a violation of any applicable laws,
including, without limitation, any Environmental Laws or a Discharge of
Hazardous Materials.
4.8 Certain Payments. (a) At Closing, but only if the Pru-Apparel Loan is
not repaid or prepaid at Closing, the MM Contributors shall pay to the Vornado
Realty Group an amount equal to the present value, based on a discount rate of
7% per annum, of the amount that the prepayment penalty would be under the loan
documents with respect to the loan described in Section 1.2.1(a)(iii) of the
Disclosure Schedule as the Pru-Apparel Loan (the "Pru-Apparel Loan"), assuming
the Pru-Apparel Loan is prepaid in full on July 1, 1998 (the "Pru-Apparel
Prepayment Date"). In addition, at Closing, the MM Group shall pay to the
Vornado Realty Group an amount equal to the present value, based on a discount
rate of 7% per annum, of the difference between (a) all interest payments
payable under the Pru-Apparel Loan through the Pru-Apparel Prepayment Date less
(b) the interest payments that would be payable under the Pru-Apparel Loan
(i.e., net of any amortization payments) through the Pru-Apparel Prepayment Date
if the Pru-Apparel Loan bore interest at rate equal to the sum of (i) the rate
of interest payable on the Closing Date for United States Treasury Bonds
("Treasury Bonds") with a term equal to the remaining term of the Pru-Apparel
Loan plus (ii) 110 basis points (the "Treasury Based Interest Rate"). In the
event that the Pru-Apparel Loan is repaid by Vornado Realty Group on or prior to
July 1, 1998 and there is no resulting prepayment penalty (i.e., in connection
with a casualty or condemnation of the Apparel Center Property) then Vornado
Realty Group shall promptly reimburse the MM Contributors for an amount equal
to the Pru-Apparel Prepayment Penalty that the MM Contributors reimbursed the
Vornado Realty Group for at Closing.
(b) Until the loan described in Section 1.2.1(a)(iii) of the
Disclosure Schedule as the Pru-Office Center Loan (the "Pru-Office Center Loan")
has been repaid in full, the MM Contributors shall reimburse the Vornado Realty
Group monthly for an amount (the "Interest Rate Differential Subsidy") equal to
the difference between (i) the actual interest payments (i.e., net of any
amortization payments) made on the Pru-Office Center Loan by the Vornado Realty
Group less (ii) the interest payments that would have been
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payable on such interest payment date had the interest rate on the Pru-Office
Center Loan been a rate equal to the sum of (i) the rate of interest for
Treasury Bonds with a term equal to the remaining term of the Pru-Office Center
Loan plus (ii) 110 basis points (the "Office Center Treasury Based Interest
Rate"). In the alternative, if the MM Contributors, in their sole discretion,
negotiate an agreement with the lender with respect to the Pru-Office Center
Loan pursuant to which the interest rate on the Pru- Office Center Loan shall be
reduced at or prior to the Closing Date to a rate equal to the Office Center
Treasury Based Interest Rate, then at Closing the Vornado Realty Group or its
designee shall assume as required thereunder the Pru-Office Center Loan, as
modified to reflect such reduction in the interest rate, without any further
obligation or liability of the MM Contributors to the Vornado Realty Group in
respect thereof.
(c) The payments to be made by the MM Contributors pursuant to this
Section 4.8 assume that the loans described herein will not be modified, amended
or extended following the Closing in any manner that adversely impacts the
amounts payable by the MM Contributors hereunder, and, accordingly, the MM
Contributors shall have no responsibility, obligation or liability with respect
to any increase in the amounts otherwise payable under this Section 4.8 as a
result of same.
4.9 Unitholder Lock-Up. Each Unitholder hereby agrees, during
the period beginning on the Closing Date and continuing to and including the
183rd day after the Closing Date, that it will not, directly or indirectly
(including without limitation, through the entering into of a cash-settled
derivative instrument), offer for sale, sell, contract to sell, pledge or
otherwise dispose of any such Units that are received by such Unitholder under
this Agreement without first obtaining the prior written consent of Vornado,
which consent shall rest in Vornado's sole and absolute discretion. Each
Unitholder understands and agrees that the certificates representing the Units
to be received by such Unitholder at Closing will contain a legend noting the
above restriction on transfer and VRLP will provide its registrar/transfer agent
appropriate stop transfer instructions with respect to such Units.
ARTICLE V
COVENANTS OF THE VORNADO REALTY GROUP
The Vornado Realty Group covenants and agrees with the MM Contributors as
follows:
5.1 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, the Vornado Realty Group shall use all commercially reasonable
efforts to take, and cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, to cause the conditions to the MM Contributors' obligation to close
specified in Article VII to be satisfied and otherwise to consummate and make
effective the transactions contemplated by this Agreement.
5.2 Inspection Obligations. In conducting any inspections, investigations
or tests of the Real Property and/or the MM Contributor Documents, the Vornado
Realty Group and its agents and representatives shall: (i) not disturb or
interfere in any material respect with the Tenants' use of the Real Property
pursuant to their respective Leases; (ii) not interfere in any material respect
with the operation and maintenance of the Real Property; (iii) not damage in any
material respect any part of the Real Property or any personal property owned or
held by Tenant or any other Person; (iv) not injure or otherwise cause bodily
harm to any member of MM Contributors, or its agents, guests, invitees,
contractors and employees or any Tenant or any other Person; (v) promptly pay
when due the costs of all tests, investigations, and examinations performed by
or on behalf of the Vornado Realty Group with regard to the Real Property; (vi)
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not permit any Liens to attach to the Real Property by reason of the exercise of
its rights hereunder; (vii) restore the Real Property to substantially the
condition in which the same was found before any such inspection or tests were
undertaken; and (viii) comply with all statutes, laws, ordinances, rules and
regulations applicable to any such inspections, investigations or tests.
5.3 Reports, Tests, Etc. If this Agreement is terminated in accordance
with the provisions of Article IX, the Vornado Realty Group promptly shall
return the MM Contributor Documents to the MM Contributors.
5.4 Met Life Loans; Vornado Bridge Loan. (a) Simultaneously with the
execution hereof, Vornado has issued to the Mart Owner a fully binding loan
commitment letter (the "Mart Commitment Letter") to provide a mortgage loan to
the Mart Owner (the "Mart Loan"). In the event that the MM Contributors exercise
their rights under the Mart Commitment Letter to borrow the Mart Loan prior to
the Closing (i.e., in the event the Closing Date is a date after April 1, 1997),
then, at the Closing, the Vornado Realty Group shall accept title to the Mart
Property subject to the lien of the Mart Loan and shall deliver to the MM
Property Contributors an assumption and indemnity of loan documents similar to
the Mortgage Loan Assumption and Indemnity Agreement.
(b) Vornado acknowledges that if it defaults in its obligation to
provide the Mart Loan as provided for in this Section 5.4 and in the Mart
Commitment Letter, the Mart Owner and the other members of the MM Contributors
may suffer extensive damages (which damages shall be reduced by the present
value of any benefits received by the MM Contributors as a result of a lower
interest rate on any new loan that is used to refinance the Met Life Loans),
including, without limitation, damages as a result of the acceleration and/or
foreclosure of the Met Life Loans and/or the loss of the Mart Property, income
and transfer tax liabilities as a result of any such acceleration of the Met
Life Loans and damage to, or loss of, the trade show business operated at the
Mart Property by other members of the MM Contributors, and Vornado agrees to
indemnify and hold the MM Contributors harmless against any such damages (which
damages shall be reduced by the present value of any benefits received by the MM
Group as a result of a lower interest rate on any new loan that is used to
refinance the Met Life Loans) as a result of such a default by Vornado in
providing the Mart Loan regardless of whether the Closing occurs. The provisions
of this section shall survive the Closing and the earlier termination of this
Agreement.
5.5 Avoidance of Publicly Traded Partnership Status. The Vornado Realty
Group shall use reasonable efforts to take, and cause to be taken, all actions
necessary to amend the OP Agreement so that the Specified Redemption Date and
the Valuation Date shall be not less than 30 days after VRLP receives a
Redemption Notice from a partner (except in the case of a redemption permitted
following a notice of an Extraordinary Transaction pursuant to Section 8.5(c) of
the OP Agreement). Terms used in this paragraph and not defined herein shall
have the meaning set forth in the OP Agreement.
ARTICLE VI
ADDITIONAL COVENANTS OF THE PARTIES
6.1 Survival. The provisions of this Article VI (other than 6.11) shall
survive the Closing.
6.2 Leasing Commissions and Tenant Improvement Obligations. All leasing
commissions due to any broker or leasing agent in connection with the Leases
(whether or not shown in any section of
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the Disclosure Schedule hereto) and all amounts owing under any Leases (whether
such Lease represents a new lease or an extension, renewal or expansion of an
existing Lease), in respect of tenant improvement obligations in connection with
the initial occupancy of the leased premises (collectively, "Lease Related
Expenses"), with a rent commencement date in respect of such lease, extension,
renewal or expansion, as the case may be, on or before December 31, 1997 shall
be the responsibility of, and paid by, the MM Contributors as and when due and
shall remain the obligation of the MM Contributors following the Closing to the
extent not yet paid. The members of the Vornado Realty Group shall be
responsible for, and shall pay, as and when due, all Lease Related Expenses on
account of any Leases (whether such Lease represents a new lease or an
extension, renewal or expansion of an existing Lease) with a rent commencement
date in respect of such lease, extension, renewal or expansion, as the case may
be, after December 31, 1997. Without limiting the generality of the foregoing,
the parties hereto agree that (i) VRLP shall be responsible for any amounts due
under that certain lease, dated as of November 13, 1997, between the owner of
the Apparel Property and Bank of America National Trust & Savings Association,
including, without limitation, all leasing commissions and tenant improvement
costs, and the Vornado Realty Group agrees to reimburse the applicable MM
Property Contributor at Closing for any amounts paid by such MM Property
Contributor in respect of such expenses and (ii) the Mart Owner shall be
responsible for any amounts due under that certain Office Lease, dated as of May
7, 1993, between the Mart Owner and CCC Information Services Inc. (as such lease
was subsequently amended, most recently by a Fifth Lease Amendment dated October
31, 1997) in respect of leasing commissions (for the initial term of the Lease
only, and including any expansion space leased prior to the Adjustment Date) and
tenant improvement expenses (in connection with the initial occupancy of the
leased premises and any expansion space leased prior to the Adjustment Date),
and agrees to reimburse the Vornado Realty Group for any such amounts (and VRLP
shall be responsible for all other costs in connection with such lease with CCC
Information Services Inc.). Further, to the extent that any party has paid any
Lease Related Expenses that are otherwise the responsibility of the other party
pursuant to the terms of this Section, then such amounts shall be adjusted
between the parties, accordingly, at Closing.
6.3 Intentionally Omitted.
6.4 Tax Deferral and Gain Recognition. The members of the Vornado Realty
Group and the Subsidiaries hereby covenant as follows:
6.4.1 Debt Maintenance and Guaranty Requirements.
(a) Guaranty or Indemnity. In response to the request of the MM
Contributors relating to their desire to defer the recognition of gain for
federal income tax purposes resulting from the contribution of property to VRLP,
at Closing, or at any time subsequent thereto in accordance with the terms
hereof, the members of the Vornado Realty Group and the Subsidiaries will permit
the MM Contributors to guarantee, or indemnify the members of the Vornado Realty
Group and the Subsidiaries for, (i) during the Restricted Period applicable to
the Mart Property and during the Restricted Period applicable to the Design
Center Property the amount of indebtedness requested by the MM Contributors of
up to $240,000,000, less reductions pursuant to Section 6.4.1(b), (the "MM
Contributors' Debt Amount"), comprised of (A) any debt on the Real Property up
to the MM Contributors' Debt Amount (such guarantee or indemnity to apply first
to the bottom portion of such debt) and (B) to the extent such debt on the Real
Property shall be less than the MM Contributors' Debt Amount, (x) the debt on
other property of VRLP or its Subsidiaries up to the MM Contributors' Debt
Amount, which guarantee or indemnity amount shall not exceed (at the time the
guarantee or indemnity is granted) the bottom 33% of the value of such other
property encumbered by the debt so guaranteed or indemnified or (y) the bottom
portion of the unsecured debt of VRLP up to the MM Contributors' Debt Amount,
and (ii) after the Restricted Periods applicable to
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the Mart Property and the Design Center Property any debt on the Real Property
up to $240,000,000 (as reduced by the first sentence of Section 6.4.1(b)),
solely for the MM Contributors to guarantee (or indemnify the members of the
Vornado Realty Group and the Subsidiaries for such indebtedness). During the
Restricted Period, the members of the Vornado Realty Group and the Subsidiaries
shall maintain (or make available for the benefit of the MM Contributors) the
indebtedness referred to in clause (i) of the preceding sentence. In addition,
after the Restricted Period, the Vornado Realty Group and the Subsidiaries, will
consider in their sole and absolute discretion a request from the MM Contributor
to allow the MM Contributors to guarantee any other debt to the extent not
guaranteed by any other partner of VRLP or the Subsidiaries. In the event that
the MM Contributors guarantee or indemnify the Vornado Realty Group or its
Subsidiaries with respect to an indebtedness encumbering any property of the
Vornado Realty Group or its Subsidiaries other than the Property, such
indebtedness shall not exceed (at the time the guarantee or indemnity is
granted) 75% of the fair market value of such property. Notwithstanding the
previous sentence, any indebtedness encumbering a particular Parcel of Real
Property during the Restricted Period applicable to such Parcel shall not exceed
(at the time the guarantee or indemnity is granted) 67.5% of the fair market
value of such Parcel. To the extent a lender refuses, during the Restricted
Periods applicable to the Mart Property and the Design Center Property, to
accept a guarantee from the MM Contributors with respect to any indebtedness
made available to the MM Contributors pursuant to this Section 6.4.1, the
Vornado Realty Group will use best efforts to make other indebtedness then
outstanding available to the MM Contributors for guarantee. Further, during the
Restricted Period for a particular Parcel, that Real Property may not be used to
secure a debt which is also secured by or cross-collateralized with any other
property, other than another Real Property. In no event shall the Vornado Realty
Group or any Subsidiary be obligated to incur personal liability in respect of
any indebtedness referred to in this Section 6.4.1(a).
(b) In the event that any member of the MM Contributors (i) obtains
a tax-free step-up in the basis of their Units for federal income tax purposes
(e.g., upon the death of a member); (ii) sells, transfers or otherwise disposes
of their Units in a taxable transaction; (iii) receives the Tax Payment from the
members of the Vornado Realty Group and the Subsidiaries in reimbursement of
taxes triggered to such member as of the result of the sale, transfer or other
disposition of property contributed by the MM Contributors; or (iv) receives an
allocation under Treasury Reg. Section 1.704-3(b) using the traditional method
without curative allocations that reduces the amount of Built-in-Gain, then the
MM Contributors Debt Amount shall be commensurately reduced. Furthermore,
following the expiration of the Restricted Period with respect to any of the
Real Property, the MM Contributors Debt Amount shall be reduced by the
percentage of the MM Contributors Debt Amount attributable to such Real Property
as set forth in Section 6.4.1(b) of the Disclosure Schedule to the extent the MM
Contributors Debt Amount (with respect to such Real Property) has not already
been reduced pursuant to the previous sentence.
6.4.2 No Property Disposition. The members of the Vornado Realty
Group and the Subsidiaries covenant that they shall not sell, transfer,
distribute or otherwise dispose of the properties (including, but not limited
to, the stock of any corporations) (or the properties, if any, that are
substituted or exchanged for the contributed Properties) contributed by the MM
Contributors, prior to the date set forth in Section 6.4.2 of the Disclosure
Schedule for such Real Property or stock (the period of restriction for each
such Real Property or stock the "Restricted Period") other than an exchange or
other disposition which does not cause the MM Contributors to recognize gain for
federal income tax purposes (including, without limitation, a transaction
pursuant to Section 1031 of the Code or any successor provision which would not
cause such recognition of gain). Before the end of the applicable Restricted
Period, the members of the Vornado Realty Group and the Subsidiaries shall have
the right to dispose or distribute any of the properties contributed by the MM
Contributors provided the members of the Vornado Realty Group and the
Subsidiaries pay to the MM Contributors the Tax Payment. Nothing contained in
this Section 6.4 shall be
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deemed to be construed to limit the rights of any lender or other secured party
to foreclose on, or otherwise dispose of, the properties contributed by the MM
Contributors or, of VRLP to dispose of the properties contributed by the MM
Contributors; provided, however, the members of the Vornado Realty Group and the
Subsidiaries shall pay to the MM Contributors the Tax Payment, if any, triggered
by any taxable disposition of the properties contributed by the MM Contributors
(other than as a result of a foreclosure) prior to the expiration of the
Restricted Period; provided, further, however, that in the event of a
condemnation by any Governmental Authority the members of the Vornado Group and
the Subsidiaries shall not be required to pay to the MM Contributors the Tax
Payment if the Vornado Group or the Subsidiaries are not afforded at least nine
(9) months (and provided that the members of the Vornado Group and the
Subsidiaries use their reasonable efforts to extend any shorter period pursuant
to Section 1033(a)(2)(B)(ii) of the Code and such period is still less than 9
months) from the date of receipt by the Vornado Realty Group of the proceeds of
such condemnation to replace the condemned property, all as provided in Section
1033 of the Code. If an event of a foreclosure with respect to any of the Real
Property (or any property substituted for the Real Property) occurs during the
Restricted Period for such Property, then the members of the Vornado Realty
Group and the Subsidiaries shall give notice to the MM Contributors of such
event and afford the MM Contributors the opportunity to cause the third party
which is otherwise to obtain title to the Real Property to accept Units, in
whole or in part, in lieu of obtaining title to the Real Property, provided that
such third party agrees in writing for the benefit of VRLP to be bound by all of
the terms and conditions of the OP Agreement and performs in accordance
therewith, including without limitation, performing the requirements pertaining
to a transfer of Units; in such event, title to the Property shall be
transferred to the MM Contributors in redemption of the Units described above.
6.4.3 Representatives. For purposes of sections 6.4, 6.4.1 and 6.4.2
hereof, the MM Contributors shall designate not more than two (2)
representatives for purposes of coordinating any guarantees, indemnities or
other items set forth in such sections.
6.5 Allocation Method. VRLP covenants that the "traditional method"
(without curative allocations), as defined in Treas. Reg. 1.704-3(b), of
allocating income, gain, loss and deduction to account for the variation between
the fair market value and adjusted basis of the Property for federal income tax
purposes, shall be used (i) with respect to the contribution of the Property,
and (ii) with respect to any revaluation of the Property, pursuant to Treas.
Reg. ss.ss.1.704-1(b)(2)(iv)(f), 1.704-1(b)(2)(iv)(g) and 1.704-3(a)(6).
6.6 Tax Matters. The MM Contributors will pay or provide for payment
of all Taxes with respect to the Properties (excluding 1997 Illinois real estate
taxes) due and payable on or after the Closing, and the MM Contributors will
file all returns and reports required to be filed on or after the Closing with
respect to Taxes imposed in connection with the ownership and operation of the
Property or on or in connection with the ownership and operation of the To Be
Acquired Companies for all taxable periods (or portions thereof) ending on or
prior to the Closing.
6.7 Past Due Rents. Any Rents received after the Adjustment Date
from a Tenant (regardless of whether such payment of Rent is received before or
after the Closing Date) shall, unless the Tenant indicates in writing otherwise
(in which event such Rent shall be applied to the period specified by the
Tenant), be applied if and when collected as follows: (1) first, to the payment
of the Rent and reimbursements then due for the period after the Adjustment Date
from such Tenant and (2) thereafter, to the payment of Rents and reimbursements
due for the period prior to the Adjustment Date ("Tenant Receivables") from such
Tenant. The Vornado Realty Group agrees to use its good faith efforts to recover
for and on behalf of the MM Contributors (at their own expense) any Tenant
Receivables owing after the
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Closing Date. Further, after the Closing Date the MM Contributors shall be
entitled to pursue collection of any Tenant Receivables directly against any
party should such party no longer be a Tenant (as set forth on the Rent Rolls).
The Vornado Realty Group shall remit to the MM Contributors any such sums
received by the Vornado Realty Group in respect of Tenant Receivables to which
the MM Contributors are entitled within ten (10) Business Days after receipt
thereof. The MM Contributors expressly agree that if the MM Contributors receive
after the Closing Date any amounts to which the Vornado Realty Group is entitled
hereunder, the MM Contributors shall remit to the Vornado Realty Group that
portion of the moneys so received by the MM Contributors within ten (10)
Business Days after receipt thereof.
6.8 Survey and Title Commitment. (a) The members of the Vornado
Realty Group hereby acknowledge receipt from the MM Contributors of an as-built
survey of each Parcel (collectively, the "Survey"). The MM Group shall be
responsible for the cost of the Survey.
(b) The MM Contributors have caused Titleserv Agency of New
York City, Inc. (the "Title Company") to prepare, and Vornado acknowledges
receipt of (i) title commitments (collectively, the "Commitments") for each
Parcel, pursuant to the terms of which the Title Company agrees to issue to VRLP
(or its designee) at Closing owner's policies of title insurance (the "Title
Policies") for each Parcel with such customary endorsements as are referenced
therein and an ALTA 3.1 endorsement as to zoning matters (including parking) for
the Illinois Parcels and in an aggregate amount equal to the respective
Allocated Property Values that comprise the Real Property, which Title Policies
shall be ALTA Owner's Policies of Title Insurance, insuring VRLP's (or its
designee's) fee simple title to each Parcel to be good and indefeasible, subject
to the Permitted Encumbrances and the terms of such Title Policy and the
exceptions described therein and not objected to by Vornado Realty Group on
Exhibit 6.8(c) and (ii) a photocopy of all documents ("Title Documents")
evidencing or describing all title exceptions shown on the Commitments. The MM
Contributors shall be responsible for paying all title premiums for the Title
Policies delivered at Closing in respect of the Parcels located in Illinois, and
the members of the Vornado Realty Group shall be responsible for all title
premiums for the Title Policies delivered at the Closing in respect of the
Parcels located in Washington, D.C.
(c) The members of the Vornado Realty Group have reviewed the
Survey, the Commitments and the Title Documents and have agreed to accept title
to the Real Property subject to the Permitted Encumbrances and the items shown
on the Survey. By execution of this Agreement, the members of the Vornado Realty
Group hereby notify the MM Contributors that they object to the items which are
crossed out or otherwise identified as "Omit" on the Commitments attached hereto
as Exhibit 6.8(c) (the "Current Title Objections"). In addition, the members of
the Vornado Realty Group may have the Title Company update the Commitments prior
to the Closing and, if they so elect, shall have a full and complete copy of any
such update, and any underlying Title Documents that are made available to the
Vornado Realty Group by the Title Company with respect to additional matters
raised therein, delivered to the MM Contributors promptly upon preparation
thereof. The Vornado Realty Group shall, promptly after receipt of an updated
Commitment, indicate in writing which title exceptions, if any, described in
such updates that it objects to, but only to the extent such title exceptions
were not reported in the original Commitments and do not constitute Permitted
Encumbrances.
(d) The MM Contributors agree that as soon as practicable and
in any event, on or prior to the Closing Date (as extended pursuant to the terms
hereof) they will cure (by eliminating the conditions giving rise to) (i) all
Current Title Objections and (ii) all additional title exceptions, if any, set
forth in any updated Commitments that Vornado Realty Group has objected to
(other than Permitted Encumbrances) and that the MM Contributors are obligated
to cure, in each case, in accordance with the
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next paragraph (such additional objections, "Additional Title Objections", and
the Current Title Objections together with the Additional Title Objections are
referred to herein as the "Title Objections").
(e) In the case of (i) each Current Title Objection and (ii)
any Additional Title Objection that can be removed by the payment of a
liquidated sum of money and that was caused or created by the MM Group
Contributors (including mechanic's and materialmans' liens relating to work
performed by or at the direction of the MM Contributors), the MM Contributors
agree that they will eliminate the condition or circumstance giving rise to such
Title Objection by any means necessary and without regard to the limitation set
forth in Section 9.3 as soon as practicable and in any event, on or prior to the
Closing Date (as extended pursuant to the terms hereof). In the case of any
other Title Objection not included in clause (i) or (ii) of the foregoing
sentence (an "Unanticipated Title Objection"), the MM Contributors agree that
they will pay such amounts (or, if the condition is not susceptible of cure by
the payment of money, take such actions as are commercially reasonable) as are
necessary to eliminate the cause of the Title Objection; provided, however, that
if the Title Objection is, by its nature, an objection that cannot be cured by
the payment of money or the taking of commercially reasonable actions, the MM
Contributors shall be entitled to reduce the Consideration by the amount of
diminution in value of the affected Parcel, which amount shall be determined by
the Vornado Realty Group and the MM Group acting in good faith. The Vornado
Realty Group and the MM Contributors agree, however, that the aggregate amount
of cash payments and reductions in Consideration that the MM Group may be
required to expend and accept under the foregoing sentence shall not, exceed the
Maximum MM Expenditure Amount. If and to the extent that the aggregate of all
such cash payments and reductions in the Consideration resulting from the prior
two sentences, when combined with all other payments made by the MM Contributors
pursuant to Section 9.3, exceed the Maximum MM Expenditure Amount and the MM
Contributors are not willing in their sole discretion to make such excess
payments or accept such reductions in the Consideration, the MM Contributors
shall notify the Vornado Realty Group promptly after making such determination.
If the MM Contributors elect to cure a Title Objection, they shall be entitled
to adjourn the Closing Date for up to thirty (30) days after the scheduled
Closing Date, if such adjournment is reasonably necessary for the purpose of
curing any Title Objection that they elect or are required to cure hereunder.
(f) In the event the MM Contributors notify the members of the
Vornado Realty Group that they are unable to cure any Title Objection, or an
unwilling to cure any Unanticipated Title Objection in accordance with the terms
of the previous paragraph, then the Vornado Realty Group shall have the right to
either (a) accept title to the Parcel affected thereby subject to such Title
Objection and receive a credit (not to exceed the Maximum MM Expenditure Amount)
to apply towards the cost to remove such Title Objection or to reduce the
Consideration by the diminution in value of the affected Parcel as a result of
such Title Objection, as the case may be, or (b) to exclude such Parcel from the
Property being conveyed hereunder; provided, however, that if the Mart Property
is the Parcel that is the subject of such Title Objection, then the Vornado
Realty Group may not elect to exclude the Mart Property, and may only elect to
terminate this Agreement and receive any amounts it may be entitled to pursuant
to the terms of Section 9.1. In the event that a Parcel (other than the Mart
Property) is excluded from the transaction contemplated by this Agreement
pursuant to the prevision sentence then (1) such Parcel shall not be conveyed to
the Vornado Realty Group as contemplated hereby, (2) the Consideration shall be
reduced by the applicable Allocated Property Value of such Parcel, and the MM
Group shall have the right to elect how such Consideration shall be reduced
(e.g., as a reduction in the Cash Payment or the MM Contribution Units payable
to the MM Group at Closing) and (3) all representations, covenants and
provisions in this Agreement relating to such Parcel shall be deemed to be
deleted from this Agreement to the extent of such relation only, unless
otherwise provided herein.
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6.9 Employment and Employee Benefit Arrangements. The Vornado Realty
Group acknowledges and agrees with the following:
6.9.1 Employment. As of the Closing Date and subject to the
other provisions of this Section 6.9, MMPI Sub shall continue to employ all
current employees ("Employees"), other than employees party to the Employment
Agreements, at least at the same salaries and wages (but excluding discretionary
bonuses) and on the same terms and conditions as those in effect immediately
prior to the Closing Date, including, but not limited to, all of the terms and
conditions set forth in the MMPI Employee Manual previously delivered to the
Vornado Realty Group through the period ending December 31, 1998; provided,
however, certain of the Employees may be employed by VOI on the same terms and
conditions, including, but not limited to, participation in benefit plans,
specified in this Section 6.9. MMPI Sub shall honor and continue to perform, all
obligations of MMPI Sub and its affiliates under the agreements with Employees
set forth in Section 6.9.1(a) of the Disclosure Schedule through the period
ending December 31, 1998 which relate to employment or compensation or benefits.
6.9.2 Retirement Plans. (a) As of the Closing Date and through
the period ended December 31, 1998, MMPI Sub or its successor shall continue to
maintain the Merchandise Mart Properties, Inc. Thrift Savings Plan (the "MMPI
Sub Savings Plan").
(b) As of the Closing Date and through the period ended
June 30, 1998, MMPI Sub or its successor shall continue to maintain the
Merchandise Mart Properties, Inc. Pension Plan (the "MMPI Sub Pension Plan").
MMPI Sub shall, within 30 days after the Closing, amend the MMPI Sub Pension
Plan to provide that no assets of the MMPI Sub Pension Plan will revert to MMPI
Sub or any contributing employer and all such assets will be used to provide
benefits to participants who are or were employed by MMPI Sub.
6.9.3 Other Benefit Plans. With respect to Employees, MMPI Sub
or its successor shall maintain for the period ending December 31, 1998 the MMPI
Employee Plans. Thereafter, Employees shall participate in such Vornado Employee
Plans as shall be determined by the Vornado Realty Group, provided, that, if
during 1999 any such plan benefits are materially reduced in scope, nature or
amount from those received by Employees during 1998, Vornado shall provide all
affected Employees at least ninety (90) days prior written notice of such
changes before the effective dates thereof. MMPI Sub shall grant all Employees
after the Closing Date credit for all service with MMPI Sub and its affiliates
and their respective predecessors prior to the Closing Date for all purposes
including, without limitation, eligibility (including eligibility for particular
levels of benefits relating to length of service or seniority) and vesting, but
excluding benefit accruals, and Vornado shall waive any pre-existing conditions,
exclusions and actively-at-work requirements under any Vornado benefit plans or
similar VOI plans in which employees become participants.
6.9.4 Share Option Pool. On or before the Closing Date,
Vornado shall establish and maintain a share option pool (the "Share Option
Pool") for the benefit of Employees (including any Employees employed by VOI) to
which Vornado shall allocate options on 400,000 Common Shares pursuant to the
Vornado Realty Trust 1993 Omnibus Share Plan (the "Share Plan"). Options
allocated to the Share Option Pool may be granted to Employees subject to the
following: (i) each option granted pursuant to the Share Option Pool must have
an exercise price per share equal to the fair market value of the Common Shares
on the date of grant and (ii) such options shall vest ratably over a multi-year
period, subject to any acceleration provisions in the Share Plan.
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6.9.5 Severance. MMPI Sub shall provide, severance pay to any
Employee whose employment is terminated by Vornado Realty Group, MMPI Sub or VOI
after the Closing Date, but prior to January 1, 1999, equal to the greater of
(i) two weeks' salary for each full year of service, plus an additional two
weeks in lieu of notice or (ii) severance pay in accordance with the severance
policy of Vornado, MMPI Sub or VOI, as applicable, in effect after the Closing.
For purposes of calculating severance pay, periods of employment or service
shall be determined consistent with the past service credited pursuant to
Section 6.9.3. Notwithstanding the foregoing, but subject to the provisions of
Section 6.9.3, no member of the Vornado Realty Group shall have any obligation
to continue the severance policy of MMPI Sub and its affiliates or to extend its
severance policy to Employees after December 31, 1998.
6.9.6 Vornado Realty Group Guarantee and Indemnification
Obligations. The Vornado Realty Group hereby guarantees to the MM Contributors
the full and timely performance by MMPI Sub of its obligations under this
Section 6.9, and shall indemnify and hold harmless the MM Group Indemnified
Parties from and against any failure by MMPI Sub or the Vornado Realty Group to
perform their obligations under this Section 6.9.
6.10 Notice to Tenants and Banks . Following the Closing, at the
request of the Vornado Realty Group, the MM Contributors agree to execute and
join with VRLP in preparing a notice to (a) each Tenant (other than Tenants
under Temporary Space Licenses) advising each such Tenant of the transactions
contemplated herein, including, but not limited to, the fact that VRLP, or its
designee, as the case may be, has succeeded to each such MM Contributor as the
landlord in connection with the applicable Lease and (b) all banks that
currently receive rent payments from Tenants advising such banks that any and
all amounts received by them from and after the Closing in respect of Rents
under Leases should automatically be transferred to an account designated by
VRLP. Such notices shall be mailed or otherwise delivered by, and at the cost
and expense of, VRLP.
6.11 1997 Employee Bonuses. Any bonuses paid or committed to be paid
by MMPI Sub to its Employees during or for 1997 shall be reflected on the
financial statements of MMPI Sub for its 1997 fiscal year, and to the extent not
paid by the Adjustment Date, shall be reflected as accounts payable as of the
Adjustment Date and shall be the responsibility of the MM Contributors.
6.12 Cooperation. For a period of sixty (60) days after the Closing,
the necessary personnel employed by MMPI and MMEI will be made reasonably
available to the MM Contributors to facilitate the filing of partnership and
corporate tax returns, the completion of independent audits and such other
institutional matters as may be reasonably necessary and identified by the MM
Contributors. Thereafter, the Vornado Realty Group will provide reasonable
cooperation to the MM Contributors in connection with any property assessment,
audit inquiry or other institutional matter relating to filing periods prior to
the Closing provided the MM Contributors agree to reimburse the Vornado Realty
Group for any costs and expenses incurred by the Vornado Realty Group in
connection therewith.
6.13 Casualty, Condemnation, and Environmental Law Violations. (a)
In the event that, prior to the Closing (i) any individual casualty, costing in
excess of $50,000 to repair, shall occur on any Parcel, or any series of
casualties costing in the aggregate in excess of $500,000 to repair shall occur,
or (ii) the MM Property Contributors or the Vornado Realty Group shall receive
notice or otherwise be advised that a condemnation proceeding has been commenced
or threatened with respect to any Parcel, then the party hereto which has
knowledge of same shall promptly notify the other party.
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(b) If, after the date hereof, the Vornado Realty Group
discovers or is advised of a condition at any Parcel that constitutes a
violation of, or requires remediation pursuant to, any Environmental Law and
same (x) was first discovered by the Vornado Realty Group (or the Vornado Realty
Group is so advised) after the date hereof, and (y) was not previously
identified or reflected in Section 2.17 of the Disclosure Schedule, in the
Environmental Reports or in any other Disclosure Schedule, representation or
warranty contained herein (such condition, an "Environmental Condition"), the
parties shall have the following rights and obligations:
(i) if the cost to remediate such Environmental
Condition, as reasonably estimated by the parties, is less than
$5,000,000, then each party shall be responsible for fifty (50%)
percent of the actual cost to remediate same, such that (1) if such
Environmental Condition is remediated by the Closing, then the
Consideration shall be increased by the Vornado Realty Group's fifty
(50%) percent share of such costs and (2) if such Environmental
Condition is not fully remediated by Closing, then the MM Group
shall deposit into an interest bearing escrow account with Vornado
cash in an amount equal to one hundred twenty-five (125%) percent of
fifty (50%) percent of the remaining cost to complete such
remediation (less any amounts that the Vornado Realty Group owes to
the MM Group in respect of amounts previously advanced by the MM
Group prior to Closing in connection with any remediation work
performed prior to Closing (i.e., 50% of same)) but in no event
shall the MM Group be required to deposit more than $2,500,000 in
escrow, and any amounts which are not applied by the Vornado Realty
Group to the remediation of such Environmental Condition in
accordance with the provisions of this Section shall promptly be
returned to the MM Group; and
(ii) if the cost to remediate such Environmental
Condition exceeds $5,000,000, as reasonably determined by the
parties, then neither party shall be obligated to expend any funds
to remediate same (except that if the Vornado Realty Group elects to
close subject to such Environmental Condition, the MM Group shall,
nonetheless, be responsible for 50% of any remediation costs, not to
exceed $2,500,000) but, unless the MM Group elects in its sole
discretion to remediate or provide for the remediation of same at
the MM Group's cost, the Vornado Group shall be permitted to
classify such New Environmental Condition as a "Material Event" with
respect to such Parcel, as more particularly provided for in Section
6.13(d), and exercise the rights granted to the Vornado Group
pursuant to Section 6.13(c).
(c) In the event that a "Material Event" (as defined below)
shall occur with respect to any Parcel after the date hereof, but prior to
Closing, then the parties hereto shall have the following rights and
obligations:
(i) if the Material Event occurred with respect to the
Mart Property, then Vornado Realty Group may, by delivering written
notice to the MM Group within ten (10) days after first learning of
such Material Event (unless the Closing Date is prior to the
expiration of such ten (10) day period, in which event such notice
must be provided no later than forty-eight (48) hours prior to
Closing), elect to terminate this Agreement; and
(ii) If the Material Event occurred with respect to any
Parcel other than the Mart Property, then Vornado Realty Group may,
by delivering written notice to the MM Group within ten (10) days
after first learning of such Material Event (unless the
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Closing Date is prior to the expiration of such ten (10) day period,
in which event such notice must be provided no later than
forty-eight (48) hours prior to Closing), elect to have such Parcel
excluded from the transaction contemplated hereby, in which event
and upon such election (1) such Parcel shall not be conveyed to the
Vornado Realty Group as contemplated hereby, (2) the Consideration
shall be reduced by the applicable Allocated Property Value of such
Parcel, and the MM Group shall have the right to elect how such
Consideration shall be reduced (e.g., as a reduction in the Cash
Payment or the Units payable to the MM Group at Closing) and (3) all
representations, covenants and provisions in this Agreement relating
to such Parcel (and the Property appurtenant to such Parcel) shall
be deemed to be deleted from this Agreement, to the extent necessary
to reflect the removal of that Parcel from the Properties being
conveyed hereunder.
(d) For purposes hereof, a "Material Event" shall be deemed to
have occurred with respect to a Parcel if (1) any damage or destruction as a
result of fire, flood or other casualty shall have occurred to such Parcel which
would cost in excess of 20% of the Allocated Property Value of such Parcel to
repair, or if such Parcel cannot be rebuilt within nine (9) months, as
reasonably determined by the parties, (2) all or a portion of the affected
Parcel is taken, or threatened to be taken, by a condemnation proceeding (x)
which does, or would reasonably be expected to, reduce the aggregate useable
square footage of the Improvements on the affected Parcel (other than parking)
to a material degree, or (y) which would entitle one or more Tenants under
Office Leases or Retail Leases with remaining Lease terms extending beyond
December 31, 1998 to terminate their Leases, and said Tenants actually elect to
terminate their Leases or (3) an Environmental Condition is classified as a
Material Event pursuant to Section 6.13(b).
(e) If any casualty, condemnation and/or Environmental
Condition shall have occurred but same does not constitute a Material Event with
respect to the affected Parcel, or if same constitutes a Material Event but the
party entitled to terminate this Agreement or eliminate such affected Parcel
from the terms of this Agreement, as the case may be, does not so elect, then
this Agreement shall not be terminated or the affected Parcel shall not be
eliminated from the terms of this Agreement, as the case may be, the
Consideration shall not be reduced or otherwise adjusted (except as specifically
provided herein) and the Vornado Realty Group shall accept title to such
Property subject to such casualty, condemnation proceeding or Environmental
Condition, as the case may be, without any liability, express or implied (except
as specifically provided in Section 6.13(b)), attaching thereby insofar as the
MM Group is concerned other than in Section 6.13(b).
(f) In the event that a casualty or condemnation occurs after
the date hereof (regardless of whether or not same constitutes a Material Event)
and the affected Parcel is, nonetheless, conveyed to the Vornado Realty Group
pursuant to the terms of this Agreement at the Closing, then the Vornado Realty
Group shall be entitled to receive (i) in the case of a casualty (A) all
insurance proceeds received by the MM Group (less the amount of all costs
reasonably incurred by the MM Group in connection with the repair of such damage
or destruction), (B) an assignment of all of the MM Group's right, title and
interest in and to any uncollected insurance proceeds which the MM Group may be
entitled to receive (and the right to adjust any such claims) in connection with
such damage or destruction (less the reasonable costs and expenses incurred by
the MM Group, if any, in collecting such insurance proceeds and in remediating,
repairing and restoring damage from such casualty which have not been reimbursed
to the MM Group from insurance proceeds received prior to Closing) and (C) an
amount from the MM Group equal to the deductible on any insurance policy (which
will be implemented by way of a reduction of the Consideration), or (ii) in the
case of a condemnation, (A) all condemnation proceeds received by the MM Group
and (B) an assignment of the MM Group's right, title and interest in and to any
unpaid condemnation awards (and the
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right to adjust such any claims) less any costs incurred by the MM Group in
connection with such condemnation (subject to the right of any Tenant to any
condemnation awards). Notwithstanding the foregoing, if a casualty or
condemnation occurs and the Vornado Realty Group has not elected to terminate
this Agreement or exclude such Parcel from the transaction contemplated hereby,
then the MM Group shall consult with, and obtain the approval of (such approval
not to be unreasonably withheld, conditioned or delayed) the Vornado Realty
Group with respect to any material decisions or courses of action with respect
to such casualty or condemnation. Notwithstanding the foregoing, after the
Vornado Realty Group has advised the MM Group that is has elected to purchase a
Parcel which is the subject of a casualty, the MM Group shall not be entitled to
be reimbursed for any costs in connection with the repair of such damage or
destruction unless such costs were (a) approved by the Vornado Realty Group
(which approval shall not be unreasonably withheld or delayed) or (b) incurred
in emergency circumstances where it was impractical to obtain the Vornado Realty
Group's prior consent.
(g) If Vornado has elected to exclude a Parcel from the
Properties being conveyed hereunder as provided for in Section 6.13(c)(ii) as a
result of a casualty, then, if the MM Group, in its sole discretion, elects to
rebuild such Parcel, and does in fact rebuild same within nine (9) months of the
Closing, the Vornado Realty Group shall have the following rights with respect
to such Parcel:
(i) If at any time prior to the 5th anniversary of the
Closing Date the owner of the Parcel that was the subject of such
casualty (the "ROFO Seller") desires to sell all of such Parcel (a
"ROFO Property") to a third party (other than to a lender as part of
a foreclosure or deed in lieu of foreclosure, or to, a party
Affiliated with, or any direct or indirect partner in, the MM Group)
such ROFO Seller may only do so if it first sends written notice
(the "Preliminary Offer Notice") to the Vornado Realty Group setting
forth the proposed sale price and the other material terms and
conditions upon which the ROFO Seller is willing to sell the ROFO
Property to such a third party, and granting the Vornado Realty
Group the option (the "ROFO Option") to purchase the ROFO Property
pursuant to the terms of this Section 6.13(g). The Vornado Realty
Group shall then have 60 days (time being of the essence) within
which to give written notice to the ROFO Seller that it wishes to
exercise the ROFO Option and purchase the ROFO Property at the price
and on the terms and conditions set forth in the Preliminary Offer
Notice. If the Vornado Realty Group timely exercises the ROFO Option
to purchase the ROFO Property pursuant to the terms of the
Preliminary Offer Notice then (i) the Vornado Realty Group shall
deposit into escrow with a third party escrow agent a down payment
equal to 5% of the purchase price set forth in the Preliminary Offer
Notice, (ii) the Parties shall promptly negotiate the terms of a
Contract of Sale for the purchase of the ROFO Property, which terms
shall be consistent with the terms of the Preliminary Offer Notice
and otherwise on customary and reasonable terms, (iii) the closing
of the sale of such ROFO Property shall occur within 90 days after
the exercise of the ROFO Option, time being of the essence with
respect to the Vornado Realty Group's obligation to close by such
date, and (iv) the ROFO Seller may elect to receive the proceeds of
the purchase price from the Vornado Realty Group in either Units
(valued based on the Current Market Value as of the Closing Date
and/or cash).
(ii) In the event that the Vornado Realty Group does not
timely exercise the ROFO Option, then the ROFO Seller shall have the
right to enter into a contract of sale to sell the ROFO Property to
any third party on terms not substantially less favorable to the
ROFO Seller than the corresponding terms set forth in the
Preliminary Offer Notice (it be agreed that a sales price equal to
90% or more of the purchase price set forth in the
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Preliminary Offer Notice shall be deemed reasonable) at any time
within twelve (12) months after the expiration of the ROFO Option.
If the ROFO Seller does not enter into a contract of sale to sell
such ROFO Property within such twelve (12) month period or actually
close under such contract of sale within eighteen (18) months after
the expiration of the ROFO Option, then the terms of this Section
6.13(g) shall again apply to any future sale of such ROFO Property;
provided that in no event shall the rights granted in this Section
6.13(g) extend beyond the fifth (5th) anniversary of the Closing
Date (unless a Preliminary Offer Notice has been delivered prior to
such date, in which event the rights granted in this Section 6.13(g)
shall extend until the expiration of the ROFO Option as provided for
in such Preliminary Offer Notice).
(iii) If the Vornado Realty Group exercises the ROFO
Option but materially defaults or otherwise fails to fulfill its
obligation to purchase the ROFO Property pursuant to the terms and
conditions contained in the Preliminary Offer Notice within the time
period required herein, then the ROFO Seller shall be entitled to
receive the ROFO Deposit, together with interest earned thereon, as
liquidated damages, and all rights under this Section 6.13(g) shall
automatically and immediately terminate.
(iv) If the Vornado Realty Group elects to purchase the
ROFO Property, it may, at its option, cause such interest to be
acquired by an affiliated nominee or designee, provided, however,
such assignment shall not relieve the Vornado Realty Group of any
obligation or liability with respect thereto. The rights afforded to
the Vornado Realty Group pursuant to this Section 6.13(g) are
personal to the Vornado Realty Group and may not be assigned,
directly or indirectly, to any other person.
(h) In the event that any Parcel is excluded from the terms of
this transaction pursuant to this Section 6.13 or Section 6.8, but the terms of
this Agreement are otherwise consummated, then MMPI shall continue to manage
such Parcel on agreed upon fair market terms until and unless such Parcel is
sold or otherwise transferred to a third party not Affiliated with any MM
Entity. Further, if any Parcel is excluded from the terms of this transaction,
then all assets (such as trademarks and tradenames) held by MMPI which relate to
such Parcel shall, at the election of the MM Property Group, and at any time and
from time to time thereafter, be transferred or licensed (for nominal
consideration) to the applicable MM Group member (unless and until such excluded
Property is subsequently transferred to the Vornado Realty Group pursuant to
Section 6.13(g)).
6.14 Designees of Vornado Realty Group. The MM Group acknowledges
and agrees that the Vornado Realty Group may designate one or more Subsidiaries
to be transferees of any of the Contributed Interests hereunder.
6.15 Certain Assignments. In the event that prior to the Closing the
MM Group is unable to obtain the necessary consents and approvals to effect the
assignments contemplated by each of the Dacap Assignment and the Florida
Assignment, then the Cash Portion of the Consideration shall be reduced by an
amount equal to the aggregate Allocated Property Values in respect of the
interests subject to such assignments and the conditions to Closing set forth in
Sections 7.2.15 and 7.3.10 shall not be applicable insofar as they relate to the
Dacap Assignment and the Florida Assignment.
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 Intentionally Omitted.
7.2 Conditions to the MM Contributors' Obligations to Close. The
obligation of the MM Contributors to consummate the transactions contemplated
hereby at the Closing is further subject to satisfaction or waiver by the MM
Contributors of the following conditions on or before the Closing Date:
7.2.1 Representations and Warranties. The representations and
warranties of the members of the Vornado Realty Group contained herein shall be
true and correct in all material respects as of the Closing Date as if remade on
the Closing Date, except to the extent that they expressly relate to an earlier
date, or, if not, any variances or deviations from said representations and
warranties shall not have a material adverse effect on the transactions
contemplated by this Agreement. For purposes of this subsection, the truth and
correctness of any representation or warranty shall be determined on an absolute
basis, meaning apart from any qualification of "knowledge" set forth in said
representation or warranty.
7.2.2 Full Performance. The members of the Vornado Realty
Group shall have performed and complied in all material respects with all
agreements, covenants, obligations and conditions required by this Agreement to
be performed or complied with by it on or prior to the Closing.
7.2.3 Closing Documents. The members of the Vornado Realty
Group shall have executed and delivered to the MM Contributors all Closing
Documents required to be delivered by the members of the Vornado Realty Group
and the Subsidiaries.
7.2.4 Employment Agreement. The Employment Agreements shall
have been executed and delivered as of the Closing.
7.2.5 Payment for Common Stock of Management Companies. The MM
Stockholders shall have received payment from the designees of the Vornado
Realty Group in respect of the transfer and the sale of all of the voting common
stock of each of the Management Companies to such designees.
7.2.6 Intentionally Omitted.
7.2.7 Issuance of Common Units, Preferred Units, and VOI
Stock. The members of the Vornado Group or VOI, as the case maybe, shall have
issued, or caused to be issued, the Common Units, the Preferred Units, and the
VOI Stock (if applicable), respectively, and, in the case of the Preferred
Units, pursuant to the certificate of designation, which shall be substantially
in the form of Exhibit 7.2.7 attached hereto.
7.2.8 REIT Election. Vornado shall not have revoked its prior
election pursuant to Section 856(c)(1) of the Code to be taxed as a REIT, and
shall be in compliance with all applicable federal income tax laws, rules and
regulations, including the Code, necessary to permit it to be taxed as a REIT.
Vornado shall not have taken any action or have failed to take any action which
would reasonably be expected to, alone or in conjunction with any other factors,
result in the loss of its status as a REIT for federal income tax purposes.
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7.2.9 Amendment to OP Agreement. The OP Agreement shall have
been amended, a copy of which shall be delivered at Closing, to reflect the
admission of the applicable Unitholders as limited partners therein.
7.2.10 Absence of Litigation. No action, suit, or legal,
administrative or arbitral proceedings shall have been instituted before or by
any court or Governmental Authority or arbitration panel seeking to enjoin or
challenging the transactions contemplated by this Agreement, other than any such
proceeding initiated by or on behalf of any member of the MM Group or any direct
or indirect beneficiary or equityholder of any member of the MM Group.
7.2.11 Approval of Transaction. The consummation of the
transactions contemplated hereby and the delivery of the Consideration to the MM
Contributors shall have been duly and validly authorized and approved by the
board of directors of VOI and Vornado, on its own behalf and in its capacity as
the general partner of VRLP. The members of the Vornado Realty Group shall
deliver to the MM Contributors the certificate referred to in Section 1.6.2(D).
7.2.12 No Injunction or Restraints. No statute, rule,
regulation, temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect, provided, however, that the
MM Contributors shall use commercially reasonable efforts to have any such
temporary restraining order, injunction, order, restraint or prohibition
vacated.
7.2.13 HSR Act. Any waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated, and no action shall have been instituted by the
United States Department of Justice or the United States Federal Trade
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall not have been withdrawn or terminated,
or the members of the Vornado Realty Group and the MM Contributors shall have
reasonably mutually concluded that no filing under the HSR Act is required with
respect to the transactions contemplated hereby.
7.2.14 Mortgage Loan Assumption and Indemnity Agreement. The
applicable members of the Vornado Realty Group shall have executed and delivered
the Mortgage Loan Assumption and Indemnity Agreement.
7.2.15 Wolf Point Agreement; River West North Agreement; Dacap
Assignment and Florida Assignment. Simultaneously with the Closing and subject
to Section 6.15, the Wolf Point Agreement, the River West North Agreement, the
Stardial Assignment and the BB&E Assignment, in the forms set forth as Exhibits
7.2.15(a) (the "Wolf Point Agreement"), 7.2.15(b) (the "River West Agreement"),
7.2.15(c) (the "Dacap Assignment") and 7.2.15(d) (the "Florida Assignment"),
respectively, shall have been executed and delivered by all of the parties
thereto.
7.3 Conditions to the Obligations of the Members of the
Vornado Group and the Subsidiaries. The obligation of the members of the Vornado
Realty Group to consummate this Agreement and the transactions contemplated
hereby at the Closing is further subject to the satisfaction or waiver by the
members of the Vornado Realty Group of the following conditions on or before the
Closing Date:
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7.3.1 Representations and Warranties. The representations and
warranties of the MM Contributors contained herein shall be true and correct in
all material respects as of the Closing Date as if remade on the Closing Date,
except to the extent that they expressly relate to an earlier date. For purposes
of this subsection, the truth and correctness of any representation or warranty
shall be determined on an absolute basis, meaning apart from any qualification
of "knowledge" set forth in said representation or warranty.
7.3.2 Full Performance. The MM Contributors and the Management
Companies shall have each performed and complied in all material respects with
all agreements, covenants, obligations and conditions required by this Agreement
to be performed or complied with by them on or prior to the Closing.
7.3.3 Closing Documents. The MM Contributors shall have
executed and delivered to the members of the Vornado Realty Group all Closing
Documents required to be delivered by the MM Contributors.
7.3.4 Title Policy. The Title Company shall be unconditionally
prepared to issue a Title Policy meeting the requirements of Section 6.8(b)
hereof for each Parcel.
7.3.5 Absence of Litigation. No action, suit, or legal,
administrative or arbitral proceedings shall have been instituted before or by
any court or Governmental Authority or arbitration panel seeking to enjoin or
challenging the transactions contemplated by this Agreement, except with respect
to any such proceeding initiated by any member of the MM Group or any direct or
indirect beneficiary or equityholder of any member of the MM Group (provided,
that, in the case of any such proceeding initiated by any member of the MM Group
or any beneficiary or equityholder thereof, the Vornado Realty Group shall
receive indemnification in form and substance reasonably satisfactory to the
Vornado Realty Group from the MM Group prior to Closing).
7.3.6 Approval of Transaction. The consummation of the
transactions contemplated hereby shall have been duly and validly authorized and
approved by the respective board of directors, general partner, managing member,
trustee or other controlling Person, as the case may be, of each member of the
MM Group. The members of the MM Group shall deliver to the members of the
Vornado Realty Group a letter of an authorized officer of each of such entities,
in form and substance reasonably satisfactory to the members of the Vornado
Realty Group, confirming the foregoing.
7.3.7 No Injunction or Restraints. No statute, rule,
regulation, temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect, provided, however, that the
members of the Vornado Realty Group shall use commercially reasonable efforts to
have any such temporary restraining order, injunction, order, restraint or
prohibition vacated.
7.3.8 HSR Act. Any waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated, and no action shall have been instituted by the
United States Department of Justice or the United States Federal Trade
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall not have been withdrawn or terminated,
or the members of the Vornado Realty Group
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and the MM Contributors shall have mutually concluded that no filing under the
HSR Act is required with respect to the transactions contemplated hereby
7.3.9 Estoppel Certificates. Notwithstanding the MM Property
Contributors' obligation to distribute Estoppel Certificates to certain Tenants
as provided for in Section 4.4, and the obligation of the MM Property
Contributors to deliver to the Vornado Realty Group any Estoppel Certificates
actually received on or before the Closing Date pursuant to Section 1.6.1(I), it
shall only be a condition to the Vornado Realty Group's obligation to consummate
this Agreement and the transactions contemplated hereby that the Vornado Realty
Group receives (a) an Estoppel Certificate from 75% (in square footage) of the
87 Tenants listed in Section 7.3.9(A) of the Disclosure Schedule, and (b) an
Estoppel Certificate from 50% (in square footage) of the Tenants listed in
Section 7.3.9(B) of the Disclosure Schedule. Notwithstanding anything else in
this Agreement to the contrary, the MM Contributors shall be entitled, but shall
not be obligated, to adjourn the Closing for up to thirty (30) days in order to
obtain any required Estoppel Certificates, subject to the right of the Vornado
Realty Group to waive delivery of such Estoppel Certificates as a condition to
Closing.
7.3.10 Wolf Point Agreement; River West North Agreement; Dacap
Assignment and Florida Assignment. Simultaneously with the Closing and subject
to Section 6.15, the Wolf Point Agreement, the River West North Agreement and
the Dacap Assignment and the Florida Assignment shall have been executed and
delivered by all of the parties thereto.
7.3.11 Common Stock of Management Companies. The MM
Stockholders shall have made available for delivery to Xxxxxx Xxxx, Xxxxxxx X.
Xxxxxxxxxx and Xxxxxx Xxxxxx, against receipt of payment therefore, certificates
evidencing all of the shares of voting common stock of each of the Management
Companies, duly endorsed in blank, together with evidence of the payment of any
applicable stock transfer taxes and any other applicable fees.
7.3.12 Zoning Opinion. A written opinion of Messrs. Xxxxxx and
Xxxxx or a reputable law firm in the Washington, D.C. area as to the compliance
of the Office Center and the Design Center with applicable zoning requirements,
including parking, in all material respects.
ARTICLE VIII
SURVIVAL, INDEMNIFICATION, LIMITATIONS ON LIABILITY
8.1 Survival. Except as set forth in this Section 8.1 to the
contrary, all representations and warranties of the MM Contributors and the
Management Companies and the members of the Vornado Realty Group in this
Agreement shall terminate thirty (30) months after the Closing and the MM
Contributors or the members of the Vornado Realty Group, as applicable, shall
have no liability thereafter with respect to such representations and warranties
except to the extent the members of the Vornado Realty Group have, or the MM
Contributors have, as applicable, notified the other party in writing of any
breach of representations and warranties during such thirty (30) month period.
In addition, the representations and warranties set forth in Section 2.23 with
respect to Tax Returns and Taxes for periods prior to the Adjustment Date shall
survive for a period expiring on the third year anniversary of the filing date
of the applicable Tax Return (provided that if the applicable member of the MM
Group and the United States Internal Revenue Service or other taxing authority
have agreed to extend the applicable statute of limitations beyond any such
period, then in such case such representations and warranties shall survive to
the date on
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which such agreement to extend expires). The covenants and agreements contained
herein with respect to post-Closing obligations of the parties shall survive
without limitation, unless specifically limited by the terms of this Agreement.
8.2 The MM Contributors' Indemnification Obligations. (a) Subject to
the other provisions of this Article VIII, from and after the Closing until the
expiration of the stated survival period, the MM Contributors jointly and
severally shall indemnify, defend and hold harmless the members of the Vornado
Realty Group and their respective officers, directors, Affiliates, partners and
agents (the "Vornado Realty Group Indemnified Parties") from and against any
costs or expenses (including, without limitation, the reasonable fees of its
engineers and other professionals and experts as well as reasonable attorneys'
fees and the reasonable out-of-pocket expenses of testifying and preparing for
testimony and responding to document and other information requests, and in
connection with the enforcement of any rights hereunder, whether or not a party
to such litigation), judgments, liabilities, fines, amounts paid in settlement,
losses, claims and damages (collectively, "Damages"), as incurred, to the extent
they relate to, arise out of or are the result of:
(i) the breach of or any inaccuracy in any of the
representations and warranties of the MM Contributors contained in or made
pursuant to this Agreement; and
(ii) the breach or nonperformance of any covenant or agreement
of the MM Contributors contained in this Agreement.
(b) From and after the Closing through the thirty (30) month
anniversary of the Closing Date, the MM Contributors shall indemnify, defend and
hold harmless the Vornado Group Indemnified Parties from and against any
Damages, as incurred, to the extent they relate to, or arise out of or are a
result of, any facts or circumstances relating to the activities or operations
of any, direct or indirect, former subsidiary of MMPI (but not, for the purposes
of this paragraph, with respect to the activities or operations of MMPI Sub or
any other MM Entity). The indemnification provided under this paragraph shall
not be subject to the monetary limitations set forth in Section 8.5(b) or
Section 8.5(d). The MM Contributors' indemnification obligations under this
paragraph shall terminate on the thirty (30) month anniversary of the Closing
Date (but not with respect to any bona fide claims asserted by any Vornado Group
Indemnified Party prior to such thirty (30) month anniversary date in accordance
with this Agreement).
From and after the Closing, the MM Contributors shall indemnify,
defend and hold harmless the Vornado Group Indemnified Parties from and against
all Damages, as incurred, to the extent they relate to, or arise out of or are a
result of, any third party personal injury or employee claims, litigations or
other proceedings arising from facts and circumstances existing and occurring
prior to the Adjustment Date, including the personal injury and employee claims
and proceedings described in Sections 2.4(b)(5) or 2.4B)(3) of the Disclosure
Schedule. The indemnification provided under this paragraph shall not be subject
to the monetary limitations set forth in Section 8.5(b) or Section 8.5(d).
8.3 The Indemnification Obligations of the Members of the Vornado
Realty Group and the Subsidiaries. Subject to the other provisions of this
Article VIII, from and after the Closing until the expiration of the stated
survival period, the members of the Vornado Realty Group shall jointly and
severally indemnify, defend and hold harmless the MM Contributors and their
respective officers, directors, members, Affiliates, shareholders,
beneficiaries, partners and agents (the "MM Group Indemnified Parties"), from
and against any Damages (for purposes of this Section 8.3 only, "Damages" shall
include the Tax Payment owing
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by the MM Contributors as a result of the breach by the members of the Vornado
Realty Group of Section 6.4), as incurred, to the extent they relate to, arise
out of or are the result of:
(i) the breach of or any inaccuracy in any of the
representations and warranties of the members of the Vornado Realty Group
contained in or made pursuant to this Agreement; and
(ii) the breach or nonperformance of any covenant or agreement
of the members of the Vornado Realty Group contained in this Agreement.
8.4 Claims. (a) If the Closing occurs and a Vornado Realty Group
Indemnified Party or a MM Group Indemnified Party (in each case, an "Indemnified
Party") intends to seek indemnification pursuant to this Article VIII, such
Indemnified Party shall promptly notify the party obligated to indemnify such
Indemnified Party (each such party shall be referred to as an "Indemnifying
Party" in such capacity), in writing, of such claim describing such claim in
reasonable detail, provided, that the failure to provide such notice shall not
affect the obligations of the Indemnifying Party unless and only to the extent
it is actually prejudiced thereby. In the event that such claim involves a claim
by a third party against the Indemnified Party which seeks Damages in an amount
in respect of which indemnification pursuant to this Article VIII would be
available, the Indemnifying Party shall have thirty (30) days after receipt of
such notice to decide whether it will undertake, conduct and control, through
counsel of its own choosing and at its own expense, the settlement or defense
thereof, and if it so decides, the Indemnified Party shall cooperate with it in
connection therewith, provided, that the Indemnified Party may participate in
such settlement or defense through counsel chosen by it, and provided further,
that the fees and expenses of such counsel shall be borne by the Indemnified
Party. The Indemnifying Party shall not, without the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld), settle or
compromise any action for which it is providing indemnity hereunder. The
Indemnified Party shall not have the right to settle any claim or action without
the consent of the Indemnifying Party; provided, that if the Indemnifying Party
does not notify the Indemnified Party within thirty (30) days after the receipt
of the Indemnified Party's notice of a claim of indemnity hereunder that it
elects to undertake the defense thereof, or thereafter does not diligently
prosecute such defense, then the Indemnified Party shall have the right to
contest, settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
(b) The Indemnifying Party and the Indemnified Party shall
cooperate fully in all aspects of any investigation, defense, pretrial
activities, trial, compromise, settlement or discharge of any claim in respect
of which indemnity is sought pursuant to this Article VIII, including, but not
limited to, by providing the other party with reasonable access to employees and
officers (including as witnesses) and other information.
(c) To the extent that the Vornado Realty Group Indemnified
Parties have a claim against both the MM Contributors and any title insurer and
elect to seek recovery from, or are otherwise indemnified by, the MM
Contributors, the Vornado Realty Group hereby assigns to the MM Contributors, to
the extent permitted by law and the terms thereof, all claims the Vornado Group
Indemnified Parties may have against said title insurer and agrees to cooperate
in any reasonable manner in the prosecution of said claims including, if
necessary, proceeding in its name for the benefit of the MM Contributors through
counsel selected by the MM Contributors, at the MM Contributors' cost.
8.5 Limitations on Liability and Amounts. (a) IN NO EVENT SHALL ANY
PARTY HERETO, OR ANY DIRECT OR INDIRECT PARTNER, MEMBER, SHAREHOLDER,
BENEFICIARY, OWNER OR AFFILIATE THEREOF, OR ANY OFFICER, DIRECTOR, EMPLOYEE,
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TRUSTEE, OR AGENT OF ANY OF THE FOREGOING OR ANY AFFILIATE OR CONTROLLING PERSON
THEREOF, BE LIABLE TO ANY MM GROUP INDEMNIFIED PARTY OR VORNADO REALTY GROUP
INDEMNIFIED PARTY, AS THE CASE MAY BE, IN CONTRACT, TORT OR OTHERWISE WITH
RESPECT TO ANY INDIRECT, CONSEQUENTIAL, OR EXEMPLARY DAMAGES ARISING FROM OR
RELATING TO THIS AGREEMENT OR ANY CLOSING DOCUMENT OR TRANSACTION DOCUMENT.
(b) IN NO EVENT SHALL THE MM CONTRIBUTORS OR THE MEMBERS OF
THE VORNADO REALTY GROUP, AS APPLICABLE, BE LIABLE TO ANY INDEMNIFIED PARTY
UNDER SECTION 8.2 OR SECTION 8.3 UNLESS AND UNTIL THE AGGREGATE AMOUNT OF
DAMAGES FOR WHICH THE MM CONTRIBUTORS OR THE MEMBERS OF THE VORNADO REALTY
GROUP, AS APPLICABLE, ARE OBLIGATED TO INDEMNIFY THE INDEMNIFIED PARTIES UNDER
SECTION 8.2 OR 8.3, AS APPLICABLE, EXCEEDS $1,500,000 AFTER WHICH THE
INDEMNIFIED PARTIES OR ANY OF THEM MAY BRING ONE OR MORE CLAIMS AGAINST THE MM
CONTRIBUTORS OR THE MEMBERS OF THE VORNADO REALTY GROUP, AS APPLICABLE, UNDER
SECTION 8.2 OR SECTION 8.3 FOR THE ENTIRE AMOUNT OF THEIR AGGREGATE DAMAGES.
(c) IF THE CLOSING OCCURS, THE MEMBERS OF THE VORNADO REALTY
GROUP, ON THE ONE HAND, AND THE MEMBERS OF THE MM GROUP, ON THE OTHER HAND,
SHALL NOT HAVE THE RIGHT TO BRING A CLAIM AGAINST ANY MEMBER OF THE OTHER GROUP
BY VIRTUE OF ANY OF THE REPRESENTATIONS OR WARRANTIES CONTAINED HEREIN OR IN ANY
TRANSACTION DOCUMENT BEING FALSE OR MISLEADING UNLESS (I) SUCH CLAIM IS BROUGHT
ON OR PRIOR TO THE DATE ON WHICH A CLAIM BASED ON SUCH REPRESENTATION OR
WARRANTY MAY NO LONGER BE BROUGHT AND (II) NOTICE OF THE FALSE OR MISLEADING
REPRESENTATION OR WARRANTY HAS BEEN GIVEN TO THE MEMBERS OF THE APPLICABLE GROUP
AND THE MEMBERS OF SUCH GROUP HAVE HAD THIRTY (30) DAYS TO CURE SAME.
FURTHERMORE, IN NO EVENT AFTER THE OCCURRENCE OF THE CLOSING SHALL (A) THE
MEMBERS OF THE VORNADO REALTY GROUP BE ENTITLED TO RECEIVE DAMAGES FROM THE MM
GROUP OR ANY MEMBER THEREOF, IN EXCESS OF THE NUMBER OF MM CONTRIBUTORS UNITS,
OR CASH, DEPOSITED AT ANY TIME PURSUANT TO THE PLEDGE AGREEMENT (EXCEPT FOR A
BREACH OF THE REPRESENTATION SET FORTH IN SECTION 2.7), OR (B) THE MEMBERS OF
THE MM GROUP BE ENTITLED TO RECEIVE DAMAGES FROM THE VORNADO REALTY GROUP OR ANY
MEMBER THEREOF IN EXCESS OF (I) $32,500,000 FROM THE CLOSING DATE TO THE
18-MONTH ANNIVERSARY OF THE CLOSING DATE, (II) $16,250,000 (PLUS THE AMOUNT OF
ANY BONA FIDE INDEMNIFICATION CLAIMS ASSERTED BY ANY MEMBER OF THE MM GROUP FROM
THE CLOSING DATE TO THE 18-MONTH ANNIVERSARY OF THE CLOSING DATE THAT HAVE NOT
BEEN RESOLVED IN ACCORDANCE WITH THIS AGREEMENT) FROM THE 18-MONTH ANNIVERSARY
OF THE CLOSING DATE TO THE 30- MONTH ANNIVERSARY OF THE CLOSING DATE, AND (III)
ZERO (PLUS (X) THE AMOUNT OF ANY BONA FIDE INDEMNIFICATION CLAIMS ASSERTED BY
ANY MEMBER OF THE MM GROUP FROM THE CLOSING DATE TO THE 18-MONTH ANNIVERSARY OF
THE CLOSING DATE THAT HAVE NOT BEEN RESOLVED IN ACCORDANCE WITH THIS AGREEMENT
AND (Y) THE AMOUNT OF ANY BONA FIDE INDEMNIFICATION CLAIMS ASSERTED BY ANY
MEMBER OF THE MM GROUP PRIOR TO THE 18-MONTH ANNIVERSARY OF THE CLOSING DATE TO
THE 30-MONTH ANNIVERSARY OF THE CLOSING DATE) THEREAFTER, BUT IN NO EVENT
GREATER THAN $32,500,000 IN THE AGGREGATE.
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(d) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IF THE
CLOSING OCCURS, RECOURSE AGAINST ANY MEMBER OF THE MM GROUP HEREUNDER (FOR
INDEMNIFICATION OBLIGATIONS OR OTHERWISE), WITH RESPECT TO THE FAILURE OR BREACH
OF ANY REPRESENTATION OR WARRANTY HEREUNDER SHALL BE LIMITED SOLELY TO THE
VORNADO REALTY GROUP'S RIGHT TO PURSUE ITS RIGHTS AND REMEDIES UNDER THE PLEDGE
AGREEMENT. IF THE CLOSING OCCURS, THE INDEMNIFICATION AND OTHER PROVISIONS IN
THIS ARTICLE 8 SHALL BE THE SOLE AND EXCLUSIVE REMEDIES OF THE MM CONTRIBUTORS
AND THE MEMBERS OF THE VORNADO REALTY GROUP AGAINST EACH OTHER WITH RESPECT TO
ANY AND ALL CAUSES OF ACTION RELATED TO ANY BREACH OF ANY REPRESENTATION OR
WARRANTY UNDER THIS AGREEMENT OR ANY TRANSACTION DOCUMENT.
(e) IF THE CLOSING DOES NOT OCCUR, IN NO EVENT SHALL THE
VORNADO REALTY GROUP HAVE ANY LIABILITY TO THE MM GROUP FOR DAMAGES IN EXCESS OF
$32,500,000 IN THE AGGREGATE.
ARTICLE IX
TERMINATION
9.1 Termination as a result of Casualty, Condemnation, Environmental
Law Violation or Title Defect. This Agreement may be terminated to the extent
provided for in Section 6.8 or Section 6.13, at which point no party shall have
any rights or obligations hereunder except the Termination Surviving
Obligations. In the event this Agreement is terminated by the Vornado Realty
Group pursuant to this Section 9.1, then (i) the MM Group shall pay to the
Vornado Realty Group a termination fee of $3,000,000 and (ii) neither the MM
Contributors nor the members of the Vornado Realty Group shall have any further
obligation or liability to the other hereunder, except for the Termination
Surviving Obligations.
9.2 Termination by the MM Contributors for the Default of the
Members of the Vornado Realty Group. In the event that on or prior to the
Closing the members of the Vornado Realty Group default with respect to their
obligations pursuant to this Agreement in any material respect for any reason
except the failure by the MM Contributors to perform their obligations
hereunder, and the MM Contributors are otherwise ready, willing and able to
perform their obligations hereunder, including, but not limited to, a breach or
failure of any representation, warranty, covenant or agreement contained herein
that is material in the context of the transactions contemplated hereby and such
breach has not been waived, the MM Contributors shall have the option to elect
either to (i) terminate this Agreement by giving the members of the Vornado
Realty Group written notice of such election prior to or at Closing and/or (ii)
pursue all of their available remedies at law or in equity (including the remedy
of specific performance); provided, however, that the remedies provided by (i)
and (ii) above shall be available to the MM Contributors only to the extent that
such default continues for thirty (30) days after the actual receipt by the
members of the Vornado Realty Group of a written notice from the MM Contributors
setting forth in detail the nature of such default or failure (except with
respect to the Vornado Realty Group's obligations under the Mart Commitment,
with respect to which such thirty (30) day period shall not apply) or, in the
case of a default with respect to a representation or warranty, thirty (30) days
after the scheduled Closing Date. Upon any termination pursuant to this Section
9.2, neither the MM Contributors nor the members of the Vornado Realty Group
shall have any further obligation or liability to the other hereunder, except
for the Termination Surviving Obligations.
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9.3 Termination by the Members of the Vornado Group and the
Subsidiaries for the MM Contributors' Default. In the event that on or prior to
the Closing the MM Contributors default with respect to their obligations
pursuant to this Agreement in any material respect for any reason except the
failure by the members of the Vornado Realty Group to perform their obligations
hereunder, and the members of the Vornado Realty Group are otherwise ready,
willing and able to perform their obligations hereunder, including, but not
limited to, a breach or failure of any representation, warranty, covenant or
Agreement contained herein that is material in the context of the transactions
contemplated hereby and such breach has not been waived, the members of the
Vornado Realty Group shall have the option to elect, as their sole and exclusive
remedy, either to: (i) terminate this Agreement by giving the MM Contributors
written notice of such election prior to or at Closing and elect in such notice
to receive the termination fee set forth in the last sentence of this Section
9.3 or (ii) pursue all of their available remedies in equity (including the
remedy of specific performance); provided, however, that the remedy selected by
the Vornado Realty Group under clauses (i) or (ii) above shall be available to
the members of the Vornado Realty Group only to the extent that such default
continues for thirty (30) days after the later of the then scheduled Closing
Date and actual receipt by the MM Contributors of a written notice from the
members of the Vornado Realty Group setting forth in detail the nature of such
default or failure or, in the case of a default with respect to a representation
or warranty, thirty (30) days after the scheduled Closing Date. In no event
shall the right of the members of the Vornado Realty Group to seek specific
performance include the right to compel the MM Contributors to expend more than
the Maximum MM Expenditure Amount (or such lesser amount as may be provided
herein in certain cases) to cure any and all defaults or failures of the
representations, warranties, covenants or agreements contained in this
Agreement. Upon any termination of this Agreement pursuant to clause (i) of this
Section 9.3, then (i) the MM Group shall pay to the Vornado Realty Group a
termination fee of $3,000,000 and (ii) neither the MM Contributors nor the
members of the Vornado Realty Group shall have any further obligation or
liability to the other hereunder, except for the Termination Surviving
Obligations.
ARTICLE X
DEFINITIONS AND TERMS
10.1 Specific Definitions. As used in this Agreement, the following
terms shall have the meaning set forth below:
"1934 Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Aboveground Storage Tank" means each and every "aboveground storage
tank," whether or not subject to the Tank Laws, as well as any "secondary
containment system" as those terms are defined by the Tank Laws.
"Accredited Investor" means a Person who qualifies as an
"accredited" investor as defined in relevant securities laws, including, without
limitation, under Rule 501 of the 1933 Act.
"Affiliate" means, when used with reference to a specified Person,
(i) if such Person is an individual, any member of the immediate family of such
Person or any trust for the benefit of any Person or any such member of the
immediate family of such Person and (ii) any Person directly or indirectly
controlled by, controlling or under common control with the Person in question.
The term "control" shall mean, for purposes of this definition, with respect to
any Person, the possession, directly or indirectly, of
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the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise. The term "member of the immediate family" means, with respect to any
individual, the spouse, children and grandchildren of any such individual.
"Apparel Property" means that certain parcel of real property, which
constitutes part of the Real Property, commonly known as the "Apparel Center"
and identified in Section 1.1(a) of the Disclosure Schedule, and all other
Property located thereon or used in connection therewith.
"Built-in-Gain" means, with respect to any item of Real Property,
the amount of gain that would be allocated to the MM Contributors under Section
704(c) of the Code if such Property were disposed of in a Taxable Transaction.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banks are authorized to be closed in the State of New York.
"Closing Date Market Value Per Unit" means the average of the
Closing Price for a Vornado Common Share for the five (5) consecutive Trading
Days immediately preceding the Closing Date.
"Closing Price" means, on any date, with respect to a Vornado Common
Share, the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, for one
Vornado Common Share in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder, or any corresponding
federal tax statute enacted after the date of this Agreement. A reference to a
specific section (ss.) of the Code refers not only to such specific section but
also to any corresponding provision of any federal tax statute enacted after the
date of this Agreement, as such specific section or corresponding provision is
in effect on the date of application of the provisions of this Agreement
containing such reference.
"Current Market Value Per Unit" on any given date means the average
of the Closing Price for a Vornado Common Share for the twenty (20) consecutive
Trading Days immediately preceding such date.
"Design Center Property" means that certain parcel of real property,
which constitutes part of the Real Property, commonly known as the "Washington
Design Center" and identified in Section 1.1(a) of the Disclosure Schedule, and
all other Property located thereon or used in connection therewith.
"Discharge" means the releasing, spilling, leaking, disposing,
pumping, pouring, emitting, emptying, treating or dumping of Hazardous Materials
at, into, onto or migrating from or onto the Property, regardless of whether the
result of an intentional or unintentional action or omission.
"Environmental Documents" means all environmental documentation in
the possession of the MM Contributors concerning the Real Property or its
environs including, without limitation, all sampling plans, cleanup plans,
preliminary assessment plans and reports, site investigation plans and reports,
remedial investigation plans and reports, remedial action plans and reports, or
the equivalent, sampling results, sampling result reports, data, diagrams,
charts, maps, analysis, conclusions, quality assurance/quality control
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documentation, correspondence to or from any Governmental Authority, submissions
to any Governmental Authority and directives, orders, approvals and disapprovals
issued by any Governmental Authority, which documentation includes, without
limitation, the documentation set forth in Section 2.17 of the Disclosure
Schedule.
"Environmental Law" means the following: (x) each and every
applicable federal, state, county or municipal law, statute, ordinance, rule,
regulation, guideline, code, license, permit, authorization, approval, consent,
legal doctrine, order, judgment, decree, injunction, directive, requirement or
agreement with any Governmental Authority, relating to (y) the protection,
preservation or restoration of the environment (including, without limitation,
air, water, vapor, surface water, groundwater, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, or (z) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Materials. The term
Environmental Law includes, without limitation, (i) the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Preauthorization Act, the federal Water Pollution Control Act of
1972, the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the federal Solid Waste Disposal Act and the
federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Atomic Energy Act, the Nuclear Waste Policy Act of 1982,
the federal Occupational Safety and Health Act of 1970, each as amended and as
now in effect, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
"GAAP" means generally accepted accounting principles and practices
consistently applied for all periods so as to properly reflect the financial
condition, results of operations and changes in cash flows of any entity.
"Governmental Authority" means any federal, state, county or
municipal court, tribunal, government, or any department, agency, bureau, board
or commission, regulatory authority, or other governmental or similar type body,
subdivision or instrumentality obtaining authority therefrom or created pursuant
to any law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Hazardous Materials" means any substance presently defined,
designated or classified as hazardous, toxic, radioactive or dangerous, whether
by type or by quantity, including any substance containing any such substance as
a component. Hazardous Materials includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, or petroleum or any derivative or by-product thereof, radon,
radioactive material, asbestos, asbestos containing material, urea formaldehyde
products, lead and polychlorinated biphenyl, and without limitation any and all
of the following, including mixtures thereof: any hazardous substance,
pollutant, contaminant, waste, by-product or constituent regulated under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., oil, petroleum and petroleum products and derivatives and
natural gas, natural gas liquids, liquefied natural gas and synthetic gas usable
for fuel; asbestos and asbestos-containing materials, PCBs and other substances
regulated under the federal Solid Waste Disposal Act and the federal Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.; source material, special
nuclear material, by-product material and any other radioactive materials or
radioactive wastes, however produced,
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regulated under the Atomic Energy Act or the Nuclear Waste Policy Act of 1982;
and chemicals subject to the OSHA Hazard Communication Standard, 29 C.F.R.
ss.ss.1910.1200 et seq.
"Knowledge of the MM Contributors", "the MM Contributors'
knowledge", "best of the MM Contributors' knowledge" or similar derivations
thereof (including as such "knowledge" qualifies may be used with respect to the
MM Group or any member thereof) means the actual knowledge of Xxxxxx Xxxxx,
Xxxxxx Xxxxxxx, Xxxxxxxxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxx and Xxxxxxx
Xxxxx.
"Knowledge of the Vornado Realty Group", "the Vornado Realty Group's
Knowledge", "best of the Vornado Realty Group's knowledge" or similar
derivations thereof means the actual knowledge of Xxxxxxx X. Xxxxxxxxxx, Xxxxxx
Xxxxxx and Xxxx Xxxxxxx.
"Land Trustee" means LaSalle National Bank, a national banking
association.
"Land Trust Agreements" means the trust agreements under which the
Land Trusts are established.
"Land Trusts" means the following land trusts established under the
trust agreements indicated, in each case with the Land Trustee as trustee and
with the respective beneficiaries indicated, which hold legal title to the
respective Parcels of the Real Property indicated: (i) Trust established by
Trust Agreement dated May 27, 1981 and known as Trust No. 104000 under which
Merchandise Mart Owners, L.L.C. is the sole beneficiary, which holds legal title
to the Mart Property; (ii) Trust established by Trust Agreement dated March 1,
1967, as extended, and known as Trust No. 36223, under which World Trade Center
Chicago, L.L.C. is the sole beneficiary, which holds legal title to the Apparel
Property; and (iii) Trust established by Trust Agreement dated August 21, 1986
and known as Trust No. 111475, under which Merchandise Mart Owners, L.L.C. is
the sole beneficiary, which holds legal title to the River West South Property.
"Law" or "Laws" means any applicable federal, state, foreign or
local law, statute, ordinance, rule, code, regulation, order, judgment or
decree.
"Lien" means any material lien, mortgage, charge, option,
contractual restriction on transfer, security interest, tax lien (other than for
Taxes not yet due and payable), pledge, encumbrance, conditional sale or title
retention arrangement, or any other claim against an asset or any agreement to
create or confer any of the foregoing, in each case whether arising by agreement
or under any statute or law or otherwise.
"Mart Owner" means the land trust which owns the Mart Property.
"Mart Property" means that certain parcel of real property, which
constitutes part of the Real Property, commonly known as the "Merchandise Mart"
and identified in Section 1.1(a) of the Disclosure Schedule, and all other
Property located thereon or used in connection therewith.
"Material Adverse Change" or "Material Adverse Effect" means a
material adverse change or effect on the business, financial condition or
results of operations of (i) the MM Contributors or (ii) the Vornado Realty
Group, as applicable, in each case, taken as a whole.
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"Maximum MM Expenditure Amount" means $12,500,000, less all payments
made by, and other expenditures of, the MM Group pursuant to Sections 4.1, 6.8,
6.13 and 9.3 (not taking into account any ordinary or customary transaction
expenses that do not relate to any specific obligation of the MM Group pursuant
to Sections 4.1, 6.8, 6.13 or 9.3), except to the extent Sections 6.8 and/or
6.13 impose an unlimited expenditure obligation on the MM Group.
"Met Life" means Metropolitan Life Insurance Company.
"Met Life Loans" means those certain loans from Met Life to the Mart
Owner.
"Notice" means, in addition to its ordinary meaning, any written
communication of any nature, whether in the form of correspondence, memorandum,
order, directive or otherwise.
"Office Center Property" means that certain parcel of real property,
which constitutes part of the Real Property, commonly known as the "Washington
Office Center" and identified in Section 1.1(a) of the Disclosure Schedule and
all other Property located thereon or used in connection therewith.
"Ordinary Course of Business" means the ordinary and prudent course
of business consistent with past custom and practice (including with respect to
quantity and frequency). In addition to the foregoing, actions taken in
satisfaction of the MM Contributors' obligations hereunder shall be deemed to be
in the Ordinary Course of Business.
"Permitted Encumbrances" means
(a) the Liens of real estate taxes, personal property taxes,
water charges, and sewer charges provided same are not due and payable, but
subject to adjustment as provided in Section 1.3;
(b) the rights of the Tenants under the Leases, as tenants and
licensees only;
(c) any easements, covenants and restrictions which are
entered into with the consent of the members of the Vornado Group after the date
hereof;
(d) any and all laws, statutes, ordinances, codes, rules,
regulations, requirements, or executive mandates affecting the Real Property
including, without limitation, those related to zoning and land use, as of the
date hereof;
(e) the state of facts shown on the Survey and any other state
of facts which a recent and accurate survey of the Real Property would actually
show, provided same do not impair the use of the Real Property as it is
currently being used and do not render title uninsurable at standard rates;
(f) the Service Contracts;
(g) any installment not yet due and payable of assessments
imposed after the date hereof and affecting the Real Property or any portion
thereof;
(h) any utility company rights, easements and franchises to
maintain poles, lines, wires, cables, pipes, boxes and other fixtures and
facilities in, over, under or upon the Real Property,
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provided same do not impair the present use of the Real Property other than to a
de minimis extent and do not render title uninsurable at standard rates;
(i) such matters as the Title Company shall be willing,
without special premium, to omit as exceptions to coverage, or to except with
insurance against collection out of the Real Property;
(j) all mortgages, deeds of trust and other security documents
relating to any loan that is expressly being assumed by the Vornado Group and
not discharged at the Closing;
(k) any exceptions and other items shown on the Commitments
which are not crossed out or labeled "Omit"; and
(l) the Easements and the rights to create same in the future,
as set forth in Section 11.19.
"Person" means any natural person, corporation, limited partnership,
limited liability company, limited liability partnership, general partnership,
joint stock company, joint venture, real estate investment trust, association,
company, trust, bank, trust company, land trust, vehicle trust, business trust
or other organization irrespective of whether it is a legal entity, or any
government or agency or political subdivision thereof.
"Preferred Units" means a series B preferred Unit of VRLP having the
designation, rights, preferences, liquidation value and other terms described in
the exhibit to the OP Agreement attached hereto as Exhibit 7.2.7.
"River West South Property" means that certain parcel of real
property, which constitutes part of the Real Property, commonly known as 000
Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, and identified on Section 1.1(a) of the
Disclosure Schedule, and all other Property located thereon or used in
connection therewith.
"Subsidiary" means (a) any entity of which Vornado owns directly or
indirectly (x) at least a majority of the outstanding capital stock (or other
shares of beneficial interest) or (y) at least a majority of the partnership,
membership or other similar equity interests or (b) any entity in which any
member of the Vornado Realty Group (or other specified entity) is a general
partner, including, without limitation, VRLP.
"Tank Laws" means all federal, state and local laws, statutes,
ordinances and codes, and the regulations promulgated thereunder where
applicable, relating to the ownership, registration, operation, maintenance and
closure of Underground Storage Tanks or Aboveground Storage Tanks.
"Taxes" means all taxes, charges, fees, levies or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, service, service use, ad valorem, transfer, franchise, profits,
license, lease, withholding, social security, payroll, employment, excise,
estimated, severance, stamp, recording, occupation, real and personal property,
gift, windfall profits or other taxes, customs, duties, fees, assessments or
charges of any kind whatsoever, whether computed on a separate, consolidated,
unitary, combined or other basis, together with any interest, fines, penalties,
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additions to tax or other additional amounts imposed thereon or with respect
thereto imposed by any taxing authority (domestic or foreign).
"Tax Payment" means an amount equal to the sum of (i) the federal,
state, and local income Taxes payable by the members of the MM Contributors
resulting from the recognition of Built-in- Gain and (ii) an additional payment
in an amount equal to the amount such that, after payment by the members of the
MM Contributors of all Taxes (including interest and penalties) on amounts
received under clause (i) and this clause (ii), the members of the MM
Contributors retain an amount equal to the amount described in clause (i).
"Tax Protest" or "Tax Protests" means a protest filed with the
Internal Revenue Service concerning tax matters or a similar request for an
administrative determination with a State taxing authority.
"Tax Returns" means all federal, state, local and foreign income,
franchise, sales and other tax returns.
"Termination Surviving Obligations" means the respective obligations
of a party set forth in Sections 1.3, 1.7.1, 3.15, 5.3 and 5.4 and Articles VI
(except for Section 6.11), VIII, IX, and X.
"Trading Day" means a day on which the principal national securities
exchange on which Vornado Common Shares are listed or admitted to trading is
open for the transaction of business.
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Underground Storage Tank" means each and every "underground storage
tank," whether or not subject to the Tank Laws, as well as the "monitoring
system," the "leak detection system," the "discharge detection system" and the
"tank system" associated with the "underground storage tank," as those terms are
defined by the Tank Laws.
"Units" means any and all units of limited partnership interest of
VRLP of any class or series which are issued and outstanding as of the Closing
Date, including, but not limited to, the MM Contributor Units.
"VOI" means Vornado Operating, Inc., a Delaware corporation.
"VOI Purchase Agreement" means the VOI Share Purchase Option
Agreement, dated as of the date hereof, by and between VOI and the MM
Contributors.
"Vornado Common Shares" means the common shares of beneficial
interest, $0.04 par value per share, of Vornado.
"Vornado Group" means Vornado, VRLP, and Vornado Operating, Inc., a
Delaware corporation.
10.2 Other Definitions. The following terms shall have the meanings
defined for such terms in the Section set forth below:
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Definition Section Reference
--------- -----------------
"1933 Act" 2.6
"1934 Act" 10.1
"1940 Act" 2.28
"Aboveground Storage Tank" 10.1
"Accredited Investor" 10.1
"Additional Title Objections" 6.8(d)
"Adjustment Date" 1.3
"Affiliate" 10.1
"Agreement" Preamble
"Allocated Property Values" 1.2.1(b)
"Apparel Property" 10.1
"Books and Records" 1.1(g)
"Building" 1.1(a)
"Built-in-Gain" 10.1
"Business Day" 10.1
"Cash Payment" 1.2.1(a)(i)
"Closing" 1.5
"Closing Date" 1.5
"Closing Date Market Value Per Unit" 10.1
"Closing Documents" 1.6
"Closing Price" 10.1
"Code" 10.1
"Commitments" 6.8(b)
"Common Unitholders" 1.2.1(a)(ii)
"Common Units" 1.2.1(a)(ii)
"Consideration" 1.2.1(a)
"Consideration Direction Letter" 1.2.1(d)
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Definition Section Reference
---------- -----------------
"Contributed Interests" 1.2.1(a)
"Current Market Value Per Xxxx" 00.0
"Current Title Objections" 6.8(c)
"Damages" 8.2
"Dacap Assignment" 7.2.15
"Deed" 1.6.1 A.(ii)
"Design Center Property" 10.1
"Discharge" 10.1
"Employees" 6.9.1
"Employment Agreements" 1.6.1 O.
"Employment Contract" 2.9(a)
"Environmental Condition" 6.13(b)
"Environmental Law" 10.1
"Environmental Documents" 10.1
"Environmental Reports" 2.17
"ERISA" 2.8
"Estoppel Certificates" 4.4
"Financial Statements" 2.34
"Floor Amount" 1.9
"Florida Assignment" 7.2.15
"GAAP" 10.1
"Governmental Authority" 10.1
"GP/MM" 2.1
"Ground Leases" 1.1(i)
"Guaranties" 1.1(e)
"Hazardous Materials" 10.1
"HSR Act" 10.1
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Definition Section Reference
---------- -----------------
"Improvements" 1.1(a)
"Indemnified Party" 8.4
"Indemnifying Party" 8.4
"Intangible Property" 1.1(e)
"Intellectual Property" 2.27
"Interest Rate Differential Subsidy" 4.8(b)
"Knowledge of the MM Contributors" 10.1
"Knowledge of the Vornado Realty Group" 10.1
"Land" 1.1(a)
"Land Trust Agreements" 10.1
"Land Trustee" 10.1
"Land Trusts" 10.1
"Law" 10.1
"Laws" 10.1
"Lease Assignment" 1.6.1 C.(i)
"Lease Related Expenses" 6.2
"Leases" 1.1(d)
"Lien" 10.1
"Management Companies" Preamble
"Management Company Assets" 2.22
"Management Company Shares" 1.1(g)
"Mart Commitment Letter" 5.4(a)
"Mart Loan" 5.4(a)
"Mart Owner" 10.1
"Mart Property" 10.1
"Material Adverse Change" or "Material Adverse Effect" 10.1
"Material Contracts" 2.24
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Definition Section Reference
---------- -----------------
"Material Event" 6.13(d)
"Maximum MM Expenditure Amount" 10.1
"Met Life" 10.1
"Met Life Loans" 10.1
"MFV" 2.1
"MM Contributor Entity" 2.1
"MM Contributors" Preamble
"MM Contributors' Debt Amount" 6.4.1(a)
"MM Contributors' Documents" 1.8 A.
"MM Contributor Units" 1.2.1(a)(ii)
"MM Entities" 2.1
"MM Environmental Reports" 2.17
"MM Group" Preamble
"MM Group Indemnified Parties" 8.3
"MM Property Contributors" Preamble
"MM Stockholders" Preamble
"MMEI" Preamble
"MMEI Shares" 1.1(h)
"MMPI" Preamble
"MMPI Employee Plan" 2.9(a)
"MMPI Shares" 1.1(h)
"MMPI Sub" 2.8
"MMPI Sub Employee Agreement" 2.9(a)
"MMPI Sub Pension Plan" 6.9.2(b)
"MMPI Sub Savings Plan" 6.9.2(a)
"Mortgage Loan Assumption and Indemnity Agreement" 1.6.2 F.
"Multiemployer Plan" 2.8
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Definition Section Reference
---------- -----------------
"Notice" 10.1
"Office Center Property" 10.1
"Office Center Treasury Based Interest Rate" 4.8(b)
"Office Leases" 1.1(d)
"OP Agreement" 1.6.2 D.
"Ordinary Course of Business" 10.1
"Organizational Documents" 2.1
"Parcel" 1.1(a)
"PBGC" 2.9(c)
"Pension Plan" 2.9(c)
"Permits" 1.1(e)
"Permitted Encumbrances" 10.1
"Person" 10.1
"Personal Property" 1.1(c)
"Plans" 2.9(a)
"Pledge Agreement" 1.6.1 Q.
"Preferred Unitholders" 1.2.1(a)(ii)
"Preferred Units" 10.1
"Preliminary Offer Notice" 6.13(g)(i)
"Property" 1.1
"Pru-Apparel Loan" 4.8(a)
"Pru-Apparel Prepayment Date" 4.8(a)
"Pru-Office Center Loan" 4.8(b)
"Real Property" 1.1(b)
"Registered Tradenames" 2.27
"Registration Rights Agreement" 1.6.1 L.
"Rent Rolls" 2.10
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Definition Section Reference
---------- -----------------
"Rents" 1.3.6
"Restricted Period" 6.4.2
"Retail Leases" 1.1(d)
"River West Agreement" 7.2.15
"River West South Property" 10.1
"ROFO Option" 6.13(g)(i)
"ROFO Property" 6.13(g)(i)
"ROFO Seller" 6.13(g)(i)
"SEC" 3.6
"Security Deposits" 1.1(d)
"Service Contracts" 1.1(e)
"Service Contracts Assignment" 1.6.1 C. (ii)
"Share Option Pool" 6.9.4
"Share Plan" 6.9.4
"Show Room Leases" 1.1(d)
"Subsidiary" 10.1
"Survey" 6.8(a)
"Tank Laws" 10.1
"Tax Declarations" 1.6.1 P.
"Taxes" 10.1
"Tax Payment" 10.1
"Tax Protest" 10.1
"Tax Protests" 10.1
"Tax Returns" 10.1
"Temporary Space Licenses" 1.1(d)
"Tenant" 1.1(d)
"Tenant Receivables" 6.7
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Definition Section Reference
---------- -----------------
"Tenants" 1.1(d)
"Termination Surviving Obligations" 10.1
"Title Company" 6.8(b)
"Title Documents" 6.8(b)
"Title Objections" 6.8(c)
"Title Policies" 6.8(b)
"To Be Acquired Companies" 2.1
"To Be Acquired Company" 2.1
"Trading Day" 10.1
"Transaction Documents" 2.2
"Treasury Based Interest Rate" 4.8(a)
"Treasury Bonds" 4.8(a)
"Treasury Regulations" 10.1
"Unanticipated Title Objection" 6.8(e)
"Underground Storage Tank" 10.1
"Unitholders" 1.2.1(a)(ii)
"Units" 10.1
"Unregistered Tradenames" 2.27
"Unrelated Entity" 4.2.1(l)
"Utilities" 1.3.3
"VOI" 10.1
"VOI Distribution" 1.2.1(a)(iv)
"VOI Purchase Agreement" 10.1
"VOI Registration Statement" 1.2.1(a)(iv)
"VOI Stock" 1.2.1(a)(iv)
"Vornado" Preamble
"Vornado Common Shares" 10.1
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Definition Section Reference
---------- -----------------
"Vornado Environmental Reports" 2.17
"Vornado Group" 10.1
"Vornado Realty Group" Preamble
"Vornado Realty Group Indemnified Parties" 8.2
"Vornado Reports" 3.6
"VRLP" Preamble
"Wolf Point Agreement" 7.2.15
"Wolf Point Development" 11.19
"Wolf Point Easements" 11.19
"Wolf Point Purchaser" 11.19
"Working Capital" 1.4
10.3 Singular and Plural; Exhibits and Disclosure Schedules; Etc.
(a) As used in this Agreement, the singular shall include the plural and the
masculine gender shall include the feminine and neuter and vice versa, as the
context requires.
(b) Words such as "herein," "hereinafter," "hereof," "hereto"
and "hereunder," when used with reference to this Agreement, refer to this
Agreement as a whole, unless the context otherwise requires.
(c) The Recitals, Disclosure Schedules and Exhibits annexed
hereto, and the capitalized terms defined therein, are hereby incorporated by
reference into the body of this Agreement as if the same were fully set forth
herein.
(d) Whenever used herein, the term "including" shall be
construed to mean "including without limitation."
ARTICLE XI
MISCELLANEOUS TERMS AND ADDITIONAL AGREEMENTS
11.1 Amendment and Modification. This Agreement may only be amended
or modified by the parties hereto, pursuant to an instrument in writing signed
by the members of the Vornado Realty Group and the MM Contributors.
11.2 Extension; Waiver. The party entitled to the benefit of any
respective term or provision hereof may waive any inaccuracies in the
representations and warranties contained herein or in any document, certificate
or writing delivered pursuant hereto or waive compliance with any obligation,
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Agreement or condition contained herein. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party entitled to the benefits of such extended or
waived term or provision. The representations, warranties and agreements of any
of the parties provided for in this Agreement, and the parties' obligations
hereunder, shall continue in effect notwithstanding any investigation made by
the other party hereto.
11.3 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties hereto with respect to the subject matter hereof.
11.4 Assignment. This Agreement shall not be assigned, by operation
of law or otherwise by a party hereto, without the prior written consent of the
other parties. Notwithstanding the foregoing, VRLP and Vornado shall be
permitted to assign this Agreement to a directly or indirectly wholly-owned
Subsidiary, or to a partnership or limited liability company in which any such
entity or any such wholly-owned Subsidiary owns, either directly or indirectly,
at least fifty-one percent (51%) of the profits, losses and cash flow thereof
and controls the management and affairs of such entity. Any other assignment or
attempted assignment by the members of the Vornado Realty Group and the
Subsidiaries shall be deemed null and void and of no force and effect. A copy of
any assignment permitted hereunder, together with an agreement of the assignee
assuming all of the terms and conditions of this Agreement to be performed by
Vornado, in form reasonably satisfactory to the MM Contributors' counsel, shall
be delivered to the MM Contributors at least one (1) Business Day prior to the
Closing. No such assignment shall relieve the members of the Vornado Realty
Group from their obligations under this Agreement.
11.5 Validity. The invalidity or unenforceability of any term or
provision of this Agreement in any situation or jurisdiction shall not affect
the validity or enforceability of the other terms or provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction, and the parties shall endeavor in good
faith to replace the invalid or unenforceable term or provision with one that
embodies the spirit and intent of the parties and which is not invalid or
unenforceable.
11.6 Notices. Any notice, request, instruction or other document to
be given hereunder by any party hereto to another party hereto shall be in
writing, shall be deemed to have been duly given or delivered when delivered
personally or when telecopied by 5:00 P.M. (New York City time) on a Business
Day (receipt confirmed, with a copy sent by certified or registered mail as set
forth herein); or three days after being sent by certified or registered mail,
postage prepaid, return receipt requested; or the business day after being sent
via a nationally known commercial courier service (such as Federal Express) for
overnight delivery, addressed as set forth below:
If to the MM Contributors or the Management Companies:
Merchandise Mart Properties Inc. (DE)
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Tel: 000-000-0000
Fax: 000-000-0000
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with a copy to:
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
If to the members of the Vornado Realty Group and the Subsidiaries:
c/o Vornado Realty Trust
Park 00 Xxxx, Xxxxx XX
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Irvine X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
11.7 Governing Law. This Agreement shall be governed by the laws of
the State of New York (without regard to the laws that might otherwise govern
under applicable principles of conflicts of law) as to all matters, including,
but not limited to, matters of validity, construction, effect, performance and
remedies.
11.8 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and shall in no way be construed to
define, limit, describe, explain, modify, amplify, or add to the interpretation,
construction or meaning of any provision of, or scope or intent of, this
Agreement nor in any way affect this Agreement.
11.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 Costs and Expenses. Whether or not this Agreement and the
transactions contemplated hereby are consummated, and except as otherwise
expressly set forth herein, all costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses. In the
event either party hereto is required to employ an attorney because any
litigation arises out of this Agreement between the parties hereto, the
non-prevailing party shall pay the prevailing party all reasonable fees and
expenses, including attorneys' fees and expenses, incurred in connection with
such litigation.
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11.11 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns and nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement, provided, however, that
each transferee who is a direct or indirect equityholder or beneficiary in any
MM Contributor (or any Affiliate of such transferee) to whom any MM Contributor
Units are transferred as permitted by this Agreement or the OP Agreement shall
succeed to the rights of the related MM Contributor under this Agreement with
respect to such MM Contributor's Units received from the applicable MM
Contributors for purposes of Articles III, VI and VIII as if such transferee was
a party to this Agreement. No such transfer shall relieve the MM Contributors of
their obligations under this Agreement.
11.12 No Waivers. Except as otherwise expressly provided herein, no
failure to exercise, delay in exercising, or single or partial exercise of any
right, power or remedy by any party, and no course of dealing between the
parties, shall constitute a waiver of any such right, power or remedy.
11.13 Further Assurances. If any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
the parties to this Agreement shall take all such necessary action.
11.14 Jurisdiction. (a) Any legal action or proceeding with respect
to this Agreement may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York and the
appellate courts of any thereof, and by execution and delivery of this
Agreement, each party to this Agreement hereby accepts, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each party to this
Agreement hereby expressly and irrevocably submits the person of such party to
this Agreement to the in personam jurisdiction of the foregoing courts in any
suit, action or proceeding arising, directly or indirectly, out of or relating
to this Agreement. To the extent permitted under applicable law, this consent to
personal jurisdiction shall be self-operative and no further instrument or
action, other than service of process in one of the manners specified in this
Agreement or as otherwise permitted by law, shall be necessary in order to
confer jurisdiction upon the person of such party to this Agreement in any such
court.
(b) To the fullest extent permitted under applicable law, each
party to this Agreement irrevocably waives and agrees not to assert, by way of
motion, as a defense or otherwise, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding brought
in such a court referred to in clause (a) above, any claim that any such suit,
action or proceeding has been brought in an inconvenient forum, any claim that
it is not personally subject to the jurisdiction of any such court or that this
Agreement or the subject matter hereof may not be enforced in or by such court.
11.15 Intentionally Omitted.
11.16 Publication. From and after the date hereof, the members of
the Vornado Realty Group shall have the right to make such public announcements
or filings with respect to the transaction as may be required by law or written
advice of counsel, provided that prior to any such announcement or filing, the
members of the Vornado Realty Group shall submit the text of the announcement or
filing to the MM Contributors for their approval, which will not be unreasonably
withheld. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement will be in the form
annexed hereto as Exhibit 11.16.
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11.17 Confidentiality Agreement. The parties acknowledge that they
continue to be bound by the terms of that certain confidentiality agreement
dated May 7, 1997.
11.18 No Recordation of Contract. The parties hereto agree that this
Agreement shall not be recorded or otherwise filed against the Real Property or
otherwise.
11.19 Wolf Point Easement. The Vornado Realty Group acknowledges
that it is the intention of Wolf Point Owners, L.L.C. (the "Wolf Point Owner"),
an affiliate of certain of the MM Entities, to develop and construct certain
improvements on the Wolf Point Property, or convey the Wolf Point Property to a
third party (a "Wolf Point Purchaser") who may, in turn, develop and construct
certain improvements on the Wolf Point Property (any such construction and
development of the Wolf Point Property, the "Wolf Point Development"), and the
MM Group and the Vornado Realty Group have determined and agreed that it is in
the best interests of the Mart Property and the Apparel Property that the owner
of the Mart Property and the owner of the Apparel Property enter into, or
receive the benefit and accept the burdens of, as the case may be, certain
easements, declarations and restrictions, as more particularly described in
Section 11.19(a) of the Disclosure Schedule (the "Wolf Point Easements"), which
Wolf Point Easements will both burden and benefit the Mart Property and the
Apparel Property. Accordingly, the parties agree as follows:
(a) The MM Group covenants and agrees that, in connection with
the Wolf Point Development, it will ensure that the Wolf Point Owner will not
(i) transfer the Wolf Point Property to any third party unless such third party
has agreed in writing to enter into the Wolf Point Easements or (ii) itself
develop and construct the Wolf Point Development unless it enters into the Wolf
Point Easements.
(b) The Vornado Realty Group agrees (i) that during the period
prior to the Closing, the owners of the Mart Property and the Apparel Property
may negotiate and enter into the Wolf Point Easements with the Wolf Point Owner
and/or a Wolf Point Purchaser, as the case may be and (ii) that after Closing it
shall cause the owner of the Mart Property and the owner of the Apparel Property
to enter into the Wolf Point Easements and any documents or instruments
reasonably requested by the Wolf Point Owner and/or the Wolf Point Purchaser, as
the case may be, to effectuate the purposes of the Wolf Point Easements.
(c) In addition to the foregoing, at or prior to the Closing
the MM Group will cause the Wolf Point Owner and the owner of the Apparel
Property to enter into a permanent easement for the use of parking spaces on the
Wolf Point Property that benefits the Apparel Center Property, which shall
incorporate the terms set forth in Section 11.19(b) of the Disclosure Schedule.
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IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly signed as of the date first above written.
VORNADO REALTY TRUST
By:
----------------------------
Name:
Title:
VORNADO REALTY L.P.
By: Vornado Realty Trust, its general partner
By:
----------------------------
Name:
Title:
MERCHANDISE MART PROPERTIES, INC. (DE)
By:
----------------------------
Name:
Title:
MERCHANDISE MART ENTERPRISES, INC.
By:
----------------------------
Name:
Title:
MMPI, L.L.C.
By:
----------------------------
Name: Xxxxxx X. Xxxxx
Title: Manager
MERCHANDISE MART ENTERPRISES, L.L.C.
By:
----------------------------
Name: Xxxxxx X. Xxxxx
Title: Manager
WORLD TRADE CENTER CHICAGO, L.L.C.
By: Mart Holdings Group, Inc. (IL), its manager
By:
----------------------------
Xxxxxx X. Xxxxx, President
84
MERCHANDISE MART OWNERS, L.L.C.
By: Mart Holdings Group, Inc. (IL), its manager
By:
----------------------------
Xxxxxx X. Xxxxx, President
WDC ASSOCIATES LIMITED PARTNERSHIP
By: Mart Holdings Group, Inc. (DC), its general
partner
By:
----------------------------
Xxxxxx X. Xxxxx, President
FOURTH AND D STREET PARTNERS
LIMITED PARTNERSHIP D.C.
By: Mart Holdings Group, Inc. (DC), its general
partner
By:
----------------------------
Xxxxxx X. Xxxxx, President
VIRGINIA AVENUE LIMITED PARTNERSHIP
By: Mart Holdings Group, Inc. (DC), its general
partner
By:
----------------------------
Xxxxxx X. Xxxxx, President
WASHINGTON DESIGN CENTER, L.L.C.
By: Mart Holdings Group, Inc. (DC), its general
partner
By:
----------------------------
Xxxxxx X. Xxxxx, President
SQUARE 649 LIMITED PARTNERSHIP
By: SCA Limited Partnership, its general partner
By: Mart Holdings Group, Inc. (DC), its
general partner
By:
----------------------------
85
Xxxxxx X. Xxxxx, President
MERCHANDISE MART PROPERTIES, INC. (solely with
respect to Section 6.9 of this Agreement)
By:
----------------------------
Name
Title:
