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ASSET CONTRIBUTION, PURCHASE AND SALE AGREEMENT
by and among
PHILIPS INTERNATIONAL REALTY, L.P.
("Contributor")
PHILIPS INTERNATIONAL REALTY CORP.
("Contributor Parent")
CERTAIN AFFILIATED PARTIES SIGNATORY HERETO
("QRSs" and "Lower Tier Entities")
KIR ACQUISITION LLC
("General Partner")
and
KIMCO INCOME OPERATING PARTNERSHIP, L.P.
("Limited Partner")
Dated as of: April 28th, 2000
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TABLE OF CONTENTS
1. DEFINITIONS..............................................................................................5
2. REDEMPTION TRANSACTIONS; LIQUIDATION OF LOWER TIER ENTITIES AND CONTRIBUTOR'S CONTRIBUTION OF
UNDIVIDED INTERESTS IN PROPERTIES TO OPERATING PARTNERSHIP...............................................8
2.1 Redemption Transactions.........................................................................8
2.2 Contribution....................................................................................8
3. CONTRIBUTION OF PROPERTIES TO NEW LOWER TIER ENTITIES....................................................9
3.1 Contribution....................................................................................9
3.2 Issuance of Partnership Interests in New Property Partnerships.................................10
3.3 Conveyance of Reconveyance Property to Reconveyance LLC........................................11
4. LIQUIDATION OF CONTRIBUTOR..............................................................................11
5. PURCHASE AND SALE OF OPERATING PARTNERSHIP UNITS AND PHILIPS QRSS' GENERAL PARTNERSHIP
INTERESTS IN NEW LOWER TIER ENTITIES....................................................................11
5.1 Purchase of Operating Partnership units and Philips QRS's general partnership
interests in New Lower Tier Entities...........................................................11
5.2 Partnership Account Adjustments................................................................12
5.3 Conveyance of Units............................................................................12
5.4 Changes to Partnership Agreement and Distribution..............................................12
6. DISTRIBUTIONS OF RECONVEYANCE LLC(s) AND DISTRIBUTIONS TO REDEEMED NON-REIT UNITHOLDERS.................13
6.1 Distribution of Reconveyance LLC's.............................................................13
6.2 Redemptions....................................................................................14
7. THE DEPOSITS............................................................................................14
7.1 The Cost Deposit...............................................................................14
7.2 The Additional Deposit.........................................................................14
7.3 Escrow Terms...................................................................................14
7.4 Investment.....................................................................................16
7.5 Duties.........................................................................................16
7.6 Notice to Escrow Agent.........................................................................17
7.7 Miscellaneous..................................................................................17
8. MANAGEMENT AND OPERATING COVENANTS PRIOR TO CLOSING.....................................................18
8.1 Pre-Closing Actions............................................................................18
8.2 Tenant Default.................................................................................19
8.3 Modification of REAs, Notes and Mortgages......................................................19
8.4 Taxes..........................................................................................20
8.5 Property Condition.............................................................................21
8.6 Access and Information.........................................................................24
8.7 Due Diligence Period...........................................................................26
8.8 No-Shop Covenants..............................................................................26
9. ADJUSTMENTS AND PRORATIONS..............................................................................27
9.1 Adjusted Items.................................................................................27
9.2 Basis of Adjustments...........................................................................32
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9.3 Installment Payments...........................................................................33
9.4 Bankruptcy of Tenant...........................................................................34
9.5 Compromise Claims..............................................................................34
9.6 Disbursements..................................................................................34
9.7 Post-Closing Adjustments.......................................................................34
9.8 Survival.......................................................................................34
10. TITLE AND SURVEY........................................................................................35
10.1 Title Commitment and Survey....................................................................35
10.2 Obligations....................................................................................36
10.3 Payment of Liens and Other Encumbrances........................................................38
10.4 Conditional Bills of Sale......................................................................38
10.5 Franchise Tax..................................................................................38
10.6 Judgments, Bankruptcies or Other Returns.......................................................39
10.7 Legal Descriptions.............................................................................39
11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER PARTIES.............................................39
11.1 Due Formation and Authority....................................................................39
11.2 Consents.......................................................................................40
11.3 Leases.........................................................................................41
11.4 Violations.....................................................................................41
11.5 No Litigation..................................................................................42
11.6 No Attachments or Bankruptcy Events............................................................42
11.7 No Ground Leases...............................................................................42
11.8 Other Agreements...............................................................................42
11.9 Taxes..........................................................................................43
11.10 Employees......................................................................................43
11.11 Signatories....................................................................................43
11.12 No Conflicts with Agreements...................................................................43
11.13 No Options.....................................................................................43
11.14 Existing Debt..................................................................................44
11.15 No Agency......................................................................................44
11.16 Securities Matters.............................................................................44
11.17 Registration...................................................................................44
11.18 Completed Construction.........................................................................45
11.19 Sellers' Taxes.................................................................................45
11.20 Non-REIT Unitholders and Redemption Agreement..................................................45
11.21 Partnership Interest...........................................................................46
11.22 No Business Activities.........................................................................46
11.23 Property-Specific Representations..............................................................46
11.24 Untrue, Inaccurate or Incorrect................................................................46
11.25 Certificate....................................................................................48
11.26 Modification of Representations and Warranties.................................................48
11.27 Survival.......................................................................................49
12. REPRESENTATIONS AND WARRANTIES OF LIMITED PARTNER AND GENERAL PARTNER...................................49
12.1 Due Formation and Authority....................................................................49
12.2 Consents.......................................................................................50
12.3 Signatories....................................................................................50
12.4 No Litigation..................................................................................50
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12.5 Ownership......................................................................................50
12.6 Partnership Interest...........................................................................50
12.7 Certificate....................................................................................51
13. SELLERS' CONSENTS.......................................................................................51
13.1 Lender Consents................................................................................51
13.2 Mortgage Assignment Consent....................................................................52
13.3 Stockholder Consent............................................................................52
13.4 Unitholder Elections...........................................................................53
13.5 Tax Matters....................................................................................53
14. DAMAGE, DESTRUCTION OR REQUIRED ALTERATION OR ADDITION..................................................54
14.1 Material Part..................................................................................54
14.2 Other Cases....................................................................................55
15. EMINENT DOMAIN..........................................................................................56
15.1 Significant Portion............................................................................56
15.2 Insignificant Portion..........................................................................56
15.3 Branhaven Property.............................................................................57
16. CONDITIONS TO CLOSING...................................................................................57
16.1 Conditions to Limited Partner's Obligations....................................................57
16.2 Conditions to Seller's Obligations.............................................................60
17. CLOSING DETAILS AND DELIVERIES..........................................................................61
17.1 Location and Date..............................................................................61
17.2 Conveyance of Interests........................................................................61
17.3 Contributor Parent's Closing Deliveries........................................................62
17.4 Limited Partner's and General Partner's Deliveries.............................................64
17.5 Fees and Costs.................................................................................66
17.6 Guarantees for Tax Purposes....................................................................66
17.7 Restricted Period..............................................................................68
18. ASSIGNMENT; DESIGNATION OF GRANTEES BY Limited Partner..................................................69
19. TERMINATION OF THE AGREEMENT; DEFAULT REMEDIES..........................................................69
19.1 Failure to Satisfy Conditions Precedent........................................................69
19.2 Property-Specific Failure to Satisfy Conditions Precedent......................................70
19.3 Contributor's Remedies.........................................................................72
19.4 Purchaser Parties' Remedies....................................................................72
19.5 Legal Fees.....................................................................................73
19.6 Cash Contract..................................................................................73
20. BROKERS.................................................................................................73
21. NOTICES.................................................................................................74
22. POST-CLOSING INSPECTION.................................................................................75
22.1 Access by Sellers..............................................................................75
22.2 Access by Operating Partnership................................................................75
23. CONFIDENTIALITY.........................................................................................76
23.1 Generally......................................................................................76
23.2 Press Releases.................................................................................76
23.3 Indemnity......................................................................................76
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23.4 Termination....................................................................................77
24. MISCELLANEOUS...........................................................................................77
24.1 No Waiver......................................................................................77
24.2 Entire Agreement...............................................................................77
24.3 Limitation of Liability; Survival of Contributor Parent; Seller's Affiliates...................77
24.4 No Oral Modifications..........................................................................79
24.5 Merger.........................................................................................79
24.6 Titles, Headings and References................................................................79
24.7 Attachments....................................................................................79
24.8 Further Assurances.............................................................................80
24.9 Successors and Assigns.........................................................................80
24.10 Joint and Several..............................................................................80
24.11 Counterparts...................................................................................80
24.12 Rules of Construction..........................................................................80
24.13 Dates..........................................................................................80
24.14 WAIVER OF JURY TRIAL...........................................................................81
24.15 Applicable Law; Venue..........................................................................81
24.16 Agency Role of Contributor and Contributor Parent..............................................81
SCHEDULES AND EXHIBITS
Schedule A Lower Tier Entities, Philips QRSs and Property addresses
Schedule B K mart Properties
Exhibit 1.11 Existing Debt
Exhibit 1.14 Major Tenants
Exhibit 1.17 Partnership Agreement
Exhibit 1.19 Permitted Exceptions
Exhibit 1.22 Description of the Property
Exhibit 1.24 Price and deposit allocation among the Properties
Exhibit 3.1.3 Assignment of Leases and security deposits
Exhibit 3.1.4 Assignment of Licenses and Intangible Property
Exhibit 3.1.5 FIRPTA Affidavit
Exhibit 6.2 Redemption Agreement
Exhibit 11.3 Space Leases, Rent Roll and Security Deposits
Exhibit 11.9 Tax Proceedings
Exhibit 11.16 Securities Law Matters
Exhibit 11.18 Uncompleted Work
Exhibit 11.20 Non-REIT Unitholders
Exhibit 16.1.7 Management Agreement
Exhibit 17.3.2 Transfer Notice to tenants
Exhibit 17.3.6 Tenant Estoppel Certificate
Exhibit 17.3.9 Management Agreement Termination
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INDEX OF DEFINED TERMS
1933 Act...........................................44
Accountants........................................53
Acquisition Proposal...............................27
Additional Deposit..................................5
Additional Rent....................................32
Adjustment Amount...................................5
Affiliate...........................................5
Agreement...........................................1
Approved Institution...............................16
Approved Investment................................16
Audit..............................................54
Base Rent..........................................28
Breakup Fee........................................36
Buildings...........................................9
Built-in Gain......................................67
CAM Charges........................................29
CAM Estimates......................................29
Cap................................................37
Cash Contract.......................................1
Class B Limited Partnership Unit....................5
Class C Limited Partnership Unit....................6
Closing.............................................6
Closing Date........................................6
Contributor.........................................1
Contributor Parent..................................1
Conveyed LP Units..................................12
Cooperating Party..................................54
Cost Deposit........................................6
Cure Period........................................71
Debt Amount........................................66
Deposits............................................6
Dime Bank Adjustment...............................51
Due Diligence Period................................6
Escrow Agent........................................6
Estoppel Certificates..............................63
Excluded Property..................................37
Existing Debt.......................................6
Existing Lender.....................................6
Fund...............................................15
General Partner.....................................1
GP Units............................................4
Initial Contribution................................9
Initial Contribution Date...........................9
insignificant......................................56
Intangible Property................................10
Investigations.....................................25
IRC.................................................6
IRS.................................................6
Kohl's Rent Abatement Period.......................31
Lake Worth..........................................1
Lake Worth Agreement................................1
Lake Worth GP.......................................1
Licenses...........................................10
Liens..............................................37
Limited Partner.....................................1
Limited Partner Entity.............................12
Lower Tier Entity...................................2
LP Units............................................4
Major Tenant........................................6
Mortgage............................................7
Mortgage Escrows...................................31
Mortgagee Consent..................................58
Mortgages..........................................52
New Lease Expenses.................................18
New Lower Tier Entity...............................4
Non-REIT Unitholder.................................4
Non-Selling Non-REIT Unitholder.....................7
Notice of Objection................................15
Operating Partnership...............................3
Owners..............................................1
Palm Springs LLC....................................3
Partnership Agreement...............................7
Permitted Designee..................................7
Permitted Exceptions................................7
Permitted Recipient................................76
Person..............................................7
Personal Property...................................7
Philips Parties....................................27
Philips QRS.........................................2
Philips Sub-VIII....................................2
Pilevsky............................................1
Pilevsky Partners...................................3
PL Corp.............................................2
Post-Closing Property......................36, 47, 69
Post-Closing Tax Year..............................20
Pre-Closing Entity.................................53
Pre-Closing Tax Return.............................54
Pre-Closing Tax Year...............................20
Property.........................................2, 7
Property Information...............................22
Property Notes......................................7
Prudential.........................................52
Purchase............................................4
Purchase Price......................................7
Purchaser Parties..................................10
REA.................................................7
REA Party..........................................29
Reconveyance LLC................................4, 11
Reconveyance Property...............................7
Redeemed Non-REIT Unitholder....................3, 14
Redemption Agreement................................3
Redemption Transaction..............................3
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Rent...............................................28
Rent Commencement Date.............................19
Restricted Period..................................68
Returns.............................................8
SEC................................................25
Security Deposits...................................8
Seller.............................................12
Seller Parties......................................1
Seller Party's knowledge...........................48
Seller's Affiliates................................79
Seller's Documents.................................39
Sellers............................................12
Selling Non-REIT Unitholder........................12
Settlement Statements..............................64
significant........................................56
Space Lease(s)......................................8
Subsidiary..........................................8
Superior Proposal..................................27
Survey.............................................35
Surviving Obligations..............................26
Taxes...............................................8
Taxpayer...........................................45
Third Avenue Agreement..............................2
Third Avenue Interest...............................2
Third LP............................................2
Title Commitment...................................35
Title Company.......................................8
Unacceptable Encumbrances..........................35
Unitholder Redemption Agreement....................14
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ASSET CONTRIBUTION, PURCHASE AND SALE AGREEMENT
This Asset Contribution, Purchase and Sale Agreement is made as of the 28th day
of April, 2000 (this "Agreement"), by and among:
PHILIPS INTERNATIONAL REALTY, L.P., a Delaware limited partnership
("Contributor"),
PHILIPS INTERNATIONAL REALTY CORP., a Maryland corporation ("Contributor
Parent"),
THOSE CERTAIN PARTIES IDENTIFIED AS A "PHILIPS QRS" or a "LOWER TIER ENTITY" ON
THE SIGNATORY PAGES HERETO (such parties, Contributor and Contributor Parent,
collectively, the "Seller Parties"); the Seller Parties each having an address
at ▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
KIR ACQUISITION LLC, a Delaware limited liability company ("General Partner")
and
KIMCO INCOME OPERATING PARTNERSHIP, L.P. ("Limited Partner"), a Delaware limited
partnership; General Partner and Limited Partner each having an address at 3333
New Hyde Park Rd., ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
WITNESSETH:
WHEREAS, Contributor is the direct or indirect owner of all equity interests in
Philips ▇▇▇▇ ▇▇▇▇ Associates, L.P., ▇▇▇▇▇▇ Park Associates, LLC, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
LLC, North Shore Triangle, LLC, Philips Shopping Center Fund, L.P. and Philips
Yonkers LLC (collectively, the "Owners"), which entities have, collectively,
entered into a Purchase and Sale Agreement with Limited Partner, dated as of the
date hereof (the "Cash Contract");
WHEREAS, Contributor owns a 99.99% limited partnership interest in Philips Lake
Worth, L.P., a New York limited partnership ("Lake Worth"), and Philips Lake
Worth Corp, a New York corporation ("Lake Worth GP") owns a 0.01% general
partnership interest in Lake Worth;
WHEREAS, Contributor and Lake Worth GP shall each sell to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
("Pilevsky") and/or one or more of his designees their entire respective
interests in Lake Worth for a total purchase price of $6,600,000 and subject to
such terms and conditions as shall be set forth in the Purchase and Sale
Agreement to be entered into by and between Contributor, Lake Worth GP and
Pilevsky (the "Lake Worth Agreement"); in the event that such sale is not
consummated prior to the Closing Date, then Contributor shall distribute its
entire interest in Lake Worth, and shall assign its rights and obligations under
the Lake Worth Agreement, to Contributor Parent and Contributor Parent and Lake
Worth GP shall consummate such sale with Pilevsky;
WHEREAS, 1517-25 Third LP, a New York limited partnership ("Third LP"), of which
Contributor owns a 99.99% limited partnership interest and PL-1517-25 Corp., a
New York corporation ("PL Corp") owns a 0.01% general partnership interest,
shall sell to Pilevsky, and Pilevsky shall purchase from Third LP, Third LP's
entire 50% membership interest in ▇▇▇▇-▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ LLC, a New York limited liability company (the "Third Avenue
Interest") that owns that certain real property located in the City, County and
State of New York having a street address of ▇▇▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, subject to
the terms and conditions as shall be set forth in the Purchase and Sale
Agreement that shall have been entered into by and between Third LP and Pilevsky
(the "Third Avenue Agreement"); in the event that such sale is not consummated
prior to the Closing Date, then Contributor and PL Corp shall cause Third LP to
assign its Third Avenue Interest and all of Third LP's rights and obligations
under the Third Avenue Agreement and redeem PL Corp's 0.01% general partnership
interest in Third LP to Contributor, and Contributor shall thereafter assign the
Third Avenue Interest and all of the rights and obligations under the Third
Avenue Agreement to Contributor Parent and Contributor Parent shall consummate
such sale with Pilevsky;
WHEREAS, Contributor is also the direct owner of a 99.9% limited partnership
interest or limited liability company ownership interest in each of the eight
entities (each, a "Lower Tier Entity", and collectively, the "Lower Tier
Entities") listed on Schedule A;
WHEREAS, Contributor Parent is the direct 100% owner of each of the corporations
identified as a Philips QRS on Schedule A (each, a "Philips QRS", and
collectively, the "Philips QRSs"); each Philips QRS is the owner of a 0.01%
general partnership interest or limited liability company membership interest in
one of the Lower Tier Entities, as listed on Schedule A;
WHEREAS, each Lower Tier Entity is the owner, directly or indirectly, of those
shopping centers listed on Schedule A, and as more precisely described on
Exhibit 1.22 (collectively, the "Property");
WHEREAS, Contributor Parent is the general partner of Contributor and owns units
in Contributor representing 74.79% of the total equity interests of Contributor;
WHEREAS, Contributor has agreed to distribute to Contributor Parent the
properties set forth on Schedule B annexed hereto;
WHEREAS, prior to the Closing Date, Contributor and Contributor Parent shall
cause Palm Springs Mile Associates, Ltd, a Florida limited partnership ("Palm
Springs Ltd"), in which Contributor owns a 99.99% limited partnership interest
and Philips Palm Springs Sub-VIII, Inc., a Delaware corporation ("Philips
Sub-VIII"), that is wholly-owned by Contributor Parent owns a 0.01% general
partnership interest, to contribute by deed transfers, to each of four newly
created single member limited liability companies (each, a "Palm Springs LLC"
and, together, the "Palm Springs LLCs"), undivided interests in two of the
parcels of that certain real property owned by Palm Springs Ltd and located in
Miami Dade County, State of Florida having such equity value and subject to such
amount of debt that shall be set forth in the Unitholder Redemption Agreement
(hereinafter defined) that each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, Philips
Freeport Development Corp and ▇▇▇▇▇▇▇ Holiday Corp (each, a "Redeemed Non-REIT
Unitholder" and collectively, the "Redeemed Non-REIT Unitholders") shall have
entered into or will enter into in redemption of their respective units in
Operating Partnership (as hereinafter defined) pursuant to Section 6.2 hereof;
2
WHEREAS, immediately following the contributions by Palm Springs Ltd to the Palm
Springs LLCs, Palm Springs Ltd shall distribute, as a nonliquidating
distribution, all of the interests in each of the Palm Springs LLCs to
Contributor;
WHEREAS, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Palm Mile Corp., a New York corporation, shall
contribute all of the units in Contributor that each of them own to SL Florida
LLC, a Delaware limited liability company ("SL Florida");
WHEREAS, pursuant to the separate Redemption Agreements (each, a "Redemption
Agreement" and, collectively, the "Redemption Agreements") made by Contributor
and each of Pilevsky and SL Florida LLC, (together with Pilevsky, the "Pilevsky
Partners") all of the units in Contributor that are owned by Pilevsky and SL
Florida shall be redeemed by Contributor and, in such redemption, Contributor
shall distribute to Pilevsky and SL Florida, respectively, 90% and 10%
partnership interests in Palm Springs Ltd in accordance with the terms of, and
as more particularly described in, the Redemption Agreements (the "Redemption
Transactions");
WHEREAS, simultaneously with the Redemption Transactions, Palm Springs Ltd shall
redeem Philips Sub-VIII's entire general partnership interest in Palm Springs
Ltd for an agreed amount of cash representing the equity value of such interest
immediately prior to the Redemption Transactions, and SL Florida shall become
the substitute general partner of Palm Springs Ltd;
WHEREAS, as a result of the Redemption Transaction, Pilevsky and SL Florida
shall no longer own any units in Contributor and shall no longer be limited
partners of Contributor;
WHEREAS, at least one day following the Redemption Transactions, Contributor and
Contributor Parent shall liquidate and cause to be liquidated, respectively,
each Lower Tier Entity and, immediately thereafter, Contributor shall contribute
its undivided interests in each of the Properties that it receives in such
liquidations to KIR Portfolio I, L.P. ("Operating Partnership"), a Delaware
limited partnership to be organized for this purpose;
WHEREAS, immediately following Operating Partnership's receipt of Contributor's
undivided 99.99% interests in each of the Properties with respect to each
Property, Operating Partnership and the Philips QRS owner of the remaining 0.01%
undivided interest in such Property shall each contribute their respective
interests in such Property to a new limited partnership or single member limited
liability company, (in each case, a "New Lower Tier Entity" and, collectively,
the "New Lower Tier Entities") in exchange for which the New Lower Tier Entity
shall distribute to Operating Partnership and such Philips QRS, respectively, a
99.99% limited partnership interest or limited liability company membership
interest and 0.01% general partnership interest or limited liability company
membership interest in such New Lower Tier Entity, except that in the case of
each Reconveyance Property (hereinafter defined), the Philips QRS owner of the
0.01% undivided interest in such Reconveyance Property shall contribute and/or
transfer such interest to Operating Partnership, and Operating Partnership shall
immediately thereafter contribute and/or transfer the entire Reconveyance
Property to a newly-formed limited liability company that will be wholly-owned
by Operating Partnership (each, a "Reconveyance LLC");
3
WHEREAS, immediately following such contributions to the New Lower Tier Entities
and Reconveyance LLCs, Contributor shall (and Contributor Parent shall cause
Contributor to) liquidate and distribute, in such liquidation, the units in
Operating Partnership that it owns to Contributor Parent and to those other
Persons owning units in Contributor immediately prior to such liquidation (a
"Non-REIT Unitholder" and, collectively, the "Non-REIT Unitholders" and which
terms shall not include any of the Pilevsky Partners) ratably according to their
respective percentage ownership of Contributor immediately prior to such
liquidation. Such units so distributed represent limited partnership interests
in Operating Partnership, except that such number of units in Operating
Partnership distributed to Contributor Parent that represents a 0.01% ownership
interest in Operating Partnership shall represent general partnership units in
Operating Partnership (the "GP Units", and the remaining units distributed to
Contributor Parent, the "LP Units") and, by virtue of its ownership thereof,
Contributor Parent shall become the general partner of Operating Partnership;
WHEREAS, thereafter, Contributor Parent shall sell to Limited Partner, and
Limited Partner shall purchase from Contributor Parent, all of Contributor
Parent's LP Units and Contributor Parent shall sell to General Partner, and
General Partner shall purchase from Contributor Parent, all of Contributor
Parent's GP Units (the "Purchase");
WHEREAS, simultaneously with the Purchase, Contributor Parent and each Philips
QRS shall sell and cause the sale of, and Limited Partner shall cause such one
or more entities (other than Limited Partner and General Partner) that it shall
designate to purchase, the respective general partnership interest or limited
liability company membership interest owned by a Philips QRS in a New Lower Tier
Entity, upon the terms more particularly described below;
WHEREAS, immediately following the Purchase, Operating Partnership shall
distribute to Limited Partner, and Limited Partner shall receive, as a
non-liquidating distribution, all of the membership interests in each
Reconveyance LLC in redemption of certain Class A Limited Partnership Units then
owned by Limited Partner;
WHEREAS, immediately thereafter, Operating Partnership shall redeem all of the
units in Operating Partnership owned by each Redeemed Non-REIT Unitholder, and
each such Redeemed Non-REIT Unitholder desires that all of his or its units in
Operating Partnership be redeemed by Operating Partnership, for all of the
interests in the Palm Springs LLC that such Redeemed Non-REIT Unitholder is
entitled to receive under the Unitholder Redemption Agreement entered into or to
be entered into by such Redeemed Non-REIT Unitholder and upon such terms as more
particularly described herein and in such Redeemed Non-REIT Unitholder
Redemption Agreement;
WHEREAS, each Non-REIT Unitholder (other than a Redeemed Non-REIT Unitholder)
may elect to either sell all of his or its units in Operating Partnership to
Limited Partner for such amount of cash and upon such terms and conditions as
more particularly described herein (in which event such Non-REIT Unitholder
shall be considered a Selling Non-REIT Unitholder (hereinafter defined)), or
remain as a limited partner of Operating Partnership (in which event such
Non-REIT Unitholder shall be considered a Non-Selling Non-REIT Unitholder
(hereinafter defined)); and
4
WHEREAS, Limited Partner, General Partner and each Non-Selling Non-REIT
Unitholder shall have entered into the Partnership Agreement (hereinafter
defined).
NOW, THEREFORE, in consideration of Ten Dollars ($10) and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, and the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. DEFINITIONS.
For this Agreement, the following terms shall have the meanings hereinafter set
forth.
1.1. "Additional Deposit": a deposit in the amount of Two Million Six Hundred
Forty-Six Thousand Six Hundred Ten Dollars ($2,646,610) plus any accrued
interest thereon.
1.2. "Adjustment Amount": the net amount of all adjustments (as set forth in
Article 8 or elsewhere in this Agreement) subtracted from (or, in the case of a
negative Adjustment Amount, added to) the Purchase Price of the Property. The
Adjustment Amount will begin at zero and decrease with amounts owed to Sellers
(hereinafter defined) and increase with amounts owed to Operating Partnership,
as set forth herein.
1.3. "Affiliate": as applied to any Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of stock, or partnership interests, by
contract, or otherwise.
1.4. "Class B Limited Partnership Unit": generally, a class of non-voting units
in Operating Partnership having limited put rights and entitling the holder
thereof to a preferred return on such holder's Imputed Equity Value (as defined
in the Partnership Agreement) and such other rights as more fully set forth in
the Partnership Agreement.
1.5. "Class C Limited Partnership Unit": generally, a class of non-voting units
in Operating Partnership having a perpetual and immediate put right and
entitling the holder thereof to a preferred return on such holder's Imputed
Equity Value (as defined in the Partnership Agreement) and such other rights as
more fully set forth in the Partnership Agreement.
1.6. "Closing": the transfer to Limited Partner of the Conveyed LP Units
(hereinafter defined) and the transfer to General Partner of the GP Units
(hereinafter defined), Limited Partner's and General Partner's payment of the
Purchase Price (hereinafter defined) to Sellers in connection therewith as
contemplated by Articles 5 and 16, each subject to and otherwise in accordance
with the terms of this Agreement.
1.7. "Closing Date": the actual date on which the Closing occurs, as set forth
in Section 17.1.
1.8. "Cost Deposit": a deposit in the amount of One Million Three Hundred
Seventy-Five Thousand Seven Hundred Fifty Dollars ($1,375,750) plus any accrued
interest thereon (together
5
with the Additional Deposit, the "Deposits"). All Deposits shall be allocated
among the Properties as shown of Exhibit 1.24.
1.9. "Due Diligence Period": a period of time commencing on the date that
Limited Partner receives a fully signed counterpart of this Agreement and the
Cash Contract, and expiring at 7:00 p.m. New York City time on May 31, 2000.
1.10. "Escrow Agent": the law firm of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP.
1.11. "Existing Debt": the existing debt as of the Closing Date (including
principal and interest) secured by a first lien on the Property in favor of
Credit Lyonnais, in the first case, and Dime Savings Bank, in the second case
(collectively, "Existing Lenders"), which Existing Debt is currently in the
approximate aggregate principal amount of Thirty-Seven Million Sixteen Thousand
Dollars ($37,016,000), as further detailed on Exhibit 1.11.
1.12. "IRC": the Internal Revenue Code of 1986, as amended, and as it may
further be amended from time to time, and any successor statutes thereto.
1.13. "IRS": the Internal Revenue Service, an agency of the United States
Department of the Treasury.
1.14. "Major Tenant": those expressly named tenants listed on Exhibit 1.14 or
any other Person at any Property in substitution thereof.
1.15. "Mortgages": collectively, the deed(s) of trust or mortgage(s) securing
the Existing Debt with respect to the Property.
1.16. "Non-Selling Non-REIT Unitholder": a Non-REIT Unitholder that shall have
made the election described in Section 13.4.1(b).
1.17. "Partnership Agreement": the amended and restated agreement of limited
partnership of Operating Partnership, the form of which is attached as Exhibit
1.17.
1.18. "Permitted Designee": a Person wholly owned by General Partner and/or
Limited Partner.
1.19. "Permitted Exceptions": the title exceptions set forth in Exhibit 1.19
attached hereto.
1.20. "Person": any individual, partnership, limited liability company, joint
venture, corporation, trust or other entity.
1.21. "Personal Property": all right, title and interest, if any, of any Lower
Tier Entity in and to all fixtures, machinery, equipment, supplies and other
articles of personal property attached or appurtenant to the Properties, or used
in connection therewith.
1.22. "Property": certain plots, pieces and parcels of real property as
described on Exhibit 1.22, annexed hereto and incorporated herein by this
reference.
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1.23. "Property Notes": collectively, all the promissory notes evidencing the
Existing Debt and described on Exhibit 1.11 with respect to the Property.
1.24. "Purchase Price": (i) One Hundred Thirty-Seven Million Five Hundred
Seventy-Five Thousand Dollars ($137,575,000), (ii) plus or minus the Adjustment
Amount as of the Closing, and (iii) minus the amount of the Existing Debt
(including the Dime Bank Adjustment, if any), assumed by Purchaser Parties
(hereinafter defined) on the Closing. The Purchase Price shall be allocated
among the New Lower Tier Entities owning each of the Properties as shown on
Exhibit 1.24.
1.25 "Reconveyance Property": The Property or Properties identified as Property
1 on Exhibit 1.22. The term "Reconveyance Property" shall also include the
Property identified as Property 5 on Exhibit 1.22 if ▇▇▇▇▇▇ ▇▇▇▇▇ makes the
election under Section 13.4.1(a) and such Properties, together, are referred to
as the "Reconveyance Properties".
1.26. "REA": any reciprocal easement agreement, common area maintenance
agreement or similar agreement affecting any portion of the Property, or
arrangement between or among (i) the Lower Tier Entity or the Property owner on
the date of the Closing, (ii) affiliated or unaffiliated third parties owning
property adjacent to the Property and/or (iii) tenants at the Property under
Space Leases.
1.27. "Returns": all returns, declarations, reports, statements, and other
documents required to be filed in respect of Taxes (hereinafter defined), and
the term "Return" means any one of the foregoing Returns.
1.28. "Security Deposits": all security deposits to the extent in the Lower
Tier Entities, Contributor and Philips QRSs' possession or control relating to
all Space Leases and new Space Leases and any amendments, guarantees and other
documents relating thereto. All existing Security Deposits as of the date hereof
are set forth on Exhibit 11.3.
1.29. "Space Lease(s)" : all tenant space lease(s), license(s), concessions or
other occupancy or use agreements, including all written modifications, addenda
and supplements thereto and guarantees thereof, applicable to the Property or
any portion thereof. All existing Space Leases as of the date hereof are listed
on Exhibit 11.3.
1.30. "Subsidiary": any Person in which any other Person owns, directly or
indirectly, a majority of the member interests, partnership interests, or
similar equity interests.
1.31. "Taxes": all federal, state, local, foreign, and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments, or charges of any kind whatever,
together with any interest and any penalties, additions to tax, or additional
amounts with respect thereto, and the term "Tax" means any one of the foregoing
Taxes.
1.32. "Title Company": Lawyers Title Insurance Corporation.
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2. REDEMPTION TRANSACTIONS; LIQUIDATION OF LOWER TIER ENTITIES AND
CONTRIBUTOR'S CONTRIBUTION OF UNDIVIDED INTERESTS IN PROPERTIES TO OPERATING
PARTNERSHIP.
2.1 Redemption Transactions. Prior to the Closing Date, Contributor and Pilevsky
Partners shall have effected the Redemption Transactions in accordance with the
terms of the Redemption Agreements. Contributor and Contributor Parent covenant
that they shall not amend, nor permit the amendment of any of the Redemption
Agreements after the date hereof if such amendment shall materially adversely
affect the interest of General Partner or Limited Partner hereunder, without the
prior consent of the General Partner, which consent shall not be unreasonably
withheld or delayed. Contributor Parent shall indemnify Limited Partner and
General Partner from and against any loss, cost or liability of Limited Partner
or General Partner under each Redemption Agreement, except for loss, cost or
liability occasioned by Limited Partner's or General Partner's intentional
default thereunder.
2.2 Contribution. On or prior to the Closing Date, but in no event earlier than
one day following the Redemption Transaction nor more than seven days prior to
the Closing Date, Contributor and each Philips QRS shall cause each Lower Tier
Entity (and each Lower Tier Entity hereby agrees) to transfer an undivided
99.99% interest in the Property owned by such Lower Tier Entity to Contributor,
and to transfer an undivided 0.01% interest in such Property to the Philips QRS
that had owned equity in the relevant Lower Tier Entity. Each Lower Tier Entity
shall thereupon liquidate in its entirety. Immediately thereafter Contributor
shall form Operating Partnership and shall contribute its undivided interests in
each of the Properties that it receives in such liquidations to Operating
Partnership. Contributor shall thereupon cause Operating Partnership to form the
New Lower Tier Entities, each of which shall be a Delaware limited partnership.
3. CONTRIBUTION OF PROPERTIES TO NEW LOWER TIER ENTITIES.
3.1 Contribution. With respect to each Property other than a Reconveyance
Property, immediately following the liquidation of Lower Tier Entities and the
contribution by Contributor of its undivided interests in the Properties to
Operating Partnership pursuant to Section 2.2, Operating Partnership shall, and
Contributor Parent and Contributor shall cause Operating Partnership and each
Philips QRS owner of the 0.01% undivided interest in such Property (and each
such Philips QRS hereby agrees) to, contribute and convey to a separate New
Lower Tier Entity (such action, the "Initial Contribution") all of their
respective right, title and interest in the following: (i) all buildings and
other improvements situated on such Property (collectively with respect to such
Property, the "Buildings"), (ii) all easements, rights of way, reservations,
privileges, appurtenances and other estates and rights of Operating Partnership
and such Philips QRS pertaining to such Property and the Buildings thereon,
(iii) all right, title and interest of Operating Partnership and such Philips
QRS pertaining to such Property in and to the Intangible Property (hereinafter
defined) pertaining to such Property, (iv) all right, title and interest of
Operating Partnership and such Philips QRS pertaining to such Property in and to
any transferable guaranties or warranties (to the extent transferable), (v) all
right, title and interest of Operating Partnership and such Philips QRS
pertaining to such Property in and to the REAs, (vi)
8
all Personal Property, (vii) all oil, gas and mineral rights of Operating
Partnership and such Philips QRS pertaining to such Property, if any, (viii) all
right, title and interest of Operating Partnership and such Philips QRS
pertaining to such Property, if any, in and to the trade names of the Buildings,
(ix) all right, title and interest of Operating Partnership and such Philips
QRS, if any, in and to all strips and gores, all alleys adjoining such Property,
and the land lying in the bed of any street, road or avenue, opened or proposed,
in front of or adjoining such Property to the center line thereof and (x) all
right, title and interest of Operating Partnership and such Philips QRS, if any,
in and to any award made or to be made in lieu thereof and in and to any unpaid
award for any taking by condemnation or any damages to such Properties or the
Buildings thereon by reason of a change of grade of any street, road or avenue.
The date of the Initial Contribution is referred to as the "Initial Contribution
Date." At the Initial Contribution, with respect to each Property contributed
and conveyed to a New Lower Tier Entity pursuant to this Section, Operating
Partnership and the relevant Philips QRS shall cause to be delivered (by
directed closing documents) from the Lower Tier Entity owning same on the date
hereof, to the New Lower Tier Entity to which such Property was conveyed and
contributed the following items:
3.1.1 A bargain and sale deed with covenant against grantor's acts, or
its equivalent, in recordable form and otherwise reasonably acceptable to the
parties, conveying title to such Property.
3.1.2 A ▇▇▇▇ of sale for a consideration of $10 conveying the
applicable Personal Property (if any) with respect to such Property to such New
Lower Tier Entity;
3.1.3 An Assignment and Assumption of Leases and Security Deposits (in
the form of Exhibit 3.1.3 annexed hereto and made a part hereof) assigning free
of liens, encumbrances and claims (except Permitted Exceptions and as set forth
in Article 10) all of such Operating Partnership's and the relevant Philips
QRS's right, title and interest, if any, in and to the Space Leases pertaining
to such Property, all guarantees thereof and the Security Deposits thereunder in
such Operating Partnership or the relevant Philips QRS's possession, if any;
3.1.4 An Assignment and Assumption of Licenses and Intangible Property
(in the form of Exhibit 3.1.4 annexed hereto and made a part hereof) assigning
free of liens, encumbrances and claims (except Permitted Exceptions and as set
forth in Article 10) all of such Operating Partnership's and the relevant
Philips QRS's right, title and interest, if any, in and to (i) all of the
assignable licenses, permits, certificates, approvals, authorizations and
variances issued for or with respect to such Property by any governmental
authority (collectively, the "Licenses"); and (ii) all intangible property owned
by Operating Partnership and the relevant Philips QRSs with respect to the
operation of such Property (including, without limitation, trade names, assumed
names and trade logos); and, if any, transferable guarantees and warranties
relating to such Property (the "Intangible Property"); and
3.1.5 A "FIRPTA" affidavit with respect to the applicable transfer,
sworn to by, as applicable, Operating Partnership, Contributor, Contributor
Parent, Lower Tier Entities, Selling Non-REIT Unitholders, Non-Selling Non-REIT
Unitholders and the relevant Philips QRS, in the form of Exhibit 3.1.5 annexed
hereto and made a part hereof. Limited Partner and General
9
Partner acknowledge and agree that upon receipt of such affidavits, neither
Limited Partner, General Partner, any Limited Partner Entity nor any other
purchasing entity owned or controlled by Limited Partner, General Partner or any
Limited Partner Entity (collectively, "Purchaser Parties") shall withhold any
portion of the Purchase Price or any of the Class B Limited Partnership Units or
Class C Limited Partnership Units (or otherwise reduce or cause the reduction of
the Imputed Equity Value of any Non-Selling Non-REIT Unitholder) pursuant to IRC
Section 1445 and the Treasury Regulations promulgated thereunder.
3.2 Issuance of Partnership Interests in New Property Partnerships. In
consideration for the conveyance and contribution by Operating Partnership and
relevant Philips QRS of their respective undivided interests in a Property to a
New Lower Tier Entity pursuant to Section 3.1, Contributor Parent, Operating
Partnership and such Philips QRS shall cause such New Lower Tier Entity to issue
the following interests in such New Lower Tier Entity:
3.2.1 to Operating Partnership, a 99.99% limited partnership interest
or limited liability company membership interest in such New Lower Tier Entity,
and
3.2.2 to such Philips QRS, a 0.01% general partnership interest or
limited liability company membership interest in such New Lower Tier Entity.
3.3 Conveyance of Reconveyance Property to Reconveyance LLC. Simultaneously
with the contributions made to the New Lower Tier Entities pursuant to Section
3.1, Operating Partnership shall (and Contributor Parent shall cause Operating
Partnership to) create a separate new single member limited liability company,
all of the membership interests of which shall be owned by (and only by)
Operating Partnership (each, a "Reconveyance LLC") for each Reconveyance
Property. With respect to each Reconveyance Property, Contributor Parent and
Contributor shall cause the Philips QRS 0.01% owner of such Reconveyance
Property to contribute and/or transfer its 0.01% undivided interest in such
Reconveyance Property to Operating Partnership (including any and all of the
interests more fully detailed in Section 3.1(i) through (x) that it may own with
respect to such Reconveyance Property), and for Operating Partnership to
thereafter contribute and/or transfer (as evidenced by documents listed in
Section 3.1.1 through 3.1.5) the entire Reconveyance Property to a separate
Reconveyance LLC.
4. LIQUIDATION OF CONTRIBUTOR.
Immediately following completion of the transactions contemplated by Article 3,
Contributor shall (and Contributor Parent shall cause Contributor to) liquidate
and, in such liquidation, Contributor shall distribute to Contributor Parent and
the Non-REIT Unitholders its units in Operating Partnership ratably according to
their respective percentage ownership of Contributor immediately prior to such
liquidation, except that Contributor shall distribute the GP Units to
Contributor Parent and Contributor Parent shall become the general partner of
Operating Partnership by virtue of its ownership of such GP ▇▇▇▇▇.
▇▇
▇. ▇▇▇▇▇▇▇▇ AND SALE OF OPERATING PARTNERSHIP UNITS AND PHILIPS QRSS'
GENERAL PARTNERSHIP INTERESTS IN NEW LOWER TIER ENTITIES.
On the terms and subject to the conditions set forth herein, at the Closing, the
parties shall take all of the actions described in detail in Article 16 to
effect the following:
5.1 Purchase of Operating Partnership units and Philips QRS's general
partnership interests in New Lower Tier Entities. Limited Partner, General
Partner and those one or more entities designated by Limited Partner (each, a
"Limited Partner Entity") shall purchase from Contributor Parent and the Philips
QRSs, and Contributor Parent and the Philips QRSs shall sell to Limited Partner,
General Partner or a Limited Partner Entity, as follows:
5.1.1 Limited Partner shall purchase from Contributor Parent and from
those Non-REIT Unitholders that shall have made the cash election described in
Section 13.4.1(a) (each, a "Selling Non-REIT Unitholder") (the Selling Non-REIT
Unitholders and Contributor Parent, individually, a "Seller" and, collectively,
the "Sellers") all of their Operating Partnership units representing limited
partnership interests in Operating Partnership (including, with respect to
Contributor Parent, the LP Units) (in the aggregate, the "Conveyed LP Units")
and shall pay to each Seller, in cash, the adjusted Purchase Price (subject to
Section 9.1.16) attributable to each Seller's Conveyed LP Units, according to a
schedule furnished by Contributor Parent, and General Partner shall purchase
from Contributor Parent the GP Units and shall pay to Contributor Parent, in
cash, the adjusted Purchase Price attributable to such GP Units, according to a
schedule furnished by Contributor Parent. In no event shall the Conveyed LP
Units and GP Units equal less than 100% of the equity interests in Operating
Partnership owned by Contributor Parent and at least 88% of the total
outstanding equity interests in Operating Partnership; and
5.1.2 Simultaneously with the purchases and sales described in Section
5.1.1, Limited Partner shall cause one or more Limited Partner Entities to
purchase from the Philips QRSs, and Contributor Parent shall cause each Philips
QRS to sell to any such one or more Limited Partner Entities, the entire
respective interest of each such Philips QRS in a New Lower Tier Entity for a
purchase price, payable in cash, equal to the product of .01% (or 0.0001),
multiplied by the portion of the Purchase Price allocated to the Property owned
by the New Lower Tier Entity in which such Philips QRS owns an interest, as
shown on Exhibit 1.24 and each Limited Partner Entity shall pay such purchase
price, in cash, to such appropriate selling Philips QRS;
5.2 Partnership Account Adjustments. The Capital Account balance and
Imputed Equity Value (each as defined in the Partnership Agreement) with respect
to the Non-Selling Non-REIT Unitholders shall be deemed automatically adjusted
to equal the Purchase Price attributable on a percentage basis to the units in
Operating Partnership owned by the Non-Selling Non-REIT Unitholders
(collectively, the "Non-Conveyed OP Units"), as reflected in the Settlement
Statement (hereinafter defined) agreed between Limited Partner and Contributor
Parent on behalf of the Non-Selling Non-REIT Unitholders;
5.3 Conveyance of Units. Sellers shall convey to Limited Partner the
Conveyed LP Units and Contributor Parent shall convey to General Partner the GP
Units;
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5.4 Changes to Partnership Agreement and Distribution. Limited Partner,
General Partner and each Non-Selling Non-REIT Unitholder shall, immediately
following the redemptions in Section 6.2:
5.4.1 execute the Partnership Agreement and/or other documents
reasonably satisfactory to Limited Partner in each case acknowledging and
agreeing that all Conveyed LP Units shall thereafter be deemed "Class A Limited
Partnership Units" (as defined in the Partnership Agreement) and the
Non-Conveyed OP Units shall thereafter be deemed "Class B Limited Partnership
Units" or "Class C Limited Partnership Units" all within the meaning of the
Partnership Agreement;
5.4.2 take all necessary action so that Operating Partnership,
Contributor, each Lower Tier Entity and New Lower Tier Entity that does not have
an election currently in effect under Section 754 of the IRC shall timely file
an election under Section 754 of the IRC, such that an election for all such
partnerships will be in effect for the time period covering the transactions
contemplated by this Agreement.
The parties agree that Limited Partner may amend the form of Partnership
Agreement, attached as Exhibit 1.17, between the date hereof and the Closing
Date, provided (w) no amendment shall be made to, or in violation of, Section
4.3.6 of the Partnership Agreement, (x) such amendment would not require the
consent of one or more holders of the Class B Limited Partnership Units and
Class C Limited Partnership Units under the provisions of the Partnership
Agreement that is attached hereto as Exhibit 1.17, (y) Limited Partner gives
Contributor Parent prompt notice and a copy of each such amendment, and (z) in
the event that such amendment would, in the reasonable opinion of Contributor
Parent's legal counsel, render the election or consent solicitation of the
holders of Non-REIT Unitholders under Section 13.4.1 invalid, then the Closing
Date and any other time periods affected thereby shall be extended on a
day-for-day basis for the number of days necessary to resolicit and obtain such
consent, acting diligently.
6. DISTRIBUTIONS OF RECONVEYANCE LLC(s) AND DISTRIBUTIONS TO REDEEMED
NON-REIT UNITHOLDERS.
6.1 Distribution of Reconveyance LLC's. Following the purchases described
in Section 5.1, Operating Partnership shall distribute all of its interests in
each Reconveyance LLC (which shall constitute all of the interests in such
Reconveyance LLC) to Limited Partner in redemption of such number of Class A
Limited Partnership Units owned by Limited Partner, equal to the dollar portion
of the adjusted Purchase Price allocated to each Reconveyance Property divided
by the amount paid by Limited Partner for each Conveyed LP Unit pursuant to
Section 5.1.1. Contributor Parent shall pay transfer taxes, if any, and other
conveyance costs in connection with such distribution of the Reconveyance LLC
interests. Limited Partner agrees that it shall not (nor shall it cause or
permit any Reconveyance LLC to) thereafter contribute or convey any Reconveyance
Property (or any portion thereof or any direct or indirect interest therein)
back to Operating Partnership and, for a period of not less than five years
shall not (nor shall it cause or permit any Reconveyance LLC to) contribute or
convey any Reconveyance Property (or any portion thereof or any direct or
indirect interest therein) to any Person other than a Subsidiary
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that is and that shall remain throughout such five-year period a wholly-owned
limited liability company of Limited Partner or the Reconveyance LLC owner of
such Reconveyance Property that is disregarded for United States federal tax
purposes.
6.2 Redemptions. Immediately following the distribution of the
Reconveyance LLCs to Limited Partner pursuant to Section 6.1, General Partner
and Limited Partner shall cause Operating Partnership to redeem (and Operating
Partnership shall redeem) all of the units in Operating Partnership owned by
each Redeemed Non-REIT Unitholder and in exchange therefor shall cause Operating
Partnership (and Operating Partnership shall) distribute to each such Redeemed
Non-REIT Unitholder all of the interests in such Palm Springs LLC that such
Redeemed Non-REIT Unitholder is to receive under the redemption agreement (each,
a "Unitholder Redemption Agreement") that such Non-REIT Unitholder shall have
entered into with Contributor, in accordance with the terms and provisions of
such Unitholder Redemption Agreement. Each Unitholder Redemption Agreement shall
be substantially in the form attached hereto as Exhibit 6.2, but any of which
agreements may be amended by Contributor and/ or Contributor Parent after the
date hereof unless such amendment shall materially adversely affect the interest
of General Partner or Limited Partner hereunder, in which case the prior consent
of General Partner shall be required for such amendment, which shall not be
unreasonably withheld or delayed.
7. THE DEPOSITS.
7.1 The Cost Deposit. Simultaneously with the execution and delivery of
this Agreement by all parties, Limited Partner, on behalf of the Purchaser
Parties, shall place the Cost Deposit in escrow by a bank wire transfer of
immediately available funds to an account designated by Escrow Agent. The Cost
Deposit shall be held by Escrow Agent in accordance with the terms of this
Article 7. If the Closing shall occur, Sellers shall be entitled to receive the
Cost Deposit and all interest accrued thereon, if any, and such amounts shall be
credited against the cash portion of the Purchase Price.
7.2 The Additional Deposit. If, at the end of the Due Diligence Period,
Limited Partner does not elect to terminate this Agreement pursuant to Section
8.7 or any other provision of this Agreement, Limited Partner shall place the
Additional Deposit in escrow by a bank wire transfer of immediately available
funds to an account designated by Escrow Agent.
7.3 Escrow Terms.
7.3.1 Escrow Agent shall hold the Deposits and all interest accrued
thereon, if any (collectively, the "Fund") in escrow and shall dispose of the
Fund only in accordance with the provisions of this Section.
7.3.2 Escrow Agent shall deliver the Fund to Sellers or Limited Partner
on behalf of the Purchaser Parties, as the case may be, as follows:
A. to Sellers, upon completion of the Closing (including all
accrued interest, which shall be applied to the Purchase Price for the
benefit of Limited Partner); or
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B. to Sellers, after receipt of Sellers' demand in which
Sellers certify that Limited Partner and/or General Partner has
defaulted under this Agreement, but Escrow Agent shall not honor
Sellers' demand until more than ten days after Escrow Agent has given a
copy of Sellers' demand to Limited Partner in accordance with Section
7.3.3, nor thereafter if Escrow Agent receives a Notice of Objection
(hereinafter defined) from Limited Partner within such ten day period;
or
C. to Limited Partner, after receipt of Limited Partner's
demand in which Limited Partner certifies either that (i) Sellers have
defaulted under this Agreement, or (ii) this Agreement has been
otherwise terminated or canceled, and Limited Partner is thereby
entitled to receive the Fund; but Escrow Agent shall not honor Limited
Partner's demand until more than ten days after Escrow Agent has given
a copy of Limited Partner's demand to Sellers in accordance with
Section 7.3.3, nor thereafter if Escrow Agent receives a Notice of
Objection from Sellers within such ten day period. Notwithstanding the
foregoing, if Limited Partner terminates this Agreement prior to the
expiration of the Due Diligence Period, Escrow Agent shall, immediately
upon receipt of Limited Partner's demand, deliver the Fund to Limited
Partner.
Upon delivery of the Fund, Escrow Agent shall be relieved of all liability
hereunder and with respect to the Fund. Escrow Agent shall deliver the Fund, at
the election of the party entitled to receive the same, by a bank wire transfer
of immediately available funds to an account designated by such party.
7.3.3 Upon receipt of a written demand from Sellers or Limited Partner
under Sections 7.3.2.B or 7.3.2.C, except in the event of a demand which states
that Limited Partner has terminated the Agreement prior to the expiration of the
Due Diligence Period, Escrow Agent shall send a copy of such demand to the other
party. Within ten days after the date of receiving same, but not thereafter, the
other party may object to delivery of the Fund to the party making such demand
by giving a notice of objection (a "Notice of Objection") to Escrow Agent. After
receiving a Notice of Objection, Escrow Agent shall send a copy of such Notice
of Objection to the party who made the demand; and thereafter, in its sole and
absolute discretion, Escrow Agent may elect either (i) to continue to hold the
Fund until Escrow Agent receives a written agreement of Limited Partner and
Sellers directing the disbursement of the Fund, in which event Escrow Agent
shall disburse the Fund in accordance with such agreement; and/or (ii) to take
any and all actions as Escrow Agent deems necessary or desirable, in its sole
and absolute discretion, to discharge and terminate its duties under this
Agreement (other than paying the Fund to one of the parties), including, without
limitation, depositing the Fund into any court of competent jurisdiction and
bringing any action of interpleader or any other proceeding; and/or (iii) in the
event of any litigation between Sellers and Limited Partner, to deposit the Fund
with the clerk of the court in which such litigation is pending.
7.3.4 If Escrow Agent is uncertain for any reason whatsoever as to its
duties or rights hereunder (and whether or not Escrow Agent has received any
written demand under Sections 7.3.2.B or 7.3.4.C, or Notice of Objection under
Section 7.3.3, notwithstanding anything to the contrary herein, Escrow Agent may
hold and apply the Fund pursuant to Section 7.3.3(i), (ii) or (iii) and may
decline to take any other action whatsoever. In the event the Fund is deposited
in a
14
court by Escrow Agent pursuant to Section 7.3.3(ii) or (iii), Escrow Agent
shall be entitled to rely upon the decision of such court. In the event of any
dispute whatsoever among the parties with respect to disposition of the Fund,
Limited Partner and Sellers shall pay the reasonable attorney's fees and costs
incurred by Escrow Agent (which said parties shall share equally, but for which
said parties shall be jointly and severally liable) for any litigation in which
Escrow Agent is named as, or becomes, a party.
7.4 Investment. Notwithstanding anything to the contrary in this Agreement,
within one business day after the date of this Agreement, Escrow Agent shall
place the Deposits in an Approved Investment. The interest, if any, which
accrues on such Approved Investment shall be deemed part of the Fund; and Escrow
Agent shall dispose of such interest as and with the Fund pursuant to this
Agreement. Escrow Agent may not commingle the Fund with any other funds held by
Escrow Agent. Escrow Agent may convert the Fund from the Approved Investment
into a non-interest-bearing demand account at an Approved Institution as
follows:
7.4.1 at any time within three days prior to the Closing Date; or
7.4.2 if the Closing Date is accelerated or extended, at any time
within three days prior to the accelerated or extended Closing Date; provided,
however, that Sellers and Limited Partner shall give Escrow Agent timely notice
of any such acceleration or extension and that Escrow Agent may hold the Fund in
a non-interest-bearing deposit account if Sellers and Limited Partner do not
give Escrow Agent timely notice of any such adjournment.
As used herein, the term "Approved Investment" means (a) any interest-bearing
money market fund in Chase Manhattan Bank, N.A. located in the City of New York
or in any other institution otherwise approved by both Sellers and Limited
Partner (collectively, an "Approved Institution"), or (b) any other investment
approved by both Sellers and Limited Partner. The rate of interest or yield need
not be the maximum available and deposits, withdrawals, purchases, reinvestment
of any matured investment and sales shall be made in the sole discretion of
Escrow Agent, which shall have no liability whatsoever therefor. Discounts
earned shall be deemed interest for the purpose hereof.
7.5 Duties. Escrow Agent shall have no duties or responsibilities except
those set forth herein, which the parties hereto agree are ministerial in
nature. Sellers and Limited Partner acknowledge that Escrow Agent is serving
without compensation, solely as an accommodation to the parties hereto, and
except for Escrow Agent's own willful default, misconduct or gross negligence,
Escrow Agent shall have no liability of any kind whatsoever arising out of or in
connection with its activity as Escrow Agent. Sellers and Limited Partner
jointly and severally agree to and do hereby indemnify and hold harmless Escrow
Agent from all loss, cost, claim, damage, liability, and expense (including
reasonable attorney's fees and disbursements whether paid to retain attorneys or
representing the fair value of legal services rendered to itself) which may be
incurred by reason of its acting as Escrow Agent provided the same is not the
result of Escrow Agent's willful default, misconduct or gross negligence. Escrow
Agent may charge against the Fund any amounts owed to it under the foregoing
indemnity or may withhold the delivery of the Fund as security for any
unliquidated claim, or both.
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7.6 Notice to Escrow Agent. Any Notice of Objection, demand or other
notice or communication which may or must be sent, given or made under this
Agreement to or by Escrow Agent shall be sent in accordance with the provisions
of Article 21.
7.7 Miscellaneous.
7.7.1 Simultaneously with their execution and delivery of this
Agreement, Limited Partner of all Sellers, shall furnish Escrow Agent with the
true Federal Taxpayer Identification Numbers so that Escrow Agent may file
appropriate income tax information returns with respect to any interest in the
Fund or other income from the Approved Investment. The party ultimately entitled
to any accrued interest in the Fund shall be the party responsible for the
payment of any tax due thereon.
7.7.2 Sellers and Limited Partner, on behalf of all Purchaser Parties,
waive any claim of conflict of interest by reason of Escrow Agent's actions in
that capacity under this Agreement. Limited Partner, on behalf of all Purchaser
Parties, hereby acknowledges that Escrow Agent is the attorney for Sellers, and
agrees that Escrow Agent may represent Sellers in connection with any and all
matters, including without limitation, the transaction contemplated by this
Agreement and any litigation, including any action arising out of this
Agreement; provided that in no event shall Limited Partner be responsible for
payment of any fees incidental to any such representation.
7.7.3 Any amendment of this Agreement which could alter or otherwise
affect Escrow Agent's obligations hereunder will not be effective against or
binding upon Escrow Agent without Escrow Agent's prior consent, which consent
may be withheld in Escrow Agent's sole and absolute discretion.
7.7.4 The provisions of this Article 7 shall survive the Closing or
sooner termination of this Agreement.
8. MANAGEMENT AND OPERATING COVENANTS PRIOR TO CLOSING.
8.1 Pre-Closing Actions.
8.1.1 Between the date hereof and the Closing Date, (i) Contributor,
Contributor Parent, any Lower Tier Entity or any New Lower Tier Entity shall not
enter into, renew, modify, terminate or otherwise amend any Space Lease or other
document affecting any Property without Limited Partner's prior written consent
in each instance, which consent shall not be unreasonably withheld or delayed,
and shall be given or denied, with the reasons for any such denial, within the
applicable period specified in Section 8.1.4; (ii) Contributor, Contributor
Parent, any Lower Tier Entity or any New Lower Tier Entity shall not enter into
any property operating maintenance or service or other contracts requiring more
than thirty days notice to terminate, (iii) Contributor, Contributor Parent, any
Lower Tier Entity and any New Lower Tier Entity shall not apply any Security
Deposits without Limited Partner's prior written consent, and (iv) Contributor,
Contributor Parent, any Lower Tier Entity or any New Lower Tier Entity shall
continue to maintain and repair each Property as in its normal course of
business. Notwithstanding anything
16
to the contrary in this Article 8, nothing herein shall prevent or restrict, in
any way, Contributor, Contributor Parent, any Lower Tier Entity or any New Lower
Tier Entity from (i) negotiating, entering into and/or carrying out any of the
terms and provisions of the Cash Contract, Redemption Agreement, a Redeemed
Non-REIT Unitholder Redemption Agreement, this Agreement and/or any other
agreement or instrument entered into in connection therewith or herewith (each,
a "Transaction Agreement" and collectively, the "Transaction Agreements"); or
(ii) undertaking and/or effectuating any of the transactions contemplated by or
undertaken in connection with any Transaction Agreement and/or referred to in,
or contemplated by, one or more of the "Whereas" clauses of this Agreement.
8.1.2 If, following Limited Partner's consent, Contributor, Contributor
Parent, any Lower Tier Entity or any New Lower Tier Entity enter into any new
Space Leases, or if there is any modification, expansion, extension or renewal
of any existing Space Leases (not provided for therein), Contributor,
Contributor Parent, any Lower Tier Entity or any New Lower Tier Entity shall
keep accurate records of all bona fide, third party expenses (collectively, "New
Lease Expenses") incurred in connection with each new Space Lease, including,
without limitation, the following: (i) brokerage commissions and fees relating
to such leasing transaction, (ii) expenses incurred for repairs, improvements,
equipment, painting, decorating, partitioning and other items to satisfy the
tenant's requirements with regard to such leasing transaction, (iii) the cost of
removal and/or abatement of asbestos or other hazardous or toxic substances
located in the demised space, (iv) reimbursements to the tenant for the cost of
any of the items described in the preceding clauses (ii) and (iii), (v) in the
event that Limited Partner declines to have its counsel draft the documents
relating thereto, Sellers' reasonable legal fees for services in connection with
the preparation of documents and other services rendered in connection with the
effectuation of the leasing transaction, (vi) rent concessions relating to the
demised space provided the tenant has the right to take possession of such
demised space during the period of such rent concessions, and (vii) expenses
incurred for the purpose of satisfying or terminating the obligations of a
tenant under a new Space Lease to the landlord under another lease (whether or
not such other lease covers space in the applicable Property).
8.1.3 The New Lease Expenses for each new Space Lease allocable to and
payable by Sellers shall be determined by multiplying the amount of such New
Lease Expenses by a fraction, the numerator of which shall be the number of days
contained in that portion, if any, of the term of such new Space Lease
commencing on the rent commencement date of such new Space Lease (the "Rent
Commencement Date") and expiring on the date immediately preceding the Closing
Date, and the denominator of which shall be the total number of days contained
in the period commencing on the Rent Commencement Date and expiring on the date
of the scheduled expiration of the term of such new Space Lease, and the
remaining balance of the New Lease Expenses for each new Space Lease shall be
allocable to and payable by Limited Partner. At the Closing, Limited Partner
shall reimburse Sellers for all New Lease Expenses theretofore paid by Sellers,
if any, in excess of the portion of the New Lease Expenses allocated to Sellers
pursuant to the provisions of the preceding sentence.
8.1.4 With respect to any proposed action by Contributor, Contributor
Parent, any Lower Tier Entity or any New Lower Tier Entity to be submitted to
Limited Partner for its consent pursuant to Section 8.1.1, Limited Partner shall
consent or deny its consent, with the
17
reasons for any such denial, within the following five business days. If notice
of any denied consent is not received, Limited Partner's consent shall be deemed
to have been granted.
8.1.5 The provisions of this Section 8.1 shall survive the Closing.
8.2 Tenant Default. Notwithstanding anything to the contrary contained
in this Agreement, Contributor, Contributor Parent, any Lower Tier Entity or any
New Lower Tier Entity reserve the right, but is not obligated, to institute
summary proceedings against any tenant or terminate any Space Lease as a result
of a default by the tenant thereunder prior to the Closing Date. Contributor,
Contributor Parent, any Lower Tier Entity or any New Lower Tier Entity make no
representations and assume no responsibility with respect to the continued
occupancy of the Properties or any part thereof by any tenant. The removal of a
tenant prior to the Closing Date, whether by summary proceedings (or any written
agreement accepting surrender or termination of the Space Lease subsequent to
the commencement of such summary proceedings) or unilateral act of such tenant,
shall not give rise to any claim on the part of any Purchaser Party. Further,
Limited Partner and General Partner agree that it shall not be grounds for any
Purchaser Party's refusal to close this transaction that any tenant is a
holdover tenant or in default under its Space Lease on the Closing Date and
Purchaser Parties shall accept title subject to such holding over or default
without credit against, or reduction of, the Purchase Price.
8.3 Modification of REAs, Notes and Mortgages. Between the date hereof
and the Closing Date, Contributor, Contributor Parent, any Lower Tier Entity or
any New Lower Tier Entity shall not renew, modify, terminate or otherwise amend
any REA, Property Note, or Mortgage or other related document affecting any
Property, or enter into any proposed REAs, promissory notes or mortgages,
without Limited Partner's consent, which consent shall not be unreasonably
withheld or delayed, and shall be given or denied, with the reasons for any such
denial, within the applicable period specified in Section 8.1.4; provided,
however, that Limited Partner's consent shall not be required to the aforestated
actions if such REA or other document may be terminated at any time on not more
than thirty days' prior notice by Contributor, Contributor Parent, any Lower
Tier Entity or any New Lower Tier Entity, or its successor, without the payment
of a penalty.
8.4 Taxes. Subject to the provisions of the applicable Space Lease,
with respect to the tax year in which the Closing occurs, and all prior tax
years, Contributor, Contributor Parent, any Lower Tier Entity and/or any New
Lower Tier Entity are hereby authorized to commence, continue and control the
progress of, and to make all decisions with respect to, any proceeding or
proceedings, whether or not now pending, for the reduction of the assessed
valuation of any Property, and, in their sole discretion, to try or settle the
same. All net real estate Tax refunds and credits attributable to any tax year
ending on or prior to the tax year ("Pre-Closing Tax Year") (net of any refund
payments to tenants under Space Leases) in which the Closing occurs shall belong
to and be the property of Contributor, Contributor Parent, any Lower Tier Entity
or any New Lower Tier Entity. All net real estate Tax refunds and credits
attributable to any tax year subsequent to the tax year in which the Closing
occurs ("Post-Closing Tax Year") shall belong to and be the property of Limited
Partner. All net real estate Tax refunds and credits attributable to the tax
year in which the Closing occurs (net of any refund payments to tenants under
Space Leases) shall be divided between Contributor, Contributor Parent, any
Lower Tier
18
Entity or any New Lower Tier Entity and Limited Partner in accordance with the
apportionment of real estate Taxes pursuant to the provisions of this Agreement,
after deducting therefrom a pro rata share of all expenses, including, without
limitation, counsel fees and disbursements and consultant's fees, incurred in
obtaining such refund, the allocation of such expenses to be based upon the
total refund obtained in such proceeding and in any other proceeding
simultaneously involved in the trial or settlement. Limited Partner agrees (and
shall cause all Purchaser Parties) to reasonably cooperate with Contributor,
Contributor Parent, any Lower Tier Entity or any New Lower Tier Entity in
connection with the prosecution of any such proceedings and to take all steps,
whether before or after the Closing Date, as may be necessary to carry out the
intention of the foregoing, including, without limitation, the delivery to
Contributor, Contributor Parent, any Lower Tier Entity or any New Lower Tier
Entity, upon demand, of any relevant books and records, including receipted real
estate Tax bills and canceled checks used in payment of such Taxes, the
execution of any and all consents or other documents, and the undertaking of any
act reasonably necessary for the collection of such refund by Contributor,
Contributor Parent, any Lower Tier Entity or any New Lower Tier Entity.
Notwithstanding anything herein to the contrary, (i) Contributor, Contributor
Parent, any Lower Tier Entity or any New Lower Tier Entity shall not take any
action that would compromise or settle the tax year in which the Closing occurs
without Limited Partner's prior written consent, which shall not be unreasonably
withheld or delayed; and (ii) Contributor, Contributor Parent, any Lower Tier
Entity or any New Lower Tier Entity shall not take any action that would
compromise or settle any tax year subsequent to the tax year in which the
Closing occurs without Limited Partner's prior written consent, which may be
withheld in Limited Partner's sole discretion. The provisions of this Section
shall survive the Closing. In the event that Contributor, Contributor Parent,
any Lower Tier Entity take any action that would compromise or settle any tax
year prior to the tax year in which the Closing occurs (as permitted above),
Contributor, Contributor Parent, any Lower Tier Entity or any New Lower Tier
Entity or any New Lower Tier Entity shall bear the entire cost and expense
thereof. In the event Contributor, Contributor Parent or any Lower Tier Entity
take any action that would compromise or settle the tax year in which the
Closing occurs (as permitted above), Contributor, Contributor Parent or any
Lower Tier Entity and Limited Partner shall share proportionately (as set forth
above) in the cost and expense thereof. In the event that Contributor,
Contributor Parent, any Lower Tier Entity or any New Lower Tier Entity take any
action that would compromise or settle any tax year subsequent to the tax year
in which the Closing occurs (as permitted above), Limited Partner shall bear the
entire cost and expense thereof.
8.5 Property Condition. Limited Partner and General Partner on behalf
of all Purchaser Parties expressly acknowledge and agree, subject to any
relevant provisions of this Agreement, to accept title to the Properties on an
"as-is-where-is and with all faults" basis.
8.5.1 This Agreement, as written, contains all the terms of the
agreement entered into between the parties as of the date hereof, and Limited
Partner and General Partner on behalf of all Purchaser Parties acknowledge that
neither Seller Parties, the Non-REIT Unitholders, the Pilevsky Partners, nor any
of Seller's Affiliates, nor any of their agents or representatives, has made any
representations or held out any inducements to Limited Partner or General
Partner or any Purchaser Parties, and Sellers Parties, the Non-REIT Unitholders,
the Pilevsky Partners and Seller's Affiliates and their agents and
representatives hereby specifically disclaim any representation, oral or
written, past, present or future, other than those specifically set forth in
19
this Agreement. Without limiting the generality of the foregoing, neither
Limited Partner nor General Partner nor any Purchaser Party has relied on any
representations or warranties, and neither Seller Parties, the Non-REIT
Unitholders, the Pilevsky Partners, nor any of their Affiliates, nor any of
their agents or representatives has or is willing to make any representations or
warranties, express or implied, other than as may be expressly set forth herein,
as to (a) the status of title to the Properties; (b) the Space Leases; (c) the
Licenses; (d) the current or future real estate tax liability, assessment or
valuation of the Properties; (e) the potential qualification of the Properties
for any and all benefits conferred by any laws whether for subsidies, special
real estate tax treatment, insurance, mortgages or any other benefits, whether
similar or dissimilar to those enumerated; (f) the compliance of the Properties
in its current or any future state with applicable laws or any violations
thereof; including, without limitation, those relating to access for the
handicapped, environmental or zoning matters, and the ability to obtain a change
in the zoning or a variance in respect to the Properties' non-compliance, if
any, with zoning laws; (g) the nature and extent of any right-of-way, lease,
possession, lien, encumbrance, license, reservation, condition or otherwise; (h)
the availability of any financing for the purchase, alteration, rehabilitation
or operation of the Properties from any source, including, without limitation,
any government authority or any lender; (i) the current or future use of the
Properties; (j) the present and future condition and operating state of any
Personal Property and the present or future structural and physical condition of
the Buildings, their suitability for rehabilitation or renovation, or the need
for expenditures for capital improvements, repairs or replacements thereto; (k)
the viability, financial condition or continued occupancy of any tenant; (l) the
status of the leasing market in which any Property is located; or (m) the actual
or projected income or operating expenses of the Properties.
8.5.2 Limited Partner and General Partner, on behalf of all Purchaser
Parties, acknowledge that Seller Parties, the Non-REIT Unitholders, the Pilevsky
Partners and Seller's Affiliates and their agents and representatives have
afforded and will continue to afford Limited Partner and General Partner, on the
behalf of all Purchaser Parties, the opportunity for full and complete
investigations, examinations and inspections of the Properties and all Property
Information (hereinafter defined). Limited Partner and General Partner
acknowledge and agree that (a) the Property Information delivered or made
available to Limited Partner, General Partner and their representatives, on
behalf of all Purchaser Parties, by Seller Parties, the Non-REIT Unitholders,
the Pilevsky Partners and Seller's Affiliates and their agents and
representatives may have been prepared by third parties and may not be the work
product of Seller Parties, the Non-REIT Unitholders, the Pilevsky Partners and
Seller's Affiliates and their agents and representatives (b) neither Seller
Parties, the Non-REIT Unitholders, the Pilevsky Partners, nor any of Seller's
Affiliates, nor any of their agents or representatives has made any independent
investigation or verification of, or have any knowledge of, the accuracy or
completeness of, the Property Information; (c) the Property Information
delivered or made available to Limited Partner, General Partner and their
representatives, on behalf of all Purchaser Parties, is furnished to each of
them at the request, and for the convenience of, Limited Partner, General
Partner and their representatives, on behalf of all Purchaser Parties; (d)
Limited Partner, General Partner and their representatives, on behalf of all
Purchaser Parties are relying solely on their own investigations (as defined
below), examinations and inspections of the Properties and are not relying in
any way on the Property Information furnished by Seller Parties, the Non-REIT
20
Unitholders, the Pilevsky Partners or Seller's Affiliates, or any of their
agents or representatives; (e) Seller Parties, the Non-REIT Unitholders, the
Pilevsky Partners and Seller's Affiliates and their agents and representatives
expressly disclaim any representations or warranties with respect to the
accuracy or completeness of the Property Information and Limited Partner,
General Partner and their representatives, on behalf of all Purchaser Parties,
release Seller Parties, the Non-REIT Unitholders, the Pilevsky Partners and
Seller's Affiliates and their agents and representatives, from any and all
liability with respect thereto; and (f) any further distribution of the Property
Information is subject to Article 23.
The term "Property Information" shall mean (a) all information and documents in
any way relating to the Properties, the operation thereof or the sale thereof
(including, without limitation, loan documents relating to the Property Notes
and the Mortgages, Space Leases and Licenses) furnished to, or otherwise made
available for review by, Limited Partner, General Partner, Purchaser Parties or
their directors, officers, employees, affiliates, partners, brokers, agents or
other representatives, including attorneys, accountants, contractors,
consultants, engineers and financial advisors or partners, by Seller Parties,
the Non-REIT Unitholders, the Pilevsky Partners or Seller's Affiliates, or their
agents or representatives, including their contractors, engineers, attorneys,
accountants, consultants, brokers or advisors, and (b) all analyses,
compilations, data, studies, reports or other information or documents prepared
or obtained by Limited Partner, General Partner, Purchaser Parties or their
representatives containing or based on, in whole or in part, the information or
documents described in the preceding clause (a), or the Investigations, or
otherwise reflecting their review or investigation of the Properties.
8.5.3 Except as expressly set forth herein or in any closing document,
Limited Partner, General Partner and Operating Partnership (or anyone claiming
by, through or under Limited Partner, General Partner or Operating Partnership),
on behalf of all Purchaser Parties, hereby fully and irrevocably release Seller
Parties, the Non-REIT Unitholders, the Pilevsky Partners and Seller's Affiliates
and their agents and representatives, from any and all claims that they may now
have or hereafter acquire against Seller Parties, the Non-REIT Unitholders, the
Pilevsky Partners or Seller's Affiliates, or their agents or representatives for
any cost, loss, liability, damage, expense, action or cause of action, whether
foreseen or unforeseen, arising from or related to any construction defects,
errors or omissions on or in the Properties, the presence of environmentally
hazardous, toxic or dangerous substances, or any other conditions (whether
patent, latent or otherwise) affecting the Properties, except for claims against
Seller Parties, the Non-REIT Unitholders, the Pilevsky Partners and Seller's
Affiliates and their agents and representatives based upon any obligations and
liabilities of Seller Parties, the Non-REIT Unitholders, the Pilevsky Partners
and Seller's Affiliates and their agents and representatives expressly provided
in this Agreement. Limited Partner, General Partner and Operating Partnership,
on behalf of all Purchaser Parties, further acknowledge and agree that this
release shall be given full force and effect according to each of its expressed
terms and provisions, including, but not limited to, those relating to unknown
and suspected claims, damages and causes of action. As a material covenant and
condition of this Agreement, Limited Partner, General Partner and Operating
Partnership, on behalf of all Purchaser Parties, agree that in the event of any
such construction defects, errors or omissions, the presence of environmentally
hazardous, toxic or dangerous substances, or any other conditions affecting the
Properties, Limited Partner, General Partner and Operating Partnership, on
behalf of all Purchaser Parties,
21`
shall look solely to Seller Parties, the Non-REIT Unitholders, the Pilevsky
Partners and Seller's Affiliates and their agents and representatives
predecessors in interest or to such contractors and consultants as may have
contracted for work in connection with the Properties for any redress or relief,
except for claims against Seller Parties, the Non-REIT Unitholders, the Pilevsky
Partners or Seller's Affiliates or any of their agents or representatives based
upon any obligations and liabilities of Seller Parties, the Non-REIT
Unitholders, the Pilevsky Partners or Seller's Affiliates or any of their agents
or representatives expressly provided in this Agreement. Limited Partner,
General Partner and Operating Partnership, on behalf of all Purchaser Parties,
further understand that some of Seller Parties, the Non-REIT Unitholders, the
Pilevsky Partners or Seller's Affiliates or any of their agents or
representatives predecessors in interest or such contractors and consultants may
have filed petitions under the bankruptcy code and Limited Partner, General
Partner and Operating Partnership and all other Purchaser Parties may have no
remedy against such predecessors, contractors or consultants.
8.5.4 Notwithstanding anything to the contrary contained in this
Section 8.5.4, Seller Parties, the Non-REIT Unitholders, the Pilevsky Partners
and Seller's Affiliates and their agents and representatives hereby agree to
cooperate in good faith with Limited Partner, General Partner and Operating
Partnership (at Limited Partner and Operating Partnership's sole cost and
expense) in the event that Limited Partner, General Partner and Operating
Partnership cannot, without the cooperation of Seller Parties, the Non-REIT
Unitholders, the Pilevsky Partners and Seller's Affiliates and their agents and
representatives, maintain an action against a third party for any matter from
which Seller Parties, the Non-REIT Unitholders, the Pilevsky Partners and
Seller's Affiliates and their agents and representatives have been released;
provided, however, that in no event shall such cooperation permit Limited
Partner, General Partner or Operating Partnership to recover against Seller
Parties, the Non-REIT Unitholders, the Pilevsky Partners and Seller's Affiliates
and their agents and representatives for any cost, loss, liability, damage,
expense, action or cause of action, whether foreseen or unforeseen, arising from
or related to any construction defects, errors or omissions on or in the
Properties, the presence of environmentally hazardous, toxic or dangerous
substances, or any other conditions (whether patent, latent or otherwise)
affecting the Properties or otherwise as provided in Section 8.5 herein.
8.5.5 Limited Partner, General Partner and Operating Partnership
acknowledge that, as of the expiration of the Due Diligence Period, they shall
have (a) undertaken their Investigations, (b) inspected, become thoroughly
acquainted with and accepted the condition of the Properties; and (c) reviewed,
to the extent necessary in its discretion, all the Property Information. Except
as expressly provided herein, Seller Parties, the Non-REIT Unitholders, the
Pilevsky Partners or Seller's Affiliates or any of their agents or
representatives shall not be liable or bound in any manner by any oral or
written "setups" or information pertaining to the Properties or the Rent (as
hereinafter defined) furnished by Seller Parties, the Non-REIT Unitholders, the
Pilevsky Partners or Seller's Affiliates or any of their agents or
representatives, any real estate broker, including, without limitation, the
broker, or other person.
8.5.6 The provisions of this Section 8.5 shall survive the Closing or
sooner termination of this Agreement.
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8.6 Access and Information. Between the date hereof and the Closing
Date, provided that this Agreement has not been terminated as expressly
permitted herein, Limited Partner and Limited Partner's representatives on
behalf of all Purchaser Parties shall have the right to enter upon the
Properties for the sole purpose of inspecting the Properties, and Limited
Partner, at its sole cost and expense, may perform, or cause to be performed,
tests, investigations and studies of or related to the Properties, including,
but not limited to, soil tests and borings, ground water tests and
investigations, percolation tests, surveys, architectural, engineering,
subdivision, environmental, access, financial, market analysis, development and
economic feasibility studies and other tests, investigations or studies as
Limited Partner, in its sole discretion, determines is necessary or desirable in
connection with the Properties and may inspect the physical (including
environmental) and financial condition of the Properties, including but not
limited to Space Leases, copies of Lower Tier Entity, each Philips QRS,
Contributor and Contributor Parent's filings, if any, with the Securities and
Exchange Commission (the "SEC"), engineering and environmental reports,
development approval agreements, permits and approvals (collectively, the
"Investigations"); provided: (a) Limited Partner shall give Lower Tier Entity,
each Philips QRS, Contributor or Contributor Parent not less than one day's
prior notice before each entry; (b) each notice shall include sufficient
information to permit Lower Tier Entity, each Philips QRS, Contributor or
Contributor Parent to review the scope of the proposed Investigations; (c)
neither Limited Partner nor Limited Partner's representatives shall permit any
borings, drillings or samplings to be done on any of the Properties without
Lower Tier Entity, each Philips QRS, Contributor or Contributor Parent's prior
written consent, which shall not be unreasonably withheld or delayed; and (d)
any entry upon any of the Properties and all Investigations shall be during
Lower Tier Entity, each Philips QRS, Contributor and Contributor Parent's normal
business hours and at the sole risk and expense of Limited Partner and Limited
Partner's representatives, and shall not interfere in any material respect with
the activities on or about the Properties of Lower Tier Entity, each Philips
QRS, Contributor or Contributor Parent, its tenants and their employees and
invitees. Lower Tier Entity, each Philips QRS, Contributor and Contributor
Parent agree to cooperate with Limited Partner in such review and inspection.
Limited Partner shall:
8.6.1 promptly repair any damage to any of the Properties resulting
from any such Investigations and replace, refill and regrade any holes made in,
or excavations of any portion of the Properties used for such Investigations so
that the Properties shall be in the same condition that it existed in prior to
such Investigations;
8.6.2 fully comply with all laws applicable to the Investigations and
all other activities undertaken in connection therewith;
8.6.3 permit Lower Tier Entity, each Philips QRS, Contributor or
Contributor Parent to have a representative present during all Investigations
undertaken hereunder;
8.6.4 take all actions and implement all protections necessary to
ensure that all actions taken in connection with the Investigations, and the
equipment, materials, and substances generated, used or brought onto the
Properties pose no threat to the safety or health of persons or the environment,
and cause no damage to the Properties or other property of Lower Tier Entity,
each Philips QRS, Contributor or Contributor Parent or other persons;
23
8.6.5 furnish to Lower Tier Entity, each Philips QRS, Contributor or
Contributor Parent, upon request and at no cost or expense to Lower Tier Entity,
each Philips QRS, Contributor or Contributor Parent, copies of all surveys, soil
test results, engineering, asbestos, environmental and other studies and reports
relating to the Investigations that Limited Partner or Limited Partner's
representatives shall obtain with respect to the Properties promptly after
Limited Partner's or Limited Partner's representatives' receipt of same;
8.6.6 not allow the Investigations or any and all other activities
undertaken by Limited Partner or Limited Partner's representatives to result in
any liens, judgments or other encumbrances being filed or recorded against any
of the Properties, and Limited Partner shall, at its sole cost and expense,
promptly discharge of record any such liens or encumbrances that are so filed or
recorded (including liens for services, labor or materials furnished); and
8.6.7 indemnify, defend and hold harmless Seller Parties, Non-REIT
Unitholders, Pilevsky Partners, Sellers and Seller's Affiliates from and against
any and all claims, demands, causes of action, losses, damages, liabilities,
costs and expenses (including attorneys' fees and disbursements), suffered or
incurred by Seller Parties, Non-REIT Unitholders, Pilevsky Partners and Seller's
Affiliates and arising out of or in connection with (i) Limited Partner's and/or
Limited Partner's representatives entry upon any or all of the Properties, (ii)
any Investigations or other activities conducted thereon by Limited Partner or
Limited Partner's representatives, (iii) any Liens or other encumbrances filed
or recorded against any or all of the Properties as a consequence of the
Investigations or any and all other activities undertaken by Limited Partner or
Limited Partner's representatives, and/or (iv) any and all other activities
undertaken by Limited Partner or Limited Partner's representatives with respect
to any or all of the Properties.
8.6.8 This Section 8.6 shall survive the Closing or earlier termination
of this Agreement.
8.7 Due Diligence Period. Until the end of the Due Diligence Period,
Limited Partner (and not General Partner) may terminate this Agreement on behalf
of all Purchaser Parties for any reason, by written notice given to Contributor
Parent, prior to the expiration of the Due Diligence Period. In the event
Limited Partner terminates this Agreement during the Due Diligence Period,
Limited Partner on behalf of all Purchaser Parties shall be entitled to a refund
of the Deposits, this Agreement shall be null and void and the parties hereto
shall be relieved of all further obligations hereunder except for the
obligations set forth in this Agreement that expressly survive the Closing,
expiration or sooner termination of this Agreement (collectively, the "Surviving
Obligations"), it being understood that the Surviving Obligations shall include,
without limitation, Section 8.7. In the event Limited Partner does not terminate
this Agreement by the end of the Due Diligence Period, then Limited Partner
shall be deemed to have elected not to terminate this Agreement pursuant to this
Section. Time shall be of the essence with respect to the expiration of the Due
Diligence Period.
8.8 No-Shop Covenants.
8.8.1 Unless and until this Agreement shall have been terminated by
either party pursuant to Article 19 hereof or by Limited Partner pursuant to
Section 8.7, or as otherwise
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permitted by this Agreement, Contributor Parent shall not take, cause or permit,
directly or indirectly (and it agrees to cause its officers, directors,
employees, agents, brokers, investment bankers, advisors and representatives not
to take, cause or permit), any of the following actions with any party other
than Limited Partner and its Affiliates: (i) solicit, encourage, initiate,
participate in, facilitate or consent to any negotiations or discussions with
respect to any offer, indication or proposal to acquire any of the Properties or
all or more than 20% of its business, assets or capital shares or voting
securities, whether by merger, consolidation, other business combination,
purchase of assets, tender or exchange offer or otherwise (each of the
foregoing, an "Acquisition Proposal"); or (ii) disclose, in connection with an
Acquisition Proposal, any information or provide access to its properties, books
or records, except as required by law or pursuant to a governmental request for
information. In addition, Contributor Parent shall, and shall cause its
officers, directors, employees, agents, brokers, investment bankers, advisors
and representatives to, immediately cease any activities of the type described
in (a)(i) and (a)(ii) existing as of the date of this Agreement.
8.8.2 Nothing contained in this Agreement shall prevent Contributor
Parent or its Board of Directors from (a) complying with Rule 14e-2 promulgated
under the Exchange Act with regard to any Acquisition Proposal; and (b) if and
only to the extent that the Board of Directors of Contributor Parent concludes
in good faith (after consulting with and considering the advice of its
investment bank and outside legal counsel) that such Acquisition Proposal would,
if consummated, result in a transaction more favorable to Contributor Parent
stockholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal, a "Superior
Proposal"), until the required vote has been obtained, Contributor Parent may
furnish or cause to be furnished confidential information or data and may
participate in such negotiations and discussions, but only if (i) Contributor
Parent is not then in breach of its obligations under this Section, (ii) and
only to the extent that the Board of Directors of Contributor Parent concludes
in good faith (after consulting with and considering the advice of outside legal
counsel) that such action is necessary in order for its directors to comply with
their respective fiduciary duties under applicable law. Contributor Parent will
notify Limited Partner immediately if any inquiries, proposals or offers
respecting an Acquisition Proposal are received by, any such information or data
is requested from, or any such discussions or negotiations are sought to be
initiated or continued with, it or any such Persons, indicating in such notice
the name of such Person and the material terms and conditions of any proposals
or offers, and shall keep Limited Partner apprised with respect to the status
and terms thereof. Contributor Parent shall provide Limited Partner at least two
business days advance notice of its intention to present to its Board of
Directors or accept any Superior Proposal and shall provide Limited Partner with
a summary of the terms and conditions thereof.
If Contributor Parent shall have breached any portion of this Section 8.8,
Limited Partner on behalf of all Purchaser Parties shall be entitled to the
Breakup Fee in accordance with Section 19.4.
9. ADJUSTMENTS AND PRORATIONS.
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All of the following Purchase Price adjustments and prorations shall be made on
a Property-by-Property basis.
9.1 Adjusted Items. Sellers and Non-Selling Non-REIT Unitholders
(collectively, the "Philips Parties") shall be entitled to all income produced
from, and shall be responsible for all expenses and liabilities of the operation
of the Property allocable to, the period prior to the Closing, and Operating
Partnership shall be entitled to all income (solely with regard to obligations
expressly accepted or assumed by Limited Partner at the Closing) and be
responsible for all expenses allocable to the period beginning at 11:59 p.m. of
the day preceding the Closing Date. At the Closing, all items of income and
expense listed below with respect to the Property shall be prorated in
accordance with the foregoing principles and the rules for the specific items
set forth hereafter:
9.1.1 Real estate taxes, water charges, sewer rents, and vault charges,
if any, based upon the period (i.e., calendar or other tax fiscal year) to which
same are attributable, regardless of whether or not any such taxes are then due
and payable or are a lien. Contributor shall pay or cause to be paid at or prior
to the Closing (or Limited Partner shall receive credit for) any unpaid taxes
attributable to periods prior to the Closing Date (whether or not then due and
payable or a lien as aforesaid). Philips Parties shall receive a credit for any
previously paid or prepaid taxes attributable to periods from and after the
Closing Date. Notwithstanding the foregoing provisions, Section 9.3 shall govern
with respect to all general, special and/or betterment assessments with respect
to the Property at the date of the Closing;
9.1.2 All base or minimum rents ("Base Rent") and Additional Rent (as
defined below; and together with the Base Rent, the "Rent") and other amounts
payable by tenants, if, as and when received. Limited Partner shall not be
obligated to make any payment or give any credit to Sellers on account of or by
reason of any Rent payments that are unpaid as of the Closing Date, but shall be
required merely to turn over Sellers' share of the same within ten days if, as
and when received by Operating Partnership after the Closing (subject to Section
9.2.2). Neither Operating Partnership nor Limited Partner shall be required to
institute any action or proceeding to collect any Rent delinquencies;
9.1.3 Percentage rent (i.e., that portion of the rent payable to the
landlord by the tenant under a Space Lease that is a percentage of the amount of
sales or of the dollar amount of sales), if any, payable under each Space Lease
shall be prorated with respect to the lease year thereunder in which the Closing
occurs on a per diem basis as and when collected. Any percentage rent collected
by Operating Partnership including any percentage rent that is delinquent and
pertaining to (i) an entire lease year or accounting period of a tenant under a
Space Lease that ends on a date prior to the Closing Date, and (ii) that portion
of a lease year or accounting period of such tenant covering a period prior to
the Closing Date where such lease year or accounting period begins prior to the
date of Closing and ends thereafter shall in both cases be paid to Philips
Parties within ten days of receipt by Operating Partnership. Neither Operating
Partnership nor Limited Partner shall be required to institute any action or
proceeding to collect any delinquent percentage rent;
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9.1.4 Fees for inspections, permits or licenses which are transferred
to Operating Partnership at the Closing;
9.1.5 Philips Parties shall use good faith efforts to arrange for cut
off and final meter readings for all utilities serving the Property, on the day
prior to the Closing. In the event that final meter readings are not available,
utilities (including telephone, steam, electricity and gas) shall be adjusted on
the basis of the most recently issued bills therefor, subject to adjustment
after the Closing when the next bills are available;
9.1.6 Personal property taxes, if any, on the basis of the fiscal year
for which assessed;
9.1.7 Philips Parties' share, if any, of all revenues from the
operation of such Property other than Rent (including parking charges, and
telephone booth and vending machine revenues), if, as and when received.
9.1.8 The actual cost to Philips Parties of the fuel stored on the
Property, including any taxes, on the basis of a statement from Philips Parties'
suppliers;
9.1.9 Permitted administrative charges, if any, on those tenants'
security deposits transferred by Contributor and Philips QRSs;
9.1.10 Common area maintenance expenses and charges relating to the
Property, including, without limitation, all expenses and charges payable by or
to Contributor (or if Contributor does not then exist, Operating Partnership)
under or in connection with an REA, if any (collectively, "CAM Charges"), shall
be prorated. Philips Parties shall be responsible for all CAM Charges incurred
prior to the Closing Date, and Operating Partnership shall be responsible for
the same incurred by it subsequent to the Closing. All CAM Charges payments made
by each tenant and such CAM Charges paid under its Space Lease with respect to
the Property for the entire lease year during which the Closing occurs, and all
CAM Charges payments to the Property owner by other parties under an REA,
including in each case end-of-year adjustments, if any, shall be prorated
between Philips Parties and Operating Partnership in the following manner: not
later than three days prior to the Closing, Contributor Parent shall deliver to
Limited Partner, with regard to the Property tenant (or each other party to the
REA, a "REA Party") obligated to pay CAM Charges under its lease (or an REA), a
detailed computation showing all CAM Charge expenses incurred by the Property
owner for the period from the beginning of each such tenant's (or REA Party's)
then current billing period for CAM Charges (e.g., calendar year, lease year,
etc.) through the Closing Date, any monthly estimates of CAM Charges theretofore
collected by the Property owner relating to such tenant (or REA Party) (the "CAM
Estimates"), and a ▇▇▇▇ for the tenant's (or REA Party's) pro rata share of CAM
Charges (i.e., for CAM Charges through the Closing Date net of any such CAM
Estimates), together with all invoices and other evidence documenting such CAM
Charges in detail required by such tenant's lease (or the REA). Operating
Partnership shall send any such bills to tenants (or REA Parties) promptly
following Closing, in which event such tenant (or REA Party) shall pay any
amount shown due directly to Contributor Parent, and Operating Partnership shall
have no responsibility to collect same; or, in the event that such tenant
refuses to accept Contributor Parent's ▇▇▇▇, Operating Partnership (as and when
appropriate for annual reconciliation or other billing of CAM Charges
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for any tenant (or REA Party)) to send two bills to such tenant (or REA Party)
(i.e., one for pre-Closing charges as prepared by Contributor Parent and one for
post-Closing charges), with such tenant (or REA Party) to pay Contributor Parent
directly for unpaid pre-Closing charges, if any;
Any CAM Estimates for any tenant shall be retained by Contributor Parent up to
the amount of the pre-Closing CAM Charges payable by such tenant as evidenced by
such bills and computations delivered by Contributor Parent at Closing, and any
excess shall be credited to Limited Partner at Closing, provided that such
credit is not prohibited by the Space Lease, applicable law or any lender;
9.1.11 All brokerage and leasing commissions or other compensation due
or accrued to any broker, agent, or other person in connection with the Property
for brokerage or other services rendered to the Lower Tier Entities,
Contributor, Contributor Parent, Operating Partnership or any predecessor of
Contributor in connection with or on account of the Space Leases shall (i) be
paid by Contributor or Contributor Parent in connection with any Space Lease (or
extension of modification thereof) which has been executed and delivered (or
exercised) by the parties thereto prior to the execution and delivery of this
Agreement; (ii) be paid by Operating Partnership in connection with any Space
Lease (or extension or modification thereof) which has been executed and
delivered (or exercised) by the parties thereto after the Closing Date; and
(iii) be adjusted as set forth in Section 9.1.2) hereof in connection with any
Space Lease (or extension or modification thereof) which has been executed and
delivered (or exercised) by the parties thereto, and for which the payment of
all Rent shall have commenced, after the execution and delivery of this
Agreement and prior to the Closing;
9.1.12 All prepaid rentals, other prepaid payments, Security Deposits
(to the extent not applied by the Owners prior to the execution of this
Agreement) , electric, gas, sewer and water deposits deposited with the Property
owner by tenants (including all accrued interest on all of the foregoing, unless
Philips Parties are entitled to retain the benefit thereof) under any Space
Leases, license agreements or concession agreements relating to the Property,
shall all belong to Operating Partnership. Notwithstanding the foregoing,
Operating Partnership shall receive at Closing a cash credit in the amount of
all such deposits, prepaid rentals, and other prepaid payments, which shall all
be retained by Philips Parties unless otherwise required by law, any lender or
any Space Lease. Notwithstanding anything to the contrary contained in this
Agreement, an Estoppel Certificate shall not be deemed to conflict with Seller's
representations and warranties in the event that such estoppel reflects that
Seller has applied all or any portion of a Tenant's Security Deposit in
accordance with the terms of the applicable Space Lease.
9.1.13 Philips Parties shall be responsible for any charges, salaries,
vacation pay or fringe benefits of employees of Contributor or the Property
owner prior to or following the Closing, and none of the foregoing shall be
prorated;
9.1.14 With respect to the Existing Debt:
A. Contributor, while it is in existence, and Philips Parties,
thereafter, shall be responsible for all interest payments attributable
to the period up to and including the day before the Closing and,
provided that Limited Partner wires the Purchase Price to
28
Sellers prior to 12:00 p.m. on the Closing Date, Operating Partnership
shall be responsible for all interest payments attributable to periods
on and after the Closing Date; and
B. Any escrow deposits and/or reserves held by the lender of
the Existing Debt under a Mortgage (in the aggregate, the "Mortgage
Escrows") with respect to the Property shall be assigned to Operating
Partnership at the Closing, and Philips Parties shall receive a credit
at the Closing for the amount thereof, to the extent that such Mortgage
Escrows remain in effect at the Closing (as set forth in the Mortgagee
Consent (hereinafter defined)).
9.1.15 The following Property-specific adjustments:
A. with respect to the Property located in Staten Island, New
York, identified as Property 8 on Exhibit 1.22, Philips Parties shall
be responsible for the entire payment (in the amount of $250,000) owing
to National Wholesale Liquidators pursuant to the Space Lease between
National Wholesale Liquidators and the Lower Tier Entity now owning
that Property, and to the extent such payments are not satisfied prior
to the Closing Date, Limited Partner shall receive a credit to the
Purchase Price for such amount; and
B. with respect to the Property located in Enfield,
Connecticut, identified as Property 2 on Exhibit 1.22, Philips Parties
shall be responsible for any commissions now or hereafter payable to
the real estate broker with respect to the Kohl's Space Lease. Philips
Parties shall also be responsible for, and Limited Partner shall
receive a credit against the Purchase Price in the amount of, the
difference between the full amount of all Rent payable under the Kohl's
Space Lease after the expiration of any Rent abatement and the amount
of Rent the tenant under that Space Lease actually pays or is required
to pay during the period between the Closing Date and the date three
months after the Lease Commencement Date (the "Kohl's Rent Abatement
Period"); provided, however Limited Partner shall forward to Philips
Parties any Rent payments actually received from such tenant for the
Kohl's Rent Abatement Period. Further, Limited Partner shall receive a
credit against the Purchase Price in the amount of the difference
between the full cost of re-paving the parking lot at such Property, to
the extent required by the Kohl's Space Lease, and payments paid by
Philips Parties to have such improvements made to the Property.
C. with respect to the property located in Foxborough,
Massachusetts identified as Property 3 on Exhibit 1.22 if the
conditions set forth in Section 16.1.11.B have not been satisfied as of
the Closing Date, then provided that the tenant is not then entitled to
terminate the lease, Purchaser Parties shall not reject the Property on
the basis of Section 16.1.11.B, and (provided all other closing
conditions shall have been fulfilled) instead shall close and receive
as a credit against the Purchase Price in the amount the parties have
reasonably estimated as the cost to complete the landlord's work, plus
the amount the parties have reasonably estimated as the Rent that would
otherwise have been payable if the work had then been completed, for
the period between the Closing Date
29
and the date that Operating Partnership or the New Lower Tier Entity
will be able to complete landlord's work and cause the lease
commencement date to occur, working diligently. Limited Partner shall
forward to Philips Parties any Rent payments actually received and
attributable to the period in respect of which it obtained the
foregoing credit, as well as the excess, if any, of the credit for
landlord's work completion over the actual cost of completing the work.
9.1.16 Except with respect to any Reconveyance Property, the net
Purchase Price shall be appropriately reduced by the amount paid to each Philips
QRS pursuant to Section 5.1.2, to reflect that a portion of the Purchase Price
was paid in accordance with Section 5.1.2.
9.1.17 As to each Property, such other items as are customarily
apportioned between sellers and purchasers of real property of a type similar to
such Property and located in the city and state where such Property is located.
9.2 Basis of Adjustments
9.2.1 If the Closing shall occur before a new real estate or personal
property tax rate is fixed, the apportionment of taxes at the Closing shall be
upon the basis of the old tax rate for the preceding fiscal year applied to the
latest assessed valuation. Promptly after the new tax rate is fixed, the
apportionment of taxes shall be recomputed and any discrepancy resulting from
such recomputation and any errors or omissions in computing apportionments at
Closing shall be promptly corrected and the proper party reimbursed.
9.2.2 If on the Closing Date any tenant is in arrears in the payment of
Rent or has not paid the Rent payable by it for the month in which the Closing
occurs (whether or not it is in arrears for such month on the Closing Date), any
Rent received by Operating Partnership or Philips Parties from such tenant after
the Closing shall be applied first, to all Rent due and payable by such tenant
during the month in which the Closing occurs; thereafter, Philips Parties shall
not be entitled to any further Rent unless and until such tenant is current with
Operating Partnership or its designee on all post-Closing Rent.
9.2.3 In the event that there remains any unpaid tenant receivable
other than Rent (including without limitation any CAM, escalation charges for
real estate taxes, parking charges, operating expenses, maintenance escalation
rents or charges, insurance expenses, percentage rent payments, cost of living
increases or other charges of a similar nature (collectively, "Additional
Rent")) for any period prior to the Closing, all such receivable payments
received from any tenant in arrears shall be applied to any Additional Rent owed
Operating Partnership from such tenant before any part thereof shall be treated
as belonging to Philips Parties. In the event that Operating Partnership or its
designee receives a tenant receivable for which Limited Partner received a
credit at the Closing, such receivable (to the extent that Limited Partner
received a credit at Closing) shall all be promptly payable to Philips Parties,
regardless of whether or not such Tenant is current with Operating Partnership.
9.2.4 After the Closing, Philips Parties shall continue to have the
right, in its own name, to demand payment of and to collect Rent arrearages owed
to Philips Parties by any tenant, which
30
right shall include the right to continue or commence legal actions or
proceedings against any tenant (other than for recovery of possession or
termination of the lease), and delivery of the Lease Assignment shall not
constitute a waiver by Philips Parties of such right. Operating Partnership
agrees to reasonably cooperate with Philips Parties (at Philips Parties' sole
cost) in connection with all efforts by Philips Parties to collect such Rent and
to take all steps after the Closing Date as may be reasonably necessary to carry
out the intention of the foregoing, including adding the Rent arrearages to
bills to tenants for current Rent obligations and, on behalf of Philips Parties,
whether before or after the Closing Date, as may be reasonably necessary to
carry out the intention of the foregoing, including the delivery to Philips
Parties, upon demand, of copies of any relevant books and records (including any
Rent or Additional Rent statements, receipted bills and copies of tenant checks
used in payment of such Rent or Additional Rent), the execution of any and all
consents or other documents, and the undertaking of any act reasonably necessary
for the collection of such Rent by Philips Parties (except litigation or lease
termination), Philips Parties hereby agreeing not to commence or continue any
proceedings against such tenant to terminate said tenant's tenancy or to
dispossess such tenant or otherwise disturb such tenant's occupancy.
9.2.5 If, subsequent to Closing but on or prior to six months from the
Closing Date, any tenant makes a claim against Operating Partnership or its
designee for any overcharge (including without limitation the withholding of any
Rent by reason thereof) or in connection with any Security Deposits, Philips
Parties will and hereby agrees to indemnify, defend and hold Operating
Partnership harmless or its designee from and against any loss, expense or
damage (including without limitation withheld Rent or reasonable attorneys'
fees) arising from or relating to any such alleged overcharge (or Rent
withholding) and/or deposit in connection therewith. The provisions of this
Section shall be subject to the limitations set forth in Section 24.3, and shall
survive the Closing until six months from the Closing Date.
9.2.6 If any of the items subject to apportionment under the foregoing
provisions of this Section 9.2 cannot be apportioned at the Closing because of
the unavailability of the information necessary to compute such apportionment,
or if any errors or omissions in computing apportionments at the Closing are
discovered subsequent to the Closing, then such item shall be reapportioned and
such errors and omissions corrected as soon as practicable after the Closing
Date and the proper party reimbursed, which obligation shall survive the Closing
for a period of one year after the Closing Date as hereinafter provided. Neither
party hereto shall have the right to require a recomputation of a Closing
apportionment or a correction of an error or omission in a Closing apportionment
unless within the aforestated one year period one of the parties hereto (a) has
obtained the previously unavailable information or has discovered the error or
omission, and (b) has given notice thereof to the other party together with a
copy of its good faith recomputation of the apportionment and copies of all
substantiating information used in such recomputation. The failure of a party to
obtain any previously unavailable information or discover an error or omission
with respect to an item subject to apportionment hereunder and to give notice
thereof as provided above one year after the Closing Date shall be deemed a
waiver of its right to cause a recomputation or a correction of an error or
omission with respect to such item after the Closing Date.
9.3 Installment Payments.
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9.3.1 If, on the date of this Agreement, any Property or any part
thereof shall be affected by any assessment or assessments which are or may
become payable in installments, of which the first installment is now a charge
or lien, or has been paid, then Philips Parties shall be obligated to pay all
installments of any such assessment, and unpaid installments of any such
assessment which are to become due and payable on or after the Closing Date
shall be deemed to be liens upon the applicable Property which Philips Parties
shall either pay or credit Limited Partner at Closing for the amount thereof.
9.3.2 If, subsequent to the date hereof, any Property or any part
thereof shall become affected by an assessment or assessments, said assessment
shall not be deemed to be a lien upon such Property and Operating Partnership
shall take title to such Property subject to such assessment, but Philips
Parties and Limited Partner shall apportion such assessment, as of 11:59 p.m. of
the day preceding the Closing. In the event any such assessment or assessments,
whether payable in lump sum or in installments, is due and payable prior to the
Closing, and has been paid in whole or in part by Philips Parties, Operating
Partnership (subject to the preceding sentence) shall reimburse Philips Parties
for its share of same at the Closing.
9.4 Bankruptcy of Tenant. In the event that any tenant shall hereafter
apply or shall have heretofore applied for relief under the provisions of any
bankruptcy or similar laws for the protection of debtors, the provisions of
Section 9.3 shall not apply, and the parties shall have the right to seek
collection of their respective accounts, their entitlements being determined by
the Closing and the other provisions of this Agreement.
9.5 Compromise Claims. Neither party shall have the right to enter into
any transactions that purport to compromise claims belonging to the other,
without the other party's prior written consent.
9.6 Disbursements. All closing adjustments for all Properties will be set
forth in closing statements for each Property and combined into one aggregate
closing statement and reflected in a single wire to Title Company, which Title
Company will disburse to parties, as instructed by an escrow recording
instructions letter delivered by Sellers and Limited Partner.
9.7 Post-Closing Adjustments. Any adjustment made after the date of the
Closing shall be made in cash with Contributor Parent and the Selling Non-REIT
Unitholders on behalf of all Seller Parties.
9.8 Survival. The provisions of this Article 9 shall survive the Closing
for a period of one year.
10. TITLE AND SURVEY.
Contributor shall convey or cause to be conveyed to Operating Partnership at the
Initial Contribution, and Contributor Parent shall cause each New Lower Tier
Entity to hold at the Closing valid and insurable fee title to the Property,
subject only to the Permitted Exceptions.
10.1 Title Commitment and Survey.
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10.1.1 Promptly following the execution of this Agreement, and in any
event not later than fifteen days prior to the expiration of the Due Diligence
Period, Limited Partner shall (i) order a binding, irrevocable commitment for an
ALTA Form B Fee Title Policy to be issued to Operating Partnership (the "Title
Commitment") at the Closing from the Title Company (which may be obtained
through an authorized agent thereof selected by Limited Partner) in the amount
of the allocable Purchase Price for each Property, including a non-imputation
endorsement with respect to all Seller Parties, evidencing that Contributor owns
and can convey valid and marketable fee title to the Property, free and clear of
all encumbrances except the Permitted Exceptions, and (ii) order an "as-built",
current ALTA/ACSM Land Title Survey certified to Operating Partnership and the
Title Company, which shows all easements of record, all parking spaces
(including a count thereof) and curb cuts, all setback restrictions of record
and flood zone designations (the "Survey") and (iii) deliver the Title
Commitment to Seller Parties' attorneys. If the Title Commitment indicate the
existence of any liens, encumbrances or other defects or exceptions in or to
title to any Property other than the Permitted Exceptions (collectively, the
"Unacceptable Encumbrances") subject to which Operating Partnership is unwilling
to accept title and Limited Partner gives Seller Parties notice of the same not
less than ten days prior to the expiration of the Due Diligence Period, Seller
Parties shall undertake to eliminate the same subject to Section 10.2. Limited
Partner and General Partner hereby waive any right either may have to advance as
objections to title or as grounds for either's refusal to close this transaction
any Unacceptable Encumbrance which Limited Partner does not notify Seller
Parties of prior to such ten day period unless (i) The Commitment has been
issued to Limited Partner prior to the expiration of the Due Diligence Period
and (x) such Unacceptable Encumbrance was first raised by the Title Company
subsequent to the expiration of the Due Diligence Period or (y) Limited Partner
or General Partner shall otherwise first discover same or be advised of same
subsequent to the expiration of the Due Diligence Period, and (ii) Limited
Partner shall notify Seller Parties of the same within ten days after Limited
Partner or General Partner first becomes aware of such Unacceptable Encumbrance
(failure to so notify Seller Parties shall be deemed to be a waiver by Limited
Partner and General Partner of their right to raise such Unacceptable
Encumbrance as an objection to title or as a ground for either's refusal to
close this transaction). Seller Parties, in its sole discretion, may adjourn the
Closing one or more times for up to thirty days in the aggregate in order to
eliminate Unacceptable Encumbrances.
10.1.2 If Seller Parties or the New Lower Tier Entities are unable
(subject to Section 10.2) to eliminate all Unacceptable Encumbrances not waived
by Limited Partner or General Partner, or to arrange for title insurance
insuring against enforcement of such Unacceptable Encumbrances against, or
collection of the same out of, the applicable Property, and to convey title in
accordance with the terms of this Agreement on or before the Closing Date
(whether or not the Closing is adjourned as provided in Section 10.1), Limited
Partner shall elect on the Closing Date (on behalf of itself and all other
Purchaser Parties), as their sole remedy for such inability of Seller Parties or
the New Lower Tier Entities, either (i) to accept title subject to such
Unacceptable Encumbrances and receive no credit against, or reduction of, the
Purchase Price, except as set forth in Section 6.2; or (ii) to postpone the
Closing for the affected Property (each, a "Post-Closing Property"), such that
the affected Property shall be subject to the provisions of Article 19, the
Purchase Price payable at the Closing shall be reduced by the amount set forth
in Exhibit 1.24 for such Post-Closing Property, the portion of the Deposits
33
allocable to such Property, as set forth in Exhibit 1.24, shall be reallocated
equally among the remaining portion of the Properties, and the balance of the
Properties shall remain unaffected. In the event that Limited Partner elects to
proceed as set forth in subsection (ii) above, Seller Parties shall have the
right to (A) terminate this Agreement, in which event Limited Partner on behalf
of all Purchaser Parties shall thereupon receive, in addition to the return of
the Deposits (together with all interest accrued thereon, if any), a breakup fee
(the "Breakup Fee") in the amount of Four Million Twenty-Two Thousand Three
Hundred Sixty Dollars ($4,022,360), as liquidated damages and as agreed
compensation for Limited Partner's lost opportunity and expenses, and not as a
penalty (in which case this Agreement shall terminate, be null and void and of
no further force or effect except with respect to the Surviving Obligations); or
(B) cause Contributor to distribute (as a non-liquidating distribution) to
Contributor Parent or its designee, Contributor's entire partnership (or
membership) interest in the Seller Party that owns the applicable Property (and
the applicable Philips QRS, except with respect to the Reconveyance Properties),
Contributor shall not be required to make the contribution set forth in Section
2.2, in which event the applicable Property shall thereafter become a
Post-Closing Property, subject to the terms of Article 19, the Purchase Price
payable at the Closing shall be reduced by the amount set forth in Exhibit 1.24
for such Post-Closing Property, the portion of the Deposits allocable to such
Property, as set forth in Exhibit 1.24, shall be reallocated equally among the
remaining portion of the Properties, and the balance of the Properties shall
remain unaffected. In the event that a title company designated by Seller and
licensed to do business in New York is willing to issue title insurance to
Limited Partner or other Purchaser Parties in satisfaction of the requirements
of this Section, Seller Parties and Non-REIT Unitholders shall not be deemed
unable to eliminate all Unacceptable Encumbrances not waived by Limited Partner
or General Partner or other Purchaser Parties, or unable to arrange for title
insurance insuring against enforcement of such Unacceptable Encumbrances
against, or collection of the same out of, the applicable Property, and Limited
Partner and General Partner on behalf of all Purchaser Parties shall be
obligated to proceed with the Closing contemplated hereunder as if such
objection did not exist.
10.2 Obligations. Notwithstanding anything to the contrary set forth in
this Article 10 or elsewhere in this Agreement, Seller Parties and Non-REIT
Unitholders shall not be obligated to bring any action or proceeding, to make
any payments or otherwise to incur any expense in order to eliminate
Unacceptable Encumbrances not waived by Limited Partner on behalf of all
Purchaser Parties or to arrange for title insurance insuring against enforcement
of such Unacceptable Encumbrances against, or collection of the same out of, the
applicable Property; provided, however, that Seller Parties and Non-REIT
Unitholders shall satisfy or discharge mortgages, real estate taxes and
assessments secured by or affecting the applicable Property regardless of
amount; and Seller Parties and Non-REIT Unitholders shall satisfy or discharge
judgments against Seller Parties and Non-REIT Unitholders, administrative or
other liens (collectively, "Liens") secured by or affecting the applicable
Property which can be satisfied by payment of readily ascertainable amounts not
to exceed, in the aggregate for all such Liens, three percent of the Purchase
Price set forth in Exhibit 1.24 for the applicable Property (the "Cap").
Notwithstanding the foregoing, in the event that Seller Parties and Non-REIT
Unitholders fail to satisfy or discharge all mortgages, real estate taxes and
assessments secured by or affecting the applicable Property as aforesaid, then
Limited Partner on behalf of all Purchaser Parties shall thereupon receive a
credit against the Purchase Price in the amount of all of such unsatisfied
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mortgages, real estate taxes and assessments and shall take title to the
affected Property subject to such mortgages, real estate taxes and assessments.
In the event that the cost of discharging or satisfying the Liens at a
particular Property exceeds the Cap, Limited Partner on behalf of all Purchaser
Parties shall have the right to either (a) waive the Liens as an Unacceptable
Encumbrance and close on the applicable Property, in which event Seller Parties
and Non-REIT Unitholders shall be obligated to credit Limited Partner on behalf
of all Purchaser Parties at Closing with an amount equal to the Cap; or (b)
exclude the affected Property from the scope of this Agreement (an "Excluded
Property"), in which event such Property shall not be subject to the provisions
of Section 19.2 (except as expressly provided in Section 19.2.1.A), the portion
of the Deposits allocable to such Property, as set forth in Exhibit 1.24, shall
be reallocated equally among the remaining portion of the Properties, the
Purchase Price payable at the Closing shall be reduced by the amount set forth
in Exhibit 1.24 for such Excluded Property, and the balance of the Properties
shall remain unaffected. In the event that Limited Partner elects to proceed as
set forth in subsection (b) above, Seller Parties shall have the right to (A)
terminate this Agreement, in which event Limited Partner shall on behalf of all
Purchaser Parties receive in addition to the return of the Deposits (together
with all interest accrued thereon, if any), the Breakup Fee, as liquidated
damages and as agreed compensation for Limited Partner's and all other Purchaser
Parties' lost opportunity and expenses, and not as a penalty (in which case this
Agreement shall terminate, be null and void and of no further force or effect
except with respect to the Surviving Obligations); or (B) cause Contributor
Parent to distribute (as a non-liquidating distribution) to Contributor Parent's
general partner or its designee Contributor Parent's entire partnership (or
membership) interest in the Seller Party that owns the applicable Property (and
the applicable Philips QRS, except with respect to the Reconveyance Properties),
Contributor shall not be required to make the contribution set forth in Section
2.2, in which event the applicable Property shall thereafter be excluded from
the scope of this Agreement, in which event such Excluded Property shall not be
subject to the provisions of Section 19.2 (except as expressly provided in
Section 19.2.1.A), the portion of the Deposits allocable to such Property, as
set forth in Exhibit 1.24, shall be reallocated equally among the remaining
portion of the Properties, the Purchase Price payable at the Closing shall be
reduced by the amount set forth in Exhibit 1.24 for such Excluded Property,
Seller Parties shall be free to sell such Excluded Property to any third party
without claim by or liability to Limited Partner or other Purchaser Parties, and
the balance of the Properties shall remain unaffected. Without limiting the
generality of the preceding provisions of this Section 10.2, for the purposes of
this Agreement, Seller Parties' failure or refusal to bring any action or
proceeding, to make any payments or to otherwise incur any expense (except for
Seller Parties' obligation to satisfy mortgages, real estate taxes, assessments,
regardless of amount, and Liens which, in the aggregate, can be satisfied by
payment of readily ascertainable amounts not to exceed the Cap) in order to
eliminate Unacceptable Encumbrances not waived by Limited Partner on behalf of
the applicable Purchaser Party or to arrange for such title insurance shall be
deemed an inability of Seller Parties to eliminate such Unacceptable
Encumbrances or to arrange for such title insurance and shall not be a default
by Seller Parties hereunder (willful or otherwise).
10.3 Payment of Liens and Other Encumbrances. If on the Closing Date
there may be any liens or other encumbrances which Seller Parties must pay or
discharge in order to convey to
35
Operating Partnership such title as is herein provided to be conveyed, Seller
Parties may use any portion of the Purchase Price to satisfy the same, provided:
10.3.1 Seller Parties shall deliver or cause to be delivered to
Operating Partnership or the Title Company, at the Closing, instruments in
recordable form and sufficient to satisfy such liens or other encumbrances of
record together with the cost of recording or filing said instruments; or
10.3.2 Seller Parties, having made arrangements with the Title Company,
shall deposit or cause to be deposited with said company sufficient monies
acceptable to said company to insure the obtaining and the recording of such
satisfactions.
The existence of any such liens or other encumbrances shall not be deemed
objections to title if Seller Parties shall comply with the foregoing
requirements.
10.4 Conditional Bills of Sale. If on the Closing Date there shall be
conditional bills of sale, chattel mortgages or security interests filed against
any of the Properties, the same shall not constitute objections to title,
provided (a) Seller Parties execute and deliver an affidavit to the effect
either (i) that the personal property covered by said conditional bills of sale,
chattel mortgages, or security interests is no longer in or on such Property, or
(ii) if such personal property is still in or on such Property, that it has been
fully paid for, or (iii) that such personal property is the property of a tenant
of such Property; and (b) the Title Company commits to either omit or insure
over any such items from the policy to be issued to Operating Partnership at
Closing.
10.5 Franchise Tax. Any franchise or corporate Tax open, levied or
imposed against any Seller Party or other owners in the chain of title that may
be a lien on the Closing Date, shall not be an objection to title if the Title
Company omits same from the title policy(ies) issued pursuant to the Title
Commitment(s) or excepts same but insures Operating Partnership against
collection thereof out of the applicable Property.
10.6 Judgments, Bankruptcies or Other Returns . If a search of title
discloses judgments, bankruptcies or other returns against other persons or
entities having names the same as or similar to that of a Seller Party,
Contributor Parent will deliver to Operating Partnership and the Title Company
an affidavit stating that such judgments, bankruptcies or other returns are not
against the Seller Party, whereupon, provided the Title Company omits such
returns as exceptions to title or provides affirmative coverage with respect
thereto, such returns shall not be deemed an objection to title.
10.7 Legal Descriptions. It is the intention of Seller Parties to convey to
Purchaser Parties all of Seller Parties' respective right, title and interest in
and to the Properties set forth on Schedule A. In the event that the Title
Company advises Limited Partner that any Seller Party owns more real property at
any of the Properties set forth on Schedule A than what is set forth in the
respective legal descriptions attached hereto as Exhibit 1.22, that Seller Party
shall, upon receipt of appropriate evidence of same, convey any such additional
real property pursuant to Section 3.1.1 by quitclaim deed. Notwithstanding the
foregoing, (a) in the event that any of the legal
36
descriptions attached hereto omits real property contained in a recorded deed to
Seller Parties, the relevant Seller Party shall (to the extent it has not, prior
to the date of this Agreement, conveyed such Property to another party) include
the legal description from such recorded deed in the legal description contained
in the bargain and sale deed required under Section 3.1.1; and (b) in the event
that the any of the legal descriptions attached hereto includes real property
contained in a recorded deed from a Seller Party to a party other than Operating
Partnership or a New Lower Tier Entity, the relevant Seller Party shall, to the
extent that such recorded deed is dated prior to the date of this Agreement,
exclude the legal description in such recorded deed from the legal description
contained in the bargain and sale deed required under Section 3.1.1.
11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER PARTIES.
Each Seller Party, with respect to itself (if applicable) and its Property (if
any), covenants, represents and warrants to Limited Partner and General Partner
the following, all of which shall be required to be true and correct in all
material respects on and as of the relevant Closing Date as a condition
precedent to Limited Partner's and General Partner's obligations hereunder:
11.1 Due Formation and Authority. Each Seller Party is a duly formed and
validly existing under the laws of the state of its incorporation and is
qualified under the laws of the state in which the Property it is selling is
located, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate would not have a material adverse
effect on the Properties. Each Seller has the full legal right, power and
authority to execute and deliver this Agreement and all documents now or
hereafter to be executed by such Seller pursuant to this Agreement
(collectively, "Seller's Documents"), to consummate the transaction contemplated
hereby, and to perform its obligations hereunder and under Seller's Documents.
This Agreement and Seller's Documents have been duly executed by each Seller
Party that is a party thereto and are enforceable against each such Seller Party
in accordance with their terms. The documents delivered to Operating Partnership
and Limited Partner at the Closing will be duly executed by each Seller Party
that is a party thereto and enforceable against each Seller Party in accordance
with their terms. This Agreement and the Seller's Documents do not and will not
contravene any provision of the certificate of formation, the partnership
agreement, the articles of organization and operating agreement of such Seller
(as applicable), any judgment, order, decree, writ or injunction issued against
such Seller, or any provision of any laws or governmental ordinances, rules,
regulations, orders or requirements applicable to such Seller, except to the
extent that such contravention would not reasonably be expected to have a
material adverse effect upon the Properties and/or the business, properties,
assets, financial condition, or results of operations of Sellers and their
subsidiaries, taken as a whole, including the ability of Sellers to consummate
the transactions contemplated herein (including, without limitation, the
contribution of the Properties to Operating Partnership). The consummation of
the transactions contemplated hereby will not result in a breach or constitute a
default or event of default by such Seller under any agreement to which such
Seller or any of its assets are subject or bound and will not result in a
violation of any laws applicable to such Seller. Neither the execution and
delivery of this Agreement nor the consummation of the transactions herein
contemplated will conflict with, result in a breach of or constitute a default
under, or otherwise adversely affect any Space Lease, REA, or any other
37
contract, agreement, instrument, license or undertaking to which Sellers or any
of its affiliates is a party or by which any of them or any of their respective
properties or assets is or may be bound or that relates to the Property in any
respect, except to the extent that such contravention would not reasonably be
expected to have a material adverse effect upon the Properties and/or the
business, properties, assets, financial condition, or results of operations of
Sellers and their subsidiaries, taken as a whole, including the ability of
Sellers to consummate the transactions contemplated herein (including, without
limitation, the contribution of the Properties to Operating Partnership).
11.2 Consents. Subject to the provisions of Section 13.3, Contributor and
each other Seller Party have obtained, or will have obtained by the Closing, all
consents required to permit the transactions contemplated hereunder (including
but not limited to the contribution of the Property to Operating Partnership and
the transfer of the Conveyed OP Units) and required under any partnership
agreement, shareholder agreement, limited liability company agreement, covenant
or other agreement concerning it or to which it (or any of its partners, members
or shareholders) is a party or by any applicable law. If, for any reason,
Contributor and each other Seller Party cannot obtain any consents required
under any law or regulation, partnership agreement, shareholder agreement,
limited liability company agreement, trust agreement, covenant or other
agreement concerning such Seller Party or to which they are a party to permit
the transactions contemplated hereunder (including but not limited to the
contribution of the Property to Operating Partnership and the transfer of the
Conveyed OP Units) or does not obtain the signature of each party to the
Redemption Agreement, then Contributor Parent shall, upon termination of this
Agreement, pay the Breakup Fee to Limited Partner in accordance with Section
19.4.
11.3 Leases. There are no leases, licenses or other occupancy agreements
affecting any portion of its Property on the date hereof except for the Space
Leases listed in the rent roll annexed hereto as Exhibit 11.3 and made a part
hereof. The Space Leases described in Exhibit 11.3 comprise all the Space Leases
presently existing and each is in full force and effect; no Space Lease has been
modified or supplemented in any material respect except (if at all) as set forth
on Exhibit 11.3; except as set forth on Exhibit 11.3, no Rent has been paid more
than one month in advance by any tenant, and no tenant is entitled to any "free
rent" period, defense, credit, allowance or offset against Rent; the information
set forth in Exhibit 11.3 is true, correct and complete in all material
respects. To Seller Parties' knowledge, there is no material default of either
landlord or tenant under any of the Space Leases, except as set forth on Exhibit
11.3. There are no persons or entities entitled to possession of the Property
other than those listed on Exhibit 11.3. Except as set forth on Exhibit 11.3, no
work or installations is required of Seller Parties except as specified (if at
all) in the Space Leases, and in any case Seller Parties have fully completed
all tenant improvements specified in any Space Lease to be the responsibility of
the landlord and has paid all tenant construction allowances. Seller Parties
have no obligations with respect to contributing for or paying dues or charges
to a shopping center merchant's association or marketing fund.
11.4 Violations. No Seller Party has received a written notice from any
governmental authority, mortgagee, tenant, insurer or other party (i) that the
Property or any portion thereof or the use or operation thereof are currently in
violation of any zoning, environmental or other land use regulations in any
material respect, and to each Seller Party's knowledge no such notice has
38
been issued; or (ii) asserting that work must be performed at the Property or
any portion thereof and to each Seller Party's knowledge no such notice has been
issued. If any Seller Party receives such a notice or a violation is issued or
filed prior to Closing, such Seller Party shall promptly notify Limited Partner.
In the event that cure of such violation would require an alteration of or
addition to a Property or Personal Property or otherwise require an expenditure
to cure the violation, the cost of which would exceed two percent of the
Purchase Price allocable to such Property, then Limited Partner, on behalf of
all Purchaser Parties, shall have the right to either (a) waive the violations
and close on the applicable Property, in which event Sellers shall be obligated
to credit Limited Partner, on behalf of all Purchaser Parties, at Closing with
an amount equal to two (2%) percent of the Purchase Price allocable to such
Property; or (b) exclude the applicable Property from the scope of this
Agreement, in which event such Excluded Property shall not be subject to the
provisions of Section 19.2 (except as expressly provided in Section 19.2.1), the
portion of the Deposits allocable to such Property, as set forth in Exhibit
1.24, shall be reallocated equally among the remaining portion of the
Properties, the Purchase Price payable at the Closing shall be reduced by the
amount set forth in Exhibit 1.24 for such Excluded Property, and the balance of
the Properties shall remain unaffected. In the event that Limited Partner elects
to proceed as set forth in subsection (b) above, Seller Parties shall have the
right to (A) terminate this Agreement, in which event Limited Partner shall on
behalf of all Purchaser Parties thereupon receive, in addition to the return of
the Deposits (together with all interest accrued thereon, if any), the Breakup
Fee, as liquidated damages and as agreed compensation for Limited Partner's and
all other Purchaser Parties' lost opportunity and expenses, and not as a penalty
(in which case this Agreement shall terminate, be null and void and of no
further force or effect except with respect to the Surviving Obligations); or
(B) cause Contributor to distribute (as a non-liquidating distribution) to
Contributor Parent or its designee, Contributor's entire partnership (or
membership) interest in the Seller Party that owns the applicable Property (and
the applicable Philips QRS, except with respect to the Reconveyance Properties),
Contributor shall not be required to make the contribution set forth in Section
2.2, in which event the applicable Property shall thereafter be excluded from
the scope of this Agreement, and such Excluded Property shall not be subject to
the provisions of Section 19.2 (except as expressly provided in Section
19.2.1.A), the portion of the Deposits allocable to such Property, as set forth
in Exhibit 1.24, shall be reallocated equally among the remaining portion of the
Properties, the Purchase Price payable at the Closing shall be reduced by the
amount set forth in Exhibit 1.24 for such Excluded Property, Seller Parties
shall be free to sell such Excluded Property to any third party without claim by
or liability to Limited Partner or other Purchaser Parties, and the balance of
the Properties shall remain unaffected. Notwithstanding the foregoing, (x)
Seller Parties shall have no obligation to satisfy or discharge or otherwise
cure any violations first arising after the execution and delivery of this
Agreement; and (y) Seller Parties shall have the right to contest any violation
filed or recorded prior to the date hereof if the same does not delay the
Closing and if the violation is cured or removed prior to the Closing.
11.5 No Litigation. There are no pending actions, suits, proceedings or, to
Seller Parties' knowledge, investigations to which such Seller Party is a party
before any court or other governmental authority with respect to its Property,
other than personal injury and other routine tort litigation arising from the
ordinary course of operations of Seller Party (x) which are covered by adequate
insurance; (y) for which all material costs and liabilities arising therefrom
are
39
reimbursable pursuant to common area maintenance or similar agreements; or
(z) which would not adversely affect or be binding upon Operating Partnership or
the Property following Closing.
11.6 No Attachments or Bankruptcy Events. There are no attachments, levies,
executions, assignments for the benefit of creditors, receiverships,
conservatorships or voluntary or involuntary proceedings in bankruptcy or any
other debtor relief actions contemplated by any Seller Party or filed by any
Seller Party, or to the best of each Seller Party's knowledge, threatened in
writing against or pending in any current judicial or administrative proceeding
against any Seller Party.
11.7 No Ground Leases. The Lower Tier Entities own the entire Property in
fee simple absolute, and no ground leases affect the Property.
11.8 Other Agreements. There are not now and will not be on the Closing
Date any agreements or understandings relating to the Property, except for the
Permitted Exceptions, Space Leases, service contracts relating to the operation
of the Property (all of which service contracts shall be terminated by Seller
prior to the Closing Date), Mortgages, Property Notes and other documents
evidencing or securing the Existing Debt (to the extent disclosed to Limited
Partner prior to the date hereof); and, subject to the provisions of Article 8,
no material alterations, amendments or waivers pertaining to the foregoing will
be made, except with Limited Partner's written approval prior to the date of
Closing, not to be unreasonably withheld or delayed.
11.9 Taxes. Except as set forth on Exhibit 11.9 hereto, there are no tax
certiorari proceedings currently pending with respect to any Property; and no
tenant entitled to a refund for a year prior to the Closing in connection with a
closed tax certiorari proceeding has not received the refund to which it is
entitled pursuant to its Space Lease.
11.10 Employees. There are no on-site employees or hired persons in
connection with the management, operation or maintenance of the Property for
whom Operating Partnership shall be responsible. Operating Partnership shall
have no obligation, liability or responsibility with respect to charges,
salaries, vacation pay, fringe benefits or like items subsequent to Closing, nor
with respect to any management or employment agreements with respect to the
Property.
11.11 Signatories. The persons or parties signing this Agreement on behalf of
each Seller Party have the power and authority to enter into this Agreement, to
bind each Seller Party to the provisions hereof and to comply with the
obligations of each Seller Party hereunder.
11.12 No Conflicts with Agreements. Neither the execution and delivery of
this Agreement nor the consummation of the transactions herein contemplated
will, to the best of each Seller Party's knowledge, conflict with, result in a
breach of or constitute (with or without the giving of notice or the passing of
time, or both) a default under, or otherwise adversely affect any Space Lease,
REA, or other contract, agreement, instrument, license or undertaking to which
that Seller Party or any of its affiliates is a party or by which any of them or
any of their respective property or assets is or may be bound or that relates to
the Property in any respect.
40
11.13 No Options. No tenant under a Space Lease (or REA Party), or other
person has any option, right of first refusal or other right to purchase
Property or any part thereof or interest therein. If any such option, right of
first refusal or other right to purchase does exist on the date hereof,
Contributor Parent shall at the Closing deliver to Operating Partnership a
written and recordable instrument, signed by the holder thereof, irrevocably and
unconditionally waiving, canceling, terminating and annulling any such option,
right of first refusal or other right.
11.14 Existing Debt. With regard to the Property Note and Mortgage: (i) all
documents relating to the Existing Debt have heretofore been delivered to
Limited Partner; (ii) Contributor has not received any notice of default from
the mortgagee (or its servicing agent, if any) claiming that any material breach
has occurred pursuant to the terms of the Property Note or Mortgage or any other
loan document which remains uncured; and (iii) the amounts (including the
amounts of the Mortgage Escrows) set forth on Exhibit 1.11 are true and correct
as of the date hereof and there are no Mortgage Escrows except as disclosed on
Exhibit 1.11.
11.15 No Agency. Contributor Parent is acquiring and will hold the general
and limited partnership interests in Operating Partnership for its own account,
as principal, for investment, and not with a view toward resale or distribution
thereof.
11.16 Securities Matters. Contributor Parent makes the acknowledgments,
representations, warranties and agreements set forth on Exhibit 11.16 annexed
hereto. In addition, as of the Closing Date Contributor Parent will be (and each
member or shareholder in Contributor, and each Non-Selling Non-REIT Unitholder
or other Person receiving limited partnership interests in Operating Partnership
by, through or on account of Contributor Parent will be) an "Accredited
Investor" as that term is defined under Regulation D under the Securities Act of
1933, as amended (the "1933 Act") by reason of the fact that it is an entity all
of whose equity owners are Accredited Investors. Contributor Parent understands
that Operating Partnership has not been registered under the 1933 Act or the
securities laws of any state and, as a result thereof, are subject to
substantial restrictions on transfer. Neither Contributor Parent, nor any
Non-Selling Non-REIT Unitholder or other Person receiving limited partnership
interests in Operating Partnership, will hold or take such interests with a view
to a distribution of such interests in violation of the 1933 Act.
11.17 Registration. Contributor Parent understands that (i) Operating
Partnership has no obligation or intention to register the limited partnership
interest in Operating Partnership issued to Contributor Parent for resale under
any federal or state securities laws, or to take any action (including the
filing of reports or the publication of information required by Rule 144 under
the ▇▇▇▇ ▇▇▇) that would make available any exemption from the registration
requirements of such laws and Operating Partnership cannot take such actions
without the written consent of Limited Partner, and therefore (ii) Contributor
may be precluded from selling or otherwise transferring or disposing (other than
pursuant to the terms and provisions of the Partnership Agreement) of any
limited partnership interests in Operating Partnership or any portion thereof
and may have to bear the economic risk of investment in such limited partnership
interests for an indefinite period.
41
11.18 Completed Construction. Except as set forth in Exhibit 11.18, all
construction and/or maintenance work required to be completed prior to the
Closing Date by the terms of any Space Lease, REA or other Permitted Exceptions
has been satisfactorily completed.
11.19 Sellers' Taxes. Regarding Operating Partnership, Contributor,
Contributor Parent, each Lower Tier Entity and each Philips QRS (each, a
"Taxpayer" and collectively, the "Taxpayers"): (a) there have been properly
completed and filed on a timely basis and in correct form all Returns required
to be filed on or prior to the date hereof; (b) as of the time of filing, the
foregoing Returns correctly reflected the facts regarding the income, business,
assets, operations, activities, status, or other matters of the applicable
Taxpayer or any other information required to be shown thereon; (c) with respect
to all amounts in respect of Taxes imposed on any Taxpayer or for which any
Taxpayer is or could be liable, whether to taxing authorities (as, for example,
under law) or to other persons or entities (as, for example, under tax
allocation agreements), with respect to all taxable periods or portions of
periods ending on or before the Closing Date, all applicable tax laws and
agreements have been fully complied with, and all such amounts required to be
paid by such Taxpayer to taxing authorities or others on or before the date
hereof have been paid; (d) no audits or examinations are currently pending by
any taxing authority in connection with any of the Returns or any Taxpayer; (e)
no waivers of statutes of limitation with respect to any Return or any Taxpayer
are currently in effect; (f) all deficiencies asserted or assessments made as a
result of any audits or examinations of any Return of any Taxpayer have been
fully paid; (g) there are no liens for Taxes (other than for current Taxes not
yet due and payable) on any Property; (h) no Property is property that is
required to be treated as being owned by any other person pursuant to the "safe
harbor lease" provisions of former Section 168(f)(8) of the IRC; (i) no Property
directly or indirectly secures any debt, the interest on which is tax-exempt
under Section 103(a) of the IRC; and (j) no Property is "tax-exempt property"
within the meaning of Section 168(h) of the IRC.
11.20 Non-REIT Unitholders and Redemption Agreement. Exhibit 11.20 accurately
identifies all Non-REIT Unitholders, as well as the ownership interest of each
such Non-REIT Unitholder in Contributor as of the date hereof. Each Unitholder
Redemption Agreement is or shall be in full force and effect and valid and
binding on the respective Redeemed Non-REIT Unitholder entering into such
Unitholder Redemption Agreement and shall be on the Closing Date valid and
binding on each Redeemed Non REIT Unitholder and will be on the Closing Date
enforceable in accordance with its terms. On the Closing Date the Pilevsky
Partners shall neither be partners of Contributor or Operating Partnership nor
own any units of Contributor or Operating Partnership. Any breach of the
warranties in this Section shall entitle Limited Partner on behalf of all
Purchaser Parties to the Breakup Fee in accordance with Section 19.4.
11.21 Partnership Interest. The Conveyed LP Units and the limited
partnership, general partnership and/or limited liability company membership
interests in each New Lower Tier Entity to be sold to Limited Partner and
Limited Partner Entity pursuant to the terms hereof, when sold and delivered for
the consideration set forth herein, shall be duly and validly issued, fully paid
and nonassessable and free and clear of any liens or encumbrances of any kind
whatsoever, except as set forth in the Partnership Agreement or this Agreement.
On the Closing Date, there will not be any outstanding options, warrants or
rights to acquire any equity interest
42
in any of the New Lower Tier Entities or Operating Partnership other than
pursuant to the terms of this Agreement.
11.22 No Business Activities. Operating Partnership and each New Lower Tier
Entity has not engaged and will not at all times between the date hereof and the
Closing engage, in any business activities, nor incur any liabilities, except
the ownership of the assets to be conveyed in consideration of the redemption of
the interests described in Section 6.2 during the period subsequent to the date
hereof and except to the extent required to effect the transactions contemplated
by this Agreement.
11.23 Property-Specific Representations. With respect to the Property
located in Freeport, New York, the Lower Tier Entity has completed all
development, the Village of Freeport has issued a certificate of completion with
respect to the Property and no municipal consents are required with respect to
the transfers and transactions contemplated hereby. With respect to the Property
located in Merrick, New York, no letter of credit or cash collateral has been
posted with respect to the Existing Debt encumbering such Property.
11.24 Untrue, Inaccurate or Incorrect.
11.24.1 Subject at all times to Section 11.26, if at or prior to the
Closing, (i) Limited Partner or any other Purchaser Party shall become aware
(whether through its own efforts, by notice from Seller Parties or otherwise)
that any of the representations or warranties made herein by Seller Parties are
untrue, inaccurate or incorrect in any material respect and shall give Seller
Parties notice thereof at or prior to the Closing, or (ii) Seller Parties shall
notify Limited Partner that a representation or warranty made herein by Seller
Parties is untrue, inaccurate or incorrect in any material respect, then Seller
Parties may, in its sole discretion, elect by notice to Limited Partner to
adjourn the Closing one or more times for up to thirty days in the aggregate in
order to cure or correct such materially untrue, inaccurate or incorrect
representation or warranty. If Limited Partner or any other Purchaser Party
shall become aware (whether through its own efforts, by notice from Seller
Parties or otherwise) that any of the representations or warranties made herein
by Seller Parties are untrue, inaccurate or incorrect in any material respect
and shall fail to give Seller Parties notice thereof at or prior to the Closing,
or if any such representation or warranty is untrue, inaccurate or incorrect in
any non-material respect, and is not cured or corrected by Seller Parties on or
before the Closing Date (whether or not the Closing is adjourned as provided
above), Limited Partner and all other Purchaser Parties shall nevertheless be
deemed to, and shall, waive such non-material untrue, inaccurate or incorrect
misrepresentation or breach of warranty and shall consummate the transactions
contemplated hereby without any reduction of or credit against the Purchase
Price. If any such representation or warranty is untrue, inaccurate or incorrect
in any material respect, and is not cured or corrected by Seller Parties on or
before the Closing Date (whether or not the Closing is adjourned as provided
above), then as their sole remedy for any and all such materially untrue,
inaccurate or incorrect representations or warranties, Purchaser Parties, acting
through Limited Partner, shall have the right on behalf of all Purchaser Parties
to elect either (i) to waive such materially untrue, inaccurate or incorrect
representations or warranties, close on the affected Property and the balance of
the Properties for which the closing conditions have been met, and receive no
credit against, or reduction of, the Purchase Price due to such materially
untrue,
43
inaccurate or incorrect representations or warranties; and/or (ii) to postpone
the closing for the affected Property (each, a "Post-Closing Property"), such
that the affected Property shall be subject to the provisions of Sections
19.2.1.A and 19.3, the portion of the Deposits allocable to such Property, as
set forth in Exhibit 1.24, shall be reallocated equally among the remaining
portion of the Properties, the Purchase Price payable at the Closing shall be
reduced by the amount set forth in Exhibit 1.24 for such Post-Closing Property,
and, subject to Section 19.3, the balance of the Properties shall remain
unaffected. In the event that Limited Partner elects to proceed as set forth in
subsection (ii) above, Seller Parties shall have the right to (A) terminate this
Agreement, in which event Limited Partner shall on behalf of all Purchaser
Parties thereupon receive, in addition to the return of the Deposits (together
with all interest accrued thereon, if any), the Breakup Fee, as liquidated
damages and as agreed compensation for Limited Partner's and all other Purchaser
Parties' lost opportunity and expenses, and not as a penalty (in which case this
Agreement shall terminate, be null and void and of no further force or effect
except with respect to the Surviving Obligations); or (B) cause Contributor to
distribute (as a non-liquidating distribution) to Contributor Parent or its
designee, Contributor's entire partnership (or membership) interest in the
Seller Party that owns the applicable Property (and the applicable Philips QRS,
except with respect to the Reconveyance Properties), Contributor shall not be
required to make the contribution set forth in Section 2.2, in which event the
applicable Property shall thereafter become a Post-Closing Property, subject to
the terms of Article 19, the Purchase Price payable at the Closing shall be
reduced by the amount set forth in Exhibit 1.24 for such Post-Closing Property,
the portion of the Deposits allocable to such Property, as set forth in Exhibit
1.24, shall be reallocated equally among the remaining portion of the
Properties, and the balance of the Properties shall remain unaffected.
11.24.2 Limited Partner on behalf of all Purchaser Parties acknowledges
and agrees that (x) at or prior to the Closing, Limited Partner's and all other
Purchaser Parties rights and remedies in the event any of Seller Parties'
representations or warranties made in this Agreement are untrue, inaccurate or
incorrect shall be only as provided in this Section 11.24, and (y) if the
Closing does not occur, or Limited Partner waives such materially untrue,
inaccurate or incorrect representations or warranties and closes on the affected
Property, Limited Partner on behalf of all Purchaser Parties hereby expressly
waives, relinquishes and releases all other rights or remedies available to it
at law, in equity or otherwise (including, without limitation, the right to seek
damages from Seller Parties) as a result of any of Seller Parties'
representations or warranties made in this Agreement being untrue, inaccurate or
incorrect. For the purposes of this Article 11, a representation shall be deemed
to be materially untrue, inaccurate or incorrect if, as a result of such
untruth, inaccuracy or incorrectness, there is a material adverse affect upon
the Property and/or the business, properties, assets, financial condition, or
results of operations of the applicable Seller Parties and its subsidiaries,
taken as a whole, including, without limitation, the ability of such Seller
Parties to consummate the transactions contemplated herein (including, without
limitation, the sale of such Property to Limited Partner).
11.25 Certificate. At Closing, Seller Parties shall deliver to Operating
Partnership a certificate reconfirming all the foregoing representations as
true, correct and complete in all material respects as of the date of Closing
(except as they relate only to an earlier date), or, if there have been any
changes, a description thereof; provided, however, that such a description shall
not operate to cure a material breach of such representations.
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11.26 Modification of Representations and Warranties. Copies of the Space
Leases in each Seller Parties' possession and certain other Property Information
have been or will be delivered or otherwise made available to Limited Partner
and General Partner on behalf of all Purchaser Parties, and Limited Partner and
General Partner on behalf of all Purchaser Parties have undertaken their own
Investigations (as defined below) and, by accepting the conveyance of the LP
Units and the GP Units, Limited Partner and General Partner on behalf of all
Purchaser Parties acknowledges its receipt and acceptance or the availability to
it thereof and that Limited Partner and General Partner on behalf of all
Purchaser Parties has reviewed the same to its satisfaction. To the extent that
any information (i) contained in the copies of the Space Leases or any other
Property Information furnished to or made available to Limited Partner or
General Partner by Seller; (ii) contained in reports provided to Limited Partner
or General Partner from professionals); (iii) contained in Seller Parties'
filings, if any, with the Securities and Exchange Commission or other publicly
available documents; (iv) obtained by Limited Partner or General Partner prior
to the expiration of the Due Diligence Period through oral or written
communications with Seller Parties' employees (provided that the representations
and warranties contained in Section 11.2 shall not be subject to modification
thereby) or tenants; or (v) subject to the Seller Parties' obligation to deliver
Estoppel Certificates in compliance with Section 17.3.6, obtained by Limited
Partner or General Partner following the expiration of the Due Diligence Period
through oral or written communications with Seller Parties' tenants, is
inconsistent with the foregoing representations and warranties, such
representations and warranties shall be deemed modified to the extent necessary
to eliminate such inconsistency and to conform such representations and
warranties to such information. Limited Partner and General Partner on behalf of
all Purchaser Parties hereby agrees to diligently and in good faith proceed to
communicate with Seller Parties' employees and those Tenants whose names are set
forth on Exhibit 1.14 prior to the expiration of the Due Diligence Period. As
used in this Agreement, the words "Seller Party's knowledge" or words of similar
import shall be deemed to mean, and shall be limited to, the actual (as
distinguished from implied, imputed or constructive) knowledge of Seller Party
after, and based solely upon, making inquiry of ▇▇▇▇▇ ▇. ▇▇▇▇▇, the person
charged with the management responsibility for the Properties.
11.27 Survival. In the event the Closing occurs:
11.27.1 Notwithstanding anything to the contrary contained in this
Article 11 or elsewhere in this Agreement to the contrary, except as expressly
set forth in Section 11.27.2 or elsewhere in this Agreement, Limited Partner and
General Partner (on behalf of themselves, Operating Partnership, each Limited
Partner Entity, each New Lower Tier Entity and each of their respective direct
or indirect Subsidiaries and affiliates) expressly waive, relinquish and release
any right or remedy available to it at law, in equity or under this Agreement to
make a claim against any Seller or any Non-Selling Non-REIT Unitholder for
damages that Limited Partner, General Partner, Operating Partnership, any
Limited Partner Entity, any New Lower Tier Entity and/or any or their direct or
indirect Subsidiaries or affiliates may incur, or to rescind this Agreement and
the transactions contemplated hereby, as the result of any Sellers' or
Non-Selling Non-REIT Unitholder's representations or warranties being materially
untrue, inaccurate or incorrect; and
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11.27.2 The representations and warranties of Sellers set forth in this
Article 11 and elsewhere in this Agreement shall survive the Closing and the
execution and delivery of the transfer documents until six months from the
Closing Date, and shall be subject to Section 24.3. Notwithstanding the
foregoing, to the extent that (A) a tenant shall certify in its estoppel
confirming any matter set forth in Sections 11.3 and 11.13; or (B) a lender
shall certify in its consent confirming any matter set forth in Section 11.14
then Sellers' representations and warranties as to such matters shall terminate.
The provisions of this Section 11.27.2 shall survive the Closing and the
execution and delivery of the transfer documents.
12. REPRESENTATIONS AND WARRANTIES OF LIMITED PARTNER AND GENERAL PARTNER.
Limited Partner and General Partner hereby warrant and represent to Contributor
and Contributor Parent that each of the following statements is true and correct
as of the date of this Agreement and shall be true and correct on the Closing
Date:
12.1 Due Formation and Authority. Limited Partner is duly formed and validly
existing limited partnership under the laws of the State of Delaware. General
Partner is a duly incorporated and validly existing limited liability company
under the laws of the State of Delaware. Limited Partner and General Partner
have full power and authority to enter into and perform this Agreement in
accordance with its terms and this Agreement has been duly executed by Limited
Partner and General Partner and is enforceable against Limited Partner and
General Partner in accordance with its terms, and the documents delivered to
Contributor Parent at the Closing will be duly executed by Limited Partner
and/or General Partner, as required, and enforceable against Limited Partner
and/or General Partner, as applicable, in accordance with their terms. Neither
the execution and delivery of this Agreement nor the performance hereof will (i)
be in violation of the organizational documents of Limited Partner or General
Partner, (ii) to the best of Limited Partner or General Partner's knowledge,
conflict with any law, decree, judgment, regulation or decree of any court or
governmental agency, or (iii) conflict with any agreement or instrument to which
Limited Partner or General Partner may be bound.
12.2 Consents. Limited Partner and General Partner have, or by the Closing
will have, obtained all consents (including without limitation the consents of
Kimco Realty Corporation and The New York Common Fund) required to permit all of
the transactions contemplated by this Agreement and required under any
partnership agreement, covenant or other agreement concerning it or to which
it (or any of its partners) is a party or by any law, decree, judgment,
regulation or decree of any court or governmental agency, and the purchase of
the Properties and the Cash Contract properties does not require the consent or
approval of any public or private authority which has not already been obtained
by Limited Partner and/or General Partner, or, if required, it will be obtained
by Limited Partner and/or General Partner prior to the Closing of the sale and
purchase of the Properties.
12.3 Signatories. The persons or parties signing this Agreement on behalf of
Limited Partner and/or General Partner, as applicable have the power and
authority to enter into this Agreement,
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to bind Limited Partner and/or General Partner, as applicable to the provisions
hereof and to comply with the obligations of Limited Partner and/or General
Partner, as applicable hereunder.
12.4 No Litigation. No litigation is in effect or, to the knowledge of
Limited Partner or General Partner, threatened, affecting the transactions
contemplated hereby. There is no action or proceeding pending or, to the
knowledge of Limited Partner or General Partner, threatened, before a court or
other governmental authority to restrain, prohibit or otherwise challenge the
transactions contemplated hereby.
12.5 Ownership. Limited Partner is the sole owner of General Partner.
12.6 Partnership Interest. The Conveyed LP Units to be sold to Limited
Partner pursuant to the terms hereof, when sold and delivered for the
consideration set forth herein, shall be duly and validly issued, fully paid and
nonassessable and free and clear of any liens or encumbrances of any kind
whatsoever, except as set forth in this Agreement or the Partnership Agreement.
12.7 Certificate. At Closing, Limited Partner and General Partner shall
deliver to Sellers a certificate reconfirming all the foregoing representations
as true, correct and complete in all material respects as of the Closing Date
(except as they relate only to an earlier date), or, if there have been any
changes, a description thereof; provided, however, that such a description shall
not operate to cure a material breach of such representations. In the event the
Closing occurs, the representations and warranties of Limited Partner and
General Partner set forth in this Article 12 and elsewhere in this Agreement
shall be true, accurate and correct in all material respects upon the execution
of this Agreement, shall be deemed to be repeated on and as of the Closing Date
(except as they relate only to an earlier date), and shall survive the Closing
and the execution and delivery of the transfer documents until six months after
the Closing Date, and no action or claim based thereon shall be commenced after
six months after the Closing Date.
13. SELLERS' CONSENTS
13.1 Lender Consents. Commencing on the date hereof, Contributor and
Contributor Parent (at their sole cost) shall diligently seek, and Limited
Partner and General Partner agree to reasonably cooperate and to cause all
Purchaser Parties to cooperate with Contributor and Contributor Parent in
seeking at no cost to any of them, the consent of the Existing Lenders to all of
the transactions contemplated hereby, including, without limitation, the Initial
Contribution, the transfer of the Conveyed OP Units to Limited Partner and the
contemplated transfer of each Property at the Closing to a new subsidiary of
Operating Partnership formed within 200 days after the date hereof solely to
hold and operate such Property. On or before the last day of the Due Diligence
period, Contributor Parent shall furnish to Limited Partner written evidence
reasonably satisfactory to Limited Partner that Contributor Parent will be able
to meet the conditions described in Section 16.1.7 at the Closing. In the event
that Contributor Parent shall be unable to provide such evidence at the Closing,
then the provisions of Article 19 shall control; provided, however, that if
Contributor or Contributor Parent shall fail to obtain the consent of Dime
Savings Bank to all of the transactions contemplated hereby, Contributor or
Contributor Parent shall at or prior to Closing pay off such loan at no cost to
Limited Partner or General
47
Partner, including, without limitation, prepayment penalties, provided further,
that in such event, there shall be an equitable adjustment to the Purchase Price
to compensate Limited Partner for the lost opportunity cost of the below-market
interest rate of the Dime Savings Bank Existing Debt, which credit shall equal
the present value (calculated using a discount rate of eight percent) of the
aggregate difference between all interest payments that would be payable on the
Dime Savings Bank Existing Debt between the Closing Date and its scheduled
maturity had the within transaction not occurred, and the greater amount of
interest that would have been payable over the same period had Limited Partner
placed a new institutional mortgage on current market terms on such properties,
at market interest rate prevailing as of the Closing Date, for a term of ten
years (the "Dime Bank Adjustment"), as reasonably determined by Limited Partner;
provided, however, that Limited Partner shall not be required to obtain such a
substitute institutional mortgage loan to receive such credit.
13.2 Mortgage Assignment Consent. Additionally, the parties acknowledge
that certain of the Properties are currently encumbered by mortgages with
Prudential Securities Incorporated ("Prudential") in the approximate principal
amount of $34,500,000 (the "Mortgages"). Limited Partner and Operating
Partnership shall have the right to request that Prudential cooperate in the
assignment to Operating Partnership's lender by Prudential of the Mortgages;
provided that such request or the assignment contemplated therein does not in
any way adversely affect the tax planning of Sellers, Seller Parties, Pilevsky
Partners, Philips Parties, any Non-REIT Unitholder or any other Person that is
or was a unit holder of Contributor. In such event, (a) the portion of the
Purchase Price allocated to the encumbered Property(ies) shall be reduced by the
lesser of (i) the amount paid to Prudential in consideration of such assignment,
and (ii) the amount outstanding under the Mortgages and (b) any and all costs
and expenses arising out of or relating to the assignments of the Mortgages
(including, without limitation, prepayment penalties, if any, Prudential's
attorney's fees and expenses, Prudential's representative's fees (for example,
and not by way of limitation, fees for attending the Closing, if necessary),
Limited Partner's attorneys' fees or costs, and recording fees and costs) shall
be the sole obligation and liability of Operating Partnership. Sellers shall
cooperate diligently and in good faith, at Operating Partnership's sole cost and
expense, to assist Operating Partnership in obtaining Prudential's consent to
and in closing the assignments of the Mortgages.
13.3 Stockholder Consent.
13.3.1 As soon as practicable following the date of this Agreement, but
in no event later than fifty days following the date of this Agreement, or as
soon thereafter as practicable, Contributor Parent shall prepare and file with
the SEC a proxy statement. Such proxy statement shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The proxy
statement will comply as to form in all material respects with the requirements
of the Securities Exchange Act of 1934, as amended, and the 1933 Act and the
rules and regulations of the SEC thereunder. Contributor Parent shall use
reasonable best efforts to comply with the comments raised by the SEC, if any,
and shall mail to Contributor Parent's stockholders a copy of the proxy
statement as promptly as practicable following the conclusion of the SEC review
of and comments on the proxy statement.
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13.3.2 Contributor Parent shall, as soon as practicable following the
conclusion of SEC review of and comments on the proxy statement referenced in
Section 13.3.1 hereof, duly call, give notice of, convene and hold a meeting of
its stockholders for the purpose of obtaining the required votes, and,
Contributor Parent shall, through its Board of Directors, recommend to its
stockholders that they approve the transactions contemplated by this Agreement;
provided, however, that the Board of Directors of Contributor Parent may
withdraw, modify or change such recommendation if it determines in good faith,
based upon the advice of outside counsel, that making such recommendation, or
the failure to so withdraw, modify or change its recommendation, or the failure
to recommend any other offer or proposal, could reasonably be deemed to cause
the members of the Board of Directors to breach their fiduciary duties under
applicable law. Limited Partner shall vote or cause to be voted all the shares
of Contributor Parent's common stock owned of record by Limited Partner or any
of its Subsidiaries or Affiliates in favor of the transactions contemplated by
this Agreement.
13.4 Unitholder Elections. Within twenty days after the expiration of the
Due Diligence Period or as soon thereafter as practicable, Contributor and
Contributor Parent shall prepare and submit to all Non-REIT Unitholders election
materials in accordance with applicable securities laws in connection with the
transactions contemplated by this Agreement. Such election materials shall:
13.4.1 require each Non-REIT Unitholder to elect either: (a) to accept
cash payment in consideration for the transfer to Limited Partner of such
Non-REIT Unitholder's interest in Operating Partnership in accordance with the
terms hereof (and thereby to be deemed a Selling Non-REIT Unitholder), (b) to
retain a limited partnership interest in Operating Partnership, in which case
such Non-REIT Unitholder shall further elect whether to receive Class B or Class
C Limited Partnership Units (and thereby to be deemed a Non-Selling Non-REIT
Unitholder) (in the absence of such further election, such Non-REIT Unitholder
shall be deemed to have elected to receive a cash payment);
13.4.2 require each Non-REIT Unitholder to make the foregoing election
within the minimum period of time after receipt of the election materials as may
be required under applicable securities laws;
13.4.3 specifically contemplate that any Non-REIT Unitholder that fails
to make an election shall be deemed a Selling Non-REIT Unitholder; and
13.4.4 authorize Contributor Parent as the sole agent to act on behalf
of each Non-REIT Unitholder for all purposes of this Agreement, from and after
the date of corporate approval of the transactions contemplated hereby, and
grant Contributor Parent a power of attorney for those purposes.
For the purposes of this Section 13.4, the term "Non-REIT Unitholder" shall not
include any Redeemed Non-REIT Unitholder.
13.5 Tax Matters.
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13.5.1 The accountants for Contributor Parent (the "Accountants") shall
prepare and timely file any and all federal, state and local income Tax returns
not previously filed and which are required to be filed by Contributor,
Operating Partnership, any Lower Tier Entity and any New Lower Tier Entity (any
of the foregoing, a "Pre-Closing Entity") for any taxable period of any such
Pre-Closing Entity ending on or before the Closing Date (including the income
tax return required to be filed by Operating Partnership for its tax year that
will end as a result of the Purchase) (any of the foregoing tax returns, a
"Pre-Closing Tax Return"). The Accountants shall designate Contributor Parent as
the "tax matters partner" on all Pre-Closing Tax Returns of Contributor and
Operating Partnership and the appropriate Philips QRS as the "tax matters
partner" on all Pre-Closing Tax Returns of a Lower Tier Entity or New Lower Tier
Entity, and Contributor Parent and each such Philips QRS shall execute a Form
2848 (Power of Attorney and Declaration of Representative), or any corresponding
state or local form, designating Pilevsky and any one or more attorneys or
accountants (including the Accountants) designated by Pilevsky to represent
Contributor Parent or Philips QRS, as the case may be, in their respective
capacities as "tax matters partners" of any Pre-Closing Entity and with respect
to any Audit involving any Pre-Closing Tax Return of any Pre-Closing Entity, and
Pilevsky shall control all proceedings and make all decisions with respect to
any Audit involving any Pre-Closing Tax Return. To the extent not previously
made, an election under IRC Section 754 shall be made for any of the Operating
Partnership, Contributor, and each Lower Tier Entity and New Lower Tier Entity
as necessary such that all such entities will have an election in effect for the
time period covering the transactions contemplated by this Agreement.
13.5.2 Operating Partnership, General Partner, Limited Partner, New
Lower Tier Entity, any Limited Partner Entity and any Subsidiary or other
affiliate of any of the foregoing (any of the foregoing, a "Cooperating Party")
shall cooperate fully, as and to the extent reasonably requested by Pilevsky,
any Non-REIT Unitholder, Contributor, Contributor Parent and/or the Accountants,
but at no out of pocket expense to the Cooperating Party unless the party or
parties requesting such cooperation agree to reimburse the Cooperating Party for
any such expense, in connection with the preparation and/or filing of any
Pre-Closing Tax Return (including any amended Pre-Closing Tax Return) and any
Audit involving any Pre-Closing Tax Return. Such cooperation shall include the
retention and provision of records and information by a Cooperating Party which
are or would be reasonably relevant to any Audit involving any Pre-Closing Tax
Return.
13.5.3 General Partner and Limited Partner shall report and shall cause
Operating Partnership and each New Lower Tier Entity to report, for all tax
purposes, the transactions undertaken pursuant to this Agreement and all of the
other transactions undertaken in connection therewith consistent with the form
of such transactions and the structure contemplated by this Agreement.
13.5.4 For purposes of this Section, "Audit" shall mean any audit,
assessment of taxes, any other examination or claim by any tax authority,
judicial, administrative or other proceeding or litigation (including any appeal
of any such judicial, administrative or other proceeding or litigation) relating
to taxes and/or tax returns.
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14. DAMAGE, DESTRUCTION OR REQUIRED ALTERATION OR ADDITION.
14.1 Material Part. If a "material" part (hereinafter defined) of any
Property is damaged or destroyed by fire or other casualty, Contributor Parent
shall notify Limited Partner of such fact and, except as hereinafter provided,
Limited Partner shall have the option to exclude such Property from the
Properties upon notice to Contributor Parent given not later than ten days after
receipt of Contributor Parent's notice. In the event Limited Partner elects to
exclude a Property as aforesaid, Contributor Parent shall have the right to (A)
terminate this Agreement, in which event Limited Partner shall on behalf of all
Purchaser Parties thereupon receive, in addition to the return of the Deposits
(together with all interest accrued thereon, if any), the Breakup Fee, as
liquidated damages and as agreed compensation for Limited Partner's and all
other Purchaser Parties' lost opportunity and expenses, and not as a penalty (in
which case this Agreement shall terminate, be null and void and of no further
force or effect except with respect to the Surviving Obligations; or (B) cause
Contributor to distribute (as a non-liquidating distribution) to Contributor
Parent or its designee Contributor's entire partnership (or membership) interest
in the Seller Party that owns the applicable Property (and the applicable
Philips QRS, except with respect to the Reconveyance Properties), Contributor
shall not be required to make the contribution set forth in Section 2.2, in
which event the applicable Property shall thereafter be excluded from the scope
of this Agreement, such Excluded Property shall not be subject to the provisions
of Article 19 hereof, the portion of the Deposits allocable to such Property, as
set forth in Exhibit 1.24, shall be reallocated equally among the remaining
portion of the Properties, Limited Partner and General Partner shall not be
entitled to the Breakup Fee unless otherwise provided for in Section 19.1, the
Purchase Price payable at the Closing shall be reduced by the amount set forth
in Exhibit 1.24 for such Excluded Property, Seller Parties shall be free to sell
such Excluded Property to any third party without claim by or liability to
Limited Partner, and the balance of the Properties shall remain unaffected.
14.2 Other Cases. If (x) Limited Partner does not elect to exclude such
Property, or (y) there is damage to or destruction of an "immaterial" part
("immaterial" means any damage or destruction that is not "material", as
hereinafter defined) of any Property, Limited Partner shall close title as
provided in this Agreement and, at the Closing, Contributor Parent shall, unless
Contributor Parent has repaired such damage or destruction prior to the Closing,
(A) pay over to Limited Partner the proceeds of any insurance collected by
Contributor Parent less the amount of all costs incurred by Contributor Parent
in connection with the repair of such damage or destruction, (B) credit Limited
Partner at Closing with the amount of any deductible under the policy for the
applicable Property, and (C) assign and transfer to Limited Partner all right,
title and interest of Contributor Parent in and to any uncollected insurance
proceeds which Contributor Parent may be entitled to receive from such damage or
destruction. A "material" part of a Property shall be deemed to have been
damaged or destroyed if the cost of repair or replacement, as reasonably
estimated by Contributor Parent, shall exceed the greater of (a) three percent
(3%) of the Purchase Price of such Property set forth in Exhibit 1.24; or (b)
$250,000.
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15. EMINENT DOMAIN.
15.1 Significant Portion. If, prior to the Closing Date, all or any
"significant" portion (hereinafter defined) of a Property is taken by eminent
domain or condemnation (or is the subject of a pending taking which has not been
consummated), Contributor Parent shall notify Limited Partner of such fact and
Limited Partner shall have the option to exclude such Property from the
Properties upon notice to Contributor Parent given not later than ten days after
receipt of Contributor Parent's notice. In the event Limited Partner elects to
exclude a Property as aforesaid, Contributor Parent shall have the right to (A)
terminate this Agreement, in which event Limited Partner shall on behalf of all
Purchaser Parties thereupon receive, in addition to the return of the Deposits
(together with all interest accrued thereon, if any), the Breakup Fee, as
liquidated damages and as agreed compensation for Limited Partner's and all
other Purchaser Parties' lost opportunity and expenses, and not as a penalty (in
which case this Agreement shall terminate, be null and void and of no further
force or effect except with respect to the Surviving Obligations); or (B) cause
Contributor to distribute (as a non-liquidating distribution) to Contributor
Parent or its designee, Contributor's entire partnership (or membership)
interest in the Seller Party that owns the applicable Property (and the
applicable Philips QRS, except with respect to the Reconveyance Property),
Contributor shall not be required to make the contribution set forth in Section
2.2, the applicable Property shall thereafter be excluded from the scope of this
Agreement, in which event such Excluded Property shall not be subject to the
provisions of Article 19 hereof, the portion of the Deposits allocable to such
Property, as set forth in Exhibit 1.24, shall be reallocated equally among the
remaining portion of the Properties, Limited Partner and General Partner shall
not be entitled to the Breakup Fee unless otherwise provided for in Section
19.1, the Purchase Price payable at the Closing shall be reduced by the amount
set forth in Exhibit 1.24 for such Excluded Property, Seller Parties shall be
free to sell such Excluded Property to any third party without claim by or
liability to Limited Partner, and the balance of the Properties shall remain
unaffected.
15.2 Insignificant Portion. If (a) Limited Partner does not elect to
exclude such Property, or (b) if an "insignificant" portion ("insignificant"
means any taking that is not "significant", as hereinafter defined) of the
Property is taken by eminent domain or condemnation, at the Closing Contributor
Parent shall assign and turn over, and Limited Partner shall be entitled to
receive and keep, all awards or other proceeds for such taking by eminent domain
or condemnation. A "significant" portion of a Property shall be deemed to have
been taken or condemned if the taking or condemnation either (a) materially and
adversely affects access between the Property and a public street, (b) takes or
condemns any material portion of the building located on the applicable
Property, (c) materially and adversely affects the availability of parking at
the applicable Property, or (d) gives any tenant that represents more than 10%
of the rental income for the applicable Property the right to terminate its
Space Lease.
Notwithstanding anything contained in Articles 14 and 15 to the contrary, if the
insurance, eminent domain or condemnation proceeds payable with respect to the
Properties as a result of any casualty or taking exceeds the Purchase Price
allocable to such Property, Contributor Parent's obligation to pay over to
Limited Partner those proceeds paid to Contributor Parent prior to the Closing
shall be limited to the amount of the Purchase Price allocable to such Property
and Contributor Parent shall be entitled to retain the remainder of such
proceeds. To the extent that
52
payment of all or any portion of such proceeds does not occur prior to the
Closing, the parties agree that Contributor Parent shall be entitled to that
portion of the proceeds in excess of the Purchase Price, which agreement shall
survive the Closing.
15.3 Branhaven Property. The Parties acknowledge and agree that the
Property located in Branhaven, Connecticut, identified as number 1 on Exhibit
1.22, is subject to road widening proceedings, as more particularly set forth in
a notification letter from the Connecticut Department of Transportation. In the
event that a portion of the Property is taken in condemnation, Limited Partner
shall be entitled to any and all proceeds therefor, and in the event that the
Property is enlarged, Contributor Parent shall be entitled to any and all
payments received therefor, except to the extent attributable to any material,
adverse impact on Limited Partner. Seller Parties agree that Limited Partner
shall have the right to reasonably direct the settlement of any condemnation
proceedings.
16. CONDITIONS TO CLOSING.
16.1 Conditions to Limited Partner's Obligations. Limited Partner's and
General Partner's obligations at the Closing are subject to the fulfillment of
each of the following conditions being satisfied or complied with (unless waived
in writing by Limited Partner), subject, however, to the provisions of Article
19.
16.1.1 Each Seller Party's warranties and representations set forth
herein shall be true and correct in all material respects as of the Closing Date
and Contributor, Contributor Parent and each Seller Party shall have performed
each and all of its covenants and agreements hereunder (including, without
limitation, the delivery of all documents) within the time provided.
16.1.2 Each Non-Selling Non-REIT Unitholder shall have agreed to the
terms and conditions of, and executed, the Partnership Agreement.
16.1.3 There shall have been no breach on the part of any Seller Party
of any of the material covenants set forth in Article 8.
16.1.4 Subject only to payment of its premium for same, the Title
Company shall be prepared to issue at the Closing (or prepared to
unconditionally commit to issue at the Closing, with no "gap") its title policy,
in the required form (including all endorsements) set forth in Article 9,
subject only to the Permitted Exceptions.
16.1.5 No order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or governmental
or regulatory authority or instrumentality that prohibits the consummation of
the transactions contemplated by this Agreement, and no litigation or
governmental proceeding seeking such an order shall be pending or threatened.
16.1.6 Not later than five business days following the execution and
delivery of this Agreement, Sellers shall request Existing Lenders to consent to
the assumption from and after the Closing of the Mortgages (Limited Partner
hereby acknowledges that the Existing
53
Lenders are under no obligation to agree) by Operating Partnership or Operating
Partnership's wholly owned subsidiary. Any and all costs and expenses arising
out of or relating to the assumption of the Mortgages (including, without
limitation, prepayment penalties, if any, assumption fees, if any, the Existing
Lenders' title insurance expenses (whether for a title search, title
endorsements or a new policy), the Existing Lenders' attorney's fees and
expenses, lenders' representative's fees (for example, and not by way of
limitation, fees for attending the Closing, if necessary), and recording fees
and costs) shall be the sole obligation and liability of Sellers. In no event
shall Sellers be obligated to pay for Operating Partnership's attorneys' fees or
costs in connection with the assumption of the Mortgages. Limited Partner,
General Partner and Operating Partnership shall cooperate diligently and in good
faith to assist Sellers in obtaining the Existing Lenders' consents and in
closing the assumptions, at no cost to Limited Partner or Operating Partnership.
In the event that the applicable Mortgage documents provide for the lender to
have the right to condition its consent upon (a) certain non-material
modifications to the applicable Mortgage, (b) compliance with bankruptcy
remoteness provisions or rating agency standards, or (c) any conditions imposed
by such lender in its sole discretion, Limited Partner and Operating Partnership
shall agree to any reasonable requests made by an Existing Lender that do not
have a material adverse effect upon Limited Partner or Operating Partnership.
16.1.7 With respect to the Existing Debt, the consent from each
Existing Lender (each, a "Mortgagee Consent") shall contain the following:
A. the outstanding principal balance of the Property Note
secured by the lien of such Mortgage, the date through which interest
has been paid thereunder, the amount held by it in the Mortgage Escrow
applicable thereto, if any, and stating that aside from said principal
balance and any accrued interest thereon, there are no other
outstanding or accrued amounts constituting the debt as defined in the
Property Note;
B. a confirmation that there are no loan documents or
instruments evidencing or securing the Property Note except as
delivered to Limited Partner as set forth in Section 11.14; and
confirmation that the representations and warranties set forth in
Section 11.14; are true, accurate and correct in all material respects.
C. a consent to all transactions contemplated by this
Agreement including, without limitation, the transfer of the Property
to Operating Partnership or to a wholly owned special purpose
Subsidiary and to the transfer of the Conveyed OP Units to Limited
Partner, without any change in interest rate, payment schedule, or any
other modification of the loan documents not approved by Limited
Partner in its sole discretion.
D. Existing Lenders' approval of Limited Partner's standard
form of lease (a copy of which has heretofore been furnished to
Sellers);
E. Existing Lenders' consent to the cancellation of any
existing management agreement, and to the management of the applicable
Property by either Limited Partner, Kimco Realty Corporation or any
subsidiary of Kimco Realty Corporation pursuant to Limited Partner's
form management agreement, which shall be substantially in the form
annexed hereto as Exhibit 16.1.7;
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F. an acknowledgment and agreement that from and after the
Closing none of the following would constitute an event of default
under such Mortgage or otherwise result in any liability or obligation
for Operating Partnership thereunder:
i. any bankruptcy, dissolution, insolvency,
attachment, failure to file financial statements, or other
event or occurrence involving any Seller Party or any
guarantor of any Seller Party's obligations under the Loan
Documents; or
ii. any breach of representation, warranty or
undertaking under any loan document occurring or accruing
prior to the Closing Date (unless and to the extent same
directly relates to the Property, continues after the Closing,
and Operating Partnership's failure to cure same would
constitute a continuing default under the Mortgage);
G. Existing Lender's agreement that as long as the New Lower
Tier Entity, Operating Partnership or Limited Partner owns the
applicable Property and insurance is provided by a blanket title policy
(and as long as there exist no other defaults under the applicable
Mortgage documents), the Existing Lender would waive the requirement of
an insurance escrow;
H. Existing Lender's agreement that either of the following
will be permitted without Existing Lender's consent and without charge:
(a) admission of additional limited partners to Limited Partner and/or
changes in the percentages among existing limited partners therein; (b)
a public offering of Kimco Income REIT, the general partner of Limited
Partner; or (c) future buyouts of the limited partners (other than
Limited Partner) in accordance with the terms of the Partnership
Agreement; and
I. with respect to the Existing Debt held by Dime Savings
Bank, an amendment to the relevant loan documents deleting all
requirements that the property manager be or be affiliated with ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or with any Seller Party; and
16.1.8 In the event that an Existing Lender's consent containing the
above provisions is not obtained prior to the Closing Date, despite the good
faith efforts of both Sellers and Limited Partner, then the failure to obtain
such consent shall be treated as a failure of a closing condition, and the
Property for which consent has not been obtained shall be treated as a
Post-Closing Property, subject to the provisions of Article 19, including
without limitation, the Cure Period provisions of Section 19.2.3.
16.1.9 Sellers shall cause each Existing Lender to deliver an update of
its consent, not more than twenty days prior to the Closing, confirming (or
updating, as the case may be) the information set forth in Section 16.1.7.A, and
confirming that it has not delivered any notice of default.
16.1.10 Prior to the Closing, the stockholders of Contributor Parent
shall have approved the transactions contemplated hereby with respect to the
Properties at a duly called meeting of stockholders, by the requisite vote
required under Maryland law.
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16.1.11 The following Property-specific conditions shall have been
satisfied, and Contributor Parent shall have provided to Limited Partner
reasonable evidence of same:
A. with respect to the Property at Enfield, Connecticut,
identified as Property No. 2 on Exhibit 1.22, with respect to the Space
Lease for the known as Kohl's, the Commencement Date and the Landlord's
Work Condition Satisfaction Date (each as defined in the lease) both
shall have occurred, and the tenant's estoppel certificate pursuant to
Section 17.3.6 shall have confirmed such facts;
B. with respect to the property in Foxborough, Massachusetts
identified as Property No. 3 on Exhibit 1.22, with respect to the lease
with Cellco, all work required to be done by Landlord prior to the
commencement date shall have been completed and the commencement date
shall have occurred, and the tenant's estoppel certificate pursuant to
Section 17.3.6 shall have confirmed such facts, subject to the
provisions of Section 9.1.15.C.
16.2 Conditions to Seller's Obligations. Philips Parties' obligations
at the Closing are expressly conditioned upon the following conditions being
satisfied or complied with (unless waived in writing by Contributor Parent):
16.2.1 the representations and warranties of Limited Partner and
General Partner contained in Article 12 shall be materially true, accurate and
correct as of the Closing Date;
16.2.2 Limited Partner shall have delivered, or caused to be delivered,
to Seller Parties and all funds required herein;
16.2.3 Limited Partner and General Partner shall have delivered to
Sellers all the documents to be executed by Limited Partner and General Partner
set forth in Article 17;
16.2.4 no order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or governmental
or regulatory authority or instrumentality that prohibits the consummation of
the transactions contemplated by this Agreement, and no litigation or
governmental proceeding seeking such an order shall be pending or threatened;
16.2.5 any consents and approvals of governmental authorities and
parties to agreements to which Limited Partner is a party or by which Limited
Partner's assets are bound that are required with respect to the consummation of
the transactions contemplated by this Agreement shall have been obtained and
copies thereof shall have been delivered to Contributor Parent at or prior to
the Closing;
16.2.6 on or prior to Closing Date, (i) Limited Partner shall not have
applied for or consented to the appointment of a receiver, trustee or liquidator
for itself or any of its assets unless the same shall have been discharged prior
to the Closing Date, and no such receiver, liquidator or trustee shall have
otherwise been appointed, unless same shall have been discharged prior to the
Closing Date, (ii) Limited Partner shall not have admitted in writing an
inability to pay its debts as they mature, (iii) Limited Partner shall not have
made a general assignment for
56
the benefit of creditors, (iv) Limited Partner shall not have been adjudicated a
bankrupt or insolvent, or had a petition for reorganization granted with respect
to Limited Partner, and (v) Limited Partner shall not have filed a voluntary
petition seeking reorganization or an arrangement with creditors or taken
advantage of any bankruptcy, reorganization, insolvency, readjustment or debt,
dissolution or liquidation law or statute, or filed an answer admitting the
material allegations of a petition filed against it in any proceedings under any
such law, or had any petition filed against it in any proceeding under any of
the foregoing laws unless the same shall have been dismissed, canceled or
terminated prior to the Closing Date; and
16.2.7 prior to the Closing, the stockholders of Contributor Parent
shall have approved the transactions contemplated hereby with respect to the
Properties at a duly called meeting of stockholders, by the requisite vote
required under Maryland law.
17. CLOSING DETAILS AND DELIVERIES.
17.1 Location and Date. The Closing shall occur no later than fifteen
days following the satisfaction of all conditions to Closing identified in
Article 16 (but in no event later than 180 days after the date hereof, subject
to the last clause of Section 19.1) at the offices of Contributor Parent's
attorneys ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇ ▇▇▇▇, ▇▇ at
9:00 A.M. on the Closing Date. At the Closing, the parties shall perform all
obligations required to be performed at the Closing with respect to the
Property.
17.2 Conveyance of Interests. At the Closing:
17.2.1 Sellers shall transfer to Limited Partner all of the Conveyed LP
Units and Contributor Parent shall transfer to General Partner all the GP Units
and receive in return immediately available funds equal to the portion of the
adjusted Purchase Price attributable to the Conveyed LP Units and GP Units;
17.2.2 General Partner and Limited Partner shall execute and deliver,
and Contributor Parent shall cause each Non-Selling Non-REIT Unitholder to
execute and deliver, the Partnership Agreement in the form of Exhibit 1.17,
evidencing the Class A Limited Partnership Units (as defined in the Partnership
Agreement) in Operating Partnership issued to Limited Partner, reflecting that
the units held by the Non-Selling Non-REIT Unitholders are Class B Limited
Partnership Units or Class C Limited Partnership Units and adjusting the Capital
Account and Imputed Equity Value balances of the Non-Selling Non-REIT
Unitholders in accordance with Section 5.2; the Capital Account and Imputed
Equity Value balance assigned to Limited Partner shall equal to the Purchase
Price (as may be adjusted by any Adjustment Amount) minus the aggregate Capital
Account and Imputed Equity Value balance of the Non-Selling Non-REIT
Unitholders, as aforesaid; and
17.2.3 Contributor Parent shall execute and deliver such instruments as
Limited Partner may reasonably desire in connection with or to consummate the
transactions contemplated by this Agreement, or cause the same to be executed
and delivered.
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17.3 Contributor Parent's Closing Deliveries. At the Closing, Contributor
Parent shall direct the conveyance and/or deliver or cause the same to be
executed and delivered, to the entity entitled to receive same, the following
items:
17.3.1 A certificate updating all of Contributor Parent's
representations as of the Closing Date, as required by Section 11.25;
17.3.2 Notices to all of the tenants under an applicable Space Lease
(in form attached hereto as Exhibit 17.3.2) advising them of the transfer of the
Property to Operating Partnership and directing payment of Rent and other
charges to Operating Partnership or its designated representative;
17.3.3 Such affidavits; "mechanic's lien", "gap", "parties in
possession" or other Seller Parties indemnities; evidence of authority; releases
of liens; or other instruments as the Title Company may reasonably request to
issue a title policy satisfactory to Operating Partnership in accordance with
Article 9;
17.3.4 Original, signed counterparts of all Space Leases, permits,
licenses, sepias, drawings, plans and specifications (to the extent in the
possession or control of Contributor Parent), finance and accounting records,
tenant correspondence, and other files relevant to Operating Partnership's
future operation of the Property (to the extent in the possession or control of
Contributor Parent);
17.3.5 Sellers agree, not later than five business days following the
execution and delivery of this Agreement, to request the Mortgagee Consent from
each lender, and to use diligent, good faith efforts to obtain same as promptly
as possible in the form required by Section 16.1.7. Sellers agree to pay to
lender at or prior to Closing, any transfer fees, legal fees, and all other
amounts required under the Mortgage or Property Note (or otherwise required by
lender) in connection with the transfer. Except as set forth in this Agreement,
Limited Partner shall not be required to pay any amounts, agree to any changes
in the Property Note or Mortgage, or otherwise incur any additional obligations
and/or liabilities in connection with obtaining the Mortgagee Consent from any
lender.
17.3.6 All Estoppel Certificates (as defined below). Promptly following
the execution and delivery of this Agreement, Contributor Parent shall have
delivered to each tenant an estoppel certificate in the form annexed hereto as
Exhibit 17.3.6, completed to reflect each tenant's particular Space Lease status
and dated not more than forty-five days prior to the Closing Date. Contributor
Parent agrees to use commercially reasonable efforts to obtain from such tenants
the estoppel certificates in such form; provided, however, that if any tenant
shall refuse to execute an estoppel letter in such form, Contributor Parent
shall use commercially reasonable efforts to obtain an estoppel certificate in
the form that such tenant is required to provide under its Space Lease.
Contributor Parent agrees to deliver to Limited Partner copies of all estoppel
letters received from tenants in the form received by Contributor Parent.
Contributor Parent shall deliver at Closing an estoppel certificate from those
tenants set forth on Exhibit 1.14 hereto, in the form required above; the
estoppel certificates received from all other tenants; and, subject to Section
11.26, in the event that any tenant (other than one set forth on Exhibit 1.14)
fails to
58
deliver an estoppel certificate in the form set forth above, Contributor Parent
shall provide limited Partner with a certificate of Contributor Parent, setting
forth those items required above, on behalf of such tenant (collectively, the
"Estoppel Certificates"). Subject at all times to Section 8.6, an Estoppel
Certificate shall not be deemed "delivered" by Contributor Parent to the extent
that such Estoppel Certificate conflicts with Contributor Parent's
representations and warranties in connection with the applicable Space Lease;
17.3.7 A FIRPTA affidavit from Contributor Parent and each selling
Non-REIT Unitholder, as contemplated by Treasury Regulations Section 1.1445-2,
and in form attached to the effect that such transferor is not a "foreign
person" (as defined in IRC Section 1445(f)(3) and the regulations issued
thereunder); Limited Partner and General Partner acknowledge and agree that upon
their receipt of such affidavits, they shall not withhold any portion of the
Purchase Price pursuant to Section 1445 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
17.3.8 All real property transfer forms, and any other documents,
instruments or forms required by municipal or other authorities in connection
with the transfer of the Conveyed OP Units, all at Seller's expense;
17.3.9 A termination of any existing management agreements with respect
to the Property, substantially in the form of Exhibit 17.3.9;
17.3.10 Evidence reasonably satisfactory to the parties that the
Redemption Transaction had occurred in accordance with the terms of the
Redemption Agreement; and
17.3.11 Copies of the consents of the members or partners (as
applicable) of Sellers authorizing the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated by this
Agreement to be undertaken by such entity, certified as true and correct by the
managing member or general partner (as applicable) of such entity.
17.3.12 Any other documents Limited Partner or General Partner may
reasonably request from Contributor Parent or Selling Non-REIT Unitholders;
17.3.13 To the extent in such Contributor Parent's possession or
control, executed counterparts of all Space Leases and new Space Leases and any
amendments, guarantees and other documents relating thereto, together with a
schedule of all tenant Security Deposits thereunder and the accrued interest on
such Security Deposits payable to tenants which are in the possession of or
received by such Contributor Parent, and a credit to Limited Partner against the
Purchase Price, in the aggregate amount of such Security Deposits and accrued
interest thereon payable to tenants which are in the possession of or received
by Contributor Parent. In the event any such cash Security Deposits and the
interest thereon payable to tenants are held by a bank, savings bank, trust
company or savings and loan association, Contributor Parent shall, if required
by law, deliver to Limited Partner, in lieu of such credit, an assignment to
Limited Partner of such deposits and interest, in form reasonably acceptable to
the parties, and written instructions to the holder thereof to transfer such
deposits and interest to Limited Partner. With respect to
59
any lease securities that are other than cash, Contributor Parent shall execute
and deliver to Limited Partner at the Closing any appropriate instruments of
assignment or transfer without warranty or representation. Contributor Parent
shall also deliver, to the extent in the possession or control of Contributor
Parent's possession of the Property and Personal Property, subject only to
possessory rights of tenants under Space Leases, with all keys; and Contributor
Parent shall also deliver original signed instruments of all Space Leases,
Licenses, sepias, drawings, plans and specifications, finance and accounting
records, tenant correspondence, and other files relevant to Limited Partner's
future operation of the Property;
17.3.14 To the extent in Contributor Parent's possession and not
already located at the Property, keys to all entrance doors to, and equipment
and utility rooms located in, such Property;
17.3.15 To the extent in Contributor Parent's possession and not
already located at its Property, all Licenses;
17.3.16 The transfer tax payments, together with the transfer returns,
if any;
17.3.17 An assignment of the Escrow Deposits, in form reasonably
acceptable to the parties; and
17.3.18 Signed settlement statements (covering all apportionments for
each Property) (the "Settlement Statements").
17.4 Limited Partner's and General Partner's Deliveries. At the Closing,
Limited Partner and/or General partner, as applicable, shall deliver or cause
the applicable Purchaser Party to deliver:
17.4.1 The cash amount (reduced by the Imputed Equity Value of the
Non-Selling Non-REIT Unitholders) of the adjusted Purchase Price payable at the
Closing pursuant to Section 5.1.1, subject to apportionments, credits and
adjustments as provided in this Agreement;
17.4.2 Sales tax returns, if required, together with a good, unendorsed
certified or official bank check drawn on or by a clearing house bank payable to
the order of the appropriate collection officer in the amount of the sales tax
due thereon;
17.4.3 Signed Settlement Statements;
17.4.4 If Limited Partner is a partnership, copies of Limited Partner's
partnership certificate and, if required by applicable law, any lender, or
Limited Partner's partnership agreement, copies of partnership resolutions
and/or consents of the partners authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement, all certified as true and correct by a general
partner of Limited Partner;
17.4.5 The transfer tax returns, if any;
60
17.4.6 If General Partner is a limited liability company, copies of
General Partner's operating agreement and, if required by applicable law, any
lender, or General Partner's operating agreement, copies of company resolutions
and/or consents of the members authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement, all certified as true and correct by a managing
member of General Partner;
17.4.7 Subject to the limitations set forth in Section 16.1.7, any
documents reasonably required by Existing Lenders in connection with the
assumptions referenced in Section 16.1.7;
17.4.8 A certificate updating all of Limited Partner's and General
Partner's representations as of the Closing Date, as required by Section 11.25;
17.4.9 The consents of Kimco Realty Corporation and The New York Common
Fund; and
17.4.10 All other documents Limited Partner and General Partner are
reasonably required to deliver to effectuate the transactions contemplated by
this Agreement.
17.4.11 Transfer of Reconveyance LLC(s). Operating Partnership shall
deliver to Limited Partner documents assigning all of the interests in each
Reconveyance LLC, pursuant to directed conveyance documents in the same form and
to the same extent as contemplated by Sections 6.1 and 17.3;
17.5 Fees and Costs. Each party shall pay its own legal fees, travel and
lodging expenses in connection with the transactions this Agreement
contemplates. At the Closing, (i) Limited Partner shall pay all costs of the
ALTA standard owners title policy (i.e., the cost of the Title Commitment and
cost of converting same to a title policy, including, without limitation, any
search and/or exam fees and premium costs, including any endorsements Limited
Partner reasonably requires) to be issued in the aggregate amount of
$137,575,000, (ii) Limited Partner shall pay all costs of the final Survey for
the Property, and (iii) Philips Parties shall pay all transfer, conveyance and
deed taxes, if any, and any documentary stamp taxes or similar taxes or charges
relating to or in connection with all of the transactions contemplated by this
Agreement, whether state, city or local. As to any item of expense for which
Philips Parties are responsible, if Philips Parties do not at the Closing pay
the same, Limited Partner may at its option pay the same and deduct the amount
thereof as an adjustment and credit against the Purchase Price. Sellers shall
indemnify Limited Partner for any of the foregoing items for which Philips
Parties are responsible, such indemnification obligation to survive the Closing.
17.6 Guarantees for Tax Purposes
17.6.1 In order to allow the Non-Selling Non-REIT Unitholders to defer
the recognition of income or gain for United States federal income tax purposes,
at Closing and at any time subsequent thereto in accordance with the terms
hereof, General Partner and Limited Partner shall cause Operating Partnership,
each New Lower Tier Entity and/or each of their direct
61
or indirect Subsidiaries to (and Operating Partnership, each New Lower Tier
Entity and each such direct and indirect Subsidiary hereby agree to) permit the
Non-Selling Non-REIT Unitholders, upon receipt of a written request by such
Non-Selling Non-REIT Unitholder, to execute guarantees, and/or indemnify
Operating Partnership or General Partner for, the "bottom portion" (i.e., the
least risky portion) of any outstanding debt of Operating Partnership, any New
Lower Tier Entity or any of their direct or indirect Subsidiaries in the
aggregate amount of up to $20,000,000 (the "Debt Amount"). During the Restricted
Period, General Partner and Limited Partner shall cause Operating Partnership,
each New Lower Tier Entity and/or each of their direct or indirect Subsidiaries
to (and Operating Partnership, each New Lower Tier Entity and each such direct
or indirect Subsidiary hereby agree to) maintain at all times during the
Restricted Period (as defined herein) an amount of liabilities equal to the Debt
Amount solely for the Non-Selling Non-REIT Unitholders to guarantee (or
indemnify Operating Partnership or General Partner for), and General Partner and
Limited Partner shall cause Operating Partnership, each New Lower Tier Entity
and/or each of their direct or indirect Subsidiaries to (and General Partner,
Operating Partnership, each New Lower Tier Entity and each such direct and
indirect Subsidiary hereby agree to) take any and all action reasonably
requested of them by a Non-Selling Non-REIT Unitholder for the purpose of
ensuring that the execution of each guarantee or indemnity by a Non-Selling
Non-REIT Unitholder results in basis for such Non-Selling Non-REIT Unitholder
for United States federal income tax purposes. In the event that any Non-Selling
Non-REIT Unitholder (i) obtains a tax-free step-up in the basis of his or its
Class B or Class C Limited Partnership Units for United States federal income
tax purposes (e.g., upon the death of the Non-Selling Non-REIT Unitholder); (ii)
sells, transfers or otherwise disposes of his or its Class B or Class C Limited
Partnership Units in a taxable transaction; (iii) receives a "tax" payment from
Operating Partnership, Limited Partner or General Partner in reimbursement of
taxes triggered to such Non-Selling Non-REIT Unitholder (including a gross-up
payment) as a result of the sale, transfer or other disposition of a Property or
any direct or indirect interest therein that was previously contributed to
Contributor; or (iv) receives an allocation under Treasury Regulations Section
1.704-3(b) using the "traditional method" without curative allocation that
reduces the amount of any Built-in-Gain (defined below), then the Debt Amount
shall be commensurately reduced. For purposes of this Agreement, the term
"Built-in Gain" for any property shall mean the excess, if any, of the fair
market value of such property as of the date that such property was contributed
to Contributor over such property's adjusted tax basis for United States federal
income tax purposes on such date. This Section shall survive the Closing.
17.6.2 During the Restricted Period, neither General Partner nor
Limited Partner shall cause or permit Operating Partnership, any New Lower Tier
Entity and/or any of their direct or indirect Subsidiaries to (and General
Partner, Operating Partnership, each New Lower Tier Entity and each such direct
or indirect Subsidiary shall not), either directly or indirectly: (i) reduce,
pay down or pay off the outstanding principal amount of the Existing Debt or any
other indebtedness of Operating Partnership, any New Lower Tier Entity and/or
any of their direct or indirect Subsidiaries, other than pursuant to the
mandatory payment provisions of such Existing Debt or other indebtedness, if
such reduction paydown or payoff would result in a Non-Selling Non-REIT
Unitholder recognizing or being allocated any income or gain for United States
federal income tax purposes; provided, however that, subject to clauses (ii) and
(iii) of this Section 17.6.2, the outstanding principal amount of the Existing
Debt may be reduced pursuant
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to a refinancing in an amount at least as great as the amount of the Existing
Debt and so long as no Non-Selling Non-REIT Unitholder would recognize or be
allocated any income or gain for United States federal income tax purposes as a
result of such refinancing, (ii) incur any indebtedness (other than the Existing
Debt) (a) to Affiliates for greater than 80% of appraised value, or (b) secured
by any of the Properties in a transaction that would result in income or gain
for United States federal income tax purposes being recognized by or allocated
to a Non-Selling Non-REIT Unitholder and (iii) unless a Non-Selling Non-REIT
Unitholder is permitted to execute one or more "bottom dollar" guarantees of
debt of Operating Partnership, any New Lower Tier Entity and/or any of their
direct or indirect Subsidiaries in substitution therefor such that no income or
gain for United States federal income tax purposes shall be recognized by or
allocated to a Non-Selling Non-REIT Unitholder, terminate or cause or permit the
termination of (including, without limitation, by reason of any reduction,
paydown or payoff of any existing debt) any guarantee of any debt of Operating
Partnership, any New Lower Tier Entity or any of their direct or indirect
Subsidiaries previously executed by a Non-Selling Non-REIT Unitholder if such
termination would result in income or gain for United States federal income tax
purposes being recognized by or allocated to such Non-Selling Non-REIT
Unitholder. After the Restricted Period, if Operating Partnership, any New Lower
Tier Entity or any of their direct or indirect Subsidiaries then has outstanding
debt, then General Partner and Limited Partner shall use good faith efforts to
cause Operating Partnership, each New Lower Tier Entry and each of their direct
and indirect Subsidiaries to (and General Partner, Operating Partnership, each
New Lower Tier Entity and each of their direct and indirect Subsidiaries shall
permit each Non-Selling Non-REIT Unitholder to) guarantee, and/or indemnify
Operating Partnership and/or General Partner for, the "bottom portion" (or
otherwise the least risky portion) of such amount of outstanding indebtedness of
Operating Partnership, any New Lower Tier Entity or any of their direct or
indirect Subsidiaries that is then available so as to enable such Non-Selling
Non-REIT Unitholder to avoid recognizing or being allocated any income or gain
for United States income tax purposes; provided, however, that neither Operating
Partnership, any New Lower Tier Entity nor any of their respective direct or
indirect Subsidiaries shall be under any obligation to have or maintain debt
outstanding, provided, further that Non-Selling Non-REIT Unitholders shall
reimburse Operating Partnership, General Partner and Limited Partner for all
reasonably necessary third-party costs incurred in connection therewith. This
Section shall survive the Closing.
17.7 Restricted Period. Unless Operating Partnership has obtained the
written consent of the Non-Selling Non-REIT Unitholder which would be adversely
affected, prior to the date that is five years after the Closing Date (the
"Restricted Period"), except for the distribution of the Reconveyance LLCs to
Limited Partner under Section 6.1, neither General Partner nor Limited Partner
shall cause or permit Operating Partnership, any New Lower Tier Entity and/or
any of their direct or indirect Subsidiaries (and neither Operating Partnership,
any New Lower Tier Entity nor any such direct or indirect Subsidiary shall),
either directly or indirectly, to sell, exchange, distribute or otherwise
dispose of (including without limitation, as a result of a merger, liquidation
of otherwise) any Property or any direct or indirect interest therein in a
taxable transaction or otherwise in any transaction which would result in the
recognition or allocation of any income or gain for United States federal income
tax purposes to a Non-Selling Non-REIT Unitholder; provided, however, that an
involuntary sale pursuant to foreclosure of any mortgage
63
secured by a Property shall not be deemed a default of this Section unless
Operating Partnership, General Partner, Limited Partner, any New Lower Tier
Entity, and/or any Subsidiary of any of the foregoing Persons (i) is unable to
settle or refinance (or cause the settlement or refinancing of) any such debt
secured by such mortgage or cure or satisfy (or cause to be cured or satisfied)
on a non-recourse basis without putting up additional equity or guarantees,
after making commercially reasonable efforts to do so under prevailing market
conditions; and (ii) shall not have used commercially reasonable efforts to
provide a Non-Selling Non-REIT Unitholder the right, at Operating Partnership's
option, to: (a) cure any such default including the right to lend to Operating
Partnership, the New Lower Tier Entity and/or any of their direct or indirect
Subsidiaries, as applicable, the funds necessary to cure such default on an
unsecured basis, as well as the right to limit such funds to Operating
Partnership, New Lower Tier Entity or such direct or indirect Subsidiary and to
receive security for any such loan (including from Limited Partner or General
Partner) in the form of a second mortgage secured solely by such Property (but
only if the lender or lenders holding any prior mortgage or mortgages on such
Property expressly consent in writing to the grant of the second mortgage,
provided that neither such loan, whether secured or unsecured by the holders of
Operating Partnership units nor the granting of any such second mortgage to such
holders violates any covenant in any agreement of Operating Partnership, any New
Lower Tier Entity or any of their direct or indirect Subsidiaries); (b) acquire,
for one Operating Partnership unit (if the value of such unit at the time of
such acquisition is not more than $1,000 or, if so, then for a fraction of a
unit, such fraction's value being equal to $1,000), such Property subject to the
debt or liability, or (c) permit the Non-Selling Non-REIT Shareholder to
exercise Operating Partnership's, New Lower Tier Entity's or such direct or
indirect Subsidiary's right of redemption with respect to such Property. For the
avoidance of doubt, the provisions of this Section shall not apply to any
transaction involving any Property if such transaction qualifies as a like-kind
exchange under Section 1031 of the IRC in which no income or gain for United
States federal income tax purposes is recognized by or allocated to any Non-REIT
Non-Selling Unitholder. This Section shall survive the Closing.
18. ASSIGNMENT; DESIGNATION OF GRANTEES BY LIMITED PARTNER.
Limited Partner and General Partner shall not assign all or any portion of its
rights under this Agreement to any person or entity without the prior written
consent of Seller, which consent may be withheld in Seller's sole and absolute
discretion. Any assignment or attempted assignment by Limited Partner shall
constitute a default by Limited Partner hereunder and shall be null and void.
Notwithstanding the foregoing, provided that it does not delay the Closing,
Limited Partner shall have the right, upon delivery of written notice to Seller,
not less than three business days prior to the Closing (or earlier if required
by any Existing Lender), to assign all or any portion of its rights under this
Agreement (including the right to designate a separate entity to take title to
each Property) to an affiliate of Limited Partner or an affiliate of Kimco
Realty Corporation. For the purposes of this section, (a) an affiliate shall be
any entity which directly controls, is controlled directly by, or is under
direct common control with Limited Partner or Kimco Realty Corporation; and (b)
control means the possession of the exclusive right or power to direct or cause
the direction of the management, business and policies of an entity, whether by
contract or otherwise.
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19. TERMINATION of the Agreement; DEFAULT remedies.
19.1 Failure to Satisfy Conditions Precedent. If within 180 days
following the date hereof not all of the conditions precedent to Limited
Partner's closing obligations (other than the conditions outlined in Articles 14
and 15) shall have been fulfilled with respect to either (i) only one Property,
or (ii) two or more Properties, whose aggregate allocable share of the Purchase
Price does not exceed $20,000,000, then Limited Partner shall have the right to
elect either (i) to waive such unfulfilled closing condition, close on the
affected Property and the balance of the Properties for which the closing
conditions have been met, and receive no credit against, or reduction of, the
Purchase Price due to such unfulfilled closing condition; or (ii) to postpone
the closing for the affected Property (each, a "Post-Closing Property"), such
that the affected Property shall be subject to the provisions of Sections
19.2.1.A and 19.2.3, the portion of the Deposits allocable to such Property, as
set forth in Exhibit 1.24, shall be reallocated equally among the remaining
portion of the Properties, the Purchase Price payable at the Closing shall be
reduced by the amount set forth in Exhibit 1.24 for such Post-Closing Property,
and, subject to Section 19.2.3, the balance of the Properties shall remain
unaffected. In the event that Limited Partner elects to proceed as set forth in
subsection (ii) above, Seller Parties shall have the right to (A) terminate this
Agreement, in which event Limited Partner shall on behalf of all Purchaser
Parties thereupon receive, in addition to the return of the Deposits (together
with all interest accrued thereon, if any), the Breakup Fee, as liquidated
damages and as agreed compensation for Limited Partner's and all other Purchaser
Parties' lost opportunity and expenses, and not as a penalty (in which case this
Agreement shall terminate, be null and void and of no further force or effect
except with respect to the Surviving Obligations); or (B) cause Contributor to
distribute (as a non-liquidating distribution) to Contributor Parent or its
designee Contributor's entire partnership (or membership) interest in the Seller
Party that owns the applicable Property (and the applicable Philips QRS, except
with respect to the Reconveyance Properties), Contributor shall not be required
to make the contribution set forth in Section 2.2, in which event the applicable
Property shall thereafter become a Post-Closing Property, subject to the terms
of Section 19.2.3, the Purchase Price payable at the Closing shall be reduced by
the amount set forth in Exhibit 1.24 for such Post-Closing Property, the portion
of the Deposits allocable to such Property, as set forth in Exhibit 1.24, shall
be reallocated equally among the remaining portion of the Properties, and the
balance of the Properties shall remain unaffected. Notwithstanding the
foregoing, if at the end of such 180-day period, the stockholders of Parent
Contributor shall have received a proxy statement setting a date for the meeting
of stockholders to vote upon the transactions contemplated hereby on or before
thirty days following the mailing date of such proxy statement, but such meeting
date has not yet occurred, then the 180-day period shall be automatically
extended for a period of twenty additional business days, at the conclusion of
which the parties shall have the rights and remedies set forth in this Section
19.1.
19.2 Property-Specific Failure to Satisfy Conditions Precedent.
19.2.1 If at the Closing, or the date otherwise contemplated for the
Closing hereunder, not all of the conditions precedent to Limited Partner's
Closing obligations (other than the conditions outlined in Articles 14 and 15),
shall have been fulfilled with respect to two or more Properties whose aggregate
allocable share of the Purchase Price exceeds $20,000,000,
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then Contributor Parent, acting on behalf of all Philips Parties, shall within
five days thereafter elect, by delivery of written notice to Limited Partner,
either to:
A. terminate this Agreement, in which event Limited Partner
shall on behalf of all Purchaser Parties thereupon immediately receive,
in addition to the return of the Deposits (together with all interest
accrued thereon, if any), the Breakup Fee, as liquidated damages and as
agreed compensation for Limited Partner's and all other Purchaser
Parties' lost opportunity and expenses, and not as a penalty (in which
case this Agreement shall terminate, be null and void and of no further
force or effect); or
B. offer to postpone the closing for the Property(ies) for
which the closing condition(s) have not been met (collectively, the
"Post-Closing Properties"), subject to Section 19.2.3, and close on
those Property(ies) for which the closing conditions have been met, in
which event Seller Parties shall cause Contributor to distribute (as a
non-liquidating distribution) to Contributor Parent or its designee,
Contributor's entire partnership (or membership) interest in the Seller
Party that owns the applicable Property (and the applicable Philips
QRS, except with respect to the Reconveyance Properties), Contributor
shall not be required to make the contribution set forth in Section
2.2, Limited Partner shall close on those Properties for which the
closing conditions have been met, as provided in this Agreement, the
Purchase Price shall be reduced in the aggregate with respect to the
applicable Post-Closing Property(ies) and the portion of the Deposits
allocable to such Property(ies) shall be and be deemed re-allocated
among the remaining Properties.
For the purposes of this Article, any Property encumbered by Existing Debt shall
be aggregated with all other Properties encumbered by the same Existing Debt (so
that a failure with respect to one shall be treated as a failure with respect to
all), and each such Property shall be treated in the same manner for the
purposes of this Article, unless the Existing Lender enters into a severance
agreement with respect to the Existing Debt and the lien of the mortgages
securing the Existing Debt, on terms wholly satisfactory to Limited Partner.
19.2.2 Limited Partner, within five business days of its receipt of
Contributor Parent's notice, may thereafter elect either to:
A. close on the Post-Closing Properties as provided for in
this Agreement, without regard to the fact that not all of the
conditions precedent have been satisfied with respect to the
Post-Closing Properties. Limited Partner shall not be entitled to
receive a Breakup Fee in such circumstances; or
B. terminate this Agreement, in which event Limited Partner
shall be entitled to the return of such portion of the Deposits
(together with the interest earned thereon) not previously applied at a
Closing, but shall not be entitled to the Breakup Fee, in which case
this Agreement shall be terminated and neither party shall have any
further rights, obligations or liabilities hereunder, except for
obligations under clause 19.2.3.A(i) or other Surviving Obligations.
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19.2.3 Notwithstanding anything to the contrary contained herein, the
following provisions shall apply to Post-Closing Properties:
A. For a period of six months (the "Cure Period") following
the Closing Date: (i) Sellers may not sell (or enter into an agreement
to sell) a Post-Closing Property to any party other than Limited
Partner, and (ii) Sellers shall continue to use diligent good faith
efforts to meet all closing conditions that caused the closing of such
Post-Closing Property to be postponed, and Sellers shall keep Limited
Partner fully informed as to the status and progress of meeting such
failed closing conditions.
B. Limited Partner shall have the right (but not the
obligation) to close on the purchase of any Post-Closing Property (on
the same terms and conditions set forth in this Agreement, including
the Purchase Price allocable thereto) during the Cure Period
(including, at Limited Partner's sole discretion, by waiving any failed
closing conditions).
C. If at any time during the Cure Period, Sellers meet all
failed closing conditions for a Post-Closing Property and so notify
Limited Partner in writing, Limited Partner shall have ten days (time
being of the essence) to elect to close on such Post-Closing Property
by delivery of written notice to Sellers. Limited Partner's failure to
make such election within the ten-day period shall be deemed an
election not to close on such Post-Closing Property, and Sellers shall
be free to sell such Post-Closing Property to any third party. In the
event that Limited Partner elects to close on such Post-Closing
Property, the closing therefor shall be held within fifteen days (time
being of the essence) following Sellers' receipt of such election
notice.
D. In the event that any closing condition for any
Post-Closing Properties remains unmet at the end of the Cure Period,
despite Sellers' good faith efforts to fully satisfy same, then Limited
Partner shall have the right to elect to close (at the end of the Cure
Period) on all Post-Closing Properties for which the closing conditions
have been, or to terminate this Agreement with respect to such
Properties for which the conditions were unmet, as set forth in Section
19.2.2.B.
19.2.4 The parties hereto acknowledge and agree that any post-closing
property under the cash contract shall be included in the calculation of the
Properties for which closing conditions have not been met under Sections 19.1
and 19.2 (both with respect to number and value). Additionally, the parties
hereto agree that the Breakup Fee shall be subject to reduction, in the event
that Limited Partner closes on any Property, by an amount equal to four (4.0%)
percent of the difference between (i) the aggregate Purchase Price of such
Property set forth on Exhibit 1.2, and (ii) the aggregate then outstanding debt
on such closed Property which is assumed by Limited Partner.
19.3 Contributor's Remedies. If Seller Parties shall have satisfied all
of the conditions set forth in Section 16.1, and all conditions to Limited
Partner's and General Partner's obligation to proceed with the Closing shall
have been satisfied or waived on behalf of all Purchaser Parties, and if Limited
Partner or General Partner or any other Purchaser Party shall fail or refuse to
close as required by the terms of this Agreement, the parties hereto agree that
the damages that Seller
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Parties would sustain as a result thereof would be substantial, but would be
difficult to ascertain. Accordingly, the parties hereto agree that in the event
of such default, failure or refusal by Limited Partner, General Partner, or any
other Purchaser Party Seller Parties' sole remedy shall be to retain the
Deposits in accordance with the provisions of Article 6. Nothing contained
herein, including without limitation the Closing, shall limit or restrict Seller
Parties' ability to pursue any rights or remedies it may have against Limited
Partner or General Partner with respect to any Surviving Obligations.
19.4 Purchaser Parties' Remedies. If Limited Partner and all other Purchaser
Parties has met (or is ready, willing and able to meet) all closing conditions
set forth in Article 16.2.1 through 16.2.6, and any Seller Party willfully
refuses to close or to meet a closing condition, or, if, in accordance with any
other provisions of this Agreement, this Section shall control, Limited Partner
on behalf of all Purchaser Parties shall, as its sole and exclusive remedy, have
the right to (a) terminate this Agreement upon written notice to Seller Parties;
and (b) thereupon receive (upon such termination) the Breakup Fee (as liquidated
damages and as agreed compensation for Limited Partner's and General Partner's
lost opportunity and expenses, and not as a penalty), in which event this
Agreement shall be terminated and neither party shall have any further rights,
obligations or liabilities hereunder, except with respect to the Surviving
Obligations, and except that Limited Partner shall be entitled to a return of
the Deposits (together with all interest accrued thereon). The parties hereto
agree that Seller Parties shall not be deemed to have willfully refused to meet
a closing condition or close in the event that Seller Parties are either
(w) unable, after diligent good faith efforts, to meet such closing conditions;
(x) diligently proceeding in good faith to satisfy such closing condition, (y)
not obligated to satisfy such closing condition hereunder or (z) not obligated
to close hereunder. Except as set forth in this Section 19.4, Limited Partner,
on behalf of all Purchaser Parties, hereby expressly waives, relinquishes and
releases any other right or remedy available to it at law, in equity or
otherwise by reason of Sellers' inability to perform its obligations hereunder.
19.5 Legal Fees. If either party brings an action to recover the Cost
Deposit, the non-prevailing party shall (notwithstanding the "exclusive
remedies" language above set forth in Section 19.4) pay the prevailing party's
reasonable legal fees, disbursements and court costs expended to obtain a
judgment.
19.6 Cash Contract. Any default by any party hereto under the Cash Contract,
beyond any relevant notice or cure periods contained therein, shall also be
deemed a default by that party hereunder. If the breakup fee is payable under
the terms of the Cash Contract, then Contributor Parent shall also pay the
Breakup Fee in accordance with Section 19.4 and subject to Section 19.2.4. Any
termination of the Cash Contract, on account of a party's default thereunder or
otherwise, shall also cause an automatic termination of this Agreement, without
prejudice to the remedies available hereunder to the non-defaulting party.
20. BROKERS.
Limited Partner, General Partner and Seller Parties each represent and warrant
to the other that it or they, as the case may be, have not dealt with any broker
in connection with this transactions
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described herein other than CIBC World Markets Corp. and Prudential, who shall
be paid pursuant to separate agreements with Limited Partner and Contributor
Parent, respectively. Each party hereto agrees to indemnify, defend and hold the
other harmless from and against any and all claims, causes of action, losses,
costs, expenses, damages or liabilities, including reasonable attorneys' fees
and disbursements, which the other may sustain, incur or be exposed to, by
reason of any claim or claims by any broker, finder or other person, for fees,
commissions or other compensation arising out of the transactions contemplated
in this Agreement if such claim or claims are based in whole or in part on
dealings or agreements with the indemnifying party. The obligations and
representations and warranties contained in this Article shall survive the
Closing or sooner termination of this Agreement.
21. NOTICES.
All notices, elections, consents, approvals, demands, objections, requests or
other communications which Limited Partner, General Partner, Seller Party or
Escrow Agent may be required or desire to give pursuant to, under or by virtue
of this Agreement must be in writing and shall be sent (a) by first class U.S.
certified or registered mail, return receipt requested, with postage prepaid;
(b) by depositing the same into the custody of a nationally recognized overnight
delivery service such as Federal Express Corporation, Airborne Express, ▇▇▇▇▇ or
Purolator for next day delivery; (c) by same-day hand delivery with proof of
service endorsed thereon; or (d) by telecopier, provided it is also delivered by
express mail or courier (for next business day delivery). All such notices,
elections, consents, approvals, demands, objections, requests or other
communications sent in compliance with the provisions hereof shall be deemed
given and received on (i) the second business day following the date it is
deposited in the U.S. mail, (ii) the date it is delivered to the other party if
sent by U.S. Express Mail, overnight delivery or hand delivery or (iii) the date
it is delivered to the other party if sent by telecopier provided it is
confirmed by express mail or courier (for next business day delivery). From time
to time either party may designate another address or addresses for all purposes
of this Agreement by a notice given to all other parties in accordance with the
provisions hereof. For purposes of this Article, the addresses of the parties
shall be as follows:
To Limited Partner or General Partner:
Kimco Income Operating Partnership, L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Kimco Realty Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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and a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To any Seller Party:
c/o Philips International Realty Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Escrow Agent:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
22. POST-CLOSING INSPECTION.
22.1 Access by Sellers. For a period of five years subsequent to the Closing
Date, Contributor Parent, Contributor, Philips Parties, Seller Parties, Seller's
Affiliates and all of their respective employees, agents and representatives
shall be entitled to access during business hours to all documents, books and
records given to Limited Partner by Seller at the Closing for tax and audit
purposes, regulatory compliance, and cooperation with governmental
investigations upon reasonable prior notice to Limited Partner, and shall have
the right, at its sole cost and expense, to make copies of such documents, books
and records.
22.2 Access by Operating Partnership. From and after the Closing, Contributor
Parent shall, upon request, give Operating Partnership access to all books and
records in its control or possession with respect to the operation of the
Property for the calendar year in which the Closing occurs and for the previous
calendar year for purposes of verifying collections and remittances and
Operating Partnership's preparation of financial statements and reports with
respect to the Property. Contributor Parent shall make such books and records
available to Operating Partnership at reasonable times and upon reasonable
advance notice to Contributor
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Parent and without any expense to Contributor Parent or charge to Operating
Partnership. This Article shall survive the Closing.
23. CONFIDENTIALITY.
23.1 Generally. Limited Partner and General Partner on behalf of each Purchaser
Party agree that, prior to the Closing, all Property Information (as defined
below) shall be kept strictly confidential and shall not, without the prior
consent of Seller, be disclosed by any Purchaser Party, in any manner
whatsoever, in whole or in part, and will not be used by any Purchaser Party,
directly or indirectly, for any purpose other than evaluating the Properties.
Moreover, Limited Partner and General Partner agrees on behalf of each Purchaser
Party that, prior to the Closing, the Property Information will be transmitted
only to prospective tenants for the Properties and/or Limited Partner's or
General Partner's representatives, in each case, (i) who need to know the
Property Information for the purpose of evaluating the Properties, and who are
informed by Limited Partner or the General Partner of the confidential nature of
the Property Information and (ii) who agree to be bound by the terms of this
Article 23.1 and Section 8.5 (each, a "Permitted Recipient"). The provisions of
this Section shall in no event apply to Property Information (a) that is a
matter of public record; (b) that became available to Limited Partner or General
Partner on a non-confidential basis from a source other than Seller Parties or
their representatives, which source was, in turn, not subject to confidentiality
restrictions; or (c)that, if not disclosed by Limited Partner or General
Partner, would prevent Limited Partner or General Partner from complying with
applicable laws, including, without limitation, governmental regulatory,
disclosure, tax and reporting requirements.
23.2 Press Releases. Limited Partner, General Partner, on behalf of all
Purchaser Parties and Sellers, for the benefit of each other, hereby agree that
between the date hereof and the Closing Date, they will not release or cause or
permit to be released any press notices, publicity (oral or written) or
advertising promotion relating to, or otherwise announce or disclose or cause or
permit to be announced or disclosed, in any manner whatsoever, the terms,
conditions or substance of this Agreement or the transactions contemplated
herein, without first obtaining the written consent of the other party hereto.
It is understood that the foregoing shall not preclude either party from
discussing the substance or any relevant details of the transactions
contemplated in this Agreement, subject to the terms of Section 23.1, with any
of its or its partners' attorneys, accountants, professional consultants or
potential lenders, as the case may be, or prevent either party hereto from
complying with applicable laws, including, without limitation, governmental
regulatory, disclosure, tax and reporting requirements.
23.3 Indemnity. Limited Partner and General Partner, on behalf of all Purchaser
Parties, shall indemnify and hold Seller and Seller's Affiliates harmless from
and against any and all claims, demands, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, attorneys' fees
and disbursements) suffered or incurred by Seller or any of Seller's Affiliates
and arising out of or in connection with a breach by any Purchaser Party or its
representatives of the provisions of this Article.
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23.4 Termination. In the event this Agreement is terminated, Limited Partner and
General Partner or Limited Partner's or General Partner's Representatives shall,
promptly upon receipt of written request, deliver to Sellers all originals and
copies of the Property Information in the possession of Limited Partner, General
Partner or Limited Partner's or General Partner's representatives. The
obligations and representations and warranties contained in this Article 23
shall survive the Closing or sooner termination of this Agreement.
24. Miscellaneous.
24.1 No Waiver. No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege.
24.2 Entire Agreement. This Agreement (including the Exhibits attached hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior or contemporaneous understandings, if
any, with respect thereto. This Agreement may not be canceled, modified, changed
or supplemented, nor may any obligation hereunder be waived, except by written
instrument signed by the party to be charged or by its agent duly authorized in
writing or except as otherwise expressly provided herein. The parties do not
intend to confer any benefit hereunder on any person, firm or corporation other
than the parties hereto and their respective successors or assigns.
24.3 Limitation of Liability; Survival of Contributor Parent; Seller's
Affiliates. Notwithstanding any language to the contrary contained herein
(whether or not any provision contained herein is expressly stated to be subject
to this Section 24.3), (i) no Purchaser Party shall have a right to bring a
post-Closing claim against Seller Parties, the Non-REIT Unitholders, Pilevsky
Partners or Seller's Affiliates by virtue of a breach of any of Seller Parties,
Non-REIT Unitholders, Pilevsky Partners, or Seller's Affiliates' obligations
hereunder (including without limitation, a default under the Cash Contract,
breach of any representations, warranties or covenants under this Agreement or
any other document relating to the transactions as contemplated herein, any
indemnification obligation and/or otherwise under this Agreement or any other
document relating to the transactions as contemplated herein) unless (A) such
claim is brought on or prior to six months from the Closing Date (time being of
the essence); (B) Seller Parties, Non-REIT Unitholders, Pilevsky Partners, or
Seller's Affiliates have received written notice of such breach (together with a
description of the nature of such breach) prior to the earlier to occur of (x)
the date that is six months from the Closing Date, or (y) ten days after the
date that Limited Partner or Operating Partnership first knows about such
breach, and Seller Parties, Non-REIT Unitholders, Pilevsky Partners, or Seller's
Affiliates have had a reasonable opportunity to cure same; and (C) the aggregate
damages to Purchaser Parties resulting from all such breaches, in the aggregate
across the
72
Properties and across the Cash Contract, are reasonably expected to exceed
$100,000; and (ii) Sellers Parties, Non-REIT Unitholders, Pilevsky Partners, or
Seller's Affiliates maximum post-Closing liability for such breaches, in the
aggregate across the Properties and under the Cash Contract, shall in no event
exceed a maximum amount of $2,500,000. Additionally, Limited Partner and
Operating Partnership, on behalf of each Purchaser Party, agree to first seek
recovery against any applicable insurance policies and/or Space Leases prior to
seeking recovery against Seller Parties, the Non-REIT Unitholders, Pilevsky
Partners or Seller's Affiliates and Seller Parties, the Non-REIT Unitholders,
Pilevsky Partners or Seller's Affiliates shall not be liable to any Purchaser
Party if such Purchaser Party's claim is satisfied out of same; provided that,
if Seller Parties, the Non-REIT Unitholders, Pilevsky Partners or Seller's
Affiliates receive written notice from Limited Partner or Operating Partnership
that Limited Partner or Operating Partnership has commenced a claim under any
applicable insurance policies and/or Space Leases, the time period within which
Limited Partner or Operating Partnership must bring a post-Closing claim against
Seller Parties, the Non-REIT Unitholders, Pilevsky Partners or Seller's
Affiliates shall be tolled during the pendency of such claim. The provisions of
this Section 24.3 shall survive the Closing and the execution and delivery of
the transfer documents. Therefore, the Seller Parties, the Non-REIT Unitholders,
Pilevsky Partners or Seller's Affiliates total liability to Limited Partner and
Operating Partnership shall equal the amount up to $2,500,000 and in excess of
$100,000.
24.3.1 In furtherance of Section 24.3, Contributor Parent agrees that
it shall not liquidate on or prior to six months from the Closing Date unless
Contributor Parent has provided for insurance reasonably acceptable to Limited
Partner or a $2,500,000 collateral account; provided, however that, if Seller
Parties receive written notice from Limited Partner or Operating Partnership
that Limited Partner or Operating Partnership has commenced a claim under any
applicable insurance policies and/or Space Leases, Contributor Parent agrees to
that it shall not liquidate until such claim against Seller Parties is settled.
24.3.2 To the extent there is a failure of a Closing condition and
Limited Partner waives such closing conditions and closes on the affected
Property, Limited Partner on behalf of all Purchaser Parties hereby expressly
waives, relinquishes and releases all other rights to remedies available to it
at law, in equity or otherwise (including, without limitation, the right of such
damages from Seller Parties) as a result of the Seller Parties, the Non-REIT
Unitholders, Pilevsky Partners or Seller's Affiliates failing to comply with the
closing condition. Notwithstanding the foregoing, Seller Parties, the Non-REIT
Unitholders, Pilevsky Partners or Seller's Affiliates shall continue to be
obligated to promptly remit to Limited Partner, on behalf of all Purchaser
Parties, any condemnation or casualty proceeds actually received by Seller
Parties post-Closing.
24.3.3 Notwithstanding anything in this Agreement to the contrary,
Limited Partner and Operating Partnership, on behalf of all Purchaser Parties,
agree that they do not have and will not have any claims or causes of action
against any disclosed or undisclosed officer, director, employee, trustee,
shareholder, partner, principal, parent, subsidiary or other affiliate of Seller
Parties, Non-REIT Unitholders, or Pilevsky Partners (current or former) that is
not itself a Seller Party (collectively, "Seller's Affiliates"), arising out of
or in connection with this Agreement or the transactions contemplated hereby.
Limited Partner and Operating Partnership agree to look solely to Seller Parties
and its assets for the satisfaction of any liability or obligation arising under
this Agreement or the transactions contemplated hereby, or for the performance
of any of the covenants, warranties or other agreements contained herein, and
further agrees not to
73
▇▇▇ or otherwise seek to enforce any personal obligation against any of Seller's
Affiliates with respect to any matters arising out of or in connection with this
Agreement or the transactions contemplated hereby. Without limiting the
generality of the foregoing provisions of this Section 24.3.3, Limited Partner
and Operating Partnership hereby unconditionally and irrevocably waive any and
all claims and causes of action of any nature whatsoever they may now or
hereafter have against Seller's Affiliates, and hereby unconditionally and
irrevocably release and discharge Seller's Affiliates from any and all liability
whatsoever which may now or hereafter accrue in favor of Limited Partner or
Operating Partnership against Seller's Affiliates, in connection with or arising
out of this Agreement or the transactions contemplated hereby. The provisions of
this Section 24.3.3 shall survive the termination of this Agreement and the
Closing.
24.4 No Oral Modifications. This Agreement shall not be altered, amended,
changed, waived, terminated or otherwise modified in any respect or particular,
and no consent or approval required pursuant to this Agreement shall be
effective, unless the same shall be in writing and signed by or on behalf of the
party to be charged.
24.5 Merger. Except as otherwise expressly provided herein (or as the context
hereof may reasonably require), Limited Partner's acceptance of the transfer
documents shall be deemed a discharge of all of the obligations of Sellers
hereunder (except those which are to be performed following Closing) and all of
Sellers' representations, warranties, covenants and agreements herein shall
merge in the documents and agreements executed at the Closing and shall not
survive the Closing.
24.6 Titles, Headings and References. Titles, Headings and References of
Articles and Sections of this Agreement are for convenience of reference only
and shall not affect the construction of any provision of this Agreement. All
references to "Sections" and "Articles" shall be deemed to be references to
Sections and Articles of this Agreement unless otherwise indicated or unless the
context otherwise requires.
24.7 Attachments. Each of the Exhibits referred to herein and attached hereto is
an integral part of this Agreement and is hereby incorporated in this Agreement
by this reference.
24.8 Further Assurances. Seller Party, Operating Partnership, Limited Partner
and General Parties agree to do such further acts and things and to execute and
deliver such additional agreements and instruments as any other party may
reasonably require to consummate, evidence or confirm the sale or any other
agreement contained herein in the manner contemplated hereby.
24.9 Successors and Assigns. This Agreement shall extend to and be binding upon
the legal representatives, heirs, executors, administrators and, subject to the
provisions of this Agreement, the permitted designee of the parties hereto.
24.10 Joint and Several. Each of the representations, warranties, covenants and
other obligations on the part of Seller Parties contained in this Agreement
(including, without limitation, payment of the Breakup Fee if and when due) is
the joint and several obligation of each of the entities constituting Seller
Parties. Any obligation to pay the Breakup Fee shall be the joint and several
obligation of Contributor and Contributor Parent.
74
24.11 Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same instrument. In addition, this Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of the signatures of each of the parties to one of such counterpart
signature pages; all of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
24.12 Rules of Construction. The provisions of this Agreement shall be
construed, in all respects, without reference to any rule or canon requiring or
permitting the construction of provisions of documents against the interest of
the party responsible for the drafting of the same, it being the intention and
agreement of the parties that this Agreement be conclusively deemed to be the
joint product of both parties and their counsel.
24.13 Dates. If the last day of the period prescribed herein for the giving of
any notice, election, consent, approval, demand, objection or request or the
submission of any documents by any party hereunder shall fall on a Saturday,
Sunday or any day observed as a public holiday by the federal government or the
state in which any of the Properties is situated, then such period shall be
deemed to be extended to the immediately following day which is not a Saturday,
Sunday or such public holiday. The term "business day" as used in this Agreement
shall mean any day other than Saturday, Sunday or any day observed as a public
holiday by the federal government or the state in which such Property is
situated.
24.14 WAIVER OF JURY TRIAL. SELLER, GENERAL PARTNER AND LIMITED PARTNER HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER ARISING
IN TORT OR CONTRACT) BROUGHT BY EITHER AGAINST THE OTHER ON ANY MATTER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.
24.15 Applicable Law; Venue. This Agreement, the rights of the parties
hereunder, and the construction, interpretation and enforcement hereof shall be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to conflicts of laws principles thereof.
24.16 Agency Role of Contributor and Contributor Parent. No Seller Party shall
be permitted to take any action or to give any notice under this Agreement,
except through Contributor or Contributor Parent, which are hereby appointed as
agents to act on each Seller Party's behalf for the purposes of this Agreement.
General Partner, Limited Partner and Operating Partnership may rely on the
putative authority of any document or notice executed or delivered by
Contributor or Contributor Parent on behalf of any Seller Party.
24.17 Cash Contract. Each party hereto acknowledges and agrees that a default by
such party under the cash contract shall constitute a default of such party
under this Agreement, and a default by such party under this Agreement shall
constitute a default by such party under the cash contract, in either of which
events the parties shall have the rights and remedies set forth in Article 19.
Additionally, Limited Partner acknowledges and agrees that a termination of the
cash
75
contract by Limited Partner prior to the expiration of the inspection period
thereunder shall constitute a termination of this Agreement pursuant to Section
8.7.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
76
IN WITNESS WHEREOF, Contributor, Operating Partnership and Escrow Agent have
executed this Agreement as of the day and year first above written.
Contributor: PHILIPS INTERNATIONAL REALTY, L.P.
By: Philips International Realty Corp.,
general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Title: President
---------------------------------------------
Contributor Parent: PHILIPS INTERNATIONAL REALTY
CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Title: President
---------------------------------------------
General Partner: KIR ACQUISITION LLC
By: KIMCO INCOME OPERATING PARTNERSHIP, L.P.
sole member
By: KIMCO INCOME REIT, general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------
Title: Vice President
---------------------------------------------
Limited Partner: KIMCO INCOME OPERATING
PARTNERSHIP, L.P.
By: KIMCO INCOME REIT, general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------
Title: Vice President
---------------------------------------------
Escrow Agent: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Partner
77
Lower Tier Entities:
PHILIPS BRANHAVEN ASSOCIATES, L.P.
By: PHILIPS BRANHAVEN SUB-III, INC.,
general partner
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS ENFIELD ASSOCIATES L.P.
By: PHILIPS ENFIELD SUB-IV, INC.
general partner
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
FOXBOROUGH SHOPPING L.L.C.
By: FOXBOROUGH SHOPPING SUB-IX, INC., managing
member
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
DELRAN SHOPPING, L.L.C.
By: PHILIPS DELRAN SHOPPING, SUB-X,
INC., managing member
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS AVENUE U ASSOCIATES, L.P.
By: PHILIPS AVENUE U SUB-VI, INC.,
general partner
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
78
PHILIPS MEADOWBROOK ASSOCIATES, L.P.
By: PHILIPS MEADOWBROOK SUB-V,
INC., general partner
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS ▇▇▇▇▇▇▇ ASSOCIATES, L.P.
By: PHILIPS MERRICK SUB-II, INC., general
partner
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS FOREST ASSOCIATES, L.P.
By: PHILIPS FOREST SUB-I, INC., general
partner
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
Philips QRSs:
PHILIPS BRANHAVEN SUB-III, INC.
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS ENFIELD SUB-IV, INC.
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
79
PHILIPS FOXBOROUGH SUB-IX, INC.
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS DELRAN SHOPPING SUB-X, INC.
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS AVENUE U SUB-VI, INC.
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS MEADOWBROOK SUB-V, INC.
By: /s/ ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS MERRICK SUB-II, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Title: President
---------------------------------------------
PHILIPS FOREST SUB-I, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. Petra
---------------------------------------------
Title: President
---------------------------------------------
80
SCHEDULE A
Lower Tier Entities, Philips QRSs and Property Addresses
--------------------------------------------------------
1. Location: Branhaven Plaza, Branford, CT
Lower Tier Entity: Philips Branhaven Associates L.P.
Philips QRS: Philips Branhaven Sub-III, Inc.
2. Location: ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
Lower Tier Entity: Philips Enfield Associates L.P.
Philips QRS: Philips Enfield Sub-IV, Inc.
3. Location: Foxborough Plaza, Foxborough, MA
Lower Tier Entity: Foxborough Shopping L.L.C.
Philips QRS: Philips Foxborough Sub-IX, Inc.
4. Location: Millside Plaza, Delran, NJ
Lower Tier Entity: Delran Shopping L.L.C.
Philips QRS: Philips Delran Sub-X, Inc.
5. Location: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
Lower Tier Entity: Philips Avenue U Associates, L.P.
Philips QRS: Philips Avenue U Sub-VI, Inc.
6. Location: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
Lower Tier Entity: Philips Meadowbrook Associates, L.P.
Philips QRS: Philips Meadowbrook Sub-V, Inc.
7. Location: ▇▇▇▇▇▇▇ Commons, Merrick, Long Island, NY
Lower Tier Entity: Philips ▇▇▇▇▇▇▇ Associates L.P.
Philips QRS: Philips Merrick Sub-II, Inc.
8. Location: Forest Ave, Staten Island, NY
Lower Tier Entity: Philips Forest Associates, L.P.
Philips QRS: Philips Forest Sub-I, Inc.
81
SCHEDULE B
K-MART PROPERTIES
Kmart Sacramento Center SACRAMENTO, CA
Kmart Atwater Shopping Center ATWATER, CA
Pennyrile Marketplace HOPKINSVILLE, KY
North Star Shopping Center ALEXANDRIA, MN
▇▇▇▇▇▇▇ Commons MCHENRY, IL
Reedley Shopping Center REEDLEY, CA
Port Angeles Shopping Center PORT ANGELES, WA
82
EXHIBIT 1.11
EXISTING DEBT
DESCRIPTION REAL ESTATE ESCROW LOAN BALANCE
BALANCE as of 4/30/00 as of 4/30/00
MERRICK __ 12,234,666
Credit Lyonnais
ENFIELD 87,797 3,326,456
Dime Savings Bank
AVENUE U __ 12,954,349
Credit Lyonnais
FOXBORO 59,901 4,192,864
Dime Savings Bank
DELRAN 73,860 4,379,214
Dime Savings Bank
ESCROWS (Not insurance or Real Estate) BALANCE as of 4/30/00
-------------------------------------- ---------------------
MERRICK -R & M Escrow 33,883
AVE U. - R & M Escrow 33,883
83
EXHIBIT 1.14
MAJOR TENANTS
1. Branhaven Plaza, Branford, CT- Kohl's 86,830 ▇▇
▇▇▇▇▇▇▇▇'▇ 46,669 SF
Olympia Sports
Cindy's Hallmark 6,115 SF
The Gap 3,675 SF
Plus 1/2 of the
remaining tenants
▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇- Kohl's 88,000 ▇▇
▇▇▇▇▇▇▇▇'▇ 56,074 SF
Chicago Sam's 5,300 SF
3. Foxboro Plaza, Foxborough, MA- Bradlees 60,000 SF
Ocean St. Job Lot 22,050 ▇▇
▇▇▇▇▇'▇ 5,473 SF
Babel's Paint 5,400 SF
Papa Gino's 5,245 SF
Cellular One
▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇- Kmart 88,654 SF
Shoprite Eickoff 31,070 SF
America Multi Cinema 12,844 SF
Rite Aid 9,760 SF
Plus 1/2 of the
remaining tenants
5. Mill Basin Plaza, Brooklyn, NY- Pergament 50,000 SF
Walgreen's 11,050 SF
Paramount Decorators 9,258 SF
6. Meadowbrook Commons, Freeport, NY- Toys R Us 37,328 ▇▇
▇▇▇▇▇▇▇ 46,753 SF
Marshals 27,540 SF
Modells 17,245 SF
Pier 1 9,125 SF
Odd Job 8,037 SF
▇▇▇▇▇▇ Store 5,400 SF
Dress Barn 8,100 SF
7. ▇▇▇▇▇▇▇ Commons, Merrick NY- ▇▇▇▇▇▇▇▇'▇ 44,478 SF
▇▇▇▇▇ Sez 15,038 SF
Party City 12,449 SF
Ulta 3 10,022 SF
Plus 1/2 of the
remaining tenants
84
8. Forest Avenue, Staten Island, NY- TJ Maxx 34,798 SF
Michael's 17,573 SF
National Wholesale 34,000 SF
Party City 11,692 SF
Hometown Buffet 11,583 SF
CVS 7,975 SF
Forest Ave Lot Store 5,896 SF
1541 Card Store 5,075 SF
Rockaway Bedding 4,350 SF
Plus 1/2 of the
remaining tenants
85
EXHIBIT 1.19
PERMITTED EXCEPTIONS
Operating Partnership shall take title to each Property subject to:
1. Present and future zoning laws, ordinances, resolutions, orders and
regulations of all municipal, county, state or federal governments
having jurisdiction over such Property and the use of improvements
thereon.
2. All covenants, restrictions, easements, encumbrances and agreements
of record which do not materially and adversely affect the Property.
3. Beams and beam rights and party walls and party wall agreements.
4. Such state of facts as are disclosed by those certain surveys
referenced in Exhibit "A" hereto, and such state of facts as would be
disclosed by a current, accurate survey of the applicable Property.
5. Such state of facts as a physical inspection of the applicable Property
and of the appurtenances, fixtures, equipment and personal property
included in this sale would disclose.
6. The lien of any unpaid real estate taxes, water charges and sewer rents
for the fiscal year(s) or other applicable period in which the Closing
occurs, provided same are apportioned at the Closing in accordance with
this Agreement.
7. Subject to Section 3.8 of this Agreement, (a) the lien of all unpaid
assessments encumbering each Property on the date of this Agreement,
and installments thereof, due and payable on or after the Closing Date,
and (b) the lien of all unpaid assessments which first encumber each
Property subsequent to the date of this Agreement, and installments
thereof, whether due and payable prior to, on or after the Closing
Date.
8. All liens and encumbrances resulting from the Investigations or any and
all other activities undertaken by Operating Partnership or Operating
Partnership's Representatives.
9. Rights, if any, of any utility company to construct and/or maintain
lines, pipes, wires, cables, poles, conduits and distributions boxes
and equipment in, over, under, and/or upon each Property or any portion
thereof.
10. Building codes and restrictions heretofore or hereafter adopted by any
public agency.
86
11. Encroachments of ▇▇▇▇▇▇, areas, cellar, steps, trim, cornices,
retaining walls, windows, window ▇▇▇▇▇, ledges, fire escapes, doors,
door caps, projecting air conditioner units or equipment, ▇▇▇▇▇▇,
railings, coping, cellar doors or fences, if any, upon any street,
highway, sidewalk or adjoining premises; variations between record line
and retaining walls; encroachments of adjoining premises upon the
applicable Property.
12. Radio antenna and television antenna violations or violations arising
out of tenant air conditioners.
13. Variations between the descriptions contained in Exhibit 1.22 of the
Agreement and the tax map description of the applicable Property.
14. Right, lack of right or restricted right of any owner of any Property
to construct and/or maintain any vault or vaulted area in or under the
sidewalks abutting the premises, any licensing statute, ordinance or
regulation and the terms of any license pertaining thereto and any fees
for vault space which may hereafter be assessed.
15. Right, lack of right or restricted right of any owner of any Property
to construct and/or maintain fuel tanks, coal chutes, electric
transformers, sidewalk elevators, gratings, manholes, hoists or
excavations under, in, upon or over any street, highway, sidewalk or
adjoining property.
16. Leases and New Leases.
17. Property Notes, Mortgages, and Mortgage Loan Documents.
18. The exceptions listed on Exhibit B hereto; and any Schedule B-II
exceptions raised by the Commitments and/or updates of such Commitments
on or before the expiration of the Due Diligence Period, subject to the
relevant provisions of the Agreement.
19. Use restrictions contained in that certain Termination of Lease between
Forest and ▇▇▇▇▇▇▇▇, Inc., dated as of August 17, 1988.
20. Use restrictions contained in that certain Declaration, by Meadowbrook,
dated as of the _____ day of April, 1999.
87
Exhibit A to Exhibit 1.5: List of Surveys
1. Branford CT. Map and Survey entitled "Property to be transferred to Branhaven
Assoc., Branhaven Plaza; Branford, Connecticut" (dated March 24, 1986; updated
October 25, 1996); prepared by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
2.Enfield CT. Map and Survey entitled "Elm Plaza Shopping Center; Elm Street;
Enfield, Connecticut" (dated June 1, 1977; last revised December 10, 1987);
prepared by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Professional Engineer and Land Surveyor".
3.Foxboro, MA. "As-Built Plan of Land in Foxboro, Massachusetts", dated May 16,
1973 (last revised August 10, 1975); prepared by Landmark Engineering of New
England, Inc.
4. Delran, NJ. "Update survey" for ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.;
Delran Township; Burlington County, New Jersey (dated December 17, 1986; revised
December 18, 1986); prepared by ▇▇▇▇▇▇ ▇. ▇▇▇▇, P.E.&L.S.
5. Mill Basin Plaza, Brooklyn, NY. Survey by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated October 9,
1991.
6. Meadowbrook Commons, Freeport, NY. Survey by Teas, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
dated February 2, 1990.
7. ▇▇▇▇▇▇▇ Commons, Merrick, NY. Survey by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇▇
dated April 4, 1995.
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. Survey by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Van
Wheele dated August 28, 1992.
Exhibit B to Exhibit 1.5: Title Exceptions
88
EXHIBIT 1.22
THE PROPERTY
1. Location: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇. Location: ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇. Location: Foxborough Plaza, Foxborough, MA
4. Location: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇. Location: Mill Basin Plaza, Brooklyn, NY
6. Location: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
7. Location: ▇▇▇▇▇▇▇ Commons, Merrick, Long Island, NY
8. Location: Forest Ave, Staten Island, NY
See detailed legal description on the following pages
89
EXHIBIT 1.24
PROPERTY ALLOCATIONS
Initial Deposit Additional Deposit Purchase Price
Property Allocation Allocation Allocation
-------- --------------- ------------------ --------------
1. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ $131,750 $393,610 $13,175,000
▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ $92,000 $142,000 $9,200,000
3. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ $53,000 0 $5,300,000
▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ $56,000 0 $5,600,000
▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ $203,000 $91,000 $20,300,000
6. Meadowbrook Commons, $308,000 $919,000 $30,800,000
Freeport, NY
7. Merrick Commons, Merrick NY $177,000 $42,000 $17,700,000
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ $355,000 $1,059,000 $35,500,000
Island, NY
---------- ---------- -------------
$1,375,750 $2,646,610 $137,575,000
90
EXHIBIT 3.1.3
ASSIGNMENT AND ASSUMPTION OF LEASES
AND SECURITY DEPOSITS
ASSIGNMENT AND ASSUMPTION OF LEASES AND SECURITY DEPOSITS, dated as of
_______________, 2000, between _______________, a _______________ corporation,
having an office at ________________________ ("Assignor") and _______________, a
_______________ corporation, having an office at ______________________
("Assignee").
WITNESSETH
WHEREAS, pursuant to that certain Asset Contribution, Purchase and Sale
Agreement, dated as of April 28th, 2000 (the "Group B Agreement"), by and among
Philips International Realty, L.P., Philips International Realty Corp., Certain
Affiliated Parties Signatory Thereto, KIR Acquisition, LLC and Kimco Operating
Partnership, L.P., Assignor has this day conveyed to assignee the real property
more particularly described in Schedule "1" annexed hereto and made a part
hereof (the "Premises").
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration paid by Assignee to Assignor, the mutual
receipt and legal sufficiency of which are hereby acknowledged, Assignor hereby
assigns, transfers and conveys to Assignee the following:
ALL OF ASSIGNOR'S right, title and interest, if any, as landlord in and
to (i) the leases, licenses and other occupancy agreements affecting the
Premises and all guarantees thereof set forth on Schedule "2" annexed hereto and
made a part hereof (collectively, the "Leases"), and (ii) the security deposits
made under the Schedule "3" annexed hereto and made a part hereof (collectively,
the "Security Deposits").
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns,
forever, from and after the date hereof, subject to the terms, covenants,
conditions and provisions of the Leases.
ASSIGNEE HEREBY ACCEPTS the foregoing assignment, acknowledges receipt
of the Security Deposits, assumes and agrees to perform all of the obligations
of Assignor under the Leases, accruing (unless otherwise required by the Leases)
from and after the date hereof, and agrees to hold or apply all of the Security
Deposits in accordance with the terms of the Leases under which the Security
Deposits were made; and
ASSIGNEE FURTHER AGREES, subject to any and all obligations of Assignor
under the Group B Agreement which expressly survive the Closing, to defend and
indemnify Assignor and any disclosed or undisclosed officer, director, employee,
trustee, shareholder, partner, principal, parent, subsidiary or other person or
entity affiliated with Assignor (collectively, "Assignor's Affiliates") against,
and to hold Assignor and Assignor's Affiliates harmless from, any and all
claims, demands, causes of action, losses, damages, liabilities, and costs and
expenses
91
(including, without limitation, attorney's fees and disbursements), whether
foreseen or unforeseen, asserted against or incurred by Assignor or any of
Assignor's Affiliates in connection with or arising out of acts or omissions of
Assignee or its directors, officers, employees, affiliates, partners, brokers,
agents, contractors, consultants and/or representatives, or other matters or
occurrences (unless caused by Assignor) that take place, from and after the date
hereof relating to the Leases and Security Deposits.
ASSIGNOR FURTHER AGREES, subject to any and all obligations of Assignee
under the Group B Agreement which expressly survive the Closing, to defend and
indemnify Assignee and any disclosed or undisclosed officer, director, employee,
trustee, shareholder, partner, principal, parent, subsidiary or other person or
entity affiliated with Assignee (collectively, "Assignee's Affiliates") against,
and to hold Assignee and Assignee's Affiliates harmless from, any and all
claims, demands, causes of action, losses, damages, liabilities, and costs and
expenses (including, without limitation, attorney's fees and disbursements),
whether foreseen or unforeseen, asserted against or incurred by Assignee or any
of Assignee's Affiliates in connection with or arising out of acts or omissions
of Assignor or its directors, officers, employees, affiliates, partners,
brokers, agents, contractors, consultants and/or representatives, or other
matters or occurrences (unless caused by Assignee) that took place, on or prior
to the date hereof relating to the Leases and Security Deposits. Notwithstanding
the foregoing, Assignor's liability hereunder shall be subject at all times to
the limitations on Seller's liability set forth in the Group B Agreement.
Except as expressly set forth herein or in the Group B Agreement,
Assignee hereby unconditionally and irrevocably waives any and all claims and
causes of action of any nature whatsoever it may now or hereafter have against
Assignor or Assignor's Affiliates, and hereby unconditionally and irrevocably
fully releases and discharges Assignor and Assignor's Affiliates from any and
all liability whatsoever which may now or hereafter accrue in favor of Assignee
against Assignor or Assignor's Affiliates, in connection with or arising out of
the Leases and Security Deposits.
This Assignment and Assumption of Leases and Security Deposits is made
without any covenant, warranty or representation by, or recourse against,
Assignor or Assignor's Affiliates of any kind whatsoever, except as expressly
set forth herein or in the Group B Agreement.
IN WITNESS WHEREOF, this Assignment and Assumption of Leases and
Security Deposits has been executed as of the date and year first above written.
ASSIGNOR:
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
92
ASSIGNEE:
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Schedule 1: real property
Schedule 2: leases
Schedule 3: security deposits
93
EXHIBIT 3.1.4
ASSIGNMENT AND ASSUMPTION OF LICENSES AND INTANGIBLE PROPERTY
ASSIGNMENT AND ASSUMPTION OF LICENSES AND INTANGIBLE PROPERTY, dated as of
_______________, 2000, between _______________, a _______________ corporation,
having an office at ________________________ ("Assignor") and _______________, a
_______________ corporation, having an office at ______________________
("Assignee").
WITNESSETH
WHEREAS, pursuant to that certain Purchase and Sale Agreement dated as
of __________, 2000 (the "Group B Agreement"), by and among Assignor, as seller,
certain other sellers and Assignee, as purchaser, Assignor has this day sold and
conveyed to assignee the real property more particularly described in Schedule
"1" annexed hereto and made a part hereof (the "Premises").
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration paid by Assignee to Assignor, the mutual
receipt and legal sufficiency of which are hereby acknowledged, Assignor hereby
assigns, transfers and conveys to Assignee the following:
ALL OF ASSIGNOR'S right, title and interest, if any, in and to (i) all
of the licenses, permits, certificates, approvals, authorizations and variances
issued for or with respect to the Premises by any governmental authority set
forth on Schedule "2" annexed hereto and made a part hereof (collectively, the
"Licenses"), and (ii) the trade names Philips International Realty Corp. and
Philips International Realty, L.P., any transferable guaranties or warranties
(to the extent transferable), and all the other intangible property relating to
the operation of the Premises set forth on Schedule "3" annexed hereto and made
a part hereof (collectively, the "Intangible Property"), including, without
limitation, that certain environmental indemnity from Shell Oil in connection
with the Merrick, New York Property.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns,
forever, from and after the date hereof, subject to the terms, covenants,
conditions and provisions of the Licenses.
ASSIGNEE HEREBY ACCEPTS the foregoing assignment and assumes and agrees
to perform all of the obligations of Assignor, if any, under the Licenses
accruing (unless required otherwise by the Licenses) from and after the date
hereof; and
Except as expressly set forth herein or in the Group B Agreement,
Assignee hereby unconditionally and irrevocably waives any and all claims and
causes of action of any nature whatsoever it may now or hereafter have against
Assignor or Assignor's Affiliates, and hereby unconditionally and irrevocably
fully releases and discharges Assignor and Assignor's Affiliates from any and
all liability whatsoever which may now or hereafter accrue in favor of Assignee
94
against Assignor or Assignor's Affiliates, in connection with or arising out of
the Licenses and/or the Intangible Property.
This Assignment and Assumption of Licenses and Intangible Property is
made without any covenant, warranty or representation by, or recourse against,
Assignor or Assignor's Affiliates of any kind whatsoever, except as expressly
set forth herein or in the Group B Agreement.
IN WITNESS WHEREOF, this Assignment and Assumption of Licenses and Intangible
Property has been executed as of the date and year first above written.
ASSIGNEE:
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
ASSIGNEE:
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Schedule 1: real property
Schedule 2: assigned items
Schedule 3: premises
95
EXHIBIT 3.1.5
FIRPTA AFFIDAVIT
STATE OF NEW YORK :
: ss:
COUNTY OF :
Section 1445 of the Internal Revenue Code provides that a transferee of
a U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform the transferee that withholding of tax is not required upon
the disposition of a U.S. real property interest by a organized under the laws
of the State of New York (the "Company"), the undersigned hereby certifies the
following on behalf of the Company:
1. The Company is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);
2. The U.S. employer identification number for the Company is
________________; and
3. The office address for the Company is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
4. The Company understands that this certification may be disclosed to the
Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury, the undersigned declares that the
undersigned has examined this certification and to the best of the undersigned's
knowledge and belief it is true, correct and complete, and the undersigned
further declares that the undersigned has authority to sign this document on
behalf of the Company.
Dated: ____________, 2000 [name]
By:
------------------------
Name:
-------------------
Title:
-------------------
Subscribed and sworn to before me
this ___ day of __________, 2000.
-----------------------------
96
EXHIBIT 11.3
RENT ROLL and SECURITY DEPOSITS
97
EXHIBIT 11.9
TAX PROCEEDINGS
Philips International Realty Corp. Properties - Certiorari
ENTITY YEARS OPEN STATUS
------ ---------- ------
Philips Branhaven Associates, L.P. No pending proceedings
Philips Enfield Associates, L.P. No pending proceedings
Philips Forest Associates, L.P. 1994/95-2000/01 On trial calendar
Waiting for pretrial
conference
Philips Meadowbrook 1989/90-2000/01 Waiting for pretrial
Associates, L.P. conference
Foxborough Shopping L.L.C. No pending proceedings
Philips Merrick Associates, L.P. 1991/92-2000/01 Waiting for fee quote
for appraisal
Philips Avenue U Associates, L.P. 1994/95-2000/01 On trial calendar
Delran Shopping L.L.C. No pending proceedings
98
EXHIBIT 11.16
SECURITIES LAW MATTERS
To induce Limited Partner and General Partner to enter into this Agreement and
to consummate the transactions contemplated hereby, Contributor and Contributor
Parent hereby acknowledge, represent, warrant, and covenant as follows:
1. Exempt Offering. Contributor and Contributor Parent acknowledge that
Operating Partnership intends the offer and issuance of the limited partnership
interests in Operating Partnership to be received hereunder to be exempt from
registration under the 1933 Act, by virtue of Regulation D promulgated under
Section 4(2) of the 1933 Act, and that no registration statement relating to the
issuance of such limited partnership interests hereunder has been or shall be
filed with the SEC or any state securities commission. Contributor and
Contributor Parent further acknowledge that Limited Partner is relying in part
upon the representations, warranties and covenants made by Contributor in this
Section in making its determination that the offer and issuance of the limited
partnership interests in Operating Partnership qualifies for exemption under
Regulation D.
2. Access to Information. All documents, records, books, and due diligence
materials pertaining to the issuance of limited partnership interests in
Operating Partnership to any Philips Party hereunder have been made available
for inspection by Contributor and Contributor Parent. Contributor and
Contributor Parent have had an opportunity to ask questions of and receive
information and answers from Limited Partner concerning Operating Partnership
and the limited partnership interests and to assess and evaluate such
information, and all such questions have been answered and all such information
has been provided to the full satisfaction of Contributor and Contributor
Parent. Any Philips Party acquiring the limited partnership interests in
Operating Partnership is doing so solely upon the information provided to
Contributor and Contributor Parent, the representations, warranties and
covenants of Operating Partnership, together with information obtained by
Contributor and Contributor Parent through its independent investigation, and
has not relied on any oral representation as to the risks or merit of this
investment.
3. No General Solicitation. No Philips Party is receiving limited partnership
interests in Operating Partnership as a result of, or subsequent to, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
presented at any seminar or meeting, or any solicitation of a subscription by a
person not previously known to the relevant Philips Party in connection with
investments in each of the Property generally.
4. Investor Sophistication. Each Philips Party has sufficient knowledge and
experience in financial, tax, and business matters to enable it to utilize the
information made available to it in connection with the transactions
contemplated by this Agreement in order to evaluate the merits and risks of an
investment in limited partnership interests and transactions contemplated by
this Agreement to make an informed investment decision with respect thereto and
is relying on no representations other than those set forth in this Agreement.
99
5. Investment Intent. Contributor, Contributor Parent and each Non-Selling
Non-REIT Unitholder will execute and deliver such instruments as Operating
Partnership or Limited Partner may reasonably require to ensure compliance with
all applicable securities laws and not with a view to the resale or further
distribution thereof.
6. Transfer Restrictions. The limited partnership interests in Operating
Partnership issued to any Philips Party hereunder shall be subject to
restrictions on transfer pursuant to the terms of the Partnership Agreement as
well as the terms of this agreement.
7. No Certificates. The limited partnership interests in Operating Partnership
shall be uncertificated.
100
EXHIBIT 11.18
UNCOMPLETED WORK
Elm Plaza - Kohl's lease - Cost of partial demolition, asbestos removal and
parking lot repair (subject to the Agreement).
Foxboro Plaza - Cellco - Cost of approximately $40,000 before turnover to
tenant. Tenant has prepaid 6 months rent ($12,500) and is obligated to prepay an
additional 6 months rent upon turnover of the space, (subject to the Agreement).
101
EXHIBIT 11.20
NON-REIT UNITHOLDERS
Name # of units in Contributor
---- -------------------------
Merrick Equities L.P. 179,133
▇▇▇▇ ▇▇▇▇▇▇▇▇ 38,090
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 96,943
Baraka Realty Co. 45,562
Century Realty Inc. 22,780
▇▇▇▇▇▇ ▇▇▇▇ 11,390
Estate of ▇▇▇▇▇ ▇▇▇▇ 11,390
Philips Freeport Development Corp. 1,847
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 42,206
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 67,660
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 12,276
SP Ave. U Corp. 4,053
▇▇▇▇▇▇ ▇▇▇▇▇ 202,656
Merrick Holiday Corp. 569
TOTAL ALLOCATION 736,555
102
EXHIBIT 17.3.6
TENANT'S ESTOPPEL CERTIFICATE
__________, 2000
[New Lower Tier Entity] and
[KIR Acquisition, LLC]
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: [Unit # and Property location]
Ladies and Gentlemen:
It is Tenant's understanding that you have entered into an agreement to
purchase the Premises. In such connection, Tenant hereby certifies to you, your
successors and/or assigns (and any lender providing financing in connection
therewith), with the knowledge that this Estoppel Letter may be relied upon by
the foregoing parties, as follows:
1. The Lease is in full force and effect as of the date hereof and has not
been modified, amended, supplemented or assigned, except as follows (if
none, so indicate):__________________________________________________.
2. All conditions under the Lease to be performed by Landlord (including,
without limitation, any construction or maintenance obligations) have
been satisfied and all required contributions by Landlord, if any, to
Tenant on account of Tenant's improvements have been received except as
follows (if none, so indicate): ______________________________. Tenant
has accepted the premises demised under the Lease and has taken full
possession and occupancy thereof and is open for business in the
Premises.
3. The Lease, as amended, supplemented, modified or assigned represents
the entire agreement between Tenant and Landlord with respect to the
leasing of the Premises.
4. The term of the Lease is for _________ years. The term commenced on
___________ and expires on ____________. The Lease does not provide for
any renewal options, except as follows (if none, so indicate):
__________________________________.
5. As of the date hereof, (i) there are no existing defenses or offsets
which Tenant has against the enforcement of the Lease by Landlord, and
(ii) there exist no defaults under the Lease.
103
6. Tenant is not entitled to any credits, offsets, abatements or
deductions against or in respect of the rent payable under the Lease.
7. There are no free rent periods or other concessions under the Lease.
8. The amount of the security deposit presently held by Landlord under the
Lease is $________.
9. The fixed rent payable under the Lease is $_______ per annum, payable
monthly in advance, and such fixed rent has been paid through
__________. No rent has been paid more than thirty (30) days in advance
of the due date thereof.
10. The Lease provides for the following rent escalations or additional
percentage or other rents or payments, all of which have been paid by
Tenant to the date hereof: $________.
11. There are no actions or proceedings, whether voluntary or involuntary,
pending against Tenant under the bankruptcy or insolvency laws of the
United States of America or any state thereof.
12. There is no right to cancel or terminate the Lease, no option, right of
first refusal or other right to purchase the Premises or any part
thereof or interest therein.
Very truly yours,
____________________ (Tenant)
By:
--------------------------
Name:
---------------------
Title:
---------------------
Subscribed and sworn to before me
on this ___ date of _______, 2000
-----------------------------
Notary Public
104
EXHIBIT 17.3.2
TENANT NOTICE
[CONTRIBUTOR PARENT'S LETTERHEAD]
__________, 2000
Tenant: (Fill in Tenant's name and address)
Tenant Code No: __________
Re: Sale of [Property name]
Dear Sir or Madam:
Please be advised that your landlord has this day sold the above
referenced shopping center to __________________, a _____________ ("Purchaser"),
having a Federal Employer Identification number of ________________ Accordingly,
please send all sums pursuant to your lease to Purchaser at:
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ Road
P.O. Box 5020
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
[Note: revise to reflect lockbox arrangements, if any]
It is necessary when remitting payments to indicate the Tenant Code
Number provided above for proper credit. This is the only notice you will
receive since Purchaser does not send monthly statements.
Please also note that, after the date hereof, all formal notices which
you may desire to give to the new party under your lease should be addressed to
Purchaser at:
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ Road
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Please note that you should contact your insurance broker and notify
them to send to the aforementioned address for notices a revised certificate of
insurance replacing the former party as the additional named insured with that
of Purchaser and Kimco Realty Corporation as the additional named insureds. All
communications to Purchaser should be sent to the aforementioned address for
notices.
105
Should you have any questions, please note the attached list of contact
people of Purchaser.
Very truly yours,
Seller:
By:
--------------------------
Name:
---------------------
Title:
---------------------
Consented To:
Purchaser:
By:
-----------------------
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
106
EXHIBIT 17.3.9
MANAGEMENT AGREEMENT TERMINATION
This Management Agreement Termination Agreement ("Agreement") is entered into as
of this ____ day of ____________, 2000, by and between ________________ [Lower
Tier Entity] ("Owner") and _______________ ("Manager") with reference to the
following:
Owner and Manager have entered into certain oral or written agreements or
understandings, as the same may have been amended or modified from time to time,
(the "Management Agreement") with respect to the management by Manager of
______________ [Property name], which is owned by Owner and legally described in
Exhibit A attached hereto (the "Property");
Owner has transferred its interest in the Property to [New Lower Tier Entity]
(the "New Owner") and the parties hereto desire to terminate the Management
Agreement as of the date hereof.
NOW THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
acknowledged by the parties, the parties agree as follows:
1. Termination. Owner and Manager hereby agree that the Management Agreement is
terminated effective as of the date hereof.
2. Turnover of Property and Items. Manager shall turn over as of the date hereof
possession of the Property and all Tangible Personal Property and Intangible
Property, each as defined in the Asset Contribution, Purchase and Sale Agreement
among Owner, Kimco Income Operating Partnership and other parties, to Owner or
New Owner as Owner may separately direct.
3. Accrued Fees and Expenses. Manager agrees that it will look solely to Owner
for all accrued but unpaid fees and expenses to which Manager is entitled under
the Management Agreement, and neither the New Owner nor the Property shall have
any liability therefore.
4. Final Accounting. Manager shall deliver to Owner a final accounting with
respect to its management of the Property within thirty days after the date
hereof.
5. Agreement with New Owner. Manager shall be free as of the date hereof to
enter into an agreement with the New Owner with respect to the interim
management of the Property.
6. Survival of Fiduciary Duties. All fiduciary duties and obligations with
respect to Manager's management of the Property for periods prior to the date
hereof shall survive the termination of the Management Agreement hereunder.
7. Governing Law. This Agreement is entered into under the laws of the State of
New York.
107
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
above first written.
[Lower Tier Entity]
By:
------------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
[Manager]
By:
------------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
108