CONFORMED COPY
▇▇▇▇▇▇▇ CONTRIBUTION AGREEMENT
Between
AMERICAN REAL ESTATE INVESTMENT CORPORATION,
AMERICAN REAL ESTATE INVESTMENT, L.P.
And
THE OTHER PARTIES LISTED ON
THE SIGNATURE PAGES OF THIS AGREEMENT
Dated as of August 20, 1997
THE SECURITIES OFFERED AND SOLD HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISK OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
TABLE OF CONTENTS
Page
1. CONTRIBUTION........................................................... 1
2. CONTRIBUTION; LP UNITS................................................. 4
(a) General..................................................... 4
(b) Contribution Consideration.................................. 4
(c) Issuance of LP Units and Common Stock....................... 5
(d) Transfer Restrictions....................................... 6
(e) Lock-Up Period.............................................. 6
3. CLOSING................................................................ 7
4. PROPERTY INSPECTION.................................................... 7
(a) General..................................................... 7
(b) Condition................................................... 7
(c) Environmental Reports....................................... 8
(d) Refinancing Properties...................................... 10
5. TITLE AND SURVEY MATTERS............................................... 10
(a) Conveyance of Title......................................... 10
(b) Title Commitments........................................... 10
(c) Surveys..................................................... 11
(d) UCC Searches................................................ 12
(e) Defects and Cure............................................ 12
6. REPRESENTATIONS AND WARRANTIES......................................... 12
6.1 ▇▇▇▇▇▇▇ Contributor and the Partnerships......................... 12
(a) Organization................................................ 12
(b) Authority................................................... 13
(c) Other Rights................................................ 13
(d) Defaults.................................................... 13
(e) Contracts................................................... 13
(f) Employees................................................... 14
(g) Compliance with Laws and Codes.............................. 14
(h) Litigation.................................................. 14
(i) Insurance................................................... 15
(j) Financial Information....................................... 15
(k) Re-Zoning................................................... 15
(l) Personal Property........................................... 15
(m) Real Estate Taxes........................................... 15
(n) Taxes....................................................... 16
(o) Transfer Taxes.............................................. 16
(p) Easements and Other Agreements.............................. 16
(q) Lease Controversies......................................... 16
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(r) United States Person........................................ 17
(s) Bulk Sales.................................................. 17
(t) Existing Mortgage(s)........................................ 17
(u) Condemnation................................................ 17
(v) Disclosure.................................................. 17
(w) Partnership Interests and Minority Partnership Interests.... 18
(x) Remaining Assets and Liabilities............................ 18
(y) Source of Income............................................ 18
(z) Income from Prohibited Transactions......................... 18
(aa) Partnership Status.......................................... 18
6.2 Investment Representation........................................ 18
6.3 Survival......................................................... 19
6.4 Indemnification.................................................. 19
6.5 No Personal Recourse............................................. 19
7. ADDITIONAL COVENANTS................................................... 19
7.1 Additional Covenants of the ▇▇▇▇▇▇▇ Contributor and the
Partnerships.................................................. 19
(a) New Leases.................................................. 20
(b) New Contracts............................................... 20
(c) Insurance................................................... 20
(d) Operation of Properties..................................... 20
(e) Pre-Closing Expenses........................................ 20
(f) Good Faith.................................................. 20
(g) No Assignment............................................... 21
(h) Availability of Records..................................... 21
(i) Change in Conditions........................................ 21
(j) Tax Items................................................... 21
(k) Financial Statements........................................ 22
(l) 2 Volvo Drive Remediation................................... 22
7.2 Additional Covenants of the Company.............................. 22
(a) Section 1031 Exchanges of Properties........................ 22
(b) Guarantee of Indebtedness................................... 22
8. ENVIRONMENTAL WARRANTIES AND AGREEMENTS................................ 22
9. LEASES-REPRESENTATIONS WITH RESPECT THERETO............................ 23
(a) Representations as to Leases................................ 23
(b) Estoppel Certificates from Tenants.......................... 25
10. CONDITIONS PRECEDENT TO CLOSING........................................ 26
(a) Pending Actions............................................. 26
(b) Zoning...................................................... 26
(c) Flood Insurance............................................. 26
(d) Utilities................................................... 26
(e) Pay-Off Letters............................................. 26
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(f) Bankruptcy.................................................. 26
(g) Representations and Warranties True......................... 26
(h) Covenants Performed......................................... 27
(i) Material Adverse Effect..................................... 27
(j) Title to the Properties..................................... 27
(k) New Jersey Environmental Clearance.......................... 27
(l) Closing Deliveries.......................................... 27
(m) Acquisition Portfolio....................................... 27
(n) Common Stock Recipient Lock-Up Letters...................... 27
(o) Master Investment Agreement................................. 27
11. CLOSING DELIVERIES..................................................... 27
11.1 ▇▇▇▇▇▇▇ Contributor.............................................. 27
(a) Deeds....................................................... 27
(b) ▇▇▇▇ of Sale................................................ 28
(c) General Assignment.......................................... 28
(d) Assignment of Contracts..................................... 28
(e) Assignment of Partnership Interests......................... 28
(f) Assignment of Leases and Estoppel Certificates.............. 28
(g) Keys........................................................ 28
(h) Affidavit of Title and ALTA Statement....................... 28
(i) Letters to Tenants.......................................... 29
(j) Title Policies and Surveys.................................. 29
(k) Original Documents.......................................... 29
(l) Plans and Specifications.................................... 29
(m) Tax Bills................................................... 29
(n) Entity Transferor Certificate............................... 29
(o) Rent Roll................................................... 29
(p) Bulk Sales Affidavit........................................ 29
(q) Pay-Off Letters............................................. 29
(r) Certificates of Occupancy................................... 29
(s) ISRA Compliance............................................. 29
(t) Employment Agreement........................................ 30
(u) Other....................................................... 30
11.2 Acquiror......................................................... 30
(a) Warrants.................................................... 30
(b) Assignment of Contracts..................................... 30
(c) Assignment of Leases........................................ 30
(d) Contract Notices............................................ 30
(e) Employment Agreement........................................ 30
(f) Other....................................................... 30
12. PRORATIONS AND ADJUSTMENTS............................................. 30
13. DESTRUCTION, LOSS OR DIMINUTION OF PROPERTIES.......................... 32
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14. SUCCESSORS AND ASSIGNS................................................. 33
15. NOTICES................................................................ 34
16. BENEFIT................................................................ 34
17. TENANTS IN DEFAULT..................................................... 34
(a) Applicability of Provision.................................. 34
(b) Acquiror's Rights........................................... 34
18. TERMINATION............................................................ 35
(a) Termination................................................. 35
(b) Effect of Termination....................................... 35
19. MISCELLANEOUS.......................................................... 35
(a) Entire Agreement............................................ 35
(b) Governing Law............................................... 35
(c) Partial Invalidity.......................................... 35
(d) Expenses.................................................... 35
(e) Counterparts................................................ 35
(f) Jurisdiction................................................ 35
THIS ▇▇▇▇▇▇▇ CONTRIBUTION AGREEMENT (this "Agreement") is made and
entered into as of August 20, 1997, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ BAY, L.P. (the
"▇▇▇▇▇▇▇ Contributor"), the entities reflected on the signature pages hereto as
"The Partnerships" (the "Partnerships"), AMERICAN REAL ESTATE INVESTMENT
CORPORATION, a Maryland corporation (the "Company"), and AMERICAN REAL ESTATE
INVESTMENT, L.P., a Delaware limited partnership ("Acquiror"). Capitalized terms
used in this Agreement and not otherwise defined have the meanings specified in
the Master Investment Agreement dated as the date hereof, by and among the
Company, Acquiror, the ▇▇▇▇▇▇▇ Contributor, the Partnerships and the other
parties thereto (the "Master Investment Agreement").
RECITALS
A. The ▇▇▇▇▇▇▇ Contributor desires to contribute or cause to be
contributed the Partnership Interests, the Fee Properties, if any, the Cash
Contribution and the Optional Cash Contribution, if any (all as defined below)
to Acquiror in exchange for the Contribution Consideration (as defined below).
B. The ▇▇▇▇▇▇▇ Contributor desires to cause to be contributed the
Minority Partnership Interests (as defined below) to the Company in exchange for
the Common Stock Amount (as defined below).
C. The ▇▇▇▇▇▇▇ Contributor is a party to the Master Investment
Agreement and the contribution by the ▇▇▇▇▇▇▇ Contributor pursuant to this
Agreement is among the transactions contemplated by the Master Investment
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. CONTRIBUTION At Closing, the ▇▇▇▇▇▇▇ Contributor shall contribute and
convey to the Acquiror, and the Acquiror shall accept and assume from the
▇▇▇▇▇▇▇ Contributor, for the Contribution Consideration, and pursuant to the
terms and subject to the conditions set forth in this Agreement, all of the
▇▇▇▇▇▇▇ Contributor's right, title and interest in and to the Partnership
Interests, the Fee Properties, if any, the Cash Contribution and the Optional
Cash Contribution, if any. The contribution and conveyance of the Partnership
Interests, the Fee Properties, if any, the Cash Contribution and the Optional
Cash Contribution, if any, shall be made subject to the Assumed Indebtedness (as
defined below). At Closing, the ▇▇▇▇▇▇▇ Contributor shall cause to be
contributed and conveyed to the Company, and the Company shall accept and
assume, for the Common Stock Amount, and pursuant to the terms and subject to
the conditions set forth in this Agreement, all of the right, title and interest
in and to the Minority Partnership Interests.
For purposes of this Agreement:
(a) "Acquisition Contracts" means the contracts or letters of intent
to acquire the Acquisition Properties, which contracts are listed in Schedule
2.07 to the Management Contribution Agreement.
(b) "Acquisition Portfolio" means the (i) Acquisition Contracts for
those Acquisition Properties which are not acquired prior to Closing, (ii) any
Acquisition Property which is acquired prior to Closing, and (iii) the cash
proceeds from the sale of any Disposition Property (to the extent such proceeds
have not been used to purchase an Acquisition Property) plus additional cash if
necessary, in each case held by the Partnerships. It being understood that, at
any time prior to the date which is 5 business days prior to the Exercise Date
(as defined in the Stock Purchase Agreement), if the ▇▇▇▇▇▇▇ Contributor
determines that the closing of the sale of the Disposition Property known as ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ will occur after the Closing Date, then the ▇▇▇▇▇▇▇
Contributor may propose to contribute such Disposition Property hereunder, and
Acquiror may then accept such contribution, subject to its due diligence and in
its sole reasonable discretion, in lieu of cash otherwise included in (iii)
above.
(c) "Acquisition Properties" means the properties that are the
subject of the Acquisition Contracts, which properties are listed in Part A of
Schedule 1(c).
(d) "Assumed Indebtedness" means the indebtedness described in
Schedule 1(d).
(e) "Books and Records" means all files, documents, instruments,
papers, books and records relating to the business or condition of the ▇▇▇▇▇▇▇
Contributor and the Partnerships, including without limitation financial
statements, tax returns and related work papers and letters from accountants,
budgets, pricing guidelines, ledgers, journals, deeds, title policies, minute
books, stock certificates and books, stock transfer ledgers, Contracts (as
defined herein), Licenses, customer lists, computer files and programs,
retrieval programs, operating data and plans and environmental studies and
plans.
(f) "Cash Contribution" means $2.0 million (which will be
contributed by ▇▇▇▇▇▇ Bay to the ▇▇▇▇▇▇▇ Contributor prior to Closing or, at the
direction of the ▇▇▇▇▇▇▇ Contributor, to the Acquiror at Closing) in cash to be
contributed to the Acquiror by or on behalf of the ▇▇▇▇▇▇▇ Contributor at the
Closing.
(g) "Disposition Properties" means those Properties listed on
Schedule 1(g) which are currently owned in fee simple by the Partnerships and
which such Partnerships intend to dispose of prior to or after the Closing.
(h) "Fee Properties" means the Properties to be contributed in fee
simple to the Acquiror at Closing by or on behalf of the ▇▇▇▇▇▇▇ Contributor and
identified in Schedule 1(h).
(i) "knowledge" of the ▇▇▇▇▇▇▇ Contributor and the Partnerships
means, with respect to any representation and warranty, the current actual
knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(j) "LP Unit Recipients" means those partners of the ▇▇▇▇▇▇▇
Contributor (or beneficial owners of such partners) who will ultimately receive
or beneficially own LP Units or Conversion Shares upon dissolution of the
▇▇▇▇▇▇▇ Contributor.
(k) "Material Adverse Effect" means an adverse effect on the
condition, financial or otherwise, or on the earnings, assets, business affairs
or business prospects of the ▇▇▇▇▇▇▇ Contributor,
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the Partnerships or the Properties which would be material to the ▇▇▇▇▇▇▇
Contributor, the Partnerships and the Properties, taken as a whole.
(l) "Minority Partnership Interests" means the up to 1% ownership
interests in the Partnerships listed in Schedule 1(l) to be owned and held
directly or indirectly by one or more owners of such Partnerships prior to
Closing and contributed to the Company at Closing, as described in Schedule
1(l).
(m) "Operating Statements" mean all income and expense statements
and year-end financial operating statements for the Partnerships and the
Properties for calendar years 1994, 1995 and 1996 and for the first and second
quarters of 1997.
(n) "Partnerships" means those certain partnerships, corporations
and limited liability companies listed in Schedule 1(n), which own, or will own
prior to Closing, the Properties and the Acquisition Portfolio.
(o) "Partnership Interests" means the ownership interests in the
Partnerships to be owned and held by or on behalf of the ▇▇▇▇▇▇▇ Contributor
prior to Closing and contributed to the Acquiror at Closing, as described in
Part A of Schedule 1(o).
(p) "Partnership Properties" means those Properties owned in fee
simple (or by way of leasehold interest in the case of ▇▇ ▇▇▇▇ ▇▇▇▇▇▇) by the
Partnerships and identified in Part A of Schedule 1(p).
(q) "Properties" means the Fee Properties and the Partnership
Properties, including: (i) the parcels of land described in Part A of Schedule
1(q) (collectively, the "Land"), together with all strips, gores, rights,
easements and interests appurtenant thereto, including, but not limited to, all
right, title and interest of the ▇▇▇▇▇▇▇ Contributor, each Partnership or any
other person contributing such Land to the Acquiror on behalf of the ▇▇▇▇▇▇▇
Contributor in and to any islands, alleys, drives, streets or other public ways
adjacent to the Land and any water or mineral rights owned by, or leased to, the
▇▇▇▇▇▇▇ Contributor, each Partnership or such other person; (ii) all
improvements located on, over or below the Land, including, but not limited to,
the buildings thereon (the "Buildings"), and all other structures, systems, and
utilities associated with, and utilized in the ownership and operation of the
Buildings (all such improvements being collectively referred to herein as the
"Improvements"), but excluding improvements and structures, systems and
utilities, if any, owned by Tenants and subtenants of the Buildings; (iii) all
right, title and interest of the ▇▇▇▇▇▇▇ Contributor, each Partnership and such
other person in and to all tangible personal property (x) located on or in the
Land or Improvements, or (y) used in connection with the operation and
maintenance of any or all of the Properties, but not including personal property
subject to equipment leases, (collectively, the "Personal Property"); (iv) all
building materials, supplies, hardware, carpeting and other inventory owned by
the ▇▇▇▇▇▇▇ Contributor, each Partnership and such other person and maintained
in connection with the ▇▇▇▇▇▇▇ Contributor's, each Partnership's and such other
person's ownership and operation of the Land and/or Improvements (collectively,
the "Inventory"); (v) the ▇▇▇▇▇▇▇ Contributor's, each Partnership's and such
other person's interest in all goodwill, trademarks, tradenames, property
owners' associations, architectural control boards, development agreements,
development rights and entitlements, claims against third parties and other
intangible property used or useful in connection with the foregoing
(collectively, the "Intangible Personal Property"); and (vi) the ▇▇▇▇▇▇▇
Contributor's, each Partnership's and such other person's
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interest in all leases and other agreements to occupy all or any portion of the
Land and/or Improvements in effect on the date hereof or into which either the
▇▇▇▇▇▇▇ Contributor, any Partnership or any such person enters prior to Closing,
but pursuant to the express terms of this Agreement (collectively, the
"Leases").
(r) "Remedial Action" shall mean any and all corrective or remedial
action, preventative measures, response, removal, transport, disposal, clean-up,
abatement, treatment and monitoring of Hazardous Materials or Environmental
Issues, whether voluntary or mandatory, and includes all studies, assessments,
reports or investigations performed in connection therewith to determine if such
actions are necessary or appropriate (including investigations performed to
determine the progress or status of any such actions), all occurring on or after
the date hereof.
(s) "Remedial Costs" shall include all costs, liabilities, expenses
and fees incurred on or after the date of this Agreement in connection with
Remedial Action, including but not limited to: (i) the fees of environmental
consultants and contractors; (ii) reasonable attorneys' fees (including
compensation for in-house and corporate counsel provided such compensation does
not exceed customary rates for comparable services); (iii) the costs associated
with the preparation of reports, and laboratory analysis (including charges for
expedited results if reasonably necessary); (iv) regulatory, permitting and
review fees; (v) costs of soil and/or water treatment (including groundwater
monitoring) and/or transport and disposal; and (vi) the cost of supplies,
equipment, material and utilities used in connection with Remedial Action.
(t) "Rent Roll" means the rent roll for the Buildings, indicating
all Leases, Tenants and other pertinent information.
(u) "Tenants" mean all of the tenants of the Properties listed
on the Rent Roll.
(v) "Transaction Agreements" means the Master Investment Agreement,
the Merger Agreement, the Stock Purchase Agreement, the Management Contribution
Agreement and all agreements and documents to be delivered by Acquiror, the
Company and the Investors in connection with the transactions contemplated by
this Agreement and the Master Investment Agreement.
2. CONTRIBUTION; LP UNITS
(a) General. Acquiror's sole general partner is the Company. The
Company is a real estate investment trust whose common stock is traded on the
American Stock Exchange (the "AMEX").
(b) Contribution Consideration.
(i) The aggregate consideration to be paid to the ▇▇▇▇▇▇▇
Contributor by Acquiror and the Company for the Partnership
Interests, the Fee Properties, if any, the Cash Contribution and the
Optional Cash Contribution, if any (the "Contribution
Consideration") shall consist of that number of LP Units (as defined
below) (the "Total LP Unit Amount") that equals the aggregate of the
amounts set forth in the next succeeding sentence (the "Total LP
Unit Value") divided by the Per Unit Purchase Price. The Total LP
Unit Value shall equal (A) the sum of the "Allocated Amounts"
assigned
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to all of the Fee Properties, if any, and Partnership Interests, as
provided on Part A of Schedule 2(b)(i)-A, subject to adjustment as
provided below; minus (B) the sum of the Assumed Indebtedness with
respect to all Properties, as reflected in Part A of Schedule
2(b)(i)-B, subject to adjustment as provided below; minus (C) any
prorations described in Paragraph 12 ("Prorations") and credited, as
of the Closing Date (as defined below), to Acquiror; plus (E) any
Prorations credited, as of the Closing Date, to the ▇▇▇▇▇▇▇
Contributor; minus (F) any other adjustments described in this
Agreement ("Adjustments") occurring on or prior to the Closing Date
in favor of Acquiror; plus (G) any Adjustments occurring on or prior
to the Closing Date in favor of the ▇▇▇▇▇▇▇ Contributor; and plus
(H) the Cash Contribution and the Optional Cash Contribution, if
any. If any Property is excluded from the transactions provided for
in this Agreement, the Allocated Amounts and the Assumed
Indebtedness shall be adjusted based on the respective amounts
thereof that are allocated on Part A of Schedule 2(b)(i)-A and Part
A of Schedule 2(b)(i)-B to that Property.
(ii) If the calculation of the Total LP Unit Amount in
accordance with the foregoing provisions would result in a fraction
of an LP Unit being delivered to the ▇▇▇▇▇▇▇ Contributor, then the
Total LP Unit Amount shall be rounded to the nearest whole number of
LP Units. The Fee Properties are to be contributed to Acquiror
subject to the corresponding items of Assumed Indebtedness. Provided
that all conditions precedent to Acquiror's obligations to close as
set forth in this Agreement (collectively, "Acquiror's Conditions
Precedent") have been satisfied and fulfilled, or waived in writing
by Acquiror, the Contribution Consideration shall be paid to the
▇▇▇▇▇▇▇ Contributor at Closing pursuant to Subparagraph 2(c).
(iii) The ▇▇▇▇▇▇▇ Contributor will have the right to elect, at
any time after the date of this Agreement and until Exercise Date,
to make an additional contribution to Acquiror of an aggregate of up
to $2.6 million of cash (which may be contributed through
Partnership Interests and may be in the form of one or more
Acquisition Properties)(the "Optional Cash Contribution"), in
consideration for the issuance to the ▇▇▇▇▇▇▇ Contributor of
additional LP Units at the Closing.
(iv) The parties acknowledge that the ▇▇▇▇▇▇▇ Contributor (or
any Partnership) may close on one or more of the Acquisition
Properties prior to the Closing Date. If that happens, such
Acquisition Properties shall become part of the Acquisition
Portfolio and the Allocated Amounts and the Assumed Indebtedness
shall be adjusted to reflect the new amounts that are to be
allocated to those Acquisition Properties.
(v) The aggregate consideration to be paid to the holders of
the Minority Partnership Interests by the Company for the Minority
Partnership Interests (the "Common Stock Amount") shall consist of
that number of shares of Common Stock that equals the sum of the
Allocated Amounts assigned to such Minority Partnership Interests,
as provided in Schedule 2(b)(v), divided by the Per Share Purchase
Price.
(c) Issuance of LP Units and Common Stock.
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(i) Units of limited partnership interest in Acquiror (the "LP
Units") equalling the Total LP Unit Amount shall be issued and
delivered at Closing to the ▇▇▇▇▇▇▇ Contributor. The LP Units shall
be exchangeable at the option of the holders thereof for shares
("Conversion Shares") of the common stock, par value $.001 per share
(the "Common Stock"), of the Company as provided in Acquiror's
Amended and Restated Partnership Agreement (as defined in the Master
Investment Agreement).
(ii) Notwithstanding the foregoing, an amount equal to 5% of
the LP Units otherwise issuable to the ▇▇▇▇▇▇▇ Contributor
hereunder, shall be issuable and held in escrow until after the date
on which all post-Closing adjustments and Prorations have been
finalized, which shall occur no later than 90 days after the Closing
Date, and all amounts payable by the ▇▇▇▇▇▇▇ Contributor in respect
of those adjustments have been paid in full. Any such amounts
remaining unpaid after 15 days following the date the adjustments
were finalized may at Acquiror's discretion be applied against those
LP Units at the Per Unit Purchase Price. Any distributions made in
respect of such LP Units during the period when such LP Units are
held in escrow will also be held in escrow and will be released to
the ▇▇▇▇▇▇▇ Contributor only when the LP Units in respect of which
such distributions were made are so released.
(iii) Shares of Common Stock equalling the Common Stock Amount
shall be issued and delivered at Closing, in the names of and for
distribution to those Common Stock recipients set forth on Schedule
2(c)(iii) (the "Common Stock Recipients"). Such shares of Common
Stock will be registered under the Securities Act.
(d) Transfer Restrictions. The ▇▇▇▇▇▇▇ Contributor agrees that it or
any LP Unit Recipient may only sell, transfer, assign, pledge or encumber, or
otherwise convey any or all of the LP Units delivered to it in connection with
this transaction and, if applicable, any Conversion Shares in strict compliance
with this Agreement, the Amended and Restated Partnership Agreement, the charter
documents of the Company, the registration and other provisions of the
Securities Act (and the rules promulgated thereunder), any state securities
laws, and the rules of the AMEX, in each case as may be applicable. Holders of
LP Units (and Conversion Shares issuable in respect of such Units) shall have
the registration rights with respect to those Conversion Shares set forth in the
Amended and Restated Partnership Agreement.
(e) Lock-Up Period. The ▇▇▇▇▇▇▇ Contributor agrees that (i) for a
period of two years following the Closing (the "Lock-Up Period") it shall not,
in any way or to any extent, redeem (pursuant to the Amended and Restated
Partnership Agreement or otherwise), sell, transfer, assign, or (without
Acquiror's consent which shall not be unreasonably withheld) pledge or encumber,
or otherwise convey, any or all of the LP Units or Conversion Shares, as the
case may be, delivered to the ▇▇▇▇▇▇▇ Contributor in connection with this
transaction; and (ii) not more than 25% of the initial number of LP Units or
Conversion Shares owned by it or an LP Unit Recipient, as the case may be, may
be sold by it or by such LP Unit Recipient in the three-month period immediately
following the Lock-Up Period, and an additional 25% of such LP Units and
Conversion Shares may be sold in each three-month period thereafter (so that all
LP Units and Conversion Shares may be sold after the third anniversary of the
Closing Date); provided that transfers may be made, subject to the restrictions
hereof and under the Amended and Restated Partnership Agreement, to Permitted
Transferees. At Closing, the ▇▇▇▇▇▇▇ Contributor will cause each Common Stock
Recipient to agree, in form and substance reasonably
6
satisfactory to the Company (the "Common Stock Recipient Lock-Up Letters"), that
(i) for the Lock-Up Period it shall not, in any way or to any extent, sell,
transfer, assign, pledge or encumber, or otherwise convey, any or all of the
shares of Common Stock delivered to it in connection with this transaction; and
(ii) not more than 25% of the initial number of shares of Common Stock owned by
it may be sold by it in the three-month period immediately following the Lock-Up
Period, and an additional 25% of such shares may be sold in each three-month
period thereafter (so that all of such shares may be sold after the third
anniversary of the Closing Date); provided that transfers may be made, subject
to the restrictions hereof, to Permitted Transferees. The term "Permitted
Transferee," with respect to the ▇▇▇▇▇▇▇ Contributor and any LP Unit Recipient
or Common Stock Recipient, shall mean any other LP Unit Recipient or Common
Stock Recipient, as the case may be, and such recipient's spouse; a parent or
lineal descendant (including an adopted child) of a parent, or the spouse of a
lineal descendant of a parent; a trustee, guardian or custodian for, or an
executor, administrator or other legal representative of the estate of, such
recipient, or a trustee, guardian or custodian for a Permitted Transferee of
such recipient; the trustee of a trust (including a voting trust) for the
benefit of such recipient; and a corporation, partnership or other entity of
which such recipient and Permitted Transferees of such recipient are the
beneficial owners of a majority in voting power of the equity, and, in the case
of an LP Unit Recipient, who (i) is an accredited investor (as defined in Rule
501 under the Securities Act); and (ii) agrees in writing in an instrument
reasonably acceptable to Acquiror to be bound by the restriction on transfer of
the LP Units and Conversion Shares contained in this Agreement and by the
obligations contained in the indemnification provisions in Section 6.02 of the
Master Investment Agreement, provided that such obligation shall be limited to
the LP Units, Conversion Shares or shares of Common Stock actually received by
such Permitted Transferee, and such Permitted Transferee shall not be liable for
money damages or otherwise.
3. CLOSING. The contribution of the Partnership Interests, the Fee
Properties, if any, the Cash Contribution, the Optional Cash Contribution, if
any, and of the Minority Partnership Interests, and delivery of the Contribution
Consideration and Common Stock Amount contemplated herein shall be consummated
at the Closing, which will take place at the place and at the time on the
Closing Date designated in the Master Investment Agreement. At the Closing,
there shall also be delivered to the Company, the Acquiror and the ▇▇▇▇▇▇▇
Contributor the certificates and other documents and instruments required to be
delivered under this Agreement and under the Master Investment Agreement.
4. PROPERTY INSPECTION
(a) General. Acquiror confirms that as of the date hereof, but
without limiting any specific warranty, representation or condition set forth in
this Agreement and except as otherwise set forth below in this Paragraph 4,
there are no further contingencies for Acquiror's studies, investigations,
evaluations and inspections of the Properties.
(b) Condition. As a material inducement to the ▇▇▇▇▇▇▇ Contributor
and the Partnerships to execute this Agreement, Acquiror acknowledges and agrees
that, except for the various express warranties, representations and conditions
of the ▇▇▇▇▇▇▇ Contributor and the Partnerships set forth in this Agreement and
for the various express warranties, representations and conditions of the
▇▇▇▇▇▇▇ Contributor and the Partnerships in the Master Investment Agreement, or
in any other documents, instruments or agreements now or hereafter to be
executed or delivered by the ▇▇▇▇▇▇▇ Contributor or any or all of the
Partnerships and delivered to Acquiror pursuant to the provisions of this
Agreement or the Master Investment Agreement (collectively, the "▇▇▇▇▇▇▇
Contributor Documents"),
7
the Partnership Interests, the Properties and the Acquisition Portfolio will be
purchased by Acquiror and the Minority Partnership Interests will be purchased
by the Company "AS IS" and "WHERE IS" and with all faults, on the basis of
Acquiror's own independent investigation. Except as expressly set forth in this
Agreement or the ▇▇▇▇▇▇▇ Contributor Documents, the ▇▇▇▇▇▇▇ Contributor and the
Partnerships have not made, do not make, and have not authorized anyone else to
make any representation as to the present or future physical condition, value,
presence or absence of Hazardous Materials, financing status, leasing,
operation, use, tax status, income and expenses or any other matter or thing
pertaining to the Properties, and Acquiror acknowledges that no such
representation or warranty has been made and that in entering into this
Agreement it does not rely on any representation or warranty other than those
expressly set forth in this Agreement or in the ▇▇▇▇▇▇▇ Contributor Documents.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE ▇▇▇▇▇▇▇ CONTRIBUTOR
DOCUMENTS, THE ▇▇▇▇▇▇▇ CONTRIBUTOR AND THE PARTNERSHIPS MAKE NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF CONDITION, HABITABILITY, MERCHANTABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTIES OR THE ACQUISITION
PROPERTIES. The ▇▇▇▇▇▇▇ Contributor and the Partnerships shall not be liable for
or bound by any verbal or written statements, representations, real estate
broker's "setups" or information pertaining to the Properties or the Acquisition
Properties furnished by any real estate broker, agent, employee, servant or any
other person unless the same are specifically set forth in this Agreement or in
the ▇▇▇▇▇▇▇ Contributor Documents. The provisions of this Paragraph 4(b) shall
survive the Closing.
(c) Environmental Reports. Schedule 4(c) contains a list of each
report delivered or made available by the ▇▇▇▇▇▇▇ Contributor and the
Partnerships to the Acquiror with regard to so-called "Phase I" or "Phase II"
environmental inspections and assessments performed prior to the date hereof,
and/or a description of any known environmental problem, at the Properties (the
"Delivered Assessments"). The ▇▇▇▇▇▇▇ Contributor and the Partnerships represent
and warrant that the Delivered Assessments are the only environmental
assessments in the possession of the Partnerships or the ▇▇▇▇▇▇▇ Contributor
with regard to the Properties. The parties acknowledge that EMG has been
retained to perform Phase I environmental inspections or assessments at the
Properties after the date of this Agreement and prior to the fifteenth business
day prior to the Closing Date. The ▇▇▇▇▇▇▇ Contributor shall deliver or cause to
be delivered to Acquiror all reports prepared in connection with those
subsequent assessments ("Subsequent Assessments"). If any Subsequent Assessment
indicates that there exists at any Property any presence of or contamination by
Hazardous Materials (i) which have, in the reasonable judgment of Acquiror, a
material adverse effect on the value of such Property, (ii) which were not
disclosed in the Delivered Assessments and (iii) for which Remedial Action (as
defined herein) is necessary in order for such Property to be in the same
condition with regard to environmental matters as was reflected in the Delivered
Assessments (such condition or contamination being referred to as an
"Environmental Issue"), then the following will apply:
(i) Environmental Issue Notice. Acquiror shall give written
notice of the existence of any Environmental Issues (the
"Environmental Issue Notice") to the ▇▇▇▇▇▇▇ Contributor not later
than September 10, 1997 (which date shall be extended for any
Property for which a Subsequent Assessment is not delivered at least
5 business days prior to September 10, 1997 to the date which shall
be 5 business days after delivery thereof)(the "Approval Date"). The
Environmental Issue Notice shall specify, in reasonable detail, the
Environmental Issue and the scope of proposed Remedial Action.
Notwithstanding the foregoing, the ▇▇▇▇▇▇▇ Contributor shall be and
remain liable
8
hereunder, as and to the extent elsewhere provided in this
Agreement, for any breach of warranty or representation relating to
the existence of any Environmental Issue existing as of the date of
this Agreement or the Closing Date, and not detected in the
Delivered Assessments or the Subsequent Assessments.
(ii) ▇▇▇▇▇▇▇ Contributor Mitigation Option. After the delivery
of the Environmental Issue Notice, the ▇▇▇▇▇▇▇ Contributor may,
within the 10 day period following such delivery, send a written
notice to Acquiror ("▇▇▇▇▇▇▇ Contributor Remediation Notice") of its
election to cause the Acquiror to correct and remediate the noted
Environmental Issues, at the ▇▇▇▇▇▇▇ Contributor's sole cost and
expense ("▇▇▇▇▇▇▇ Contributor Mitigation Option"), in which event:
(A) the terms and provisions of this Agreement shall remain in full
force and effect, and (B) Acquiror may deposit into an escrow with
the Title Company (a "Remediation Escrow") a number of LP Units
which would otherwise be delivered to the ▇▇▇▇▇▇▇ Contributor at
Closing equal in value to the reasonably anticipated Remedial Costs
(as defined herein). The ▇▇▇▇▇▇▇ Contributor will pay all costs and
expenses incurred subsequent to Closing in connection with Remedial
Action at those Properties with respect to which the ▇▇▇▇▇▇▇
Contributor delivered a ▇▇▇▇▇▇▇ Contributor Remediation Notice. The
escrowed LP Units in the Remediation Escrow shall be delivered to
the ▇▇▇▇▇▇▇ Contributor or its designee upon completion of such
Remedial Action. Any distributions made in respect of such LP Units
during the period when such LP Units are held in escrow will also be
held in escrow and will be released to the ▇▇▇▇▇▇▇ Contributor only
when the LP Units in respect of which such distributions were made
are so released. In the event LP Units are escrowed pursuant to this
Subparagraph 4(c), then at Closing, Acquiror and the ▇▇▇▇▇▇▇
Contributor shall enter into a remediation escrow and disbursement
agreement reasonably and mutually satisfactory to Acquiror, the
▇▇▇▇▇▇▇ Contributor and their respective counsel.
(iii) Remediation To Be Performed by Acquiror. If the Closing
occurs hereunder, all Remedial Action at those Properties with
respect to which the ▇▇▇▇▇▇▇ Contributor delivered a ▇▇▇▇▇▇▇
Contributor Remediation Notice shall be undertaken by Acquiror or
its agents or contractors, and the ▇▇▇▇▇▇▇ Contributor shall not be
responsible for conducting such Remedial Action; provided, however,
that the ▇▇▇▇▇▇▇ Contributor liability pursuant to the
indemnification set forth in the Master Investment Agreement is in
addition to, and not replaced or limited by, the terms of this
Subparagraph 4(c). For purposes of this Subparagraph 4(c) the
"reasonably anticipated Remedial Costs" shall be the good faith
estimate of Remedial Costs, as set forth in a detailed bid proposal
by Acquiror's first-class nationally or regionally recognized
environmental engineering and/or consulting firm.
(iv) Acquiror's Right To Delete Properties. If the ▇▇▇▇▇▇▇
Contributor does not elect or fails to timely elect the ▇▇▇▇▇▇▇
Contributor Mitigation Option with respect to any Property subject
to any Environmental Issue Notice, then Acquiror may, at Acquiror's
sole option, elect to delete and eliminate from this Agreement any
such Property (the "Environmental Issue Deletion Option"), by giving
written notice to the ▇▇▇▇▇▇▇ Contributor no later than the Closing
Date. Upon delivery of such notice, this Agreement shall, without
further action of the parties, be deemed to have been
9
automatically and ipso facto amended so as to eliminate from this
transaction each Property so deleted by Acquiror, subject to a
reduction in the Contribution Consideration equal to the aggregate
amount of the Allocated Amounts and related Assumed Indebtedness,
Prorations and Adjustments of all Properties so deleted. Upon such
amendment of this Agreement, all references to the Properties shall
automatically exclude each Property so deleted and no Closing or
pre-Closing obligations imposed on the ▇▇▇▇▇▇▇ Contributor (or
Acquiror's Conditions Precedent) shall apply thereto except that
Acquiror shall promptly return all documents, records and studies
relating to such deleted Properties. Unless the ▇▇▇▇▇▇▇ Contributor
or any Partnership breaches a representation or warranty contained
in Paragraph 8 (in which event the remedies applicable thereto shall
apply), Acquiror's exclusive remedy in the event of Environmental
Issues or contamination (assuming that the ▇▇▇▇▇▇▇ Contributor does
not elect or fails to timely elect the ▇▇▇▇▇▇▇ Contributor
Mitigation Option) at any of the Properties shall be the deletion of
such Properties in the manner provided above.
(d) Refinancing Properties. This Paragraph 4 and the rights
granted to Acquiror hereunder shall not apply to any Properties which are
security for the Refinancing (as defined in the Master Investment Agreement).
5. TITLE AND SURVEY MATTERS
(a) Conveyance of Title. At Closing, the ▇▇▇▇▇▇▇ Contributor agrees
to deliver to Acquiror or Acquiror's assignee or designee bargain and sale deeds
with covenants against grantor's acts ("Deeds"), in recordable form, conveying
any Fee Properties to Acquiror or Acquiror's assignee or designee and to deliver
the Partnership Interests, the Cash Contribution and the Optional Cash
Contribution, if any, to the Acquiror or Acquiror's assignee or designee, the
Partnership Interests and the Properties each being free and clear of all liens,
claims and encumbrances except for the following items (the "Permitted
Exceptions"): (i) any real estate taxes not yet due and payable; (ii) those
matters listed on Schedule 5(a) attached hereto; (iii) those additional matters
that may become Permitted Exceptions pursuant to Subparagraph 5(e); (iv) the
rights of Tenants (as tenants only) under the Leases; (v) matters arising as a
direct result of any acts or omissions of Acquiror and its Representatives; (vi)
any matters disclosed on the Title Commitments referenced in paragraph (b)
below, other than matters listed in Schedule 5(a) and liens required to be
removed pursuant to this Agreement; (vii) liens securing the Assumed
Indebtedness; and (viii) any other items acceptable to Acquiror in its
reasonable discretion. At Closing, the ▇▇▇▇▇▇▇ Contributor shall also deliver to
Acquiror each of the documents listed in Paragraph 11.1. At Closing, the ▇▇▇▇▇▇▇
Contributor agrees to cause to be delivered to the Company or the Company's
assignee or designee the Minority Partnership Interests, being free and clear of
all liens, claims and encumbrances except for the Permitted Exceptions.
(b) Title Commitments. The ▇▇▇▇▇▇▇ Contributor has heretofore caused
(at their sole cost and expense) TitleServNY as agent for ▇▇▇▇▇▇▇ Title Guaranty
Company (the "Title Company") to issue to Acquiror an owner's title insurance
commitment for each of the Properties other than ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ (the "Title
Commitments"). The title insurance policy to be issued at Closing by the Title
Company pursuant to the Title Commitment (the "Title Policy") shall be an ALTA
Form B (1987 or later) owner's policy with respect to each Property. Each Title
Commitment shall reflect the full amount of the Allocated Amount for each
Property, show fee simple or leasehold, as applicable, title to the Properties
vested in the ▇▇▇▇▇▇▇ Contributor or the Partnerships, together with legible and
complete
10
copies of all recorded documents evidencing title exceptions raised in Schedule
B of the Title Commitments. It shall be an Acquiror's Condition Precedent that
the Title Policies (or "marked-up" title commitments) shall have all standard
and general printed exceptions deleted so as to afford full "extended form
coverage," and shall further include an owner's comprehensive endorsement (or
the equivalent by way of affirmative insurance); an endorsement certifying that
the bills for the real estate taxes pertaining to the Land and Improvements do
not include taxes pertaining to any other real estate; an access endorsement; a
contiguity endorsement, if applicable; a subdivision or plat act endorsement; a
survey "land same as" endorsement; a zoning 3.1 endorsement (amended to include
parking); a creditors' rights endorsement; an endorsement indicating that the
Properties are not within any special benefit district for any entity that has
been created and that will assess any one or more of the Properties, but no
assessments from such entity currently appear of record; and any other
endorsements reasonably requested by Acquiror and reasonably approved by the
▇▇▇▇▇▇▇ Contributor, including non-imputation and "Fairway" endorsements. As an
Acquiror's Condition Precedent, each Title Commitment shall be marked for
laterdating to cover the Closing and the recording of the Deeds, and the Title
Company shall deliver the Title Policies (or "marked-up" title commitments) to
Acquiror concurrently with the Closing. Should an update to any Title Commitment
after the date hereof indicate matters that do or would materially adversely
affect the value or marketability of title to any Property, or other matters
which do or would materially adversely affect Acquiror's use, operation or
financing of any Property, such matters shall be considered Defects (as defined
below) and the cure provisions set forth in Subparagraph 5(e) shall apply,
provided that a Defects Notice (as defined below) is timely delivered with
respect to such Defects.
(c) Surveys. The ▇▇▇▇▇▇▇ Contributor has heretofore delivered (at
their sole cost and expense) an as-built survey or site plan of each Property
other than the Acquisition Properties (the "Surveys"), prepared by a surveyor(s)
duly registered in the State of New Jersey. The Surveys shall be updated to a
date on or after the date hereof, and certified to the appropriate Partnership,
the Company, any designated lender(s) of Acquiror, and the Title Company, by a
surveyor(s) duly registered in the State of New Jersey as having been prepared
in accordance with the minimum detail and classification requirements of the
land survey standards of the American Land Title Association, and specifically
incorporating all of the standards and protocols contemplated by the minimum
standard detail requirements and classifications for ALTA/ASCM land title
surveys, as adopted in 1992 by ALTA/ASCM, including Table A responsibilities and
specifications 1-5 (excluding for Table A5 any information with respect to
elevations), 6-11, and 13, and shall include the certification attached hereto
as Exhibit A. The Surveys shall show any encroachments of the Improvements onto
adjoining properties, easements, set-back lines or rights-of-way, and any
encroachments of adjacent improvements onto any Property, and shall comply with
any requirements imposed by the Title Company as a condition to the removal of
the survey exception from the standard printed exceptions in Schedule B of the
Title Commitments, and shall comply with any reasonable requirements of
Acquiror's lender(s), if any. Without limitation of the foregoing, the Surveys
shall state the legal description of the Land, the acreage of the Land and the
dimensions, height and square footage of each Building, the number and location
of all legal parking spaces on each parcel of Land, driveways, ingress and
egress, the address of the Improvements, the zoning of the Property and shall
further state whether any parcel of Land is located in a wetlands area or in an
area designated by an agency of the United States as being subject to flood
hazards or flood risks. Should any Survey indicate the presence of any
encroachments by or upon any Property, or other matters that do or would
adversely affect the value or marketability of title to any Property, or other
matters which do or would adversely affect Acquiror's use, operation or
financing of any Property, such matters shall be considered Defects, and the
cure provisions set forth in Subparagraph
11
5(e) shall apply, provided that a Defects Notice (as defined below) is timely
delivered with respect to such Defects.
(d) UCC Searches. The ▇▇▇▇▇▇▇ Contributor shall deliver to Acquiror,
or cause the Title Company to deliver to Acquiror, within 20 days after the date
hereof, and shall update to the Closing Date, current searches of all Uniform
Commercial Code financing statements naming the record owner of each Property as
debtor and filed with either or both of the Secretaries of State of the States
pursuant to the laws of which such record owner was organized and the
Secretaries of State of the States in which the Properties are located (the "UCC
Searches"). Should the UCC Searches indicate matters that do or would materially
adversely affect the value or marketability of title to any Property, including,
but not limited to, claims or liens against any of such parties encumbering all
or any portion of any Property, or other matters which do or would adversely
affect Acquiror's use, operation or financing of any Property, and such matters
are not Permitted Exceptions, such matters shall be considered Defects, and the
cure provisions set forth in Subparagraph 5(e) shall apply, provided that a
Defects Notice (as defined below) is timely delivered with respect to such
Defects.
(e) Defects and Cure. The items described in this Paragraph 5 are
collectively referred to as "Title Evidence." If any Title Evidence obtained
after the date hereof and prior to the Closing Date discloses claims, liens,
exceptions, or conditions (other than Assumed Indebtedness) that materially
adversely affect the use and/or marketability of title to any Property
("Defects"), Acquiror may, prior to the Closing Date, give written notice (the
"Defects Notice") of such Defects to the ▇▇▇▇▇▇▇ Contributor. If and to the
extent that the Title Evidence discloses any claims, liens, exceptions or
conditions to which Acquiror does not object in its Defects Notice, then such
items shall thereafter constitute Permitted Exceptions. If, with respect to any
one or more Properties, the ▇▇▇▇▇▇▇ Contributor fails or refuses prior to 15
days prior to Closing ("Response Period"), to either (i) cure all Defects; or
(ii) cause all Defects to be insured over by the Title Company (in form and
substance acceptable to Acquiror), then Acquiror may delete and eliminate from
this Agreement the applicable Property by written notice to the ▇▇▇▇▇▇▇
Contributor delivered on or before the Closing Date, whereupon this Agreement
shall, without further action of the parties, be deemed to have been
automatically and ipso facto amended, as to eliminate such Property or
Properties (the "Title Deleted Properties") herefrom, subject to a reduction in
the Contribution Consideration in an amount equal to the aggregate amount of (x)
the Allocated Amounts minus (y) the Assumed Indebtedness of all Title Deleted
Properties, in each case adjusted by eliminating any and all appropriate
Prorations and Adjustments.
6. REPRESENTATIONS AND WARRANTIES
6.1 ▇▇▇▇▇▇▇ Contributor and the Partnerships. The ▇▇▇▇▇▇▇
Contributor and the Partnerships, jointly and severally, represent and warrant
to, and covenant with, Acquiror and the Company as follows:
(a) Organization. The ▇▇▇▇▇▇▇ Contributor and each Partnership is
duly organized and validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and lawful
authority to (a) own, lease and operate its properties and assets as they are
now owned, leased and operated and (b) carry on its business as now conducted
and presently proposed to be conducted. The ▇▇▇▇▇▇▇ Contributor and each
Partnership is duly qualified, licensed or admitted to do business and is in
good standing in those jurisdictions in which the ownership, use or leasing of
its assets and properties, or the conduct or nature of its business, makes such
qualification, licensing or
12
admission necessary, except for failures to be so qualified, licensed or
admitted and in good standing that individually or in the aggregate would not
result in a Material Adverse Effect.
(b) Authority. The ▇▇▇▇▇▇▇ Contributor and each Partnership has the
full legal right and power and all authority and approval required to enter
into, execute and deliver this Agreement and to perform fully its obligations
hereunder. The execution and delivery of this Agreement and the other documents
delivered by the ▇▇▇▇▇▇▇ Contributor and each Partnership pursuant to this
Agreement, and the performance of all of its obligations under this Agreement
and such other documents by it, have been duly authorized by it, and this
Agreement is binding on it and enforceable against it in accordance with its
terms. No consent (other than those which have been obtained or as set forth on
Schedule 6.1(b)) of any creditor, investor, partner, shareholder,
tenant-in-common of the ▇▇▇▇▇▇▇ Contributor or any Partnership, judicial or
administrative body, Governmental Authority, or other governmental body or
agency, or other party to such execution, delivery and performance by the
▇▇▇▇▇▇▇ Contributor or any Partnership is required. Neither the execution of
this Agreement nor the consummation of the transactions contemplated hereby by
the ▇▇▇▇▇▇▇ Contributor or any Partnership will (i) result in a breach of,
default under, or acceleration of, any agreement to which the ▇▇▇▇▇▇▇
Contributor or any Partnership is a party or by which it or the Partnership or
Properties are bound (other than the Existing Mortgages as set forth on Schedule
6.1(b)); (ii) violate any provision of its partnership agreement, limited
liability company agreement or other organizational documents; or (iii) violate
any restriction, court order, agreement or other legal obligation to which the
▇▇▇▇▇▇▇ Contributor and/or any of the Partnerships or Properties are subject,
except for such breaches, defaults, accelerations or violations which
individually or in the aggregate would not have a Material Adverse Effect.
(c) Other Rights. There are no development or other rights
associated with any Property which are not being transferred to Acquiror under
this Agreement or the other transaction documents.
(d) Defaults. To their knowledge, neither the ▇▇▇▇▇▇▇ Contributor
nor any Partnership is in default (which default remains uncured) under any of
the documents, recorded or unrecorded, referred to in the Title Commitments for
the Properties, except for such defaults that individually or in the aggregate
would not have a Material Adverse Effect. To their knowledge, neither the
▇▇▇▇▇▇▇ Contributor nor any Property nor any Partnership is in default under any
certificates of occupancy, licenses, permits, authorizations and approvals
required by law or by any governmental authority having jurisdiction thereof in
respect of the Properties, or any portion thereof, occupancy thereof or any
present use thereof (the "Governmental Approvals"), except for such defaults
which individually or in the aggregate would not have a Material Adverse Effect.
(e) Contracts. There are no existing contracts or equipment leases
of any kind relating to the management, leasing, construction, operation,
maintenance or repair of any Property to which the ▇▇▇▇▇▇▇ Contributor or any
Partnership is a party, except those contracts listed on Schedule 6.1(e)
attached hereto (the "Contracts"). The Contracts are in full force and effect
and have not been modified except as set forth in Schedule 6.1(e), and all of
the Contracts will remain in full force and effect through the Closing unless
Acquiror otherwise directs the ▇▇▇▇▇▇▇ Contributor pursuant to written notice
provided to the ▇▇▇▇▇▇▇ Contributor at least 35 days prior to Closing. To their
knowledge, each party to the Contracts has performed all material obligations
required to be performed by it, and is not in default, under any of such
Contracts, except for such defaults that individually or in the aggregate would
not have a Material Adverse Effect. Except as set forth on Schedule 6.1(e), all
of the Contracts
13
may, by the express terms thereof, be terminated without penalty or other
payment by the ▇▇▇▇▇▇▇ Contributor or the Partnership party thereto (or their
assignees or successors) upon no more than 30 days' prior notice.
(f) Employees. Neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership
has any employees. Neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership is a
party to any collective bargaining or other agreement or understanding with any
labor union relating to any one or more of the Properties, and neither the
▇▇▇▇▇▇▇ Contributor nor the Partnerships are privy to or involved in any labor
or union controversy or other union interaction of any kind.
(g) Compliance with Laws and Codes. (i) The Properties, and the use
and operation of any or all of them are (or the use and operation of any
component, portion or area of any Property is) in material compliance with all
applicable municipal and other governmental laws, ordinances, regulations, codes
(as defined below), licenses, permits and authorizations; and (ii) there are
presently and validly in effect all licenses, permits and other authorizations
necessary for the use, occupancy and operation of the Properties as they are
presently being operated, whether required of the ▇▇▇▇▇▇▇ Contributor, any
Partnership or any Tenant, except for failures in (i) or (ii) above to comply or
to hold such licenses, permits or other authorizations which, individually or in
the aggregate, are not having and would not be reasonably expected to have a
Material Adverse Effect. The ▇▇▇▇▇▇▇ Contributor has not, and no Partnership
has, received any written notice from any Governmental Authority or person
alleging that any or all of the Properties fails to comply with any or all
applicable requirements of the Americans With Disabilities Act of 1990, as
amended (42 U.S.C.A. ▇▇.▇▇. 12101 et seq.). (i) Each Property is zoned by the
municipality in which it is located so as to permit the existing uses and
structures thereon, in a manner that accommodates and is fully compatible with
the Building and Improvements as they presently exist at each such Property, and
(ii) no Property constitutes a nonconforming use or nonconforming structure
under applicable present zoning laws, except for violations in (i) or (ii) above
which, individually or in the aggregate, are not having and would not be
reasonably expected to have a Material Adverse Effect. To their knowledge, no
zoning, subdivision, Environmental Law, Environmental Permit, building code,
health, fire, safety or other law, order or regulation is, or on the Closing
Date will be, violated by the continued maintenance, operation or use of any
Improvements or parking areas at the Properties, except for violations which,
individually or in the aggregate, are not having and would not be reasonably
expected to have a Material Adverse Effect, and, other than those set forth in
Schedule 6.1(g), neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership has
received any written notice of any such violation from any Governmental
Authority having jurisdiction over the Properties. The foregoing representation
in this Subparagraph 6.1(g) shall not apply to any matters specifically
described in Subparagraph 6.1(h) or Paragraph 8 below.
(h) Litigation. Except as shown on Schedule 6.1(h) or those
proceedings as to which liability has been expressly assumed in writing by an
insurer, there are no pending or, to their knowledge, threatened, actions,
suits, arbitrations, or judicial, municipal, or administrative proceedings
("Action or Proceeding") nor to their knowledge are there any Governmental or
Regulatory Authority investigations or audits pending or threatened against,
relating to or affecting any Property or in which the ▇▇▇▇▇▇▇ Contributor or any
Partnership is or will be a party by reason of its ownership or operation of, or
right to acquire, any Property or any portion thereof, including, without
limitation, proceedings for or involving collections (other than collection
proceedings in the ordinary course of business), condemnation, eminent domain,
alleged building code or environmental or zoning violations, or personal
injuries or property damage alleged to have occurred on any Property or by
reason of the condition, use of, or
14
operations on, such Property. No attachments, execution proceedings, assignments
for the benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending or, to their knowledge threatened, against the ▇▇▇▇▇▇▇
Contributor or any Partnership, nor, to their knowledge, are any of such
proceedings contemplated by them which, individually or in the aggregate, is
having or would be reasonably expected to have a Material Adverse Effect.
Neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership is subject to any Order of
any Governmental or Regulatory Authority which, individually or in the
aggregate, is having or would be reasonably expected to have a Material Adverse
Effect or adversely affect in any material respect the ability of the ▇▇▇▇▇▇▇
Contributor and the Partnerships to consummate the transactions contemplated by
this Agreement or the Transaction Agreements to which it is a party.
(i) Insurance. The ▇▇▇▇▇▇▇ Contributor and/or the Partnerships now
have in force or are named as an additional insured on casualty, liability and
business interruption insurance relating to the Properties in the minimum
coverages and amounts set forth in Schedule 6.1(i) hereto. Neither the ▇▇▇▇▇▇▇
Contributor nor any Partnership has received any written notice from any
insurance carrier and has no knowledge of any defects or inadequacies in the
Properties that, if not corrected, would result in termination of insurance
coverage or material increase in the present cost thereof.
(j) Financial Information. The Operating Statements (as defined
herein) and all of their Books and Records (as defined herein), are complete,
accurate, true and correct; will be, prior to the Exercise Date, compiled in
accordance with generally accepted accounting principles; and accurately set
forth in all material respects the results of the operation of the Properties
and/or the financial position of the applicable Partnership for the periods
covered. There has been no material adverse change in the financial condition or
operation of the Properties or the Partnerships since the period covered by the
Operating Statements.
(k) Re-Zoning. There is not now pending, and the ▇▇▇▇▇▇▇ Contributor
has no knowledge of, any threatened proceeding for the rezoning of any Property
or any portion thereof, or the taking of any other action by governmental
authorities that would have a material adverse impact on the value of any
Property or use thereof.
(l) Personal Property. The Personal Property is all of the personal
property owned by the ▇▇▇▇▇▇▇ Contributor, the Partnerships and the other
persons referred to in Section 1(q)(iii) and used in (or necessary for) the
operation of the Properties. The ▇▇▇▇▇▇▇ Contributor has good title to the
Personal Property, free and clear of any Liens, except for Permitted Liens. All
such Personal Property is in good working condition, and free of material
defects, normal wear and tear excepted.
(m) Real Estate Taxes. The ▇▇▇▇ or bills issued for the years 1994,
1995 and 1996, for all real estate taxes and personal property taxes and copies
of any and all notices pertaining to real estate taxes or assessments applicable
to the Properties (the "Tax Bills") (and, to the ▇▇▇▇▇▇▇ Contributor's
knowledge, the only real estate tax bills applicable to the Properties) have
been delivered to Acquiror. Except as set forth on Schedule 6.1(m) attached
hereto, neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership has received written
notice of any proposed or actual increase in the assessed valuation or rate of
taxation of any or all of the Properties from that reflected in the most recent
Tax Bills. Except as described on Schedule 6.1(m) attached hereto, to its
knowledge, there is not now pending, and the ▇▇▇▇▇▇▇ Contributor agrees that
neither it nor any Partnership will, without the prior written consent of
Acquiror (which consent shall not be unreasonably withheld or delayed and shall
15
automatically be deemed given in the event that Acquiror fails to respond to a
request for its consent within five business days after the date on which such
request is deemed delivered), institute prior to the Closing Date, any
proceeding or application for a reduction in the real estate tax assessment of
any of the Properties or any other relief for any tax year. In the event that
any of the pending tax proceedings reflected on Schedule 6.1(m) result in any
rebate of taxes paid after the Closing Date in respect of any period ending
prior to the Closing Date, the amount of such rebate, net of the fees and
expenses owing to tax certiorari counsel and all other fees and expenses
(including, without limitation, other attorneys' fees and expenses) payable by
the ▇▇▇▇▇▇▇ Contributor in connection with any such tax proceedings shall be the
property of and remitted to the ▇▇▇▇▇▇▇ Contributor (except if and to the extent
that all or any portion of such rebated sums are due to Tenants). There are no
outstanding agreements with attorneys or consultants providing for compensation
on a contingency basis with respect to the Tax Bills that will be binding on
Acquiror or any of the Properties after the Closing. Other than the amounts
disclosed by the Tax Bills, no other real estate taxes have been, or to their
knowledge, will be, assessed against the Properties, or any portion thereof or
the Partnerships, in respect of the year 1997 or any prior year, and no special
assessments of any kind (special, bond or otherwise) are or have been levied
against the Properties, or any portion thereof, or the Partnership that are
outstanding or unpaid, and, to their knowledge, none will be levied prior to
Closing.
(n) Taxes. No federal, state or local taxing authority has asserted
in writing any tax deficiency, lien, interest or penalty or other assessment
against the Properties, the Partnerships or the ▇▇▇▇▇▇▇ Contributor which has
not been paid and there is no pending audit or inquiry from any federal, state
or local tax authority relating to the Properties, the Partnerships or the
▇▇▇▇▇▇▇ Contributor which reasonably may be expected to result in a tax
deficiency, lien, interest, penalty or other assessment against the Partnerships
or the Properties, and to the ▇▇▇▇▇▇▇ Contributor's knowledge, no event has
occurred and no condition or circumstance exists which presents a material risk
that any tax will be imposed on the ▇▇▇▇▇▇▇ Contributor or any Partnership, in
each case which would have, individually or in the aggregate, a Material Adverse
Effect. The ▇▇▇▇▇▇▇ Contributor and the Partnerships have prepared and timely
filed all tax returns required to be filed by them on or before the date hereof,
which to the extent the taxes are imposed on the Properties or on the ▇▇▇▇▇▇▇
Contributor or any Partnership are true, correct and complete in all material
respects. The ▇▇▇▇▇▇▇ Contributor and the Partnerships have paid or made
provision for the payment of all taxes that are due or claimed in writing to be
due from them on or before the date hereof by any governmental taxing authority.
Since December 31, 1996, neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership has
incurred any liability for taxes except in the ordinary course of business.
(o) Transfer Taxes. All applicable recording fees, documentary
transfer taxes, and use, personal property and all other transfer taxes imposed
with respect to the contribution of the Properties, shall be paid by the ▇▇▇▇▇▇▇
Contributor.
(p) Easements and Other Agreements. Neither the ▇▇▇▇▇▇▇ Contributor
nor any Partnership has received any written notice (that remains outstanding)
alleging that it is in default in complying with the terms and provisions of any
of the covenants, conditions, restrictions, rights-of-way or easements
constituting one or more of the Permitted Exceptions.
(q) Lease Controversies. Except as described in Schedule 6.1(q),
no controversy, complaint, proceeding, suit or litigation relating to all or
any of the Leases, is pending or, to their knowledge, threatened, whether in
any tribunal or informally. The ▇▇▇▇▇▇▇ Contributor is and shall
16
remain responsible after the Closing Date for defending (or continuing) any such
suit, proceeding or other matter, including any suit, proceeding or other matter
with respect to Leases (as defined in the Merger Agreement), in each case
relating to periods prior to the Closing Date, and all damages, loss, expenses
and costs related thereto.
(r) United States Person. Neither the ▇▇▇▇▇▇▇ Contributor nor any
Partnership is a "Foreign Person" within the meaning of Section 1445(f)(3) of
the Internal Revenue Code of 1986, as amended (the "Code") and each of them
shall execute and deliver an "Entity Transferor" certification at Closing.
(s) Bulk Sales. The sale of the Fee Properties to Acquiror hereunder
is not subject to, and does not subject Acquiror to, any liability for income
tax, retail sales tax or bulk sales obligation under applicable law. The ▇▇▇▇▇▇▇
Contributor shall deliver to Acquiror at Closing, its affidavit concerning such
matters.
(t) Existing Mortgage(s). Schedule 6.1(t) attached hereto sets forth
a true, correct and complete schedule of those mortgage(s) or trust deed(s)
("Existing Mortgages") presently encumbering the Properties or any portion
thereof. The ▇▇▇▇▇▇▇ Contributor and each Partnership has complied with (and,
prior to Closing, shall continue to comply with) the terms of, and all notices
or correspondence received from the holder of, the promissory notes evidencing
the loans (the "Existing Loans") secured by the Existing Mortgages (the
"Existing Notes"), the Existing Mortgages, and all other documents securing the
Existing Notes (collectively, the "Existing Loan Documents"). The ▇▇▇▇▇▇▇
Contributor and each Partnership has paid (and, at all times prior to Closing,
shall pay), when and as due, all sums due under the Existing Loan Documents. The
Existing Notes and Existing Mortgages are in full force and effect, and neither
the ▇▇▇▇▇▇▇ Contributor nor any Partnership has received any notice of a default
thereunder or under the Existing Loan Documents. The ▇▇▇▇▇▇▇ Contributor has
delivered to Acquiror true, complete and accurate copies of all of the Existing
Loan Documents. All of the Existing Loans other than the Refinancing and those
set forth on Schedule 6.1(t) may be prepaid, in full, on the Closing Date
without imposition of any penalty or premium.
(u) Condemnation. Neither the ▇▇▇▇▇▇▇ Contributor nor any
Partnership has received any written notice of any, and to their knowledge there
are no, pending or contemplated condemnation or other governmental eminent
domain proceedings affecting all or any part of any of the Properties.
(v) Disclosure. Neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership
has intentionally withheld from Acquiror any materially adverse information
about any Property of which it has knowledge. All items delivered by the ▇▇▇▇▇▇▇
Contributor pursuant to this Agreement are true, accurate, correct and complete
in all material respects, and fairly present the information set forth in a
manner that is not misleading. The copies of all documents and other agreements
delivered or furnished and made available by the ▇▇▇▇▇▇▇ Contributor to Acquiror
pursuant to this Agreement constitute all of and the only Leases and other
agreements to which the ▇▇▇▇▇▇▇ Contributor and any Partnership is presently a
party relating to or affecting the ownership, leasing, management and operation
of the Properties, there being no "side" or other agreements, written or oral,
in force or effect, to which the ▇▇▇▇▇▇▇ Contributor or any Partnership is a
party or to which any Property is subject. No representation or warranty made by
the ▇▇▇▇▇▇▇ Contributor in this Agreement, no exhibit attached hereto with
respect to the Properties and Partnerships, and no schedule contained in this
Agreement contains any untrue
17
statement of a material fact, or omits to state a material fact necessary in
order to make the statements contained therein not misleading.
(w) Partnership Interests and Minority Partnership Interests. At
Closing, the Acquiror will receive good and marketable title to the Partnership
Interests, free and clear of all Liens, other than the Assumed Indebtedness. At
Closing, the Company will receive good and marketable title to the Minority
Partnership Interests, free and clear of all Liens, other than the Assumed
Indebtedness. Each of the partnership agreements of the Partnerships has been
duly authorized, executed and delivered by each party thereto and constitutes a
valid and binding obligation of those parties, enforceable in accordance with
its terms. True and complete copies of such partnership agreements have been
made available to the Company. The Partnership Interests and the Minority
Partnership Interests represent all of the equity interests in the Partnerships.
Each Partnership has good and marketable title to its Properties and all
Improvements thereon, and, as applicable, the Partnerships have good and
marketable title to the Acquisition Portfolio, in each case free and clear of
all Liens, except such as are referred to in the Title Policies of such
Properties or those which, individually or in the aggregate, would not have a
Material Adverse Effect.
(x) Remaining Assets and Liabilities. At the Closing Date, the only
assets of the Partnerships will be the Partnership Properties listed on Part A
of Schedule 1(p) and the only liabilities of the Partnerships will be the
Assumed Indebtedness associated with the Partnership Properties and liabilities
incurred in the ordinary course of business with respect to the operation of the
Partnership Properties (and Acquisition Properties) prior to the Closing Date or
those which, individually or in the aggregate, would not have a Material Adverse
Effect.
(y) Source of Income. Except as set forth in Schedule 6.1(y), which
may be delivered or updated through the date that is 30 days before the Closing,
(i) at Closing, all gross income of the Partnerships and all gross income
generated by the Fee Properties, if any, in each case pursuant to the Leases (as
amended through the Closing) or otherwise will be from the sources described in
Section 856(c)(3) of the Code, and (ii) at Closing, all of the assets held by
the Partnerships and all of the Fee Properties, if any, will be assets described
in Section 856(c)(5)(A) of the Code.
(z) Income from Prohibited Transactions. Neither the ▇▇▇▇▇▇▇
Contributor nor the Partnerships are holding any of the Properties primarily for
sale to customers in the ordinary course of business as described in Section
1221(1) of the Code such that the income derived therefrom would be considered
income from prohibited transactions as defined at Section 857(b)(6) of the Code.
(aa) Partnership Status. Each Partnership Interest contributed by
the ▇▇▇▇▇▇▇ Contributor that constitutes an ownership interest in a partnership
is an interest in a partnership that has been organized and at all times
classified as a partnership for federal income tax purposes and for the
applicable state income tax purposes and not as a corporation or an association
taxable as a corporation.
6.2 Investment Representation. The ▇▇▇▇▇▇▇ Contributor represents
that its LP Units are being acquired by it with the present intention of holding
such LP Units for purposes of investment and not with a view towards sale or any
other distribution. The ▇▇▇▇▇▇▇ Contributor recognizes that it may be required
to bear the economic risk of an investment in the LP Units for an indefinite
period of time. The ▇▇▇▇▇▇▇ Contributor represents that it is an Accredited
Investor, and has such knowledge and experience in financial and business
matters so as to be fully capable of evaluating the merits and risks
18
of an investment in the LP Units. The ▇▇▇▇▇▇▇ Contributor represents that it has
(i) been afforded the opportunity to ask questions of those persons they
consider appropriate and to obtain any additional information they desire in
respect of the LP Units and the business, operations, conditions (financial and
otherwise) and current prospects of Acquiror and the Company and (ii) consulted
its own financial, legal and tax advisors with respect to the economic, legal
and tax consequences of delivery of the LP Units and have not relied on the
Informational Materials, Acquiror, the Company or any of their officers,
directors, affiliates or professional advisors for such advice as to such
consequences.
6.3 Survival. The representations, warranties, covenants and
agreements of the ▇▇▇▇▇▇▇ Contributor and the Partnerships contained in this
Agreement will survive the Closing until the second anniversary of the Closing
Date, or in the case of any covenant or agreement for which a time period for
performance is specified, for two years following the last date on which such
covenant or agreement is to be performed, except that to the extent any claim
for indemnification is made under the Master Investment Agreement with respect
to any representation, warranty, covenant or agreement that would otherwise
terminate and a notice for indemnification shall have been timely given under
Article VI of the Master Investment Agreement on or prior to such termination
date, then such survival period will be extended as it relates to such claim
until the related claim for indemnification has been satisfied or otherwise
resolved as provided in Article VI of the Master Investment Agreement. This
Section shall not limit in any way the survival and enforceability of any
covenant or agreement of the parties hereto which by its terms contemplates
performance after the Closing Date, which shall survive for the respective
periods set forth herein.
6.4 Indemnification. Indemnification with respect to breaches of or
inaccuracies in any representation or warranty of, or nonfulfillment of, failure
to perform or breach of any covenant or agreement on the part of, the ▇▇▇▇▇▇▇
Contributor or the Partnerships contained in this Agreement, or on the part of
the Company or the Acquiror in the Master Investment Agreement, shall be as
provided in and pursuant to the Master Investment Agreement.
6.5 No Personal Recourse. Notwithstanding anything to the contrary
contained in this Agreement or in any of the Transaction Agreements, except as
otherwise specifically set forth in the Master Investment Agreement with respect
to the Termination Fee, (i) only the ▇▇▇▇▇▇▇ Contributor (and not the
Partnerships or any partner, shareholder or member of any of the ▇▇▇▇▇▇▇
Contributor and the Partnerships) shall be liable for any claims made by
non-▇▇▇▇▇▇▇ parties under this Agreement or any of the Transaction Agreements,
(ii) the non-▇▇▇▇▇▇▇ parties to this Agreement and the other Transaction
Agreements shall look only to the assets of the ▇▇▇▇▇▇▇ Contributor with respect
to any claims that may be made under this Agreement or any of the Transaction
Agreements, and (iii) no personal recourse or personal liability for any claims
under this Agreement or any of the Transaction Agreements shall be had against
the Partnerships or any partner, shareholder or member of any of the ▇▇▇▇▇▇▇
Contributor and the Partnerships.
7. ADDITIONAL COVENANTS.
7.1 Additional Covenants of the ▇▇▇▇▇▇▇ Contributor and the
Partnerships. Effective as of the execution of this Agreement, the ▇▇▇▇▇▇▇
Contributor and the Partnerships hereby jointly and severally covenant with
Acquiror and the Company as follows:
19
(a) New Leases. Neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership
shall amend any Lease in any material respect or execute any new or renewal
lease, license, or other agreement affecting the ownership or operation of all
or any portion of the Properties or for personal property, equipment, or
vehicles (unless in replacement of any existing personal property lease on
substantially similar or better terms), other than in the ordinary course of
business and on terms comparable to similarly situated properties, except that
any costs associated with Leases not listed on Schedule 9(a)(x) which would
result in an aggregate cost of greater than $100,000 shall require the approval
of Acquiror.
(b) New Contracts. Neither the ▇▇▇▇▇▇▇ Contributor nor any
Partnership shall enter into any contract with respect to the ownership,
management or operation of all or any portion of any or all of the Properties
that will survive the Closing (other than those in connection with the
Refinancing), or that would otherwise affect the use, operation or enjoyment of
any or all of the Properties, other than in the ordinary course of business and
on commercially reasonable terms.
(c) Insurance. The insurance coverage described in the policies
listed on Schedule 6.1(i) shall remain continuously in force through and
including the Closing Date.
(d) Operation of Properties. The ▇▇▇▇▇▇▇ Contributor shall, and
shall ensure that each Partnership shall, operate and manage the Properties
which they own in the same manner as in effect on the date hereof, maintaining
present services, and shall maintain the Properties in good repair and working
order; keep on hand sufficient materials, supplies, equipment and other Personal
Property for the efficient operation and management of the Properties in the
same manner as in effect on the date hereof; and perform, when due, all of its
obligations under the Leases, Contracts, Existing Mortgages, Governmental
Approvals and other agreements relating to the Properties and otherwise in
accordance with applicable laws, ordinances, rules and regulations affecting the
Properties. Except as otherwise specifically provided herein, the Properties at
Closing shall be in substantially the same condition as each of them is in on
the date hereof (subject to the performance of tenant improvements and
improvements provided for in the ▇▇▇▇▇▇▇ Contributor current budget for that
particular Property), reasonable wear and tear excepted, and the Contracts shall
remain in full force and effect through the Closing Date, unless otherwise
advised to the contrary by Acquiror, in writing, no later than thirty days prior
to the Closing Date. None of the Personal Property, fixtures or Inventory
(except such Inventory as may be consumed in the ordinary course of business)
shall be removed from the Properties, unless replaced by personal property,
fixtures or Inventory of equal or greater utility and value.
(e) Pre-Closing Expenses. The ▇▇▇▇▇▇▇ Contributor shall, and shall
ensure that each Partnership shall, pay in full, prior to Closing (or after the
Closing if the ▇▇▇▇ or invoice is not issued by Closing), all bills and invoices
for labor, goods, material and services of any kind relating to the Properties
(or FLIP Properties (as defined in the Merger Agreement) if after the Closing
and not previously paid by FLIP or the FLIP Shareholders) and utility charges,
relating to the period prior to Closing, but excluding therefrom all utility and
other charges billed directly to Tenants or subtenants of the Properties or the
FLIP Properties. Except as the parties may otherwise agree herein, any
alterations, installations, decorations and other work required to be performed
by the ▇▇▇▇▇▇▇ Contributor prior to the Closing under any and all agreements
affecting the Properties have been or will, by the Closing, be completed and
paid for in full.
(f) Good Faith. All actions required pursuant to this Agreement
that are necessary or desirable to effectuate the transactions contemplated
herein or to satisfy each Acquiror's Conditions
20
Precedent shall be taken promptly and in good faith by the ▇▇▇▇▇▇▇ Contributor,
and the ▇▇▇▇▇▇▇ Contributor shall furnish Acquiror with such documents or
further assurances as Acquiror may reasonably require, whether prior to or
following the Closing.
(g) No Assignment. Neither the ▇▇▇▇▇▇▇ Contributor nor any
Partnership shall assign, alienate, lien, encumber or otherwise transfer all or
any part of any or all of the Properties or Partnership Interests or any
interest in any or all of them except to another Partnership or in connection
with the Refinancing, or as otherwise contemplated by this Agreement.
Notwithstanding the foregoing, (i) Partnership Interests in ▇▇▇▇▇▇▇ Properties
and New Jersey Associates may be transferred to one or more newly formed
entities which will be wholly owned by one or more of the current owners of
▇▇▇▇▇▇▇ Properties and New Jersey Associates, and (ii) any Partnership may
transfer some or all of its Properties to a newly formed subsidiary partnership
or limited liability company that is owned at least 99% by such Partnership,
with the remaining 1% or less ownership interest in such subsidiary owned,
directly or indirectly, by one or more owners of such Partnership; it being
understood that up to a 1% interest in ▇▇▇▇▇▇▇ Properties and the up to 1%
interests referred to in (ii) above shall constitute the "Minority Partnership
Interests".
(h) Availability of Records. Upon Acquiror's request, for a period
of two years after Closing, the ▇▇▇▇▇▇▇ Contributor shall (i) make the Books and
Records available to Acquiror, to the extent not transferred to the Acquiror,
with respect to the Properties and the FLIP Properties, for inspection, copying
and audit by Acquiror's designated accountants; and (ii) cooperate with Acquiror
(without any third party expense to the ▇▇▇▇▇▇▇ Contributor) in obtaining any
and all permits, licenses, authorizations, and other Governmental Approvals
necessary for the operation of any or all of the Properties.
(i) Change in Conditions. The ▇▇▇▇▇▇▇ Contributor shall promptly
notify Acquiror of any change in any condition with respect to any or all of the
Partnerships or Properties or of the occurrence of any event or circumstance
that makes any representation or warranty of the ▇▇▇▇▇▇▇ Contributor to Acquiror
and the Company under this Agreement untrue or misleading, or any covenant of
Acquiror or the Company under this Agreement incapable or less likely of being
performed, it being understood that ▇▇▇▇▇▇▇ Contributor's obligation to provide
notice to Acquiror under this Subparagraph 7(i) shall in no way relieve the
▇▇▇▇▇▇▇ Contributor of any liability for a breach by the ▇▇▇▇▇▇▇ Contributor of
any of its representations, warranties or covenants under this Agreement.
(j) Tax Items. The ▇▇▇▇▇▇▇ Contributor acknowledges that (i) the
computation of taxable income of Acquiror is crucial in the determination of the
taxable income of the Company, (ii) the Company needs to be able to prepare
accurate estimates of its taxable income in order to monitor compliance with the
requirement that it distribute 95% of its taxable income to its shareholders,
and (iii) the depreciation of the Properties and the required depreciation
allocations under Section 704(c) of the Code will materially impact the
computation of Acquiror's and the Company's taxable income. Accordingly, the
▇▇▇▇▇▇▇ Contributor agrees that (i) within 30 days after Closing, the ▇▇▇▇▇▇▇
Contributor shall provide Acquiror with tax basis computations and historical
tax depreciation schedules updated through the Closing Date for each Property;
and (ii) within 30 days after Closing, the ▇▇▇▇▇▇▇ Contributor shall provide
Acquiror with all data required to perform depreciation allocations (as
contemplated by Section 704(c) of the Code) with respect to each Property. The
parties acknowledge that the ▇▇▇▇▇▇▇ Contributor shall select, and Acquiror
shall employ, the traditional method for calculating Section 704(c) allocations.
21
(k) Financial Statements. As promptly as practicable, the ▇▇▇▇▇▇▇
Contributor will deliver or cause to be delivered to the Company the audited (in
the case of any fiscal year ending after the date hereof and before the Closing
Date) and the unaudited (in the case of any fiscal quarter ending after the date
hereof and before the Closing Date) balance sheet of the Partnerships, and the
related audited or unaudited statements of income, retained earnings and cash
flows, in each case as of and for the fiscal year then ended or as of and for
each such fiscal quarter and the portion of the fiscal year then ended, as the
case may be.
(l) 2 Volvo Drive Remediation. Notwithstanding Paragraphs 4 and 8,
for a period of 3 years from the Closing Date, the ▇▇▇▇▇▇▇ Contributor agrees to
pay for required Remedial Action, if any, and for all incidental and
administrative costs related thereto, for the Property known as 2 Volvo Drive.
7.2 Additional Covenants of the Company. Effective as of the
execution of this Agreement, the Company, as general partner of the Acquiror,
and the Acquiror, hereby jointly and severally covenant with the ▇▇▇▇▇▇▇
Contributor and the Partnerships (and the LP Unit Recipients) as follows:
(a) Section 1031 Exchanges of Properties. The Company and the
Acquiror shall use all commercially reasonable efforts in disposing of any of
the Properties or the FLIP Properties to structure such transaction as one or
more Section 1031 Exchanges.
(b) Guarantee of Indebtedness. The Company and the Acquiror agree to
use all commercially reasonable efforts (i) to maintain a level of indebtedness
at least equal to the indebtedness of Acquiror immediately following the Closing
and (ii) to cause Acquiror's lenders to permit the ▇▇▇▇▇▇▇ Contributor (or any
LP Unit Recipient) to guarantee any indebtedness of the Acquiror in an amount at
least equal to the indebtedness of Acquiror immediately following the Closing
(including additional indebtedness or substitute indebtedness incurred after the
Closing Date).
8. ENVIRONMENTAL WARRANTIES AND AGREEMENTS
The ▇▇▇▇▇▇▇ Contributor and the Partnerships have obtained all
Licenses which are required in respect of its business, operations or Properties
under applicable Environmental Laws, and the ▇▇▇▇▇▇▇ Contributor, the
Partnerships and the Properties are in compliance in all material respects with
the terms and conditions of all such Licenses and with any applicable
Environmental Law, except for such instances of noncompliance as would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
disclosed in the Delivered Assessments or on Schedule 8, and except in such
circumstances as would not, individually or in the aggregate, have a Material
Adverse Effect, the ▇▇▇▇▇▇▇ Contributor represents and warrants to Acquiror and
the Company that to the ▇▇▇▇▇▇▇ Contributor's knowledge:
(a) No Order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any Governmental or Regulatory Authority with respect to any
alleged failure by the ▇▇▇▇▇▇▇ Contributor or the Partnerships to have any
License required in connection with the conduct of the business or
operations of the ▇▇▇▇▇▇▇ Contributor or the Partnerships with respect to
any treatment, storage, recycling, transportation, disposal or Release, of
any Hazardous Material at any of the Properties.
22
(b) Neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership nor any
prior owner or lessee of any of the Properties has handled any Hazardous
Material on any Property and, without limiting the foregoing, (i) no
polychlorinated biphenyl is or has been present, (ii) no asbestos is or
has been present, (iii) there are no underground storage tanks, active or
abandoned, and (iv) no Hazardous Material has been Released in a quantity
reportable under, or in violation of, any Environmental Law, at, on or
under any of the Properties, during any period that the ▇▇▇▇▇▇▇
Contributor or any Partnership owned or leased such Property or, to their
knowledge, prior thereto.
(c) Neither the ▇▇▇▇▇▇▇ Contributor nor any Partnership has
transported or arranged for the transportation of any Hazardous Material
to any location which is the subject of any Action or Proceeding that
would lead to claims against Acquiror, the Company or any of their
Subsidiaries for clean-up costs, remedial work, damages to natural
resources or personal injury claims, including, but not limited to, claims
under CERCLA.
(d) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the ▇▇▇▇▇▇▇ Contributor or any
Partnership and none of the Properties is listed or proposed for listing
on the National Priorities List promulgated pursuant to CERCLA or on any
similar state list of sites requiring investigation or clean-up.
(e) There are no Liens (other than Permitted Liens) arising under or
pursuant to any Environmental Law or Order on any Property, and no action
of any Governmental or Regulatory Authority has been taken or is in
process which could subject any Property to such Liens, and neither the
▇▇▇▇▇▇▇ Contributor nor any Partnership would be required to place any
notice or restriction relating to the presence of Hazardous Material at
any Property owned by it in any deed to such Property.
(f) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or which are in the
possession of, the ▇▇▇▇▇▇▇ Contributor or any Partnership in relation to
any Property since 1991 which have not been delivered or made available to
Acquiror or the Company prior to the execution of this Agreement.
9. LEASES-REPRESENTATIONS WITH RESPECT THERETO
(a) Representations as to Leases. With respect to each of the Leases
and Tenants listed on the Rent Roll (as defined herein), the ▇▇▇▇▇▇▇ Contributor
and the Partnerships, jointly and severally, represent and warrant to Acquiror
and the Company as follows:
(i) Except as set forth on the Rent Roll, each of the Leases
is in full force and effect according to the terms set forth therein
and in the Rent Roll, and has not been modified, amended, or
altered, in writing or otherwise. Except as otherwise specifically
disclosed on the Rent Roll, each Tenant is legally required to pay
all sums and perform all obligations set forth in the Leases,
without concessions, abatements, offsets or other bases for relief
or adjustment;
(ii) Except as set forth on Schedule 9(a)(ii), all obligations
of the lessor under the Leases that accrue to the date of Closing
have been performed, including, but not
23
limited to, all required tenant improvements, cash or other
inducements, rent abatements or moratoria, installations and
construction (for which payment in full has been made or will be
made prior to Closing, or subject to proration hereunder in all
cases), and, to the ▇▇▇▇▇▇▇ Contributor's knowledge, each Tenant has
unconditionally accepted lessor's performance of such obligations.
Except as set forth on Schedule 9(a)(ii), no Tenant has asserted any
offsets, defenses or claims available against rent payable by it or
other performance or obligations otherwise due from it under any
Lease, which assertion remains outstanding;
(iii) Except as set forth on the Rent Roll, no Tenant is
currently in default under or is in arrears in the payment of any
sums or in the performance of any monetary obligations required of
it under its Lease, and the ▇▇▇▇▇▇▇ Contributor has no knowledge of
any other default under any such Lease;
(iv) Except as set forth in Schedule 9(a)(iv), during the
18-month period immediately preceding the date hereof: (A) no Tenant
has, at any time, been more than 30 days delinquent in its
respective payment of any and all sums due under the terms of its
respective Lease; (B) no Tenant has requested that either the
▇▇▇▇▇▇▇ Contributor or any Partnership provide that Tenant with any
reduction in the Tenant's monetary obligations under its Lease; (C)
no Tenant has expressed to either the ▇▇▇▇▇▇▇ Contributor or any
Partnership (whether orally or in writing) any weakness or material
decline in that Tenant's financial condition, nor has any Tenant
requested that the ▇▇▇▇▇▇▇ Contributor or any Partnership, in its
capacity as landlord, permit the Tenant to sublease its leased
premises, or assign its Lease, or terminate its Lease on an
accelerated basis; (D) neither the ▇▇▇▇▇▇▇ Contributor nor any
Partnership has "written off" any delinquent sums owed by any Tenant
to satisfy its obligation to contribute to the payment of real
estate taxes, common area maintenance charges, and insurance
premiums; and (E) no ▇▇▇▇▇▇▇ Contributor has had (nor is it
currently engaged in) any dispute (whether of a formal or an
informal nature) with any Tenant concerning that Tenant's
obligations to make payments under the terms of its Lease toward
real estate taxes, insurance premiums and common area maintenance
charges or other charges imposed under its Lease;
(v) Except as set forth on Schedule 9(a)(v), no ▇▇▇▇▇▇▇
Contributor has received any written notice from any Tenant stating
that a petition in bankruptcy has been filed by or against it;
(vi) Except with respect to security deposits, neither base
rent ("Base Rent"), nor regularly payable estimated Tenant
contributions or operating expenses, insurance premiums, real estate
taxes, common area charges, and similar or other "pass through" or
non-base rent items including, without limitation, cost-of-living or
so-called "C.P.I." or other such adjustments (collectively,
"Additional Rent"), nor any other material item payable by any
Tenant under any Lease has been heretofore prepaid for more than one
month;
(vii) To the ▇▇▇▇▇▇▇ Contributor's knowledge, no guarantor(s)
of any Lease has been released or discharged, partially or fully,
voluntarily or involuntarily, or by
24
operation of law, from any obligation under or in connection with
any Lease or any transaction related thereto;
(viii)Except as set forth on Schedule 9(a)(viii), there are no
brokers' commissions, finders' fees, or other charges payable or to
become payable to any third party on behalf of the ▇▇▇▇▇▇▇
Contributor or any Partnership in connection with any Lease,
including, but not limited to, any exercised option(s) to expand or
renew;
(ix) Each security deposit set forth on the Rent Roll shall be
assigned to Acquiror at the Closing (or Acquiror shall receive a
credit therefor). Except as set forth on Schedule 9(a)(ix), (i) no
Tenant or any other party has asserted any claim (other than for
customary refund at the expiration of a Lease) to all or any part of
any security deposit and (ii) no ▇▇▇▇▇▇▇ Contributor has applied any
portion of any security deposit to the payment of any sums due from
any Tenant under a Lease;
(x) The ▇▇▇▇▇▇▇ Contributor shall pay (or Acquiror shall
receive a credit therefor), and retain sole and exclusive
responsibility for, all expenses set forth on Schedule 9(a)(x) due
on or before the Closing Date connected with or arising out of the
negotiation, execution and delivery of the Leases, including,
without limitation, brokers' commissions (including those
applicable, if any, to future expansions or renewals by a Tenant),
leasing fees, recording fees, and the cost of all tenant
improvements not required to be paid for by Tenants;
(xi) Except as set forth on Schedule 9(a)(xi), no Tenant has,
by virtue of its Lease or any other agreement or understanding, any
purchase option with respect to any Property, or any portion
thereof, or any right of first refusal to purchase any Property, or
a portion thereof, whether triggered by the transactions
contemplated by this Agreement or by a subsequent sale of such
Property or a portion thereof. Except as set forth on Schedule
9(a)(xi), no Tenant has, by virtue of its Lease or any other
agreement or understanding any of the following (A) the right or
option to terminate its Lease other than customary termination
rights in the event of a default, casualty or condemnation and (B)
the right or option to reduce the rentable space at any Property
that such Tenant is currently occupying and (C) the right to use or
occupy any property outside the boundaries of the Property in which
the premises demised thereunder are located; and
(xii) Except as set forth on the Rent Roll or on Schedule
9(a)(xii): (A) to the ▇▇▇▇▇▇▇ Contributor's knowledge, no Tenant has
sublet its leased premises; (B) no assignment of any interest in a
Lease has been made by any Tenant; and (C) there are no outstanding
requests from any Tenants to the ▇▇▇▇▇▇▇ Contributor or any
Partnership, requesting any consent to an assignment of the Tenant's
Lease or to a sublease of all or some portion of a Tenant's leased
premises.
(b) Estoppel Certificates from Tenants. The ▇▇▇▇▇▇▇ Contributor
shall use its reasonable, good faith and diligent efforts to obtain and deliver
to Acquiror, on or prior to the Closing Date, a tenant's estoppel certificate
(the "Estoppel Certificate") dated no earlier than 60 days prior to the Closing
Date from each of the Tenants. Each such Estoppel Certificate shall be
substantially in the form attached hereto as Exhibit B. It shall be an
Acquiror's Condition Precedent that the ▇▇▇▇▇▇▇ Contributor
25
shall obtain and deliver to Acquiror, at Closing, Estoppel Certificates for (i)
75% of the total aggregate gross rental income for all of the Properties (as
shown on the Rent Roll delivered at Closing), (ii) any single-Tenant Property
and (iii) those particular Tenants reflected in Schedule 9(b) ("Required
Estoppel Tenants"). If the ▇▇▇▇▇▇▇ Contributor satisfy the above requirement,
but (despite their good faith and diligent efforts) are unable to obtain all of
the remaining Estoppel Certificate(s) from any Tenants, then, at Closing, the
▇▇▇▇▇▇▇ Contributor shall deliver to Acquiror an Estoppel Certificate with
respect to such Tenant(s) in substantially the same form as Exhibit B; provided,
however, that in the event that the ▇▇▇▇▇▇▇ Contributor ultimately procure
(within 60 days after Closing) an Estoppel Certificate from any Tenant with
respect to which the ▇▇▇▇▇▇▇ Contributor issue their own Estoppel Certificate
and such Tenant's Estoppel Certificate complies with the requirements of this
Paragraph 9(b), then the ▇▇▇▇▇▇▇ Contributor shall be released from its own
Estoppel Certificate with respect to that Tenant.
10. CONDITIONS PRECEDENT TO CLOSING. The following shall be Acquiror's
Conditions Precedent to Closing (all of which may be waived in whole or in part
by Acquiror in its sole discretion):
(a) Pending Actions. As of the Closing Date, except as set forth on
Schedule 6.1(h), there shall be no administrative agency, litigation or
governmental proceeding of any kind whatsoever, pending or threatened, that,
after Closing, would materially and adversely affect the value or marketability
of any Property or the Properties as a whole, or the ability of Acquiror to
operate any or all of the Properties in the manner in which such Property is
being operated on the date hereof.
(b) Zoning. As of the Closing Date, no proceedings shall be pending
or threatened in writing that could or would involve the change, redesignation,
redefinition or other modification of the zoning classifications of any or all
of the Properties, or any portion thereof.
(c) Flood Insurance. As of the Closing Date, if any material
improvement at a Property is located in a flood plain, flood plain insurance in
form and substance reasonably acceptable to Acquiror shall be available for
purchase by Acquiror at or prior to the Closing Date.
(d) Utilities. On the Closing Date, no moratorium or legal
proceeding shall be pending or threatened affecting the availability, at regular
rates and connection fees, of sewer, water, electric, gas, telephone or other
services or utilities servicing the Properties.
(e) Pay-Off Letters. The ▇▇▇▇▇▇▇ Contributor shall have provided to
Acquiror a payoff letter (the "Pay-off Letter") issued by each mortgagee holding
an Existing Mortgage, setting forth the amount of principal and interest
outstanding on the Closing Date.
(f) Bankruptcy. As of the Closing Date, no ▇▇▇▇▇▇▇ Contributor,
Partnership or Property is the subject of any bankruptcy proceeding for which
approval of this transaction has not been given and issued by the applicable
bankruptcy court.
(g) Representations and Warranties True. The respective
representations and warranties of the ▇▇▇▇▇▇▇ Contributor severally contained
herein are true and correct in all material respects as of the Closing Date.
26
(h) Covenants Performed. All covenants of the ▇▇▇▇▇▇▇ Contributor
required to be performed prior to the Closing Date have been performed, in all
material respects.
(i) Material Adverse Effect. As of the Closing Date, there have
been no events which have had or could be expected to have a Material Adverse
Effect.
(j) Title to the Properties. Title to the Properties is in the
condition required under Paragraph 5.
(k) New Jersey Environmental Clearance. Except with respect to the
Partnership Property referred to as 2 Volvo Drive, on or prior to the Closing
Date, the ▇▇▇▇▇▇▇ Contributor shall have delivered to Acquiror written proof of
compliance with the Industrial Site Recovery Act (N.J.S.A. 13:1K-6 to et seq.)
("ISRA") or written proof of exemption or exclusion therefrom for each Property
at the ▇▇▇▇▇▇▇ Contributor sole cost and expense and shall certify that such
written proof is a true, complete and correct copy thereof. Such written proof
shall be in the form of either (i)(A) a Letter of NonApplicability from the New
Jersey Department of Environmental Protection ("NJDEP"), (B) obtaining an
unconditional Negative Declaration and No Further Action Letter from the NJDEP
or (C) a De Minimis Quantity Exemption; and (ii) true complete and correct
copies of the supporting Applicability/Nonapplicability Affidavits. THE
PARTNERSHIPS AND THE ▇▇▇▇▇▇▇ CONTRIBUTOR HEREBY WAIVE THEIR RIGHT UNDER ISRA TO
VOID THE TRANSACTION CONTEMPLATED HEREIN AND TO TERMINATE THIS AGREEMENT AS A
RESULT OF NONCOMPLIANCE WITH ISRA.
(l) Closing Deliveries. On the Closing Date, all Closing Deliveries
shall have been made by the ▇▇▇▇▇▇▇ Contributor pursuant to Subparagraph 11.1
and the ▇▇▇▇▇▇▇ Contributor shall have delivered any Estoppel Certificates
required to be executed by the ▇▇▇▇▇▇▇ Contributor pursuant to Paragraph 9(b).
(m) Acquisition Portfolio. The aggregate value of (ii) and
(iii) in Section 1((b) above shall be at least $3.7 million as of the Closing
Date.
(n) Common Stock Recipient Lock-Up Letters. The Common Stock
Recipient Lock-Up Letters shall have been executed and delivered.
(o) Master Investment Agreement. All of the transactions
contemplated in the Master Investment Agreement (other than those contemplated
by this Agreement) shall have been consummated.
11. CLOSING DELIVERIES
11.1 ▇▇▇▇▇▇▇ Contributor. It shall be an Acquiror's Condition
Precedent that at Closing (or such other times as may be specified below), the
▇▇▇▇▇▇▇ Contributor shall deliver or cause to be delivered to Acquiror the
following, each in form and substance reasonably acceptable to Acquiror and its
counsel:
(a) Deeds. Deeds, duly executed by or on behalf of the ▇▇▇▇▇▇▇
Contributor, in recordable form conveying the Fee Properties to Acquiror free
and clear of all liens, claims and encumbrances except for the Permitted
Exceptions;
27
(b) ▇▇▇▇ of Sale. A warranty assignment and ▇▇▇▇ of Sale, duly
executed by the ▇▇▇▇▇▇▇ Contributor or the applicable Partnership, assigning,
conveying and warranting to Acquiror title to the Personal Property and
Inventory, free and clear of all encumbrances, other than the Permitted
Exceptions, and assignments of title to all vehicles, if any, included in the
Personal Property, together with the original certificates of title thereto;
(c) General Assignment. An assignment, duly executed by the
▇▇▇▇▇▇▇ Contributor or the applicable Partnership, to Acquiror of all right,
title, and interest of the ▇▇▇▇▇▇▇ Contributor or such Partnership, as the case
may be, and their agents in and to the Intangible Personal Property
(including, but not limited to, the Governmental Approvals);
(d) Assignment of Contracts. An assignment, duly executed by the
▇▇▇▇▇▇▇ Contributor, to Acquiror of the ▇▇▇▇▇▇▇ Contributor's right, title and
interest in and to those Contracts that will remain in effect after Closing (the
"Assigned Contracts"), with (i) the agreement of the ▇▇▇▇▇▇▇ Contributor to
indemnify, protect, defend and hold Acquiror and the Company harmless from and
against any and all claims, damages, losses, suits, proceedings, costs and
expenses (including, but not limited to, reasonable attorneys' fees) resulting
from a default by it under the Assigned Contracts and relating to the period of
time prior to Closing and (ii) the corresponding agreement of Acquiror and the
Company to indemnify, protect, defend and hold the ▇▇▇▇▇▇▇ Contributor and the
Partnerships harmless for claims arising in connection with the Assigned
Contracts and relating to the period of time from and after the Closing. To the
extent assignable, the ▇▇▇▇▇▇▇ Contributor shall also assign all existing
guarantees and warranties given to it in connection with the operation,
construction, improvement, alteration or repair of any or all of the Properties;
(e) Assignment of Partnership Interests. An assignment, duly
executed by or on behalf of the ▇▇▇▇▇▇▇ Contributor, to Acquiror of all right,
title and interest in and to the Partnership Interests and the Acquisition
Contracts. An assignment, duly executed by the holders of the Minority
Partnership Interests, to the Company (or, pursuant to Section 5.16 of the
Master Investment Agreement, a subsidiary thereof) of all of the right, title
and interest in and to the Minority Partnership Interests. An amended
partnership agreement or limited liability company agreement, as the case may
be, reflecting the transfer of the Partnership Interests and the Minority
Partnership Interests;
(f) Assignment of Leases and Estoppel Certificates. An assignment of
the ▇▇▇▇▇▇▇ Contributor right, title and interest in and to the Leases
(including all security deposits and/or other deposits thereunder, except to the
extent an appropriate credit is given to Acquiror at Closing), with the
reciprocal indemnity provisions described in Subparagraph 11.1(d), together with
the Estoppel Certificates of the Tenants in conformity with Subparagraph 9(b);
(g) Keys. Keys to all locks located at each Property to the
extent in the ▇▇▇▇▇▇▇ Contributor's or any Partnership's possession;
(h) Affidavit of Title and ALTA Statement. As to each Property, an
Affidavit of Title and an ALTA Statement (or comparable forms required by the
Title Company in New Jersey and required by the Title Company as a condition to
the issuance of the Title Policies), including any affidavit required to obtain
a non-imputation endorsement, each executed by the ▇▇▇▇▇▇▇ Contributor and in
form and substance acceptable to the Title Company and to Acquiror;
28
(i) Letters to Tenants. Letters executed by the ▇▇▇▇▇▇▇ Contributor
and, if applicable, its management agents, addressed to all Tenants, in form
approved by Acquiror (the "Tenant Letters"), notifying all Tenants of the
transfer of ownership and directing payment of all rents accruing after the
Closing Date to be made to Acquiror or at its direction;
(j) Title Policies and Surveys. The Title Policies (or "marked-up"
title commitments) issued by the Title Company, dated as of the Closing Date in
the amount of the Allocated Amounts for each Property, with such endorsements
and otherwise in accordance with the requirements of Paragraph 5 (it being
understood that the ▇▇▇▇▇▇▇ Contributor will provide any certificates or
undertakings required in order to induce the Title Company to insure over any
"gap" period resulting from any delay in recording of documents or later-dating
the title insurance file); and the Surveys for each Property in the form
required in Paragraph 5(c) certified by the surveyor to the applicable
Partnership and its assigns, the Company, any designated lender(s) of Acquiror
and the Title Company;
(k) Original Documents. To the extent not previously delivered
to Acquiror, originals or copies of the Leases, Assigned Contracts and
Governmental Approvals;
(l) Plans and Specifications. To the extent not previously
delivered to Acquiror, all plans and specifications in the ▇▇▇▇▇▇▇
Contributor's possession and control or otherwise available to the
▇▇▇▇▇▇▇ Contributor or any Partnership;
(m) Tax Bills. To the extent not previously delivered to
Acquiror, copies of the most currently available Tax Bills;
(n) Entity Transferor Certificate. Entity transferor
certification confirming that neither the ▇▇▇▇▇▇▇ Contributor nor any
Partnership is a "Foreign Person" within the meaning of Section 1445 of the
Code;
(o) Rent Roll. A Rent Roll, prepared as of the Closing Date,
certified by theMcBride Contributor to be true, complete and correct through
the Closing Date;
(p) Bulk Sales Affidavit. The ▇▇▇▇▇▇▇ Contributor's affidavit
confirming that the sale of the Fee Properties to Acquiror hereunder is not
subject to, and does not subject Acquiror to, liability for income tax, retail
sales tax or bulk sales obligations under applicable law;
(q) Pay-Off Letters. The ▇▇▇▇▇▇▇ Contributor shall procure and
deliver the Pay-Off Letters with respect to each and every Existing Mortgage;
(r) Certificates of Occupancy. The ▇▇▇▇▇▇▇ Contributor shall procure
and deliver valid and subsisting certificates of occupancy or the equivalent
thereof with respect to each Property issued by each municipality in which such
Property is located;
(s) ISRA Compliance. Documentation evidencing compliance with
ISRA issued by the NJDEP's for each of the Properties;
29
(t) Employment Agreement. ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have executed and
delivered an employment agreement (the "Employment Agreement") with the
Company substantially in the form attached hereto as Exhibit C; and
(u) Other. Such other documents and instruments as may reasonably be
required by Acquiror, its counsel or the Title Company and that may be necessary
to consummate the transaction that is the subject of this Agreement and to
otherwise effect the agreements of the parties hereto.
11.2 Acquiror. It shall be a ▇▇▇▇▇▇▇ Contributor Condition Precedent
that at Closing (or such other times as may be specified below) (i) all
conditions precedent to the consummation of the transactions contemplated by the
Master Investment Agreement and the other Transaction Agreements (other than the
condition that the transactions contemplated by this Agreement shall have been
consummated) shall have been satisfied or, if permissible, waived; and (ii)
Acquiror and the Company shall deliver or cause to be delivered to the ▇▇▇▇▇▇▇
Contributor the following, each in form and substance reasonably acceptable to
the ▇▇▇▇▇▇▇ Contributor and its counsel:
(a) Warrants. Warrants (exercisable for a period of seven years from
the Closing Date) to purchase 125,000 LP Units at a price of $11.00 per LP Unit,
substantially in the form of Exhibit D, to be issued to ▇▇▇▇▇ ▇▇▇▇▇▇▇.
(b) Assignment of Contracts. An Assignment of Contracts, duly
executed by Acquiror;
(c) Assignment of Leases. An Assignment of Leases, duly executed
by Acquiror;
(d) Contract Notices. Notices to parties to Contracts which are
being assigned pursuant to the Assignment of Contracts, duly executed by
Acquiror;
(e) Employment Agreement. The Company shall have signed the
employment Agreement; and
(f) Other. Such other documents and instruments as may reasonably be
required by the ▇▇▇▇▇▇▇ Contributor or its counsel or the Title Company, and
that are necessary to consummate the transaction which is the subject of this
Agreement and to otherwise effect the agreements of the parties hereto.
After Closing, each of Acquiror and the ▇▇▇▇▇▇▇ Contributor shall execute and
deliver to the other such further documents and instruments as the other
reasonably requests to effect this transaction and otherwise effect the
agreements of the parties hereto.
12. PRORATIONS AND ADJUSTMENTS. The following shall be prorated and
adjusted between the ▇▇▇▇▇▇▇ Contributor, on the one hand, and Acquiror and the
Company, on the other hand, as of 12:00 a.m. on the Closing Date, except as
otherwise specified:
(a) The amount of all security and other Tenant deposits, and
interest due thereon, if any, shall be credited to Acquiror;
30
(b) Acquiror and the ▇▇▇▇▇▇▇ Contributor shall divide the cost of
any escrows hereunder equally between them;
(c) To the extent such charges are not billed directly to Tenants,
water, electricity, sewer, gas, telephone and other utility charges shall be
prorated based, to the extent practicable, on final meter readings and final
invoices, or, in the event final readings and invoices are not available, based
on the most currently available billing information, and reprorated upon
issuance of final utility bills;
(d) Amounts paid or payable under any Assigned Contracts shall be
prorated based, to the extent practicable, on final invoices or, in the event
final invoices are not available, based on the most currently available billing
information, and reprorated upon issuance of final invoices;
(e) All real estate, personal property and ad valorem taxes
applicable to the Properties and levied with respect to calendar year 1997 (or
1998, if the Closing occurs in 1998) shall be prorated on an accrual basis, as
of the Closing Date, utilizing the actual final Tax Bills for those Properties
for 1996 (or 1997 if available) adjusted for any announced changes in rates of
taxation. Prior to or at Closing, the ▇▇▇▇▇▇▇ Contributor shall pay or have paid
all Tax Bills that are due and payable prior to or on the Closing Date and shall
furnish evidence of such payment to Acquiror and the Title Company. Each party's
respective obligations to reprorate real estate taxes shall survive the Closing
and shall not merge into any instrument of conveyance delivered at Closing. The
▇▇▇▇▇▇▇ Contributor shall also be obligated to reprorate real estate taxes with
respect to the FLIP Properties after the Closing. The taxes to be prorated
(i.e., county, school, city) for each Property and the billing and accrual
schedule for each such tax are set forth in Schedule 12(e);
(f) All assessments, general or special, shall be prorated as of the
Closing Date on a "due date" basis such that the ▇▇▇▇▇▇▇ Contributor shall be
responsible for any installments of assessments which are first due or payable
prior to the Closing Date and Acquiror shall be responsible for any installments
of assessments which are first due or payable on or after the Closing Date;
(g) Commissions of leasing and rental agents for any Lease entered
into as of or prior to the Closing Date (which are set forth on Schedule
9(a)(x)) that are due and payable at or prior to the Closing Date, whether with
respect to base lease term, future expansions, renewals, or otherwise, shall be
paid in full at or prior to Closing by the ▇▇▇▇▇▇▇ Contributor, without
contribution or proration from Acquiror;
(h) All Base Rents and other charges actually received, including,
without limitation, all Additional Rent, shall be prorated at Closing. At the
time(s) of final calculation and collection from Tenants of Additional Rent for
1997, there shall be a re-proration between Acquiror and the ▇▇▇▇▇▇▇ Contributor
as to Additional Rent adjustments, which re-proration shall be paid upon
Acquiror's presentation of its final accounting to the ▇▇▇▇▇▇▇ Contributor,
certified as to accuracy by Acquiror. The party's respective obligations to
reprorate Additional Rent shall survive the Closing and shall not merge into any
instrument of conveyance delivered at Closing. The ▇▇▇▇▇▇▇ Contributor shall
also be obligated to re-prorate Additional Rents (as defined in the Merger
Agreement) with respect to the FLIP Properties after the Closing. At the
Closing, no "Delinquent Rents" (rents or other charges which are due and owing
as of the Closing) shall be prorated in favor of the ▇▇▇▇▇▇▇ Contributor.
Notwithstanding the foregoing, Acquiror shall use reasonable efforts after the
Closing Date to collect any Delinquent Rents due to the ▇▇▇▇▇▇▇ Contributor from
Tenants. Further, after the Closing Date, the ▇▇▇▇▇▇▇ Contributor
31
shall continue to have the right, enforceable at its sole expense, to pursue
legal action against any Tenant (and any guarantors) who have defaulted, prior
to the Closing Date, under a Lease; provided, however, that the ▇▇▇▇▇▇▇
Contributor give Acquiror advance written notice of its intent to pursue such
action and further provided that the ▇▇▇▇▇▇▇ Contributor shall have no right to
terminate any Lease (or any right to dispossess any Tenant thereunder). All
rents and other charges received from any Tenant after the Closing by and for
the benefit of Acquiror shall be applied, first, against current and past due
rental obligations owed to, or for the benefit of, Acquiror with respect to
those rental obligations accruing subsequent to the Closing Date (including, but
not limited to, obligations to replenish any security deposit withdrawal by the
▇▇▇▇▇▇▇ Contributor or Acquiror), or any obligations accruing prior to the
Closing Date that the ▇▇▇▇▇▇▇ Contributor or any Partnership does not pay or for
which Acquiror does not receive a credit at Closing, and second, any excess
shall be delivered to the ▇▇▇▇▇▇▇ Contributor, but only to the extent of
Delinquent Rents owed to, and for the benefit of, the ▇▇▇▇▇▇▇ Contributor for
the period prior to the Closing Date (in no event, however, shall any sums be
paid to the ▇▇▇▇▇▇▇ Contributor to the extent they have been previously
reimbursed for such default out of any security deposit);
(i) Such other items that are customarily prorated in transactions
of this nature shall be ratably prorated.
For purposes of calculating Prorations, Acquiror shall be deemed to be in title
to the Properties, and therefore entitled to the income therefrom and
responsible for the expenses thereof, for the entire Closing Date. All such
prorations shall be made on the basis of the actual number of days of the year
and month that shall have elapsed as of the Closing Date.
13. DESTRUCTION, LOSS OR DIMINUTION OF PROPERTIES. If prior to Closing,
all or any portion of any Property is damaged by fire or other natural casualty
(collectively "Damage"), or is taken or made subject to condemnation, eminent
domain or other governmental acquisition proceedings (a "Taking"), then the
following procedures shall apply:
(a) As used herein, a "Material Event" shall mean any of the
following:
(i) Damage to all or any portion of a Property, and the cost
of repair or replacement of such Damage exceeds 50% of the Allocated
Amount and the related Assumed Indebtedness, Prorations and
Adjustments of such Property; or
(ii) Taking of all or any portion of a Property, and the value
of such Taking exceeds 50% of the Allocated Amount and the related
Assumed Indebtedness, Prorations and Adjustments of such Property;
or
(iii) any Taking or Damage that results in the cancellation or
termination of any Lease of a Required Estoppel Tenant, or that
provides to a Required Estoppel Tenant the right to cancel or
terminate its Lease upon the giving of subsequent notice (unless
such termination right is waived, in writing, by such Tenant), or
that otherwise results in the permanent loss of a Required Estoppel
Tenant.
(b) In the event of Damage or a Taking that does not constitute a
Material Event, Acquiror shall close and take the Properties as diminished by
such Damage or Taking, subject to (i) a
32
reduction in the Contribution Consideration in an amount equal to the
difference, if any, between (x) the cost of repair or replacement of such Damage
(or the value of such Taking) and (y) the casualty insurance proceeds (or
condemnation awards) actually collected by the ▇▇▇▇▇▇▇ Contributor prior to
Closing (and paid to Acquiror at Closing) by reason of such Damage or Taking.
(c) If the Damage or Taking is a Material Event, then Acquiror, at
its sole option, shall elect, within 15 days after its acquisition of actual
knowledge that such Damage or Taking is a Material Event, to either: (i) delete
and eliminate from this Agreement any Property that has sustained Damage or is
taken or made subject to a Taking by giving written notice to the ▇▇▇▇▇▇▇
Contributor, in which event (x) this Agreement shall be deemed to have been
automatically and ipso facto amended so as to eliminate the deleted Properties
herefrom, and (y) Acquiror and the ▇▇▇▇▇▇▇ Contributor shall proceed to close on
the remaining Properties (i.e., the non-deleted Properties) subject to a
reduction in the Contribution Consideration equal to the aggregate amount of (x)
the Allocated Amounts minus (y) the Assumed Indebtedness of the Property(s) so
deleted, in each case as adjusted by eliminating any and all appropriate
Prorations and Adjustments; or (ii) proceed to close on all of the Properties,
subject to a reduction in the Contribution Consideration in an amount equal to
the aggregate of all deductible(s) imposed under any casualty insurance policies
applicable to the Property(s) that is the subject of Damage, and an assignment
of the ▇▇▇▇▇▇▇ Contributor's or the Partnership's interest in any unpaid
insurance proceeds or condemnation awards (as provided in Subparagraph 13(d)).
(d) In the event that Acquiror elects to close on any Property that
is subject to any Damage or Taking, each party shall fully cooperate with the
other party in the adjustment and settlement of the insurance claim (or
governmental acquisition proceeding) and if, as of Closing, all or any portion
of the insurance proceeds assignable, or condemnation awards payable, to
Acquiror shall not have been collected from the insurer or Governmental
Authority, then the ▇▇▇▇▇▇▇ Contributor shall irrevocably and unconditionally
assign to Acquiror its entire right, title and interest in and to the
outstanding proceeds or award (except that in the event Subparagraph 13(b)
applies, Acquiror shall not have any rights pursuant to this Subparagraph
13(d)). The proceeds and benefits under any rent loss or business interruption
policies attributable to the period following the Closing shall likewise be
transferred, assigned and paid over to Acquiror.
(e) In the event of a dispute between the ▇▇▇▇▇▇▇ Contributor and
Acquiror with respect to the cost of repair, restoration or replacement as to
any Damage or the value of a Taking, an engineer designated by the ▇▇▇▇▇▇▇
Contributor and an engineer designated by Acquiror shall select an independent
third engineer licensed to practice in the jurisdiction where the Property is
located who shall resolve such dispute. The determination of such third engineer
shall be final and binding on the parties and judgment may be rendered thereon
in any appropriate court of record. All fees, costs and expenses of such third
engineer so selected shall be shared equally by Acquiror and the ▇▇▇▇▇▇▇
Contributor.
14. SUCCESSORS AND ASSIGNS. The terms, conditions and covenants of this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective nominees, successors, beneficiaries and assigns; provided,
however, except as provided in Subparagraph 7(g), no direct or indirect
conveyance, assignment or transfer of any interest whatsoever of, in or to any
or all of the Properties, Partnership Interests or Acquisition Contracts, or of
this Agreement shall be made by the ▇▇▇▇▇▇▇ Contributor or Acquiror during the
term of this Agreement.
33
15. NOTICES. All notices, requests and other communications hereunder
must be given in the manner provided in the Master Investment Agreement.
16. BENEFIT. This Agreement is for the benefit only of the parties hereto
and their nominees, successors, beneficiaries and assignees as permitted in
Paragraph 14 above and no other person or entity shall be entitled to rely
hereon, receive any benefit herefrom or enforce against any party hereto any
provision hereof.
17. TENANTS IN DEFAULT
(a) Applicability of Provision. If, subsequent to the Approval Date,
and prior to the Closing, any Property shall be leased to (or subject to Leases
with) one or more "Tenants in Default" (as hereinafter defined), and the total
monthly rent payable with respect to such Property by its Tenants in Default
shall, in the aggregate, represent 20% or more of the total rentals then being
realized from that Property (whether one or more, the "Defaulted Building"),
then, at the Closing, the provisions of this Paragraph 17 shall be applicable.
Upon the ▇▇▇▇▇▇▇ Contributor's discovery of the existence of a Tenant in Default
in any Property, the ▇▇▇▇▇▇▇ Contributor shall promptly notify Acquiror, in
writing, of the specific facts and circumstances giving rise to such conditions
(such written notice being a "TID Notice"). For purposes hereof, a "Tenant in
Default" shall be any Tenant who (i) commits a material default under its Lease,
monetary or otherwise, which default has (without regard to applicable notice
and cure provisions of its Lease) continued more than 45 days; or (ii) vacates
or abandons its respective leased premises without timely paying rent therefor
(i.e., within 45 days of due date); or (iii) files, or has filed against it, any
petition for bankruptcy or reorganization or other debtor or creditor relief
procedure under any state or federal law; or (iv) who repudiates in writing its
obligations under its Lease; or (v) who admits or asserts, in writing, its
inability or unwillingness either to pay its debts as they become due or
otherwise to comply with the terms of its respective Lease.
(b) Acquiror's Rights. For and during a period of 20 days after its
receipt of a TID Notice (the "TID Study Period"), Acquiror shall have the right
to reexamine all of the Books and Records relating to the Tenant In Default and
its respective Lease; to inspect the Defaulted Building and leased premises of
the Tenant(s) In Default; to interview representatives of, and otherwise freely
deal with, the Tenant(s) In Default in order to ascertain the cause and likely
effects and ramifications of the particular default(s) in question; and to
otherwise evaluate the impact of that particular default on Acquiror's
acquisition of the Defaulted Building as a component of the Properties. Within
ten days after the conclusion of the applicable TID Study Period, upon its
reasonable determination that the situation has a material adverse effect on the
value of the building, Acquiror shall have the unilateral right to delete and
eliminate those Properties that include Defaulted Buildings from this Agreement
(the "Deleted Buildings") by giving written notice to the ▇▇▇▇▇▇▇ Contributor
("Deletion Notice"). Upon any such identification by Purchaser of Deleted
Buildings and delivery of the Deletion Notice to the ▇▇▇▇▇▇▇ Contributor, this
Agreement shall, without further action of the parties, be deemed to have been
amended, ipso facto, so as to eliminate herefrom all such Deleted Buildings,
subject to a reduction in the Contribution Consideration equal to the aggregate
of (x) the Allocated Amounts minus (y) the Assumed Indebtedness of the
Properties so deleted, in each case adjusted by eliminating any and all
appropriate Prorations and Adjustments. Upon such amendment, all references to
the Properties shall automatically exclude the Properties so deleted and no
Closing or pre-Closing obligations of the ▇▇▇▇▇▇▇ Contributor (or Acquiror's
Conditions Precedent) shall apply to the Properties so deleted.
34
18. TERMINATION
(a) Termination. This Agreement shall be terminated in the event
the Master Investment Agreement is terminated pursuant to its terms.
(b) Effect of Termination. If this Agreement is validly terminated
pursuant to Subparagraph 18(a), this Agreement will forthwith become null and
void, and there will be no liability or obligation on the part of the ▇▇▇▇▇▇▇
Contributor, the Partnerships, the Company or the Acquiror, except as provided
in the Master Investment Agreement.
19. MISCELLANEOUS
(a) Entire Agreement. This Agreement and the other documents
contemplated hereby constitute the entire understanding between the parties with
respect to the transaction contemplated herein, and all prior or contemporaneous
oral agreements, understandings, representations and statements, and all prior
written agreements, understandings, letters of intent and proposals are merged
into this Agreement. Neither this Agreement nor any provisions hereof may be
waived, modified, amended, discharged or terminated except by an instrument in
writing signed by the party against which the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
(b) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, except that title and real
estate matters shall be governed by the law of the State in which the affected
Property is located.
(c) Partial Invalidity. The provisions hereof shall be deemed
independent and severable, and the invalidity or partial invalidity or
enforceability of any one provision shall not affect the validity of
enforceability of any other provision hereof.
(d) Expenses. Except as otherwise expressly provided in this
Agreement or the Master Investment Agreement, whether or not the transactions
contemplated hereby are consummated, each party will pay their own costs and
expenses, incurred in connection with the negotiation, execution and closing of
this Agreement and the Transaction Agreements and the transactions contemplated
hereby and thereby.
(e) Counterparts. This Agreement may be executed in any number
of identical counterparts, any of which may contain the signatures of less than
all parties, and all of which together shall constitute a single agreement
(f) Jurisdiction. THE PARTIES AGREE THAT ALL DISPUTES BETWEEN ANY OF
THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND
WHETHER ARISING IN LAW OR EQUITY OR OTHERWISE, SHALL BE RESOLVED BY THE FEDERAL
OR STATE COURTS LOCATED IN NEW YORK, NEW YORK. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE OTHER IN ANY OTHER
JURISDICTION.
35
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by each party hereto as of the date first above written.
Acquiror:
AMERICAN REAL ESTATE INVESTMENT, L.P.
By: American Real Estate Investment
Corporation, General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
AMERICAN REAL ESTATE INVESTMENT CORPORATION
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ Contributor and Partnerships:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ BAY, L.P.
By: Urban Farms Shopping Center, Inc.,
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
RAMAPO ▇▇▇▇▇-▇▇▇▇▇▇▇ OFFICE PARK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Attorney-in-Fact for General Partner
36
OAKLAND INDUSTRIAL PARK, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
URBAN FARMS SHOPPING CENTER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇▇▇ PROPERTIES
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Partner
NEW JERSEY ASSOCIATES
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Partner
37
EXHIBIT A
SURVEY CERTIFICATION
DATE:__________
To: [Contributor] [Acquiror] [Title Company] [Lender]
I, ______________________, a Registered Land Surveyor in the
State of _______________, do hereby certify to the aforesaid parties, their
successors and assigns, as of the date set forth above that I have made a
careful survey of a tract of land known by the street address and more fully
described in the legal description set forth on the Survey.
I further certify that:
1. The Survey was actually made upon the ground, that the Survey is made at
least in accordance with the minimum standards established by the State of New
Jersey for surveyors and with the "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys" jointly established and adopted by ALTA and ACSM
in 1992 and meets the Accuracy Standards (as adopted by ALTA and ACSM and in
effect on the date of this certification) of any Urban Survey, with accuracy and
precision requirements modified to meet current minimum angular and linear
tolerance requirements of the state in which the subject property is located,
and contains Items 1, 2, 3, 4, 6, 7(a), 7(b)(1), 8, 9, 10, 11, 13 of Table A
thereto.
2. The Survey correctly shows the location of all buildings, structures and
other improvements situated on or at the parcel of land described above (the
parcel, along with such buildings and improvements, the "Property").
3. Except as shown, all utilities serving the Property enter through adjoining
public streets and/or easements of record; that, except as shown, there are no
visible easements or rights of way across the Property; that the Property is the
same as the property described in [Title Company] Commitment No. ________ with
an effective date of _______________ and that all easements, covenants and
restrictions referenced in said title commitment, or easements which the
undersigned has been advised or has knowledge, have been plotted on the Survey
or otherwise noted as to their effect on the Property;
4. Except as shown on the Survey, there are no encroachments across zoning
restriction lines or onto adjoining premises, streets or alleys by any
buildings, structures or other improvements, and no encroachments onto the
Property by buildings, structures or other improvements situated on adjoining
premises;
5. The Property is located within an area having a Zone Designation ____________
by the Secretary of Housing and Urban Development, on Flood Insurance Rate Map
No. ________, with a date of identification of __________, for Community Number
__________, in _______________ County, State of __________, which is the current
Flood Insurance Rate Map for the community in which said Property is situated;
A-1
6. The Property has direct physical access to _______________, a public street
or highway.
7. The number of striped parking spaces located at the Property is ___ (which
number includes __ handicapped parking spaces), and such parking spaces are
graphically located on the Survey.
______________________________________
Reg. Land Surveyor No.________________
A-2
EXHIBIT B
TENANT ESTOPPEL CERTIFICATE
Tenant: ___________________________________________________ ("Tenant")
Landlord: ___________________________________________________ ("Landlord")
Acquiror:
Lease: Lease between________________and________________dated
________________ 19__, as amended by amendments dated
(collectively, the "Lease")
Demised Premises:______________________________________________________
(the "Demised Premises")
Property:_______________________________________________(the "Property")
The undersigned has been informed that Acquiror intends to acquire
the Property of which the Demised Premises is a part and that Acquiror desires
assurance that the Lease is in good standing.
The undersigned hereby certifies as follows:
1. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as indicated above and the Lease
represents the entire agreement between the parties as to this leasing and/or
Tenant's rights in and to the Demised Premises.
2. Except as set forth in the Lease, there are no other
representations, warranties, commitments, agreements or understandings between
Landlord (and its predecessors, if applicable) and Tenant with respect to the
Lease or any obligations of any party thereunder.
3. Except as set forth in the Lease, there are no options to
purchase, rights of refusal or rights of first offer in favor of Tenant with
respect to the purchase of the Property or any interest therein.
4. The term of the Lease commenced on_____________________and
expires on________________. A security deposit of $______________ has been
paid to Landlord.
5. Basic Rent under the Lease is currently payable at the rate of
$___________ per month and has been paid through [July 30], 1997. No Basic Rent
has been paid more than thirty (30) days in advance. Tenant has not asserted,
and has no actual knowledge of, any defenses or claims that might be set-off or
credited against any amount due Landlord under the Lease or the enforcement of
the Lease.
B-1
6. As Additional Rent, Tenant currently pays all real estate taxes
and assessments, interior and exterior building maintenance, utility costs,
insurance and other charges relating to the operation and maintenance of the
Demised Premises, except as follows (insert description of any operating costs
payable by Landlord; if none, write "None"):_________________________________
__________________________________________________________. No Additional Rent
has been paid more than thirty (30) days in advance. All Additional Rent that is
currently due from Tenant pursuant to the Lease has been paid.
[7. Tenant has not executed any sublease with respect to the
Demised Premises and Tenant has not assigned or encumbered its interest in the
Lease. No person or entity other than Tenant is in possession of the Demised
Premises. Tenant is presently conducting business at the Demised
Premises.]
8. Landlord has satisfied all conditions under the Lease in the
nature of inducements to Tenant's occupancy, including without limitation all
co-tenancy requirements thereunder; and all improvements required by the
provisions of the Lease to be made by Landlord have been satisfactorily
completed.
9. Landlord has paid in full all amounts required by the Lease to be
paid by Landlord to Tenant on account of Tenant's improvements or as otherwise
required by the Lease.
10. Tenant is not in default in any of its obligations under the
Lease and, to the best of Tenant's knowledge, Landlord is not in default in any
of its obligations under the Lease. Neither Tenant nor, to the best of Tenant's
knowledge, Landlord has committed any breach under the Lease which, alone or
with the passage of time, the giving of notice, or both, would constitute a
default thereunder. Tenant has not received from or given to Landlord any
written notice of default under the Lease.
11. Except for those services required (under the express terms of
the Lease) to be provided by Landlord to Tenant, Landlord provides no other
services to Tenant in connection with its lease of the Demised Premises.
12. There are no actions, whether voluntary or involuntary, pending
against Tenant under the bankruptcy laws of the United States or any state
thereof.
13. [Tenant agrees that, upon Acquiror's acquisition of the
Property, Tenant will attorn to and recognize Acquiror as the Landlord under the
Lease, with the same force and effect as if there were a direct lease between
Tenant and Acquiror. Tenant further agrees that Acquiror shall not be liable for
any defaults or other acts or omissions of Acquiror's predecessors in interest
in the Property (including, but not limited to, Landlord).]
14. Tenant acknowledges that Acquiror has relied on the information
contained in this Tenant Estoppel Certificate in determining whether to acquire
the land and improvements in or on which the Demised Premises is located. The
statements contained herein may be relied upon by Landlord, Acquiror, Acquiror's
title insurers, and Acquiror's lender, if any, in connection with Acquiror's
acquisition of the Property.
Executed this ___ day of ______________, 1997.
B-2
TENANT:
By:
Printed:
Title:
[If this certificate is delivered by the ▇▇▇▇▇▇▇ Contributors in lieu of a
tenant certificate, then the following shall apply:
(i) all bracketed items shall be deleted;
(ii) Paragraph 10 above shall be replaced with the following paragraph:
There is no continuing default by Landlord in the performance or observance of
any covenant, agreement or condition contained in the Lease to be performed or
observed by Landlord, and there has not occurred any event which, with the
giving of notice or passage of time or both, would become a default under the
Lease. Landlord has not delivered to Tenant any notice of default by Tenant in
the performance or observance of any covenant, agreement or condition contained
in the Lease to be performed or observed by Tenant which has not been cured by
Tenant; and
(iii) The following phrase shall be inserted at the beginning of
Paragraph 12: "To the best of Landlord's knowledge,".]
B-3
Exhibit C
EMPLOYMENT AGREEMENT
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇
▇-▇