CONTRIBUTION AND EXCHANGE AGREEMENT
between and among
G&G MARTCO,
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
THE ▇▇▇▇▇▇▇▇ ▇. AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST,
▇▇▇▇▇ ▇▇▇▇▇▇▇,
PLENITUDE PARTNERS, L.P.
and
▇▇▇▇-▇▇▇▇ REALTY, L.P.
Date: April 30, 1998
TABLE OF CONTENTS
ss. Section Heading Page
--- --------------- ----
INDEX OF DEFINED TERMS...............................................iv
SCHEDULES..........................................................viii
EXHIBITS.............................................................ix
RECITALS..............................................................1
1. CONTRIBUTION AND EXCHANGE.............................................2
2. CONSIDERATION.........................................................3
3. INSPECTION RIGHTS.....................................................4
4. TITLE; MATTERS TO WHICH THIS SALE IS SUBJECT..........................6
5. REPRESENTATIONS AND WARRANTIES OF THE OWNERS..........................9
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................20
7. COVENANTS OF THE OWNERS..............................................23
8. LEASING COMMISSIONS AND TENANT IMPROVEMENT OBLIGATIONS...............26
9. ESTOPPEL CERTIFICATES................................................27
10. CLOSING..............................................................27
11. ADJUSTMENTS..........................................................31
12. "AS-IS" ACQUISITION..................................................33
13. MORTGAGE DEBT........................................................33
14. CONDITIONS PRECEDENT TO CLOSING......................................33
15. INTENTIONALLY DELETED PRIOR TO EXECUTION.............................35
16. BROKER...............................................................35
17. CASUALTY LOSS........................................................36
18. CONDEMNATION.........................................................36
19. TRANSFER RESTRICTIONS; RIGHT OF FIRST REFUSAL........................37
20. PUBLICATION; CONFIDENTIALITY.........................................38
21. REMEDIES.............................................................39
22. NOTICE...............................................................40
ii
23. DEBT MAINTENANCE.....................................................41
24. SALE OF THE PROPERTY.................................................44
25. TAX MATTERS..........................................................45
26. INTEREST PURCHASE OPTION.............................................45
27. MISCELLANEOUS........................................................46
iii
INDEX OF DEFINED TERMS
Page No.
A
Act.........................................................................14
Additional Rents............................................................32
Adjustment Units............................................................32
Adjustments.................................................................32
Agreement....................................................................1
Amended Partnership Agreement...............................................30
Assignment of Contributor's Interest........................................27
Audit.......................................................................13
Audits......................................................................13
B
Basket......................................................................19
Beneficiaries................................................................1
Books and Records............................................................3
Building.....................................................................2
Built-in Gain...............................................................44
C
Casualty....................................................................36
Casualty Notice.............................................................36
CERCLA......................................................................17
Certificates.................................................................4
Closing.....................................................................27
Closing Date................................................................27
Closing Price................................................................4
Code........................................................................29
Common Stock.................................................................4
Company......................................................................1
Condemnation Notice.........................................................36
Consideration................................................................3
Contaminants................................................................17
Contributor..................................................................1
Contributor Debt............................................................42
Contributor Debt Amount.....................................................42
Contributor Party...........................................................37
Contributor Units............................................................3
Contributor's Interest.......................................................1
Contributor's Withheld Interest.............................................45
iv
Current Market Value Per Unit................................................4
D
Debt Amount.................................................................42
Discharge...................................................................18
Disposition Notice..........................................................37
Disposition Securities......................................................37
▇▇▇▇▇▇▇......................................................................1
E
Election Period.............................................................45
Environmental Documents.....................................................18
Environmental Laws..........................................................18
Estoppel Certificate........................................................27
Estoppel Certificates.......................................................27
Excess Adjustment Amount....................................................32
Exchange.....................................................................4
Excluded Liabilities........................................................14
Exercise Notice.............................................................37
Existing Mortgage Debt.......................................................3
Existing Principal Amount...................................................33
F
First Tier Portion..........................................................42
G
Governmental Authorities....................................................11
H
Holding Period..............................................................45
I
Improvements.................................................................2
Initial Indemnity...........................................................42
Initial Indemnity Amount....................................................42
Inspection Period............................................................4
Intangible Property..........................................................3
L
Land.........................................................................2
Lease........................................................................2
Leases.......................................................................2
Letter Agreement............................................................45
Liabilities.................................................................13
Liability...................................................................13
LWF..........................................................................1
v
M
MCRC.........................................................................4
N
New Bank Account............................................................32
New Leases..................................................................26
Notice......................................................................18
Notice Period...............................................................37
O
OP Agreement................................................................14
Owners.......................................................................1
P
Partnership Recourse Debt...................................................42
Permits and Licenses.........................................................2
Permitted Encumbrances.......................................................6
Personal Property............................................................2
Plenitude....................................................................1
Pre-Closing Period..........................................................25
Promotional Materials........................................................3
Property.....................................................................3
Property Financials.........................................................13
Property Value...............................................................3
Proposed Disposition........................................................37
Purchase Option.............................................................37
PWC art. 20.................................................................35
R
Real Property................................................................2
Reconstituted Partnership....................................................3
Rent Roll....................................................................9
Repair Cost.................................................................36
Replacement Loan............................................................33
Reserve Fund................................................................32
Restricted Period...........................................................41
S
SEC Documents...............................................................14
Second Tier Portion.........................................................43
Security Deposit.............................................................2
Service Contracts............................................................3
Straddle Period.............................................................25
vi
T
Tank Laws...................................................................18
Tax.........................................................................12
Tax Authorities.............................................................13
Tax Authority...............................................................13
Tax Return..................................................................13
Tax Returns.................................................................13
Taxes.......................................................................12
Tenant.......................................................................2
Tenants......................................................................2
Third Tier Portion..........................................................42
Title Commitment.............................................................6
Title Company................................................................6
Title Policy.................................................................7
Tradenames...................................................................2
Trading Day..................................................................4
Transfer....................................................................14
Transferred.................................................................37
U
Underground Storage Tank....................................................18
Underlying Shares...........................................................37
Undisclosed Liability.......................................................13
Union Agreements............................................................11
Unit Holders.................................................................3
Units........................................................................3
W
Withheld Consideration......................................................45
vii
SCHEDULES
Schedule 1.1(a) Land
Schedule 1.1(c) Personal Property
Schedule 1.1(f) Service Contracts
Schedule 2.1(b) Unit Holders
Schedule 4.1(c) Permitted Encumbrances
Schedule 4.1(e) Survey
Schedule 4.3(a)(i) Non-Imputation Endorsement
Schedule 4.3(a)(ii) Fairway Endorsement
Schedule 5.1(c)(i) G&G Partnership Agreement
Schedule 5.1(c)(ii) Certificate of Partnership
Schedule 5.1(d) Leases
Schedule 5.1(e) Rent Roll
Schedule 5.1(h) Permits and Licenses
Schedule 5.1(j) Leasing Commissions
Schedule 5.1(n)-1 Union Agreement
Schedule 5.1(n)-2 Union Letter Re: Un-Funded Liabilities
Schedule 5.1(t) Basis, Depreciation & Useful Life of Real Property
Contributed to the Company
Schedule 5.1(w) Property Financials
Schedule 5.4(a) Environmental Matters
Schedule 6.1(g) List of Form 8-K's Filed Since December 31, 1997
Schedule 7.4 Assessed Valuation Proceedings
Schedule 24.1 Built-In Gain
viii
EXHIBITS
Exhibit 9.1 Form of Estoppel Certificate
Exhibit 10.2(a) Assignment of Contributor's Interest
Exhibit 10.4(f) Registration Rights Agreement
ix
CONTRIBUTION AND EXCHANGE AGREEMENT
THIS CONTRIBUTION AND EXCHANGE AGREEMENT (this "Agreement") made April 30,
1998 by and between G&G MARTCO ("G&G"), a general partnership organized under
the laws of the State of California, having an address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual having an address at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ("LWF"), THE ▇▇▇▇▇▇▇▇ ▇. AND ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ TRUST, a California trust having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ("Contributor"), ▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual having an
address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
("▇▇▇▇▇▇▇"), and PLENITUDE PARTNERS, L.P., a Delaware limited partnership having
an address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
("Plenitude", and hereinafter G&G, Contributor, ▇▇▇▇▇▇▇ and Plenitude shall
collectively be referred to as the "Owners") and ▇▇▇▇-▇▇▇▇ REALTY, L.P., a
Delaware limited partnership having an address at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company").
RECITALS
A. G&G is the owner in fee simple of that certain property located
in the City and County of San Francisco and State of California, commonly known
as Convention Plaza. Contributor and ▇▇▇▇▇▇▇, along with those certain entities,
such as Plenitude, and other trusts and individuals listed on Schedule 2.1(b)
annexed hereto (collectively, the "Beneficiaries"), each own a fifty (50%)
percent interest in the profits and capital of G&G. Together, Contributor,
▇▇▇▇▇▇▇, Plenitude and the Beneficiaries own all of G&G.
B. Contributor and the Beneficiaries hereby desire to contribute a
forty-nine and 9/10 (49.9%) percent interest in the profits and capital of G&G
("Contributor's Interest"), and the Company desires to accept the contribution
of Contributor's Interest, on and subject to, the terms, covenants and
conditions set forth herein.
C. Subsequent to Contributor's contribution of Contributor's
Interest, the Company, Contributor, ▇▇▇▇▇▇▇ and Plenitude desire to continue to
operate the property referenced above, and in connection therewith, to amend and
restate the partnership agreement for G&G on and subject to the terms, covenants
and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and for Ten Dollars ($10.00) and other good and valuable consideration,
the mutual receipt and legal sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, do hereby agree as
follows:
1. CONTRIBUTION AND EXCHANGE.
1.1 Upon, and subject to, the terms, covenants and conditions of
this Agreement, on the Closing Date (as hereinafter defined), Contributor shall
contribute and convey to the Company Contributor's Interest in G&G, which is the
owner and possesses all right, title and interest in, to and under the
following:
(a) that certain plot, piece or parcel of land situate, lying
and being in the City and County of San Francisco and State of California, and
being more particularly described on Schedule 1.1(a) (the "Land"), the building
or buildings constructed on the Land (the "Building") and all of the other
improvements located on the Land (together with the Building, the
"Improvements");
(b) all rights, privileges, grants and easements appurtenant
to the Land and Improvements including, without limitation, all of G&G's right,
title and interest in and to all land lying in the bed of any public street,
road or alley, all mineral and water rights and all easements, licenses,
covenants and rights-of-way or other appurtenances used in connection with the
beneficial use and enjoyment of the Land and Improvements (the Land and
Improvements, and all such rights, privileges, easements, grants and
appurtenances, are sometimes referred to herein as the "Real Property");
(c) all personal property, fixtures, equipment, inventory and
computer programming and software owned or licensed by G&G and located on the
Real Property or used in connection with or in relation to the sale, management,
leasing, promotion, ownership, operation, development, maintenance, use or
occupancy of the Real Property including, without limitation, the items, if any,
described on Schedule 1.1(c) (collectively the "Personal Property");
(d) all leases and other agreements with respect to the use
and occupancy of the Real Property, together with all amendments and
modifications thereto and any guaranties provided thereunder (each a "Lease",
and collectively the "Leases"), and all rents, additional rents, reimbursements,
profits, income, receipts and the amount deposited under any Lease in the nature
of security (plus any accrued interest) (the "Security Deposit") for the
performance by any entity or person(s) using or occupying space at the Property
(each a "Tenant", and collectively the "Tenants") pursuant to a Lease;
(e) all trademarks and tradenames used or useful in connection
with the Real Property, including without limitation the names Convention Plaza
and G&G Martco and any other name by which the Real Property is commonly known,
and all goodwill, if any, related to said names, all for which G&G shall have
the sole and exclusive rights (collectively, the "Tradenames");
(f) all permits, licenses, guaranties, approvals, certificates
and warranties relating to the Real Property and the Personal Property
(collectively, the "Permits and Licenses"), those contracts and agreements for
the servicing, maintenance and operation of
2
the Real Property, to the extent the Company has elected to continue same as
provided herein (the "Service Contracts") as set forth on the annexed Schedule
1.1(f), and the telephone numbers in use at any of the Real Property (together
with the Permits and Licenses and the Service Contracts, collectively the
"Intangible Property");
(g) all promotional materials, brochures, prints and/or
pictures of the Land and Improvements (collectively, "Promotional Materials"),
books, records, tenant data, leasing material and forms, past and current rent
rolls, files, statements, tax returns, market studies, keys, plans,
specifications, reports, tests and other materials of any kind owned by or in
the possession of G&G which are or may be used by G&G in the use and operation
of the Real Property or Personal Property (together with the Promotional
Materials, collectively the "Books and Records"); and
(h) all other rights, privileges and appurtenances owned by G
& G, if any, and in any way related to the rights and interests described above
in this Section.
1.2. The Real Property, the Personal Property, the Leases, the
Security Deposits, the Tradenames, the Intangible Property, the Books and
Records and the other property interests being conveyed hereunder are
hereinafter collectively referred to as the "Property".
1.3. For all periods prior to the Closing, G&G and all references to
it herein shall be deemed to be the partnership composed of Contributor,
▇▇▇▇▇▇▇, the Beneficiaries and Plenitude. From and after the Closing, G&G shall
be deemed to be the partnership inclusive of the Company, composed as more
particularly set forth in the Amended Partnership Agreement (as hereinafter
defined). All references herein to the "Reconstituted Partnership" shall be to
G&G as it shall be composed from and after the Closing, which is herein
considered to be a separate and distinct entity from G&G prior to the Closing.
2. CONSIDERATION.
2.1 (a) Contributor shall contribute Contributor's Interest to the
Company or its designee at Closing (as hereinafter defined). The consideration
("Consideration") for the contribution of Contributor's Interest shall be equal
to forty-nine and 9/10 (49.9%) percent, multiplied by the difference between
$58,000,000.00 and the outstanding principal balance of mortgage debt existing
on the Property as of the Closing Date (as hereinafter defined)(the "Mortgage
Debt"). The mortgage debt existing on the Property as of the date hereof shall
hereinafter be referred to as the "Existing Mortgage Debt". The Owners and the
Company hereby agree that the value of the Property is $58,000,000.00 (the
"Property Value").
(b) The Consideration shall be paid at Closing by the issuance
of operating partnership units of the Company ("Units"). The Units shall be
subject to the terms and conditions of the OP Agreement (as hereinafter
defined). The Units shall be issued at Closing by the Company to Contributor and
the individuals listed on Schedule 2.1(b) (the "Unit Holders") in such amounts
as Contributor shall direct the Company in writing no less than five (5) days
prior to Closing. The aggregate number of such Units (the "Contributor Units")
to be
3
issued to the Unit Holders shall be calculated by dividing (i) the
Consideration, by (ii) the Current Market Value Per Unit (as hereinafter
defined).
2.2 [INTENTIONALLY DELETED PRIOR TO EXECUTION]
2.3 At Closing, the Company shall issue to Contributor and/or the
Unit Holders certificates ("Certificates") representing the Contributor Units,
which Certificates shall contain the legend set forth in Section 5.6. All rights
and benefits incidental to the ownership of the Contributor Units as set forth
in the OP Agreement (as hereinafter defined) including, but not limited to, the
right to receive distributions, voting rights and the right to exchange the
Contributor Units for shares of Common Stock (as hereinafter defined), shall,
subject to the provisions of Sections 5.3 and 19, accrue for the benefit of the
Contributor and/or the Unit Holders commencing on the Closing Date.
2.4 With respect to the first Partnership Record Date (as defined in
the OP Agreement) on or after the Closing, the Unit Holders shall receive
distributions payable with respect to the Contributor Units on a pro rata basis
based upon the number of days during the calendar quarter preceding such
Partnership Record Date that the Unit Holders held the Contributor Units.
2.5 For purposes of this Agreement, the following terms shall have
the following meanings:
(a) "Closing Price" means, on any date, with respect to a
share of common stock of ▇▇▇▇-▇▇▇▇ Realty Corporation ("MCRC"), the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, for one share of
Common Stock in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange (the "Exchange").
(b) "Common Stock" means the shares of common stock of MCRC.
(c) "Current Market Value Per Unit" means the average of the
Closing Price for a share of Common Stock for twenty (20) consecutive Trading
Days ending on, and including, April 27, 1998, which the parties hereby agree is
$38.2094.
(d) "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business.
3. INSPECTION RIGHTS.
3.1. Through the period ending on the date hereof (the
"Inspection Period"), the Company, at its own cost and expense, may perform, or
cause to be performed, tests, investigations and studies of or related to the
Property including, but not limited to, soil tests and
4
borings, ground water tests and investigations, percolation tests, surveys,
architectural, engineering, subdivision, environmental, access, financial,
market analysis, development and economic feasibility studies and other tests,
investigations or studies as the Company, in its sole discretion, determines is
necessary or desirable in connection with the Property and may inspect the
physical (including environmental) and financial condition of the Property,
including but not limited to the Leases, Service Contracts, engineering and
environmental reports, development approval agreements, permits and approvals,
which inspection shall be satisfactory to the Company in its sole discretion.
The Company shall conduct any tests and studies in a manner which does not
unreasonably impede the day-to-day operations of the Property, and shall repair
and restore any portion of the surface of the Premises disturbed by the Company,
its agents or contractors during the conduct of any tests and studies to the
same condition as existed prior to such disturbance. Such right of inspection
and the exercise of such right shall not constitute a waiver by the Company of
the breach of any representation, warranty, covenant or agreement of the Owners
which might, or should, have been disclosed by such inspection. The Owners
acknowledge that no consents are required for the Company to conduct its
investigations of the Property as provided herein.
3.2. During the Inspection Period, the Company, its agents and
contractors, shall have unlimited access to the Property and other information
pertaining thereto in the possession or within the control of the Owners for the
purpose of performing such studies, tests, borings, investigations and
inspections for the purposes described in this Section 3. The Owners shall
cooperate with the Company in facilitating its due diligence inquiry and will
deliver to the Company, promptly after request, true and complete copies of all
test borings, Environmental Documents (as defined in Section 5.4(f)), surveys,
title materials and engineering and architectural data and the like relating to
the Property that are in the Owners' possession or under their control. In the
event any additional materials or information come within the Owners' possession
or control after the date of this Agreement, the Owners shall promptly submit
true and complete copies of the same to the Company. The Owners shall notify the
Company of any dangerous conditions on the Property, including, without
limitation, conditions which due to the nature of the borings, studies,
investigations, inspections or testing to be performed by or on behalf of the
Company may pose a dangerous condition to the Company or the Company's agents
and contractors.
3.3. In the event the inspection is not satisfactory, for any
reason, the Company may terminate this Agreement prior to the expiration of the
Inspection Period. If, prior to the expiration of the Inspection Period, the
Company shall have failed to notify ▇▇▇▇▇▇▇ and Contributor of its election to
terminate this Agreement, then the Company shall be deemed to have not
terminated this Agreement.
3.4. The Company's right of inspection and the exercise of such
right shall not constitute a waiver by the Company of the breach of any
representation, warranty covenant or agreement of the Owners which might, or
should, have been disclosed by such inspection.
5
3.5. Notwithstanding the expiration of the Inspection Period, the
Company shall continue to have the rights provided it in this Section 3, other
than the right to terminate this Agreement.
3.6. In the event that the Closing does not occur, the Company will
provide Contributor and ▇▇▇▇▇▇▇ with copies of those reports and studies in the
Company's possession which pertain to the Property and are neither proprietary
nor privileged.
4. TITLE; MATTERS TO WHICH THIS SALE IS SUBJECT.
4.1 At Closing, the Property is to be subject only to the following
(collectively, the "Permitted Encumbrances"):
(a) the liens of real estate taxes, personal property taxes,
water charges, and sewer charges provided same are not due and payable, but
subject to adjustment as provided herein;
(b) the rights of Tenants, as tenants only;
(c) those restrictions, covenants, agreements, easements,
matters and things affecting title to the Real Property as of the date hereof
and more particularly described in Schedule 4.1(c) annexed hereto and by this
reference made a part hereof;
(d) any and all laws, statutes, ordinances, codes, rules,
regulations, requirements, or executive mandates affecting the Property,
including, without limitation, those related to zoning and land use, as of the
date hereof;
(e) the state of facts shown on the survey, if any, described
on Schedule 4.1(e), and any other state of facts which an accurate survey of the
Real Property would actually show, provided same do not impair the use of the
Real Property as it is currently being used and do not render title uninsurable
at standard rates;
(f) the Service Contracts; and
(g) leases, leasing commissions and construction obligations
approved in writing by the Company.
4.2. (a) The Company shall cause any title company licensed to do
business in the State in which the Real Property is located (the "Title
Company") to prepare a title insurance search and commitment for an owner's
title insurance policy for the Real Property (the "Title Commitment") and shall
cause a copy of same to be delivered to counsel for Contributor and ▇▇▇▇▇▇▇. If
any defects, objections or exceptions in the title to the Real Property appear
in the Title Commitment (other than the Permitted Encumbrances) which the
Company is not required to accept under the terms of this Agreement, the Owners
agree to use good faith efforts to cure, prior to Closing and at their expense,
(i) judgments of which
6
Contributor, as of the date hereof, has knowledge or which arise out of
Contributor's actions, up to $150,000.00, (ii) mortgages or other liens of which
Contributor, as of the date hereof, has knowledge or which Contributor has
executed or consented to which can be satisfied by payment of a liquidated
amount and (iii) any other defects, objections or exceptions which can be
removed by payments not to exceed $50,000.00. The Owners, in their discretion,
may adjourn the Closing for up to sixty (60) days in order to eliminate
unacceptable defects, objections or exceptions. If after complying with the
foregoing requirements, the Owners are unable or unwilling to eliminate all
unacceptable defects, objections or exceptions in accordance with the terms of
this Agreement on or before such adjourned date for the Closing, the Company may
elect either (w) to terminate this Agreement by notice given to the Owners, in
which event the provisions of Section 4.7 shall apply, or (x) to accept title
subject to such unacceptable defects, objections or exceptions and receive no
credit against or reduction of the Consideration. The Owners agree and covenant
that they shall not voluntarily place any encumbrances or exceptions to title to
the Real Property from and after the date of the first issuance of the Title
Commitment for the Real Property.
4.3. (a) It shall be a condition to Closing that the Title Company
insure title to the Real Property in the amount of the Property Value (at a
standard rate for such insurance) in the name of G&G, and/or the name of the
Reconstituted Partnership if the name of the Reconstituted Partnership shall be
different, by a standard 1992 ALTA Owners Policy, with ALTA endorsements Form
3.1, Form 8.1, Form 9 and any other endorsements as required by the Company,
free and clear of all liens, encumbrances and other matters, other than the
Permitted Encumbrances (the "Title Policy"). In addition, the Title Company, at
Contributor's and ▇▇▇▇▇▇▇'▇ expense, shall issue to the Company and the
Reconstituted Partnership both a non-imputation endorsement and a Fairway
endorsement in the forms annexed hereto as Schedules 4.3(a)(i) and (ii)
respectively. The Title Company shall provide affirmative insurance that any (i)
Permitted Encumbrances have not been violated, and that any future violation
thereof will not result in a forfeiture or reversion of title; (ii) the
contemplated use of the Property will not violate the Permitted Encumbrances;
(iii) the existing use of the Property complies with all applicable zoning
ordinances and regulations as may affect the Property; and (iv) the exception
for taxes shall apply only to the current taxes not yet due and payable.
(b) The Owners shall provide such affidavits, including title
affidavits and survey affidavits of no change, and undertakings as the Title
Company insuring title to the Property may require. In addition, if the Title
Commitments disclose judgments, bankruptcies or other returns against other
persons having names the same as or similar to that of the Owners, the Owners,
on request, shall deliver to the Title Company affidavits showing that such
judgments, bankruptcies or other returns are not against the Owners, or any of
their affiliates. Upon request by the Company, the Owners shall deliver any
affidavits and documentary evidence as are reasonably required by the Title
Company to eliminate the standard or general exceptions on the ALTA form Owner's
Policy.
(c) The words "insurable title" and "insurable" as used in
this Agreement are hereby defined to mean title which is insurable at standard
rates (without special premium) by the Title Company without exception other
than the Permitted Encumbrances.
7
4.4 Prior to Closing, the Owners shall cause one or more surveyors
reasonably acceptable to the Company (a) to certify and warrant to the Company,
and/or its designee(s), G&G and the Title Company the square footage and acreage
of the Land (to the nearest one-one hundredth (1/100)), (b) to certify that the
survey is a complete and accurate representation of the Real Property, (c) to
certify that there are no gores, gaps or strips, and such other facts that are
customarily required by the Title Company, (d) to provide to the Company and the
Title Company a metes and bounds description of the Land and any off-site
private easements benefiting the Real Property, and (e) otherwise prepare the
survey in accordance with the customary requirements of a lending institution
financing such a transaction. The Owners shall cause the surveyor to update the
survey as of the Closing Date and have the general survey exception removed from
the Title Policy (and replaced by a specific exception based on the survey) and
the survey affirmatively insured to both the Company and G&G.
4.5 Any unpaid taxes, water charges, sewer rents and assessments,
together with the interest and penalties thereon to a date not less than seven
(7) business day following the Closing Date (in each case subject to any
applicable apportionment), and any mortgages or other liens created by the
Owners, which the Owners are obligated to pay and discharge pursuant to the
terms of this Agreement, together with the cost of recording or filing of any
instruments necessary to discharge such liens and such judgments, shall be paid
at the Closing by the Owners. The Owners shall deliver to the Company, on the
Closing Date, instruments in recordable form sufficient to discharge any such
mortgages or other liens which the Owners are obligated to pay and discharge
pursuant to the terms of this Agreement, or, if acceptable to the Title Company,
the Owners shall deliver payoff letters from the lien holders.
4.6 If, on the date of this Agreement, the Real Property or any part
thereof shall be or shall have been affected by an assessment or assessments
which are or may become payable in annual installments, of which the first
installment is either then a charge or lien or has been paid, then for the
purposes of this Agreement all the unpaid installments of any such assessment,
including those which are to become due and payable after the Closing Date,
shall be deemed to be due and payable and to be liens upon the Real Property and
shall be paid and discharged by the Owners on the Closing Date.
4.7 If the Owners are unable to present title in accordance with the
terms of this Agreement, the Company shall have the right to terminate this
Agreement. In such event, neither party shall have any further rights or
obligations hereunder other than those obligations set forth in this Section 4.7
and Section 16.1, which are expressly stated herein to survive any such
termination, and Contributor shall refund to the Company all charges made for
(i) canceling the title commitment ordered with respect to the Real Property,
(ii) any appropriate additional municipal searches made in accordance with this
Agreement, and (iii) survey and survey inspection charges, which refund
obligation shall survive said termination.
8
5. REPRESENTATIONS AND WARRANTIES OF THE OWNERS
5.1 In order to induce the Company to perform as required hereunder,
Contributor hereby warrants and represents the following:
(a) G&G is a duly organized and validly existing general
partnership organized under the laws of the State of California, is duly
authorized to transact business in the State in which the Property is located,
has all requisite power and authority to execute and deliver this Agreement and
all other documents and instruments to be executed and delivered by it
hereunder, and to perform its obligations hereunder. All necessary actions of
the partners of G&G to confer such power and authority upon the persons
executing this Agreement and all documents which are contemplated by this
Agreement on its behalf have been taken.
(b) This Agreement, when duly executed and delivered, will be
the legal, valid and binding obligation of G&G and Contributor, separately and
collectively, and will be enforceable in accordance with the terms of this
Agreement. The performance by G&G and Contributor of their duties and
obligations under this Agreement and the documents and instruments to be
executed and delivered by them hereunder will not conflict with, or result in a
breach of, or default under, any provision of any of the organizational
documents of G&G or any agreements, instruments, decrees, judgments,
injunctions, orders, writs, laws, rules or regulations, or any determination or
award of any court or arbitrator, to which G&G and Contributor are a party or by
which any of their respective assets are or may be bound.
(c) Annexed hereto as Schedule 5.1(c)(i) is a true, complete
and correct copy of G&G's partnership agreement, as amended to date, and same
shall be unchanged and in effect on the Closing Date. Annexed hereto as Schedule
5.1(c)(ii) is a filed copy of the certificate of partnership of G&G.
(d) Annexed hereto as Schedule 5.1(d) is a true, complete and
correct schedule of all of the Leases. The Leases are valid and bona fide
obligations of the landlord and are in full force and effect. Except with
relation to the Existing Mortgage Debt, the Leases have not been sold,
transferred, pledged, hypothecated or assigned. To Contributor's knowledge, no
default and/or condition exists which, solely with the passage of time or the
giving of notice or both, will become a material default by G&G under the
Leases. To Contributor's knowledge, there are no agreements which confer upon
any Tenant or any other person or entity any rights with respect to the use and
occupancy of the Property other than the Leases. All Tenants have commenced
occupancy. Except for a general right contained in the Leases to offset rent in
the event of a breach or default, no Tenant is presently entitled to any offset
to its rent, nor is any Tenant currently asserting a concession, rebate,
allowance or free rent for any period.
(e) The rent roll annexed hereto as Schedule 5.1(e) (the "Rent
Roll") is a true, complete and correct listing of the information contained
therein in all material respects. The Rent Roll shall contain the following
information: (i) the name of each Tenant; (ii) the fixed rent actually being
collected; (iii) the commencement and expiration date or status of each Lease
(including all rights or options to renew); (iv) the Security Deposit, if any;
(v) whether there is
9
any guaranty of a Tenant's obligations from a third party, and if so the nature
of said guaranty; (vi) arrangements under which any Tenant is occupying space on
the date hereof or will, in the future, occupy such space; (vii) any written
notices given by any Tenant of an intention to vacate space in the future;
(viii) the base year(s) and base year amounts for all items of rent or
additional rent billed to each Tenant on that basis; and (ix) any arrearages of
any Tenant.
(f) To Contributor's knowledge, G&G has performed all of the
material obligations and observed all of the material covenants required of the
landlord under the terms of the Leases. Except for work, alterations,
improvements or installations required to be performed under leases entered into
after the date hereof and approved in writing by the Company, all work,
alterations, improvements or installations required to be performed under the
Leases have been or prior to Closing will be performed in all material respects.
To G&G's knowledge, all work performed by G&G, or through its employees, agents
or contractors, at the Real Property to the date hereof and to the Closing Date
has been performed in accordance with the rules, laws and regulations of all
applicable authorities and any certificate of occupancy or completion, or
amendments thereto, to be issued on account of such work, have been so issued.
(g) To Contributor's knowledge, there are no service
contracts, equipment leases, employment agreements or other agreements to which
G&G is a party and affecting the Property or the operation thereof, except the
Service Contracts. True, accurate and complete copies of the Service Contracts
have been delivered by G&G to the Company. All of the Service Contracts are and
will on the Closing Date be unmodified and in full force and effect, and to the
knowledge of G&G, are without any default or claim of default by any of the
parties thereto. All sums due and payable as of the date hereof by G&G under the
Service Contracts have been paid. All of the Service Contracts may be terminated
on not more than thirty (30) days notice without the payment of any fee or
penalty.
(h) To Contributor's knowledge, the Permits and Licenses
include all certificates, licenses, permits and authorizations, including
without limitation any Permits and Licenses relating to any environmental
matters, necessary to operate and occupy the Building or customarily obtained in
operating and occupying buildings similar to the Building, all of which Permits
and Licenses are listed on Schedule 5.1(h), along with the expiration date of
same. G&G and Contributor have not received any notice that any of the Permits
and Licenses are subject to, or in jeopardy of, revocation or non-renewal. To
Contributor's knowledge, G&G is current in the payment of any fees required to
be paid for the Permits and Licenses and all Permits and Licenses are in full
force and effect.
(i) To Contributor's knowledge, there are no actions, suits,
labor disputes, litigation or proceedings currently pending or, to the knowledge
of G&G, threatened against or related to G&G or to all or any part of the
Property, the environmental condition thereof, or the operation thereof.
(j) Annexed hereto as Schedule 5.1(j) is a schedule of all
leasing commission obligations affecting the Property. The respective
obligations of G&G and the Reconstituted Partnership with respect to said
commissions are set forth in Section 8.
10
(k) Contributor has received no written notice and has no
knowledge of (i) any pending or contemplated annexation or condemnation
proceedings, or private purchase in lieu thereof, affecting or which may affect
the Property, or any part thereof, (ii) any proposed or pending proceeding to
change or redefine the zoning classification of all or any part of the Property,
(iii) any proposed or pending special assessments affecting the Property or any
portion thereof, (iv) any penalties or interest due with respect to real estate
taxes assessed against the Property and (v) any proposed change(s) in any road
or grades with respect to the roads providing a means of ingress and egress to
the Property. G&G and Contributor agree to furnish the Company with a copy of
any such notice received within two (2) days after receipt.
(l) G&G and Contributor have provided or made available to the
Company all reports, including without limitation, the Environmental Documents,
in the possession or under the control of G&G or Contributor related to the
physical condition of the Property and all Books and Records necessary for the
Company to conduct its due diligence of the Property.
(m) To Contributor's knowledge, no violations exist, nor does
Contributor have any knowledge of any written notices, suits, investigations or
judgments relating to any violations of any laws, ordinances or regulations
affecting the Property, (including, without limitation, Environmental Laws (as
hereinafter defined)), or any violations or conditions that may give rise
thereto, and has no reason to believe that any agency, board, bureau,
commission, department, office or body of any municipal, county, state or
federal governmental unit, or any subdivision thereof, having, asserting or
acquiring jurisdiction over all or any part of the Property or the management,
operation, use or improvement thereof (collectively, the "Governmental
Authorities") contemplates the issuance thereof, and there are no outstanding
orders, judgments, injunctions, decrees, directives or writs of any Governmental
Authorities against G&G, Contributor or the Property; provided, however, the
Company acknowledges that certain alterations or improvements to the Property
may be necessary in order to comply with the Americans with Disabilities Act and
life safety laws required by Governmental Authorities as a condition of the
issuance of any new building permits for tenant improvements or other
construction at the Property.
(n) There are no employees of G&G working at, in connection
with or on behalf of G&G, nor are there any union or collective bargaining
agreements affecting the Property, except those listed on Schedule 5.1(n)-1 (the
"Union Agreement"), which expire no later than August 31, 1998. No un-funded
vested liabilities exist under the pension plan created pursuant to the Union
Agreement, as indicated by that certain letter from Stationary Engineers Local
39, dated April 21, 1998, annexed hereto as Schedule 5.1(n)-2.
(o) To Contributor's knowledge, there are no outstanding
requirements or recommendations communicated to G&G in writing by (i) the
insurance company(s) currently insuring the Property; (ii) any board of fire
underwriters or other body exercising similar functions, or (iii) the holder of
any mortgage encumbering any of the Property, which require or recommend any
repairs or work to be done on the Property.
11
(p) Neither G&G nor Contributor have made a general assignment
for the benefit of creditors, filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by G&G's or Contributor's
creditors, suffered the appointment of a receiver to take possession of all, or
substantially all, of G&G's or Contributor's assets, suffered the attachment or
other judicial seizure of all, or substantially all, of the Owners' assets,
admitted in writing its inability to pay its debts as they come due or made an
offer of settlement, extension or composition to its creditors generally.
(q) Subject to the security interest created by the mortgagee
under the Existing Mortgage Debt and the security interest to be placed on the
Property at Closing as a result of the Replacement Loan (as hereinafter
defined), the Personal Property is now owned and will on the Closing Date be
owned by G&G free and clear of any conditional bills of sale, chattel mortgages,
security agreements or financing statements or other security interests of any
kind.
(r) No portion of the Property is located in a flood plain.
(s) (i) G&G, Contributor, the Unit Holders and their
affiliated entities have timely paid all Taxes (as hereinafter defined) due and
payable by each of them on or prior to the Closing Date and have timely filed
all Tax Returns (as hereinafter defined) required to be filed by each of them on
or prior to the Closing Date. Each such Tax Return is complete and accurate in
all material respects.
(ii) True and complete copies of all Tax Returns filed
by G&G for taxable periods beginning on or after January 1, 1994, and all
written communications with any Tax Authorities relating thereto will be, upon
request, delivered to the Company during the Inspection Period. G&G has also
provided, or will also provide, to the Company during the Inspection Period
copies of: (i) any letter ruling, determination letter or similar document
issued to G&G by any Tax Authority (as hereinafter defined), and (ii) any
closing or other agreement entered into by G&G with any Tax Authority. To
Contributor's knowledge, there are no ongoing Audits (as hereinafter defined) or
Audits pending or threatened against the Property, G&G or the Contributor. To
Contributor's knowledge, no claim has ever been made by a Tax Authority in a
jurisdiction where G&G or Contributor do not file Tax Returns that they are or
may be subject to taxation by that jurisdiction. To Contributor's knowledge, no
assessment of Taxes, other than current Taxes for which adjustment is being made
hereunder, is proposed against G&G, Contributor or any of the Property. To
Contributor's knowledge, there are no agreements or waivers extending the
statutory period of limitations with respect to any Tax Return of G&G, or for
the assessment or collection of any Taxes attributable to G&G or the Property.
To Contributor's knowledge, G&G is not, nor has it ever been a party to, or has,
or has ever had liability under, any indemnification, allocation or sharing
agreement with respect to Taxes. "Taxes" or "Tax" means all federal, state,
county, local, foreign and other taxes of any kind whatsoever (including,
without limitation, income, profits, premium, estimated, excise, sales, use,
occupancy, gross receipts, franchise, ad valorem, severance, capital levy,
production, transfer, license, stamp, environmental, withholding, employment,
unemployment compensation, payroll related and property taxes, import duties and
other governmental charges or assessments),
12
whether or not measured in whole or in part by net income, and including
deficiencies, interest, additions to tax (or interest and penalties with respect
thereto), and including expenses associated with contesting any proposed
adjustment related to any of the foregoing. "Tax Returns" or "Tax Return" means
all original and amended Federal, state, local and foreign returns,
declarations, statements, reports, schedules, forms, information returns and
other filings relating to Taxes. "Audits" or "Audit" means any audit,
assessment, other examination or claim by any Tax Authority, judicial,
administrative or other proceeding or litigation (including any appeal of any
such judicial, administrative or other proceeding or litigation) relating to
Taxes and/or Tax Returns. "Tax Authorities" or "Tax Authority" means the
Internal Revenue Service and any other federal, state, local or foreign taxing
authority.
(t) Annexed hereto as Schedule 5.1(t) is a schedule setting
forth, for federal and state income tax purposes and with respect to each item
of the Property, the following information: (i) such item's adjusted basis as of
the first day of G&G's taxable year which includes the Closing Date; (ii) the
date that such item was placed in service; (iii) the depreciation method with
respect to such item; and (iv) such item's remaining useful life. The
information set forth on Schedule 5.1(t) is true, complete and correct in all
material respects.
(u) To Contributor's knowledge, (i) no representation or
warranty made by G&G or Contributor contained in this Agreement, and (ii) no
statement contained in any Environmental Documents, Tax Returns, Rent Roll,
Permits and Licenses, Promotional Materials, Service Contracts, Schedule or
Exhibit furnished by or on behalf of G&G or Contributor to the Company or any of
its designees or affiliates pursuant to this Agreement (taking into account any
knowledge, materialty or similar qualifiers contained in this Agreement), when
taken as a whole, contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading or necessary in order to fully and
fairly provide the information required to be provided therein.
(v) Contributor and the Unit Holders have good and marketable
title to one-hundred (100%) percent of Contributor's Interest, free of all liens
and encumbrances whatsoever. Contributor has all requisite consent of the Unit
Holders to convey Contributor's Interest.
(w) Except as set forth on Schedule 5.1(w) (the "Property
Financials") or as provided in Section 11, there are no liabilities of G&G that
are accrued, and are attributable to periods, prior to the Closing Date, whether
known or unknown, fixed or unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise,
whether or not of a kind required by GAAP to be set forth on the Property
Financials or the notes thereto, including, without limitation, indebtedness for
borrowed money (individually a "Liability", and collectively, "Liabilities").
Notwithstanding the terms and conditions of Section 5.5, in the event that a
Liability is not set forth on the Property Financials (an "Undisclosed
Liability") but (i) such Undisclosed Liability is the subject of other
provisions of this Agreement or (ii) is of a nature that, if known, would have
had to have been disclosed under other provisions of this Agreement ((i) and
(ii) being collectively referred to as
13
the "Excluded Liabilities"), such other provisions shall govern and control and
the provisions of this Section 5.1(w) shall not apply to such Excluded
Liabilities. Subject to the Basket (as hereinafter defined), Contributor shall
be liable to the Company for its entire loss or damage arising out of an
Undisclosed Liability, other than Excluded Liabilities, up to a maximum of the
lesser of (x) $8,000,000, or (y) one-half (1/2) of any loss or damage suffered
by the Reconstituted Partnership as a result thereof.
(x) After the Closing Contributor shall not be entitled,
except as otherwise herein provided, to receive from either G&G or the
Reconstituted Partnership any distribution or payment of indebtedness or for any
other reason whatsoever.
5.2. [INTENTIONALLY DELETED PRIOR TO EXECUTION]
5.3 In order to induce the Company to issue the Contributor Units,
Contributor and the Unit Holders hereby acknowledge their understanding that the
issuance of the Contributor Units is intended to be exempt from registration
under the Securities Act of 1933, as amended, and the rules and regulations in
effect thereunder (the "Act"). In furtherance thereof, Contributor and the Unit
Holders represent and warrant to the Company to as follows:
(a) Contributor and the Unit Holders are acquiring the
Contributor Units solely for their own account for the purpose of investment and
not as a nominee or agent for any other person and not with a view to, or for
offer or sale in connection with, any distribution of any thereof other than to
the Unit Holders. Contributor agrees and acknowledges that it is not permitted
to offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
("Transfer") any of the Contributor Units except as provided in this Agreement
and the Amended and Restated Agreement of Limited Partnership of the Company,
dated as of December 11, 1997 (the "OP Agreement").
(b) Contributor and the Unit Holders are knowledgeable,
sophisticated and experienced in business and financial matters. Contributor and
the Unit Holders fully understand the limitations on transfer described in this
Agreement and the OP Agreement. Contributor and the Unit Holders are able to
bear the economic risk of holding the Contributor Units for an indefinite period
and are able to afford the complete loss of their investment in the Contributor
Units. Contributor and the Unit Holders have received and reviewed the OP
Agreement and copies of the most recent 10K, (collectively, the "SEC Documents")
and have been given the opportunity to obtain any and all additional information
and/or documents and to ask questions and receive answers about such documents,
as well as MCRC and the Company and the business and prospects of MCRC and the
Company which Contributor and the Unit Holders deem necessary to evaluate the
merits and risks related to its investment in the Contributor Units. Contributor
and the Unit Holders understand and have taken cognizance of all risk factors
related to the purchase of the Contributor Units.
(c) Contributor and the Unit Holders acknowledge that they
have been advised that (i) the Contributor Units must be held indefinitely, and
Contributor and the Unit Holders will continue to bear the economic risk of the
investment in the Contributor ▇▇▇▇▇,
▇▇
unless they are redeemed pursuant to the OP Agreement or are subsequently
registered under the Act or an exemption from such registration is available,
(ii) it is not anticipated that there will be any public market for the Units at
anytime, (iii) Rule 144 promulgated under the Act may not be available with
respect to the sale of any securities of the Company (and that upon redemption
of the Contributor Units in the Company for shares of Common Stock a new holding
period under Rule 144 may commence), and the Company has made no covenant, and
makes no covenant, to make Rule 144 available with respect to the sale of any
securities of the Company (although MCRC and the Company have agreed to register
the Common Stock pursuant to the Registration Rights Agreement, as hereinafter
defined), (iv) a restrictive legend as set forth in Section 5.6 below shall be
placed on the Certificates representing the Contributor Units, and (v) a
notation shall be made in the appropriate records of the Company indicating that
the Contributor Units are subject to restrictions on transfer.
(d) Contributor and the Unit Holders also acknowledge that (i)
the redemption of Contributor Units for shares of Common Stock is subject to
certain restrictions contained in the OP Agreement; and (ii) the shares of said
Common Stock which may be received upon such a redemption may, under certain
circumstances, be restricted securities and be subject to limitations as to
transfer, and therefore subject to the risks referred to in subsection (c)
above. Notwithstanding anything herein or in the OP Agreement to the contrary,
Contributor hereby acknowledges and agrees that it and the Unit Holders may not
exercise the Redemption Rights (as defined in the OP Agreement) until after the
date which is one year from the Closing Date.
(e) Contributor and each of the Unit Holders is either an
"accredited investor" (as such term is defined in Rule 501 (a) of Regulation D
under the Act) or Contributor and each of the Unit Holders either alone or with
its representative(s) has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
prospective investment.
5.4 In addition to the provisions of Section 5.1, 5.2 and 5.3,
Contributor hereby warrants and represents the following with respect to
environmental matters:
(a) To Contributor's knowledge, except as disclosed on
Schedule 5.4(a):
(i) there are no Contaminants (as defined in Section
5.4(f)) on, under, at, emanating from or affecting the Real Property, except
those in compliance with all applicable Environmental Laws (as defined in
Section 5.4(f));
(ii) neither G&G, Contributor, nor any current occupant
or any prior owner or occupant, of the Property has received any Notice (as
defined in Section 5.4(f)) or advice from any Governmental Authority (as defined
in Section 5.4(f)) or any other third party with respect to Contaminants on,
under, at, emanating from or affecting the Property, and no Contaminants have
been Discharged (as defined in Section 5.4(f)) which would allow a Governmental
Authority to demand that a cleanup be undertaken;
15
(iii) no portion of the Property has ever been used by
G&G or any former owner or current or former occupant, to generate, manufacture,
refine, produce, treat, store, handle, dispose of, transfer or process
Contaminants, whether or not any of those parties has received Notice or advice
from any Governmental Authority or any other third party with respect thereto;
(iv) G&G has not transported any Contaminants, nor has
any current or former occupant or former owner transported any Contaminants,
from the Property to another location which was not done in compliance with all
applicable Environmental Laws;
(v) no ss.104(e) informational request has been received
by the Owners issued pursuant to CERCLA (as defined in Section 5.4(f));
(vi) there is no asbestos or asbestos containing
material in any friable state or otherwise in violation of Environmental Laws on
the Property;
(vii) there are no above ground storage tanks or
Underground Storage Tanks (as defined in Section 5.4(f)) at the Property,
regardless of whether such tanks are regulated or not;
(viii) all pre-existing above ground storage tanks and
Underground Storage Tanks at the Property have been removed and their contents
disposed of in accordance with and pursuant to Environmental Laws;
(ix) the Property has not been used as a transfer
station, incinerator, resource recovery facility, landfill or other similar
facility, for receiving or treating, storing or disposing of Contaminants,
garbage and refuse, and other discarded materials resulting from, without
limitation, industrial, commercial, agricultural, domestic or community
activities, including, without limitation, sanitary, hazardous, medical, special
or other waste.
(x) there is no violation of any statute, ordinance,
rule, regulation, order, code, directive or requirement, including, without
limitation, Environmental Laws with respect to any environmental certificates,
and Licenses and Permits, nor any pending application for any Licenses and
Permits;
(xi) the Property is not subject to any wetlands
regulations, administered by the United States of America, Army Corps of
Engineers, the Environmental Protection Agency, or any other Governmental
Authority;
(xii) there are no federal or state liens as referred to
under CERCLA, or Cal. Water Code ss.13305, Cal Health & Safety Code ss.25365.6,
or any other applicable Environmental Laws that have attached to the Property;
(xiii) Contributor has not, and has not permitted any
occupant to engage in any activity on the Property in violation of Environmental
Laws; and
16
(xiv) the Property is in material compliance with
Environmental Laws.
(b) [INTENTIONALLY DELETED PRIOR TO EXECUTION]
(c) G&G shall notify the Company in advance of all meetings
scheduled between G&G or G&G's representatives, and any Governmental Authority
regarding the Property and environmental matters, and the Company, and the
Company's representatives, shall have the right, without obligation, to attend
and participate in all such meetings.
(d) Contemporaneously with the execution of this Agreement,
and subsequently promptly upon receipt by G&G's representatives, G&G shall
deliver to the Company: (i) all Environmental Documents concerning the Property
generated by or on behalf of predecessors in title or former occupants of the
Property to the extent in G&G's possession or control, if any; (ii) all
Environmental Documents concerning the Property generated by or on behalf of
G&G, whether currently or hereafter existing, if any; (iii) all Environmental
Documents concerning the Property generated by or on behalf of current or future
occupants of the Property to the extent in G&G's possession or control, whether
currently or hereafter existing, if any; and (iv) a description of all known
operations, past and present, undertaken at the Property while owned by G&G,
which G&G represents and warrants consisted of construction activities and
office and retail operations, and (v) any existing maps, diagrams and other
documentation known to G&G to be in G&G's possession or control designating the
location of past and present operations at the Property and past and present
storage of Contaminants above or below ground, on, under, at, emanating from or
affecting the Property or its environs.
(e) [INTENTIONALLY DELETED PRIOR TO EXECUTION].
(f) The following terms shall have the following meanings when
used in this Agreement:
(i) "Contaminants" shall include, without limitation,
any regulated substance, toxic substance, hazardous substance, hazardous waste,
pollution, pollutant or contaminant, as defined or referred to in the "Tanks
Laws" as defined below; the Resource Conservation and Recovery Act, as amended,
42 U.S.C. ss.6901 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. ss.9601 et seq.
("CERCLA"); the Water Pollution and Control Act, 33 U.S.C. ss.1251 et seq.;
together with any amendments thereto, regulations promulgated thereunder and all
substitutions thereof, as well as words of similar purport or meaning referred
to in any other applicable federal, state, county or municipal environmental
statute, ordinance, code, rule or regulation, including, without limitation,
radon, asbestos, polychlorinated biphenyls, urea formaldehyde and petroleum
products and petroleum based derivatives. Where a statute, ordinance, code, rule
or regulation defines any of these terms more broadly than another, the broader
definition shall apply.
17
(ii) "Discharge" shall mean the releasing, spilling,
leaking, leaching, disposing, pumping, pouring, emitting, emptying, treating or
dumping of Contaminants at, into, onto or migrating from or onto the Real
Property, regardless of whether the result of an intentional or unintentional
action or omission.
(iii) "Environmental Documents" shall mean all
environmental documentation in the possession or under the control of
Contributor concerning the Real Property, or its environs, including without
limitation, all sampling plans, cleanup plans, preliminary assessment plans and
reports, site investigation plans and reports, remedial investigation plans and
reports, remedial action plans and reports, or the equivalent, sampling results,
sampling result reports, data, diagrams, charts, maps, analysis, conclusions,
quality assurance/quality control documentation, correspondence to or from any
Governmental Authority, submissions to any Governmental Authority and
directives, orders, approvals and disapprovals issued by any Governmental
Authority.
(iv) "Environmental Laws" shall mean each and every
applicable federal, state, county or municipal statute, ordinance, rule,
regulation, order, code, directive or requirement, together with all successor
statutes, ordinances, rules, regulations, orders, codes, directives or
requirements, of any Governmental Authority in any way related to Contaminants.
(v) "Notice" shall mean, in addition to its ordinary
meaning, any written communication of any nature, whether in the form of
correspondence, memoranda, order, directive or otherwise.
(vi) "Tank Laws" shall mean Cal. Health & Safety Code
ss.25280 et seq., the federal underground storage tank law (Subtitle I) of the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901 et seq.,
and any other applicable state, county or municipal statute, ordinance, code,
rule or regulation applicable to underground or above ground tanks, together
with any amendments thereto, regulations promulgated thereunder, and all
substitutions thereof, and any successor legislation and regulations.
(vii) "Underground Storage Tank" shall mean each and
every "underground storage tank", whether or not subject to the Tank Laws, as
well as the "monitoring system", the "leak detection system", the "discharge
detection system" and the "tank system" associated with the "underground storage
tank", as those terms are defined by the Tank Laws.
5.5. All representations and warranties made by Contributor in this
Agreement shall survive the Closing Date for a period of one (1) year, except
that the representations and warranties set forth in Section 5.1(a), (b), (s),
(t) and (w) and Section 5.4 shall survive the Closing Date for the applicable
period of statute of limitations, and shall not be merged in the delivery of the
Certificates to Contributor and the Unit Holders. Contributor agrees to
indemnify and defend the Company, and to hold the Company harmless, from and
against any and all claims, liabilities, losses, deficiencies and damages as
well as reasonable expenses (including attorney's, consulting and engineering
fees), and interest and penalties related thereto
18
(collectively, a "loss"), incurred by the Company to the extent of such loss, by
reason of or resulting directly or indirectly, wholly or partly, from any breach
of the representations and warranties of Contributor and G&G contained in this
Agreement to the extent same was not actually known at Closing by ▇▇▇▇▇▇▇ ▇▇▇▇▇
or ▇▇▇▇ ▇▇▇▇▇▇, up to a maximum liability of $8,000,000.00 except that such
maximum liability is subject to the provisions of Section 5.8. The Company shall
not have a right to bring a claim against Contributor by virtue of any of the
representations and warranties being false or misleading unless (i) such claim
is brought on or prior to the date through which such representation or warranty
survives, (ii) and until notice of the false or misleading representation or
warranty has been given to the party against whom such claim is to be made and
said party has had a reasonable opportunity to cure same, and (iii) the
aggregate damages to the Company resulting from such false, misleading or untrue
representations and warranties are reasonably expected to exceed $50,000.00 (the
"Basket"), but thereafter the Company may bring a claim against G&G and/or
Contributor, or all or some of them, for any amount in excess of the Basket up
to $8,000,000.00. The Company's sole recourse in the event of a breach of this
Agreement, as against Contributor, shall be against the Units, and in such event
Contributor hereby authorizes the Company to attach and/or take recourse against
the Units, and any distributions appurtenant thereto. This paragraph shall
survive the termination of this Agreement or Closing.
5.6. Contributor hereby acknowledges that each Certificate
representing the Contributor Units shall bear the following legend:
REFERENCE IS MADE TO THE SECOND AMENDED AND RESTATED LIMITED
PARTNERSHIP AGREEMENT DATED AS OF DECEMBER 11, 1997 OF ▇▇▇▇-▇▇▇▇
REALTY, L.P. (THE "SECOND AMENDED AND RESTATED PARTNERHSIP
AGREEMENT") FOR THE RIGHTS OF THE COMMON UNITS REPRESENTED BY THIS
CERTIFICATE.
THE COMMON UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISONS OF THE SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT
(A COPY OF WHICH IS ON FILE WITH ▇▇▇▇-▇▇▇▇ REALTY, L.P.). EXCEPT AS
OTHERWISE PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE UNITS COMMON UNITS
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR (B) IF ▇▇▇▇-▇▇▇▇ REALTY, L.P. HAS
BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER
THAT
19
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT
AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER. IN ADDITION, THE
COMMON UNITS ARE SUBJECT TO THE PROVISIONS OF A CERTAIN CONTRIBUTION
AND EXCHANGE AGREEMENT DATED APRIL ___, 1998 (A COPY OF WHICH IS ON
FILE WITH THE OPERATING PARTNERSHIP).
▇▇▇▇-▇▇▇▇ REALTY, L.P. WILL FURNISH TO EACH HOLDER WHO SO
REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH
CLASS OF UNITS OR SERIES THEREOF WHICH ▇▇▇▇-▇▇▇▇ REALTY, L.P. IS
AUTHORIZED TO ISSUE AND OF THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. ANY SUCH REQUEST IS
TO BE ADDRESSED TO ▇▇▇▇-▇▇▇▇ REALTY, L.P. AT ITS PRINCIPAL PLACE OF
BUSINESS.
5.7. Contributor, ▇▇▇▇▇▇▇, Plenitude and G&G acknowledge that they
are not in a significantly disparate bargaining position with respect to the
Company in connection with the transaction contemplated by this Agreement and
that Contributor, ▇▇▇▇▇▇▇, Plenitude and G&G were represented by legal counsel
in connection with this transaction.
5.8. Notwithstanding anything to the contrary contained in Section
5.5, the right of the Company to pursue a claim for a failure of Feldman,
Dworman, the Owners, Plenitude, G&G or all or some of them to perform the
obligations set forth in Sections 8.1, 11.2, 11.3 and 16 shall be without regard
to a minimum in damages suffered, nor shall any recovery on account of a failure
to perform in accordance with said Sections apply to the $8,000,000.00 cap on
damages.
5.9. As used throughout this Agreement, the phrases "to
Contributor's knowledge", "to the best of Contributor's knowledge" or any
similar derivation thereof, shall mean the actual knowledge of Contributor or
▇▇▇▇▇ ▇▇▇▇▇▇.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
6.1 In order to induce Contributor and the Unit Holders to perform
as required hereunder, the Company hereby warrants and represents the following:
(a) (i) The Company is a duly organized and validly existing
limited partnership organized and in good standing under the laws of the State
of Delaware, has all requisite power and authority to execute and deliver this
Agreement and all other documents and instruments to be executed and delivered
by it hereunder, and to perform its obligations
20
hereunder and under such other documents and instruments in order to acquire
Contributor's Interest in accordance with the terms and conditions hereof. All
necessary actions of the partners of the Company to confer such power and
authority upon the persons executing this Agreement and all documents which are
contemplated by this Agreement on its behalf have been taken.
(ii) MCRC is a duly organized and validly existing
corporation organized and in good standing under the laws of the State of
Maryland, has all requisite power and authority to execute and deliver the
Registration Rights Agreement annexed hereto as Exhibit 10.4(f) and all other
documents and instruments to be executed and delivered by it thereunder, and to
perform its obligations thereunder. All necessary actions of the Executive
Committee of MCRC to confer such power and authority upon the persons executing
the Registration Rights Agreement and all documents which are contemplated
thereunder on its behalf have been taken.
(b) This Agreement and the agreements and other documents to
be executed and delivered by the Company hereunder, when duly executed and
delivered, will be the legal, valid and binding obligation of each of the
Company, enforceable in accordance with the terms of this Agreement. The
performance by the Company of its duties and obligations under this Agreement
and the documents and instruments to be executed and delivered by the Company
hereunder will not conflict with, or result in a breach of, or default under,
any provision of any of the organizational documents of the Company or any
agreements, instruments, decrees, judgments, injunctions, orders, writs, laws,
rules or regulations, or any determination or award of any court or arbitrator,
to which the Company is a party or by which each of its assets are or may be
bound.
(c) The Contributor Units to be issued to Contributor and the
Unit Holders are duly authorized and, when issued by the Company, will be fully
paid and non-assessable, free and clear of any mortgage, pledge, lien,
encumbrance, security interest, claim or right of interest of any third party of
any nature whatsoever. The shares of Common Stock to be issued upon redemption
of the Contributor Units are authorized and will be reserved for future listing
with the Exchange no later than the date upon which the Units become redeemable
for Common Stock and, upon such issuance, will be fully paid and non-assessable,
free and clear of any mortgage, pledge, lien, encumbrance, security interest,
claim or rights of interest of any third party of any nature whatsoever.
(d) The Company has furnished to Contributor a true and
complete copy of the OP Agreement.
(e) The execution and delivery of this Agreement and the
performance by the Company of its obligations hereunder do not and will not
conflict with or violate any law, rule, judgment, regulation, order, writ,
injunction or decree of any court or governmental or quasi-governmental entity
with jurisdiction over the Company or MCRC.
(f) The Company has not made a general assignment for the
benefit of creditors, filed any voluntary petition in bankruptcy or suffered the
filing of any involuntary
21
petition by the Company's creditors, suffered the appointment of a receiver to
take possession of all, or substantially all, of the Company's assets, suffered
the attachment or other judicial seizure of all, or substantially all, of the
Company's assets, admitted in writing its inability to pay its debts as they
come due or made an offer of settlement, extension or composition to its
creditors generally.
(g) Schedule 6.1(g) lists any Form 8-K's filed by MCRC with
the Commission since December 31, 1997.
(h) MCRC qualified as a real estate investment trust under the
Code for the calendar year ended December 31, 1997, and the Company has no
reason to believe that MCRC will not qualify as a real estate investment trust
for the calendar year ending December 31, 1998.
(i) Other than as set forth in the Company's most recent 10-K,
there is no existing, or to the knowledge of the Company, threatened legal
action or governmental proceedings of any kind involving the Company which, if
determined adversely to the Company, would have a material adverse affect on the
consolidated financial position, results of operation, business or prospects of
the Company or which would interfere with the Company's ability to execute,
deliver, or perform its obligations under this Agreement or the Registration
Rights Agreement.
6.2 All representations and warranties made by the Company in this
Agreement shall survive the Closing Date for a period of one (1) year, except
that the representations and warranties set forth in Section 6.1(a), (b), (c),
(d) and (e) shall survive the Closing Date for the applicable period of statute
of limitations, and shall not be merged in the delivery of the Certificates to
Contributor and the Unit Holders. All other covenants, obligations, liabilities
and acknowledgments of the Company contained in this Agreement and not otherwise
expressly stated to survive, shall be merged in the delivery of the Certificates
to Contributor and the Unit Holders. The Company agrees to indemnify and defend
Contributor and the Unit Holders, and to hold Contributor and the Unit Holders
harmless, from and against any and all claims, liabilities, losses, deficiencies
and damages as well as reasonable expenses (including reasonable attorney's
fees), and interest and penalties related thereto, incurred by Contributor and
the Unit Holders, by reason of or resulting from any breach of the
representations, warranties, covenants and agreements of the Company, contained
in this Agreement to the extent same was not actually known at Closing by
Contributor or ▇▇▇▇▇ ▇▇▇▇▇▇, up to a maximum liability of $8,000,000.00. In
addition, Contributor and the Unit Holders shall not have a right to bring a
claim against the Company by virtue of any of the representations and warranties
being false or misleading unless (i) such claim is brought on or prior to the
date through which such representation or warranty survives, (ii) and until
notice of the false or misleading representation or warranty has been given to
the Company and the Company has had a reasonable opportunity to cure same, and
(iii) the aggregate damages to Contributor and/or the Unit Holders, resulting
from such false, misleading or untrue representations and warranties are
reasonably expected to exceed the Basket, but thereafter the Contributor and/or
the Unit Holders, may bring a claim
22
against the Company for any amount in excess of the Basket up to $8,000,000.00.
The Company shall be liable for any damages hereunder.
7. COVENANTS OF THE OWNERS.
7.1 G&G covenants and agrees that between the date hereof and the
Closing Date it shall perform or observe the following with respect to the
Property:
(a) G&G will operate and maintain the Real Property in the
ordinary course of business and use reasonable efforts to reasonably preserve
for the Reconstituted Partnership and the Company the relationships of G&G and
G&G's Tenants, suppliers, managers, employees and others having on-going
relationships with the Real Property. G&G will complete any capital expenditure
program currently in process or anticipated to be completed at or prior to
Closing. G&G will not defer taking any actions or spending any of its funds, or
otherwise manage the Real Property differently, due to the transaction
contemplated by this Agreement.
(b) G&G will not enter into any new leases with respect to the
Real Property, renew or modify any Lease, or enter into any agreement with any
Tenants, without the Company's prior written consent, which will not be
unreasonably withheld or delayed.
(c) G&G shall not:
(i) agree to terminate any Service Contract or Lease, or
grant any concession, rebate, allowance or free rent;
(ii) apply any Security Deposits with respect to any
Tenant in occupancy on the Closing Date;
(iii) renew, extend or modify any of the Service
Contracts; or
(iv) remove any Personal Property, except as may be
required for repair and replacement. All replacements shall be free and clear of
liens and encumbrances and shall be of quality at least equal to the replaced
items;
(d) G&G shall, upon request of the Company at any time after
the date hereof and at the Company's sole expense, assist the Company in its
preparation of audited financial statements, statements of income and expense,
and such other documentation as the Company may reasonably request, covering the
period of Contributor's ownership of the Real Property. This Section 7.1(d)
shall survive the Closing;
(e) G&G shall make all required payments under any mortgage
affecting the Real Property within any applicable grace period, but without
reimbursement by the Company therefor. G&G shall also comply with all other
material terms covenants, and conditions of any mortgage on the Real Property.
Nothing herein shall create any personal
23
liability for Contributor, ▇▇▇▇▇▇▇ or Plenitude for any obligations under any
mortgage affecting the Property or any indebtedness secured thereby;
(f) G&G shall maintain and keep those hazard, liability and
casualty insurance policies presently held on the Property in full force and
effect;
(g) [INTENTIONALLY DELETED PRIOR TO EXECUTION];
(h) G&G shall permit the Company and its authorized
representatives to inspect the Books and Records of its operations at all
reasonable times. All Books and Records not delivered to the Company hereunder
shall be maintained for the Company's inspection at G&G's address as set forth
above;
(i) G&G shall:
(i) promptly notify the Company of, and promptly deliver
to the Company, a certified true and complete copy of any Notice G&G may
receive, on or before the Closing Date, from any Governmental Authority,
concerning a violation of Environmental Laws or Discharge of Contaminants, or
any other matter;
(ii) promptly deliver or cause to be delivered to the
Company a certified true and complete copy of all Environmental Documents which
shall come into the possession or under the control of G&G or their
representatives between the signing of this Agreement and the Closing;
(j) G&G, at its sole cost and expense, shall complete all work
under construction by G&G, its agent(s) or contractor(s) at the Property as of
the date hereof, if any, in accordance with the obligation giving rise to such
work having to be performed, and shall obtain and deliver to the Company, as
soon as practical, all final certificates of completion and occupancy, or other
documentation reasonably satisfactory to the Company, evidencing the acceptance
of said work by all appropriate Governmental Authorities having jurisdiction
thereover and the party for whom the work is being so performed. The obligations
set forth in this paragraph shall survive Closing.
(k) If the cost of compliance with the provisions of Section
14.2(h) shall exceed the sum of Fifty Thousand ($50,000) Dollars, then either
party shall have the right to terminate this Agreement. If this Agreement is so
terminated, this Agreement shall be rendered null and void and of no further
force or effect and neither party shall have any further liability or obligation
to the other under or by virtue of this Agreement. Notwithstanding the
foregoing, the Company shall have the right to proceed to closing, even if the
other party shall elect to terminate this Agreement, on notice to the other
party; provided, however, that neither G&G, ▇▇▇▇▇▇▇, Contributor nor the Unit
Holders shall be liable or responsible pursuant to this Agreement for any excess
cost of such compliance.
24
7.2 To the extent that any of the Promotional Materials are not in
the possession of G&G, G&G shall use reasonable efforts to cause the holders or
owners of same to deliver such Promotional Materials to the Company. The
obligations set forth in this paragraph shall survive Closing.
7.3 G&G covenants and agrees that it shall timely provide the
Company with drafts of any pertinent documentation in connection with leasing
matters, Service Contracts and agreements for work to be done on behalf of
Tenants and shall keep the Company informed of all substantive negotiations and
discussions with respect to the foregoing matters on an on-going basis. This
Section 7.3 shall survive the Closing.
7.4. To G&G's knowledge, except as set forth on Schedule 7.4 there
are no proceedings now pending or anticipated for a reduction in the assessed
valuation of the Property or for a refund or recovery of business taxes
(including interest and penalties) paid with respect to the Property. G&G is
hereby authorized to continue the proceedings set forth on Schedule 7.4, and
except as provided in the next sentence, to litigate or settle the same in G&G's
discretion. Notwithstanding the foregoing, the Owners shall not litigate or
settle any such matters without the Company's prior written consent, not to be
unreasonably withheld, if such litigation or settlement shall affect the current
tax year or any future tax year. The Company is hereby authorized by G&G, in the
Company's sole discretion, to file any applicable proceeding on behalf of the
Reconstituted Partnership for any tax years following the last tax year set
forth on Schedule 7.4. The net refund of taxes, if any, for any tax year for
which G&G or the Reconstituted Partnership shall be entitled to share in the
refund shall be divided between G&G and the Reconstituted Partnership in
accordance with the apportionment of taxes pursuant to the provisions hereof.
All expenses in connection therewith, including counsel fees, shall be paid for
by the party entitled to the benefits thereof, with a pro-rata sharing between
G&G and the Company for any tax year in which both parties are entitled to a
portion of the refund. The provisions of this Section 7.4 shall survive the
Closing Date.
7.5. To the extent of any Taxes that are a liability or obligation
of G&G arising as a result of the operations of G&G which have not been paid and
are attributable to taxable periods which end prior to the Closing Date (a
"Pre-Closing Period"), Contributor and ▇▇▇▇▇▇▇ shall each pay one-half (1/2) of
same no later than the Closing Date (and provide Company with reasonably
acceptable evidence thereof) or shall establish with the Company at Closing a
cash reserve equal to the reasonably estimated Taxes that will be due, with such
cash reserve being applied by the Company to pay same or the Company agreeing to
make such reserve available to Contributor and ▇▇▇▇▇▇▇ to pay same, promptly
upon request. With respect to taxable periods of G&G which end on or after the
Closing Date (a "Straddle Period"), Contributor will establish with the Company
a cash reserve at Closing equal to one-half (1/2) of the reasonably estimated
Taxes arising as a result of the operations of G&G attributable to Contributor's
Interest or the Unit Holders (pro rated based on the respective ownership
periods of Contributor and Unit Holders, on the one hand, and the Company, on
the other hand). ▇▇▇▇▇▇▇ and Contributor acknowledge that any cash reserves
established herein do not constitute a limitation as to the Taxes that will be
due, and that such parties shall continue to be liable from and after the
Closing for all such Taxes that are due. The provisions of this Section 7.5
shall
25
survive the Closing. This Section 7.5 shall not apply to any Taxes otherwise
adjusted pursuant to Section 11.
7.6. As of December 31, 1997, no un-funded vested liabilities
existed under the pension plan created pursuant to the Union Agreement, as
indicated by that certain letter from Stationary Engineers Local 39, dated April
21, 1998, annexed hereto as Schedule 5.1(n)-2. In the event that any un-funded
liabilities shall become due and payable which are attributable to the 1998
calendar year, G&G shall be liable for its pro rata share, based upon its period
of ownership in the 1998 calendar year. The provisions of this Section 7.6 shall
survive the Closing.
7.7. To the extent of any breach of any covenant or agreement by
G&G, Contributor shall be liable for the entire loss suffered by the Company, up
to a maximum of the lesser of (i) one-half (1/2) of the loss suffered by the
Reconstituted Partnership, or (ii) $8,000,000.00, in the aggregate for all
losses hereunder. The $8,000,000.00 cap on Contributor's liability set forth in
this Section 7.6 shall not apply to Section 7.5. In the event that the Closing
does not occur as a result of a breach of any covenant or agreement by G&G, then
the provisions of Section 21.2 shall apply.
8. LEASING COMMISSIONS AND TENANT IMPROVEMENT OBLIGATIONS.
8.1 (a) All leasing commissions due on account of the original term
of all Leases made before the date of this Agreement as well as any extension
and renewal terms which are presently effective (but not renewals or extensions
of such Leases which are exercised after the Closing Date or otherwise with the
written approval of the Company) shall be paid by G&G prior to the Closing Date.
The Reconstituted Partnership shall pay to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ the leasing
commissions set forth on Schedule 5.1(j), provided the leases for the tenants on
Schedule 5.1(j) (the "New Leases") in fact commence and the Closing occurs. G&G
hereby represents that it has not dealt with any brokers, finders or salesmen in
connection with the New Leases, other than ▇▇▇▇▇▇▇ & Wakefield. G&G hereby
agrees to indemnify, defend and hold the Reconstituted Partnership harmless from
and against any and all loss, cost, damage, liability or expense, including
reasonable attorneys' fees, which the Reconstituted Partnership may sustain,
incur or be exposed to by reason of any claim for fees or commissions made on
account of the New Leases.
(b) All tenant improvement obligations in connection with
original Lease terms or extensions and renewals made prior to the Closing shall
be satisfied by G&G prior to the Closing Date. All tenant improvement
obligations in connection with the New Leases, or renewals or extensions of
Leases entered into prior to Closing with the prior written approval of the
Company shall be paid by the Reconstituted Partnership provided the Closing
occurs.
(c) The provisions of this Section 8 shall survive the
Closing.
26
9. ESTOPPEL CERTIFICATES.
9.1. On or prior to the date hereof, the Owners agree to deliver to
each Tenant an estoppel certificate in the form annexed hereto as Exhibit 9.1
for Tenant's execution, completed to reflect the Tenant's particular Lease
status. The Owners agree to use its best efforts to obtain from all Tenants the
estoppel certificates in such form; provided, however, that if any Tenant shall
refuse to execute an estoppel letter in such form, the Owners shall nevertheless
be obligated to obtain estoppel certificates in the form in which each Tenant is
obligated to deliver same as provided in its Lease. The Owners agree to deliver
to the Company, upon receipt, copies of all estoppel letters received from
Tenants, in the form received by the Owner. The estoppel certificates required
to be obtained pursuant to this Section 9.1 are collectively referred to as the
"Estoppel Certificates", and individually as an "Estoppel Certificate".
9.2. As a condition to Closing, the Owners shall deliver (a) an
Estoppel Certificate from each Tenant that leases space at the Real Property in
excess of 10,000 square feet or more in the aggregate, and (b) Estoppel
Certificates from the remaining Tenants leasing, in the aggregate, at least
seventy-five (75%) percent of the remaining square footage of the Real Property.
9.3 For an Estoppel Certificate to be deemed delivered for purposes
of this Agreement, it must certify that the Tenant's most recent rental payment
under its Lease was made not more than one (1) month prior to the month in which
the Closing occurs and that no material default of either landlord or tenant
exists under that tenant's lease.
10. CLOSING.
10.1 The consummation of the transactions contemplated hereunder
(the "Closing") shall take place through the mail, on or about April 28, 1998
(the "Closing Date"), time being of the essence, provided the Company has not
terminated or been deemed to terminate this Agreement prior thereto. In the
event that the Closing has not occurred by April 28, 1998 or any date thereafter
on which Contributor is ready, willing and able to perform all of its
obligations and requirements set forth herein which are conditions precedent to
the Company's obligations to perform, Contributor may terminate this Agreement
within five (5) days thereafter. Notwithstanding such termination, Contributor
shall retain any rights it has against the Company pursuant to Section 21.
10.2 On the Closing Date, Contributor, at its sole cost and expense,
will duly execute and acknowledge, where applicable, and deliver or cause to be
delivered to the Company or such place as directed the following documents:
(a) an assignment and assumption of Contributor's Interest
(the "Assignment of Contributor's Interest"), in the form annexed hereto as
Exhibit 10.2(a), to the Company or its designee, as assignee, together with all
applicable and requisite partnership consents, partner consents, mortgagee
consents and resolutions by the general partners of G&G authorizing this
assignment and transaction;
27
(b) all original Leases and all other documents pertaining
thereto, and certified copies of such Leases or other documents where
Contributor, using its best efforts, is unable to deliver originals of same;
(c) all other original documents or instruments referred to
herein, including, without limitation, the Service Contracts, Permits and
Licenses, and Books and Records, and certified copies of same where Contributor,
using its best efforts, is unable to deliver originals;
(d) a letter to Tenants, in a form acceptable to the Company,
advising the Tenants of the transaction hereunder and directing that rent and
other payments thereafter be sent to the Reconstituted Partnership or, as the
Reconstituted Partnership shall so direct;
(e) the title affidavit required by Section 4.3(b), and an
affidavit, and such other documents or instruments required by the Title
Company, executed by G&G certifying (i) against any work done or supplies
delivered to the Property which might be grounds for a materialman's or
mechanic's lien under or pursuant to California Law, in form sufficient to
enable the Title Company to affirmatively insure G&G, the Reconstituted
Partnership or its designee(s) against any such lien, (ii) that the signatures
on the Assignment of Contributor's Interest is sufficient to bind Contributor
and convey Contributor's Interest to the Company and (iii) the Rent Roll;
(f) affidavits and other instruments, including but not
limited to, all organizational documents of G&G including partnership agreements
and good standing certificates (or its equivalent), reasonably requested by the
Company and the Title Company evidencing the power and authority of G&G and its
partners to enter into this Agreement and any documents to be delivered
hereunder, and the enforceability of same;
(g) the original Estoppel Certificates;
(h) a list of all cash Security Deposits and all non-cash
Security Deposits (including letters of credit) delivered by Tenants under the
Leases;
(i) a certificate indicating that the representations and
warranties of the Owners made in this Agreement are true and correct in all
material respects as of the Closing Date;
(j) a Rent Roll for the Real Property current as of the
Closing Date, certified by Contributor and G&G as being true and correct in all
material respects, and showing no adverse change from the Rent Roll annexed
hereto;
(k) subject to Section 18, all proper instruments as shall be
reasonably required for the conveyance to the Company of all right, title and
interest, if any, of Contributor in and to any award or payment made, or to be
made, (i) for any taking in condemnation, eminent
28
domain or agreement in lieu thereof of land adjoining all or any part of the
Improvements, (ii) for damage to the Land or Improvements or any part thereof by
reason of change of grade or closing of any such street, road, highway or
avenue, and (z) for any taking in condemnation or eminent domain of any part of
the Land or Improvements;
(l) a certificate signed by Contributor and the Unit Holders
to the effect that neither Contributor nor any of the Unit Holders is a "foreign
person" as that term is defined in Section 1445(f)(3) of the Internal Revenue
Code of 1986, as amended (the "Code"), in order to avoid the imposition of the
withholding tax payment pursuant to Section 1445 of the Code;
(m) all transfer and other tax declarations and returns and
information returns, duly executed and sworn to by Contributor as may be
required of Contributor by law in connection with the conveyance of
Contributor's Interest to the Company, including, but not limited to, Internal
Revenue Service Forms;
(n) a statement setting forth all adjustments and prorations
shown thereon;
(o) letter of direction regarding the issuance of the
Contributor Units to the Unit Holders from the legal and beneficial owners of
Contributor's Interest. The signatories of said letter are also to acknowledge
that they are the legal and beneficial owners of same;
(p) evidence of compliance with PWC art. 20, the California
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance Account Act and the Cal. Health &
Safety Code ss.ss.25359.7, or the affidavit described in Section 14.2(h);
(q) a computer diskette containing any closing or other
documents executed in connection with this transaction and prepared by the
Owners or its counsel, in WordPerfect or Microsoft Word format;
(r) the Reserve Fund (as hereinafter defined);
(s) the legal opinions of ▇▇▇▇▇ & ▇▇▇▇▇, LLP and ▇▇▇▇▇▇
Radovsky ▇▇▇▇▇▇▇ & Share, LLP, in such forms as are mutually agreed upon by the
parties;
(t) a counterpart to the OP Agreement duly executed by
Contributor and each of the Unit Holders; and
(u) such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions contemplated by
this Agreement.
10.3 On the Closing Date, Contributor, ▇▇▇▇▇▇▇ and Plenitude, at
their sole cost and expense, shall duly execute and acknowledge an amended and
restated partnership
29
agreement reflecting the Reconstituted Partnership (the "Amended Partnership
Agreement"), which shall provide, in part and as more particularly set forth
therein, that (i) the Company is to be the managing general partner of the
Reconstituted Partnership, and shall have sole and exclusive control and
authority over the management of the Property, and (ii) subject to the
provisions of Section 24, both the Company and ▇▇▇▇▇▇▇ shall have the option to
purchase or sell their respective partnership interests to or from the other at
any time after three (3) years from the Closing Date.
10.4 On the Closing Date, the Company, at its sole cost and expense,
will deliver or cause to be delivered to Contributor the following documents:
(a) the Certificates representing the Contributor Units;
(b) duly executed and acknowledged Assignment of Contributor's
Interest;
(c) a certificate indicating that the representations and
warranties of the Company made in this Agreement are true and correct as of the
Closing Date;
(d) a Registration Rights Agreement substantially in the form
of Exhibit 10.4(f);
(e) an acknowledgment by the general partner of the Company
reflecting the admission of Contributor as a limited partner;
(f) duly executed and acknowledged Amended Partnership
Agreement; and,
(g) such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions contemplated by
this Agreement.
10.5 Contributor and ▇▇▇▇▇▇▇, severally and not jointly, shall each
be liable for one-half of all state or county documentary stamps or transfer
taxes on the Assignment of Contributor's Interest. Each party shall be
responsible for its own attorney's fees. Except for Contributor's obligation to
pay any additional fees or premiums incurred by the Restructured Partnership as
a result of the non-imputation endorsement and Fairway endorsement, the
Reconstituted Partnership shall be responsible for all title insurance premiums
and title examination fees. The provisions of this Section 10.5 shall survive
the Closing.
10.6 [INTENTIONALLY DELETED PRIOR TO EXECUTION]
30
11. ADJUSTMENTS.
11.1 The following items with respect to the Real Property are to be
apportioned between the Reconstituted Partnership, on the one hand, and
Contributor, ▇▇▇▇▇▇▇ and Plenitude, on the other hand, as of midnight on the
date preceding the Closing:
(a) Rents, escalation charges and percentage rents payable by
Tenants as and when collected. All moneys received from Tenants and attributable
to periods from and after the Closing shall belong to the Reconstituted
Partnership and shall be applied by the Reconstituted Partnership to current
rents and other charges under the Leases. After application of such moneys to
current rents and charges, the Reconstituted Partnership shall remit to
Contributor ▇▇▇▇▇▇▇ and Plenitude any excess amounts paid by a Tenant to the
extent that such Tenant was in arrears in the payment of any amount due under
the Leases prior to the Closing;
(b) any prepaid rents, together with interest required to be
paid thereon, as well as the amount of all cash Security Deposits;
(c) utility charges payable by G&G including, without
limitation, electricity, water charges and sewer charges. If there are meters on
the Real Property, G&G will cause readings of all said meters to be performed
not more than five (5) days prior to the Closing Date;
(d) amounts payable under the Service Contracts other than
those Service Contracts which the Reconstituted Partnership has elected not to
assume;
(e) real estate taxes due and payable for the calendar year or
fiscal year, as applicable. If the Closing Date shall occur before the tax rate
is fixed, the apportionment of real estate taxes shall be upon the basis of the
tax rate for the preceding year applied to the latest assessed valuation. If
subsequent to the Closing Date, real estate taxes (by reason of change in either
assessment or rate or for any other reason) for the Real Property should be
determined to be higher or lower than those that are apportioned, a new
computation shall be made, and Contributor agrees to pay the Company any
increase shown by such recomputation and vice versa;
(f) the value of heating, fuel or petroleum stored at and used
for the Real Property, at G&G's most recent cost, including taxes, on the basis
of a reading made within ten (10) days prior to the Closing by G&G's supplier;
(g) all sums due and payable by G&G pursuant to bills and
claims for labor performed and materials furnished to or for the benefit of the
Property by or on behalf of G&G; and
(h) any other items of income or expense of a recurring nature
that are incurred in connection with the ownership or operation of the Property.
31
11.2 .At the Closing, G&G shall deliver to the Company a list of
additional rent, however characterized, under each Lease, including without
limitation, real estate taxes, electrical charges, utility costs and operating
expenses (collectively, "Additional Rents") being billed to Tenants for the
calendar year in which the Closing occurs (both on a monthly basis and in the
aggregate), the basis for which the monthly amounts are being billed, and the
amounts incurred by G&G on account of the components of Additional Rent for such
calendar year. Upon the reconciliation by the Company of the Additional Rents
billed to Tenants, and the amounts actually incurred for such calendar year,
Contributor, ▇▇▇▇▇▇▇ and Plenitude, on the one hand, and the Reconstituted
Partnership, on the other, shall be liable for or entitled to their respective
shares of overpayments or underpayments, as the case may be, of Additional
Rents, and shall be entitled to such payments from Tenants, as the case may be,
on a pro-rata basis based upon each party's period of ownership during such
calendar year.
11.3 Prior to Closing, the Reconstituted Partnership shall establish
a bank account at a bank selected by the Company (the "New Bank Account"), and
shall advise G&G of same. Contributor and ▇▇▇▇▇▇▇ shall, simultaneous with the
Closing, deposit into the New Bank Account a reserve fund (the "Reserve Fund").
The Reserve Fund is to be used by the Reconstituted Partnership, or its
successors and assigns, for tenant improvements, leasing commissions, rent
incentives on account of leasing any vacant space at the Property or for any
other purpose the Reconstituted Partnership may deem appropriate. The Reserve
Fund shall be equal to $500,000.00, which shall be increased or decreased by the
net amount of all adjustments and apportionments provided for in Section 11 and
the remainder of this Agreement, and shall be increased by the amount due to the
Reconstituted Partnership as a result of those certain closing costs with regard
to title described in Section 4.3(a) (collectively, the "Adjustments"). In the
event that the net sum of the Adjustments in favor of G&G are in excess of
$500,000.00, then one-half (1/2) of the amount in excess of $500,000.00 (the
"Excess Adjustment Amount") shall be paid by the Company to Contributor in Units
(the "Adjustment Units"); the remaining one-half (1/2) shall be paid by, and
shall belong to, ▇▇▇▇▇▇▇ and Plenitude. The aggregate number of the Adjustment
Units to be issued to Contributor and the Unit Holders shall be calculated by
dividing (i) the Excess Adjustment Amount, by (ii) the Current Market Value Per
Unit. So long as the Excess Adjustment Amount is known at least two (2) days
prior to Closing, the Company shall at Closing issue to Contributor and the Unit
Holders, according to their pro rata share of the Consideration, Certificates
representing the Adjustment Units. In the event that the Excess Adjustment
Amount is not known at least two (2) days prior to Closing the Company shall
issue to Contributor and the Unit Holders as soon thereafter as practicable, but
in no event later than two (2) days after Closing, the Certificates representing
the Adjustment Units. Except with regard to the New Bank Account, ▇▇▇▇▇▇▇,
Plenitude and Contributor shall maintain exclusive control, right and access to
any other bank accounts bearing the name "G&G Martco"; provided, however,
▇▇▇▇▇▇▇, Plenitude and Contributor hereby covenant and agree to close all such
accounts or otherwise change the name thereon within fifteen (15) days of the
Closing Date.
11.4 Except as otherwise provided in this Agreement, the adjustments
shall be made in accordance with the customs in respect to title closings in the
State of California.
32
11.5 Any and all errors in the adjustments will be corrected as soon
as practicable after the Closing. Any amounts paid to G&G following the Closing
on account of any provisions of this Agreement after the Closing Date shall be
treated as, and deemed to have been, paid to Contributor, ▇▇▇▇▇▇▇ and Plenitude
as distributions prior to the Closing Date pursuant to Section 6.2(c) of the
Amended Partnership Agreement.
11.6 The provisions of this Section 11 shall survive the Closing
Date.
12. "AS-IS" ACQUISITION
12.1 The Company acknowledges that by the end of the Inspection
Period and provided this Agreement has not been terminated, that the Company has
had an opportunity to review all the information it desires regarding
Contributor's Interest and the Real Property, that the Company understands the
risks of, and other considerations relating to, Contributor's Interest and the
Real Property, that the Company has performed all diligence desired by the
Company with respect to Contributor's Interest and the Real Property and that
the Company is acquiring Contributor's Interest, subject to the representations
and warranties of G&G and Contributor contained in this Agreement, in its
"as-is", "with all faults" condition.
13. MORTGAGE DEBT.
13.1 (a) Subject to Section 23, the Company and ▇▇▇▇▇▇▇ agree to use
all commercially reasonable efforts to refinance the Existing Mortgage Debt on
terms and conditions acceptable to both the Company and ▇▇▇▇▇▇▇ in their sole
discretion (the "Replacement Loan"). Contributor and ▇▇▇▇▇▇▇, jointly and
severally, shall be responsible and pay for any and all accrued and unpaid
interest, prepayment penalties, expenses, late charges, legal fees, protective
advances and all other costs and fees which are attributable to the Existing
Mortgage Debt, due to the holder of the Existing Mortgage Debt other than the
outstanding principal amount thereof (the "Existing Principal Amount"). The
Replacement Loan shall be subject to the provisions of Section 23.
(b) In the event that the amount of the initial advance under
the Replacement Loan that is used to satisfy the Mortgage Debt, which shall not
be less than $35,000,000.00, is less than the Existing Principal Amount, then
(i) the difference between the Existing Principal Amount and $40,000,000.00
shall be shared equally by the Company and ▇▇▇▇▇▇▇, and (ii) the difference
between the amount of the initial advance under the Replacement Loan that is
used to satisfy the Mortgage Debt and $40,000,000.00 shall be advanced by the
Company. The Company shall thereafter be entitled to a preferred return of 9.5%
on the amount so advanced under clause (ii) of this Section 13.1(b), as more
particularly set forth in the Amended Partnership Agreement.
14. CONDITIONS PRECEDENT TO CLOSING
14.1 The obligations of Contributor to deliver an executed and
acknowledged Assignment of Contributor's Interest, and the Owners to provide
insurable title to the Property,
33
and to perform the other covenants and obligations to be performed by the Owners
on the Closing Date shall be subject to the following conditions (all or any of
which may be waived, in whole or in part, by the Owners):
(a) the representations and warranties made by the Company
herein shall be true and correct in all material respects with the same force
and effect as though such representations and warranties had been made on and as
of the Closing Date;
(b) the Company shall have executed and delivered to
Contributor all of the documents provided herein for said delivery;
(c) there shall not have been any material adverse change in
the Company between the date hereof and Closing. Contributor acknowledges that
any decrease, regardless of amount, in the price of the Common Stock shall not
be considered a material adverse change. The provisions of this Section 14.1(c)
shall be merged into the Company's delivery of the Certificates to Contributor
and the Unit Holders; and
(d) the Company shall have performed all material covenants
and material obligations undertaken by the Company herein in all respects and
complied with all material conditions required by this Agreement to be complied
with or performed by it on or before the Closing Date.
14.2 The obligations of the Company to deliver the Certificates to
the Unit Holders and the Company's obligation to perform the other covenants and
obligations to be performed by the Company on the Closing Date shall be subject
to the following conditions (all or any of which may be waived, in whole or in
part, by the Company):
(a) the representations and warranties made by the Owners
herein shall be true and correct in all material respects with the same force
and effect as though such representations and warranties had been made on and as
of the Closing Date;
(b) the Owners shall have performed all material covenants and
material obligations undertaken by the Owners herein in all respects and
complied with all material conditions required by this Agreement to be complied
with or performed by any of them on or before the Closing Date;
(c) the Title Company is unconditionally prepared to issue to
the Company a Title Policy meeting the requirements set forth in Section 4
hereof for an "insurable title";
(d) the Owners shall have executed and delivered to the
Company all of the documents provided for herein for said delivery;
34
(e) the Property shall be in compliance in all material
respects with all statutes, ordinances, rules, regulations, orders, codes,
directives or requirements of all Governmental Authorities, and Environmental
Laws, affecting the Property;
(f) the Reconstituted Partnership shall have closed the
Replacement Loan;
(g) all of the representations and warranties made in Section
5.1 shall be true and complete, without regard to knowledge, in all material
respects as though such representations and warranties had been made on and as
of the Closing Date. In the event that any of said representations and
warranties are not true and complete, without regard to knowledge, in all
material respects, then the Company may, at its election, terminate this
Agreement; and
(h) the Property shall be in compliance with the San
Francisco, California Public Works Code art. 20, ss.ss.1001-1015 ("PWC art.
20"), Cal. Health & Safety Code ss.25359.7, the California
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance Account Act, the Cal. Health &
Safety Code ss.ss.25915-25919.7, any regulations promulgated thereunder and any
amending or successor legislation and regulations now or hereafter existing with
respect to the Property. In the event that the Property is not in compliance
with PWC art. 20, Cal. Health & Safety Code ss.25359.7, the California
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance Account Act, the Cal. Health &
Safety Code ss.ss.25915-25919.7, any regulations promulgated thereunder and any
amending or successor legislation and regulations now or hereafter existing with
respect to the Property, then the Company's sole remedies shall be limited to
either terminating this Agreement or waiving the compliance requirements set
forth herein. If this Agreement is so terminated, this Agreement shall be
rendered null and void and of no further force or effect and neither party shall
have any further liability or obligation to the other under or by virtue of this
Agreement. In the event that the Property is not subject to the provisions of
PWC art. 20, Cal. Health & Safety Code ss.25359.7, the California
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance Account Act, the Cal. Health &
Safety Code ss.ss.25915-25919.7, any regulations promulgated thereunder, then
G&G shall, at its sole cost and expense, provide to the Company an affidavit
stating that the Property is not subject to the provisions of PWC art. 20, Cal.
Health & Safety Code ss.25359.7, the California ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇
Hazardous Substance Account Act, the Cal. Health & Safety Code
ss.ss.25915-25919.7, any regulations promulgated thereunder.
15. [INTENTIONALLY DELETED PRIOR TO EXECUTION]
16. BROKER.
16.1 The Company, MCRC and the Owners represent that they have not
dealt with any brokers, finders or salesmen in connection with this transaction.
The Company and the Owners agree to indemnify, defend and hold each other
harmless from and against any and all loss, cost, damage, liability or expense,
including reasonable attorneys' fees, which they may
35
sustain, incur or be exposed to by reason of any claim for fees or commissions
made through the other party. The provisions of this Section shall survive the
Closing or other termination of this Agreement.
17. CASUALTY LOSS.
17.1 If at any time prior to the Closing Date any portion of the
Property is destroyed or damaged as a result of fire or any other casualty (a
"Casualty"), the Owners shall promptly give written notice ("Casualty Notice")
thereof to the Company along with the Owners' estimate, given in good faith, of
the cost to repair as a result of the Casualty (the "Repair Cost"). If the
Repair Cost is in excess of three percent (3%) of the Property Value, then
within ten (10) days after the receipt of the Casualty Notice, the Company shall
have the right, at its sole option, of terminating this Agreement by written
notice to the Owners given within ten (10) days after receipt of the Casualty
Notice. If the Company does not terminate this Agreement or if the Repair Cost
is less than three percent (3%) of the Consideration, then the proceeds of any
insurance with respect to the Property paid between the date of this Agreement
and the Closing Date plus the amount of G&G's deductible under the policy
insuring the Casualty shall be paid to the Reconstituted Partnership at Closing.
Notwithstanding the foregoing, in the event of an earthquake, all of the terms
and conditions of this Section 17.1 shall apply, except that G&G need not pay
over to the Reconstituted Partnership the amount of G&G's deductible under the
policy insuring the earthquake.
17.2 To the extent of available insurance proceeds, the Owners shall
cause all temporary repairs to be made to the Property as shall be required to
prevent further deterioration and damage to the Property prior to the Closing
Date provided, however, that any such repairs shall first be approved by the
Company. Contributor shall have the right to be reimbursed from the proceeds of
any insurance with respect to the Real Property paid between the date of this
Agreement and the Closing Date for the cost of all such repairs.
18. CONDEMNATION.
18.1 In the event, that prior to Closing, the Owners receive notice
of the institution or threatened institution of any proceedings, judicial,
administrative or otherwise, by eminent domain or otherwise, which propose to
affect a material portion of the Property, the Owners shall give notice (a
"Condemnation Notice") to the Company promptly thereafter. Within fifteen (15)
days following receipt of the Condemnation Notice, the Company shall have the
right and option to terminate this Agreement by giving the Owners written notice
thereof. Any damage to or destruction of the Property as a result of a taking by
eminent domain shall be deemed "material" for purposes of this Section if the
estimate of the damage, which estimate shall be performed by an insurance
adjuster and the Company's architect, shall exceed three percent (3%) of the
Property Value. Should the Company so terminate this Agreement in accordance
with this Section, neither party shall have any further liability or obligations
to the other. In the event the Company shall not elect to cancel this Agreement,
Contributor shall assign Contributor's Interest in such proceeds to the Company,
the same shall be the Company's
36
sole property, and the Company shall have the sole right to settle any claim in
connection with the Property, and there shall be no reduction in the
Consideration.
19. TRANSFER RESTRICTIONS; RIGHT OF FIRST REFUSAL.
19.1 Contributor agrees that the Contributor Units may not be sold,
assigned, transferred, pledged, encumbered or in any manner disposed of
(collectively, "Transferred") or redeemed for shares of Common Stock until after
the first anniversary of the Closing Date. Thereafter, the Contributor Units
and/or the shares of Common Stock underlying the Contributor Units (the
"Underlying Shares") may only be Transferred in accordance with the terms of the
OP Agreement and this Section 19.
19.2 (a) If Contributor or the Unit Holders (each a "Contributor
Party") receives a bona fide written offer to purchase part or all of its
Contributor Units or Underlying Shares in a privately negotiated transaction
which it desires to accept, such Contributor Party shall not sell, transfer, or
otherwise dispose of (the "Proposed Disposition") such Units or Underlying
Shares (the "Disposition Securities") to a third party unless, prior to such
Proposed Disposition, such Contributor Party shall have promptly reduced the
terms and conditions, if any, of the Proposed Disposition to a reasonably
detailed writing and shall have delivered written notice (the "Disposition
Notice") of such Proposed Disposition to the Company. All offers to purchase
Contributor Units or Underlying Shares must be for cash. The Disposition Notice
shall contain an irrevocable offer to sell all, but not less than all, the
Disposition Securities to the Company upon the same terms (including price) and
subject to the same conditions, if any, as those contemplated by the Proposed
Disposition, and shall be accompanied by a true and correct copy of the
agreement embodying the terms and conditions, if any, of the Proposed
Disposition (which shall identify the Company, the Disposition Securities, the
consideration and method of payment contemplated by the Proposed Disposition and
all other terms and conditions, if any, of the Proposed Disposition).
(b) The Company shall have the irrevocable right and option
(the "Purchase Option"), within five (5) business days after receipt of the
Disposition Notice (the "Notice Period"), to accept such irrevocable offer to
purchase all, but not less than all, of the Disposition Securities which are
subject to the Proposed Disposition. If the Company determines to exercise such
Purchase Option, it shall deliver to the Contributor Party written notice of the
exercise of its Purchase Option with respect to the Disposition Securities (an
"Exercise Notice") prior to the expiration of the Notice Period.
(c) If the Company shall have timely delivered its Exercise
Notice with respect to the Disposition Securities, all certificates for the
Disposition Securities shall be delivered to the Company at a closing to be held
on the later of the date on which the Proposed Disposition, if accepted, would
close or five (5) business days after such Exercise Notice is given, at the
offices of Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇. At such closing, the Company shall deliver to the Contributor
Party in immediately available funds the amount of the purchase price set forth
in the Disposition Notice due against the simultaneous delivery of certificates
representing the Disposition Securities so
37
disposed of, duly endorsed in blank or accompanied by a stock power or powers
duly endorsed in blank, and in proper form for transfer, together with any
necessary stock-transfer stamps, and such Disposition Securities shall be
delivered free and clear of all liens, security interests and encumbrances
whatsoever.
(d) If the Company (i) notifies the Contributor Party that it
is not exercising its Purchase Option or (ii) does not deliver an Exercise
Notice prior to the expiration of the Notice Period, the Company shall be deemed
to have waived its Purchase Option in which event Contributor Party may sell the
Disposition Securities to the proposed transferee for a period of sixty (60)
days after the expiration of the Notice Period in which event the proposed
transferee shall take free and clear of the restrictions set forth in this
Section 19; provided, however, that such Disposition Securities are sold to the
proposed transferee at a price not less than that contained in the Disposition
Notice and on terms and conditions, if any, not more favorable to the proposed
transferee than those contained in the Disposition Notice. If Contributor Party
wishes to sell all or any part of the Disposition Securities on terms more
favorable to the proposed transferee than those set forth in the Disposition
Notice or does not sell such Disposition Securities on the terms and conditions
contained in the Disposition Notice within the aforementioned sixty (60) day
period, it shall again be obligated to make new offers to the Company, in
accordance with this Section 19, before it shall be permitted to consummate a
Proposed Disposition of the Disposition Securities, or any part thereof, in a
privately negotiated transaction.
20. PUBLICATION; CONFIDENTIALITY.
20.1 The Company shall have the right to make such public
announcements or filings with respect to the Exchange or the Securities and
Exchange Commission as the Company may deem reasonably prudent, and shall be
entitled to make such filings or announcements upon advice of counsel as may be
otherwise be deemed necessary or required by law.
20.2. Without the prior written consent of the other party, until
the Company shall make a public announcement as provided in Section 20.1,
neither the Company nor the Owners shall disclose, and the Owners and the
Company will direct their respective representatives, employees, agents and
consultants not to disclose, to any person or entity the fact that the Company
and the Owners have entered into this Agreement to acquire the Property nor any
of the terms, conditions or other facts with respect to this Agreement.
Notwithstanding the foregoing, either party may disclose those terms and
conditions which are required to be disclosed pursuant to law or in order to
comply with this Agreement; provided, however, that the disclosing party shall
use its best efforts to limit the disclosure to the information necessary, shall
advise any party to whom disclosure is made that said terms and conditions are
subject to a confidentiality requirement and shall obtain the agreement of said
party to keep any information disclosed to it as confidential. In the event of a
breach of the provisions of this Section 20.2, either party shall be entitled to
all of its rights and remedies at law or in equity.
20.3 The Owners shall not disclose to any third party any
information that is not public information concerning MCRC, the Company or any
transaction or potential
38
transaction the Owners may become aware of involving MCRC or the Company without
the Company's prior written consent.
21. REMEDIES.
21.1 (i) In the event of any breach by the Company of any
representation, warranty, covenant or agreement in any material respect, which
breach was neither willful nor intentional, the Owner's sole recourse shall be
limited to terminating this Agreement, whereupon the parties hereto shall have
no further liabilities and obligations hereunder, and this Agreement shall be of
no further force and effect, except for the obligations set forth in Section
16.1.
(ii) In the event of a willful breach by the Company of any
representation, warranty, covenant or agreement, in any material respect (except
for a breach of the time of the essence closing obligation set forth in Section
10.1, in which case the provisions of Section 21.1(i) shall apply), the Company
shall pay as liquidated damages and as its sole liability, the sum of
$250,000.00. The Owners waive any other claim, at law or in equity, either
against the Company, MCRC or against any person, known or unknown, disclosed or
undisclosed, and hereby acknowledge and agree that said liquidated sum
constitutes a reasonable forecast of damages which would be sustained by the
Owners in the event of a willful breach by the Company.
21.2 (i) In the event of any breach by Contributor of any
representation or warranty, or the Owners of any covenant or agreement in any
material respect, which breach was neither willful nor intentional, the
Company's sole recourse shall be limited to terminating this Agreement,
whereupon the parties hereto shall have no further liabilities and obligations
hereunder, and this Agreement shall be of no further force and effect, except
for the obligations set forth in Sections 4.7 and 16.1.
(ii) In the event of a willful breach by Contributor of any
representation or warranty, or the Owners of any covenant or agreement in any
material respect, the Company shall be entitled to any and all of its rights and
remedies, at law or in equity, including without limitation, a termination of
this Agreement, in which event the provisions of Section 4.7 shall govern and
control, or an action seeking specific performance.
21.3 The acceptance of the Assignment of Contributor's Interest by
the Company shall be deemed a full performance and discharge of every agreement
and obligation of Contributor to be performed under this Agreement, except
those, if any, which are specifically stated in this Agreement to survive the
Closing or those which, by their terms, cannot be performed or complied with
until after the Closing.
21.4 The provisions of this Section 21 shall survive the Closing or
earlier termination of this Agreement.
39
22. NOTICE
All notices, demands, requests, or other writings in this Agreement
provided to be given or made or sent, or which may be given or made or sent, by
either party hereto to the other, shall be in writing and shall be delivered by
depositing the same with any nationally recognized overnight delivery service,
or by telecopy or fax machine, in either event with all transmittal fees
prepaid, properly addressed, and sent to the following addresses:
If to the Company: c/o ▇▇▇▇-▇▇▇▇ Realty Corporation
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
with two (2) separate copies
of the notice sent to the attention of:
▇▇▇▇▇▇ ▇. ▇▇▇▇, CEO
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (tele.)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
with a copy to: Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (tele.)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
If to Contributor: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (tele.)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
with a copy to: ▇▇▇▇▇▇ Radovsky ▇▇▇▇▇▇▇ & Share LLP
Four ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (tele.)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
40
and a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (tele.)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
If to ▇▇▇▇▇▇▇ ADCO Group
or Plenitude: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (tele.)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
with a copy to: ADCO Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (tele.)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
and a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (tele.)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
or to such other address as either party may from time to time designate by
written notice to the other. Notices given by (i) overnight delivery service as
aforesaid shall be deemed received and effective upon actual receipt provided a
delivery receipt is obtained and (ii) telecopy or fax machine shall be deemed
given at the time and on the date of machine transmittal provided same is sent
prior to 4:00 p.m. Eastern Standard time on a business day (if sent later, then
notice shall be deemed given on the next business day) and if the sending party
receives a written send confirmation on its machine and forwards a copy thereof
by regular mail accompanied by such notice or communication. Notices may be
given by counsel for the parties described above, and such notices shall be
deemed given by said party, for all purposes hereunder.
23. DEBT MAINTENANCE
23.1 Subject to (i) the Company's right to sell, transfer or dispose
of its interest in the Reconstituted Partnership, or the Reconstituted
Partnership's right to sell, transfer or dispose of the Property, in accordance
with the terms and conditions of Section 24, and (ii) Section 23.2 below, for a
period of six (6) years following the Closing (the "Restricted Period"), (A) the
Reconstituted Partnership shall maintain not less than $35,000,000.00 (the
41
"Debt Amount") of nonrecourse mortgage debt (the "Contributor Debt") on the
Property and which debt is not guaranteed by any person, and (B) Contributor and
the Unit Holders shall be permitted to guarantee or indemnify (the "Initial
Indemnity") the Company or MCRC for up to $3,800,000.00 in the aggregate (the
"Initial Indemnity Amount") of the most risky portion ("Third Tier Portion") of
any available Partnership Recourse Debt (as hereinafter defined). For purposes
of this Section 23, "Partnership Recourse Debt" shall mean such debt that the
Company has incurred, and may hereafter incur, on a recourse basis, which may or
may not be secured in whole or in part by property owned directly or indirectly
by the Company and which may or may not be guaranteed by MCRC and/or any
subsidiary of the Company that owns or becomes the owner of property. Upon the
expiration of the Restricted Period, the Company is under no obligation to
permit Contributor and the Unit Holders to guarantee or indemnify the Initial
Indemnity Amount or the Contributor Debt. Upon the expiration of the Restricted
Period, (x) if the Company terminates the Initial Indemnity, and/or (y) in the
event that the Reconstituted Partnership (I) does not maintain any of the
Contributor Debt on the Property, or (II) in the event that the Reconstituted
Partnership maintains all or any portion of the Contributor Debt on the Property
(as the Reconstituted Partnership and/or the Company) may or may not do in their
sole discretion) and the amount of such Contributor Debt that is then allocated
to the Contributor and the Unit Holders under Section 752 of the Code and the
Treasury Regulations thereunder, as of the date hereof, is reduced so as to
result in the recognition of income or gain to the Contributor and the Unit
Holders (and provided further that the Contributor and the Unit Holders shall be
required to establish, annually, and to the reasonable satisfaction of the
Company, the amount of any such income or gain that would be so recognized as a
result of the foregoing), the Company shall, if and only if requested by the
Unit Holders, permit Contributor and/or the Unit Holders to guarantee or
indemnify the Company for the Third Tier Portion of any Partnership Recourse
Debt which is then available up to an amount (the "Contributor Debt Amount")
equal to the lesser of $21,500,000.00, or an amount necessary to keep
Contributor and/or the Unit Holders from recognizing any income or gain as a
result of a reduction in liabilities allocated to them under Section 752 of the
Code and the Treasury Regulations thereunder; provided, however, that, as noted
below, it is expressly understood and agreed that MCRC and/or the Company shall
be under no obligation (either express or implied) to have or maintain debt
outstanding for the Contributor and/or the Unit Holders to indemnify or
guarantee at any time after the Restricted Period. It is expressly understood
and agreed that MCRC and/or the Company has prior and present commitments to
permit other persons to guaranty or indemnify MCRC and/or the Company for the
least risky portion ("First Tier Portion") of the Partnership Recourse Debt in
the amount of, in the aggregate, up to $508,000,000.00. It is further expressly
understood and agreed that MCRC and/or the Company, in their sole discretion,
reserve the right, at any time in the future to make additional commitments, in
connection with the issuance of additional Units in exchange for other
properties to unrelated third parties in tax deferred transactions, to permit
persons to guaranty or indemnify MCRC and/or the Company for (i) the First Tier
Portion of Partnership Recourse Debt, pari passu with other persons then
guaranteeing or indemnifying the First Tier Portion of Partnership Recourse
Debt; provided, however, that if the persons being permitted by MCRC and/or the
Company to guaranty or indemnify for the First Tier Portion of Partnership
Recourse Debt would have also been permitted, pursuant to clause (iii) below, to
guaranty or indemnify MCRC and/or the Company for the Second Tier Portion (as
defined below) of the Partnership Recourse Debt, then such guaranty or indemnity
by such persons may
42
or may not be pari passu (as MCRC and/or the Company shall determine in
their sole discretion) with other persons then guaranteeing or indemnifying the
First Tier Portion of Partnership Recourse Debt, (ii) the Third Tier Portion of
Partnership Recourse Debt, pari passu with other persons then guaranteeing or
indemnifying the Third Tier Portion of Partnership Recourse Debt (which includes
the Contributors and/or the Units Holders pursuant hereto with respect to the
Contributor Debt Amount) or (iii) with respect to significant transactions or
transactions involving more than one property, the portion of the Partnership
Recourse Debt which is more risky than the First Tier Portion of the Partnership
Recourse Debt but less risky than the Third Tier Portion ("Second Tier Portion")
of the Partnership Recourse Debt. In addition to the foregoing, the Company
reserves the right, at any time after the Restricted Period and in its sole
discretion, to refinance, payoff or paydown any of the Partnership Recourse Debt
or permit new partners of the Company to guarantee or indemnify MCRC and/or the
Company for a portion or portions of the Partnership Recourse Debt and to
designate the portion or portions of the Partnership Recourse Debt (i.e., First
Tier Portion, Second Tier Portion or Third Tier Portion) which will be
guaranteed or for which MCRC and/or the Company will be indemnified, as MCRC
and/or the Company shall determine in their sole discretion, thereby making no
debt available for Contributor and/or the Unit Holders to guarantee or
indemnify, or altering the priority or level of then-available Partnership
Recourse Debt, in terms of risk and amount, that Contributor and the Unit
Holders may guarantee or indemnify. Subject to and in accordance with this
Section 23.1, Contributor and the Unit Holders and Company agree to execute and
deliver duly acknowledged agreements in order for Contributor and the Unit
Holders to recognize basis for Federal income tax purposes.
23.2 In the event that the Contributor or any Unit Holder (i)
obtains a tax-free step-up in the basis of their Units for federal income tax
purposes (e.g., upon the death of a member); (ii) sells, transfers or otherwise
disposes of their Units in a taxable transaction; (iii) receives a "tax" payment
from MCRC or the Company in the amount described in Section 24.1 hereof (or
corresponding provisions of other agreements to which members of Contributor or
any Unit Holder are parties) in reimbursement of taxes triggered to such member
as a result of the sale, transfer or other disposition of property contributed
by such member, or (iv) receives an allocation under Treasury Regulations
Section 1.704-3(b) that reduces the amount of any Built-in-Gain (as defined in
Section 24.1 hereof), then the Initial Indemnity Amount or the Contributor Debt
Amount, as the case may be, shall be commensurately reduced.
23.3 In addition to the other rights of the Company as provided
herein, at the Company's election, the Reconstituted Partnership shall have the
right, from time to time during the Restricted Period, to refinance any mortgage
debt encumbering the Property. If such new mortgage debt provides for payments
of principal, then Contributor and the Unit Holders shall have the same rights
to guaranty or indemnify the Company for the amount of such principal payments
as are applicable to Contributor and/or the Unit Holders during the Restricted
Period, to the extent there is any Partnership Recourse Debt which both (i)
constitutes the Third Tier Portion of Partnership Recourse Debt, and (ii) at
that time, has not been committed to any limited partner of the Company. If such
new mortgage debt provides for payments of principal, then the Company shall
provide notice to ▇▇▇▇▇ ▇▇▇▇▇▇, at least twenty-five (25) days prior to the
first
43
payment under such new mortgage debt, of the amortization schedule for such new
mortgage debt.
23.4 If, as and when the Reconstituted Partnership elects to
decrease the nonrecourse mortgage debt on the Property subsequent to the
Restricted Period to an amount below $35,000,000.00 (as adjusted by Section
23.2), the Company shall endeavor to give ▇▇▇▇▇ ▇▇▇▇▇▇ (and no one else,
notwithstanding the notice provisions contained in Section 22) sixty (60) days
prior written notice of the intended reduction in debt; provided, however,
Contributor and the Unit Holders shall have no recourse, and the Company shall
have no liability whatsoever, in the event that the Company shall fail to give
such notice. The notice to ▇▇▇▇▇ ▇▇▇▇▇▇ shall be sent to that address provided
for ▇▇▇▇▇ ▇▇▇▇▇▇ in Section 22.
23.5 The provisions of this Section 23 shall survive the Closing.
24. SALE OF THE PROPERTY.
24.1 During the Restricted Period the Reconstituted Partnership may
not sell or dispose of the Real Property, and the Company, its designees,
subsidiaries or affiliates, may not sell or dispose of its interest in the
Reconstituted Partnership, at any time except (i) in an entirely tax-free
like-kind exchange which satisfies the requirements of Code Section 1031 and the
Treasury Regulations promulgated thereunder, (ii) if a sale or disposition of
the Real Property would not result in recognition of all or any part of the
Built-in Gain (as hereinafter defined) by Contributor or any Unit Holders, (iii)
in accordance with Section 24.2, or (iv) if the Company pays to Contributor an
amount which, after the payment of all federal, state and local taxes payable
with respect to such amount, would be equal to the federal, state, and local
income taxes payable by the Contributor resulting from the recognition of the
Built-in Gain triggered by such sale. After the Restricted Period, the
restrictions contemplated by this Section 24 shall terminate in their entirety.
For purposes of this Agreement, the term "Built-in Gain" for Contributor's
Interest shall mean the excess, if any, of $29,000,000.00 over the adjusted
basis for Federal income tax purposes on the Closing Date of Contributor's
Interest as set forth on Schedule 24.1.
24.2 Notwithstanding Section 24.1 above, during the Restricted
Period, the Reconstituted Partnership may dispose of the Real Property, or the
Company, its designees, subsidiaries or affiliates, may dispose of its interest
in the Reconstituted Partnership, at any time in connection with (a) the sale,
transfer or disposition of all or substantially all of the properties owned by
the Company, which in the Company's sole judgment, is determined to be in the
best interests of MCRC and its public stockholders, (b) a foreclosure or deed in
lieu of foreclosure, or (c) a government taking or condemnation of all or
substantially all of the Property.
24.3 After the expiration of the Restricted Period, the
Reconstituted Partnership may sell or dispose of the Real Property, and/or the
Company may sell, transfer or dispose of its interest in the Reconstituted
Partnership, at any time and in the manner that the Reconstituted Partnership
and/or the Company may so choose. Subsequent to the Restricted Period, if, as
and when the Company and/or the Reconstituted Partnership may elect to sell,
transfer or dispose of its interest in the Reconstituted Partnership or to sell,
transfer or dispose of the Property, as the
44
case may be, the Company shall endeavor to give Contributor (and no one else,
notwithstanding the notice provisions contained in Section 22) sixty (60) days
prior written notice of the intended sale, transfer or disposition; provided,
however, Contributor and the Unit Holders shall have no recourse, and the
Company shall have no liability, whatsoever, in the event that the Company shall
fail to give such notice.
24.4 The provisions of this Section 24 shall survive the Closing.
25. TAX MATTERS
25.1 The Company shall use the traditional method without curative
allocations in the manner set forth in Treasury Regulations issued under Section
704(c) of the Code, as amended, with respect to the contribution of
Contributor's Interest and Contributor's Interest in the Real Property or in
connection with any re-evaluation of the same.
25.2 Using the exact method of accounting, G&G's taxable year shall
be treated as closed as of the Closing Date with respect to Contributor and the
Unit Holders, and allocations shall be made to Contributor and the Unit Holders
in accordance with Section 706 of the Code and the Treasury Regulations
thereunder (as shall be determined by the Company).
26. INTEREST PURCHASE OPTION
26.1 Commencing one year and a day after the Closing Date (the
"Holding Period") and ending six (6) months thereafter (the "Election Period"),
the Company has the sole and exclusive option to purchase the 1/10 (.1%) percent
interest ("Contributor's Withheld Interest") in G&G which Contributor is not
transferring pursuant to this Agreement. At the Closing, Contributor and the
Company shall enter into a letter agreement (the "Letter Agreement") setting
forth the number of Units due on account of Contributor's Withheld Interest (the
"Withheld Consideration"); the number of such Units issued to Contributor shall
be equal to (x) 1/10 (.1%) percent, multiplied by the difference between the
Property Value and the Mortgage Debt, divided by (y) the Current Market Value
Per Unit. In the event that the Company elects to exercise its purchase option,
the Company shall (i) deliver written notice to Contributor of its election
prior to the expiration of the Election Period, and (ii) in conjunction with
said notice, deliver Certificates representing the Withheld Consideration to the
Company's counsel to be held in escrow, and which is to be released according to
the provisions of Section 26.2. Notwithstanding the provisions of Section 26.2,
the Company's delivery of the notice and Certificates to the Company's counsel,
as set forth in (i) and (ii) above, shall immediately effectuate the assignment
of Contributor's Withheld Interest, and no further action need be taken by
Contributor, the Reconstituted Partnership or the Company to effectuate same.
26.2 In order to obtain the release of the Certificates representing
the Withheld Consideration from the Company's counsel, Contributor hereby agrees
to execute an assignment of Contributor's Withheld Interest in a form
substantially similar to the Assignment of Contributor's Interest. Upon receipt
of the assignment required in this Section 26.2, the
45
Company's counsel shall immediately release the Certificates representing the
Withheld Consideration to Contributor.
26.3 The provisions of this Section 26 shall survive the Closing.
27. MISCELLANEOUS.
27.1 If any instrument is necessary in order to obviate a defect in
or objection or exception to title, the following shall apply: (a) any such
instrument shall be in such form and shall contain such terms and conditions as
may be required by the Title Company to omit any defect, objection or exception
to title, (b) any such instrument shall be deposited with the Title Company, and
(c) Contributor agrees to execute, acknowledge and deliver any such instrument
and to make any such deposit.
27.2 This Agreement constitutes the entire agreement between the
parties and incorporates and supersedes all prior negotiations and discussions
between the parties. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their permitted successors and assigns, and
nothing in the Agreement express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
27.3 This Agreement cannot be amended, waived or terminated orally,
but only by an agreement in writing signed by the party to be charged.
27.4 This Agreement shall be interpreted and governed by the laws of
the State of California and shall be binding upon the parties hereto and their
respective successors and assigns. The parties hereto hereby submit, and waive
any objections, to the jurisdiction of the courts of the State of New York and
of the courts of The United States of America situated in the State of New York.
27.5 The caption headings in this Agreement are for convenience only
and are not intended to be part of this Agreement and shall not be construed to
modify, explain or alter any of the terms, covenants or conditions herein
contained.
27.6 If any term, covenant or condition of this Agreement is held to
be invalid, illegal or unenforceable in any respect, this Agreement shall be
construed without such provision.
27.7 Prior to and after the Closing, each party shall, from time to
time, execute, acknowledge and deliver such further instruments, in recordable
form, if necessary, and perform such additional acts, as the other party may
reasonably request in order to effectuate the intent of this Agreement, within
thirty (30) days of the request. This Agreement shall be given a fair and
reasonable construction in accordance with the intentions of the parties hereto,
and without regard to or aid of canons requiring construction against
Contributor, the Company or the party whose counsel drafted this Agreement. The
provisions of this Section shall survive the Closing.
46
27.8 This Agreement shall not be effective or binding until such
time as it has been executed and delivered by all parties hereto.
27.9 This Agreement may be executed by the parties hereto in
counterparts, all of which together shall constitute a single Agreement.
27.10 All references herein to any Section, Schedule or Exhibit
shall be to the Sections of this Agreement and to the Schedules and Exhibits
annexed hereto unless the context clearly dictates otherwise. All of the
Schedules and Exhibits annexed hereto are, by this reference, incorporated
herein.
27.11 In the event of any litigation or alternative dispute
resolution between the Company and Contributor in connection with this Agreement
or the transaction contemplated herein, the non-prevailing party in such
litigation or alternative dispute resolution shall be responsible for payment of
all expenses and reasonable attorneys' fees incurred by the prevailing party.
The provisions of this Section shall survive the Closing.
27.12 All references herein to the Owners shall apply to the Owners
both singularly and collectively, and all liability of the Owners shall be joint
and several.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
47
27.13 Whenever used herein, the singular number shall include the
plural, the plural shall include the singular, and the use of any gender shall
be applicable to all genders.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
▇▇▇▇-▇▇▇▇ REALTY, L.P., a Delaware limited
partnership
By: ▇▇▇▇-▇▇▇▇ Realty Corporation, its General Partner
By:
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Title: Executive Vice President and General
Counsel
G&G MARTCO, a California general partnership
By:
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Partner
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Partner
By: PLENITUDE PARTNERS, L.P., a Delaware
limited partnership
By: Plenitude Corporation, its General
Partner
By:
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
48
THE ▇▇▇▇▇▇▇▇ ▇. AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
TRUST, a California trust
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee
By:
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee
----------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
PLENITUDE PARTNERS, L.P., a Delaware limited
partnership
By: Plenitude Corporation, its General Partner
By:
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
49