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Exhibit 10.56
CONTRIBUTION AGREEMENT
(OP Units)
BY AND AMONG
TOWER REALTY TRUST, INC.
TOWER REALTY OPERATING PARTNERSHIP, L.P.
AND
OFFICE INVEST SUB LLC
Dated as of May 1, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I
CONTRIBUTION OF PARTNERSHIP INTERESTS
1.1 Contribution Transaction....................................... 2
1.2 Consideration to be Paid to Contributor........................ 2
1.3 Adjustments Relating to the Allocation of the
Consideration.................................................. 7
1.4 Deferred Management Fee........................................ 9
1.5 Additional Consideration....................................... 10
1.6 Contribution of Certain Rights................................. 11
1.7 Payment of Debt................................................ 11
1.8 Treatment as Contribution...................................... 11
1.9 Additional Documents........................................... 11
1.11 Option to Purchase Property Interests for
Increased Price; Termination of Agreement...................... 11
ARTICLE II
CLOSING
2.1 Conditions Precedent........................................... 13
2.2 Time and Place................................................. 15
2.3 Closing Deliveries............................................. 15
2.4 Closing Costs.................................................. 17
2.5 Good Faith Efforts............................................. 17
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CONTRIBUTOR
3.1 Title to Interests............................................. 17
3.2 Organization; Authority; No Conflicts.......................... 18
3.3 Litigation..................................................... 19
3.4 No Other Agreements............................................ 20
3.5 No Brokers..................................................... 20
3.6 Investment Representations and Warranties...................... 20
3.7 Legends........................................................ 22
3.8 Covenant to Remedy Breaches.................................... 23
3.9 Actions Prior to Closing....................................... 23
3.10 Certain ERISA Matters.......................................... 24
3.11 Principal Purpose.............................................. 24
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY AND THE OPERATING PARTNERSHIP
4.1 Authority...................................................... 24
4.2 No Brokers..................................................... 25
4.3 Sale of Property............................................... 25
4.4 Allocation of Built-in Gain.................................... 26
4.5 REIT Sponsors.................................................. 26
4.6 Capital Expenditures........................................... 26
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PAGE
ARTICLE V
MISCELLANEOUS
5.1 Amendment...................................................... 26
5.2 Entire Agreement; Counterparts; Applicable Law................. 26
5.3 Assignability.................................................. 27
5.4 Titles......................................................... 27
5.5 Third Party Beneficiary........................................ 27
5.6 Severability................................................... 27
5.7 Equitable Remedies............................................. 27
5.8 Notices........................................................ 28
5.9 Waiver of Rights; Consents with Respect to
Partnership Interests.......................................... 28
5.10 Releases and Waivers........................................... 31
5.11 Confidentiality................................................ 31
5.12 Computation of Time............................................ 32
5.13 Legal Fees and Expenses........................................ 32
5.14 Termination.................................................... 32
5.15 Survival....................................................... 32
5.16 Time of the Essence............................................ 32
EXHIBITS
A. Partnership & Interests
B. Contribution and Assumption Agreement
C. Customary Closing Cost Splits
D. Model for Consideration Calculation
E. Exchange Rights Agreement
F. Registration Rights Agreement
G. Lock-Up Agreement
H. Existing Properties
I. Capital Expenditures
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CONTRIBUTION AGREEMENT
This Contribution Agreement (this "AGREEMENT") is dated as of the 1st
day of May, 1997 and is entered into by and among TOWER REALTY TRUST, INC., a
Maryland corporation (the "COMPANY"), TOWER REALTY OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership (the "OPERATING PARTNERSHIP"), and OFFICE INVEST
SUB LLC, a Delaware limited liability company ("CONTRIBUTOR").
R E C I T A L S:
A. Contributor owns a general partner and a limited partner interest in
the partnership (the "PARTNERSHIP") described on EXHIBIT A attached hereto and
made a part hereof, which Partnership owns direct or indirect interests in
certain properties (the "PROPERTIES") also set forth on EXHIBIT A.
B. The Company and the Operating Partnership desire to acquire through
a contribution to capital from Contributor, and Contributor desires, among other
things, to contribute to the Company and the Operating Partnership, on the terms
and conditions set forth herein, all of Contributor's right, title and interest
as a general partner and a limited partner of the Partnership (collectively, the
"PROPERTY INTERESTS") in exchange for one or more of the following: (a) cash,
(b) units of limited partnership interest ("OP UNITS") in the Operating
Partnership, and (c) shares of common stock, par value $0.01 per share (the
"COMMON STOCK") of the Company, as hereinafter provided.
C. The Company and the Operating Partnership desire to acquire the
Property Interests in connection with the intended initial public offering (the
"IPO") of shares of Common Stock by the Company.
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company, the
Operating Partnership and Contributor agree as follows:
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ARTICLE I
CONTRIBUTION OF PARTNERSHIP INTERESTS
1.1 Contribution Transaction. (a) At the Closing (as hereinafter
defined) and subject to the terms and conditions contained in this
Agreement, Contributor shall transfer to the Company and the Operating
Partnership, absolutely and unconditionally and free and clear of all
Encumbrances (as defined in Section 3.1(a)), all of the Property
Interests. The contribution of Contributor's Property Interests shall
be evidenced by a Contribution and Assumption Agreement in
substantially the form of EXHIBIT B attached hereto and made a part
hereof. The portion of the Property Interests that will be contributed
to the Company, if any, will be determined as set forth in Section
1.2(d) hereof.
(b) The parties shall take such additional actions and execute
such additional documentation as may be required by either (i) the
Partnership Agreement (as hereinafter defined) or (ii) the Agreement of
Limited Partnership dated as of March 24, 1997 of the Operating
Partnership (the "OP AGREEMENT") in order to effect the transactions
contemplated hereby.
(c) Contributor hereby subscribes for and agrees to accept the
issuance of the Common Stock and the OP Units specified by it pursuant
to the terms of this Agreement, and, if Contributor receives OP Units,
accepts, subject to the provisions of this Contribution Agreement, the
terms and conditions of the OP Agreement, including, without
limitation, the power of attorney granted therein, and agrees to
execute and deliver at the Closing such other documents and agreements
as may be reasonably required by the Company under the OP Agreement to
effect the admission of Contributor as a limited partner in the
Operating Partnership.
(d) As used herein, the term "PARTNERSHIP AGREEMENT" shall
mean the Amended, Restated and Reconstituted Agreement of Limited
Partnership of D/F Portfolio Associates Limited Partnership dated as of
December 10, 1996 among ▇▇▇▇▇▇▇ MOT Portfolio Corp, Contributor and FSA
Associates, L.P.
1.2 Consideration to be Paid to Contributor. Subject to Sections 1.3
and 1.5 hereof, the Company and the Operating Partnership (as the case may be)
shall, in exchange for the Property Interests (and Contributor's obligations
hereunder), pay to Contributor the amount determined as follows:
(a) The amount (the "CONSIDERATION") that Contributor would
receive under the Partnership Agreement if:
(i) the Partnership were to sell all of the Properties, free
and clear of all Encumbrances, for an aggregate of $132,500,000 (or
$138,000,000 in the event the Closing occurs after September 13, 1997),
in each case minus the outstanding principal
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amount of the GECC Loan (as defined in the Partnership Agreement) as of
the Closing Date and
(ii) the Partnership were to dissolve and distribute the
proceeds of the sale referred to in clause (i) above and any
undistributed cash (in accordance with the procedures and priorities
stated in Articles 8, 9 and 11 of of the Partnership Agreement) to be
calculated as of, and assuming such sale was effective as of, the
Closing Date, taking into account disposition costs and other similar
costs (excluding real estate brokerage commissions) associated with
such liquidation, as follows:
(A) the actual cost of any transfer taxes,
documentary stamps and other closing costs which are normally
payable by a seller in the relevant market, as more
particularly described on EXHIBIT C attached hereto and made a
part hereof,
(B) the actual cost, if any, of Funding Losses (as
defined under the GECC Documents (as such term is defined in
the Partnership Agreement)) due under Section 2.8 of the GECC
Documents as a result of the prepayment of the GECC Loan at
the time of the Closing, but only if such costs are actually
incurred in connection with the closing of the IPO (the "IPO
CLOSING"),
(C) the amount referred to in Section 1.12 hereof,
and
(D) if actually paid, the lesser of (x) the actual
amount of any prepayment penalty (other than Funding Losses)
under the GECC Documents, and (y) $437,500.
(b)(i) (A) The following shall be apportioned (ratably based
upon the number of days prior to and after the Closing Date to which
any of the following amounts relates) between the Partnership as it was
composed immediately prior to the Closing (the "PREVIOUS
PARTNERSHIP") and the Operating Partnership at the Closing, as of the
close of business of the day immediately preceding the Closing Date
(the "APPORTIONMENT DATE"), and amounts apportioned to the Previous
Partnership shall be allocated between the Operating Partnership and
Contributor in accordance with the applicable provisions of the
Partnership Agreement, assuming that Contributor directly or indirectly
holds the interests in the Partnership held by Contributor immediately
prior to the Closing Date and the Operating Partnership directly or
indirectly holds all other interests in the Partnership:
(I) water rates and charges, sewer taxes and
rents and electricity and other utility charges, except those
required to be paid directly by tenants to the entity imposing
same, based upon the per diem charges obtained by using the
most recent period for which readings of such utility services
shall then be available;
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(II) fuel oil and liquid propane gas, if any,
at the cost per gallon most recently charged to the Previous
Partnership or its relevant subsidiary entity which is the
direct owner of the applicable Property, based on the
supplier's measurements thereof taken within one (1) business
day (to the extent practicable) of the Apportionment Date;
(III) rents, if, as and when collected in
accordance with the provisions of Section 1.2(b)(ii);
(IV) business, occupancy and sales taxes, if
any;
(V) real and personal property taxes and
assessments (or installments thereof) for or relating to
periods commencing on or after December 13, 1996, on the basis
of the fiscal year for which payable, except those required to
be paid directly by tenants to the entity imposing same; if
the Apportionment Date shall be prior to the date on which the
real or personal property tax rate is fixed, the apportionment
of real or personal property taxes, as the case may be, shall
be made on the basis of the tax rate for the preceding year
applied to the latest assessed valuation and after the real or
personal property taxes, as the case may be, are finally
fixed, and Contributor and the Operating Partnership shall
make a recalculation of the apportionment of same and the
Operating Partnership and the Previous Partnership, as the
case may be, shall promptly make an appropriate payment to the
other based on such recalculation;
(VI) payments to the lender under the GECC
Documents, including, without limitation, tax and insurance
escrows (which shall be treated as Capital Event Proceeds
under the Partnership Agreement) and interest payments;
(VII) all other payables and receivables of the
Previous Partnership and its subsidiary entities and any
general partner thereof, if any, not otherwise apportioned
herein; and
(VIII) all other payments made by or on behalf of
the Previous Partnership, any general partner thereof or any
subsidiary entity for liabilities or obligations relating to a
period which extends in part prior to and in part beyond the
Closing Date.
(B) If, on the Closing Date, all or any portion of
any Properties shall be or shall have been affected by assessments that
are, or which may become, payable in annual installments, of which the
first installment is then a charge or lien or has been paid or if any
of the improvements to be paid for thereby are in place or commenced,
then for
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purposes of this Agreement only the installment which shall then be due
and payable shall be apportioned between the Previous Partnership and
the Operating Partnership and all of the unpaid installments of any
such assessments, including those which are to become due and payable
after the date hereof, shall not be deemed to be due and payable and
shall continue to be liens upon such Properties, it being understood
and agreed that the Operating Partnership shall be responsible for the
period from and after the Apportionment Date and the Previous
Partnership shall be responsible for the period prior to the
Apportionment Date, regardless of when such installments are due and
payable.
(C) To the extent that any refund of real property
taxes, water rates and charges or sewer taxes and rents made after the
Closing Date is applicable to a period before the Closing Date, such
refund shall be payable to the Previous Partnership within 10 business
days from the date of receipt thereof, subject to the reasonable costs
incurred in obtaining same and to tenants having a right to any portion
of such refunds, and the Operating Partnership shall indemnify the
Previous Partnership from and against all claims, damages and expenses
incurred by the Previous Partnership if any claim by any tenant is made
that the Operating Partnership's pursuit of such refunds was inadequate
or insufficient.
(D) Contributor and the Operating Partnership agree
that
(I) in the event that there have been
underbillings of operating expenses, due to underestimating,
resulting in underpayments by tenants applicable to a period
before the Closing Date, the Operating Partnership shall
directly or indirectly ▇▇▇▇ such tenants for such
underpayments (or Contributor may so ▇▇▇▇) and any amounts
directly or indirectly paid to the Operating Partnership (or
Contributor) in respect thereof shall be deemed paid to the
Previous Partnership (less any costs incurred in connection
with the collection of same), and
(II) in the event that there have been
overbillings of operating expenses or real estate tax
contributions resulting in overpayments by tenants applicable
to a period before the Closing Date, the Previous Partnership
shall indemnify the Operating Partnership and the Partnership
and hold the Operating Partnership and the Partnership
harmless from and against claims, damages and expenses
incurred, directly or indirectly, by the Operating Partnership
for Contributor's ratable share incurred as a result of such
overbillings.
(E) Within 10 business days following the Closing and
periodically thereafter, for a period of up to 120 days, if additional
adjustments are necessary, the Operating Partnership shall prepare a
schedule demonstrating the computation of the Closing Date
reimbursement adjustments, including detailed supporting schedules for
each of the line items appearing in such computation. If Contributor
disputes the amount of the adjustments, then the Operating Partnership
and Contributor shall make a good faith effort
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to resolve such dispute. If the Operating Partnership and Contributor
are unable to resolve such disagreement within a reasonable period of
time (not to exceed 20 days), either the Operating Partnership or
Contributor may pursue all remedies available pursuant to applicable
law.
(ii) (A) Subject to Section 1.2(b)(ii)(B) and (C), if
the Operating Partnership shall directly or indirectly receive rents
under any lease after the Closing Date from tenants which are
thirty-one (31) days or more in arrears in the payment of rent as of
the Closing Date, the same shall be allocated first, to the payment of
current rent then due for the month in which the rent is received,
second, to the payment of rent due for the month prior to the month in
which the rent is received and such allocation shall continue by month
in reverse chronological order until all arrearages have been paid. For
example, if the Operating Partnership shall directly or indirectly
receive two (2) months' rent on January 15 under a lease which is in
arrears for the months of October, November, December and January, the
two months' rent shall first be applied to rent due for the month of
January, second to rent due for the month of December, and the months
of October and November shall remain in arrears. With respect to rents
due for the month during which the Closing occurs, the Operating
Partnership shall render an accounting to Contributor, and the amount
of such rents shall be apportioned between the Previous Partnership and
the Operating Partnership based upon the Apportionment Date.
(B) Subject to the provisions of the last sentence of
this clause (B), at the end of the fiscal year with respect to which
any additional rent is payable under a lease, there shall be a
calculation of the amount of each of such additional rents to which
each of the Previous Partnership and the Partnership is entitled, based
upon the Apportionment Date, with the Previous Partnership being
entitled to an amount equal to the amount of additional rent multiplied
by a fraction, expressed as a percentage, the numerator of which is the
number of days in said fiscal year with respect to which additional
rent under such lease was payable prior to the Closing Date, and the
denominator of which is the total number of days in said fiscal year
during which additional rent under such lease was payable, and the
Operating Partnership shall be entitled to the remaining portion of
such additional rent. Anything to the contrary contained in this clause
(B) notwithstanding, with respect to tenants which are 31 days or more
in arrears in the payment of additional rent under leases as of the
Closing Date, the provisions of Section 1.2(b)(ii)(A) shall apply as if
such arrearage were for rents and not for additional rent.
(C) If there shall be any change in the assessed
value of any Property or in the base amounts utilized in the
calculation of any additional rents generated by any Property, or for
any other reason, so that any tenant shall be required to pay
additional rents with respect to any period prior to the Closing Date,
the Operating Partnership shall ▇▇▇▇ or cause to be billed such tenants
therefor and shall use commercially reasonable efforts to collect the
amount thereof, for a period of up to 120 days following the Closing
Date, and any such amounts directly or indirectly received by the
Operating Partnership,
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less the reasonable third-party costs incurred in collecting such
additional rents, shall be paid by the Operating Partnership to the
Previous Partnership promptly after receipt.
(c) Attached hereto as EXHIBIT D, and made a part hereof, is a model of
the calculations described in Section 1.2(a) utilizing an assumed date for the
sale of the Properties of March 31, 1997. This model shall govern the
determination of the Consideration and shall be utilized by the parties as a
methodology for performing the calculation set forth in Section 1.2(a); any
ambiguity in the provisions set forth in Section 1.2(a) shall be resolved by
Ernst & Young LLP (or, if Ernst & Young LLP shall not be available, such other
accounting firm of nationally recognized standing as shall be chosen by the
Operating Partnership and Contributor within two business days after receipt of
notice of such unavailability) by reference to such model.
(d) The Consideration shall be paid to the Contributor in the form of a
combination of (i) cash, (ii) shares of Common Stock and (iii) OP Units in the
percentages set forth in a written notice from the Contributor to the Operating
Partnership and the Company that must be received on or before April 29, 1997.
In the event no timely election is made, Contributor will receive the
Consideration in the following proportion: 50% in cash and 50% through the
issuance of Common Stock. In the event Contributor elects to receive all or a
portion of the Consideration in respect of its contribution of Property
Interests in shares of Common Stock, Contributor shall transfer to the Company
an undivided percentage interest in the Property Interests that corresponds to
the percentage of the Consideration that will be paid in shares of Common Stock.
The balance of the Property Interests shall be contributed to the Operating
Partnership.
(e) For purposes of this Agreement, each share of Common Stock and each
OP Unit shall be valued based on the mid-point of the price range (the
"MID-POINT PURCHASE PRICE") per share of Common Stock set forth in the
Preliminary Prospectus (as defined below). For purposes of this Agreement, the
term "PRELIMINARY PROSPECTUS" means the last preliminary prospectus of the
Company circulated to investors in connection with the IPO, or any subsequent
preliminary prospectus which is included in a subsequent amendment to the
Company's Registration Statement on Form S-11 which is declared effective by the
Securities and Exchange Commission. It is the intention of the parties that the
definition shall mean that preliminary prospectus in which REIT Sponsor equity
is last determined. For purposes of this Agreement, the term "REIT SPONSORS"
shall mean ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, including their direct or indirect interests
in any affiliates controlled by any of them.
1.3 Adjustments Relating to the Allocation of the Consideration. (a) In
the event Contributor elects to receive more than fifty percent (50%) of the
Consideration in the form of OP Units and/or shares of Common Stock, then the
number of OP Units or shares of Common Stock to be received by Contributor (as
designated by Contributor) shall be increased based upon the following:
IP x C x 0.5 x 0.07 x 1
--
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MP
where: IP = the difference between (1) the aggregate percentage
of the Consideration that Contributor elects to
receive in the form of OP Units and shares of Common
Stock and (2) 50% (expressed as a decimal fraction);
C = the amount of the Consideration (without regard to
any adjustments made pursuant to this Section 1.3 or
Section 1.5); and
MP = the Mid-Point Purchase Price.
For example, if (i) Contributor elects to receive 70% of the Consideration in
the form of OP Units and shares of Common Stock, (ii) the amount of the
Consideration is $132,500,000, and (iii) the Mid-Point Purchase Price is $25,
then the aggregate number of OP Units or shares of Common Stock to be received
by Contributor shall be increased by 37,100.
(b) In the event Contributor elects to receive less than fifty percent
(50%) of the Consideration in the form of OP Units and/or shares of Common
Stock, then the cash portion of the Consideration shall be reduced by an amount
determined as follows:
IP x C x 0.5 x 0.07
where: IP = the difference between (1) the aggregate percentage
of the Consideration that Contributor elects to
receive in cash and (2) 50% (expressed as a decimal
fraction); and
C = the amount of the Consideration (without regard to
any adjustments made pursuant to this Section 1.3 or
Section 1.5).
For example, if (i) Contributor elects to receive 70% of the Consideration in
the form of cash, and (ii) the amount of the Consideration is $132,500,000, then
the cash portion of the Consideration shall be reduced by $927,500.
(c) The adjustments to the Consideration set forth in Section 1.3(a)
and (b) shall be made after the calculation of the Consideration pursuant to
Section 1.2(a), and without further recomputation pursuant to Section 1.2(a).
(d) Notwithstanding the foregoing provisions of this Section 1.3, in
the event that adjustments to the Consideration are required to be made as a
result of a violation or potential violation of the limitation on ownership
contained in clause (1) of the legend contained in Section 3.7(b) hereof, such
adjustment to the Consideration shall not be deemed to have been made at the
election of Contributor, and no further adjustment shall be made pursuant to
Section 1.3(b) hereof.
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1.4 Deferred Management Fee and Amendments to Management Agreements. In
addition to Contributor's foregoing obligations, (a) Contributor shall pay to
the ▇▇▇▇▇▇▇ Partners (as defined in the Partnership Agreement) at Closing an
amount equal to any management fees deferred pursuant to certain restrictions
set forth in the GECC Documents (as defined in the Partnership Agreement), as
amended, for the period from and after December 13, 1996 and (b) Contributor
and/or its affiliates, as the case may be, shall at the Closing agree to amend
each of the Management Agreements (as defined below) to provide that the
Management Agreements shall not be terminated during the period commencing on
the Closing Date and ending on the second anniversary of the Closing Date unless
either (i) Contributor or its affiliates pays to Tower Equities Management,
Inc., a Delaware corporation and the management affiliate of the Company and the
Operating Partnership ("TEMI"), the applicable management company the
Cancellation Payment (as hereinafter defined) prior to such cancellation or (ii)
such cancellation is made either (1) pursuant to Sections 7(a)(i), (ii), (iv),
(v), (vi) or (vii) or 7(b) of the Mountainside Agreement or pursuant Section
7(a)(ii), (iii), (v), (vi), (vii) or (viii) or 7(b) of the Lakeside Agreement or
the Warner Agreement, as the case may be, or (2) upon an Uncured Default Event
(as defined below) or (3) because TEMI fails to be the exclusive property
manager of all of the ▇▇▇▇▇▇▇▇▇▇ Fountain, Union Crossing and Cobblestone Plaza
properties (collectively, the "MANAGEMENT AGREEMENT AMENDMENTS"). As used
herein, the phrase "CANCELLATION PAYMENT" shall mean a payment equal to the
number derived by multiplying (A) the average management fee paid during the
twelve consecutive (12) months immediately preceding the effective date of such
cancellation by (B) a fraction the a numerator of which equals the number of
months from the effective date of such cancellation through the second
anniversary of the date hereof and (y) a denominator equal to twelve (12). As
used herein, the term "MANAGEMENT AGREEMENTS" means, collectively, that certain
Property Management Agreement dated as of January __, 1995 between Mountainside
Plaza Associates, Limited Partnership and Tower Equities of Arizona, L.L.C.
("TEA") (the "MOUNTAINSIDE AGREEMENT"); that certain Property Management
Agreement dated as of May 12, 1995 between Lakeside Plaza Associates, Limited
Partnership and TEA (the "LAKESIDE AGREEMENT"); and that certain Property
Management Agreement dated as of May 12, 1995 between Warner Ranch Associates,
Limited Partnership and TEA (the "WARNER AGREEMENT"). As used herein, the term
"UNCURED DEFAULT EVENT" means the occurrence of two Uncured Defaults (as defined
below) which occur during any 60-day period provided that the corresponding
notices of default are not less than 30 days apart or the occurrence of three
Uncured Defaults which occur during any 12 consecutive month period. As used
herein, an "UNCURED DEFAULT" means one particular, specifically identified
obligation of the manager under the respective Management Agreement that is
breached and is not cured within ten days' written notice thereof, provided,
however, that such ten-day cure period shall be extended one day for each day of
delay attributable to the events described in Section 7(d) of that certain
Property Management Agreement dated as of December 10, 1996 between East
Broadway 5151 Limited Partnership and TEA. At the Closing, Contributor shall, or
shall cause its affiliates to, enter into amended and restated Management
Agreements with TEMI that reflect the current terms of such agreements as
modified as set forth above.
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1.5 Additional Consideration. In the event (a) the Closing occurs on or
before September 13, 1997 and (b) the product of (i) the Mid-Point Purchase
Price and (ii) the aggregate number of shares of Common Stock and OP Units
issued or to be issued to the REIT Sponsors (but specifically excluding any
shares of Common Stock or OP Units issued or to be issued to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Asset Management Inc. or any entity advised thereby) as of the Closing of the
IPO, exceeds $20,000,000, then Contributor shall receive the following number of
additional shares of Common Stock or OP Units (determined as a percentage to be
designated by Contributor prior April 29, 1997, and as computed by ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, Incorporated):
0.072207 x {REIT Sponsor Equity - [(FFO(n)/(FFO(t)) x
REIT Sponsor Equity] - $20,000,000},
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Mid-Point Purchase Price
where REIT Sponsor Equity = The aggregate number of shares
of Common Stock and OP Units
issued or to be issued to the
REIT Sponsors, times the
Mid-Point Purchase Price.
FFO(n) = Estimated 1997 funds from operations
relating to any properties (the "NEW
PROPERTIES") directly or indirectly
acquired or to be acquired as of the
Closing Date by the Company, other
than properties set forth on Exhibit
H hereto. Funds from operations for
the New Properties shall be equal to
NOI for the New Properties, minus
the debt service allocable to the
New Properties. The debt service
allocable to the New Properties
shall be equal to the amount of
principal and interest payments on
all indebtedness for money borrowed
of the Company on a consolidated
basis, times the NOI for the New
Properties, divided by the NOI for
all properties directly or
indirectly owned by the Company.
FFO(t) = Estimated 1997 funds from
operations relating to all
properties directly or
indirectly owned or to be
owned as of the Closing Date
by the Company. Funds from
operations shall be equal to
NOI for all such properties,
minus the Company's debt
service. The Company's debt
service shall be equal to the
amount of principal and
interest payments on all
indebtedness for money
borrowed of the Company on a
consolidated basis.
NOI = The net cash flow (determined
after giving effect to the
"straight lining" of rents
over applicable rental
periods) after operating
expenses for the applicable
properties.
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1.6 Contribution of Certain Rights. Except as provided in Section
5.10(a), effective upon the Closing, Contributor hereby contributes to the
Operating Partnership all of its rights and interests, if any, including rights
to indemnification in favor of Contributor, if any, under the agreements
pursuant to which Contributor or its affiliates initially acquired the Property
Interests transferred pursuant to this Agreement.
1.7 Payment of Debt. Effective upon the Closing, the Operating
Partnership shall pay off any and all outstanding debt encumbering the
Properties, including, without limitation, the GECC Loan, in accordance with a
pay-off letter to be obtained from the lender prior to the Closing and certified
by an officer of such lender.
1.8 Treatment as Contribution. The transfer, assignment and exchange of
interests effectuated with respect to the Operating Partnership, pursuant to
this Agreement, shall constitute a "CAPITAL CONTRIBUTION" pursuant to Article 4
of the OP Agreement and is intended to be governed by Section 721(a) of the
Internal Revenue Code of 1986, as amended (the "CODE"). The transfer, assignment
and exchange of interests effectuated with respect to the Company pursuant to
this Agreement is intended to be governed by Section 351 of the Internal Revenue
Code of 1986, as amended (the "CODE").
1.9 Additional Documents. At the Closing of the IPO, Contributor shall
enter into with the Operating Partnership, the Company or the underwriters for
the IPO (as the case may be) an exchange rights agreement, a registration rights
agreement and a lock-up agreement, substantially in the same form as those
attached hereto as EXHIBITS E, F and G, respectively.
1.10 Appointment of Observer. Effective on and for each year after the
IPO, until the aggregate number of OP Units and shares of Common Stock held by
Contributor and DRA Opportunity Fund, is less than 50% of the number of OP Units
and shares of Common Stock held by Contributor and DRA Opportunity Fund
immediately following the IPO, the Company, on behalf of itself and the
Operating Partnership, will afford one person selected by DD Investment
Partners, L.P. ("DDI") and DRA Opportunity Fund full Board observation rights,
including (i) full and timely notice of all meetings of the Board of Directors
and each of its committees, (ii) copies of all written and other materials
disseminated to members of the Board or its committees, (iii) the right to
attend in person or by telephone all meetings of the Board or its committees,
(iv) the right to receive all reports concerning the business and financing of
the Company and the Operating Partnership that are prepared or otherwise
provided to the Company and the Operating Partnership, (v) the right to consult
at least once per calendar quarter, if requested by DDI, with the management
personnel of the Company concerning the finances and operations of the Company
and the Operating Partnership and (vi) the right to receive in advance written
notice from the Company of any acquisition or divestiture by the Company or the
Operating Partnership (subject to the requirements of applicable securities
laws).
1.11 Option to Purchase Property Interests for Increased Price;
Termination of Agreement. (a) At any time after the date hereof and on or prior
to December 13, 1997, in
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connection with the formation of a private real estate investment trust by the
Company (a "PRIVATE REIT"), upon ten business days notice to Contributor, the
Company and the Operating Partnership shall have the right to purchase the
Property Interests and to pay to Contributor in cash the amount (the "PRIVATE
REIT CONSIDERATION") that Contributor would receive under the Partnership
Agreement if:
(i) the Partnership were to sell all of the Properties, free and
clear of all liens, mortgages and other encumbrances, for $138,000,000,
minus the outstanding principal amount of the GECC Loan as of the
Closing Date; and
(ii) the Partnership were to dissolve and distribute the proceeds
of the sale referred to in clause (i) above (in accordance with the
procedures and priorities stated in Articles 8, 9 and 11 of of the
Partnership Agreement) to be calculated as of, and assuming such sale
was effective as of, the the closing date for such Private REIT (the
"PRIVATE REIT CLOSING DATE"), taking into account disposition costs and
other similar costs (excluding real estate brokerage commissions)
associated with such liquidation, as follows:
(A) the actual cost of any transfer taxes, documentary stamps
and other closing costs which are normally payable by a seller in the
relevant market, as more particularly described on EXHIBIT C attached
hereto and made a part hereof,
(B) the actual cost, if any, of Funding Losses due under
Section 2.8 of the GECC Documents as a result of the prepayment of the
GECC Loan at the time of the Closing, but only if such costs are
actually incurred in connection with the formation of the Private REIT,
(C) the amount referred to in Section 1.12 hereof, as
increased to $1,060,000, and
(D) if actually paid, the lesser of (x) the actual amount of
any prepayment penalty (other than Funding Losses) under the GECC
Documents, and (y) $437,500.
(b) In the event the Company and the Operating Partnership exercise the
option set forth in Section 1.11(a), then (i) the obligation to make any payment
in respect of the Consideration or issue any shares of Common Stock or OP Units
pursuant to Section 1.2 hereof or any other provision of this Agreement and the
obligations under Sections 1.3 and 1.10 hereof shall terminate, and shall be of
no further force and effect and (ii) Contributor and the Operating Partnership
shall make or cause to be made the apportionments and allocations set forth in
Section 1.2(b) hereof.
1.12 Management Fee. On the Closing Date, the Operating Partnership
will cause the Partnership to pay to Contributor or its designee (the "MANAGER")
referred to in Section 5.2(b) of the Partnership Agreement, $560,000 in cash, in
complete satisfaction of all additional amounts (the "ASSET MANAGEMENT FEE")
payable to Contributor or the Manager pursuant to such Section
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5.2(b), provided, however, that in the event the Company and the Operating
Partnership shall exercise the option set forth in Section 1.11 hereof, such
amount shall be increased to $1,060,000. Such payment shall be made to the party
that is actually receiving the Asset Management Fee immediately prior to the
Closing Date. At the Closing, Contributor and the Manager shall execute a
release, in form and substance reasonably satisfactory to the Operating
Partnership and the Company, that forever releases the Operating Partnership,
the Company, the Partnership, any future owner of the Properties or any of their
respective partners, members, officers, directors, stockholders and agents from
the obligation to pay the Asset Management Fee.
1.13 REIT Election. The ▇▇▇▇▇▇▇ Partners (as defined in the Partnership
Agreement) may not make another REIT Election (as defined in the Partnership
Agreement) prior to the third (3rd) anniversary of the earlier to occur of (a)
the December 13, 1997 and (b) the date upon which the ▇▇▇▇▇▇▇ Partners sent
written notice to the Contributor of the abandonment of the IPO.
ARTICLE II
CLOSING
2.1 Conditions Precedent. (a) The obligation of the parties to
consummate the transactions contemplated hereby, other than those set forth in
Section 1.11 hereof, are subject to the IPO Closing, including, without
limitation, the requirement that at or prior to Closing the ▇▇▇▇▇▇▇ Partners
shall have transferred their Partnership Interests in the Partnership to the
Company or Operating Partnership in connection with the IPO. If the Company and
the Operating Partnership are unable to consummate the IPO Closing on or before
December 13, 1997, this Agreement shall terminate and be of no force and effect,
the parties hereto shall be relieved of any obligations hereunder.
(b) The obligation of the Company and the Operating Partnership to
consummate the transactions contemplated hereby shall be subject to the
following additional conditions:
(i) the representations and warranties of Contributor contained in this
Agreement shall have been true and correct in all material respects on
the date such representations and warranties were made, and shall be
true and correct in all material respects on the Closing Date as if made
at and as of such date; provided, however, that in the event that the
Closing relates to the transactions set forth in Section 1.11 hereof,
the representations and warranties set forth in Sections 3.6 and 3.7
hereof need not be true and correct;
(ii) each of the obligations of Contributor to be performed by it shall
have been duly performed by it on or before the Closing Date;
(iii) the Company and the Operating Partnership shall have received a
certificate of a member of Contributor certifying as to clauses (i) and
(ii) above;
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(iv) concurrently with the Closing, Contributor shall have executed and
delivered to the Operating Partnership the documents required to be
delivered pursuant to Section 2.3 hereof;
(v) Contributor shall have obtained all necessary consents or approvals
of governmental authorities or third parties to the consummation of the
transactions contemplated hereby;
(vi) no order, statute, rule, regulation, executive order, injunction,
stay, decree or restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or
governmental or regulatory authority or instrumentality that prohibits
the consummation of the transactions contemplated hereby, and no
litigation or governmental proceeding seeking such an order shall be
pending or threatened; and
(vii) there shall not have occurred between the date hereof
and the Closing Date any material adverse change in the Partnership's
businesses.
The foregoing conditions may be waived by the Company and the
Operating Partnership in their sole and absolute discretion.
(c) The obligation of Contributor to consummate the transactions
contemplated hereby shall be subject to the following additional conditions:
(i) the representations and warranties of the Company and the
Operating Partnership contained in this Agreement shall have been true
and correct in all material respects on the date such representations
and warranties were made, and shall be true and correct in all material
respects on the Closing Date as if made at and as of such date;
(ii) each of the obligations of the Company and the Operating
Partnership to be performed by either of them shall have been duly
performed by it on or before the Closing Date;
(iii) Contributor shall have received a certificate of an
executive officer of the Company certifying as to clauses (i) and (ii)
above;
(iv) concurrently with the Closing, the Company and the
Operating Partnership shall have executed and delivered to the
Operating Partnership the documents required to be delivered by them
pursuant to Section 2.3 hereof;
(v) the Company and the Operating Partnership shall have
obtained all necessary consents or approvals of governmental
authorities or third parties to the consummation of the transactions
contemplated hereby;
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(vi) no order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order shall have been enacted,
entered, promulgated or enforced by any court of competent jurisdiction
or governmental or regulatory authority or instrumentality that
prohibits the consummation of the transactions contemplated hereby, and
no litigation or governmental proceeding seeking such an order shall be
pending or threatened;
(vii) there shall not have occurred between the date hereof
and the Closing Date any material adverse change in the businesses
(other than the Partnership's business) proposed to be acquired and
operated by the Operating Partnership following the IPO or the
formation of the Private REIT, as applicable
(viii) Contributor shall have received the Consideration or
the Private REIT Consideration, as applicable;
(ix) the GECC Loan shall have been repaid from the proceeds of
the IPO or the formation of the Private REIT, or provision shall have
been made for such repayment promptly after the Closing; and
(x) the Closing shall have occurred under the Contribution
Agreement dated as of the date hereof among the Company, the Operating
Partnership and DRA Opportunity Fund.
The foregoing conditions may be waived by Contributor in its
sole and absolute discretion.
2.2 Time and Place. The date, time and place of the transactions
contemplated hereunder shall be the day of the IPO Closing or the formation of
the Private REIT, as the case may be, at 10:00 a.m. in the office of Battle
▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "CLOSING" or
"CLOSING DATE"). The transfers described in Article I hereof and all closing
deliveries shall be deemed concurrent for all purposes and shall occur
immediately after the closing of the IPO.
2.3 Closing Deliveries. At the Closing, the parties shall make,
execute, acknowledge and deliver, or cause to be made, executed, acknowledged
and delivered, the legal documents and other items (collectively, the "CLOSING
DOCUMENTS") necessary to carry out the intention of this Agreement, which
Closing Documents and other items shall include, without limitation, the
following:
(a) a Contribution and Assumption Agreement in substantially
the form of EXHIBIT B attached hereto and made a part hereof;
(b) the Amendment evidencing the transfer of OP Units to
Contributor;
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(c) the Management Agreement Amendments;
(d) an Exchange Rights Agreement in substantially the form of
EXHIBIT E attached hereto and made a part hereof;
(e) a Registration Rights Agreement in substantially the form
of EXHIBIT F attached hereto and made a part hereof;
(f) a Lock-Up Agreement in substantially the form of EXHIBIT G
attached hereto and made a part hereof;
(g) the Partnership's books and records and securities or
other evidences of ownership held by Contributor, provided, however, that
Contributor shall continue to have reasonable access to inspect the same from
time to time;
(h) an affidavit from Contributor, stating under penalty of
perjury Contributor's United States taxpayer identification number and that
Contributor is not a foreign person pursuant to section 1445(b)(2) of the Code
and a comparable affidavit satisfying any other withholding requirements;
(i) (i) a member's certificate from Contributor certifying as
to Contributor's organizational documents and resolutions or other
actions authorizing the consummation of the transactions contemplated
hereby; and
(ii) a secretary's certificate from the Company certifying
as to the organizational documents of the Company and the Operating
Partnership and resolutions or other actions authorizing the
consummation by them of the transactions contemplated hereby;
(j) resignations of Contributor's affiliates, designees and
employees who are officers and directors of the subsidiary entities of the
Partnership immediately prior to the Closing;
(k) the release referred to in Section 1.12; and
(l) customary opinions of counsel relating to the
organization and good standing of Contributor, on the one hand, and the Company
and the Operating Partnership, on the other, authorization of the transactions
contemplated hereby, due execution, delivery and enforceability of this
Agreement and such other matters as shall be reasonably requested by the party
or parties receiving such opinion.
Notwithstanding the foregoing, in the event of a Closing
resulting from the exercise of the option set forth in Section 1.11 hereof,
Contributor shall not be required to deliver the documents set forth in Section
2.3(d), (e) and (f) above.
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2.4 Closing Costs. The Operating Partnership shall pay any documentary
transfer taxes, escrow charges, title charges and recording taxes or fees
incurred in connection with the transactions contemplated hereby
(notwithstanding the allocation of such expenses as provided in connection with
the calculation of the Consideration).
2.5 Good Faith Efforts. Each of the parties hereto agrees to proceed in
good faith to facilitate the IPO. The Company has and agrees to continue to
diligently pursue the IPO until the earlier to occur of (i) December 13, 1997,
and (ii) the date upon which the Company sends written notice to Contributor
that it reasonably believes that the IPO cannot be completed by December 13,
1997 (a "REIT TERMINATION NOTICE"). The Company shall provide Contributor with
monthly progress reports in writing with respect to the IPO.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CONTRIBUTOR
As a material inducement to the Company and the Operating Partnership
to enter into this Agreement and to consummate the transactions contemplated
hereby, Contributor hereby makes to the Company and the Operating Partnership,
with respect to the Property Interests, each of the representations and
warranties set forth in this Article III, which representations and warranties
(unless otherwise noted) are true as of the date hereof. As a condition to the
Operating Partnership's obligation to consummate the contribution of
Contributor's Property Interests to the capital of the Operating Partnership,
such representations and warranties must be true as of the Closing Date.
3.1 Title to Interests.
(a) Contributor owns beneficially and of record, free and
clear of any claim, lien, pledge, voting agreement, option, charge, security
interest, mortgage, deed of trust, encumbrance, right of assignment, purchase
right or other rights of any nature whatsoever (except for any of the foregoing
given in respect of the mortgage indebtedness encumbering the Properties or
arising under the Partnership Agreement (any of the foregoing, a "PERMITTED
PLEDGE")) (each, an "ENCUMBRANCE"), and has full power and authority to convey
free and clear of any Encumbrances, its Property Interests and, upon delivery of
a Contribution and Assumption Agreement by Contributor conveying its Property
Interests and delivery of the Consideration by the Company and the Operating
Partnership for such Property Interests as herein provided, the Company and the
Operating Partnership will acquire, as a contribution to its capital, good and
valid title to the Property Interests, free and clear of any Encumbrance, except
Encumbrances created in favor of the Company or the Operating Partnership by the
transactions contemplated hereby.
(b) Contributor will fund before the same is past due all
capital contributions and advances to the Partnership that are required to be
funded or advanced prior to the Closing.
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(c) In making the representations in this Section 3.1
regarding the absence of Encumbrances, Contributor may assume that all consents
and waivers of rights required to be received under the Partnership Agreement
have been given by all other partners or members of the Partnership, as the case
may be.
3.2 Organization; Authority; No Conflicts.
(a) Contributor is a limited liability company duly organized,
validly existing and in good standing under the laws of the state of its
organization.
(b) Contributor has full right, authority, power and capacity:
(i) to execute and deliver this Agreement, each Closing
Document and each other agreement, document and instrument to be
executed and delivered by or on behalf of Contributor pursuant to this
Agreement;
(ii) to perform the transactions contemplated hereby and
thereby; and
(iii) to transfer, assign, convey and deliver the
Property Interests to the Company and the Operating Partnership in accordance
with this Agreement.
(c) (i) All applicable corporate, partnership, limited
liability company, trust or other action necessary for such Contributor
to execute and deliver this Agreement, the Closing Documents and each
other agreement, document and instrument executed by or on behalf of
Contributor pursuant to this Agreement, and to perform the transactions
contemplated hereby and thereby, has been taken, or will be taken prior
to the Closing Date.
(ii) Except for any that have been obtained, no approval,
authorization or consent of the shareholders, limited partners, members
(other than a managing member) or beneficiaries of Contributor is or
was required for the execution, delivery and performance described in
paragraph (c)(i) above.
(d) This Agreement, each Closing Document and each other
agreement, document and instrument executed and delivered by or on behalf of
Contributor pursuant to this Agreement constitute, or when executed and
delivered will constitute, the legal, valid and binding obligation of
Contributor, each enforceable in accordance with its respective terms, subject,
however, as to enforceability to applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, and other similar laws of general applicability and to
general principles of equity (whether interpreted in a proceeding at law or in
equity).
(e) Except for any breaches, violations or defaults which will
be waived or cured, or discharged or repaid prior to or contemporaneously with
the Closing, the execution,
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delivery and performance of this Agreement, the Closing Documents and each other
agreement, document and instrument to be executed and delivered by or on behalf
of such Contributor:
(i) does not and will not violate Contributor's partnership
agreement or operating agreement, as applicable;
(ii) does not and will not violate any foreign, federal,
state, local or other laws applicable to Contributor or require
Contributor to obtain any approval, consent or waiver of, or make any
filing with, any person or authority (governmental or otherwise) that
has not been obtained or made and which does not remain in effect; and
(iii) does not and will not result in a breach or a violation
of, constitute a default under, accelerate any obligation under or give
rise to a right of termination of, any indenture, deed of trust,
mortgage, loan or credit agreement or any other agreement, contract,
instrument, lease, permit, authorization, order, writ, judgment,
injunction, decree, determination or arbitration award to which
Contributor is a party or by which the property of Contributor is bound
or affected, or result in the creation of any Encumbrance on any of the
property or assets of the Partnership.
(f) In making the representations set forth in this Section
3.2, Contributor may assume
(i) that all consents and waivers of rights required to be
received under the Partnership Agreement have been given by all other
partners or members of the Partnership, as the case may be;
(ii) that, for purposes of making such representation as of
the date hereof, any Permitted Pledge has been released; and
(iii) that GECC has given all necessary consents and
approvals.
3.3 Litigation.
(a) Contributor knows of no litigation or proceeding, whether
judicial, administrative or arbitral, pending or overtly threatened, affecting
all or any portion of Contributor's Property Interests (other than litigation or
proceedings with respect to the Properties) or Contributor's ability to
consummate the transactions contemplated hereby.
(b) Contributor knows of no outstanding order, writ,
injunction or decree of any court, government, governmental entity or authority
or arbitration against or affecting all or any portion of its Property Interests
which would impair such Contributor's ability to enter into and perform all of
its obligations under this Agreement.
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3.4 No Other Agreements.
(a) Except as set forth in the Partnership Agreement and this
Agreement, Contributor has made no agreement with, and will not enter into any
agreement with, and has no obligation (absolute or contingent) to, any other
person or entity to sell, transfer, dispose of or in any way encumber any of
Contributor's Property Interests or restricting in any way Contributor's ability
to contribute Contributor's Property Interests to the capital of the Company or
the Operating Partnership or to enter into any agreement with respect to
Contributor's Property Interests.
(b) In making the representations set forth in this Section
3.4, Contributor may assume
(i) that all consents and waivers required under the
Partnership Agreement have been given by all other partners or members
of the Partnership, as the case may be;
(ii) that, for purposes of making such representations as of
the date hereof, any Permitted Pledge has been released; and
(iii) that GECC has given all necessary consents and
approvals.
3.5 No Brokers. Contributor has not entered into, and covenants
that it will not enter into, any agreement, arrangement or understanding with
any person or entity which will result in the obligation of the Operating
Partnership to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
3.6 Investment Representations and Warranties.
(a) Contributor understands that an investment in the Company
or the Operating Partnership involves substantial risks and is capable of
bearing the economic risk of its investment in Common Stock or OP Units
(b) Contributor is an Accredited Investor.
(c) Contributor has not retained a person that is not employed
by Contributor to represent or advise it with respect to its investment
hereunder.
(d) Contributor has been given the opportunity to make a
thorough investigation of the proposed activities of the Company and the
Operating Partnership.
(e) Contributor has been afforded the opportunity to obtain
any additional information requested by it.
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(f) Contributor has had an opportunity to ask questions of and
receive answers from representatives of the Company and the Operating
Partnership concerning the Company and the Operating Partnership and their
respective proposed activities and the terms and conditions of an investment in
Common Stock or OP Units.
(g) The Common Stock and OP Units to be issued to Contributor
will be acquired by Contributor for its own account, for investment only and not
with a view to, or with any intention of, a distribution or resale thereof, in
whole or in part, or the grant of any participation therein.
(h) Contributor was not formed for the specific purpose of
acquiring an interest in the Company or the Operating Partnership.
(i) Contributor acknowledges that:
(i) the Common Stock or OP Units to be issued to such
Contributor at the Closing have not been registered under the
Securities Act or state securities laws by reason of a specific
exemption or exemptions from registration under the Securities Act and
applicable state securities laws, and any shares of Common Stock or OP
Units that are represented by certificates will bear the legend set
forth in Section 3.7,
(ii) the Company's and the Operating Partnership's
reliance on such exemptions is predicated in part on the accuracy and
completeness of the representations and warranties of such Contributor
contained herein,
(iii) the Common Stock or OP Units to be issued to
Contributor at the Closing may not be resold or otherwise distributed
unless registered under the Securities Act and applicable state
securities laws, or unless an exemption from registration is available,
(iv) there is no public market for the OP Units, and
(v) except as set forth in the Registration Rights
Agreement, the Company and the Operating Partnership has no obligation
or intention to register the shares of Common Stock or OP Units to be
issued to Contributor pursuant to this Agreement under the Securities
Act or any state securities laws or to take any action that would make
available any exemption from the registration requirements of such
laws.
(j) Contributor hereby acknowledges that because of the
restrictions on transfer or assignment of the Common Stock and OP Units to be
issued hereunder, which will be set forth in the OP Agreement and in the lock-up
agreement referred to in Section 1.9, Contributor may have to bear the economic
risk of the investment commitment evidenced by this Agreement and any shares of
Common Stock or OP Units issued hereunder for an indefinite period of time.
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(k) The address previously provided by Contributor to the
Operating Partnership is the address of Contributor's principal place of
business, and Contributor has no present intention of becoming a resident of any
country, state or jurisdiction other than the country and state in which such
principal place of business is situated.
3.7 Legends. (a) Contributor acknowledges that each certificate, if
any, representing the OP Units (and any shares of Common Stock that might be
exchanged therefor) and each certificate representing shares of Common Stock
shall bear the following legend:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO
THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
(b) Contributor also acknowledges that each certificate
representing shares of Common Stock (including shares for which the OP Units
might be exchanged) shall also bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE
OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS
EXPRESSLY PROVIDED IN THE CORPORATION'S CHARTER, (1) NO PERSON MAY
BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION'S
COMMON STOCK IN EXCESS OF 9.80% (BY VALUE OR BY NUMBER OF SHARES,
WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING COMMON STOCK OF THE
CORPORATION; (2) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN
COMMON STOCK THAT WOULD RESULT IN THE CORPORATION BEING "CLOSELY HELD"
UNDER SECTION 856(H) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO
FAIL TO QUALIFY AS A REIT; AND (3) NO PERSON MAY TRANSFER COMMON STOCK
IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION
BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR
CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN
COMMON STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR
CONSTRUCTIVELY OWN COMMON STOCK
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IN EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE
CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE
VIOLATED, THE COMMON STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY
TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE
CHARITABLE BENEFICIARIES. IN ADDITION, THE CORPORATION MAY REDEEM
SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF
DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES
THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE
RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF
CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS
DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL TERMS IN THIS LEGEND THAT
HAVE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS THE SAME
MAY BE AMENDED FROM TIME TO TIME, SHALL HAVE THE MEANINGS THEREIN
DEFINED. A COPY OF SUCH CHARTER, INCLUDING THE RESTRICTIONS ON TRANSFER
AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF COMMON STOCK ON
REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO
THE SECRETARY OF THE CORPORATION.
3.8 Covenant to Remedy Breaches. So long as this Agreement is in
effect, but in no event subsequent to the Closing Date, Contributor covenants to
use all reasonable efforts within its control:
(a) to prevent the breach of any representation or warranty of
Contributor hereunder;
(b) to satisfy all covenants of Contributor hereunder; and
(c) to clear promptly any breach of a representation, warranty
or covenant of Contributor hereunder upon its learning of same.
3.9 Actions Prior to Closing. Between the date hereof and the
Closing Date, Contributor shall not:
(a) sell or transfer all or any portion of any Property
Interest; or
(b) mortgage, pledge or encumber (or permit to become
encumbered) all or any portion of any Property Interest.
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27
3.10 Certain ERISA Matters. Contributor is neither an "employee
benefit plan" within the meaning of Section 3(3) of ERISA (a "PLAN") nor an
entity whose assets include, or will include immediately following the
consummation of the transactions contemplated hereby, the assets of a Plan
pursuant to Section 2510.3-101 of the regulations of the United States
Department of Labor. The execution, delivery and performance of this Agreement,
each Closing Document to which Contributor is a party and each such agreement,
document and instrument by the Contributor will not constitute a non-exempt
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code.
3.11 Principal Purpose. Contributor's principal purpose is other
than to permit the Partnership to satisfy the 100 partner limitation under
Treasury Regulation 1.7704-1(h)(3).
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY AND THE OPERATING PARTNERSHIP
As a material inducement to Contributor to enter into this Agreement
and to consummate the transactions contemplated hereby, the Company and the
Operating Partnership hereby make to Contributor each of the representations and
warranties set forth in this Article IV, which representations and warranties
are true as of the date hereof and shall be true as of the Closing Date.
4.1 Authority.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland, and the
Operating Partnership is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) Each of the Company and the Operating Partnership has full
right, authority, power and capacity:
(i) to execute and deliver this Agreement, each Closing
Document to which it is a party and each other agreement, document and
instrument to be executed and delivered by or on behalf of it pursuant
to this Agreement;
(ii) to perform the transactions contemplated hereby
and thereby; and
(iii) to issue shares of Common Stock and OP Units, as
applicable, to each Contributor pursuant to and in accordance with the
terms of this Agreement.
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(c) This Agreement, each Closing Document to which the Company
or the Operating Partnership is a party and each agreement, document and
instrument executed and delivered by the Company or the Operating Partnership
pursuant to this Agreement constitutes, or when executed and delivered will
constitute, the legal, valid and binding obligation of the Company or the
Operating Partnership party thereto, each enforceable in accordance with its
respective terms, subject, however, as to enforceability to applicable
bankruptcy, insolvency, moratorium, fraudulent conveyance, and other similar
laws of general applicability and to general principles of equity (whether
interpreted in a proceeding at law or in equity).
(d) The execution, delivery and performance of this Agreement,
each Closing Document to which the Company or the Operating Partnership is a
party and each such agreement, document and instrument by the Company or the
Operating Partnership:
(i) in the case of the Operating Partnership, does not
and will not violate the OP Agreement;
(ii) does not and will not violate any foreign,
federal, state, local or other laws applicable to the Company or the
Operating Partnership, as the case may be, or require the Company or
the Operating Partnership to obtain any approval, consent or waiver of,
or make any filing with, any person or authority (governmental or
otherwise) that has not been obtained or made and which does not remain
in effect; and
(iii) does not and will not result in a breach or a
violation of, constitute a default under, accelerate any obligation
under or give rise to a right of termination of, any indenture, deed of
trust, mortgage, loan or credit agreement, any other material
agreement, contract, instrument, lease, permit or authorization, or any
order, writ, judgment, injunction, decree, determination or arbitration
award to which the Company or the Operating Partnership is a party or
by which the property of either of them is bound or affected.
4.2 No Brokers. The Company and the Operating Partnership have not
entered into, and covenant that they will not enter into, any agreement,
arrangement or understanding with any person or entity which will result in the
obligation of Contributor to pay any finder's fee, brokerage commission or
similar payment in connection with the transactions contemplated hereby.
4.3 Sale of Property. The Company and the Operating Partnership
agree that, in connection with any sale of any of the Properties within two
years after the Closing Date, the Company and the Operating Partnership will pay
Contributor an amount representing the federal and state income tax liability
associated with the recognition of gain by Contributor in connection with such
sale (the "MAKE-WHOLE AMOUNT"). No Make-Whole Amount would be due in the case of
a transaction that does not result in the recognition of gain for tax purposes
(such as Section
-25-
29
1031 "like-kind" exchanges under the Code). The provisions of this Section 4.3
shall survive the Closing for a period of two years.
4.4 Allocation of Built-in Gain. Notwithstanding anything to the
contrary contained in the OP Agreement, the Operating Partnership agrees to use
the "traditional method" described in Treasury Regulation 1.704-3(b) in making
allocations to its partners with respect to the Properties under Section 704(c)
of the Internal Revenue Code of 1986, as amended.
4.5 REIT Sponsors. The Company and the Operating Partnership
represent and warrant that the REIT Sponsors constitute all of the employees of
the Company and the Operating Partnership who will receive, directly or
indirectly, OP Units or shares of Common Stock in connection with the IPO,
provided, however, that (a) ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is expected to receive, directly
or indirectly, OP Units and is also expected to be employed by the Company or
the Operating Partnership, and (b) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is expected to receive,
directly or indirectly, OP Units and is also expected to be a director of the
Company.
4.6 Capital Expenditures. Exhibit I attached hereto sets forth the
Partnership's budget of the monthly amount of capital expenditures (excluding
tenant improvements and brokerage fees) and borrowings expected to be made under
the GECC Loan. Between the date hereof and the Closing Date, the Partnership
will have caused to be made aggregate amounts of capital expenditures and
borrowings under the GECC Loan that are less than or equal to the aggregate
amounts of capital expenditures and borrowings, respectively, shown on Exhibit I
for such period.
ARTICLE V
MISCELLANEOUS
5.1 Amendment. This Agreement may only be amended by a written
agreement duly executed by both Contributor and the Operating Partnership. No
waiver of any provision of this Agreement shall be valid unless in writing and
signed by the party against whom enforcement is sought.
5.2 Entire Agreement; Counterparts; Applicable Law. This
Agreement:
(a) notwithstanding any provisions of the OP Agreement to the
contrary, this Agreement constitutes the entire agreement and, to the extent
specifically set forth herein, supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and, specifically, supersedes Sections 13.1(a)-(d) and
(f), 13.2, 13.4, 13.5 and 13.6 (but not Section 13.1(e) or Section 13.3) of the
Partnership Agreement; however, no part of Article 13 of the Partnership
Agreement shall be deemed superseded with respect to any REIT Election (as
defined in the Partnership Agreement) subsequent to the one currently being
exercised in connection with the IPO;
-26-
30
(b) may be executed in several counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
instrument; and
(c) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of New York without giving
effect to the conflicts of law provisions thereof.
5.3 Assignability. This Agreement shall be binding upon, and shall
be enforceable by and inure to the benefit of, the parties hereto and their
respective heirs, legal representatives, successors and assigns, provided,
however, that this Agreement may not be assigned (i) by the Company and the
Operating Partnership without the prior written consent of Contributor, or (ii)
except as permitted herein, by Contributor without the prior written consent of
the Company and the Operating Partnership, and any attempted assignment without
such consent shall be void and of no effect, provided further, however, that the
Company and the Operating Partnership may assign all or any portion of this
Agreement, the Closing Documents and any agreement contemplated hereunder or
thereunder to the Company or to a Controlled Affiliate of the Operating
Partnership or the Company without Contributor's consent. The term "CONTROLLED
AFFILIATE" shall mean an entity the majority of the voting stock of which, or
the general partner or managing member of which, is or is under the control of
and is beneficially owned by the Company, the Operating Partnership or a public
or private real estate investment trust controlled by ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
5.4 Titles. The titles and captions of the Articles, Sections and
paragraphs of this Agreement are included for convenience of reference only and
shall have no effect on the construction or meaning of this Agreement.
5.5 Third Party Beneficiary. No provision of this Agreement is
intended, nor shall it be interpreted, to provide or create any third party
beneficiary right or any other right of any kind in any customer, affiliate,
stockholder, partner, director, officer or employee of any party hereto or any
other person or entity, except as expressly provided herein.
5.6 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as reasonably to
effect the intent of the parties hereto. The parties agree (i) to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision and (ii) to execute any
amendment, consent or agreement deemed necessary or desirable by the Operating
Partnership to effect such replacement.
5.7 Equitable Remedies. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be
-27-
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entitled to an injunction or injunctions to prevent any breach of this Agreement
and to enforce specifically the terms and provisions hereof in any federal or
state court located in the State of New York (as to which the parties agree to
submit to jurisdiction for the purposes of such action), this being in addition
to any other remedy to which they are respectively entitled under this Agreement
or otherwise at law or in equity.
5.8 Notices. Any notice or demand which must or may be given under
this Agreement or by law shall, except as otherwise provided, be in writing and
shall be deemed to have been given (i) when physically received by personal
delivery, (ii) three (3) business days after being deposited in the United
States certified or registered mail, return receipt requested, postage prepaid,
or (iii) one (1) business day after being deposited with a nationally known
commercial courier service utilizing its next day delivery service (such as
Federal Express); addressed and delivered in the case of a notice to the
Operating Partnership to the following address:
Tower Realty Operating Partnership, L.P.
c/o Feldman Equities
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
and addressed and delivered, in the case of a notice to Contributor, to the
address set forth in EXHIBIT A hereto.
5.9 Waiver of Rights; Consents with Respect to Partnership
Interests. From and after the Closing Date,
(a) Contributor acknowledges that the agreements contained
herein and the transactions contemplated hereby and any actions taken in
contemplation of the transactions contemplated hereby (including the declaration
of any dividend or distribution in the form of Property Interests) may conflict
with and may not have been contemplated by the Partnership Agreement or another
agreement among one or more of the partners of the Partnership.
(b) With respect to the Partnership, Contributor expressly
gives all Consents (and any consent necessary to authorize the proper parties in
interest to give such Consents) and Waivers necessary or desirable to facilitate
any Conveyance Action relating to such partnership (as such terms are defined
below).
-28-
32
(c) Contributor agrees that it will take no action to enjoin,
or seek damages resulting from, any Conveyance Action by any holder of a direct
or indirect interest in the Partnership.
(d) The Waivers and Consent contained in this Section 5.9
shall terminate upon the termination of this Agreement, except as to
transactions completed hereunder prior to termination.
(e) As used herein, the term "CONVEYANCE ACTION" means, with
respect to the Partnership,
(i) the conveyance or agreement to convey by a partner
thereof or by any holder of an indirect interest therein (whether or
not such partner or holder is a Contributor hereunder) of its direct or
indirect interest in the Partnership to the Operating Partnership or
the Company or to another person in connection with the formation of
the Operating Partnership or the Company, or
(ii) the entering into by any such partner or holder of any
agreement relating to
(A) the formation of the Operating Partnership or the
Company,
(B) the direct or indirect acquisition by the Operating
Partnership or the Company of any such direct or indirect
interest, or
(C) the transactions described in or contemplated by the
Registration Statement or the prospectus included therein
relating to the IPO, or
(iii) the taking by any such partner or holder of any action
necessary or desirable to facilitate any of the foregoing, including,
without limitation, the following (provided that the same are taken in
furtherance of the foregoing):
(A) any sale or distribution to any person of a direct
or indirect interest in the Partnership or an undivided
tenant-in-common interest in the Property represented by such
partnership interest;
(B) entering into any agreement with any person or
entity that grants to such person or entity the right to
purchase a direct or indirect interest in the Partnership; and
(C) giving the Consents and Waivers contained in this
Section 5.9 or consents or waivers similar thereto in form or
purpose.
-29-
33
(f) As used herein, the term "CONSENTS" means any consent
deemed by the Operating Partnership to be necessary or desirable under the
Partnership Agreement or any other agreement among all or any of the holders of
interests therein or any other agreement relating thereto or referred to
therein:
(i) to permit any and all Conveyance Actions relating to the
Partnership or to amend the Partnership Agreement and/or other
agreements so that no provision thereof prohibits, restricts, impairs
or interferes with any Conveyance Action (such amendment to include,
without limitation, the deletion of provisions which cause a default
under such agreement if interests therein are transferred for other
than cash);
(ii) to admit the Operating Partnership (or the Company or any
affiliate of the Operating Partnership or the Company in accordance
with Section 5.3 above) as a substitute limited partner or general
partner or member of the Partnership, as the case may be, upon the
Operating Partnership's acquisition of a limited or general partner or
membership interest therein, respectively, and to adopt such amendment
as is necessary or desirable to effect such admission;
(iii) to adopt any amendment as may be deemed desirable by the
Company or the Operating Partnership, either simultaneously with or
immediately prior to the acquisition of a limited or general
partnership or membership interest therein, as the case may be,
provided, however, that such amendment shall not result in any
increased liability on the part of any Contributor hereunder or under
the Partnership Agreement; and
(iv) to continue the Partnership following the transfer of
interests therein to the Operating Partnership (or the Company or any
affiliate of the Operating Partnership or the Company in accordance
with Section 5.3 above).
(g) As used herein, the term "WAIVERS" means, with respect to
the Partnership, the waiving of any and all rights that Contributor may have
with respect to, and (to the extent possible) that any other person may have
with respect to, or that may accrue to Contributor or other person upon the
occurrence of, a Conveyance Action relating to such partnership, including,
without limitation, the following rights:
(i) rights of notice;
(ii) rights to response periods;
(iii) rights to purchase the direct or indirect interest of
another partner in the Partnership (or the property interests
represented by such partnership interest) or to sell Contributor's or
other person's direct or indirect interest therein to another partner;
-30-
34
(iv) rights to sell Contributor's or other person's direct or
indirect interest therein at a price other than as provided herein; or
(v) rights to prohibit, limit, invalidate, or otherwise
restrict or impair any such Conveyance Action or to cause a termination
or dissolution of the Partnership because of such Conveyance Action.
5.10 Releases and Waivers. Each of the releases and waivers enumerated
in this Section 5.10 shall become effective at Closing.
(a) As of the Closing, Contributor and the Manager jointly and
severally irrevocably waive, release and forever discharge the Company and the
Operating Partnership and their respective affiliates, partners (including
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇), agents, attorneys, successors and assigns of and from, any
and all charges, complaints, claims, liabilities, damages, actions, causes of
action, losses and costs of any nature whatsoever (collectively, "CONTRIBUTOR
CLAIMS"), known or unknown, suspected or unsuspected, arising out of or relating
to any of the Partnership agreements, this Agreement or any other matter which
exists at the Closing, except for Contributor Claims arising from the breach of
any representation, warranty, covenant or obligation under this Agreement.
Notwithstanding the foregoing, any indemnities, representations or warranties
made by any affiliate or partner of the Company or the Operating Partnership
(including ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇) in the Partnership Agreement or the Contribution
Agreement dated as of December 10, 1996 relating to the Partnership shall
survive as provided in the Partnership Agreement.
(b) As of the Closing, the Company and the Operating
Partnership jointly and severally irrevocably waive, release and forever
discharge Contributor, the Manager and their respective agents, attorneys,
successors and assigns of and from, any and all charges, complaints, claims,
liabilities, damages, actions, causes of action losses and costs of any nature
whatsoever (collectively, "OPERATING PARTNERSHIP CLAIMS"), known or unknown,
suspected or unsuspected, arising out of or relating to any of the Partnership
Agreements, this Agreement or any other matter which exists at the Closing,
except for Operating Partnership Claims arising from the breach of any
representation, warranty, covenant or obligation under this Agreement.
(c) Other than as provided in Section 5.10(a), as of the
Closing, Contributor and the Manager jointly and severally waive and relinquish
all rights and benefits otherwise afforded to Contributor under the Partnership
Agreement including, without limitation, any right to consent to or approve of
the sale or contribution by the other partners or members of the Partnership, as
the case may be, of their partnership interests to the Company or the Operating
Partnership.
5.11 Confidentiality. Contributor shall treat as strictly confidential
the fact that the Company is contemplating an offering of its common stock until
such time as the Company has filed the Registration Statement with the
Securities and Exchange Commission and shall not
-31-
35
communicate at any time the terms of this Agreement to any person other than
counsel or advisors to Contributor who agree to keep such terms confidential and
any lender holding a lien on any Property Interests. Each Contributor shall
treat all information received from the Operating Partnership or its counsel or
advisors pertaining to the Operating Partnership or the Company confidential and
shall disseminate same only to counsel to such Contributor who agree to keep
such information confidential.
5.12 Computation of Time. Any time period provided for herein which
shall end on a Saturday, Sunday or bank or legal holiday shall extend to 5:00
p.m. of the next full business day. All times are New York City time.
5.13 Legal Fees and Expenses. The Company and the Operating
Partnership, on the one hand, and Contributor, on the other, agree that each
side will bear the fees and expenses of its own counsel and counsel to their or
its affiliates relating to or incurred in connection with the negotiation,
execution, delivery and performance of this Agreement and the transactions
contemplated hereby, including, without limitation, the IPO and any financing or
other transactions contemplated or effected by the Company or the Operating
Partnership prior to the Closing.
5.14 Termination. This Agreement shall terminate and the obligations of
the parties hereunder shall be of no further force and effect upon
(a) the mutual consent thereto of the parties hereto;
(b) the failure of the Closing to occur on or prior to December
13, 1997; or
(c) the delivery of a REIT Termination Notice.
5.15 Survival. It is the express intention and agreement of the parties
hereto that the representations, warranties and covenants of the Company and the
Operating Partnership and Contributor set forth in this Agreement shall survive
the consummation of the transactions contemplated hereby.
5.16 Time of the Essence. Time is of the essence with respect to all
obligations of Contributor under this Agreement.
-32-
36
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
COMPANY:
TOWER REALTY TRUST, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
OPERATING PARTNERSHIP:
TOWER REALTY OPERATING PARTNERSHIP,
L.P.
By: Tower Realty Trust, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
CONTRIBUTOR:
OFFICE INVEST SUB LLC
By: DD Investment Partners, L.P., a member
By: General Realty, LLC, its general
partner
By: Manageco, Inc., its managing
member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
-33-
37
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
By: Office Invest Sub Inc., a member
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
WITH RESPECT TO SECTION 1.10 ONLY:
DD INVESTMENT PARTNERS, L.P.,
By: General Realty, LLC, its general partner
By: Manageco, Inc., its managing member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
THE ▇▇▇▇▇▇▇ PARTNERS, WITH RESPECT
TO SECTION 1.13 ONLY:
▇▇▇▇▇▇▇ MOT PORTFOLIO CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
FSA ASSOCIATES, L.P.
By: ▇▇▇▇▇▇▇ FSA Corp, its general partner
-34-
38
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
-35-
39
EXHIBIT A
TO
CONTRIBUTION AGREEMENT
PARTNERSHIP AND INTERESTS
Partnership
D/F Portfolio Associates Limited Partnership, a Delaware limited partnership
Properties Directly or
Indirectly Held by Partnership
(the following are the "Properties,"
as defined in the Contribution Agreement
to which this Exhibit A is attached)
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
One Orlando Center
All surplus land associated therewith in Tucson, Arizona and Orlando, Florida
Type of Interest
On the date hereof and on the Closing Date, Contributor owns and will own a
general partnership interest and a limited partnership interest in D/F Portfolio
Associates Limited Partnership, of which Contributor hereby contributes all of
its general and limited partnership interest, together with all right, title and
interest in all income, distributions and other payments due or owing to
Contributor, pursuant to the D/F Portfolio Associates Limited Partnership
Amended, Restated and Reconstituted Agreement of Limited Partnership dated as of
December 10, 1996. No affiliate of the original Contributor under the
Contribution Agreement to which this Exhibit A is attached owns any interest in
the Property or the Property Interests, other than the indirect beneficial
interests of the equity owners of such original Contributor.
A-1
40
Address
c/o DRA Advisors, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
A-2
41
EXHIBIT B
TO
CONTRIBUTION AGREEMENT
CONTRIBUTION AND ASSUMPTION AGREEMENT
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
is hereby acknowledged, the undersigned hereby assigns, transfers, contributes
and conveys to Tower Realty Operating Partnership, L.P. a Delaware limited
partnership (the "OPERATING PARTNERSHIP"), its entire legal and beneficial
right, title and interest in and to the assets, interests and other rights set
forth on Exhibit A to this Agreement and described thereon as being assigned,
transferred, contributed and conveyed hereunder (the "PARTNERSHIP INTEREST"),
including, without limitation, all rights to receive distributions of money,
profits and other assets from or relating to the Partnership Interest, presently
existing or hereafter at any time arising or accruing TO HAVE AND TO HOLD the
same unto the Operating Partnership, its successors and assigns, forever.
Upon the execution and delivery hereof, the Operating Partnership assumes
all obligations in respect of the Partnership Interest.
Executed: March __, 1997
OFFICE INVEST SUB LLC
By: DD Investment Partners, L.P., a member
By: General Realty, LLC, its general partner
By: Manageco, Inc., its managing
member
By: ____________________ Name:
Title:
By: Office Invest Sub Inc., a member
A-1
42
By: _______________________
Name:
Title:
A-2
43
EXHIBIT C
TO
CONTRIBUTION AGREEMENT
CUSTOMARY CLOSING COSTS SPLITS
Florida:
Documentary
Stamps - Customarily paid by Seller.
Intangible Stamps - N/A
Recording Fees - Customarily paid by purchaser.
Title Insurance - Seller and purchaser split equally
Other closing costs which are normally paid or payable by Seller
New York:
Transfer Taxes - Customarily paid by seller.
Recording Fees - Customarily paid by purchaser (except for
Satisfaction of Mortgage).
Title Insurance - Customarily paid by purchaser.
Other closing costs which are normally paid or payable by Seller
C-1
44
Arizona:
Transfer Taxes - N/A
Escrow Fees - Customarily split evenly between seller and
purchaser.
Recording Fees - Customarily paid by purchaser.
Title Insurance - Seller customarily pays for purchaser's basic
owner's policy.
Other closing costs which are normally paid or payable by Seller
The amounts set forth in Section 1.12 of the Contribution Agreement to which
this Exhibit C is attached.
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45
EXHIBIT D
TO
CONTRIBUTION AGREEMENT
MODEL FOR CONSIDERATION CALCULATION
To be attached.
D-1
46
EXHIBIT E
TO
CONTRIBUTION AGREEMENT
EXCHANGE RIGHTS AGREEMENT
THIS EXCHANGE RIGHTS AGREEMENT (this "AGREEMENT"), dated as of __________
__, 1997, is entered into by and among Tower Realty Trust, Inc., a Maryland
corporation (the "COMPANY"), Tower Realty Operating Partnership, L.P., a
Delaware limited partnership (the "OPERATING PARTNERSHIP"), and the Persons
whose names are set forth on Exhibit A attached hereto (as it may be amended
from time to time).
R E C I T A L S:
(a) The Company, acting on its own behalf and through FEC LP, Inc., a
Delaware corporation ("FEC LP"), a wholly-owned subsidiary of the Company, has
formed the Operating Partnership pursuant to the Agreement of Limited
Partnership of the Operating Partnership dated __________ __, 1997 (as such
agreement may be amended or amended and restated from time to time, the
"PARTNERSHIP AGREEMENT").
(b) Pursuant to the Partnership Agreement, the Limited Partners (as
defined below) directly or indirectly hold units of limited partnership interest
("OP UNITS") in the Operating Partnership.
(c) The Operating Partnership has agreed to provide the Limited Partners
with certain direct or indirect rights to exchange their OP Units for cash or,
at the election of the Company, for shares of the Company's common stock, par
value $0.01 per share (the "REIT STOCK").
Accordingly, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"ASSIGNEE" means a Person to whom one or more OP Units have been
transferred in a manner permitted under the Partnership Agreement, but who has
not become a substituted Limited Partner in accordance therewith.
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"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"CASH AMOUNT" means an amount of cash per OP Unit equal to the Value on
the Valuation Date of the REIT Stock Amount.
"EXCHANGE FACTOR" means 1.0, provided, that in the event that the Company
(i) declares or pays a dividend on its outstanding REIT Stock in REIT Stock or
makes a distribution to all holders of its outstanding REIT Stock in REIT Stock;
(ii) subdivides its outstanding REIT Stock; or (iii) combines its outstanding
REIT Stock into a smaller number of shares of REIT Stock, the Exchange Factor
shall be adjusted by multiplying the Exchange Factor by a fraction, the
numerator of which shall be the number of shares of REIT Stock issued and
outstanding on the record date for such dividend, contribution, subdivision or
combination assuming for such purpose that such dividend, distribution,
subdivision or combination has occurred as of such time, and the denominator of
which shall be the actual number of shares of REIT Stock (determined without the
above assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. Any adjustment to the Exchange Factor
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
"EXCHANGING PARTNER" has the meaning set forth in Section 2.1 hereof.
"EXCHANGE RIGHT" has the meaning set forth in Section 2.1 hereof.
"IPO" means an initial public offering by the Company of the REIT Stock
pursuant to a Registration Statement on Form S-11, filed with and declared
effective by the SEC.
"LIEN" means any lien, security interest, mortgage, deed of trust, charge,
claim, encumbrance, pledge, option, right of first offer or first refusal and
any other right or interest of others of any kind or nature, actual or
contingent, or other similar encumbrance of any nature whatsoever.
"LIMITED PARTNER" means any Person, other than FEC LP, named as a Limited
Partner on Exhibit A, as such Exhibit may be amended from time to time.
"LOCK-UP AGREEMENT" means, collectively, the several Lock-up Agreements
executed by each of the Limited Partners other than FEC LP, dated the date
hereof, which prohibit the transfer of the OP Units held by such Limited Partner
without the consent of the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
"NOTICE OF EXCHANGE" means the Notice of Exchange substantially in the
form of Exhibit B to this Agreement.
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"PERSON" shall mean an individual, partnership, corporation, limited
liability company, trust, estate, or unincorporated organization, or other
entity, or a government or agency or political subdivision thereof.
"REIT STOCK AMOUNT" means that number of shares of REIT Stock equal to the
product of the number of OP Units offered for exchange by an Exchanging Partner,
multiplied by the Exchange Factor as of the Valuation Date, provided, that in
the event the Company or the Operating Partnership issues to all holders of REIT
Stock rights, options, warrants or convertible or exchangeable securities
entitling the stockholders to subscribe for or purchase REIT Stock, or any other
securities or property (collectively, the "rights"), then the REIT Stock Amount
shall also include such rights that a holder of that number of shares of REIT
Stock would be entitled to receive.
"SEC" means the Securities and Exchange Commission.
"SPECIFIED EXCHANGE DATE" means the tenth (10th) Business Day after
receipt by the Operating Partnership and the Company of a Notice of Exchange.
"VALUATION DATE" means the date of receipt by the Operating Partnership
and the Company of a Notice of Exchange or, if such date is not a Business Day,
the first Business Day thereafter.
"VALUE" means, with respect to shares of REIT Stock, the average of the
daily market price for the five (5) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be:
(i) if the REIT Stock are listed or admitted to trading on the New
York Stock Exchange (the "NYSE"), any other national securities exchange
or the Nasdaq Stock Market ("Nasdaq"), the closing price on such day, or
if no such sale takes place on such day, the average of the closing bid
and asked prices on such day; or
(ii) if the REIT Stock are not listed or admitted to trading on the
NYSE, any national securities exchange or Nasdaq, the last reported sale
price on such day or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day, as reported by a reliable
quotation source designated by the Company.
In the event the REIT Stock Amount includes rights that a holder of REIT Stock
would be entitled to receive, then the Value of such rights shall be determined
by the independent directors of the Company acting in good faith on the basis of
such quotations and other information as they consider, in their reasonable
judgment, appropriate.
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ARTICLE II
EXCHANGE RIGHT
2.1 Exchange Right. (a) Subject to Sections 2.2, 2.3, 2.4 and 2.5 hereof,
and subject to any limitations under applicable law, the Operating Partnership
hereby grants to each Limited Partner and each Limited Partner hereby accepts
the right (the "EXCHANGE RIGHT"), exercisable on or after the date that is one
(1) year after the closing of the IPO, to exchange on a Specified Exchange Date
all or a portion of the OP Units held by such Limited Partner at an exchange
price equal to the Cash Amount.
(b) The Exchange Right shall be exercised pursuant to a Notice of Exchange
delivered to the Operating Partnership, with a copy delivered to the Company, by
the Limited Partner who is exercising the Exchange Right (the "EXCHANGING
PARTNER"); provided, however, that the Company, on behalf of the Operating
Partnership, may elect, after a Notice of Exchange is delivered, to satisfy the
Exchange Right which is the subject of such notice in accordance with Section
2.2.
(c) A Limited Partner may not exercise the Exchange Right for less than
one thousand (1,000) OP Units or, if such Limited Partner holds less than one
thousand (1,000) OP Units, all of the OP Units held by such Limited Partner.
(d) Any Assignee of a Limited Partner may exercise the rights of such
Limited Partner pursuant to this Article 2, and such Limited Partner shall be
deemed to have assigned such rights to such Assignee and shall be bound by the
exercise of such rights by such Assignee.
(e) In connection with any exercise of such rights by an Assignee on
behalf of a Limited Partner, the Cash Amount or the REIT Stock Amount, as the
case may be, shall be satisfied by the Operating Partnership or the Company, as
the case may be, directly to such Assignee and not to such Limited Partner.
2.2 Option of Company to Exchange for REIT Stock. (a) Notwithstanding the
provisions of Section 2.1, the Company may, on behalf of the Operating
Partnership, in its sole and absolute discretion, elect to satisfy an Exchanging
Partner's Exchange Right by exchanging REIT Stock and rights equal to the REIT
Stock Amount on the Specified Exchange Date for the OP Units offered for
exchange by the Exchanging Partner, provided, however, that at the time of such
exchange the Company qualifies as a real estate investment trust within the
meaning of Section 856 of the Internal Revenue Code of 1986, as amended.
(b) In the event the Company shall elect to satisfy, on behalf of the
Operating Partnership, an Exchanging Partner's Exchange Right by exchanging REIT
Stock for the OP Units offered for exchange,
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50
(i) the Company hereby agrees so to notify the Exchanging Partner
within five (5) Business Days after the receipt by the Company of such
Notice of Exchange,
(ii) each Exchanging Partner hereby agrees to execute such documents
and instruments as the Company may reasonably require in connection with
the issuance of REIT Stock upon exercise of the Exchange Right and
(iii) the Company hereby agrees to deliver stock certificates
representing fully paid and nonassessable shares of REIT Stock.
2.3 Prohibition of Exchange for REIT Stock. Notwithstanding anything
herein to the contrary, the Company shall not be entitled to satisfy an
Exchanging Partner's Exchange Right pursuant to Section 2.2 if the delivery of
REIT Stock to such Limited Partner by the Company pursuant to Section 2.2
(regardless of the Operating Partnership's obligations to the Limited Partner
under Section 2.1)
(A)(B)(i)(a) would be prohibited under the Articles of Incorporation
of the Company,
(b) would otherwise jeopardize the REIT status of the Company, or
(c) would cause the acquisition of the REIT Stock by the Limited
Partner to be "integrated" with any other distribution of REIT Stock by
the Company for purposes of complying with the registration provisions of
the Securities Act.
2.4 Payment Date. Any Cash Amount to be paid to an Exchanging Partner
shall be paid on the Specified Exchange Date; provided, however, that the
Operating Partnership may elect to cause the Specified Exchange Date to be
delayed for up to an additional 105 days to the extent required for the Company
to cause additional REIT Shares to be issued to provide financing to be used to
make such payment of the Cash Amount by the Operating Partnership.
2.5 Exercise by Pledgee. Notwithstanding the provisions of this Article 2,
any person to whom OP Units have been pledged, in compliance with the terms of
the Lock-up Agreement, may exercise its Exchange Right prior to the date that is
one (1) year after the closing of the IPO, provided, however, such OP Units
shall only be exchangeable for the Cash Amount.
2.6 Expiration of Exchange Right. The Exchange Right shall expire with
respect to any OP Units for which an Exchange Notice has not been delivered to
the Operating Partnership and the Company on or before December 31, 2047.
2.7 Effect of Exchange. (a) Any exchange of OP Units pursuant to this
Article 2 shall be deemed to have occurred as of the Specified Exchange Date for
all purposes, including without limitation the payment of distributions or
dividends in respect of OP Units or REIT Stock, as applicable.
E-5
51
(b) Any OP Units acquired by the Company pursuant to an exercise by any
Limited Partner of an Exchange Right shall be deemed to be acquired by and
reallocated or reissued to the Company or FEC LP as directed by the Company.
(c) The Company, as general partner of the Operating Partnership, shall
amend the Partnership Agreement to reflect each such exchange and reallocation
or reissuance of OP Units and each corresponding recalculation of the OP Units
of the Limited Partners.
ARTICLE III
OTHER PROVISIONS
3.1 Covenants of the Company. (a) At all times during the pendency of the
Exchange Right, the Company shall reserve for issuance such number of shares of
REIT Stock as may be necessary to enable the Company to issue such shares in
full payment of the REIT Stock Amount in regard to all OP Units held by Limited
Partners which are from time to time outstanding.
(b) During the pendency of the Exchange Right, the Company shall deliver
to Limited Partners in a timely manner all reports filed by the Company with the
SEC to the extent the Company also transmits such reports to its stockholders
and all other communications transmitted from time to time by the Company to its
stockholders generally.
(c) The Company shall notify each Limited Partner, upon request, of the
then current Exchange Factor and such notice will include a reasonable
explanation of the Exchange Factor calculation to be applied at such time.
3.2 Fractional Shares. (a) No fractional shares of REIT Stock shall be
issued upon exchange of OP Units.
(b) The number of full shares of REIT Stock which shall be issuable upon
exchange of OP Units (or the cash equivalent amount thereof if the Cash Amount
is paid) shall be computed on the basis of the aggregate amount of OP Units so
surrendered.
(c) Instead of any fractional shares of REIT Stock which would otherwise
be issuable upon exchange of any OP Units, the Operating Partnership shall pay a
cash adjustment in respect of such fraction in an amount equal to the Cash
Amount of an OP Unit multiplied by such fraction.
3.3 Investment Representations and Warranties. By delivering to the
Company a Notice of Exchange, each Exchanging Partner will be deemed to
represent and warrant to the Company and the Operating Partnership that such
Exchanging Partner is aware of the Company's option to exchange such Exchanging
Partner's OP Units for REIT Stock pursuant to Section 2.2 hereof and that:
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52
(a) (i) Such Exchanging Partner has received and reviewed
(A) a copy of the prospectus contained in the Registration
Statement on Form S-11 filed by the Company in connection with the
IPO, any prospectus contained in any Registration Statement
subsequently filed by the Company, and any supplement or amendment
thereto (each, a "PROSPECTUS"), and
(B) copies of all reports and other filings (the "SEC
REPORTS"), including Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, made by the Company
with the SEC pursuant to the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder,
and understands the risks of, and other considerations relating to, an
investment in REIT Stock.
(ii) Such Exchanging Partner, by reason of its business and
financial experience, together with the business and financial experience
of those persons, if any, retained by it to represent or advise it with
respect to its investment in REIT Stock,
(A) has such knowledge, sophistication and experience in
financial and business matters and in making investment decisions of
this type that it is capable of evaluating the merits and risks of and
of making an informed investment decision with respect to an investment
in REIT Stock,
(B) is capable of protecting its own interest or has
engaged representatives or advisors to assist it in protecting
its interests and
(C) is capable of bearing the economic risk of such
investment.
(iii) (A) Such Exchanging Partner is an "accredited investor"
as defined in Rule 501 of the regulations promulgated under
the Securities Act.
(B) If such Exchanging Partner has retained or retains a
person to represent or advise it with respect to its
investment in REIT Stock, such Exchanging Partner will advise
the Company of such retention and, at the Company's request,
such Exchanging Partner shall, prior to or at delivery of the
REIT Stock hereunder,
(I) acknowledge in writing such representation and
(II) cause such representative or advisor to
deliver a certificate to the Company containing such
representations as may be reasonably requested by the
Company.
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53
(b) (i) Such Exchanging Partner understands that an investment in
the Company involves substantial risks.
(ii) Such Exchanging Partner has been given the opportunity to
make a thorough investigation of the activities of the Company and has
been furnished with materials relating to the Company and its
activities, including, without limitation, each Prospectus and the SEC
Reports.
(iii) Such Exchanging Partner has relied and is making its
investment decision based upon the Prospectus relating to the IPO and
any subsequent Prospectus, the SEC Reports and other written
information provided to the Exchanging Partner by or on behalf of the
Company and, as applicable, such Exchanging Partner's position as a
director or executive officer of the Company.
(c) (i) The REIT Stock to be issued to such Exchanging Partner
hereunder will be acquired by such Exchanging Partner for its own
account, for investment only and not with a view to, or with any
intention of, a distribution or resale thereof, in whole or in part, or
the grant of any participation therein.
(ii) Such Exchanging Partner was not formed for the specific
purpose of acquiring an interest in the Company.
(d) (i) Such Exchanging Partner acknowledges that
(A) the shares of REIT Stock to be issued to such
Exchanging Partner hereunder have not been registered under
the Securities Act or state securities laws by reason of a
specific exemption or exemptions from registration under the
Securities Act and applicable state securities laws and, the
certificates representing such shares of REIT Stock will bear
a legend to such effect,
(B) the Company's and the Operating Partnership's
reliance on such exemptions is predicated in part on the
accuracy and completeness of the representations and
warranties of such Exchanging Partner contained herein,
(C) the REIT Stock to be issued to such Exchanging
Partner hereunder may not be resold or otherwise distributed
unless registered under the Securities Act and applicable
state securities laws, or unless an exemption from
registration is available,
(D) there may be no market for unregistered shares of
REIT Stock, and
(E) the Company has no obligation or intention to
register such REIT Stock under the Securities Act or any state
securities laws or to take any action
E-8
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that would make available any exemption from the registration
requirements of such laws, except as provided in the
Registration Rights Agreement entered into by the Company and
the Exchanging Partner (the "REGISTRATION RIGHTS AGREEMENT").
(ii) Such Exchanging Partner acknowledges that because of the
restrictions on transfer or assignment of such REIT Stock to be issued
hereunder, such Exchanging Partner may have to bear the economic risk
of its investment in REIT Stock issued hereunder for an indefinite
period of time, although the holder of any such REIT Stock will be
afforded certain rights to have such REIT Stock registered under the
Securities Act and applicable state securities laws pursuant to the
Registration Rights Agreement.
(e) The address set forth under such Exchanging Partner's name in the
Notice of Exchange is the address of the Exchanging Partner's principal place of
business or, if a natural person, the address of the Exchanging Partner's
residence, and such Exchanging Partner has no present intention of becoming a
resident of any country, state or jurisdiction other than the country and state
in which such principal place of business or residence is situated.
ARTICLE IV
GENERAL PROVISIONS
4.1 Addresses and Notice. Any notice, demand, request or report
required or permitted to be given or made to the Operating Partnership, the
Company, a Limited Partner or Assignee, as the case may be, under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other similarly reliable
means of written communication to the Operating Partnership, the Company, a
Limited Partner or Assignee, as the case may be, (i) at the address listed on
the records of the Operating Partnership, with respect to a Limited Partner or
Assignee, and (ii) at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn:
President, with respect to the Operating Partnership or the Company.
4.2 Titles and Captions. All article or section titles or captions in
this Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provisions hereof. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
4.3 Pronouns and Plurals. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
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4.4 Further Action and Additional Restrictions. The parties shall
execute and deliver all documents, provide all information and take or refrain
from taking action as may be necessary or appropriate to achieve the purposes of
this Agreement.
4.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors, legal representatives and permitted assigns.
4.6 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
4.7 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute one agreement binding on all of the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto.
4.8 Applicable Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Maryland, without
regard to the principles of conflicts of law thereof.
4.9 Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
4.10 Entire Agreement. This Agreement contains the entire understanding
and agreement among the Limited Partners, the Operating Partnership and the
Company with respect to the subject matter hereof and supersedes any other prior
written or oral understandings or agreements among them with respect thereto.
4.11 Amendment. This Agreement may be amended from time to time with
the consent of the Company by a vote of the Limited Partners in the same manner
as the Partnership Agreement (in accordance with Section 14.1(a) thereof) may be
amended as provided therein,
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56
provided, however, that the FEC LP shall vote its interest in proportion to the
votes of the Limited Partners.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
THE COMPANY:
TOWER REALTY TRUST, INC.
By:
------------------------------------
Name:
Title:
OPERATING PARTNERSHIP:
TOWER REALTY OPERATING PARTNERSHIP, L.P.
BY: Tower Realty Trust, Inc.,
its general partner
By:
--------------------------------
Name:
Title:
LIMITED PARTNERS:
---------------------------
Signature
---------------------------
Name (Please Print or Type)
E-11
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Exhibit A
Name and Address of Limited Partners
[To be attached]
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Exhibit B
Notice of Exchange
The undersigned Limited Partner hereby irrevocably (i) exchanges
___________ OP Units in Tower Realty Operating Partnership, L.P., in accordance
with the terms of the Exchange Rights Agreement, dated as of _________ __, 1997
(the "EXCHANGE RIGHTS AGREEMENT"), and the Exchange Right referred to therein;
(ii) surrenders such OP Units and all right, title and interest therein; and
(iii) directs that the Cash Amount or REIT Stock Amount (as determined by the
Company) deliverable upon exercise of the Exchange Right be delivered to the
address specified below, and if REIT Stock is to be delivered, such REIT Stock
will be registered or placed in the name(s) and at the address(es) specified
below.
The undersigned hereby represents, warrants, and certifies that the
undersigned (a) has marketable and unencumbered title to such OP Units, free and
clear, other than any encumbrance arising pursuant to the Partnership Agreement,
of the rights or interests of any other person or entity; (b) has the full
right, power, and authority to exchange and surrender such OP Units as provided
herein; and (c) has obtained the consent or approval of all persons or entities,
if any, (other than consent or approval that may be required of the Company or
the Operating Partnership) having the right to consent or approve such exchange
and surrender on the part of the undersigned.
The undersigned hereby makes the representations and warranties
contained in Section 3.3 of the Exchange Rights Agreement as if such
representations and warranties had been set forth in full in this Notice of
Exchange.
Dated: ____________________
__________________________________________
Name of Limited Partner (Please Print)
Signature guaranteed by:
_______________________
__________________________________________
(Signature of Limited Partner)
__________________________________________
(Street Address)
__________________________________________
(City) (State) (Zip Code)
If REIT Stock is to be issued, issue to:
Name: ____________________________________
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Limited Partner's social security or tax
identification number:
E-14
60
EXHIBIT F
TO
CONTRIBUTION AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of _______ __, 1997 by and among Tower Realty Trust, Inc., a
Maryland corporation, which operates as a real estate investment trust (the
"COMPANY"), Tower Realty Operating Partnership, L.P., a Delaware limited
partnership (the "OPERATING PARTNERSHIP"), and the other parties which are
signatories hereto (together with their respective successors, transferees and
assigns, each a "HOLDER" and collectively the "HOLDERS").
WHEREAS, on the date hereof, the Operating Partnership is acquiring,
among other things, certain partnership interests or assets of various
partnerships, joint ventures, corporations and other entities which are Holders
or in which the Holders own direct or indirect interests (the "PROPERTY
PARTNERSHIPS") pursuant to Omnibus Option Agreements of even date herewith (the
"OPTION AGREEMENTS") among the Operating Partnership and the Grantors named
therein, and in connection therewith the Holders will receive units of limited
partnership interest in the Operating Partnership (such units of limited
partnership interest being referred to hereinafter as the "OP UNITS");
WHEREAS, the Company, the Operating Partnership and the Holders are
parties to an Exchange Rights Agreement which provides the Holders, among other
things, with the right to demand that the Operating Partnership redeem their
limited partnership units for cash and, at the option of the Company, the
Company may satisfy that redemption request on behalf of the Operating
Partnership through the issuance of the Company's Common Stock, par value $0.01
per share; and
WHEREAS, in order to induce the Property Partnerships and the Holders
to consummate the closings contemplated under the Option Agreements, the Company
has agreed to grant to the Holders the registration rights set forth in Section
2 hereof.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
I Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
61
"COMMON STOCK" shall mean shares of common stock, par value $0.01 per
share, of the Company.
"COMPANY" shall have the meaning set forth in the Preamble and also
shall include the Company's successors.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"EXCHANGE RIGHTS AGREEMENT" shall mean the Exchange Rights Agreement,
dated the date hereof, among the Company, the Operating Partnership and the
other parties thereto.
"EXCHANGE STOCK" shall mean any Common Stock issued or to be issued to
the Holders upon the exchange of their OP Units pursuant to the Exchange Rights
Agreement.
"HOLDER" or "HOLDERS" shall have the meaning set forth in the Preamble.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"OP UNITS" shall have the meaning set forth in the Preamble.
"OPERATING PARTNERSHIP" shall have the meaning set forth in the
Preamble and also shall include the Operating Partnership's successors.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, trust, estate, or unincorporated organization, or other
entity, or a government or agency or political subdivision thereof.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"REGISTRABLE SECURITIES" shall mean the Exchange Stock, excluding
(i) Exchange Stock for which a Registration Statement relating
to the sale thereof shall have become effective under the Securities
Act and which have been disposed of under such Registration Statement
or
(ii) Exchange Stock sold or eligible for sale pursuant to Rule
144(k).
62
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing
fees;
(ii) all fees and expenses incurred in connection with
compliance with state securities or "blue sky" laws (including
reasonable fees and disbursements of counsel in connection with "blue
sky" qualification of any of the Registrable Securities and the
preparation of a Blue Sky Memorandum) and compliance with the rules of
the NASD;
(iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to
the performance of and compliance with this Agreement;
(iv) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Securities on any securities
exchange or exchanges pursuant to Article III, Section (xii) hereof;
and
(v) the fees and disbursements of counsel for the Company and
of the independent public accountants of the Company, including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance.
Registration Expenses shall specifically exclude underwriting discounts and
commissions, the fees and disbursements of counsel representing a selling
Holder, and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a selling Holder, all of which shall be borne by such
Holder in all cases.
"REGISTRATION STATEMENT" or "SHELF REGISTRATION STATEMENT" shall mean a
"shelf" registration statement of the Company and any other Person required to
be a registrant with respect to such shelf registration statement pursuant to
the requirements of the Securities Act which covers the issuance or resale of
the Registrable Securities on Form S-3 or otherwise under Rule 415 promulgated
under the Securities Act, or any similar rule that may be adopted by the SEC,
and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"RULE 144" shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, and any successor rule or regulation under the
Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
63
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended from
time to time, and any successor Act.
"SHELF REGISTRATION" shall mean a registration required to be effected
pursuant to Section 2 hereof.
II Shelf Registration Under the Securities Act.
2.1 Filing of Shelf Registration Statement.
(i) Within 15 days after the first anniversary date of the
date hereof, the Company shall cause to be filed a Shelf Registration
Statement providing for the sale by the Holders of the Registrable
Securities and will use its reasonable efforts to cause such Shelf
Registration Statement to be declared effective by the SEC as soon as
practicable.
(ii) The Company agrees to use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective for a
period expiring on the date on which all of the Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to
the Shelf Registration Statement or have become eligible for sale
pursuant to Rule 144(k) and, subject to Article III hereof, further
agrees to supplement or amend the Shelf Registration Statement, if and
as required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration
Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration; provided, however, that
the Company shall not be deemed to have used its reasonable efforts to
keep a Registration Statement effective during the applicable period if
it voluntarily takes any action that would result in selling Holders
covered thereby not being able to sell such Registrable Securities
during that period, unless such action is required under applicable law
or the Company has filed a post-effective amendment to the Registration
Statement and the SEC has not declared it effective.
(iii) Notwithstanding the foregoing, the Company shall not be
required to file a Registration Statement or to keep a Registration
Statement effective if the negotiation or consummation of a transaction
is pending or an event has occurred, which negotiation, consummation or
event would require additional disclosure by the Company in the
Registration Statement of material information which the Company has a
bona fide business purpose for keeping confidential and the
nondisclosure of which in the Registration Statement might cause the
Registration Statement to fail to comply with applicable disclosure
requirements; provided, however, that the Company may not delay,
suspend or withdraw a Registration Statement for such reason for more
than 60 days or more often than twice during any period of 12
consecutive months.
64
(iv) The Company is not required to file a separate
Registration Statement, but may file one Registration
Statement covering the Registrable Securities held by more
than one Holder.
2.2 Expenses. (i) The Company shall pay all Registration
Expenses in connection with any registration pursuant to
Article II.
(ii) Each Holder shall pay all underwriting
discounts, if any, sales commissions, the fees and
disbursements of counsel representing such Holder and transfer
taxes, if any, relating to the sale or disposition of such
Holder's Registrable Securities pursuant to the Shelf
Registration Statement or Rule 144.
2.3 Inclusion in Shelf Registration Statement. Any Holder that
does not, within 10 days after receipt of a reasonable request by the
Company for information in connection with the Shelf Registration
Statement, provide such information to the Company, shall not be
entitled to have its Registrable Securities included in the Shelf
Registration Statement.
2.4 Effect of Material Breach. In the event that the Company
shall breach any of its material obligations hereunder in any material
respect, any Holder of Registrable Securities may demand that the
Company file a registration statement covering such Holder's
Registrable Securities. The Company agrees to file such registration
statement within 60 days after receipt of such demand and agrees to use
its best efforts to procure the effectiveness of such registration
statement within 60 days after filing.
III Registration Procedures. (a) In connection with the obligations of
the Company with respect to the Registration Statement required to be
filed pursuant to Article 2 hereof, the Company shall, to the extent
applicable:
(i) Prepare and file with the SEC, within the time
period set forth in Section 2 hereof, a Shelf Registration
Statement, which Shelf Registration Statement
(A) shall be available for the sale of the
Registrable Securities in accordance with the
intended method or methods of distribution by the
selling Holders thereof, and
(B) shall comply as to form in all material
respects with the requirements of the applicable form
of registration statement and include all financial
statements required by the SEC to be filed therewith.
(ii) (A) Subject to Article III, Section (a)(ii)
(B),
65
(I) prepare and file with the SEC
such amendments and post-effective
amendments to each such Registration
Statement as may be necessary to keep such
Registration Statement effective for the
applicable period;
(II) cause each such Prospectus to
be supplemented by any required prospectus
supplement, and as so supplemented to be
filed pursuant to Rule 424 or any similar
rule that may be adopted under the
Securities Act;
(III) respond as promptly as
practicable to any comments received from
the SEC with respect to the Shelf
Registration Statement, or any amendment,
post-effective amendment or supplement
relating thereto; and
(IV) comply with the provisions of
the Securities Act with respect to the
disposition of all securities covered by
each Registration Statement during the
applicable period in accordance with the
intended method or methods of distribution
by the selling Holders thereof.
(B) (I) Each Holder shall promptly
provide to the Company such information as
the Company reasonably requests in order to
identify such Holder and the method of
distribution in a post-effective amendment
to the Registration Statement or a
supplement to the Prospectus.
(II) Such Holder also shall notify
the Company in writing upon completion of
any offer or sale or at such time as such
Holder no longer intends to make offers or
sales under the Registration Statement.
(iii) Furnish to each Holder of Registrable
Securities, without charge, as many copies of each Prospectus,
including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder may
reasonably request, in order to facilitate the public sale or
other disposition of the Registrable Securities; the Company
consents to the use of the Prospectus, including each
preliminary Prospectus, by each such Holder of Registrable
Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or the
preliminary Prospectus.
(iv) Use its reasonable efforts to register or
qualify the Registrable Securities by the time the applicable
Registration Statement is declared effective by the SEC under
all applicable state securities or "blue sky" laws of such
66
jurisdictions as any Holder of Registrable Securities covered
by a Registration Statement shall reasonably request in
writing, keep each such registration or qualification
effective during the period such Registration Statement is
required to be kept effective, and do any and all other acts
and things which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such
Holder; provided, however, that the Company shall not be
required to
(A) qualify generally to do business in any
jurisdiction or to register as a broker or dealer in
such jurisdiction where it would not otherwise be
required to qualify but for this Article III, Section
(a)(iv),
(B) subject itself to taxation in any such
jurisdiction, or
(C) submit to the general service of process
in any such jurisdiction.
(v) Notify each Holder of Registrable Securities
promptly and, if requested by such Holder, confirm such
notification in writing
(A) when a Registration Statement has become
effective and when any post-effective amendments and
supplements thereto become effective,
(B) of the issuance by the SEC or any state
securities authority of any stop order suspending the
effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose,
(C) if the Company receives any notification
with respect to the suspension of the qualification
of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for
such purpose, and
(D) of the happening of any event during the
period a Registration Statement is effective which is
of a type specified in Article II, Section 2.1(iii)
hereof or as a result of which such Registration
Statement or the related Prospectus contains any
untrue statement of a material fact or omits to state
any material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances under which they were made (in the
case of the Prospectus), not misleading.
(vi) Make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement at the earliest possible moment.
67
(vii) Furnish to each Holder of Registrable
Securities, without charge, at least one conformed copy of
each Registration Statement and any post-effective amendment
thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested).
(viii)(A) Cooperate with the selling Holders of
Registrable Securities to facilitate the timely
preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any
Securities Act legend; and
(B) enable certificates for such Registrable
Securities to be issued for such numbers of shares of
Common Stock and registered in such names as the
selling Holders may reasonably request at least two
business days prior to any sale of Registrable
Securities.
(ix) Subject to Article II, Section 2.1(iii) and
Article III, Section (a)(ii)(B) hereof, upon the occurrence of
any event contemplated by Article III, Section (a)(v)(D)
hereof, use its reasonable efforts promptly to prepare and
file a supplement or prepare, file and obtain effectiveness of
a post-effective amendment to a Registration Statement or the
related Prospectus or any document incorporated therein by
reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(x) Make available for inspection by representatives
of the Holders of the Registrable Securities and any counsel
or accountant retained by such Holders, all financial and
other records, pertinent corporate documents and properties of
the Company, and cause the respective officers, directors and
employees of the Company to supply all information reasonably
requested by any such representative, counsel or accountant in
connection with a Registration Statement; provided, however,
that such records, documents or information which the Company
determines, in good faith, to be confidential and notifies
such representatives, counsel or accountants in writing that
such records, documents or information are confidential shall
not be disclosed by such representatives, counsel or
accountants unless
(A) the disclosure of such records,
documents or information is necessary to avoid or
correct a material misstatement or omission in a
Registration Statement,
68
(B) the release of such records, documents
or information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction,
or
(C) such records, documents or information
have been generally made available to the public.
(xi) Within a reasonable time prior to the filing of
any Registration Statement, any Prospectus, any amendment to a
Registration Statement or amendment or supplement to a
Prospectus, provide copies of such document (not including any
documents incorporated by reference therein unless requested)
to the Holders of Registrable Securities.
(xii) Use its reasonable efforts to cause all
Registrable Securities to be listed on any securities exchange
on which similar securities issued by the Company are then
listed.
(xiii) Provide a CUSIP number for all Registrable
Securities, not later than the effective date of a
Registration Statement.
(xiv) Otherwise use its reasonable efforts to comply
with all applicable rules and regulations of the SEC and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering at least 12 months
which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder.
(xv) Use its reasonable efforts to cause the
Registrable Securities covered by a Registration Statement to
be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable Holders to
consummate the disposition of such Registrable Securities.
(b) The Company may require each Holder of Registrable
Securities to furnish to the Company in writing such information
regarding the proposed distribution by such Holder of such Registrable
Securities as the Company may from time to time reasonably request in
writing.
(c) In connection with and as a condition to the Company's
obligations with respect to the Registration Statement required to be
filed pursuant to Section 2 hereof and this Section 3, each Holder
agrees that
(i) it will not offer or sell its Registrable
Securities under the Registration Statement until it has
received copies of the supplemental or amended
69
Prospectus contemplated by Article III, Section (a)(ii) hereof
and receives notice that any post-effective amendment has
become effective, and
(ii) upon receipt of any notice from the Company of
the happening of any event of the kind described in Article
III, Section (a)(v)(D) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to
a Registration Statement until such Holder receives copies of
the supplemented or amended Prospectus contemplated by Article
III, Section (a)(ix) hereof and receives notice that any
post-effective amendment has become effective, and, if so
directed by the Company, such Holder will deliver to the
Company (at the expense of the Company) all copies in its
possession, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such
notice.
IV Indemnification; Contribution.
4.1 Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Holder and its officers and directors
and each Person, if any, who controls any Holder (within the meaning of
Section 15 of the Securities Act) as follows:
(a) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of
(A) any untrue statement or alleged untrue
statement of a material fact contained in any
Registration Statement (or any amendment thereto)
pursuant to which Registrable Securities were
registered under the Securities Act, including all
documents incorporated therein by reference, or
(B) the omission or alleged omission
therefrom of a material fact required to be stated
therein or necessary to make the statements therein
not misleading or
(C) arising out of any untrue statement or
alleged untrue statement of a material fact contained
in any Prospectus (or any amendment or supplement
thereto), including all documents incorporated
therein by reference, or
(D) the omission or alleged omission
therefrom of a material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made, not
misleading;
(b) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement
70
of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if
such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld or
delayed; and
(c) against any and all expense whatsoever, as
incurred (including reasonable fees and disbursements of
counsel), reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, in each case whether or not a party, or any claim
whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph
(a) or (b) above;
provided, however, that the indemnity provided pursuant to this Article
IV, Section 4.1(c) does not apply to any Holder with respect to any
loss, liability, claim, damage or expense to the extent arising out of
(x) any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company
by such Holder expressly for use in a Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment
or supplement thereto) or
(y) such Holder's failure to deliver an amended or
supplemental Prospectus, after having been provided copies of
any such amended or supplemental Prospectus by the Company, if
such loss, liability, claim, damage or expense would not have
arisen had such delivery occurred.
4.2 Indemnification by Holders. Each Holder severally agrees
to indemnify and hold harmless the Company and the other selling
Holders, and each of their respective directors and officers (including
each director and officer of the Company who signed the Registration
Statement), and each Person, if any, who controls the Company or any
other selling Holder within the meaning of Section 15 of the Securities
Act, under the same circumstances and to the same extent as the
indemnity contained in Section 4.1(a) hereof (except that any
settlement described in Section 4.1(a)(B) shall be effected with the
written consent of such Holder, which consent shall not be unreasonably
withheld or delayed), but only insofar as such loss, liability, claim,
damage or expense arises out of or is based upon any untrue statement
or omission, or alleged untrue statements or omissions, made in a
Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity
with written information furnished to the Company by
71
such selling Holder expressly for use in such Registration Statement
(or any amendment thereto) or such Prospectus (or any amendment or
supplement thereto).
4.3 Conduct of Indemnification Proceedings. (i) Each
indemnified party shall give reasonably prompt notice to each
indemnifying party of any action or proceeding commenced
against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party
(A) shall not relieve it from any liability
which it may have under the indemnity agreement
provided in Section 4.1(a) or 4.1(b) above, unless
and to the extent it did not otherwise learn of such
action and the lack of notice by the indemnified
party results in the forfeiture by the indemnifying
party of substantial rights and defenses and
(B) shall not, in any event, relieve the
indemnifying party from any obligations to any
indemnified party other than the indemnification
obligation provided under Section 4.1(a) or 4.1(b)
above.
(ii) If the indemnifying party so elects within a
reasonable time after receipt of such notice, the indemnifying
party may assume the defense of such action or proceeding at
such indemnifying party's own expense with counsel chosen by
the indemnifying party and approved by the indemnified parties
defendant in such action or proceeding, which approval shall
not be unreasonably withheld; provided, however, that, if such
indemnified party or parties reasonably determine that a
conflict of interest exists where it is advisable for such
indemnified party or parties to be represented by separate
counsel or that, upon advice of counsel, there may be legal
defenses available to them which are different from or in
addition to those available to the indemnifying party, then
the indemnifying party shall not be entitled to assume such
defense and the indemnified party or parties shall be entitled
to one separate counsel at the indemnifying party's or
parties' expense.
(iii)(A) If an indemnifying party is not entitled to
assume the defense of such action or proceeding as a
result of the proviso to Section 4.1(c), such
indemnifying party's counsel shall be entitled to
conduct such indemnifying party's defense, and
counsel for the indemnified party or parties shall be
entitled to conduct the defense of such indemnified
party or parties, it being understood that both such
counsel will cooperate with each other to conduct the
defense of such action or proceeding as efficiently
as possible.
(B) If an indemnifying party is not so
entitled to assume the defense of such action or does
not assume such defense, after having received the
notice referred to in Section 4.1(c), the
indemnifying party
72
or parties will pay the reasonable fees and expenses
of counsel for the indemnified party or parties as
incurred.
(C) In such event, however, no indemnifying
party will be liable for any settlement effected
without the written consent of such indemnifying
party, which consent may not be unreasonably withheld
or delayed.
(iv) If an indemnifying party is entitled to assume,
and assumes, the defense of such action or proceeding in
accordance with this Section 4(c), such indemnifying party
shall not be liable for any fees and expenses of counsel for
the indemnified parties incurred thereafter in connection with
such action or proceeding.
4.4 Contribution.
(i) (A) In order to provide for just and equitable
contribution in circumstances in which the indemnity
agreement provided for in this Section 4 is for any
reason held to be unenforceable although applicable
in accordance with its terms, the Company and the
selling Holders shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity agreement
incurred by the Company and the selling Holders, in
such proportion as is appropriate to reflect the
relative fault of and benefits to the Company on the
one hand and the selling Holders on the other (in
such proportions that the selling Holders are
severally, not jointly, responsible for the balance),
in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities
or expenses, as well as any other relevant equitable
considerations.
(B) (I) The relative benefits to the
indemnifying party and indemnified parties
shall be determined by reference to, among
other things, the total proceeds received by
the indemnified party and indemnified
parties in connection with the offering to
which such losses, claims, damages,
liabilities or expenses relate.
(II) The relative fault of the
indemnifying party and indemnified parties
shall be determined by reference to, among
other things, whether the action in
question, including any untrue or alleged
untrue statement of a material fact or
omission or alleged omission to state a
material fact, has been made by, or relates
to information supplied by, such
indemnifying party or the indemnified
parties, and the parties' relative intent,
knowledge,
73
access to information and opportunity to
correct or prevent such action.
(ii) (A) The parties hereto agree that it would not
be just or equitable if contribution pursuant to this
Section 4.4(d) were determined by pro rata allocation
or by any other method of allocation which does not
take account of the equitable considerations referred
to in Section 4.4(i).
(B) Notwithstanding the provisions of this
Section 4.4, no selling Holder shall be required to
contribute any amount in excess of the amount by
which the total price at which the Registrable
Securities of such selling Holder were offered to the
public exceeds the amount of any damages which such
selling Holder would otherwise have been required to
pay by reason of such untrue statement or omission.
(iii) Notwithstanding the foregoing, no Person guilty
of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent
misrepresentation.
(iv) For purposes of this Section 4.4, each Person,
if any, who controls a Holder within the meaning of Section 15
of the Securities Act and directors and officers of a Holder
shall have the same rights to contribution as such Holder, and
each director of the Company, each officer of the Company who
signed the Registration Statement and each Person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as
the Company.
V Filing of Exchange Act Reports; Rule 144 Sales. 5.1The Company
covenants that it will file the reports required to be filed by the
Company under the Securities Act and the Exchange Act so as to enable
any Holder to sell Exchange Stock pursuant to Rule 144.
5.2 In connection with any sale, transfer or other disposition
by any Holder of any Exchange Stock pursuant to Rule 144, the Company
shall cooperate with such Holder to facilitate the timely preparation
and delivery of certificates representing Exchange Stock to be sold and
not bearing any Securities Act legend, and enable certificates for such
Exchange Stock to be for such number of shares and registered in such
names as the selling Holders may reasonably request at least two
business days prior to any sale of Exchange Stock.
74
VI Miscellaneous.
6.1 Amendments and Waivers. (i) The provisions of this
Agreement, including the provisions of this Section 6(a)(i),
may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be
given without the written consent of the Company and the
Holders of a majority in amount of the outstanding Registrable
Securities; provided, however, that no amendment, modification
or supplement or waiver or consent to the departure with
respect to the provisions of Articles 2, 4 or 5 hereof shall
be effective as against any Holder unless consented to in
writing by such Holder.
(ii) Notice of any amendment, modification or
supplement to this Agreement adopted in accordance with this
Section 6.1 shall be provided by the Company to each Holder at
least thirty (30) days prior to the effective date of such
amendment, modification or supplement.
6.2 Notices. (i) All notices and other communications provided
for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier,
or any courier guaranteeing overnight delivery, to the parties
at their respective addresses set forth opposite their
signatures below or at such other address as a party may
indicate by written notice to the other party or parties.
(ii) All such notices and communications shall be
deemed to have been duly given:
(A) at the time delivered by hand, if
personally delivered;
(B) three (3) business days after being
deposited in the mail, postage prepaid, if mailed;
(C) when answered back, if telexed;
(D) when receipt is acknowledged, if
telecopied; or
(E) at the time delivered, if delivered by
an air courier guaranteeing overnight delivery.
6.3 Successors, Assigns and Transferees. (i) This Agreement
shall inure to the benefit of and be binding upon the
successors, assigns and transferees of each of the parties,
including, without limitation and without the need for an
express assignment, subsequent Holders.
75
(ii) If any successor, assignee or transferee of any
Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable
Securities such Person shall be entitled to receive the
benefits hereof and shall be conclusively deemed to have
agreed to be bound by all of the terms and provisions hereof.
(iii) The term "successor, assignee or transferee of
a Holder" shall include any Person that acquires Registrable
Securities by operation of law, including upon the merger or
consolidation, liquidation or dissolution of a Holder.
6.4 Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
6.5 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
6.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
6.7 Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if any party fails to perform
any of its obligations hereunder, and accordingly agree that each
party, in addition to any other remedy to which it may be entitled at
law or in equity, shall be entitled to compel specific performance of
the obligations of any other party under this Agreement in accordance
with the terms and conditions of this Agreement in any court of the
United States or any State thereof having jurisdiction.
6.8 Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein.
This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
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Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ TOWER REALTY TRUST, INC.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
By:
-------------------------------------
Name:
Title:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ TOWER REALTY OPERATING
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ PARTNERSHIP, L.P.
By: Tower Realty Trust, Inc., its general
partner
By:
-------------------------------------
Name:
Title:
HOLDERS:
[Address:]
-----------------------------------------
Signature
-----------------------------------------
Name (Please Print or Type)
77
EXHIBIT G
TO
CONTRIBUTION AGREEMENT
FORM OF
LOCK-UP AGREEMENT
_____________, 1997
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇, Incorporated
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sirs,
The undersigned understands that ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇,
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and certain other firms propose to enter into an
Underwriting Agreement (the "Underwriting Agreement") providing for the purchase
by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and such other firms (the Underwriters") of shares (the
"Shares") of Common Stock, par value $0.01 per share (the "Common Stock"), of
Tower Realty Trust, Inc. (the "Company") and that the Underwriters propose to
reoffer the Shares to the public. Capitalized terms used but not otherwise
defined in this letter agreement will have the meaning set forth in the
Company's Registration Statement on Form S-11 in connection with the
registration under the Securities Act of 1933, as amended, of Shares.
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that without the prior written consent of ▇▇▇▇▇▇▇
▇▇▇▇▇, the undersigned will not (and, except as may be disclosed in the
Prospectus, will not announce or disclose any intention to), directly or
indirectly, sell, offer to sell, solicit an offer to buy, contract to sell,
grant any option to purchase, or otherwise transfer or dispose (or enter into
any transaction or device which is designed to, or could be expected to, result
in the disposition at any time in the future) of, any shares of Common Stock, or
any securities convertible into or exercisable or exchangeable for Common Stock,
including any units of limited partnership interest (the "OP Units") in Tower
Realty Operating Partnership, L.P., a Delaware limited partnership (the
"Operating Partnership") beneficially owned by the undersigned as of the date of
the closing of the Company's initial public offering, for a period of twelve
(12) months after the date of the final Prospectus relating to the offering of
the Shares to the public by the Underwriters. Prior to the expiration of such
period, the undersigned will not publicly announce or disclose any intention
78
to do anything after the expiration of such period which the undersigned is
prohibited, as provided in the preceding sentence, from doing during such
period.
This letter shall not prohibit the undersigned from (i)
transferring OP Units to any Affiliate (as defined below) of the undersigned,
provided that such transferee is an accredited investor (as such term is defined
in Rule 501 under the Securities Act of 1933, as amended) and agrees in writing
with you to the transfer restrictions described above, or (ii) pledging the OP
Units and Common Stock which are subject to this Agreement to the Operating
Partnership or the Company, or to any financial institution as collateral bona
fide for any loan or other obligation with respect to which the undersigned is
personally liable. As used herein, the term "AFFILIATE" shall mean any Person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with a specified Person, and, with
respect to an individual, shall include such Person's immediate family or a
trust for the benefit thereof, with respect to a partnership, shall include a
general or limited partner thereof, with respect to a limited liability company,
is a member thereof, and with respect to a corporation, is a shareholder
thereof.
The undersigned agrees that the provisions of this agreement shall also
be binding upon the successors, assigns, heirs and personal representatives of
the undersigned.
In furtherance of the foregoing, the Company and [___________________],
its Transfer Agent, are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
letter agreement.
It is understood that, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the shares of Common Stock relating to such agreement, you will
release the undersigned from [his][its] obligations under this letter agreement.
Very truly yours,
[INVESTOR]
By: _____________________________________
Name:
Title:
79
EXHIBIT H
TO CONTRIBUTION AGREEMENT
EXISTING PROPERTIES
Tower 45
Maitland Forum
120 Mineola
The D/F Portfolio Properties
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇
Corporate Center
80
EXHIBIT I
TO CONTRIBUTION AGREEMENT
BUDGET OF CAPITAL EXPENDITURES AND BORROWINGS