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EXHIBIT 10.58
CONTRIBUTION AGREEMENT
Between
FR ACQUISITIONS, INC.
And
THE OTHER PARTIES LISTED ON
THE SIGNATURE PAGES OF THIS AGREEMENT
(▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates)
Dated as of January 31, 1997
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING
THE MERITS AND RISKS INVOLVED. THE SECURITIES REFERENCED HEREIN
HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES
COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO
BEAR THE FINANCIAL RISK OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
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TABLE OF CONTENTS
Page
1. CONTRIBUTION.................................................................................. 1
2. CONTRIBUTION; LP UNITS; TAX MATTERS........................................................... 2
(a) General................................................................................. 2
(b) Contribution Consideration.............................................................. 2
(c) LP Units................................................................................ 2
(d) Partnership Agreement and Other Materials............................................... 5
(e) Transfer and Voting Restrictions........................................................ 5
(f) Lock-Up Period.......................................................................... 6
(g) Volume Restriction...................................................................... 6
(h) Registration Rights..................................................................... 7
(i) Partnership Liabilities; Non-Taxable Transactions....................................... 7
(j) Amendments to Partnership Agreement..................................................... 8
(k) Notice of Certain Transactions.......................................................... 8
3. CLOSING AND ▇▇▇▇▇▇▇ MONEY..................................................................... 9
(a) Closing................................................................................. 9
(b) ▇▇▇▇▇▇▇ Money........................................................................... 9
4. CONTRIBUTOR'S PRE-CLOSING DELIVERIES.......................................................... 10
5. INSPECTION PERIOD............................................................................. 11
(a) Basic Project Inspection................................................................ 11
(b) Environmental Assessment................................................................ 12
(c) Acquiror's Undertaking.................................................................. 13
(d) Confidentiality......................................................................... 14
(e) Deletion of Projects.................................................................... 15
(f) Scope of Representations and Warranties................................................. 15
6. TITLE AND SURVEY MATTERS...................................................................... 15
(a) Conveyance of Title..................................................................... 15
(b) Title Commitments....................................................................... 15
(c) Surveys................................................................................. 16
(d) UCC Searches............................................................................ 16
(e) Defects and Cure........................................................................ 17
7. REPRESENTATIONS AND WARRANTIES................................................................ 18
7.1 Contributor and LP Unit Recipients...................................................... 18
(a) [Intentionally Omitted]................................................................. 18
(b) Title................................................................................... 18
(c) Contributor's Deliveries................................................................ 18
(d) Defaults................................................................................ 18
(e) Contracts............................................................................... 18
(f) Physical Condition...................................................................... 18
(g) Utilities............................................................................... 18
(h) Improvements............................................................................ 19
(i) Employees............................................................................... 19
(j) Compliance with Laws and Codes.......................................................... 19
(k) Litigation.............................................................................. 19
(l) Insurance............................................................................... 19
(m) Financial Information................................................................... 19
(n) Re-Zoning............................................................................... 20
(o) Personal Property....................................................................... 20
(p) Authority............................................................................... 20
(q) Real Estate Taxes....................................................................... 20
(r) Easements and Other Agreements.......................................................... 21
(s) Lease Controversies..................................................................... 21
(t) Soil Condition.......................................................................... 21
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(u) United States Person................................................................... 21
(v) Broadvet Lease and Purchase Option..................................................... 21
(w) Existing Mortgage(s)................................................................... 21
(x) Investment Representation.............................................................. 21
(y) Project No. 16......................................................................... 22
(z) Project No. 52......................................................................... 22
(aa) Patomi Realty Co. Mortgage............................................................. 22
7.2 Acquiror............................................................................... 23
(a) Existence and Power.................................................................... 23
(b) Legal Compliance....................................................................... 23
(c) Notice of Violations................................................................... 23
(d) Authorization.......................................................................... 23
(e) Pending Actions........................................................................ 24
7.3 The UPREIT............................................................................. 24
(a) Existence and Power.................................................................... 24
(b) Legal Compliance....................................................................... 24
(c) Notice of Violations................................................................... 24
(d) Partnership Agreement.................................................................. 24
(e) Authorization.......................................................................... 25
(f) Pending Actions........................................................................ 25
(g) Written Information.................................................................... 25
(h) Partnership Classification............................................................. 25
7.4 The REIT............................................................................... 26
(a) Existence and Power.................................................................... 26
(b) Legal Compliance....................................................................... 26
(c) Capitalization......................................................................... 26
(d) Notice of Violations................................................................... 26
(e) REIT Qualification..................................................................... 26
(f) Authorization.......................................................................... 26
(g) Pending Actions........................................................................ 27
(h) Written Information.................................................................... 27
8. ADDITIONAL COVENANTS......................................................................... 27
8.1 Contributor's.......................................................................... 27
(a) New Leases............................................................................. 27
(b) New Contracts.......................................................................... 27
(c) Insurance.............................................................................. 28
(d) Operation of Projects.................................................................. 28
(e) Pre-Closing Expenses................................................................... 28
(f) Good Faith............................................................................. 28
(g) No Assignment.......................................................................... 28
(h) Availability of Records................................................................ 28
(i) Change in Conditions................................................................... 29
(j) Ownership Structure.................................................................... 29
(k) Initial Public Offering................................................................ 29
(l) Existing Mortgages..................................................................... 29
(m) Remediation of Code Violations......................................................... 29
(n) Sewer Hookups.......................................................................... 29
(o) Patomi Mortgage........................................................................ 29
(p) Certain Estoppels...................................................................... 30
8.2 Acquiror's, REIT's and UPREIT's........................................................ 30
(a) Change in Conditions................................................................... 30
(b) Ownership Structure.................................................................... 30
(c) Good Faith............................................................................. 30
(d) Consent Decree......................................................................... 30
9. ENVIRONMENTAL WARRANTIES AND AGREEMENTS...................................................... 31
(a) Definitions............................................................................ 31
(b) Warranties............................................................................. 32
(c) Environmental Indemnities.............................................................. 34
(d) Remediation............................................................................ 37
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10. ADDITIONAL CONDITIONS PRECEDENT TO CLOSING................................................... 42
(a) Zoning and Subdivision................................................................. 42
(b) Flood Insurance........................................................................ 42
(c) Utilities.............................................................................. 42
(d) Assumed Indebtedness................................................................... 42
(e) Bankruptcy............................................................................. 42
(f) Representations and Warranties True.................................................... 42
(g) Covenants Performed.................................................................... 42
(h) Leases................................................................................. 42
(i) Occupancy Rate......................................................................... 42
(j) Representations and Warranties True.................................................... 43
(k) Covenants Performed.................................................................... 43
(l) Assumed Indebtedness................................................................... 43
11. LEASES-CONDITIONS PRECEDENT AND REPRESENTATIONS WITH RESPECT THERETO......................... 43
(a) Representations as to Leases........................................................... 43
(b) Estoppel Certificates from Tenants..................................................... 45
(c) Tenants................................................................................ 45
12. CLOSING DELIVERIES........................................................................... 45
12.1 Contributor............................................................................ 45
(a) Deeds.................................................................................. 46
(b) ▇▇▇▇ of Sale........................................................................... 46
(c) General Assignment..................................................................... 46
(d) Assignment of Contracts................................................................ 46
(e) Assignment of Leases and Estoppel Certificates......................................... 46
(f) Keys................................................................................... 46
(g) Affidavit of Title and ALTA Statement.................................................. 46
(h) Letters to Tenants..................................................................... 46
(i) Title Policies......................................................................... 46
(j) Original Documents..................................................................... 47
(k) Closing Statement...................................................................... 47
(l) Plans and Specifications............................................................... 47
(m) Tax Bills.............................................................................. 47
(n) Entity Transfer Certificate............................................................ 47
(o) Rent Roll.............................................................................. 47
(p) Ownership Table........................................................................ 47
(q) Partnership Agreement.................................................................. 47
(r) Pay-Off Letters........................................................................ 47
(s) Partnership Agreement Adoption Materials............................................... 47
(t) LP Unit Schedule....................................................................... 47
(u) Registration Rights Agreement.......................................................... 47
(v) County of Suffolk Lease................................................................ 47
(w) JC Penney Lease/Project No. 57......................................................... 47
(x) Closing Certificate.................................................................... 48
(y) Zoning Certifications.................................................................. 48
(z) Satisfaction of Certain Obligations.................................................... 48
(aa) Other.................................................................................. 48
12.2 Acquiror............................................................................... 48
(a) Registration Certificate............................................................... 48
(b) Partnership Agreement.................................................................. 48
(c) Amendment.............................................................................. 48
(d) Organizational Documents............................................................... 48
(e) Assignment of Contracts................................................................ 48
(f) Assignment of Leases................................................................... 48
(g) Contract Notices....................................................................... 48
(h) Closing Statement...................................................................... 48
(i) Registration Rights Agreement.......................................................... 48
(j) LP Unit Schedule....................................................................... 49
(k) Assignment............................................................................. 49
(l) Certain Acknowledgements............................................................... 49
(m) Consent to Pledge...................................................................... 49
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(n) Tenant Letters......................................................................... 49
(o) Certificate of Acquiror, UPREIT and REIT............................................... 49
(p) Opinion................................................................................ 49
(q) Assumption............................................................................. 49
(r) Employment Agreement................................................................... 49
(s) Pledge Agreements...................................................................... 49
(t) Certificate of UPREIT.................................................................. 50
(u) Other.................................................................................. 50
13. PRORATIONS AND ADJUSTMENTS................................................................... 50
14. CLOSING EXPENSES............................................................................. 51
15. DESTRUCTION, LOSS OR DIMINUTION OF PROJECTS.................................................. 52
16. DEFAULT...................................................................................... 53
(a) Willful Failure to Close by Contributor................................................ 53
(b) Other Defaults by Contributor.......................................................... 53
(c) Contributor's Breach of Representations Discovered After Closing....................... 54
(d) Intervening Events..................................................................... 54
(e) Default by Acquiror and Failure of Contributor's Condition Precedent................... 55
(f) Breach of Representations by Acquiror, the REIT or the UPREIT
Discovered After Closing............................................................... 55
17. SUCCESSORS AND ASSIGNS....................................................................... 55
18. DISPUTE RESOLUTION........................................................................... 55
(a) Preliminary Dispute Resolution Through Mediation....................................... 55
(b) Arbitration As Optional Means Of Resolution............................................ 56
19. NOTICES...................................................................................... 57
20. BENEFIT...................................................................................... 58
21. LIMITATION OF LIABILITY...................................................................... 58
22. BROKERAGE.................................................................................... 59
23. REASONABLE EFFORTS........................................................................... 59
24. TENANTS IN DEFAULT........................................................................... 59
(a) Applicability of Provision............................................................. 59
(b) Acquiror's Rights...................................................................... 59
25. NON-COMPETE AND NON-SOLICITATION............................................................. 60
26. PRE-CLOSING LEASING.......................................................................... 61
(a) Acquiror's Consent..................................................................... 61
(b) Payment of Tenant Improvement Costs and Brokerage Commission........................... 62
(c) Defaults by Existing Tenants........................................................... 62
(d) Survival............................................................................... 62
27. SENIOR REGIONAL DIRECTOR POSITION AND EMPLOYMENT CONTRACT.................................... 62
28. CONTRIBUTOR'S ORGANIZATION AND STAFF......................................................... 63
29. MANAGEMENT OF RETAINED PROPERTIES............................................................ 63
30. COSMETIC IMPROVEMENTS AND DEFERRED MAINTENANCE ESCROW........................................ 64
31. CAPITAL IMPROVEMENTS ESCROW.................................................................. 65
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32. MAXIMUM DELETION............................................................................. 66
(a) Contributor's Right of Termination..................................................... 66
(b) Acquiror's Right of Termination........................................................ 66
33. OPTION PROJECTS.............................................................................. 66
(a) Trigger Date, and Trigger Notice....................................................... 66
(b) Option Exercise........................................................................ 67
(c) Project Numbers 26, 28 and 29.......................................................... 67
(d) Closing................................................................................ 67
34. PREPAYMENT OF ASSUMED INDEBTEDNESS; REFINANCING.............................................. 69
35. REIMBURSEMENT FOR CERTAIN TAX INCREASES BASED ON ▇▇▇▇▇▇▇▇ REMEDIATION........................ 69
36. ADDITIONAL TENANT MATTERS.................................................................... 70
(a) Exercise of Termination Options........................................................ 70
(b) Purchase Options....................................................................... 71
(c) Financially Questionable Tenants....................................................... 71
(d) Tenants' Rights of First Refusal....................................................... 71
37. ONGOING ROOF REPAIR.......................................................................... 71
38. MISCELLANEOUS................................................................................ 72
(a) Entire Agreement....................................................................... 72
(b) Time of the Essence.................................................................... 72
(c) Conditions Precedent................................................................... 72
(d) Construction........................................................................... 72
(e) Governing Law.......................................................................... 72
(f) Partial Invalidity..................................................................... 72
(g) Expenses............................................................................... 72
(h) Certain Securities Matters............................................................. 73
(i) Counterparts........................................................................... 73
(j) Calculation of Time Periods............................................................ 73
(k) Exclusive Jurisdiction................................................................. 73
39. PROJECT NUMBER 56............................................................................ 73
40. CODE COMPLIANCE/ADA.......................................................................... 74
41. CERTAIN ADDITIONAL CLOSING PAYMENTS AND ESCROWS.............................................. 74
42. ENGINEERING MATTERS AT PROJECT NO. 24........................................................ 75
43. INDEMNITY WITH RESPECT TO CERTAIN ESTOPPEL CERTIFICATES...................................... 76
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THIS CONTRIBUTION AGREEMENT is made and entered into as of this 31st day
of January, 1997 (the "CONTRACT DATE"), by and between the parties reflected on
the signature pages hereto as "Contributor and Other LP Unit Recipients," which
parties include, but are not limited to, each of the ownership entities listed
on Exhibit A attached hereto (such ownership entities, individually and
collectively, as appropriate, "CONTRIBUTOR"), and FR ACQUISITIONS, INC., a
Maryland corporation ("ACQUIROR").
1. CONTRIBUTION. It shall be a Contributor's Condition Precedent (as
defined below) that, prior to Closing (as defined below), Acquiror shall have
assigned its entire right, title and interest in, to and under this Agreement
to First Industrial, L.P., a Delaware limited partnership (the "UPREIT"), and
the UPREIT shall have assumed all of Acquiror's right, title, interest,
obligations and liabilities under this Agreement (the "ASSIGNMENT").
Thereafter and at Closing, Contributor shall contribute and convey to the
UPREIT, and the UPREIT shall accept and assume from Contributor, for the
Contribution Consideration (as defined below), and pursuant to the terms and
subject to the conditions set forth in this Agreement, all of Contributor's
right, title and interest in the Projects (as defined below), which Projects
are identified on Exhibit A attached hereto and include those certain buildings
(the "BUILDINGS"), each containing that approximate number of net rentable
square feet specified on Exhibit A. The conveyance of the Projects at Closing
shall, however, be exclusive of the Option Projects, as defined in Paragraph
33, and Project No. 56 (as discussed in Paragraph 39). The contribution and
conveyance of such Buildings and the Projects of which they are a part shall be
made subject to the Assumed Indebtedness (as defined below), which shall be
repaid by the UPREIT, in full, on the Closing Date. The Buildings are leased
by Contributor to Tenants (as defined below) for
industrial/warehouse/distribution purposes. Each of the Buildings is commonly
known by the respective street address in the cities, counties and states
described on Exhibit A. For purposes of this Agreement:
(a) The term "ASSUMED INDEBTEDNESS" shall be deemed to mean all of
the indebtedness of Contributor described on Exhibit A-2 attached hereto;
(b) The term "PROJECTS" shall be deemed to mean, on a collective
basis: (i) all of the parcels of land described in Exhibit A-1 attached
hereto (collectively, the "LAND"), together with all rights, easements and
interests appurtenant thereto, including, but not limited to, all right,
title and interest of Contributor in any streets or other public ways
adjacent to the Land and any water or mineral rights owned by, or leased
to, Contributor; (ii) all improvements located on the Land, including, but
not limited to, the Buildings, and all other structures, systems, and
utilities associated with, and utilized by, Contributor in the ownership
and operation of the Buildings (all such improvements being collectively
referred to herein as the "IMPROVEMENTS"), but excluding improvements, if
any, owned by Tenants and subtenants of the Buildings; (iii) all tangible
personal property owned by Contributor and (x) located on or in the Land
or Improvements, or (y) used in connection with the operation and
maintenance of any or all of the Projects (collectively, the "PERSONAL
PROPERTY"), including, without limitation, all (if any) tangible personal
property listed (as being included within the subject transaction) on
Exhibit B attached hereto, but expressly excluding therefrom those
excluded items as expressly set forth on Exhibit B (the "EXCLUDED PERSONAL
PROPERTY"); (iv) all building materials, supplies, hardware, carpeting and
other inventory owned by Contributor and maintained exclusively in
connection with Contributor's ownership and operation of the Land and/or
Improvements (collectively, the "INVENTORY"); (v) Contributor's interest
in all trademarks, tradenames, development rights and entitlements and
other intangible property used in connection with the foregoing
(collectively, the "INTANGIBLE PERSONAL PROPERTY"), but expressly
excluding therefrom those excluded items as expressly set forth on Exhibit
B (the "EXCLUDED INTANGIBLE PROPERTY"); and (vi) Contributor's interest in
all leases and other agreements to occupy all or any portion of the Land
and/or Improvements in effect on the Contract Date (the "EXISTING LEASES")
or into which Contributor enters prior to Closing, but pursuant to the
express terms of this Agreement (the "ADDITIONAL LEASES" and, collectively
with the Existing Leases, the "LEASES"). As noted above, however, for
purposes of (1) the Closing, (2) the representations and warranties
contained herein and (3) the schedules to be attached hereto, the term,
"Projects" shall exclude the Option Projects and Project No. 56; and if
and to the extent that Acquiror acquires the Option Projects and Project
No. 56, such acquisition shall occur pursuant to the terms of Paragraphs
33 or 39, as the case may be; and
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(c) The term "PROJECT" shall mean a specific Building, together with
the specific parcel of Land associated with such Building, or on which
such Building is situated, in each case together with (i) all other
Improvements located on such Land; (ii) all Personal Property and
Inventory located on or used in connection with such Land and/or Building
or other Improvements located on that Land; (iii) Contributor's interest
in all Intangible Property used in connection with that Land; and (iv)
Contributor's interest in all Leases of such Land and/or Building or other
Improvements.
2. CONTRIBUTION; LP UNITS; TAX MATTERS.
(a) General. The UPREIT's sole general partner is First Industrial
Realty Trust, Inc., a Maryland corporation (the "REIT"). The REIT is a
publicly-traded real estate investment trust. Prior to the Assignment,
Acquiror shall not constitute the agent of the UPREIT hereunder. As noted
above, the consummation of the Assignment shall be a condition precedent
to the Contributor's obligation to close, as set forth in this Agreement
("CONTRIBUTOR'S CONDITION PRECEDENT").
(b) Contribution Consideration. The consideration to be paid to
Contributor by the UPREIT for all of the Projects (other than the Option
Projects, for which the consideration shall be determined pursuant to
Paragraph 33, and Project No. 56, for which the consideration shall be
determined pursuant to Paragraph 39) [the "CONTRIBUTION CONSIDERATION"]
shall consist of that number of LP Units (as defined below) having an
aggregate value, calculated as provided in Subparagraph 2(c)(iii) below,
equal to (the "TOTAL LP UNIT AMOUNT"): (A) the sum of the "ALLOCATED
AMOUNTS" assigned to all of the Projects, as provided on Exhibit A-2
attached hereto, as Exhibit A-2 may be modified pursuant to this
Subparagraph 2(b); minus (B) the sum of the Assumed Indebtedness with
respect to all Projects, as such amount may be modified as reflected in
the Final Exhibit A-2, as defined in and delivered pursuant to this
Subparagraph 2(b); minus (C) Contributor's Closing Costs (as defined in
Paragraph 14 below); minus (D) any prorations described in Paragraph 13
below ("PRORATIONS") and credited, as of the Closing Date (as defined
below), to Acquiror; plus (E) any Prorations credited, as of the Closing
Date, to Contributor; minus (F) any other adjustments described in this
Agreement ("ADJUSTMENTS"), including, without limitation, those pursuant
to Paragraphs 22 and 34 below, occurring on or prior to the Closing Date
in favor of Acquiror; and plus (G) any Adjustments occurring on or prior
to the Closing Date in favor of the Contributor, including, without
limitation, those pursuant to Paragraphs 26 and 34 below. The parties
acknowledge and agree that the form of Exhibit A-2 attached hereto as of
the date of this Agreement (the "PRELIMINARY EXHIBIT A-2") is for
illustration and planning purposes only. It shall be an Acquiror's
Condition Precedent (as defined below) and a Contributor's Condition
Precedent that the UPREIT and Contributor prepare and reasonably agree
upon an updated Exhibit A-2 (the "FINAL EXHIBIT A-2") to be substituted
for the Preliminary Exhibit A-2 as of and on the Closing Date. (The Final
Exhibit A-2 may be incorporated into the closing statement required to be
delivered at Closing.) If the above-described calculation of Contribution
Consideration would result in a fractional number of LP Units to be
delivered to Contributor, the UPREIT shall round that fraction up or down,
as the case may be, to the nearest whole number of LP Units. The Projects
are to be contributed to the UPREIT subject to the corresponding items of
Assumed Indebtedness, which, subject to Paragraph 34 below, will be
assumed by the UPREIT and paid off, in full, simultaneously with the
occurrence of the Closing. No portion of the Contribution Consideration
shall be paid directly to Contributor in cash. Provided that all
conditions precedent to Acquiror's obligations to close as set forth in
this Agreement (collectively, "ACQUIROR'S CONDITIONS PRECEDENT") have been
satisfied and fulfilled, or waived in writing by Acquiror, the
Contribution Consideration shall be paid to Contributor at Closing
pursuant to Subparagraph 2(c) below.
(c) LP Units.
(i) The Total LP Unit Amount shall be paid by the UPREIT's
delivery of Partnership Units (as that term is defined in the
Partnership Agreement, as defined below) in the UPREIT (the "LP
UNITS"). The Total LP Unit Amount and the allocation thereof shall
be set forth in the LP Unit Schedule (as defined below). The LP
Units shall be redeemable for shares of common stock of the REIT
("STOCK")
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or cash (or a combination thereof) in accordance with the redemption
procedures described in the Partnership Agreement. Contributor
acknowledges that the LP Units are not certificated and that,
therefore, the issuance of the LP Units shall be evidenced by the
execution and delivery of an amendment to the Partnership Agreement,
which amendment shall be executed and delivered by the REIT at
Closing (the "AMENDMENT").
(ii) Contributor hereby directs the UPREIT to deliver to
Contributor, at Closing, LP Units issued in the names of, and for
distribution to, those LP Unit Recipients set forth on Exhibit A-3
attached hereto (the "LP UNIT RECIPIENTS"). Each LP Unit Recipient
shall receive, with respect to the respective Project(s) in which it
has an interest as reflected on Exhibit A-3, that number of LP Units
(subject to appropriate rounding to eliminate fractional LP Units) as
shall be set forth on the updated Exhibit A-3 to be prepared by
Acquiror and to be mutually and reasonably approved by Contributor
and the UPREIT at Closing (the "UPDATED EXHIBIT A-3" or the "LP UNIT
SCHEDULE"). (The Updated Exhibit A-3/LP Unit Schedule may be
incorporated into the closing statement required to be delivered at
Closing.) With respect to each Project, such number shall be
calculated by multiplying (A) the Total LP Unit Amount, times (B) the
percentage of the Total LP Unit Amount allocated to such Project at
Closing, times (C) the "Ownership Percentage in Subject Project" of
each LP Unit Recipient as reflected on Exhibit A-3.
(iii) For purposes of determining the number of LP Units to be
delivered in satisfaction of payment of the Total LP Unit Amount, the
Total LP Unit Amount shall be divided by a "UNIT PRICE," which shall
be equal to the weighted average (by daily trading volume) of the
closing price of shares of Stock for the forty-five (45) trading days
preceding, but excluding, the five (5) business days prior to the
Closing Date (the "CALCULATED PRICE"). The LP Unit Schedule shall
reflect the Unit Price. Notwithstanding anything to the contrary in
this Subparagraph 2(c)(iii): (A) in the event the Calculated Price
is calculated to be in excess of $30.00, the Unit Price shall be
deemed to be $30.00; and (B) in the event the Calculated Price is
calculated to be less than $22.00, the Unit Price shall be deemed to
be $22.00. In the event that, on the Closing Date, Contributor and
Acquiror fail to agree upon the LP Unit Schedule and Acquiror's
corresponding calculation (as contemplated above) of the weighted
average of the closing price of shares of Stock, then the Closing
shall be postponed until such calculation and determination of the
number of LP Units to be delivered at the rescheduled Closing (the
"INDEPENDENT DETERMINATION") shall be made by KPMG Peat Marwick LLP
(the "INDEPENDENT FIRM"); provided, however, that if KPMG Peat
Marwick LLP, as of the date on which such calculation is required to
be made, represents any or all of Contributor, Acquiror or any or all
of their respective affiliates, then the Independent Firm shall be
another so-called "Big Six" accounting firm mutually and reasonably
agreed to by Coopers & ▇▇▇▇▇▇▇ LLP, on behalf of Acquiror, and Ernst
& Young LLP, on behalf of Contributor. The Independent Determination
shall be conclusive and binding on Contributor and Acquiror, and each
of Contributor and Acquiror shall pay one-half of the fees imposed by
the Independent Firm in connection with the Independent
Determination.
(iv) Contributor has delivered to Acquiror, and has caused its
partners, shareholders, members (including, without limitation, those
partners, shareholders and members that are LP Unit Recipients) and
any other LP Unit Recipient to deliver to Acquiror, or to any other
party designated by Acquiror, a completed questionnaire and
representation letter (in substantially the form set forth in Exhibit
T attached hereto, the "INVESTOR MATERIALS") [signed by a custodian
under the New York Uniform Gift to Minors Act ("NYUGMA") where
appropriate, for those LP Unit Recipients who are minors under New
York law] providing, among other things, information concerning
Contributor's and each of its partners' and shareholders' status as
an accredited investor ("ACCREDITED INVESTOR"), as such term is
defined in Regulation D promulgated under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and shall provide or cause to be
provided to Acquiror, or to any other party designated by Acquiror,
such other information and documentation as may reasonably be
requested by Acquiror in furtherance of the
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issuance of the LP Units as contemplated hereby. Notwithstanding
anything contained in this Agreement to the contrary, in the event
that, in the written opinion of securities or tax counsel for
Acquiror, as the case may be, any such person or entity is not
considered an Accredited Investor, the proposed issuance of LP Units
hereunder might not qualify for the exemption from registration
provided by Section 4(2) of the Securities Act, or the proposed
issuance of LP Units hereunder would violate any applicable federal
or state securities laws, rules or regulations, or agreements to
which the REIT or the UPREIT is privy, or any tax related or other
rules, agreements or constraints applicable to Acquiror, the REIT or
the UPREIT, Acquiror shall so advise Contributor, in writing (the
"REGULATORY VIOLATION NOTICE") within five (5) business days after
such determination is made. The interest of each and every person or
other entity with respect to which Acquiror delivers a Regulatory
Violation Notice shall be redeemed by the appropriate Contributor
prior to the Closing Date. In the event of any such redemption, the
Updated Exhibit A-3 shall reflect the updated list of LP Unit
Recipients and the revised ownership percentages in the appropriate
Projects resulting from such redemption.
(v) Contributor hereby covenants and agrees that it shall
deliver or shall cause each of its partners, shareholders, members
and any other LP Unit Recipient to deliver to Acquiror, or to any
other party designated by Acquiror, any documentation that may be
required under the Partnership Agreement or any charter document of
the REIT, and such other information and documentation as may
reasonably be requested by Acquiror, at such time as any LP Units are
redeemed for shares of Stock ("CONVERSION SHARES"). The preceding
covenant shall survive the Closing and shall not merge into any of
the conveyancing documentation delivered at Closing.
(vi) The UPREIT, the REIT and the Contributor intend to and
shall treat the transfer of the Projects in exchange for LP Units
(the "EXCHANGE") as a partnership contribution pursuant to Section
721 of the Internal Revenue Code of 1986, as amended (the "CODE").
The UPREIT and the REIT shall cooperate in all reasonable respects
with Contributor to effectuate such Exchange; provided, however,
that:
(A) The Closing shall not be extended or delayed by reason
of such Exchange, unless Acquiror has breached its obligations
to Contributor under this Agreement;
(B) None of Acquiror, the UPREIT nor the REIT shall be
required to incur any additional extraordinary (as opposed to a
normal, customary and recurring) cost or expense primarily as a
result of such Exchange, other than the cost of Acquiror's
counsel in connection with the preparation of this Agreement.
Notwithstanding anything to the contrary in the foregoing
sentence, the UPREIT and the REIT shall be responsible for costs
associated with any IRS audit made directly of either or both of
the UPREIT and the REIT (as opposed to an audit that is
ancillary to an audit made of any or all of the entities
comprising the Contributor). Contributor hereby covenants and
agrees that it shall, forthwith on demand, reimburse the UPREIT
or the REIT for any additional extraordinary cost or expense (as
opposed to a normal, customary and recurring cost or expense,
such as the analysis or computation related to the manner in
which depreciation and built-in gain are allocated amongst the
LP Unit Recipients), including, but not limited to, reasonable
attorneys' fees, incurred by either or both of the UPREIT and
the REIT as a result of the characterization of the contribution
of the Projects pursuant to this Agreement as a partnership
contribution pursuant to Section 721 of the Code, or which
additional extraordinary cost or expense is or may be otherwise
directly attributable to the Exchange;
(C) Subject to the UPREIT's and the REIT's performance and
fulfillment in all material respects of the express covenants
and conditions contained in this Agreement, none of Acquiror,
the UPREIT or the REIT
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warrant, nor shall any of them be responsible for, the federal,
state or local tax consequences to any or all of Contributor,
any or all of Contributor's partners and any or all of the LP
Unit Recipients of the transactions contemplated by this
Agreement (including, without limitation, the allocation of
losses and liabilities under the Code); and
(D) Except as otherwise expressly set forth in this
Agreement and in the documents executed and delivered by
Acquiror at the Closing, none of Acquiror, the UPREIT nor the
REIT shall incur any liability under any document or agreement
required to be executed or delivered in connection with such
Exchange.
The provisions of this Subparagraph 2(c)(vi) shall survive the Closing and
shall not merge into any conveyancing documents delivered at Closing.
(d) Partnership Agreement and Other Materials. For purposes hereof,
the term "PARTNERSHIP AGREEMENT" shall mean the UPREIT's Second Amended
and Restated Limited Partnership Agreement dated as of June 30, 1994, as
amended, a true and complete copy of which Partnership Agreement has been
furnished by Acquiror to Contributor prior to the Contract Date.
Contributor hereby acknowledges and agrees that the ownership of LP Units
by Contributor and its partners and their respective rights and
obligations as limited partners of the UPREIT (including, without
limitation, their right to transfer, encumber, pledge and exchange LP
Units) shall be subject to all of the express limitations, terms,
provisions and restrictions set forth herein and in the Partnership
Agreement. In that regard, Contributor hereby covenants and agrees that,
at Closing, it shall execute any and all documentation reasonably required
by the UPREIT and the REIT to formally memorialize the foregoing
(collectively, the "PARTNERSHIP AGREEMENT ADOPTION MATERIALS").
Contributor further acknowledges that it and its partners have received
and reviewed, prior to the Contract Date, the REIT's Prospectus
Supplement, dated October 21, 1996, and the Prospectus supplemented
thereby dated October 4, 1996 (collectively, the "PROSPECTUS"), which
Prospectus describes the risk factors associated with an investment in the
REIT. Contributor acknowledges that it and its partners have received and
reviewed, prior to the Contract Date, the REIT's Annual Report on Form
10-K for the year ended December 31, 1995, the REIT's Proxy Statement
soliciting proxy materials in connection with the REIT's 1996 annual
meeting of stockholders and the REIT's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1996, June 30, 1996, and September 30, 1996,
and have otherwise had an opportunity to conduct a due diligence review of
the affairs of the UPREIT and the REIT.
(e) Transfer and Voting Restrictions. Each LP Unit Recipient agrees
that it may only sell, transfer, assign, pledge or encumber, or otherwise
convey any or all of the LP Units delivered to it in connection with this
transaction and, if applicable, any Conversion Shares (any of the
foregoing by any LP Unit Recipient, a "TRANSFER") in strict compliance
with this Agreement, the Partnership Agreement, the charter documents of
the REIT, the registration and other provisions of the Securities Act (and
the rules promulgated thereunder), any state securities laws, the rules of
the New York Stock Exchange and the Registration Rights Agreement, in each
case as may be applicable. In the event that the number of Conversion
Shares held by the LP Unit Recipients or their respective successors and
assigns, at any time, or from time to time, exceeds, in the aggregate,
1,252,640 shares of Stock (as adjusted, from time to time, by any dividend
payable in Stock, any stock split, or any reclassification affecting the
Stock) [the "THRESHOLD AMOUNT"] the parties agree that those Conversion
Shares in excess of the Threshold Amount shall be subject to a voting
trust agreement (the "VOTING TRUST AGREEMENT"), the terms and provisions
of which Voting Trust Agreement shall be negotiated in good faith by the
parties promptly upon the parties' determination that the Contributor
shall hold, in the aggregate, Conversion Shares in excess of the Threshold
Amount. It shall be a condition to the redemption of LP Units that would
result in the issuance of Conversion Shares in excess of the Threshold
Amount that the Voting Trust Agreement be executed by the LP Unit
Recipients (or their respective successors and assigns, as the case may
be). The Voting Trust Agreement shall provide, among other terms
negotiated (reasonably and in good faith) by the REIT and the LP Unit
Recipients (or their respective successors and assigns, as the case may
be), that: (i) the chief executive officer of the REIT shall be the
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trustee of the voting trust established pursuant to the Voting Trust
Agreement (the "VOTING TRUST"), and shall have complete discretion to vote
those Conversion Shares (subject to the Voting Trust) that exceed the
Threshold Amount; (ii) the Voting Trust shall be governed by, and have the
maximum duration permitted under, Maryland law; and (iii) the Conversion
Shares of each LP Unit Recipient with Conversion Shares shall be subject
to the Voting Trust on a pro rata basis (based on the number of Conversion
Shares held by LP Unit Recipients at any time a Voting Trust is created)
unless the applicable parties otherwise agree to an alternative mechanism
for the determination of which Conversion Shares held by which LP Unit
Recipients shall be subject to the Voting Trust. In addition to the
possible Voting Trust, the total amount of LP Units held, from time to
time, by the LP Unit Recipients or any successors or assigns ("▇▇▇▇▇▇▇
▇▇▇▇▇▇ UNITS") shall be subject to a voting agreement, which will be
incorporated into the Amendment and shall be in the form of Exhibit U
attached hereto (the "UNIT VOTING AGREEMENT"). The REIT shall not consent
to any amendment to any portion of the Partnership Agreement that sets
forth any provisions of the Unit Voting Agreement without the prior
written consent of the holders of a majority of the then-outstanding
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Units, which consent shall not be unreasonably withheld or
delayed. The provisions of this Subparagraph 2(e) shall survive the
Closing and shall not merge into any conveyancing documents delivered at
Closing.
(f) Lock-Up Period. The LP Unit Recipients agree that for a period
of one year following the Closing (the "LOCK-UP PERIOD") and except as
otherwise expressly provided in this Subparagraph (f), they may not
Transfer any or all of the LP Units delivered to the LP Unit Recipients in
connection with this transaction. Notwithstanding the foregoing
limitations, prior to the expiration of the Lock-Up Period, the LP Unit
Recipients may (in each case, in accordance with the Partnership
Agreement) each (i) pledge or encumber (to or for the benefit of an
institutional lender, which, in addition to banks, shall include, without
limitation, securities firms, broker/dealers and other entities engaged in
the business of commercial lending) a maximum of fifty percent (50.0%) of
those LP Units issued on the Closing Date to the LP Unit Recipient in
question (and that are not otherwise pledged by such LP Unit Recipient to
the UPREIT or the REIT under the ▇▇▇▇▇▇▇▇ Pledge Agreement and the JCP
Pledge Agreement, as those terms are defined below); provided, however,
that any such pledge or encumbrance shall be expressly subject to the
terms and provisions of Subparagraph 2(e) above; and provided, further,
that none of the LP Units pledged to the UPREIT or the REIT under the
▇▇▇▇▇▇▇▇ Pledge Agreement and the JCP Pledge Agreement may be pledged by
any LP Unit Recipient pursuant to this clause (i); (ii) redeem any or all
of their respective LP Units; provided, however, that (x) notwithstanding
such redemption, no LP Unit Recipient may Transfer any of its Conversion
Shares during the Lock-Up Period, and if and to the extent that, under the
terms of this Agreement or any document delivered at Closing, an LP Unit
Recipient pledges any or all of its LP Units to the UPREIT or the REIT,
then as a condition precedent to the redemption of such pledged LP Units,
the LP Unit Recipient shall instead pledge to the UPREIT or the REIT, as
the case may be, those Conversion Shares issued to such LP Unit Recipient
upon the redemption of its pledged LP Units (which pledge of Conversion
Shares shall be substantially comparable to the pledge of the LP Units);
and (iii) Transfer any or all of their LP Units in any transaction
described in Schedule 2(g); provided, however, that if and to the extent
that any transferring LP Unit Recipient has, pursuant to the terms of this
Agreement or any other document delivered at Closing, pledged any or all
of its LP Units to the UPREIT or the REIT, as the case may be, then as a
condition precedent to the Transfer of any of such pledged LP Units, the
transferee LP Unit Recipient shall instead pledge to the UPREIT or the
REIT, as the case may be, those LP Units that are the subject of such
Transfer. The provisions of this Subparagraph 2(f) shall survive the
Closing and shall not merge into any conveyancing documents delivered at
Closing.
(g) Volume Restriction. Subject to the Lock-Up Period, the LP Unit
Recipients agree that, collectively, they shall not (i) during the first
calendar year after the Closing Date, effect a Transfer or series of
Transfers involving an aggregate number of Conversion Shares that exceeds
one-third (1/3) of the number of shares of Stock for which the ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Units outstanding immediately following the Closing could be
redeemed; (ii) during the second calendar year after the Closing Date,
effect a Transfer or series of Transfers involving an aggregate number of
Conversion Shares that exceeds
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two-thirds (2/3) of the number of shares of Stock for which the ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Units outstanding immediately following the Closing could be
redeemed; and (iii) during any 10-trading day period, effect a Transfer or
series of Transfers involving an aggregate number of Conversion Shares
that exceeds 30% of the average daily trading volume of the Stock during
the 30 trading days prior to the first day of any such 10-trading day
period. The volume restrictions set forth in this Subparagraph 2(g) shall
be inapplicable to any Conversion Shares sold in (A) an underwritten
offering or (B) those transactions described in Schedule 2(g) attached
hereto. The provisions of this Subparagraph 2(g) shall survive the
Closing and shall not be merged into any of the conveyancing documents
delivered at Closing.
(h) Registration Rights. At Closing, the REIT shall enter into a
"REGISTRATION RIGHTS AGREEMENT" (which for all purposes hereunder shall
include the supplement thereto) substantially in the form of Exhibit S
attached hereto, pursuant to which the REIT shall agree to register the
sale of Conversion Shares.
(i) Partnership Liabilities; Non-Taxable Transactions.
(i) Subject to the last sentence of this Subparagraph 2(i)(i)
and the provisions of Subparagraph 2(i)(ii) hereof, for a period of
ten years following the Closing Date (the "NON-TAXABLE DISPOSITION
PERIOD"), the REIT and the UPREIT shall use their good faith,
reasonable and diligent efforts:
(A) to cause any sale or other voluntary disposition (other
than through a deed in lieu of foreclosure, a foreclosure
action, or an act of eminent domain) of a Project to qualify for
non-recognition of gain under the Code, whether by means of
exchanges contemplated under Code Sections 351, 354, 355, 368,
721, 1031, 1033, or otherwise; provided, however, that the
foregoing shall not require the REIT and UPREIT, in their sole
and absolute discretion, to sell, or otherwise dispose of, or
prevent the REIT and UPREIT, in their sole and absolute
discretion, from selling or otherwise disposing of, a Project in
transactions which would result in a loss for federal income tax
purposes;
(B) to maintain, on a continuous basis, an amount of
indebtedness for which the Contributor (including, for this
purpose, its partners or transferees, collectively) bears the
"economic risk of loss" within the meaning of Treasury
Regulation Section 1.752-2(a), in an amount equal to $27,000,000
(the "MAXIMUM AMOUNT");
(C) to avoid a distribution of property that would cause
Contributor to recognize income or gain pursuant to the
provisions of either or both of Code Sections 704(c)(1)(B) and
737;
(D) to avoid a termination of the UPREIT pursuant to the
provisions of Code Section 708(b)(1)(B); and
(E) as long as Contributor (including, for this purpose,
its partners or transferees, collectively) remains as a partner
of the UPREIT, the REIT and/or UPREIT agree to utilize the
"traditional method," without curative allocations (as provided
for in the Partnership Agreement), of allocating gain and
depreciation under Code Section 704(c) for the Projects.
In all events, the Non-Taxable Disposition Period shall terminate,
and the provisions of this Subparagraph 2(i)(i) shall be of no
further force or effect, as of the earlier to occur of (a) the
failure, for any reason, of any or all of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
members of their respective immediate families (spouse and children)
[collectively referred to as the "PROTECTED PARTIES"], or entities in
which the Protected Parties own a 10% or greater beneficial interest
(whether by vote or value, including without limitation, through a
trust), to own, in the aggregate, 10% or more of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Units issued on the Closing Date, or (b) with respect to the
requirements of Subparagraph 2(i)(i)(A) only, an amendment or other
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14
material revision to Code Section 1031 or the Treasury Regulations
promulgated thereunder, which amendment or revision materially and
adversely alters the mechanics for implementing a "like-kind"
exchange of real estate pursuant to such provisions.
(ii) Notwithstanding the above provisions of this Subparagraph
2(i), the obligation of either or both of the REIT and the UPREIT to
undertake those activities set forth in Subparagraphs 2(i)(i)(A)-(E)
hereof shall, in all events, be subject to, and otherwise interpreted
consistent with, the REIT's fiduciary and statutory obligations to
all partners (both present and future) in the UPREIT, and to its
stockholders, both present and future. Notwithstanding the preceding
sentence, however, the UPREIT and/or REIT shall use every reasonable
effort (but shall not be required) to engage in a non-taxable
disposition of a Project. Further, for purposes of this Subparagraph
2(i), and except as otherwise provided in Subparagraph 2(k), the LP
Unit Recipients agree that neither the REIT nor the UPREIT shall be
required to obtain any approval, consent or waiver from, or take
direction from, or otherwise communicate with, any person or
representative or entity concerning a particular Project, other than
those certain persons designated on Schedule 2(i)(ii) attached hereto
(and at the addresses set forth therein) with respect to such Project
(the "PROJECT CONTACTS"). Notification of the Project Contacts for a
Project shall constitute sufficient and effective notification to all
LP Unit Recipients associated with that Project, and written
communications from the Project Contacts for a Project shall bind all
LP Unit Recipients associated with, related to, or having an interest
in, that Project.
The provisions of this Subparagraph 2(i) shall survive the Closing
and shall not merge into any conveyancing documents delivered at Closing.
(j) Amendments to Partnership Agreement. It shall be a Contributor's
Condition Precedent that the Amendment be duly authorized and validly
executed on the Closing Date, and provide for the matters set forth in
Exhibit P hereto.
(k) Notice of Certain Transactions.
(i) In the event, on or before the tenth anniversary of the
Closing Date, of (each, a "TAX-RELATED EVENT"): (A) a post-Closing
sale of any Project; (B) a reduction in the amount of indebtedness to
be maintained pursuant to Subparagraph 2(i)(i)(B) to an amount that
is less than the Maximum Amount (other than by regularly or other
scheduled principal payments); or (C) an attempt by the UPREIT to
effect a Project transfer as permitted by Subparagraph 2(i)(i)(A)
above occurs, but the terms of Section 1031 of the Code or the
regulations promulgated thereunder have changed such that the
mechanics for implementing a tax-deferred exchange of real estate are
materially and adversely altered (whether with respect to the timing
required to identify and close upon an exchange property or
otherwise) from those mechanics in place as of the Contract Date,
and, in any case, provided that the obligations of the REIT and the
UPREIT under Subparagraph 2(i) shall not have otherwise terminated by
the terms of such Subparagraph, the UPREIT shall give written notice
of such Tax-Related Event (a "TAX-RELATED NOTICE") to the relevant
Project Contacts for the subject Project as soon as practicable after
the occurrence of such event becomes reasonably likely, or, if later,
on the date on which the UPREIT is, in the reasonable judgment of its
securities counsel, legally permitted, under applicable federal and
state securities laws and regulations, and the rules and regulations
of the New York Stock Exchange, to disseminate such Tax-Related
Notice to the Project Contacts.
(ii) Upon their receipt of a Tax-Related Notice, the Project
Contacts shall designate a single spokesperson from among them to
represent the LP Unit Recipients in connection with the Tax-Related
Event that triggered the delivery of the such Tax-Related Notice (the
"SPOKESPERSON"). The LP Unit Recipients hereby irrevocably appoint
any Spokesperson so designated as its attorney-in-fact, with full
power to grant in the name of and on behalf of such LP Unit
Recipient, any and all consents, waivers, approvals, and to execute
any and all documents required or
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appropriate to be executed, whether with respect to this Agreement,
the Partnership Agreement or otherwise; provided, however, that such
attorney-in-fact may only act within the scope necessitated by the
event giving rise to the appointment of such Spokesperson. The
UPREIT and the REIT shall be entitled to rely on the first written
notice either of them receives that designates a Spokesperson with
respect to a given Tax-Related Event, and shall be under no
obligation to deal with any person other than the Spokesperson so
designated in connection with the subject Tax-Related Event as it
relates to the LP Unit Recipients. The UPREIT and the REIT shall have
no obligation to deal with any person or entity whatsoever in
connection with a Tax-Related Event unless and until a Spokesperson
is properly designated. The UPREIT and the REIT, and their respective
independent accountants, attorneys and other representatives and
advisors, shall cooperate with the Spokesperson in order to consider
strategies proposed by or through the Spokesperson (it being
understood that neither the REIT nor the UPREIT shall have any
obligation whatsoever to propose any such strategies), on behalf of
affected LP Unit Recipients, which strategies are designed or
intended to defer or mitigate any recognition of gain under the Code
by any LP Unit Recipient or any shareholder or partner in any LP Unit
Recipient (any such gain recognition being referred to herein as an
"ADVERSE TAX CONSEQUENCE") that may result from a Tax-Related Event,
whether such strategies involve any or all of the LP Unit Recipients
(including Contributor) on a basis independent of the REIT and
UPREIT, or in conjunction with the REIT or the UPREIT. Each party
shall pay its own fees and expenses incurred in connection with the
procedure delineated in this Subparagraph 2(k). Under this
Subparagraph 2(k), the UPREIT and the REIT are only obligated to
cooperate with the Spokesperson on behalf of any LP Unit Recipient
(or any partner, shareholder or member of any LP Unit Recipient) who
may be facing an Adverse Tax Consequence, in connection with such LP
Unit Recipient's determination of the efficacy of tax-deferral or
tax-mitigation alternatives proposed by or through the Spokesperson
that may involve the REIT or the UPREIT. In no event shall either the
REIT or the UPREIT be required to incur any expense [other than the
cost of professional fees and expenses and administrative expenses
incurred in complying with this Subparagraph 2(k)] in connection its
cooperation under this Subparagraph 2(k), nor shall any transaction
duly approved by the Board of Directors of the REIT that results in a
Tax-Related Event be required to be suspended, postponed, impeded or
otherwise adversely affected by virtue of any potential Adverse Tax
Consequence. The provisions of this Subparagraph 2(k)(ii) shall
survive to the Closing and shall not merge into any conveyancing
documents delivered at Closing.
3. CLOSING AND ▇▇▇▇▇▇▇ MONEY.
(a) Closing. The contribution and delivery of LP Units contemplated
herein shall be consummated at a closing ("CLOSING") to take place at the
offices of Contributor's counsel, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on the basis of a "New York style" closing with a
representative of the Title Company (as defined below) in attendance. The
Closing shall occur on January 30, 1997, at 9:30 a.m. New York time or at
such other time and at such other place as the parties may agree upon in
writing (the "CLOSING DATE"). The Closing shall be effective as of 12:01
a.m. New York time on the Closing Date. Notwithstanding the foregoing,
the risk of loss of all or any portion of any or all of the Projects shall
be borne by Contributor up to and including the actual time of the
Closing, and thereafter by Acquiror, subject to the terms and conditions
of Paragraph 15 below.
(b) ▇▇▇▇▇▇▇ Money.
(i) Escrowee. Unless the Closing shall have already occurred,
within three (3) business days after the Contract Date, the parties
shall enter into escrow instructions in substantially the form
attached hereto as Exhibit C (the "ESCROW AGREEMENT," the escrow
created thereby being referred to herein as the "ESCROW"),
designating Commonwealth Land Title Insurance Company as the escrowee
thereunder (the "ESCROWEE"). The parties hereby authorize their
respective attorneys to execute the Escrow Agreement and to make such
amendments thereto as they
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shall deem necessary or convenient to close the transaction
contemplated by this Agreement.
(ii) ▇▇▇▇▇▇▇ Money Deposit. Unless the Closing shall have
already occurred, not later than three (3) business days following
the Contract Date, Acquiror shall deposit into the Escrow, in
accordance with the terms of the Escrow Agreement, and as its ▇▇▇▇▇▇▇
money deposit (the "▇▇▇▇▇▇▇ MONEY"), the sum of One Million and
No/100 Dollars ($1,000,000). The ▇▇▇▇▇▇▇ Money may be in the form of
cash or the Letter of Credit (as defined below).
(iii) Application at Closing. At Closing, the ▇▇▇▇▇▇▇ Money,
and any and all interest earned thereon, shall be paid to Acquiror.
(iv) Letter of Credit. The ▇▇▇▇▇▇▇ Money may be in the form of
an irrevocable standby letter of credit ("LETTER OF CREDIT") issued
by an FDIC-insured, national bank having gross assets in excess of
$10,000,000,000 (an "APPROVED DEPOSITORY" and, for purposes of the
Letter of Credit, the "ISSUER"). Escrowee shall be the beneficiary
under the Letter of Credit, and the Letter of Credit shall expire no
earlier than March 31, 1997. The Letter of Credit shall be
non-transferable, and shall permit Escrowee to present it to the
Issuer for payment only if accompanied by a sworn certificate,
executed by or on behalf of Contributor or one or more duly
authorized partner(s) of Contributor (it being understood that for
such purpose ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall each constitute such
an authorized partner), certifying that Contributor has declared
Acquiror to be in default under this Agreement and that Contributor
is, therefore, entitled to the proceeds of the Letter of Credit (the
"DEFAULT CERTIFICATE"); provided, however, that such Default
Certificate shall not be required in the event that Escrowee presents
the Letter of Credit to the Issuer pursuant to the penultimate
sentence of this Subparagraph (b)(iv). Upon its receipt from
Contributor of the Default Certificate, the Escrowee is hereby
instructed to (A) notify Acquiror as provided in Paragraph 19 of this
Agreement; and (B) subject to the terms and notice requirements of
the Escrow Agreement, contemporaneously present the Letter of Credit
to the Issuer and deliver the proceeds thereof to Contributor. In
the event that Contributor delivers a Default Certificate to
Escrowee, Escrowee shall have no right or obligation to review the
underlying facts and circumstances to determine whether or not such
Default Certificate is correct. Notwithstanding anything contained
herein or in the Escrow Agreement to the contrary and irrespective of
any contrary instruction from Acquiror, in the event that the Closing
Date is delayed to a date on or after March 1, 1997, whether by
mutual agreement of the parties or due to the pendency of a dispute
between the parties concerning this Agreement, and any Letter of
Credit on deposit with Escrowee is not renewed or replaced by
Acquiror at least thirty (30) days prior to its expiration date, then
such Letter of Credit shall be presented by Escrowee to the Issuer
for payment prior to its expiration date, and the proceeds thereof
shall be held in the Escrow in accordance with the terms of the
Escrow Agreement. Upon Closing, Escrowee is hereby instructed to
return the Letter of Credit to Acquiror.
4. CONTRIBUTOR'S PRE-CLOSING DELIVERIES. To the extent in Contributor's
possession or control, Contributor shall continue to make available to
Acquiror, from and after the Contract Date, at reasonable times and upon
reasonable notice, copies of all documents, contracts, information, Records (as
defined below) and exhibits relevant to the transaction that is the subject of
this Agreement, including, but not limited to, the documents listed as
"CONTRIBUTOR'S DELIVERIES" on Exhibit D attached hereto. In the event that
Acquiror exercises its unilateral right to terminate this Agreement pursuant to
Paragraph 5 below, all originals of items, if any, so delivered by Contributor
pursuant to this Paragraph 4 shall be returned to Contributor, and all copies
of items so delivered by Contributor pursuant to this Paragraph 4 shall be
destroyed by Acquiror. In the event this Agreement is terminated for any
reason and the transactions contemplated herein do not close, Acquiror shall
promptly deliver to Contributor copies of all diligence reports prepared for
Acquiror by third parties with respect to the physical, structural and/or
environmental condition of the Projects (the "DUE DILIGENCE REPORTS");
provided, however, that this requirement shall only be applicable in the event
that Contributor has reimbursed Acquiror, prior to the date of such delivery by
Acquiror, for due diligence costs
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to the extent required to be paid by Contributor pursuant to those certain
letter agreements dated October 11, 1996 and January 17, 1997 between ▇▇▇
▇▇▇▇▇▇ (on behalf of Contributor) and Acquiror (and pursuant to any other
letter agreement into which such parties may enter into subsequent to the
Contract Date with respect to the sharing of due diligence costs). The
obligations of the parties under this Paragraph 4 shall survive the Closing or
the termination of this Agreement indefinitely.
5. INSPECTION PERIOD.
(a) Basic Project Inspection. At all times prior to Closing and
during normal business hours, including times following the "INSPECTION
PERIOD" [which Inspection Period is defined to be the period from and
after the Contract Date, through and including: (x) January 30, 1997 with
respect to all matters described in this Paragraph 5 other than that
described in Subparagraph 5(b); and (y) January 30, 1997 with respect to
all matters described in Subparagraph 5(b)], Acquiror, its agents and
representatives shall be entitled to conduct a "BASIC PROJECT INSPECTION,"
which will include the rights to: (i) enter upon the Land and
Improvements, on reasonable notice to Contributor, to perform inspections
and tests of any and all of the Projects, including, but not limited to,
inspection, evaluation and testing of the heating, ventilation and
air-conditioning systems and all components thereof (collectively, the
"HVAC SYSTEM"), all structural and mechanical systems within the
Improvements, including, but not limited to, sprinkler systems, power
lines and panels, air lines and compressors, automatic doors, tanks,
pumps, plumbing and all equipment, vehicles, and Personal Property; (ii)
examine and copy any and all books, records, tax returns, correspondence,
financial data, leases, and all other documents and matters, public or
private, maintained by Contributor or its agents, relating to receipts and
expenditures pertaining to all of the Projects for the three (3) most
recent full calendar years and all or any portion of the current calendar
year and all contracts, rental agreements and all other documents and
matters, public or private, maintained by Contributor or its agents,
relating to operations of the Projects (collectively, the "RECORDS");
(iii) make investigations with regard to zoning, environmental (including
an environmental "ASSESSMENT" or "ADDITIONAL ASSESSMENT" as specified in
Subparagraph 5(b) below, in, under or upon the Projects, or any Containers
(as defined below) on, or under, the Land), building, code, regulatory and
other legal or governmental requirements; (iv) make or obtain market
studies and real estate tax analyses; and (v) upon reasonable notice to
Contributor, interview Tenants (in which event a representative of
Contributor may be present during each and every such interview, if
Contributor so elects) with respect to their current and prospective
occupancies. Acquiror agrees to give no less than 48 hours' prior notice
to ▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇ of any component of the Basic Project
Inspection requiring access to any Project. Contributor may elect to have
a representative(s) accompany Acquiror or its consultants on any part of
the Basic Project Inspection requiring access to any Project. Prior to,
and throughout the performance of, the Basic Project Inspection, Acquiror
shall cause its environmental consultant(s) to maintain workers'
compensation insurance, as required by law, general liability (single
limit) insurance with coverage of no less than $1,000,000 per occurrence,
umbrella liability insurance with coverage of no less than $10,000,000,
professional errors and omissions liability insurance of no less than
$3,000,000, and contractor's pollution liability insurance with coverage
of no less than $1,000,000 per occurrence. Contributor and the other LP
Unit Recipients and the partners therein (including their officers,
directors and employees) shall be named as additional insureds on each
policy described in the immediately preceding two sentences (provided
Contributor advises Acquiror, in writing, on or before the Contract Date,
of the specific names of all desired additional insureds), and
certificates of insurance evidencing such fact shall be delivered to
Contributor prior to the commencement of the Basic Project Inspection.
Acquiror agrees that its environmental consultant shall conduct no soil or
groundwater sampling or other intrusive testing, whether as part of a
Phase I or Phase II test, unless and until the location, scope and
methodology of such sampling or testing, as the case may be, as well as
the identity of the environmental consultant, have all been approved by
Contributor, such approval to not be unreasonably withheld or delayed. In
addition, prior to conducting any such environmental sampling, Acquiror
shall have a "utility markout" performed for the applicable Project and
delivered to Acquiror's environmental consultant and Contributor.
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In addition, Contributor shall provide, and cooperate in all
reasonable respects in providing, Acquiror with copies of, or access to,
such factual information (not previously provided) as may be reasonably
requested by Acquiror, and in the possession or control of Contributor, to
enable the REIT to issue (subsequent to Closing) one or more press
releases concerning the transaction that is the subject of this Agreement
(provided that any press release to be issued by Contributor or Acquiror
shall be subject to the prior approval, not to be unreasonably withheld or
delayed, of the other party), to file a Current Report on Form 8-K (as
specified on Exhibit Q attached hereto), if, as and when such filing may
be required by the Securities and Exchange Commission ("SEC") and to make
any other filings that may be required by any Governmental Authority (as
defined below). The obligation of Contributor to cooperate in providing
Acquiror with such information for Acquiror to file its Current Report on
Form 8-K shall survive the Closing for a period of two (2) years, and
shall not merge into any conveyancing documents delivered at Closing.
Without limitation of the foregoing, Acquiror or its designated
independent or other accountants may, at Acquiror's expense, audit the
Operating Statements (as defined in Exhibit D attached hereto), and
Contributor shall supply such existing documentation as Acquiror or its
accountants may reasonably request in order to complete such audit. If
Acquiror, in its sole and absolute discretion, determines that the results
of any inspection, test or examination do not meet Acquiror's criteria for
the purchase, financing or operation of any or all of the Projects in the
manner contemplated by Acquiror, including, but not limited to, if any
inspection, test or examination reveals the presence of a Hazardous
Condition (as defined below), any Hazardous Material, or toxic substance
(including, but not limited to, asbestos, chlordane or formaldehyde) in or
upon any of the Projects, or the existence of any Containers on, or under,
the Land, or any deficiency or code violation with respect to any aspect
of any Project, or if the information disclosed does not otherwise meet
Acquiror's investment criteria for any reason whatsoever, or if Acquiror,
in its sole and absolute discretion, otherwise determines that any or all
of the Project(s) is/are unsatisfactory to it, then subject to
Subparagraph 5(e) below, Acquiror may terminate this Agreement by written
notice to Contributor (the "TERMINATION NOTICE"), with a copy to Escrowee,
given not later than the last day of the Inspection Period (the "APPROVAL
DATE"), subject to the potential extension of the Approval Date as is
contemplated under Subparagraph 5(b). Upon such termination, the ▇▇▇▇▇▇▇
Money, together with all interest thereon, shall be returned immediately
to Acquiror and neither party shall have any further liability to the
other under this Agreement, except as otherwise provided herein. If
Acquiror fails to deliver the Termination Notice to Contributor prior to
the Approval Date, Acquiror's right to unilaterally terminate this
Agreement, pursuant to this Subparagraph 5(a) only, shall automatically be
deemed to have been deleted from this Agreement.
In the event of termination of this Agreement pursuant to the terms
of this Subparagraph 5(a), and in consideration of Contributor's
performance of its obligations under this ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ shall pay
to Contributor the sum of One Hundred and No/100 Dollars ($100.00)
simultaneously with the delivery of the Termination Notice. The parties
hereto acknowledge that Acquiror may expend material sums of money in
reliance on Contributor's obligations under this Agreement, in connection
with negotiating and executing this Agreement, furnishing the ▇▇▇▇▇▇▇
Money, conducting the inspections contemplated by this Paragraph 5 and
preparing for Closing, and that Acquiror would not have entered into this
Agreement without the availability of an Inspection Period. The parties
therefore agree that adequate consideration exists to support
Contributor's obligations hereunder, even before expiration of the
Inspection Period. Except to the extent otherwise specifically and
expressly provided in this Agreement (including, but not limited to, the
last grammatical paragraph of Paragraph 7.1 and the introductory clauses
of Subparagraph 9(b) below), the effect of any representations, warranties
or undertakings made by Contributor in this Agreement shall not be
diminished, abrogated, or compromised by the Basic Project Inspection, any
Assessment or Additional Assessment (each as defined below), or other
inspections, tests or investigations made by Acquiror.
(b) Environmental Assessment. During the Inspection Period, Acquiror
or Acquiror's agent(s) shall have the right to employ one or more
environmental consultants or other professional(s), such parties to be
approved by Contributor, which approval shall not be unreasonably withheld
or delayed, to perform or complete a "Phase I" environmental inspection
and assessment (the "ASSESSMENT") of the Projects, to evaluate
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the present and past uses of the Projects, and the presence on, in, at,
about, near or under the Land (including land sufficiently proximate to
any or all of the Projects as to pose the risk of migration, or other
adverse effect on any of the Projects) of any Hazardous Materials. The
scope of the Assessment shall be in Acquiror's sole discretion; provided
that it shall not exceed the full extent contemplated under ASTM Document
E 1527, which describes the "Phase I Environmental Site Assessment
Process." Contributor acknowledges and consents to such Assessment.
Acquiror and its consultants shall also have the right to undertake or
complete a technical review of final copies of all documentation, reports,
plans, studies and information in the possession of Contributor and its
environmental counsel concerning the environmental condition of the
Projects. In order to facilitate the Assessment and technical review,
Contributor shall extend its reasonable cooperation (but without
out-of-pocket expense to Contributor, unless reimbursed by Acquiror) to
Acquiror and its environmental consultants, including, without limitation,
providing complete access to (and copies requested by Acquiror of) all
files, documents, reports, maps, plans, photographs, surveys, sampling and
test results, analyses and studies concerning the Projects maintained by
either or both of Contributor and its environmental counsel. In the event
that (i) the results of the Assessment or technical review are
inconclusive as to a particular Project or Projects, or (ii) the results
of the Assessment or technical review reveal Recognized Environmental
Conditions, as defined in ASTM E 1527, then, at Acquiror's sole option (to
be exercised by written notice given to Contributor prior to the
expiration of the initial Inspection Period), the initial Inspection
Period shall be extended for an "ADDITIONAL PERIOD" of thirty (30) days,
with respect to that particular Project or Projects, to allow Acquiror to
conduct additional inspections and tests (the "ADDITIONAL ASSESSMENT").
Following the initial Inspection Period and during any Additional Period,
Acquiror's Basic Project Inspection shall be deemed completed, and
Acquiror shall be deemed satisfied, with respect to all Projects other
than those at which an Additional Assessment is being conducted (the "AA
PROJECTS"); and with respect to those AA Projects, the Basic Project
Inspection shall be deemed completed and Acquiror shall be deemed
satisfied with respect to all due diligence matters other than those that
are the subject of the Additional Assessment; therefore, from and after
the expiration of the initial Inspection Period, Acquiror may not deliver
a Termination Notice except as a result of matters considered in
connection with, or information derived from or as a result of, the
Additional Assessments at any or all of the AA Projects. A Termination
Notice delivered in connection with the Additional Assessment must be
delivered, if at all, no later than the last day of the Additional Period.
Such Additional Period, if applicable, shall automatically and
concomitantly extend the original Inspection Period (but only insofar as
described above), Approval Date and Closing Date, on a day-to-day basis,
for all relevant purposes hereunder, but specifically subject to the
limitations set forth in the preceding sentence (it being understood,
however, that in all events there shall be one Closing with respect to all
Projects that Acquiror elects to acquire pursuant to this Agreement,
excluding the Option Projects and Project No. 56). Any information
concerning the Projects expressly set forth in any writing delivered to
Acquiror by its environmental consultant(s), in connection with any
Assessment or Additional Assessment, shall be deemed to be incorporated by
reference in Schedule 9(b) hereto.
(c) Acquiror's Undertaking. Acquiror hereby covenants and agrees
that it shall cause all studies, investigations and inspections
(including, but not limited to, the Assessment and Additional Assessment,
if any), performed at the Projects pursuant to this Paragraph 5 to be
performed in a manner that does not unreasonably disturb or disrupt the
tenancies or business operations of any of the Projects. In the event
that, as a result of Acquiror's exercise of its rights under Subparagraphs
5(a) and 5(b), physical damage occurs to any or all of the Projects, then
Acquiror shall promptly notify Contributor and repair such damage, at
Acquiror's sole cost and expense, so as to return the damaged Project(s)
to the same condition as exists on the Contract Date. Acquiror hereby
indemnifies, protects, defends and holds harmless Contributor and the
other LP Unit Recipients and the partners therein (including their
officers, directors and employees and agents) from and against any and all
liabilities, losses, damages, claims, causes of action, judgments,
damages, penalties, fines, obligations, costs and expenses (including,
without limitation, the reasonable fees of attorneys or environmental
consultants) that Contributor actually suffers or incurs as a result of
any negligent, willful or intentional act or omission of Acquiror or its
agents or representatives or consultants that occurs during the course of,
or as a result of, any or all of the studies, investigations and
inspections (including,
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but not limited to, the Assessment and Additional Assessment, if any),
that Acquiror elects to perform (or causes to be performed) pursuant to
this Paragraph 5. The provisions of this Subparagraph 5(c) shall survive
the Closing or any sooner termination of this Agreement and shall not be
merged into any conveyance documents delivered at Closing.
(d) Confidentiality. Contributor, Acquiror, the REIT and the UPREIT
each agree to maintain in confidence the information contained in this
Agreement or pertaining to the transaction contemplated hereby and intend
that no claim of privilege or protection from disclosure be waived by
reason of the disclosure or transfer of information among the parties
pursuant to the terms of this Agreement; provided, however, that each
party, its agents and representatives may disclose such information and
data (i) to such party's accountants, attorneys, existing or prospective
lenders, investment bankers, underwriters, ratings agencies, partners,
consultants and other advisors in connection with the transactions
contemplated by this Agreement (collectively, "REPRESENTATIVES") to the
extent that such Representatives reasonably need to know (in the
disclosing party's reasonable discretion) such information and data in
order to assist, and perform services on behalf of, the disclosing party;
(ii) to the extent required by any applicable statute, law, regulation or
Governmental Authority (including, but not limited to, Form 8-K and other
reports and filings required by the SEC and other regulatory entities,
including the Internal Revenue Service, as described in Exhibit Q attached
hereto), or by the New York Stock Exchange in connection with the listing
of the Conversion Shares; (iii) in connection with any litigation that may
arise between the parties in connection with the transactions contemplated
by this Agreement; (iv) to the extent such disclosure is required or
appropriate in connection with any securities offering or other capital
markets or financing transaction undertaken by the REIT; (v) to the extent
such information and data become generally available to the public other
than as a result of disclosure by such party or its agents or
Representatives; (vi) to the extent such information and data become
available to such party or its agents or Representatives from a third
party who, insofar as is known to such party, is not subject to a
confidentiality obligation to the other party hereunder; and (vii) to the
extent necessary in order to comply with each party's respective
covenants, agreements and obligations under this Agreement; provided,
however, that with respect to environmental matters only, disclosure may
be made pursuant to Subparagraphs 5(d)(ii), (iii), (iv) or (vii) only if
the party seeking to disclose any information receives a demand or order
from a federal or state court or governmental agency or authority, or if
disclosure of information is otherwise required by law (the "DISCLOSURE
STANDARD"), and the party believes in good faith that such information
must be disclosed; provided, further, that prior to such disclosure, the
party seeking to disclose the information shall promptly confer in good
faith with the other party about the necessity, form and content of such
disclosure; provided, further that the party seeking to disclose the
information, after conferring with the other party, shall have the final
discretion (subject to the Disclosure Standard), as to whether or not such
disclosure shall be made, and if so, what the form and content of the
disclosure shall be. Each party shall take all necessary and appropriate
measures to ensure that any person who is granted access to any
confidential information pursuant to the terms of this Subparagraph 5(d)
is familiar with the terms hereof and complies with such terms as they
relate to the duties of such person. In the event the transactions
contemplated by this Agreement shall not be consummated, such
confidentiality shall be maintained indefinitely and both parties shall
promptly return all documents or other confidential written information,
together with all copies thereof, to the party that generated such
information. The obligations of the parties (and the REIT and UPREIT)
under this Subparagraph 5(d) shall survive the Closing or any sooner
termination of this Agreement and shall not be merged into any conveyance
documents delivered at Closing. Furthermore, Contributor and Acquiror
acknowledge that, notwithstanding any contrary term of this Subparagraph
5(d), Acquiror shall have the right to conduct Tenant interviews during
the Inspection Period in accordance with Subparagraph 5(a) and the
disclosure of the existence of this Agreement (but none of the material
terms hereof) to the Tenants shall not constitute a breach of the above
restriction. Acquiror and Contributor shall also have the right to issue,
or cause to be issued, a press release upon the consummation of the
transactions described in this Agreement so long as such press release is
approved by the other party prior to its issuance, which approval shall
not be unreasonably withheld or delayed, and, with respect to any press
release issued by Acquiror, does not mention the LP Unit Recipients by
name. The parties acknowledge that the terms and provisions
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of this Subparagraph 5(d) supersede and replace that certain
Confidentiality Agreement, dated October 25, 1996, between Acquiror and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates.
(e) Deletion of Projects. If Acquiror does not exercise its
unilateral right to deliver a Termination Notice pursuant to Subparagraph
5(a), Acquiror may nevertheless elect to proceed with the acquisition of
less than all of the Projects, and to delete and eliminate from this
Agreement those certain Projects that Acquiror, in its sole discretion,
elects not to acquire (the "INITIAL DELETED PROJECTS"), pursuant to the
delivery to Contributor, not later than January 30, 1997 for any AA
Project and not later than January 30, 1997 for any other Project, of an
"INITIAL PROJECT DELETION NOTICE," under which Acquiror may exercise the
foregoing partial termination option and designate those specific Projects
that shall constitute Initial Deleted Projects under this Agreement. Upon
the delivery by Purchaser of an Initial Project Deletion Notice, this
Agreement shall, without further action of the parties, be deemed to have
been automatically and ipso facto amended, as so to eliminate the Initial
Deleted Projects herefrom, subject to a reduction in the Contribution
Consideration in an amount equal to the aggregate amount of (x) the
Allocated Amounts minus (y) the Assumed Indebtedness of all of the Initial
Deleted Projects, in each case as adjusted by eliminating any and all
appropriate Prorations and Adjustments. Upon such amendment of this
Agreement, all references to the Projects shall automatically exclude the
Initial Deleted Projects, and, except with respect to (i) the deposit of
▇▇▇▇▇▇▇ Money, (ii) any indemnity or other surviving obligations with
respect to any Initial Deleted Projects, and (iii) the return of
documents, records and studies relating to any Initial Deleted Projects,
no Closing or pre-Closing obligations of Contributor (or Acquiror's
Conditions Precedent) shall apply to the Initial Deleted Projects. In all
events, however, Acquiror's rights under this Subparagraph 5(e) are
expressly subject to the specific limitations imposed under Paragraph 32
below, and except with respect to the Option Projects and Project No. 56,
there shall be one (1) Closing with respect to all Projects that Acquiror
elects to acquire pursuant to the express provisions of this Agreement.
(f) Scope of Representations and Warranties. All Projects being
acquired by Acquiror pursuant to this Agreement shall be transferred and
conveyed on an "AS-IS" and "WHERE-IS" basis, and WITH ALL FAULTS, except
as otherwise expressly set forth in this Agreement or in any document
delivered by Contributor at Closing. Except as expressly set forth in
this Agreement or in any document delivered by Contributor at Closing,
Contributor has not made any representation or warranty as to the present
or future physical condition, value, presence/absence of hazardous or
toxic materials, financing status, leasing, operations, use, tax status,
income and expense or any other matter pertaining to those of the Projects
that Acquiror acquires under the terms of this Agreement.
6. TITLE AND SURVEY MATTERS.
(a) Conveyance of Title. At Closing, Contributor agrees to deliver
to the UPREIT bargain and sale deeds with covenants against grantor's acts
("BARGAIN AND SALE DEEDS"), in recordable form, conveying the Projects to
the UPREIT, free and clear of all liens, claims and encumbrances except
for the following items (the "PERMITTED EXCEPTIONS"): (i) those matters
listed on Exhibit E attached hereto; (ii) those additional matters that
may become Permitted Exceptions pursuant to Subparagraph 6(e); (iii) the
rights of Tenants as tenants under the Leases, and (iv) matters arising as
a direct result of any acts or omissions of Acquiror and its
Representatives. At Closing, Contributor shall also deliver to the UPREIT
each of the documents listed in Paragraph 12.1 below.
(b) Title Commitments. Within twenty (20) days after the Contract
Date, Acquiror shall obtain, at Contributor's sole cost and expense,
commitments, dated after the Contract Date, issued by Commonwealth Land
Title Insurance Company (as to 60%, on a co-insured basis), Chicago Title
Insurance Company (as to 25%, on a co-insured basis) and Old Republic
Title Insurance (as to 15%, on a co-insured basis) [collectively, the
"TITLE COMPANY"], for owner's title insurance policies (the "TITLE
POLICIES") as follows: ALTA Owner's Policy (4-6-90) with a Standard New
York Endorsement, and an endorsement deleting the arbitration provision of
the policy, issued in the State of New York with regard to the Projects
located in the State of New York; and an ALTA Owner's
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Policy (10-21-87), with an endorsement deleting the arbitration provision
of the policy, issued in the State of New Jersey with regard to the
Project located in the State of New Jersey. Each such title commitment
shall be delivered to Contributor and shall reflect the full amount of the
Allocated Amount for each Project, show fee simple title to the Projects
in the Contributor, together with legible and complete copies of all
recorded documents evidencing title exceptions raised in Schedule B of the
title commitment. It shall be an Acquiror's Condition Precedent that the
Title Policies (or "marked-up" title commitments) shall have all standard
and general printed exceptions deleted so as to afford full "extended form
coverage," and, to the extent available in New York and New Jersey, as the
case may be, shall further include an owner's comprehensive endorsement,
or the equivalent by way of affirmative insurance; an endorsement
certifying that the bills for the real estate taxes pertaining to the Land
and Improvements do not include taxes pertaining to any other real estate,
or the equivalent by way of affirmative insurance; an access endorsement,
or the equivalent by way of affirmative insurance; a contiguity
endorsement, or the equivalent by way of affirmative insurance, if
applicable; a survey "land same as" endorsement; and a zoning 3.1
endorsement for the New Jersey Project. As an Acquiror's Condition
Precedent, each commitment shall be marked for later-dating to cover the
Closing and the recording of the Bargain and Sale Deeds, and the Title
Company shall deliver the Title Policies (or "marked-up" title
commitments) to the UPREIT concurrently with the Closing. The cost of all
title insurance charges, premiums and endorsements, including all search,
continuation and later-date fees shall be paid by Contributor, except that
Acquiror shall pay the premium imposed for any comprehensive survey
endorsement required by Acquiror. Should any commitment indicate matters
that do adversely affect the value or marketability of title to any
Project, or other matters which do adversely affect Acquiror's use,
operation or financing of any Project, such matters shall be considered
Defects (as defined below), and the cure provisions set forth in
Subparagraph 6(e) below shall apply, provided that a Defects Notice
(defined below) is timely delivered with respect to such Defects.
(c) Surveys. No later than January 30, 1997, Contributor shall
deliver to Acquiror, at Contributor's sole cost and expense (except that
Acquiror shall pay one-half of the cost if this Agreement is terminated),
an as-built, spotted survey of each Project (the "SURVEYS"), prepared by a
surveyor(s) duly registered in the States of New York or New Jersey (as
corresponds to the location of the surveyed Project), and certified by
said surveyor(s) as having been prepared in accordance with the minimum
detail and classification requirements of the land survey standards of the
American Land Title Association, and specifically incorporating all of the
standards and protocols contemplated by the minimum standard detail
requirements and classifications for ALTA/ASCM land title surveys, as
adopted in 1992 by ALTA/ASCM, including Table A Items 1 (excluding the
placement of monuments), 3, 4, 6 (showing setback lines only), 7(a), 8, 9,
10, 11 and 13, and shall include the certification attached hereto as
Exhibit G. The Surveys shall be dated no earlier than sixty (60) days
prior to the Closing Date. The Surveys shall show any encroachments of
the Improvements onto adjoining properties, easements, set-back lines or
rights-of-way, and any encroachments of adjacent improvements onto any
Project, and shall comply with any requirements imposed by the Title
Company as a condition to the removal of the survey exception from the
standard printed exceptions in Schedule B of the title commitments.
Without limitation of the foregoing, the Surveys shall state the legal
description of the Land, the square footage of the Land and each Building,
the number and location of all legal parking spaces on each parcel of
Land, and shall further state whether any parcel of Land is located in an
area designated by an agency of the United States as being subject to
flood hazards or flood risks. Should any Survey indicate the presence of
any encroachments by or upon any Project, or other matters that do
adversely affect the value or marketability of title to any Project, or
other matters which do adversely affect Acquiror's use, operation or
financing of any Project, such matters shall be considered Defects
(provided the Defects Notice therefor is timely delivered), and the cure
provisions set forth in Subparagraph 6(e) below shall apply.
(d) UCC Searches. Contributor, at its sole cost and expense, shall
deliver to Acquiror, or cause the Title Company to deliver to Acquiror, on
or before December 10, 1996, current searches of all Uniform Commercial
Code financing statements naming Contributor as debtor and filed with
either or both of the Secretaries of State of the States pursuant to the
laws of which Contributor was organized and the Secretaries of State of
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the States in which the Projects are located. Should the UCC Searches
indicate matters that do or could adversely affect the value or
marketability of title to any Project, including, but not limited to,
claims or liens against any of such parties encumbering all or any portion
of any Project, or other matters which do materially adversely affect
Acquiror's use, operation or financing of any Project, such matters shall
be considered Defects (provided the Defects Notice therefor is timely
delivered), and the cure provisions set forth in Subparagraph 6(e) below
shall apply.
(e) Defects and Cure. The items described in this Paragraph 6 are
collectively referred to as "TITLE EVIDENCE." If the Title Evidence
obtained during the Inspection Period discloses claims, liens, exceptions,
or conditions that do adversely affect the use and/or marketability of
title to any Project ("DEFECTS"), Acquiror may, prior to the Approval
Date, give written notice (the "DEFECTS NOTICE") of such Defects to
Contributor. If and to the extent that the Title Evidence discloses any
claims, liens, exceptions or conditions to which Acquiror does not object
in its Defects Notice, then such items shall thereafter constitute
Permitted Exceptions. If Contributor fails or refuses, within a period of
twenty (20) days after its receipt of a Defects Notice ("RESPONSE
PERIOD"), to either (i) cure all Defects; or (ii) cause all Defects to be
insured over by the Title Company (in form and substance reasonably
acceptable to Acquiror); or (iii) provide Contributor's written assurance
and affirmative undertaking to Acquiror that Contributor will, in fact,
undertake (with diligence and good faith) to use all reasonable efforts to
promptly cure or cause the Title Company to insure over (in form and
substance reasonably acceptable to Acquiror) the Defects at Closing (a
"TITLE UNDERTAKING"), then Acquiror may either (A) subject to the
restrictions of Paragraph 32, delete the affected Project in accordance
with the procedures (but not the time limits) described in Subparagraph
5(e) by written notice to the Contributor delivered within ten (10) days
after the expiration of the Response Period; or (B) if the deletion of
Projects [pursuant to clause (A)] encumbered by Defects shall violate the
restrictions imposed under Paragraph 32, then Acquiror may terminate this
Agreement by written notice to Contributor, delivered within ten (10) days
after the expiration of the Response Period, whereupon the ▇▇▇▇▇▇▇ Money,
together with all (if any) interest earned thereon, shall be returned to
Acquiror and neither party shall have any further liability to the other
hereunder, except as otherwise specifically provided in this Agreement.
If Acquiror fails to make an affirmative election of (A) or (B) above
prior to Closing, then Acquiror shall be conclusively deemed to have
accepted title to the Project(s) in question, subject to the Defects in
question.
Notwithstanding anything contained above or elsewhere in this
Agreement to the contrary, Contributor covenants and agrees that it shall
cure (or procure title insurance over, in form and substance reasonably
satisfactory to Acquiror), prior to Closing, any and all of the following
Defects (the "MANDATORY CURE DEFECTS"), whether described in the Title
Commitment, or first arising or first disclosed by the Title Company or
otherwise to Contributor and Acquiror after the date of the Title
Commitment: (1) mortgage liens created by Contributor and not to be paid
off or assumed at the Closing pursuant to this Agreement; (2) any lien,
encumbrance, covenant, easement or restriction arising as a result of, due
to, or because of, any willful or intentional act or omission of
Contributor in violation of this Agreement, which act or omission occurs
after the earlier of (w) the effective date of the applicable Title
Commitment or (x) the Contract Date; (3) judgment liens, tax liens or
broker's liens against Contributor; (4) any mechanics liens (up to a
maximum aggregate amount per Project of $100,000) that are based upon a
written agreement between either (y) the claimant (a "CONTRACT CLAIMANT")
and Contributor or (z) the Contract Claimant and any other contractor,
supplier or materialman with which any contractor of Contributor has a
written agreement, and (5) any Defects as to which Contributor shall have
undertaken the obligation of cure pursuant to a Title Undertaking. In the
event that, as of Closing, any Mandatory Cure Defect remains uncured then,
notwithstanding anything to the contrary contained in this Agreement,
Acquiror shall have the unilateral right to reduce the Total LP Unit
Amount in order to effectuate a cure or obtain a title endorsement over
such Mandatory Cure Defect(s), and such reduction shall be in the amount
of the ascertainable monetary amount required to cure or insure over such
Mandatory Cure Defect(s). Once the Mandatory Cure Defect(s) in question
has been cured, any remaining escrowed or retained funds shall be paid
over to Contributor.
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7. REPRESENTATIONS AND WARRANTIES.
7.1 Contributor and LP Unit Recipients. Each Contributor represents
and warrants to Acquiror, but only with respect to its respective
Project(s), that the following matters are true as of the Contract Date;
and each LP Unit Recipient represents and warrants (but only as to itself)
to Acquiror that the matters set forth in Subparagraph 7.1(x) are true as
of the Contract Date:
(a) [Intentionally Omitted];
(b) Title. Contributor is, as of the Closing Date, the legal fee
simple titleholder of the Projects.
(c) Contributor's Deliveries. To the actual knowledge of
Contributor, all of Contributor's Deliveries listed on Exhibit D attached
hereto and all other items delivered by Contributor pursuant to this
Agreement, including, without limitation, those required pursuant to
Paragraphs 4 and 5 above, are true, accurate, correct and complete in all
material respects, and fairly present, in all material respects and as of
the dates specified therein, the information set forth in a manner that is
not materially misleading. Contributor has delivered to Acquiror,
however, copies of all Leases and other agreements to which Contributor is
presently a party and that relate to or affect the ownership and operation
of the Projects, and that would or will bind Acquiror upon Closing.
(d) Defaults. Contributor has not received any written notice
alleging that it is in default (which default remains uncured), in any
material respect, under any of the documents, recorded or unrecorded,
referred to in the title commitment (other than the Existing Mortgages).
Except as set forth in Schedule 7.1(d), Contributor has not received any
written notice alleging that it is in default (which default remains
uncured), in any material respect, under any of the Major Repair
Contracts, or Governmental Approvals (as such terms are defined in Exhibit
D attached hereto).
(e) Contracts. Contributor is not a party to any existing contracts
of any kind relating to the management, leasing, operation, maintenance or
repair of any Project, except those Contracts listed on Exhibit H attached
hereto, all of which will be terminated by Contributor prior to Closing
unless Acquiror otherwise directs Contributor pursuant to written notice
provided to Contributor at least five (5) business days prior to Closing.
Contributor has not given, nor has Contributor received, any written
notice of a material default under any of the Contracts that remains
uncured, except as set forth in Schedule 7.1(e). Copies of all the
Contracts have been or will be delivered or made readily available to
Acquiror within ten (10) days after the Contract Date.
(f) Physical Condition. To the actual knowledge of Contributor,
other than as expressly or specifically discussed or described in any
written environmental and engineering reports prepared during the Basic
Project Inspection for the benefit of Acquiror, by Acquiror's third party
consultants (collectively, the "REPORTS"), and except for the matters
described in Paragraphs 30, 31 and 37 below, there is no existing latent
structural defect in any Project that will materially impair, or require
the expenditure of more than $25,000 (on an aggregate, but per Project,
basis) to permit the continuing (as of the Closing Date) use, occupancy or
operation of such Project in a manner substantially consistent with the
use, occupancy and operation of such Project as of the Contract Date
(collectively, "PROJECT DEFECTS"), nor to Contributor's actual knowledge,
has Contributor received any written notice from any Tenant or any other
party alleging the existence of any such defect. Furthermore, Contributor
represents and warrants to Acquiror that Contributor has no written
reports in its possession that advise of, or allege the existence of, any
Project Defects that have not been completely remedied and cured.
(g) Utilities. To the best of Contributor's knowledge, all water,
sewer (except as set forth in Schedule 7.1(g) hereto), gas, electric,
telephone, drainage and other utility equipment, facilities and services
that are necessary for the operation of the Projects as they are now being
operated are installed and connected and are operational. Contributor has
not received any written notice (which remains outstanding) providing for
or threatening the termination (on a permanent basis) of the furnishing of
service to the
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Projects of water, sewer, gas, electric, telephone, drainage or other such
utility services. Contributor has paid all amounts owing for utility
services as of the most recent billing period, except to the extent that
the charges for any such utility services are directly billed to any of
the Tenants.
(h) Improvements. To the actual knowledge of Contributor,
Contributor has not received any written notice (that remains outstanding)
from any Governmental Authority alleging that any or all of the
Improvements were not completed and installed substantially in accordance
with the Plans (as defined in Exhibit D attached hereto) therefor approved
by all Governmental Authorities having jurisdiction thereover.
(i) Employees. Contributor does not have any employees. Contributor
is not a party to any collective bargaining or other agreement relating to
the Projects with any labor union, and Contributor is not currently
involved in any labor or union controversy relating to the operation of
the Projects.
(j) Compliance with Laws and Codes. Except as set forth in Schedule
7.1(j), Contributor has not received any written notice from any
Governmental Authority (that remains uncured or otherwise outstanding)
claiming or alleging that: (i) any Project, or the use and operation of
any component, portion or area of any Project, is in material
non-compliance with any applicable municipal or other governmental law,
ordinance, regulation, code, license, permit or authorization; or (ii)
there is not presently and validly in effect any material license, permit
or other authorization necessary for the use, occupancy or operation of
any Project as it is presently being operated by Contributor. Contributor
has not received any written notice from any Governmental Authority (that
remains uncured or otherwise outstanding) alleging that any or all of the
Projects fails to comply with any or all applicable requirements of the
Americans With Disabilities Act of 1990, as amended (42 U.S.C.A.
Sections 12101 et seq., the "ADA"). Project No. 1 is not currently in
violation of any fire code provision, and any previously cited fire code
violations have been remedied. The foregoing representation in this
Subparagraph 7.1(j) shall not apply to Environmental Laws or Environmental
Permits (each as defined below) or any other matters specifically
described in Paragraph 9 below.
(k) Litigation. Except as set forth in Schedule 7.1(k) or Schedule
9(b), there are no pending or, to Contributor's actual knowledge,
threatened (in writing), judicial or administrative proceedings affecting
Contributor's interest in any Project or in which Contributor is a party
by reason of Contributor's ownership or operation of any Project or any
portion thereof, including, without limitation, proceedings for or
involving collections (in excess of $25,000 on an aggregate, but per
Project, basis), condemnation, eminent domain, alleged building code or
zoning violations, or personal injuries (not covered by insurance and the
subject of a claim accepted by the relevant insurer) or property damage
alleged to have occurred on any Project or by reason of the condition, use
of, or operations on, such Project. Except as set forth in Schedule
7.1(k), no attachments, execution proceedings, assignments for the benefit
of creditors, insolvency, bankruptcy, reorganization or other proceedings
are pending or, to Contributor's actual knowledge, threatened, against
Contributor, nor are any of such proceedings about to be commenced by
Contributor.
(l) Insurance. Contributor now has in force customary and
commercially reasonable casualty, liability and business interruption
insurance coverages relating to the Projects. Contributor has received no
written notice (that remains outstanding) from any insurance carrier now
providing coverages for the Projects of any defects or inadequacies in the
Projects that, if not corrected, would result in termination of insurance
coverage or material increase in the present cost thereof.
(m) Financial Information. All Operating Statements (as defined in
Exhibit D attached hereto) delivered by Contributor are complete,
accurate, true and correct, in all material respects; and accurately set
forth, in all material respects, the results of the operation of the
Projects for the periods covered. The tax basis of the Projects indicated
in the schedules to Contributor's federal, state and local tax returns for
the period ending December 31, 1995, as delivered by Contributor to
Acquiror, are complete, accurate, true and correct in all material
respects. There has been no material adverse change in the
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financial condition or operation of the Projects since the latest period
covered by the Operating Statements.
(n) Re-Zoning. To the actual knowledge of Contributor, there is not
now pending or threatened any proceeding for the rezoning of any Project
or any portion thereof that would have a material adverse impact on the
use of any Project.
(o) Personal Property. The Personal Property listed in Exhibit B
attached hereto (other than Excluded Personal Property) is all of the
personal property owned by Contributor and used in (or necessary for) the
operation of the Projects.
(p) Authority. The execution and delivery of this Agreement and the
other documents delivered by Contributor pursuant to this Agreement, and
the performance of all obligations of Contributor under this Agreement and
such other documents by Contributor, have been duly authorized by all
requisite partnership, corporate or limited liability company action, as
the case may be. This Agreement and the other documents delivered by
Contributor pursuant to this Agreement are binding on Contributor and
enforceable against Contributor in accordance with their respective terms,
subject to bankruptcy and similar laws affecting the remedies or recourse
of creditors generally and general principles of equity. Except for
consent required under any partnership agreement of Contributor (or other
similar governing document), which consent shall be obtained prior to
Closing, and except as set forth in Schedule 7.1(p), to the actual
knowledge of Contributor, no consent is required of any creditor,
investor, shareholder, tenant-in-common of Contributor or judicial or
administrative body, Governmental Authority, or other governmental body or
agency having jurisdiction over the Projects, to such execution, delivery
and performance of this Agreement by Contributor. Neither the execution
of this Agreement nor the consummation of the transactions contemplated
hereby by Contributor will (i) result in a breach of, default under, or
acceleration of, any material agreement to which Contributor is a party or
by which Contributor is bound; or (ii) to Contributor's actual knowledge
violate any material restriction, agreement or other legal obligation, or
any court order, to which Contributor is subject. Notwithstanding
anything to the contrary contained in this Subparagraph 7.1(p), this
Subparagraph 7.1(p) excludes any reference to (A) consent by any mortgagee
of any Project and (B) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
(q) Real Estate Taxes. The most recent real estate "TAX ▇▇▇▇(S)" for
(and, to Contributor's knowledge, the only real estate tax bills
applicable to) the Projects have been delivered to Acquiror. Except as
set forth on Exhibit J attached hereto, Contributor has not received
written notice of any proposed increase in the assessed valuation or rate
of taxation of any or all of the Projects from that reflected in the most
recent Tax Bills. There are now pending proceedings or applications for
reductions in the real estate tax assessments for most, if not all, of the
Projects. In the event that any of the pending tax proceedings results in
any rebate of taxes paid after the Closing Date in respect of any period
ending prior to the Closing Date, the amount of such rebate, net of the
fees and expenses owing to certiorari counsel, and all other fees and
expenses (including without limitation, other attorneys' fees and
expenses) payable by Contributor in connection with any such tax
proceeding, shall be the property of and remitted to Contributor (except
if and to the extent that all or any portion of such rebated sums are due
to Tenants), which obligation shall survive the Closing and not be merged
into any conveyancing document delivered at Closing. Except as set forth
in Schedule 7.1(q), there are no outstanding agreements with attorneys or
consultants with respect to the Tax Bills that will be binding on Acquiror
or any of the Projects after the Closing. To the actual knowledge of
Contributor, other than as disclosed by the Tax Bills, no other real
estate taxes have been, or will be, assessed against the Projects, or any
portion thereof, in respect of the year 1996 or any prior year (that have
not been paid), and no special assessments of any kind (special, bond or
otherwise) have been levied against the Projects, or any portion thereof,
that are outstanding or unpaid. Contributor has paid all real estate
taxes and assessments presently due and owing (before the imposition of a
penalty) with respect to the Projects, with the exception of Project Nos.
19, 20 and 21 all of which have past-due taxes and assessments (and
penalties relating thereto) outstanding as of the Contract Date. Such
delinquent taxes, assessments and penalties shall be paid, in full, prior
to or at Closing by Contributor.
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(r) Easements and Other Agreements. Contributor has not received any
written notice (that remains outstanding) alleging that it is in default
in complying with the terms and provisions of any of the material
covenants, conditions, restrictions, rights-of-way or easements
constituting one or more of the Permitted Exceptions.
(s) Lease Controversies. Except as described in Exhibit K or
Schedule 11(a)(iv) attached hereto, neither any material controversy,
complaint, negotiation or renegotiation, nor any proceeding, suit or
litigation relating to all or any of the Existing Leases is pending or has
been threatened, in writing. Contributor is and shall remain responsible
after the Closing Date for defending (or continuing) any such suit,
proceeding or other matter relating to periods prior to the Closing Date
("PENDING CONTROVERSIES"), and all damages, loss, expenses and costs
related to such Pending Controversies; and Contributor shall be entitled
to all (if any) recoveries arising directly from and as a result of such
Pending Controversies. If and to the extent that, prior to Closing, any
controversy, complaint, negotiation, renegotiation, proceeding, suit or
litigation is pending or threatened with respect to, or involving, any
Additional Lease(s) ("ADDITIONAL LEASE CONTROVERSIES"), Contributor shall
so advise Acquiror, in writing and with reasonably detailed information,
as soon as is reasonably possible after Contributor is advised of, or
learns of the existence or potential threat of, any Additional Lease
Controversies.
(t) Soil Condition. Contributor has no written reports in its
possession advising or alleging that the soil condition of the Land at any
Project upon which Contributor constructed (or caused to be constructed)
the Improvements is such that it will not support all of the Improvements
for the foreseeable life of the Improvements without unusual or new
sub-surface excavations, fill, footings, caissons or other installations.
(u) United States Person. Contributor is a "United States Person"
within the meaning of Section 1445(f)(3) of the Code, as amended, and
shall execute and deliver an "Entity Transferor" certification at Closing.
(v) Broadvet Lease and Purchase Option. Broadvet Consumers'
Warehouse is a Tenant at Project No. 9 under a Lease that includes two (2)
purchase options for the benefit of such Tenant, each of which is still
outstanding.
(w) Existing Mortgage(s). Exhibit L attached hereto sets forth a
true, correct and complete schedule of those mortgage(s) or trust deed(s)
("EXISTING MORTGAGES") presently encumbering the Projects or any portion
thereof. Except as set forth in Schedule 7.1(w), all of the loans secured
by the Existing Mortgages may be prepaid, in full, on the Closing Date
without imposition of any penalty or premium.
(x) Investment Representation. Each of Contributor and each LP Unit
Recipient represents that its LP Units are being acquired by it with the
present intention of holding such LP Units for purposes of investment and
not with a view towards sale or any other distribution. Each LP Unit
Recipient recognizes that it may be required to bear the economic risk of
an investment in the LP Units for an indefinite period of time. Each of
Contributor and each LP Unit Recipient is an Accredited Investor.
Contributor and each LP Unit Recipient has (indirectly through a custodian
under the New York Uniform Gift to Minors Act, in the case of LP Unit
Recipients who are minors under New York law) such knowledge and
experience in financial and business matters so as to be fully capable of
evaluating the merits and risks of an investment in the LP Units. No LP
Units will be issued, delivered or distributed to any person or entity who
either (i) is a resident of the State of California or (ii) is other than
an Accredited Investor with respect to whom there has been delivered to
Acquiror a satisfactory accredited investor questionnaire confirming the
status of such person or entity as an Accredited Investor. Each LP Unit
Recipient has been furnished with the informational materials described in
Subparagraph 2(d) above (collectively, the "INFORMATIONAL MATERIALS"), and
has read and reviewed the Informational Materials and understands the
contents thereof. The LP Unit Recipients have been afforded the
opportunity to ask questions of those persons they consider appropriate
and to obtain any additional information they desire in respect of the LP
Units and the business, operations, conditions (financial and otherwise)
and current prospects of the UPREIT and the REIT. The LP Unit Recipients
have consulted their own financial, legal and tax advisors with respect to
the economic, legal and tax consequences of delivery
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of the LP Units and have not relied on the Informational Materials,
Acquiror, the UPREIT, the REIT or any of their officers, directors,
affiliates or professional advisors for such advice as to such
consequences. Nothing contained in this Agreement shall prevent
Contributor or any LP Unit Recipient from (A) converting any of the LP
Units into Conversion Shares subject to the limitations set forth in, and
in accordance with the terms of, all of this Agreement, the Registration
Rights Agreement and the Partnership Agreement, and (B) selling,
transferring or otherwise disposing of any LP Units (or any Conversion
Shares for which any of the LP Units are redeemed) in any transaction that
does not violate the terms of this Agreement, the Partnership Agreement,
the Registration Rights Agreement, federal securities laws or the
securities laws of any state.
(y) Project No. 16. Project No. 16 is owned by LBA Melville
Associates, a general partnership. LBA Melville Associates is 50% owned
by MP/Melville Realty Associates, a New York limited partnership that is
unaffiliated with Contributor, and 50% owned by LBR Melville Associates,
L.P., a New York limited partnership ("LBRMA"). The ownership of LBRMA is
as follows: 49.5% by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇; 24.75% by each of ▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇ ▇▇▇▇▇▇ as custodian for each under the NYUGMA);
and 1% by LBR Commack, Inc., a Delaware corporation ("LBRCI"). ▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ each own 50% of the outstanding stock of LBRCI.
(z) Project No. 52. Project No. 52 is owned by ▇▇▇▇▇▇▇ & Clinton
Co., LLC, a New York limited liability company ("S&CLLC"). The only
members of S&CLLC that are affiliated with Contributor are Four-Bur Family
Co., L.P. and five individuals who are LP Unit Recipients.
(aa) Patomi Realty Co. Mortgage. Project No. 43 is encumbered by a
$3,800,000 mortgage in favor of Patomi Realty Co. (the "PATOMI MORTGAGE")
that will not be paid off at Closing. The unpaid principal balance of the
note evidencing amounts due pursuant to the Patomi Mortgage (the "PATOMI
NOTE") is $3,800,000. All sums due and payable under the Patomi Mortgage
and Patomi Note, including, without limitation, interest, on or prior to
January 31, 1997 have been paid. To the best knowledge of Contributor, no
default has occurred and is continuing under the Patomi Note and the
Patomi Mortgage. The Patomi Note and the Patomi Mortgage have not been
modified or amended up to and including the date hereof. To the best
knowledge of Contributor, no offsets or defenses exist with respect to the
debt secured by the Patomi Mortgage.
The representations and warranties made in this Agreement by Contributor and
the LP Unit Recipients, as the case may be, shall be deemed remade by
Contributor and the LP Unit Recipients, as the case may be, as of the Closing
Date with the same force and effect as if, in fact, specifically remade at that
time. In the event matters occurring after the Contract Date render
Contributor (or the LP Unit Recipients) unable to remake a representation or
warranty as of the Closing Date, and Contributor specifically so advises
Acquiror, in writing and prior to Closing, of the particular circumstances
rendering any representation or warranty untrue, the failure to remake such
representation and warranty shall not constitute a default hereunder by
Contributor (or any LP Unit Recipient), except in the event or to the extent
that the untruth of such representation or warranty is the result of any
willful or intentional act or omission on the part of Contributor and in breach
of this Agreement; in all events, however, the continuing truth and accuracy of
all representations and warranties made by Contributor in this Agreement shall
be an Acquiror's Condition Precedent. Except as provided in the next sentence,
all representations and warranties made in this Agreement by Contributor or an
LP Unit Recipient shall survive the Closing for a period of one (1) year and
shall not merge into any instrument of conveyance delivered at the Closing;
provided, however, that (i) Acquiror shall be required to advise Contributor
or, if appropriate, the LP Unit Recipients, in writing, prior to the first
anniversary of the Closing of any claims that Acquiror believes it has with
respect to an alleged breach by Contributor or, if appropriate, the LP Unit
Recipients, of any of such representations and warranties and (ii) if Acquiror
determines to file suit for breach of representation or warranty against
Contributor or, if appropriate, the LP Unit Recipients, such suit must be filed
within six (6) months after giving the written notice of claims described in
clause (i) above. In the event that Acquiror receives an Estoppel Certificate
(as hereinafter defined) from a Tenant that addresses and confirms, with
respect to that Tenant's Lease, those particular matters set forth in
Subparagraph 11(a) hereof, Acquiror shall rely on such Estoppel Certificate in
lieu of those representations and warranties of Contributor set forth in
Subparagraph 11(a), but only if
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and to the extent that Contributor's representations and warranties set forth
in Subparagraph 11(a) are actually and specifically addressed and confirmed by
the Estoppel Certificate. In that event and to that extent, the
representations and warranties of Contributor set forth in Subparagraph 11(a)
shall expire as of the Closing Date, but only with respect to those Tenants
(and their respective Leases) from which Acquiror receives an Estoppel
Certificate that actually and specifically addresses and confirms those matters
that are the subject of Subparagraph 11(a). If, prior to Closing, Acquiror
acquires actual knowledge (through the provision of any written documentation
delivered to Acquiror by Contributor, or received by Acquiror from Contributor,
or through the delivery to Acquiror of a written report from any third party
engaged by Acquiror in order to perform any of the tests, studies,
investigations and inspections contemplated under Paragraph 5) of the breach of
any or all of the Contributor's representations and warranties made in this
Agreement, and Acquiror nevertheless elects to close under this Agreement, then
Acquiror shall be deemed to have waived the breach(es) in question, and shall
have no right, at any time after Closing, to assert a claim, of any nature
whatsoever, against Contributor with respect to that breach. As used in this
Agreement with respect to any representation or warranty, the "knowledge" of
Contributor refers to the actual knowledge of each and all of ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (the "EXECUTIVES").
7.2 Acquiror. Acquiror represents and warrants to Contributor that
the following matters are true as of the Contract Date:
(a) Existence and Power. Acquiror is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Maryland.
(b) Legal Compliance. To Acquiror's knowledge, it is not (i) in
violation of any of its organizational documents, (ii) in default in any
material respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a material default, in the due
performance or observance of any material term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a party
or by which it is bound or to which any of its properties or assets is
subject or by which it, or any of them, may be materially affected, or
(iii) in violation, in any material respect, of any material law,
ordinance, governmental rule, regulation or court decree to which it or
its properties or assets may be subject.
(c) Notice of Violations. Acquiror has not received written notice
of any existing violation of any federal, state, county or municipal law,
ordinance, order, code, regulation or requirement affecting Acquiror or
any of its assets that would have a material adverse effect on the
financial condition, business or operations of Acquiror or any of its
assets.
(d) Authorization. Acquiror has all requisite corporate power and
authority to enter into this Agreement, the Assignment and all other
Acquiror Documents (as defined below) and perform its obligations
hereunder and thereunder. The execution and delivery to Contributor of
all agreements and other documents Acquiror executes and delivers in
connection with the transactions described in this Agreement, including,
without limitation, this Agreement and the Assignment ("ACQUIROR
DOCUMENTS"), and the performance by Acquiror of its obligations under the
Acquiror Documents and of its other obligations arising out of this
Agreement, if any, have been (or, prior to execution, shall be) duly
authorized by all requisite corporate action. The Acquiror Documents are
(or, upon execution, shall be) binding on Acquiror and enforceable against
Acquiror in accordance with their terms, subject to bankruptcy and similar
laws affecting the remedies or recourse of creditors generally and general
principles of equity. Neither the execution and delivery of the Acquiror
Documents, nor compliance with the terms and provisions thereof on the
part of Acquiror and consummation of the transactions contemplated
thereby, will violate any statute, license, decree, order or regulation of
any Governmental Authority, judicial or administrative body, or other
governmental body or agency having jurisdiction over Acquiror, or will, at
the Closing Date, breach, conflict with, or result in a breach of, any of
the terms, conditions or provisions of any material agreement or
instrument to which Acquiror is a party, or by which it is or may be
bound, or constitute a default thereunder, or, to Acquiror's actual
knowledge, result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon, or give to others any interest
or rights in, the LP Units to be issued to Contributor. No consent,
waiver, approval or
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authorization of, or filing, registration or qualification with, or notice
to, any Governmental Authority, judicial or administrative body, or other
governmental body or agency having jurisdiction over Acquiror, is required
to be made (including, but not limited to, any governmental bodies,
agencies, tenants, partners or lenders) obtained, or given by Acquiror in
connection with the execution, delivery and performance of the Acquiror
Documents.
(e) Pending Actions. There is no existing or, to Acquiror's
knowledge, threatened, legal action or governmental proceedings of any
kind involving Acquiror, any of its assets or the operation of any of the
foregoing, which, if determined adversely to Acquiror or its assets, would
have a material adverse effect on the financial condition, business or
operations of Acquiror or its assets or which would interfere with
Acquiror's ability to perform Acquiror's obligations under this Agreement
and the other Acquiror Documents or prevent the consummation of the
transactions contemplated by this Agreement. Acquiror has not (i) made a
general assignment for the benefit of creditors, (ii) filed any voluntary
petition in bankruptcy or suffered the filing of an involuntary petition
by its creditors, (iii) suffered the appointment of a receiver to take
possession of all or substantially all of its assets, (iv) suffered the
attachment, or other judicial seizure of all, or substantially all, of its
assets, (v) admitted in writing its inability to pay its debts as they
come due, or (vi) made an offer of settlement, extension or compromise to
its creditors generally.
7.3 The UPREIT. It shall be a Contributor's Condition Precedent that
the UPREIT make the following representations and warranties, in writing,
as of the Closing Date, to Contributor:
(a) Existence and Power. The UPREIT is a limited partnership duly
formed, validly existing and in good standing under the laws of the State
of Delaware, and is duly qualified to do business in all jurisdictions
where such qualification is necessary to carry on its business, except
where the failure to so qualify would not materially and adversely affect
the financial condition, business or operations of the UPREIT. The UPREIT
is treated as a partnership for federal income tax purposes and not as an
association taxable as a corporation or a "publicly-traded partnership."
The UPREIT has all partnership power and authority under the Partnership
Agreement and its certificate of limited partnership to enter into the
Assignment and all other documents and agreements executed by it in
connection with the transaction that is the subject of this Agreement (the
Assignment and all such other documents and agreements, the "UPREIT
TRANSACTION DOCUMENTS") and to perform its obligations under this
Agreement following the Assignment and the other UPREIT Transaction
Documents.
(b) Legal Compliance. To the UPREIT's knowledge, it is not (i) in
violation of any of its organizational documents, (ii) in default in any
material respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a material default, in the due
performance or observance of any material term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a party
or by which it is bound or to which any of its properties or assets is
subject or by which it, or any of them, may be materially affected, or
(iii) in violation, in any material respect, of any material law,
ordinance, governmental rule, regulation or court decree to which it or
its properties or assets may be subject.
(c) Notice of Violations. The UPREIT has not received written notice
of any existing violation of any federal, state, county or municipal law,
ordinance, order, code, regulation or requirement affecting the UPREIT or
any of its assets that would have a material adverse effect on the
financial condition, business or operations of the UPREIT or any of its
assets.
(d) Partnership Agreement. Contributor has received a true and
correct copy of the Partnership Agreement, as amended through the Contract
Date and the Closing Date, as applicable. The Partnership Agreement is in
full force and effect. The LP Units to be issued to Contributor hereunder
have been duly authorized for issuance to Contributor and, upon such
issuance, will be validly issued, fully paid and non-assessable and will
not be
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subject to preemptive rights upon their issuance. Upon admission of the
LP Unit Recipients to the UPREIT, pursuant to the Partnership Agreement,
every LP Unit Recipient will acquire legal and equitable title to its LP
Units, free and clear of all liens, encumbrances, claims and rights of
others, except to the extent any lien, encumbrance, claim or right of
others is created or conferred by an LP Unit Recipient or by the express
terms of the Partnership Agreement.
(e) Authorization. The execution and delivery to Contributor of the
UPREIT Transaction Documents, and the performance of all obligations of
Acquiror under this Agreement, all of which will become obligations of the
UPREIT upon its execution of and on the date of the Assignment, and all
other obligations under the other UPREIT Transaction Documents, are
permitted under the Partnership Agreement and have been duly authorized by
all requisite partnership action. The Assignment and all other UPREIT
Transaction Documents are (or, upon execution, shall be) binding on the
UPREIT and enforceable against the UPREIT in accordance with their terms,
subject to bankruptcy and similar laws affecting the remedies or recourse
of creditors generally and general principles of equity. Neither the
execution and delivery of the UPREIT Transaction Documents, nor compliance
with the terms and provisions thereof on the part of the UPREIT, and
consummation of the transactions contemplated thereby, will violate any
statute, license, decree, order or regulation of any Governmental
Authority, judicial or administrative body, or other governmental body or
agency having jurisdiction over the UPREIT, or will, at the Closing Date,
breach, conflict with or result in a breach of any of the terms,
conditions or provisions of any material agreement or instrument to which
the UPREIT is a party, or by which it is or may be bound, or constitute a
default thereunder, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon, or give to others any
interest or rights in, the LP Units to be issued to Contributor. No
consent, waiver, approval or authorization of, or filing, registration or
qualification with, or notice to, any Governmental Authority, judicial or
administrative body, or other governmental body or agency having
jurisdiction over the UPREIT, is required to be made, obtained or given by
the UPREIT prior to the Closing Date in connection with the execution,
delivery and performance of the UPREIT Transaction Documents.
(f) Pending Actions. There is no existing or, to the UPREIT's
knowledge, threatened, legal action or governmental proceedings of any
kind involving the UPREIT, any of its assets or the operation of any of
the foregoing, which, if determined adversely to the UPREIT or its assets,
would have a material adverse effect on the financial condition, business
or operations of the UPREIT or its assets or which would interfere with
the UPREIT's ability to perform Acquiror's obligations under this
Agreement following the Assignment or any of its other obligations under
the other UPREIT Transaction Documents or prevent the consummation of the
transactions contemplated by this Agreement. The UPREIT has not (i) made
a general assignment for the benefit of creditors, (ii) filed any
voluntary petition in bankruptcy or suffered the filing of an involuntary
petition by its creditors, (iii) suffered the appointment of a receiver to
take possession of all or substantially all of its assets, (iv) suffered
the attachment, or other judicial seizure of all, or substantially all, of
its assets, (v) admitted in writing its inability to pay its debts as they
come due, or (vi) made an offer of settlement, extension or compromise to
its creditors generally.
(g) Written Information. The Prospectus, as of its date, including
those documents incorporated by reference in the Prospectus as of the date
of the Prospectus, did not contain an untrue statement of a material fact
and did not omit to state a material fact necessary in order to make the
statements therein (in light of the circumstances under which they were
made), not misleading.
(h) Partnership Classification. The UPREIT (i) has been at all
times, and presently intends to continue to be, classified as a
partnership or a publicly traded partnership taxable as a partnership for
federal income tax purposes and not an association taxable as a
corporation or a publicly traded partnership taxable as a corporation, and
(ii) will not be rendered unable to be classified as a partnership or a
publicly traded partnership taxable as a partnership for federal income
tax purposes as a consequence of the transaction contemplated hereby.
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7.4 The REIT. It shall be a Contributor's Condition Precedent that
the REIT make the following representations and warranties, in writing, as
of the Closing Date, to Contributor:
(a) Existence and Power. The REIT is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Maryland, and is duly qualified to do business in all jurisdictions where
such qualification is necessary to carry on its business, except where the
failure to so qualify would not materially and adversely affect the
financial condition, business or operations of the REIT. The REIT is the
sole general partner in the UPREIT.
(b) Legal Compliance. To the REIT's knowledge, it is not (i) in
violation of its charter or by-laws, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a material default, in the due performance or
observance of any material term, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject or by which
it, or any of them, may be materially affected, or (iii) in violation, in
any material respect, of any material law, ordinance, governmental rule,
regulation or court decree to which it or its properties or assets may be
subject.
(c) Capitalization. The Conversion Shares will be duly authorized
and, to the extent delivered upon redemption of the LP Units, will have
been validly issued, fully paid, nonassessable and free of any preemptive
or similar rights.
(d) Notice of Violations. The REIT has not received written notice
of any existing violation of any federal, state, county or municipal law,
ordinance, order, code, regulation or requirement affecting the REIT or
any of its assets that would have a material adverse effect on the
financial condition, business or operations of the REIT or any of its
assets.
(e) REIT Qualification. The REIT (i) has, in its federal income tax
return for its tax year ended December 31, 1994, elected to be taxed as a
"real estate investment trust" within the meaning of Section 856 of the
Code, which election remains in effect and is currently intended to
continue to remain in effect for each of the REIT's taxable years, (ii)
has complied (or will comply) with all applicable provisions of the Code
relating to real estate investment trusts for each of its taxable years,
(iii) has operated, and intends to continue to operate, in such manner as
to qualify as a real estate investment trust for each of its taxable
years, (iv) has not taken or omitted to take any action which could result
in a challenge to its status as a real estate investment trust, and no
such challenge is pending or has been threatened (in writing), and (v)
will not be rendered unable to qualify as a real estate investment trust
for federal income tax purposes as a consequence of the transaction
contemplated hereby.
(f) Authorization. The REIT has all requisite corporate power and
authority to perform its obligations as described in this Agreement. The
execution and delivery to Contributor of all agreements and other
documents the REIT executes and delivers in connection with the
transactions described in this Agreement, including, without limitation,
the Assignment and the Amendment (the "REIT DOCUMENTS"), and performance
by the REIT under the REIT Documents and of its other obligations arising
out of this Agreement, if any, have been (or, prior to execution, shall
be) duly authorized by all requisite corporate action. The REIT Documents
are (or, upon execution, shall be) binding on the REIT and enforceable
against the REIT in accordance with their terms, subject to bankruptcy and
similar laws affecting the remedies or recourse of creditors generally and
general principles of equity. Neither the execution and delivery of the
REIT Documents, nor the compliance with the terms and provisions thereof
on the part of the REIT, and consummation of the transactions contemplated
thereby, will violate any statute, license, decree, order or regulation of
any Governmental Authority, judicial or administrative body, or other
governmental body or agency having jurisdiction over the REIT, or will, at
the Closing Date, breach, conflict with, or result in a breach of, any of
the terms, conditions or provisions of any material agreement or
instrument to which
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REIT is a party, or by which it is or may be bound, or constitute a
default thereunder, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon, or give to others any
interest or rights in, the LP Units to be issued to Contributor. No
consent, waiver, approval or authorization of, or filing, registration or
qualification with, or notice to, any Governmental Authority, judicial or
administrative body, or other governmental body or agency having
jurisdiction over the REIT, is required to be made, obtained or given by
the REIT prior to the Closing Date, in connection with the execution,
delivery and performance of the REIT Documents.
(g) Pending Actions. There is no existing, or, to the REIT's
knowledge, threatened legal action or governmental proceedings of any kind
involving the REIT, any of its assets or the operation of any of the
foregoing, which, if determined adversely to the REIT or its assets, would
have a material adverse effect on the financial condition, business or
operations of the REIT or its assets and which would interfere with the
REIT's ability to perform its obligations under the REIT Documents, or
prevent the consummation of the transactions contemplated in this
Agreement. The REIT has not (i) made a general assignment for the benefit
of creditors, (ii) filed any voluntary petition in bankruptcy or suffered
the filing of an involuntary petition by its creditors, (iii) suffered the
appointment of a receiver to take possession of all or substantially all
of its assets, (iv) suffered the attachment, or other judicial seizure of
all, or substantially all, of its assets, (v) admitted in writing its
inability to pay its debts as they come due, or (vi) made an offer of
settlement, extension or compromise to its creditors generally.
(h) Written Information. The Prospectus, as of its date, including
those documents incorporated by reference in the Prospectus as of the date
of the Prospectus, did not contain an untrue statement of a material fact
and did not omit to state a material fact necessary in order to make the
statements therein (in light of the circumstances under which they were
made), not misleading.
All representations and warranties made (and to be made) in this Paragraph 7 by
Acquiror, the UPREIT or the REIT shall survive the Closing for a period of one
(1) year and shall not merge into any instrument of conveyance delivered at the
Closing; provided, however, that (i) Contributor shall be required to advise
Acquiror, the UPREIT and/or the REIT, as the case may be, in writing, prior to
the first anniversary of the Closing of any claims that Contributor believes it
has with respect to an alleged breach by Acquiror, the UPREIT and/or the REIT,
as the case may be, of any such representations and warranties and (ii) if
Contributor determines to file suit for breach of representation or warranty
against Acquiror, the UPREIT or the REIT, as the case may be, such suit must be
filed within six (6) months after giving the written notice of claims described
in clause (i) above. As used in this Agreement with respect to any
representation or warranty, the "knowledge" of Acquiror, the UPREIT and the
REIT refers to the actual knowledge of each and all of Michael Tomasz, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Johannson Yap. From and after the date of the
Assignment, the UPREIT shall be liable for any breach or default by the
Acquiror under this Agreement.
8. ADDITIONAL COVENANTS.
8.1 Contributor's. Effective as of the execution of this Agreement,
Contributor hereby covenants with Acquiror, with respect to the period
ending at Closing for all but clauses 8.1(f) and (h), as follows:
(a) New Leases. Subject to the terms of Paragraph 26 below,
Contributor shall neither amend any Lease in any economic or other
material respect nor execute any new lease, license, or other occupancy
agreement affecting the ownership or operation of all or any portion of
the Projects or for personal property, equipment, or vehicles (unless in
replacement of any existing personal property lease on substantially
similar or better terms), without Acquiror's prior written approval (which
approval shall not be unreasonably withheld or delayed and shall
automatically be deemed given if Acquiror fails to respond within five (5)
business days following Contributor's written request for approval).
(b) New Contracts. Contributor shall not enter into any contract
with respect to the management or operation of all or any portion of any
or all of the Projects that will
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survive the Closing, or that would otherwise materially affect the use,
operation or enjoyment of any or all of the Projects, without Acquiror's
prior written approval (which approval shall not be unreasonably withheld
or delayed and shall automatically be deemed given if Acquiror fails to
respond within five (5) business days following Contributor's written
request for approval), except for service contracts entered into in the
ordinary course of business that are terminable, without penalty, on not
more than sixty (60) days' notice, for which no consent shall be required.
(c) Insurance. The insurance coverage described in Subparagraph
7.1(l) shall remain continuously in force through and including the
Closing Date.
(d) Operation of Projects. Contributor shall operate and manage the
Projects in the same manner as in effect on the Contract Date, maintaining
present services (including, but not limited to, pest control), and shall
maintain the Projects in the condition required under the Leases and in
substantially the same condition as exists on the Contract Date (casualty
and reasonable wear and tear excepted), shall keep on hand sufficient
materials, supplies, equipment and other Personal Property for the
operation and management of the Projects in substantially the same manner
as in effect on the Contract Date; and shall perform, when required by the
terms of the underlying document or by law, all of Contributor's material
obligations under the Leases, Contracts, Governmental Approvals and other
agreements binding on Contributor and relating to the Projects; provided
that nothing contained in this Subparagraph 8.1(d) shall require
Contributor to make any unscheduled capital improvements or repairs or
bring any of the Projects up to current code requirements. Except as
otherwise specifically provided herein (including, without limitation,
Paragraph 15), Contributor shall deliver the Projects at Closing in
substantially the same condition as each of them is in on the Contract
Date (subject to the performance of tenant improvements and improvements
provided for, and contemplated, in Contributor's current budget for that
particular Project), reasonable wear and tear excepted, and shall
terminate, as of the Closing Date, the Contracts, unless otherwise advised
to the contrary by Acquiror, in writing, no later than the Approval Date.
None of the Personal Property, fixtures or Inventory (except as such
Inventory may be consumed in the ordinary course of business) shall be
removed from the Projects, unless replaced by personal property, fixtures
or inventory of substantially equal or greater utility and value.
(e) Pre-Closing Expenses. Subject to the provisions of Paragraphs 13
and 26 below, Contributor will pay in full, prior to Closing (or the same
shall be subject to reproration after the Closing if the ▇▇▇▇ or invoice
is not issued by Closing), all bills and invoices for labor, goods,
material and services of any kind rendered to or at the request of
Contributor relating to the Projects and utility charges, relating to the
period prior to Closing, but excluding therefrom all utility and other
charges billed directly to Tenants or subtenants of the Projects. Except
as the parties may otherwise agree herein, any alterations, installations,
decorations and other work required to be performed by Contributor prior
to the Closing under any and all agreements affecting the Projects to
which Contributor is a party and by which Acquiror will be bound will, by
the Closing, be completed and paid for, in full or subject to proration.
(f) Good Faith. All actions required pursuant to this Agreement that
are necessary to effectuate the transaction contemplated herein will be
taken promptly and in good faith by Contributor and Acquiror, as the case
may be, and each party shall furnish the other party with such documents
or further assurances as such other party may reasonably require.
(g) No Assignment. After the Contract Date and prior to Closing,
Contributor shall not assign, alienate, lien, encumber or otherwise
transfer all or any part of any or all of the Projects except as permitted
herein.
(h) Availability of Records. Upon Acquiror's request, for a period
of two (2) years after Closing, Contributor shall (i) make the Records
available to Acquiror for inspection, copying and audit (at Acquiror's
expense) by Acquiror's designated accountants; and (ii) reasonably
cooperate with Acquiror (without any third party expense to Contributor)
in obtaining any and all permits, licenses, authorizations, and other
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35
Governmental Approvals necessary for the operation of any or all of the
Projects. Without limitation of the foregoing in this Subparagraph
8.1(h), Contributor agrees to abide by the terms of Exhibit Q attached
hereto, but without any third-party expense to Contributor. The
provisions of this Subparagraph 8.1(h) shall survive the Closing for a
period of two (2) years.
(i) Change in Conditions. Prior to Closing, Contributor shall
promptly notify Acquiror of any material adverse change (about or of which
Contributor has actual knowledge) of any condition with respect to any or
all of the Projects or of the occurrence of any event or circumstance that
makes any representation or warranty of Contributor to Acquiror under this
Agreement untrue or misleading in any material respect, or any covenant of
Acquiror under this Agreement incapable of being performed in any material
respect, it being understood that Contributor's obligation to provide
notice to Acquiror under this Subparagraph 8.1(i) shall in no way relieve
Contributor of any liability for a breach by Contributor of any of its
representations, warranties or covenants under this Agreement or otherwise
impair any cure period of Contributor set forth herein, except to the
extent Contributor elects to exercise the Contributor's Mitigation Option
pursuant to (and as defined in) Subparagraph 9(d)(ii).
(j) Ownership Structure. From the Contract Date through and
including the Closing Date, Contributor shall maintain the same
composition of its partners, shareholders and members as exists on the
Contract Date, subject to redemption of certain partners and intra-family
transfers, unless otherwise required pursuant to Subparagraph 2(c)(iv)
above.
(k) Initial Public Offering. From and after the Contract Date to the
Closing Date, Contributor shall not file, and shall not permit any
partner, shareholder, member, affiliate or Representative of Contributor
to file, any registration statement (on Form S-11 or otherwise) with the
SEC that in any way relates to any Project or the business of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Associates.
(l) Existing Mortgages. Contributor shall, prior to Closing, comply
in all material respects with the requirements of the Existing Mortgages.
(m) Remediation of Code Violations. Notwithstanding anything to the
contrary contained herein, Contributor agrees to remediate, or otherwise
respond to, at Contributor's sole expense and in a prompt and commercially
reasonable fashion, in a manner reasonably satisfactory to Acquiror, any
existing violation of any municipal or other governmental law, ordinance,
regulation, code, license, permit or authorization cited by a municipality
with respect to any Project. Contributor shall have no obligation
pursuant to this Subparagraph 8.1(m) unless, within 45 days of the Closing
Date, Acquiror delivers to Contributor a written notice concerning such a
violation issued by a municipal agency.
(n) Sewer Hookups. The parties acknowledge that certain of the
Projects are not currently hooked up to and into the applicable
municipality's sewer system; however, given the availability of municipal
sewer lines at and near those Projects, Contributor has advised Acquiror
that these Projects are eligible for connection to and into the applicable
municipality's sewer system. As a result, Contributor hereby covenants
and agrees that, as soon as is reasonably possible, but in all events
within one year after the Closing Date, Contributor shall cause Projects
Nos. 22, 45, 46, 47, 48 and 49 to be hooked up to the appropriate
municipal sewer system in accordance with all applicable laws, regulations
and ordinances (the "HOOKUPS").
(o) Patomi Mortgage. JB shall use his good faith, diligent and
reasonable efforts to obtain and deliver to Acquiror promptly following
the Closing a mortgagee estoppel with respect to the Patomi Mortgage in
form and substance reasonably acceptable to Acquiror from Patomi Realty
Co. Such mortgagee's estoppel shall include, among other things, an
unqualified consent from the mortgagee to the transfer of Project 43 to
the UPREIT. Post-Closing Contributor hereby agrees to immediately
reimburse Acquiror for (i) any penalty or premium assessed against it
under the Patomi Mortgage or Patomi Note in connection with the
contribution of Project No. 43 hereunder and (ii) any prepayment
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of the Patomi Note. Post-Closing Contributor further agrees to provide to
Acquiror and its counsel (Barack ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇), promptly following the Closing, copies of all documents in its
possession relating to the Patomi Mortgage and the Patomi Note.
(p) Certain Estoppels. Post-Closing Contributor hereby agrees to
protect, defend, indemnify and hold Acquiror, the UPREIT, the REIT and any
of their partners, officers, directors, shareholders, successors and
assigns harmless from and against any and all losses that any or all of
the indemnified parties suffers or incurs as a result of any matter raised
in the estoppel certificates delivered in connection with the Closing
hereunder by the following Tenants that is not contemplated by the form
estoppel certificate attached as Exhibit O: ▇▇▇▇▇▇ Biomechanics Group,
Inc.; Metro Area Sales Inc.; and Dictaphone Corporation (which Dictaphone
estoppel certificate shall include the matters referenced by hand in that
certain letter dated December 13, 1996 from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to Dictaphone
Corporation).
In all events, however, the satisfaction of, and compliance with (in all
material respects), all of the covenants made by Contributor in this Agreement
shall be an Acquiror's Condition Precedent. All covenants made in this
Agreement by Contributor shall survive the Closing for a period of one (1)
year, unless otherwise expressly provided herein, and shall not be merged into
any instrument of conveyance delivered at Closing. If, prior to Closing,
Acquiror acquires actual knowledge (through the provision of any written
documentation delivered to Acquiror by Contributor, or received by Acquiror
from Contributor, or through the delivery to Acquiror of a written report from
any third party engaged by Acquiror in order to perform any of the tests,
studies, investigations and inspections contemplated under Paragraph 5) of the
Contributor's failure to satisfy and comply with any or all of the covenants
made by Contributor in this Agreement, and Acquiror nevertheless elects to
close under this Agreement, then Acquiror shall be deemed to have waived the
failure(s) in question, and shall have no right, at any time after Closing, to
assert a claim, of any nature whatsoever, against Contributor, with respect to
that failure to so satisfy or comply with any or all of such covenants of
Contributor.
8.2 Acquiror's, REIT's and UPREIT's. Effective as of the execution
of this Agreement, Acquiror and, effective as of the Closing Date, the
REIT and the UPREIT hereby covenant with Contributor, with respect to the
period ending at Closing for all but clauses 8.2(c) and (d), as follows:
(a) Change in Conditions. Any or all of Acquiror, the REIT and the
UPREIT shall promptly notify Contributor of any material change in any
condition with respect to the business of any or all of Acquiror, the REIT
and the UPREIT, or of the occurrence of any event or circumstance that
makes any representation or warranty of any or all of Acquiror, the REIT
and the UPREIT to Contributor under this Agreement untrue or misleading,
in any material respect, or any covenant of any or all of Acquiror, the
UPREIT and the REIT under this Agreement incapable of being performed in
any material respect, it being understood that Acquiror's, the REIT's and
the UPREIT's obligation to provide notice to Contributor under this
Subparagraph 8.2(a) shall in no way relieve Acquiror, the REIT and the
UPREIT of any liability for a breach by them of their respective
representations, warranties or covenants under this Agreement.
(b) Ownership Structure. From the Contract Date through and
including the Closing Date, Acquiror, the REIT and the UPREIT shall each
maintain (unless prevented by death or incapacity) substantially the same
composition of their respective executive officers, boards of directors or
general partner, as the case may be, as exists on the Contract Date.
(c) Good Faith. All actions required pursuant to this Agreement that
are necessary to effectuate the transaction contemplated herein will be
taken promptly and in good faith by Acquiror, the UPREIT and the REIT, as
applicable, and the appropriate representatives, officers or partners of
such parties shall furnish Contributor with such documents or further
assurances as Contributor may reasonably require.
(d) Consent Decree. With respect to Projects 8 and 9, Acquiror
acknowledges that Contributor has advised it of the existence of that
certain "Consent Decree"
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concerning these two Projects signed by the Regional Administrator of the
United States Environmental Protection Agency, Region II, on or about
September 30, 1996; and if Acquiror acquires these Projects, Acquiror
shall fully comply with the obligations imposed on the owner of these two
Projects under the following paragraphs of the Consent Decree: Paragraph
9 (Notice of Obligations to Successors-in-Title), Paragraph 22(a) and (b)
(Site Access) and Paragraph 23 (Institutional Controls). Acquiror shall
not be bound or required to comply with any other provisions of the
Consent Decree. The provisions of this Subparagraph shall survive the
Closing so long as the requirements imposed under the relevant Consent
Decree(s) remain in effect.
In all events, however, the satisfaction of, and compliance with, in all
material respects, all of the covenants made by Acquiror, the REIT and the
UPREIT in this Agreement shall be a Contributor's Condition Precedent. All
covenants made in this Agreement by Acquiror, the REIT and the UPREIT, shall
survive the Closing for a period of one (1) year, unless otherwise expressly
provided herein, and shall not be merged into any instrument of conveyance
delivered at Closing.
9. ENVIRONMENTAL WARRANTIES AND AGREEMENTS.
(a) Definitions.
Unless the context otherwise requires:
(i) "ENVIRONMENTAL LAW" or "ENVIRONMENTAL LAWS" shall mean all
applicable state and local statutes, regulations, directives,
ordinances, rules, court orders, judicial or administrative decrees,
binding arbitration awards and the common law, which pertain to the
environment, soil, water, air, flora and fauna, or health and safety
matters, as such have been amended, modified or supplemented from
time to time, and are in effect on the Closing Date (including all
present amendments thereto and re-authorizations thereof).
Environmental Laws include, without limitation, those relating to:
(i) the manufacture, processing, use, distribution, treatment,
storage, disposal, generation or transportation of Hazardous
Materials; (ii) air, soil, surface, subsurface, groundwater or noise
pollution; (iii) Releases; (iv) protection of endangered species,
wetlands or natural resources; (v) the operation and closure of
Containers; (vi) health and safety of employees and other persons;
and (vii) notification and reporting requirements relating to the
foregoing. Without limiting the above, Environmental Law also
includes the following: (i) the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Sections 9601 et
seq.), as amended ("CERCLA"); (ii) the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act (42 U.S.C.
Sections 6901 et seq.), as amended ("RCRA"); (iii) the Emergency
Planning and Community Right to Know Act of 1986 (42 U.S.C. Sections
11001 et seq.), as amended; (iv) the Clean Air Act (42 U.S.C.
Sections 7401 et seq.), as amended; (v) the Clean Water Act (33
U.S.C. Sections 1251 et seq.), as amended; (vi) the Toxic Substances
Control Act (15 U.S.C. Sections 2601 et seq.), as amended; (vii) the
Hazardous Materials Transportation Act (49 U.S.C. Sections 1801 et
seq.), as amended; (viii) the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. Sections 136 et seq.), as amended;
(ix) the Federal Safe Drinking Water Act (42 U.S.C. Sections 300f et
seq.), as amended; (x) the Federal Radon and Indoor Air Quality
Research Act (42 U.S.C. Sections 7401, et seq.); (xi) the
Occupational Safety and Health Act (29 U.S.C. Sections 651 et seq.),
as amended; (xii) any state, county, municipal or local statutes,
laws or ordinances similar or analogous to (including counterparts
of) any of the statutes listed above; and (xiii) any rules,
regulations, directives, orders or the like adopted by a Governmental
Authority pursuant to or implementing any of the above.
(ii) "ENVIRONMENTAL PERMIT" or "ENVIRONMENTAL PERMITS" shall
mean licenses, certificates, permits, directives, requirements,
registrations, government approvals, agreements, authorizations, and
consents which are required under or are issued pursuant to an
Environmental Law or are otherwise required by Governmental
Authorities.
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(iii) "GOVERNMENTAL AUTHORITY" shall mean any agency,
commission, department or body of any municipal, township, county,
local, state or Federal governmental or quasi-governmental regulatory
unit, entity or authority having jurisdiction or authority over all
or any portion of the Projects or the management, operation, use or
improvement of any of them.
(iv) "HAZARDOUS CONDITION" or "HAZARDOUS CONDITIONS" refers to
the existence or presence of any Hazardous Materials on, in, under or
at, the Projects (including air, soil and groundwater) or any portion
of any of them.
(v) "HAZARDOUS MATERIAL" or "HAZARDOUS MATERIALS" shall mean any
chemical, pollutant, contaminant, pesticide, petroleum or petroleum
product or by-product, radioactive substance, hazardous or extremely
hazardous solid waste, special or toxic waste, substance, chemical or
material regulated, listed, limited or prohibited under any
Environmental Law, including without limitation: (i) friable or
damaged asbestos, asbestos-containing material, polychlorinated
biphenyls ("PCBS"), solvents and waste oil; (ii) any "hazardous
substance" as defined under CERCLA; and (iii) any "hazardous waste"
as defined under RCRA or comparable state or local law.
(vi) "RELEASE" means any spill, discharge, leak, migration,
emission, escape, injection, dumping or other release or threatened
release of any Hazardous Material into the environment, whether or
not notification or reporting to any governmental agency was or is
required. Release includes, without limitation, historical releases
and the meaning of Release as defined under CERCLA.
(vii) "QUALIFIED CONSULTING FIRM" shall mean a first-class
nationally or regionally recognized environmental engineering and/or
consulting firm (the parties hereby specifically recognize C.A. Rich
Consultants, Inc., ERM, ▇▇▇▇▇▇ Engineering, Ground Water
Technologies, Inc., ICF ▇▇▇▇▇▇, Roux Associates, Inc. and Dames and
▇▇▇▇▇ as such firms).
(viii) "REMEDIAL ACTION" shall mean any and all corrective or
remedial action, preventative measures, response, removal, transport,
disposal, clean-up, abatement, treatment and monitoring of Hazardous
Materials or Hazardous Conditions, whether voluntary or mandatory,
and includes all studies, assessments, reports or investigations
performed in connection therewith to determine if such actions are
necessary or appropriate (including investigations performed to
determine the progress or status of any such actions), all occurring
on or after the Contract Date.
(ix) "CONTAINER" or "CONTAINERS" means above-ground and
underground storage tanks and related equipment containing or
previously containing any Hazardous Material or fraction thereof.
(x) "REMEDIAL COSTS" shall include all costs, liabilities
expenses and fees incurred on or after the date of this Agreement in
connection with Remedial Action, including but not limited to: (i)
the reasonable fees of environmental consultants and contractors;
(ii) reasonable attorneys' fees (including compensation for in-house
and corporate counsel provided such compensation does not exceed
customary rates for comparable services); (iii) the costs associated
with the preparation of reports, and laboratory analysis (including
charges for expedited results if reasonably necessary); (iv)
regulatory, permitting and review fees; (v) costs of soil and/or
water treatment (including groundwater monitoring) and/or transport
and disposal; and (iv) the cost of supplies, equipment, material and
utilities used in connection with Remedial Action.
(b) Warranties. Contributor represents and warrants to Acquiror
that: (i) it has provided complete access, to all of Acquiror, Acquiror's
counsel and Acquiror's environmental consultants, to all documents
concerning the Projects that are (x) within any and all of the files in
the possession of each of Contributor and its environmental counsel and
(y) relevant to the representations and warranties set forth in this
Subparagraph 9(b);
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(ii) to Contributor's actual knowledge, no other documents concerning the
Projects and the environmental condition thereof are in the possession of
any parties other than (x) Contributor, (y) Contributor's environmental
counsel, and (z) those environmental consultants whose names have been
provided to Acquiror, in writing, to whom Contributor has sent letters
advising such consultants that they may disclose to Acquiror information
in their possession concerning any of the Projects; and (iii) except as
(x) revealed in those particular documents to which Acquiror has had
complete access (pursuant to clause (i) above) or (y) set forth on
Schedule 9(b) attached hereto (which Schedule shall also be deemed to
incorporate any information developed or acquired by Acquiror's
environmental consultants during or as a result of any environmental
Assessments or Additional Assessments performed pursuant to Subparagraph
5(b) and expressly set forth in Reports delivered to Acquiror by its
environmental consultants), to Contributor's actual knowledge, the
following matters are true and correct as of the Contract Date and shall
be true and correct as of the Closing Date:
(i) The Projects have been and continue to be owned and operated
in material compliance with all Environmental Laws and Environmental
Permits.
(ii) There have been no past and there are no pending or
threatened: (i) claims, complaints, notices, correspondence or
requests for information received by Contributor with respect to any
violation or alleged violation of any Environmental Law or
Environmental Permit or with respect to any corrective or remedial
action for or cleanup of the Projects or any portion of any of them;
and (ii) written correspondence, claims, complaints, notices, or
requests for information from or to Contributor regarding any actual,
potential or alleged liability or obligation under or violation of
any Environmental Law or Environmental Permit with respect to the
Projects or any portion of any of them.
(iii) There have been no Releases, and there has not been a
threatened Release of a Hazardous Material at, on, under or in any of
the Projects or any portion of any of them which could give rise to
any material claim, liability or obligation.
(iv) No conditions exist at, on, in, or under the Land or the
Projects that would give rise to any material claim, liability or
obligation arising out of a Hazardous Condition under any
Environmental Law or Environmental Permit.
(v) Contributor has been issued and is in material compliance
with all Environmental Permits required for the operation of the
Projects.
(vi) The Projects are not listed, proposed or nominated for
listing on the National Priorities List pursuant to CERCLA (the
"NPL"), or the New York State Registry of Inactive Hazardous Waste
Disposal Sites.
(vii) Contributor has not transported, disposed of or treated,
or arranged for the transportation, disposal or treatment of, any
Hazardous Material from any or all of the Projects to any location
that is: (i) listed, proposed or nominated for listing on the NPL, or
the New York State Registry of Inactive Hazardous Waste Disposal
Sites; and (ii) the subject of any pending Federal, state or local
enforcement action or other investigation that includes any claim or
liability against Contributor as a result of any Remedial Action,
damage to natural resources or personal injury, including, but not
limited to, any claim under CERCLA.
(viii) There are no Containers at, in, on or under the Projects
which could give rise to any material claims, obligations, or
liabilities under Environmental Laws; Contributor has not removed,
closed or abandoned any Containers at any or all of the Projects in a
manner which could give rise to any material claims, obligations, or
liabilities under Environmental Laws; and Contributor has no
knowledge of the existence, abandonment, closure or removal of
Containers at any or all of the Projects in a manner which could give
rise to any material claims, obligations, or liabilities under
Environmental Laws. Any and all Containers which
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have heretofore been removed from, or closed at, any or all of the
Projects have been removed or closed in accordance with all
Environmental Laws.
(ix) There are no PCBs or friable or damaged asbestos at any or
all of the Projects which could give rise to any material claims,
obligations, or liabilities under Environmental Laws.
(x) There has been no storage, treatment, disposal, generation,
transportation or Release of any Hazardous Materials by Contributor
or by its predecessors in interest, or by any other person or entity
for which Contributor is or may be held responsible, at, on, under or
in any or all of the Projects (or any portion of any of them) in
violation of, or which could give rise to, any material claim,
obligation or liability under Environmental Laws.
(xi) No drums containing or previously containing any Hazardous
Material or fraction thereof are buried or otherwise stored under the
surface of any soil at any of the Projects.
(c) Environmental Indemnities.
(i) Indemnification Concerning Projects 8, 9, 10, 11 and 33-37.
The LP Unit Recipients (jointly and severally, "POST-CLOSING
CONTRIBUTOR") hereby indemnify, defend, and hold harmless Acquiror,
its partners, shareholders and the respective agents, contractors,
employees, shareholders, trustees and representatives of each of
Acquiror, its partners and shareholders, and each of their successors
and assigns, from and against any and all liabilities, claims,
demands, suits, administrative proceedings, causes of action,
penalties, fines, liens, reasonable fees, costs (including reasonable
attorneys' fees and costs and environmental consultants' fees, as
limited by Subparagraph 9(c)(ii)), damages (including reasonable
attorneys' fees and costs and environmental consultants' fees and
expenses incurred by Acquiror with respect to enforcing its rights
hereunder), personal injuries and property damages, losses and
expenses, both known and unknown, present and future, at law or in
equity, but not including consequential damages (collectively, "LOSS"
or "LOSSES") as a result of or arising from:
(A) the presence at Projects 8 and 9 (the "GOLDISC SITE")
of (i) any Hazardous Materials in the groundwater, and (ii) the
presence at the Goldisc Site of any petroleum products or
petroleum degradation products in the soil or groundwater at
Areas of Environmental Concern ("AEC") 5 and 13 as depicted in
Figure 2-2 of Phase II Remedial Investigation Report: Former
Goldisc Recordings Facility, Holbrook, New York, prepared by
ERM-Northeast, April 1995; provided, however, that the
activities, events, conditions or occurrences that resulted in
Losses concerning the Goldisc Site occurred prior to the Closing
Date (and such conditions or occurrences shall be deemed to
include the continued spread of contamination that may occur
after the Closing Date); provided further, however, that all
indemnities concerning groundwater contamination at the Goldisc
Site shall immediately terminate only after the remedial action
for groundwater selected by the USEPA is completed, including,
but not limited to, any monitoring and/or operations and
maintenance required by a Governmental Authority, and all
indemnities concerning AEC 5 and 13 of the Goldisc Site shall
terminate only after the remedial actions for AEC 5 and 13 have
been completed (as "completed" is defined in Subparagraph
9(d)(ii)(E) herein), including, but not limited to, any
monitoring and/or operations and maintenance required by a
Governmental Authority; and
(B) any Hazardous Conditions at Projects 10 and 11 (the
"ALSY SITE"); provided, however, that the activities, events,
conditions or occurrences which resulted in Losses concerning
the Alsy Site occurred prior to the Closing Date; provided
further, however, that all indemnities concerning the Alsy Site
shall terminate upon the removal of the Alsy Site from the New
York State Registry of Inactive Hazardous Waste Disposal Sites
or the reclassification of
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the Alsy Site to a class "5" site. Post-Closing Contributor
shall have an affirmative obligation to petition the New York
State Department of Environmental Conservation for such removal
or reclassification of the Alsy Site and shall take all
reasonable steps to pursue diligently such petition until such
removal or reclassification is obtained, including any appeals
or challenges to denials of such petition as may be appropriate.
It shall be in Post-Closing Contributor's sole discretion as to
when to initiate any such petition; provided, however, that
Post-Closing Contributor shall initiate such petition within six
months of completion of the Remedial Work at the Alsy Site
required by any Governmental Authority (including any monitoring
and/or operation and maintenance).
(C) the presence of volatile organic compounds in the
groundwater (and any associated source area in the soil) at
Projects 33, 34, 35 and 37; provided, however, that the
activities, events, conditions or occurrences that resulted in
such Losses occurred prior to the Closing Date (such occurrence
shall include the continued spread and/or migration of
contamination that may occur after the Closing Date); provided,
further, that any such Losses relate to a demand, claim, suit,
administrative proceeding or other action brought by, or on
behalf of, a Governmental Authority or other third party. This
indemnity shall terminate five (5) years after the Closing Date.
(ii) Indemnification Procedure. Within a reasonable period of
time after receipt by Acquiror of its first notice of any Loss in
respect of which Acquiror will seek indemnification under
Subparagraph 9(c)(i) above, but in no event later than ten (10)
business days prior to the expiration of any required response
period, or, if the required response period is less than ten (10)
business days, immediately upon receipt by Acquiror of its first
notice of the Loss in respect of which indemnification is sought:
(1) Acquiror shall notify Post-Closing Contributor thereof in
writing, and, subject to the other provisions of this Subparagraph
9(c)(ii), any failure to so notify Post-Closing Contributor shall
relieve Post-Closing Contributor from any liability for
indemnification that it may have to Acquiror (but such relief shall
apply only to the alleged Loss about which Acquiror fails to timely
notify Post-Closing Contributor); provided, however, that as long as
JB is employed pursuant to the Employment Agreement (or pursuant to
any other written agreement between JB and Acquiror or any of its
Affiliates), receipt of notice of a Loss in Acquiror's New York
office (in which JB is employed by Acquiror [or any of its
Affiliates] in a management position) shall constitute notice to
Post-Closing Contributor of that Loss; and (2) Acquiror shall consult
and cooperate with Post-Closing Contributor as to the proper course
of action to be taken and shall not take any action that may result
in the acknowledgement of any liability of Acquiror or may result in
settlement or compromise of any claim against Acquiror, unless
Acquiror obtains Post-Closing Contributor's prior written consent,
which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, any failure by Acquiror to notify Post-Closing
Contributor within such 10 business day period (or less, as the case
may be) shall not, to the extent that Acquiror can establish that
Post-Closing Contributor has not been materially prejudiced by such
delay, relieve Post-Closing Contributor of any or all of its
indemnification obligations under this Paragraph 9; and any
reasonable additional costs or expenses actually incurred by
Post-Closing Contributor as a result of such delay shall be borne by
Acquiror and shall be paid by Acquiror within thirty (30) days after
Acquiror's receipt of an invoice describing, in reasonable detail,
such costs or expenses. Post-Closing Contributor shall have final
approval over any settlement or material decisions concerning any
Losses. Post-Closing Contributor shall be entitled to select counsel
in the defense of any action, suit, or administrative proceeding, and
in any other actions that may result in Losses for which a claim for
indemnity may be made under Subparagraph 9(c)(i) above (collectively,
"ACTION") and to assume control of the defense of such Action.
Acquiror shall have the right to approve of the selection of counsel
and if it chooses to exercise this right, such approval shall not be
unreasonably withheld. After written notice by Post-Closing
Contributor to Acquiror of its election to assume control of the
defense of such Action, and provided that Post-Closing Contributor
does, in fact, defend such Action, Post-Closing Contributor shall not
be liable to
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Acquiror hereunder for any legal expenses subsequently incurred by
Acquiror in connection with the defense of that particular Action,
including any appeals. Post-Closing Contributor shall regularly
apprise Acquiror, in reasonable detail, of the status of any Action
for which Post-Closing Contributor assumes the defense. If
Post-Closing Contributor assumes control of the defense and selects
counsel, and if counsel chosen by Post-Closing Contributor has or
develops a conflict of interest and is unable to continue its
representation, the reasonable fees and expenses of Acquiror's
counsel thereafter incurred shall, to the extent that Acquiror can
show that it has, or reasonably could have, been materially
prejudiced by such delay, be at the expense of Post-Closing
Contributor, provided that no substitute for Post-Closing
Contributor's original counsel is engaged by Post-Closing Contributor
within a reasonable period of time (subject to the right of Acquiror
to approve selection of counsel, which consent shall not be
unreasonably withheld). If Post-Closing Contributor does not assume
control of the defense of such Action within the longer of (A) ten
(10) business days after the first notice of such Losses to
Post-Closing Contributor or (B) the time to respond to such action or
proceeding (inclusive of extensions of time to respond), but in no
event more than 45 days from the date of receipt of such first
notice, Acquiror (within 30 days after Acquiror's delivery of a
written demand therefore) shall control the defense in such manner as
it deems appropriate and Post-Closing Contributor shall reimburse
Acquiror for all reasonable costs and expenses in connection with
such defense.
(iii) Limitation of Indemnities and Reservation of Rights.
Except for the indemnities provided in Subparagraph 9(c)(i) above
concerning Projects 8, 9, 10, 11, 33, 34, 35, and 37, Post-Closing
Contributor provides no environmental indemnities for any of the
Projects to be acquired by Acquiror pursuant to this Agreement.
Post-Closing Contributor also retains all of its rights to (x) assert
claims, causes of action, demands, and suits against any third party
("THIRD-PARTY ACTIONS") concerning Losses which Post-Closing
Contributor has incurred or may incur in the future relating to any
of the Projects subject to this Agreement, including without
limitation Projects 8, 9, 10, 11, 33, 34, 35 and 37; (y) retain
control of any such Third-Party Actions; and (z) retain in full any
and all amounts recovered thereby.
(iv) Indemnification for Offsite Disposal. Post-Closing
Contributor hereby indemnifies, defends, and holds harmless Acquiror,
its partners, shareholders and the respective agents, contractors,
employees, shareholders, trustees and representatives of each of
Acquiror, its partners and shareholders, and each of their successors
and assigns, from and against any and all Losses as a result of or
arising from the disposal of any Hazardous Material by Contributor
from any Project at any offsite location ("OFFSITE LOSS OR LOSSES");
provided, however, that this indemnity does not extend to any such
disposal by any current or former tenant or occupant at any Project,
but does extend to disposal by Contributor (or any agents directly
engaged by Contributor for disposal) of such tenants' wastes. Within
a reasonable period of time after receipt by Acquiror of its first
notice of any Offsite Loss in respect of which Acquiror will seek
indemnification under this paragraph, but in no event later than ten
(10) business days prior to the expiration of any required response
period, or, if the required response period is less than ten (10)
business days, immediately upon receipt by Acquiror of its first
notice of the Offsite Loss, Acquiror shall notify Post-Closing
Contributor thereof in writing, and any failure to so notify
Post-Closing Contributor shall relieve Post-Closing Contributor from
any liability for indemnification that it may have to Acquiror for
that particular Offsite Loss about which Acquiror fails to timely
notify Post-Closing Contributor; provided, however, that as long as
JB is employed pursuant to the Employment Agreement (or pursuant to
any other written agreement between JB and Acquiror or any of its
Affiliates), receipt of notice of a Loss in Acquiror's New York
office (in which JB is employed by Acquiror in a management position)
shall constitute notice to Post-Closing Contributor of that Loss; and
provided, further, that any failure by Acquiror to notify
Post-Closing Contributor within such 10 business day period (or less,
as the case may be) shall not, to the extent that Acquiror can show
that Post-Closing Contributor has not been materially prejudiced by
any such delay, relieve Post-Closing Contributor of any or all of its
indemnification obligations
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under this Paragraph 9, and any reasonable additional costs or
expenses actually incurred by Post-Closing Contributor as a result of
such delay by Acquiror shall be borne by Acquiror and shall be paid
by Acquiror within thirty (30) days after Acquiror's receipt of an
invoice describing, in reasonable detail, such costs or expenses.
Post-Closing Contributor shall at all times retain complete control
of the defense of any such Offsite Loss, including the selection of
counsel to conduct the defense of any such Offsite Loss, and shall
regularly apprise Acquiror of the status of its defense concerning
any such Offsite Loss.
All of the provisions of this Subparagraph 9(c) shall survive the Closing and
shall not merge into any of the conveyancing documents delivered at Closing.
Furthermore, with respect to any of the indemnities set forth in this
Subparagraph 9(c), Contributor and Post-Closing Contributor acknowledge and
agree that if Acquiror makes any claim for or otherwise seeks indemnification
pursuant to the requirements of Subparagraph 9(c)(ii) and the matter about
which Acquiror makes such claim for, or otherwise seeks, indemnification (the
"INDEMNIFICATION CLAIM") remains pending and unresolved (whether in whole or in
part) as of the date on which the applicable indemnity expires pursuant to the
specific limitations expressly set forth above in this Subparagraph 9(c) (the
"OUTSTANDING INDEMNIFICATION MATTER") then the indemnity in question shall
nevertheless remain in full force and effect, but only with respect to such
Outstanding Indemnification Matter, and shall not expire until the date on
which the Outstanding Indemnification Matter is resolved and satisfied, in its
entirety.
(d) Remediation. Post-Closing Contributor agrees and acknowledges
that it shall cause the following to be completed:
(i) Contributor's Remediation Requirement. Post-Closing
Contributor shall cause the Hazardous Conditions and all other
conditions and matters set forth on Schedule 9(d) attached hereto to
be corrected and remediated in accordance with applicable
Environmental Law and at Contributor's sole cost and expense
("CONTRIBUTOR'S REMEDIATION REQUIREMENT"). For the purposes of this
Paragraph 9(d) only, the term "HAZARDOUS CONDITION" or "HAZARDOUS
CONDITIONS" shall be deemed to be all matters and conditions
described on Schedule 9(d). There shall be no Contributor's
Remediation Requirement for those Projects not listed on Schedule
9(d). Notwithstanding the foregoing, Post-Closing Contributor shall
be and remain liable hereunder, as and to the extent elsewhere
provided in the Agreement, for any breach of warranty or
representation relating to the existence of any Hazardous Conditions
existing as of the Closing Date, and not detected in the Assessment
or otherwise not described on Schedule 9(d).
(ii) Procedure for Post-Closing Contributor's Remediation
Requirement. Post-Closing Contributor shall undertake the following
steps:
(A) Within sixty (60) days after the Closing Date,
Post-Closing Contributor shall select a Qualified Consulting
Firm to provide a work plan ("SCOPE OF WORK") setting forth (in
reasonable detail) the Remedial Action planned to correct or
remediate the Hazardous Conditions set forth on Schedule 9(d)
(the "REMEDIAL WORK") for the approval of Acquiror, which
approval shall not be unreasonably withheld. Within five (5)
business days after receipt from Post-Closing Contributor of the
Scope of Work, Acquiror shall advise Post-Closing Contributor in
writing of its approval thereof or objections thereto. If
Acquiror fails to respond, in writing, within such five (5)
business day period, then Acquiror shall automatically be deemed
to have approved the Scope of Work. If Acquiror objects to the
Scope of Work for any such Hazardous Conditions, or any
additional work related thereto, and the parties are unable to
resolve such objection, either Post-Closing Contributor or
Acquiror shall have the unilateral right, but not the
obligation, to provide written notice to, and/or consult with
("NOTIFY"), the applicable Government Authority regarding the
appropriate Scope of Work for the Project or Project(s) for
which Acquiror and Post-Closing Contributor fail to agree upon a
Scope of Work; provided, however, that the party that desires to
notify and/or consult with such Governmental Authority shall
first give the
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other party five (5) business days' prior written notice thereof
(the "SCOPE OF WORK NOTICE") in accordance with the following
procedure:
(1) within five (5) days after Acquiror or
Post-Closing Contributor (as the case may be) receives the
Scope of Work Notice, Post-Closing Contributor shall Notify
the applicable Governmental Authority, in writing,
regarding the appropriate Scope of Work for the Project or
Projects for which Acquiror and Post-Closing Contributor
disagree upon a Scope of Work; and
(2) in the event that Post-Closing Contributor fails
to Notify the Governmental Authority within such 5 day
period, Acquiror shall have the right, but not the
obligation, to Notify the Governmental Authority, in
writing, in order to determine the appropriate Scope of
Work.
(B) After the Scope of Work is determined pursuant to
subparagraph (A) above, then, prior to undertaking the Remedial
Work, Post-Closing Contributor shall, at any time, consult with
Acquiror regarding whether any notice to, or consultation with,
any Governmental Authority is required under applicable
Environmental Laws. If Post-Closing Contributor reasonably
determines that any such notice or consultation is required
under applicable Environmental Laws (which determination shall
be resolved in favor of such notice to, or consultation with,
the responsible Governmental Authority where there is any
doubt), Post-Closing Contributor shall undertake such notice or
consultation and, if required by the Governmental Authority with
jurisdiction over the Remedial Work, shall seek approval of the
Remedial Work from that Governmental Authority. Post-Closing
Contributor agrees that, from time to time, the Scope of Work
for the Remedial Work may be revised and shall be deemed to
include any and all Remedial Action required by such
Governmental Authority; provided, however, that Post-Closing
Contributor shall have the right to conduct negotiations with,
and undertake appeals to, such Governmental Authority. Nothing
contained herein shall be deemed to prevent Post-Closing
Contributor from complying with applicable reporting
requirements under Environmental Laws. Post-Closing Contributor
shall have the right to delay commencement or continuation of
Remedial Work as long as it properly obtains any necessary stays
pending appeals from the Governmental Authority, if needed.
(C) Promptly following approval of the Scope of Work by
Acquiror and any Governmental Authorities consulted or notified,
Post-Closing Contributor shall diligently cause and continue to
cause the Remedial Work and all Additional Work to be diligently
performed by its Qualified Consulting Firm until such work is
completed (as that term is defined under Subparagraph
9(d)(ii)(E) herein). From and after Acquiror's approval of any
Scope of Work, Post-Closing Contributor may not materially
modify, amend, restrict, expand, alter or eliminate any
provision or component of the Scope of Work without Acquiror's
prior consent, which consent shall not be unreasonably withheld.
(D) In the event that the Governmental Authority with
jurisdiction over the Remedial Work agrees that the level of
remediation required at a Project at which Remedial Work is
being performed may be reduced by the imposition of
institutional controls at the Project, including but not limited
to restrictions limiting the use and occupancy of the Project to
non-residential uses or limiting the construction, renovation or
maintenance activities that may be performed at the Project, and
such institutional controls will not materially impair the use
of the Project (as it exists as of the Closing Date), Acquiror
shall not unreasonably withhold its consent to the imposition of
such institutional controls and shall not seek any compensation
therefor from Post-Closing Contributor, provided that
Post-Closing Contributor shall make reasonable and good-faith
efforts to limit the areal extent of any such institutional
controls.
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(E) Upon the completion of the Remedial Work at any
Project, Post-Closing Contributor shall so advise Acquiror and shall
provide such documentation as Acquiror may reasonably require to
satisfy Acquiror that the Remedial Work (and Additional Work, as the
case may be) has been completed. For the purposes of this Paragraph
9, "completed" or "completion" shall mean: (i) in the event that
Post-Closing Contributor has provided notice to or consulted with a
Governmental Authority with respect to the Remedial Work (and
Additional Work, as the case may be), Post-Closing Contributor shall
have: (x) obtained a written statement by the Governmental Authority
with jurisdiction over the Remedial Work (and Additional Work, as the
case may be) in question that no further action is required with
respect to such Project, and (y) if applicable, formally requested
and obtained, in writing, the closure, de-listing and/or removal of
the relevant Project(s) from any list maintained by such Governmental
Authority; or (ii) in the event that a Governmental Authority has not
been consulted, completion of the Remedial Work (and Additional Work,
as the case may be) in accordance with the Scope of Work approved by
Acquiror, which completion shall be evidenced by a written
certification to Acquiror from Post-Closing Contributor's Qualified
Consulting Firm, in a form reasonably acceptable to Acquiror, stating
that all such work has been completed.
(F) Prior to, and throughout the performance of the
Remedial Work by Post-Closing Contributor, Post-Closing
Contributor shall cause its Qualified Consulting Firm to
maintain workers' compensation insurance, as required by law,
professional errors and omissions liability insurance of not
less than $3,000,000, contractor's pollution liability insurance
with coverage of not less than $1,000,000 per occurrence,
general liability insurance with coverage of not less than
$1,000,000 per occurrence and umbrella liability insurance with
coverage of not less than $10,000,000. Acquiror shall be named
as an additional insured on each policy described in this
Subparagraph.
(G) Post-Closing Contributor shall cause the Remedial Work
to be performed in a manner that does not unreasonably disturb
or disrupt the tenancies or business operations located on any
of the applicable Projects. In the event that physical damage
occurs to any of the Projects as a result of the Remedial Work
or any Additional Work, then Post-Closing Contributor shall
promptly notify Acquiror and repair any such damage, at
Post-Closing Contributor's sole cost and expense, so as to
return the damaged Project(s) to the same condition as exists on
the Contract Date. Post-Closing Contributor hereby indemnifies,
protects, defends and holds harmless Acquiror (including its
partners, shareholders, and the respective partners,
shareholders, officers, directors, employees and agents of each
of Acquiror, its partners and shareholders and all of the
respective successors and assigns of such above-described
indemnitees) from and against any and all Losses that Acquiror
actually suffers or incurs as a result of any negligent, willful
or intentional act or omission of any or all of Post-Closing
Contributor or its agents, contractors, subcontractors or
representatives or consultants that occur during the course, or
as a result of, the performance of the Remedial Work.
(H) On the Closing Date, Contributor shall execute a
written assignment (the "ASSIGNMENT"), to Acquiror, of that
certain Indemnity Agreement (the "INDEMNITY"), dated August,
1995, by and between SmithKline ▇▇▇▇▇▇▇ Corporation and
SmithKline Clinical Laboratories, Inc. (individually and
collectively, "INDEMNITOR") and 290 Industrial Co., LLC, which
Assignment shall be in the form of Exhibit AA attached hereto.
Post-Closing Contributor shall have discretion to negotiate with
Indemnitor concerning the imposition of a deed restriction upon
Project 50; provided, however, that:
(1) in accordance with Subparagraph 9(d)(ii)(D)
herein, Post-Closing Contributor shall make reasonable
efforts to limit the areal extent of any such deed
restriction to the smallest area possible, which
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may include any portion of or all of "Area 3", as defined
by the Letter Report, dated August 7, 1996, Re:
Supplemental Area 3 Investigation Report, Magnusonic
Devices, Inc., Hicksville, New York, prepared by Roux
Associates for Indemnitor. Acquiror shall not unreasonably
withhold its consent to the imposition of such a deed
restriction placed upon Project 50;
(2) Post-Closing Contributor shall regularly apprise
Acquiror of the status of its negotiations, and/or contacts
with, Indemnitor; and
(3) promptly upon Post-Closing Contributor's receipt
of any compensation or any other amount(s) or benefits
(including, but not limited to, a release of all or any
portion of a mortgage or other lien interest encumbering
all or any portion of Project 50) ["COMPENSATION"] from
Indemnitor, Post-Closing Contributor shall give Acquiror
fifty (50) percent of such Compensation, net the reasonable
costs incurred by Post-Closing Contributor after the
Closing Date and in connection with reaching an agreement
with Indemnitor regarding such deed restriction, which
costs shall include, but shall not be limited to,
reasonable attorneys' or consultants' fees or other
reasonable costs associated with negotiating and
implementing such deed restriction.
(I) All of the provisions of this Subparagraph 9(d)(ii)
shall survive the Closing and shall not merge into any
conveyance documents delivered at Closing.
(iii) Completion of Remedial Work. The following shall apply to
the aggregate of all Remedial Work and any and all additional work
("ADDITIONAL WORK") relating to the investigation, correction and/or
remediation (including, but not limited to, any monitoring, operation
and/or maintenance) of the Hazardous Conditions described in Schedule
9(d), which Additional Work is required by any Governmental Authority
or otherwise determined to be necessary by Post-Closing Contributor's
Qualified Consulting Firm:
(A) In the event that Post-Closing Contributor does not, at
any time or for any reason whatsoever, cause any Remedial Work
or Additional Work to diligently commence, continue and/or be
completed with respect to any one or more Project(s) (the
"REMEDIATION DEFAULT"), Acquiror shall give Post-Closing
Contributor written notice thereof (the "FIRST REMEDIATION
DEFAULT NOTICE") specifying, in reasonable detail, the nature of
the Remediation Default. From and after the date that the First
Remediation Default Notice is deemed to have been delivered to
Post-Closing Contributor, Post-Closing Contributor shall have
thirty (30) days (the "REMEDIATION DEFAULT CURE PERIOD") in
which to cure the Remediation Default. If Post-Closing
Contributor fails to cure any Remediation Default within the
applicable Remediation Default Cure Period, Acquiror shall give
Post-Closing Contributor written notice thereof (the "FINAL
REMEDIATION DEFAULT NOTICE"), and thereafter, without further
notice or action by Acquiror, Acquiror shall have the right, but
not the obligation, to cause the Remedial Work and/or Additional
Work described in the applicable Remediation Default Notice to
be completed by a Qualified Consulting Firm pursuant to the
applicable Scope of Work for that Project(s); and Acquiror shall
have the right, but not the obligation, to enforce any or all of
its rights and/or remedies under the Environmental Pledge
Agreement (as defined below) and under this Agreement, from
time-to-time, in order to pay for and cause the performance of
such work. Notwithstanding the foregoing, Post-Closing
Contributor shall immediately become obligated to pay Acquiror
(in accordance with the payment structure described in Paragraph
9(d)(iii)(D) herein) any and all reasonable costs and expenses
incurred by Acquiror in connection with a Remediation Default
and/or Acquiror's causing the cure of same (including, but not
limited to, reasonable attorney's and consultant's fees and any
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amounts that, as a result of a Remediation Default, cause the
cost of performing Remedial Work and/or Additional Work to
exceed the total estimated cost to complete the Scope of Work
for that particular Project or Projects).
(B) As an Acquiror's Condition Precedent to Closing,
Acquiror and Post-Closing Contributor shall enter into an
Environmental Pledge and Security Agreement (the "ENVIRONMENTAL
PLEDGE AGREEMENT") in form reasonably satisfactory to Acquiror.
(C) Post-Closing Contributor shall pay, in full, the cost
of all Remedial Work and Additional Work. For purposes of this
Subparagraph 9(d)(iii)(C), "PAYMENT IN FULL" shall be deemed to
be made by Post-Closing Contributor only after Post-Closing
Contributor delivers to Acquiror a complete release and waiver
of any and all liens, in a form reasonably satisfactory to
Acquiror, or other evidence of payment reasonably satisfactory
to Acquiror, covering all claims (including but not limited to
claims and/or liens of, by and/or from contractors or
subcontractors) arising out of any Remedial Work or Additional
Work at the applicable Project.
(D) In the event Acquiror receives any bills from
Post-Closing Contributor's Qualified Consulting Firm for
Remedial Work or Additional Work, Acquiror shall forward those
bills to Post-Closing Contributor, and Post-Closing Contributor
shall pay directly such bills within thirty (30) days after
receipt. If any such bills remain unpaid by Post-Closing
Contributor for a period of thirty (30) days after receipt and
Post-Closing Contributor's Qualified Consulting Firm seeks
payment from Acquiror, Acquiror has the right, but not the
obligation, to pay such bills on Post-Closing Contributor's
behalf, upon five (5) days prior notice to Post-Closing
Contributor (which notice shall include a copy of the ▇▇▇▇ to be
paid) [the "PAYMENT"]. If Acquiror makes a Payment,
Post-Closing Contributor shall immediately become obligated to
re-pay all such sums to Acquiror. Any such Payment made by
Acquiror shall be due and payable by Post-Closing Contributor to
Acquiror within ten (10) days of Post-Closing Contributor's
receipt of written notice from Acquiror that Acquiror has made
such a Payment. Any amounts not paid by Post-Closing
Contributor to Acquiror as and when due shall accrue interest at
a rate of interest per annum equal to the lesser of the "prime
rate" as then published in The Wall Street Journal (or a
comparable business/financial publication if The Wall Street
Journal ceases publication) plus four (4) percentage points or
the highest rate allowable by law. In addition to accruing
interest as provided above, in the event that any amount or
Payment is collected by, through or with the use of any attorney
at law, Post-Closing Contributor shall also be liable and
responsible for reasonable attorney's fees incurred by Acquiror
in connection therewith. In addition, Post-Closing Contributor
hereby indemnifies, defends and holds harmless Acquiror for all
Losses incurred in connection with removing liens which may be
filed against any Project as a result of Post-Closing
Contributor's failure to timely pay in full for any work
performed by Post-Closing Contributor's Qualified Consulting
Firm, consultants and/or contractors in connection with Remedial
Work or Additional Work.
(E) Notwithstanding anything to the contrary in the
Management Agreement, in no event shall the REIT, the UPREIT or
any affiliate of the REIT receive any fees or commissions in
connection with the performance of any or all of the Remaining
Remedial Work or Additional Work.
(F) Until completion of the Remedial Work and Additional
Work, JB shall have primary responsibility and the authority to
coordinate and contract for all components of services,
materials and work to perform all of the Remedial Work and
Additional Work and JB shall also have primary responsibility
for all contacts with Governmental Authorities and for arranging
for such contact to occur if required; provided, however, that
Acquiror has
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not assumed responsibility for such Remedial Work and/or
Additional Work pursuant to Subparagraph 9(d)(iii)(A).
(G) All of the provisions of this Subparagraph 9(d)(iii)
(including, but not limited to, any and all indemnities) shall
survive the Closing and shall not merge into any conveyancing
documents delivered at the Closing.
Any and all notices required under any provision of this Paragraph 9 shall
be sent pursuant to Paragraph 19 of this Agreement, and any notice sent to,
and/or received by, Post-Closing Contributor, JB or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates
shall be deemed to have been sent to, and/or received by, Post-Closing
Contributor, as the case may be.
10. ADDITIONAL CONDITIONS PRECEDENT TO CLOSING. In addition to the other
conditions enumerated in this Agreement, the following shall be additional
Acquiror's Conditions Precedent:
(a) Zoning and Subdivision. On the Closing Date, no proceedings
shall be pending or threatened (in writing) that would involve the
material adverse change, redesignation, redefinition or other modification
of the zoning classifications of any or all of the Projects, or any
portion thereof, or any property adjacent to any Project. On or before
the Closing Date, Contributor shall have obtained and delivered to
Acquiror a certification(s) with respect to each Project located in the
State of New York, in the form of Exhibit V attached hereto (collectively,
the "ZONING CERTIFICATIONS"), issued by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an architect
licensed and certified in the State of New York.
(b) Flood Insurance. As of the Closing Date, if any material
Improvement at a Project is located in a flood plain, Acquiror shall have
obtained flood plain insurance in form and substance reasonably acceptable
to Acquiror.
(c) Utilities. On the Closing Date, no moratorium or legal
proceeding shall be pending or threatened (in writing) affecting the
continuing availability of sewer, water, electric, gas, telephone or other
services or utilities servicing the Projects.
(d) Assumed Indebtedness. Contributor shall provide to Acquiror a
pay-off letter (the "PAY-OFF LETTER") issued by each mortgagee holding an
Existing Mortgage securing any Assumed Indebtedness, setting forth the
amount of principal and interest outstanding on the Closing Date.
Contributor shall also provide a statement of account from each other
creditor holding any Assumed Indebtedness, setting forth the amount
necessary to retire such Assumed Indebtedness, which statements of account
shall also constitute Pay-Off Letters for purposes of this Agreement.
(e) Bankruptcy. As of the Closing Date, no Contributor and no
Project is the subject of any bankruptcy proceeding for which approval of
this transaction has not been given and issued by the applicable
bankruptcy court.
(f) Representations and Warranties True. The representations and
warranties of Contributor contained herein are true and correct as of the
Closing Date.
(g) Covenants Performed. All covenants of Contributor required to be
performed prior to the Closing Date have been performed, in all material
respects.
(h) Leases. There shall have been no event or occurrence, nor shall
any circumstance have arisen, that causes or results in the untruth, as of
the Closing Date, of any of the representations and warranties set forth
in Subparagraph 11(a).
(i) Occupancy Rate. The Occupancy Rate of those Projects being
acquired on the Closing Date shall be no less than 95% (based on the
aggregate gross annual Base Rental income from all Leases in full force
and effect on the Closing Date with respect to all of such Projects).
In the event an Acquiror's Condition Precedent is not satisfied at Closing and
the failure of such condition relates to certain of, but not all of the
Projects ("FAILED CONDITION PROJECTS"),
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Acquiror shall not be entitled to terminate this Agreement, but instead may
eliminate from this Agreement those Failed Condition Projects affected by the
failure of the subject Condition Precedent (the Project elimination mechanics
of Subparagraph 5(e) shall apply to any such deletion of Failed Condition
Projects). Notwithstanding anything to the contrary in Paragraph 32 or the
immediately preceding sentence, (i) Contributor shall have the right to
terminate this Agreement in the event the limitations set forth in Subparagraph
32(a) are exceeded due to the inclusion of any or all of the Failed Condition
Projects within the Deleted Projects; and (ii) Acquiror shall have the right to
terminate this Agreement in the event that (x) the limitations set forth in
Subparagraph 32(b) are exceeded due to the inclusion of any or all of the
Failed Condition Projects within the Deleted Projects and (y) Contributor does
not exercise its right, under Subparagraph 32(a), to terminate this Agreement.
In addition to the other conditions enumerated in this Agreement, the
following shall be additional Contributor's Conditions Precedent:
(j) Representations and Warranties True. The representations and
warranties of Acquiror contained herein, and the representations and
warranties of the UPREIT and the REIT required to be delivered at Closing,
are true and correct as of the Closing Date.
(k) Covenants Performed. All covenants of Acquiror, the UPREIT and
the REIT required to be performed prior to the Closing Date have been
performed, in all material respects.
(l) Assumed Indebtedness. The UPREIT shall assume responsibility for
the payment of all Assumed Indebtedness.
In the event that one or more of the Contributor's Conditions Precedent is not
satisfied at Closing, then Contributor shall have the rights set forth under
Subparagraph 16(e).
11. LEASES-CONDITIONS PRECEDENT AND REPRESENTATIONS WITH RESPECT
THERETO.
(a) Representations as to Leases. With respect to each of the
Tenants listed on the Rent Roll (as defined in Exhibit D) provided to
Acquiror by Contributor, Contributor represents and warrants to Acquiror
as follows, as of the Contract Date:
(i) Except as otherwise specifically disclosed in a writing
delivered by Contributor, each of the Leases is in full force and
effect according to the terms set forth therein and in the Rent Roll,
and has not been modified, amended, or altered, in any material
respect, in writing or otherwise. Except as otherwise specifically
disclosed on the Rent Roll, Contributor has not granted any
concessions, abatements or offsets under the Leases that will remain
in effect after the Closing;
(ii) Except as set forth on Schedule 11(a)(ii) attached hereto,
all material obligations of the lessor under the Leases that have
accrued to the date of this Agreement have been performed, including,
but not limited to, all required tenant improvements, cash or other
inducements, rent abatements or moratoria, installations and
construction (for which payment in full has been made or will be made
prior to Closing, or subject to proration hereunder, in all cases),
and, to Contributor's actual knowledge, each Tenant has
unconditionally accepted lessor's performance of such obligations.
Except as set forth on Schedule 11(a)(ii) attached hereto, no Tenant
has asserted, in a writing delivered to Contributor, any offsets,
defenses or claims available against rent payable by it or other
performance or obligations otherwise due from it under any Lease,
which assertion remains outstanding;
(iii) Except as otherwise specifically disclosed in a writing
delivered by Contributor, no Tenant is currently in default in the
payment of any rent required of it under its Lease (the foregoing
does not apply to any delinquencies in the payment of monthly rent
that (x) have existed for less than thirty (30) days or (y)
represent Leases that constitute, on an aggregate basis, less than 2%
of the aggregate gross monthly rental income from the Projects);
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(iv) Except as set forth on Schedule 11(a)(iv) attached hereto,
with respect to the Existing Leases, during the 12-month period
immediately preceding the Contract Date: (A) no Tenant has, on two
(2) or more occasions (including currently), been more than thirty
(30) days delinquent in its respective payment of its regular monthly
rent; (B) no Tenant has requested, in writing, that Contributor
provide that Tenant with any material reduction in the Tenant's
monetary obligations under its Lease; (C) no Tenant has expressed to
Contributor, in writing, any material decline in that Tenant's
financial condition that would prevent it from complying with its
obligations under its Lease, nor has any Tenant requested that
Contributor, in its capacity as landlord, permit the Tenant to
sublease its leased premises, or assign its Lease, or terminate its
Lease on an accelerated basis; (D) Contributor has not "written off"
any delinquent sums in excess of $20,000 (on a per Tenant basis) owed
by any Tenant, and in excess of $200,000, on an aggregate basis with
respect to all Tenants, to satisfy its obligation to contribute to
the payment of real estate taxes, common area maintenance charges,
and insurance premiums; and (E) Contributor has not been engaged in
any legal proceeding with any Tenant concerning that Tenant's failure
to make payments under the terms of its Lease toward real estate
taxes, insurance premiums and common area maintenance charges or
other charges imposed under its Lease;
(v) Except as set forth on Schedule 11(a)(iv) attached hereto,
Contributor has not received any written notice (which remains
outstanding) from any Tenant stating that a petition in bankruptcy
has been filed by or against it;
(vi) Except as set forth on the schedules to the Closing
Statement, and except with respect to security deposits, neither base
rent ("BASE RENT"), nor regularly payable estimated Tenant
contributions or operating expenses, insurance premiums, real estate
taxes, common area charges, and similar or other "pass through" or
non-base rent items including, without limitation, cost-of-living or
so-called "C.P.I." or other such adjustments (collectively,
"ADDITIONAL RENT"), nor any other material item payable by any Tenant
under any Lease has been prepaid for more than one (1) month;
(vii) Except as specifically disclosed in a writing delivered by
Contributor, to Contributor's actual knowledge, no guarantor(s) of
any Lease has been released or discharged, partially or fully,
voluntarily or involuntarily, or by operation of law, from any
obligation under any Lease;
(viii) Except as otherwise specifically disclosed on Schedule
11(a)(viii) attached hereto, there are no brokers' commissions,
finders' fees, or other charges presently payable to any third party
on behalf of Contributor in connection with any Lease including, but
not limited to, any exercised option(s) to expand or renew;
(ix) Each security deposit set forth on the Rent Roll shall be
assigned to Acquiror at the Closing (or Acquiror shall receive a
credit therefor). Except as set forth on Schedule 11(a)(ix), no
Tenant or any other party has asserted any written claim (other than
for customary refund at the expiration of a Lease) to all or any part
of any security deposit (which claim remains outstanding);
(x) Contributor shall pay (or Acquiror shall receive a credit
therefor), and retains sole and exclusive responsibility for, all
expenses due on or before the Closing Date connected with or arising
out of the negotiation, execution and delivery of the Existing
Leases, including, without limitation, brokers' commissions (but
excluding those applicable, if any, to future expansions or renewals
by a Tenant), leasing fees and recording fees (as well as the cost of
all tenant improvements not required to be paid for by Tenants);
(xi) Except as set forth in Schedule 36(a) or 36(e) and as
otherwise described in Paragraph 36 below, no Tenant has, by virtue
of its Existing Lease or any other written agreement or understanding
with Contributor, any purchase option with respect to any Project, or
any portion thereof, or any right of first refusal to purchase any
Project, or a portion thereof, whether triggered by the transactions
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contemplated by this Agreement or by a subsequent sale of such
Project or a portion thereof. Except as otherwise specifically
disclosed on Schedule 36(a) or 36(e) attached hereto, and except as
otherwise described in Paragraph 36 below, no Tenant has, by virtue
of its Lease or any other agreement or understanding binding upon
Contributor any of the following: (A) the right or option to
terminate its Lease prior to the expiration of the current term (not
including termination rights arising from casualty, condemnation or
default); and (B) the right or option to reduce the rentable space at
any Project that such Tenant is currently occupying (not including
reduction by reason of condemnation);
(xii) Except as otherwise expressly disclosed in a writing
delivered by Contributor, to Contributor's knowledge: (A) no Tenant
under an Existing Lease has sublet its leased premises; (B) no
assignment of the lessee's interest in a Lease has been made by any
Tenant; and (C) there are no outstanding written requests from any
Tenants to Contributor, requesting any consent to an assignment of
the Tenant's Lease or to a sublease of all or some portion of a
Tenant's leased premises; and
(b) Estoppel Certificates from Tenants. Contributor shall use its
reasonable, good faith and diligent efforts (but without any obligation to
make any payment or to institute any action or proceeding) to obtain and
deliver to Acquiror, on or prior to the Closing Date, a tenant's estoppel
certificate (the "ESTOPPEL CERTIFICATE") dated no earlier than December 6,
1996; provided, however, that in the event that, for any reason
whatsoever, the Closing Date occurs after January 31, 1997, then as an
Acquiror's Condition Precedent, Contributor shall use its good faith,
diligent and reasonable efforts to procure Estoppel Certificates from all
Tenants that are dated no earlier than forty-five (45) days prior to the
Closing Date. Each such Estoppel Certificate shall be substantially in
the form attached hereto as Exhibit O; except that with respect to those
Required Estoppel Tenants (as defined below) designated with an asterisk,
Paragraph 10 of such Estoppel Certificate shall be revised pursuant to (or
other written evidence satisfactory to Acquiror with respect to such
Tenants shall be provided to Acquiror in accordance with) that certain
memorandum dated December 4, 1996 from ▇▇▇▇▇▇ ▇▇▇▇ to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇. It shall be an Acquiror's Condition Precedent that
Contributor shall obtain and deliver to Acquiror, at Closing, Estoppel
Certificates for (i) 85% of the total aggregate gross rental income for
all of the Projects (as shown on the Rent Roll delivered at Closing); (ii)
any single-Tenant Project; and (iii) those particular Tenants reflected in
Schedule 11(b) ("REQUIRED ESTOPPEL TENANTS"). If Contributor satisfies
clauses (ii) and (iii) above and obtains estoppels representing 75% of the
total aggregate gross rental income for all of the Projects, but (despite
its good faith and diligent efforts) is unable to obtain all of the
remaining Estoppel Certificate(s) it is required to obtain, then, at
Closing, Contributor shall deliver to Acquiror its own Estoppel
Certificate with respect to such Tenant(s) as is necessary to satisfy the
percentage requirement in clause (i) above; provided, however, that in the
event that Contributor ultimately procures (within sixty (60) days after
Closing) an Estoppel Certificate from any Tenant with respect to which
Contributor issues its own Estoppel Certificate and such Tenant's Estoppel
Certificate complies with the requirements of this Paragraph 11(b), then
Contributor shall be released from its own Estoppel Certificate with
respect to that Tenant.
(c) Tenants. For all purposes under this Agreement, the term,
"Tenants," shall mean each of the tenants listed on the Rent Roll
delivered to Acquiror by Contributor and any other tenants leasing space
in any or all of the Projects pursuant to Additional Leases; provided,
however, that all representations and warranties made by Contributor as of
the Contract Date with respect to any Leases shall apply only to the
Existing Leases and the Tenants thereunder.
12. CLOSING DELIVERIES.
12.1 Contributor. It shall be an Acquiror's Condition Precedent that
at Closing (or such other times as may be specified below), Contributor
shall deliver or cause to be delivered to Acquiror the following, each in
form and substance reasonably acceptable to Acquiror and its counsel:
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(a) Deeds. Bargain and Sale Deeds, duly executed by Contributor, in
recordable form conveying the Projects to Acquiror free and clear of all
liens and encumbrances except for the Permitted Exceptions, and, for those
Projects located in New York, corresponding New York State Transfer Tax
Declaration Forms TP-584;
(b) ▇▇▇▇ of Sale. A warranty assignment and ▇▇▇▇ of Sale, duly
executed by Contributor, assigning, conveying and warranting to Acquiror
title to the Personal Property and Inventory, free and clear of all
encumbrances, other than the Permitted Exceptions, and assignments of
title to all vehicles, if any, included in the Personal Property, together
with the original certificates of title thereto;
(c) General Assignment. An assignment, duly executed by Contributor,
to Acquiror of all right, title and interest of Contributor and its agents
in and to the Intangible Personal Property (including, but not limited to,
the Governmental Approvals);
(d) Assignment of Contracts. An assignment, duly executed by
Contributor, to Acquiror of Contributor's right, title and interest in and
to those of the Contracts that will remain in effect after Closing (the
"ASSIGNED CONTRACTS"), with (i) the agreement of Contributor to indemnify,
protect, defend and hold Acquiror harmless from and against any and all
claims, damages, losses, suits, proceedings, costs and expenses
(including, but not limited to, reasonable attorneys' fees) resulting from
a default by Contributor under the Assigned Contracts and relating to the
period of time prior to Closing and (ii) the corresponding agreement of
Acquiror to indemnify, protect, defend and hold Contributor harmless for
claims arising in connection with the Assigned Contracts and relating to
the period of time from and after the Closing. To the extent assignable,
Contributor shall also assign all existing guarantees and warranties given
to Contributor in connection with the operation, construction,
improvement, alteration or repair of any or all of the Projects;
(e) Assignment of Leases and Estoppel Certificates. An assignment of
Contributor's (and, if different than Contributor, the respective
landlord's) right, title and interest in and to the Leases (including all
security deposits and/or other deposits thereunder, except to the extent
an appropriate credit is given to Acquiror at Closing), with the
reciprocal indemnity provisions described in Subparagraph 12.1(d) above,
together with the Estoppel Certificates of the Tenants in conformity with
Subparagraph 11(b) above (where landlord is assigning its right in Leases,
evidence reasonably satisfactory to Acquiror of the authority of the party
signing the assignment of leases on behalf of such landlord shall also be
delivered);
(f) Keys. Keys to all locks located at each Project, to the extent
in Contributor's possession;
(g) Affidavit of Title and ALTA Statement. As to each Project, an
Affidavit of Title and an ALTA Statement (or comparable forms required by
the Title Company in New York and New Jersey and required by the Title
Company as a condition to the issuance of the Title Policies), each
executed by Contributor and in form and substance reasonably acceptable to
the Title Company;
(h) Letters to Tenants. Letters executed by Contributor and, if
applicable, its management agent, addressed to all Tenants, in form
approved by Contributor and Acquiror (the "TENANT LETTERS"), notifying all
Tenants of the transfer of ownership and directing payment of all rents
accruing after the Closing Date to be made to Acquiror or at its
direction;
(i) Title Policies. The Title Policies (or "marked-up" title
commitments) issued by the Title Company, dated as of the Closing Date in
the amount of the Allocated Amounts for each Project, with such
endorsements and otherwise in accordance with the requirements of
Paragraph 6 above (it being understood that Contributor will provide any
certificates or undertakings reasonably required in order to induce the
Title Company to insure over any "gap" period resulting from any delay in
recording of documents or later-dating the title insurance file);
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(j) Original Documents. To the extent not previously delivered to
Acquiror, originals of the Leases, Assigned Contracts and Governmental
Approvals in Contributor's possession or subject to its control;
(k) Closing Statement. A closing statement conforming to the
proration and other relevant provisions of this Agreement (the "CLOSING
STATEMENT"), duly executed by Contributor;
(l) Plans and Specifications. To the extent not previously delivered
to Acquiror, all plans and specifications in Contributor's possession and
control or otherwise available to Contributor;
(m) Tax Bills. To the extent not previously delivered to Acquiror,
copies of the most currently available Tax Bills;
(n) Entity Transfer Certificate. Entity transfer certification
confirming that Contributor is a "United States Person" within the meaning
of Section 1445 of the Internal Revenue Code of 1986, as amended;
(o) Rent Roll. A Rent Roll, prepared as of the Closing Date,
certified by Contributor to be true, complete and correct through the
Closing Date;
(p) Ownership Table. A chart or table reflecting the direct and
indirect ownership interest (including percentages) of each LP Unit
Recipient with respect to each Project, and any assumed or fictitious
names utilized by any entity reflected on such chart or table, certified
by ▇▇▇ ▇▇▇▇▇▇;
(q) Partnership Agreement. The documents that are referred to in
Section 8.7 of the Partnership Agreement (or any similar provision in any
amendment to the Partnership Agreement) in connection with the admission
of an additional limited partner (including, but not limited to, an
appropriate amendment to the Partnership Agreement), each of such
documents to be duly executed by Contributor and each LP Units Recipient;
(r) Pay-Off Letters. Contributor shall procure and deliver the
Pay-Off Letters with respect to each and every Existing Mortgage except as
reflected on Schedule 12.1(r), which Existing Mortgages are to be paid off
by Acquiror substantially simultaneously with the Closing, as reflected on
Schedule 12.1(r);
(s) Partnership Agreement Adoption Materials. The Partnership
Agreement Adoption Materials, duly executed by the LP Unit Recipients;
(t) LP Unit Schedule. The LP Unit Schedule, duly executed by
Contributor;
(u) Registration Rights Agreement. The Registration Rights
Agreement, or the appropriate supplement thereto, as the case may be,
executed by the LP Unit Recipients;
(v) County of Suffolk Lease. Contributor shall deliver written
evidence that the County of Suffolk has failed to timely exercise its
right to terminate its Lease (pursuant to Paragraph 22 of such lease) as a
result of the transfer of the Project in which the County is a Tenant
(such evidence may be included in the Estoppel Certificate delivered by
Contributor at Closing in respect of such tenant);
(w) JC Penney Lease/Project No. 57. An agreement, duly executed by
those LP Unit Recipients to whom LP Units are issued in respect of the
contribution of Project No. 57 (the "PROJECT 57 UNIT RECIPIENTS"), in form
reasonably satisfactory to Acquiror and the Project 57 Unit Recipients,
pursuant to which the Project 57 Unit Recipients shall pledge all those LP
Units received in respect of the contribution of Project No. 57 as
security for the performance of certain obligations of Contributor with
respect to ▇▇ ▇▇▇▇▇▇'▇ Lease at Project No. 57 (the "JCP PLEDGE
AGREEMENT");
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(x) Closing Certificate. A certificate, signed by Contributor,
certifying to the UPREIT that the representations and warranties of
Contributor contained in this Agreement are true and correct as of the
Closing Date;
(y) Zoning Certifications. The Zoning Certifications, which may be
delivered prior to Closing;
(z) Satisfaction of Certain Obligations. Contributor shall deliver
the documents cited as missing or not having been properly issued on, and
cure (to Acquiror's reasonable satisfaction) the violations described on,
Schedule 12.1(z), which Schedule reflects matters raised with Contributor
by Acquiror as a result of municipal searches conducted by Acquiror as
part of its Basic Project Inspection (notwithstanding the foregoing,
however, Contributor shall have no obligation with respect to (i) matters
dating prior to 1980, or (ii) subject to Paragraph 33, matters relating to
Option Projects, or (iii) matters relating to work performed by Tenants);
and
(aa) Other. Such other documents and instruments as may reasonably
be required by Acquiror, its counsel or the Title Company and that may be
necessary to consummate the transaction that is the subject of this
Agreement and to otherwise effect the agreements of the parties hereto.
12.2 Acquiror. It shall be a Contributor's Condition Precedent that
at Closing (or such other times as may be specified below) Acquiror shall
deliver or cause to be delivered to Contributor the following, each in
form and substance reasonably acceptable to Contributor and its counsel:
(a) Registration Certificate. A certificate from the REIT's transfer
agent (KeyCorp Shareholder Services, Inc.) attesting to the registration
of the LP Units in the books and records of the UPREIT;
(b) Partnership Agreement. A copy of the Partnership Agreement, duly
certified by the secretary of the REIT as true, complete and correct;
(c) Amendment. The Amendment, duly executed by the REIT;
(d) Organizational Documents. (i) A copy certified by the Secretary
of State of the State of Maryland of the Articles of Incorporation of
Acquiror and the REIT and a good standing certificate for Acquiror and the
REIT; (ii) a copy certified by the Secretary of State of the State of
Delaware, dated not more than ten (10) days before the Closing Date, of
the certificate of limited partnership of the UPREIT; (iii) a copy,
certified by the secretary of the REIT, of the resolution of the REIT's
board of directors, authorizing the transaction described herein; and (iv)
an incumbency certificate from the secretary of Acquiror and the REIT with
respect to those documents executed by Acquiror and the REIT (in its own
capacity and as sole general partner of the UPREIT), respectively, in
connection with the subject transaction, certifying the names and
signatures of the officers of the REIT authorized to execute those
documents (and who have in fact signed such documents) required to be
delivered by the REIT and the UPREIT under the terms of this Agreement;
(e) Assignment of Contracts. An Assignment of Contracts, duly
executed by the UPREIT;
(f) Assignment of Leases. An Assignment of Leases, duly executed by
the UPREIT;
(g) Contract Notices. Notices to parties to Contracts which are
being assigned pursuant to the Assignment of Contracts, duly executed by
the UPREIT;
(h) Closing Statement. A Closing Statement, duly executed by the
UPREIT;
(i) Registration Rights Agreement. The Registration Rights
Agreement, duly executed by the REIT;
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(j) LP Unit Schedule. The LP Unit Schedule, duly executed by the
UPREIT;
(k) Assignment. The Assignment, duly executed by Acquiror and the
UPREIT;
(l) Certain Acknowledgements. The written acknowledgements of (i)
the REIT and the UPREIT with respect to their respective obligations under
Subparagraphs 2(h), 2(i) and 2(j), (ii) of the REIT with respect to its
obligations under Subparagraph 2(e) and Paragraph 28 and (iii) of the
UPREIT with respect to its obligations under Paragraphs 30 and 31;
(m) Consent to Pledge. Evidence reasonably satisfactory to
Contributor that the REIT shall consent to the pledge, if any, of LP Units
by the LP Unit Recipients in order to secure financing from institutional
lenders (subject, however, to the limitations imposed under Subparagraph
2(f) above);
(n) Tenant Letters. The Tenant Letters, duly executed by the UPREIT;
(o) Certificate of Acquiror, UPREIT and REIT. A certificate from
Acquiror, the UPREIT and the REIT, respectively, certifying to Contributor
that the representations and warranties of Acquiror, the UPREIT and the
REIT, respectively, contained in this Agreement are true and correct as of
the Closing Date;
(p) Opinion. An opinion of counsel of Acquiror, the UPREIT and the
REIT, in form and substance reasonably satisfactory to Contributor and
Contributor's counsel, providing or with respect to: (i) the legal
existence and good standing of each of Acquiror, the UPREIT and the REIT,
respectively, in their various jurisdictions of organization and
qualification; (ii) the due authorization, execution and delivery of this
Agreement, the Amendment and the other documents required (under the terms
of this Agreement) to be delivered by each of Acquiror, the UPREIT and the
REIT, as applicable; (iii) that this Agreement, the Amendment and the
other documents required (under the terms of this Agreement) to be
delivered by each of Acquiror, the UPREIT and the REIT, as applicable,
constitute the legal, valid and binding obligations of Acquiror, the
UPREIT and the REIT, as the case may be, enforceable against them in
accordance with their respective terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws of general
applicability relating to or affecting the enforcement of creditors'
rights and by the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding of equity or at law);
(iv) the LP Units being validly issued and fully paid and, except as
otherwise provided in accordance with applicable law, non-assessable; (v)
the number of (x) authorized and (y) issued and outstanding shares of
Stock; (vi) that the UPREIT qualifies as a partnership for federal income
tax purposes; and (vii) that the REIT is organized in conformity with the
requirements for qualification as a real estate investment trust for
federal income tax purposes; it being understood, however, that those
opinions described in items (vi) and (vii) shall be based upon
certifications made to the counsel issuing the opinion from a senior
officer of the REIT, on behalf of itself and in its capacity as sole
general partner of the UPREIT;
(q) Assumption. An assumption of the Assumed Indebtedness, duly
executed by the UPREIT (it being understood and agreed that in the event
that the UPREIT does not pay all Assumed Indebtedness, in full and
together with all interest accrued thereon, on the Closing Date and
pursuant to the Pay-Off Letters, then the UPREIT shall not only formally
assume the Assumed Indebtedness, but shall also protect, defend,
indemnify, and hold Contributor harmless from and against those
liabilities and obligations arising from any failure of the UPREIT to pay
such Assumed Indebtedness);
(r) Employment Agreement. The REIT shall execute and deliver the
Employment Agreement;
(s) Pledge Agreements. The JCP Pledge Agreement and the ▇▇▇▇▇▇▇▇
Pledge Agreement, both duly executed by Acquiror.
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(t) Certificate of UPREIT. A certificate of the UPREIT certifying to
Contributor that the Closing Date Percentage is true and correct as of the
Closing Date; and
(u) Other. Such other documents and instruments as may reasonably be
required by Contributor, an LP Unit Recipient or its or their respective
counsel or the Title Company, and that are necessary to consummate the
transaction which is the subject of this Agreement and to otherwise effect
the agreements of the parties hereto.
After Closing, each of Acquiror and Contributor shall execute and deliver to
the other such further documents and instruments as the other reasonably
requests to effect this transaction and otherwise effect the agreements of the
parties hereto.
13. PRORATIONS AND ADJUSTMENTS. The following shall be prorated and
adjusted between Contributor and Acquiror as of the Closing Date, except as
otherwise specified:
(a) The amount of all security and other Tenant deposits, and
interest due thereon, if any, shall be credited to Acquiror;
(b) Acquiror and Contributor shall divide the cost of the ▇▇▇▇▇▇▇
money, closing, capital improvements and cosmetic improvements escrows
established pursuant to this Agreement equally between them;
(c) To the extent such charges are not billed directly to Tenants,
water, electricity, sewer, gas, telephone and other utility charges shall
be prorated based, to the extent practicable, on final meter readings and
final invoices, or, in the event final readings and invoices are not
available, based on the most currently available billing information, and
reprorated upon issuance of final utility bills;
(d) Amounts paid or payable under any Assigned Contracts shall be
prorated based, to the extent practicable, on final invoices, or, in the
event final invoices are not available, based on the most currently
available billing information, and reprorated upon issuance of final
invoices;
(e) Except for Project No. 3 (where the sole Tenant pays the Tax
Bills directly to the appropriate taxing authority), all real estate,
personal property and ad valorem taxes applicable to the Projects and
levied with respect to calendar year 1996 and 1997 shall be prorated on an
accrual basis, as of the Closing Date, utilizing the actual final Tax
Bills for those Projects. Prior to or at Closing, Contributor shall pay
or have paid all Tax Bills that are due and payable prior to or on the
Closing Date and shall furnish evidence of such payment to Acquiror and
the Title Company. Each party's respective obligations to reprorate real
estate taxes shall survive the Closing and shall not merge into any
instrument of conveyance delivered at Closing. The taxes to be prorated
(i.e., county, school, village, town) for each Project and the billing and
accrual schedule for each such tax are set forth in Schedule 13(e);
(f) All assessments, general or special, shall be prorated as of the
Closing Date on a "due date" basis such that Contributor shall be
responsible for any installments of assessments which are first due or
payable prior to the Closing Date and Acquiror shall be responsible for
any installments of assessments which are first due or payable on or after
the Closing Date;
(g) Subject to the provisions of Paragraph 26, commissions of leasing
and rental agents for any Lease entered into as of or prior to the Closing
Date that are due and payable at or prior to the Closing Date, whether
with respect to the current lease term, future expansions, renewals, or
otherwise, shall be paid in full at or prior to Closing by Contributor,
without contribution or proration from Acquiror;
(h) Except for non-recurring charges incurred prior to Closing (e.g.,
snow plowing), which Contributor shall pay and have the right to ▇▇▇▇ and
collect from Tenants following the Closing, all Base Rents and other
Tenant charges, including, without limitation, all Additional Rent, shall
be prorated at Closing. At the time(s) of final
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calculation and collection from Tenants of Additional Rent for 1996 and
1997, there shall be a reproration between Acquiror and Contributor as to
Additional Rent adjustments, which reproration shall be paid upon
Acquiror's presentation of its final accounting to Contributor, certified
as to accuracy by Acquiror. In the event that Contributor fails to agree
on the accounting of final reproration of 1996 and 1997 Additional Rent
adjustments prepared by Acquiror, Contributor shall so notify Acquiror in
writing, in which event such accounting shall be made by the Independent
Firm. The accounting by the Independent Firm shall be conclusive and
binding on Contributor and Acquiror, and each of Contributor and Acquiror
shall pay one-half of the fees imposed by the Independent Firm in
connection with such accounting. The party's respective obligations to
reprorate Additional Rent shall survive the Closing and shall not merge
into any instrument of conveyance delivered at Closing. At the Closing,
no "DELINQUENT RENTS" (rents or other charges which are due and owing as
of the Closing) shall be prorated in favor of Contributor (such Delinquent
Rents shall remain the property of Contributor, subject to the Rent
collection provisions below). Notwithstanding the foregoing, Acquiror
shall use reasonable efforts after the Closing Date to collect any
Delinquent Rents due to Contributor from Tenants. Further, after the
Closing Date, Contributor shall continue to have the right, enforceable at
its sole expense, to pursue legal action against any Tenant (and any
guarantors) who have defaulted, prior to the Closing Date, under a Lease;
provided, however, that Contributor gives Acquiror advance written notice
of its intent to pursue such action and further provided that Contributor
shall have no right to terminate any Lease (or any right to dispossess any
Tenant thereunder). Subject to the requirement of the second sentence of
this Subparagraph 13(h), all rents and other charges received from any
Tenant after the Closing shall be applied, first, against current and past
due rental obligations owed to, or for the benefit of, Acquiror [with
respect to those rental obligations accruing subsequent to the Closing
Date (including, but not limited to, obligations to replenish any security
deposit withdrawal by Contributor or Acquiror), or any obligations
accruing prior to the Closing Date that Contributor does not pay or for
which Acquiror does not receive a credit at Closing], and, second, any
excess shall be delivered to Contributor, but only to the extent of
Delinquent Rents owed to, and for the benefit of, Contributor for the
period prior to the Closing Date (in no event, however, shall any sums be
paid to Contributor to the extent Contributor has been previously
reimbursed for such default out of any security deposit);
(i) Dividends in respect of the LP Units acquired by Contributor or
its partners shall begin to accrue from and after the Closing Date
(notwithstanding the fact that such date may not be the record date for
acquisition of such LP Units), and the amount of dividends paid or to be
paid to Contributor or its partners for any quarter shall be prorated
accordingly; and
(j) Such other items that are customarily prorated in transactions of
this nature shall be ratably prorated.
For purposes of calculating prorations, Acquiror shall be deemed to be in title
to the Projects, and therefore entitled to the income therefrom and responsible
for the expenses thereof, for the entire Closing Date. All such prorations
shall be made on the basis of the actual number of days of the year and month
that shall have elapsed as of the Closing Date.
14. CLOSING EXPENSES. Contributor will pay the entire cost of the Title
Policies (except for the cost of comprehensive survey endorsements), the
Surveys (inclusive of any updates thereof required under this Agreement, but
subject to reimbursement by Acquiror in the event this Agreement is terminated
as provided herein) and the UCC searches (including any and all "date downs"
thereto), all documentary and state, county and municipal transfer taxes
relating to the instruments of conveyance contemplated herein, all release
fees, prepayment fees and any other fees in connection with the payoff, release
and satisfaction of the Existing Mortgages (subject to Paragraph 34 below),
one-half of any escrows hereunder, and all fees and expenses imposed by its
accountants and attorneys in connection with this Agreement and the transaction
contemplated hereunder. The aggregate amount of such costs to Contributor is
referred to herein as "CONTRIBUTOR'S CLOSING COSTS." The payment obligation of
Contributor with respect to Contributor's Closing Costs shall be satisfied by
reducing the Total LP Unit Amount otherwise due at Closing by the amount of
such Contributor's Closing Costs. Without limiting any other term of this
Agreement, Acquiror will pay the cost of recording the Bargain and Sale Deeds
(but
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not any related transfer tax), one-half of any escrows hereunder and all fees
and expenses imposed by Acquiror's accountants and attorneys, and the costs of
Acquiror's due diligence pursuant to Paragraph 5, subject, however, to the
terms and provisions of those certain letter agreements, dated October 11, 1996
and January 17, 1997, by and between ▇▇▇ ▇▇▇▇▇▇ (on behalf of Contributor) and
Acquiror (and subject to the terms and provisions of any other letter agreement
into which such parties may enter into subsequent to the Contract Date with
respect to the sharing of due diligence costs).
15. DESTRUCTION, LOSS OR DIMINUTION OF PROJECTS. If, prior to Closing,
all or any portion of any Project is damaged by fire or other natural casualty
(collectively "DAMAGE"), or is taken or made subject to condemnation, eminent
domain or other governmental acquisition proceedings (a "TAKING"), then the
following procedures shall apply:
(a) As used herein, a "MATERIAL EVENT" shall mean any of the
following:
(i) Damage to all or any portion of a Project, and the cost of
repair or replacement of such Damage exceeds 20% of the Allocated
Amount of such Project; or
(ii) Taking of all or any portion of a Project, and the value of
such Taking exceeds 20% of the Allocated Amount of such Project; or
(iii) any Taking or Damage that results in the cancellation or
termination of any Lease of a Required Estoppel Tenant, or that
provides to a Required Estoppel Tenant the right to cancel or
terminate its Lease upon the giving of subsequent notice (unless such
termination right is waived, in writing, by such Tenant), or that
otherwise results in the permanent loss of a Required Estoppel
Tenant.
(b) In the event of Damage or a Taking that does not constitute a
Material Event, Acquiror shall close and take the Projects as diminished
by such Damage or Taking, subject to a reduction in the Total LP Unit
Amount in an amount equal to the deductible, if any, under Contributor's
casualty insurance policy applicable to such Project.
(c) If the Damage or Taking is a Material Event, then subject to the
terms and provisions of Paragraph 32 below, Acquiror, at its sole option,
shall elect, within fifteen (15) days after its acquisition of actual
knowledge of such Damage or Taking, to either: (i) delete and eliminate
from this Agreement any Project that has sustained Damage or is taken or
made subject to a Taking by giving written notice to Contributor, in which
event (x) this Agreement shall be deemed to have been automatically and
ipso facto amended so as to eliminate the deleted Projects herefrom, and
(y) Acquiror and Contributor shall proceed to close on the remaining
Projects (i.e., the non-deleted Projects) subject to a reduction in the
Contribution Consideration equal to the aggregate amount of (x) the
Allocated Amounts minus (y) the Assumed Indebtedness of the Project(s) so
deleted, in each case as adjusted by eliminating any and all appropriate
Prorations and Adjustments; or (ii) proceed to close on all of the
Projects, subject to a reduction in the Contribution Consideration in an
amount equal to the aggregate of all deductible(s) imposed under any of
Contributor's casualty insurance policies applicable to the Project(s)
that is the subject of Damage, and an assignment of Contributor's interest
in any unpaid insurance proceeds or condemnation awards (as provided in
Subparagraph 15(d) below).
(d) In the event that Acquiror elects to close on any Project that is
subject to any Damage or Taking, each party shall fully cooperate with the
other party in the adjustment and settlement of the insurance claim (or
governmental acquisition proceeding) and if, as of Closing, all or any
portion of the insurance proceeds assignable, or condemnation awards
payable, to Acquiror shall not have been collected from the insurer or
Governmental Authority, then Contributor shall irrevocably and
unconditionally assign to Acquiror its entire right, title and interest in
and to the outstanding proceeds or award. The proceeds and benefits under
any rent loss or business interruption policies attributable to the period
following the Closing shall likewise be transferred, assigned and paid
over to Acquiror.
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(e) In the event of a dispute between Contributor and Acquiror with
respect to the cost of repair, restoration or replacement as to any Damage
or the value of a Taking, an engineer designated by Contributor and an
engineer designated by Acquiror shall select an independent third engineer
licensed to practice in the jurisdiction where the Project is located who
shall resolve such dispute. The determination of such third engineer
shall be final and binding on the parties and judgment may be rendered
thereon in any appropriate court of record. All fees, costs and expenses
of such third engineer so selected shall be shared equally by Acquiror and
Contributor.
16. DEFAULT.
(a) Willful Failure to Close by Contributor. In the event that
Contributor willfully and wrongfully fails or refuses to close, or
willfully and wrongfully fails or refuses to take such actions (as herein
provided) as are required of it to close, Acquiror may elect either to (i)
terminate this Agreement by written notice (the "DEFAULT TERMINATION
NOTICE") to Contributor, with a copy to Escrowee, in which event the
▇▇▇▇▇▇▇ Money, together with all (if any) interest earned thereon, shall
be returned immediately to Acquiror and Acquiror shall be entitled to
recover Acquiror's damages, which shall be limited to those actual
out-of-pocket costs and expenses that Acquiror incurs prior to and on the
Closing Date in order to negotiate this Agreement, perform its due
diligence efforts with respect to the Projects, and prepare to finance and
consummate the subject acquisition (including, but not limited to, the
fees and costs imposed by lenders, attorneys, accountants, appraisers,
environmental engineers, and other consultants engaged by Acquiror), up to
a maximum aggregate amount of $1,000,000; provided, however, that such
right of termination shall be subject to the limitation set forth below in
this Subparagraph 16(a); or (ii) close, in which event Acquiror may file
an action for specific performance of this Agreement to compel Contributor
to close or otherwise perform its obligations hereunder, whereupon
Acquiror shall be entitled to deduct from the Contribution Consideration
all reasonable, third-party expenses actually incurred by Acquiror in
connection with such action and cure. Notwithstanding anything to the
contrary in this Subparagraph 16(a), in the event that Acquiror delivers a
Default Termination Notice, Acquiror shall also describe, with reasonable
specificity in the Default Termination Notice, the nature and scope of the
default that allegedly has occurred, and in the event that such default
may be cured by the payment of a liquidated sum of money (a "LIQUIDATED
DEFAULT"), then Contributor shall have five (5) business days from the
date on which Acquiror delivers the Default Termination Notice to advise
Acquiror that Contributor shall cure the Liquidated Default and pay, in
cash, the entire liquidated sum required to do so ("CONTRIBUTOR'S CURE
NOTICE"). In the event that Contributor timely delivers Contributor's
Cure Notice, then Contributor shall be required to proceed to so cure the
Liquidated Default within five (5) business days after its delivery of
Contributor's Cure Notice. Upon the completion of such cure, Acquiror's
Default Termination Notice shall automatically be rendered null and void,
and this Agreement shall remain in full force and effect. In the event,
however that Contributor timely delivers a Contributor's Cure Notice, but
fails to timely cure the Liquidated Default, the Acquiror shall once again
have the right to deliver a Default Termination Notice, but Contributor
shall have no further right to deliver a Contributor's Cure Notice, but
rather, this Agreement shall automatically terminate as provided above.
If, however, the default(s) that is the subject of a Default Termination
Notice is not a Liquidated Default(s), then Contributor shall have no
right, of any nature whatsoever, to deliver a Contributor's Cure Notice.
(b) Other Defaults by Contributor. If any of Contributor's
representations and warranties contained herein shall not be true and
correct on the date made, or if Contributor shall have failed to perform,
in any material respect, any of the covenants and agreements contained
herein to be performed by Contributor within the time for performance as
specified herein, and the occurrence of such event or failure is not due
to, or the result of, Contributor's willful and wrongful failure or
refusal to close, or to take such actions as are required of it to close,
and such untruth or failure is not cured (to Acquiror's reasonable
satisfaction) within ten (10) business days after the date on which
Acquiror delivers its written notice thereof to Contributor, then subject
to the requirements of Subparagraph 16(d), Acquiror may elect either (i)
to terminate Acquiror's obligations under this Agreement by written notice
to Contributor, with a copy to Escrowee, in which
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event the ▇▇▇▇▇▇▇ Money, together with all (if any) interest earned
thereon, shall be returned immediately to Acquiror; or (ii) to close, in
which event Acquiror may file an action for specific performance of this
Agreement to compel Contributor to cure all or any of such default(s), in
whole or in part (to the extent same are capable of being cured),
whereupon Acquiror shall be entitled to deduct from the Contribution
Consideration the actual out-of-pocket cost of such action and cure, and
all reasonable expenses incurred by Acquiror in connection therewith,
including, but not limited to, reasonable fees of Acquiror's counsel, up
to a maximum aggregate amount of $1,000,000. Notwithstanding anything to
the contrary contained above in this Subparagraph 16(b), if any of
Acquiror's Conditions Precedent shall not have been satisfied (except with
respect to the truth and correctness of Contributor's representations and
warranties on the date made, which situation is addressed in the first
sentence of this Subparagraph 16(b)), and the failure to so satisfy all of
such Acquiror's Conditions Precedent is not due to, or the result of,
Contributor's willful and wrongful failure or refusal to close or to take
such actions as are required of it to close, and such non-satisfaction is
not cured (to Acquiror's reasonable satisfaction) within ten (10) business
days after the date on which Acquiror delivers its written notice thereof
to Contributor, then Acquiror may elect to terminate Acquiror's
obligations under this Agreement by written notice to Contributor, with a
copy to Escrowee, in which event the ▇▇▇▇▇▇▇ Money, together with all (if
any) interest earned thereon, shall be returned immediately to Acquiror.
(c) Contributor's Breach of Representations Discovered After Closing.
In the event that, at any time during the one (1) year period after
Closing, Acquiror first acquires actual knowledge that any representation
or warranty of the Contributor contained in this Agreement was untrue
(taking into account any applicable knowledge qualification), as of the
date made, Acquiror's sole and exclusive remedy shall be to file an action
within six (6) month's after such knowledge is acquired to recover the
actual damages sustained by Acquiror by reason of Contributor's breach of
the representations and warranties contained herein.
(d) Intervening Events. Subparagraphs 16(a), (b) and (c) above
notwithstanding, in the event that as a direct and proximate result of any
Intervening Events (as hereinafter defined), the warranties and
representations of the Contributor hereunder become untrue after the
Contract Date, or any or all of Contributor's covenants hereunder become
incapable of being performed in any material respect, Acquiror shall have
the right, at its sole election, exercisable at any time prior to the
Closing Date, to either (i) waive the requirement that the warranties and
representations in question be true or that the covenants in question be
performed in any material respect, and proceed to close; or (ii) delay the
Closing for a period not to exceed thirty (30) days (the "INTERVENING
EVENTS PERIOD") and permit Contributor to attempt to (A) cause the
Intervening Events to no longer exist or, if they continue to exist, to no
longer prevent Contributor's warranties and representations from being
true, or Contributor's covenants from being performed, or (B) mitigate the
consequences of the Intervening Events [it being understood that if
Contributor is unable to effect a cure or Acquiror is not reasonably
satisfied with the results of (B), as the case may be, then Acquiror may,
on or before the expiration of the Intervening Events Period, elect either
of the remedies described in clause (i) or (iii) of this Subparagraph
16(d)]; or (iii) terminate this Agreement by sending written notice (the
"INTERVENING EVENTS TERMINATION NOTICE") to Contributor, in which event
the ▇▇▇▇▇▇▇ Money, together with all (if any) interest thereon, shall be
returned immediately to Acquiror and neither party shall have any further
liability to the other except as otherwise specifically provided in this
Agreement; provided, however, that such right of termination shall be
subject to the limitations set forth below in this Subparagraph 16(d).
For purposes of this Paragraph 16(d), "INTERVENING EVENTS" shall be
defined as events, circumstances or conditions that (w) first arise after
(and did not exist as of) the Contract Date; and (x) arise on the basis of
acts of a Governmental Authority or other such independent, disinterested
third party, unrelated to the subject matter of this Agreement (including,
but not limited to, Tenants), or acts otherwise beyond the control of
Contributor; and (y) would not reasonably have been known by Contributor
as of the Contract Date; and (z) are disclosed by Contributor to Acquiror
no later than the time of Contributor's delivery of its Closing
Certificate pursuant to Paragraph 12 hereof. Without limiting the
generality of the foregoing, Intervening Events shall include, as to any
warranty or representation of Contributor in this Agreement that is
limited to the
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"Contributor's knowledge" or words of similar import, the initial
acquisition of actual knowledge by Contributor after the Contract Date
that renders such warranty or representation no longer true as of the
Closing Date; provided, however, that this limitation shall not apply with
respect to any representation or warranty that is rendered untrue as a
result of, or due to, or because of, any voluntary or willful or
intentional act or omission of Contributor that occurs after the Contract
Date. Notwithstanding anything to the contrary in this Subparagraph
16(d), in the event that Acquiror delivers an Intervening Events
Termination Notice, Acquiror shall also describe, with reasonable
specificity in the Intervening Events Termination Notice, the nature and
scope of the Intervening Event(s) that has occurred, whereupon Contributor
shall have the right (at its option) to advise Acquiror, in writing and
within five (5) business days after Acquiror's delivery of the Intervening
Events Termination Notice, that Contributor shall remedy and cure the
Intervening Events, at Contributor's sole cost and expense ("CONTRIBUTOR'S
INTERVENING EVENTS CURE NOTICE"). In the event that Contributor timely
delivers a Contributor's Intervening Events Cure Notice, then Contributor
shall be required to proceed to so cure the Intervening Events within
fifteen (15) days after its delivery of Contributor's Intervening Events
Cure Notice, whereupon Acquiror's Intervening Events Termination Notice
shall automatically be rendered null and void, and this Agreement shall
remain in full force and effect. In the event, however, that Contributor
timely delivers Contributor's Intervening Events Cure Notice, but fails to
timely remedy and cure the Intervening Events, then Acquiror shall once
again have the right to deliver an Intervening Events Termination Notice,
but Contributor shall have no further right to deliver a Contributor's
Intervening Events Cure Notice, but rather, this Agreement shall
automatically terminate as provided in (iii) above.
(e) Default by Acquiror and Failure of Contributor's Condition
Precedent. If any of Acquiror's representations and warranties contained
herein shall not be true and correct on the Contract Date and on the
Closing Date, or if Acquiror fails to perform (in any material respect)
any of the covenants and agreements contained herein to be performed by
such party within the time for performance as specified herein (including,
without limitation, Acquiror's obligation to close), then Contributor
shall have, as its sole and exclusive remedy, the right to terminate this
Agreement by written notice to Acquiror, in which event, the ▇▇▇▇▇▇▇ Money
shall be paid to (or drawn upon by) Contributor and, except as otherwise
expressly provided in this Agreement, neither Contributor nor Acquiror
shall have any further rights or obligations under this Agreement. Except
as otherwise specifically provided in the conclusory grammatical paragraph
of Paragraph 7, Contributor shall have no remedy other than as provided in
this Subparagraph 16(e) for any default by Acquiror discovered prior to
Closing.
(f) Breach of Representations by Acquiror, the REIT or the UPREIT
Discovered After Closing. In the event that, at any time during the one
(1) year period after Closing, Contributor first acquires actual knowledge
that any representation or warranty of the Acquiror, the REIT or the
UPREIT contained in this Agreement was untrue (taking into account any
applicable knowledge qualification), as of the date made, Contributor's
sole and exclusive remedy shall be to file an action within six (6)
month's after such knowledge is acquired to recover the actual damages
sustained by Contributor by reason of the breach of the representations
and warranties of Acquiror, the REIT or the UPREIT contained herein.
17. SUCCESSORS AND ASSIGNS. The terms, conditions and covenants of this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective permitted nominees, successors, beneficiaries and assigns;
provided, however, subject to the terms of Subparagraph 2(a), no direct or
indirect conveyance, assignment or transfer of any interest whatsoever of, in
or to any of this Agreement shall be made by Contributor or Acquiror during the
term of this Agreement.
18. DISPUTE RESOLUTION.
(a) Preliminary Dispute Resolution Through Mediation.
(i) Notice of Dispute. If a claim or controversy arises out of,
or relating to, this Agreement either (1) on a post-Closing basis or
(2) on a pre-Closing basis,
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but the claim or controversy in question gives rise to a right, by
either Contributor or Acquiror, to terminate this Agreement, then the
party raising the claim or controversy must give notice (a "DISPUTE
NOTICE") to the other party specifying the details of the dispute,
including the claim being made or the matter in controversy, the
factual basis for the claim or controversy, any purported damages,
and any requested relief. The Dispute Notice must be given prior to
initiating any arbitration concerning the dispute, as provided in
Subparagraph 18(b) below. If either party commences any arbitration
concerning a matter covered by this Subparagraph 18(a) prior to
sending the required Dispute Notice and mediating in good faith, such
failure constitutes grounds for both dismissal of the arbitration,
and the levy of attorneys' fees, costs, and expenses against the
defaulting party.
(ii) Good Faith Negotiations. Within 15 days after delivery of
the Dispute Notice, the contesting parties shall make reasonable
efforts to settle the dispute through communication and negotiations
through a designated representative of each party to the dispute,
each of whom shall have the authority to settle the dispute. If the
dispute is not settled within the 15-day period, then the dispute
must be submitted to a mutually acceptable mediator. Neither party
may unreasonably withhold acceptance of a proposed mediator. If the
parties fail to agree upon a mediator, each party shall select a
mediator and the two mediators selected by the parties shall promptly
select a third mediator to preside over the mediation. If either
party does not select a mediator, the mediator selected by the other
party shall preside over the mediation. Mutual approval of a
mediator or selection of mediators by the parties must occur within
25 days after the date of the delivery of the Dispute Notice. The
cost of the mediation, and any other subsequent alternative dispute
resolution procedures agreed to by the parties, shall be shared
equally, except as otherwise expressly provided in Subparagraph
18(b)(iv). The parties shall appear before the selected mediator and
engage in mediation in good faith. The mediation must be completed
within 60 days after the date of the delivery of the Dispute Notice.
(b) Arbitration As Optional Means Of Resolution.
(i) Arbitration. In the event that the contesting parties fail
to agree upon the resolution of any claim or controversy,
notwithstanding preliminary mediation under Subparagraph 18(a) above,
then either of them may then institute arbitration proceedings
administered by the American Arbitration Association (the
"ASSOCIATION") under its Commercial Arbitration Rules (the "RULES"),
to resolve the matter in dispute. Any such arbitration proceeding
shall commence by the delivery by one party of a written notice of
demand for arbitration (the "DEMAND NOTICE") to the other party. A
copy of the Demand Notice shall be simultaneously delivered to the
New York City chapter of the Association as provided by the Rules.
Arbitration proceedings shall commence no later than thirty (30) days
after delivery of the Demand Notice, pursuant to procedure set forth
below.
(ii) The arbitration proceeding shall be conducted in New York,
New York by a single arbitrator (the "ARBITRATOR"), who shall be
selected pursuant to the provisions of this Subparagraph 18(b)(ii).
The Demand Notice shall direct the Association to assemble a list of
eleven (11) proposed independent arbitrators, each of whom shall be a
member of the Association and none of whom may be related to, or
affiliated with, any of Acquiror or Contributor or any affiliates of
any of them. Within ten (10) days of the delivery of the Demand
Notice, the Association shall deliver its list of the names of those
eleven (11) proposed independent arbitrators to each party. No later
than ten (10) days after delivery of said list of proposed
independent arbitrators by the Association to the parties, the
parties shall cause a meeting to occur between their respective
spokespersons (or their authorized representatives), which meeting
shall occur at a mutually convenient location in New York, New York.
At that meeting, the two (2) spokespersons shall examine the list of
eleven (11) names submitted to the parties by the Association, and
they shall each eliminate five (5) of those names, and the sole
remaining proposed arbitrator shall be the Arbitrator. In order to
eliminate ten (10) of the proposed arbitrators whose names were
submitted by the Association, first, the spokesperson for the party
who
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issued the Demand Notice shall eliminate a proposed arbitrator of his
choice and then the other spokesperson shall eliminate a proposed
arbitrator of his choice. The two (2) spokespersons shall continue
to eliminate names from the Association's list in this manner until
each of them has eliminated five (5) names, and they have thereby
selected the Arbitrator through mutual elimination. The two (2)
spokespersons shall immediately notify the Association, in writing
and by telephone, of the name of the Arbitrator, and they shall
direct the Association to contact the Arbitrator in order to schedule
the commencement of the arbitration proceedings within the required
time period described above. In the event that the chosen Arbitrator
is not available to commence the Arbitration proceedings within a
thirty (30) day limit, the parties shall direct the Association to
engage the last eliminated Arbitrator whose schedule permits
commencement of the proceedings within such thirty (30) day period.
In the event any party fails to participate in the elimination
process, the other party may unilaterally choose the Arbitrator.
(iii) In connection with the arbitration proceedings, each party
shall submit, in writing, a description of the dispute(s) giving rise
to the arbitration proceedings, together with the specific requested
resolution that the submitting party seeks with respect to each
component of the dispute(s) or each matter(s) in dispute. The
Arbitrator shall be obligated to choose one (1) party's specific
requested resolution with respect to each component of, or each
matter comprising, the dispute(s), without being permitted to
effectuate any compromise position as to any component of such
matters or disputes. Except as otherwise stated in this Subparagraph
18(b), and as the parties otherwise expressly agree in writing, the
arbitration proceeding shall be conducted in accordance with the
Rules then in effect. The decision or award rendered by the
Arbitrator shall be final and non-appealable, and judgment may be
entered upon it in accordance with applicable law in the State of New
York or any other court of competent jurisdiction.
(iv) The party whose requested resolution is not selected by the
Arbitrator shall bear the cost of all counsel, experts or other
representatives which are retained by the parties in the arbitration
proceeding, together with all other costs of the arbitration
proceeding, including, without limitation, the fees, costs and
expenses imposed or incurred by the Arbitrator (collectively,
"Arbitration Expenses"). If the dispute resolved by the Arbitrator
involves more than one matter, issue or component, then the burden to
pay the Arbitration Expenses shall be allocated between each of
Acquiror and Contributor, in the manner reasonably deemed appropriate
by the Arbitrator in light of the value to each of Acquiror and
Contributor, respectively, of those matters or components for which
their respective requested resolution was not selected.
(v) Unless otherwise agreed in writing, during the period of
time that any arbitration proceeding is pending under this Agreement,
the parties shall continue to comply with all those terms and
provisions of this Agreement which are not the subject of their
dispute and the pending arbitration proceeding.
(vi) Subject to Subparagraph 38(k), nothing herein contained
shall deny any party the right to seek injunctive or other equitable
relief from a court of competent jurisdiction in the context of a
bona fide emergency or prospective irreparable harm, and such an
action may be filed and maintained notwithstanding or auxiliary to
any previously commenced arbitration proceeding.
Notwithstanding any provision of this Agreement to the contrary, the
obligations of the parties under this Paragraph 18 shall survive termination of
this Agreement and the Closing, and shall not merge into any conveyancing
documents delivered at Closing.
19. NOTICES. Any notice, demand or request which may be permitted,
required or desired to be given in connection therewith shall be given in
writing and directed to Contributor and Acquiror as follows:
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Contributor: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to
its attorneys: ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Acquiror: FR Acquisitions, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Johannson Yap, Senior Vice President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to
its attorneys: Barack ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇, Esq. and
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notices shall be deemed properly delivered and received when and if either (i)
personally delivered; or (ii) on the first business day after deposit with
Federal Express or other commercial overnight courier for delivery on the next
business day.
20. BENEFIT. This Agreement is for the benefit only of the parties hereto
and their nominees, successors, beneficiaries and assignees as permitted in
Paragraph 17 above, and no other person or entity shall be entitled to rely
hereon, receive any benefit herefrom or enforce against any party hereto any
provision hereof.
21. LIMITATION OF LIABILITY. Upon the Closing, none of the UPREIT, the
REIT and Acquiror shall assume or undertake to pay, satisfy or discharge any
liabilities, obligations or commitments of Contributor other than those
specifically agreed to between the parties and set forth in this Agreement. In
the event that the UPREIT, in its sole and absolute discretion, elects to
assume any of the obligations under any one or more of the Contracts delivered
pursuant to Exhibit D attached hereto, Acquiror shall so notify Contributor, in
writing, no later than the Approval Date. Except with respect to the foregoing
obligations, and subject to Subparagraph 5(f) above, none of the UPREIT, the
REIT and Acquiror shall assume or discharge any debts, obligations, liabilities
or commitments of Contributor, whether accrued now or hereafter, fixed or
contingent, known or unknown. Subject to all applicable limitations expressly
imposed under this Agreement, the LP Unit Recipients shall be liable, on a
joint and several basis, with respect to any and all claims made by Acquiror
against Contributor pursuant to the terms of this Agreement; provided, however,
that the liability of the LP Unit Recipients shall be limited as follows: (i)
with respect to claims made prior to the first anniversary of the Closing Date
(the "FIRST ANNIVERSARY"), to the market value of those LP Units delivered at
Closing and still held by any or all of Contributor and any or all of the LP
Unit Recipients (and any or all of their transferees and assigns), determined
as of the date on which Acquiror first delivers notice to Contributor of
Acquiror's claim; provided, however, that if and to the extent that any LP Unit
Recipient redeems any or all of its LP Units (pursuant to Subparagraph 2(f)
above) prior to the date on which Acquiror first delivers notice to Contributor
of Acquiror's claim, then the maximum liability of such redeeming LP Unit
Recipient shall also include the market value of such LP Unit Recipient's
Conversion Shares, determined as of the date on which Acquiror first delivers
notice to Contributor of Acquiror's claim; and (ii) with respect to claims made
on or after the First Anniversary, to the product of (x) the market value of a
share of
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Stock on the date on which Acquiror first delivers notice to Contributor of
Acquiror's claim and (y) the number of LP Units delivered at Closing and still
held by any or all of Contributor and any or all of the LP Unit Recipients (and
any or all of their transferees and assigns) on the First Anniversary;
provided, however, that if and to the extent that any LP Unit Recipient redeems
any or all of its LP Units (pursuant to Subparagraph 2(f) above), on or before
the First Anniversary, then the maximum liability of such redeeming LP Unit
Recipient shall also include the market value of such LP Unit Recipient's
Conversion Shares, determined as of the First Anniversary. Notwithstanding
anything to the contrary in this Agreement, Acquiror agrees that prior to and
following Closing, it will not bring any claim against Contributor pursuant to
the terms of this Agreement except and unless the actual damages allegedly
incurred by Acquiror as a result of all alleged claims, on an aggregate basis,
exceed $200,000.
22. BROKERAGE. Each party hereto represents and warrants to the other
that it has dealt with no brokers or finders in connection with this
transaction except ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), and that no broker,
finder or other party (except ▇▇▇▇▇▇▇ ▇▇▇▇▇) is entitled to a commission,
finder's fee or other similar compensation as a result hereof. Contributor
hereby indemnifies, protects and defends and holds Acquiror harmless from and
against all losses, claims, costs, expenses, damages (including, but not
limited to, reasonable attorneys' fees of counsel selected by Acquiror)
resulting or arising from the claims of any other broker, finder or other such
party, claiming by, through or under the acts or agreements of Contributor.
Acquiror hereby indemnifies, defends and holds Contributor harmless from and
against all losses, claims, costs, expenses, damages (including, but not
limited to, reasonable attorneys' fees of counsel selected by Contributor)
resulting or arising from the claims of any other broker, finder or other such
party claiming by, through or under acts or agreements of Acquiror. At
Closing, Acquiror shall pay the commission due and owing to ▇▇▇▇▇▇▇ ▇▇▇▇▇ (in
an amount determined pursuant to a separate agreement but in no event greater
than one percent (1.0%) of the aggregated Allocated Value of all Projects
acquired by Acquiror on the Closing Date), and such payment shall constitute an
Adjustment against the Total LP Unit Amount in favor of Acquiror. The
obligations of this Paragraph 22 shall survive any termination of this
Agreement.
23. REASONABLE EFFORTS. Contributor and Acquiror shall use their
reasonable, diligent and good faith efforts, and shall cooperate with and
assist each other in their efforts, to obtain such consents and approvals of
third parties (including, but not limited to, governmental authorities), to the
transaction contemplated hereby, and to otherwise perform as may be necessary
to effectuate the transfer of the Projects to Acquiror in accordance with this
Agreement.
24. TENANTS IN DEFAULT.
(a) Applicability of Provision. If, subsequent to the Approval Date,
and prior to the Closing, any Project shall be leased to (or subject to
Leases with) one or more "TENANTS IN DEFAULT" (as hereinafter defined),
and the total monthly rent payable with respect to such Project by its
Tenants in Default shall, in the aggregate, represent fifteen percent
(15.0%) or more of the total rentals then being realized from that Project
(whether one or more, the "DEFAULTED BUILDING"), then, at the Closing, the
provisions of this Paragraph 24 shall be applicable. Upon Contributor's
discovery, subsequent to the Approval Date, of the existence of a Tenant
in Default in any Project, Contributor shall promptly notify Acquiror, in
writing, of the specific facts and circumstances giving rise to such
conditions (such written notice being a "TID NOTICE"). For purposes
hereof, a "TENANT IN DEFAULT" shall be any Tenant who (i) commits a
material default under its Lease, monetary or otherwise, which default has
(without regard to applicable notice and cure provisions of its Lease)
continued more than fifty-eight (58) days; or (ii) vacates or abandons its
respective leased premises without timely paying rent therefor (i.e.,
within fifty-eight (58) days after the applicable due date); or (iii)
files, or has filed against it, any petition for bankruptcy or
reorganization or other debtor or creditor relief procedure under any
state or federal law; or (iv) who repudiates in writing all of its
obligations under its Lease; or (v) who admits or asserts, in writing, its
inability or unwillingness either to pay its debts as they become due or
otherwise to comply with the terms of its respective Lease.
(b) Acquiror's Rights. For and during a period of fifteen (15) days after
its receipt of a TID Notice (the "TID STUDY PERIOD"), Acquiror shall have
the right to re-
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examine all of the records relating to the Tenant In Default and its
respective Lease; to inspect the Defaulted Building and leased premises of
the Tenant(s) In Default; to interview representatives of the Tenant(s) In
Default in order to ascertain the cause and likely effects and
ramifications of the particular default(s) in question; and to otherwise
evaluate the impact of that particular default on Acquiror's acquisition
of the Defaulted Building as a component of the Projects. Within seven
(7) days after the conclusion of the applicable TID Study Period, and
subject to Paragraph 32 hereof, Acquiror shall have the unilateral right
to delete and eliminate those Projects that include Defaulted Buildings
from this Agreement (the "DELETED BUILDINGS") by giving written notice to
Contributor ("DELETION NOTICE"). Upon any such identification by
Purchaser of Deleted Buildings and delivery of the Deletion Notice to
Contributor, this Agreement shall, without further action of the parties,
be deemed to have been amended, ipso facto, so as to eliminate herefrom
all Projects in which such Deleted Buildings are located, subject to a
reduction in the Contribution Consideration equal to the aggregate of the
(x) Allocated Amounts minus (y) the Assumed Indebtedness of the Projects
so deleted, in each case as adjusted by eliminating any and all
appropriate Prorations and Adjustments. Upon such amendment, all
references to the Projects shall automatically exclude the Projects so
deleted and, except as otherwise provided in Subparagraph 5(e) above, no
Closing or pre-Closing obligations of Contributor (or Acquiror's
Conditions Precedent) shall apply to the Projects so deleted.
Notwithstanding anything set forth above, Acquiror may, in the event of
the existence of multiple Deleted Buildings, exercise its rights to delete
any or all of the Projects in which those Deleted Buildings are located,
it being agreed hereby that, subject to Paragraph 32 hereof, Acquiror may
selectively exercise its rights to delete on a Project-by-Project basis,
as opposed to an all-or-none or otherwise consistent basis.
25. NON-COMPETE AND NON-SOLICITATION. In consideration of Acquiror's
agreement to purchase the Projects, JB (as defined below) hereby covenants and
agrees that, subject to the third-to-last sentence of this Paragraph 25, during
and throughout the period commencing on the Closing Date and ending on (the
"NON-COMPETE EXPIRATION DATE") the earlier of (x) the fifth (5th) anniversary
of the Closing Date, (y) the date on which the Employment Agreement (as defined
below) is terminated by the REIT in accordance with its terms, other than for
cause and (z) the date on which the Employment Agreement is terminated by JB in
accordance with its terms, neither JB, nor any entity controlled by, or under
common control with JB (control requiring the ownership of more than fifty
percent (50%) of the ownership interest of the entity in question)
[collectively, "JB AFFILIATES"], shall, directly or indirectly, solicit,
initiate contact with, or approach, on behalf of any entity other than the
UPREIT, any Tenant leasing space (or otherwise having any possessory interests
in any space), as of the Closing Date, in any Project that Acquiror actually
acquires pursuant to this Agreement (a "CLOSING DATE TENANT") or any other
third party with whom Acquiror enters into any lease after the Closing ("NEW
TENANT"), for the purpose of leasing, selling, contracting for, constructing or
otherwise directly or indirectly providing any or all of warehouse or
industrial space, or office space in an industrial building that is ancillary
to the use of warehouse or industrial space in the same building ("ANCILLARY
OFFICE SPACE"), within Long Island, New York and Essex County, New Jersey. In
the event that any Closing Date Tenant or New Tenant shall independently
initiate contact with any or all of JB and the JB Affiliates to lease, purchase
or otherwise occupy warehouse or industrial space or Ancillary Office Space
within either or both of Long Island, New York or Essex County, New Jersey, JB
or JB Affiliates shall forthwith (and prior to entering into any lease,
commitment letter of intent, contract or other agreement with such Closing Date
Tenant or New Tenant) notify the UPREIT, in writing, of the particulars of such
Closing Date Tenant's or New Tenant's request for warehouse or industrial space
or Ancillary Office Space (a "COMPETITION NOTICE"). Upon receipt of a
Competition Notice, the UPREIT shall have five (5) business days (excluding the
day of receipt) to determine whether or not it wishes to compete for any such
Closing Date Tenant or New Tenant. If the UPREIT notifies JB, in writing and
prior to the expiration of the applicable five (5) business day period, that it
is interested in so competing, the UPREIT shall have the right to compete
(within the ninety (90) day period following the date on which Contributor
delivers the Competition Notice, the "COMPETITION PERIOD"), with JB and the
applicable JB Affiliates, in good faith and on "equal footing," to attempt to
provide such desired space to such Closing Date Tenant or New Tenant. If the
UPREIT fails to respond, in writing, within the applicable five (5) business
day period, then the UPREIT shall automatically be deemed to have waived its
right to compete with respect to the then-applicable Closing Date Tenant or New
Tenant. Provided that JB and JB Affiliates comply with their obligations set
forth in this Paragraph 25, then from and after the expiration
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of the applicable Competition Period, they shall not be prohibited from
entering into any such lease, construction or sales transaction with any
Closing Date Tenant or New Tenant. In further consideration of Acquiror's
agreement to purchase the Projects, JB hereby covenants and agrees that,
subject to the penultimate sentence of this Paragraph 25, during and throughout
the period commencing on the Closing Date and ending on the Non-Compete
Expiration Date, neither JB nor any entity in which JB has any ownership
interest, of any nature whatsoever, whether directly or indirectly, shall
solicit, initiate contact with, approach, negotiate with, or hold discussions
with, or on behalf of, any entity (other than the REIT, the UPREIT, or any
entity affiliated with either or both of the REIT and the UPREIT) in connection
with any matter relating to the purchase, sale, ground lease, development or
acquisition of any other interests, of any nature whatsoever, of any warehouse
or industrial property in either or both of the States of New York and New
Jersey; provided, however, that the foregoing limitation shall not apply with
respect to the Retained Properties (as defined below). In further
consideration of Acquiror's agreement to purchase the Projects, JB further
covenants and agrees, during and throughout the period commencing on the
Closing Date and ending on the Non-Compete Expiration Date, that neither he nor
any entity in which he has any interest whatsoever shall, within either or both
of the States of New York and New Jersey, in any manner own, manage, control,
participate in, consult with, render services for or otherwise deal with in any
manner any entity involved in the development, management, leasing or operation
of other projects or properties used for industrial, warehouse or distribution
purposes (the foregoing covenant shall not apply to the Retained Properties,
with respect to which JB's rights are governed by Paragraph 27). JB further
agrees that, in the event of breach of any or all of the covenants contained in
this Paragraph 25, and notwithstanding the provisions of Paragraph 18, the
UPREIT shall be entitled to all available remedies against any or all of JB and
the JB Affiliates, at law or in equity, including without limitation,
injunctive relief, all of which remedies shall be cumulative and not exclusive.
Nothing contained herein shall be deemed to limit or restrict JB's and the JB
Affiliates' right to continue to lease space to, or otherwise deal with (1)
existing (as of the Contract Date and the Closing Date) tenants of any Project
that is a Retained Property, and (2) any Closing Date Tenant or New Tenant with
respect to which a Competition Notice is delivered to Acquiror, but Acquiror
either fails to timely respond thereto, or Acquiror timely responds to the
Competition Notice, but then fails to enter into a lease with the applicable
Closing Date Tenant or New Tenant during the Competition Period; provided,
however, that in the case of (2), Contributor's right to deal directly with
such Closing Date Tenant or New Tenant shall be limited to the specific
opportunity and circumstances described in the relevant Competition Notice and
any subsequent renewal of the lease or expansion of the same space demised to
such Closing Date Tenant or New Tenant as a result of the transaction described
in the relevant Competition Notice. If the conditions of the foregoing clause
(2) are met at any time with respect to a given Tenant or New Tenant and the
respective lease, Contributor shall have no obligation to deliver a Completion
Notice with respect to the same Tenant or New Tenant, and respective lease, in
connection with any renewal or expansion of such lease. The terms and
provisions of this Paragraph 25 shall survive the Closing and shall not merge
into any conveyancing documents delivered at Closing.
26. PRE-CLOSING LEASING. Contributor and Acquiror acknowledge that
various of the Projects may contain certain vacancies (i) as of October 21,
1996 and all such vacancies are reflected on the Rent Roll; and (ii) as a
result of space that was occupied on October 21, 1996 but becomes vacant prior
to the Closing Date and after October 21, 1996 (collectively, the "VACANCIES").
Given the parties' mutual desire and expectation that various of the Vacancies
may be leased prior to Closing, Contributor and Acquiror have determined that,
from and after October 21, 1996, and continuing to the Closing Date (subject to
any earlier termination of this Agreement), Contributor has the right to seek
tenants for the Vacancies (and Acquiror shall have the right to submit to
Contributor proposed tenants for the Vacancies). The following parameters have
applied (since October 21, 1996) and shall continue to apply with respect to
such pre-Closing leasing:
(a) Acquiror's Consent. Attached to this Agreement as Exhibit "F" is
Contributor's current form lease utilized at the Projects (the "FORM
LEASE"). Contributor agrees to use its reasonable, good faith and
diligent efforts to ensure that any tenant leasing all or any portion of
any Vacancy shall enter into a lease substantially in the form of the Form
Lease. Prior to entering into such new lease with a prospective new
Tenant under an Additional Lease, Contributor shall deliver to Acquiror a
copy of the proposed lease and a term sheet summarizing all of the
economic and material terms of the proposed
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Additional Lease ("TERM SHEET") so as to enable Acquiror to decide whether
or not to consent to such proposed Additional Lease. In the event that
Acquiror does not specifically reject a proposed Additional Lease, in
writing delivered to Contributor within three (3) business days after
Acquiror's receipt from Contributor of a request for consent (which notice
from Acquiror shall specify the reasons for rejection, if applicable),
Acquiror shall be deemed conclusively to have consented to such lease
transaction. Contributor shall not enter into any Additional Leases for
Vacancies if Acquiror timely rejects such proposed Additional Lease in
accordance with this Subparagraph 26(a).
(b) Payment of Tenant Improvement Costs and Brokerage Commission. If
an Additional Lease is executed prior to Closing and in accordance with
Subparagraph 26(a), then, at Closing, Acquiror shall pay to Contributor,
in cash and in addition to the Contribution Consideration, those portions
(if any) of the tenant improvement costs and brokerage commissions
attributable to the initial term of the Lease ("INITIAL ADDITIONAL LEASE
COSTS") and actually paid by Contributor prior to Closing; provided,
however, that the maximum amount that Acquiror shall be required to pay
for such Initial Additional Lease Costs shall be those amounts set forth
in the applicable Term Sheet (with respect to tenant improvement costs and
leasing commissions) prepared by Contributor for that particular
Additional Lease. In the event that, prior to Closing, Contributor does
not advance all Initial Additional Lease Costs with respect to all
Additional Leases approved (or deemed approved) by Acquiror, then after
Closing, Contributor shall remain liable for the payment of all Initial
Additional Lease Costs that are due and payable after the Closing, but
only if and to the extent that the Initial Additional Lease Costs for a
given Additional Lease exceed those corresponding amounts set forth by
Contributor in the Term Sheet for that particular Additional Lease; and
Acquiror shall remain liable for the payment of those Initial Additional
Lease Costs for a given Additional Lease approved (or deemed approved by
Acquiror) that are equal to, or less than, those corresponding amounts set
forth on the Term Sheet for the particular Additional Lease.
Notwithstanding the preceding terms of this Subparagraph 26(b), in the
event that this Agreement is terminated prior to Closing, then Acquiror
shall have no liability or obligation with respect to any Additional Lease
or any Initial Additional Lease Costs; and in the event that a Project for
which an Additional Lease is executed becomes a Deleted Project, then
Acquiror shall have no liability for that Additional Lease or the Initial
Additional Lease Costs associated therewith.
(c) Defaults by Existing Tenants. Notwithstanding anything to the
contrary contained in this Paragraph 26, in the event that, prior to
Closing, Contributor enters into an Additional Lease with respect to
premises that are the subject of a Vacancy arising or occurring after
October 21, 1996 as a result of a default by an Existing Tenant (a
"DEFAULTING EXISTING TENANT"), Acquiror shall retain the approval rights
set forth in Subparagraph 26(a), and, if Acquiror does not timely reject
such Additional Lease, Contributor shall be solely responsible for the
payment of that percentage (the "SHARED PERCENTAGE") of the Initial
Additional Lease Costs equal to (x) the number of months of the term of
the Defaulting Existing Tenant's Existing Lease remaining unexpired as of
the first date on which such Defaulting Existing Tenant defaulted under
the requirements of its respective Existing Lease; divided by (y) the
number of months in the initial term of the proposed Additional Lease that
shall replace the Existing Lease of the Defaulting Existing Tenant;
provided, however, that the Shared Percentage shall be deemed to be zero
if the occupancy rate of the Projects (based on aggregate gross rental
income of the Projects) exceeds 95% both immediately prior to and after
the first date on which possession of the leased premises vacated by the
applicable Defaulting Existing Tenant is unconditionally delivered to
Contributor.
(d) Survival. The terms and provisions of this Paragraph 26 shall
survive the Closing and shall not merge into any conveyancing documents
delivered at Closing.
27. SENIOR REGIONAL DIRECTOR POSITION AND EMPLOYMENT CONTRACT. At the
Closing, ▇▇▇ ▇▇▇▇▇▇ ("JB"), a principal of Contributor, and the REIT shall
enter into an employment agreement pursuant to which the REIT engages JB as a
"SENIOR REGIONAL DIRECTOR," and agrees to compensate JB on terms, and pursuant
to financial arrangements, that are commensurate with those pursuant to which
the REIT engages its other Senior Regional Directors (i.e., base and incentive
compensation, health insurance and other benefits, and stock
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options). JB's employment agreement (the "EMPLOYMENT AGREEMENT"), shall be in
the form of Exhibit X attached hereto. In his capacity as a Senior Regional
Director ("SRD"), JB shall also be elected (effective upon Closing), as a
"signing officer" of the REIT, thereby authorizing JB (to the same extent as
the REIT's other SRDs are authorized) to execute various acquisition-,
leasing-, operational-, disposition- and development-related documentation for
and on behalf of both the UPREIT and the REIT.
Notwithstanding the foregoing, however, Acquiror acknowledges that from
and after the Closing Date, JB, in his capacity as a principal of Contributor,
shall continue to retain a significant interest in (i) the Deleted Projects (as
defined below); (ii) subject to Acquiror's rights to acquire the Option
Projects and Project No. 56 pursuant to Paragraphs 33 and 39, respectively, the
Option Projects and Project No. 56; and (iii) certain other commercial real
properties (primarily of a non-industrial nature), that Contributor, or an
affiliate thereof, current owns and which are not included within the scope of
this Agreement (collectively with the Deleted Projects, the Option Projects and
Project No. 56, the "RETAINED PROPERTIES"). At Closing, Acquiror and
Contributor shall prepare and agree upon a schedule of all of the Retained
Properties. (Pursuant to Paragraph 29 of this Agreement, at Closing, the
owner(s) of the Retained Properties and First Industrial Management Corporation
("FIMC") shall enter into a property management and leasing agreement pursuant
to the terms of which FIMC shall manage and lease certain of the Retained
Properties.) During the term of the Employment Agreement, JB shall have the
right to participate in strategic and significant business decisions (e.g.,
sale and refinance) concerning the Retained Properties, but JB, acting in his
individual capacity, shall not participate in the day-to-day management and
leasing decisions concerning any or all of the Retained Properties.
The Employment Agreement, among other things, shall have a five-year term
and shall include the REIT's covenant to cause JB to be elected to the Board of
Directors of FI Development Services Corporation, a Maryland corporation
("FIDS") and the sole general partner of First Industrial Development Services
Group, L.P., a Delaware limited partnership, as soon as is reasonably possible,
in the good faith determination of the REIT, after the Closing.
28. CONTRIBUTOR'S ORGANIZATION AND STAFF. Acquiror acknowledges that
Contributor engages various individuals to lease, manage, and operate the
Projects on a day-to-day basis (collectively, the "MANAGER EMPLOYEES"). Given
the familiarity of the Manager Employees with the Projects and the Long Island
market, Acquiror has advised Contributor that the REIT may desire to engage
certain of the Manager Employees (or to cause FIMC to engage some or all of
such Manager Employees) after the Closing. Acquiror acknowledges that, given
JB's role as an SRD of the REIT, with the post-Closing responsibility to
operate and manage the Projects, JB is likely to require that either or both of
the REIT and FIMC engage employees to work under his direction. In light of
the foregoing, Contributor agrees that Acquiror (with JB's consent, which
consent shall not be unreasonably withheld or delayed) may directly contact,
interview and extend offers of employment to any or all of the Manager
Employees at any time and from time to time after the Approval Date and prior
to the Closing Date. Acquiror hereby covenants and agrees that, if and to the
extent that either or both of the REIT and FIMC determine that it is
appropriate to engage Long Island-based employees (in connection with the
acquisition, ownership, leasing and management of any or all of the Retained
Properties and the Projects), then Acquiror shall cause either or both of the
REIT and FIMC, as the case may be, to consider, in good faith, the possibility
of engaging some or all of the Manager Employees; provided, however, that
neither the REIT nor FIMC shall be obligated to extend offers of employment to
any or all of the Manager Employees. Notwithstanding the foregoing, JB, in his
capacity as an SRD, shall be authorized to extend offers of employment to those
Manager Employees listed on Schedule 28 attached hereto, and on terms set forth
in Schedule 28. JB acknowledges that any Manager Employee hired by the REIT
will be expected to devote his or her full-time, diligent and good faith
efforts to the operation of the business of the REIT, UPREIT or FIMC, as the
case may be.
29. MANAGEMENT OF RETAINED PROPERTIES. At the Closing, Contributor shall
cause the owner(s) of the Retained Properties (collectively, the "RP OWNER") to
enter into property management and leasing agreements with FIMC, pursuant to
which the RP Owner shall engage FIMC to manage, operate and lease certain of
the Retained Properties (collectively, the "MANAGEMENT AGREEMENT"). The
Retained Properties to be made subject to the Management Agreement are listed
on Schedule 29 attached hereto. The Management Agreement for those
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Retained Properties that are designated with an asterisk on Schedule 29 (being
properties owned in whole or in substantial part by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or entities
she or members of her immediate family controls) [the "DRAIZIN PROPERTIES"]
shall have a 2-year term; provided, however, that upon the expiration of such
2-year term, the term will automatically renew for a 2-year period; subject,
however, to the right of the RP Owner of a Draizin Property to terminate the
Management Agreement with respect to that Draizin Property upon not less than
six months' written notice to FIMC, which notice may not, however, be delivered
prior to the second anniversary of the Closing. The term of the Management
Agreement for all other Retained Properties shall be equal to the lesser of (x)
five years and (y) the duration of JB's tenure as Senior Regional Director (or
as an equivalent or senior officer) of the REIT (if such tenure is terminated
in accordance with terms of the Employment Agreement, either by the REIT other
than for cause or by JB). Contributor and Acquiror shall each act reasonably
and in good faith to agree upon the terms and conditions of the Management
Agreement prior to the Approval Date; provided, however, that the Management
Agreement shall include, but not be limited to, an annual management fee equal
to 4% of aggregate annual gross rental income (which fee shall be payable,
however, on a monthly basis), but without any allocation to Contributor of any
responsibility to contribute to the payment of FIMC's overhead expenses, and
the terms and provisions set forth on Exhibit "W" attached hereto and
incorporated herein by this reference (including, but not limited to, the right
to terminate, without a penalty, a Management Agreement with respect to a given
Retained Property in the event of a sale and transfer of that Retained Property
to a third party or, in the case of Option Project, to the UPREIT, whereupon
such termination shall be effective on the date on which such sale is
consummated).
30. COSMETIC IMPROVEMENTS AND DEFERRED MAINTENANCE ESCROW. Contributor
and Acquiror have agreed that certain cosmetic improvements and deferred
maintenance shall be required at certain of the Projects, and shall be
completed as soon as is reasonably possible after Closing, but in all events
and under all circumstances, substantially completed by December 31, 1997.
Such cosmetic improvement items and deferred maintenance are described in
separate sections of Exhibit Y (collectively, "COSMETIC IMPROVEMENTS"). At
Closing, Acquiror shall deposit the amounts set forth in the separate sections
of Exhibit Y, on an aggregated basis (the "COSMETIC IMPROVEMENTS FUND"), into
an escrow with the Chicago Title and Trust Company, Nassau County, New York
office ("CT&T"), and the amount of the Cosmetic Improvements Fund shall be
deducted from the Total LP Unit Amount, as an Adjustment. The escrow into
which the Cosmetic Improvements Fund is deposited shall be governed by escrow
instructions into which Contributor, Acquiror and the Title Company enter at
Closing. Acquiror hereby covenants and agrees that it shall expend the
proceeds of the Cosmetic Improvements Fund for the performance only of the
Cosmetic Improvements, which covenant (together with those additional covenants
made by Contributor in this Paragraph 30) shall survive the Closing and shall
not merge into any conveyancing documents delivered at Closing. In the event
that Acquiror completes the performance of all Cosmetic Improvements, but
Acquiror does not expend the entire Cosmetic Improvements Fund for such
purposes, the balance of such unexpended Cosmetic Improvements Fund, including
all interest earned thereon (the "COSMETIC IMPROVEMENTS FUND BALANCE"), shall
be paid to the UPREIT; and, subject to compliance with Subparagraph 2(c)(iv) in
connection with such issuance, the UPREIT shall promptly thereafter issue an
aggregate amount (rounded to the nearest whole number of LP Units) of LP Units,
equal to the quotient of (x) the Cosmetic Improvements Fund Balance divided by
(y) the Unit Price, to the those LP Unit Recipients as are, and in the amounts,
designated in writing by JB. In such event, neither Acquiror, the UPREIT nor
the REIT shall have any liability or responsibility with respect to such
distribution. In the event the entire Cosmetic Improvements Fund is properly
applied towards the completion of the Cosmetic Improvements, but the Cosmetic
Improvements are not completed, Contributor shall be responsible for the
payment (or reimbursement of Acquiror) of the additional amounts necessary to
complete the Cosmetic Improvements in accordance with Exhibit Y.
Notwithstanding anything to the contrary in the Management Agreement, in no
event shall the REIT, the UPREIT or any affiliate of the REIT receive any fees
or commissions in connection with the performance and installation of any or
all of the Cosmetic Improvements. Acquiror acknowledges that certain Leases
require the Tenants thereunder to reimburse the landlord if and to the extent
that the landlord expends monies for certain Cosmetic Improvement items,
located at and on the Project in which such Tenants' respective leased premises
are located (the "TENANT-FUNDED COSMETIC IMPROVEMENTS"); therefore, if and to
the extent that Acquiror performs any Tenant-Funded Cosmetic Improvements as
part of the Cosmetic Improvements, Acquiror shall use reasonable, good faith
efforts to ▇▇▇▇ to, and collect from, the relevant Tenants the costs incurred
to perform
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such Tenant-Funded Cosmetic Improvements (the "TF COSMETIC COSTS"). If and to
the extent that Acquiror collects all or any portion of the TF Cosmetic Costs
from Tenants, and Acquiror has already been reimbursed, from the Cosmetic
Improvements Fund, for such TF Cosmetic Costs, then Acquiror shall deliver to
JB those monies that Acquiror receives from Tenants as reimbursement for TF
Cosmetic Costs, and JB shall be solely and entirely responsible for the
distribution of such TF Cosmetic Costs monies to Contributor. For as long as
JB is employed pursuant to the Employment Agreement, JB shall have primary
responsibility and the authority to coordinate and contract for all components
of services, materials and work to perform all of the Cosmetic Improvements;
therefore, JB acknowledges and agrees that, in his capacity as SRD, he shall be
required to complete the Cosmetic Improvements as soon as is reasonably
possible after Closing, but in all events such improvements shall be
substantially completed by December 31, 1997. The provisions of this Paragraph
30 shall survive the Closing and shall not merge into any conveyancing
documents delivered at Closing.
31. CAPITAL IMPROVEMENTS ESCROW. Contributor and Acquiror have agreed
that certain capital improvements and items of deferred maintenance shall be
required at certain of the Projects (collectively, "CAPITAL IMPROVEMENTS"),
which Capital Improvements shall be substantially completed on or before the
5th anniversary of the Closing Date. Such Capital Improvements are described
in Exhibit Z. At Closing, Acquiror shall deposit the aggregate sum reflected
in Exhibit Z (the "CAPITAL IMPROVEMENTS FUND") into an escrow with the Title
Company, and the amount of the Capital Improvements Fund shall be deducted from
the Total LP Unit Amount, as an Adjustment. The escrow into which the Capital
Improvements Fund is deposited shall be governed by escrow instructions into
which Contributor, Acquiror and the CT&T enter at Closing. Acquiror hereby
covenants and agrees that it shall expend the proceeds of the Capital
Improvements Fund for the repair, maintenance and replacement of Capital
Improvements only, which covenant (together with those additional covenants
made by Contributor in this Paragraph 31) shall survive the Closing and shall
not merge into any conveyancing documents delivered at Closing. In the event
that Acquiror completes the performance of all Capital Improvements, but
Acquiror does not expend the entire Capital Improvements Fund for such
purposes, the balance of such unexpended Capital Improvements Fund, including
all interest earned thereon (the "CAPITAL IMPROVEMENTS FUND BALANCE"), shall be
paid to the UPREIT; and, subject to compliance with Subparagraph 2(c)(iv) in
connection with such issuance, the UPREIT shall promptly thereafter issue an
aggregate amount (rounded to the nearest whole number of LP Units) of LP Units,
equal to the quotient of (x) the Capital Improvements Fund Balance divided by
(y) the Unit Price, to the those LP Unit Recipients as are, and in the amounts,
designated in writing by JB. In such event, neither Acquiror, the UPREIT nor
the REIT shall have any liability or responsibility with respect to such
distribution. In the event the entire Capital Improvements Fund is properly
applied towards the completion of the Capital Improvements, but the Capital
Improvements are not completed, Contributor shall be responsible for the
payment (or reimbursement of Acquiror) of the additional amounts necessary to
complete the Capital Improvements in accordance with Exhibit Z.
Notwithstanding anything to the contrary in the Management Agreement, in no
event shall the REIT, the UPREIT or any affiliate of the REIT receive any fees
or commissions in connection with the performance and installation of any or
all of the Capital Improvements. Acquiror acknowledges that certain Leases
require the Tenants thereunder to reimburse the landlord if and to the extent
that the landlord expends monies for certain Capital Improvement items, located
at and on the Project in which such Tenants' respective leased premises are
located (the "TENANT-FUNDED IMPROVEMENTS"); therefore, if and to the extent
that Acquiror performs any Tenant-Funded Improvements as part of the Capital
Improvements, Acquiror shall use reasonable, good faith efforts to ▇▇▇▇ to, and
collect from, the relevant Tenants the costs incurred to perform such
Tenant-Funded Improvements (the "TF COSTS"). If and to the extent that
Acquiror collects all or any portion of the TF Costs from Tenants, and Acquiror
has already been reimbursed, from the Capital Improvements Fund, for such TF
Costs, then Acquiror shall deliver to JB those monies that Acquiror receives
from Tenants as reimbursement for TF Costs, and JB shall be solely and entirely
responsible for the distribution of such TF Costs monies to Contributor. For
as long as JB is employed pursuant to the Employment Agreement, JB shall have
primary responsibility and the authority to coordinate and contract for all
components of services, materials and work to perform all of the Capital
Improvements; therefore, JB acknowledges and agrees that, in his capacity as
SRD, he shall be required to complete the Capital Improvements as soon as is
reasonably practicable after Closing, but in all events, such improvements
shall be substantially completed on or before the fifth (5th) anniversary of
the Closing Date. The
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provisions of this Paragraph 31 shall survive the Closing and shall not merge
into any conveyancing documents delivered at Closing.
32. MAXIMUM DELETION.
(a) Contributor's Right of Termination. If Acquiror shall elect,
under any or all of Subparagraphs 5(e), 6(e), 9(d), 10, 15(c) and 24(b)
hereof, to delete and eliminate from this Agreement two (2) or more
Projects (each such deleted Project, a "DELETED PROJECT") which, in the
aggregate, represent more than fifteen percent (15%) of the total
aggregate gross rental income of all of the Projects originally
contemplated to be conveyed and acquired (on the Closing Date) under this
Agreement (determined as of the Contract Date), then Contributor shall
have the right, exercisable by written notice to Acquiror ("CONTRIBUTOR'S
TERMINATION NOTICE"), within five (5) business days after the date on
which Acquiror delivers its notice of deletion, to terminate this
Agreement in its entirety, whereupon the ▇▇▇▇▇▇▇ Money, together with all
(if any) interest thereon, shall be immediately refunded to Acquiror and
the parties shall have no further obligations hereunder, except as
specifically provided in this Agreement to the contrary. Upon its receipt
of a Contributor's Termination Notice, Acquiror shall have the right,
exercisable by written notice to Contributor ("REINSTATEMENT NOTICE"),
given within five (5) business days after its receipt of such
Contributor's Termination Notice, to reinstate this Agreement by
withdrawing its prior deletion of one or more Projects sufficient in size
to reduce the aggregate square footage of Deleted Projects to a number
which results in an aggregate deletion of fifteen percent (15%) or less of
the total aggregate gross rental income of all of the Projects originally
contemplated by this Agreement. Upon the delivery of such Reinstatement
Notice, Contributor's Termination Notice shall be rendered null and void,
and the parties shall proceed to close on all non-deleted Projects as
herein provided, subject to an extension of the Closing Date, on a
day-for-day basis, equal to the number of days that elapse between the
delivery of Contributor's Termination Notice and the delivery of
Acquiror's Reinstatement Notice.
(b) Acquiror's Right of Termination. If Acquiror shall elect, under
any or all of Subparagraphs 5(e), 6(e), 9(d), 10, 15(c) and 24(b) hereof,
to delete and eliminate from this Agreement two or more Deleted Projects
which, in the aggregate, represent more than thirty percent (30%) of the
total aggregate gross rental income of all of the Projects originally
contemplated to be conveyed and acquired (on the Closing Date) under this
Agreement (determined as of the Contract Date), and Contributor fails to
timely deliver a Contributor's Termination Notice, then Acquiror shall
have the right, exercisable by written notice to Contributor, delivered
within five (5) business days after the last date on which Contributor may
deliver (pursuant to Subparagraph 32(a) above) the Contributor's
Termination Notice, to terminate this Agreement in its entirety, whereupon
the ▇▇▇▇▇▇▇ Money, together with all (if any) interest thereon, shall be
immediately refunded to Acquiror and the parties shall have no further
obligations hereunder, except as specifically provided in this Agreement
to the contrary.
33. OPTION PROJECTS. Acquiror desires to acquire an option (the "PURCHASE
OPTION") to purchase (on a date after the Closing Date) Projects Nos. 16, 26,
28, 29 and 52 (collectively, the "OPTION PROJECTS"), on the following terms and
conditions, which terms and conditions shall survive the Closing hereunder:
(a) Trigger Date, and Trigger Notice. From and after the Closing
Date and continuing to the second anniversary thereof, JB shall use his
reasonable, good faith and diligent efforts to cause (without being
required to pay any consideration or commence litigation) the requisite
number of partners in Project No. 16, and the requisite number of members
of the limited liability company that owns Project No. 52, to
unconditionally agree to the transfer, sale and conveyance of fee simple
interest in each such respective Project to Acquiror for the prices
determined in accordance with Subparagraph 33(d) (each, the "PARTNER
CONSENT"). Upon the occurrence, and provided such occurrence happens
prior to, or on, the second anniversary of the Closing Date, of either or
both of: (x) the receipt of the Partner Consent with respect to, Project
No. 16; and (y) the receipt of the Partner Consent with respect to,
Project No. 52; (the dates on which either or both of (x) and (y) occur is
hereinafter referred to as a "TRIGGER DATE"), JB shall, if and only if
such Trigger Date occurs within the period from and after the Closing Date
through,
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but excluding, the second anniversary of the Closing Date, promptly send
written notice to Acquiror (the "TRIGGER NOTICE"), advising Acquiror that
the requirements described in either or both of (i) and (ii) above have
been satisfied with respect to the applicable Option Project(s).
(b) Option Exercise. Acquiror shall have thirty (30) days from the
date on which a Trigger Notice is delivered (the "OPTION RESPONSE PERIOD")
to conduct, at and with respect to the applicable Option Project, subject
to the terms and requirements of Paragraph 5, all of the deliveries,
tests, inquiries and inspections described in Paragraph 5 with respect to
the then-applicable Option Project(s) and to advise JB, on behalf of the
owner of such Option Project, in writing (the "OPTION RESPONSE NOTICE"),
as to whether or not Acquiror exercises its Purchase Option with respect
to that particular Option Project. The Option Response Period shall be
subject to extension on the terms and conditions provided in Subparagraph
5(b) with respect to the performance of an Additional Assessment
concerning and with respect to the then-applicable Option Project(s) if
Acquiror reasonably determines that an Additional Assessment is warranted
in connection with that Option Project(s). If Acquiror fails to timely
deliver an Option Response Notice or otherwise declines to exercise its
Purchase Option on an Option Project, Acquiror shall be deemed to have
automatically and irrevocably waived its Purchase Option with respect to
that particular Option Project, and Acquiror shall execute and deliver to
Contributor (upon Contributor's written request) any documents (in
recordable form) reasonably requested by Contributor to reflect the
termination of the Purchase Option with respect to that Option Project.
JB hereby covenants and agrees that, during any Option Response Period, JB
shall use his reasonable, diligent and good faith efforts to cause the
owner of the applicable Option Project(s) to provide Acquiror, its agents,
employees and representatives with access to, and the ability to perform
the inspections contemplated under Paragraph 5 at, the applicable Option
Project, but subject to all of the requirements and restriction imposed
under Paragraph 5. In the event Acquiror exercises its option with
respect to Project No. 52, JB agrees to use his reasonable, diligent and
good faith efforts to cause the owner of the applicable Option Project(s)
to complete the legal subdivision (the "SUBDIVISION") of Project No. 52
such that the municipality in which such Project is located permits the
conveyance of such Project as a separate and distinct parcel.
Notwithstanding anything to the contrary contained herein, Acquiror shall
have no obligation to consummate the closing of Project No. 52 unless and
until the Subdivision of Project No. 52 occurs.
(c) Project Numbers 26, 28 and 29. From and after the Closing Date
and continuing to the second anniversary thereof, Acquiror shall have the
opportunity to advise Contributor that it may wish to exercise its option
to purchase any or all of Projects Nos. 26, 28 and 29 by so advising
Contributor, in writing, on or before the second anniversary of the
Closing Date (each, a "▇▇▇▇▇ PLACE PROJECT TRIGGER NOTICE"). The thirty
(30) day period of time after the date on which the ▇▇▇▇▇ Place Project
Trigger Notice is delivered to Contributor shall constitute the Option
Response Period for whichever of Projects Nos. 26, 28 and 29 is the
subject of a ▇▇▇▇▇ Place Project Trigger Notice; therefore, during that
Option Response Period, Acquiror shall have the rights described under
Paragraph 33(b) above. If Acquiror exercises its option with respect to
either or both of Projects Nos. 26 and 28, the Closing thereof shall be
conditioned on the recording of easements reasonably acceptable to
Acquiror governing access-related matters between such properties and
those properties contiguous thereto, as appropriate and as the case may
be. Acquiror shall have no obligation to acquire any of such Option
Projects if no such easement is agreed upon and recorded. Contributor
shall negotiate reasonably and in good faith to reach agreement on any
such easements. Notwithstanding anything to the contrary contained
herein, Acquiror shall have no obligation to consummate the closing of
Project No. 26 and/or Project No. 28, as the case may be, unless and until
the Subdivision of such Project(s) occurs.
(d) Closing. If Acquiror timely delivers an Option Response Notice
in accordance with the terms of this Paragraph 33, then such purchase and
sale shall occur in accordance with, and pursuant to, the provisions of
this Agreement (to the extent applicable and having due regard for the
purchase price of the Option Project in question), except as follows:
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(i) Closing. The consummation of the purchase and sale of the
Option Project shall occur on the thirtieth (30th) day after the
expiration of the applicable Option Response Period (the "OPTION
PROJECT CLOSING DATE");
(ii) Calculation of Contribution Consideration. The purchase
price for each Option Project (the "OP PURCHASE PRICE") shall be as
follows: Acquiror and Contributor shall calculate the OP Purchase
Price as of the expiration of the applicable Option Response Period
(the "DETERMINATION DATE") and such calculation shall be the quotient
of (1) the net operating income ("NOI") of that Option Project as of
the applicable Determination Date, divided by (2) .107. Acquiror and
Contributor acknowledge and agree that, on a semi-annual basis from
and after the Closing Date and continuing to the second anniversary
of the Closing Date, they shall determine the OP Purchase Price
applicable to each Option Project with respect to which a Purchase
Option remains outstanding, which calculation shall be made on an
informational basis so as to facilitate the procurement of any
Partner Consents that may be required as a condition to the sale of
any Option Project. For all purposes herein, "NOI" shall mean, with
respect to any Project and at the time of calculation, Project
revenues (i.e., base rent, plus recoveries from tenants) generated by
leases at the Project during the preceding 12 full calendar months
less Project operating expenses during the same period. The revenue
component of the NOI calculation shall be reduced by 1% as a credit
loss factor.
(iii) Payment of OP Purchase Price. Acquiror shall pay the
applicable OP Purchase Price at each and every Option Project closing
in cash or LP Units, as directed by Contributor and any partner or
member that delivers a Partner Consent; provided, however, that LP
Units may only be issued to LP Unit Recipients having a direct or
indirect interest in such Option Project. Additionally, if and to
the extent that all or any portion of an OP Purchase Price is paid in
LP Units, the pricing of such LP Units shall be calculated pursuant
to the formula described in Subparagraph 2(c)(iii), but without the
limitations of the third sentence of that subparagraph. Prorations
and adjustments required (under the terms of this Agreement) in
connection with the consummation of the purchase and sale of each
Option Project shall be in accordance with the terms of this
Agreement;
(iv) Partnership Agreements and Subdivision. The parties agree
to negotiate in good faith to enter into and/or deliver on the
appropriate Option Project Closing Date any additional covenants,
conditions or representations or warranties with respect to the
partnership agreement and operating agreement affecting Projects Nos.
16 and 52, respectively, and the Subdivision of Project No. 52 that
may be reasonably requested by either party.
(v) Exclusivity. Contributor shall have no right, of any nature
whatsoever, to market an Option Project for sale, or solicit any
offer, of any nature, to purchase all or any part of Contributor's
interest in an Option Project, or participate in any negotiations to
sell (whether by fee simple interest, ground lease, installment sale
or otherwise), or agree to sell, all or any portion of, or any
interest in, an Option Project unless and until Contributor complies
with the obligations of this Paragraph 33 with respect to that Option
Project.
(vi) Schedule 12.1(z). It shall be an Acquiror's Condition
Precedent with respect to the Closing of any Option Project that any
matters reflected on Schedule 12.1(z) dating from and after 1980 with
respect to any such Option Project be resolved to the reasonable
satisfaction of Acquiror.
At Closing, Contributor and Acquiror shall execute, and record against
Projects No. 26, 28 and 29, a memorandum of Acquiror's Purchase Option,
provided that such recordation does not result in a default under any existing
mortgage thereon. Each such memorandum shall expire on the date that is thirty
(30) days after the second anniversary of the Closing Date. The terms and
provisions of this Paragraph 33 shall survive the Closing and shall not merge
into the conveyancing documents delivered at Closing.
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34. PREPAYMENT OF ASSUMED INDEBTEDNESS; REFINANCING. Contributor shall
have the right (but not the obligation) to negotiate with the lenders of the
loans secured by the Existing Mortgages regarding the prepayment of any such
loans, in full and at Closing, at a discount from the principal amount (after
application of accrued interest) that would be otherwise outstanding and due
and owing as of the Closing Date (such discount, net of any prepayment penalty
that may nevertheless be required by the applicable lender, a "PREPAYMENT
DISCOUNT"). To the extent that a Prepayment Discount has been negotiated with
respect to any or all of the Existing Mortgages (as reflected on the Pay-Off
Letter delivered with respect to such Existing Loan), one-half (50%) of any
such Prepayment Discount shall be credited to Contributor by an increase in the
Total LP Unit Amount. At Closing, the UPREIT shall satisfy and pay, in full,
all of the Assumed Indebtedness, including, but not limited to, the Existing
Mortgages. The Total LP Unit Amount shall be reduced by an amount equal to
one-half percent (1/2%) of the principal amount, as such principal amount is
discounted, of all loans secured by Existing Mortgages that are the beneficiary
of a Prepayment Discount.
35. REIMBURSEMENT FOR CERTAIN TAX INCREASES BASED ON ▇▇▇▇▇▇▇▇ REMEDIATION.
Contributor and Acquiror acknowledge that the Allocated Values of Projects
Nos. 8 and 9 (the "▇▇▇▇▇▇▇▇ PROPERTIES") were determined, in part, based on the
most currently known real property taxes levied against the ▇▇▇▇▇▇▇▇
Properties, which amounts are reflected on Schedule 35 hereto ("CURRENT
TAXES"). The ▇▇▇▇▇▇▇▇ Properties may be encumbered, at the request of the
United States Environmental Protection Agency ("USEPA"), by deed restrictions
as a result of currently pending environmental remediation that is ongoing at
the ▇▇▇▇▇▇▇▇ Properties and more fully described in Schedule 9(b) hereto (the
"▇▇▇▇▇▇▇▇ REMEDIATION"). The ▇▇▇▇▇▇▇▇ Remediation consists of two components,
namely (i) the remediation of contaminated soil (the "SOIL REMEDIATION") and
(ii) the monitoring and, depending on the maximum contaminant levels for nickel
to be promulgated by the USEPA, the remediation of contaminated ground water
(the "GROUNDWATER REMEDIATION"). If, at any time within the Selected
Assessment Period (hereinafter defined), the real property taxes levied against
either or both of the ▇▇▇▇▇▇▇▇ Properties increase to an amount in excess of
the Current Taxes (a "TAX INCREASE"), the UPREIT shall promptly advise
Contributor, in writing, of such Tax Increase, together with a copy of the
billing statement evidencing the Tax Increase (the "TAX INCREASE NOTICE"). The
▇▇▇▇▇▇▇▇ Recipients (as hereinafter defined) shall be required, within thirty
(30) days after the UPREIT's delivery of the Tax Increase Notice, to promptly
reimburse the UPREIT (in cash) for the amount (the "TAX REIMBURSEMENT AMOUNT")
equal to the quotient of: (a) the difference between (1) the newly effective
real property taxes levied against the affected ▇▇▇▇▇▇▇▇ Properties, as
reflected on the Tax Increase Notice (the "NEWLY APPLICABLE TAXES") and (2) the
most currently known and most recently paid real estate taxes levied against
such ▇▇▇▇▇▇▇▇ Project pursuant to the tax ▇▇▇▇ issued immediately prior to the
tax increase reflected in the Tax Increase Notice; divided by (b) .107. For
purposes of this paragraph, (i) the term "Selected Assessment Period" shall
mean the two (2) fiscal years (for real property tax purposes) following the
fiscal year in which the Soil Remediation and the Groundwater Remediation are
completed (if and to the extent that Groundwater Remediation is required), (ii)
completion of the Soil Remediation will be evidenced by a written notification
thereof issued by the USEPA and (iii) completion of the Groundwater Remediation
will be evidenced by a written approval thereof issued by the USEPA; provided,
however, that if, by the fifth (5th) anniversary of the Closing Date, the USEPA
has failed to issue a written approval of the Groundwater Remediation due to
the lack of ground water remediation standards, completion of the Groundwater
Remediation shall be deemed, for purposes of this Agreement, to have occurred
on such fifth (5th) anniversary. Notwithstanding the foregoing, the
computation of the Tax Reimbursement Amount shall not include (x) any portion
of the real property taxes payable by tenants of the ▇▇▇▇▇▇▇▇ Projects and (y)
any portion of the increase in real property taxes unrelated to either or both
of the Soil Remediation and Groundwater Remediation. In determining what
portion, if any, of the increase in real property taxes is related to either or
both of Soil Remediation and Groundwater Remediation, the parties may rely upon
a written allocation from the applicable taxing authority. If such allocation
is not available, and the ▇▇▇▇▇▇▇▇ Recipients and the UPREIT fail to agree upon
such allocation, the ▇▇▇▇▇▇▇▇ Recipients may submit this issue to
mediation/arbitration in accordance with Paragraph 18. The obligation of the
▇▇▇▇▇▇▇▇ Recipients with respect to the payment of the Tax Reimbursement Amount
pursuant to this Paragraph 35 shall be secured by a first priority pledge in
favor of the UPREIT of those LP Units issued in respect of the contribution of
the ▇▇▇▇▇▇▇▇ Properties (the "▇▇▇▇▇▇▇▇ UNITS"), which pledge shall expire on
the expiration date of the Selected Assessment Period (the "▇▇▇▇▇▇▇▇ EXPIRATION
DATE"). At Closing, the LP Unit Recipients to whom the
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▇▇▇▇▇▇▇▇ Units are issued in consideration of the contribution of the ▇▇▇▇▇▇▇▇
Properties (collectively, the "▇▇▇▇▇▇▇▇ RECIPIENTS") shall execute and deliver
to the UPREIT (on a joint and several basis) a pledge agreement (and ancillary
UCC Financing Statements) in form and substance mutually and reasonably
satisfactory to the ▇▇▇▇▇▇▇▇ Recipients and the UPREIT, with respect only to
the ▇▇▇▇▇▇▇▇ Units (the "▇▇▇▇▇▇▇▇ PLEDGE AGREEMENT"). The ▇▇▇▇▇▇▇▇ Pledge
Agreement shall provide, among other things, that (A) the pledge of the
▇▇▇▇▇▇▇▇ Units shall terminate upon a sale of the ▇▇▇▇▇▇▇▇ Properties, (B) if
any one of the ▇▇▇▇▇▇▇▇ Properties is sold, that portion of the ▇▇▇▇▇▇▇▇ Units
relating thereto shall be released from such pledge, (C) the ▇▇▇▇▇▇▇▇ Units, or
portions thereof, may be sold by the ▇▇▇▇▇▇▇▇ Recipients only to satisfy their
obligations with respect to the payment of the Tax Reimbursement Amount under
this Paragraph 35, and (D) when and as the ▇▇▇▇▇▇▇▇ Remediation is completed
for any of the ▇▇▇▇▇▇▇▇ Properties and the ▇▇▇▇▇▇▇▇ Recipients perform their
obligations under this Paragraph 35 with respect to the payment of the Tax
Reimbursement Amount, that portion of the ▇▇▇▇▇▇▇▇ Units relating thereto shall
be released from the pledge. In the event that any or all of the ▇▇▇▇▇▇▇▇
Recipients elect to redeem any or all of their pledged ▇▇▇▇▇▇▇▇ Units prior to
the ▇▇▇▇▇▇▇▇ Expiration Date, then the UPREIT shall release its security
interest in those particular ▇▇▇▇▇▇▇▇ Units provided that, as a condition to
such release and simultaneously with the issuance of the applicable Conversion
Shares, the applicable ▇▇▇▇▇▇▇▇ Recipients pledge (on a joint and several
basis) those Conversion Shares to the UPREIT, and grant the UPREIT a first
priority security interest in such Conversion Shares, which pledge shall be
memorialized by the execution and delivery of a pledge agreement in form and
substance reasonably and mutually satisfactory to the UPREIT and the applicable
▇▇▇▇▇▇▇▇ Recipients (such pledge to include the release and termination
provisions contained in the original pledge), and such pledge (and
corresponding security interest) shall not be released until the ▇▇▇▇▇▇▇▇
Expiration Date. The obligations of the ▇▇▇▇▇▇▇▇ Recipients under this
Paragraph 35 to pay the Tax Reimbursement Amount shall survive the Closing for
a period of seven (7) years, and shall not merge into the conveyancing
documents delivered at Closing.
36. ADDITIONAL TENANT MATTERS.
(a) Exercise of Termination Options. Contributor has advised
Acquiror that the Leases of those Tenants listed on Schedule 36(a)
attached hereto provide such Tenants with the right to terminate their
respective Leases on an accelerated basis, prior to the expiration of the
now-current terms of each such Lease. In the event that, at any time and
from time to time from and after the Closing Date, if any or all of the
tenants designated with an asterisk on such Schedule 36(a) (the
"TERMINATING TENANTS") exercise their respective termination rights, then,
from and after the effective date of each such accelerated termination,
Post-Closing Contributor shall be obligated to pay to the UPREIT, on the
first day of each month and continuing through the date on which the
relevant Lease would have expired, but for the Terminating Tenant's
exercise of its termination option (the "CONTRACT EXPIRATION DATE"), all
Base Rent, Additional Rent and other amounts that would have been due for
each calendar month in question under that particular terminated Lease
(had such Lease not been terminated on an accelerated basis); provided,
however, that (i) Post-Closing Contributor's obligation to make such
monthly payments with respect to a given terminated Lease shall cease on
the first date on which (x) the entire leased premises that were the
subject of that terminated Lease are re-leased to a New Tenant on lease
terms reasonably acceptable to the UPREIT, and (y) Post-Closing
Contributor pays, or reimburses the UPREIT for, Post-Closing Contributor's
proportionate share of all costs and expenses incurred to perform those
tenant improvements required under the New Tenant's lease and the leasing
commission due in connection with that New Tenant's lease (collectively,
"RE-LETTING COSTS") and (z) such New Tenant accepts occupancy of its
leased premises and pays to the UPREIT the first month's Base Rent and
Additional Rent (if any) due under its respective lease; and (ii) if and
to the extent that any Terminating Tenant actually pays to Acquiror any
termination fee, penalty or premium in consideration of the accelerated
termination of its respective Lease (each, a "TERMINATION FEE"), then
Acquiror shall apply that Termination Fee to the payment of those
installments of Base Rent and Additional Rent that would have been due
under the terminated Lease (but for its accelerated termination) from and
after its effective date of termination; therefore, Post-Closing
Contributor shall not be required to pay any monthly installments of Base
Rent and Additional Rent with respect to a given Terminating Tenant's
terminated Lease until such time as Acquiror has exhausted any Termination
Fee paid by the Terminating Tenant in question by so applying that
Termination Fee in the
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manner required above. With respect to component (y) above, Post-Closing
Contributor's proportionate share of Re-Letting Costs attributable to a
given New Lease shall be the product of (A) the Re-Letting Costs in
question and (B) a fraction, in which the numerator is the number of
months from the commencement date of the New Lease in question through the
Contract Expiration Date of the terminated Lease now being replaced by
that New Lease, and the denominator of which is the number of months
comprising the initial term of the New Lease then in question (without
regard to renewal or extension options or rights). Notwithstanding
anything herein to the contrary (1) if portions, but not the entire,
leased premises subject to a terminated Lease are re-let to a New Tenant
as provided above, then all rents received from the New Tenant shall be
applied to Post-Closing Contributor's obligations hereunder with respect
to that particular terminated Lease, and (2) Post-Closing Contributor
shall have no obligations under this Subparagraph 36(a) with respect to
Capital Management, a Tenant in Project No. 10, if such Tenant fails to
timely exercise its right to terminate its Lease on or prior to the second
anniversary of the Closing Date.
(b) Purchase Options. Post-Closing Contributor hereby agrees to pay
to Acquiror (in cash and simultaneously with the closing of the sale of
Project No. 8 to Broadvet Consumer's Warehouse, a Tenant at Project No. 8
("BROADVET"), any deficiency between the Allocated Amount for Project No.
8 and the net purchase price payable by Broadvet (pursuant to the
applicable provisions of its Lease and exclusive of benefits provided
voluntarily by the UPREIT to Broadvet) if and when Broadvet exercises any
purchase option it has under its Lease.
(c) Financially Questionable Tenants. In the event that, at any time
and from time to time after the Closing, any or all of Aid-Auto, a Tenant
in Project No. 36; Speed & Chrome, a Tenant at Project No. 33; and Prime
Time Sports, a Tenant in Project No. 24, defaults on any payment
obligation (of any nature) under its respective Lease, and such default is
not cured within 30 days of the due date of any such payment, then the
UPREIT shall so advise Post-Closing Contributor, in writing, and
Post-Closing Contributor shall pay such delinquent payment directly to the
UPREIT, in cash, less any security deposit for such Tenant held by the
UPREIT and not otherwise applied by the UPREIT to restore the relevant
Tenant's leased premises to the condition required under the applicable
Lease. The UPREIT agrees that, in such an event, it will use its
reasonable, good faith and diligent efforts to pursue any legal remedies
it may have against the applicable delinquent Tenant in the event of a
breach of its respective Lease, and to reimburse Post-Closing Contributor
for any such payment of delinquent sums that Post-Closing Contributor
makes to the UPREIT, if and to the extent that the UPREIT actually
collects such delinquencies from the applicable Tenant (after subtracting
the UPREIT's reasonable costs, including attorneys' fees, associated with
pursuing any such remedy). The foregoing provisions apply only to the
current terms of (which terms may not be expressly provided in) the Leases
described above, and not to any post-Closing renewal or extension of those
terms.
(d) Tenants' Rights of First Refusal. Those Tenants listed on
Schedule 36(e) have (pursuant to the terms of their respective Leases)
rights of first refusal or purchase options to acquire the Projects in
which their respective leased premises are located; therefore, it shall be
an Acquiror's Condition Precedent that Contributor procure from each of
such Tenants a written confirmation that each such Tenant irrevocably and
unconditionally waives its respective right of first refusal or purchase
option, as the case may be, with respect to the transaction contemplated
by this Agreement.
The provisions of Subparagraphs 36(a), (b), and (c) shall survive the
Closing and shall not be merged into any of the conveyancing documents
delivered at Closing.
37. ONGOING ROOF REPAIR. Contributor has provided to Acquiror a true and
complete copy of a certain agreement, including specifications, with respect to
the currently pending repair of the roof of Project No. 25 (the "ROOFING
AGREEMENT"). Post-Closing Contributor hereby covenants and agrees to assign
the Roofing Agreement and any warranty relating thereto to the UPREIT at
Closing. Nevertheless, Post-Closing Contributor agrees that he shall timely
pay (or promptly reimburse the UPREIT for the payment of) all amounts owing (by
the owner of Project No. 25) under the Roofing Agreement, from time to time,
but not
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including amounts arising from any change orders requested by the UPREIT.
Post-Closing Contributor further agrees that, if the UPREIT so desires, he
shall reasonably assist and cooperate with the UPREIT in the enforcement of the
Roofing Agreement and the pursuit of any remedies available with respect
thereto in the event of a breach thereof. In the event the work required to be
performed under the Roofing Agreement has been completed as of the Closing, it
shall be an Acquiror's Condition Precedent that final lien waivers with respect
to such work, in form and substance satisfactory to the Title Company, be
delivered at Closing. Post-Closing Contributor's obligations under this
Paragraph 37 shall survive the Closing.
38. MISCELLANEOUS.
(a) Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the transaction
contemplated herein, and all prior or contemporaneous oral agreements,
understandings, representations and statements, and all prior written
agreements, understandings, letters of intent and proposals are merged
into this Agreement. Neither this Agreement nor any provisions hereof may
be waived, modified, amended, discharged or terminated except by an
instrument in writing signed by the party against which the enforcement of
such waiver, modification, amendment, discharge or termination is sought,
and then only to the extent set forth in such instrument.
(b) Time of the Essence. Time is of the essence of this Agreement.
If any date herein set forth for the performance of any obligations by
Contributor or Acquiror or for the delivery of any instrument or notice as
herein provided should be on a Saturday, Sunday or legal holiday, the
compliance with such obligations or delivery shall be deemed acceptable on
the next business day following such Saturday, Sunday or legal holiday.
As used herein, the term "legal holiday" means any state or federal
holiday for which financial institutions or post offices are generally
closed in the State of New York for observance thereof.
(c) Conditions Precedent. Each of Acquiror and Contributor shall
have the right, at any time and from time to time, to waive any or all of
Acquiror's or Contributor's, as the case may be, respective Conditions
Precedent, each of which is for the sole benefit of Acquiror or
Contributor, as the case may be, and may be waived at any time by written
notice thereof from Acquiror to Contributor, or from Contributor to
Acquiror, as the case may be. The waiver of any particular Acquiror's or
Contributor's Condition Precedent shall not constitute the waiver of any
other.
(d) Construction. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of the
fact that it may have been prepared by counsel for one of the parties, it
being recognized that both Contributor and Acquiror have contributed
substantially and materially to the preparation of this Agreement. The
headings of various Paragraphs in this Agreement are for convenience only,
and are not to be utilized in construing the content or meaning of the
substantive provisions hereof.
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of law.
(f) Partial Invalidity. The provisions hereof shall be deemed
independent and severable, and the invalidity or partial invalidity or
enforceability of any one provision shall not affect the validity of
enforceability of any other provision hereof.
(g) Expenses. Except as and to the extent otherwise expressly
provided to the contrary herein and in those certain letter agreements,
dated October 11, 1996 and January 17, 1997, by and between JB (on behalf
of Contributor) and Acquiror (and in any other letter agreement into which
such parties may enter subsequent to the Contract Date with respect to the
sharing of due diligence costs), Acquiror and Contributor shall each bear
its own respective costs and expenses relating to the transactions
contemplated hereby, including, without limitation, fees and expenses of
legal counsel or other representatives for the services used, hired or
connected with the proposed transactions mentioned above.
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(h) Certain Securities Matters. No sale of LP Units is intended by
the parties by virtue of their execution of this Agreement. Any sale of
LP Units referred to in this Agreement will occur, if at all, upon the
Closing.
(i) Counterparts. This Agreement may be executed in any number of
identical counterparts, any of which may contain the signatures of less
than all parties, and all of which together shall constitute a single
agreement.
(j) Calculation of Time Periods. Notwithstanding anything to the
contrary contained in this Agreement, any period of time (other than any
cure periods and any time period set forth in Paragraph 13) provided for
in this Agreement that is intended to expire on or prior to the Closing
Date, but that would extend beyond the Closing Date if permitted to run
its full term, shall be deemed to expire upon Closing.
(k) Exclusive Jurisdiction. SUBJECT TO PARAGRAPH 18, THE PARTIES
AGREE THAT ALL DISPUTES BETWEEN ANY OF THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN LAW OR
EQUITY OR OTHERWISE, SHALL BE RESOLVED BY STATE OR FEDERAL COURTS LOCATED
IN NEW YORK COUNTY, NEW YORK, BUT THE PARTIES ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT OUTSIDE OF SUCH COUNTY.
39. PROJECT NUMBER 56. From and after the Closing Date and continuing to
the second anniversary thereof, Acquiror shall have a continuing right of first
refusal to purchase Contributor's interest in Project No. 56, to be exercised
as provided in this Paragraph 39. In the event that Contributor enters into
any agreement to sell, convey, transfer or assign all, or any portion of, its
interest in such Project (whether by transfer of fee simple interest, a ground
lease, sale of an interest in the Contributor entity owning this Project, an
installment sale, or otherwise), Contributor shall immediately notify the
UPREIT and provide the UPREIT with a copy of such agreement (collectively, the
"SALE NOTICE"). The date on which such Sale Notice is deemed (pursuant to
Paragraph 19) delivered to the UPREIT shall hereinafter be referred to as the
"OFFER NOTICE DATE" and the transaction described in the Sale Notice shall
hereinafter be referred to as the "PROPOSED TRANSACTION." Contributor shall be
prohibited from consummating a Proposed Transaction unless and until the UPREIT
declines to exercise its right of first refusal with respect to the Proposed
Transaction and declines to close on Project No. 56 in accordance with this
Paragraph 39. For a period of fifteen (15) days following the Offer Notice
Date (the "DELIBERATION PERIOD"), the UPREIT shall have the right to review the
Sale Notice and determine whether or not it shall exercise its right of first
refusal with respect to Project No. 56. If the UPREIT advises Contributor, in
writing, prior to the expiration of the Deliberation Period that the UPREIT
wishes to exercise its right of first refusal in accordance with the terms of
the Sale Notice (a "RIGHT OF FIRST REFUSAL ACCEPTANCE"), Contributor shall be
required to sell Project No. 56 to the UPREIT on the same terms and conditions
as described in the Sale Notice; provided, however, that the purchase price for
Project No. 56 shall equal the price set forth in the Sale Notice. In
addition, upon delivery of a Right of First Refusal Acceptance, the mechanics
of a closing for an Option Project (as set forth in Subparagraphs 33(b) and
(d)) will apply to the UPREIT's acquisition of Project No. 56. The UPREIT
shall forego whatever rights it may have under this Paragraph 39 in the event
the UPREIT, having delivered a Right of First Refusal Acceptance, willfully and
wrongfully fails to take such action as is required to close the acquisition of
Project No. 56. In the event the UPREIT fails to timely deliver a Right of
Refusal Acceptance, Contributor shall have 120 days (the "SALES PERIOD") to
consummate the sale of Project No. 56 on the express terms set forth in the
Sale Notice. If (a) Contributor fails to close the Proposed Transaction
(pursuant to the terms set forth in the Sale Notice) by the expiration of the
subject Sales Period or (b) the terms of the Proposed Transaction (as described
in the Sale Notice) change in any material respect, Contributor shall
immediately notify the UPREIT of such fact, which notice shall be treated, for
all purposes, as another Sale Notice, with the date on which such notice is
deemed (pursuant to Paragraph 19) to have been delivered as another Offer
Notice Date for purposes of this Paragraph 39. The provisions of this
Paragraph 39 shall not apply to a Transfer pursuant to Subparagraph 2(f)(iii).
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At Closing, Contributor and Acquiror shall execute, and record against
Project No. 56, a memorandum of Acquiror's Right of First Refusal, provided
that such recordation does not result in a default under any existing mortgage
thereon. Such memorandum shall expire on the date that is thirty (30) days
after the second anniversary of the Closing Date. The terms and provisions of
this Paragraph 39 shall survive the Closing and shall not merge into the
conveyancing documents delivered at Closing.
40. CODE COMPLIANCE/ADA. In the event that, at any time or from time to
time from and after the Closing Date and continuing through the First
Anniversary, the UPREIT receives any written notice from any Governmental
Authority, claiming or alleging that (any such written notice, a "VIOLATIONS
NOTICE"): (i) a Project listed under the appropriate heading on Schedule 40
attached hereto, or the use or operation of all or any portion of any such
Project, is in material non-compliance with any applicable municipal or other
governmental law (other than the ADA and Environmental Laws), ordinance,
regulation, code, license, permit or authorization; or (ii) a Project listed
under the appropriate heading on Schedule 40 attached hereto is in material
non-compliance with the ADA, then the provisions of this Paragraph 40 shall
apply. Promptly upon receipt of a Violations Notice, the UPREIT shall deliver
a copy thereof to JB. The UPREIT agrees to consult with JB with respect to the
UPREIT's response to a particular Violations Notice, although the final
decision on how to respond to any to such Violations Notice shall be the
UPREIT's alone. Post-Closing Contributor shall (pursuant to this and the
succeeding sentence) pay any and all costs and expenses reasonably incurred by
the UPREIT in its response to a Violations Notice (including, without
limitation, those of attorneys, engineers and architects), whether incurred in
connection with any or all of analysis, research, strategy, protest, and
compliance with respect to any or all of the matters set forth in any
Violations Notice (collectively, "VIOLATION CURE COSTS"); provided, however,
that Post-Closing Contributor's maximum aggregate liability under this
Paragraph 40 (x) with respect to the matters in clause (i) above shall not
exceed $40,250 and (y) with respect to the matters in clause (ii) above shall
not exceed $64,000. In such regard, Post-Closing Contributor shall promptly
reimburse the UPREIT for any Violation Cure Costs upon Post-Closing
Contributor's receipt of written evidence as to the amount of Violation Cure
Costs, or directly pay any third-party invoices delivered by the UPREIT and
evidencing any Violation Cure Costs, as the case may be. The foregoing
obligation in this Paragraph 40 shall not apply to any Violations Notices
relating to Environmental Laws or Environmental Permits. The provisions of
this Paragraph 40 shall survive the Closing and shall not merge into any
conveyancing documents delivered at Closing.
41. CERTAIN ADDITIONAL CLOSING PAYMENTS AND ESCROWS.
(a) At Closing, Contributor shall pay to the UPREIT (as a Closing
Cost) the Asset Management fees described below. Such fees shall be
allocated pro rata (based on Allocated Value) to all Projects that are
affected by such fees and that shall be contributed to Acquiror on the
Closing Date (the "CLOSING PROJECTS"). The fees shall be set forth, under
an appropriate heading, on the Closing Statement to be agreed to by the
parties at Closing. In consideration of the UPREIT's provision to
Contributor, on a pre-closing basis, of various asset management services,
including, but not limited to, services and consultations involving or
relating to matters of ownership structure, financing, leasing, and sale,
Contributor shall pay to Acquiror a fee comprised of two components: (x)
a "set-up" fee, equal to 0.25% of the aggregate Allocated Value of the
Closing Projects; and (y) a "management" fee, equal to an annualized rate
of 0.75% of the aggregate Allocated Value of the Closing Projects, which
latter fee component shall be applicable for the period of time commencing
on July 1, 1996 and continuing through the Closing Date. No portion of
the fees paid to Acquiror at Closing pursuant to the requirements of this
Paragraph 41(a) shall be refundable.
(b) At Closing, Acquiror shall deposit into escrow with CT&T the sum
set forth under the appropriate caption on the Closing Statement (the
"DEFERRED FEE ESCROW"), which Deferred Fee Escrow shall constitute a
Closing Cost, and therefore, the Contribution Consideration shall be
reduced by the amount of the Deferred Fee Escrow. The Deferred Fee Escrow
shall be comprised of the following three components:
(i) Financing Facilitation Fee. In consideration of the
UPREIT's pre-Closing assistance in negotiations with Contributor's
existing lenders to procure
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relief from prepayment restrictions and other financial
accommodations relating to the pay-off of certain Existing Mortgages,
the Deferred Fee Escrow shall include a "Financing Facilitation Fee"
in an aggregate amount equal to one-half (50%) of each discount or
other financial accommodation provided or granted to Contributor by
any or all of the holders of any of the Existing Mortgages that shall
be paid, in full, as of the Closing Date (the "ADJUSTED DISCOUNT").
The amount in the Referred Fee Escrow corresponding to each Adjusted
Discount may (but shall not necessarily) be withdrawn from the
Deferred Fee Escrow by Acquiror in equal monthly installments,
prorated over that number of months remaining in the term of the
Existing Mortgage corresponding to such Adjusted Discount, but not to
exceed 24 months for any Adjusted Discount, as of the Closing Date.
(ii) Land Planning Fee. In consideration of the UPREIT's
provision of pre-Closing consultation services to Contributor
concerning land planning issues in connection with Project 56, on
which parcel the UPREIT has a right of first refusal pursuant to
Paragraph 39, the Deferred Fee Escrow shall also include the sum of
$200,000, which amount may (but shall not necessarily) be withdrawn
from the Deferred Fee Escrow in equal monthly installments over the
24-month term of the right of first refusal.
(iii) Strategic Planning. In consideration of the UPREIT's
provision of pre-Closing consultation services with Contributor
concerning strategic planning issues involving the Option Projects,
the Deferred Fee Escrow shall also include a sum equal to 2% of the
aggregate projected fair market value of all of the Option Projects,
calculated as of the expiration date of the two-year option term (the
"Strategic Planning Fee"). At or prior to Closing, Acquiror and
Contributor shall mutually and reasonably agree upon such projected
fair market values. The Strategic Planning Fee may (but shall not
necessarily) be withdrawn from the Deferred Fee Escrow in equal
monthly installments over the 24-month option period.
The establishment and administration of, and disbursements from, the Deferred
Fee Escrow shall be governed exclusively by written instructions between (A)
the UPREIT or the REIT and (B) CT&T. Contributor shall have no right, title or
interest, of any nature whatsoever, in any or all of the monies in the Deferred
Fee Escrow. Provided that the Closing shall have occurred, all of the fees
described in this Paragraph 41 shall be deemed to have been fully earned as of
the Closing Date; therefore, from and after the Closing Date, neither the
UPREIT nor the REIT shall have any obligation to provide to Contributor any of
the services described in this Paragraph 41.
42. ENGINEERING MATTERS AT PROJECT NO. 24. Acquiror has been advised by
its consultants that there is a void or hole in the soil beneath the surface
relating to an improperly closed leaching pool at Project No. 24 (the "Soil
Condition"). In order to determine whether and the extent to which the Soil
Condition is adverse or potentially adverse to the normal use and operation of
Project No. 24 (as in effect on the Closing Date), JB and Acquiror agree that,
following closing, they shall mutually agree on the selection of an appropriate
licensed and third-party engineer (the "Engineer") to investigate and analyze
the Soil Condition, and advise Acquiror and JB of the Engineer's
recommendations with respect to the Soil Condition (collectively, the
"ENGINEERING ANALYSIS"). Post-Closing Contributor shall be responsible for all
fees and expenses incurred to engage the Engineer and procure the Engineering
Analysis. The Engineer shall commence the Engineering Analysis no later than
30 days following the Closing Date. In the event the Engineer concludes (in
the Engineering Analysis) that it is appropriate to remedy the Soil Condition,
Acquiror shall, following reasonable consultation with JB, arrange for the
remediation of the Soil Condition in accordance with the Engineering Analysis
and corresponding recommendations. Post-Closing Contributor shall be
responsible for the entire cost of any such remediation, and shall reimburse
Acquiror for such costs within ten (10) business days after Acquiror delivers
written demand to Contributor, together with written evidence of the costs for
which Acquiror requires reimbursement. The provisions of this Paragraph 42
shall survive the Closing and shall not merge into any conveyancing document
delivered at Closing.
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43. INDEMNITY WITH RESPECT TO CERTAIN ESTOPPEL CERTIFICATES. The Estoppel
Certificates delivered in connection with the Closing by ▇.▇. ▇▇▇▇▇▇ Company,
Inc. with respect to its premises at Project No. 55 and dated December 30, 1996
(the "JCP ESTOPPEL") and SmithKline ▇▇▇▇▇▇▇ Chemical Laboratories, Inc. with
respect to its premises at Project No. 18 and dated January 21, 1992 (the "SBCL
ESTOPPEL") describe certain problems that the parties wish to address following
the Closing pursuant to the terms of this Paragraph 43. In light of such
problems, JB hereby agrees to cooperate fully with Acquiror to attempt to
obtain a new Estoppel Certificate from such Tenants in form reasonably
satisfactory to Acquiror (the "NEW ESTOPPEL DELIVERY CONDITION"). Post-Closing
Contributor hereby agrees to protect, defend, indemnify and hold Acquiror, the
UPREIT, the REIT and any of their partners, officers, directors, shareholders,
successors and assigns harmless from and against any and all Losses that any or
all of the indemnified parties suffers or incurs as a result of any matter
raised in the JCP Estoppel or SBCL Estoppel that is not contemplated by the
form estoppel certificate attached as Exhibit O. The indemnity provided by the
foregoing sentence shall expire with respect to each of the JCP Estoppel and
the SBCL Estoppel, respectively, immediately upon the satisfaction of the New
Estoppel Delivery Condition for that particular estoppel and the issues raised
therein. The provisions of this Paragraph 43 shall survive the Closing and
shall not merge into any conveyancing documents delivered at closing.
44. SECURITY DEPOSIT DISPUTES. Schedule 44 attached hereto reflects
certain leases ("SECURITY DEPOSIT LEASES") with respect to which Acquiror and
Contributor have a disagreement as to the appropriate amount of the security
deposits required by each of such leases, respectively. The disputed amounts
(the "DISPUTED AMOUNTS") are also reflected on Schedule 44. If, following the
Closing, any tenant under a Security Deposit Lease delivers an estoppel letter
or other written evidence in a form reasonably acceptable to Acquiror (a
"SECURITY DEPOSIT DOCUMENT") that confirms the amount of a security deposit
(the "STATED AMOUNT"), Post-Closing Contributor shall promptly pay to Acquiror
the positive difference, if any, between the Stated Amount and the amount
reflected in Schedule 44 as "Security Deposit Per Contributor." Post-Closing
Contributor's obligation under this Paragraph 44 with respect to any Tenant
that delivers a Security Deposit Document shall terminate upon delivery of the
corresponding payment required pursuant to the preceding sentence. With
respect to those Tenants reflected on Schedule 44 that do not deliver a
Security Deposit Document ("VACATING TENANTS"), Post-Closing Contributor's
obligations under this Paragraph 44 shall be as set forth below. Post-Closing
Contributor hereby agrees to promptly pay to Acquiror, upon Acquiror's request,
an amount equal to the Security Deposit Correction Amount [(as defined below),
which amount, if it exceeds the Disputed Amount, shall be deemed to equal the
Disputed Amount] with respect to each Vacating Tenant if the following
conditions are met: (i) the Vacating Tenant has vacated the premises and
requested a refund of its security deposit; and (ii) (x) the amount requested
to be refunded by such Tenant (the "REFUND AMOUNT") exceeds (y) the amount
reflected in Schedule 44 as the "Security Deposit Per Contributor" [the
"CONTRIBUTOR'S AMOUNT"] (the difference between (x) and (y) is the "SECURITY
DEPOSIT CORRECTION AMOUNT"). The provisions of this Paragraph 44 shall survive
the Closing and shall not merge into any conveyancing documents delivered at
Closing.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement on the date first above written.
ACQUIROR:
FR ACQUISITIONS, INC.,
a Maryland corporation
By: Johannson ▇. ▇▇▇
---------------------------------------
Name: Johannson ▇. ▇▇▇
Title: Senior Vice President-Acquisitions
CONTRIBUTOR AND OTHER LP UNIT RECIPIENTS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES, a New York
general partnership
▇▇▇ ▇▇▇▇▇▇ MANAGEMENT CO., a New York
general partnership
▇▇▇▇▇ ▇▇▇▇▇▇▇ MANAGEMENT CO., a New
York general partnership
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MANAGEMENT CO., a New
York general partnership
RED GROUND CO., a New York general partnership
SURREY CO., a New York general partnership
L.B. MANAGEMENT CO., a New York
general partnership
SJB REALTY CO., a New York general
partnership
By: ▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Partner of each of the above general
partnerships
JERNIE INVESTORS CO., a New York
general partnership
C 4-6-7 CO., a New York general partnership
C 3-5 CO., a New York general partnership
▇-▇
▇▇
▇▇▇-▇▇▇ CO., a New York general partnership
By: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, partner of each of
the above general partnerships
By: ▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Attorney-in-fact
109 INDUSTRIAL CO., L.L.C., a New York
limited liability company
FOURBUR CO., L.L.C., a New York limited liability
company
By: ▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Member of each of the above limited liability
companies
116 LEHIGH INDUSTRIAL CO., L.L.C., a New Jersey
limited liability company
By: Fourbur Family Co., L.P., a New York limited
partnership and its manager
By: ▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: General Partner
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.▇., ▇ ▇▇▇ ▇▇▇▇ limited
liability company
290 INDUSTRIAL CO., L.L.C., a New York limited
liability company
By: Four Bur Co., L.L.C., a New York limited
liability company and manager of each of the
above limited liability companies
By: ▇▇▇▇▇ ▇▇▇▇▇▇, member
By: ▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Attorney-in-fact
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (d/b/a JDHJ CO.)
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: ▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Attorney-in-fact
▇▇▇▇▇ ▇▇▇▇▇▇ (d/b/a SUSIECO CO.)
By: ▇▇▇▇▇ ▇▇▇▇▇▇
By: ▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Attorney-in-fact
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85
JERNIE HOLDINGS CORP., a New York corporation
By: ▇▇▇ ▇▇▇▇▇▇
----------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: President
FOURBUR FAMILY CO., L.P., a New York limited
partnership
By: ▇▇▇ ▇▇▇▇▇▇
----------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: General Partner
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually
▇▇▇▇▇ ▇▇▇▇▇▇, individually
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually
▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇ ▇▇▇▇▇▇, individually and as attorney-in-fact
for the above named individuals
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually
▇▇▇▇▇ ▇▇▇▇▇▇▇, individually
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, custodian for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
By: ▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Attorney-in-fact
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86
JOINDER
The undersigned, being duly authorized, hereby agree to be bound by their
obligations set forth in Subparagraph 5(d) of this Contribution Agreement.
FIRST INDUSTRIAL, L.P., a
Delaware limited partnership
By: First Industrial Realty Trust, Inc.,
a Maryland corporation and its sole
general partner
By: Johannson ▇. ▇▇▇
----------------------------
Name: Johannson ▇. ▇▇▇
Title: Senior Vice President - Acquisitions
FIRST INDUSTRIAL REALTY TRUST, INC., a
Maryland corporation
By: Johannson ▇. ▇▇▇
----------------------------
Name: Johannson ▇. ▇▇▇
Title: Senior Vice President - Acquisitions
The undersigned hereby agrees to be bound by its obligations set forth in
Paragraphs 25, 30, 31, 33(a), 33(b), 36(a), (b), and (c), 37 and 40 of this
Contribution Agreement.
▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇ ▇▇▇▇▇▇
S-4
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[EXHIBITS TO THIS CONTRIBUTION AGREEMENT HAVE BEEN OMITTED]