Exhibit 10.1
Form of Contribution Agreement among Grove Real Estate Asset Trust,
Grove Operating, L.P. and certain other parties.
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FORM OF CONTRIBUTION AGREEMENT
by and between
GROVE REAL ESTATE ASSET TRUST,
a Maryland real estate investment trust,
GROVE OPERATING, L.P.,
a Delaware limited partnership
and
the Contributors named herein
DATED: As of _______, 1997
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS......................................................1
1.1 Definitions......................................................1
1.2 References.......................................................7
ARTICLE 2 CONTRIBUTION AND ACCEPTANCE; OTHER TRANSACTIONS..................7
2.1 Contribution and Acceptance of GREAT Properties..................7
2.2 Contribution and Acceptance of New Equity Proceeds...............9
2.3 Non-Liquidating Property Partnerships............................9
2.4 Liquidating Property Partnerships................................9
2.5 Management Company Assets and Liabilities.......................10
2.6 Burgundy Studio Apartments......................................10
ARTICLE 3 CONSIDERATION...................................................11
3.1 Units and Cash..................................................11
3.2 Operating Partnership Agreement.................................11
ARTICLE 4 COVENANTS, REPRESENTATIONS AND WARRANTIES.......................12
4.1 Representations and Warranties of the Grove Contributors........12
4.2 Representations and Warranties of GREAT.........................18
4.3 Representations and Warranties of the Other Contributors........23
4.4 Representations and Warranties of the Operating Partnership.....25
4.5 Survival of Representations and Warranties......................26
ARTICLE 5 CLOSING MATTERS.................................................26
5.1 Closing.........................................................26
5.2 New York Style Closing..........................................26
5.3 Surveys, Title Commitments and Searches.........................26
5.4 Title Policies..................................................27
ARTICLE 6 CLOSING DELIVERIES..............................................27
6.1 The Contributors' Deliveries....................................27
6.2 The Operating Partnership's Deliveries..........................29
6.3 Concurrent Transactions.........................................30
6.4 Further Assurances..............................................30
6.5 Possession......................................................30
ARTICLE 7 APPORTIONMENTS; SECURITY DEPOSITS...............................30
7.1 Apportionments for Wholly-Owned Projects........................30
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7.2 Apportionments for Non-Liquidating Partnerships.................31
7.3 Apportionments for Management Company...........................32
7.4 Payment of Apportionments.......................................32
7.5 Security Deposits...............................................32
ARTICLE 8 INDEMNITIES.....................................................32
8.1 The Contributors' Indemnity.....................................32
8.2 The Operating Partnership's Indemnity...........................33
8.3 Notice of Claims................................................33
8.4 Limitation on Liability.........................................33
8.5 Limitations on Indemnification Obligations......................34
ARTICLE 9 MISCELLANEOUS...................................................34
9.1 Expenses........................................................34
9.2 Brokerage.......................................................34
9.3 Survival........................................................34
9.4 Construction....................................................35
9.5 General.........................................................35
9.6 Headings........................................................35
9.7 Governing Law; Parties at Interest..............................35
9.8 Power of Attorney...............................................35
Schedules
Schedule A - Contributions
Schedule B - Cash Contributions by the Operating Partnership to Liquidating
Partnerships
Schedule C - Management Company Assets and Liabilities
Schedule D - GREAT Real Estate
Schedule E - Partnership Real Estate
Schedule F - Burgundy Real Estate
Schedule G - Rent Roll
Schedule H - Hazardous Materials; Environmental Matters
Schedule I - Financing Arrangements
Schedule J - Insurance
Schedule K - Service Contracts
Schedule L - Condition of Projects
Schedule M - Property Partnership Agreements
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FORM OF CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement") is made as of this ____ day
of __________, 1997, by and between: GROVE REAL ESTATE ASSET TRUST, a Maryland
real estate investment trust ("GREAT"), GROVE OPERATING, L.P., a Delaware
limited partnership (the "Operating Partnership" or the "OP"), and each of the
individuals and
entities listed on Schedule A hereto (each, a "Contributor" and, collectively,
the "Contributors").
W I T N E S S E T H:
WHEREAS, the Contributors own interests in 23 multi-family residential
projects, one neighborhood shopping center and certain other assets, all as set
forth herein.
WHEREAS, concurrently with the consummation of the other Consolidation
Transactions (as hereinafter defined), the Contributors desire to contribute to
the Operating Partnership all of their respective rights, title and interests in
and to such assets in exchange for Units (as hereinafter defined) and cash, all
pursuant to and in accordance with this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, agreements, covenants and conditions
herein contained, and other good and valuable consideration, the parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used herein, the following terms shall have the
respective meanings indicated below:
Agreement: This Contribution Agreement, including the schedules attached
hereto, as this Contribution Agreement may be, amended, supplemented or modified
from time to time.
Burgundy: Burgundy Associates Limited Partnership, a Connecticut limited
partnership.
Burgundy Improvements: As defined in Section 2.6.B.
Burgundy Intangible Property: As defined in Section 2.6.D.
Burgundy Leases: As defined in Section 2.6.E.
Burgundy Personalty: As defined in Section 2.6.C.
Burgundy Project: As defined in Section 2.6.
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Burgundy Real Estate: As defined in Section 2.6.A.
Closing: As defined in Section 5.1 hereof.
Closing Date: As defined in Section 5.1 hereof.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Consolidation Transactions: The consolidation transactions proposed to be
entered into by GREAT, the Operating Partnership and certain other parties, as
described in the Proxy Statement.
Contributors: As defined in the caption to this Agreement.
Damages: Any loss, liability, claim, obligation, damage or expense
(including reasonable legal fees and expenses).
Economic Interest:With respect to any Contributor's interest in a
Liquidating Partnership, all of such Contributor's right, title and interest in
and to the economic interests in such Liquidating Partnership, including,
without limitation, all of such Contributor's rights in the profits, losses,
capital, surplus, assets and distributions of such Liquidating Partnership.
ERISA: The Employee Retirement Income Security Act of 1974, as amended
from time to time.
Environment: Soil, surface waters, ground waters, land, stream sediments,
surface or subsurface strata and ambient air.
Environmental Laws: Any and all federal, state and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the Environment or to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the Environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.
Exchange Offer: The Offer to Exchange, dated December 2, 1996, from the
Operating Partnership to the limited partners of the Property Partnerships, as
amended and as supplemented from time to time.
Expenses: As defined in Section 9.1 hereof.
GREAT: Grove Real Estate Asset Trust, a Maryland real estate investment
trust.
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GREAT Improvements: As defined in Section 2.1.B.
GREAT Intangible Property: As defined in Section 2.1.D.
GREAT Leases: As defined in Section 2.1.E.
GREAT Personalty: As defined in Section 2.1.C.
GREAT Projects: As defined in Section 2.1.
GREAT Real Estate: As defined in Section 2.1.A.
Grove Contributors: ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Grove Investment Group, Inc., the Management Company, Burgundy and
[other Grove-affiliated Contributors].
Grove Leases: Collectively, the Partnership Leases and the Burgundy
Leases.
Grove Owners: Collectively, the Property Partnerships and Burgundy.
Grove Projects: Collectively, the Partnership Projects and the Burgundy
Project.
Hazardous Materials: As defined in Section 4.1.J hereof.
Improvements: Collectively, the GREAT Improvements, the Partnership
Improvements and the Burgundy Improvements.
Leases: Collectively, the GREAT Leases, the Partnership Leases and the
Burgundy Leases.
Liquidating Partnerships: The Property Partnerships identified on Schedule
A as being Liquidating Partnerships.
Liquidating Partnership Contributors: Collectively, the parties identified
on Schedule A as Contributors of interests in the Liquidating Partnerships.
Liquidating Partnership Projects: Collectively, the Partnership Projects
owned by the Liquidating Partnerships.
Management Company: Grove Property Services Limited Partnership, a
Connecticut limited partnership.
Management Company Assets and Liabilities: As defined in Section 2.5.
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Management Contracts: All contracts, commitments and agreements of the
Management Company relating to the provision of property management services by
the Management Company to Owners or any other Person.
Material Adverse Effect: With respect to any Person, a material adverse
effect on the properties, business, results of operation or financial condition
of such Person.
Multiemployer Plan: A multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions have been made by a Contributor or Property
Partnership and which is covered by Title IV of ERISA.
New Equity Proceeds: As defined in Section 2.2.
Non-Liquidating Partnerships: The Property Partnerships identified on
Schedule A as being Non-Liquidating Partnerships.
Non-Liquidating Partnership Contributors: Collectively, the parties
identified on Schedule A as being Contributors of interests in the
Non-Liquidating Partnerships.
Obligations: All payments required to be made and all representations,
warranties, covenants, agreements and commitments required to be performed under
the provisions of this Agreement by the Contributors or the Operating
Partnership, as applicable.
OP: As defined in the caption to this Agreement.
Operating Partnership: As defined in the caption to this Agreement.
Operating Partnership Agreement: The Limited Operating Partnership
Agreement of the Operating Partnership to be entered into at or prior to Closing
by GREAT, as general partner, and the other Contributors and various other
persons, as limited partners, as amended, modified or supplemented from time to
time.
Other Contributors: The Contributors other than GREAT and the Grove
Contributors.
Owners: Collectively, GREAT, the Property Partnerships and Burgundy.
Partnership Improvements: Collectively, the apartment complexes, ancillary
parking lots, and any and all other improvements and structures located on the
Partnership Real Estate.
Partnership Intangible Property: Collectively, all intangible property or
interest therein now or hereafter owned or held by a Property Partnership
between the date hereof and the date of the Closing in connection with the
Partnership Real Estate (or any portion thereof), the Partnership Improvements,
the Partnership Personalty or any business or businesses conducted on the
Partnership Real Estate, or on any portion thereof, or in connection with the
ownership,
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operation, management or use thereof, including (1) any trade style or trade
name used in connection with the Partnership Real Estate or any of the
Partnership Improvements; (2) any assignable Service Contracts; (3) all
"as-built" plans and specifications or other construction drawings of any type
in the Property Partnerships' possession or control prepared in connection with
the construction of the Partnership Improvements; (4) all tests, studies and
reports in the Property Partnerships' possession or control prepared with
respect to the Partnership Real Estate or the Partnership Improvements
(including any environmental reports); (5) all of the Property Partnerships'
books and records with respect to the Partnership Real Estate or the Partnership
Improvements; and (6) all assignable guarantees and warranties (including
guarantees and warranties pertaining to the construction of the Partnership
Improvements or pertaining to the acquisition of the Partnership Real Estate, or
any parcel thereof, or any of the Partnership Improvements by a Property
Partnership), licenses and other governmental permits, approvals and permissions
(including the certificate of occupancy) relating to the Partnership Real
Estate, or any portion thereof, the Partnership Improvements, or the ownership,
operation, management or use thereof.
Partnership Leases: All leases or occupancy agreements for any units in
the Partnership Improvements or for any other portion of the Partnership Real
Estate or the Partnership Improvements.
Partnership Personalty: Collectively, all fixtures and other personal and
tangible property or interest therein owned by the Property Partnerships,
including the heating, sprinkler, plumbing, air conditioning and ventilation
systems, furniture, appliances, blinds, office equipment and furniture,
supplies, replacements, machinery, equipment, and any other personal property or
interest therein owned by Partnership, now or hereafter located on the
Partnership Real Estate, or on any portion thereof, or in any of the Partnership
Improvements, or used in connection with the ownership, operation, management or
use of the Partnership Real Estate, or any portion thereof, or any of the
Partnership Improvements.
Partnership Projects: Collectively, the Partnership Real Estate,
Partnership Improvements, Partnership Personalty, Partnership Intangible
Property and Partnership Leases.
Partnership Real Estate: Collectively, the land described on Schedules E-1
through E-[___] attached hereto and made a part hereof, together with all of the
rights, privileges, easements and appurtenances belonging or appertaining to
such land, including all oil, gas and mineral rights belonging to the Property
Partnerships, all right, title and interest of the Property Partnerships in and
to all land lying in any street, alley, road or avenue, open or proposed, in
front of or adjoining such land, to the centerline thereof, all rights-of-way
adjacent to such land and all right, title and interest of the Property
Partnerships in and to any award made or to be made in lieu thereof and in and
to any unpaid award for damage to such land by reason of change of grade of any
street.
PBGC: The Pension Benefit Guaranty Corporation or any entity succeeding to
any or all of its functions under ERISA.
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Permitted Exceptions: Any liens, encumbrances, restrictions, exceptions
and other matters specified on the Searches, Title Commitments, Title Policies
or Surveys, to which title to the Real Estate may be subject on the Closing
Date.
Person: Any individual, a partnership, a joint venture, a corporation, a
trust, a limited liability company, an unincorporated organization or a
government or any department or agency thereof.
Plan: An employee benefit or other plan established or maintained by a
Contributor, Property Partnership or the Management Company and which is covered
by Title IV of ERISA, other than a Multiemployer Plan.
Projects: The GREAT Projects, the Partnership Projects and the Burgundy
Project.
Property Partnerships: The partnerships listed on Schedule A hereto.
Property-Related Representations and Warranties: The representations and
warranties of the Grove Contributors set forth in subsections [F-J and L-Z] of
Section 4.1 and the representations and warranties of GREAT set forth in
subsections [F-J and L-Z] of Section 4.2.
Proxy Statement: The proxy statement relating to a special meeting of
shareholders of GREAT to be held on or about March 10, 1997.
Real Estate: Collectively, the GREAT Real Estate, the Partnership Real
Estate and the Burgundy Real Estate.
Searches: As defined in Section 5.3(c) hereof.
Securities Act: As defined in Section 4.1.DD.
Service Contracts: All laundry equipment leases, management, leasing,
repair, maintenance, operating, supply, purchase, consulting, advertising,
service, equipment, concession and other contracts, commitments and agreements
(excluding the Leases) relating to the Real Estate.
Surveys: Collectively, the surveys for the Projects delivered in
accordance with Section 5.3(a) hereof.
Title Commitments: Collectively, the commitments for title insurance
delivered in accordance with Section 5.3(b) hereof.
Title Company: __________.
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Title Defect: Any lien, claim, charge, security interest, restriction,
title exception, defect or encumbrance other than a Permitted Exception.
[Title Policies: Collectively, the policies of title insurance delivered
in accordance with Section 5.3 hereof.]
Transfer: As defined in Section 4.1.DD.
Units: Units of beneficial interest in the Operating Partnership. Except
for Units issued to GREAT, which shall be Units of general partnership interest,
all Units referred to in this Agreement shall be Units of limited partnership
interest.
Unit Value: The per Unit value of the Units at the time of the
consummation of the Consolidation Transactions (which per Unit value shall be
equal to the value of a Unit as set forth in the Exchange Offer).
Withdrawing General Partner: Each Contributor identified on Schedule A as
being a Withdrawing General Partner.
Wholly-Owned Projects: Collectively, the GREAT Projects, the Liquidating
Partnership Projects and the Burgundy Project.
1.2 References. Except as otherwise specifically indicated, all references
to Section and Subsection numbers refer to Sections and Subsections of this
Agreement, and all references to Schedules refer to the Schedules attached
hereto. The words "hereby," "hereof," "herein," "hereto," "hereunder,"
"hereinafter," and words of similar import refer to this Agreement as a whole
and not to any particular Section or Subsection hereof. The word "hereafter"
shall mean after, and the term "heretofore" shall mean before, the date of this
Agreement. The word "including" shall mean "including, without limitation."
Captions used herein are for convenience only and shall not be used to construe
the meaning of any part of this Agreement.
ARTICLE 2
CONTRIBUTION AND ACCEPTANCE; OTHER TRANSACTIONS
2.1 Contribution and Acceptance of GREAT Properties. Subject to the terms
and conditions contained in this Agreement, GREAT agrees to contribute and
assign to the Operating Partnership, and the Operating Partnership agrees to
accept, the following (collectively, the "GREAT Projects"):
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A. All of the land described on Schedules D-1 through D-4 attached
hereto and made a part hereof, together with all of the rights, privileges,
easements and appurtenances belonging or appertaining to such land, including
all oil, gas and mineral rights belonging to GREAT, all right, title and
interest of GREAT in and to all land lying in any street, alley, road or avenue,
open or proposed, in front of or adjoining such land, to the centerline thereof,
all rights-of-way adjacent to such land and all right, title and interest of
GREAT in and to any award made or to be made in lieu thereof and in and to any
unpaid award for damage to such land by reason of change of grade of any street
(such land and all such rights, privileges, easements and appurtenances are
collectively referred to herein as the "GREAT Real Estate").
B. The apartment complexes, ancillary parking lots, and any and all
other improvements and structures located on the GREAT Real Estate (hereinafter
collectively called the "GREAT Improvements").
C. All fixtures and other personal and tangible property or interest
therein owned by GREAT, including the heating, sprinkler, plumbing, air
conditioning and ventilation systems, furniture, appliances, blinds, office
equipment and furniture, supplies, replacements, machinery, equipment, and any
other personal property or interest therein owned by GREAT, now or hereafter
located on the GREAT Real Estate, or on any portion thereof, or in any of the
GREAT Improvements, or used in connection with the ownership, operation,
management or use of the GREAT Real Estate, or any portion thereof, or any of
the GREAT Improvements (all of the foregoing are hereinafter collectively called
the "GREAT Personalty").
D. All intangible property or interest therein now or hereafter
owned or held by GREAT between the date hereof and the date of the Closing in
connection with the GREAT Real Estate (or any portion thereof), the GREAT
Improvements, the GREAT Personalty or any business or businesses conducted on
the GREAT Real Estate, or on any portion thereof, or in connection with the
ownership, operation, management or use thereof, including (1) any trade style
or trade name used in connection with the GREAT Real Estate or any of the GREAT
Improvements; (2) any assignable Service Contracts; (3) all "as-built" plans and
specifications or other construction drawings of any type in GREAT's possession
or control prepared in connection with the construction of the GREAT
Improvements; (4) all tests, studies and reports in GREAT's possession or
control prepared with respect to the GREAT Real Estate or the GREAT Improvements
(including any environmental reports); (5) all of GREAT's books and records with
respect to the GREAT Real Estate or the GREAT Improvements; and (6) all
assignable guarantees and warranties (including guarantees and warranties
pertaining to the construction of the GREAT Improvements or pertaining to the
acquisition of the GREAT Real Estate, or any parcel thereof, or any of the GREAT
Improvements by GREAT), licenses and other governmental permits, approvals and
permissions (including the certificate of occupancy) relating to the GREAT Real
Estate, or any portion thereof, the GREAT Improvements, or the ownership,
operation, management or use thereof (all of the foregoing are hereinafter
collectively called the "GREAT Intangible Property").
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E. All leases or occupancy agreements for any units in the GREAT
Improvements or for any other portion of the GREAT Real Estate or the GREAT
Improvements (the "GREAT Leases").
2.2 Contribution and Acceptance of New Equity Proceeds. Subject to the
terms and conditions contained in this Agreement, GREAT agrees to contribute to
the Operating Partnership, and the Operating Partnership agrees to accept, up to
$30 million, which amount shall equal the gross proceeds of a private placement
by GREAT of up to 3,333,333 Common Shares to one or more investors ("New Equity
Proceeds").
2.3 Non-Liquidating Property Partnerships.
A. Withdrawing General Partners. Subject to the terms and conditions
contained in this Agreement, each of the Withdrawing General Partners hereby
agrees to withdraw as a general partner of the applicable Non-Liquidating
Property Partnership, effective immediately prior to consummation of the
transactions contemplated by Subsection 2.3.B, which withdrawal will, in
accordance with the partnership agreement of such Non-Liquidating Property
Partnership, cause such general partnership interest to be automatically
converted into a limited partnership interest in the applicable Property
Partnership.
B. Contribution or Transfer; Acceptance. Subject to the terms and
conditions contained in this Agreement, each of the Non-Liquidating Partnership
Contributors hereby agrees to contribute and/or assign to the Operating
Partnership or GREAT, as the case may be, the interests in the Non-Liquidating
Partnerships, as set forth on Schedule A.
2.4 Liquidating Property Partnerships.
A. Contribution; Acceptance. Subject to the terms and conditions of
this Agreement, each Liquidating Partnership Contributor hereby agrees to
contribute to the Operating Partnership, and the Operating Partnership agrees to
accept, all of such Liquidating Partnership Contributor's Economic Interests in
the Liquidating Partnerships, as set forth on Schedule A.
B. Liquidation and Distribution of Assets. Subject to the terms and
conditions of this Agreement, each Liquidating Partnership Contributor hereby
agrees to cause each Liquidating Partnership in which it holds interests to
liquidate in accordance with its partnership agreement immediately after
consummation of the transactions contemplated by Subsection 2.4.A, and in
connection with such liquidation, to make an "in-kind" distribution to the
Operating Partnership (or a subsidiary of the Operating Partnership) in
accordance with its partnership agreement of 100% of the Partnership Project
held by such Liquidating Partnership. As partial consideration for such
distribution and simultaneously therewith, the Operating Partnership shall
contribute cash to each Liquidating Partnership, in the amounts set forth on
Schedule B, which amounts shall be sufficient to permit distribution to those
limited partners of such Liquidating Partnership not
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electing to participate in the Exchange Offer of cash equivalent to such
limited partners' allocable portion of the assets of the Liquidating
Partnership to which they are entitled in accordance with the partnership
agreement of such Liquidating Partnership. In connection with such
liquidation each Liquidating Partnership Contributor hereby agrees to cause
such Liquidating Partnership to distribute such cash to such limited
partners, all in accordance with the partnership agreement of the Liquidating
Partnership.
2.5 Management Company Assets and Liabilities. Subject to the terms and
conditions contained in this Agreement, the Management Company hereby agrees to
contribute and assign to the Operating Partnership, and the Operating
Partnership agrees to accept and assume, all of the Contributors' right, title
and interest in and to the assets and liabilities of the Management Company as
of the Closing Date relating primarily to the property management business of
the Management Company, including, without limitation, the Management Contracts,
the trade name "Grove Property Services" and the assets and liabilities set
forth on Schedule C hereto (the "Management Company Assets and Liabilities").
2.6 Burgundy Studio Apartments. Subject to the terms and conditions
contained in this Agreement, Burgundy hereby agrees to contribute to the
Operating Partnership, and the Operating Partnership agrees to accept, the
following (collectively, the "Burgundy Project"):
A. All of the land described on Schedule F attached hereto and made
a part hereof, together with all of the rights, privileges, easements and
appurtenances belonging or appertaining to such land, including all oil, gas and
mineral rights belonging to Burgundy, all right, title and interest of Burgundy
in and to all land lying in any street, alley, road or avenue, open or proposed,
in front of or adjoining such land, to the centerline thereof, all rights-of-way
adjacent to such land and all right, title and interest of Burgundy in and to
any award made or to be made in lieu thereof and in and to any unpaid award for
damage to such land by reason of change of grade of any street (such land and
all such rights, privileges, easements and appurtenances are collectively
referred to herein as the "Burgundy Real Estate").
B. The apartment complexes, ancillary parking lots, and any and all
other improvements and structures located on the Burgundy Real Estate
(hereinafter collectively called the "Burgundy Improvements").
C. All fixtures and other personal and tangible property or interest
therein owned by Burgundy, including the heating, sprinkler, plumbing, air
conditioning and ventilation systems, furniture, appliances, blinds, office
equipment and furniture, supplies, replacements, machinery, equipment, and any
other personal property or interest therein owned by Burgundy, now or hereafter
located on the Burgundy Real Estate, or on any portion thereof, or in any of the
Burgundy Improvements, or used in connection with the ownership, operation,
management or use of the Burgundy Real Estate, or any portion thereof, or any of
the Burgundy Improvements (all of the foregoing are hereinafter collectively
called the "Burgundy Personalty").
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D. All intangible property or interest therein now or hereafter
owned or held by Burgundy between the date hereof and the date of the Closing in
connection with the Burgundy Real Estate (or any portion thereof), the Burgundy
Improvements, the Burgundy Personalty or any business or businesses conducted on
the Burgundy Real Estate, or on any portion thereof, or in connection with the
ownership, operation, management or use thereof, including (1) any trade style
or trade name used in connection with the Burgundy Real Estate or any of the
Burgundy Improvements; (2) any assignable Service Contracts; (3) all "as-built"
plans and specifications or other construction drawings of any type in
Burgundy's possession or control prepared in connection with the construction of
the Burgundy Improvements; (4) all tests, studies and reports in Burgundy's
possession or control prepared with respect to the Burgundy Real Estate or the
Burgundy Improvements (including any environmental reports); (5) all of
Burgundy's books and records with respect to the Burgundy Real Estate or the
Burgundy Improvements; and (6) all assignable guarantees and warranties
(including guarantees and warranties pertaining to the construction of the
Burgundy Improvements or pertaining to the acquisition of the Burgundy Real
Estate, or any parcel thereof, or any of the Burgundy Improvements by Burgundy),
licenses and other governmental permits, approvals and permissions (including
the certificate of occupancy) relating to the Burgundy Real Estate, or any
portion thereof, the Burgundy Improvements, or the ownership, operation,
management or use thereof (all of the foregoing are hereinafter collectively
called the "Burgundy Intangible Property").
E. All leases or occupancy agreements for any units in the Burgundy
Improvements or for any other portion of the Burgundy Real Estate or the
Burgundy Improvements (the "Burgundy Leases").
ARTICLE 3
CONSIDERATION
3.1 Units and Cash. In consideration of the contributions, conveyances,
assignments and transfers to be made by the Contributors under Article 2 hereof,
the Operating Partnership agrees to issue and sell to each Contributor the Units
set forth with respect to such Contributor set forth on Schedule A hereto, and
GREAT agrees to pay to each Contributor the cash amounts set forth with respect
to such Contributor on Schedule A hereto, as adjusted pursuant to Section 7.4
hereof and after accounting for any credits or adjustments pursuant to any other
provision of this Agreement.
3.2 Operating Partnership Agreement. At or prior to Closing, the Operating
Partnership and the Contributors receiving Units pursuant to Section 3.1 shall
enter into the Operating Partnership Agreement with all other parties thereto.
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ARTICLE 4
COVENANTS, REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Grove Contributors. To induce
the Operating Partnership to execute, deliver and perform this Agreement, each
of the Grove Contributors represents and warrants, jointly and severally, to
GREAT and the Operating Partnership on and as of the date hereof as follows:
A. Existence. Each Grove Contributor that is not a natural person,
and each of the Property Partnerships and the Management Company: (i) is duly
organized and validly existing under the laws of the state of its organization;
(ii) has all requisite power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (iii) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified would not have a Material Adverse Effect on such Grove
Contributor.
B. Authorization, Execution, Etc. Each Grove Contributor has, in the
case of any Grove Contributor other than an individual, all necessary power and
authority, and in the case of a natural person, the legal capacity to execute,
deliver and perform its obligations under this Agreement; the execution,
delivery and performance by each Grove Contributor of this Agreement have been
duly authorized by all necessary action on its part; and this Agreement has been
duly and validly executed and delivered by each Grove Contributor and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights in general and to general
principles of equity.
C. No Breach. None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof by the Grove Contributors will conflict with or
result in a breach of, or require any consent (except such consents as have been
obtained) under (i) the organizational documents of any Grove Contributor,
Property Partnership or the Management Company, (ii) any material applicable law
or regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or (iii) any material agreement or instrument
to which any Grove Contributor, Property Partnership or the Management Company
is a party or by which it is bound or to which it is subject, or constitute a
default under any such agreement or instrument, or result in the creation or
imposition of any lien upon any of the revenues or assets of any Grove
Contributor, Property Partnership or the Management Company pursuant to the
terms of any such agreement or instrument.
D. Litigation. There are no legal or arbitral proceedings or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or, to the knowledge of the Grove Contributors, threatened against any
of the Grove Contributors, Property
12
Partnerships or the Management Company, except for such proceedings which, if
decided adversely to such Person would not have a Material Adverse Effect on
such Person.
E. Approvals. The Grove Contributors have obtained all material
authorizations, approvals or consents of, and have made all material filings or
registrations with, any governmental or regulatory authority or agency that are
necessary for the execution, delivery or performance by the Grove Contributors
of this Agreement or for the validity or enforceability thereof.
F. Rent Roll. Schedule G hereto is a true and correct list of the
rent rolls for the Grove Projects copies of which have been delivered to the
Operating Partnership. Each rent roll is a true and correct rent roll for the
applicable Grove Project, showing, for each apartment unit the following
information: (i) whether the unit is occupied and, if occupied, (ii) the name(s)
of the tenant(s), (iii) the amount of rent, (iv) the amount of any security
deposit, (v) the starting and termination date of the lease term, (vi) whether
there is any delinquency and, if so, how much, (vii) unit type (e.g., 1, 2 or 3
bedroom) and number of baths, (viii) rentable square footage per unit, (ix)
renewal options, if any, and (x) any utilities which are furnished as part of
the rent.
G. Parties In Possession. Except as shown on the rent rolls listed
on Schedule G, no Person is in possession of any Grove Project or any portion
thereof, and no Person has any interest in any Project, or any portion thereof,
except for the Grove Owners.
H. Leases. A correct and complete copy of each Grove Lease
(including all amendments thereto) has been provided to the Operating
Partnership and each Grove Lease is unmodified (except for such amendments) and
in full force and effect and neither the Grove Owners nor, to the Grove
Contributors' knowledge, any other party to any thereof is in default
thereunder.
I. ERISA. Each Grove Contributor, Property Partnership and the
Management Company has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and is in compliance
in all material respects with the presently applicable provisions of ERISA and
the Code, and have not incurred any liability to the PBGC or any Plan or
Multiemployer Plan (other than to make contributions in the ordinary course of
business).
J. Hazardous Materials. To the Grove Contributors' knowledge, except
as disclosed in Schedule H hereto or in any environmental reports or audits
furnished to the Operating Partnership prior to the date hereof, each Grove
Owner has obtained all permits, licenses and other authorizations which it is
required to obtain under all Environmental Laws, and each Grove Owner is in
compliance with the terms and conditions of all such permits, licenses and
authorizations, and is also in compliance in all material respects with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan,
13
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
In addition, to the Grove Contributors' knowledge, except as
disclosed in Schedule H hereto or in any environmental reports or audits
furnished to the Operating Partnership prior to the date hereof:
(1) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened, by any governmental or other entity with respect to any alleged
failure by a Grove Owner to have any permit, license or authorization required
in connection with the conduct of its business with respect to any generation,
treatment, storage, recycling, transportation, release or disposal, or any
release as defined in 42 U.S.C. ss. 9601(22), of any substance regulated under
Environmental Laws ("Hazardous Materials") generated by a Grove Owner.
(2) No Grove Owner has handled any Hazardous Material, other
than as a generator, on any property now or previously owned or leased by it.
(3) No polychlorinated biphenyls are or have been present at
any property now or previously owned or leased by a Grove Owner.
(4) No asbestos is or has been present at any property now or
previously owned or leased by a Grove Owner.
(5) There are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now or previously owned or
leased by a Grove Owner.
(6) No Hazardous Materials have been released and continue to
affect the subject property, in a reportable quantity, where such a quantity has
been established by statute, ordinance, rule, regulation or order, at, on or
under any property now or previously owned or leased by a Grove Owner.
(7) No Hazardous Materials have been otherwise released at, on
or under any property now or previously owned or leased by a Grove Owner.
(8) No Grove Owner has transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), listed for
possible inclusion on the National Priorities List by the Environmental
Protection Agency in CERCLIS or on any similar state list or which is the
subject of federal, state or local enforcement actions or other investigations
which may reasonably be expected to lead to claims against a Grove Owner for
clean-up costs, remedial work, damages to natural resources or for personal
injury claims, including claims under CERCLA.
14
(9) No notification of a release of a Hazardous Material has
been filed by or on behalf of a Grove Owner and no property now or previously
owned or leased by a Grove Owner is listed or proposed for listing on the
National Priority List promulgated pursuant to CERCLA, on CERCLIS or on any
similar state list of sites requiring investigation or clean-up.
(10) There are no liens arising under or pursuant to any
Environmental Laws on any of the real property or properties owned or leased by
a Grove Owner, and no government actions have been taken or are in process which
could subject any of such properties to such liens and no Grove Owner would be
required to place any notice or restriction relating to the presence of
Hazardous Materials at any property owned or leased by it in any deed to such
property.
(11) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in the
possession of a Grove Owner in relation to any property or facility now or
previously owned or leased by it which have not been made available to the
Operating Partnership.
K. Title. The Grove Owners are the sole beneficial owners of, and
have good and marketable title to, the Grove Projects, free and clear of all
Title Defects. The Management Company is the sole beneficial owner of, and has
good and marketable to, assets included in the Management Company Assets and
Liabilities free and clear of all security interests, liens or other
encumbrances.
L. Financing Arrangements. Schedule I hereto is a true and correct
list of all financing agreements to which any of the Property Partnerships is a
party (other than those which are to be repaid or refinanced as part of the
Consolidation Transactions), setting forth with respect to each the names of the
parties, the dates thereof and of any modifications, amendments or supplements
thereto, and the principal amount of the indebtedness evidenced or secured
thereby.
M. Employees. Each of the Property Partnerships and the Management
Company has complied in all material respects with all laws relating to the
employment of labor, including any provisions thereof relating to wages, hours,
collective bargaining and the payment of social security and similar taxes (in
each case except where any statute of limitations applicable to non-compliance
has expired without any claim having been made with respect to such
non-compliance), and is not liable for any arrearage of wages, taxes or
penalties for failure to comply with any of the foregoing.
N. Solvency. None of the transactions contemplated by this Agreement
will be or have been made with an actual intent to hinder, delay or defraud any
present or future creditors of the Grove Contributors, and the Grove
Contributors are not and will not be rendered insolvent by such transactions or
will have received fair and reasonably equivalent value in good faith for the
contribution and sale of assets pursuant to this Agreement. The Grove
Contributors
15
are able to pay their debts as they become due, including contingent obligations
reasonably likely to become due.
O. Delinquent Property Liens. Except for claims which are not
material in amount or which are expressly permitted to exist under this
Agreement or which otherwise constitute Permitted Exceptions, there is no
delinquent tax, sewer rent, water charge, assessment or other outstanding
charges against any of the Partnership Real Estate or the Burgundy Real Estate.
Except as shown in the title policy, there are no mechanics' liens or similar
Title Defects or, to the Grove Contributors' knowledge, claims for overdue
payment for work performed by or on behalf of the Grove Owners, labor or
material affecting the Grove Projects and there are no mechanics' liens or
similar Title Defects or claims affecting the Grove Projects which have not been
insured or endorsed over by the Title Company issuing the Title Policies.
P. Insurance. The Grove Projects are covered by insurance of the
type and in the amounts set forth on Schedule J.
Q. Improvements. Except as disclosed in the Surveys or Title
Commitments, all the Partnership Improvements and Burgundy Improvements lie
wholly within the boundary and building restriction lines of the Partnership
Real Estate and the Burgundy Real Estate, respectively, and no improvements on
adjoining properties encroach upon the Partnership Real Estate or the Grove Real
Estate in any respect.
R. Casualty; Condemnation. The Grove Projects are free of material
damage and waste and there is no proceeding pending or, to the best of the Grove
Contributors' knowledge, threatened, for the total or partial taking of any
Grove Project, and there has not occurred with respect to any Grove Project any
(i) damage or destruction which would cost more than $100,000 to repair, (b) any
taking by condemnation or eminent domain or other similar proceeding involving
loss in excess of $100,000 or (c) any taking by condemnation or eminent domain
or other similar proceeding of all or substantially all thereof (other than for
temporary use).
S. Zoning and Other Laws. To the Grove Contributors' knowledge, the
Grove Projects and the use and operation thereof, separate and apart from any
other properties, constitute a legal use under applicable zoning regulations and
comply in all material respects with all applicable requirements of law and all
applicable insurance requirements, and comply in all material respects with the
applicable provisions of the Americans with Disabilities Act and the Fair
Housing Amendments Act of 1988 and all applicable regulations issued thereunder
and each similar applicable state law and regulation.
T. Management Contracts. A correct and complete copy of each
Management Contract (including all amendments thereto) has been provided to the
Operating Partnership. Each Management Contract is unmodified (except for such
amendments) and in full force and effect and neither the Management Company, any
Grove Owner nor, to the Grove Contributors' knowledge, any other party to any
Management Contract is in default thereunder.
16
U. Service Contracts. Except as set forth in Schedule K, each
Service Contract relating to any Grove Project may be terminated on thirty days'
or less notice and without any material penalty. Each contract or other
agreement specified on Schedule K is unmodified (except as set forth on Schedule
K) and in full force and effect and neither the Grove Owners nor, to the Grove
Contributors' knowledge, any other party to any thereof is in default
thereunder.
V. Permits. Except for permits relating to Hazardous Materials
(which are provided for in Section 4.1(j)), there have been issued in respect of
the Grove Projects all permits and governmental approvals necessary or required
to own, operate, use and occupy the Grove Projects in the manner currently
operated. Each such permit is in full force and effect and the Grove Owners have
not received any notice of violation or revocation thereof. No other permits are
required from any governmental entity in order to operate the Grove Projects as
they are now operated.
W. Utilities. The Grove Owners have not received any notice of
actual or threatened reduction or curtailment of any utility service now
supplied to any Grove Project.
X. Certificates of Occupancy. The Grove Owners have not received any
notice of actual or threatened cancellation or suspension of the certificate of
occupancy for any portion of any Grove Project and each such certificate of
occupancy is in full force and effect.
Y. Assessments. The Grove Owners have not received any notice of
actual or threatened special assessments or reassessments of any Grove Project.
Z. Condition of Projects. Except as set forth in Schedule L, the
Partnership Improvements and the Burgundy Improvements are structurally sound
and in good repair, and all mechanical, electrical, heating, air conditioning,
drainage, sewer, water and plumbing systems are in proper working order.
AA. Activities of Property Partnerships. The sole activities of each
Property Partnership are (i) the ownership of its Project, (ii) the operation,
leasing, financing and management of its Project and (iii) activities incidental
to such ownership, operation, leasing, financing and management.
BB. Property Partnership Agreements. Schedule M hereto is a true and
correct list of all partnership agreements with respect to the Property
Partnerships, including all modifications, amendments or supplements thereto.
All such partnership agreements are in full force and effect in accordance with
their respective terms and have not been modified or amended (except as
indicated on Schedule M).
CC. Title to Contributed Interests. Subject to the provisions of the
partnership agreement of each Property Partnership, the Grove Contributors are
the owners of the partnership
17
interests, capital stock and other assets set forth opposite their respective
names on Schedule A free and clear of all security interests, liens or other
encumbrances.
DD. Accredited Investor; Acquisition for Investment Purposes. Each
Grove Contributor and each direct and indirect owner of such Grove Contributor
is an "accredited investor" as defined in Rule 501 of the General Rules and
Regulations promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). Each of the Grove Contributors is acquiring the Units solely
for its own account for the purpose of investment and not as a nominee or agent
for any other Person and not with a view to, or for offer or sale in connection
with, any distribution of any Units (other than in a transaction which is either
registered under the Securities Act or exempt from such registration, and in
compliance with all applicable Blue Sky or state securities laws or exempt
therefrom). Each Grove Contributor agrees and acknowledges that it will not,
directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of (hereinafter, "Transfer") any of the Units unless such
Transfer complies with the Operating Partnership Agreement and is either (i)
pursuant to an effective registration statement under the Securities Act and
qualification or other compliance under applicable Blue Sky or state securities
laws, or (ii) exempt from registration under the Securities Act and
qualification or other compliance under applicable Blue Sky or state securities
laws.
4.2 Representations and Warranties of GREAT. To induce the Operating
Partnership to execute, deliver and perform this Agreement, GREAT represents and
warrants, to the Operating Partnership on and as of the date hereof as follows:
A. Existence. GREAT: (i) is duly organized and validly existing
under the laws of the state of its organization; (ii) has all requisite power,
and has all material governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as now being or
as proposed to be conducted; and (iii) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect on such Other Contributor.
B. Authorization, Execution, Etc. GREAT has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement;
the execution, delivery and performance by GREAT of this Agreement have been
duly authorized by all necessary action on its part; and this Agreement has been
duly and validly executed and delivered by GREAT and constitutes its legal,
valid and binding obligation, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and to general principles of equity.
C. No Breach. None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof by GREAT will conflict with or result in a breach
of, or require any consent (except such consents as have been obtained) under
(i) the organizational documents of GREAT, (ii) any material applicable law or
regulation, or any order, writ, injunction or decree of any court
18
or governmental authority or agency, or (iii) any material agreement or
instrument to which GREAT is a party or by which it is bound or to which it is
subject, or constitute a default under any such agreement or instrument, or
result in the creation or imposition of any lien upon any of the revenues or
assets of GREAT, pursuant to the terms of any such agreement or instrument.
D. Approvals. GREAT has obtained all material authorizations,
approvals or consents of, and has made all material filings or registrations
with, any governmental or regulatory authority or agency that are necessary for
the execution, delivery or performance by GREAT of this Agreement or for the
validity or enforceability thereof.
E. Accredited Investor; Acquisition for Investment Purposes. GREAT
is an "accredited investor" as defined in Rule 501 of the General Rules and
Regulations promulgated under the Securities Act. GREAT is acquiring the Units
solely for its own account for the purpose of investment and not as a nominee or
agent for any other Person and not with a view to, or for offer or sale in
connection with, any distribution of any Units (other than in a transaction
which is either registered under the Securities Act or exempt from such
registration, and in compliance with all applicable Blue Sky or state securities
laws or exempt therefrom). GREAT agrees and acknowledges that it will not,
directly or indirectly, Transfer any of the Units unless such Transfer complies
with the Operating Partnership Agreement and is either (i) pursuant to an
effective registration statement under the Securities Act and qualification or
other compliance under applicable Blue Sky or state securities laws, or (ii)
exempt from registration under the Securities Act and qualification or other
compliance under applicable Blue Sky or state securities laws.
F. Rent Roll. Schedule G hereto is a true and correct list of the
rent rolls for the GREAT Projects, copies of which have been delivered to the
Operating Partnership. Each rent roll is a true and correct rent roll for the
applicable GREAT Project, showing, for each apartment unit the following
information: (i) whether the unit is occupied and, if occupied, (ii) the name(s)
of the tenant(s), (iii) the amount of rent, (iv) the amount of any security
deposit, (v) the starting and termination date of the lease term, (vi) whether
there is any delinquency and, if so, how much, (vii) unit type (e.g., 1, 2 or 3
bedroom) and number of baths, (viii) rentable square footage per unit, (ix)
renewal options, if any, and (x) any utilities which are furnished as part of
the rent.
G. Parties In Possession. Except as shown on the rent rolls listed
on Schedule G, no Person is in possession of any GREAT Project or any portion
thereof, and no Person has any interest in any GREAT Project, or any portion
thereof, except for GREAT.
H. Leases. A correct and complete copy of each GREAT Lease
(including all amendments thereto) has been provided to the Operating
Partnership and each GREAT Lease is unmodified (except for such amendments) and
in full force and effect and neither GREAT nor, to GREAT's knowledge, any other
party to any thereof is in default thereunder.
19
I. ERISA. GREAT has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Code, and have not incurred any liability to the PBGC or any Plan
or Multiemployer Plan (other than to make contributions in the ordinary course
of business).
J. Hazardous Materials. To GREAT's knowledge, except as disclosed in
Schedule H hereto or in any environmental reports or audits furnished to the
Operating Partnership prior to the date hereof, GREAT has obtained all permits,
licenses and other authorizations which it is required to obtain under all
Environmental Laws, and GREAT is in compliance with the terms and conditions of
all such permits, licenses and authorizations, and is also in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
In addition, to GREAT's knowledge, except as disclosed in Schedule H
hereto or in any environmental reports or audits furnished to the Operating
Partnership prior to the date hereof:
(1) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened, by any governmental or other entity with respect to any alleged
failure by GREAT to have any permit, license or authorization required in
connection with the conduct of its business with respect to any generation,
treatment, storage, recycling, transportation, release or disposal, or any
release as defined in 42 U.S.C. ss. 9601(22), of any substance regulated under
Environmental Laws ("Hazardous Materials") generated by GREAT.
(2) GREAT has not handled any Hazardous Material, other than
as a generator, on any property now or previously owned or leased by it.
(3) No polychlorinated biphenyls are or have been present at
any property now or previously owned or leased by GREAT.
(4) No asbestos is or has been present at any property now or
previously owned or leased by GREAT.
(5) There are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now or previously owned or
leased by GREAT.
(6) No Hazardous Materials have been released and continue to
affect the subject property, in a reportable quantity, where such a quantity has
been established by
20
statute, ordinance, rule, regulation or order, at, on or under any property now
or previously owned or leased by GREAT.
(7) No Hazardous Materials have been otherwise released at, on
or under any property now or previously owned or leased by GREAT.
(8) GREAT has not transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), listed for
possible inclusion on the National Priorities List by the Environmental
Protection Agency in CERCLIS or on any similar state list or which is the
subject of federal, state or local enforcement actions or other investigations
which may reasonably be expected to lead to claims against GREAT for clean-up
costs, remedial work, damages to natural resources or for personal injury
claims, including claims under CERCLA.
(9) No notification of a release of a Hazardous Material has
been filed by or on behalf of GREAT and no property now or previously owned or
leased by GREAT is listed or proposed for listing on the National Priority List
promulgated pursuant to CERCLA, on CERCLIS or on any similar state list of sites
requiring investigation or clean-up.
(10) There are no liens arising under or pursuant to any
Environmental Laws on any of the real property or properties owned or leased by
GREAT and no government actions have been taken or are in process which could
subject any of such properties to such liens and GREAT would not be required to
place any notice or restriction relating to the presence of Hazardous Materials
at any property owned or leased by it in any deed to such property.
(11) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in the
possession of GREAT in relation to any property or facility now or previously
owned or leased by it which have not been made available to the Operating
Partnership.
K. Title. GREAT is the sole beneficial owner of, and has good and
marketable title to, the GREAT Projects, free and clear of all Title Defects.
L. Financing Arrangements. Schedule I hereto is a true and correct
list of all financing agreements to which GREAT is a party (other than those
which are to be repaid or refinanced as part of the Consolidation Transactions),
setting forth with respect to each the names of the parties, the dates thereof
and of any modifications, amendments or supplements thereto, and the principal
amount of the indebtedness evidenced or secured thereby.
M. Employees. GREAT has complied in all material respects with all
laws relating to the employment of labor, including any provisions thereof
relating to wages, hours, collective bargaining and the payment of social
security and similar taxes (in each case except where any statute of limitations
applicable to non-compliance has expired without any claim
21
having been made with respect to such non-compliance), and is not liable for any
arrearage of wages, taxes or penalties for failure to comply with any of the
foregoing.
N. Solvency. None of the transactions contemplated by this Agreement
will be or have been made with an actual intent to hinder, delay or defraud any
present or future creditors of GREAT, and GREAT is not and will not be rendered
insolvent by such transactions or will have received fair and reasonably
equivalent value in good faith for the contribution and sale of assets pursuant
to this Agreement. GREAT is able to pay its debts as they become due, including
contingent obligations reasonably likely to become due.
O. Delinquent Property Liens. Except for claims which are not
material in amount or which are expressly permitted to exist under this
Agreement or which otherwise constitute Permitted Exceptions, there is no
delinquent tax, sewer rent, water charge, assessment or other outstanding
charges against any of the GREAT Real Estate. Except as shown in the title
policy, there are no mechanics' liens or similar Title Defects or, to GREAT's
knowledge, claims for overdue payment for work performed by or on behalf of
GREAT, labor or material affecting the GREAT Projects and there are no
mechanics' liens or similar Title Defects or claims affecting the GREAT Projects
which have not been insured or endorsed over by the Title Company issuing the
Title Policies.
P. Insurance. The GREAT Projects are covered by insurance of the
type and in the amounts set forth on Schedule J.
Q. Improvements. Except as disclosed in the Surveys or Title
Commitments, all GREAT Improvements lie wholly within the boundary and building
restriction lines of the GREAT Real Estate and no improvements on adjoining
properties encroach upon the GREAT Real Estate in any respect.
R. Casualty; Condemnation. The GREAT Projects are free of material
damage and waste and there is no proceeding pending or, to the best of GREAT'S
knowledge, threatened, for the total or partial taking of any GREAT Project, and
there has not occurred with respect to any GREAT Project any (i) damage or
destruction which would cost more than $100,000 to repair, (b) any taking by
condemnation or eminent domain or other similar proceeding involving loss in
excess of $100,000 or (c) any taking by condemnation or eminent domain or other
similar proceeding of all or substantially all thereof (other than for temporary
use).
S. Zoning and Other Laws. To GREAT's knowledge, the GREAT Projects
and the use and operation thereof, separate and apart from any other properties,
constitute a legal use under applicable zoning regulations and comply in all
material respects with all applicable requirements of law and all applicable
insurance requirements, and comply in all material respects with the applicable
provisions of the Americans with Disabilities Act and the Fair Housing
Amendments Act of 1988 and all applicable regulations issued thereunder and each
similar applicable state law and regulation.
22
T. Management Contracts. A correct and complete copy of each
Management Contract relating to any GREAT Project (including all amendments
thereto) has been provided to the Operating Partnership. Each such Management
Contract is unmodified (except for such amendments) and in full force and effect
and neither GREAT nor, to GREAT's knowledge, any other party to any Management
Contract is in default thereunder.
U. Service Contracts. Except as set forth in Schedule K, each
Service Contract relating to any GREAT Project may be terminated on thirty days'
or less notice and without any material penalty. Each contract or other
agreement specified on Schedule K is unmodified (except as set forth on Schedule
K) and in full force and effect and neither GREAT nor, to GREAT's knowledge, any
other party to any thereof is in default thereunder.
V. Permits. Except for permits relating to Hazardous Materials
(which are provided for in Section 4.1(j)), there have been issued in respect of
the GREAT Projects all permits and governmental approvals necessary or required
to own, operate, use and occupy the GREAT Projects in the manner currently
operated. Each such permit is in full force and effect and GREAT has not
received any notice of violation or revocation thereof. No other permits are
required from any governmental entity in order to operate the GREAT Projects as
they are now operated.
W. Utilities. GREAT has not received any notice of actual or
threatened reduction or curtailment of any utility service now supplied to any
GREAT Project.
X. Certificates of Occupancy. GREAT has not received any notice of
actual or threatened cancellation or suspension of the certificate of occupancy
for any portion of any GREAT Project and each such certificate of occupancy is
in full force and effect.
Y. Assessments. GREAT has not received any notice of actual or
threatened special assessments or reassessments of any GREAT Project.
Z. Condition of Projects. Except as set forth in Schedule L, the
GREAT Improvements are structurally sound and in good repair, and all
mechanical, electrical, heating, air conditioning, drainage, sewer, water and
plumbing systems are in proper working order.
4.3 Representations and Warranties of the Other Contributors. To induce
the Operating Partnership to execute, deliver and perform this Agreement, each
of the Other Contributors represents and warrants, with respect to itself and
not with respect to any Other Contributor, severally (and not jointly), to GREAT
and the Operating Partnership on and as of the date hereof as follows:
A. Existence. Each Other Contributor that is not a natural person:
(i) is duly organized and validly existing under the laws of the state of its
organization; (ii) has all requisite power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be
23
conducted; and (iii) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified would not have a Material Adverse
Effect on such Other Contributor.
B. Authorization, Execution, Etc. Each Other Contributor has, in the
case of any Other Contributor other than an individual, all necessary power and
authority, and in the case of a natural person, the legal capacity to execute,
deliver and perform its obligations under this Agreement; the execution,
delivery and performance by each Other Contributor of this Agreement have been
duly authorized by all necessary action on its part; and this Agreement has been
duly and validly executed and delivered by each Other Contributor and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights in general and to general
principles of equity.
C. No Breach. None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof by any Other Contributor will conflict with or
result in a breach of, or require any consent (except such consents as have been
obtained) under (i) the organizational documents of such Other Contributor, (ii)
any material applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or (iii) any material
agreement or instrument to which any such Other Contributor is a party or by
which it is bound or to which it is subject, or constitute a default under any
such agreement or instrument, or result in the creation or imposition of any
lien upon any of the revenues or assets of any such Other Contributor, pursuant
to the terms of any such agreement or instrument.
D. Approvals. Each Other Contributor has obtained all material
authorizations, approvals or consents of, and have made all material filings or
registrations with, any governmental or regulatory authority or agency that are
necessary for the execution, delivery or performance by such Other Contributor
of this Agreement or for the validity or enforceability thereof.
E. Title to Contributed Interests. Subject to the provisions of the
partnership agreement of each Property Partnership, each Other Contributor is
the owner of the partnership interests, capital stock and other assets set forth
opposite its name on Schedule A free and clear of all security interests, liens
or other encumbrances.
F. Accredited Investor; Acquisition for Investment Purposes. Each
Other Contributor and each direct and indirect owner of such Other Contributor
is an "accredited investor" as defined in Rule 501 of the General Rules and
Regulations promulgated under the Securities Act. Each of the Grove Contributors
is acquiring the Units solely for its own account for the purpose of investment
and not as a nominee or agent for any other Person and not with a view to, or
for offer or sale in connection with, any distribution of any Units (other than
in a transaction which is either registered under the Securities Act or exempt
from such registration, and in compliance with all applicable Blue Sky or state
securities laws or exempt therefrom).
24
Each Other Contributor agrees and acknowledges that it will not, directly or
indirectly, Transfer any of the Units unless such Transfer complies with the
Operating Partnership Agreement and is either (i) pursuant to an effective
registration statement under the Securities Act and qualification or other
compliance under applicable Blue Sky or state securities laws, or (ii) exempt
from registration under the Securities Act and qualification or other compliance
under applicable Blue Sky or state securities laws.
4.4 Representations and Warranties of the Operating Partnership. To induce
the Contributors to execute, deliver and perform this Agreement, the Operating
Partnership represents and warrants to the Contributors on and as of the date
hereof as follows:
A. Existence. The Operating Partnership: (i) is a limited
partnership duly organized and validly existing under the laws of the State of
Delaware; (ii) has all requisite power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and (iii) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified would not have a Material Adverse Effect on the
Operating Partnership.
B. Authorization, Execution, Etc. The Operating Partnership has all
necessary power and authority to execute, deliver and perform its obligations
under this Agreement; the execution, delivery and performance by the Operating
Partnership of this Agreement have been duly authorized by all necessary action
on its part; and this Agreement has been duly and validly executed and delivered
by the Operating Partnership and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights in general and to general principles of equity.
C. No Breach. None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent (except such consents as have been obtained) under (i) the
organizational documents of the Operating Partnership, (ii) any material
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or (iii) any agreement or instrument
to which the Operating Partnership is a party or by which it is bound or to
which it is subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any lien upon any of the
revenues or assets of the Operating Partnership pursuant to the terms of any
such agreement or instrument.
D. Approvals. The Operating Partnership has obtained all material
authorizations, approvals or consents of, and has made all material filings or
registrations with, any governmental or regulatory authority or agency that are
necessary for the execution, delivery or performance by the Operating
Partnership of this Agreement or for the validity or enforceability thereof.
▇▇
▇. ▇▇▇▇▇; ▇▇▇▇▇▇ Shares. The Units, when issued to the Contributors,
will not be subject to any lien, claim, encumbrance, restriction upon voting
right, preemption right or other claim of any third party, other than pursuant
to federal or state securities laws or the Operating Partnership Agreement. The
Units, when issued to the Contributors, will be duly and validly issued
partnership units in the Operating Partnership. Any Common Shares which may be
issued in redemption of Units will, when issued, be duly and validly issued,
fully paid, non-assessable and shall not be subject to any preemptive or similar
rights.
F. Securities Act Compliance. Assuming the truth and accuracy of the
representations and warranties in Sections 4.1.DD, 4.2.E and 4.3.F hereof, the
issuance of Units to the Contributors pursuant to this Agreement is exempt from
the registration requirements of the Securities Act.
4.5 Survival of Representations and Warranties. The representations and
warranties of the parties contained in this Article 4 shall survive the Closing;
provided, that any claim for breach by the Grove Contributors or GREAT of any
Property-Related Representation and Warranty must be asserted within one (1)
year of discovery by the party asserting same, and in any event within two (2)
years after the Closing Date.
ARTICLE 5
CLOSING MATTERS
5.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of the Operating Partnership's
attorneys on the date (the "Closing Date") on which the Consolidation
Transactions are consummated. The Closing shall take place concurrently with the
consummation of the other Consolidation Transactions. As of the Closing Date,
the Title Company shall be willing to approve and insure title to the Real
Estate, subject only to the Permitted Exceptions, at regular premium rates,
under its ALTA Form Owner's Policy.
5.2 New York Style Closing. The transactions contemplated hereby shall be
closed by means of a so-called "New York Style Closing," with the concurrent
delivery of the documents of title, transfers of interests, delivery of the
Title Policies and transfer of the Units and all other consideration to be paid
to the Contributors pursuant to this Agreement. The Contributors shall provide
any undertaking to the Title Company necessary for the New York Style Closing to
occur or for the satisfaction of any other requirement for Closing.
5.3 Surveys, Title Commitments and Searches. At or prior to the Closing,
the Contributors shall deliver to the Operating Partnership the following:
(a) Surveys. A plat of Survey of each Project prepared within _____
months of the date hereof by a surveyor licensed by the state in which such
Project is located in
26
conformity with such standards as are required by the Operating Partnership and
the Title Company.
(b) Title Commitments. A Title Commitment for each Project for an
ALTA Form Owner's Policy issued by the Title Company showing title to the Real
Estate in the applicable Owner, subject only to the Permitted Exceptions, which
Title Commitments shall include such endorsements as may be reasonably requested
by the Operating Partnership.
(c) Searches. UCC, judgment and tax lien searches on the names of
the Contributors and the Owners (the "Searches") showing no Title Defect as to
the Projects unless the same is to be paid and released at or prior to Closing.
5.4 Title Policies. [To come]
ARTICLE 6
CLOSING DELIVERIES
6.1 The Contributors' Deliveries. At the Closing, the Contributors shall
deliver to the Operating Partnership the following, all in form and substance
reasonably satisfactory to the Operating Partnership:
A. deeds for the GREAT Real Estate, which shall be in recordable
form and shall be the form of deed customarily used in Connecticut for
properties similar to the GREAT Projects, duly executed and acknowledged by
GREAT, conveying to the Operating Partnership, good, marketable and indefeasible
fee simple title to the GREAT Real Estate, the GREAT Improvements and any
fixtures located thereon, in proper form for recording and subject only to the
Permitted Exceptions;
B. general warranty bills of sale, duly executed and acknowledged by
GREAT, conveying to the Operating Partnership title to the GREAT Personalty,
free and clear of all liens, encumbrances, claims and security interests, with
express warranties of good title;
C. assignments, duly executed and acknowledged by GREAT, conveying
title to the Operating Partnership, free and clear of all liens, encumbrances,
claims and security interests, to (i) the GREAT Intangible Property; (ii) each
GREAT Lease and each Service Contract relating to any of the GREAT Projects;
(iii) any security deposits, prepaid rents or other monies, if any, held by or
for GREAT with respect to the GREAT Projects, along with an accounting of any
such security deposits, prepaid rents or other monies;
D. an original executed copy of each GREAT Lease and Service
Contract that is assigned to the Operating Partnership;
27
E. a certification by GREAT stating GREAT's U.S. Taxpayer
identification number and that GREAT is not a "foreign person" or a "foreign
corporation" (as defined under Internal Revenue Code Section 1445 and Section
7701);
F. any state, county and city documentary stamp declarations or
transfer tax forms required to be signed by GREAT or in connection with the
conveyance of each of the GREAT Projects, duly executed by GREAT, as necessary
or customary in the jurisdiction in which each GREAT Project is located;
G. cash in an amount equal to the New Equity Proceeds, payable by
wire transfer of immediately available funds;
H. documents evidencing the withdrawal by each Withdrawing Partner
as a general partner in the applicable Non-Liquidating Property Partnership, as
set forth on Schedule A;
I. assignments, duly executed and acknowledged by each
Non-Liquidating Partnership Contributor, conveying title to the Operating
Partnership, free and clear of all liens, encumbrances, claims and security
interests, of such Non-Liquidating Partnership Contributor's interests in the
Non-Liquidating Partnerships, as set forth on Schedule A;
J. assignments, duly executed and acknowledged by each Liquidating
Partnership Contributor, conveying to the Operating Partnership, free and clear
of all liens, encumbrances, claims and security interests, of such Liquidating
Partnership Contributor's interests in the Liquidating Partnerships, as set
forth on Schedule A;
K. general warranty bills of sale, duly executed and acknowledged by
the Management Company, conveying to the Operating Partnership the assets
included in the Management Company Assets and Liabilities;
L. deeds for the Burgundy Real Estate, which shall be in recordable
form and shall be the form of deed customarily used in Connecticut for
properties similar to the Burgundy Project, duly executed and acknowledged by
Burgundy, conveying to the Operating Partnership, good, marketable and
indefeasible fee simple title to the Burgundy Real Estate, the Burgundy
Improvements and any fixtures located thereon, in proper form for recording and
subject only to the Permitted Exceptions;
M. general warranty bills of sale, duly executed and acknowledged by
Burgundy, conveying to the Operating Partnership title to the Burgundy
Personalty, free and clear of all liens, encumbrances, claims and security
interests, with express warranties of good title;
N. assignments, duly executed and acknowledged by Burgundy,
conveying title to the Operating Partnership, free and clear of all liens,
encumbrances, claims and security
28
interests, to (i) the Burgundy Intangible Property; (ii) each Burgundy Lease and
each Service Contract relating to the Burgundy Project; (iii) any security
deposits, prepaid rents or other monies, if any, held by or for Burgundy with
respect to the Burgundy Project, along with an accounting of any such security
deposits, prepaid rents or other monies;
O. an original executed copy of each Burgundy Lease and Service
Contract that is assigned to the Operating Partnership;
P. a certification by Burgundy stating Burgundy's U.S. Taxpayer
identification number and that Burgundy is not a "foreign person" or a "foreign
corporation" (as defined under Internal Revenue Code Section 1445 and Section
7701);
Q. any state, county and city documentary stamp declarations or
transfer tax forms required to be signed by Burgundy or in connection with the
conveyance of the Burgundy Project, duly executed by Burgundy, as necessary or
customary in the jurisdiction in which the Burgundy Project is located;
R. letters addressed to each and every existing tenant at each of
the Wholly-Owned Projects stating that the Project has been sold to the
Operating Partnership, that all rent is payable to the Operating Partnership,
stating the amount of the security deposit, and that the security deposit has
been transferred to the Operating Partnership;
S. a counterpart of the Operating Partnership Agreement duly
executed by or on behalf of each Contributor; and
T. all such further instruments and documents as may be necessary,
expedient, proper, or appropriate in the reasonable opinion of the Operating
Partnership, in order to complete the transactions contemplated hereby.
6.2 The Operating Partnership's Deliveries. At the Closing, the Operating
Partnership shall deliver to the Contributors the following, all in form and
substance reasonably satisfactory to the Contributors:
A. the Units and cash in accordance with Section 3.1 hereof;
B. cash to the Liquidating Partnerships in accordance with Section
2.4B hereof;
C. a counterpart of the Operating Partnership Agreement duly
executed by GREAT, as general partner, and all other parties thereto (other than
the Contributors);
D. countersigned copies of any documents listed in Section 6.1
hereof which are required to be signed by the Operating Partnership, including,
without limitation, an
29
assumption agreement under which the Operating Partnership assumes the
liabilities included in the Management Company Assets and Liabilities; and
E. any state, county and city documentary stamp declarations or
transfer tax forms required to be signed by the Operating Partnership or in
connection with the conveyance of each of the GREAT Projects and the Burgundy
Project, duly executed by the Operating Partnership, as necessary or customary
in the jurisdiction in which each GREAT Project and the Burgundy Project are
located.
6.3 Concurrent Transactions. All documents or other deliveries required to
be made pursuant to this Agreement at or prior to Closing, and the Consolidation
Transactions, shall be deemed to have been delivered and to have been
consummated simultaneously with all other transactions and all other deliveries,
and no delivery shall be deemed to have been made, and no transaction shall be
deemed to have been consummated, until all deliveries required by all the
parties hereto shall have been made and the Consolidation Transactions shall
have been consummated.
6.4 Further Assurances. The parties hereto, at the Closing, or at any time
or from time to time thereafter, upon request of either party, will execute such
additional instruments, documents or certificates as any other party deems
reasonably necessary in order to effect the transactions contemplated hereby.
6.5 Possession. Possession of the Wholly-Owned Projects shall be delivered
to the Operating Partnership at Closing.
ARTICLE 7
APPORTIONMENTS; SECURITY DEPOSITS
7.1 Apportionments for Wholly-Owned Projects. Adjustments in respect of
the Wholly-Owned Projects shall be made between the applicable Contributors and
the Operating Partnership for the following items, pro-rated on a per diem
basis, as of midnight of the day preceding the Closing Date:
A. Rents and other charges paid under each Lease relating to the
Wholly-Owned Projects, or any portion thereof.
B. Real estate, personal property and ad valorem taxes and other
state or city taxes, charges and assessments affecting the Wholly-Owned
Projects, or any portion thereof, not yet due and payable, shall be prorated on
the basis of the most recent fiscal year for which the same are levied or
assessed; provided, that if the amount of any such taxes, charges or assessments
shall not be fixed or ascertainable before the Closing Date, the proration
thereof on the date of the Closing shall be upon the basis of the most recent
ascertainable amount of such
30
taxes, charges and assessments in which event, there shall be a re-proration of
such tax, charge or assessment immediately upon receipt of the actual ▇▇▇▇
therefor, and, within ten (10) days of the receipt of such ▇▇▇▇, the applicable
Contributors shall pay the Operating Partnership or the Operating Partnership
shall pay the applicable Contributors, as the case may be, any amount due the
other party as a result of such re-proration.
C. Charges for water, electricity, sewer rental, gas, telephone and
other utilities for the Wholly-Owned Projects (normally billed to the
Contributors, not to tenants) will be paid by the applicable Contributors on a
per diem basis on the basis of readings or the most recent available bills
(subject to readjustment on receipt of bills covering the period in which the
Closing occurs). To the extent deposits held on behalf of GREAT, the Liquidating
Partnerships or Burgundy by utility companies are transferable to the Operating
Partnership, the applicable Contributors shall receive a credit at Closing in
the amount of such deposits and such deposits shall be transferred and placed in
the name of the Operating Partnership. Otherwise, the applicable Contributors
shall receive a refund of such deposits and the Operating Partnership shall have
no claim with regard to the same.
D. Charges under existing Service Contracts assigned to the
Operating Partnership, if any, and other ordinary costs and expenses for
maintenance and protection of the Wholly-Owned Project for which payment has
been made or is due for the periods prior to and after Closing.
E. Such additional adjustments as are normally made in connection
with the sale of property similar to the Wholly-Owned Projects in the county and
state where the Wholly-Owned Projects are located.
7.2 Apportionments for Non-Liquidating Partnerships. Adjustments in
respect of the partnership interests in the Non-Liquidating Partnerships shall
be made between the applicable Non-Liquidating Partnership Contributors and the
Operating Partnership as follows, as of midnight of the day preceding the
Closing Date:
A. The Non-Liquidating Partnership Contributors and the other
partners in each Non-Liquidating Partnership (collectively, the "Existing
Partners") shall be entitled to all revenues of the Non-Liquidating Partnerships
from all sources, including, without limitation, from the proceeds of
operations, leasing and financing (collectively, "Revenues") payable or accruing
to such Non-Liquidating Partnership through the Closing Date (whether or not
actually received prior to the Closing Date). Each Non-Liquidating Partnership
shall be entitled to all Revenues accruing to such Non-Liquidating Partnership
on and after the Closing Date (whether or not actually received on or after the
Closing Date).
B. The Existing Partners shall bear all expenses, obligations and
liabilities of each Non-Liquidating Partnership accruing through the Closing
Date. Expenses, obligations and liabilities of each Non-Liquidating Partnership
accruing on or after the Closing Date, shall be the responsibility of such
Non-Liquidating Partnership after the Closing Date.
31
C. Subject to the contrary provisions of any applicable partnership
agreement, all income, gains, losses, deductions and credits of each
Non-Liquidating Partnership accruing prior to the Closing Date shall be
allocated to its Existing Partners. After the Closing Date, the respective
shares of the partners in each Non-Liquidating Partnership in the revenues,
distributions, expenses, income, gains, losses, deductions and credits of such
Non-Liquidating Partnership shall be in accordance with its partnership
agreement.
7.3 Apportionments for Management Company. Adjustments in respect of the
Management Company Assets and Liabilities shall be made between the applicable
Contributors and the Operating Partnership as follows, as of midnight of the day
preceding the Closing Date:
A. The applicable Contributors shall be entitled to all revenues in
respect of the Management Company Assets and Liabilities from all sources
payable or accruing through the Closing Date (whether or not actually received
prior to the Closing Date). The Operating Partnership shall be entitled to all
revenues in respect of the Management Company Assets and Liabilities from all
sources payable or accruing on or after the Closing Date (whether or not
actually received on or after the Closing Date).
B. The applicable Contributors shall bear all expenses, obligations
and liabilities in respect of the Management Company Assets and Liabilities
accruing through the Closing Date. Expenses, obligations and liabilities in
respect of the Management Company Assets and Liabilities accruing on or after
the Closing Date, shall be the responsibility of the Operating Partnership after
the Closing Date.
7.4 Payment of Apportionments. At the Closing, the number of Contributors'
Units that the Operating Partnership is required to transfer to the Contributors
pursuant to Section 3.1 hereof shall be increased (or decreased) by an amount
equal to the net amount owing to (or owed by) the Contributors under Sections
7.1 through 7.3 hereof divided by the Unit Value.
7.5 Security Deposits. At the Closing, GREAT, the Liquidating Partnerships
and Burgundy shall pay to the Operating Partnership, in cash, the aggregate
amount of any security deposits which the Leases at the Wholly-Owned Projects
provide have been delivered by tenants, together with all interest on such
security deposits which is due to any tenant under the provisions of any lease
or applicable law.
ARTICLE 8
INDEMNITIES
8.1 The Contributors' Indemnity.
A. Grove Contributors. Subject to the limitations on liability set
forth in Sections 8.4.B and 8.5 hereof, the Grove Contributors agree, jointly
and severally, to indemnify,
32
defend (with counsel mutually acceptable to the Operating Partnership and the
Grove Contributors) and hold the Operating Partnership harmless from and against
any Damages to the Operating Partnership resulting from any inaccuracy in or
breach of any representation or warranty of the Grove Contributors or resulting
from any breach or default by the Grove Contributors of any Obligation of the
Grove Contributors under this Agreement.
B. GREAT. Subject to the limitations on liability set forth in
Section 8.4.B and 8.5, GREAT agrees to indemnify, defend (with counsel mutually
acceptable to Operating Partnership and GREAT) and hold the Operating
Partnership harmless from and against any Damages to the Operating Partnership
resulting from any inaccuracy in or breach of any representation or warranty of
GREAT or resulting from any breach or default by GREAT of any Obligation of
GREAT under this Agreement.
C. Other Contributors. Subject to the limitations on liability set
forth in Section 8.4.B, each Other Contributor agrees severally (and not
jointly) to indemnify, defend (with counsel mutually acceptable to the Operating
Partnership and such Other Contributor) and hold the Operating Partnership
harmless from and against any Damages to the Operating Partnership resulting
from any inaccuracy in or breach of any representation or warranty of such Other
Contributor or resulting from any breach or default by such Other Contributor of
any Obligation of such Other Contributor under this Agreement.
8.2 The Operating Partnership's Indemnity. Subject to the limitation on
liability set forth in Section 8.4.A hereof, the Operating Partnership agrees to
indemnify, defend (with counsel mutually acceptable to the Operating Partnership
and the applicable Contributors) and hold the Contributors harmless from and
against any Damages to the Contributors resulting from any inaccuracy in or
breach of any representation or warranty of the Operating Partnership or
resulting from any breach or default by the Operating Partnership of any
Obligation of the Operating Partnership under this Agreement.
8.3 Notice of Claims. Each Contributor and the Operating Partnership, as
applicable, shall promptly notify the other in the event any claim is made
against it as to which the other party has agreed to indemnify and the
indemnitor shall thereupon undertake to defend and hold the indemnitee harmless
therefrom.
8.4 Limitation on Liability.
A. The Contributors shall look solely to the assets of the Operating
Partnership for satisfaction of any liability of the Operating Partnership in
respect of this Agreement and all documents, agreements, understandings and
arrangements relating to this transaction and will not seek recourse or commence
any action against any of GREAT or the partners, officers, directors,
shareholders or employees of the Operating Partnership and GREAT.
B. The Operating Partnership shall look solely to the applicable
Contributors' Units issued to such Contributor pursuant to this Agreement,
(together with any securities issuable with respect to such Units) for
satisfaction of any liability of the Contributors in respect of this Agreement
and all
33
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of the
Contributors or the partners, officers, directors, shareholders or employees of
the Contributors and its partners.
8.5 Limitations on Indemnification Obligations.
A. Neither the Grove Contributors nor GREAT shall not have any
liability under this Agreement for Damages resulting from any inaccuracy in or
breach of any Property-Related Representation and Warranty unless the aggregate
of all Damages for which either the Grove Contributors or GREAT, as the case may
be, would, but for this sentence, be liable exceeds $50,000 on a cumulative
basis, and then either the Grove Contributors or GREAT, as the case may be,
shall be liable only for amounts exceeding such amount.
B. Claims for indemnification for any Damages resulting from a
breach of any Property-Related Representation and Warranty shall not be brought
or made after one year from discovery of such breach by GREAT's Board of Trust
Managers, or, in any event, after two years from the date of the consummation of
the Consolidation Transactions; provided that such time limitation shall not
apply to any item as to which the party to be indemnified shall have, before the
expiration of such period, previously made a claim by delivering a notice
(stating, in reasonable detail, the basis of such claim) to the indemnifying
party.
ARTICLE 9
MISCELLANEOUS
9.1 Expenses. The Operating Partnership shall be responsible for all costs
incurred by the Contributors and the Operating Partnership directly or
indirectly relating to the transactions contemplated hereby (collectively, the
"Expenses"), including all sales, use, recording and transfer taxes, all costs
of the Surveys, all title insurance premiums and charges for the issuance of the
Title Policies, including the charges for title endorsements, the charges for
the New York Style Closing, all testing and inspection costs, and all legal,
accounting, consulting and engineering fees. The Operating Partnership shall
reimburse the Contributors for all of the Expenses paid or payable by the
Contributors.
9.2 Brokerage. The Contributors and the Operating Partnership each hereby
represent and warrant to the other that neither has dealt with any broker or
finder in connection with the transactions contemplated hereby, and each hereby
agrees to indemnify, defend and hold the other harmless of and from any and all
manner of claims, liabilities, loss, damage, attorneys' fees and expenses,
incurred by either party and arising out of, or resulting from, any claim by any
such broker or finder in contravention of its representation and warranty herein
contained.
9.3 Survival. Except as expressly provided or limited to the contrary
herein or in any instrument delivered pursuant hereto, the representations,
warranties, obligations, covenants,
34
agreements, undertakings and indemnifications of the parties contained herein or
in any instrument required to be delivered pursuant hereto shall survive the
Closing.
9.4 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 primarily by counsel for one of the parties, it being
recognized that both the Operating Partnership and the Contributors have
contributed substantially and materially to the preparation of this Agreement.
9.5 General. This Agreement may be executed in any number of counterparts,
each of which shall constitute an original but all of which, taken together,
shall constitute but one and the same instrument. This Agreement (including all
Schedules hereto) contains the entire agreement between the parties with respect
to the subject matter hereof, supersedes all prior understandings, if any, with
respect thereto and may not be amended, supplemented or terminated except by
written agreement between the parties hereto, nor shall any Obligation hereunder
or condition hereof be deemed waived, except by a written instrument to such
effect signed by the party to be charged. The warranties, representations,
agreements and undertakings contained herein shall not be deemed to have been
made for the benefit of any Person, other than the parties hereto and their
permitted successors and assigns.
9.6 Headings. The headings preceding the text of the paragraphs and
subparagraphs hereof are inserted solely for convenience of reference and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
9.7 Governing Law; Parties at Interest. This Agreement will be governed by
the law of the State of New York, and will bind and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors, assigns and personal representatives.
9.8 Power of Attorney. Each Contributor does hereby make, constitute and
appoint ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and
each of them, its true and lawful attorney-in-fact, with full power of
substitution and resubstitution, to negotiate, execute and deliver any and all
other documents which such attorney deems necessary or desirable in order to
consummate the transactions contemplated hereby in accordance with this
Agreement. Such attorney (and any substitute named by such attorney) shall have
full power and authority to do and perform in the name and on behalf of such
Contributor in any and all capacities, every act whatsoever necessary or
desirable to be done in connection with the foregoing as such Contributor might
or could do in person. Each Contributor hereby ratifies and approves the acts of
such attorney and any substitute therefor.
35
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed, all as of the day and year first above written.
GROVE REAL ESTATE ASSET TRUST
By: _______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
President
GROVE OPERATING, L.P.
By: GROVE REAL ESTATE ASSET TRUST,
its general partner
By: _______________________________
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President
CONTRIBUTORS:
36
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