SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
-------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 29, 2000
SL GREEN REALTY CORP.
(Exact name of Registrant as specified in its Charter)
Maryland
(State of Incorporation)
1-13199 13-3956775
(Commission File Number) (IRS Employer Id. Number)
420 Lexington Avenue 10018
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 594-2700
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
On September 29, 2000, SL Green Realty Corp. ("SL Green") announced
that it has signed an agreement to acquire various ownership and mortgage
interests in the 913,000 square foot, 20-story office building at One Park
Avenue ("One Park Avenue"), New York, New York. A copy of the purchase and
sale agreement is attached as an Exhibit to this Form 8-K.
The purchase price for the interests in One Park Avenue is $233.9
million. SL Green will acquire the fee interest in the Property, which is
subject to a ground lease position held by third-parties, and certain mortgage
interests. SL Green is also acquiring an option to purchase the ground lease
position. The acquisition is expected to close in January 2001. The
acquisition of the interests is subject to the closing conditions contained in
the attached purchase and sale agreement. Accordingly, no assurance can be
given that the acquisition will be completed.
One Park Avenue is located between 32nd and 33rd Streets in the Grand
Central South sub-market of midtown Manhattan. The Property features large,
50,000 square foot floor plates. The leases on over 180,000 square feet on
four floors of the Property expire in 2002. Currently, the in-place escalated
rents for this space are $39 per square foot which is below the current market
rate in the area. One Park Avenue has many prime tenants including Mt. Sinai
and NYU Hospital Centers, Martin E. Segal & Company, Loews Corporation, and
Coty Inc.
Item 7. Financial Statements and Exhibits
(b) Exhibits
99.1.1 Form of Purchase and Sale Agreement, dated
September 28, 2000
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SL GREEN REALTY CORP.
By: /s/ Benjamin P. Feldman
------------------------------
Benjamin P. Feldman
Executive Vice President
Date: October 3, 2000
<PAGE>
Exhibit 99.1
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, made as of September 28, 2000 (this "Agreement"),
by and among ARE ONE PARK AVENUE, LLC, a New York limited liability company
having an address c/o Argent Ventures LLC, 551 Fifth Avenue, 34th Floor, New
York, New York 10176 ("ARE"), ONE PARK AVENUE FEE LLC, a New York limited
liability company having an address c/o Argent Ventures LLC, 551 Fifth Avenue,
34th Floor, New York, New York 10176 ("Fee Owner"), ONE PARK AVENUE SPE INC.,
a New York corporation having an address c/o Argent Ventures LLC, 551 Fifth
Avenue, 34th Floor, New York, New York 10176 ("SPE"; ARE, SPE and Fee Owner
are sometimes referred to herein individually as a "Seller" and collectively
as "Sellers"), ONE PARK AVENUE MANAGER LLC, a New York limited liability
company having an address c/o Argent Ventures LLC, 551 Fifth Avenue, 34th
Floor, New York, New York 10176 ("Manager") and SL GREEN DIAMOND LLC, a
Delaware limited liability company having an address c/o SL Green Realty
Corp., 420 Lexington Avenue, New York, New York 10170 ("Buyer").
W I T N E S S E T H:
WHEREAS, Fee Owner is the owner of those certain lots, pieces or parcels of
the land known as and located at One Park Avenue in the City, County and State
of New York as more particularly bounded and described in Exhibit A attached
hereto and made a part hereof (the "Land");
WHEREAS, the Land is subject to a ground lease between Fee Owner (as
successor-in-interest to Metropolitan Life Insurance Company), as landlord and
One Park Avenue Tenant LLC ("Tenant") (as successor-in-interest to 7878
Corporation), as tenant, as more particularly described on Exhibit B attached
hereto and made a part hereof (the "Ground Lease");
WHEREAS, ARE is the owner and holder of that certain mortgage loan (the
"Leasehold Loan") evidenced by that certain Amended Substitute Note "A" made
by Tenant in favor of ARE, dated November 29, 1999 in the original principal
amount of $113,022,425.93 (the "Leasehold Note") and secured by, among other
things, that certain Substitute Leasehold Mortgage, Security Agreement and
Fixture Filing "A", dated as of November 10, 1998 made by Tenant in favor of
ARE, as modified by the Note and Mortgage Severance Agreement dated November
29, 1999 made by and between Tenant and ARE thereby splitting the lien of the
mortgage and reducing the principal sum secured by the mortgage to
$113,022,425.93 (the "Leasehold Mortgage") and encumbering, inter alia, the
leasehold interest of Tenant under the Ground Lease (the Leasehold Note and
the Leasehold Mortgage and all other documents evidencing or securing or
otherwise relating to or delivered in connection with, or providing for the
terms of, the Leasehold Loan, are hereinafter collectively referred to as the
"Leasehold Loan Documents"); and
WHEREAS, ARE is also the owner and holder of that certain mortgage loan (the
"Fee Loan") evidenced by that certain Substitute Note "B" made by One Park Fee
Associates Limited Partnership ("One Park Fee"), in favor of ARE, dated
November 10, 1998 in the original principal amount of $5,200,000.00 (the "Fee
Note") and secured by, among other things, that certain Substitute Fee
Mortgage, Security Agreement and Fixture Filing "B", dated as of November 10,
1998 made by One Park Fee, in favor of ARE (the "Fee Mortgage") and
encumbering, inter alia, the fee interest of Fee Owner in and to the Land (the
Fee Note and the Fee Mortgage and all other documents evidencing or securing
or otherwise relating to or delivered in connection with, or providing for the
terms of, the Fee Loan, are hereinafter collectively referred to as the "Fee
Loan Documents");
WHEREAS, CDC Mortgage Capital Inc., a New York corporation or its successor or
assigns pursuant to an assignment to a real estate mortgage investment conduit
(collectively, "CDC") made a loan to Tenant and Fee Owner, jointly and
severally (the "CDC Loan"), evidenced by that certain Amended and Restated
Promissory Note made by Tenant and Fee Owner, jointly and severally, dated
November 29, 1999 in the principal amount of $125,000,000.00 (the "CDC Note")
and secured by, among other things, (i) a first-priority Amended and Restated
Leasehold Mortgage, Assignment of Leases and Rents and Security Agreement
dated November 29, 2000 by Tenant to CDC encumbering the Tenant's leasehold
interest under the Ground Lease (the "CDC Leasehold Mortgage") and (ii) a
first-priority Mortgage, Assignment of Leases and Rents and Security Agreement
dated November 29, 2000 by Fee Owner to CDC and encumbering the fee interest
of Fee Owner in and to the Land (the "CDC Fee Mortgage"; the CDC Fee Mortgage
and the CDC Leasehold Mortgage are sometimes referred to herein collectively
as the "CDC Mortgages") (the CDC Mortgages and all other documents evidencing
or securing or otherwise relating to or delivered in connection with, or
providing for the terms of the CDC Loan are hereinafter collectively referred
to as the "CDC Loan Documents");
WHEREAS, pursuant to that certain Settlement Agreement dated as of July 30,
1998 (the "Settlement Agreement"), by and among Park Comcar Associates Limited
Partnership ("Park Comcar"), One Park Fee, Stanley Stahl, Kenneth Carmel,
William Langelier, ARE, Tenant and Manager, those certain Consolidated
Prepackaged Chapter 11 Plans of Reorganization pursuant to Section 1121 of the
Bankruptcy Code, each dated July 30 1998, were filed in the United States
Bankruptcy Court Southern District of New York (the "Bankruptcy Court")
captioned (a) In Re One Park Fee Associates Limited Partnership, Et. Al.,
Debtors (Cases Nos. 98-10012 through 98-10014 (JHG)), and In Re Park Comcar
Associates Limited Partnership; One Park Avenue Tenant LLC, Debtor (Case Nos.
98-10013 and 98-10014 (JHG)) and (b) In Re One Park Fee Associates Limited
Partnership, Et. Al., Debtors (Cases No. 98-10012 through 98-10014 (JHG)), and
In Re One Park Fee Associates Limited Partnership, Debtor (Cases No. 98-10012
(JHG)) ((a) and (b) collectively, the "Bankruptcy Plans"), were confirmed
pursuant to the Confirmation Order dated October 22, 1998, entered by the
Bankruptcy Court (the "Bankruptcy Order", and together with the Bankruptcy
Plans and all other motions, orders, affidavits and other documents filed,
delivered and/or executed in connection with the Bankruptcy Plans and the
Bankruptcy Order, the "Bankruptcy Documents");
WHEREAS, Tenant is a Delaware limited liability company, the sole member of
which is Park Comcar and the sole manager of which is Manager;
WHEREAS, ARE is a member of Manager and owns 99% of the record and beneficial
interest in Manager (the "ARE Membership Interest");
WHEREAS, SPE is the managing member of Manager and owns 1% of the record and
beneficial interest in Manager (the "SPE Membership Interest");
WHEREAS, pursuant to the Option Agreement dated as of March 19, 1999, which
(a) replaced the Option Agreement dated as of November 10, 1998 by and among
Park Comcar, Tenant and Manager (the "Option Agreement"), and (b) constitutes
the Option Agreement provided for in the Bankruptcy Plans, Manager owns an
option to purchase all of Tenant's rights under, in and to the Ground Lease or
all of the ownership interests in Tenant (the "Option");
WHEREAS, Manager is also the owner and holder of the Manager Loans (as defined
in the Operating Agreement of Tenant attached hereto as Exhibit J);
WHEREAS, Sellers desire to sell to Buyer and Buyer desires to purchase from
Sellers (i) the Fee Owner Property (as hereinafter defined), (ii) all rights
of Sellers under or relating to the Leasehold Loan and the Leasehold Loan
Documents, (iii) all rights of Sellers under or relating to the Fee Loan and
the Fee Loan Documents, (iv) the ARE Membership Interest, (v) the SPE
Membership Interest, (vi) all rights of Sellers under or relating to the
Settlement Documents (as defined in the Settlement Agreement) and (vii) all
rights of Sellers arising under or relating to the Bankruptcy Documents (the
foregoing are hereinafter collectively referred to as the "Sale Property"),
subject to the terms and conditions hereinafter set forth; and
WHEREAS, (i) Park Comcar is the sole owner of Tenant, (ii) Tenant is the sole
owner of the leasehold estate under the Ground Lease, including, without
limitation, the Building (as defined hereinafter) and the Improvements (as
defined hereinafter) on the Land, and (iii) Fee Owner's only interest in the
Building or the Improvements is the landlord's reversionary interest under and
subject to the Ground Lease.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and conditions contained herein, and other good and valuable
consideration, the mutual receipt and sufficiency of which are hereby
acknowledged, Sellers, Manager and Buyer hereby agree as follows:
1. Sale and Purchase.
(a) The Fee Owner Property. Fee Owner hereby agrees to sell,
transfer and convey to Buyer, and Buyer hereby agrees to purchase from Fee
Owner, on the Closing Date (as hereinafter defined) and on the terms and
conditions set forth in this Agreement, the Land, together with all of Fee
Owner's rights, claims, privileges, immunities, title and interests in, to and
under the following (the Land and Fee Owner's rights, claims, privileges,
immunities, title and interests in, to and under and all of the following
being hereinafter collectively referred to as the "Fee Owner Property"): (i)
the building(s) erected thereon (the "Building") and any and all other
fixtures and improvements erected thereon (the Building and such other
fixtures and improvements being hereinafter collectively referred to as the
"Improvements"), (ii) the land lying in the bed of any street, highway, road
or avenue, opened or proposed, public or private, in front of or adjoining the
Land, to the center line thereof, (iii) any rights of way, appendages,
appurtenances, easements, sidewalks, alleys, gores or strips of land adjoining
or appurtenant to the Land or any portion thereof and used in conjunction
therewith, (iv) any development rights appurtenant to the Land or any portion
thereof and (v) any award or payment made or to be made in lieu of any of the
foregoing or any portion thereof and any unpaid award for damage to the Land
or any of the Improvements by reason of change of grade or closing of any
street, road or avenue, it being understood and agreed that Sellers will
execute and deliver to Purchaser on the Closing Date (as hereinafter defined)
or thereafter (which obligation shall survive the Closing (as hereinafter
defined)), upon reasonable written request, all proper instruments for the
conveyance of such right, title and interest and for the assignment and
collection of any such awards or payments, without representation or warranty
by or recourse to Sellers, except to the extent specifically provided herein
and without extension of any survival periods relating thereto, (vi) all
fixtures, machinery, tangible personal property and equipment (excluding
furniture, furnishings, equipment and other personal property of tenants under
Space Leases (as hereinafter defined)) used in connection with or attached or
appurtenant to or at or upon all or any portion of the Land and the
Improvements at the date hereof, including, without limitation, such fire
protection, heating, plumbing, electrical and air conditioning systems as now
exist thereat, (vii) to the extent assignable without the consent of third
parties, all permits, licenses and warranties held solely for use in
connection with all or any portion of the Land and the Improvements, (viii)
Fee Owner's rights as landlord under the Ground Lease and (ix) the right to
use the name or names currently used with respect to the Land and
Improvements.
(b) The Loans. ARE hereby agrees to sell, transfer and
assign to Buyer, and Buyer hereby agrees to purchase from ARE, on the Closing
Date and on the terms and conditions set forth in this Agreement, all of ARE's
rights, claims, privileges, immunities, title and interests in, to and under
(i) the Leasehold Loan and Leasehold Loan Documents and any rights and
interests appurtenant thereto and (ii) the Fee Loan and the Fee Loan Documents
and any rights and interests appurtenant thereto, subject to all obligations
of the lender first arising from and after the Closing Date under the
Leasehold Loan Documents and Fee Loan Documents.
(c) The ARE Membership Interest. ARE hereby agrees to sell,
transfer and assign to Buyer, and Buyer hereby agrees to purchase from ARE, on
the Closing Date and on the terms and conditions set forth in this Agreement,
the ARE Membership Interest and any rights and interests appurtenant thereto.
(d) The SPE Membership Interest. SPE hereby agrees to sell,
transfer and assign to Buyer, and Buyer hereby agrees to purchase from SPE, on
the Closing Date and on the terms and conditions set forth in this Agreement,
the SPE Membership Interest and any rights and interests appurtenant thereto.
(e) The Settlement Documents. Sellers hereby agree to sell,
transfer and assign to Buyer, and Buyer hereby agrees to purchase and assume
(with respect to obligations first arising after the Closing Date) from
Sellers on the Closing Date and on the terms and conditions set forth in this
Agreement, all of the Sellers' rights and obligations under or relating to the
Settlement Documents and all rights and interests appurtenant thereto,
including, without limitation, all rights of Sellers in respect of the Chapter
11 Cases (as defined in the Settlement Agreement) and all claims which were
filed, could have been filed or could in the future be filed in the Chapter 11
Cases.
(f) The Bankruptcy Documents. Sellers hereby agree to sell,
transfer and assign to Buyer, and Buyer hereby agrees to purchase and assume
(with respect to obligations first arising after the Closing Date) from
Sellers, on the Closing Date and on the terms and conditions set forth in this
Agreement, all of Sellers' rights, claims, privileges, immunities, title and
interests in, to and under the Bankruptcy Documents.
2. Purchase Price.
(a) As consideration for the Sale Property, Buyer shall pay
to Sellers an aggregate purchase price equal to TWO HUNDRED THIRTY THREE
MILLION NINE HUNDRED THOUSAND and 00/100 DOLLARS ($233,900,000.00) (the
"Purchase Price") subject to the adjustments described in Article 4 herein.
(b) Buyer shall pay the Purchase Price to Sellers as follows:
(i) Upon Buyer's execution and delivery of this
Agreement, FIFTEEN MILLION and 00/100 DOLLARS ($15,000,000.00) (such amount,
together with any interest earned thereon, the "Deposit") by immediately
available funds to the account of Escrow Agent (as hereinafter defined) at
Citibank, N.A. in accordance with wiring instructions attached hereto as
Schedule 1. The Deposit shall be held in accordance with this Section 2(b)
and the provisions of Article 29 hereof;
(A) In lieu of the Deposit, Buyer may concurrently
herewith, at Buyer's option, deliver to Escrow Agent a clean, irrevocable and
unconditional letter of credit naming Escrow Agent as beneficiary in the amount
of the Deposit issued by and drawn upon Fleet National Bank, N.A. (hereinafter
referred to as the "Issuing Bank") in the form attached hereto as Exhibit CC
(the "Deposit Letter of Credit"), the term of which Deposit Letter of Credit
shall not expire prior to the date which is one hundred eighty (180) days from
the date of issuance thereof and which Deposit Letter of Credit shall be deemed
to be a substitute for the Deposit hereunder. The Deposit Letter of Credit
shall be held by Escrow Agent and delivered in accordance with the terms and
conditions of this Agreement. Buyer may at any time prior to November 1, 2000
deliver to Escrow Agent a Deposit Letter of Credit issued by the Issuing Bank
in substitution for the Deposit, which shall be released and paid to Buyer by
Escrow Agent within two (2) Business Days thereafter. For purposes of this
Agreement, "Business Day(s)" shall mean any day other than a Saturday, Sunday
or any day on which commercial banks in New York, New York are authorized or
required to close.
(B) If Buyer has provided Escrow Agent with the
Deposit Letter of Credit, the entire Purchase Price, subject to adjustment as
provided in this Agreement, shall be paid to Sellers on the Closing Date. If
Buyer has provided Escrow Agent with the Deposit Letter of Credit, Escrow
Agent shall contemporaneously with Buyer's payment of the Purchase Price
deliver the Deposit Letter of Credit to Buyer at the Closing, together with a
letter from Escrow Agent confirming that the Deposit Letter of Credit has not
been drawn upon and that neither Escrow Agent nor Sellers have any further
rights thereunder.
(C) Subject to Article 29 herein, whenever in this
Agreement Buyer is entitled to a return of the Deposit, Buyer shall be
entitled to the return of either (x) the Deposit actually being held by Escrow
Agent pursuant to this Agreement or (y) the Deposit Letter of Credit, as
applicable. Subject to Article 29, whenever in this Agreement Sellers are
entitled to retain the Deposit then, if Escrow Agent is holding the Deposit,
Sellers shall be entitled to the Deposit actually being held by Escrow Agent
pursuant to this Agreement or, if Escrow Agent is holding the Deposit Letter
of Credit, Escrow Agent shall be (and hereby is) entitled to (and authorized
and directed without further notice to or from any other party except as
provided in Article 29) draw thereon and deliver all of the proceeds thereof
to Sellers, and any funds so drawn shall be and become part of the "Deposit".
(ii) TWO HUNDRED EIGHTEEN MILLION NINE HUNDRED THOUSAND
and 00/100 DOLLARS ($218,900,000.00) (the "Balance"); provided, however, that
if as of the Closing the Deposit is held in the form of the Deposit Letter of
Credit as set forth in Section 2(b)(i)(A), then the Balance shall be TWO
HUNDRED THIRTY THREE MILLION NINE HUNDRED THOUSAND and 00/100 DOLLARS
($233,900,000.00), at the Closing, in either case subject to adjustment as
provided in Article 4 herein, as applicable, by wire transfer of immediately
available funds in accordance with written wire instructions to be delivered
by Sellers to Buyer not less then two (2) Business Days prior to Closing.
3. Election to Assume Mortgage. Notwithstanding anything to the contrary
herein, Buyer shall have the right to acquire the Sale Property subject to the
CDC Loan and to elect to seek the assumption of the CDC Loan and take the Sale
Property subject to the liens, claims, pledges and encumbrances of CDC
pursuant to the CDC Loan Documents set forth on Exhibit W attached hereto (the
"CDC Option"). As used in this Agreement, the "CDC Option" and the phrase
"Buyers assumption of the CDC Loan" or words of similar import shall be deemed
to mean, (i) the assumption by or substitution of Buyer and, to the extent
required, its principals, of or in respect of the obligations first arising
from and after the Closing, of Sellers and their principals under the CDC Loan
Documents, (ii) reaffirmation of the obligations of Tenant under the CDC Loan
Documents, (iii) reaffirmation of the collateral assignment of the Leasehold
Loan Documents in favor of CDC and (iv) satisfaction of such other
requirements as CDC may impose in accordance with the CDC Loan Documents.
Buyer shall endeavor to notify Sellers of its election of the CDC Option no
later than ten (10) days prior to the Closing. In no event shall the actual
consummation of the Closing of the CDC Option be a condition to Closing.
Sellers and Buyer shall furnish CDC with such information as may reasonably be
required in connection with such request and shall otherwise take reasonable
steps to cooperate with CDC and any applicable rating agencies and with each
other in an effort expeditiously to procure such consent, but, except as
expressly provided below, Sellers shall not be obligated to make any payment
to obtain such consent. Buyer agrees to keep Sellers reasonably informed as to
Buyer's efforts to assume the CDC Loan and to use reasonable efforts to give
Sellers and/or its representatives the opportunity, upon reasonable notice, to
participate in meetings and telephone conferences with CDC and any rating
agencies with respect thereto. Buyer's assumption of the CDC Loan is subject
to the release of Sellers, and their respective affiliates and principals,
from any and all liabilities under the CDC Loan Documents (including, without
limitation, Buyer's assumption of any remaining funding obligations of Lehman
Brothers Holdings Inc. ("LBHI") with regard to tenant improvement work under
the Agreement dated as of November 29, 1999 made by LBHI in favor of CDC,
Tenant and Fee Owner (the "Lehman Funding Obligations")), to the extent such
parties are entitled to such release(s) under the CDC Loan Documents (the "CDC
Releases"). If such CDC Releases are not delivered by CDC at Closing, to
Sellers reasonable satisfaction, Sellers shall have the right to adjourn the
Closing to a date not later than February 15, 2001 so that Sellers may enforce
their rights under the CDC Loan Documents to obtain the CDC Releases provided
that Sellers shall pay Buyer's Extension Fees (as hereinafter defined) if
actually incurred as a result of such adjournment. If Sellers have not
theretofore obtained the CDC Releases, Closing shall occur on February 15,
2001. If Buyer assumes the CDC Loan at Closing, Buyer shall receive a credit
toward the Balance of the Purchase Price at Closing in the amount of the sum
of (i) the outstanding balance of the CDC Loan as of the date of Closing plus
(ii) any other outstanding amounts owing to CDC (including, without
limitation, late charges) as of the Closing Date. Notwithstanding anything to
the contrary in this Article 3, Buyer shall be responsible for, and agrees to
indemnify and hold Sellers, Manager, Tenant and each of their respective
principals, employees, agents and representatives harmless from and against,
any and all losses, costs, damages, liabilities and expenses (including,
without limitation, reasonable attorneys' fees) arising out of or relating to
the CDC Option; provided, however, if Buyer assumes the CDC Loan at Closing,
then Sellers agree to pay all costs and expenses (including, without
limitation, CDC's legal fees, rating agency fees and expenses, other third
party consultants' fees and any loan assumption fees) required by CDC to be
paid in connection with the assumption of the CDC Loan by Buyer (but
specifically excluding any of Buyer's legal or other third party expenses
incurred in connection therewith) (the "CDC Expenses") up to the amount of any
prepayment penalties, Yield Maintenance Premium (as defined in the Loan
Agreement dated as of November 29, 1999 by and between Tenant, Fee Owner and
CDC (the "CDC Loan Agreement")) or Exit Fees (as defined in the CDC Loan
Agreement) (collectively, the "Prepayment Costs") which would have been paid
if the CDC Loan had been paid in full and not been so assumed, provided,
however, that Sellers shall not be responsible for payment of any assumption
or similar fee charged by CDC if any of the material economic terms of the CDC
Loan are modified in a manner favorable to the borrower or Buyer in connection
with Buyer's assumption of the CDC Loan. If Buyer assumes the CDC Loan at
Closing, Tenant shall retain that certain Interest Rate Cap Agreement dated
December 1, 1999 between Tenant and CDC Financial Products, Inc. (the "Cap
Agreement") without additional cost to Tenant or Buyer. If Buyer does not
assume the CDC Loan, Sellers and Manager shall cause Tenant to assign the Cap
Agreement to ARE and the Manager Loans shall be reduced by the fair market
value of such Cap Agreement as of the Closing Date as reasonably determined by
Sellers and Buyer.
4. Adjustments.
(a) Interest. ARE and Buyer shall apportion or adjust Base
Interest and Additional Interest due under the Leasehold Note (collectively,
"Interest") by adjustment or apportionment of the items set forth in this
Section 4(a) as of 11:59 p.m. on December 31, 2000 (the "Adjustment Date").
The parties acknowledge and agree that the total amount of Interest due is
contingent upon the amount of Net Operating Cash. However, for purposes of
this Agreement, the parties hereby agree that as between them only (and
without any effect to Tenant or amounts actually due under the Leasehold
Note), for purposes of this Agreement, the following items of Net Operating
Cash shall be deemed to be adjusted by adjustment of the following items in
accordance with the following provisions:
(i) Real Estate Taxes.
(A) Real estate taxes, assessments, vault charges,
water charges, sewer rents and other like charges, if any, on the basis of the
lien period for which assessed. If on the Closing Date the tax rate shall not
have been fixed, the apportionment shall be based upon the tax rate for the
preceding year applied to the latest assessed valuation; however, adjustment
will be made when the actual tax amount is determined. If there are water
meters at the Building which are the responsibility of Tenant and not a tenant
under a Space Lease, Sellers and/or Manager shall furnish readings thereof to
a date not more than thirty (30) days prior to the Closing Date. Meter charges
shall be apportioned on the basis of the last reading. Upon the taking of a
subsequent actual reading, such apportionment shall be readjusted.
(B) If the real estate taxes affecting the Land
and/or the Improvements are reduced, because of a reduction of the assessed
valuation or tax rate or for any other reason, Sellers and Buyer shall adjust
the benefits of the tax savings (net of any and all costs and expenses
incurred by Tenant in obtaining any such tax reduction) as of the Adjustment
Date. Sellers shall only be entitled to the benefits of a tax savings due to a
reduction in taxes for the period up to and including the Adjustment Date, net
of sums payable to current or former tenants under Space Leases entitled to
share in such refund.
(C) (1) Subject to paragraph (2) below, if there
shall be pending as of the Closing Date real estate tax certiorari or other
proceedings or protests brought by Fee Owner or Tenant, as applicable, to
reduce the real estate taxes, assessments, valuations or other impositions on
the Land and/or the Improvements or any portion thereof, Buyer shall, or shall
cause Tenant to, continue the prosecution of such proceedings or protests
using counsel selected by Buyer until a final determination has been rendered
or a settlement reached and pay, from the proceeds of any refund, all legal,
accounting and other expenses which may be incurred in connection with such
real estate tax certiorari or other proceedings or protests. Sellers shall be
entitled to participate in any settlement discussions with respect to such
proceedings, to the extent related to periods prior to the Closing, and Buyer
shall not (and shall cause Tenant not to) settle or compromise any such
proceedings, to the extent related to periods prior to the Closing, without
ARE's prior written consent, which consent shall not be unreasonably withheld
or delayed. If such determination shall result in a refund or credit, then the
net amount of such refund or credit (after deducting Buyer's costs and any
refunds or credits owed to current or former tenants under the Space Leases)
shall be apportioned between Sellers and Buyer and any amount due to Sellers
shall be paid to it by Buyer promptly following receipt thereof, and Buyer
shall pay, or cause Tenant to pay, to any tenants any amounts owed under
current or former Space Leases.
(2) Notwithstanding the provisions of clause (1)
above, Sellers and Buyer hereby acknowledge that pursuant to Section 32 of the
Settlement Agreement, Park Comcar, as predecessor in interest to Tenant,
retains all right, title and interest in and to the pending real estate tax
certiorari claims and proceedings with respect to the Land and/or the
Improvements covering the tax years between July 1, 1989 and June 30, 1991,
including all proceeds and/or other payments in respect thereof (the "Tax
Certiorari Claims"). In addition, Park Comcar shall have the right to
prosecute and settle, at its sole cost and expense, the Tax Certiorari Claims
and all other pending tax certiorari claims and proceedings with respect to
the Land and/or the Improvements covering all tax years ending on or prior to
June 30, 1997 on whatever basis it chooses (provided that no settlement shall
increase the actual assessed valuation for any such year or any subsequent
year).
(ii) Fixed Rents under Space Leases.
(A) Fixed rents ("Fixed Rents") paid or payable by
tenants under the Space Leases (as hereinafter defined) in connection with
their occupancy shall be adjusted and prorated on an if, as and when collected
basis, with Sellers receiving the portion of Fixed Rent attributable to
periods prior to and including the Adjustment Date. Any Fixed Rents collected
by Buyer or Sellers and/or Tenant after the Closing from any tenant who owes
Fixed Rents for periods prior to the Closing shall be applied in the following
manner: (1) first, in payment of the Fixed Rents owed by such tenant for the
calendar month in which the Closing Date occurs; (2) second, if such tenant is
less than one (1) calendar month plus one (1) day in arrears, in payment of
Fixed Rents owed by such tenant for the calendar month prior to the calendar
month in which the Closing Date occurs; (3) third, in payment of Fixed Rents
owed by such tenant for the period (if any) after the calendar month in which
the Closing Date occurs through the end of the calendar months in which such
amount is collected; and (4) fourth, after Fixed Rents for all current periods
have been paid in full, in payment of Fixed Rents owed by such tenant for the
period prior to the calendar month in which the Closing Date occurs. Each such
amount, less any costs of collection (including reasonable attorneys' fees)
reasonably allocable thereto, shall be adjusted and prorated as provided
above, and the party who receives such amount shall promptly pay over to the
other party the portion thereof to which it is so entitled. In furtherance and
not in limitation of the preceding sentence, with respect to any tenant which
has paid all Fixed Rents for periods through the Closing, if, prior to the
Closing, Sellers and/or Tenant shall receive any prepaid Fixed Rents from a
tenant attributable to a period following the Closing, at the Closing, Sellers
shall pay over to Buyer the amount of such prepaid Fixed Rents.
(B) Buyer shall bill, or cause Tenant to bill,
tenants who owed Fixed Rents for periods prior to the Closing on a monthly
basis for a period of one (1) year following the Closing Date and shall use
its commercially reasonable efforts to collect such past due Fixed Rents in
the ordinary course of business and without Buyer or Tenant being required to
institute or pursue any legal proceedings. Notwithstanding the foregoing, if
Sellers or Manager are unable to collect past due Fixed Rents from tenants no
longer in possession at the Building prior to Closing, then, within thirty
(30) days after receipt of a written request therefor to Buyer accompanied by
all information reasonably necessary for the collection of such past due Fixed
Rents to the extent not previously delivered or certified to Buyer, Buyer
shall, at Sellers' sole cost and expense, cause Tenant to bring a legal action
to collect such Fixed Rent delinquencies due and owing prior to the Closing
Date for a period up to one (1) year after Closing or, if such suit has been
commenced and is continuing at the end of such one (1) year period, Buyer, on
behalf of Tenant, shall continue to prosecute (at Sellers' sole cost and
expense) such suit in a commercially reasonable manner. Buyer shall not, and
shall not permit Tenant to, settle or compromise any such action or the claim
for any such amounts owed by tenants no longer in possession of their demised
premises in the Building without the prior written consent of Sellers, which
consent shall not be unreasonably withheld or delayed.
(iii) Overage Rent under Space Leases.
(A) Any of the following charges and/or rents
provided for by any Space Lease: (1) the payment of additional rent based upon
a percentage of the tenant's business during a specified annual or other
period (sometimes referred to as "percentage rent"), (2) common area
maintenance or "CAM" charges, (3) "escalation rent" or additional rent based
upon increases in real estate taxes, operating expenses, labor costs, cost of
living, porter's wages, or other index including the consumer price index or
otherwise, or (4) any other items of additional rent, e.g., charges for
electricity, water, cleaning, overtime services, sundries and/or miscellaneous
charges, shall be adjusted and prorated on an if, as and when collected basis
(such percentage rent, CAM charges, escalation rent and other additional rent
being collectively called "Overage Rent").
(B) (1) Buyer agrees that as to any Overage Rent
attributable exclusively to accounting periods prior to the Closing that are
to be paid after the Closing, to pay an amount equal to all amounts received
by Tenant on account thereof promptly after Tenant's receipt thereof, less any
costs of collection (including reasonable attorney's fees) reasonably
allocable thereto. Buyer agrees that it will or will cause Tenant to (x)
render bills for any such Overage Rent on a timely basis, (y) bill tenants
such Overage Rent on a monthly basis for a period of one (1) year thereafter,
and (z) use its commercially reasonable efforts to collect such Overage Rent
in the ordinary course of business and without Buyer being required to
institute or pursue any legal proceedings.
(2) Notwithstanding the foregoing, if Sellers or
Manager are unable to collect such Overage Rent from tenants no longer in
possession at the Building prior to Closing, then, within thirty (30) days
after receipt of a written request therefor to Buyer accompanied by all
information reasonably necessary for the collection of such past due Overage
Rent to the extent not previously delivered to Buyer, Buyer shall, at Sellers'
sole cost and expense, cause Tenant to bring a legal action to collect such
Overage Rent delinquencies due and owing prior to the Closing Date for a
period up to one (1) year after the Closing or, if such suit has been
commenced and is continuing at the end of such one (1) year period, Buyer, on
behalf of Tenant, shall continue to prosecute (at Sellers' sole cost and
expense) such suit in a commercially reasonable manner. Buyer shall not, and
shall not permit Tenant to, settle or compromise any such action or the claim
for any such amounts owed by tenants no longer in possession of their demised
premises in the Building without the prior written consent of Sellers, which
consent shall not be unreasonably withheld or delayed. Sellers shall furnish
to Buyer all information relating to the period prior to the Closing that is
reasonably necessary for the billing of such Overage Rent as a condition to
Buyer's obligations hereunder, and Buyer will deliver and/or cause Tenant to
deliver to Sellers, upon Sellers' request, copies of all statements relating
to Overage Rent for a period prior to the Closing. Buyer shall bill and/or
cause Tenant to bill tenants for Overage Rent for accounting periods prior to
the Closing in accordance with and on the basis of such information furnished
by Sellers.
(C) Overage Rent for an accounting period in which
the Closing Date occurs shall be apportioned between Sellers and Buyer as of
the Adjustment Date, with Sellers receiving the proportion of such Overage
Rent less a like portion of any costs and expenses (including reasonable
attorneys' fees) incurred in the collection of such Overage Rent that the
portion of such accounting period prior to the Adjustment Date bears to such
entire accounting period, and Buyer receiving the proportion of such Overage
Rent less a like portion of any costs and expenses (including reasonable
attorneys' fees) incurred in the collection of such Overage Rent that the
portion of such accounting period from and after the Adjustment Date bears to
such entire accounting period. If, prior to the Closing, Sellers and/or Tenant
shall receive any installments of Overage Rent attributable to Overage Rent
for periods from and after the Adjustment Date, such sum shall be apportioned
at the Closing. If, after the Closing, Buyer and/or Tenant shall receive any
installments of Overage Rent attributable to Overage Rent for periods prior to
the Closing, such sum less any costs and expenses (including reasonable
attorneys' fees) incurred by Buyer and/or Tenant in the collection of such
Overage Rent shall be paid by Buyer to Sellers promptly after Buyer and/or
Tenant receives payment thereof. Sellers shall remit to Buyer promptly after
receipt, Overage Rent received by Sellers and attributable to periods after
the Closing.
(D) Any payment by a tenant on account of Overage
Rent (to the extent not applied against Fixed Rents due and owing by such
tenant in accordance with Section 4(a)(ii) above) shall be applied to Overage
Rent then due on an if, as and when collected basis in the following order:
(1) first, in payment of the Overage Rents owed by such tenant for the fiscal
period in which the Closing Date occurs; (2) second, in payment of Overage
Rents then due and owing by such tenant for the fiscal period (if any)
immediately succeeding the fiscal period in which the Closing Date occurs; and
(3) third, in payment of Overage Rents owed by such tenant for the fiscal
period immediately preceding the fiscal period in which the Closing Date
occurs.
(E) To the extent that any portion of Overage Rent
is required to be paid monthly by tenants on account of estimated amounts for
any calendar year (or, if applicable, any Space Lease year or any other
applicable accounting period), and at the end of such calendar year (or Space
Lease year or other applicable accounting period, as the case may be), such
estimated amounts are to be recalculated based upon the actual expenses, taxes
and other relevant factors for that calendar year, Space Lease year or other
applicable accounting period, with the appropriate adjustments being made with
such tenants, then such portion of the Overage Rent shall be prorated between
Sellers and Buyer at the Closing based on such estimated payments (i.e., with
Sellers entitled to all monthly or other periodic installments of such amounts
paid with respect to periods prior to the calendar month or other applicable
installment period in which the Closing occurs; Sellers to pay to Buyer at the
Closing an amount equal to all monthly or other periodic installments of such
amounts theretofore received by Sellers and/or Tenant with respect to periods
following the calendar month or other applicable installment period in which
the Closing occurs; and Sellers and Buyer to apportion as of the Adjustment
Date all monthly or other periodic installments of such amounts with respect
to the calendar month or other applicable installment period in which the
Closing occurs).
(F) At the time(s) of final calculation and
collection from (or refund to) each tenant of the amounts in reconciliation of
actual Overage Rent for a period for which estimated amounts paid by such
tenant have been prorated, there shall be a re-proration between Sellers and
Buyer. If, with respect to any tenant, the recalculated Overage Rent exceeds
the estimated amount paid by such tenant, (1) the entire excess shall be paid
by Buyer to Sellers if, as and when received by Buyer or Tenant, if the
accounting period for which such recalculation was made expired prior to the
Closing, and (2) such excess shall be apportioned between Sellers and Buyer as
of the Adjustment Date (on the basis described in the first sentence of
Section 4(a)(iii)(C) above), if the Closing occurred during the accounting
period for which such recalculation was made, with Buyer paying to Sellers an
amount equal to the portion of such excess which Sellers are (i.e., that
Tenant would be) so entitled to receive if, as and when received by Buyer or
Tenant. If, with respect to any tenant, the recalculated Overage Rent is less
than the estimated amount paid by such tenant, then (x) the entire shortfall
shall be paid by Sellers to Buyer, if the accounting period for which such
recalculation was made expired prior to the Closing, and (y) such shortfall
shall be apportioned between Sellers and Buyer as of the Adjustment Date (on
the basis described in the first sentence of Section 4(a)(iii)(C) above), if
the Closing occurred during the accounting period for which such recalculation
was made, with Sellers paying to Buyer the portion of such shortfall so
allocable to Sellers, and Buyer causing Tenant to refund the appropriate
amounts to the appropriate tenants.
(G) Until such time as all amounts required to be
paid to Sellers by Buyer pursuant to Section 4(a)(ii) and this Section
4(a)(iii) are paid in full, but in no event for a period longer than one (1)
year following the Closing, Buyer shall furnish to Sellers upon written
request made not more frequently than quarterly, a reasonably detailed
accounting of such amounts, if any, owed by Buyer, which accounting shall be
delivered to Sellers on the later to occur of twenty (20) days following
Sellers' request and forty-five (45) days following the last day of each
calendar quarter from and after the Closing. Subsequent to the Closing,
Sellers shall have the right from time to time, not more frequently than once
each such quarter, on prior written notice to Buyer, to review those rental
records with respect to Overage Rent during ordinary business hours on
Business Days, to ascertain the accuracy of such accountings.
(H) Sellers and Manager shall cause Tenant to
furnish all information, and apply all payments of Fixed Rent and Overage Rent
for any period on or prior to the Closing, in the manner set forth in this
Agreement.
(iv) License Fees. Amounts paid or payable with respect
to licenses and permits, if any, required for the operation of the Improvements
and which are transferred to Buyer or retained by Tenant at Closing.
(v) Service and Maintenance Charges. Amounts paid or
payable with respect to the Service Contracts (as hereinafter defined),
including without limitation, the OneSource Contract (as hereinafter defined).
(A) Buyer agrees that it will not, and will cause
Tenant not to, terminate the cleaning contract with OneSource Facility
Services Inc. ("OneSource") dated February 1, 1999 (the "OneSource Contract")
for a period of at least three (3) months after the Closing.
(vi) Utilities. Utility charges, including, but not
limited to, electricity, gas, steam, telephone and other utilities, all
prorated based upon the most current bill unless actual readings are obtained
as of the Adjustment Date, in which case such actual readings shall govern,
and each party shall pay the amount billed to it, respectively.
(vii) Inventory. The value of Building inventory and
supplies in customary quantities (e.g., soap, cleaning powder, light bulbs,
etc.) in unopened containers in the Building, if any, in accordance with an
inventory prepared by Manager, shall be credited to Sellers. Such value amount
shall be determined based upon Sellers' or Tenant's cost thereof, based upon
actual invoices.
(viii) Fuel. Proration shall be made of fuel on the
Building on the Adjustment Date, based upon a reading made by the supplier as
close as obtainable to the Adjustment Date (reasonably adjusted to the
quantity present on the Adjustment Date). The value thereof shall be
calculated at Tenant's last cost (including sales tax), based upon actual
invoices. If the heating, ventilation or air conditioning for the Building is
provided by a measurable product (e.g., steam or gas) the adjustment will be
based on meter readings prorated, if necessary, to the Adjustment Date.
(ix) Insurance Premiums. No existing insurance policy
shall be assigned to Buyer. All existing insurance policies maintained by
Tenant will be canceled as of the Closing Date without adjustment. Buyer shall
pay to Sellers, if and when received by Manager or Tenant, an amount equal to
the amount of any refund paid to Manager or Tenant for any existing insurance
policies canceled as of the Closing Date.
(x) Interest on CDC Loan. Interest on the CDC Loan shall
be adjusted as of the Adjustment Date.
(xi) Other. Any other adjustments or prorations the
parties reasonably determine to be necessary at Closing to adjust for any
Excess Net Operating Cash generated by the Fee Owner Property and/or Building.
(b) Certain Capital Expenditures. Sellers have caused Tenant
to incur or commit to making certain capital expenditures (including tenant
improvements, leasing commissions and base building work), which Sellers have
funded or intend to fund by causing Manager to make Manager Loans.
Accordingly, Sellers and Buyer shall make the following adjustments:
(i) Tenant Improvement Work at Landlord's Cost. Buyer
shall receive a credit against the Balance at Closing for the unpaid cost of
the performance of any tenant improvement work required to be performed by
landlord pursuant to Space Leases executed (or renewal, extension or
additional space rights or options exercised) prior to the date hereof (the
"Space Leasing Cutoff Date") as shown on the certificate updating the
representation made in Section 5(f) hereof (provided that any reduction shown
in such updated certificate will be accompanied by evidence reasonably
satisfactory to Buyer of lien-free completion and payment) and Buyer shall
thereafter cause the payment and performance of such tenant improvement work.
To the extent paid for by Sellers prior to Closing, Sellers shall receive a
credit at Closing for the cost of the performance of any tenant improvement
work required to be performed by landlord pursuant to Space Leases entered
into (or renewal, extension or additional space rights or options exercised)
on or after the Space Leasing Cutoff Date pursuant to this Agreement.
(ii) Costs of Work to be Paid or Reimbursed to Tenants.
Buyer shall receive a credit against the Balance at Closing to the extent any
payment or reimbursement by landlord for the cost of work performed or to be
performed by tenants is required pursuant to a Space Lease executed (or
renewal, extension or additional space rights or options exercised) prior to
the Space Leasing Cutoff Date and has not yet been so paid or reimbursed as
shown on the certificate updating the representation made in Section 5(f)
hereof (provided that any reduction in such updated certificate will be
accompanied by evidence reasonably satisfactory to Buyer of such payment or
reimbursement), and Buyer shall thereafter pay or reimburse (or cause Tenant
to pay or reimburse) to the applicable tenants any such sums so credited when
the same becomes due; provided, however, Buyer agrees to pay or reimburse
Public Service Mutual Insurance ("PSMI") (or cause Tenant to pay or reimburse
PSMI) for the cost of the performance of tenant improvement work performed
under the Lease Agreement dated March 22, 2000 between Tenant and PSMI (the
"PSMI Lease") to the extent shown on Exhibit Z. To the extent paid for by
Sellers prior to Closing, Sellers shall receive a credit at Closing to the
extent payment or reimbursement was made pursuant to the PSMI Lease or
pursuant to a Space Lease entered into (or renewal, extension or additional
space rights or options exercised) on or after the Space Leasing Cutoff Date
pursuant to this Agreement.
(iii) Leasing Commissions. Brokerage and leasing
commissions payable under the Brokerage Agreements (as hereinafter defined)
incurred in connection with the leasing of space at the Building shall be
prorated so that such commissions earned or payable (A) with respect to Space
Leases executed (or renewal, extension or additional space rights or options
exercised) prior to the Space Leasing Cutoff Date shall be paid at Closing by
Sellers, and (B) with respect to Space Leases executed pursuant to this
Agreement (or renewal, extension or additional space rights or options
exercised) on or after the Space Leasing Cutoff Date shall be paid, as and
when due, by Buyer or Tenant; provided, however, Buyer agrees to (or to cause
Tenant to) pay the brokerage and leasing commissions (or reimburse or pay
Sellers with respect to any brokerage or leasing commissions paid by Sellers
or Tenant prior to Closing) with respect to the PSMI Lease and any agreement
with respect to the renewal or extension of the Perkins & Will, Inc. Space
Lease (the "Perkins Extension") as set forth in the Brokerage Agreement
relating thereto. No adjustment shall be made with respect to leasing or
brokerage commissions payable on or after the Closing Date pursuant to a
Brokerage Agreement as a consequence of an event occurring after the Closing.
Buyer shall indemnify and hold Sellers harmless from and against any actual
liability for leasing and brokerage commissions earned pursuant to a Brokerage
Agreement from and after the Space Lease Cutoff Date. Sellers shall indemnify
and hold Buyer free and harmless from and against any actual liability for any
and all brokerage and leasing commissions earned prior to the Space Leasing
Cut Off Date, except with respect to (A) the PSMI Lease and the Perkins
Extension and (B) such brokerage and leasing commissions for which Buyer
received a credit against the Purchase Price pursuant to this clause (iii) but
only to the extent of such credit.
(c) Escrows. Provided that Tenant is paid or credited with
or if the CDC Loan is assumed, retains the aggregate amount of any and all
amounts accumulated in any escrows or accounts held by CDC under the CDC Loan
Documents (the "CDC Escrow Amount"), Sellers shall receive a credit for the
CDC Escrow Amount. At the Closing, upon receipt of the CDC Escrow Amount,
Tenant shall be deemed to have repaid a portion of the outstanding balance of
the Manager Loans in the amount of the CDC Escrow Amount and Manager shall be
deemed to have thereupon made additional loans to Tenant constituting Manager
Loans in an amount equal to the CDC Escrow Amount. In addition, Sellers shall
receive a credit in the aggregate amount of any and all amounts accumulated in
any escrows or accounts (other than the account(s) holding security deposits
under Space Leases) held by ARE under the Leasehold Loan Documents, and Buyer
shall succeed to ARE's right, title and interest in such escrows and accounts
subject to the terms and provisions of the Leasehold Loan Documents. After
Closing, Manager and Buyer will cause the books and records of Tenant and
Manager to properly reflect such adjustment.
(d) Deposits. In the event Sellers shall provide Buyer at
Closing with written evidence reasonably satisfactory to Buyer from Con Edison
of the deposit held by Con Edison, then Sellers shall receive a credit at
Closing in the amount of such deposit.
(e) Net Apportionments and Adjustments.
(i) Due Seller. In the event the net apportionments and
adjustments result in a payment due Sellers, then such payment shall be made
at the Closing in the manner set forth in Article 2.
(ii) Due Buyer. In the event the net apportionments and
adjustments result in a payment due Buyer, then such payment shall be made at
the Closing by way of a credit against the Balance.
(f) Determination of Closing Adjustments. The parties hereto
agree to make a good faith effort to determine the adjustments and prorations
to be made at Closing, pursuant to this Article 4 at least one (1) Business
Day prior to the Closing Date. If the parties shall discover any errors made
in the calculation of any of the adjustments to be made pursuant to this
Article 4, the appropriate adjustment(s) and payment(s) shall be made
following the Closing.
(g) This Article 4 shall survive the Closing for a period of
two (2) years.
5. Representations and Warranties of Seller. Sellers and Manager hereby
jointly and severally represent and warrant to Buyer that the following
statements are true and correct as of the date of this Agreement:
(a) Organization; Power and Authority. ARE, Fee Owner and
Manager are each limited liability companies duly organized, validly existing
and in good standing under the laws of the State of New York. SPE is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New York. Sellers and Manager have the requisite power
and authority to execute and deliver and to perform their respective
obligations under this Agreement and all instruments and other documents
executed and delivered by Sellers and/or Manager to Buyer, as applicable, in
connection with this Agreement. Neither Sellers nor Manager are subject to any
law, order, decree, restriction or agreement which prohibits or would be
violated by this Agreement or the consummation of the transactions
contemplated hereby.
(b) Execution and Enforceability. This Agreement (and all
other instruments executed by Sellers and/or Manager and delivered to Buyer in
connection with the Closing under this Agreement) and the transactions
contemplated hereby (and thereby) have been or will be duly and validly
executed and delivered by Sellers and/or Manager, as applicable, and do or
will constitute the legal, valid and binding obligations of Sellers and/or
Manager, as applicable, enforceable in accordance with their respective terms,
except as enforcement might be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law). The execution
and delivery by Sellers and Manager of this Agreement to Buyer (and all other
instruments executed by Sellers and/or Manager, as applicable, and delivered
to Buyer in connection with the Closing under this Agreement) and the
transactions contemplated hereby (and thereby), and Sellers' and/or Manager's,
as applicable, performance of the transactions contemplated hereby (and
thereby), are within the limited liability company or corporate powers of
Sellers and/or Manager, as applicable, have been duly authorized by all
necessary limited liability company or corporate action of Sellers and/or
Manager's, as applicable, and, will not contravene or conflict with Sellers'
and/or Manager's, as applicable, Articles of Organization, Articles of
Incorporation, Operating Agreements or Shareholder's Agreements.
(c) Ground Lease. Fee Owner is not a party to or bound by
any leases or other agreements relating to the use or occupancy of the Fee
Owner Property (written or otherwise) other than the Ground Lease and the
Permitted Exceptions (as hereinafter defined). Prior to the execution and
delivery of this Agreement, Fee Owner has delivered to Buyer or its
representatives true, correct and complete copies of all documents comprising
the Ground Lease as described on Exhibit B hereto (except to the extent
unavailable as set forth on such Exhibit B), and other than as may be
described on Exhibit B, neither Tenant nor any Seller has amended, modified or
terminated the Ground Lease or assigned its interest as tenant and/or landlord
thereunder. The Ground Lease is in full force and effect and, to the best of
Seller's knowledge, no default exists thereunder. Fee Owner has not sent to
Tenant or received from Tenant (x) any notice of default under the Ground
Lease which default remains uncured or (y) any notice of termination of the
Ground Lease which notice has not been rescinded in writing.
(d) Litigation. Except as set forth on Exhibit C attached
hereto and made a part hereof, there is no litigation pending, or to the best
of knowledge of any such party (without any duty of independent investigation)
threatened, in which ARE, Fee Owner, SPE, Tenant and/or Manager are a party in
respect of the Sale Property, the Improvements, the Ground Lease, the Option
Agreement, the Operating Agreement of Manager, the Operating Agreement of
Tenant, the Settlement Documents, the Bankruptcy Documents or the CDC Loan
Documents. The pending or threatened litigation identified in Exhibit C are
adequately covered by insurance policies, which coverage will continue as to
such pending claims after the Closing notwithstanding the cancellation of such
policies at Closing, and the policy limits of applicable insurance exceed the
damages sought by each plaintiff thereunder.
(e) Space Leases.
(i) Attached hereto as Exhibit D is (a) a true and
complete list of all space leases and other agreements for the use and
occupancy of the Building (the "Space Leases") and, (b) a true and complete
list of all tenants of the Building as of the date hereof, all security
deposits held by Hatfield Philips or Manager (and the form) on behalf of
tenants, rent commencement dates for Space Leases at the Building commencing
after 1998, the space designation, the pro rata share of each leased premises
currently used to determine Overage Rent, the Fixed Rent and Overage Rent
currently being billed, and any outstanding arrearage in Fixed Rent or Overage
Rent as of September 1, 2000 for amounts billed prior to such date (the "Rent
Roll"). Attached hereto as Exhibit E is a complete listing of all brokerage
agreements affecting the Space Leases (the "Brokerage Agreements") and there
are no other agreements by which Tenant or any Seller is liable for payment of
leasing commissions.
(ii) Prior to the execution and delivery of this
Agreement, Sellers and Manager have delivered to Buyer or its representatives
true, correct and complete copies of all documents comprising the Space Leases
and Brokerage Agreements. None of the Space Leases or Brokerage Agreements
have been amended, modified or terminated except as set forth on Exhibit D and
Exhibit E.
(iii) All tenants listed on the Rent Roll or, to the
actual knowledge of Sellers (without any duty of independent investigation),
their subtenants under subleases listed on Exhibit D, are in possession of
their premises unless otherwise stated therein.
(iv) Tenant has billed such tenants in accordance with
the Rent Roll.
(v) Tenant and its agents have held all security
deposits as set forth on the Rent Roll in accordance with the terms of the
applicable Space Leases; all security deposits, including without limitation,
letters of credit or other deposits not in cash, are held in the name of
Tenant.
(vi) Tenant has not received prepaid rentals in
connection with any of the Space Leases more than thirty (30) days in advance
of the date hereof.
(vii) Neither Sellers nor Tenant have received written
notice from any tenant asserting any default by landlord under the Space
Leases that remains uncured.
(viii) There are no pending written notice of claims
asserted by any tenant under any Space Lease for offsets or abatements against
rent or any other monetary claim or any other default by the landlord under
its Space Lease. Tenant has not sent to any tenant written notice of a default
by a space tenant which remains uncured as of the date hereof.
(ix) Tenant is the sole owner of the lessor's interest
in all of the Space Leases and, except for any collateral assignments of
leases and rent given or made to CDC or ARE, Tenant has not given any other
assignment or pledge in respect of any of the Space Leases or its interests
thereunder, and except for the rights of CDC under the CDC Loan Documents and
ARE under the Leasehold Loan Documents, Tenant (under the direction of
Manager) has the sole right to collect rents and other amounts due under the
Space Leases.
(x) Sellers have not received any stock warrants,
options or any other equity rights in or to any of the tenants under the Space
Leases except the warrants (the "Circline Warrants") issued to Tenant by
Circline Inc. pursuant to the Warrant Agreement dated March, 2000 between
Tenant and Circline, Inc. (the "Warrant Agreement"), a true and complete copy
of which has been delivered to Buyer, which Warrant Agreement shall be
assigned to ARE or its designee at or prior to Closing for a reduction in the
outstanding amount of Manager Loans equal to $25,000.
(xi) To the best knowledge of Sellers (without any duty
of independent investigation), there are no subleases affecting the Space
Leases other than as set forth on Exhibit D.
(f) Tenant Improvement Work. All tenant improvement work to
be performed by Tenant or paid for by Tenant (e.g., landlord allowances)
pursuant to the Space Leases has been performed and/or paid for as of the date
hereof except as set forth on Exhibit Z attached hereto and a part hereof;
provided, however, that Buyer hereby acknowledges that, as of the date hereof,
Tenant has not obtained a certificate of occupancy for use of the top floor
space as office space under the Perkins & Will Space Lease and the failure of
Sellers, Manager or Tenant to deliver to Buyer such certificate of occupancy
at Closing shall not in any way constitute a default or misrepresentation by
Sellers or Manager under this Agreement.
(g) Intentionally Deleted.
(h) Environmental Laws. Sellers or Manager have not received
(i) any written notices of violation from any governmental agency of any
environmental laws relating to the Improvements other than as set forth on
Schedule FF attached hereto (which Sellers shall cause to be paid at or prior
to Closing) or (ii) written notice from any person relating to environmental
compliance regarding the Land and/or the Improvements.
(i) Condemnation. There are no pending or, to the best of
Sellers' or Manager's knowledge (without any duty to independently
investigate), threatened condemnation proceedings against the Sale Property or
the Improvements or any portion thereof.
(j) Tax Certiorari Proceedings. Attached hereto as Schedule
4 is a list of all pending real estate tax certiorari proceedings or other
proceedings or protests brought by Sellers or Tenant to reduce the real estate
taxes, assessments, valuations or other impositions on the Improvements or Fee
Owner Property or any portion thereof.
(k) Certificates of Insurance. Tenant will at all times up
to the Closing, maintain in full force and effect casualty and extended
coverage with Industrial Risk Insurers and a general liability insurance
policy with Zurich Insurance Co., Cigna Property & Casualty and Firearms Fund
Insurance Co. or other insurance companies of comparable financial standing as
set forth in the Certificates of Insurance attached hereto as Exhibit EE.
(l) Service Contracts. Attached as Exhibit F hereto are
true, correct and complete copies of all service contracts or purchase orders
or other similar agreements ("Service Contracts") affecting the Building (and
binding on Tenant, Sellers or Manager) in effect on the date hereof and such
Service Contracts have not been terminated or amended. Neither Manager nor
Tenant has delivered to or received from the other party to any such Service
Contract written notice of a default thereunder which remains uncured.
(m) Employees. There are no employment, union or other
similar agreements affecting the Building that will be binding on Buyer or the
Building after Closing except as set forth in Exhibit DD attached hereto and
made a part hereof. A true, correct and complete copy of the agreement listed
as item 1 on such schedule has been delivered by Sellers or Manager to Buyer
or its representatives. There are not more than 35 individuals employed at the
Building who are members of Local 32B-32J, all of whom are employed by
OneSource and not by Fee Owner or Tenant (the "Employees"); provided, however,
the number of Employees may increase to 36 individuals upon Circline, Inc.
and/or Martin E. Segal & Co., Inc. taking possession of new or expanded space,
as applicable, pursuant to their respective Space Leases.
(n) Title to Loan Documents. ARE is the sole owner and
holder of mortgagee interest in the Leasehold Loan and Fee Loan, Manager is
the sole holder of the Option, and ARE and Manager are both a party to the
Escrow Agreement with other parties. Neither ARE nor Manager have taken any
action to subject the Leasehold Loan, Fee Loan, the Option or any of the
Leasehold Loan Documents, Fee Loan Documents, Option Agreement or Escrow
Agreement to any liens, claims or other encumbrances except for those liens,
claims or encumbrances granted to CDC pursuant to the CDC Loan Documents,
which liens, claims and encumbrances shall be assigned to Buyer's lender as of
the Closing; provided, however, if Buyer makes the CDC Election and assumes
the CDC Mortgages at Closing pursuant to Article 3 herein, Buyer shall take
subject to such liens, claims and encumbrances.
(o) Leasehold Loan Documents. Exhibit G sets forth a true
and complete list of (i) all of the documents, instruments, assignments,
policies and statements which evidence, secure or otherwise provide for the
terms of the Leasehold Loan and (ii) all other material documents,
instruments, assignments and policies that constitute the Leasehold Loan
Documents, true, correct and complete copies of which have been delivered to
Buyer or its counsel and no binding and enforceable oral agreements exist that
have amended, modified, waived, extinguished, subordinated, satisfied,
canceled or released any of the material rights of ARE under the Leasehold
Loan or the Leasehold Loan "Collateral" (as defined in the Leasehold Mortgage)
or obligates ARE to do any of the foregoing except as set forth under the CDC
Loan Documents. As of the date hereof, ARE has no further funding obligations
under the Leasehold Loan Documents and there have been no written claims made
under the mortgagee title insurance policy or written disclaimers of liability
by the title insurer thereunder since the restructuring in 1998.
(p) Fee Loan Documents. Exhibit H sets forth a true and
complete list of the (i) all of the documents, instruments, assignments,
policies and statements which evidence, secure or otherwise provide for the
terms of the Fee Loan and (ii) all other material documents, instruments,
assignments and policies that constitute the Fee Loan Documents, true, correct
and complete copies of which have been delivered to Buyer or its counsel and
no binding and enforceable oral agreements exist that have amended, modified,
waived, extinguished, subordinated, satisfied, canceled or released any of the
material rights of ARE under the Fee Loan or the Fee Loan "Collateral" (as
defined in the Fee Mortgage) or obligates ARE to do any of the foregoing
except as set forth under the CDC Loan Documents. As of the date hereof, ARE
has no further funding obligations under the Fee Loan Documents and there have
been no written claims made under the mortgagee title insurance policy or
written disclaimers of liability by the title insurer thereunder since the
restructuring in 1998.
(q) Option Agreement. A true, correct and complete copy of
the Option Agreement has been delivered to Buyer or its representatives and
(i) no other written agreements or documents exist that create or evidence the
Option Agreement or the Option and (ii) no binding and enforceable oral
agreements exist that have amended, modified, waived, extinguished, terminated
or subordinated any of the material rights of the Manager under the Option
Agreement or the Option or that obligates Manager or the Sellers to do any of
the foregoing. Manager is the sole owner and holder of the interest of
optionee under the Option Agreement subject to the Permitted Exceptions and
the CDC Loan Documents. Sellers and Manager have no actual knowledge of any
default by any party under the Option Agreement, and have not received or sent
any written notice of any such default.
(r) CDC Loan Documents. Exhibit W sets forth a true and
complete list of the (i) all of the documents, instruments, assignments,
policies and statements which evidence, secure or otherwise provide for the
terms of the CDC Loan and (ii) all other material documents, instruments,
assignments and policies that constitute the CDC Loan Documents, true, correct
and complete copies of which have been delivered to Buyer or its counsel and
no binding and enforceable oral agreements exist that have amended, modified,
waived, extinguished, subordinated, satisfied, canceled or released any of the
material rights of CDC, Sellers or Tenant under the CDC Loan Documents.
Sellers have received no written notices of default from CDC which have
remained uncured and, to the actual knowledge of Sellers, no material defaults
exist under the CDC Loan Documents.
(s) Settlement Documents. Exhibit BB sets forth a true and
complete list of (i) all of the documents, instruments, assignments and
statements executed in connection with the Settlement Agreement and (ii) all
other material documents, instruments and assignments that constitute the
Settlement Documents (other than those already listed on Exhibits G, H or W
and any other documents filed in connection with the Chapter 11 Cases that are
a matter of public record or relate to claims thereunder that have been fully
satisfied), true, correct and complete copies of which have been delivered to
Buyer or its counsel and no binding and enforceable oral agreements exist that
have amended, modified, waived, extinguished, subordinated, satisfied,
canceled or released any of the material rights of the Sellers, Manager or
Tenant under the Settlement Documents or obligates Sellers, Manager or Tenant
to do any of the foregoing except as set forth under the CDC Loan Documents.
True, correct and complete copies of the Escrow Documents (as defined in the
Escrow Agreement dated July 30, 1998 by and among Park Comcar, One Park Fee,
Tenant, ARE, Manager and New York Land Services, Inc. ("NYLS") (the "Escrow
Agreement")) have been delivered to Buyer or its counsel.
(t) No Lender Default. No Lender Default (as defined in the
Settlement Agreement) has occurred under any of the Settlement Documents, the
Leasehold Loan Documents, the Bankruptcy Documents, the Fee Loan Documents,
the Option Agreement or the Escrow Agreement, and no Lender Default Notice (as
defined in the Settlement Agreement) has been received or sent by any of the
Sellers, Manager or any Lender Party under any of such documents.
(u) No Borrower Defaults. To Sellers and Manager's knowledge
(without any duty of independent investigation), no Borrower Default (as
defined in the Settlement Agreement) has occurred under any of the Settlement
Documents, the Leasehold Loan Documents, the Bankruptcy Documents, the Fee
Loan Documents, the Option Agreement or the Escrow Agreement (except, that
Buyer expressly acknowledges that Stahl (as defined in the Settlement
Agreement) has not delivered a Net Worth Letter (as defined in the Settlement
Agreement) since 1998, and Sellers have neither requested nor demanded any
such letter) and no Borrower Default Notice (as defined in the Settlement
Agreement) has been received or sent by any of the Sellers, Manager or any
Lender Party under any of such documents.
(v) Payment History of Loans. Attached hereto as Schedule 6
are the payment histories (on a monthly basis) of Tenant and Fee Owner under
the Leasehold Loan, the Fee Loan and the CDC Loan.
(w) Outstanding Amounts of Leasehold Loan, Fee Loan and CDC
Loan. There is $113,022,425.93 of principal outstanding under the Leasehold
Loan, $5,200,000.00 of principal outstanding under the Fee Loan and
$125,000,000.00 of principal outstanding under the CDC Loan. Tenant has paid
Base Interest as described in the Leasehold Note through and including
September 1, 2000 subject to any Shortfall Amount (as defined in the Leasehold
Note) and Shortfall Interest (as defined in the Leasehold Note). The total
Shortfall Amount and Shortfall Interest outstanding under the Leasehold Note
as of September 1, 2000 is $628,350.63. Fee Owner has paid interest as
described in the Fee Note through and including September 1, 2000 subject to
any Shortfall Amount (as defined in the Fee Note) and Shortfall Interest (as
defined in the Fee Note). The total Shortfall Amount and Shortfall Interest
outstanding under the Fee Note as of September 1, 2000 is $0.00. Tenant has
paid interest on the CDC Loan through and including September 1, 2000.
(x) Outstanding Amount of Manager Loans. Attached as
Schedule 3 hereto and made a part hereof is a list of the dates, amounts and
interest rates of the Manager Loans made by Manager. Such Manager Loans were
funded with equity contributions to Manager by ARE. As of the date hereof,
Tenant has not paid Manager any outstanding amounts due Manager in connection
with the Manager Loans. Manager is the sole owner and holder of the Manager
Loans; Manager has not assigned, pledged or transferred any right in or to the
Manager Loans except such rights granted CDC pursuant to the CDC Loan
Documents. No other documentation of the Manager Loans exists except as set
forth in Schedule 3.
(y) Lockbox; Escrows. Except for the Lockbox Account
(established pursuant to that certain Lockbox and Security Agreement dated
November 10, 1998 between ARE, Tenant and Hatfield Philips Inc., as amended by
the Amended and Restated Lockbox and Security Agreement dated as of November
29, 1999 between ARE, Tenant and Hatfield Philips Inc. (collectively, the
"Lockbox Agreement")), the Security Deposit Account (as defined in the Lockbox
Agreement) and the Property Operating Account (as defined in the Lockbox
Agreement), there are no other accounts in which monies are held by or for the
benefit of ARE, Tenant or Fee Owner in connection with the Leasehold Loan
and/or Fee Loan except for the accounts set forth in the CDC Loan Documents,
which accounts shall be closed as of the Closing; provided, however, if Buyer
elects the CDC Option and assumes the CDC Loan, such accounts shall remain
open.
(z) ARE Membership Interest. ARE is the sole owner and
holder of the ARE Membership Interest; no party has any right to acquire any
portion of the ARE Membership Interest; the ARE Membership Interest is not
subject to any pledges, liens, claims or encumbrances except for those
pledges, liens, claims or encumbrances granted pursuant to the CDC Loan
Documents, which pledges, liens, claims or encumbrances shall be released as
of the Closing; provided, however, if Buyer elects the CDC Option and assumes
the CDC Mortgages at Closing pursuant to Article 3 herein, Buyer shall take
subject to such pledges, liens, claims or encumbrances. The ARE Membership
Interest was acquired for investment purposes only and not with a view towards
resale.
(aa) SPE Membership Interest. SPE is the sole owner and
holder of the SPE Membership Interest; no party has any right to acquire any
portion of the SPE Membership Interest; the SPE Membership Interest is not
subject to any pledges, liens, claims or encumbrances except for those
pledges, liens, claims or encumbrances granted pursuant to the CDC Loan
Documents, which pledges, liens, claims or encumbrances shall be released as
of the Closing; provided, however, if Buyer elects the CDC Option and assumes
the CDC Mortgages at Closing pursuant to Article 3 herein, Buyer shall take
subject to such pledges, liens, claims or encumbrances. The SPE Membership
Interest was acquired for investment purposes only and not with a view towards
resale.
(bb) Articles of Organization of Tenant. Attached hereto as
Exhibit I is a true, correct and complete copy of the Articles of Organization
of Tenant and any and all amendments and modifications thereto. Tenant is a
limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified to do
business in the State of New York. Neither Sellers, Manager nor Tenant have
received any written notice of (i) an assignment of Park Comcar's interest in
Tenant or (ii) any assertion by Park Comcar that Manager is in default of any
of its obligations as Manager under the Operating Agreement of Tenant.
(cc) Operating Agreement of Tenant. Attached hereto as
Exhibit J is a true, correct and complete copy of the Operating Agreement of
Tenant and any and all amendments thereto. The Operating Agreement of Tenant
has not been terminated and no other written agreement exists which has
amended, modified or restated the Operating Agreement of Tenant, or waived any
material rights of Manager thereunder. The membership interests of Tenant are
not certificated. Manager is the sole manager of Tenant. Tenant is not a party
to any instrument, agreement or document which imposes any material obligation
upon Tenant, other than the Operating Agreement of Tenant, Settlement
Documents, Bankruptcy Documents, Leasehold Loan Documents, CDC Loan Documents
or Permitted Exceptions.
(dd) Articles of Organization of Manager. Attached hereto as
Exhibit K is a true, correct and complete copy of the Articles of Organization
of Manager and any and all amendments and modifications thereto.
(ee) Operating Agreement of Manager. Attached hereto as
Exhibit L is a true, correct and complete copy of the Operating Agreement of
Manager and any and all amendments thereto. The Operating Agreement of Manager
has not been terminated and no other written agreement exists which has
amended, modified or restated the Operating Agreement of Manager, or waived
any material rights of ARE or SPE thereunder. The membership interests of
Manager are not certificated. Manager is not a party to any instrument,
agreement or document which imposes any material obligation upon Tenant, other
than the Operating Agreement of Manager, Operating Agreement of Tenant,
Settlement Documents, Bankruptcy Documents, Leasehold Loan Documents, Fee Loan
Documents, CDC Loan Documents or Permitted Exceptions. All income and
franchise taxes owed by Manager, if any, through calendar year 1999 have been
paid and all income tax returns for Manager for all years through 1999 which
were required to be filed either were filed or will be filed by October 15,
2000.
(ff) Intentionally Deleted.
(gg) Intentionally Deleted.
(hh) Manager's Assets. The sole assets of Manager are: (i)
its right as optionee under the Option Agreement, (ii) the sole and exclusive
right to act as manager of Tenant and to control all decisions and actions of
Tenant pursuant to the Operating Agreement of Tenant, (iii) the Manager Loans
and (iv) the rights of Manager under the Settlement Documents and the
Bankruptcy Documents. Manager has no liabilities, other than such obligations,
if any, arising under the Operating Agreement of Tenant, the Settlement
Documents and the CDC Loan Documents.
(ii) FIRPTA. No Seller is a "foreign person" within the
meaning of Section 1445 of the Internal Revenue Code 1986, as amended, or any
regulations promulgated thereunder.
(jj) Street Maintenance Declaration. Sellers, Manager, Fee
Owner and Tenant have not breached the terms, covenants and conditions of that
certain Distinctive Street Improvement Maintenance Declaration, dated March
18, 1988, made by Park Comcar and recorded in the New York County Clerk's
Office on April 15, 1988 in Reel 1389, Page 1858 (the "Declaration"). Without
limiting the foregoing, (a) no written notice of failure to maintain, repair
or reconstruct the Improvements (for purposes of this paragraph, as such term
is defined in the Declaration) has been received by Sellers, Manager, Fee
Owner or Tenant and (b) neither Sellers, Manager, Fee Owner nor Tenant has
received written notice that any costs have been incurred by the Department of
Transportation, Bureau of Highway Operations or the City (for purposes of this
paragraph, as such terms are used in the Declaration) which may become a lien
upon the Land and Building pursuant to of the Declaration.
(kk) Private Street. To the best of Sellers, Manager's, Fee
Owner's and Tenant's knowledge, no monetary maintenance or repair obligations
have become due to the owner of the fifty (50') foot wide private street (the
"Private Street") between the Building and the building on the parcel
immediately adjacent to the Building (the "Adjacent Parcel") at any time
during Fee Owner's ownership of the Fee Owner's Property or Tenant's tenancy
of the Building, nor has the owner of the Adjacent Parcel or any other entity
demanded in writing or otherwise from Sellers, Manager, Fee Owner or Tenant
any such monetary maintenance in connection with the Private Street.
(ll) Furniture Agreement. Neither Sellers, Manager, Fee
Owner nor Tenant has paid any rent under that certain Agreement dated May 25,
1925 between New York Furniture Exchange Association, Inc., as landlord
("Landlord"), One Park Avenue Corporation, as tenant, and Lexington-32nd
Street Corporation, as owner ("Owner") (the "Furniture Agreement"), which
Furniture Agreement leased to the owner of the Building a portion of the land
covered by the Private Street. No written demand has been made to Sellers,
Manager, Fee Owner or Tenant for rent by the Landlord or Owner (or their
successors in interest) at any time during Fee Owner's ownership of the Fee
Owner Property or Tenant's tenancy of the Building. The premises demised under
the Furniture Agreement are being used by the Fee Owner and the Tenant for
automobile parking. As of the date hereof, neither Sellers, Manager, Fee Owner
nor Tenant has been able to locate copies of any unrecorded documents amending
the Furniture Agreement, including, without limitation, those documents
referenced in subparagraph (a) of that certain Bargain and Sale Deed, dated
February 17, 1982, and recorded on February 19, 1982 in Reel 607, Page 1106,
nor do Sellers, Manager, Fee Owner or Tenant have knowledge of the contents of
such unrecorded documents.
(mm) Lehman Funding Obligations. The maximum amount of the
Lehman Funding Obligations is $21,000,000.00 of which (i) $16,842,481.67 has
been funded to date and (ii) $11,264,593.78 of the $16,842,481.67 has been
acknowledged in writing by Orix Real Estate Capital Markets, LLC.
(nn) Chapter 11 Cases. ARE did not cast a ballot in the
unsecured creditor class in connection with either of the Chapter 11 Cases;
ARE's claims were not treated in the class of unsecured creditors in either of
the Chapter 11 Cases; and ARE did not receive a distribution as an unsecured
creditor pursuant to either of the Chapter 11 Cases.
6. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Sellers and Manager that the following statements are true and
correct as of the date of this Agreement:
(a) Organization; Power and Authority. Buyer is a limited
liability company, duly organized, validly existing and in good standing under
the laws of the State of Delaware and upon Closing shall be duly authorized
and qualified to do business in the State of New York. Buyer has the requisite
power and authority to execute and deliver and to perform its obligations
under this Agreement and all instruments and other documents executed and
delivered by Buyer in connection with this Agreement. Buyer is not subject to
any law, order, decree, restriction or agreement which prohibits or would be
violated by this Agreement or consummation of the transactions contemplated
hereby.
(b) Execution and Enforceability. This Agreement (and all
other instruments executed by Buyer and delivered to Sellers and/or Manager in
connection with the Closing under this Agreement) and the transactions
contemplated hereby (and thereby) have been or will be duly and validly
executed and delivered by Buyer and do or will, as applicable, constitute the
legal, valid and binding obligations of Buyer, enforceable in accordance with
their respective terms, except as enforcement might be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
The execution and delivery by Buyer of this Agreement (and all other
instruments executed by Buyer and delivered to Sellers and/or Manager in
connection with the Closing under this Agreement) and the transactions
contemplated hereby (and thereby), and Buyer's performance of the transactions
contemplated hereby (and thereby), are within the liability company powers of
Buyer, have been duly authorized by all necessary limited liability company
action of Buyer and, will not contravene or conflict with Buyer's charter,
certificate of limited liability company or agreement of limited liability
company.
(c) BUYER ACKNOWLEDGES TO AND AGREES WITH SELLERS AND
MANAGER THAT BUYER HAS NOT RELIED, AND IS NOT RELYING, UPON ANY INFORMATION,
DOCUMENT, SALES BROCHURES OR OTHER LITERATURE, MAPS OR SKETCHES, PROJECTION,
PRO FORMA, STATEMENT, REPRESENTATION, GUARANTEE OR WARRANTY (WHETHER EXPRESS
OR IMPLIED, ORAL OR WRITTEN, MATERIAL OR IMMATERIAL) THAT MAY HAVE BEEN GIVEN
BY OR MADE BY OR ON BEHALF OF SELLERS OR MANAGER WHICH ARE NOT EXPRESSLY SET
FORTH IN THIS AGREEMENT.
(d) BUYER HEREBY ACKNOWLEDGES THAT, EXCEPT FOR THE EXPRESS
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS MADE BY SELLERS AND/OR
MANAGER IN THIS AGREEMENT, IT SHALL NOT BE ENTITLED TO RELY ON, AND SHOULD NOT
RELY ON, SELLERS, MANAGER OR THEIR AGENTS AS TO (I) THE QUALITY, NATURE,
ADEQUACY OR PHYSICAL CONDITION OF THE BUILDING, INCLUDING (BUT IN NO WAY
LIMITED TO) THE STRUCTURAL ELEMENTS, FOUNDATION, ROOF, APPURTENANCES, ACCESS,
LANDSCAPING, PARKING FACILITIES OR THE ELECTRICAL, MECHANICAL, HVAC, PLUMBING,
SEWAGE OR UTILITY SYSTEM, FACILITIES OR APPLIANCES AT THE BUILDING, IF ANY;
(II) THE QUALITY, NATURE, ADEQUACY OR PHYSICAL CONDITION OF SOILS OR THE
EXISTENCE OF GROUND WATER AT THE LAND; (III) THE EXISTENCE, QUALITY, NATURE,
ADEQUACY OR PHYSICAL CONDITION OF ANY UTILITIES SERVING THE BUILDING; (IV) THE
DEVELOPMENT POTENTIAL OF THE BUILDING AND/OR LAND, ITS HABITABILITY,
MERCHANTABILITY OR FITNESS OR THE SUITABILITY OR ADEQUACY OF THE BUILDING
AND/OR LAND FOR ANY PARTICULAR PURPOSE; (V) THE ZONING OR OTHER LEGAL STATUS
OF THE FEE OWNER PROPERTY AND BUILDING; (VI) THE FEE OWNER PROPERTY'S OR
BUILDING'S OR ITS OPERATIONS' COMPLIANCE WITH ANY APPLICABLE CODES, LAWS,
REGULATIONS, STATUTES, ORDINANCES, COVENANTS, CONDITIONS OR RESTRICTIONS OF
ANY GOVERNMENTAL OR QUASI-GOVERNMENTAL ENTITY OR OF ANY OTHER PERSON OR
ENTITY; (VII) THE QUALITY OF ANY LABOR OR MATERIALS RELATING IN ANY WAY TO THE
BUILDING; OR (VIII) THE CONDITION OF TITLE TO THE FEE OWNER PROPERTY AND THE
BUILDING OR THE NATURE, STATUS AND EXTENT OF ANY EASEMENT, RIGHT-OF-WAY,
LEASE, RIGHT OF REDEMPTION, POSSESSION, LIEN, ENCUMBRANCE, LICENSE,
RESERVATION, COVENANT, CONDITION, RESTRICTION OR OTHER MATTER AFFECTING TITLE
TO THE FEE OWNER PROPERTY AND THE BUILDING.
(e) BUYER ACKNOWLEDGES TO AND AGREES WITH SELLERS AND
MANAGER THAT WITH RESPECT TO THE SALE PROPERTY, EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, SELLERS AND/OR MANAGER HAVE NOT, DO NOT AND WILL NOT MAKE
ANY WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, OR ARISING BY OPERATION
OF LAW, INCLUDING (BUT IN NO WAY LIMITED TO) WARRANTIES OR REPRESENTATIONS
REGARDING (I) THE BUILDING'S CONDITION, MERCHANTABILITY, HABITABILITY OR
FITNESS FOR A PARTICULAR USE; (II) THE VALUE, PROFITABILITY OR MARKETABILITY
OF THE FEE OWNER PROPERTY AND THE BUILDING; (III) ANY ENVIRONMENTAL CONDITION,
WHETHER LATENT OR OBSERVABLE; OR (IV) COMPLIANCE WITH ANY ENVIRONMENTAL
PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR
REQUIREMENTS, INCLUDING (BUT IN NO WAY LIMITED TO) THOSE PERTAINING TO THE
HANDLING, GENERATING, TREATING, STORING OR DISPOSING OF ANY HAZARDOUS WASTE OR
SUBSTANCE. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE SALE PROPERTY
TO BE SOLD TO BUYER PURSUANT TO THIS AGREEMENT IS SOLD AND TRANSFERRED WITHOUT
RECOURSE.
(f) BUYER ACKNOWLEDGES AND AGREES WITH SELLERS AND MANAGER
THAT WITH RESPECT TO THE LEASEHOLD LOAN, LEASEHOLD LOAN DOCUMENTS, FEE LOAN,
FEE LOAN DOCUMENTS, CDC LOAN, CDC LOAN DOCUMENTS, OPTION, OPTION AGREEMENT,
SETTLEMENT DOCUMENTS, OPERATING AGREEMENTS OF SELLERS AND ITS AFFILIATES AND
PRINCIPALS AND THE GROUND LEASE EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, SELLERS AND/OR MANAGER HAVE NOT, DO NOT AND WILL NOT MAKE ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT WITHOUT IN
ANY WAY LIMITING THE GENERALITY OF THE FOREGOING, NO WARRANTIES OR
REPRESENTATIONS REGARDING (I) THE COLLECTABILITY OF THE LEASEHOLD LOAN, FEE
LOAN OR CDC LOAN, (II) THE CREDITWORTHINESS OF TENANT OR FEE OWNER, (III) THE
VALUE OF THE FEE OWNER PROPERTY AND/OR BUILDING OR ANY OTHER COLLATERAL
SECURING THE LEASEHOLD LOAN, FEE LOAN OR CDC LOAN, (IV) THE TRANSFERABILITY
AND ENFORCEABILITY OF THE LEASEHOLD LOAN DOCUMENTS, FEE LOAN DOCUMENTS, CDC
LOAN DOCUMENTS, OPTION AGREEMENT OR SETTLEMENT DOCUMENTS AND ANY OTHER
COLLATERAL SECURING THE LEASEHOLD LOAN, FEE LOAN OR CDC LOAN, (V) THE
CONDITION OF THE UNDERLYING COLLATERAL OR (VI) THE PROPER PAYMENT OF TRANSFER
TAXES, RECORDING TAXES AND SUCH OTHER TAXES RELATING TO THE LEASEHOLD LOAN,
FEE LOAN OR CDC LOAN. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE
LEASEHOLD LOAN, FEE LOAN, LEASEHOLD LOAN DOCUMENTS, FEE LOAN DOCUMENTS, CDC
LOAN, CDC LOAN DOCUMENTS, OPTION, OPTION AGREEMENT AND SETTLEMENT DOCUMENTS,
TO BE SOLD TO BUYER PURSUANT TO THIS AGREEMENT ARE SOLD AND TRANSFERRED
WITHOUT RECOURSE.
(g) EXCEPT AS SET FORTH IN THIS AGREEMENT, BUYER
ACKNOWLEDGES THAT SELLERS AND/OR MANAGER HAVE NOT, DO NOT AND WILL NOT MAKE
ANY REPRESENTATION OR WARRANTY WITH REGARD TO COMPLIANCE WITH ANY STATE OR
FEDERAL SECURITIES LAWS WITH RESPECT TO THE MEMBERSHIP INTEREST OR THE SALE OF
THE MEMBERSHIP INTEREST.
(h) Buyer acknowledges that Buyer has had and/or will be
given pursuant to this Agreement an adequate opportunity to make such legal,
factual and other inquiries and investigations as Buyer deems necessary,
desirable or appropriate with respect to the Fee Owner Property and/or
Building. Such inquiries and investigations of Buyer shall be deemed to
include, but shall not be limited to, any leases and contracts pertaining to
the Building, the physical components of all portions of the Building, the
condition of the Building, the existence of any wood destroying organisms at
the Building, such state of facts as an accurate survey and inspection would
show, zoning ordinances, resolutions and regulations of the City of New York
and State of New York and the value and marketability of the Fee Owner
Property and/or the Building.
(i) BUYER WARRANTS AND ACKNOWLEDGES TO AND AGREES WITH
SELLERS AND MANAGER THAT BUYER IS PURCHASING THE SALE PROPERTY IN "AS IS" AND
"WITH ALL FAULTS" CONDITION AS OF THE DATE OF THE CLOSING AND SPECIFICALLY AND
EXPRESSLY WITHOUT ANY WARRANTIES, REPRESENTATIONS OR GUARANTEES, EITHER
EXPRESS OR IMPLIED, OF ANY KIND, NATURE, OR TYPE WHATSOEVER FROM OR ON BEHALF
OF SELLERS AND/OR MANAGER, EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT.
Without in any way limiting the generality of the immediately preceding
sentence, Buyer, Sellers and Manager further acknowledge and agree that in
entering into this Agreement and purchasing the Sale Property:
(i) Buyer specifically acknowledges and agrees
that, except as set forth in this Agreement, it hereby and by consummating the
transactions contemplated by this Agreement waives, releases and discharges
any claim it has, might have had or may have against Sellers with respect to:
the condition of the Building, either patent or latent; its ability or
inability to obtain or maintain either temporary or final certificates of
occupancy or other licenses for the use or operation of the Building, and/or
certificates of compliance for the Building; and compliance with any
environmental protection, pollution or land use laws, rules, regulations or
requirements.
(ii) Except as set forth in this Agreement, Sellers
will have no obligation to take steps to cure or cause Tenant to cure the
existence of any note or notice of violation from any governmental authority
having jurisdiction over the Building noted or issued before, on or after the
date hereof. Except as set forth in this Agreement, the existence of any such
violation, note or notice before, on or after the date hereof will not affect
the obligations of Buyer hereunder.
7. Covenants Pending the Closing. Sellers and Manager, as applicable,
covenant that between the date hereof and the Closing Date:
(a) No Transfer. Sellers and Manager will not, and will not
cause, suffer or permit Tenant to, sell, assign, mortgage, pledge, encumber or
otherwise transfer all or any portion of (i) the Sale Property, (ii) the
Improvements, (iii) Tenant's interest in the Ground Lease or (iv) any
Settlement Documents, (including, without limitation, the Option Agreement);
or (v) any asset of Manager or Tenant.
(b) Operation of the Improvements. Manager shall cause
Tenant to continue to manage, maintain, repair and operate the Improvements in
accordance with Tenant's customary and ordinary business practices, subject to
the limitations set forth in this Agreement. Sellers agree not to cause or
permit Manager to transfer to any third party or remove any personal property
from the Improvements after the date hereof, except for repair or replacement
thereof and except in the case of any termination of this Agreement. Any items
of personal property replaced after the date hereof shall promptly be
installed prior to Closing and shall be of substantially similar quality to
the item of personal property being replaced.
(c) Spaces Leases. Manager shall not cause, permit, suffer
or allow Tenant to enter into, modify, terminate or renew (except pursuant to
the exercise by a tenant of a renewal or extension option contained in such
tenant's Space Lease, provided that Tenant shall take no discretionary action
with respect thereto) any leases for space at the Building or grant any other
rights of occupancy or other rights in respect of all or any portion of the
Building, grant any consent or waive any material right of landlord under any
such Space Lease; accept a surrender, or consent to the termination or
cancellation of any Space Lease by the tenant thereunder, except to the extent
landlord is obligated to do so in accordance with the terms of such Space
Lease or as required by law, in each case without the prior written approval
of Buyer, which approval shall be in Buyer's sole and absolute discretion. In
furtherance and not in limitation of the preceding sentence, Buyer's consent
as aforesaid shall also be required in connection with the negotiation of fair
market rents and other discretionary items with respect to the terms of any
expansion or renewal option, right of first offer or first refusal or similar
rights which are not expressly fixed pursuant to the terms of the Space Lease
in question. Buyer acknowledges and agrees that, subject to the provisions of
Section 7(b), nothing in this Agreement shall be deemed to obligate Sellers to
cause Manager to send any notice of default or take any other affirmative
action in connection with a default by any tenant under a Space Lease.
(d) No Amendment of Ground Lease. Fee Owner will not take,
and Manager will not cause Tenant to take, permit, suffer or allow any action
to modify or amend any term, covenant, provision or agreement contained in the
Ground Lease or enter into any new agreement in respect of the Ground Lease
nor shall Fee Owner permit any surrender or termination of the Ground Lease,
without the prior written consent of Buyer, which consent may be withheld in
Buyer's sole discretion. Buyer acknowledges and agrees that nothing herein
shall be deemed to obligate Fee Owner to send any notice of default or take
any other affirmative action in connection with a default by Tenant under the
Ground Lease (and such failure to send any such notice or take any other
action, in and of itself, shall not be deemed a waiver by Fee Owner of the
obligations of Tenant with respect thereto); provided, however, Fee Owner
shall send a letter reserving its rights if failure to give such notice of
default could reasonably be expected to constitute a waiver thereof.
(e) No Amendment of Loan Documents. Except as set forth in
Section 7(t) hereof, Sellers will not, and will not permit or cause Manager or
Tenant to, modify or amend any term, covenant, provision or agreement
contained in any Leasehold Loan Document, Fee Loan Document, the CDC Loan
Documents or enter into any new agreement in respect of the Leasehold Loan,
Fee Loan or CDC Loan without the prior written consent of Buyer, which consent
may be withheld in Buyer's sole discretion, except that Sellers shall take
such actions as shall be necessary to cause the assignment of the CDC
Mortgages and CDC Note to Buyer's lender at Closing. Buyer acknowledges and
agrees that nothing herein shall be deemed to obligate ARE to send any notice
of default or take any other affirmative action in connection with a default
by Tenant or Fee Owner under the Leasehold Loan Documents or Fee Loan
Documents (and such failure to send any such notice or take any other action,
in and of itself, shall not be deemed a waiver by ARE of the obligations of
Tenant or Fee Owner with respect thereto); provided, however, ARE shall send a
letter reserving its rights if failure to do so could reasonably be expected
to constitute a waiver thereof. Notwithstanding anything herein to the
contrary, Buyer hereby agrees and acknowledges that prior to Closing Sellers
and Manager may continue to submit to CDC requests acknowledging reduction of
the Lehman Funding Obligations (to the extent applicable) without the consent
of Buyer and the same shall not constitute amendments or modifications of the
CDC Loan.
(f) No Sellers and Manager Consents. Subject to the
provisions of paragraph (c) above, Sellers and Manager will not consent to,
and will not cause, suffer or permit Tenant to, sell, assign, mortgage,
pledge, encumber or otherwise transfer all or any portion of the Sale
Property, the Improvements, the assets of Manager or Tenant's interest in the
Ground Lease or any of the other collateral under the Leasehold Loan Documents
without the prior written consent of Buyer, which consent may be withheld in
Buyer's sole discretion.
(g) Copies of Notices, Etc. Sellers and/or Manager will
deliver to Buyer copies of all notices of default and all other material
notices and other material correspondence sent, filed, served on or received
by Sellers, Tenant and/or Manager (including requests for acknowledgment of
reduction in the Lehman Funding Obligations) in connection with the
Improvements, the Ground Lease, the assets of Manager or the Sale Property
(other than any correspondence received by Sellers, Tenant and/or Manager in
respect of any offers or proposals regarding the sale or financing of the
Improvements, the Ground Lease, the assets of Manager or Sale Property to any
party other than Buyer) from and after the date hereof promptly after the
delivery or receipt thereof. Neither Sellers nor Manager shall declare or take
any action in respect of a Borrower Default without Buyer's prior written
consent, which consent may be withheld in its sole discretion, unless Sellers
or Manager determine, in their sole and absolute discretion, that in the
absence of declaring a Borrower Default or taking such action with respect to
such Borrower Default or any action which could, with the giving of notice or
the passage of time, constitute a Borrower Default, any Seller's or Manager's
rights, obligations or liabilities under and/or in respect of the Sale
Property could be materially and adversely affected.
(h) Access. (A) Sellers and Manager will provide Buyer and
Buyer's representatives with access (at Sellers', Manager's or their
attorneys' office in New York City or at such other location as Sellers and
Manager may designate in New York City), during regular business hours, upon
reasonable prior notice, to, the Ground Lease, the Space Leases, the Leasehold
Loan Documents, the Fee Loan Documents, the CDC Loan Documents and such other
information and materials relating to Tenant, the Fee Owner Property, the
Improvements, the Ground Lease, the Space Leases, the Leasehold Loan, the Fee
Loan, the ARE Membership Interest, the SPE Membership Interest and the CDC
Loan as are in Sellers' and/or Manager's possession and control (other than
any correspondence sent or received by Sellers and/or Manager in respect of
any offers or proposals regarding the sale or financing of the Sale Property
to any party other than Buyer), including, without limitation, to the
accounting records used to prepare operating statements in order to enable
Buyer to comply with SEC Regulations S-X Rule 3-14.
(B) (i) Sellers and Manager agree to afford, and
to cause Tenant to afford, Buyer reasonable access to the Improvements prior
to the Closing, at reasonable times upon reasonable notice, provided that
Buyer shall not enter any portion of the Improvements unless accompanied by a
representative of Sellers and Manager. Buyer specifically agrees that neither
it, nor its employees or agents, will communicate directly with any tenants
under Space Leases. Buyer also agrees that Sellers and Manager shall not be
required to commence any action to afford Buyer such access. Such access shall
be subject to the rights of each tenant under their respective Space Lease and
shall not cause an interruption of the business of any such tenants. Buyer
shall not be permitted to perform or cause the performance of any invasive
action (i.e., environmental tests or other similar tests) with respect to the
Land and/or Improvements, without the prior written consent of Sellers and
Manager, which consent shall not be unreasonably withheld.
(ii) Buyer hereby agrees to indemnify and hold
Sellers and Manager and their respective partners, members, officers,
directors, employees and agents harmless from and against any and all claims,
actions and causes of action which may arise out of any act taken by or injury
or damage caused by Buyer, its agents, lenders, representatives, contractors,
inspectors or any other person granted access to the Improvements or any
portion of the Fee Owner Property in accordance with this Section 7(i)(B).
Buyer shall indemnify and reimburse Sellers and/or Manager for the actual,
out-of-pocket cost of repairing any damage to the Improvements caused by or
resulting from activities associated with any inspections made by or on behalf
of Buyer or such other parties. Buyer shall maintain comprehensive liability
and property damage insurance in amounts and underwritten by a carrier
reasonably acceptable to Sellers and Manager, naming Sellers, Manager and
Tenant as insureds against any damage, injury, expenses and other liabilities
which either of them may incur arising out of any act taken by or injury or
damage caused by Buyer, its agents, representatives, contractors, inspectors
or any other person granted access to the Improvements or any portion of the
Fee Owner Property in accordance with this Section 7(i)(B). The obligations of
Buyer under this clause (ii) shall survive the termination of this Agreement
without the occurrence of a Closing.
(i) Subordination, Non-Disturbance and Attornment
Agreements. Sellers and Manager shall use reasonable efforts to assist Buyer
in obtaining subordination, non-disturbance and attornment agreements from
tenants under the Space Leases identified by Buyer's lender.
(j) Service Contracts. Sellers and Manager shall not,
without the prior written consent of Buyer, which consent may be withheld in
its reasonable discretion, cause, suffer or permit Tenant to modify, amend or
terminate any Service Contracts or enter into any new Service Contracts that
cannot be terminated without penalty upon no more than thirty (30) days'
notice by Sellers or Buyer. Sellers shall be obligated to pay any incremental
cost increases in effect during the first thirty (30) days after the Closing
Date so long as Buyer gives the required thirty (30) day notice of termination
as of the Closing Date.
(k) Settlement Documents. Sellers and Manager shall perform
and observe all terms, covenants, provisions and agreements contained in each
Settlement Document and binding on them. Sellers and Manager shall not,
without the written consent of Buyer, which consent may be withheld in its
sole discretion, modify or amend any term, covenant, provision or agreement
contained in any Settlement Document, nor shall Sellers or Manager waive,
release or subordinate any right granted thereunder.
(l) Employees. Sellers and Manager shall cause Tenant not to
hire and cause OneSource not to hire, any new employees, with the exception of
replacements at the same rate, or change the terms of employment, including,
without limitation, salary or benefits, of any employee unless such change is
required under any existing union agreement other than as permitted pursuant
to Section 5(m) hereof.
(m) Tax Proceedings. Sellers shall continue any ongoing tax
certiorari proceedings relating to the reduction of the assessed valuation of
the Land and Improvements other than the Tax Certiorari Claims, which are not
in Seller's or Tenant's control; provided, however, Sellers shall not settle
any pending proceedings without Buyer's consent, which consent shall not be
unreasonably withheld or delayed, if such settlement covers any portion of a
tax year after the Closing Date.
(n) Security Deposits. Sellers shall not, and Manager shall
not permit or allow Tenant to, apply any security deposits of tenants at the
Building unless such tenant has vacated the leased premises and is more than
ninety (90) days in arrears.
(o) Insurance. Sellers and Manager shall cause Tenant to
maintain the current or materially similar insurance coverage for the
Improvements. Evidence of the current level of insurance is set forth on
Exhibit EE attached hereto and made a part hereof.
(p) Member's Estoppel. (A) Sellers shall use reasonable
efforts to cause Park Comcar, the sole member of Tenant, to deliver (i) an
estoppel upon which Buyer and Buyer's lender may rely (the "Member's
Estoppel"), dated at any time after the date hereof, in substantially the same
form as, or providing no less information than provided to CDC on November 29,
1999, which may be qualified by a reference to the Letter dated September 5,
2000 from Park Comcar to ARE and Manager (the "Park Comcar Letter") and/or the
allegations made therein and (ii) an updated estoppel upon which Buyer and
Buyer's lender may rely (the "Updated Member's Estoppel") dated at any time
after the date hereof, approving the modification to the Leasehold Loan
Documents, Fee Loan Document and CDC Loan Documents and the revocation of the
Irrevocable Waiver of Options to Extend under the Ground Lease as contemplated
by Buyer in Section 7(t) hereof and such other documents as may be provided to
Park Comcar and/or its counsel for review, and confirming that the execution,
delivery and performance of same shall not constitute a default by Buyer,
Manager, any Lender Party or any of the other parties under the Settlement
Documents or a Lender Default.
(B) If for any reason whatsoever, Sellers are
unable to obtain the Member's Estoppel pursuant to Section 7(p) above, Buyer
shall provide notice to Sellers no earlier than November 1, 2000 of its desire
for Sellers to commence legal proceedings against Park Comcar compelling the
delivery of the Member's Estoppel. Sellers shall prepare a summons and
complaint to commence such proceeding (the "Summons and Complaint") and submit
the same to Buyer for Buyer's review and consent. Sellers shall not be
obligated to file the Summons and Complaint or otherwise take any action in
respect of any legal proceeding against Park Comcar unless and until Sellers
shall have received the written approval thereof by Buyer or its counsel. If
Buyer consents to the Summons and Complaint ("Buyer's Notice"), Sellers shall
file the Summons and Complaint (through counsel chosen by Sellers in their
reasonable discretion) against Park Comcar to obtain the Member's Estoppel or
the Updated Members Estoppel, as applicable within five (5) days after
receiving Buyer's Notice and shall prosecute the same in a commercially
reasonable manner. Any action taken or failed to be taken in connection with
any such proceeding at the direction or request or with the prior approval of
Buyer or its counsel shall be deemed to be commercially reasonable. Sellers
agree to consult with Buyer and its counsel in devising any such strategy,
without any obligation to take or refrain from taking any action requested by
Buyer or its counsel. Any and all costs and expenses incurred by Sellers prior
to Closing in connection with any legal proceeding to compel the delivery of
the Member's Estoppel shall be borne by Seller. Any and all costs and expenses
incurred by Sellers in connection with any legal proceeding to compel the
Updated Member's Estoppel shall be borne by Buyer. Prior to Closing, and upon
the reasonable request of Buyer, Sellers agree to keep Buyer apprised of the
status of the legal proceeding. Buyer shall be solely responsible for the
costs any legal proceeding against Park Comcar in respect of any Member's
Estoppel or Updated Member's Estoppel incurred on and after the Closing and
Sellers shall have no other responsibilities or obligations to Buyer with
regard to the delivery of the Member's Estoppel or the Updated Member's
Estoppel, or the continuance of any legal proceedings therefor. It is
expressly acknowledged and agreed that the obtaining of such Member's Estoppel
or Updated Member's Estoppel shall in no way constitute a condition to
Closing, nor shall the failure to obtain such Member's Estoppel or Updated
Member's Estoppel constitute a default hereunder. At Closing, Sellers agree,
upon the written request of Buyer, to assign all rights and interests of
Sellers in the legal proceeding against Park Comcar.
(q) Capital Improvement Work. (A) Sellers shall complete the
work described on or in the construction contracts attached to or described in
Exhibit AA and deliver lien waivers to Buyer at Closing for such work to the
extent then paid. If Sellers are unable to complete such work and provide such
lien waivers at Closing, then Sellers shall provide Buyer with notice to such
effect ten (10) Business Days prior to Closing and Buyer's architect shall
thereafter determine the reasonable cost to complete such work. Sellers shall
deliver the amount so determined by Buyer's architect to Escrow Agent at
Closing (the "Capital Work Escrow"). Escrow Agent shall hold such amount in
escrow, and upon the completion of all work, Escrow Agent shall release to
Buyer such amounts paid or incurred by Buyer or Tenant after the Closing with
respect to such work as evidenced by invoices or other documentation, and
Sellers shall be entitled to the balance, if any. Sellers shall remain liable
for any additional amount required to complete such work to the extent the
amounts escrowed are insufficient. This Section 7(q) shall survive Closing.
(r) CDC Loan Principal; Leasehold Loan Principal. Sellers
and Manager shall not make or cause Tenant to make any payment on account of
the principal sum owed to CDC or otherwise consent to the reduction of the
principal sum secured by the CDC Mortgages. ARE shall not apply any payment
received from Tenant on account of the principal sum secured by the Leasehold
Mortgage.
(s) CDC Documents. If Buyer does not assume the CDC Loan,
Sellers shall cause CDC to execute and deliver all documents specified in
Article 10(b) hereinafter, as applicable, and in accordance therewith so as to
assign the CDC Note and CDC Mortgages to Buyer or its lender.
(t) Leasehold Note and Leasehold Mortgage. So long as Buyer
does not assume the CDC Loan, and provided the following is not prohibited
under the Operating Agreement of Tenant, at Buyer's request (provided that
Buyer pays at Closing or upon any earlier termination of this Agreement the
reasonable third party out of pocket expenses of Sellers in connection
therewith), immediately prior to or at Closing ARE shall and shall (i) cause
Manager to cause Tenant to split and sever the Leasehold Note and the
Leasehold Mortgage into two or more loans, and consolidate such portion
thereof as Buyer may elect with the CDC Note, so as to increase the principal
sum secured by the CDC Leasehold Mortgage encumbering the Ground Lease (which
may be accomplished by ARE first taking assignment of the CDC Note and the CDC
Mortgages), and (ii) cause Manager to cause Tenant and Fee Owner to revoke
(the "Revocation") the waiver of the right of Tenant to extend the term of the
Ground Lease, which was waived pursuant to the Irrevocable Waiver of Option to
Extend under the Ground Lease between Tenant and Fee Owner, dated as of
November 29, 1999 (the "Waiver of Option"). The Revocation of the Waiver of
Option shall be subject to the written consent of Park Comcar; provided,
however, ARE shall cause Fee Owner and shall cause Manager to cause Tenant to
deliver the Revocation of the Waiver of Option so long as Sellers are
indemnified against any liability, loss, cost, damage or expense arising out
of or relating to any claim that the Revocation Triggered Adverse Tax
Consequences or otherwise results in Tax Damage by an entity and in form and
substance acceptable to Sellers in their sole discretion. In no event shall
the Revocation of the Waiver of Option by Tenant and Fee Owner be a condition
to Closing.
(u) Non-Imputation Affidavit. If required to enable Buyer to
obtain title insurance (without exception for the knowledge of Sellers or
their officers or employees, including in their capacities as officers or
representatives of Manager or Tenant) on the Option or Tenant's interest in
the Ground Lease, Sellers shall execute and deliver a customary
"non-imputation" affidavit in form reasonably acceptable to the Title Company
(but which in any event shall be limited to the actual knowledge of the
affiant, without any duty of independent investigation and signing solely in
such individual's capacity as an officer or representative of ARE, in its
capacity as a member of Manager).
8. Conditions to Closing.
(a) The obligation of Sellers to sell the Sale Property to
Buyer is subject to the satisfaction of the following conditions:
(i) Buyer shall have performed, satisfied and
complied, or tendered performance, satisfaction and compliance, in all
material respects, with every covenant, agreement and condition required by
this Agreement to be performed or complied with by Buyer on or before the
Closing Date.
(ii) The representations and warranties of Buyer set
forth in Section 6 shall be true and correct in all material respects on the
Closing Date.
The foregoing conditions are for the sole benefit of Sellers
and may be waived, in whole or in part, by Sellers in their sole and absolute
discretion.
(b) The obligations of Buyer to purchase the Sale Property
from Sellers is subject to the satisfaction of the following conditions:
(i) Subject to the provisions of Section 11(b) hereof,
Sellers and/or Manager shall have performed, satisfied and complied or
tendered performance, satisfaction and compliance, in all material respects,
with every covenant, agreement and condition required by this Agreement to be
performed or complied with by Sellers and/or Manager on or before the Closing
Date.
(ii) Subject to the provisions of Sections
10(b)(xxxii) and 11(c) hereof, the representations and warranties of Sellers
and Manager shall be true and correct as of the Closing Date.
(iii) Sellers shall use reasonable efforts to obtain
an estoppel certificate (an "Estoppel") from each tenant under a Space Lease,
dated not earlier than November 15, 2000, in the form attached hereto as
Exhibit Y. It shall be a condition to Buyer's obligation to close under this
Agreement that Buyer receives an estoppel certificate dated not earlier than
November 15, 2000 (which may be relied upon by Buyer and its Lender) from
tenants occupying not less than 90% of the space occupied by office and retail
tenants under Space Leases. Notwithstanding the foregoing, such condition
shall be deemed satisfied (a) if Buyer receives from any such tenant such
certification as such tenant is obligated to deliver under such tenant's Space
Lease (notwithstanding that such certificate may contain more, less or
different information than that set forth in Exhibit Y) and/or, (b) if Sellers
are unable to obtain sufficient Estoppels from any such tenants as set forth
herein, by delivering the certification of Sellers for up to 15% of the
occupied space under the Space Leases (but only with respect to tenants which
have refused or failed to respond to an estoppel request) in the form attached
hereto as Exhibit V as would, together with the Estoppels delivered by
tenants, constitute a sufficient number of Estoppels as required by the terms
of this paragraph (iii). Any such Estoppel given by any tenant or Sellers
shall be sufficient to satisfy the condition set forth in this paragraph (iii)
unless any statements in the Estoppel reveal a Breach of a representation by
Sellers or Manager hereunder (which statements are not demonstrated by Sellers
to be wrong or are not cured at or prior to Closing, in each case, to Buyer's
reasonable satisfaction) and the Damage arising from such Breach(es), together
with the Damage arising from any other Breach(es) which remain incurred as of
the Closing Date, does not exceed the Breach Threshold. If the Closing is
adjourned pursuant to this Agreement, and to the extent any Estoppel becomes
more than fifty-four (54) days old (a "Stale Estoppel"), it shall be a
condition to Buyer's obligation to close under this Agreement that Sellers (a)
obtain from such tenants with a Stale Estoppel a reaffirmation of such
statements in such tenants' original Estoppel, (a "Bring-Down Letter") or (b)
if Sellers are unable to obtain a Bring-Down Letter for each Stale Estoppel,
then Sellers may satisfy the condition by delivering the certification of
Sellers for Stale Estoppels relating to up to 10% of the occupied space under
the Space Leases (which shall be in addition to the Seller Certificates
referred to above). To the extent any Estoppel confirms any information as to
which Sellers or Manager has made a representation herein, Buyer shall rely
solely on the Estoppel with respect to such information and Sellers' or
Manager's representation shall be null, void and of no further force and
effect as to such information.
(iv) Sellers shall either (x) obtain an estoppel from
NYLS in the form attached hereto as Exhibit HH, dated not more than thirty
(30) days prior to Closing, or (y) deliver an estoppel certificate signed by
ARE certifying as to the same information set forth in the Escrow Agent
Estoppel, dated not more than thirty (30) days prior to the Closing (either
such letter, the "Escrow Agent Estoppel").
(v) As of the Closing Date, the unpaid principal
balance of the CDC Loan shall be $125,000,000.00; as of the Closing Date, the
unpaid principal balance of the Leasehold Loan shall be $113,022,425.93.
(vi) A reputable title insurance company shall be
prepared to issue and deliver to Buyer (subject to Buyer ordering title
insurance in accordance with Article 9 herein and paying or causing to be paid
for title insurance in accordance with Article 18 herein), (a) at Buyer's
option, either (x) TIRSA Successor in Ownership of Indebtedness Endorsement to
the existing title insurance relating to the Leasehold Mortgage or (y) a new
policy of title insurance insuring the lien and priority of the Leasehold
Mortgage subject to no Exceptions (as hereinafter defined) other than the
Permitted Exceptions and the CDC Mortgage (as assigned to Buyer or its lender
or assumed by Buyer, as applicable, (b) an owner's policy of title insurance
insuring Buyer's fee simple title to the Fee Owner Property subject to no
Exceptions other than the Permitted Exceptions, and (c) if Buyer assumes the
CDC Loan, an endorsement to the lender's policy of title insurance relating to
the CDC Mortgages insuring the lien and priority of the CDC Mortgages subject
to no Exceptions other than the Permitted Exceptions. Any failure of Buyer to
obtain title insurance due to Sellers' inability to produce the unrecorded
Assignment of Lease made by One Park Fee Venture to Park Fee Associates dated
April 20, 1984 shall not be deemed a failure of the condition set forth in
this Section 8(b)(vi).
The foregoing conditions are for the sole benefit of Buyer
and may be waived, in whole or in part, by Buyer in its sole and absolute
discretion.
9. Title Matters.
(a) Sellers shall convey and Buyer shall accept insurable
fee simple title to the Fee Owner Property, subject to no liens, charges,
encumbrances, mortgages, pledges, security interests, easements, agreements,
other interests, adverse claims or exceptions to title (collectively,
"Exceptions"), other than the matters set forth in Exhibit M attached hereto
and made a part hereof (the "Permitted Exceptions").
(b) Buyer shall order an examination of title and shall
cause a copy of the title commitment (the "Title Commitment") and each update
thereof (each, an "Update") to be forwarded to Sellers' attorney upon receipt
by Buyer from the title company (the "Title Company") issuing the Title
Commitment. Sellers shall be entitled to a reasonable adjournment or
adjournments of the Closing for up to thirty (30) days (as to which date time
shall be of the essence) to remove any Exceptions other than Permitted
Exceptions provided that Sellers pay any extension costs actually charged and
incurred under Buyer's commitment for financing with its lender; provided,
however, such costs shall not exceed $100,000.00 in the aggregate (as so
limited, the "Extension Fees"). Notwithstanding anything herein to the
contrary, if the Title Company shall raise Exceptions other than the Permitted
Exceptions, but the Title Company shall nevertheless be willing to insure
without special premium that upon the Closing, Buyer will obtain insurable fee
simple title to the Fee Owner Property, subject only to the Permitted
Exceptions, then Buyer shall have no right to object thereto and Sellers shall
have no obligations with respect to such Exceptions as may have been raised by
the Title Company.
(c) If Sellers shall be unable to convey title to either the
Fee Owner Property or the Leasehold Loan at the Closing in accordance with the
provisions of this Agreement, Buyer, nevertheless, may elect to accept such
title as Sellers may be able to convey with a credit against the monies
payable at the Closing equal to the reasonable estimated cost (as agreed upon
by Sellers and Buyer) to cure the same (up to the Maximum Expense described
below), but without any other credit or liability on the part of Sellers.
Notwithstanding any provision of this Agreement to the contrary, if Buyer
elects to accept such title and receive a credit against the amounts payable
at Closing, then Buyer shall indemnify, defend and hold harmless Sellers from
and against any claims, losses or expenses (including without limitation
reasonable attorneys' fees) suffered or incurred by Sellers on account of the
matters for which Buyer has received a credit at Closing, provided that
Buyer's liability hereunder shall not exceed the amount of such credit
actually received by Buyer. If Buyer shall not so elect, Buyer may terminate
this Agreement and the sole liability of Sellers shall be to cause the refund
of the Deposit or Deposit Letter of Credit, if applicable, to Buyer plus (i)
the reimbursement for Buyer's Costs (as hereinafter defined) and (ii) Buyer's
Extension Fees if incurred as a result of any such adjournment by Sellers.
Upon such refund, this Agreement shall be null and void and the parties hereto
shall be relieved of all further obligations and liability other than as
specifically provided herein. Sellers shall not be required to bring any
action or proceeding or to incur any expense to cure any title defect or to
enable Sellers otherwise to comply with the provisions of this Agreement,
except that Sellers shall pay, satisfy or remove at the Closing, to the extent
of the Purchase Price payable at the Closing Involuntary Liens not in excess
of $20,000,000 in the aggregate and all Voluntary Liens. "Voluntary Liens"
shall mean mortgages, security interests and other liens, judgments,
exceptions, defects, or encumbrances upon either the Sale Property or the
Ground Lease that are created or caused by any Seller or Tenant (other than
the Permitted Exceptions and the Fee Loan Documents). "Involuntary Liens"
shall mean any other mortgage, security interest, lien, judgment or similar
monetary title exception upon either the Sale Property or the Ground Lease
which was not created or caused by any Seller or Tenant (other than the
Permitted Exceptions) that can be removed by payment of a liquidated sum of
money.
(d) If at Closing there are liens or encumbrances that
Sellers are obligated to pay or discharge, Sellers' may use any portion of the
Purchase Price to pay or discharge them, provided Sellers shall simultaneously
deliver to Buyer at Closing instruments in recordable form and sufficient to
satisfy such liens or encumbrances of record, together with the cost of
recording or filing said instruments. As an alternative, Sellers may deposit
sufficient monies with the Title Company acceptable to and required by it, to
assure their discharge, but only if the Title Company will insure Buyer's
title free and clear of such matters.
10. Closing.
(a) The closing of the purchase and sale under this
Agreement (the "Closing") shall take place at the offices of Sellers' and
Manager's counsel, Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth
Avenue, New York, New York 10176, at 10:00 a.m. on January 8, 2001 or at the
offices of Buyer's lender, time being of the essence as to Buyer's and
Sellers' obligations to close on such date or such later date to which the
Closing may be adjourned pursuant to Sellers' Adjournment Right, as
hereinafter defined (the actual date of the Closing is referred to herein as
the "Closing Date"). The parties agree to pre-close at least one Business Day
prior to the Closing Date.
(b) On the Closing Date:
(i) Buyer shall pay the Balance in the manner specified
in Section 2(b)(ii), subject to adjustment as provided in this Agreement.
(ii) Fee Owner shall execute and deliver to Buyer a
Bargain and Sale Deed Without Covenants Against Grantor's Acts in the form of
Exhibit N annexed hereto and made a part hereof.
(iii) Fee Owner shall execute and deliver to Buyer an
Assignment and Assumption of Ground Lease in the form of Exhibit O annexed
hereto and made a part hereof and Buyer shall execute and deliver such
Assignment and Assumption.
(iv) Sellers and Manager shall execute and deliver to
Buyer notices to Tenant and such other parties (including, without limitation,
tenants under the Space Leases, and other lien holders) as Buyer may
reasonably request giving notice of the conveyance of the Fee Owner Property,
the Leasehold Loan, the Leasehold Loan Documents, the Fee Loan, the Fee Loan
Documents, the ARE Membership Interest and the SPE Membership Interest.
(v) Sellers, Manager and Buyer shall execute and
deliver a settlement statement (the "Settlement Statement") setting forth the
amounts paid by or on behalf of and/or credited to Buyer and Sellers and
Manager pursuant to this Agreement.
(vi) Fee Owner and Buyer shall execute and deliver to
each other the Tax Returns (as hereinafter defined), and Buyer shall deliver
at Closing to Buyer's title company certified or official bank checks to the
order of the appropriate officers in payment of all applicable transfer taxes;
Buyer shall receive a credit against the Balance with respect to all such
transfer taxes.
(vii) Fee Owner shall execute and deliver to Buyer an
affidavit pursuant to Section 1445 (b)(2) of the Internal Revenue Code of
1986, as amended, stating that Fee Owner is not a foreign person within the
meaning of such provision.
(viii) Sellers shall execute and deliver such usual and
customary affidavits as Buyer's title company shall reasonably require.
(ix) ARE shall deliver to Buyer and/or Buyer's lender,
at Buyer's discretion, the following original promissory notes: (a) Substitute
Note "A" dated November 10, 1998 in the original principal amount of
$238,022,425.93 made by Tenant in favor of ARE, and identified as item 1 of
that section of Exhibit G entitled "New Leasehold Note and Mortgage"; (b)
Severed Promissory Note in the original principal amount of $125,000,000.00
made by Tenant in favor of ARE and identified as item 1 of that section of
Exhibit G entitled "Mortgage Splitter, Assignment and Subordination
Documents"; and (c) Amended Substitute Note "A" in the original principal
amount of $113,022,425.93 made by Tenant in favor of ARE and identified as
item 6 of that section of Exhibit G entitled "Mortgage Splitter, Assignment
and Subordination Documents" (the promissory notes described in (a), (b) and
(c), hereinafter, collectively, the "Required Notes"), as well as originals of
all promissory notes which comprise the indebtedness evidenced by the Required
Notes (the "Underlying Notes") and the original Fee Note together with an
allonge annexed to each of the foregoing notes in the form of Exhibit P
annexed hereto and made a part hereof (subject to, if Buyer assumes the CDC
Loan, the collateral assignment to CDC). If the Required Notes are lost or
misplaced, ARE shall cause to be delivered, in lieu thereof (or of any one of
them) and Buyer shall accept, a lost note affidavit and indemnity from either
LaSalle Bank National Association, CDC Mortgage Capital, Inc. or another
credit-worthy entity reasonably acceptable to Buyer and acceptable to Buyer's
lender, and in form and substance reasonably acceptable to Buyer and Buyer's
lender. In addition, at Buyer's request, Fee Owner and Manager, on behalf of
Tenant, shall execute one or more replacement notes for any Required Note not
delivered to Buyer at Closing. If the Underlying Notes (or any one of them)
and the original Fee Note are lost or misplaced, ARE shall deliver, or cause
another entity reasonably satisfactory to Buyer and Buyer's lender, and Buyer
shall accept, a lost note affidavit and indemnity in form and substance
reasonably satisfactory to Buyer and Buyer's lender for any of the foregoing
which is not delivered at Closing. At Buyer's request, Fee Owner and Manager,
on behalf of Tenant, shall execute a replacement note with respect to any of
the notes previously signed by Fee Owner or Tenant not delivered to Buyer at
Closing.
(x) ARE shall execute and deliver to Buyer an
Assignment of Leasehold Mortgage and an Assignment of Fee Mortgage in the
forms of Exhibit Q annexed hereto and made a part hereof (subject to, if Buyer
assumes the CDC Loan at Closing, the collateral assignment to CDC).
(xi) ARE shall execute and deliver to Buyer an
Assignment of Leasehold Loan Documents and an Assignment of Fee Loan Documents
in the forms of Exhibit R annexed hereto and made a part hereof (subject to,
if Buyer assumes the CDC Loan at Closing, the collateral assignment to CDC).
(xii) Sellers and Manager shall execute and deliver to
Buyer an Assignment of Settlement Documents and Bankruptcy Documents in the
form of Exhibit GG annexed hereto and made a part hereof (subject to, if Buyer
assumes the CDC Loan at Closing, the collateral assignment to CDC).
(xiii) ARE shall execute and deliver to Buyer an
Assignment of the Assignment of Leases and Rents delivered in connection with
the Leasehold Mortgage in the form of Exhibit S annexed hereto and made a part
hereof (subject to, if Buyer assumes the CDC Loan at Closing, the collateral
assignment to CDC).
(xiv) ARE shall execute and deliver to Buyer such UCC-3
assignments as shall be necessary to assign any UCC financing statements
relating to the Leasehold Loan and Fee Loan (subject to, if Buyer assumes the
CDC Loan at Closing, any UCCs in favor of CDC).
(xv) Subject to Section 10(b)(ix) above, ARE shall
deliver to Buyer or Buyer's lender such other original Leasehold Loan
Documents and Fee Loan Documents as are in ARE's or CDC's possession or
control and, if originals of same are not in ARE's or CDC's possession, copies
of same certified by ARE or CDC; provided, however, if Buyer assumes the CDC
Loan at Closing, such documents shall remain in CDC's possession.
(xvi) ARE shall execute such documents and instruments
as counsel to Buyer reasonably requests to effect the transfer of ARE's
interest in the Lockbox Account including, without limitation, the Security
Deposit Account and the Property Operating Account and ARE's check-writing
authority thereunder; if and to the extent ARE is unable to substitute Buyer
in all respects with respect to the Lockbox Account, including check-writing
ability, as of the Closing Date, then ARE will continue to act as Buyer's
nominee and agent with respect to such accounts from and after the Closing
until such time as Buyer is fully substituted for ARE as provided above. With
respect thereto, ARE shall only take such actions, and shall only be
authorized to take such actions, as may be specifically requested by Buyer in
writing, and Buyer shall indemnify and hold ARE harmless with respect to all
Losses (as hereinafter defined) incurred by ARE as a result of taking any such
requested action and ARE shall indemnify and hold Buyer harmless with respect
to ARE's failure to take such actions as per Buyer's written requests. Buyer
and ARE shall cooperate in good faith to effectuate the transfer of the
Lockbox Account and all of ARE's rights with respect thereto at the Closing or
as soon as possible thereafter.
(A) Security deposits of tenants (other than
those which are marketable securities, letters of credit, or other non-cash
items) shall be transferred by direct assignment of the Security Deposit
Account; provided, however, there shall be maintained or credited to Sellers
all interest earned or accrued to the Adjustment Date, less such portion of
the interest to which the respective tenant would be entitled pursuant to its
Space Lease or by law. No allocation shall be made of security deposits
properly applied prior to the Adjustment Date in accordance with this
Agreement, and Sellers shall be entitled to such amounts. Security deposits
held in the form of marketable securities shall be delivered to Buyer at
Closing, with any interest thereon through the Adjustment Date in accordance
with the applicable Space Lease and/or this Agreement credited to Sellers,
less such portion to which the tenant under the applicable Space Lease would
be entitled. Security deposits held in the form of letters of credit shall be
delivered to Buyer at Closing.
(B) At Closing (1) Buyer shall indemnify and
hold Sellers free and harmless from and against any claim for misapplication,
on or after the Closing, made with respect to all security deposits assigned
to Buyer, or a security deposit as to which Buyer has received a credit, and
(2) Sellers shall indemnify and hold Buyer harmless from and against any claim
with respect to any security deposit (x) not delivered to Buyer or (y) for
which Buyer has not received a credit, including, without limitation, any
security deposit applied by Sellers, Manager and/or Tenant on or prior to the
Closing Date.
(xvii) Sellers shall deliver to Buyer copies of all
information and materials which are required by this Agreement to be delivered
or made available by Sellers and Manager to Buyer relating to Manager, Tenant,
the Fee Owner Property, the Improvements, the Ground Lease, the Leasehold
Loan, the Fee Loan, the ARE Membership Interest, the SPE Membership Interest
and the CDC Loan and as are in Sellers', Manager's and/or Insignia/ESG, Inc.'s
possession or control to the extent not previously delivered to Buyer.
(xviii) ARE shall execute and deliver to Buyer an
Assignment and Assumption of ARE Membership Interest in the form of Exhibit T
attached hereto transferring ARE's interest in the ARE Membership Interest and
Buyer shall execute and deliver such Assignment and Assumption of ARE
Membership Interest (subject to, if Buyer assumes the CDC Loan at Closing the
pledges to CDC).
(xix) SPE shall execute and deliver to Buyer an
Assignment and Assumption of SPE Membership Interest in the form of Exhibit U
attached hereto transferring SPE's interest in the SPE Membership Interest and
Buyer shall execute and deliver such Assignment and Assumption of SPE
Membership Interest (subject to, if Buyer assumes the CDC Loan at Closing the
pledges to CDC).
(xx) Sellers, Manager and Buyer shall cause their
respective secretaries or other appropriate officers to execute and deliver to
each other certificates as to the resolutions authorizing the transactions
contemplated by this Agreement and certifying as to the authority of any
individuals signing on such party's behalf.
(xxi) Sellers shall cause the respective officers and
directors of Manager to resign as officers and directors of Manager (the
"Resignations") as of the Closing Date and deliver to Buyer the original
Resignations, Articles of Organization of Manager and Operating Agreement of
Manager and, if originals of same are not in Manager's or Sellers' possession,
copies of same certified by Sellers.
(xxii) Buyer, Sellers and Manager each shall execute,
have acknowledged and deliver any and all other documents or instruments
reasonably requested by the parties in order to consummate the transactions
contemplated by this Agreement.
(xxiii) Sellers shall deliver to Buyer the Estoppels in
accordance with and pursuant to Section 8(b)(iii) herein.
(xxiv) If Buyer does not assume the CDC Loan at
Closing, Sellers shall cause CDC (or ARE) to deliver to Buyer or Buyer's
lender the following:
(A) The original CDC Note, together with an
allonge payable to Buyer or Buyer's lender annexed to such Note; provided,
however, at Buyer's request, Sellers shall cause CDC to deliver the CDC Note
to ARE, in which case, ARE shall deliver to Buyer or Buyer's lender the
original CDC Note, together with an allonge payable to Buyer or Buyer's lender
annexed to such CDC Note which allonge shall be delivered without
representation or warranty by assignor and without recourse to assignor except
as to the outstanding principal balance of the CDC Loan and CDC being the sole
owner and holder of the CDC Note, free and clear of all liens and
encumbrances. If the original CDC Note is lost or misplaced, Seller shall
cause to be delivered and Buyer shall accept, a lost note affidavit and
indemnity from either LaSalle Bank National Association, CDC Mortgage Capital,
Inc. or another credit-worthy entity reasonably acceptable to Buyer and
acceptable to Buyer's lender, and in form and substance reasonably
satisfactory to Buyer and Buyer's lender. At Buyer's request, Fee Owner and
Manager, on behalf of Tenant, shall execute a new note to replace the CDC
Note.
(B) An Assignment of the CDC Mortgages;
provided, however, Sellers shall have the right to cause CDC to assign the CDC
Mortgages to ARE, in which case, ARE shall execute and deliver to Buyer or its
lender an Assignment of the CDC Mortgages.
(C) An assignment or termination of all
collateral assignments of Leasehold Loan Documents, as requested by Buyer or
Buyer's lender.
(D) An assignment or termination of any UCC-1
financing statements perfecting any security interests created pursuant to the
CDC Loan, the Assignment of Assignment of Leases and Rents executed by Tenant
in connection with the CDC Loan and such Intercreditor Agreements listed on
Exhibit W in connection with the CDC Loan.
(xxv) Certificate(s) or letter(s) executed by CDC
stating (i) that the amount of the unpaid principal balance of the CDC Loan is
$125,000,000.00, (ii) the interest rate of the CDC Loan, (iii) the date
installments of interest were last paid with respect to the CDC Loan and (iv)
all other sums owed to CDC under the CDC Loan.
(xxvi) If Buyer assumes the CDC Loan at Closing, Buyer
shall deliver the written consent of CDC.
(xxvii) If Buyer assumes the CDC Loan at Closing,
Sellers shall deliver an assignment of all Sellers' right, title and interest,
if any, in the Clearing Account (as defined in the Clearing Account Agreement
dated November 29, 1999 and executed by Tenant, CDC, The Chase Manhattan Bank
and Insignia/ESG, Inc.) and the Deposit Account (as defined in the Deposit
Account Agreement dated November 29, 1999 and executed by LaSalle Bank N.A.,
Tenant, ARE and CDC) for Rent (as defined in the Clearing Account Agreement
and Deposit Account Agreement) then held by CDC.
(xxviii) Intentionally Deleted.
(xxix) If Buyer assumes the CDC Loan at Closing, Buyer
shall receive a credit toward the Balance at Closing in the amount of the sum
of (i) the outstanding balance of the CDC Loan as of the date of Closing plus
(ii) any other outstanding amounts owing CDC (including, without limitation,
late charges but specifically excluding any Exit Fee) as of the Closing Date
and not paid by or on behalf of Sellers.
(xxx) Sellers shall deliver the Member's Estoppel and
the Updated Member's Estoppel in accordance with and pursuant to Section 7(p)
herein.
(xxxi) Sellers shall deliver or cause NYLS to deliver
the Escrow Agent Estoppel.
(xxxii) Sellers and Manager shall deliver to Buyer a
certificate signed by Sellers stating that the representations and warranties
made by Sellers and Manager in this Agreement are true and correct as of the
Closing Date; provided, however, that if and to the extent any such
representations or warranties are no longer true and correct, Sellers and
Manager shall update such representations and warranties and provide such
additional information as would be required under the circumstances to make
such representations and warranties true and correct as of the Closing Date.
Provided changes set forth in such certificate arise only out of (A) any
action taken with Buyer's written approval, (B) any action expressly permitted
or required under this Agreement, (C) a tenant's action or omission in respect
of its Space Lease, the premises demised thereunder or the Improvements,
including without limitation any default by, bankruptcy of or vacating of
space by such tenant or any payment made or not made by any such tenant or the
exercise of any option for renewal, expansion, termination or otherwise as set
forth in such tenant's Space Lease subject to the limitations set forth in
this Agreement, (D) the expiration of the term of any Space lease or the
disaffirmance or termination of any Space Lease by any tenant in any
bankruptcy proceeding subject to the limitations set forth in this Agreement,
(E) any Seller or Manager making or performing, or causing Tenant to make or
perform any payment obligations hereunder or under any document or instrument
described herein or in any Exhibit or Schedule hereto subject to the
limitations set forth in this Agreement, (F) the threat or commencement of any
litigation against ARE, Fee Owner, SPE, Tenant and/or Manager which is
adequately covered by the insurance policies described in the Certificates of
Insurance as set forth on Exhibit EE, (G) the sending by Tenant of any notice
of default in respect of a Space Lease or Service Contract subject to the
limitations set forth in this Agreement, (H) the receipt by Sellers, Manager
or Tenant of any written notice of default or claims asserted by any tenant
for offsets or abatements against rent or any other monetary claim if such
alleged default(s) or claim(s) are demonstrated by Sellers to be wrong or
cured on or prior to Closing to Buyer's reasonable satisfaction, (I) any
reduction in the number of union employees employed at the Improvements
provided Tenant shall have no liability with respect thereto following the
Closing, (J) the occurrence of any Borrower Default under any Settlement
Document, or any action or omission which, with the giving of notice and/or
the passage of time, would constitute a Borrower Default under any Settlement
Document, and (K) the making of any additional Manager Loans, then such
changes shall not constitute a default or breach of such representation or
warranty or failure of a condition hereunder.
(xxxiii) Buyer shall deliver to Sellers and Manager a
certificate signed by Buyer stating that the representations and warranties
made by Buyer in this Agreement are true and correct in all material respects
as of the Closing Date.
(xxxiv) Sellers shall deliver to Buyer invoices from
each broker set forth in the Brokerage Agreements attached hereto as Exhibit E
for any leasing or brokerage commissions due and owing as of the Closing Date
and canceled checks or other evidence reasonably satisfactory to Buyer to
evidence proof of payment thereof except for such leasing and brokerage
commissions otherwise agreed to between the parties pursuant to Section 4(b)
herein.
(xxxv) Sellers shall cause Tenant to execute and
deliver any affidavit required under Section 275 of the Real Property Law of
New York with respect to any assignment of the CDC Mortgage and/or the
Leasehold Mortgage contemplated by this Agreement. Sellers shall have no
obligation hereunder to execute or deliver, or to cause Manager or Tenant to
execute or deliver, any such affidavit with respect to the Fee Mortgage.
11. Defaults; Remedies.
(a) Default by Buyer. If Buyer shall default in its
obligation to close in accordance with the terms of this Agreement (which
obligations shall include, without limitation, the requirement that Buyer's
representations and warranties in Section 6 are true and correct in all
material respects on the Closing Date) and Sellers shall then be ready,
willing and able to close in accordance with the terms, provisions and
conditions of this Agreement, then Buyer agrees that it shall be liable to
Sellers for damages incurred by Sellers by reason of such default, but that
the amount of such damages to Sellers while substantial, would be difficult or
impossible to determine with any kind of mathematical precision. Thus, in such
event, Sellers shall have the right as their sole and exclusive remedy, to
terminate this Agreement and retain the Deposit as liquidated damages, and
thereafter the parties hereto shall have no further obligations or liabilities
hereunder, except as may expressly survive the termination of this Agreement
as provided for herein. Buyer hereby acknowledges and agrees that the
provisions of this Section 11(a) represent an agreed-upon measure of damages
and are not to be deemed a forfeiture or penalty.
(b) Default by Sellers and/or Manager.
(i) In the event that Buyer has actual knowledge
(without any duty of independent investigation) at or before the Closing of
any default by Sellers and/or Manager in the performance of any of their
respective covenants and agreements under this Agreement (a "Seller Default"),
then Buyer shall give Sellers written notice thereof within five (5) days of
learning of such Seller Default or any facts or circumstances which Buyer
believes constitutes a Seller Default, but in any event such notice shall be
given at or prior to the Closing. For purposes of clarification, Seller
Defaults shall specifically exclude Breaches (as hereinafter defined).
(ii) In the event that any material Seller Default(s)
remain uncured as of the date then scheduled for Closing (subject to
adjournment as provided herein) or Sellers or Manager shall otherwise
willfully and intentionally default in any of their respective obligations
hereunder, and Buyer shall then be ready, willing and able to close in
accordance with the terms, provisions and conditions of this Agreement, then
Buyer shall have the right, at Buyer's option and as its sole and exclusive
remedy with respect to such Seller Default(s), either (i) to obtain specific
performance of Seller's and Manager's obligations hereunder, in which case
this Agreement shall continue in full force and effect, or (ii) to terminate
this Agreement provided, however, that if Buyer elects to terminate this
Agreement as provided in this clause (ii), then Sellers may cancel such
termination and either (A) cure the Seller Default(s), and Seller shall have
the right to adjourn the Closing for up to thirty (30) days as to which date
time shall be of the essence in order to so cure the Seller Default(s)
(provided that such Seller Default (x) is not Sellers' wilful and intentional
refusal to close in accordance with this Agreement, (y) shall be susceptible
of cure within such thirty (30) day period, and (z) Sellers' shall pay Buyer's
Extension Fees if imposed as a result of such adjournment), or (B) provided
the Damage (as hereinafter defined) arising from such Seller Default(s)
(together with the Damage arising from any Breaches described in Section
11(c)(iii) below) does not exceed $10,000,000, and provided further that the
Seller Default in question is not Sellers' willful and intentional refusal to
close in accordance with this Agreement, obligate Buyer to close by agreeing
to give Buyer a credit against the Purchase Price in the amount of the Damage
arising from such Seller Default(s) (as agreed to by Buyer and Sellers). If
the parties are unable to agree on the amount of the Damage arising from such
Seller Default(s) within five (5) Business Days of Buyer's assertion of a
Seller Default, then, at the election of Sellers exercised within five (5)
Business Days thereafter, either (1) Buyer's termination of this Agreement
shall be reinstated or (2) the Closing shall occur with an abatement to the
Purchase Price in the amount, if any, of the undisputed amount of Damage
arising from such Seller Default(s) and the disputed portion of the Damage
arising from such Seller Default(s) claimed by Buyer shall be deducted from
the Balance and escrowed with a party reasonably acceptable to both parties
(it being hereby agreed that the Title Company is acceptable to both parties)
pending a final and binding resolution of the dispute. For purposes of this
Agreement, the term "Damage" and the phrases "Damage from" or " Damage arising
out of" and similar phrases shall mean and refer to the actual loss, cost,
damage or expense that will be suffered or incurred by Buyer arising directly
from or by reason of the Seller Default(s) or Breach(es) in question. If
Sellers do not elect to cancel Buyer's termination of this Agreement as set
forth above, then Buyer shall be entitled to the return of the Deposit plus
reimbursement for Buyer's reasonable, actual and out-of-pocket due diligence
costs and expenses, as evidenced by invoices or other evidence reasonably
satisfactory to Sellers, including title, survey, legal, accounting and
engineering and environmental consultants' fees, costs and expenses, in an
amount not to exceed $150,000 in the aggregate (collectively, as so limited,
"Buyer's Costs"). Upon such payment, this Agreement shall terminate and
thereafter the parties shall have no further obligations or liabilities
hereunder, except as may expressly survive the termination of this Agreement
as provided for herein.
(c) Breach of Representation by Sellers and/or Manager.
(i) Subject to the provisions of Section 10(b)(xxxii),
in the event that (x) any of Sellers' or Manager's representations or
warranties made in this Agreement or in any closing document are not true as
of the date made (any such event being referred to herein as a "Breach"), (y)
Buyer has actual knowledge (without any duty of independent investigation), at
or before the Closing of any such Breach, and (z) the Damage arising from such
Breach (the "Damage") is equal to or less than $1,000,000 (the "Breach
Threshold") on an aggregate basis with respect to all such Breaches, then,
Buyer shall have no right to terminate this Agreement or to assert any claim
with respect to such Breach(es), except to the extent any subsequent Breach of
a surviving representation causes the aggregate Damage arising from all
Breaches to exceed the Breach Threshold, in which event the provisions of
Sections 11(c)(v) and (d) shall apply.
(ii) In the event that Buyer has actual knowledge
(without any duty of independent investigation) at or before the Closing of
any Breach, then Buyer shall give Sellers written notice thereof within five
(5) days of learning of such Breach or any facts or circumstances which Buyer
believes constitutes a Breach, but in any event such notice shall be given at
or prior to the Closing. If Buyer fails to give such notice within the time
periods described above, then, Buyer shall have no right to terminate this
Agreement or to assert any claim with respect to such Breach(es), except to
the extent any subsequent Breach of a surviving representation causes the
aggregate Damage arising from all Breaches to exceed the Breach Threshold, in
which event the provisions of Sections 11(c)(v) and (d) shall apply.
(iii) In the event that a Breach of which Buyer shall
have actual knowledge (without any duty of independent investigation) at or
prior to the Closing shall occur and the aggregate Damage arising from all
Breaches is greater than $1,000,000, then Buyer shall have the right, at its
option and as its sole and exclusive remedy therefor, either to (A) close in
accordance with this Agreement with an adjustment to the Purchase Price on
account of such Breach(es) in the amount of the aggregate Damage in excess of
$500,000 (such credit not to exceed $5,000,000) and release Sellers and
Manager from any further liability and forever waive any and all further
remedies (whether at law or in equity) on account thereof or (B) terminate
this Agreement; provided, however, that if Buyer elects to terminate this
Agreement as provided in this clause (iii), then Sellers may cancel such
termination and either (1) cure the Breach(es), and Seller shall have the
right to adjourn the Closing for up to thirty (30) days in order to so cure
the Breach(es) (provided that Seller's shall pay Buyer's Extension Fees is
imposed as a result of such adjournment), or (2) provided the Damage arising
from such Breach(es) (together with the Damage arising from any Seller
Default(s) described in Sections 11(b)(ii)(B) hereof does not exceed
$10,000,000, obligate Buyer to close by agreeing to give Buyer a credit
against the Purchase Price in the amount of the Damage arising from such
Breaches (as agreed to by Buyer and Sellers) in excess of $500,000. If the
parties are unable to agree on the amount of the Damage arising from such
Breaches, then, at the election of Sellers, either (A) Buyer's termination of
this Agreement shall be reinstated or (B) the Closing shall occur with a
credit against the Purchase Price in the amount, if any, of the undisputed
amount of Damage arising from such Breaches in excess of $500,000, and the
disputed portion of the Damage arising from such Breaches in excess of
$500,000 claimed by Buyer shall be deducted from the Balance and escrowed with
a party reasonably acceptable to both parties (it being hereby agreed that the
Title Company is acceptable to both parties) pending a final and binding
resolution of the dispute. If Sellers do not elect to cancel Buyer's
termination of this Agreement as set forth above, then, Buyer shall be
entitled to a return of the Deposit plus reimbursement for Buyer's Costs. Upon
such payment, this Agreement shall terminate and thereafter the parties hereto
shall have no further obligations or liabilities hereunder, except as may
expressly survive the termination of this Agreement as provided for herein.
(iv) Arbitration shall be the exclusive method for
determining the amount of any credit against the Purchase Price to be given in
accordance with Sections 11(b) and (c). A single arbitrator shall resolve the
dispute in accordance with this clause (iv). If the parties are unable to
agree on a single arbitrator, either party may at any time after the Closing
ask the president of the Real Estate Board of New York, Inc. to appoint a
single arbitrator. Any arbitrator must be disinterested in the dispute and
impartial with respect to all parties hereto. Each party shall submit its
suggested amount of the credit, and the arbitrator shall be authorized and
instructed only to choose one of the two submitted amounts, whichever the
arbitrator deems more closely approximates the Damage suffered by Buyer. Any
arbitration shall be conducted in the Borough of Manhattan, and in accordance
with the commercial arbitration rules of the American Arbitration Association.
The arbitrator shall render his or her decision regarding the credit within
thirty (30) days of appointment. A determination by an arbitrator thus
appointed shall be final and binding on the parties. The cost of such
arbitration shall be borne in accordance with Section 19 hereof. If Buyer is
successful in any arbitration or other resolution of a dispute over the amount
of a credit, Buyer shall be entitled to the amount of the actually determined
Damage (but, with respect to Breaches, only to the extent in excess of
$500,000 to the extent not already deducted in calculating any credit for
Breaches given to Buyer at Closing) from the amount escrowed at Closing, but
Sellers' liability for such amount shall not be limited to the amount so
escrowed.
(v) In the event that (x) a Breach shall occur, (y)
Buyer first obtains actual knowledge of any such Breach after the Closing, and
(z) the aggregate Damage arising from all such Breaches and Breaches of which
Buyer had knowledge at or prior to the Closing is greater than $1,000,000,
then, subject to the provisions of this Article, Sellers shall protect,
defend, hold harmless and indemnify Buyer, its officers, directors,
shareholders, employees, agents and affiliates, and their respective
successors and assigns, from, against and in respect of any and all Damage in
excess of $500,000 (to the extent not already deducted in calculating any
credit for Breaches given to Buyer at Closing) that may be suffered or
incurred by any or all of them arising directly from or by reason of (A) all
such Breaches and (B) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses (including without
limitation, interest, penalties, reasonable legal and accounting fees)
incident to the foregoing and the enforcement of the provisions of this clause
(v); provided, however, that in no event shall Sellers' aggregate liability
under this indemnification and clause (iii) above exceed $10,000,000 in the
aggregate for any and all such Breaches plus all costs of enforcement of the
foregoing indemnity (including without limitation, reasonable attorneys' fees
and disbursements).
(d) Indemnification Procedures. Whenever a party hereto
(such party and each of its affiliates which is entitled to indemnification
pursuant to any provision of this Agreement, an "Indemnified Party") shall
learn of a claim that, if allowed (whether voluntarily or by judicial or
quasi-judicial tribunal or agency), would give rise to an obligation of
another party (the "Indemnifying Party") to indemnify the Indemnified Party
under any provision of this Agreement, before paying the same or agreeing
thereto, the Indemnified Party shall promptly notify the Indemnifying Party in
writing of all such facts within the Indemnified Party's knowledge with
respect to such claim and the amount thereof (a "Notice of Claim"); provided,
however, that in order to be entitled to indemnification hereunder, a Notice
of Claim must in any event be given prior to the expiration of any applicable
survival period hereunder. If, prior to the expiration of fifteen (15) days
from the delivery of a Notice of Claim, the Indemnifying Party shall request,
in writing, that such claim not be paid, the Indemnified Party shall not pay
the same, provided the Indemnifying Party proceeds promptly, at its or their
own expense (including employment of counsel reasonably satisfactory to the
Indemnified Party), to settle, compromise or litigate, in good faith, such
claim. After notice from the Indemnifying Party requesting the Indemnified
Party not to pay such claim and the Indemnifying Party's assumption of the
defense of such claim at its or their expense, the Indemnifying Party shall
not be liable to the Indemnified Party for any legal or other expense
subsequently incurred by the Indemnified Party in connection with the defense
thereof, unless the joint representation of the Indemnifying Party and the
Indemnified Party would create a conflict of interest. However, the
Indemnified Party shall have the right to participate at its expense and with
counsel of its choice in such settlement, compromise or litigation. The
Indemnified Party shall not be required to refrain from paying any claim which
has matured by a court judgment or decree, unless an appeal is duly taken
therefrom and execution thereof has been stayed, nor shall the Indemnified
Party be required to refrain from paying any claim where the delay in paying
such claim would result in the foreclosure of a lien upon any of the property
or assets then held by the Indemnified Party or any criminal sanctions. The
failure to provide a prompt Notice of Claim as provided in this Section 11(d)
shall not excuse the Indemnifying Party from its or their continuing
obligations hereunder; however, the Indemnified Party's claim shall be reduced
by any damages to the Indemnifying Party resulting from the Indemnified
Party's delay or failure to provide a Notice of Claim as provided in this
Section 11(d); and provided, further, however, that in order to be entitled to
indemnification hereunder, a Notice of Claim must in any event be given prior
to the expiration of any applicable survival period hereunder. For purposes of
this Article, any assertion of fact and/or law by a third party that, if true,
would constitute a breach of a representation or warranty made by a party to
this Agreement or make operational an indemnification obligation hereunder,
shall, on the date that such assertion is made, immediately invoke the
Indemnifying Party's obligation to protect, defend, hold harmless and
indemnify the Indemnified Party pursuant to this Article.
(e) Survival. The provisions of this Article 11 shall
survive the Closing without limitation.
12. Survival.
(a) Survival Periods for Sellers and Manager. The
representations and warranties of Sellers and Manager made in Section 5(a)
[Organization ], Section 5(b) [Execution], Section 16 [Broker] and in any
estoppel certificates made by any Sellers and delivered pursuant to Section
8(b)(iii) shall survive without limitation. The representations and warranties
of Sellers and Manager made in Section 5(hh) [Manager's Assets] shall survive
without limitation. Except to the extent otherwise expressly provided for to
the contrary with respect to any given representation or warranty, all other
representations and warranties made by Sellers or Manager in this Agreement
shall survive for six months following the Closing.
Except as expressly set forth in this Agreement, none of the
representations, warranties, covenants, indemnities, agreements or obligations
of Sellers or Manager made in this Agreement shall survive the Closing, the
same being merged in the conveyance of the Sale Property.
(b) Survival Periods for Buyer. Except to the extent
otherwise expressly provided for to the contrary with respect to any given
representation or warranty, all representations and warranties made by Buyer
in this Agreement shall survive without limitation.
13. Casualty or Condemnation. In the event that the Improvements are
substantially damaged or destroyed by fire or other casualty (which for
purposes hereof shall be deemed to mean that either the cost to restore or
repair the damage, excluding any and all costs of damages which are tenant's
obligations under the Space Leases, caused thereby is equal to or greater than
10% of the Purchase Price or that such event would deny Buyer reasonable
access to the Building for more than sixty (60) days) or the Land and/or the
Improvements are the subject of a material condemnation proceeding (which for
purposes hereof shall be deemed to mean that either the value of the portion
of the Building which is the subject of such proceeding is equal to or greater
than 10% of the Purchase Price or that such event would deny Buyer reasonable
access to the Building for more than sixty (60) days), Buyer shall have the
option to terminate this Agreement by written notice to the other given not
later than ten (10) Business Days after Buyer receives written notice of such
event and the estimated cost of repair or restoration. If Buyer elects, then
this Agreement shall be terminated and this Agreement (i) the Deposit shall be
returned to Buyer, (ii) Sellers and Buyer shall have no further rights or
obligations to each other under this Agreement except under those Sections
relating to the return of the Deposit and except as may expressly survive the
termination of this Agreement as provided for herein and (iii) Sellers and
Tenant shall retain any insurance proceeds or condemnation award paid in
respect of such casualty or condemnation. If this Agreement is not so
terminated or if the Building is damaged or destroyed by fire or other
casualty or taken by eminent domain, but Buyer shall not have the right to
terminate this Agreement pursuant to the preceding sentence, then this
Agreement shall remain in full force and effect and Sellers shall, at Closing,
pay to Buyer the full amount of the insurance deductible and assign to Buyer
or Tenant, as applicable, all right, title and interest of Sellers in and to
any insurance proceeds or condemnation awards and pay over to Buyer any
proceeds and awards received by Sellers prior to Closing in respect of such
casualty or condemnation proceeding, subject to the terms of the Leasehold
Loan Documents, and if Buyer assumes the CDC Mortgages at Closing pursuant to
Article 3 herein, the CDC Loan Documents. The provisions of this Section 13
supersede and are in place of Section 5-1311 of the New York General
Obligations Law, the provisions of which are hereby expressly waived by the
parties hereto.
14. Confidentiality; Indemnity.
(a) Any information furnished to Sellers and Manager or
Buyer or its affiliates, officers, directors, partners, principals, employees,
agents and representatives (all such parties being referred to as "Agents") by
the other party together with analyses, compilations, studies or other
documents which contain such information and are identified by the other party
as non-public, confidential and proprietary, are hereinafter referred to as
the "Document Information." The fact that discussions or negotiations
concerning the sale of the Sale Property to Buyer from Sellers and Manager
have taken place and the terms, covenants, conditions, and other facts with
respect to this Agreement, including without limitation, the status of the
sale of the Sale Property, are hereinafter referred to as the "Transfer
Information."
(b) Sellers and Manager shall, and shall cause their Agents
to hold the Transfer Information in confidence and not disclose the Transfer
Information to any party other than their Agents (provided that each party
shall require such other parties to hold the Transfer Information in
confidence and not to disclose the Transfer Information to any party other
than its Agents, who shall be similarly obligated), without Buyer's prior
consent, which consent may be granted or withheld in Buyer's sole and absolute
discretion.
(c) Upon the termination of this Agreement, the Document
Information and all copies thereof, except for that portion of the Document
Information which consists of analyses, compilations, studies or other
documents prepared by Buyer or its Agents, will be returned to Sellers upon
request without retaining any copies thereof. That portion of the Document
Information which consists of analyses, compilations, studies or other
documents prepared by Buyer or its Agents will be held by Buyer and kept
confidential and subject to the terms of this Agreement.
(d) Notwithstanding anything herein to the contrary, Sellers
and Manager may disclose Transfer Information to its attorneys, accountants,
principals and the Brokers, and each party may disclose the foregoing: (i) to
their Agents; (ii) which is or becomes generally available to the public other
than as a result of a disclosure by such party or their Agents; (iii) which is
or becomes available to such party or one of its Agents on a non-confidential
basis from a source other than the other party or one of their Agents which is
entitled to disclose it; (iv) was already in such party's possession or known
to such party on a non-confidential basis prior to its disclosure to such
party by the other party or one of their Agents; (v) required to be disclosed
by such party pursuant to the order process of any regulatory authority or
court of competent jurisdiction.
(e) Buyer shall not issue any press release or other public
announcement regarding the Transfer Information without the prior written
consent of Sellers, which consent shall not be unreasonably withheld.
(f) This Article 14 shall survive the Closing.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to principles of conflicts of law.
16. Brokers. Each party hereto represents and warrants to the other that it
has dealt with no brokers or finders in connection with the sale and purchase
of the Sale Property other than Rockwood Realty and Lehman Brothers Inc., and
each party hereby indemnifies and agrees to defend and hold the other harmless
from and against any claims, losses, or expenses (including, without
limitation, reasonable attorneys' fees) suffered and incurred by the other as
a result of the inaccuracy of such representation and warranty. The provisions
of this Section 16 shall survive the Closing or the earlier termination of
this Agreement. Sellers shall pay any such brokerage or finders' fees to
Rockwood Realty and Lehman Brothers Inc. per separate agreements.
17. Notices. Any and all notices, requests or other communications hereunder
shall be deemed to have been duly given if transmitted in writing, by hand
delivery with receipt therefor, or by facsimile with a confirmation copy
simultaneously transmitted by one of the foregoing methods, as follows:
If to Sellers or ARE One Park Avenue, LLC
to Manager: One Park Avenue Fee LLC
One Park Avenue SPE LLC
One Park Avenue Manager LLC
c/o Argent Ventures LLC
551 Fifth Avenue, 34th Floor
New York, New York 10176
Attention: Andrew Penson
Telephone: (212) 692-5400
Facsimile: (212) 681-6096
with a copy to: Squadron, Ellenoff, Plesent & Sheinfeld LLP
551 Fifth Avenue
New York, New York 10176
Attention: Alan Schacter, Esq.
Telephone: (212) 476-8376
Facsimile: (212) 697-6098
If to Buyer: SL Green Diamond LLC
c/o SL Green Realty Corp.
420 Lexington Avenue
New York, New York 10170
Attention: Marc Holliday
Telephone: (212) 594-2700
Facsimile: (212) 216-1785
with a copy to: SL Green Diamond LLC
c/o SL Green Realty Corp.
420 Lexington Avenue
New York, New York 10170
Attention: General Counsel
Telephone: (212) 594-2700
Facsimile: (212) 216-1785
Solomon and Weinberg LLP
70 East 55th Street
New York, New York 10022
Attention: Craig H. Solomon, Esq.
Telephone: (212) 605-1000
Facsimile: (212) 605-0999
If to Escrow Agent: Squadron, Ellenoff, Plesent & Sheinfeld LLP
551 Fifth Avenue
New York, New York 10176
Attention: Alan Schacter, Esq.
Telephone: (212) 476-8376
Facsimile: (212) 697-6098
or such other address as the parties may furnish to the other by notice in
accordance with this Section 17. Notices shall be deemed given when received
or upon refusal of a party to accept delivery of such notice. Each party's
attorney may give any notice hereunder for its client. Each party and their
respective attorneys shall have the right to change its address for the
receipt of notices, upon the giving of proper notice to all other parties in
accordance with the terms of this Section 17.
18. Costs. Buyer shall pay all expenses for examination of title, the premium
for any title insurance policy issued to Buyer, and all other title, survey or
other expenses incurred by Buyer in connection with this Agreement or the
closing of title hereunder. Except as provided in the following sentence,
Buyer shall pay all charges, fees and recording costs to be paid in connection
with the execution, delivery or recording of any and all documents to be
delivered in connection herewith. Sellers shall pay all transfer taxes and
recording costs and filing fees and any other charges in connection with
clearing any liens and/or encumbrances on the Sale Property or the Option as
required by this Agreement. Buyer acknowledges that Sellers will make an
allocation of the Purchase Price to the Fee Owner Property and the Option (the
"Allocation") prior to or at Closing for determining the amount of transfer
taxes to be paid pursuant to this Agreement, and shall deliver a copy of the
Allocation not less than fifteen (15) days prior to Closing. Sellers shall
indemnify and hold Buyer harmless against any costs, claims or liabilities,
actions, suits, proceedings, demands, assessments, judgments, costs and
expenses (including without limitation, interest, fines, penalties and
reasonable attorneys' fees and disbursements), arising out of any claim by New
York City or New York State for payment of or imposition of additional
transfer taxes owing in connection with the transactions contemplated by this
Agreement, together with the costs of enforcement of such indemnity. All
transfer tax returns filed by Sellers and Buyer with respect to the
transactions contemplated by this Agreement (the "Tax Returns") shall be
consistent with the Allocation. This Section shall survive the Closing.
19. Attorney's Fees. If any action is brought by a party against another in
connection with or arising out of this Agreement or any of the documents and
instruments delivered in connection with the transactions contemplated hereby,
the prevailing party shall be entitled to recover from such other party
reasonable attorney's fees and expenses incurred in connection with the
prosecution or defense of such action.
20. Waiver. No waiver by a party of another party's breach of any term,
covenant or condition contained in this Agreement shall be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition of this Agreement. In addition, no waiver by a party of any
condition prior to Closing is enforceable unless in writing.
21. Severability. Each part of this Agreement is intended to be severable. If
any term, covenant, condition or provision of this Agreement is unlawful,
invalid or unenforceable, such illegality, invalidity or unenforceability
shall not affect the remaining provisions of this Agreement, which shall
remain in full force and effect and shall be binding upon the parties. Nothing
in this Agreement, express or implied, is intended to permit or obligate Buyer
to purchase less than all of the Sale Property, it being the intention of the
parties that all of the Sale Property must be sold hereunder.
22. Assignments; Binding Effect. Buyer represents that on the date hereof it
is wholly-owned and controlled by SL Green Operating Partnership L.P. ("SL
Green"). Buyer may not assign this Agreement to any person or entity other
than an entity in which SL Green or a wholly-owned subsidiary thereof has (a)
a 35% economic interest and (b) the right to exercise day to day operating
control (provided such entity remains so owned as of the consummation of the
Closing) without Sellers' prior written consent. Any change in the direct or
indirect structure of Buyer which would result in SL Green not (x) owning at
least a 35% economic interest in Buyer and (y) having the right to exercise
day to day operating control over Buyer, will be deemed an assignment of this
Agreement. Buyer may direct Sellers to assign, transfer and convey different
portions of the Sale Property to different assignees, provided such assignees
comply with the ownership and control restrictions set forth above and
provided all such assignees shall be deemed collectively to constitute "Buyer"
hereunder for the purposes of any surviving liabilities and/or obligations
hereunder or with respect hereto. At or after Closing, Buyer may collaterally
assign its rights, but not its obligations, under this Agreement to its
lender(s) or any subsequent successor or assign. Notwithstanding any
assignment by Buyer of its rights and obligations under this Agreement, Buyer
shall remain liable under this Agreement, and under all documents executed by
Buyer prior to such assignment in connection herewith. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties. The provisions of this
Section 22 shall survive the Closing.
23. Entire Agreement. This Agreement, including any agreements, attachments,
exhibits and schedules referred to herein and attached hereto, constitutes the
entire agreement between the parties pertaining to the subject matter hereof
and supersedes any and all prior agreements, representations and
understandings of the parties, written or oral.
24. Amendment. This Agreement may only be modified or amended by a written
instrument duly executed by authorized representatives of the parties.
25. Parties in Interest. Nothing in this Agreement, express or implied, is
intended to confer any rights or remedies under or by reason of this Agreement
on any person or entity (including, without limitation, Tenant) other than
Sellers, Manager and Buyer and their respective permitted successors and
assigns, nor is anything in this Agreement intended to relieve or discharge
any obligation of any third party (including, without limitation, Tenant), or
give any third party (including, without limitation, Tenant) any right to
subrogation or action over or against any party to this Agreement. This
Agreement is not intended for the benefit of any person or entity other than
Buyer, Sellers and Manager, and no other person or entity may rely on any
matter discussed or referred to herein.
26. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. Facsimile copies of
the parties' signatures shall be effective as originals.
27. Further Assurances. Buyer, Sellers and Manager shall execute, acknowledge
and deliver such additional documents or instruments reasonably requested by
the requesting party in order to consummate or evidence the transactions
contemplated by this Agreement, but in no event shall the parties be required
to execute, acknowledge or deliver any additional document or instrument if
same requires a party to incur any material out-of-pocket expenses or incur
any additional potential liabilities. The provisions of this Section 27 shall
survive the Closing.
28. Recordation. Neither this Agreement nor any memorandum hereof shall be
recorded without the prior written consent of Sellers and Buyer, subject to
Buyer's obligation to file a copy of this Agreement with the Securities and
Exchange Commission.
29. Escrow.
(a) (i) Squadron, Ellenoff, Plesent & Sheinfeld, LLP shall
act as Escrow Agent in connection with the transactions contemplated by this
Agreement. The Escrow Agent shall deposit the Deposit in an interest-bearing
account that it maintains with Citibank, N.A., but the Escrow Agent shall be
under no duty to maximize the rate of return on the Deposit or to insure
against any reduction in the value of the Deposit by reason of any loss in
value of any security in which the Deposit is invested. Any increase or
decrease in the value of the Deposit shall inure to the party to which the
Deposit is disbursed.
(ii) Escrow Agent will deliver the Deposit or the Deposit Letter
of Credit, as the case may be, to Sellers or Buyer, as the case may be, under
the following conditions:
(A) To Sellers, at the Closing upon the consummation
thereof; or
(B) To Sellers, upon the receipt of written demand
therefor, stating the Buyer has failed to pay to
Sellers the Purchase Price, adjusted as provided
herein, less the Deposit at the Closing and the
facts and circumstances underlying such default;
provided, however, that Escrow Agent shall not honor
such demand until more than five (5) Business Days
after the Escrow Agent shall have delivered a copy
of such demand to Buyer, nor thereafter if the
Escrow Agent shall have received written notice of
objection from Buyer in accordance with the
provisions of subparagraph (iii) of this Section
29(a); or
(C) To Buyer, upon receipt of written demand thereof,
stating that Sellers have defaulted in the
performance of this Agreement and the facts and
circumstances underlying such default; provided,
however, that Escrow Agent shall not honor such
demand until more than five (5) Business Days after
the Escrow Agent shall have delivered a copy of such
demand to Seller, nor thereafter if the Escrow Agent
shall have received written notice of objection from
Seller in accordance with the provisions of
subparagraph (iii) of this Section 29(a); or
(D) To Buyer, upon receipt of written demand thereof,
stating that Buyer has timely exercised its right to
terminate this Agreement, if any; provided, however,
that Escrow Agent shall not honor such demand (x)
unless it is accompanied by evidence, reasonably
acceptable to Escrow Agent, that Buyer has timely
delivered notice of such termination to Sellers, as
required by this Agreement, or, (y) if such evidence
is not provided to Escrow Agent, until more than
five (5) Business Days after the Escrow Agent shall
have delivered a copy of such demand to Sellers, nor
thereafter, if Escrow Agent shall have received
written notice of objection from Sellers in
accordance with the provisions of subparagraph (iii)
of this Section 29(a).
(iii) Upon the filing of a written demand for the Deposit or
the Deposit Letter of Credit, as the case may be, by Buyer and Sellers,
pursuant to subsections (ii), (iii) or, if applicable, (iv) of subparagraph
(a) of this Section 29, Escrow Agent shall promptly send a copy thereof to the
other party using one of the methods described in Section 17 above. The other
party shall have the right to object to the delivery of the Deposit or the
Deposit Letter of Credit, as the case may be, by filing written notice of such
objection with the Escrow Agent at any time within five (5) Business Days
after the receipt or refusal to accept receipt of such copy by it, but not
thereafter. Such notice shall set forth the basis for objecting to the
delivery of the Deposit or the Deposit Letter of Credit, as the case may be.
Upon receipt of such notice, Escrow Agent shall promptly send a copy thereof
to the party who filed the written demand by one of the methods described in
Section 17 above.
(iv) In the event Escrow Agent shall have received the notice
of objection provided for in subparagraph (iii) above of this Section 29(a)
and within the time therein prescribed, the Escrow Agent shall continue to
hold the Deposit or the Deposit Letter of Credit, as the case may be, until
(A) the Escrow Agent receives written notice executed by Sellers and Buyer
instructing the Escrow Agent to whom the Deposit or the Deposit Letter of
Credit, as the case may be, should be disbursed, or (B) until resolution of
any dispute by judicial or agreed upon non-judicial procedure by Sellers and
Buyer and delivery of a copy of any final judicial order or non-judicial
decision to the Escrow Agent, whereupon the Escrow Agent shall disburse the
Deposit or deliver the Deposit Letter of Credit (if to Buyer), or draw on the
Deposit Letter of Credit and deliver the proceeds thereof (if to Sellers), as
the case may be, as provided in such joint instructions, order or decision or
(C) the Escrow Agent takes such affirmative steps as the Escrow Agent may, at
the Escrow Agent's option, elect in order to terminate the Escrow Agent's
duties as Escrow Agent, including, but not limited to, deposit in Court and an
action for interpleader, the costs thereof to be borne by whichever of Sellers
or Buyer is the losing party. Sellers and Buyer hereby agree to submit
themselves to the jurisdiction of the courts of the State of New York sitting
in the County of New York and service upon them may be effected by the Escrow
Agent in any way provided by statute. If, within ten (10) days prior to the
date of expiration of the Deposit Letter of Credit, Buyer has not delivered
either (x) an endorsement extending the expiration date thereof, or (y) a
substitute letter of credit in form and substance required under Section
2(b)(A), or (z) cash in the amount of the Deposit, Escrow Agent shall draw
upon the Deposit Letter of Credit and hold the proceeds in accordance with
this Article 29.
(b) (i) The Escrow Agent has agreed not to charge a fee for
performing its duties hereunder. Sellers and Buyer shall jointly and severally
indemnify and hold the Escrow Agent harmless from all reasonable expenses,
including reasonable legal fees, and charges (including reasonable legal fees
and charges at the Escrow Agent's standard fees and charges if the Escrow
Agent shall elect to represent itself, either in conjunction with or without
outside counsel) and other actual liabilities incurred by the Escrow Agent
arising out of this Agreement, except to the extent that such expenses or
liabilities result from the Escrow Agent's gross negligence or willful
misconduct. The provisions of this paragraph (b)(i) shall survive the delivery
of the conveyancing instruments at the Closing or the termination of this
Agreement.
(ii) The Escrow Agent may resign upon ten (10) days' prior
notice to each of Sellers and Buyer and by (1) depositing the Deposit or the
Deposit Letter of Credit, as the case may be, with the Clerk of the County of
New York, New York or (2) transferring the Deposit or the Deposit Letter of
Credit, as the case may be, to a bank or other institution acceptable to
Sellers and Buyer which shall have assumed in writing the obligations of the
Escrow Agent pursuant to this Agreement. Upon the effective date of such
resignation, the Escrow Agent shall have no further obligations arising
hereunder and shall be released from all liability arising out of this
Agreement, except its misapplication of any portion of the Deposit or the
Deposit Letter of Credit, as the case may be, or its gross negligence or
willful misconduct.
(iii) The Escrow Agent shall have no liability for its failure
to perform any obligation hereunder, except arising by reason of its gross
negligence or willful misconduct. Notwithstanding the foregoing, the Escrow
Agent is hereby released from liability for any act performed or omitted to be
performed in good faith in its performance of its duties hereunder. The Escrow
Agent shall not be required to inquire into the authority of any person
purporting to give a notice on behalf of Sellers or Buyer and may assume that
all signatures are genuine. It is understood and agreed that the persons and
firms referred to in Article 17 as counsel for Sellers and Manager and Buyer
are authorized to give notices to the Escrow Agent pursuant to this Article
29.
(iv) Sellers and Buyer acknowledge that the Escrow Agent is
acting solely as a stakeholder hereunder and not the agent of either party in
connection with its obligations hereunder. The escrow created hereunder and
the obligations of the Escrow Agent as an escrow agent hereunder are for the
benefit of the parties to this Agreement only, and no other person shall have
any rights hereunder nor shall the Escrow Agent have any obligations or duties
to any other person other than a party to this Agreement by reason or arising
out of this Article 29.
(c) Buyer acknowledges that the Escrow Agent is also counsel
to Sellers, Manager and Tenant in connection with this and other transactions.
Notwithstanding that fact, Buyer agrees that the Escrow Agent may continue to
act as counsel to Sellers, Manager and Tenant in connection herewith and in
connection with any other transaction between or among any of the Sellers,
Manager and/or Tenant and Buyer and in connection with any dispute, action,
cause of action or claim arising out of this transaction or any other
transaction between or among any of the Sellers, Manager and/or Tenant and
Buyer.
(d) The Escrow Agent is executing this Agreement solely for
the purpose of agreeing to the terms and provisions of this Article 29.
(e) The Escrow Agent shall be a beneficiary of the terms and
provisions of this Article 29.
30. Tax Deferred Exchange. Buyer or its permitted assignee may elect to
acquire title to the Fee Owner Property as part of a tax deferred exchange (an
"Exchange") pursuant to Section 1031 of the Internal Revenue Code, as amended
("Section 1031"), and in connection therewith, Buyer may cause the Purchase
Price to be paid by a "Qualified Intermediary" (as defined in regulations
relating to Section 1031), or may direct that the Deed be executed in the name
of the party designated as the "exchangor" thereunder. Sellers and Manager
agree to accept payment by such Qualified Intermediary as a payment by Buyer,
and agrees to reasonably cooperate, at Buyer's sole cost and effect, with such
Exchange. Buyer agrees to indemnify and hold Sellers and Manager and their
Agents harmless from and against any and all actual losses, damages, claims,
causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees) arising out the Exchange.
31. Estoppel Certificate. Prior to the Closing or earlier termination of this
Agreement, each party hereto shall deliver, within five (5) days of written
request therefor by another party hereto, a certificate stating that (a) this
Agreement remains in full force and effect and has not been modified or
amended except as set forth in such certificate and (b) to the actual
knowledge of such party (without any duty of independent investigation), the
requesting parties are not in default or breach under this Agreement. Any such
certificate may only be relied upon by the requesting party(ies) or in the
case of the Buyer, its lender and permitted assigns.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and
delivered this agreement as of the date and year first above written.
SELLERS:
ARE ONE PARK AVENUE, LLC, a New York
limited liability company
By:
---------------------------------------
Name:
Title: Authorized Representative
ONE PARK AVENUE FEE LLC, a New York
limited liability company
By:
-----------------------------------------
Name:
Title: Authorized Representative
ONE PARK AVENUE SPE INC., a New York
corporation
By:
----------------------------------------
Name:
Title:
MANAGER:
ONE PARK AVENUE MANAGER LLC, a New
York limited liability company
By:
----------------------------------------
Name:
Title: Authorized Representative
<PAGE>
BUYER:
SL GREEN DIAMOND LLC, a Delaware limited
liability company
By: SL Green Operating Partnership, L.P., a
Delaware limited partnership, Sole Member
By: SL Green Realty Corp., a Maryland
corporation General Partner
By:
-------------------------------
Name:
Title:
ESCROW AGENT:
SQUADRON, ELLENOFF, PLESENT &
SHEINFELD, LLP
By:
-----------------------------------------
Name:
Title: Authorized Representative
