<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 12 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JANUARY 10, 1996
NEW VALLEY CORPORATION
(Exact Name of Registrant as Specified in Charter)
NEW YORK 1-2493 13-5482050
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(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
100 S.E. SECOND STREET, MIAMI, FLORIDA 33131
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code:
(305) 579-8000
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 10 and January 11, 1996, New Valley Corporation
(the "Company") acquired four commercial office buildings (the "Office
Buildings") and eight shopping centers (the "Shopping Centers"), respectively,
for an aggregate purchase price of $183.9 million, consisting of $23.9 million
in cash and $160 million in mortgage financing.
The Office Buildings consist of two adjacent commercial office
buildings in Troy, Michigan and two adjacent commercial office buildings in
Bernards Township, New Jersey. The Company acquired the Office Buildings in
Michigan from Bellemead of Michigan, Inc. ("Bellemead Michigan") and the Office
Buildings in New Jersey from Jared Associates, L.P. (each, a "Seller"), for an
aggregate purchase price of $111,400,000. Each Seller is an affiliate of
Bellemead Development Corporation, which is indirectly wholly owned by The
Chubb Corporation. The purchase price was paid for the Office Buildings as
follows: (i) $23,500,000 for the 700 Tower Drive property, located in Troy,
Michigan; (ii) $28,100,000 for the 800 Tower Drive property, located in Troy,
Michigan; (iii) $48,325,000 for the Westgate I property, located in Bernards
Township, New Jersey; and (iv) $11,475,000 for the Westgate II property,
located in Bernards Township, New Jersey. The two Michigan buildings were
constructed in 1987 and the two New Jersey buildings were constructed in 1991.
The gross square footage of the Office Buildings ranges from approximately
50,300 square feet to approximately 244,000 square feet.
The Company acquired a fee simple interest in each Office
Building (subject to certain rights of existing tenants), together with a fee
simple interest in the land underlying three of the Office Buildings and a 98-
year ground lease (the "Ground Lease") underlying one of the Office Buildings.
Under the Ground Lease, Bellemead Michigan, as lessor, is entitled to receive
rental payments of a fixed monthly amount and a specified portion of the income
received from the 700 Tower Drive property. Space in the Office Buildings is
leased to commercial tenants and, as of the closing date, the Office Buildings
were fully occupied.
Of the $111,400,000 aggregate purchase price for the Office
Buildings, the Company paid $11,400,000 in cash at the closing, and executed
four promissory notes in the aggregate principal amount of $100,000,000 (the
"Office Building Notes") in favor of the applicable Seller for the balance of
the purchase price. Each Office Building Note has a term of approximately 15
years (other than the note for the 800 Tower Drive property, which has a term
of approximately 10 years), bears interest at the rate of 7.5% per annum, and
is secured by a first mortgage on the respective Office Building in favor of
the applicable Seller, as well as by an assignment of leases and rents.
Principal is amortized to the extent of approximately 7% (or, in the case of
the 800 Tower Drive property, approximately 6%) during the term of the Office
Building Notes and, with respect to the 800 Tower Drive property only, the
Company must make additional prepayments of principal to the Sellers on a
quarterly basis to the extent of
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2
a specified portion of tenants' payments for electricity and overtime heat,
ventilation and air conditioning. The Office Building Notes may be prepaid
without penalty and are non-recourse against the Company, except to a specified
extent for misappropriations of rents and certain other proceeds and failure to
pay special assessments and taxes on the mortgaged properties and except for
material misrepresentations by the Company in the purchase agreement pursuant
to which it acquired the Office Buildings.
Concurrently with the acquisition of the Office Buildings, the
Company engaged a property-management affiliate of Sellers that had previously
managed the Office Buildings to act as the managing agent and leasing agent for
the Office Buildings. The agreement has a fifteen-year term, but may be
terminated by either party on 60 days' notice without cause or economic
penalty.
On January 11, 1996, the Company acquired the Shopping Centers
from various limited partnerships (AP Century I., L.P., AP Century II, L.P., AP
Century III, L.P., AP Century IV, L.P., AP Century V, L.P., AP Century VI,
L.P., AP Century VIII, L.P., and AP Century IX, L.P.) (each, a "Partnership")
for an aggregate purchase price of $72,500,000. Each Partnership is an
affiliate of Apollo Real Estate Investment Fund, L.P. ("Apollo"). The Shopping
Centers are located in Marathon and Royal Palm Beach, Florida; Lincoln,
Nebraska; Santa Fe, New Mexico; Milwaukee, Oregon; Richland and Marysville,
Washington; and Charleston, West Virginia. The Company acquired a fee simple
interest in each Shopping Center and the underlying land for each property.
Space in the Shopping Center is leased to a variety of commercial tenants and,
as of the closing date, the aggregate occupancy of the Shopping Centers was not
less than approximately 80%. The Shopping Centers were constructed at various
times during the period 1963-1988. The gross square footage of the Shopping
Centers ranges from approximately 108,500 square feet to approximately 222,500
square feet.
The purchase price was paid for the Shopping Centers as
follows: (i) $3,900,000 for the Marathon Shopping Center property, located in
Marathon, Florida; (ii) $9,840,000 for the Village Royale Plaza Shopping Center
property, located in Royal Palm Beach, Florida; (iii) $5,970,000 for the
University Place property, located in Lincoln, Nebraska; (iv) $9,600,000 for
the Coronado Shopping Center property, located in Santa Fe, New Mexico; (v)
$7,280,000 for the Holly Farm Shopping Center property, located in Milwaukee,
Oregon; (vi) $10,610,000 for the Washington Plaza property, located in
Richland, Washington; (vii) $12,350,000 for the Marysville Towne Center
property, located in Marysville, Washington; and (viii) $12,950,000 for the
Kanawha Mall property, located in Charleston, West Virginia (the properties
described in clauses (i), (ii), (v), (vii) and (viii) are subject to an
underlying mortgage in favor of a single lender and are referred to
collectively as the "Properties").
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3
Of the $72,500,000 aggregate purchase price for the Shopping
Centers, the Company paid $12,500,000 in cash at the closing, and pursuant to
the Loan and Security Agreements (as defined below) executed eight promissory
notes in the aggregate principal amount of $60,000,000 (the "Shopping Center
Notes") in favor of the applicable Partnership for the balance of the purchase
price. Each Shopping Center Note has a term of approximately five years, and
bears interest at the rate of 8% per annum for the first two and one-half years
and at the rate of 9% for the remainder of the term. In addition, with respect
to the Properties only, if the net operating income from such Shopping Center
is insufficient to cover the interest payments on the corresponding Shopping
Center Note, the interest rate thereon is reduced to a rate per annum not less
than 6%, whereupon the interest otherwise payable will be deferred until the
earlier of the date on which sufficient net operating income is available and
the maturity date. There is no amortization of principal except in connection
with payments made to obtain the release of mortgages from the property and to
the extent net operating income from the Shopping Centers is so available as
provided in the Loan and Security Agreements (as described below).
Under agreements to be entered into after the closing date,
income from the Shopping Centers will be paid to a trustee bank. Under such
agreements, certain payments, including regular payments of principal and
interest on the Senior Mortgages and the Shopping Center Notes, are to be made
before the Company receives income for such period from the Shopping Centers.
In addition, the Company has agreed to use any net income from the Shopping
Centers it receives in excess of a specified return on its cash investment in
the Shopping Centers to pay down principal on the Shopping Center Notes.
Each Shopping Center Note is secured by a subordinated
purchase-money mortgage (each, a "Purchase-Money Mortgage") and an assignment
of leases and rents, and the five Shopping Center Notes covering the Properties
are also secured by mortgages junior to the Purchase-Money Mortgages (the
"Junior Mortgages") and subordinated assignments of leases, rents and fixtures.
Each Purchase-Money Mortgage and Junior Mortgage (together with corresponding
assignments) "wraps around" and is junior to the Senior Mortgages (as defined
below), and is in favor of the applicable Partnership. The five Shopping
Center Notes covering the Properties are cross-collateralized. The other three
Shopping Center Notes may also be cross-collateralized at the option of the
applicable Partnerships, provided certain conditions have been met. In
addition, the Shopping Centers are subject to existing senior mortgages (the
"Senior Mortgages") in favor of certain lenders to the Partnerships (the
"Lenders"). The Shopping Center Notes are non-recourse against the Company,
except for misappropriations of insurance and certain other proceeds, failures
to apply rent and other income to required maintenance and taxes, environmental
liabilities and certain other matters.
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4
The maturities of the Partnerships' obligations to the
Lenders under the Senior Mortgages are in all cases but one shorter than those
of the Company to the Partnerships under the Purchase-Money Mortgages and have
remaining maturities ranging from approximately one month to approximately
seven years. The Company is entitled to certain rights of offset with respect
to Seller's failure to discharge or refinance any of the Senior Mortgages and
to an indemnity from the Partnerships relating thereto. In addition, the
Company has obtained indemnities from Apollo relating to (i) discrepancies
between the Purchase-Money (and Junior) Mortgages, on the one hand, and Senior
Mortgages, on the other hand, in each case with respect to the Properties, (ii)
defaults or acceleration of payments under the Senior Mortgages triggered as a
result of the acquisition of the Shopping Centers (other than the Properties)
by the Company or the financing thereof and (iii) certain environmental
matters.
Concurrently with the acquisition of the Shopping Centers, the
Company engaged a property-management affiliate of Sellers that had previously
managed the Shopping Centers to act as the managing agent and leasing agent for
the Shopping Centers. The agreement has a one-year term, and may be terminated
by either party at any time after December 31, 1996 on 60 days' notice without
cause or economic penalty.
The acquisition of the Office Buildings was effected pursuant
to a purchase agreement dated January 10, 1996. The acquisition of the
Shopping Centers was effected pursuant to a purchase agreement dated January
11, 1996. Each such acquisition was negotiated on an arm's-length basis
between the Company and the respective sellers, none of whom is affiliated with
the Company or any of its affiliates, or any director or officer of the
Company, or any affiliate or associate of any such director or officer. As of
December 7, 1995 an affiliate of Apollo and the Partnerships owned
approximately $92,988,000 aggregate principal amount of debt securities of BGLS
Inc. ("BGLS"). BGLS directly and indirectly holds common and preferred stock
of the Company representing in the aggregate approximately 42% of the voting
power of the Company.
The Company intends to continue the respective uses to which
the Office Buildings and the Shopping Centers had previously been devoted
immediately prior to their acquisition by the Company. The Office Buildings
and Shopping Centers will be operated through the Company's recently
established division, New Valley Realty. The source of funds used by the
Company for the cash portion of the purchase price for the foregoing real
estate acquisitions was internally generated funds of New Valley.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a,b) It is impracticable to provide the required financial
statements and pro forma information for the recently acquired real estate
properties described above as of the filing date of this Report on Form 8-K.
The Company will cause these financial statements and pro forma information to
be prepared as promptly as practicable after the filing date, and they will be
filed as an amendment to this Report on Form 8-K not later than 60 days
following the filing date.
(c) The following Exhibits are provided in accordance with the
provisions of Item 601 of Regulation S-K and are filed herewith unless
otherwise noted.
EXHIBIT INDEX
<TABLE>
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2.1 Purchase Agreement dated January 10, 1996 by and among the Company, Bellemead of Michigan, Inc., and Jared
Associates, L.P. ("Jared").
*2.2 Purchase Agreement dated January 11, 1996 between the Company and AP Century I, L.P., AP Century II, L.P.,
AP Century III, L.P., AP Century IV, L.P, A.P. Century V, L.P., A.P. Century VI, L.P., A.P. Century VIII,
L.P. and AP Century IX, L.P.
4.1 First Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of January
10, 1996 by the Company, as Mortgagor, and Jared, as Mortgagee (Westgate I).
4.2 Secured Promissory Note of the Company dated January 10, 1996 in favor of Jared (Westgate I).
*4.3 Loan and Security Agreement dated January 11, 1996 by and between AP Century III, L.P., AP Century IV, L.P.,
AP Century V, L.P., AP Century VI, L.P. and AP Century VIII, L.P., as Lenders, and the Company, as Borrower
(the Properties).
*23.1 Consent of Independent Auditor
</TABLE>
The foregoing list omits instruments defining the rights of holders
of long-term debt of the Company and its consolidated subsidiaries where the
total amount of securities authorized thereunder does not exceed 10% of the
total assets of the Company and its consolidated subsidiaries. The Company
hereby agrees to furnish a copy of each such instrument or agreement to the
Securities and Exchange Commission upon request.
_______________________
* To be filed by amendment.
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6
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 hereunto duly authorized.
NEW VALLEY CORPORATION
Date: January 25, 1996 By:/s/ Richard J. Lampen
---------------------
Name: Richard J. Lampen
Title: Executive Vice President
and General Counsel
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Exhibit Numbered Page
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2.1 Purchase Agreement dated January 10,
1996 by and among the Company,
Bellemead of Michigan, Inc., and
Jared Associates, L.P. ("Jared").
*2.2 Purchase Agreement dated January 11,
1996 between the Company and AP
Century I, L.P., AP Century II,
L.P., AP Century III, L.P., AP Century
IV, L.P, A.P. Century V, L.P.,
A.P. Century VI, L.P., A.P. Century
VIII, L.P. and AP Century IX, L.P.
4.1 First Mortgage, Security Agreement,
Assignment of Leases and Rents and
Fixture Filing dated as of January 10,
1996 by the Company, as Mortgagor,
and Jared, as Mortgagee (Westgate I).
4.2 Secured Promissory Note of the Company
dated January 10, 1996 in favor of
Jared (Westgate I).
*4.3 Loan and Security Agreement dated
January 11, 1996 by and between AP
Century III, L.P., AP Century IV,
L.P., AP Century V, L.P., AP Century
VI, L.P. and AP Century VIII, L.P.,
as Lenders, and the Company, as
Borrower (the Properties).
*23.1 Consent of Independent Auditor
</TABLE>
_______________________
* To be filed by amendment.
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Exhibit 2.1
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PURCHASE AND SALE AGREEMENT
BETWEEN
BELLEMEAD OF MICHIGAN, INC.
AND
JARED ASSOCIATES, L.P.
COLLECTIVELY, SELLERS
AND
NEW VALLEY CORPORATION,
PURCHASER
DATED: JANUARY 10, 1996
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TABLE OF CONTENTS
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Section 1. Sale of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Apportionments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5. Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 6. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7. The Notes and Mortgages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 9. Costs of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 10. Conditions Precedent to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11. Documents to be Delivered by Sellers at Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 12. Documents to be Delivered by Purchaser at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 13. Operation of the Properties Prior to the Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 14. As Is . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 15. Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 16. Casualty; Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 17. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 18. Purchaser's Access to the Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 19. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 20. Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 21. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 22. Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 23. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 24. [Intentionally deleted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 25. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
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2
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
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"Actions" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)(v)
"Actions" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 (a)(iv)
"Additional Rents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4
"Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Approved Institution" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5
"Approved Investment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5
"Assignment Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(f)
"BDC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(iii)
"Bills of Sale" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(h)
"BMI" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Building Deed" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(b)
"business day" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.13
"Borrower's Estoppel" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(e)
"Broker" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
"Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
"Collateral Assignee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(e)
"Contract and License Assignment" . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(e)
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)(xiii)
"Deeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(a)
"Downpayment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
"800 Tower Drive Building" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
"800 Tower Drive Land" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
"800 Tower Drive Mortgage" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(ii)
"800 Tower Drive Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(ii)
"800 Tower Drive Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . 1.2
"800 Tower Drive Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
"Environmental Indemnity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(b)
"Environmental Laws" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)(xviii)
"Escrow Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
"FIRPTA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(m)
"Fund" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1
"Ground Lease Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(c)
"Intangible Property Assignment" . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(f)
"Investigations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1
"Jared" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Laws" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)(iii)
"Lease Assignment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(d)
"Leases" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)(iv)
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1(e)
"Liens" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
"Management Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(b)
"Manager" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(d)
"material" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1
"Mortgages" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"New Lease" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1(a)(ii)
"New Lease Expenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1(a)(ii)
"Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"Notice of Objection" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3
"Permitted Encumbrances" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
"Properties" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
</TABLE>
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<TABLE>
<S> <C>
"Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Property Information" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)(xix)
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Purchaser" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Purchaser's Documents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2(a)(ii)
"Sellers" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Sellers' Affiliates" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.5
"Sellers' Documents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)(ii)
"Sellers' Environmental Indemnity" . . . . . . . . . . . . . . . . . . . . . . . . 11.1(o)
"Sellers' knowledge" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)(xix)
"Surviving Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(b)
"Tenants" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)(viii)
"700 Tower Drive Building" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
"700 Tower Drive Ground Lease" . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
"700 Tower Drive Land" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
"700 Tower Drive Mortgage" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(i)
"700 Tower Drive Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(i)
"700 Tower Drive Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . 1.1
"700 Tower Drive Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
"Schedule 3 Encumbrances" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(b)
"significant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2
"Surviving Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(b)
"Title Commitments" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
"Title Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
"Unacceptable Encumbrances" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
"Westgate I Building" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
"Westgate I Land" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
"Westgate I Mortgage" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(iii)
"Westgate I Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(iii)
"Westgate I Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
"Westgate I Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
"Westgate II Building" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
"Westgate II Land" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
"Westgate II Mortgage" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(iv)
"Westgate II Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(iv)
"Westgate II Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
"Westgate II Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
"Westgate Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
</TABLE>
<PAGE> 6
PURCHASE AND SALE AGREEMENT (this "Agreement"), dated the 10th
day of January, 1996, by and between BELLEMEAD OF MICHIGAN, INC., a Michigan
corporation ("BMI") and JARED ASSOCIATES, L.P., a New Jersey limited
partnership ("Jared") both having and address c/o Bellemead Development
Corporation, 280 Corporate Center, Four Becker Farm Road, Roseland, New Jersey
07068 (BMI and Jared, collectively "Sellers"), and NEW VALLEY CORPORATION, a
New York corporation, having an office at 100 S.E. Second Street, 32nd Floor,
Miami, Florida 33131 ("Purchaser").
W I T N E S S E T H
WHEREAS, BMI is the owner of (i) a leasehold estate in the 700
Tower Drive Property and (ii) the 800 Tower Drive Property , and Jared is the
owner of the Westgate I Property and the Westgate II Property (the 800 Tower
Drive Property, the Westgate I Property, the Westgate II Property and the
leasehold interest in the 700 Tower Drive Property are referred to herein
collectively as the "Properties" and individually as a "Property");
WHEREAS, Purchaser desires to purchase the Properties from Sellers; and
WHEREAS, Sellers and Purchaser desire to enter into an
agreement whereby, subject to the terms and conditions contained herein,
Sellers shall sell the Properties to Purchaser and Purchaser shall purchase the
Properties from Sellers.
NOW, THEREFORE, in consideration of ten dollars ($10.00) and
the mutual covenants and agreements hereinafter set forth, and intending to be
legally bound hereby, it is hereby agreed as follows:
Section 1. Sale of Properties
1.1 BMI agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase from BMI, at the price and upon the terms and
conditions set forth in this Agreement, its leasehold estate in and to those
certain plots, pieces and parcels of land located in the City of Troy, County
of Oakland and State of Michigan, as more particularly described in Schedule
1-A annexed hereto and made a part hereof (the "700 Tower Drive Land"), created
pursuant to that certain Agreement of Lease, dated as of June 14, 1990, between
BMI, as landlord, and 700 Tower Drive Associates, as tenant, the tenant's
interest in which lease was assigned by Assignment and Assumption of Ground
Lease, dated as of March 31, 1994, from 700 Tower Drive Associates to BMI (as
so assigned, the "700 Tower Drive Ground Lease") together with (a) its fee
simple interest in and to all buildings and other improvements situated on the
700 Tower Drive Land (collectively, the "700 Tower Drive Building"), (b) all
easements, rights of way, reservations, privileges, appurtenances, and other
estates and rights of BMI pertaining to the 700 Tower Drive Land and the
<PAGE> 7
2
700 Tower Drive Building, (c) all right, title and interest of BMI in and to
all fixtures, machinery, equipment, supplies and other articles of personal
property attached or appurtenant to the 700 Tower Drive Land or the 700 Tower
Drive Building, or used in connection therewith (collectively, the "700 Tower
Drive Personal Property"), (d) all oil, gas and mineral rights of BMI, if any,
as lessee under the 700 Tower Drive Ground Lease, in and to the 700 Tower Drive
Land, (e) all right, title and interest of BMI, if any, in and to the trade
names, if any, of the 700 Tower Drive Building, and (f) all right, title and
interest of BMI, if any, as lessee under the 700 Tower Drive Ground Lease, in
and to all strips and gores, all alleys adjoining the 700 Tower Drive Land, and
the land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the 700 Tower Drive Land to the center line thereof, and
all right, title and interest of BMI, if any, as lessee under the 700 Tower
Drive Ground Lease, in and to any award made or to be made in lieu thereof and
in and to any unpaid award for any taking by condemnation or any damages to the
700 Tower Drive Land or the 700 Tower Drive Building by reason of a change of
grade of any street, road or avenue (the leasehold estate in the 700 Tower
Drive Land pursuant to the 700 Tower Drive Ground Lease, together with all of
the foregoing items listed in clauses (a) through (f) above being hereinafter
sometimes collectively referred to as the "700 Tower Drive Property").
1.2 BMI agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase from BMI, at the price and upon the terms and
conditions set forth in this Agreement, all those certain plots, pieces and
parcels of land located in the City of Troy, County of Oakland, and State of
Michigan as more particularly described in Schedule 1-B annexed hereto and made
a part hereof (the "800 Tower Drive Land"), together with (a) all buildings and
other improvements situated on the land (collectively, the "800 Tower Drive
Building"), (b) all easements, rights of way, reservations, privileges,
appurtenances, and other estates and rights of BMI pertaining to the 800 Tower
Drive Land and the 800 Tower Drive Building, (c) all right, title and interest
of BMI in and to all fixtures, machinery, equipment, supplies and other
articles of personal property attached or appurtenant to the 800 Tower Drive
Land or the 800 Tower Drive Building, or used in connection therewith
(collectively, the "800 Tower Drive Personal Property"), (d) all oil, gas and
mineral rights of BMI, if any, in and to the 800 Tower Drive Land, (e) all
right, title and interest of BMI, if any, in and to the trade names of the 800
Tower Drive Building, and (f) all right, title and interest of BMI, if any, in
and to all strips and gores, all alleys adjoining the 800 Tower Drive Land, and
the land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the 800 Tower Drive Land to the center line thereof, and
all right, title and interest of BMI, if any, in and to any award made or to be
made in lieu thereof and in and to any unpaid award for any taking by
condemnation or any damages to the 800 Tower Drive Land or the 800 Tower Drive
Building by reason of a change of grade of
<PAGE> 8
3
any street, road or avenue (the 800 Tower Drive Land, together with all of the
foregoing items listed in clauses (a) through (f) above being hereinafter
sometimes collectively referred to as the "800 Tower Drive Property").
1.3 Jared agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase from Jared, at the price and upon the terms and
conditions set forth in this Agreement, all those certain plots, pieces and
parcels of land located in the Township of Bernards, County of Somerset, and
State of New Jersey as more particularly described in Schedule 1-C annexed
hereto and made a part hereof (the "Westgate I Land"), together with (a) all
buildings and other improvements situated on the land (collectively, the
"Westgate I Building"), (b) all easements, rights of way, reservations,
privileges, appurtenances, and other estates and rights of Jared pertaining to
the Westgate I Land and the Westgate I Building, (c) all right, title and
interest of Jared in and to all fixtures, machinery, equipment, supplies and
other articles of personal property attached or appurtenant to the Westgate I
Land or the Westgate I Building, or used in connection therewith (collectively,
the "Westgate I Personal Property"), (d) all oil, gas and mineral rights of
Jared, if any, in and to the Westgate I Land, (e) all right, title and interest
of Jared, if any, in and to the trade names of the Westgate I Building, and (f)
all right, title and interest of Jared, if any, in and to all strips and gores,
all alleys adjoining the Westgate I Land, and the land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Westgate I Land to the center line thereof, and all right, title and interest
of Jared, if any, in and to any award made or to be made in lieu thereof and in
and to any unpaid award for any taking by condemnation or any damages to the
Westgate I Land or the Westgate I Building by reason of a change of grade of
any street, road or avenue (the Westgate I Land, together with all of the
foregoing items listed in clauses (a) through (f) above being hereinafter
sometimes collectively referred to as the "Westgate I Property").
Section 1.4 Jared agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase from Jared, at the price and upon the terms
and conditions set forth in this Agreement, all those certain plots, pieces and
parcels of land located in the Township of Bernards, County of Somerset, and
State of New Jersey as more particularly described in Schedule 1-D annexed
hereto and made a part hereof (the "Westgate II Land"), together with (a) all
buildings and other improvements situated on the land (collectively, the
"Westgate II Building"), (b) all easements, rights of way, reservations,
privileges, appurtenances, and other estates and rights of Jared pertaining to
the Westgate II Land and the Westgate II Building, (c) all right, title and
interest of Jared in and to all fixtures, machinery, equipment, supplies and
other articles of personal property attached or appurtenant to the Westgate II
Land or the Westgate II Building, or used in connection therewith
(collectively, the "Westgate II Personal Property"), (d) all oil,
<PAGE> 9
4
gas and mineral rights of Jared, if any, in and to the Westgate II Land, (e)
all right, title and interest of Jared, if any, in and to the trade names of
the Westgate II Building, and (f) all right, title and interest of Jared, if
any, in and to all strips and gores, all alleys adjoining the Westgate II Land,
and the land lying in the bed of any street, road or avenue, opened or
proposed, in front of or adjoining the Westgate II Land to the center line
thereof, and all right, title and interest of Jared, if any, in and to any
award made or to be made in lieu thereof and in and to any unpaid award for any
taking by condemnation or any damages to the Westgate II Land or the Westgate
II Building by reason of a change of grade of any street, road or avenue (the
Westgate II Land, together with all of the foregoing items listed in clauses
(a) through (f) above being hereinafter sometimes collectively referred to as
the "Westgate II Property").
Section 2. Purchase Price
2.1 The purchase price to be paid by Purchaser to Sellers
for the Properties (the "Purchase Price") is One Hundred Eleven Million Four
Hundred Thousand Dollars ($111,400,000), allocated as follows: (i) Twenty-Three
Million Five Hundred Thousand Dollars ($23,500,000) is allocated to the
purchase of the 700 Tower Drive Property, (ii) Twenty-Eight Million One Hundred
Thousand Dollars ($28,100,000) is allocated to the purchase of the 800 Tower
Drive Property, (iii) Forty-Eight Million Three Hundred Twenty-Five Thousand
Dollars ($48,325,000) is allocated to the purchase of the Westgate I Property,
and (iv) Eleven Million Four Hundred Seventy-Five Thousand Dollars
($11,475,000) is allocated to the purchase of the Westgate II Property. The
Purchase Price is payable as follows:
(a) Eleven Million Four Hundred Thousand Dollars ($11,400,000)
(the "Downpayment"), simultaneously with the execution and delivery of this
Agreement, by a bank wire transfer of immediately available funds to an account
designated by Schulte Roth & Zabel ("Escrow Agent") which Downpayment shall be
held by Escrow Agent in accordance with the terms of Section 20; provided,
however, if this Agreement is executed at the Closing, Purchaser shall pay the
Downpayment by not more than 10 bank wire transfers of immediately available
funds as Sellers shall direct, such payment to be applied in proportion to
Sellers' respective shares of the Purchase Price; and
(b) One Hundred Million Dollars ($100,000,000) at the Closing by
Purchaser executing and delivering the following promissory notes, each of
which shall be in the form attached hereto as Exhibit A:
(i) a promissory note in the principal amount of Twenty-Two
Million Five Hundred Thousand Dollars ($22,500,000) payable to BMI (
the "700 Tower Drive Note"), secured by a first purchase money
mortgage on the 700 Tower Drive Property (the 700 Tower Drive
Mortgage");
<PAGE> 10
5
(ii) a promissory note in the principal amount of Twenty-Three
Million One Hundred Thousand Dollars ($23,100,000) (the "800 Tower
Drive Note"), payable to BMI and secured by a first purchase money
mortgage on the 800 Tower Drive Property (the "800 Tower Drive
Mortgage"); and
(iii) a promissory note in the principal amount of Forty-Four
Million Sixty-Four Thousand Dollars ($44,064,000), payable to Jared
(the "Westgate I Note"), and secured by a first purchase money
mortgage on the Westgate I Property (the "Westgate I Mortgage"), which
note and mortgage shall be immediately assigned by Jared to Bellemead
Development Corporation ("BDC"); and
(iv) a promissory note in the principal amount of Ten Million
Three Hundred Thirty-Six Thousand Dollars ($10,336,000), payable to
Jared (the "Westgate II Note"), and secured by a first purchase money
mortgage on the Westgate II Property (the "Westgate II Mortgage"),
which note and mortgage shall be immediately assigned by Jared to BDC.
(c) Sellers shall be entitled to receive the Downpayment
in proportion to their respective shares of the Purchase Price,
together with all interest accrued thereon, if any, and such interest
shall not be credited against the Purchase Price or credited to
Purchaser in connection with Closing adjustments.
(d) Sellers and Purchaser agree that Sellers must convey
and Purchaser must purchase all of the Properties in accordance with
the terms and conditions of this Agreement, and, except as expressly
provided in Sections 6.1, 8.1, 10.3, 16.1, 16.2 or 17.1, that failure
of Sellers to convey all of the Properties or the failure of Purchaser
to purchase all of the Properties in accordance with the terms and
conditions of this Agreement shall be a default hereunder and permit
the non-defaulting party to exercise its remedies provided for in this
Agreement.
Section 3. Apportionments
3.1 The following shall be apportioned with respect to
each Property between the Seller of such Property and Purchaser at the Closing
as of 11:59 P.M. on December 31, 1995:
(a) prepaid rents and Additional Rents (hereinafter
defined) and other amounts payable by Tenants (hereinafter defined),
if, as and when received and, in the case of the 700 Tower Drive
Ground Lease, ground rent;
(b) real estate taxes, personal property taxes, water
charges, sewer rents and vault charges, if any, on the basis of the
applicable periods for which the same have been assessed;
<PAGE> 11
6
(c) value of fuel stored on the Properties, at Sellers'
cost, including any taxes, on the basis of a statement from Sellers'
supplier;
(d) charges and payments under Contracts which are
transferred to Purchaser or permitted renewals or replacements
thereof;
(e) any prepaid items of operating expense relating to
the Properties, including fees for licenses which are transferred to
Purchaser at the Closing and annual permit and inspection fees;
(f) utilities, including telephone, steam, electricity
and gas, on the basis of the most recently issued bills therefor,
subject to adjustment after the Closing when the next bills are
available, or if current meter readings are available, on the basis of
such readings;
(g) transferable deposits with telephone and other
utility companies, and any other persons or entities who supply goods
or services in connection with the Properties, if same are assigned to
Purchaser at the Closing, which shall be credited in their entirety to
Sellers;
(h) personal property taxes, if any, on the basis of the
applicable periods for which assessed;
(i) Sellers' share, if any, of all revenues from the
operation of the Properties other than rents and Additional Rents
(including parking charges, and telephone booth and vending machine
revenues), if, as and when received;
(j) permitted administrative charges, if any, on those
tenants' security deposits (if any) transferred by Sellers pursuant to
Section 11.1(f); and
(k) as to each Property, such other items as are
customarily apportioned between sellers and purchasers of real
properties of a type similar to the Properties and located in the city
and state where the Property is located.
3.2 If the Closing shall occur before a new real estate
or personal property tax rate is fixed, the apportionment of taxes at the
Closing shall be upon the basis of the old tax rate for the preceding fiscal
year applied to the latest assessed valuation. Promptly after the new tax rate
is fixed, the apportionment of taxes shall be recomputed and any discrepancy
resulting from such recomputation and any errors or omissions in computing
apportionments at Closing shall be promptly corrected and the proper party
reimbursed.
3.3 If on the Closing Date any Tenant is in arrears in
the payment of base rent or has not paid the base rent payable by it for the
month in which the Closing occurs (whether or not it
<PAGE> 12
7
is in arrears for such month on the Closing Date), any rents received by
Purchaser or Sellers from such Tenant after the Closing shall be applied first
to all rent due and payable by such Tenant for the month in which the Closing
occurs, then to the month prior to the month in which the Closing occurs, then
to all rent due and payable by such Tenant for the period from and after the
month in which the Closing occurs, and then to the period prior to the month
preceding the month in which the Closing occurs. If rents or any portion
thereof received by Sellers or Purchaser after the Closing are due and payable
to the other party by reason of this allocation, the appropriate sum, less a
proportionate share of any reasonable attorneys' fees and costs and expenses
expended in connection with the collection thereof, shall be promptly paid to
the other party.
3.4 If any tenants are required to pay percentage rent,
escalation charges for real estate taxes, parking charges, operating expenses
and maintenance escalation rents or charges, cost-of-living increases or other
charges of a similar nature ("Additional Rents") and any Additional Rents are
collected by Purchaser from a tenant after the Closing Date, then (i) if and to
the extent that the tenant has specified that any payment of such Additional
Rents so collected is to be applied for a particular item of Additional Rent
with respect to a period prior to the Closing Date, such payment shall be
applied as specified by the tenant and (ii) in all other cases, the Additional
Rents or any other sums so collected shall be applied first to pay all sums
then due and payable by such tenant for the period subsequent to the Closing
Date, and then Purchaser shall promptly pay to the applicable Seller out of any
remaining balance of such Additional Rents the amount of all Additional Rents
which are due and payable by such tenant with respect to any period prior to
the Closing Date (whether or not such Additional Rents first became due and
payable on or after the Closing Date), less a proportionate share of any
reasonable attorneys' fees and costs and expenses of collection thereof.
3.5 After the Closing, Sellers shall continue to have the
right, in its own name, to demand payment of and to collect rent and Additional
Rent arrearages owed to Sellers by any Tenant, which right shall include the
right to continue or commence legal actions or proceedings against any Tenant
for the payment of such arrearages (provided, however, Seller shall not
commence or continue any legal action or proceeding to terminate a Tenant's
tenancy or to dispossess a Tenant or otherwise disturb a Tenant's occupancy),
and delivery of the Lease Assignment shall not constitute a waiver by Sellers
of such right. At no cost to Purchaser or if Purchaser incurs any cost with
Seller's prior written consent, Seller agrees to reimburse Purchaser for same,
Purchaser agrees reasonably to cooperate with Sellers in connection with all
reasonable efforts by Sellers to collect such rents and Additional Rents and to
take all reasonable steps, including adding the rent arrearages to Purchaser's
bills to Tenant for current rent obligations and testifying on behalf of
Sellers, whether before or after the Closing Date, as may be
<PAGE> 13
8
reasonably necessary to carry out the intention of the foregoing, including the
delivery to Sellers, upon demand and to the extent in Purchaser's possession,
of any relevant books and records (including any rent or Additional Rent
statements, receipted bills and copies of Tenant checks used in payment of such
rent or Additional Rent), the execution of any and all consents or other
documents, and the undertaking of any other reasonable act necessary for the
collection of such rents and Additional Rents by Sellers. If a Tenant, in
response to Sellers' legal actions or proceedings to recover rent and
Additional Rent arrearages, commences its own legal action against a Seller or
files a counterclaim to such Seller's legal action or proceeding, and such
Tenant's legal action or counterclaim names Purchaser as a defendant and
relates to the issues raised in Sellers' legal action or proceeding, then, in
such event, Seller hereby indemnifies and agrees to hold harmless and defend
Purchaser with counsel of Sellers' choice and reasonably acceptable to
Purchaser with respect to any such legal action or counterclaim.
3.6 If there is a water meter on any of the Properties,
then, unless a Tenant shall be obligated under its Lease to pay for the water
metered thereby, Sellers shall furnish a reading for each such meter to a date
not more than thirty (30) days prior to the Closing Date, and the unfixed water
charges and sewer rent, if any, based thereon for the intervening time shall be
apportioned on the basis of such last reading.
3.7 If any of the items subject to apportionment under
the foregoing provisions of this Section 3 cannot be apportioned at the Closing
because of the unavailability of the information necessary to compute such
apportionment, or if any errors or omissions in computing apportionments at the
Closing are discovered subsequent to the Closing, then such item shall be
reapportioned and such errors and omissions corrected as soon as practicable
after the Closing Date and the proper party reimbursed, which obligation shall
survive the Closing for a period of one hundred eighty (180) days after the
Closing Date as hereinafter provided. Neither party hereto shall have the
right to require a recomputation of a Closing apportionment or a correction of
an error or omission in a Closing apportionment unless within the aforesaid one
hundred eighty (180) day period one of the parties hereto (a) has obtained the
previously unavailable information or has discovered the error or omission, and
(b) has given notice thereof to the other party together with a copy of its
good faith recomputation of the apportionment and copies of all substantiating
information used in such recomputation. The failure of a party to obtain any
previously unavailable information or discover an error or omission with
respect to an item subject to apportionment hereunder and to give notice
thereof as provided above within one hundred eighty (180) days after the
Closing Date shall be deemed a waiver of its right to cause a recomputation or
a correction of an error or omission with respect to such item after the
Closing Date.
<PAGE> 14
9
3.8 (a) If, on the date of this Agreement, the
Properties or any part thereof shall be affected by any assessment or
assessments which are or may become payable in installments and which are not
payable directly by a Tenant, of which the first installment is now a charge or
lien, or has been paid, then (i) Sellers shall be obligated to pay all
installments of any such assessment which are due and payable prior to the
Closing Date, and (ii) for the purposes of this Agreement, all the unpaid
installments of any such assessment which are to become due and payable on or
after the Closing Date shall not be deemed to be liens upon the Properties and
Purchaser shall acquire the Properties on the Closing Date subject to any such
assessment without abatement of the Purchase Price.
(b) If, subsequent to the date hereof, the Properties or
any part thereof shall become affected by an assessment or assessments
which are not payable directly by a Tenant, said assessments shall not
be deemed to be liens upon the Properties and the Purchaser shall
acquire the Properties on the Closing Date subject to any such
assessment without abatement of the Purchase Price. If an assessment
may be paid alternatively, at Sellers election, in installments or in
lump sum and such election must be made prior to the Closing Date,
Seller shall make an election to have same payable in installments.
In the event any such assessment or assessments, whether payable in
lump sum or in installments, is due and payable prior to the Closing,
and has been paid by Sellers, Purchaser shall reimburse Sellers for
same at the Closing.
3.9 Sellers shall have the right to pay any net Closing
adjustments in favor of Purchaser out of the Downpayment. If the net Closing
adjustments are in favor of Sellers, Purchaser shall pay the net sum owing to
the applicable Seller or Sellers by bank wire transfer of immediately available
federal funds.
3.10 The provisions of this Section 3 shall survive the
Closing indefinitely, except for the provisions of Sections 3.2 and 3.7, which
shall survive the Closing for a period of one hundred and eighty (180) days
following the Closing Date.
Section 4. Closing Date
4.1 The delivery of the Deeds and the consummation of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Schulte Roth & Zabel, 900 Third Avenue, New York, New York, at
10:00 A.M. on January 10, 1996 (the "Closing Date"), WITH TIME BEING OF THE
ESSENCE.
Section 5. Permitted Encumbrances
5.1 Each Seller shall convey the Property owned by it and
Purchaser shall accept title to such Property subject only to those matters set
forth on Schedule 2 annexed hereto and made a part hereof (collectively, the
"Permitted Encumbrances").
<PAGE> 15
10
Section 6. Title
6.1 (a) Purchaser shall order, at its sole cost and
expense, commitments for an owner's fee (or in the case of the 700 Tower
Property leasehold) title insurance policy or policies and mortgagee's title
insurance policies with respect to each of the Properties (the "Title
Commitments") issued by Chicago Title Insurance Company and/or Commonwealth
Land Title Insurance Company (collectively, the "Title Company") and shall
request the Title Company to deliver copies of the Title Commitments, together
with true and complete copies of all instruments giving rise to any defects or
exceptions to title to the Properties, to Purchaser's and Sellers' attorneys
(and any liens, encumbrances or other defects or exceptions in or to title to
the Properties other than the Permitted Encumbrances set forth in the Title
Commitments are herein collectively called the "Unacceptable Encumbrances").
(b) If any Seller is unable (subject to Section 6.2) to
eliminate all Unacceptable Encumbrances not waived in writing by Purchaser, or
to arrange for title insurance reasonably acceptable to Purchaser insuring
against enforcement of such Unacceptable Encumbrances against, or collection of
the same out of, the applicable Property (which shall constitute the
elimination of such Unacceptable Encumbrances for all purposes of this
Agreement as to those encumbrances listed on Schedule 3 attached hereto
("Schedule 3 Encumbrances")), and to convey title in accordance with the terms
of this Agreement on or before the Closing Date, Purchaser shall elect on the
Closing Date, as its sole remedy for such inability of the applicable Seller,
either (i) to terminate this Agreement as to such Property by notice given to
Sellers pursuant to Section 17.1, in which event the provisions of Section 17.1
shall apply, or (ii) to accept title subject to such Unacceptable Encumbrances
and receive no credit against, or reduction of, the Purchase Price.
6.2 Notwithstanding anything to the contrary set forth in
this Section 6 or elsewhere in this Agreement, no Seller shall be obligated to
bring any action or proceeding, to make any payments or otherwise to incur any
expense in order to eliminate Unacceptable Encumbrances; except that each
Seller shall (i) satisfy mortgages, real estate taxes, assessments, judgments
against such Seller or other liens required to be paid hereunder secured by or
affecting such Seller's Property which can be satisfied by payment of
liquidated amounts (collectively, "Liens") and (ii) as to Schedule 3
Encumbrances, arrange for insurance against enforcement or collection thereof.
Without limiting the generality of the preceding provisions of this Section
6.2, for the purposes of this Agreement (including Sections 6.1 and 17.1), any
Seller's failure or refusal to bring any action or proceeding, to make any
payments or to otherwise incur any expense (except for such Seller's obligation
to satisfy Liens or arrange for title insurance as aforesaid) in order to
eliminate Unacceptable Encumbrances shall be deemed to constitute the inability
of such Seller to eliminate such Unacceptable
<PAGE> 16
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Encumbrances, and shall not constitute a default by such Seller (willful or
otherwise) under this Agreement which would entitle Purchaser to exercise any
of the rights or remedies set forth in Section 17.3 hereof (other than the
right to terminate this Agreement as aforesaid).
6.3 If on the Closing Date there are any Liens or other
encumbrances which a Seller must pay or discharge in order to convey to
Purchaser such title as is herein provided to be conveyed, such Seller may use
any portion of the Downpayment to satisfy the same, provided:
(a) such Seller shall deliver to Purchaser or the Title
Company, at the Closing, instruments in recordable form and sufficient to
satisfy such Liens or other encumbrances of record and omit the same from the
owner's fee (or in the case of the 700 Tower Drive Property leasehold) title
insurance policy together with the cost of recording or filing said
instruments; or
(b) such Seller, having made arrangements with the Title
Company, shall deposit with said company sufficient monies acceptable to said
company to insure the obtaining and the recording of such satisfactions and the
Title Company omits such items as exceptions on Purchaser's owner's title
insurance policies. The existence of any such Liens or other encumbrances shall
not be deemed objections to title if Sellers shall comply with the foregoing
requirements.
6.4 Sellers shall have the right to provide or to request
that the Escrow Agent provide from the Downpayment at the Closing separate
unendorsed certified or official bank checks payable to the order of such
parties as are designated by Sellers and drawn on or by a Clearing House Bank,
in order to facilitate the satisfaction or release of any Liens or other
encumbrances required to be discharged or removed by Sellers. Similarly, at
Sellers' election, unpaid Liens for taxes, water and sewer charges and
assessments, which are the obligation of Sellers to satisfy and discharge,
shall not be objections to title, provided the amount thereof, plus interest
and penalties thereon, if any, computed to the third (3rd) business day after
the Closing Date, is paid by Sellers (which may be paid from the Downpayment)
and the Title Company omits any exception therefor.
6.5 If on the Closing Date there shall be financing
statements, conditional bills of sale, chattel mortgages or security interests
filed against any of the Properties, the same shall not constitute objections
to title provided that the Title Company omits the same from the owner's fee or
leasehold title insurance policy and the applicable Seller executes and
delivers an affidavit to the effect either (a) that the personal property
covered by said financing statements, conditional bills of sale, chattel
mortgages, or security interests is no longer in or on such Properties, or (b)
if such personal property is still in or on such Properties, that it has been
fully paid for (and the applicable Seller provides reasonable proof thereof to
<PAGE> 17
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Purchaser), or (c) that such personal property is the property of a Tenant or
other occupant of such Properties.
6.6 Any franchise or corporate tax open, levied or
imposed against one or both Sellers or other owners in the chain of title that
may be a Lien on the Closing Date, shall not be an objection to title if the
Title Company omits same from the title policy issued pursuant to the Title
Commitment.
6.7 If a search of title discloses judgments,
bankruptcies or other returns against other persons or entities having names
the same as or similar to that of one or both Sellers, Sellers will deliver to
Purchaser and the Title Company an affidavit stating that such judgments,
bankruptcies or other returns are not against the applicable Seller(s),
whereupon, provided the Title Company omits such returns as exceptions to title
or provides affirmative coverage with respect thereto (as to the Schedule 3
Encumbrances), such returns shall not be deemed an objection to title.
Section 7. The Notes and Mortgages.
7.1 The Notes shall be in the form attached hereto as
Exhibit A and the Mortgages shall be in the form attached hereto as Exhibit B.
7.2 In addition to delivery of a Note and Mortgage, with
respect to each of the Properties, Purchaser shall execute, deliver and/or
provide to the applicable Seller the following in connection with each Note and
Mortgage and as conditions to Closing:
(a) An Assignment of Leases and Rents, in the form of
Exhibit C annexed hereto.
(b) An Environmental Indemnity Agreement (the
"Environmental Indemnity") in the form of Exhibit D annexed hereto.
(c) A mortgagee's title insurance policy or policies in
the amount of the applicable Mortgage, insuring the Mortgage and issued by the
Title Company, subject only to the Permitted Encumbrances, and including such
affirmative insurance, endorsements and reinsurance agreements as the
applicable Seller shall reasonably require and as are obtainable without
significant additional premium.
(d) A Property Management and Leasing Agreement (the
Management Agreement"), between Purchaser, as owner, and Bellemead Management
Co., Inc., a New Jersey corporation, as manager ("Manager") in the form of
Exhibit N annexed hereto.
(e) opinions of counsel with regard to the due
authorization, execution and delivery by Purchaser and the
<PAGE> 18
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enforceability of the Note, Mortgage and other loan documents, which shall be
addressed to the applicable Seller and shall provide that such opinions may be
relied on by the mortgagee, BDC, and any lender to whom such Note, Mortgage and
other loan documents shall be collaterally assigned (any such lender, a
"Collateral Assignee").
(f) an estoppel certificate and agreement executed by
Purchaser for the benefit of the applicable Collateral Assignee in the form
attached hereto as Exhibit Q (each, a "Borrower's Estoppel").
(g) Such other instruments, documents, certificates and
other items which are required to be delivered to the applicable Seller under
the applicable Mortgage.
Section 8. Representations and Warranties
8.1 (a) Each of the Sellers represents and warrants
to Purchaser as follows:
(i) (A) In the case of Jared, it is a duly formed and
validly existing limited partnership organized under the laws of the
State of New Jersey and is qualified under the laws of the State of
New Jersey to conduct business therein, and (B) in the case of BMI, it
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan and is qualified under the
laws of the State of Michigan to conduct business therein.
(ii) It has the full legal right, power and authority to
execute and deliver this Agreement and all documents now or hereafter
to be executed by such Seller pursuant to this Agreement
(collectively, "Sellers' Documents"), to consummate the transaction
contemplated hereby, and to perform its obligations hereunder and
under the Sellers' Documents to which it is a party.
(iii) This Agreement and Sellers' Documents to which it is
a party do not and will not contravene any provision of (A) in the
case of Jared, its Agreement of Limited Partnership or certificate
thereof , and (B) in the case of BMI, its certificate of incorporation
or by-laws, or any judgment, order, decree, writ or injunction issued
against it, or any provision of any laws or governmental ordinances,
rules, regulations, orders or requirements (collectively, "Laws")
applicable to it. The consummation of the transactions contemplated
hereby will not result in a breach or constitute a default or event of
default by it under any agreement to which it or any of its assets are
subject or bound, and will not result in a violation of any Laws
applicable to it.
(iv) There are no leases, licenses or other occupancy
agreements affecting any portion of such Seller's Property
<PAGE> 19
14
on the date hereof, except for the leases and other documents
affecting such Seller's Property listed in Schedule 4 annexed hereto
and made a part hereof (collectively, the "Leases") and there are no
agreements with the Tenants under the Leases regarding the Properties
or which might otherwise be binding on the Sellers other than the
Leases. Such Seller has delivered or caused to be delivered to
Purchaser true and complete photocopies of all Leases affecting the
applicable Property.
(v) Except as set forth on Schedule 5 annexed hereto and
made a part hereof, (i) there are no actions, suits, proceedings,
arbitrations, or investigations before any court or other governmental
authority or quasi-governmental authority or arbitrator (collectively,
"Actions") pending with respect to such Seller's Property and (ii) to
such Seller's knowledge, there are no Actions pending or threatened in
writing against such Seller or otherwise which would materially
adversely affect such Seller's ability to consummate the transactions
contemplated by this Agreement or which would materially adversely
affect such Seller's Property.
(vi) (a) the certificates of occupancy attached on
Schedule 6 annexed hereto and made a part hereof are true and complete
copies thereof and constitute all the certificates of occupancy
currently held by such Seller in connection with the ownership, use
and occupancy of such Seller's Property, (b) such Seller has received
no written notice that any of the certificates of occupancy have been
suspended or revoked or will not be renewed, (c) to such Seller's
knowledge, the uses permitted by the Leases comply with the
certificates of occupancy, and (d) such Seller has received no written
notice that any current uses of the Property violate any certificates
of occupancy.
(vii) Such Seller has received no written notice of any
pending or threatened assessments with respect to such Seller's
Property and, to such Seller's knowledge, there are no pending or
threatened assessments with respect to such Property due and payable
prior to or after the Closing.
(viii) Set forth on Schedule 4 is a true, complete and
accurate listing of (i) the December, 1995 rental amounts billed to
the Tenants under the Leases (collectively, the "Tenants") by Manager
which rents represent the rents currently being collected except for
the arrearages shown on Schedule 4, (ii) the rental arrearages, if
any, for each of the Tenants as of December 1, 1995 and (iii) the
security deposits being held by Sellers pursuant to the Leases.
Except as set forth on Schedule 4, such Seller has received no written
notice and has no knowledge of any offset, defense to or claim against
the payment of rent or any other obligation of any Tenant under any
of the Leases.
<PAGE> 20
15
(ix) To such Seller's actual knowledge based on its
owner's title insurance policies (without the qualification as to such
Seller's knowledge set forth in the last sentence in this Section
8.1(a)), such Seller owns the fee simple title to the Properties and
in the case of BMI, BMI owns leasehold title to the 700 Tower Drive
Property. Except as specifically set forth in this Agreement, Sellers
are conveying the Properties to Purchaser without representation,
warranty or recourse as to the state of title.
(x) Except as set forth in Schedule 4 (and, in the case
of the 700 Tower Drive Property, except as set forth in the 700 Tower
Drive Ground Lease), there are no renewal, extension, expansion or
cancellation options regarding any interest in the such Seller's
Property nor any options or rights of first refusal to lease or
purchase any portion of such Seller's Property, and such Seller has
not granted and, to such Seller's knowledge, its Property is not
subject to, any option or right of first refusal or other sales
contract which remains in effect pursuant to which any party has any
option or right of first refusal to purchase or lease any interest in
such Seller's Property.
(xi) To such Seller's knowledge, none of the Tenants are
subject to a bankruptcy filing and such Seller has received no written
notice of a bankruptcy filing by or against any Tenant.
(xii) There are no employees employed by such Seller with
respect to such Seller's Property and no employment contracts relating
to such Seller's Property that would bind Purchaser.
(xiii) Except as set forth in Schedule 9, there are no
service contracts, including management or brokerage agreements,
affecting such Seller's Property (collectively, the "Contracts") on
the date hereof. Each Seller has delivered true and complete
copies of the Contracts relating to its Property. Except as set forth
in Schedule 9, such Seller has neither given nor received any written
notice of default under the Contracts relating to such Seller's
Property which remains in effect and Seller has no knowledge of any
material defaults under any such Contracts. Except as set forth in
the Contracts, there are no leasing commissions due or payable with
respect to any Property.
(xiv) Except as set forth in Schedule 4, none of the
Tenants has the right to vacate the space leased by such Tenant in
such Seller's Property or to terminate such Tenant's Lease; and Seller
has received no written notice from any Tenant (i) asserting such
Tenant's intent to vacate the premises leased by such Tenant, or (ii)
asserting that such Tenant has any right to cancel its Lease.
<PAGE> 21
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(xv) There are no condemnation proceedings pending against
all or part of such Seller's Property and, such Seller has not
received any written notice and has no knowledge of any threatened
condemnation of all or part of the Properties.
(xvi) Except as set forth in Schedule 4, such Seller has
neither given nor received any written notices of default under the
Leases affecting the applicable Property and such Seller has no
knowledge of any monetary defaults or any non-monetary defaults other
than non-monetary defaults which are immaterial under the applicable
Leases.
(xvii) Except to the extent, if any, set forth in the
environmental and engineering reports obtained by Purchaser in
connection with this Agreement, such Seller has received no written
notice of any violation of any Laws with respect to such Seller's
Property which remains outstanding.
(xviii) Except to the extent, if any, set forth in the
environmental and engineering reports obtained by Purchaser in
connection with this Agreement, such Seller has not received any
written notice from any governmental authority or any other party that
remains in effect as of the Closing Date that such Seller's Property
violates any Environmental Laws (as defined below). The term
"Environmental Laws" shall mean all statutes specifically described
in the immediately following sentence and all applicable federal,
state and local environmental health and safety statutes, ordinances,
codes, rules, regulations, orders and decrees regulating, relating to
or imposing liability or standards concerning or in connection with
Hazardous Materials (as defined below). The term "Hazardous
Materials" shall mean with respect to any Property any substance,
material, waste, gas or particulate matter which is regulated by any
local governmental authority where the applicable Property is located,
the State where the applicable Property is located, or the United
States Government, including any material or substance which is (i)
defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," or "restricted hazardous
waste" under any provision of applicable state or local law, (ii)
petroleum, (iii) asbestos, (iv) polychlorinated biphenyls, (v)
radioactive material, (vi) designated as a "hazardous substance"
pursuant to Section 311 of the Clean Water Act, 33 U.S.C. 1251 et seq.
(33 U.S.C. Section 1317), (vii) defined as a "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), or
(viii) defined as a "hazardous substance" pursuant to Section 101 of
the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601).
<PAGE> 22
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(xix) Such Seller has delivered true and correct copies of the
tax bills for such Seller's Property and, to such Seller's knowledge,
there are no pending tax reduction or certiorari proceedings except as
set forth on Schedule 5. True and complete copies of the Leases and
certain other information and documents relating to the Properties, the
operation thereof and/or the sale thereof (collectively, the "Property
Information") have been delivered or otherwise made available to
Purchaser and, by accepting the Deeds, Purchaser acknowledges its
receipt and acceptance or the availability to it thereof and that
Purchaser has reviewed the same to its satisfaction. To the extent
the copies of the Leases delivered by Sellers to Purchaser contain
provisions or information that are inconsistent with the
representations and warranties in this Agreement other than with
respect to the information in Schedule 4, the foregoing representations
and warranties shall be deemed modified to the extent necessary to
eliminate such inconsistency and to conform such representations and
warranties to the information contained in the Leases addressing
matters other than those contained in Schedule 4. As used in this
Agreement, the words "Sellers' knowledge" or words of similar import
shall be deemed to mean, and shall be limited to, the actual (as
distinguished from implied, imputed or constructive) knowledge of
Sellers after, and based solely upon, making inquiry of Mr. Donn H.
Norton, an officer of each of BMI and Chubb Realty, Inc., the general
partner of Jared, and of Mr. Ilan Herman, a Senior Vice President of
Bellemead Management Co., Inc., who Sellers represent are the
individuals charged with overall supervisory responsibility for the
management and operation of the Properties, but without such persons
having any obligation to make an independent inquiry or investigation.
(b) If at or prior to the Closing, (i) Purchaser shall
acquire actual knowledge (which for purposes of this Section 8 shall mean the
actual knowledge of Purchaser's counsel and/or its officers, directors,
employees, agents or principals), whether such actual knowledge is obtained
through its own efforts, by notice from Sellers or otherwise, that any of the
representations or warranties made herein by Sellers are untrue, inaccurate or
incorrect and shall give Sellers notice thereof at or prior to the Closing, or
(ii) Sellers shall notify Purchaser that a representation or warranty made
herein by Sellers is untrue, inaccurate or incorrect in any respect, then (A)
if any such representation or warranty is either (1) immaterial or (2) material
but not materially untrue, inaccurate or incorrect, and is not cured or
corrected by Sellers on or before the Closing Date, Purchaser shall
nevertheless be deemed to, and shall, waive such misrepresentation or breach of
warranty and shall consummate the transactions contemplated hereby without any
reduction of or credit against the Purchase Price, and (B) if any such
representation or warranty is both (1) material and (2) materially untrue,
inaccurate or incorrect, and is not cured or corrected by Sellers on or before
the Closing Date then
<PAGE> 23
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Purchaser, as its sole remedy for any and all such materially untrue,
inaccurate or incorrect material representations or warranties, shall elect
either (x) to waive such misrepresentations or breaches of warranties and
consummate the transactions contemplated hereby without any reduction of or
credit against the Purchase Price, or (y) to terminate this Agreement as to
such Property by notice given to Sellers on the Closing Date, in which event,
this Agreement shall be terminated as to such Property and neither party shall
have any further rights, obligations or liabilities hereunder, except as
otherwise expressly provided herein (collectively, the "Surviving
Obligations"), and except that Purchaser shall be entitled to a return of the
portion of the Downpayment allocable to such Property, together with all
interest accrued on such portion of the Downpayment, if any, and the
out-of-pocket costs incurred by Purchaser for obtaining an environmental due
diligence report and engineering inspection report with respect to such
Property, provided Purchaser is not otherwise in default hereunder. Purchaser
acknowledges and agrees that (x) at or prior to the Closing, Purchaser's rights
and remedies in the event any representations or warranties made by one or more
Sellers in this Agreement are untrue, inaccurate or incorrect shall be only as
provided in this Section 8.1(b), and (y) if the Closing does not occur,
Purchaser hereby expressly waives, relinquishes and releases all other rights
or remedies available to it at law, in equity or otherwise (including, without
limitation, the right to seek damages from one or more Sellers) as a result of
any of one or more Sellers' representations or warranties made in this
Agreement being untrue, inaccurate or incorrect.
(c) Notwithstanding anything contained in Section 8.1(b)
or elsewhere in this Agreement to the contrary, Purchaser hereby expressly
waives, relinquishes and releases any right or remedy available to it at law,
in equity or under this Agreement to make a claim against Sellers for damages
that Purchaser may incur, or to rescind this Agreement and the transactions
contemplated hereby, as the result of any of Sellers' representations or
warranties being untrue, inaccurate or incorrect if (A) Purchaser had actual
knowledge that such representation or warranty was untrue, inaccurate or
incorrect at the time of the Closing and Purchaser nevertheless closes title
hereunder, or (B) Purchaser's damages as a result of such representation or
warranty being untrue, inaccurate or incorrect are less than $100,000.00 in the
aggregate. The provision of this Section 8.1(c) shall survive the Closing.
Except as provided in the second preceding sentence or otherwise qualified
elsewhere in this Agreement, Purchaser shall have all remedies hereunder, at
law or in equity, for the breach of any of Seller's representations or
warranties contained in this Agreement.
(d) The representations and warranties of Sellers set
forth in Section 8.1(a) and elsewhere in this Agreement shall be true, accurate
and correct in all material respects upon the execution of this Agreement and
shall be deemed to be repeated on and as of the Closing Date (except as they
relate only to an
<PAGE> 24
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earlier date). The representations and warranties of Sellers set forth in
Section 8.1(a) and elsewhere in this Agreement and/or the Sellers' Documents
(including the Deeds and the Assignment Agreement) shall remain operative and
shall survive the Closing for a period of one hundred eighty (180) days
following the Closing Date and no action or claim based thereon shall be
commenced or submitted after such period and any purported action or claim
against Sellers or their successors and assigns commenced or submitted by or on
behalf of Purchaser after such date shall be null and void.
8.2 (a) Purchaser represents and warrants to each
Seller as follows:
(i) Purchaser is a duly formed and validly existing
corporation organized under the laws of the State of New York.
(ii) Purchaser has the full legal right, power, authority
and financial ability to execute and deliver this Agreement and all
documents now or hereafter to be executed by it pursuant to this
Agreement (collectively, the "Purchaser's Documents"), to consummate
the transactions contemplated hereby, and to perform its obligations
hereunder and under Purchaser's Documents.
(iii) This Agreement and Purchaser's Documents do not and
will not contravene any provision of the Certificate of Incorporation
or the by-laws of Purchaser, any judgment, order, decree, writ or
injunction issued against Purchaser, or any provision of any Laws
applicable to Purchaser. The consummation of the transactions
contemplated hereby will not result in a breach or constitute a
default or event of default by Purchaser under any agreement to which
Purchaser or any of its assets are subject or bound and will not
result in a violation of any Laws applicable to Purchaser.
(iv) There are no actions, suits, proceedings,
arbitrations, or investigations before any court or other governmental
authority or quasi-governmental authority or arbitrator (collectively,
"Actions") pending with respect to Purchaser's acquisition of the
Properties and, to Purchaser's knowledge, there are no Actions pending
or threatened in writing against Purchaser or otherwise which would
materially adversely affect Purchaser's ability to consummate the
transactions contemplated by this Agreement.
(b) The representations and warranties of Purchaser set
forth in Section 8.2(a) and elsewhere in this Agreement shall be true,
accurate and correct in all material respects upon the execution of
this Agreement and shall be deemed to be repeated on and as of the
Closing Date (except as they relate only to an earlier date).
<PAGE> 25
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(c) The representations and warranties of Purchaser set
forth in this Section 8.2 and elsewhere in this Agreement and/or the
Purchaser's Documents shall remain operative and shall survive the
Closing and the execution and delivery for a period of one hundred
eighty (180) days following the Closing Date and no action or claim
based thereon shall be commenced or submitted after such period and
any purported action or claim against Purchaser or its successors and
assigns based thereon commenced or submitted after such date shall be
null and void.
(d) Notwithstanding anything contained in this Section
8.2 or elsewhere in this Agreement to the contrary, Seller hereby
expressly waives, relinquishes and releases any right or remedy
available to it at law, in equity or under this Agreement to make a
claim against Purchaser for damages that Sellers may incur, or to
rescind this Agreement and the transactions contemplated hereby, as
the result of any of Purchaser's representations or warranties being
untrue, inaccurate or incorrect if (A) Sellers had actual knowledge
that such representation or warranty was untrue, inaccurate or
incorrect at the time of the Closing and Sellers nevertheless close
title hereunder, or (B) Sellers' damages as a result of such
representation or warranty being untrue, inaccurate or incorrect are
less than $100,000.00 in the aggregate. The provision of this Section
8.2(d) shall survive the Closing. Except as provided in the second
preceding sentence or otherwise qualified elsewhere in this Agreement,
each Seller shall have all remedies hereunder, at law or in equity,
for the breach of any of Purchaser's representations or warranties
contained in this Agreement.
Section 9. Costs of Transaction
Sellers shall be responsible for (a) Sellers' legal fees
attributable to the transfer of the Properties to, and the purchase money
financing of the Properties for, Purchaser including preparation and
negotiation of this Agreement and the consummation of the transactions
contemplated herein, (b) all transfer or sales taxes imposed by the states
where each of the Properties is located in connection with the transfer of the
Property to Purchaser to the extent customarily paid by a seller of real
property, (c) the Michigan Single Business Tax, if and to the extent payable by
BMI with respect to the transfer of the 800 Tower Drive Property and the 700
Tower Drive Property and (d) fee and mortgagee title insurance premiums, survey
updates, recording fees, taxes and expenses with respect to the Westgate I
Property and the Westgate II Property. All (i) additional costs attributable
to affirmative insurance and non-customary endorsements desired by Purchaser,
(ii) fee (in the case of the 800 Tower Drive Property), leasehold (in the case
of the 700 Tower Drive Property) and mortgagee title insurance premiums,
recording fees, taxes (but not transfer, sales or business taxes for which
Seller is responsible under the preceding sentence) and expenses with respect
to the 700 Tower Drive Property and the 800
<PAGE> 26
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Tower Drive Property and the Mortgages relating thereto, (iii) engineering,
environmental, inspection and other due diligence expenses, and (iv)
Purchaser's legal fees. All other closing expenses shall be the sole
responsibility of, and be paid by, the party that customarily pays such
expenses in the jurisdiction where the applicable Property is located. The
provisions of this Section 9 shall survive the Closing.
Section 10. Conditions Precedent to Closing
10.1 Purchaser's obligation under this Agreement to
purchase the Properties is subject to the fulfillment of each of the following
conditions, subject, however, to the provisions of Section 10.3:
(a) The representations and warranties of Sellers
contained herein shall, subject to the provisions of Section 8.1(b),
be true, accurate and correct in all material respects as of the
Closing Date, except to the extent they relate only to an earlier
date;
(b) Sellers shall be ready, willing and able to deliver
title to the Properties in accordance with the terms and conditions of
this Agreement;
(c) the Title Company shall be ready, willing and able to
issue fee and leasehold title insurance to Purchaser in accordance
with the terms and conditions of this Agreement at the Title Company's
standard rates;
(d) Sellers shall have delivered all the documents and
other items required pursuant to Section 11, and shall have performed
all other covenants, undertakings and obligations, and complied with
all conditions required by this Agreement to be performed or complied
with by the Sellers at or prior to the Closing;
(e) any net credit due from Sellers to Purchaser by
reason of Closing apportionments shall have been paid; and
(f) all consents and approvals of governmental
authorities and parties to agreements to which Seller is a party, or
by which Seller's assets are bound, that are required with respect to
the transactions contemplated by this Agreement shall have been
obtained.
10.2 Sellers' obligation under this Agreement to sell the
Properties to Purchaser is subject to the fulfillment of each of the following
conditions, subject, however to the provisions of Section 10.3:
(a) the representations and warranties of Purchaser
contained herein shall be true, accurate and correct in all material
respects as of the Closing Date;
<PAGE> 27
22
(b) Purchaser shall have paid to Sellers any net Closing
apportionments due from Purchaser to Sellers;
(c) Purchaser shall have executed and delivered to
Sellers each of the Notes and Mortgages and all other documents
required under Section 7 and pursuant to the provisions of the Notes
and Mortgages;
(d) Purchaser shall have delivered to Sellers all the
documents to be executed by Purchaser set forth in Section 12 and
shall have performed all other covenants, undertakings and
obligations, and complied with all conditions required by this
Agreement to be performed or complied with by Purchaser at or prior to
the Closing;
(e) all consents and approvals of governmental
authorities and parties to agreements to which Purchaser is a party,
or by which Purchaser's assets are bound, that are required with
respect to the consummation of the transactions contemplated by this
Agreement shall have been obtained; and
(f) on or prior to Closing Date, (i) Purchaser shall not
have applied for or consented to the appointment of a receiver,
trustee or liquidator for itself or any of its assets unless the same
shall have been discharged prior to the Closing Date, and no such
receiver, liquidator or trustee shall have otherwise been appointed,
unless same shall have been discharged prior to the Closing Date, (ii)
Purchaser shall not have admitted in writing an inability to pay its
debts as they mature, (iii) Purchaser shall not have made a general
assignment for the benefit of creditors, (iv) Purchaser shall not have
been adjudicated a bankrupt or insolvent, or had a petition for
reorganization granted with respect to Purchaser, or (v) Purchaser
shall not have filed a voluntary petition seeking reorganization or an
arrangement with creditors or taken advantage of any bankruptcy,
reorganization, insolvency, readjustment or debt, dissolution or
liquidation law or statute, or filed an answer admitting the material
allegations of a petition filed against it in any proceedings under
any such law, or had any petition filed against it in any proceeding
under any of the foregoing laws unless the same shall have been
dismissed, canceled or terminated prior to the Closing Date.
10.3 In the event that any condition contained in Section
10.1 or 10.2 is not satisfied, then, unless such failure is a default by
Purchaser under Section 17.2 or a willful failure or refusal by Sellers
pursuant to Section 17.3, as the case may be, the party entitled to the
satisfaction of such condition as a condition to its obligation to close title
hereunder shall have as its sole remedy hereunder the right to elect to (a)
waive such unsatisfied condition whereupon title shall close as provided in
this Agreement or (b) terminate this Agreement. In the event such party elects
to terminate this Agreement, this Agreement
<PAGE> 28
23
shall be terminated and neither party shall have any further rights,
obligations or liabilities hereunder, except for the Surviving Obligations, and
except that if Purchaser terminates the Agreement because a condition contained
in Section 10.1 is not satisfied, then Purchaser shall be entitled to a return
of the Fund, provided Purchaser is not otherwise in default hereunder. Nothing
contained in this Section 10.3 shall be construed so as to bestow any right of
termination upon a party for the failure of a condition to be satisfied unless
such party is expressly entitled to the satisfaction of such condition as
provided in Section 10.1 or 10.2.
Section 11. Documents to be Delivered by Sellers at Closing.
11.1 At the Closing, each Seller shall execute,
acknowledge and/or deliver (or cause to be delivered), as applicable, the
following to Purchaser or the Title Company:
(a) A bargain and sale deed without covenant against
grantor's acts or a special warranty deed (collectively, the "Deeds")
conveying title to the Property owned by such Seller (other than 700
Tower Drive) in the forms annexed hereto as Exhibit E-1 and E-2 and
made a part hereof, but with such changes as are required by the laws
of the applicable jurisdiction.
(b) A bargain and sale deed without covenant against
grantor's acts (the "Building Deed") conveying fee title to the 700
Tower Drive Building, in the form of Exhibit F annexed hereto and made
a part hereof.
(c) An Assignment and Assumption of Ground Lease, from
BMI to Purchaser (the "Ground Lease Assignment"), conveying BMI's
leasehold interest in 700 Tower Drive to Purchaser, in the form of
Exhibit G-1 annexed hereto and made a part hereof, and a Restated and
Amended Ground Lease, between BMI, as landlord, and Purchaser, as
tenant, in the form of Exhibit G-2 annexed hereto and made a part
hereof.
(d) The Assignment and Assumption of Leases and Security
Deposits in the form of Exhibit H annexed hereto and made a part
hereof, assigning all of such Seller's right, title and interest in
and to the Leases, all guarantees thereof and the security deposits
thereunder in such Seller's possession, if any (the "Lease
Assignment").
(e) The Assignment and Assumption of Contracts, Licenses
and Building Plans in the form of Exhibit I annexed hereto and made a
part hereof (the "Contract and License Assignment") assigning all of
such Seller's right, title and interest in and to (i) all of the
assignable licenses, permits, certificates, approvals, authorizations
and variances issued for or with respect to the Properties by any
governmental authority (collectively, the "Licenses")
<PAGE> 29
24
(ii) all assignable purchase orders, equipment leases, advertising
agreements, franchise agreements, license agreements, leasing and
brokerage agreements and other service contracts relating to the
operation of the Properties to the extent Purchaser did not in advance
notify such Seller in writing that it wanted any of such Contracts
terminated and (iii) all building plans and specifications and
guarantees and warrantees for any real or personal property being
transferred pursuant to this Agreement.
(f) The Assignment and Assumption of Intangible Property
in the form of Exhibit J annexed hereto and made part hereof assigning
all of such Seller's right, title and interest, if any, in and to all
intangible property owned by such Seller with respect to the operation
of the applicable Property listed on Schedule 14 annexed hereto and
made a part hereof, including, without limitation, any trade names
appertaining to the Properties (the "Intangible Property Assignment")
(the Lease Assignment, the Contract and License Assignment and the
Intangible Property Assignment are herein referred to collectively as
the "Assignment Agreement").
(g) Certified copies of the Ground Lease, all Leases and
New Leases and any amendments, guarantees and other documents relating
thereto together with a schedule of all tenant security deposits
thereunder and the accrued interest on such security deposits payable
to Tenants, and a good, unendorsed certified or official bank check
drawn on or by a Clearing House Bank payable to the order of
Purchaser, or a credit to Purchaser against the Purchase Price, in the
aggregate amount of such security deposits and accrued interest
thereon payable to Tenants. Sellers represent that true, executed
original counterparts of the all of the Lease are located either at
Seller's office or the offices of the Manager and, if not located at
the offices of the Manager, will be delivered to such offices within
10 Business Days after the date hereof, which shall survive the
Closing.
(h) A bill of sale in the form of Exhibit K annexed
hereto and made a part hereof (collectively, the "Bills of Sale"),
conveying, transferring and selling to Purchaser all right, title and
interest of such Seller in and to all Personal Property relating to
the applicable Property and being transferred pursuant to Section 1 of
this Agreement. Sellers and Purchaser agree that no portion of the
Purchase Price has been allocated to, or is otherwise attributable to,
the Personal Property.
(i) Notices to the Tenants of the Properties, in the form
of Exhibit L annexed hereto and made a part hereof, advising the
Tenants of the sale of the Properties to Purchaser and directing that
rents and other payments under the Leases thereafter continue to be
sent to Manager.
<PAGE> 30
25
(j) Copies of the resolutions of (i) BMI, as to the 700
Tower Drive Property and the 800 Tower Drive Property, and (ii) the
general partner of Jared and consents signed by the limited partners
of Jared, together with a certified copy of the partnership agreement
of Jared, as to the Westgate I and II Property, authorizing the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement to be
undertaken by such Seller certified as true and correct by the
Secretary or Assistant Secretary of BMI or such general partner of
Jared, as the case may be.
(k) Possession of the Properties, subject only to the
Permitted Encumbrances, Leases and Unacceptable Encumbrances waived in
writing by Purchaser.
(l) any required transfer tax returns, if any, and to the
extent required, the return(s) required to be filed in connection with
the Michigan Single Business Tax, together with payment of any tax
due.
(m) A "FIRPTA" certification by Sellers in the form of
Exhibit M annexed hereto and made a part hereof. Purchaser
acknowledges and agrees that upon Sellers' delivery of such
affidavits, Purchaser shall not withhold any portion of the Purchase
Price pursuant to Section 1445 of the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder.
(n) A Funding Agreement, in the form of Exhibit O annexed
hereto and made a part hereof, between BDC and Purchaser, pursuant to
which BDC shall undertake to make certain payments and reimbursements
in connection with leasing management and other matters at the
Westgate I Property and the Westgate II Property.
(o) An environmental indemnity executed by each Seller
and BDC ("Sellers' Environmental Indemnity"), in the form attached
hereto as Exhibit S.
(p) To the extent requested by Purchaser and not
appropriate to leave in possession of the Manager, all files, records,
plans and specifications in Sellers' possession relating to the
construction, maintenance, operation and leasing of the Properties and
not previously delivered to Purchaser.
(p) Estoppel certificates from the Tenants listed on
Schedule 4, in the form previously approved by Purchaser, provided,
however, that failure of Sellers to obtain any such estoppel
certificates after using reasonable efforts to do so shall not
constitute a default by Sellers under this Agreement so long as Seller
delivers its estoppel certificate in the form attached hereto as
Exhibit P attached hereto with respect to any undelivered Tenant
<PAGE> 31
26
estoppel, with respect to certain matters addressed in the proposed
Tenant estoppel (which Seller's estoppel shall provide that it
survives the Closing for 180 days in the manner contemplated by
Section 8.1(d) hereof).
(q) The Management Agreement, executed by the Manager.
(r) An estoppel certificate from BMI as lessee and as
lessor under the Ground Lease, in the form of Exhibit R attached
hereto, which shall certify, inter alia, that a true and correct
copy of the Ground Lease is attached.
(s) Any net apportionment credit due to Purchaser.
(t) Evidence of the authorization of BDC to execute and
deliver the documents executed and delivered by it pursuant to this
Agreement.
(u) All other documents Sellers are required to deliver
pursuant to the provisions of this Agreement.
Section 12. Documents to be Delivered by Purchaser at Closing
12.1 At the Closing, Purchaser shall execute, acknowledge
and/or deliver, as applicable, the following to the applicable Seller or
Sellers:
(a) Any net apportionment credit due to Sellers.
(b) The Notes, the Mortgages, the Assignments of Leases
and Rents, the Environmental Indemnities and all other documents
required thereunder and under Section 7 of this Agreement.
(c) The Ground Lease Assignment and the Restated and
Amended Ground Lease.
(d) The Bills of Sale.
(e) The Assignments of Leases and Rents.
(f) [Intentionally Deleted.]
(g) The Lease Assignment, the Contract and License
Assignment, and the Intangible Property Assignment.
(h) The Management Agreement.
(i) The Funding Agreement.
(j) If Purchaser is a corporation, (i) copies of the
certificate of incorporation and by-laws of Purchaser and of the
resolutions of the board of directors of Purchaser authorizing the
execution, delivery and performance of this
<PAGE> 32
27
Agreement and the consummation of the transactions contemplated by
this Agreement certified as true and correct by the Secretary or
Assistant Secretary of Purchaser; (ii) a good standing certificate
issued by the state of incorporation of Purchaser, dated within thirty
(30) days of the Closing Date; (iii) a good standing certificate
issued by the appropriate authorities in the States of Michigan and
New Jersey, dated within thirty (30) days of the Closing Date; and
(iv) an incumbency certificate executed by the Secretary or Assistant
Secretary of Purchaser with respect to those officers of Purchaser
executing any documents or instruments in connection with the
transactions contemplated herein.
(k) The transfer tax returns, if any.
(l) All other documents Purchaser is required to deliver
pursuant to Section 7 and the other provisions of this Agreement.
Section 13. Operation of the Properties Prior to the
Closing Date.
13.1 Between the date hereof and the Closing Date, Sellers
agree to continue to operate and to cause Manager to continue to manage the
Properties in substantially the same manner as they were operated and managed
prior to the execution and delivery of this Agreement including preserving the
good will of all suppliers and tenants. In connection therewith:
(a) (i) no Seller may modify, extend, renew, cancel,
institute summary or other proceedings against any Tenant or terminate
any Lease as a result of a default by the Tenant thereunder, or enter
into any proposed Lease of all or any portion of the Properties
without Purchaser's consent in each instance, which consent shall not
be unreasonably withheld or delayed by Purchaser.
(ii) If any Seller enters into any new Lease, or
if there are any extensions or renewals of any Leases with
Purchaser's consent as aforesaid, whether or not such Leases
provide for their extension or renewal, or any expansion or
modification of any Leases (each, a "New Lease"), Sellers
shall keep accurate records of all expenses (collectively,
"New Lease Expenses") incurred in connection with each New
Lease. At the Closing, Purchaser shall reimburse Sellers for
all New Lease Expenses theretofore paid by one or more
Sellers, if any, except that if the term of any New Lease
shall have commenced prior to the Closing Date, the New Lease
Expenses attributable to such New Lease shall be amortized
over the term thereof, and the applicable Seller shall be
responsible for such New Lease Expenses allocable to the
period prior to the Closing Date. The
<PAGE> 33
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provisions of this Section 13.1(a)(ii) shall survive the
Closing.
(b) Sellers make no representations and assume no
responsibility with respect to the continued occupancy of the
Properties or any part thereof by any Tenant. Subject to compliance
by the applicable Seller with the provisions of Section 13.1(a) above,
the removal of a Tenant, whether by summary proceedings or otherwise,
prior to the Closing Date, shall not give rise to any claim on the
part of Purchaser. Further, Purchaser agrees that it shall not be
grounds for Purchaser's refusal to close this transaction that any
Tenant is in default under its Lease on the Closing Date and Purchaser
shall accept title subject to such default without credit against, or
reduction of, the Purchase Price.
(c) Sellers shall not modify, extend, renew or cancel
(except as a result of a default by the other party thereunder) any
Contracts, or enter into any new Contract without Purchaser's prior
consent in each instance, which consent shall not be unreasonably
withheld or delayed, and if withheld, Purchaser shall promptly give
Sellers a notice stating the reasons therefor.
(d) Sellers will keep in force and effect with respect to
the Properties the insurance policies currently carried by Sellers or
policies providing similar coverage.
(e) From the date hereof until the Closing, Sellers shall
not withdraw, settle or otherwise compromise any protest or reduction
proceedings relating to the assessed valuation of the Properties for
any tax year subsequent to the tax year in which the Closing occurs or
the tax year in which the Closing occurs. Each Seller shall, at
Closing, assign to Purchaser, without representation, warranty or
recourse of any kind, all of such Seller's right, title and interest
(if any) in and to any then pending protests or reduction proceedings
relating to the assessed valuation of the Properties for any fiscal
tax year(s) subsequent to the respective tax years in which the
Closing occurs and, subject to the succeeding provisions of this
Section 13.1(e), for the tax year in which the Closing occurs,
whereupon Purchaser shall be authorized to continue and control the
progress of, and to make all decisions with respect to, any such
proceedings. All net tax refunds and credits attributable to any tax
year prior to the tax year in which the Closing occurs shall belong to
and be the property of Sellers. All net tax refunds and credits
attributable to any tax year subsequent to the tax year in which the
Closing occurs shall belong to and be the property of Purchaser. All
net tax refunds and credits attributable to the tax year in which the
Closing occurs shall be divided between Sellers and Purchaser in
accordance with the apportionment of taxes pursuant to the provisions
of this
<PAGE> 34
29
Agreement, after deducting therefrom a pro rata share of all expenses,
including, without limitation, counsel fees and disbursements and
consultant's fees, incurred in obtaining such refund, the allocation
of such expenses to be based upon the total refund obtained in such
proceeding and in any other proceeding simultaneously involved in the
trial or settlement. Each party agrees reasonably to cooperate with
the other party in connection with the prosecution of any such
proceedings and to take all steps, whether before or after the Closing
Date, as may be necessary to carry out the intention of the foregoing,
including, without limitation, the delivery to the other party, upon
demand, of any relevant books and records, including receipted tax
bills and canceled checks used in payment of such taxes to the extent
in the possession of such first party or its agents, the execution of
any and all consents or other documents, and the undertaking of any
act reasonably necessary for the collection of such refund by the
requesting party. All tax refunds to be paid to either party after
the Closing as contemplated under this Section 13(e) shall be net of
any amounts due to Tenants at the Properties on account of any such
tax refunds, and Sellers and Purchaser shall jointly determine such
amount(s) (if any) due Tenants and direct the Sellers' tax protest or
certiorari counsel to deduct such amounts from the gross tax refund
and forward the same to the appropriate Tenant(s) prior to making any
payment to Sellers or Purchaser (as the case may be). The provisions
of this Section 13.1(e) shall survive the Closing.
13.2 Each Seller will cause the Manager to cause to be
delivered to Purchaser an unaudited financial statement for 1995 with respect
to such Seller's Property, in the form contemplated by Section 9(a) of the
applicable Property Management and Leasing Agreement, by or before March 31,
1996 and will cause an audited financial statement for 1995 to be delivered to
Purchaser no later than May 31, 1996.
Section 14. As Is
14.1 Purchaser expressly acknowledges and agrees to accept
title to the Properties on an "as-is-where-is and with all faults" basis except
as otherwise provided herein.
14.2 This Agreement, as written, contains all the terms of
the agreement entered into between the parties as of the date hereof, and
Purchaser acknowledges that neither Sellers nor any of Sellers' Affiliates, nor
any of their respective agents or representatives, have made any
representations or held out any inducements to Purchaser, and Sellers hereby
specifically disclaim any representations, oral or written, past, present or
future, other than those specifically set forth in Section 8.1 and Section 15.1
or elsewhere in this Agreement. Without limiting the generality of the
foregoing, Purchaser has not relied on any representations or warranties, and
neither Sellers
<PAGE> 35
30
nor any of Sellers' Affiliates, nor any of their agents or representatives has
or is willing to make any representations or warranties, express or implied,
other than as may be expressly set forth herein, as to (a) the status of title
to the Properties, (b) the Leases, (c) the Contracts, (d) the Licenses, (e) the
current or future real estate tax liability, assessment or valuation of the
Properties; (f) the potential qualification of the Properties for any and all
benefits conferred by any Laws, whether for subsidies, special real estate tax
treatment, insurance, mortgages or any other benefits, whether similar or
dissimilar to those enumerated; (g) the compliance of the Properties in their
current or any future state with applicable Laws or any violations thereof,
including, without limitation, those relating to access for the handicapped,
environmental or zoning matters, and the ability to obtain a change in the
zoning or a variance in respect to the Properties' non-compliance, if any, with
zoning Laws; (h) the nature and extent of any right-of-way, lease, possession,
lien, encumbrance, license, reservation, condition or otherwise; (i) the
availability of any financing for the purchase, alteration, rehabilitation or
operation of the Properties from any source, including, without limitation, any
government authority or any lender; (j) the current or future use of the
Properties; (k) the present and future condition and operating state of any
Personal Property and the present or future structural and physical condition
of the Buildings, their suitability for rehabilitation or renovation, or the
need for expenditures for capital improvements, repairs or replacements
thereto; (l) the viability or financial condition of any Tenant; (m) the status
of the leasing market in which the Properties is located; or (n) the actual or
projected income or operating expenses of the Properties.
14.3 Purchaser acknowledges that Sellers have afforded
Purchaser the opportunity for full and complete investigations, examinations
and inspections of the Properties and all Property Information. Purchaser
acknowledges and agrees that (a) the Property Information delivered or made
available to Purchaser and Purchaser's Representatives by Sellers or Sellers'
Affiliates, or any of their agents or representatives, may have been prepared
by third parties and may not be the work product of Sellers and/or any of
Sellers' Affiliates; (b) neither Sellers nor any of Sellers' Affiliates have
made any independent investigation or verification of, or has any knowledge of,
the accuracy or completeness of, the Property Information, except as and to the
extent specifically set forth in Section 8.1(a) or elsewhere in this Agreement;
(c) all Property Information delivered or made available to Purchaser and
Purchaser's Representatives has been furnished to each of them at the request,
and for the convenience, of Purchaser; (d) except as specifically set forth in
Section 8.1(a) or elsewhere in this Agreement and in the Schedules delivered by
Sellers pursuant thereto, Purchaser is relying solely on its own
investigations, examinations and inspections of the Properties and those of
Purchaser's Representatives and is not relying in any way on the Property
Information furnished by Sellers or any of Sellers' Affiliates,
<PAGE> 36
31
or any of their agents or representatives; and (e) except as specifically set
forth in Section 8.1(a) or elsewhere in this Agreement, Sellers expressly
disclaim any representations or warranties with respect to the accuracy or
completeness of the Property Information.
14.4 Purchaser, or anyone claiming by, through or under
Purchaser, hereby fully and irrevocably releases Sellers and Sellers'
Affiliates, and their agents and representatives, from any and all claims that
it may now have or hereafter acquire against Sellers or Sellers' Affiliates, or
their respective agents or representatives, for any cost, loss, liability,
damage, expense, action or cause of action, whether foreseen or unforeseen,
arising from or related to any construction defects, construction errors or
omissions on or in the Properties, except for claims against Sellers based upon
any representations, warranties, obligations or liabilities of Sellers
expressly provided in this Agreement.
14.5 Purchaser acknowledges that it has inspected the
Properties, is acquainted with and accepts their condition, and has reviewed,
to the extent necessary in its discretion, all the Property Information.
Sellers shall not be liable or bound in any manner by any oral or written
"setups" or information pertaining to the Properties or the rents furnished by
Sellers (except to the extent expressly set forth in Section 8.1 hereof or
elsewhere in this Agreement), Sellers' Affiliates, their agents or
representatives, any real estate broker, or other person.
14.6 The provisions of this Section 14 shall survive the
termination of this Agreement and the Closing.
Section 15. Broker
15.1 Sellers shall pay the commission(s), if any, due and
owing to Ivan M. Dochter of Amedex, L.P. and/or Robert J. Eide (the "Broker")
pursuant to a separate agreement. Purchaser agrees to indemnify, defend and
hold Sellers harmless from and against any and all claims, causes of action,
losses, costs, expenses, damages or liabilities, including reasonable
attorneys' fees and disbursements, which one or both Sellers may sustain, incur
or be exposed to by reason of any claim or claims by any other broker, finder
or other person, for fees, commissions or other compensation arising out of the
transactions contemplated in this Agreement, if and to the extent such claim or
claims by any broker, finder or other person are based in whole or in part on
dealings or agreements with Purchaser. Sellers agree to indemnify, defend and
hold Purchaser harmless from and against any and all claims, causes of action,
losses, costs, expenses, damages or liabilities, including reasonable
attorneys' fees and disbursements, which Purchaser may sustain, incur or be
exposed to by reason of any claim or claims (i) by Broker, and (ii) by any
other broker, finder or other person, for fees, commissions or other
compensation arising out of the transactions
<PAGE> 37
32
contemplated in this Agreement, if and to the extent such claim or claims by
any other broker, finder or other person are based in whole or in part on
dealings or agreements with one or both Sellers.
15.2 The obligations contained in this Section 15 shall
survive the termination of this Agreement and the Closing.
Section 16. Casualty; Condemnation
16.1 Damage or Destruction: If a "material" part (as
hereinafter defined) of one or more of the Properties is damaged or destroyed
by fire or other casualty, the applicable Seller or Sellers shall notify
Purchaser of such fact and, except as hereinafter provided, Purchaser shall
have the option to terminate this Agreement, as to the damaged Property only,
upon notice to Sellers given not later than ten (10) business days after
receipt of such notice from the applicable Seller or Sellers. If this
Agreement is so terminated as to such Property, the provisions of Section 16.4
shall apply. If (a) Purchaser does not elect to so terminate this Agreement,
or (b) there is damage to or destruction a portion of a Property, which is not
"material", as such term is hereinafter defined, Purchaser shall close title as
provided in this Agreement and, at the Closing, the applicable Seller shall,
unless and to the extent such Seller has repaired such damage or destruction
prior to the Closing, (A) pay over to Purchaser the proceeds of any insurance
collected by Seller on account of such damage or destruction, plus the amount
of the deductible applied in determining Seller's insurance award, less the
amount of all out-of-pocket costs incurred by Sellers in connection with the
repair of such damage or destruction, and (B) assign and transfer to Purchaser
all right, title and interest of Sellers in and to any uncollected insurance
proceeds which Sellers may be entitled to receive on account of such damage or
destruction. A "material" part of any Property shall be deemed to have been
damaged or destroyed if (a) the cost of repair or replacement shall be equal to
$500,000 or more, as reasonably estimated by an independent engineer selected
by Sellers and reasonably approved by Purchaser, or (b) any Tenant under a
Lease demising in excess of fifty percent (50%) of the rentable area of such
damaged Property shall have irrevocably terminated its Lease on account of such
damage or destruction.
16.2 Condemnation: If, prior to the Closing Date, all or
any "significant" portion (as hereinafter defined) of any of the Properties is
taken by eminent domain or condemnation (or is the subject of a pending taking
which has not been consummated), Sellers shall notify Purchaser of such fact
and the Purchaser shall have the option to terminate this Agreement as to such
Property upon notice to the Sellers given not later than ten (10) days after
receipt of the Sellers' notice. If this Agreement is so terminated, the
provisions of Section 16.4 shall apply. If Purchaser does not elect to
terminate this Agreement, or if the portion of such Property which is taken by
eminent domain or condemnation is not significant, then, at the Closing,
Sellers
<PAGE> 38
33
shall assign all of its rights in connection with such taking to Purchaser, and
shall turn over to Purchaser, and Purchaser shall be entitled to receive and
keep, all awards, or other proceeds for such taking by eminent domain or
condemnation. A "significant" portion of a Property means a taking (i) of
any portion of the Buildings, (ii) of twenty-five percent (25%) or more of the
land relating to such Property, (iii) which reduces the remaining available
number of parking spaces at such Property below the minimum legally required or
the minimum required under any Lease, or (iv) which materially interferes with
access to or from such Property.
16.3 Notwithstanding anything contained in Section 16.1
and Section 16.2 to the contrary, if this Agreement is not terminated as to a
Property as provided in Section 16.1 or Section 16.2 and the insurance, eminent
domain or condemnation proceeds payable with respect to any of the Properties
as a result of any casualty or taking exceeds the Purchase Price allocated to
such Property pursuant to Section 2.1 hereof, the applicable Seller's
obligation to pay over to Purchaser those proceeds paid to such Seller prior to
the Closing shall be limited to the amount of the Purchase Price for such
Property, and such Seller shall be entitled to retain the remainder of such
proceeds. To the extent that payment of all or any portion of such proceeds
does not occur prior to the Closing, the parties agree that such Seller shall
be entitled to that portion of the proceeds in excess of the Purchase Price,
which agreement shall survive the Closing.
16.4 If Purchaser elects to terminate this Agreement as to
any one or more of the Properties pursuant to Section 16.1 or 16.2, neither
party shall have any further rights, obligations or liabilities hereunder with
respect to such Property or Properties, except for the Surviving Obligations
with respect thereto. No such partial termination shall entitle Purchaser to a
return of any portion of the Fund.
Section 17. Remedies
17.1 If the Closing fails to occur as to any one or more
of the Properties, by reason of any Seller's inability (including, without
limitation, Seller's inability to eliminate Unacceptable Encumbrances as set
forth in Section 6.2) to perform its obligations under this Agreement, then
Purchaser, as its sole remedy for such inability of Sellers, may terminate this
Agreement as to such Property or Properties by notice to Sellers. If Purchaser
so elects to terminate this Agreement, neither party shall have any further
rights, obligations or liabilities hereunder with respect to such Property or
Properties, except for the Surviving Obligations with respect thereto. Except
as set forth in this Section 17.1, Purchaser hereby expressly waives,
relinquishes and releases any other right or remedy available to it at law, in
equity or otherwise by reason of Sellers' inability to perform its obligations
hereunder.
<PAGE> 39
34
17.2 In the event of a default in the performance of its
obligations hereunder by Purchaser as a result of which the Closing fails to
occur as to one or more of the Properties, then Sellers sole remedy shall be to
terminate this Agreement by notice to Purchaser and to retain the Fund as
liquidated damages for all loss, damage and expenses suffered by Sellers, it
being agreed that Sellers' damages are impossible to ascertain, and following
such termination, neither party shall have any further rights, obligations or
liabilities hereunder except as specifically set forth in this Agreement.
17.3 If the Closing as to one or more Properties fails to
occur by reason of the willful failure or refusal of one or both Sellers to
perform its obligations hereunder, then subject to the succeeding provisions of
this Section 17.3, Purchaser, as its sole remedy hereunder, may (a) either
terminate this Agreement by notice to Sellers and sue for damages, or (b) seek
specific performance from Sellers; provided, however, that Purchaser's action
for specific performance may request damages if specific performance is not
available. As a condition precedent to Purchaser exercising either such
remedy, Purchaser must commence such an action within ninety (90) days after
the occurrence of such default. Purchaser agrees that its failure to timely
commence such an action for damages or specific performance within such ninety
(90) day period shall be deemed a waiver by it of its right to commence such an
action. In any action for damages under this Section 17.3, Sellers agree that
Purchaser shall be entitled to recover from Sellers, as liquidated damages, and
not as a penalty, Sellers hereby acknowledging that Purchaser's damages are
impossible to ascertain, an amount equal to Twelve Million Dollars
($12,000,000). In any action for liquidated damages, such liquidated damages
shall be in addition to Sellers' liability to cause the Fund to be returned to
Purchaser.
Section 18. Purchaser's Access to the Properties
18.1 Purchaser and Purchaser's Representatives shall have
the right to enter upon the Properties for the sole purpose of
inspecting the Properties and making surveys, soil borings,
engineering tests and other investigations, inspections and tests
(collectively, "Investigations"), provided (a) Purchaser shall give
Sellers not less than two business days' prior notice before the first
such entry and one (1) day's prior notice before each subsequent
entry, (b) the first such notice shall include sufficient information
to permit Sellers to review the scope of the proposed Investigations,
and (c) neither Purchaser nor Purchaser's Representatives shall permit
any borings, drillings or samplings to be done on any of the
Properties without Sellers' prior written consent. Any entry upon the
Properties and all Investigations shall be during Sellers' normal
business hours and at the sole risk and expense of Purchaser and
Purchaser's Representatives, and shall not unreasonably interfere with
the activities on or about the
<PAGE> 40
35
Properties of Sellers, its tenants and their employees and invitees.
Purchaser shall:
(a) promptly repair any damage to the Properties
resulting from any such Investigations and replace, refill and regrade
any holes made in, or excavations of, any portion of the Properties
used for such Investigations so that the Properties shall be in the
same condition that it existed in prior to such Investigations;
(b) fully comply with all Laws applicable to the
Investigations and all other activities undertaken in connection
therewith;
(c) permit Sellers to have a representative present
during all Investigations undertaken hereunder;
(d) take all actions and implement all protections
necessary to ensure that all actions taken in connection with the
Investigations, and the equipment, materials, and substances
generated, used or brought onto the Properties pose no threat to the
safety or health of persons or the environment, and cause no damage to
the Properties or other property of Sellers or other persons;
(e) furnish to Sellers, at no cost or expense to Sellers,
copies of all surveys, soil test results, engineering, asbestos,
environmental and other studies and reports relating to the
Investigations which Purchaser shall obtain with respect to the
Properties promptly after Purchaser's receipt of same;
(f) maintain or cause to be maintained, at Purchaser's
expense, a policy of commercial general liability insurance, and with
a combined single limit of not less than $1,000,000 per occurrence for
bodily injury and property damage, automobile liability coverage
including owned and hired vehicles with a combined single limit of
$1,000,000 per occurrence for bodily injury and property damage, and
an excess umbrella liability policy for bodily injury and property
damage in the amount of $5,000,000, insuring Purchaser and Sellers and
Sellers' Affiliates, as additional insureds, against any injuries or
damages to persons or property that may result from or are related to
(i) Purchaser's and/or Purchaser's Representatives' entry upon the
Properties, (ii) any Investigations or other activities conducted
thereon, and (iii) any and all other activities undertaken by
Purchaser and/or Purchaser's Representatives, all of which insurance
shall be on an "occurrence form" and otherwise in such forms and with
an insurance company reasonably acceptable to Sellers, and deliver a
copy of such insurance policy to Sellers prior to the first entry on
the Properties;
<PAGE> 41
36
(g) not allow the Investigations or any and all other
activities undertaken by Purchaser or Purchaser's Representatives to
result in any liens, judgments or other encumbrances being filed or
recorded against the Properties, and Purchaser shall, at its sole cost
and expense, promptly discharge of record any such liens or
encumbrances that are so filed or recorded (including liens for
services, labor or materials furnished); and
(h) indemnify Sellers and Sellers' Affiliates and hold
Sellers and Sellers' Affiliates harmless from and against any and all
claims, demands, causes of action, losses, damages, liabilities, costs
and expenses (including reasonable attorneys' fees and disbursements),
suffered or incurred by Sellers or any of Sellers' Affiliates and
arising out of or in connection with (i) Purchaser's and/or
Purchaser's Representatives' entry upon the Properties, (ii) any
Investigations or other activities conducted thereon by Purchaser or
Purchaser's Representatives, (iii) any Liens or other encumbrances
filed or recorded against the Properties as a consequence of the
Investigations or any and all other activities undertaken by Purchaser
or Purchaser's Representatives, and/or (iv) any and all other
activities undertaken by Purchaser or Purchaser's Representatives with
respect to the Properties.
18.2 The provisions of this Section 18 shall survive the
termination of this Agreement and the Closing.
Section 19. Indemnification.
19.1. Purchaser's Indemnification. Purchaser shall
indemnify Sellers and hold and save Sellers harmless of and from any and all
loss, cost, damage, injury or expense (including, without limitation,
reasonable attorneys' fees and expenses) arising out of or in any way related
to (a) any Michigan Single Business Tax now or hereafter payable by Purchaser
or assessed or imposed or levied against BMI by reason of Purchaser's operation
or any subsequent sale of the 700 Tower Drive Property and/or the 800 Tower
Drive Property, including, without limitation, all interest, fines, penalties
resulting from any non-payment thereof, and (b) any and all leasing commissions
due or which may become due to any broker (other than Manager or any other
affiliate of any Seller) with respect to any extension or renewal term of any
Lease beyond the current term of such Lease as such term is in effect as of the
Closing Date or any expansion of the space demised under any Lease. No leasing
or brokerage commissions shall be due or payable to any Seller or any affiliate
of any Seller except as expressly provided in the Management Agreements.
19.2. Seller's Indemnification. With respect to a Seller's
Property, such Seller shall indemnify Purchaser and hold and save Purchaser
harmless of and from any and all loss, cost,
<PAGE> 42
37
damage, injury or expense (including, without limitation, reasonable attorneys'
fees and expenses) arising out of or in any way related to (a) in the case of
BMI, any Michigan Single Business Tax now or hereafter payable by BMI or
assessed or imposed or levied against Purchaser or the 700 Tower Drive Property
or the 800 Tower Drive Property by reason of BMI's prior ownership or operation
(or acquisition or disposition) of the 700 Tower Drive Property and/or the 800
Tower Drive Property, including, without limitation, all interest, fines,
penalties resulting from any non-payment thereof, (b) all costs of remedying
violations which relate to conditions existing at the Properties as of the
Closing Date, to the extent noted of record on the Closing Date or within 90
days thereafter, (c) any and all leasing commissions due or to become due to
any broker not affiliated with such Seller, with respect to the current term of
any Lease, but not with respect to any extension or renewal thereof beyond such
current term as such term is in effect as of the Closing Date or with respect
to any expansion of the space demised under any Lease, (d) any and all leasing
commissions due or to become due to the Manager or any other affiliate of any
Seller with respect to the renewal, extension, expansion or execution of a new
lease by any existing tenant at such Seller's Property, and (e) any refund due
to a Tenant arising out of amounts billed to and paid by such Tenant for any
period prior to the date hereof which the Tenant was not obligated to pay.
19.3 Survival. The provisions of this Section 19 shall
survive the Closing.
Section 20. Escrow
20.1 If this Agreement is executed prior to the Closing
Date, Escrow Agent shall hold the Downpayment and all interest accrued thereon,
if any (collectively, the "Fund") in escrow and shall dispose of the Fund only
in accordance with the provisions of this Section 20.
20.2 Escrow Agent shall deliver the Fund to Sellers or
Purchaser, as the case may be, as follows:
(a) to Sellers, upon completion of the Closing; or
(b) to Sellers, after receipt of Sellers' demand in which
Sellers certifies either that (i) Purchaser has defaulted under this
Agreement, or (ii) this Agreement has been otherwise terminated or
canceled, and Sellers is thereby entitled to receive the Fund; but
Escrow Agent shall not honor Sellers' demand until more than ten (10)
days after Escrow Agent has given a copy of Sellers' demand to
Purchaser in accordance with Section 20.3(a), nor thereafter if Escrow
Agent receives a Notice of Objection from Purchaser within such ten
(10) day period; or
(c) to Purchaser, after receipt of Purchaser's demand in
which Purchaser certifies either that (i) Sellers have
<PAGE> 43
38
defaulted under this Agreement, or (ii) this Agreement has been
otherwise terminated or canceled, and Purchaser is thereby entitled to
receive the Fund; but Escrow Agent shall not honor Purchaser's demand
until more than ten (10) days after Escrow Agent has given a copy of
Purchaser's demand to Sellers in accordance with Section 20.3(a), nor
thereafter if Escrow Agent receives a Notice of Objection from Sellers
within such ten (10) day period. Upon delivery of the Fund, Escrow
Agent shall be relieved of all liability hereunder and with respect to
the Fund. Escrow Agent shall deliver the Fund, at the election of the
party entitled to receive the same, by (i) a good, unendorsed
certified check of Escrow Agent payable to the order of such party,
(ii) an unendorsed official bank or cashier's check payable to the
order of such party, or (iii) a bank wire transfer of immediately
available funds to an account designated by such party.
20.3 (a) Upon receipt of a written demand from Sellers
or Purchaser under Section 20.2(b) or (c), Escrow Agent shall send a copy of
such demand to the other party. Within ten (10) days after the date of
receiving same, but not thereafter, the other party may object to delivery of
the Fund to the party making such demand by giving a notice of objection (a
"Notice of Objection") to Escrow Agent. After receiving a Notice of Objection,
Escrow Agent shall send a copy of such Notice of Objection to the party who
made the demand; and thereafter, in its sole and absolute discretion, Escrow
Agent may elect either (i) to continue to hold the Fund until Escrow Agent
receives a written agreement of Purchaser and Sellers directing the
disbursement of the Fund, in which event Escrow Agent shall disburse the Fund
in accordance with such agreement; and/or (ii) to take any and all actions as
Escrow Agent deems necessary or desirable, in its sole and absolute discretion,
to discharge and terminate its duties under this Agreement, including, without
limitation, depositing the Fund into any court of competent jurisdiction and
bringing any action of interpleader or any other proceeding; and/or (iii) in
the event of any litigation between Sellers and Purchaser, to deposit the Fund
with the clerk of the court in which such litigation is pending.
(b) If Escrow Agent is uncertain for any reason whatsoever as to
its duties or rights hereunder (and whether or not Escrow Agent has received
any written demand under Section 20.2(b) or (c), or Notice of Objection under
Section 20.3(a)), notwithstanding anything to the contrary herein, Escrow Agent
may hold and apply the Fund pursuant to Section 20.3(a)(i), (ii) or (iii) and
may decline to take any other action whatsoever. In the event the Fund is
deposited in a court by Escrow Agent pursuant to Section 20.3(a)(ii) or (iii),
Escrow Agent shall be entitled to rely upon the decision of such court. In the
event of any dispute whatsoever among the parties with respect to disposition
of the Fund, (i) Purchaser and Sellers shall pay the attorney's fees and costs
incurred by Escrow Agent (which said parties shall share equally, but for which
said parties shall be
<PAGE> 44
39
jointly and severally liable) for any litigation in which Escrow Agent is named
as, or becomes, a party and (ii) as between Purchaser and Sellers, the
non-prevailing party shall pay the reasonable attorneys' fees and costs of the
prevailing party.
20.4 Notwithstanding anything to the contrary in this
Agreement, within one (1) business day after the date of this Agreement, Escrow
Agent shall place the Downpayment in an Approved Investment. The interest, if
any, which accrues on such Approved Investment shall be deemed part of the
Fund; and Escrow Agent shall dispose of such interest as and with the Fund
pursuant to this Agreement. Escrow Agent may not commingle the Fund with any
other funds held by Escrow Agent. Escrow Agent may convert the Fund from the
Approved Investment into cash or a non-interest-bearing demand account at an
Approved Institution as follows:
(a) at any time within seven (7) days prior to the
Closing Date; or
(b) if the Closing Date is accelerated or extended, at
any time within seven (7) days prior to the accelerated or extended
Closing Date (provided, however, that Sellers and Purchaser shall give
Escrow Agent timely notice of any such acceleration or extension and
that Escrow Agent may hold the Fund in cash or a non-interest-bearing
deposit account if Sellers and Purchaser do not give Escrow Agent
timely notice of any such adjournment).
20.5 As used herein, the term "Approved Investment" means
(a) any interest-bearing demand account or money market fund in Citibank, N.A.
located in the City of New York or in any other institution otherwise approved
by both Sellers and Purchaser (collectively, an "Approved Institution"), or (b)
any other investment approved by both Sellers and Purchaser. The rate of
interest or yield need not be the maximum available and deposits, withdrawals,
purchases, reinvestment of any matured investment and sales shall be made in
the sole discretion of Escrow Agent, which shall have no liability whatsoever
therefor. Discounts earned shall be deemed interest for the purpose hereof.
20.6 Escrow Agent shall have no duties or responsibilities
except those set forth herein, which the parties hereto agree are ministerial
in nature. Sellers and Purchaser acknowledge that Escrow Agent is serving
without compensation, solely as an accommodation to the parties hereto, and
except for Escrow Agent's own willful default, misconduct or gross negligence,
Escrow Agent shall have no liability of any kind whatsoever arising out of or
in connection with its activity as Escrow Agent. Sellers and Purchaser jointly
and severally agree to and do hereby indemnify and hold harmless Escrow Agent
from all loss, cost, claim, damage, liability, and expense (including
reasonable attorney's fees and disbursements whether paid to retained attorneys
or representing the fair value of legal
<PAGE> 45
40
services rendered to itself) which may be incurred by reason of its acting as
Escrow Agent provided the same is not the result of Escrow Agent's willful
default, misconduct or gross negligence. Escrow Agent may charge against the
Fund any amounts owed to it under the foregoing indemnity or may withhold the
delivery of the Fund as security for any unliquidated claim, or both.
20.7 Any Notice of Objection, demand or other notice or
communication which may or must be sent, given or made under this Agreement to
or by Escrow Agent shall be sent in accordance with the provisions of Section
23.
20.8 Simultaneously with their execution and delivery of
this Agreement, Purchaser and Sellers shall furnish Escrow Agent with their
true Federal Taxpayer Identification Numbers so that Escrow Agent may file
appropriate income tax information returns with respect to any interest in the
Fund or other income from the Approved Investment. The party ultimately
entitled to any accrued interest in the Fund shall be the party responsible for
the payment of any tax due thereon.
20.9 Sellers and Purchaser waive any claim of conflict of
interest by reason of Escrow Agent's actions in that capacity under this
Agreement. Purchaser hereby acknowledges that Escrow Agent is the attorney for
the Sellers, and agrees that Escrow Agent may represent Sellers in connection
with any and all matters, including without limitation, the transaction
contemplated by this Agreement and any litigation, including any action arising
out of this Agreement; provided that in no event shall Purchaser be responsible
for payment of any fees incidental to any such representation.
20.10 Any amendment of this Agreement which could alter or
otherwise affect Escrow Agent's obligations hereunder will not be effective
against or binding upon Escrow Agent without Escrow Agent's prior consent,
which consent may be withheld in Escrow Agent's sole and absolute discretion.
20.11 The provisions of this Section 20 shall survive the
termination of this Agreement and the Closing.
Section 21. Assignment
21.1 Purchaser shall not assign all or any portion of its
rights under this Agreement to any person or entity without the prior written
consent of Sellers, which consent may be withheld in Sellers' sole and absolute
discretion; provided, however, that Sellers shall not unreasonably withhold
consent to an assignment to a subsidiary or Affiliate of Purchaser. Any
assignment or attempted assignment by Purchaser shall constitute a default by
Purchaser hereunder and shall be null and void.
Section 22. Access to Records
<PAGE> 46
41
22.1 For a period of five (5) years subsequent to the
Closing Date, Sellers, Sellers' Affiliates and their employees, agents and
representatives shall be entitled to access during business hours to all
documents, books and records given to Purchaser by Sellers at the Closing for
tax and audit purposes, regulatory compliance, and cooperation with
governmental investigations upon reasonable prior notice to Purchaser, and
shall have the right, at its sole cost and expense, to make copies of such
documents, books and records to extent such records are still in Purchaser's
possession.
Section 23. Notices
23.1 All notices, elections, consents, approvals, demands,
objections, requests or other communications which Sellers, Purchaser or Escrow
Agent may be required or desire to give pursuant to, under or by virtue of this
Agreement must be in writing and sent by (a) first class U.S. certified or
registered mail, return receipt requested, with postage prepaid, (b) by
depositing the same into the custody of a nationally recognized overnight
delivery service such as Federal Express Corporation, Airborne Express, Emery
or Purolator; (c) by hand delivery with proof of service endorsed thereon; or
(d) by telecopier provided it is also delivered by express mail or courier
(within the next two (2) business days). All such notices, elections,
consents, approvals, demands, objections, requests or other communications sent
in compliance with the provisions hereof shall be deemed given and received on
(i) the second business day following the date it is deposited in the U.S.
Mail, (ii) the date it is delivered to the other party if sent by U.S. Express
Mail, overnight delivery or hand delivery or (iii) the date it is delivered to
the other party if sent by telecopier provided it is confirmed by express mail
or courier (for next business day delivery). From time to time either party
may designate another address or addresses for all purposes of this Agreement
by a notice given to all other parties in accordance with the provisions
hereof. For purposes of this Section 23.1, the addresses of the parties shall
be as follows:
If to Sellers:
c/o Bellemead Development Corporation
280 Corporate Center
Four Becker Farm Road
Roseland, New Jersey 07068
Attention: Mr. Donn H. Norton
Joanne F. Meisler, Esq.
Facsimile: (201) 740-8844
Telephone: (201) 740-1110
<PAGE> 47
42
with a copy to:
Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Attention: Michael J. Feinman, Esq.
Facsimile: (212) 593-5955
Telephone: (212) 758-0404
If to Purchaser:
New Valley Corporation
100 S.E. Second Street, 32nd Floor
Miami, Florida 33131
Attention: Richard J. Lampen, Esq.
Facsimile: (305) 579-8016
Telephone: (305) 579-8000
with a copy to:
Dreyer and Traub LLP
101 Park Avenue
New York, New York 10178
Attention: Howard A. Kalka, Esq.
Facsimile: (212) 661-2865
Telephone: (212) 661-8800
If to Escrow Agent:
Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Attention: Gregory P. Pressman, Esq.
Facsimile: (212) 593-5955
Telephone: (212) 758-0404
23.2 Sellers, Purchaser or Escrow Agent may designate
another addressee or change its address for notices and other communications
hereunder by a notice given to the other parties in the manner provided in this
Section 23.
23.3 Any notice or other communication hereunder given by
any Seller shall be deemed given by all Sellers.
23.4 Notices and other communications given by the
attorneys, respectively, for Sellers or Purchaser shall be deemed given by,
respectively, Sellers or Purchaser.
Section 24. [Intentionally deleted.]
Section 25. Miscellaneous
25.1 This Agreement shall not be altered, amended,
changed, waived, terminated or otherwise modified in any respect or particular,
and no consent or approval required pursuant to
<PAGE> 48
43
this Agreement shall be effective, unless the same shall be in writing and
signed by or on behalf of the party to be charged.
25.2 This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and to their respective heirs, executors,
administrators, successors and permitted assigns.
25.3 All prior statements, understandings, representations
and agreements between the parties, oral or written, are superseded by and
merged in this Agreement, which alone fully and completely expresses the
agreement between them in connection with this transaction and which is entered
into after full investigation, neither party relying upon any statement,
understanding, representation or agreement made by the other not embodied in
this Agreement. This Agreement shall be given a fair and reasonable
construction in accordance with the intentions of the parties hereto, and
without regard to or aid of canons requiring construction against Sellers or
the party drafting this Agreement.
25.4 Except as otherwise expressly provided herein,
Purchaser's acceptance of the Deed shall be deemed a discharge of all of the
obligations of Sellers hereunder and all of Sellers' representations,
warranties, covenants and agreements herein shall merge in the documents and
agreements executed at the Closing and shall not survive the Closing.
25.5 Purchaser agrees that it does not have and will not
have any claims or causes of action against any disclosed or undisclosed
officer, director, employee, trustee, shareholder, partner, principal, parent,
subsidiary or other affiliate of Sellers, including Bellemead Development
Corporation and The Chubb Corporation (collectively, "Sellers' Affiliates"),
arising out of or in connection with this Agreement or the transactions
contemplated hereby. Except as expressly provided in the Funding Agreement and
Sellers' Environmental Indemnity, Purchaser agrees to look solely to Sellers
and their assets for the satisfaction of any liability or obligation arising
under this Agreement or the transactions contemplated hereby, or for the
performance of any of the covenants, warranties or other agreements contained
herein, and further agrees not to sue or otherwise seek to enforce any personal
obligation against any of Sellers' Affiliates with respect to any matters
arising out of or in connection with this Agreement or the transactions
contemplated hereby. Without limiting the generality of the foregoing
provisions of this Section 25.5, Purchaser hereby unconditionally and
irrevocably waives any and all claims and causes of action of any nature
whatsoever it may now or hereafter have against Sellers' Affiliates, and hereby
unconditionally and irrevocably releases and discharges Sellers' Affiliates
from any and all liability whatsoever which may now or hereafter accrue in
favor of Purchaser against Sellers' Affiliates, in connection with or arising
out of this Agreement or the transactions contemplated
<PAGE> 49
44
hereby. The provisions of this Section 25.5 shall survive the termination of
this Agreement and the Closing.
25.6 Purchaser agrees that, wherever this Agreement
provides that Purchaser must send or give any notice, make an election or take
some other action within a specific time period in order to exercise a right or
remedy it may have hereunder, time shall be of the essence with respect to the
taking of such action, and Purchaser's failure to take such action within the
applicable time period shall be deemed to be an irrevocable waiver by Purchaser
of such right or remedy.
25.7 No failure or delay of either party in the exercise
of any right or remedy given to such party hereunder or the waiver by any party
of any condition hereunder for its benefit (unless the time specified herein
for exercise of such right or remedy has expired) shall constitute a waiver of
any other or further right or remedy nor shall any single or partial exercise
of any right or remedy preclude other or further exercise thereof or any other
right or remedy. No waiver by either party of any breach hereunder or failure
or refusal by the other party to comply with its obligations shall be deemed a
waiver of any other or subsequent breach, failure or refusal to so comply.
25.8 Neither this Agreement nor any memorandum thereof
shall be recorded and any attempted recordation hereof shall be void and shall
constitute a default.
25.9 This Agreement may be executed in one or more
counterparts, each of which so executed and delivered shall be deemed an
original, but all of which taken together shall constitute but one and the same
instrument.
25.10 Each of the Exhibits and Schedules referred to herein
and attached hereto is incorporated herein by this reference.
25.11 The caption headings in this Agreement are for
convenience only and are not intended to be a part of this Agreement and shall
not be construed to modify, explain or alter any of the terms, covenants or
conditions herein contained.
25.12 This Agreement shall be interpreted and enforced in
accordance with the laws of the State of New York without reference to
principles of conflicts of laws.
25.13 If the last day of the period prescribed herein for
the giving of any notice, election, consent, approval, demand, objection or
request or the submission of any documents by any party hereunder shall fall on
a Saturday, Sunday or any day observed as a public holiday by the federal
government or the state in which the Property is situated, then such period
shall be deemed to be extended to the immediately following day which is not a
Saturday, Sunday or such public holiday. The term
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45
"business day" as used in this Agreement shall mean any day other than
Saturday, Sunday or any day observed as a public holiday by the federal
government or the state in which the Property is situated.
25.14 Unless otherwise specified herein, (a) references to
persons or parties include their permitted successors and assigns; (b)
references to modifications or amendments shall in all events mean
modifications and amendments; (c) references to statutes are to be construed as
including all rules and regulations adopted pursuant to the statute referred to
and all statutory provisions consolidating, amending or replacing the statute
referred to; (d) references to agreements and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications
thereto entered into from time to time after the date hereof to satisfy the
requirements of this Agreement or otherwise with Seller's prior written
consent; (e) references to a mortgage shall be deemed to mean or include a deed
of trust, depending on the jurisdiction in which the Property is located; (f)
the words "include" or "including", and words of similar import, shall be
deemed to be followed by the words "but not limited to" or "without
limitation"; (g) the words "hereto", "herein", "hereof" and "hereunder", and
words of similar import, refer to this Agreement in its entirety; and (h)
unless otherwise specified herein, all references to Sections are to Sections
of this Agreement. Terms defined herein may be used in the singular or the
plural; when used in the singular and preceded by "a", "an" or "any", such term
shall be taken to indicate one or more members of the relevant class; and when
used in the plural, such term shall be taken to indicate all members of the
relevant class.
25.15 If any provision of this Agreement shall be
unenforceable or invalid, the same shall not affect the remaining provisions of
this Agreement and to this end the provisions of this Agreement are intended to
be and shall be severable. Notwithstanding the foregoing sentence, if (a) any
provision of this Agreement is finally determined by a court of competent
jurisdiction to be unenforceable or invalid in whole or in part, (b) the
opportunity for all appeals of such determination have expired, and (c) such
unenforceability or invalidity alters the substance of this Agreement (taken as
a whole) so as to deny either party, in a material way, the realization of the
intended benefit of its bargain, such party may terminate this Agreement within
thirty (30) days after the final determination by notice to the other. If such
party so elects to terminate this Agreement, then this Agreement shall be
terminated and neither party shall have any further rights, obligations or
liabilities hereunder, except for the Surviving Obligations, and except that
Purchaser shall be entitled to a return of the Fund, provided Purchaser is not
otherwise in default hereunder.
SELLERS AND PURCHASER HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER ARISING IN TORT OR
<PAGE> 51
46
CONTRACT) BROUGHT BY EITHER AGAINST THE OTHER ON ANY MATTER ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS AGREEMENT.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.
[SEAL]
ATTEST: BELLEMEAD OF MICHIGAN, INC.,
Seller
By: /s/ Donn H. Norton
---------------------------
Joanne F. Meisler Name: Donn H. Norton
- ----------------- Title: President
Secretary
JARED ASSOCIATES, L.P., Seller
By: Chubb Realty, Inc., general partner
By: /s/ Donn H. Norton
-----------------------
Joanne F. Meisler Name: Donn H. Norton
- ----------------- Title: President
Secretary
NEW VALLEY CORPORATION,
Purchaser
By: /s/ Richard J. Lampen
---------------------
Name: Richard J. Lampen
Title: Executive Vice President
SCHULTE ROTH & ZABEL is
executing this Agreement, as Escrow
Agent, solely for the purpose of
agreeing to the provisions of Section 20
(if this Agreement is executed prior to the Closing):
By:
<PAGE> 52
1
LIST OF SCHEDULES -- EXHIBIT 2.1
<TABLE>
<CAPTION>
SCHEDULE
- --------
<S> <C>
1-A Description of the 700 Tower Land
1-B Description of the 800 Tower Land
1-C Description of the Westgate I Land
1-D Description of the Westgate II Land
2 Permitted Encumbrances
3 Encumbrances which may be insured over
4 Leases
5 Actions
6 Certificates of Occupancy
9 Contracts
10 Defaults under the Contracts
14 Intangible Property
</TABLE>
The Company hereby agrees to furnish supplementally a copy of
each such instrument or agreement to the Securities and Exchange Commission
upon request.
<PAGE> 53
2
LIST OF EXHIBITS -- EXHIBIT 2.1
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
A Form of Notes
B Form of Mortgages
C Form of Assignment of Leases and Rents
D Form of Environmental Indemnity Agreement
E Deed
F Deed to 700 Tower Drive Building
G-1 Ground Lease Assignment
G-2 Restated and Amended Ground Lease
H Lease Assignment
I Contract and License Assignment
J Intangible Property Assignment
K Bill of Sale
L Notice to Tenants [and Vendors]
EXHIBIT
- -------
M Sellers' FIRPTA Affidavit
N Form of Management Agreement
O Form of Funding Agreement
P Form of Seller's Estoppel Certificate
Q Form of Borrower's Estoppel Certificate and Agreement
R Form of Ground Lessor's and Ground Lessee's Estoppel Certificate
S Form of Sellers' Environmental Indemnity
</TABLE>
The Company hereby agrees to furnish supplementally a copy of
each such instrument or agreement to the Securities and Exchange Commission
upon request.
<PAGE> 1
Exhibit 4.1
<PAGE> 2
FIRST MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF LEASES AND RENTS AND FIXTURE FILING
BY
NEW VALLEY CORPORATION
A NEW YORK CORPORATION
AS MORTGAGOR
AND
JARED ASSOCIATES, L.P.
A NEW JERSEY LIMITED PARTNERSHIP
AS MORTGAGEE
DATED AS OF JANUARY 10, 1996
Premises:
Westgate I
477 Martinsville Road
Bernards Township, New Jersey
Prepared by, and when recorded return to:
Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Attention: Michael J. Feinman, Esq.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Payment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Title to the Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. No Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7. Interest on Insurance Proceeds and Condemnation Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. Certificates of Amount Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9. Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. Changes in Method of Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. Expenses of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. Maintenance and Repair; Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13. Condemnation Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
14. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15. Leases and Assignment of Rents, Issues and Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
16. Suits without Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
17. Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
18. Restrictive Covenants; Transfers of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
19. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
20. Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
21. Remedies Cumulative; No Waivers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
22. Revenue Stamps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
23. Performance by Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
24. Financial Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
25. Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
26. Incorporation of the Note by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
<PAGE> 4
2
<TABLE>
<S> <C> <C>
27. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
28. No Oral Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
29. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
30. Subordinate Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
31. Due on Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
32. Environmental Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
33. Discharge of Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
34. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
35. No Unlawful Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
36. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
37. Exculpation Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
38. Existing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
<PAGE> 5
FIRST MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
(Westgate I)
FIRST MORTGAGE, SECURITY AGREEMENT ASSIGNMENT OF LEASES AND
RENTS AND FIXTURE FILING (THIS "MORTGAGE"), made as of the 10th day of January,
1996 by NEW VALLEY CORPORATION, a New York, corporation, having an office at
100 S.E. Second Street, 32nd Floor, Miami, Florida 33131 ("MORTGAGOR") in
favor of JARED ASSOCIATES, L.P., a New Jersey limited partnership, with an
address c/o Bellemead Development Corporation, 280 Corporate Center, 4 Becker
Farm Road, Roseland, New Jersey 07068 ("MORTGAGEE").
W I T N E S S E T H:
WHEREAS, Mortgagor has executed and delivered to Mortgagee its
secured promissory note (the "NOTE") bearing even date herewith (but effective
as of January 1, 1996) wherein Mortgagor promises to pay to Mortgagee the
principal sum of FORTY-FOUR MILLION SIXTY-FOUR THOUSAND ($44,064,000.00) lawful
money of the United States of America, with interest thereon at the rate
therein set forth, said principal and interest to be paid in installments as
therein provided.
NOW, THEREFORE, in order to further secure the payment of the
Note in accordance with the terms thereof, and all extensions and modifications
thereof, and the performance and observance of each term, covenant and
condition contained in the Note and in this Mortgage, and payment of all sums
payable by Mortgagor to Mortgagee as provided in this Mortgage and all other
documents executed by Mortgagor in favor of Mortgagee in connection herewith
(collectively with the Note and Mortgage, the "LOAN DOCUMENTS"), and for other
good and valuable consideration, Mortgagor does hereby give, grant, bargain,
sell, and mortgage, alien, enfeoff, convey, grant a security interest in, and,
confirm to Mortgagee and its successors and assigns Mortgagor's fee estate in
and to that certain lot or parcel of land (the "LAND") situated in the Township
of Bernards, County of Somerset and State of New Jersey more particularly
described in EXHIBIT A attached hereto and made a part hereof free from any
prior liens and encumbrances except as set forth on EXHIBIT B hereto and made a
part hereof (the "PERMITTED ENCUMBRANCES").
TOGETHER WITH all of the structures, buildings and
improvements of every kind and description now situated on or hereafter to be
erected on the Land (the "IMPROVEMENTS");
TOGETHER with all the right, title and interest of Mortgagor
in and to the land lying in the streets and roads adjoining the Land or any
part thereof;
TOGETHER with all leases of the Land or the Improvements, or
any part thereof, now existing or hereafter entered into by or on behalf of
Mortgagor or any successor and all rents, issues, profits and other rights and
benefits derived or to be derived therefrom, including without limitation, all
<PAGE> 6
2
guarantees thereof, all security deposits made by the tenants thereunder, and
all of Mortgagor's right, title and interest in any subleases and underlettings
of the Land and any security deposits made by the subtenants or undertenants
with respect thereto (the "LEASES");
TOGETHER with all right, title and interest of Mortgagor in
and to all machinery, apparatus, equipment, fittings, fixtures, furniture,
furnishings and articles of personal property of every kind and nature
whatsoever, now or hereafter located in the Improvements or upon the Land, or
any part thereof, and used or usable in connection with the present use of the
Improvements or any other future occupancy or use of the Improvements
(hereinafter called "EQUIPMENT"), including, but without limiting the
generality of the foregoing, all heating, lighting, loading, unloading,
landscaping, engines, pipes, pumps, tanks, motors, conduits, switchboards,
plumbing, lifting, cleaning, fire prevention, fire extinguishing,
refrigerating, ventilating and communications apparatus, air cooling and air
conditioning apparatus, elevators, escalators, ducts and compressors, cleaning
equipment and supplies, and all right, title and interest of Mortgagor in and
to any Equipment which may be subject to any security agreements (as defined in
the Uniform Commercial Code of the State of New Jersey (the "UNIFORM COMMERCIAL
CODE") and hereinafter called "SECURITY AGREEMENTS") superior in lien to the
lien of this Mortgage; and Mortgagor agrees to execute and deliver, from time
to time, such further instruments (including further Security Agreements) as
may be reasonably requested by Mortgagee to confirm the lien of this mortgage
on any Equipment;
TOGETHER with right, title and interest of Mortgagor in and to
all tax refunds, contract rights, general intangibles (as such term is defined
in the Uniform Commercial Code), and all rents and profits derived or to be
derived from oil, gas and mineral interests in and to the Land; and
TOGETHER with all awards or payments, including interest
thereon, heretofore and hereafter made to Mortgagor for the taking by eminent
domain of the whole or any part of the Land or Improvements, or the use
thereof, or any easement therein, including any awards or payments for changes
of grade of streets or any other injury to or decrease in the value of the
Mortgaged Property (as hereinafter defined), which said awards and payments are
hereby assigned to Mortgagee, who is hereby authorized to collect and receive
the proceeds thereof and to give proper receipts and acquittance therefor, and,
subject to the terms and conditions of this Mortgage, to apply the same as
provided in this Mortgage toward the payment of the indebtedness at any time
secured hereby, notwithstanding the fact that the amount thereof may not then
be due and payable and toward the reasonable counsel fees, costs and
disbursements incurred by Mortgagee in connection with the collection of such
awards or payments and toward the
<PAGE> 7
3
payment of the indebtedness at any time secured hereby, notwithstanding the
fact that the amount thereof may not then be due and payable; and Mortgagor
hereby agrees, upon request, to make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning said
awards or payments to Mortgagee, free, clear and discharged of any encumbrances
of any kind or nature whatsoever created by Mortgagor.
ALL of the foregoing real and personal property and rights and
interests in property and awards are herein collectively referred to as the
"MORTGAGED PROPERTY".
AND Mortgagor covenants that it is lawfully seized in fee of
the Land and Improvements, that it has good right, full power and lawful
authority to make the conveyances made herein, and that, subject to the
Permitted Encumbrances, it will warrant and forever defend the title thereto
against the lawful claims of any and all persons whomsoever.
AND Mortgagor hereby certifies that there are no offsets,
defenses or counterclaims to this Mortgage, or to the Note or to the
indebtedness evidenced and secured hereby and thereby.
AND at all times until the entire unpaid principal
indebtedness of the Note, including all sums now or hereafter due Mortgagee
under the terms hereof and the Note are fully paid, together with interest
thereon, Mortgagor further covenants with Mortgagee as follows:
1. PAYMENT OF INDEBTEDNESS. The Mortgagor will pay the
indebtedness secured by this Mortgage in accordance with the terms of the Note
and this Mortgage.
2. TITLE TO THE MORTGAGED PROPERTY. Mortgagor warrants
that it has good and marketable title to an indefeasible fee estate in the
Mortgaged Property subject to no lien, charge or encumbrance except for the
Permitted Encumbrances; and that this Mortgage is and will remain a valid and
enforceable first priority mortgage lien on the Mortgaged Property. Mortgagor
will preserve such title and will forever warrant and defend the same to
Mortgagee and will forever warrant and defend the validity and priority of the
lien hereof against the claims of all persons and parties whomever. Mortgagor
has full power and lawful authority to mortgage the Mortgaged Property in the
manner and form herein done or intended to be done.
3. FURTHER ASSURANCES. (a) Mortgagor will, at the cost
of Mortgagor, and without expense to Mortgagee, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment, transfers and assurances as Mortgagee shall
from time to time
<PAGE> 8
4
reasonably require, for the better assuring, conveying, assigning, transferring
and confirming unto Mortgagee the Mortgaged Property and rights hereby conveyed
or assigned or intended now or hereafter so to be, or which Mortgagor may be or
may hereafter become bound to convey or assign to Mortgagee, or for carrying
out the intention or facilitating the performance of the terms of this
Mortgage, or for filing, registering or recording this Mortgage. Mortgagor
hereby authorizes Mortgagee to execute in the name of Mortgagor to the extent
it may lawfully do so, one or more financing statements and/or continuation
statements to perfect the lien hereof upon the Mortgaged Property or any
portion hereof.
(b) Mortgagor forthwith upon the execution and delivery
of this Mortgage, and thereafter from time to time, will cause this Mortgage to
be recorded in such manner and in such places as may be required by any present
or future law in order to publish notice of and protect the lien hereof upon,
and the interest of Mortgagee in, the Mortgaged Property.
4. INSURANCE. (a) Mortgagor shall obtain and maintain
at all times throughout the term of this Mortgage the following insurance in
amounts, with deductibles and with companies reasonably satisfactory to
Mortgagee from time to time: (i) comprehensive general public liability
insurance covering all operations of Mortgagor; (ii) "all-risk" fire and
extended coverage hazard insurance (together with vandalism and malicious
mischief endorsements) in an aggregate amount not less than 100% of the full
insurable replacement value of the Mortgaged Property (excluding foundations,
footings, roads, parking areas, paths, walkways and like improvements),
including coverage for loss of contents owned by Mortgagor; (iii) during the
course of any construction, reconstruction, remodeling or repair of
improvements on the Mortgaged Property, builders' all-risk extended coverage
insurance in amounts based upon the completed replacement value of the
improvements (excluding foundations, footings, roads, parking areas, paths,
walkways and like improvements), including coverage for loss of contents and
endorsed to provide that occupancy by any person shall not void such coverage;
(iv) if the Mortgaged Property is required to be insured pursuant to the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Act of 1968, as
the same has been or may hereafter be amended or modified (and any successor
act thereto), or pursuant to any other municipal, county, state of federal
statute, ordinance, rule or regulation, flood insurance in an amount at least
equal to the lesser of the outstanding principal balance of this Mortgage or
the maximum limit of coverage available; (v) insurance which complies with the
workers' compensation and employers' liability laws of all states in which
Mortgagor shall have employees who render services in connection with the
Mortgaged Property; (vi) business interruption and/or rental loss insurance
sufficient to pay, for a period of not less than twelve (12) months gross
income from
<PAGE> 9
5
the Mortgaged Property; (vii) boiler and machinery insurance covering pressure
vessels, air tanks, boilers, machinery, pressure piping, heating, air
conditioning and elevator equipment in such amounts as Mortgagee shall
reasonably require from time to time, provided that the Mortgaged Property
contains equipment of such nature; and (viii) such other insurance as Mortgagee
may reasonably require and that are customarily obtained for similar
properties, including, without limitation, environmental liability insurance.
(b) Each insurance policy required under this Article
shall be written by an insurance company authorized or licensed to do business
in New Jersey having an Alfred M. Best Company, Inc. rating of A or higher and
a financial size category of not less than VII, and shall be on such forms and
written by such companies as shall be reasonably approved by Mortgagee. Each
insurance policy providing insurance against loss or damage to property,
business interruption or rent loss shall be written or endorsed so as to (i)
name Mortgagee as mortgagee under a New Jersey standard mortgagee or secured
party endorsement, as the case may be, or its equivalent; and (ii) make all
losses payable directly to Mortgagee, without contribution. Each insurance
policy providing public liability coverage shall be written and endorsed so as
to name Mortgagee as a certificate holder with thirty (30) days prior written
notice of cancellation. Each insurance policy required under this Article shall
contain a provision (i) requiring the insurer to notify Mortgagee, in writing
and at least thirty (30) days in advance, of any cancellation or material
change in the policy; (ii) waiving all rights of setoff, counterclaim,
deduction or subrogation against Mortgagor; and (iii) excluding Mortgagee from
the operation of any coinsurance clause. At least thirty (30) days prior to
the expiration of any insurance policy, Mortgagor shall furnish evidence
satisfactory to Mortgagee that such policy has been renewed or replaced or is
no longer required by this Article.
(c) In the event Mortgagor fails to keep the Mortgaged
Property insured in compliance with this Article, Mortgagee may, after prior
written notice to Mortgagor (unless an Event of Default has occurred and is
continuing), obtain insurance and pay the premiums therefor and Mortgagor
shall, on demand, reimburse Mortgagee for all sums advanced and expenses
incurred in connection therewith together with interest thereon at the Default
Rate (defined in the Note). The policy or policies of such insurance shall be
delivered to Mortgagee. The Mortgagor shall give Mortgagee prompt notice of any
loss covered by such insurance and Mortgagee shall have the right to join
Mortgagor in adjusting any loss in excess of $250,000. Except as hereinafter
set forth, any moneys received as payment for any loss under any such insurance
shall be paid over to Mortgagee to be applied at the sole option of Mortgagee
either to the prepayment of the Note, without premium, and/or to the
reimbursement of Mortgagor for expenses incurred by it in the collection of the
insurance
<PAGE> 10
6
proceeds and/or to the restoration of the Mortgaged Property. If (i) in the
reasonable opinion of Mortgagee, the Mortgaged Property may be restored to a
size and character substantially similar to that which existed prior to the
casualty in respect of which insurance proceeds were received, or (ii) as a
result of zoning laws, building codes or substantially similar governmental
requirements, the Mortgaged Property may only be restored to a size smaller
than that which existed prior to the casualty but, in the reasonable opinion of
Mortgagee, based on (A) tenants who have agreed or are obligated to remain in
place after the restoration, and (B) the estimated excess insurance proceeds
that will remain after the restoration of such smaller building and which will
be applied in reduction of the Note, such smaller building (an "ECONOMICALLY
VIABLE SMALLER BUILDING") will have a character substantially similar to the
pre-existing building and upon restoration will generate revenues sufficient to
sustain a debt service coverage ratio not less than that which existed prior to
the casualty, Mortgagee shall hold the net insurance proceeds (after
reimbursement of Mortgagee for the expenses of collection), for the payment for
the restoration of the Mortgaged Property and shall reimburse Mortgagor from
time to time out of such net insurance proceeds for expenses incurred by
Mortgagor in the restoration of the Mortgaged Property upon the written request
of Mortgagor, accompanied by the following:
(i) A certificate signed by the chief financial officer
of Mortgagor dated not more than 30 days prior to such request, setting forth
the following:
(A) That Mortgagor has promptly commenced the restoration
of the Mortgaged Property and is diligently proceeding therewith;
(B) That said restoration, to the extent performed, has
been satisfactorily accomplished substantially in accordance with
plans and specifications approved by Mortgagee and in compliance with
all applicable requirements of law;
(C) That the sum then requested either has been paid by
Mortgagor, or is justly due to contractors, subcontractors,
materialmen, or other persons who have rendered services or furnished
materials for the restoration therein specified, the names and
addresses of such persons, a brief description of such services and
materials, the several amounts so paid or due to each of said persons
in respect thereof, that no part of such expenditures has been or is
being made the basis, in any previous or then pending request, for the
withdrawal of insurance money or has been made out of the proceeds of
insurance received by Mortgagor, and that, to the best of its
knowledge after appropriate inquiry, the sum then requested does not
exceed the value of the services and materials described in the
certificate;
<PAGE> 11
7
(D) That, except for the amount stated in such
certificate, there is no outstanding indebtedness which is then due in
connection with the restoration of the Mortgaged Property;
(E) That the cost, as estimated by the persons signing
such certificate, of the restoration required to be done subsequent to
the date of such certificate in order to complete the same does not
exceed the insurance plus any other money deposited by Mortgagor to
defray such expense and remaining in the hands of Mortgagee after
payment of the sum requested in such certificate.
(ii) Such other proof as Mortgagee may
reasonably require that the statements contained in the
certificate delivered under clause (i) above are true.
(iii) A title company or official search,
or other evidence reasonably satisfactory to Mortgagee,
showing that there has not been filed, with respect to the
Property, any lien which has not been discharged of record,
except such as will be discharged upon payment of the sum
requested in such certificate.
If the net insurance proceeds at any time available for such
purpose shall be insufficient to pay the entire cost of the restoration,
Mortgagee shall not be required to disburse the proceeds for the restoration of
the Mortgaged Property unless Mortgagor has first paid over to Mortgagee, to be
held with the insurance proceeds, the full amount of the deficiency. Upon
receipt by Mortgagee of satisfactory evidence of the character required by
clauses (i)-(iii) above, that the restoration has been completed and paid for
in full and that there are no liens of the character referred to therein, then
(i) if the restoration related to an Economically Viable Smaller Building, the
balance of the insurance proceeds held by Mortgagee shall be applied in
reduction of the Note and the remaining payments thereunder shall be
appropriately recomputed, and (ii) in all other cases, so long as no Event of
Default or event which with the giving of notice or the passage of time would
be an Event of Default (an "UNMATURED DEFAULT") shall have occurred and be
continuing, any remaining balance of the insurance proceeds held by Mortgagee
shall be paid to Mortgagor. If an Event of Default shall have occurred and be
continuing, at the election of Mortgagee, such proceeds shall be applied to the
then unpaid installments of principal due under the Note in the inverse order
of their maturity, such that the regular payments thereunder shall not be
reduced or altered in any manner. If an Unmatured Default shall exist,
Mortgagee may continue to hold such proceeds until the Unmatured Default shall
have been cured or shall have become an Event of Default.
<PAGE> 12
8
(d) The Mortgagor shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to
be maintained under this Article 4, unless Mortgagee has approved such
insurance which approval will not be unreasonably withheld or delayed, the
insurance company and the form and content of the insurance policy, including,
without limitation, the naming thereon of Mortgagee as a mortgagee, with loss
payable to Mortgagee under a standard mortgage endorsement of the character
above described. The Mortgagor shall immediately notify Mortgagee whenever any
such separate insurance is taken out and shall promptly deliver to Mortgagee
the policy or policies of such insurance or certificates thereof in accordance
with the provisions of the Article.
5. PAYMENT OF TAXES, ETC. The Mortgagor shall pay any
and all taxes, charges, excises and levies imposed upon Mortgagee by reason of
its ownership of the Note or this Mortgage, other than income, franchise and
doing business taxes, and shall pay all corporate stamp taxes and other taxes
required to be paid on the Note. In the event Mortgagor fails to make such
payment within five days after written notice thereof from Mortgagee, Mortgagee
shall have the right to pay the amount due, and Mortgagor shall, on demand,
reimburse Mortgagee for said amount together with interest at the Default Rate
from the date that such sum is advanced to and including the date of
reimbursement. The amount advanced by Mortgagee, together with the interest
thereon, shall be part of the indebtedness secured hereby.
6. NO ALTERATIONS. Neither the Improvements nor any
Equipment shall be removed, demolished or materially altered without the prior
written consent of Mortgagee, except that Mortgagor may make non-structural
tenant improvements, and Mortgagor may replace any part of the Equipment with
articles of a value or utility at least equal to the replaced articles, and
upon such replacement such new articles shall be subject to the lien created by
the security agreement made a part of this Mortgage. By accepting this
Mortgage, Mortgagee agrees not to unreasonably withhold its consent to
alterations required to comply with law or to comply with Mortgagor's
obligations under a permitted lease. All such replaced Equipment shall be free
from any title retention, security agreement or other encumbrance in favor of
any party other than Mortgagee.
7. INTEREST ON INSURANCE PROCEEDS AND CONDEMNATION
AWARDS. At any time that Mortgagee shall have received any insurance proceeds
or condemnation awards and shall be holding such proceeds or awards for
disbursement for the rebuilding of the Mortgaged Property in accordance with
the provisions of Section 4 or 13 of this Mortgage, as the case may be, then
upon written request of Mortgagor, Mortgagee shall use its best efforts to
invest temporarily any such proceeds or awards in
<PAGE> 13
9
short term United States government securities, certificates of deposit,
banker's acceptances or other money market instruments, and the interest on
such investments shall be applied in the same manner as the proceeds or awards
in respect of which such interest was earned; provided, however, that Mortgagee
shall not be required to make any such investment which would interfere with
the timely application of such proceeds or awards in accordance with this
Mortgage, and, provided, further, that Mortgagee shall not be required to make
any investment which it deems to be insecure for any reason. For income tax
purposes, interest, or other income arising out of any such investment shall be
deemed received and reportable by Mortgagor and Mortgagor shall execute and
deliver to Mortgagee appropriate tax reporting forms and information.
8. CERTIFICATES OF AMOUNT DUE. Each of Mortgagor and
Mortgagee, within 10 days after request by the other party, will furnish a
written statement, duly acknowledged, of the amount due on this Mortgage, the
last date to which interest has been paid under the Note, whether any notices
of default have been delivered or received by such party and remain in effect,
whether to such party's knowledge any Events of Default or Unmatured Defaults
(as hereinafter defined) exist and whether any known offsets or defenses exist
against the indebtedness secured by this Mortgage.
9. IMPOSITIONS. The Mortgagor will pay when due all
special assessments for local improvements, sewer rents, water rates, and real
estate taxes or assessments, sales and use taxes or any other charges in lieu
of or in substitution of real estate taxes or assessments from which the
Mortgaged Property or any part thereof are not exempt. If Mortgagor shall
default in the payment thereof, Mortgagee may after written notice to Mortgagor
(which need not be given if an Event of Default or an Unmatured Default shall
exist) pay any such special assessments, sewer rents, water rates, taxes,
assessments and charges (the "Impositions"), and all such payments so made by
Mortgagee shall be deemed to be due and payable to Mortgagee by Mortgagor, with
interest at the Default Rate, immediately upon demand by Mortgagee and shall be
an additional indebtedness secured by this Mortgage. Upon request of Mortgagee
from time to time, Mortgagor shall deliver to Mortgagee receipts showing
payment of all Impositions to the extent such receipts are obtainable.
Notwithstanding the foregoing, if Mortgagor has instituted and is diligently
prosecuting appropriate administrative or judicial action to contest such taxes
and assessments, and if in the reasonable opinion of Mortgagee neither the
Property nor the Land nor any part thereof is in danger of being forfeited or
lost by a postponement of payment of such contested charge, then, in lieu of
payment, pending a final determination of such proceedings, Mortgagor may
furnish such surety bonds or other assurances as Mortgagee shall reasonably
deem sufficient to assure the payment of such taxes, assessments or charges.
<PAGE> 14
10
10. CHANGES IN METHOD OF TAXATION. In the event of the
passage after the date hereof of any law of the State of New Jersey (or any
other state) deducting from the value of the Mortgaged Property or the Land for
the purposes of taxation any lien thereon, or changing in any way the laws for
the taxation of mortgages or debts secured thereby for state or local purposes,
or the manner of collection of any such taxes, and imposing a tax, either
directly or indirectly, on mortgages or debts secured thereby, the holder of
this Mortgage shall have the right to declare all sums due under this Mortgage
to be due and payable on a date to be specified by not less than 30 days'
written notice to be given to Mortgagor unless Mortgagor, if permitted by law
and within such thirty (30) day period, shall assume as an obligation hereunder
the payment of any taxes, costs and charges incurred by Mortgagee as a result
thereof, until full payment of the indebtedness secured by this Mortgage.
11. EXPENSES OF LITIGATION. The Mortgagee shall have the
right to appear in and defend any action or proceeding, in the name of and on
behalf of Mortgagor, which Mortgagee, in its discretion, believes may adversely
affect this Mortgage or its interest in the Mortgaged Property and Mortgagee
shall also have the right to institute any action or proceeding which
Mortgagee, in its discretion, believes should be brought to protect its
interest in the Mortgaged Property or its rights hereunder. If any action or
proceeding be commenced (except an action to foreclose this Mortgage or to
collect the indebtedness secured hereby), to which action or proceeding
Mortgagee is or becomes a party or in which it becomes necessary to defend or
uphold the lien of this Mortgage, all expenses incurred by Mortgagee in
connection with any such action or proceeding (including reasonable attorneys'
fees and expenses) shall on notice and demand be paid by Mortgagor, together
with interest thereon at the same rate of interest that is then payable under
the Note, and shall be a lien on the Mortgaged Property prior to any right or
title to, interest in or claim upon the Mortgaged Property subordinate to the
lien of this Mortgage, and shall be secured by this Mortgage. To the extent
permitted by law, Mortgagor agrees to bear and pay all out-of-pocket expenses
(including reasonable attorneys' fees and expenses for legal services of every
kind) of or incidental to the administration, modification or enforcement of
any provision hereof, or the enforcement, compromise, or settlement of this
Mortgage or the indebtedness secured hereby, and for the curing thereof, or
defending or asserting the rights and claims of Mortgagee in respect thereof,
by litigation or otherwise, and all such expenses incurred by Mortgagee shall
be part of the indebtedness secured hereby.
12. MAINTENANCE AND REPAIR; MANAGEMENT. (a) Mortgagor
will maintain the Improvements and the Land in good condition and repair, will
not commit or suffer any waste thereof, and will comply with, or cause to be
complied with, all statutes, ordinances and requirements of any governmental
authority to
<PAGE> 15
11
which the Mortgaged Property or the Land are subject, except to the extent that
Mortgagee has expressly agreed, pursuant to a certain Purchase and Sale
Agreement dated the date hereof between Mortgagee and Jared Associates, L.P.,
as sellers, and Mortgagor, as purchaser, to be responsible for the costs of
remedying violations which relate to conditions existing at the Mortgaged
Property as of the date hereof, and are noted of record on the date hereof or
within 90 days hereafter. Subject to the provisions of Section 12(c) below,
the Mortgagor will promptly repair, restore, replace or rebuild any part of the
Improvements or the Equipment now or hereafter subject to the lien of this
Mortgage which may be damaged or destroyed by any casualty whatsoever, free
from liens and encumbrances except the lien of this Mortgage. The failure of
Mortgagor to pay any taxes or assessments assessed against the Mortgaged
Property, or any installment thereof, or any premium payable with respect to
any insurance policy covering the Mortgaged Property shall constitute waste.
(b) Mortgagor will cause the Mortgaged Property to
be managed at all times by a manager affiliated with Mortgagor or with another
manager reasonably satisfactory to Mortgagee, in either case on commercially
reasonable arms' length terms.
(c) Upon the occurrence of a casualty, if, in the
reasonable opinion of Mortgagee, the net insurance or condemnation proceeds are
not sufficient to restore the Mortgaged Property to a size and character
substantially similar to that which existed prior to the casualty or
condemnation or to restore an Economically Viable Smaller Building, and
Mortgagee shall notify Mortgagor in writing of its election to apply the net
insurance or condemnation proceeds to the indebtedness secured by this
Mortgage, then, within 30 days after the delivery of Mortgagee's notice,
Mortgagor shall have the right to notify Mortgagee of its election to restore
the Mortgaged Property to a size and character substantially similar to that
which existed prior to the casualty or condemnation or to restore an
Economically Viable Smaller Building with funds other than such net insurance
or condemnation proceeds. If Mortgagor so elects to restore with funds other
than the net insurance or condemnation proceeds, it shall commence the
restoration within 30 days after notifying Mortgagee of its election, and shall
diligently proceed to restore the Mortgaged Property to a size and character
substantially to that which existed prior to the casualty or condemnation or to
restore an Economically Viable Smaller Building. If Mortgagor shall not elect
to restore within 30 days after the delivery of Mortgagor's notice, such
non-election shall constitute an Event of Default hereunder, and Mortgagee
shall have the right upon ten (10) days' written notice to Mortgagor, to
accelerate the indebtedness secured by this Mortgage.
<PAGE> 16
12
13. CONDEMNATION AWARDS. The Mortgagor, immediately upon
obtaining knowledge of the institution of any proceedings for the condemnation
or taking by eminent domain or purchase in lieu thereof (referred to herein
collectively as "CONDEMNATION PROCEEDINGS") of the Mortgaged Property or any
portion thereof, will notify Mortgagee of the pendency of such proceedings. The
Mortgagee may participate in any such proceedings and Mortgagor from time to
time will deliver to Mortgagee all instruments requested by it to permit such
participation. In the event of such Condemnation Proceedings, the award or
compensation payable is hereby assigned to and shall be paid to Mortgagee. The
Mortgagor, upon request by Mortgagee, shall make, execute and deliver any and
all assignments and other instruments sufficient for the purpose of assigning
the aforesaid awards and compensation to Mortgagee free and clear of any liens,
charges or encumbrances of any kind or nature whatsoever. The Mortgagee shall
be under no obligation to question the amount of any such award or compensation
and may accept the same in the amount in which the same shall be paid. In any
such Condemnation Proceedings Mortgagee may be represented by counsel selected
by Mortgagee. Except as hereinafter set forth, the proceeds of any award or
compensation so received shall at the option of Mortgagee either be applied,
without premium, to the prepayment of the Note or be paid over to Mortgagor for
restoration of the Mortgaged Property. The Mortgagee shall not be limited to
the interest paid on the proceeds of any award or compensation, but shall be
entitled to the payment of interest by Mortgagor at the rates provided for
herein or in the Note. The Mortgagor will not enter into an agreement for the
taking of the Mortgaged Property, or any part thereof, with anyone authorized
to acquire the same by condemnation unless Mortgagee shall have consented
thereto in writing. Notwithstanding anything contained in this Article to the
contrary, if (i) in the reasonable opinion of Mortgagee, the Mortgaged Property
may be restored to a size and character substantially similar to that existing
prior to the condemnation or (ii) an Economically Viable Smaller Building may
be restored, Mortgagee shall hold the award proceeds (after reimbursement to
Mortgagee and Mortgagor for the reasonable expenses of collection, including
reasonable attorneys' fees and expenses) to the extent reasonably estimated by
Mortgagee to cover the cost of restoration (including all hard and soft cost
contingencies, operating expenses and carrying charges of the Mortgaged
Property), for payment of the restoration of the Improvements and, so long as
no Event of Default or Unmatured Default shall have occurred and be continuing,
shall reimburse Mortgagor from time to time out of such award proceeds for
expenses incurred by Mortgagor in the restoration of the Improvements upon
written request of Mortgagor accompanied by the following:
(i) A certificate signed by the chief financial
officer of Mortgagor dated not more than 30 days prior to such
request, setting forth the following:
<PAGE> 17
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(A) That Mortgagor has promptly
commenced the restoration of the Mortgaged Property
and is diligently proceeding therewith;
(B) That said restoration, to the extent
performed, has been satisfactorily accomplished
substantially in accordance with plans and
specifications approved by Mortgagee and in
compliance with all applicable requirements of law;
(C) That the sum then requested either
has been paid by Mortgagor, or is justly due to
contractors, subcontractors, materialmen, or other
persons who have rendered services or furnished
materials for the restoration therein specified, the
names and addresses of such persons, a brief
description of such services and materials, the
several amounts so paid or due to each of said
persons in respect thereof, that no part of such
expenditures has been or is being made the basis, in
any previous or then pending request, for the
withdrawal of award money or has been made out of the
proceeds of the award received by Mortgagor, and that
to the best knowledge of Mortgagor after appropriate
inquiry the sum then requested does not exceed the
value of the services and materials described in the
certificate;
(D) That, except for the amount stated
in such certificate, there is no outstanding
indebtedness which is then due in connection with the
restoration of the Mortgaged Property;
(E) That the cost, as estimated by the
persons signing such certificate, of the restoration
required to be done subsequent to the date of such
certificate in order to complete the same does not
exceed the award plus any other money deposited by
Mortgagor to defray such expense and remaining in the
hands of Mortgagee after payment of the sum requested
in such certificate.
(ii) Such other proof as Mortgagee
may reasonably require that the statements
contained in the certificate delivered under
clause (i) above are true.
(iii) A title company or official
search, or other evidence satisfactory to
Mortgagee, showing that there has not been
filed, with respect to the Mortgaged
<PAGE> 18
14
Property, any lien which has not been
discharged of record, except such as will be
discharged upon payment of the sum requested
in such certificate.
If an Event of Default shall have occurred and be continuing, at
the election of Mortgagee, the net condemnation proceeds shall be applied to
the then obligations secured by this Mortgage in such order as Mortgagee shall
elect, in its sole discretion. If an Unmatured Default shall exist, Mortgagee
may continue to hold such proceeds until the Unmatured Default shall have been
cured or shall have become an Event of Default.
If the net award at the time available for the purpose, shall be
insufficient to pay the entire cost of the restoration, Mortgagee shall not be
required to use the proceeds for restoration unless Mortgagor has first paid
over to Mortgagee, to be held with the net condemnation proceeds, the full
amount of the deficiency.
Upon receipt by Mortgagee of satisfactory evidence of the
character required by clauses (i)-(iii) above, that the restoration has been
completed and paid for in full and that there are no liens of the character
referred to therein, any balance of the award money held by Mortgagee, and any
portion of the award in excess of the amount held for restoration, shall be
applied to the then principal due under the Note, and the regular payments
thereunder shall be appropriately recomputed by Mortgagee.
14. INSPECTION. The Mortgagee and any persons authorized by
Mortgagee shall have the right to enter and inspect the Improvements at all
reasonable times upon reasonable notice to Mortgagor.
15. LEASES AND ASSIGNMENT OF RENTS, ISSUES AND PROFITS. (a)
Mortgagor will not (i) execute an assignment of any lease affecting, or
assignment of the rents or any part thereof from, the Mortgaged Property, or
(ii) except where the lessee is in default thereunder, terminate or consent to
the cancellation or surrender of any lease of the Mortgaged Property, or of any
part thereof, now existing or hereafter to be made, provided that any lease
other than the existing leases to Federal Insurance Company and Prudential
Insurance Company of America, as amended to date (the EXISTING LEASES') may be
cancelled if promptly after the cancellation or surrender thereof a new lease
is entered into with a new lessee having a credit standing, in the judgment of
Mortgagee reasonably satisfactory to Mortgagee, on substantially the same terms
as the terminated or cancelled lease, or (iii) execute any new lease of all or
a portion of the Mortgaged Property except on arms' length terms reasonably
satisfactory to Mortgagee, or (iv) further amend or modify (A) the Existing
Leases, or (B) any future lease affecting the Mortgaged Property
<PAGE> 19
15
except, in the case of clause (B), for a modification on arms' length terms
reasonably satisfactory to Mortgagee (it being acknowledged that Mortgagee will
have the sole discretion to approve modifications that reduce the rent, shorten
the term or materially increase the landlord's obligations under a lease), or
(v) accept prepayments of any installments of rents to become due under such
leases, except prepayments in the nature of security for the performance of the
lessees thereunder, or (vi) in any other manner impair the value of the
Mortgaged Property or the security of this Mortgage.
(b) The Mortgagor hereby assigns to Mortgagee as additional
security for the loan evidenced by the Note, the rents, issues and profits
derived from (i) all leases of the Land or the Improvements now or hereafter
entered into by Mortgagor, including all security deposits held by Mortgagor
pursuant to such leases, (ii) all other lettings of the Land or the
Improvements now or hereafter entered into, and (iii) all occupancy, license
and concession agreements in respect of any part of the Land or the
Improvements now or hereafter entered into, as further security for the payment
of the indebtedness secured by this mortgage, and Mortgagor grants to Mortgagee
the right to enter the Improvements for the purpose of collecting the same and
to lease the Mortgaged Property, or any part thereof, and to apply said rents,
issues and profits on account of said indebtedness. This assignment and grant
shall continue in effect until the indebtedness secured by this Mortgage is
paid, but Mortgagee hereby waives the right to enter the Improvements for the
purposes of collecting said rents, issues and profits and leasing the
Improvements, and Mortgagor shall be entitled to collect, receive, use and
retain said rents, issues and profits and to lease the Improvements, until the
occurrence of an Event of Default under this Mortgage; such right of Mortgagor
to collect, receive, use and retain said rents, issues and profits and to lease
the Improvements may be revoked by Mortgagee upon the occurrence of any Event
of Default under this Mortgage, by Mortgagee giving written notice of such
revocation to Mortgagor; Mortgagor shall not accept prepayments of installments
of rent to become due for a period of more than one month in advance.
16. SUITS WITHOUT FORECLOSURE. The Mortgagee shall have the
right from time to time to take action against Mortgagor to recover any sums,
whether interest, principal or any installment of either, or any other sums
required to be paid under the terms of this Mortgage, as the same become due,
without regard to whether or not the indebtedness evidenced by the Note shall
be due, and without prejudice to the right of Mortgagee thereafter to bring an
action of foreclosure, or any other action, for a default or defaults by
Mortgagor existing at the time such earlier action was commenced.
17. DEPOSITS. In order to protect more fully the security
afforded hereby, if requested at any time in writing by
<PAGE> 20
16
Mortgagee, Mortgagor will pay to Mortgagee monthly, together with, and in
addition to the periodic installments of interest and/or principal payable
under the Note, until the indebtedness at any time secured by this Mortgage
shall have been fully paid, a sum determined by Mortgagee to be required to
amortize any installment of insurance premiums (except to the extent payable by
tenants), real estate taxes, assessments and water or other charges (except to
the extent being paid directly by a tenant who is not in default) within one
(1) month prior to the date such payment or installment is payable without
interest or penalty. If Mortgagor has instituted and is diligently prosecuting
appropriate administrative or judicial action to contest such taxes and
assessments, and in the reasonable opinion of Mortgagee neither the
Improvements nor the Land nor any part thereof is in danger of being forfeited
or lost by a postponement of payment of such contested charge, then, in lieu of
such deposits, Mortgagor may furnish such surety bonds or other assurances as
Mortgagee shall reasonably deem sufficient to assure the payment of such taxes,
assessments or charges. The amounts so deposited will be held by Mortgagee
without interest and provided Mortgagor shall not be in default in the
performance of its obligations hereunder, shall be applied to payment of the
aforementioned charges ("under protest", if applicable and if Mortgagor shall
so request) as they become due and payable, to the extent Mortgagee shall have
funds on hand. Upon the occurrence of an Event of Default under this Mortgage,
Mortgagee may apply such portion of such deposits as shall be necessary to
remedy such Event of Default. In the event of the acceleration of the
indebtedness secured by this Mortgage, Mortgagee may apply such amounts in
reduction of any indebtedness secured hereby. Notwithstanding the foregoing
provisions of this Section 17, Mortgagee shall not be entitled to require
deposits under this Section 17 so long as no Event of Default has occurred and
is continuing under this Mortgage.
18. RESTRICTIVE COVENANTS; TRANSFERS OF TITLE. Unless
Mortgagee consents thereto in writing in each instance:
A. Mortgagor shall not, either voluntarily or by
operation of law, permit to exist any interest, lien, charge or encumbrance in
or on the Mortgaged Property ranking prior to or on a parity with or
subordinate to the lien hereof;
B. Mortgagor shall not install, or permit to be
installed, in or on the Mortgaged Property any new fixture or equipment in
replacement of, substitution for, or addition to, any fixtures or equipment in
or on the Mortgaged Property owned by Mortgagor, if such new fixtures or
equipment would be subject to a security interest held by any person other than
Mortgagee;
C. Mortgagor shall not cause or permit any transfer
of the Mortgaged Property or any part thereof, whether voluntarily,
involuntarily or by operation of law, nor shall
<PAGE> 21
17
Mortgagor enter into any agreement or transaction to transfer, or accomplish in
form or substance a transfer, of the Mortgaged Property unless, in the case of
an agreement, it shall be executed and delivered subject to Mortgagee's
consent. A "transfer" of the Mortgaged Property includes: (i) the direct or
indirect sale, transfer or conveyance of the Mortgaged Property or any portion
thereof or interest therein except as provided in clause (iii) below; (ii) the
execution of an installment sale contract or similar instrument affecting all
or any portion of the Mortgaged Property unless made subject to Mortgagee's
consent; (iii) if Mortgagor is a partnership or limited liability company, the
transfer (whether in one transaction or a series of transactions) of stock,
partnership, limited liability company or other ownership interests in
Mortgagor or its constituent entities; (iv) if Mortgagor is a corporation, a
transfer (whether accomplished in a single transaction or in a series of
related transactions) of stock (or any other mechanism such as the issuance of
additional stock, a stock voting agreement, or change in classes of stock but
not including, in the case of a corporation which is traded on a recognized
securities exchange or over-the-counter market, any transfers of stock via any
such exchange or market), which results in a change of direct or indirect
control of Mortgagor, and any merger or consolidation of Mortgagor with any
other corporation or other entity, or any sale of all or a substantial portion
of Mortgagor's business or assets; provided, however, that (i) the transfer of
shares of stock in New Valley Corporation ("NVC"), whether by one or more
private sales or via a recognized stock exchange or over-the-counter market
shall not constitute a prohibited transfer, irrespective of whether such
transfers result in a change of more than 49% of the ownership interests of
NVC, whether in one transaction or in a series of transactions and (ii) neither
a merger or consolidation of NVC with any other corporation or other entity nor
a sale by NVC of all or substantially all of its business or assets shall
constitute a prohibited transfer so long as Mortgagee receives notice thereof
prior to or concurrently therewith; and, provided further, that upon written
notice to but without the prior consent of Mortgagee, (i) NVC may transfer the
Mortgaged Property to a wholly-owned, single-purpose subsidiary of NVC and (ii)
NVC may transfer the Mortgaged Property or direct or indirect interests in the
Mortgagor to a person or entity controlling, controlled by or under common
control with NVC.
D. Mortgagor shall not remove or demolish or, except
as permitted in Article 6 hereof, materially alter the design or structural
character of any building now or hereafter erected upon the Mortgaged Property
or create easements affecting the Mortgaged Property, other than customary
utility easements.
19. EVENTS OF DEFAULT. The whole of the indebtedness secured
by this Mortgage shall become immediately due and payable at the option of
Mortgagee upon the occurrence of any of the following Events of Default:
<PAGE> 22
18
(a) after default for five (5) days after notice from
Mortgagee, with respect to (i) any payment of any principal or interest payable
pursuant to the terms of the Note, (ii) the payment of the deposits referred to
in Article 17 hereof, or (iii) any other sum required to be paid in the Note or
this Mortgage when due and payable, provided, however, that no such notice and
no grace period shall apply with respect to the payments due on the maturity
date of the Note; or
(b) after default for 10 days after notice from Mortgagee in
the payment of any tax, municipal water rate, sewer rent, assessment or
insurance premium for which deposits have not been made pursuant to Article 17,
subject to Mortgagor's right to contest as provided in Articles 9 or 17; or
(c) after default for 10 days after notice from Mortgagee
either in assigning and delivering the policies insuring the Mortgaged Property
against loss by fire and other hazards or in reimbursing Mortgagee for premiums
paid on such insurance; or
(d) after default by Mortgagor for 10 days after request by
Mortgagee in furnishing a statement of the type described in section 8 hereof
with respect to the indebtedness secured by this Mortgage; or
(e) upon the commencement of any structural alteration or
demolition or removal of any part of the Improvements or the Equipment and
failure to restore the Improvements and the Equipment to their original
condition within 30 days after notice, provided however, that if such
restoration cannot reasonably be accomplished within 30 days, no Event of
Default shall be deemed to have occurred if Mortgagor shall begin such
restoration within such 30 day period and thereafter diligently prosecute the
same to completion; or
(f) upon the assignment of any of the rents, issues or profits
of the Mortgaged Property, or any part thereof, to anyone other than Mortgagee
or the holder of a mortgage permitted pursuant to Article 30 without the prior
written consent of Mortgagee; or
(g) if the Improvements or Equipment are not maintained in
good condition and repair in accordance with the provisions of this Mortgage
and such condition is not remedied within 30 days after notice, provided,
however, that if the nature of any required repair is such that it cannot
reasonably be accomplished within 30 days, no Event of Default shall be deemed
to have occurred if Mortgagor shall begin to repair within such 30-day period
and thereafter diligently prosecute the same to completion; or
(h) after failure to comply with any requirement of an
<PAGE> 23
19
order or notice of violation of law or ordinance issued by any governmental
department claiming jurisdiction over the Mortgaged Property or the Land within
15 days after the issuance of such order or notice; provided, however, if the
nature of the compliance is such that it cannot reasonably be accomplished
within such 15-day period, no Event of Default shall be deemed to have occurred
if Mortgagor shall begin to comply within such 15-day period and thereafter
diligently prosecute the same to completion; or
(i) if Mortgagor shall fail to cause the Mortgaged Property to
be managed as provided in Article 12(b), or to restore the Mortgaged Property
as provided in Article 12(c) and such failure shall continue for 15 days after
notice from Mortgagee to Mortgagor; or
(j) in the event of the removal, demolition or destruction in
whole or in part, or as a result of the exercise of the power of eminent
domain, of any of the Improvements or Equipment, unless, within 30 days after
notice and demand by Mortgagee, the same are promptly replaced by similar
articles at least equal in quality and condition to those replaced, free from
security interests or encumbrances thereof, including reservation of title
thereto; or
(k) except as expressly permitted in Article 15(a) hereof, if
an Existing Lease is further amended, modified or terminated without the prior
written consent of Mortgagee in each instance; or
(l) except as expressly permitted by this Mortgage, in the
event of a lease, sale, assignment or other transfer of the Mortgaged Property
or a part thereof or interest therein without the prior written consent of
Mortgagee in its sole discretion; or
(m) if any material representation made to Mortgagee in
writing by or on behalf of Mortgagor shall be false or incorrect in any
material respect on the date as of which it was made; or
(n) except to the extent, if any, expressly permitted in
Article 18 hereof, if Mortgagor further mortgages, pledges or otherwise
encumbers the Mortgaged Property or any part thereof or any interest therein,
without the consent of Mortgagee in its sole discretion; or
(o) if Mortgagor fails for a period of 30 days after notice
to keep, observe and perform any of the other covenants, restrictive covenants,
warranties, conditions or agreements contained in this Mortgage or the Note,
any other Loan Document or any other agreement executed at any time by
Mortgagor for the benefit of Mortgagee as additional security for the Note;
provided, however, if the nature of such failure of compliance is such that it
cannot reasonably be cured within such 30-day
<PAGE> 24
20
period, no Event of Default shall be deemed to have occurred if Mortgagor shall
begin to comply within such 30-day period and thereafter diligently prosecute
the same to completion; or
(p) if the holder of any permitted subordinate mortgage or
lien accelerates the maturity of the indebtedness secured thereby or commences
foreclosure proceedings; or
(q) should an action be instituted for the foreclosure of any
lien affecting the Mortgaged Property or any part thereof and such action shall
not be discharged or bonded within thirty (30) days after notice from Mortgagee
to Mortgagor; or
(r) if Mortgagor shall (i) apply for or consent to the
appointment of a custodian, receiver, trustee or liquidator of Mortgagor or of
all or a substantial part of Mortgagor's assets; or (ii) be adjudicated a
bankrupt or insolvent or shall file a voluntary petition in bankruptcy or admit
in writing its inability to pay its debts as they become due or fail to pay
debts generally as they become due; or (iii) make a general assignment for the
benefit of creditors; or (iv) file a petition or answer seeking reorganization
or arrangement with creditors or to take advantage of any insolvency law; or
(v) file an answer admitting the material allegations of, or consenting to, or
default in answering, a petition filed against Mortgagor in any bankruptcy,
reorganization or insolvency proceeding; or (vi) in any action instituted by
someone other than Mortgagor, an order, judgment or decree shall be entered
approving a petition seeking reorganization of Mortgagor, or of all or
substantially all of Mortgagor's assets and such order, judgment or decree
shall continue unstayed for a period of forty-five (45) days; or
(s) if, (i) by order of a court of competent jurisdiction, a
receiver, liquidator or trustee of Mortgagor or the Mortgaged Property shall be
appointed and shall not have been discharged within forty-five (45) days, or
(ii) if a petition in bankruptcy, insolvency proceeding or petition for
reorganization shall have been filed against Mortgagor and same is not
withdrawn, dismissed, cancelled or terminated within forty-five (45) days, or
(iii) if Mortgagor is adjudicated bankrupt or insolvent or a petition for
reorganization is granted (without regard for any grace period provided for
herein), or (iv) if there is an attachment or sequestration of any of the
property of Mortgagor which materially adversely affects Mortgagor's financial
condition or which attaches to or affects the Mortgaged Property and same is
not discharged or bonded within ten days; or
(t) if final judgment shall be rendered against Mortgagor for
the payment of $1,000,000 or more or which otherwise materially adversely
affects Mortgagor's financial condition or which attaches to or affects the
Mortgaged Property and Mortgagor shall not discharge the same or cause it to be
discharged within forty-five (45) days from the entry thereof, or
<PAGE> 25
21
shall not appeal therefrom or from the order, decree or process upon which or
pursuant to which said judgment was granted, based or entered, and secured a
stay of execution pending such appeal or posted an appeal bond reasonably
acceptable to Mortgagee.
20. REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuance of any Event of Default hereunder, Mortgagee may take such action,
without notice or demand except as otherwise provided in this Mortgage, as it
deems advisable to protect and enforce its rights against Mortgagor and in and
to the Mortgaged Property, including, but not limited to, the following
actions, each of which may be pursued concurrently or otherwise, at such time
and in such order as Mortgagee may determine, in its sole discretion, without
impairing or otherwise affecting the other rights and remedies of Mortgagee:
(a) declare the entire unpaid indebtedness secured hereby to
be immediately due and payable; or
(b) enter into or upon the Mortgaged Property, either
personally or by its agents, nominees or attorneys, and dispossess Mortgagor
and its agents and servants therefrom, and thereupon Mortgagee may (i) use,
operate, manage, control, insure, maintain, restore and otherwise deal with all
and every part of the Mortgaged Property and conduct the business thereat; (ii)
complete any construction on the Mortgaged Property in such manner and form as
Mortgagee deems advisable; (iii) make alterations, additions, renewals,
replacements and improvements to or on the Improvements or the Equipment; (iv)
exercise all rights and powers of Mortgagor with respect to the Mortgaged
Property, either in the name of Mortgagor or otherwise, including, without
limitation, the right to make, cancel, enforce or modify leases, obtain and
evict tenants, and demand, sue for, collect and receive all earnings, revenues,
rents, issues, profits and other income of the Mortgaged Property and every
part thereof; and (v) apply the receipts from the Mortgaged Property to the
payment of the indebtedness secured hereby, after deducting therefrom, all
expenses incurred in connection with the aforesaid operations and all amounts
necessary to pay the taxes, assessments, insurance and other charges in
connection with the Mortgaged Property, as well as just and reasonable
compensation for the services of Mortgagee, its counsel, agents and employees;
or
(c) institute proceedings for the complete foreclosure of this
Mortgage in which case the Mortgaged Property may be sold in one parcel; or
(d) with or without entry, to the extent permitted and
pursuant to the procedures provided by applicable law, institute proceedings
for the partial foreclosure of this Mortgage for the portion of the
indebtedness then due and payable, subject to the
<PAGE> 26
22
continuing lien of this Mortgage for the balance of the indebtedness not then
due; or
(e) sell the Mortgage Property or any part thereof and all
estate, claim, demand, right, title and interest of Mortgagor therein and right
of redemption thereof, pursuant to power of sale or otherwise, at one or more
sales, as an entity or in parcels, at such time and place, upon such terms and
after such notice thereof as may be required or permitted by law, and in the
event of a sale, by foreclosure or otherwise, of less than all of the Mortgaged
Property, this Mortgage shall continue as a lien on the remaining portion of
the Mortgaged Property; or
(f) subject to the provisions of Section 37 hereof, recover
judgment on the Note either before, during or after any proceedings for the
enforcement of this Mortgage; or
(g) apply for the appointment of a trustee, receiver,
liquidator or conservator of the Mortgaged Property, without regard for the
adequacy of the security for the indebtedness and without regard for the
solvency of Mortgagor or any other person, firm or other entity liable for the
payment of the indebtedness, to which appointment Mortgagor hereby consents; or
(h) pursue such other remedies as Mortgagee may have under
applicable law. Upon the sale of the Mortgaged Property or any part thereof
under the power of sale herein granted, or as a result of judicial proceedings
or a judgment or decree of foreclosure, Mortgagee may bid for and acquire the
Mortgaged Property or any part thereof, and credit against the indebtedness
secured hereby, the net sales price thereof after deducting therefrom all
expenses of the sale and the proceedings in connection therewith and all other
items which Mortgagee is authorized to deduct under this Mortgage, the Note and
applicable law. The Mortgagee and any receiver of the Mortgaged Property or any
part thereof shall be liable to account for only those rents, issues and
profits actually received by it.
(i) Without limiting the generality of clause (g) above, upon
or at any time after the filing of a complaint to foreclose this Mortgage, the
court in which such complaint is filed shall, upon application of Mortgagee,
appoint a receiver of the Mortgaged Property. In addition, Mortgagee also
shall be entitled to the appointment of a receiver upon or at any time of
foreclosing this Mortgage pursuant to the Power of Sale contained herein. Such
appointment may be made either before or after sale, without notice, without
regard to the solvency or insolvency of Mortgagor at the time of application
for such receiver and without regard to the then value of the Mortgaged
Property or whether the same shall be then occupied as a homestead or not and
Mortgagee or any holder of the Note may be appointed as such receiver. Such
receiver shall have power to collect the rents, issues and profits of the
Mortgaged Property
<PAGE> 27
23
during the pendency of such foreclosure suit, during the pendency of a
foreclosure by advertisement and during any statutory period of redemption, if
any, whether there be redemption or not, as well as during any further times
when Mortgagor, except for the intervention of such receiver, might be entitled
to collect such rents, issues and profits, and all other powers which may be
necessary or are usual in such cases for the protection, possession, control,
management and operation of the Premises during the whole of said period. The
court from time to time shall authorize the receiver to apply the net income in
his hands in payment in whole or in part of: (i) the indebtedness secured
hereby, or by any decree foreclosing this Mortgage, or any tax, special
assessment or other lien which may be or become superior to the lien hereof or
of such decree, provided such application is made prior to foreclosure sale;
and (ii) the deficiency in case of a sale and deficiency.
In the event of any Event of Default hereunder, it is agreed that
the then owner of the Mortgaged Property, if it is the occupant of the
Mortgaged Property or any part thereof, shall immediately surrender possession
of the Mortgaged Property so occupied to Mortgagee, and if such occupant is
permitted to remain in possession, the possession shall be as tenant of
Mortgagee and such occupant shall, on demand, pay monthly in advance to
Mortgagee a reasonable rental for the space so occupied and in default thereof,
such occupant may be dispossessed by the usual summary proceedings. The
covenants herein contained may be enforced by any receiver of the Mortgaged
Property or any part thereof.
21. REMEDIES CUMULATIVE; NO WAIVERS, ETC. (a) The rights and
remedies of Mortgagee hereunder shall be cumulative and not exclusive one of
the other and shall be in addition to every other right and remedy now and
hereafter provided by law or equity. No delay or omission by Mortgagee in
exercising a right or remedy shall exhaust or impair the same or any other
remedy or constitute a waiver or acquiescence in the default or in any other
default. Any failure by Mortgagee to insist upon the strict performance of any
of the terms and provisions of this mortgage shall not be deemed to be a waiver
of any of the terms and provisions hereof, and Mortgagee, notwithstanding any
such failure, shall have the right thereafter to insist upon the strict
performance of any and all of the terms and provisions of this Mortgage;
neither Mortgagor nor any other person now or hereafter obligated for the
payment of the whole or any part of the sums now or hereafter secured by this
Mortgage, including, but not limited to, any guarantor, shall be relieved of
such obligation by reason of the failure of Mortgagee to comply with any
request of Mortgagor or of any other person so obligated, to take action to
foreclose this Mortgage or otherwise enforce any of the provisions of this
Mortgage or of any obligations secured hereby, or by reason of the release,
regardless of consideration, of the whole or any part of the security held for
the
<PAGE> 28
24
indebtedness secured by this Mortgage, or by reason of any agreement or
stipulation between any subsequent owner or owners of the Mortgaged Property
and Mortgagee extending the time of payment or modifying the terms of the Note
or this Mortgage without first having obtained the consent of Mortgagor or such
other person and, in the last-mentioned event, Mortgagor and all such other
persons shall continue to be liable to make such payments according to the
terms of any such agreement of extension or modification unless expressly
released and discharged in writing by Mortgagee; Mortgagee may release,
regardless of consideration and without the necessity for any notice to or
consent by the holder of any subordinate lien on the Mortgaged Property, any
part of the security held for the indebtedness secured by this Mortgage
without, as to the remainder of the security, in any way impairing or affecting
the lien of this Mortgage or the priority of such lien over any subordinate
lien; the holder of any subordinate lien on the Mortgaged Property shall have
no right to terminate any lease affecting the Mortgaged Property or the
Improvements whether or not such lease be subordinate to this Mortgage; and
Mortgagee may resort for the payment of the indebtedness secured by this
Mortgage to any other security therefor held by Mortgagee in such order and
manner as Mortgagee may elect.
(b) Mortgagor hereby waives all benefits of any present or
future statute of limitations or moratorium law or any other present and future
law, regulation or judicial decision which (i) exempts any of the Mortgaged
Property, or any part of the proceeds arising from any sale thereof from
attachment, levy or sale under execution, (ii) provides for any stay of
execution, marshalling of assets, exemption from civil process, redemption,
extension of time for payment or valuation or appraisement of any of the
Mortgaged Property, (iii) requires Payee to institute proceedings in mortgage
foreclosure against the Mortgaged Property before any other remedy afforded
Mortgagee under the Note, this Mortgage or the other Loan Documents in the
event of default, or (iv) conflicts with any provision of any Loan Document.
22. REVENUE STAMPS. If at any time the United States of
America or the State of New Jersey shall require internal revenue or other
stamps to be affixed to the Note or this Mortgage, Mortgagor will pay for the
same, together with any interest or penalties imposed in connection therewith.
23. PERFORMANCE BY MORTGAGEE. If Mortgagor shall at any time
fail to make any payment or perform any act under the Leases or under this
Mortgage required to be made or performed by it at the time such payment or
performance is required (without regard to any grace periods or any required
notice) then Mortgagee, without waiving or releasing Mortgagor from any
obligation or default under the instrument requiring such payment or
performance, may at any time (but shall be under no obligation
<PAGE> 29
25
to) upon prior written notice to Mortgagor (except after an Event of Default or
in an emergency) make such payment or perform such act for the account and at
the expense of Mortgagor. All sums so paid by Mortgagee and all costs and
expenses incurred by Mortgagee in connection with the performance of any such
act shall be paid by Mortgagor to Mortgagee upon demand with interest at the
Default Rate from the date of the payment thereof, and the same shall be deemed
to be secured by this Mortgage and shall be a lien on the Mortgaged Property
prior to any right, title to, interest in or claim upon the Mortgaged Property
attaching subsequent to the lien of this Mortgage.
24. FINANCIAL REPORTS. The Mortgagor shall furnish to
Mortgagee within sixty (60) days after the close of each June 30 and December
31, financial statements of the operations of the Mortgaged Property for such
semi-annual period, subject to any adjustments which may be set forth in the
financial statements delivered pursuant to the next succeeding clause, and (ii)
within one hundred and eighty (180) days after the close of each calendar year,
financial statements of the operations of the Mortgaged Property for such year
which shall be accompanied by the opinion of an independent certified public
accountant to the effect that such statements fairly reflect the results of
operations for such period. Each financial statement delivered pursuant to this
Article 24 shall be prepared in accordance with income tax accounting
principles. So long as Mortgagor is a public company, it will provide
Mortgagee copies of its annual report delivered to its shareholders and the
quarterly financial reports filed with the Securities and Exchange Commission.
The Mortgagor shall at all times keep and maintain full and
correct records and books of account of the operations of the Mortgaged
Property in accordance with sound accounting practices and shall accurately
record and preserve for a period of two years the records of all of its
operations in the Mortgaged Property. The Mortgagor, upon request of Mortgagee,
shall from time to time furnish or cause to be furnished to Mortgagee, within
fifteen (15) days from the date of the request, a written statement setting
forth the names of all tenants, the terms of their respective tenancies and
agreements, the spaces occupied and the rental and any security paid by each
tenant. Upon written request by Mortgagee, Mortgagor shall from time to time
make available for inspection by Mortgagee or its designee during reasonable
business hours the said records and books of account and the leases covering
the various portions of the Mortgaged Property.
25. SECURITY AGREEMENT. It is the intention of the parties
hereto that this instrument shall constitute a Security Agreement within the
meaning of the Uniform Commercial Code with respect to the Equipment, and that
a security interest shall attach thereto for the benefit of Mortgagee to secure
the sums secured by this Mortgage and all other sums and charges which may
<PAGE> 30
26
become due hereunder. This Mortgage shall also constitute a "fixture filing"
for purposes of Article 9 of the Uniform Commercial Code. The Mortgagor hereby
authorizes Mortgagee to file financing and continuation statements with respect
to the Equipment in which Mortgagor has a mortgageable interest, without the
signature of Mortgagor whenever lawful and, upon request, Mortgagor shall
promptly execute financing and continuation statements in form satisfactory to
Mortgagee to further evidence and secure Mortgagee's interest in the Equipment,
and shall pay all filing fees in connection therewith. In the event of default
under this Mortgage, Mortgagee, pursuant to Section 9-501(4) of the Uniform
Commercial Code, as said Section is currently constituted or may be hereafter
amended, shall have the option of proceeding as to both real and personal
property in accordance with its rights and remedies in respect of the real
property, in which event the default provisions of the Uniform Commercial Code
shall not apply. The parties agree that in the event Mortgagee elects to
proceed with respect to the Equipment separately from the real property, thirty
(30) days' notice of the sale of the Equipment shall be reasonable notice. The
Mortgagor agrees that, without the written consent of Mortgagee, Mortgagor will
not remove or permit to be removed from the Improvements any of the Equipment
unless the same are promptly replaced with Equipment of a quality and utility
equal or superior to that which is replaced. All such replacements, renewals
and additions shall become and be immediately subject to the security interest
therein of Mortgagee and be covered by this instrument. The Mortgagor
represents and warrants that all Equipment now is, and that all replacements
thereof, substitutions therefor or additions thereto will be, free and clear of
all liens, encumbrances or security interests of others, except as may be
permitted by Article 2 hereof.
26. INCORPORATION OF THE NOTE BY REFERENCE. This Mortgage is
made pursuant to the Note, and all of the terms, covenants, conditions,
provisions and agreements of the Note (except those which by their terms are
inapplicable) are incorporated herein by reference.
27. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be prior (unless otherwise
expressly provided) and in writing and shall be deemed to have been duly given
or made, unless otherwise expressly provided herein, three days after deposited
in the mail, by registered or certified mail, return receipt requested, postage
prepaid, and addressed as follows or to such address or other address as may be
hereafter designated by like notice by the respective parties hereto and any
future holders of the Note:
Mortgagor: New Valley Corporation
100 S.E. Second Street, 32nd Floor
Miami, Florida 33131
<PAGE> 31
27
with a copy to:
Dreyer and Traub LLP
101 Park Avenue
New York, New York 10178
Attention: Howard A. Kalka, Esq.
Mortgagee: Bellemead Development Corporation
280 Corporate Center
4 Becker Farm Road
Roseland, New Jersey 07068-3790
Attention: General Counsel
Any notice, request or demand may be sent by hand addressed as set forth above
and shall be deemed properly given only when received by the person to whom it
is sent.
28. NO ORAL MODIFICATION. This Mortgage may not be changed
or terminated orally.
29. PARTIAL INVALIDITY. In the event any one or more of the
provisions of this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, but each
provision shall be construed as if such invalid, illegal or unenforceable
provisions had never been included.
30. SUBORDINATE FINANCING. The Mortgagor shall not, without
the prior written consent of Mortgagee being first obtained, which may be given
or withheld in its sole and absolute discretion, obtain subordinate financing,
execute or deliver any pledge, security agreement, or mortgage covering all or
any portion of the Mortgaged Property.
31. DUE ON SALE. The Mortgagor acknowledges that the
continuous ownership of the Mortgaged Property by Mortgagor is of a material
nature to the transactions and the making of the loan evidenced by the Note and
secured by this Mortgage. Therefore, Mortgagor agrees that, except as expressly
permitted in this Mortgage, in the event of any transfer of all of the
Mortgaged Property or any part thereof, however evidenced or occasioned, other
than by leases to space tenants in the ordinary course of business of Mortgagor
or customary utility easements, then, at the option of Mortgagee, the entire
unpaid principal balance under the Note together with accrued interest and any
prepayment premium applicable thereto shall immediately become due and payable.
32. ENVIRONMENTAL COVENANTS.
(a) For purposes of this Section 32, "APPLICABLE ENVIRONMENTAL
LAWS" shall mean any and all existing or future
<PAGE> 32
28
federal, state and local statutes, ordinances, regulations, rules, executive
orders, standards and requirements, including the requirements imposed by
common law, concerning or relating to industrial hygiene and the protection of
health and the environment including, without limitation: (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. 9601 et seq. ("CERCLA"); (ii) the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. 6901 et seq. ("RCRA"); (iii) the Clean Air Act,
as amended, 42 U.S.C. 7901 et seq.; (iv) the Clean Water Act, as amended, 33
U.S.C. 1251 et seq.; and (v) the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. 1801 et seq. Any terms mentioned in this Section 31 which
are defined in any Applicable Environmental Law shall have the meanings
ascribed to such terms in said laws; provided, however, that if any of such
laws are amended so as to broaden any term defined therein, such broader
meaning shall apply subsequent to the effective date of such amendment.
(b) Mortgagor represents, warrants, covenants and agrees as
follows:
(i) To the best of its knowledge, without independent
inquiry, neither Mortgagor nor the Mortgaged Property or any occupant thereof
are in violation of or subject to any existing, pending or threatened
investigation or inquiry by any governmental authority pertaining to any
Applicable Environmental Law with respect to the Mortgaged Property. Mortgagor
shall not cause or permit the Mortgaged Property to be in violation of, or do
anything which would subject the Mortgaged Property to any remedial obligations
under any Applicable Environmental Law, and shall promptly notify Mortgagee in
writing of any existing, pending or threatened (in writing) investigation or
inquiry by any governmental authority in connection with any Applicable
Environmental Law. In addition, Mortgagor shall provide Mortgagee with copies
of any and all material written communications with any governmental authority
in connection with any Applicable Environmental Law, concurrently with
Mortgagor's giving or receiving of same.
(ii) To the best of its knowledge, without independent
inquiry, there are no underground storage tanks, radon, asbestos materials,
polychlorinated biphenyls or urea formaldehyde insulation present at or
installed in the Mortgaged Property. Mortgagor covenants and agrees that if
any such materials are found to have been introduced to the Mortgaged Property
from and after the date hereof, Mortgagor shall remove or remediate the same
promptly upon discovery at its sole cost and expense.
(iii) Mortgagor has not received any notice of violation,
request for information, summons, citation, directive or other communication,
written or oral, from the New Jersey Department of Environmental Protection or
the United States
<PAGE> 33
29
Environmental Protection Agency concerning any intentional or unintentional act
or omission on Mortgagor's or any occupant's part resulting in a spill,
discharge, leak, disposal or emission (collectively, a "RELEASE") of hazardous,
toxic and/or radioactive matter and/or waste, including without limitation
asbestos (collectively, "HAZARDOUS SUBSTANCES") into the waters or onto the
lands within the jurisdiction of the State of New Jersey or into the waters
outside the jurisdiction of the State of New Jersey.
(iv) The Mortgaged Property has not been and is not
now being used as a Major Facility, and Mortgagor shall not use any such
property as a Major Facility in the future without the prior written consent of
Mortgagee.
(v) Mortgagor has operated shall continue to operate,
and shall, to the extent permitted under the leases and at law, cause its
tenants to operate the Mortgaged Property in compliance with all Applicable
Environmental Laws. Mortgagor shall not permit any Hazardous Substances,
excepting small quantities of petroleum and chemical products, in proper
storage containers, as are necessary for the construction or operation of the
commercial business of Mortgagor and its tenants, and the usual waste products
therefrom ("PERMITTED SUBSTANCES") to be placed in or used in connection with
the Mortgaged Property.
(c) Mortgagee shall have the right to conduct or have
conducted by its agents or contractors such environmental inspections, audits
and tests as Mortgagee shall deem necessary or advisable from time to time at
the sole cost and expense of Mortgagor, PROVIDED, HOWEVER, that Mortgagor shall
not be obligated to bear the expense of such environmental inspections, audits
and tests so long as (i) no Event of Default exists, and (ii) Mortgagee has no
cause to believe in its sole reasonable judgment that there has been a Release
after the date hereof or threatened Release of Hazardous Substances at the
Mortgaged Property or that Mortgagor or the Mortgaged Property has violated any
Applicable Environmental Laws after the date hereof. The cost of such
inspections, audits and tests, if chargeable to Mortgagor as aforesaid, shall
be added to the indebtedness of Mortgagor to Mortgagee and shall be secured by
this Mortgage. Mortgagor shall, and to the extent permitted under the leases
and at law shall cause each tenant of the Mortgaged Property to, cooperate with
such inspection efforts; such cooperation shall include, without limitation,
supplying all information requested concerning the operations conducted and
Hazardous Substances located at the Mortgaged Property. In the event that
Mortgagor fails to comply with any Applicable Environmental Laws, Mortgagee
may, in addition to any of its other remedies under this Mortgage, cause the
Mortgaged Property to be in compliance with such laws and the cost of such
compliance shall be added to the sums secured by this Mortgage.
<PAGE> 34
30
(d) Mortgagor agrees to indemnify, defend and hold Mortgagee
harmless for all claims, demands, liabilities, losses, damages, judgments,
penalties, costs and expenses imposed upon asserted against or incurred or paid
by Mortgagee by reason of, on account of or in connection with, after the date
of its Mortgage the presence of, use, generation, manufacture, storage,
treatment, disposal, or Release of Hazardous Substances, from or to the
Mortgaged Property, after the date of this Mortgage. The provisions of this
section shall survive the termination of this Mortgage and the repayment of the
Note.
33. DISCHARGE OF MORTGAGE. If and when the Note shall have
become due and payable in full (whether by lapse of time or by acceleration or
by the exercise of the privilege of prepayment), Mortgagor shall well and truly
pay or cause to be paid the full amount thereof and all other sums payable
thereunder and hereunder, and if Mortgagor shall pay or cause to be paid such
sums, then upon the request and at the expense of Mortgagor, Mortgagee shall
satisfy and cancel the same as a lien on the Mortgaged Property and the Land
and shall execute and deliver such deeds or other instruments as shall be
reasonably requested by Mortgagor to satisfy and discharge the lien hereof or
an assignment of the Mortgage, without recourse, at Mortgagor's sole expense.
34. SUCCESSORS AND ASSIGNS. (a) This Mortgage shall be
binding upon and inure to the benefit of Mortgagor and Mortgagee and their
respective successors and assigns, except that Mortgagor may not assign its
rights hereunder or any interest herein without the prior written consent of
Mortgagee. Mortgagee shall have the right, without notice to or consent by
Mortgagor or any other Person, to assign to one or more assignees all or any
part of, or may grant participations to one or more third parties in or to all
or any part of, this Mortgage and the Loan Documents, and to the extent of any
such assignment or participation (unless and to the extent otherwise stated
therein) the assignee or participant of such assignment or participation shall
have the same rights and benefits hereunder and under the Loan Documents as it
would have if it were Mortgagee hereunder. Mortgagee may, in connection with
any such assignment or participation or proposed assignment or participation,
disclose any non-public information relating to Mortgagor and its Affiliates
furnished by or on behalf of Mortgagor or any of its Affiliates to Mortgagee.
Subject to the foregoing provisions of this Section 34, all covenants of
Mortgagor contained in this Mortgage are imposed solely and exclusively for the
benefit of Mortgagee and its successors and assigns and no other person shall
have standing to require compliance with such covenants or shall, under any
circumstances, be deemed to be a beneficiary of such covenants, any or all of
which may be freely waived in whole or in part by Mortgagee at any time its
sole discretion it deems it advisable to do so, but all such covenants of
Mortgagor shall run with the land and bind Mortgagor and its respective
<PAGE> 35
31
successors and assigns and all subsequent owners, encumbrances and tenants of
the Mortgaged Property, and shall inure to the benefit of Mortgagee, its
successors and assigns. The word "Mortgagor" shall be construed as if it read
"Mortgagors" whenever the sense of this Mortgage so requires and shall include
all successors and assigns of Mortgagor. The word "Mortgagee" shall be
construed to mean Mortgagee named herein or any subsequent holder or holders of
the Note.
(b) In the event that Mortgagee shall collaterally assign this
Mortgage and the other Loan Documents, Mortgagor, at the request of Mortgagee's
assignee, shall cause both Mortgagee and such assignee to be named as a
mortgagee on Mortgagor's insurance policies as contemplated by Section 4(b)
above and shall execute such additional documents as Mortgagee and/or such
assignee shall reasonably request from time to time for the purpose of carrying
out or facilitating the assignment of the Loan Documents to such assignee.
35. NO UNLAWFUL INTEREST. Nothing in this Mortgage, the Note
or in any other agreement between Mortgagor and Mortgagee shall require
Mortgagor to pay, or Mortgagee to accept, interest in an amount which would
violate applicable law. In the event that the payment of any interest due
hereunder or under the Note or any such other agreement would violate
applicable law, then ipso facto the obligation of Mortgagor to make such
payment shall be reduced to the highest rate authorized under applicable law.
36. GOVERNING LAW. The Note and this Mortgage and all matters
relating or pertaining to this Mortgage shall be governed, construed and
enforced by and under the laws of the State of New Jersey.
37. EXCULPATION PROVISIONS. (a) Notwithstanding anything to
the contrary contained herein, Mortgagee agrees that except as expressly
provided in subparagraph (b) below Mortgagor shall have no personal liability
for any amount due under the Note or this Mortgage, and Mortgagee agrees not to
seek any deficiency judgment against Mortgagor for any amount due hereunder or
under the Note in any action to foreclose this Mortgage, and agrees that any
judgment obtained in any action commenced to collect the indebtedness evidenced
by the Note secured by this Mortgage will be enforced only against (i) the
Mortgaged Property, (ii) the rents, issues and profits from the Mortgaged
Property, (iii) any funds held by Mortgagee pursuant to the terms of the Note
or this Mortgage, (iv) insurance and condemnation awards and proceeds, and (v)
security deposits, if any. Nothing in this paragraph shall (A) be deemed to be
a release or impairment of the indebtedness evidenced by the Note or of the
security interest herein granted, or the lien of this Mortgage upon the
Mortgaged Property, or (B) preclude Mortgagee from naming Mortgagor in any
proceeding to foreclose this Mortgage in the case of any Event of Default, or
from enforcing
<PAGE> 36
32
any of its rights and remedies in law or equity, except as stated in this
paragraph, (C) impair the right of Mortgagee to obtain the appointment of a
receiver or (D) prejudice the right of Mortgagee as against any other entity or
person now or hereafter liable for the payment of the indebtedness or other
agreement for the compliance with any of the terms, covenants or conditions of
the Note and this Mortgage or (E) affect any other indebtedness now or
hereafter owing by Mortgagor to Mortgagee, or (F) limit Mortgagee's rights
under any separate indemnity, guaranty or other agreement now or hereafter
delivered to Mortgagee in connection with the indebtedness evidenced by the
Note or otherwise.
(b) Notwithstanding any of the foregoing, nothing in this
Mortgage shall be deemed to prejudice the rights of Mortgagee to recover
damages against Mortgagor and/or any other person for any misappropriation of
rents (but Mortgagee's recourse with respect to such misappropriation shall be
limited to the one month period prior to the delivery of a notice of default),
security deposits, insurance proceeds or condemnation awards; rents received
more than one month in advance; failure by Mortgagor to deliver to Mortgagee on
demand all rents and security deposits with respect to the Mortgaged Property
from and after the occurrences of an Event of Default; failure to pay
Impositions to the extent such failure would constitute waste (but Mortgagee's
recourse with respect to such Impositions shall be limited to the one month
period prior to the delivery of a notice of default); or material
misrepresentation by Mortgagor in the Purchase and Sale Agreement dated of even
date herewith between Mortgagee and Bellemead of Michigan, Inc. as sellers, and
Mortgagor, as purchaser.
38. EXISTING LEASES. So long as the Existing Leases, as
modified from time to time with the prior written consent of Mortgagee in each
instance, shall remain in full force and effect
(i) To the extent that an Existing Lease contains a covenant on
the part of the tenant thereunder to perform an obligation substantially
similar to (but not necessarily identical to) an obligation to be performed by
Mortgagor under this Mortgage, Mortgagee shall accept performance by such
tenant of such obligation under the such Existing Lease as compliance by
Mortgagor with the substantially similar obligation of Mortgagor under this
Mortgage to the extent relating to such tenant's space. By way of illustration
and not of limitation, "substantially similar" obligations under such Existing
Lease shall include the maintaining of hazard and liability insurance policies
and the payment of premiums therefor,
(ii) To the extent that an Existing Lease shall grant to the
tenant thereunder certain rights or privileges that are not granted to
Mortgagor under this Mortgage, the exercise of such rights or privileges by the
tenant under such Existing Lease
<PAGE> 37
33
shall not be deemed to constitute a default by Mortgagor hereunder, and
(iii) In the event that this Mortgage imposes stricter
obligations upon Mortgagor than an Existing Lease imposes upon the tenant
thereunder with respect to substantially similar matters, then compliance by
the tenant under such Existing Lease with such obligations thereunder shall be
deemed to constitute compliance with the corresponding provisions of this
Mortgage,
provided, however, that notwithstanding anything to the contrary contained in
this section or elsewhere in this Mortgage or any other Loan Document, no
performance or failure to perform by the tenant under such Existing Lease and
no provision in such Existing Lease or in any modification or amendment
thereof, whether or not consented to by Mortgagee shall excuse Mortgagor from
(A) its obligation to pay amounts due and payable under the Note as and when
required under the terms of the Note, (B) its obligation to comply with legal
requirements which if not complied with would subject Mortgagee to any
potential criminal liability, or (C) the performance of obligations which can
be performed by Mortgagor without disturbing the possession of the tenant under
the Existing Lease.
MORTGAGOR ACKNOWLEDGES THAT IT HAS RECEIVED FROM MORTGAGEE WITHOUT
CHARGE A TRUE COPY OF THIS INSTRUMENT STAMPED "COPY" AND ON WHICH SUCH "COPY"
IS A CERTIFICATION BY THE MORTGAGEE THAT SUCH INSTRUMENT IS A TRUE COPY OF THIS
MORTGAGE.
<PAGE> 38
34
IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be
signed as of the date and year above written.
NEW VALLEY CORPORATION,
A NEW YORK CORPORATION
/s/ Debbie Kurtzberg
- ------------------------
Debbie Kurtzberg
/s/ Charles Saperstein By: /s/ Richard J. Lampen
- ------------------------ ---------------------
Charles Saperstein Name: Richard J. Lampen
Title: Executive Vice President
<PAGE> 39
35
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK)
On this 10th day of January, 1996, before me personally came
Richard J. Lampen, who, being by me duly sworn, did depose and say that he
resides at 350 Costa Brava Court, Coral Gables, Florida 33143, that he is an
Executive Vice President of NEW VALLEY CORPORATION, the corporation described
in and which executed the foregoing instrument and that he signed his name
thereto by order of the Board of Directors of said corporation as the act and
deed of said corporation for the uses and purposes mentioned therein.
/s/ Alyssa J. Zimmerman
---------------------------
Notary Public
<PAGE> 1
Exhibit 4.2
<PAGE> 2
(Westgage I)
ALLONGE TO $44,064,000 PROMISSORY NOTE
DATED JANUARY 10, 1996 MADE
BY JARED ASSOCIATES, L.P.
IN FAVOR OF BELLEMEAD DEVELOPMENT CORPORATION
For value received, pay to the order of BELLEMEAD DEVELOPMENT CORPORATION,
a Delaware corporation, having an address at 280 Corporate Center, Four Becker
Farm Road, Roseland, New Jersey 07068.
JARED ASSOCIATES, L.P.,
a New Jersey limited partnership
By: Chubb Realty, Inc.
a general partner
By: /s/ Donn H. Norton
-------------------------
Name: Donn H. Norton
Title: President
Dated: January 10, 1996
<PAGE> 3
SECURED PROMISSORY NOTE
(Westgate I)
$44,064,000.00 January 10, 1996
Effective as of January 1, 1996
FOR VALUE RECEIVED, NEW VALLEY CORPORATION, a New York
corporation, having an office at 100 S.E. Second Street, 32nd Floor, Miami,
Florida 33131 ("Maker"), promises to pay to the order of JARED ASSOCIATES,
L.P, a New Jersey limited partnership, with an address c/o Bellemead
Development Corporation, 280 Corporate Center, Four Becker Farm Road, Roseland,
New Jersey 07068 ("Payee"), or such other address as Payee may designate in
writing, the principal sum (the "Principal Sum") of FORTY-FOUR MILLION
SIXTY-FOUR THOUSAND and 00/100 Dollars ($44,064,000.00), together with interest
from the date hereof to maturity at the rate of seven and one-half percent (7
1/2%) per annum, in lawful money of the United States of America, as follows:
1. On January 31, 1996, Maker shall pay all accrued interest
on the outstanding Principal Sum from January 1, 1996 through January 31, 1996.
2. Commencing on February 29, 1996 and on the last day of
each and every month thereafter through and including December 31, 2010, Maker
shall pay equal consecutive monthly installments of principal and interest,
each in the amount of Two Hundred Eighty-Four Thousand Five Hundred Eighty and
00/100 Dollars ($284,580.00).
3. On January 1, 2011 (the "Maturity Date"), the entire
outstanding Principal Sum, all accrued interest and any other sums owing under
this Note, shall be due and payable.
4. Interest shall be computed over the actual number of days
elapsed as if each calendar year consisted of 360 days and each calendar month
consisted of 30 days.
5. All payments on this Note shall be applied first to the
payment of late charges and other fees, costs and charges, if any, payable to
Payee hereunder or under any of the Security Documents, then to the payment of
interest then due on the unpaid Principal Sum, and thereafter to the payment
and reduction of the unpaid Principal Sum.
6. As used in this Note, the following terms shall have the
following meanings:
(a) "Mortgage" shall mean the Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Filing of even date herewith
from Maker, as mortgagor, to Payee, as mortgagee, securing this Note and
encumbering the Mortgaged Property.
(b) "Mortgaged Property" shall mean the real property located
in the Township of Bernards, County of Somerset, State of New Jersey as
more particularly described in Exhibit A to the Mortgage and commonly known
as 477 Martinsville Road, Basking Ridge, New Jersey 07920, together
<PAGE> 4
2
with such additional property as is described in the granting clauses of
the Mortgage.
(c)"Security Documents" shall mean the Mortgage, the Assignment of
Leases and Rents made by Maker to Payee as of the date hereof, and any and
all other documents now or hereafter executed by Maker or others, which
wholly or partially secure this Note.
7. Payment of all sums under this Note is secured by the
Security Documents, and Maker covenants and agrees to perform them, or cause
them to be performed, strictly in accordance with their terms.
8. Maker may prepay this Note, in whole or in part, together
with accrued and unpaid interest on the portion of principal being repaid
without penalty or premium, upon thirty (30) days prior written notice to
Payee. All prepayments shall be by wire transfer of immediately available
funds to an account designated by Payee, or by good unendorsed certified or
bank cashier's check payable to Payee.
9. In the event any installment of principal or interest due
under this Note or any required payment due to Payee under the Mortgage is not
paid when due and the applicable notice and/or cure period, if any, under the
Mortgage has expired, Maker shall pay to Payee a "late charge" of four cents
($.04) for each dollar so overdue in order to defray part of the cost of
collection.
10. Should any default be made in the payment of any
installment of principal or interest as set forth above for a period of five
(5) days after notice from Payee that such payment is due, or in the payment or
performance of any of the provisions, terms, covenants or conditions contained
in any Security Document, which default remains uncured at the expiration of
any applicable notice and/or cure period, if any, or upon the happening of any
other event by which, under the terms of a Security Document, the Principal Sum
may or shall become due or payable (each of the foregoing occurrences being
referred to as an "Event of Default"), then, at Payee's option, (a) the entire
unpaid balance of the Principal Sum with interest accrued thereon at the then
applicable rate provided above to the date of such Event of Default and
thereafter at the rate of fifteen percent (15%) per annum (the "Default Rate"),
and all other sums due by Maker under this Note and the Security Documents
shall, without further notice to Maker, become due and payable immediately, (b)
the entire unpaid balance of the Principal Sum hereof shall bear interest at
the Default Rate from the date of such Event of Default until such Event of
Default is cured by Maker, which interest shall be payable on each date on
which an installment of interest is due hereunder, and/or (c) Payee shall be
entitled to exercise such other remedies as are afforded Payee under this Note
or any of the Security Documents and such other rights or remedies provided by
law or equity by reason of the occurrence of said Event of Default. Payment of
the
<PAGE> 5
3
sums set forth above may be enforced and recovered in whole or in part at any
time by one or more of such remedies; and in such case Payee may also recover
all costs of suit and other expenses in connection therewith, together with
reasonable attorneys' fees and expenses and other costs of collection.
11. This Note is subject to the express condition that at no
time shall interest be payable on this Note or under any of the Security
Documents at a rate in excess of the maximum permitted by law; and Maker shall
not be obligated or required to pay, nor shall Payee be permitted to charge or
collect, interest at a rate in excess of such maximum rate. If by the terms of
this Note or any Security Document, Maker is required to pay interest at a rate
in excess of such maximum rate, the rate of interest hereunder or thereunder
shall be deemed to be reduced immediately and automatically to such maximum
rate, and any such excess payment previously made shall be immediately and
automatically applied to the unpaid balance of the Principal Sum hereof and not
to the payment of interest.
12. Payee shall in no event be construed for any purpose to be
a partner, joint venturer or associate of Maker or of any lessee, operator,
concessionaire or licensee of Maker in the conduct of their respective
businesses.
13. Maker hereby waives all benefits of any present or future
statute of limitations or moratorium law or any other present and future law,
regulation or judicial decision which (a) exempts any of the Mortgaged
Property, or any part of the proceeds arising from any sale thereof from
attachment, levy or sale under execution, (b) provides for any stay of
execution, marshalling of assets, exemption from civil process, redemption,
extension of time for payment or valuation or appraisement of any of the
Mortgaged Property, (c) requires Payee to institute proceedings in mortgage
foreclosure against the Mortgaged Property before any other remedy afforded
Payee under this Note or the Security Documents in the event of default, or (d)
conflicts with any provision of any Security Document.
14. Maker (a) waives (i) presentment for payment, demand,
notice of nonpayment, notice of protest and protest of this Note, and all other
notices not provided for herein or in the other Security Documents in
connection with the delivery, acceptance, performance, default or enforcement
of the payment of this Note, (ii) all rights of offset with respect to any
payments due under this Note, and (iii) any right to a trial by jury with
respect to any dispute arising under this Note or any Security Document; (b)
agrees that, subject to the provisions of Paragraph 18 hereof, its liability
shall be unconditional without regard to the liability of any other party and
shall not be in any manner affected by any indulgence, extension of time,
renewals, waivers or modifications that may be granted by Payee with respect to
the payment or other provisions of this Note, and to the release of any of the
Mortgaged Property with or without substitution; and (c) agrees that additional
makers, endorsers, guarantors or
<PAGE> 6
4
sureties may become parties hereto without notice to it or affecting its
liability hereunder.
15. Payee shall not by any act or omission or commission be
deemed to have waived any of its rights or remedies hereunder unless such
waiver be in writing and signed by Payee, and then only to the extent
specifically set forth therein; a waiver in one event shall not be construed as
continuing or as a bar to or waiver of such right or remedy in a subsequent
event.
16. The remedies provided Payee in this Note and the Security
Documents shall be cumulative and concurrent, and shall be in addition to every
other right or remedy now and hereafter provided by law or equity. Such
remedies may be pursued singly, successively or together against Maker, any of
the Mortgaged Property, or any other security at Payee's option, and may be
exercised as often as occasion therefor shall arise. The failure to exercise or
delay in exercising any such remedy shall not be construed as a waiver or
release thereof.
17. This Note shall be binding upon and inure to the benefit
of Maker and Payee and their respective successors and assigns, except that
Maker may not assign its rights hereunder or any interest herein without the
prior written consent of Payee. Payee shall have the right, without notice to
or consent by Maker or any other Person, to assign to one or more assignees all
or any part of, or may grant participations to one or more third parties in or
to all or any part of, this Note and the Security Documents, and to the extent
of any such assignment or participation (unless and to the extent otherwise
stated therein) the assignee or participant of such assignment or participation
shall have the same rights and benefits hereunder and under the Security
Documents as it would have if it were Payee hereunder. Payee may, in
connection with any such assignment or participation or proposed assignment or
participation, disclose any non-public information relating to Maker and its
Affiliates furnished by or on behalf of Maker or any of its Affiliates to
Payee. Subject to the foregoing provisions of this Paragraph 17, the words
"Payee" and "Maker" whenever occurring in this Note shall be deemed and
construed to include the respective heirs, distributees, personal
representatives, successors and assigns of Payee and Maker, and if there shall
be more than one Maker, the obligation of each shall be joint and several. As
used in this Note, the singular shall include the plural as the context
requires and the phrases "any of the Mortgaged Property" shall mean "the
Mortgaged Property or any part thereof or interest therein". This Note may be
modified, amended, discharged or waived only by an agreement in writing signed
by the party against whom enforcement of any such modification, amendment,
discharge or waiver is sought.
18. Notwithstanding anything to the contrary contained herein,
Payee agrees that except as expressly provided in Paragraph 19 below, Maker
shall have no personal liability for any amount due hereunder or under the
Mortgage, and Payee agrees not to seek any deficiency judgment against Maker
for any amount
<PAGE> 7
5
due hereunder or under the Mortgage in any action to foreclose the Mortgage,
and agrees that any judgment obtained in any action commenced to collect the
indebtedness evidenced by this Note and the other obligations of Maker secured
by the Mortgage will be enforced only against (i) the Mortgaged Property, (ii)
the rents, issues and profits from the Mortgaged Property, (iii) any funds held
by Payee pursuant to the terms of this Note or the Mortgage, (iv) insurance and
condemnation awards and proceeds, and (v) security deposits, if any. Nothing
in this paragraph shall (a) be deemed to be a release or impairment of the
indebtedness evidenced by this Note, or the lien of the Mortgage upon the
Mortgaged Property, or of any security interest therein granted, or (b)
preclude Payee from naming Maker in any proceeding to foreclose the Mortgage in
the case of any Event of Default, or from enforcing any of its rights and
remedies in law or equity, except as stated in this paragraph, (c) impair the
right of Payee to obtain the appointment of a receiver, (d) prejudice the right
of Payee as against any other entity or person now or hereafter liable for the
payment of the indebtedness or other agreement for the compliance with any of
the terms, covenants or conditions of this Note and the Mortgage, (e) affect
any other indebtedness owing by Maker to Payee or any affiliate of Payee, or
(f) limit Payee's rights under any separate written indemnity, guaranty or
other agreement now or hereafter delivered to Payee in connection with the
indebtedness evidenced by the Note or otherwise.
19. Notwithstanding any of the foregoing, nothing in this Note
or the Mortgage shall be deemed to prejudice the right of Payee to recover
damages against Maker and/or any other person for any misappropriation of rents
(but Payee's recourse with respect to such misappropriation shall be limited to
the one month period prior to the delivery of a notice of default), security
deposits, insurance proceeds or condemnation awards; rents received more than
one month in advance; failure by Maker to deliver to Payee on demand all rents
and security deposits with respect to the Mortgaged Property from and after the
occurrence of an Event of Default; failure to pay Impositions (as defined in
the Mortgage) to the extent such failure would constitute waste (but Payee's
recourse with respect to such failure shall be limited to amounts payable in
respect of the one month period prior to the delivery by Payee of a notice of
default); or material misrepresentation by Maker in the Purchase and Sale
Agreement dated of even date herewith between Payee and Bellemead of Michigan,
Inc., as sellers, and Maker, as purchaser.
20. This Note shall be governed by and construed according to
the laws of the State of New Jersey.
WITNESS: NEW VALLEY CORPORATION,
A NEW YORK CORPORATION
By: /s/ Howard M. Lorber
-----------------------
/s/ Charles Saperstein Name: Howard M. Lorber
- ---------------------- Title: President
Charles Saperstein
<PAGE> 8
6
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK:)
On this 10th day of January, 1996, before me personally came
Howard M. Lorber, who, being by me duly sworn, did depose and say that he
resides at 1050 Seawane Dr., Hewlett Harbor, New York 11557, that he is a
President of NEW VALLEY CORPORATION, the corporation described in and which
executed the foregoing instrument and that he signed his name thereto by order
of the Board of Directors of said corporation as the act and deed of said
corporation for the uses and purposes mentioned therein.
/s/ Lisa J. Zydel
-------------------
Notary Public
