<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): SEPTEMBER 28, 1998
NEW VALLEY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-2493 13-5482050
(Commission File Number) (I.R.S. Employer Identification No.)
100 S.E. SECOND STREET, MIAMI, FLORIDA 33131
(Address of principal executive offices) (Zip Code)
(305) 579-8000
(Registrant's telephone number, including area code)
(NOT APPLICABLE)
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 28, 1998, New Valley Corporation (the "Company") completed
the sale to institutional investors of four commercial office buildings (the
"Office Buildings") for an aggregate purchase price of $112.4 million. The
Company received approximately $13.0 million in cash from the transaction before
closing adjustments and expenses. The Office Buildings were subject to
approximately $99.0 million of mortgage financing which was retired at closing.
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 sold the Office Buildings in Michigan
to PW/MS OP Sub I, LLC, a Delaware limited liability company (the "Michigan
Purchaser"), and the Office Buildings in New Jersey to OTR, an Ohio general
partnership acting as the duly authorized nominee of The State Teachers
Retirement System of Ohio (the "New Jersey Purchaser").
The sale of the Office Buildings was effected pursuant to a
Sale-Purchase Agreement (the "Purchase Agreement"), dated as of September 2,
1998, by and between the Company and the Michigan Purchaser. Prior to the
closing of the sale, the Michigan Purchaser assigned and delegated to the New
Jersey Purchaser its rights and obligations under the Purchase Agreement
pertaining to the purchase of the Office Buildings in New Jersey. The sale was
negotiated on an arm's-length basis between the Company and the Michigan
Purchaser. None of the purchasers 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.
The foregoing summary of the sale of the Office Buildings is qualified
in its entirety by reference to the text of the Purchase Agreement and related
agreements and the Company's Press Release dated September 29, 1998, which are
attached hereto as exhibits and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(b) Pro Forma Financial Information.
On September 28, 1998, the Company consummated the sale to
institutional investors of the Office Buildings. The Unaudited Pro Forma
Consolidated Statements of Operations for the year ended December 31, 1997 and
for the six months ended June 30, 1998 present the results of operations of the
Company assuming the sale of the Office Buildings had been consummated as of the
beginning of the periods presented.
The Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1998
reflects the assets, liabilities and capitalization of the Company after giving
effect to the elimination of the assets and liabilities relating to the Office
Buildings, the receipt of the sale proceeds and the retirement of mortgage
financing.
The pro forma information does not purport to be indicative of the
results of operations or the financial position which would have actually been
obtained if the sale of the Office Buildings had been consummated as of the
beginning of the periods presented or at June 30, 1998. In
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addition, the pro forma financial information does not purport to be indicative
of results of operations or financial position which may be obtained in the
future.
The pro forma financial information should be read in conjunction with
the Company's historical Consolidated Financial Statements and Notes thereto
contained in the Company's 1997 Annual Report on Form 10-K, as amended, and the
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June
30, 1998.
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NEW VALLEY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, 1998
----------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
------------ ----------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 5,606 $ 11,812 (B) $ 17,418
Investment securities available for sale...................... 33,856 33,856
Trading securities owned...................................... 42,701 42,701
Restricted assets............................................. 4,448 (61)(A) 4,387
Receivable from clearing brokers.............................. 1,609 1,609
Other current assets.......................................... 2,302 (475)(A) 1,827
---------- ---------- ----------
Total current assets..................................... 90,522 11,276 101,798
---------- ---------- ----------
Investment in real estate, net.................................... 185,916 (106,012)(B) 79,904
Furniture and equipment, net...................................... 11,275 11,275
Restricted assets................................................. 5,640 478 (B) 6,118
Long-term investments, net........................................ 23,725 23,725
Investment in joint venture....................................... 59,682 59,682
Other assets...................................................... 10,712 (1,364)(A) 9,348
---------- ---------- ----------
Total assets............................................. $ 387,472 $ (95,622) $ 291,850
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Margin loans payable.......................................... $ 12,374 $ -- $ 12,374
Current portion of notes payable and other long-term
obligations................................................ 668 (349)(B) 319
Accounts payable and accrued liabilities...................... 34,929 (1,022)(A)
150 (B) 34,057
Prepetition claims and restructuring accruals................. 12,402 12,402
Income taxes.................................................. 18,736 18,736
Securities sold, not yet purchased............................ 22,826 22,826
---------- ---------- ----------
Total current liabilities................................ 101,935 (1,221) 100,714
---------- ---------- ----------
Notes payable..................................................... 153,557 (98,757)(A) 54,800
Other long-term obligations....................................... 15,852 (61)(A) 15,791
Redeemable preferred shares....................................... 285,932 285,932
Commitments and Contingencies.....................................
Shareholders' deficiency:
Cumulative preferred shares; liquidation preference of $69,769;
dividends in arrears, $152,166 and $139,412................ 279 279
Common Shares, $.01 par value; 850,000,000 shares authorized;
9,577,624 shares outstanding............................... 96 96
Additional paid-in capital.................................... 578,238 578,238
Accumulated deficit........................................... (748,266) 4,417 (C) (743,849)
Unearned compensation on stock options........................ (51) (51)
Accumulated other comprehensive income........................ (100) (100)
---------- ---------- ----------
Total shareholders' deficiency........................... (169,804) 4,417 (165,387)
---------- ---------- ----------
Total liabilities and shareholders' deficiency........... $ 387,472 $ (95,622) $ 291,850
========== ========== ==========
</TABLE>
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(A) To eliminate the operations of the Office Buildings.
(B) To record the sale of the Office Buildings.
(C) Represents the gain realized on the sale of the Office Buildings.
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NEW VALLEY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
----------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C>
Revenues:
Principal transactions, net................................. $ 16,754 $ 16,754
Commissions................................................. 16,727 16,727
Corporate finance fees...................................... 12,514 12,514
Gain on sale of investments................................. 20,492 20,492
Real estate leasing......................................... 27,067 $(14,506) (A) 12,561
Computer sales and service.................................. 3,947 3,947
Interest and dividends...................................... 9,417 (66) (A) 9,351
Other income................................................ 7,650 -- 7,650
--------- ----------- ---------
Total revenues......................................... 114,568 (14,572) 99,996
--------- ----------- ---------
Costs and expenses:
Selling, general and administrative expenses................ 119,205 (7,444) (A) 111,761
Interest.................................................... 16,988 (7,463) (A) 9,525
Write-down of long-term investments ........................ 3,796 -- 3,796
--------- ----------- ---------
Total costs and expenses............................... 139,989 (14,907) 125,082
--------- ----------- ---------
Loss from continuing operations before income taxes............. (25,421) (335) (25,086)
Income tax provision ........................................... 186 186
Minority interests in loss from continuing operations of
consolidated subsidiary..................................... 1,347 -- 1,347
--------- ----------- ---------
Loss from continuing operations................................. (24,260) (335) (23,925)
Discontinued operations:
Gain on disposal of discontinued operations................. 3,687 -- 3,687
--------- ----------- ---------
Income from discontinued operations.................... 3,687 -- 3,687
--------- ----------- ---------
Net loss ....................................................... (20,573) (335) (20,238)
Dividend requirements on preferred shares....................... (68,475) -- (68,475)
--------- ----------- ---------
Net loss applicable to Common Shares............................ $ (89,048) $ (335) $ (88,713)
========= =========== =========
Loss per Common Share (basic and diluted):
Continuing operations...................................... $ (9.68) $ .04 $ (9.64)
Discontinued operations.................................... .38 -- .38
--------- ----------- ---------
Net loss per Common Share.................................. $ (9.30) $ .04 $ (9.26)
========= =========== =========
Number of shares used in computation............................ 9,578,000 9,578,000
========= =========
</TABLE>
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(A) To eliminate the operations of the Office Buildings.
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NEW VALLEY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998
-----------------------------------------
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- ----------
Revenues:
<S> <C> <C> <C>
Principal transactions, net................................ $ 8,336 $ $ 8,336
Commissions................................................ 14,153 14,153
Corporate finance fees..................................... 4,282 4,282
Gain on sale of investments, net........................... 8,562 8,562
Loss in joint venture...................................... (487) (487)
Real estate leasing........................................ 13,721 (7,506) (A) 6,215
Interest and dividends..................................... 5,391 (47) (A) 5,344
Computer sales and service................................. 459 459
Other income............................................... 4,695 4,695
--------- --------- ---------
Total revenues......................................... 59,112 (7,553) 51,559
--------- --------- ---------
Cost and expenses:
Operating, general and administrative...................... 59,357 (3,860) (A) 55,497
Interest................................................... 7,612 (3,723) (A) 3,889
Provision for loss on long-term investment................. -- --
--------- --------- ---------
Total costs and expenses............................... 66,969 (7,583) 59,386
--------- --------- ---------
Loss from continuing operations before income taxes
and minority interests..................................... (7,857) (30) (7,827)
Income tax provision............................................ 21 21
Minority interests in loss from continuing operations
of consolidated subsidiaries............................... 1,159 -- 1,159
--------- --------- ---------
Loss from continuing operations................................. (6,719) (30) (6,689)
Discontinued operations:
Gain on disposal of discontinued operations................ 880 -- 880
--------- --------- ---------
Income from discontinued operations........................ 880 -- 880
--------- --------- ---------
Net loss........................................................ (5,839) (30) (5,809)
Dividend requirements on preferred shares....................... (38,590) -- (38,590)
--------- --------- ---------
Net loss applicable to Common Shares............................ $ (44,429) $ (30) $ (44,399)
========= ========= =========
Loss per Common Share (basic and diluted):
Continuing operations...................................... $ (4.73) $ -- $ (4.73)
Discontinued operations.................................... .09 -- .09
--------- --------- ---------
Net loss per Common Share.................................. $ (4.64) $ -- $ (4.64)
========= ========= =========
Number of shares used in computation............................ 9,578,000 9,578,000
========= =========
</TABLE>
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(A) To eliminate the operations of the Office Buildings.
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(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
2.1 Sale-Purchase Agreement dated as of September 2, 1998 by and between
the Company and the Michigan Purchaser.
99.1 Press Release of the Company dated September 29, 1998.
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SIGNATURE
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
By: /s/ J. Bryant Kirkland III
------------------------------------------
J. Bryant Kirkland III
Vice President and Chief Financial Officer
Date: October 5, 1998
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EXHIBIT 2.1
--------------------------------------
--------------------------------------
SALE - PURCHASE AGREEMENT
- between -
NEW VALLEY CORPORATION,
("Seller")
- and -
PW/MS OP SUB I, LLC
("Purchaser")
Dated: As of September 02, 1998
Premises: 477 Martinsville Road (Westgate I)
505 Martinsville Road (Westgate II)
Bernards Township, New Jersey
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700 Tower Drive (700 Tower)
800 Tower Drive (800 Tower)
Troy, Michigan
<PAGE> 2
TABLE OF CONTENTS
-----------------
PAGE
Section 1. Sale of Properties 5
Section 2. Purchase Price 9
Section 3. Apportionments 13
Section 4. Closing Date 20
Section 5. Permitted Encumbrances 20
Section 6. Title 21
Section 7. Representations and Warranties 27
Section 8. Costs of Transaction 41
Section 9. Documents and Items to be Delivered by
Seller at Closing 42
Section 10. Documents and Items to be Delivered by Purchaser at
Closing 48
Section 10 A. Tax Certiorari 49
Section 11. As Is 51
Section 12. Broker 55
Section 13. Indemnification 56
Section 14. Access to Records 58
Section 15. Notices 58
Section 16. Conditions Precedent to Closing;
Tenant Estoppels; Mortgagee Negotiations 61
Section 17. Operation of the Properties Prior to the
Closing Date 66
Section 18. Remedies 69
Section 19. Casualty; Condemnation 72
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Section 20. [Intentionally Deleted] 75
Section 20.A Escrow 76
Section 21. Miscellaneous 83
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SALE-PURCHASE AGREEMENT
AGREEMENT made as of the 2nd day of September, 1998, by and
between NEW VALLEY CORPORATION, a Delaware corporation having an office at 100
S.E. Second Street, 32nd Floor, Miami, Florida 33131 ("SELLER"); and PW/MS OP
SUB I, LLC, a Delaware limited liability company having an address c/o Gale &
Wentworth, LLC, Park Avenue at Morris County, 200 Campus Drive, Suite 200,
Florham Park, New Jersey 07932 ("PURCHASER").
W I T N E S S E T H:
WHEREAS, Seller is the owner of the Westgate I Property and
the Westgate II Property, each in Bernards Township, New Jersey, and the owner
of the 800 Tower Drive Property and the ground lessee of the 700 Tower Drive
Property, each in Troy, Michigan (collectively the "PROPERTIES" and individually
a "PROPERTY");
WHEREAS, Purchaser desires to purchase Seller's fee and
leasehold interests in the Properties from Seller; and
WHEREAS, Seller and Purchaser desire to enter into an
agreement whereby, subject to the terms and conditions contained herein, Seller
shall sell its fee and leasehold interests in the
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Properties to Purchaser and Purchaser shall purchase such interests from Seller.
NOW, THEREFORE, in consideration of ten dollars ($10.00) and
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
SECTION 1. SALE OF PROPERTIES
1.1 Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase from Seller, at the price and upon the terms and
conditions set forth in this Agreement:
A. 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-A annexed
hereto (collectively, the "WESTGATE I LAND"), together with all
buildings and other improvements situated on such land (collectively,
the "WESTGATE I BUILDING");
B. 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-B annexed
hereto (collectively, the "WESTGATE II LAND"), together with all
buildings and other improvements situated on such land (collectively,
the "WESTGATE II BUILDING");
C. 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-C annexed hereto
(the "800 TOWER DRIVE LAND"), together with all buildings and other
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improvements situated on such land (collectively, the "800 TOWER DRIVE
BUILDING");
D. Seller's leasehold estate under the ground lease
for all those certain plots, pieces, and parcels of land located in the
City of Troy, County of Oakland, and State of Michigan, as such ground
lease and such land are more particularly described in SCHEDULE I-D
annexed hereto (the "700 TOWER GROUND LEASE" and the "700 TOWER DRIVE
LAND", respectively), together with all of Seller's right, title, and
interest in and to all buildings and other improvements situated on
such land (collectively, the "700 TOWER DRIVE BUILDING");
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TOGETHER WITH:
--------------
E. All easements, rights of way, reservations,
privileges, appurtenances, and other estates and rights of Seller
pertaining to the Westgate I Land and the Westgate I Building, the
Westgate II Land and the Westgate II Building, the 800 Tower Land and
the 800 Tower Building, and (to the extent of Seller's interest
therein) the 700 Tower Land and the 700 Tower Building;
F. All right, title and interest of Seller, if any,
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, the Westgate II Land or the Westgate
II Building, the 800 Tower Land or the 800 Tower Building, and the 700
Tower Land or the 700 Tower Building, or used in connection with any
thereof (collectively and respectively, the "WESTGATE I PERSONAL
PROPERTY", the "WESTGATE II PERSONAL PROPERTY", the "800 TOWER PERSONAL
PROPERTY", and the "700 TOWER PERSONAL Property");
G. All right, title and interest of Seller, if any,
in and to the trade names and all other intangible property
appertaining to the Westgate I Building, the Westgate II Building, the
800 Tower Building, and the 700 Tower Building; and
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H. All right, title and interest of Seller, if any,
in and to all strips and gores; all alleys adjoining the Westgate I
Land the Westgate II Land, the 800 Tower Land, and the 700 Tower Land;
all right, title and interest of Seller, if any, in and to the land
lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Westgate I Land, the Westgate II Land, the
800 Tower Land, or the 700 Tower Land, to the center line thereof, and
in and to any award to be made in lieu thereof; and all right, title
and interest of Seller, if any, in and to any unpaid award for any
taking by condemnation of the Westgate I Land or the Westgate I
Building, the Westgate II Land or the Westgate II Building, the 800
Tower Land or the 800 Tower Building, and the 700 Tower Land or the 700
Tower Building, or for any damage thereto by reason of a change of
grade of any street, road or avenue.
(The Westgate I Land and the Westgate I Building, the Westgate
II Land and the Westgate II Building, the 800 Tower Land and
the 800 Tower Building, and (to the extent of Seller's
interest therein) the 700 Tower Land and the 700 Tower
Building, together with all of the foregoing items listed in
clauses E. through H. above, are hereinafter sometimes
collectively and respectively referred to as the "WESTGATE I
PROPERTY" the "WESTGATE II PROPERTY", the "800 TOWER
PROPERTY", and the
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"700 TOWER PROPERTY". The Westgate I Property and the Westgate
II Property are hereinafter sometimes collectively referred to
as the "NEW JERSEY PROPERTIES" and the 800 Tower property and
the 700 Tower Property are hereinafter sometimes collectively
referred to as the "MICHIGAN PROPERTIES".)
SECTION 2. PURCHASE PRICE
2.1 (a) The purchase price to be paid by Purchaser to Seller
for the Properties (the "PURCHASE PRICE") is the sum of:
A. the unpaid principal balance, as of
August 1, 1998 (assuming that all regularly scheduled payments of
interest and principal due and payable through July 31, 1998 were paid,
and further assuming that all installments of interest due and payable
through the day immediately preceding the "Closing Date", as
hereinafter defined, are paid) of the mortgages encumbering the New
Jersey Properties and the Michigan Properties, respectively, which
mortgages are identified in SCHEDULES 1-A and 1-B hereto in the case of
the Westgate I Property and the Westgate II Property, respectively, and
in SCHEDULES I-C and I-D hereto in the case of the 800 Tower Property
and the 700
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Tower Property, respectively (collectively, the "MORTGAGES"); and
B. (i) with respect to the New Jersey
Properties, SEVEN MILLION THREE HUNDRED THOUSAND ($7,300,000) DOLLARS,
and (ii) with respect to the Michigan Properties, SIX MILLION ONE
HUNDRED THOUSAND ($6,100,000) DOLLARS.
C. If the unpaid principal balance of the
Mortgages shall be reduced as a result of Seller's making any of the
regularly scheduled payments of principal due and payable thereon on
August 31, and (in the event the "CLOSING", as hereinafter defined, is
adjourned as a result of any permitted adjournment by Seller to a date
after September 28, 1998 and occurs on or after September 30, 1998) on
September 30, 1998, then, with respect to the Mortgages encumbering the
New Jersey Properties only, an amount equal to 50% of the reduction in
principal resulting from the August 31 payment and an amount equal to
100% of the reduction in principal resulting from the September 30
payment shall be reimbursed by Purchaser to Seller at Closing by
increases in such respective amounts in the portion of the Purchase
Price payable by Purchaser pursuant to clause B above; provided,
however, that if Seller shall exercise any of its rights under this
Agreement to adjourn the Closing and the Closing shall occur after
September 30, 1998, then Seller shall not be entitled to any further
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reimbursement as a result of any payments of principal made on the
Mortgages by Seller after September 30, 1998.
(b) The Purchase Price is payable as follows:
A. TWO MILLION FIVE HUNDRED THOUSAND
($2,500,000) DOLLARS (the "DOWNPAYMENT"), simultaneously with the
execution and delivery of this Agreement, by a bank wire transfer of
immediately available funds in such amount to an account designated by
Fischbeino Badilloo Wagnero Harding ("ESCROW AGENT"); the proceeds of
the Downpayment shall be held in escrow by Escrow Agent pursuant to the
terms of Section 20A. hereof; and
B. The balance of the Purchase Price (the
"CASH BALANCE"), subject to apportionment and credit for any "discount"
as hereinafter in Sections 3 and 2.2 respectively provided, at the
Closing by a bank wire transfer or transfers of immediately available
funds in such amount to an account or accounts designated by Seller by
written direction to Purchaser given on or before the Closing Date;
provided, however, that the sum of $477,862.50 shall be withheld from
the Cash Balance and deposited in escrow by the Purchaser pursuant to
the "REFURBISHING LETTER" (as hereinafter defined).
(c) Subject to Purchaser's payment of the Purchase
Price pursuant to clauses A. and B. of Section 2.1(a),
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and subject to Purchaser's complying with its obligations under Section 16.5,
Seller shall prepay and cause the Mortgages to be satisfied and discharged at
the Closing; provided, however, that Seller shall not be required thereby to pay
more than (x) the amount paid by Purchaser to Seller under said clause A. for
payment of the unpaid principal balance of the Mortgages, and (y) any accrued,
unpaid interest thereon apportioned as of midnight of the night preceding the
Closing Date. In the event Purchaser shall have been successful in causing the
holder thereof to agree to accept, in full prepayment thereof from Seller, a
payment of principal which is less than the unpaid principal balance thereof as
of the Closing Date (the difference between such sums being herein called the
"DISCOUNT"), then the amount of the discount shall be credited against the
portion of the Purchase Price payable by Purchaser pursuant to clause A. of
Section 2.1(a). In no event shall Seller be obligated to pay to discharge the
Mortgages, exclusive of accrued interest thereon as aforesaid, an amount which
is more than the amount which Purchaser has paid to Seller under clause A. of
Section 2.1(a).
2.2 Notwithstanding anything to the contrary provided herein,
Seller and Purchaser agree that Seller must convey and Purchaser must purchase
all of the Properties in accordance with the terms and conditions of this
Agreement, and that, except for any right of either party to terminate this
Agreement expressly provided in this Agreement, the failure of Seller 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
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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 the
Properties between Seller and Purchaser at the Closing as of midnight of the
night preceding the Closing Date:
(a) prepaid rents and "ADDITIONAL RENTS" and other
amounts payable by "TENANTS" (each as hereinafter defined), if, as and
when received;
(b) to the extent not payable directly by any Tenants
under their "LEASES" (as hereinafter defined), real estate taxes,
personal property taxes, water charges, sewer rents and vault charges,
if any, on the basis of the fiscal years, respectively, for which same
have been assessed;
(c) value of fuel stored on the Properties, at
Seller's cost, including any taxes, on the basis of a statement from
Seller's supplier;
(d) charges and payments under "CONTRACTS"(as
hereinafter defined) which are transferred to and assumed by Purchaser;
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(e) any prepaid items 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
Seller;
(h) personal property taxes, if any, for any personal
property of Seller transferred to Purchaser hereunder, on the basis of
the fiscal year for which assessed; in the event any sales or
intangible taxes shall become due and payable by reason of such
transfer of personal property, such taxes shall be paid by Purchaser,
which obligation shall survive the Closing.
(i) Seller's share, if any, of all revenues from the
operation of the Properties other than rents and
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Additional Rents (including parking charges, and telephone booth and
vending machine revenues), if, as and when received;
(j) minimum rent, contingent rent, and additional
rent payable under the 700 Tower Ground Lease; 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, then 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, any discrepancy
resulting from such recomputation and any errors or omissions in computing
apportionments at Closing shall be promptly corrected, and the proper party
shall be reimbursed.
3.3 If on the Closing Date any Tenant is in arrears in the
payment of rent or has not paid the rent payable by it for the month in which
the Closing occurs (whether or not it is in arrears for such month on the
Closing Date), any rents received by Purchaser or Seller from such Tenant after
the Closing shall be applied in the following order of priority: (a) first, to
all
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rent due and payable by such Tenant for the month in which the Closing occurred;
(b) next, to all rent due and payable by such Tenant for the month preceding the
month in which the Closing occurred; (c) next, to all rent due and payable by
such Tenant for the month or months following the month in which the Closing
occurred; and (d) last, to all rent due and payable by such Tenant for the
period prior to the month preceding the month in which the Closing occurred. If
rents or any portion thereof received by Seller 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 or "pass-through" charges for real estate taxes, fuel, electricity,
labor, porter's wage or other operating expenses, parking charges,
cost-of-living increases, common area maintenance charges, 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 Purchaser shall promptly
pay Seller out of the first such sums received from such Tenant 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
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and expenses of collection thereof. Notwithstanding anything provided herein to
the contrary, if it shall be determined by any court or arbitrator of competent
jurisdiction that any Additional Rents charged to any Tenants prior to the
Closing Date were in excess of what Seller was entitled to charge such Tenants,
then, as between Seller and Purchaser, Seller shall be responsible for
reimbursing such Tenants for any such overcharges, and Purchaser shall have no
liability as a result of any such overcharges.
3.5 (a) After the Closing, Seller shall continue to have the
right, in its own name, to demand payment of and to collect rent and Additional
Rent arrearages owed to Seller by any Tenant, which right shall include the
right to continue or commence legal actions or proceedings against any Tenant
for the payment of any such arrearages (PROVIDED, HOWEVER, that Seller shall not
commence or continue any legal action or proceeding to terminate a Tenant's
tenancy), and delivery of the "LEASE ASSIGNMENT"(as hereinafter defined) shall
not constitute a waiver by Seller of such right. At no cost to Purchaser, or if
Purchaser incurs any cost with Seller's prior written consent, not to be
unreasonably withheld or delayed, then Seller agrees to reimburse Purchaser for
same, Purchaser agrees to cooperate with Seller in connection with all
reasonable efforts by Seller to collect such rents and Additional Rents and to
take all reasonable steps, including adding any such rent arrearages to
Purchaser's bills to such Tenant for
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current rent obligations and testifying on behalf of Seller, whether before or
after the Closing Date, as may be necessary to carry out the intention of the
foregoing, including the delivery to Seller, upon demand, 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 reasonably required consents or other documents,
and the undertaking of any reasonable act necessary for the collection of such
rents and Additional Rents by Seller. If any such Tenant, in response to
Seller's legal actions or proceedings to recover any such rent and Additional
Rent arrearages, commences its own legal action against Seller or files a
counterclaim to Seller's legal action or proceeding, and Tenant's legal action
or counterclaim names Purchaser as a defendant and relates to the issues raised
in Seller's legal action or proceeding, then, in such event, Seller shall
indemnify, hold harmless, and defend Purchaser with counsel of Seller's choice
and reasonably acceptable to Purchaser with respect to any such legal action or
counterclaim.
(b) Purchaser shall not waive, compromise, settle,
release or discharge any claims against any Tenants for any past-due rents or
Additional Rent accrued prior to the Closing Date without Seller's prior written
consent.
3.6 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
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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 obligations shall survive the Closing. 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 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 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.
3.7 The provisions of this Section 3, including the provision
for one party to give notice to the other under Section 3.6 requesting any
correction or recomputation of a closing apportionment, shall survive the
Closing for a period of one year, except that the obligations of Purchaser under
Section 3.1(h) shall survive the Closing for the applicable statutory period of
limitations.
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SECTION 4. CLOSING DATE
4.1 The delivery of the "DEEDS" and the "LEASE ASSIGNMENT"
(each as hereinafter defined) and the consummation of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Fischbein Badillo Wagner Harding, 909 Third Avenue, New York, New York, at
10:00 A.M. on September 28, 1998 (the "CLOSING DATE"), subject only to such
adjournments by Seller as are expressly permitted hereunder. In the event of any
permitted adjournment by Seller of the initially scheduled Closing Date, the
term "Closing Date" shall then mean the actual date of the Closing. TIME SHALL
BE OF THE ESSENCE FOR PURCHASER TO CLOSE ON THE CLOSING DATE. TIME SHALL ALSO BE
OF THE ESSENCE FOR SELLER TO CLOSE ON SUCH DATE AFTER ONE OR MORE ADJOURNMENTS
NOT EXCEEDING 15 DAYS IN THE AGGREGATE (in addition to any other permitted
adjournments hereunder).
SECTION 5. PERMITTED ENCUMBRANCES
5.1 Seller shall convey the Properties and Purchaser shall
accept title to the Properties subject only to (i) the 700 Tower Ground Lease;
(ii) the Leases; (iii) the lien of taxes not yet due and payable; (iv) those
matters set forth on SCHEDULE B to the "TITLE COMMITMENTS" and those states of
facts disclosed in the "SURVEYS", each as hereinafter defined and as such
matters are more particularly identified in SCHEDULE 2 hereto; and (v) those
matters set forth in any updates of the Title Commitments,
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and those states of facts disclosed in any updates of the Surveys, prior to
Closing which are not "UNACCEPTABLE ENCUMBRANCES" (as hereinafter defined). (All
title matters permitted pursuant to the foregoing or otherwise expressly
permitted pursuant to this Agreement or, if not so permitted, which are waived
in writing by Purchaser, are hereinafter collectively called the "PERMITTED
ENCUMBRANCES".)
SECTION 6. TITLE
6.1 (a) Purchaser has ordered and obtained (i) commitments for
an owner's fee title or ground lessee's leasehold title, as applicable,
insurance policy or policies with respect to the Properties from Chicago Title
Insurance Company (the "TITLE COMPANY"), which commitments are more particularly
described in SCHEDULE 2 hereto (the "COMMITMENTS"); and (ii) surveys of the
Properties, which surveys are made more particularly also described in SCHEDULE
2 hereto (the "SURVEYS"). The cost of the Title Commitments and any updates
thereof, the cost of any title insurance policies issued pursuant thereto, and
the cost of the Surveys and any updates thereof, shall be borne and paid by
Purchaser. Copies of the Title Commitments and the Surveys have heretofore been
delivered by the Title Company (or its agent) and by Purchaser's attorneys to
Seller's attorneys. All liens, encroachments, encumbrances, and other title
matters set forth in Schedule B to the Title Commitments, as such matters are
more particularly identified on SCHEDULE 2 hereto, and all states of facts
disclosed in the Surveys, shall constitute
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Permitted Encumbrances. Purchaser shall have the right to cause the Title
Company to update the Title Commitments, and to cause the Surveys to be updated,
prior to Closing and to deliver written notice to Seller's attorneys objecting
to any new title matters disclosed by such updates and not caused by Purchaser,
together with copies of such updates and copies of any underlying instruments
giving rise to such objections; provided, however, that no such new title
matters shall be objectionable unless the same materially interfere with the
current use or operation of any of the Properties or materially impair the value
of any thereof. Any such new title matters which are properly so objectionable
and which are timely so objected to by Purchaser, and which were not caused by
Purchaser, are herein collectively called the "UNACCEPTABLE ENCUMBRANCES".
(b) If 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), and to
convey title in accordance with the terms of this Agreement on or before the
Closing Date, then Purchaser shall elect on the Closing Date, as its sole remedy
for such inability of Seller, either (i) to terminate this Agreement by notice
given to Seller pursuant to Section 18.1, in which event the provisions of
Section 18.1 shall apply; or (ii) to accept
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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, Seller shall not be obligated to bring
any action or proceeding, to make any payments, or otherwise to incur any
expense in order to eliminate any Unacceptable Encumbrance, except as follows:
Seller shall satisfy or pay any (i) mortgages or other security agreements
encumbering any of the Properties, subject to Purchaser's payment of the
Purchase Price pursuant to clauses A. and B. of Section 2.1(a) and Purchaser's
complying with its obligations under Section 16.5; provided, however, that
Seller shall not be required hereby to pay more than the amount called for under
Section 2.1(c) in order to satisfy such mortgages and security agreements, and
accrued, unpaid interest thereon apportioned as set forth therein; (ii) real
estate taxes and assessments, subject to apportionment hereunder; and (iii)
judgments against Seller or other liens secured by or filed against any of the
Properties and which judgments or other liens can be satisfied by the payment of
liquidated amounts not exceeding $250,000 in the aggregate (the items described
in such clauses (i)-(iii), collectively, "LIENS"). Without limiting the
generality of the preceding provisions of this Section 6.2, for purposes of this
Agreement (including Sections 6.1 and 18.1), Seller's failure or refusal to
bring any action or proceeding, to make any payments or to otherwise incur any
expense (except for Seller's obligation to satisfy Liens as aforesaid) in order
to eliminate Unacceptable
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Encumbrances shall be deemed to constitute the inability of Seller to eliminate
such Unacceptable Encumbrances, and shall not constitute a default by Seller
(willful or otherwise) under this Agreement which would entitle Purchaser to
exercise any of the rights or remedies set forth in Section 18.3 hereof.
6.3 If on the Closing Date there are any Liens or other
encumbrances which Seller must pay or discharge in order to convey to Purchaser
such title as is herein provided to be conveyed, then Seller may use any portion
of the Downpayment or the Cash Balance to satisfy the same, provided:
(a) 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 to
permit the Title Company to omit the same from the owner's fee title
insurance policy, together with the cost of recording or filing said
instruments; or
(b) Seller, having made arrangements with
the Title Company, shall deposit with the Title Company sufficient
monies acceptable to such Company to insure the obtaining and the
recording of such satisfactions and the Title Company shall actually
omit the same as exceptions from the owner's fee title insurance
policy.
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The existence of any such Liens or other encumbrances shall
not be deemed objections to title if Seller shall comply with the foregoing
requirements.
6.4 Purchaser, if request is made by Seller at least two
business days prior to the Closing, agrees to provide at the Closing separate
unendorsed certified or official bank checks payable to the order of such
parties as are designated by Seller and drawn on or by a New York Clearing House
Association member bank, aggregating not in excess of the Cash Balance, as
apportioned, in order to facilitate the satisfaction or release of any Liens or
other encumbrances. Similarly, at Seller's election, unpaid Liens for taxes,
water and sewer charges, and assessments which are the obligation of Seller to
satisfy and discharge, shall not be objections to title, but the amount thereof,
plus interest and penalties thereon, if any, computed to the third business day
after the Closing Date, shall be deducted from the Cash Balance and shall be
allowed to Purchaser, subject to the provisions for apportionment of taxes,
water and sewer charges and assessments contained herein.
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, then the same shall not constitute
objections to title provided that the Title Company omits the same from the
owner's fee title insurance policy and Seller executes and delivers an affidavit
to the effect either (a) that the personal property covered by said
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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
Seller provides reasonable proof thereof to 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 Seller, or any other owner in the chain of title to any of the
Properties, that may be a Lien on the Closing Date shall not be an objection to
title if the Title Company omits the same from the owner's fee title insurance
policy.
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 Seller, then Seller will deliver to Purchaser and the Title
Company an affidavit stating that such judgments, bankruptcies or other returns
are not against Seller, whereupon, provided the Title Company omits such returns
as exceptions to its owner's fee title insurance policy, such returns shall not
be deemed objections to title.
6.8 Seller shall be entitled to one or more adjournments of
the initially scheduled Closing Date, not exceeding 60 days in the aggregate, in
order to dispose of any Unacceptable Encumbrances which Seller elects or is
required to
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remove, satisfy, or otherwise discharge, and Purchaser's obligations to close
hereunder shall remain in full force and effect during such period.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 (a) Seller represents and warrants to Purchaser
as follows:
(i) Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
(ii) Seller has the full legal right, power and
authority to execute and deliver this Agreement and all documents now or
hereafter to be executed by Seller pursuant to this Agreement (collectively,
"SELLER'S DOCUMENTS"), to consummate the transactions contemplated hereby, and
to perform its obligations hereunder and under the Seller's Documents.
(iii) The execution and delivery of this
Agreement and Seller's Documents and the performance of Seller's obligations
hereunder and thereunder do not and will not contravene any provision of
Seller's certificate of incorporation or by-laws, or any judgment, order,
decree, writ or injunction issued against Seller, and do not require the consent
of any governmental or private party or body (other than the Executive Committee
of the Board of Directors of Seller), except that any
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sale of the Properties requires the consent of the holder of the existing
Mortgages, which mortgages will be paid and discharged concurrently with such
sale, and except further that the assignment of the 700 Ground Lease requires
the consent of the fee owner of the 700 Tower Land, which consent is waived by
Purchaser. The consummation of the transactions contemplated hereby will not
result in a breach of or constitute a default or event of default by Seller
under any agreement to which it or any of its assets are subject or bound.
(iv) To Seller's knowledge, there are no leases,
licenses or other occupancy agreements (collectively, "LEASES") affecting any
portion of the Properties on the date hereof, except for the 700 Tower Ground
Lease, the leases described in SCHEDULE 3 annexed hereto (the leases so
scheduled, collectively, the "LEASES"), and any subleases or other occupancy
agreements made by the tenants under the Leases.
(v) There are no material actions, suits,
proceedings or investigations to which Seller is a party pending before any
court or other governmental authority with respect to any of the Properties,
except as set forth on SCHEDULE 4 annexed hereto.
(vi) Seller has received no written notice that
any of the certificates of occupancy or any other material permits, licenses, or
other governmental approvals
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<PAGE> 29
issued in connection with the ownership, use and the occupancy of Properties
have been suspended or revoked.
(vii) Set forth on SCHEDULE 3 hereto is a true
and complete listing of (A) the rental amounts being currently billed to the
tenants under the Leases (collectively, the "TENANTS") by the managing agents
for the Properties; (B) the rental arrearage, if any, for each of the Tenants as
of August 11, 1998; and (C) the security deposit being held by Seller pursuant
to the only Lease in respect of which Seller holds a security deposit. Except as
set forth in those tenant estoppel letters heretofore delivered by Seller to
Purchaser from Federal Insurance Company (as more particularly described in
Section 16.4), in certain correspondence to Gale & Wentworth, LLC regarding the
results of lease audits conducted by Jones Lang Wootton USA on behalf of the
Tenant of the Michigan Properties, and in certain correspondence to Seller's
predecessor in title from The Prudential Insurance Company of America advising
of lease audits to be conducted on its behalf by Deloitte & Touche, LLP, copies
of which correspondence have heretofore been delivered or made available to
Purchaser by Seller or by Gale & Wentworth LLC, Seller (X) has not received
written notice of any offsets, defenses to, or claims against the payment of
rent or any other obligation of any Tenant under any of the Leases, which notice
has not also been received by Gale & Wentworth, LLC or its affiliates; (Y) has
neither given nor received any written notices of any default under any of the
Leases which remains uncured, which notice has not also been given or received
by Gale
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<PAGE> 30
& Wentworth, LLC or its affiliates; and (Z) has no knowledge of any material
default by any of the Tenants under the Leases which remains uncured, which
knowledge is not also possessed by Gale & Wentworth, LLC or its affiliates.
Seller's representation and warranty in this clause (vii) (the "TENANT REP")
speaks only as of the date hereof, and shall not be deemed restated as of the
Closing Date.
(viii) Seller has no employment contracts or
collective bargaining agreements relating to any of the Properties that would
bind Purchaser.
(ix) To Seller's knowledge, there are no material
service contracts, including management and brokerage agreements (collectively,
"CONTRACTS"), affecting any of the Properties on the date hereof, except for the
contracts set forth on SCHEDULE 5 annexed hereto (collectively, the
"CONTRACTS"). Except as set forth in SCHEDULE 5 hereto, Seller has neither given
nor received any written notice of default under the Contracts and Seller has no
knowledge of any material defaults under any of the Contracts, which notice has
not also been given or received and which knowledge is not also possessed by
Gale & Wentworth, LLC or its affiliates. Within 10 days after the date hereof,
Purchaser shall give Seller written notice identifying which of the Contracts it
elects not to assume. Absent notice of such election, Purchaser shall be deemed
to have agreed to assume all of the Contracts. As to those Contracts which
Purchaser so elects not to assume, Seller shall, at the Closing, give the
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notices required to terminate them and at the Closing Purchaser shall pay or
reimburse Seller for and indemnify and hold Seller harmless from and against any
resultant termination charges or fees and any other charges accruing under such
Contracts from and including the Closing Date to the effective date of such
termination notices.
(x) Seller knows of no condemnation proceedings
pending or threatened in writing against any of the Properties or any portion
thereof, and Seller has received no written notice of any pending condemnation
or of any condemnation threatened in writing of all or any part of any of the
Properties, which knowledge is not also possessed and which notice has not also
been received by Gale & Wentworth, LLC or its affiliates.
(xi) Seller has delivered or caused to be
delivered to Purchaser true and complete photocopies of all of the Leases and
the Contracts.
(xii) Seller is not a "foreign person" within the
meaning of Section 1445 of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder ("FIRPTA").
(xiii) Seller has not entered into any other
contract for the sale of the Properties or any thereof.
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(xiv) The sale of the Properties pursuant to this
Agreement will not render Seller insolvent.
(xv) Seller has received no written notice from
any governmental authority of any material violations of any material laws
applicable to any of the Properties, which violations have not been dismissed or
corrected, and which notice has not also been received by Gale & Wentworth, LLC
or its affiliates. Seller's representation and warranty in this clause (xv) (the
"VIOLATIONS REP") speaks only as of the date hereof, and shall not be deemed
restated as of the Closing Date. If Seller shall receive written notices of any
such violations between the date hereof and the Closing, and such notices shall
not also have been received by Gale & Wentworth, LLC or its affiliates, then
Seller shall endeavor promptly to furnish Purchaser with copies thereof, but
Seller's agreement to do so shall not change or detract from the immediately
preceding statement that the Violations Rep speaks only as of the date hereof
and is not deemed restated as of the Closing Date, or the statement with respect
to the Violations Rep contained in Section 16.1(a), nor shall Seller's failure
to furnish copies of any such notices to Purchaser give rise to any liability on
the part of the Seller or to any rights in favor of Purchaser.
(b) Copies of the Leases, the Ground Lease,
the Contracts, and certain other Property Information have been delivered or
otherwise made available by Seller to Purchaser, and Purchaser acknowledges
having received and having reviewed or
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having had sufficient opportunity to review the same. By accepting the Deeds and
the Lease Assignment, Purchaser acknowledges its receipt and acceptance or the
availability to it all Property Information delivered or made available to it
and that Purchaser has reviewed the same to its satisfaction. To the extent the
copies of the Leases and the Contracts delivered by Seller to Purchaser contain
provisions or information that are inconsistent with the information set forth
on SCHEDULES 3 and 5 hereto, 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 above-referenced
Schedules.
(c) As used in this Agreement, the words "SELLER'S
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 Seller after, and based solely upon, making inquiry of Bennett P.
Borko, an officer of New Valley Realty, the real estate division of Seller,
without such person having any obligation to make any independent inquiry or
investigation other than inquiries of the management agents for the Properties.
Without limiting the generality of the preceding, knowledge of any matter
possessed by Gale & Wentworth, LLC or its affiliates shall not be imputed to
Seller unless such matter is actually known by Mr. Borko. Furthermore,
references herein to the receipt of any notices by Seller or terms of similar
import shall mean written notices actually received by Mr. Borko, and no notices
received by Seller's
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management agents or by any other of Seller's agents or employees shall be
imputed to Seller unless the same have actually been received by Mr. Borko.
Purchaser acknowledges that Mr. Borko's knowledge is based solely upon his
inquiries of the management agents for the Properties and Purchaser further
acknowledges that such agents (Gale & Wentworth, LLC or its affiliates) are
affiliates of Purchaser and directly or indirectly are participants in the
acquisition of the Properties by Purchaser. Furthermore, to the extent that any
representation or warranty made by Seller herein is to its knowledge or is based
on the giving or receipt of any notice, and such knowledge is also possessed or
such notice has also been given or received by Gale & Wentworth, LLC or its
affiliates, then such representation and warranty shall be deemed nullified.
(d) If at or prior to the Closing:
(i) Purchaser shall acquire knowledge (whether
through its own efforts, by notice from Seller or otherwise) that any of the
representations or warranties made herein by Seller, other than the Tenant Rep
and the Violations Rep, are untrue or incorrect, and shall give Seller notice
thereof at or prior to the Closing, or (ii) Seller shall notify Purchaser that a
representation or warranty made herein by Seller, other than the Tenant Rep and
the Violations Rep, is untrue or incorrect, then (A) if any such representation
or warranty is either (1) immaterial or (2) material but not materially untrue
or incorrect and such untruth or incorrectness
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is not cured or corrected by Seller on or before the Closing Date, then
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 or incorrect, and such untruth or incorrectness is not
cured or corrected by Seller on or before the Closing Date, then Purchaser, as
its sole remedy for any and all such materially untrue 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 by notice given to Seller on the
Closing Date, in which event this Agreement shall be terminated 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 the return of the
Downpayment provided Purchaser is not otherwise in default hereunder.
(ii) In the case of the Tenant Rep and in the
case of the Violations Rep, Purchaser shall not have any option to terminate
this Agreement or be entitled to any reduction of or credit against the Purchase
Price by reason of the untruth or incorrectness of either thereof, unless (A)
either of such representations and warranties was materially untrue
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<PAGE> 36
or incorrect (when viewed with respect to the Properties in the aggregate) as of
the date hereof; (B) neither Gale & Wentworth, LLC nor any of its affiliates had
actual knowledge of such untruth or incorrectness or had received any notice
contrary to the Tenant Rep or the Violations Rep; and (C) Seller has not elected
to cure or correct such untruth or incorrectness.
(iii) If the Tenant Rep or the Violations Rep
shall have been materially untrue or incorrect (when viewed with respect to the
Properties in the aggregate) as of the date hereof and the conditions of
immediately preceding clauses (B) and (C) in Section 7.1(d)(ii) above shall have
been met, then Purchaser, as its sole remedy for such material untruth or
incorrectness shall be entitled to elect only either (x) to waive such
misrepresentations and consummate the transactions contemplated hereby without
any reduction of or credit against the Purchase Price, or (y) to terminate this
Agreement by notice given to Seller on the Closing Date, in which event this
Agreement shall be terminated, neither party shall have any further rights,
obligations or liabilities hereunder except for the Surviving Obligations, and
Purchaser shall be entitled to the return of the Downpayment provided Purchaser
is not otherwise in default hereunder. If the Tenant Rep or the Violations Rep
shall become untrue or incorrect by reason of any notices given or received,
knowledge acquired, or other events occurring after the date hereof, then
Purchaser shall nonetheless remain bound to close title in accordance with this
Agreement without any reduction of or credit against the Purchase Price.
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(iv) Purchaser acknowledges, confirms, and agrees
that (1) at or prior to the Closing, Purchaser's rights and remedies, in the
event any representations or warranties made by, Seller in this Agreement are
untrue or incorrect, shall be only as provided in this Section 7.1(d); (2) 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, under
this Agreement, or otherwise (including, without limitation, the right to seek
specific performance and/or damages from Seller) as a result of any of one or
more Seller's representations or warranties made in this Agreement being untrue
or incorrect; and (3) Purchaser shall not be entitled to terminate this
Agreement in the event the Tenant Rep or the Violations Rep shall become untrue
or incorrect in any material or immaterial respect by reason of any notices
given or received, knowledge acquired, or other events occurring after the date
hereof.
(e) In the event the Closing occurs:
(i) Notwithstanding anything contained in Section
7.1(d) or elsewhere in this Agreement to the contrary, Purchaser hereby
expressly and irrevocably waives, relinquishes and releases any right or remedy
available to it at law, in equity, under this Agreement, or otherwise to make a
claim against Seller for damages that Purchaser may incur, or to rescind this
Agreement and the transactions contemplated hereby,
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as the result of any of Seller's representations or warranties which survive the
Closing being untrue or incorrect if (A) (x) in the case of any surviving
representation or warranty other than the Violations Rep, Purchaser or Gale &
Wentworth LLC or its affiliates had actual knowledge that such representation or
warranty was untrue or incorrect at the time of the Closing and Purchaser
nevertheless closed title hereunder, and (y) in the case of the Violations Rep,
Purchaser or Gale & Wentworth, LLC or its affiliates had actual knowledge that
such representation was untrue or incorrect as of the date hereof or had
received a notice of the kind referred to it in the Violations Rep; or (B) (x)
in the case of any surviving representation or warranty other than the
Violations Rep, Purchaser's actual damages as a result of such representation or
warranty being untrue or incorrect are less than $250,000 in the aggregate, and
(y) in the case of the Violations Rep, Purchaser's actual damages as a result of
the Violations Rep having been untrue or incorrect as of the date hereof are
less than $50,000 in the aggregate.
(ii) Notwithstanding anything contained in this
Agreement to the contrary, to the extent Purchaser shall not have waived,
relinquished and released all rights or remedies available to it at law, in
equity, under this Agreement, or otherwise as provided in Section 7.1(d) above,
the aggregate liability of Seller arising pursuant to or in connection with any
surviving representations, warranties, covenants and other obligations (whether
express or implied) of Seller in this Agreement and/or in the Seller's Documents
(including the Deeds
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and the Assignment Agreement), shall not exceed in the aggregate an amount equal
to (A) 2% of the Purchase Price, in the case of all such surviving items other
than the Violations Rep, and (y) $250,000 in the case of the Violations Rep.
The provisions of this Section 7.1(e) shall survive the Closing.
(f) The representations and warranties of Seller set
forth in Section 7.1(a) and elsewhere in this Agreement, and/or the Seller's
Documents (including the Deeds and the Assignment Agreement) shall not survive
the Closing, except that Seller's representations and warranties set forth in
Section 7.1(a)(i)-(iii) and 7.1(a)(xii) shall survive the Closing for a period
of one year, and except that Seller's representation and warranty in Section
7.1(a)(xiii) and the Violations Rep shall survive the Closing for a period of
180 days.
7.2 (a) Purchaser represents and warrants to Seller as
follows:
(i) Purchaser is a limited liability
company, duly formed, validly existing, and in good standing under the laws of
the State of Delaware.
(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
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by it pursuant to this Agreement (collectively, "PURCHASER'S DOCUMENTS"), to
consummate the transactions contemplated hereby, and to perform its obligations
hereunder and under Purchaser's Documents.
(iii) The execution and delivery of this
Agreement and Purchaser's Documents and the performance of Purchaser's
obligations hereunder and thereunder do not and will not contravene any
provision of the Articles of Formation or Operating Agreement of Purchaser, or
any judgment, order, decree, writ or injunction issued against Purchaser, and do
not require the consent of any governmental or private party. The consummation
of the transactions contemplated hereby will not result in a breach of 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.
(iv) There are no material pending actions,
suits, proceedings or investigations to which Purchaser is a party before any
court or other governmental authority which may have an adverse impact on
Purchaser's ability to consummate the transactions contemplated hereby.
(b) The representations and warranties of Purchaser
set forth in Section 7.2(a) and elsewhere in this Agreement shall survive the
Closing and the execution and delivery of the Deeds for a period of one year.
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7.3 Any claim asserted by either party against the other for
breach of a surviving representation or warranty must be asserted by notice
given to the party allegedly in breach thereof prior to the expiration of the
applicable survival period therefor. Such notice shall set forth in reasonable
detail the basis for such claim.
SECTION 8. COSTS OF TRANSACTION
8.1 Seller shall be responsible for (a) Seller's legal fees
and expenses attributable to the transfer of the Properties to Purchaser,
including the preparation and negotiation of this Agreement and the consummation
of the transactions contemplated herein, and (b) any transfer or sales taxes
imposed by the states and localities in which the Properties are located in
connection with the transfer of the Properties to Purchaser. Except as otherwise
provided in Section 12, all other costs and expenses in connection with such
transfer, including (i) Purchaser's legal fees and expenses, (ii) Purchaser's
fee title insurance premiums, recording fees and expenses, survey costs, and the
cost of any affirmative title insurance and endorsements desired by Purchaser,
(iii) mortgagee title insurance premiums, recording fees, taxes and expenses
with respect to any mortgage financing procured by Purchaser, (iv) engineering,
environmental, inspection and other due diligence expenses, (v) Purchaser's
costs and expenses in connection with the purchase of the Mortgages from the
holder thereof, and (vi) all other closing
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expenses, shall be the sole responsibility of, and be paid by, Purchaser.
SECTION 9. DOCUMENTS AND ITEMS TO BE DELIVERED BY SELLER AT CLOSING.
9.1 At the Closing, Seller shall execute, acknowledge and/or
deliver (or cause to be delivered), as applicable, the following to Purchaser or
the Title Company, as applicable:
(a) Deeds conveying title to the New Jersey
Properties and the 800 Tower Property, in the form of EXHIBITS A-1 to
A-3 annexed hereto (collectively, the "DEEDS").
(b) An Assignment and Assumption of Leases and
Security Deposits for each of the Properties, in the form of EXHIBIT B
annexed hereto, assigning without warranty or representation all of
Seller's right, title and interest, if any, in and to the Leases, all
guarantees thereof, and the security deposits thereunder in Seller's
possession, if any (the "LEASE ASSIGNMENT").
(c) An Assignment and Assumption of Contracts,
Licenses and Building Plans for each of the Properties, in the form of
EXHIBIT C annexed hereto (the "CONTRACT AND LICENSE ASSIGNMENT")
assigning all of Seller's right, title and interest, if any, in and to
(i) all of the assignable
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licenses, permits, certificates, approvals, authorizations and
variances issued for or with respect to the Properties by any
governmental authority (collectively, the "LICENSES"); (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 that Purchaser has agreed under Section
7.1(a)(ix) to assume such Contracts; and (iii) all assignable building
plans and specifications and guarantees and warranties for any real or
personal property being transferred pursuant to this Agreement, to the
extent any such plans and specifications are in Seller's possession or
control and Seller is the beneficiary of any such guarantees and
warranties.
(d) An Assignment and Assumption of Intangible
Property in the form of EXHIBIT D annexed hereto, assigning all of
Seller's right, title and interest, if any, in and to all intangible
property, if any, owned by Seller with respect to the operation of the
applicable Property including, without limitation, any trade names
appertaining to the Properties (the "INTANGIBLE PROPERTY Assignment").
(e) An Assignment and Assumption of Ground Lease in
the form of EXHIBIT E-1 annexed hereto, assigning all of Seller's
right, title, and interest in and to the 700 Tower Ground Lease, and a
Deed in the form of EXHIBIT E-2 annexed
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hereto, conveying fee title to the 700 Tower Building (the "GROUND
LEASE ASSIGNMENT" and the "700 TOWER DEED", respectively; the Lease
Assignment, the Contract and License Assignment, the Intangible
Property Assignment, the Ground Lease Assignment, and the 700 Tower
Deed are herein referred to collectively as the "ASSIGNMENT
AGREEMENT").
(f) To the extent in Seller's possession, true and
correct copies of the Ground Lease, all Leases, and any amendments,
guarantees and other documents relating thereto, together with a
schedule of all tenant security deposits under the Leases and the
accrued interest on such security deposits payable to Tenants which are
in the possession of or received by Seller, and a good, unendorsed
certified or official bank check drawn on or by a New York Clearing
House Association member 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 which are in the possession of or received by Seller. With
respect to any security deposits under Leases which are other than
cash, Seller shall execute and deliver to Purchaser at the Closing any
appropriate instruments of assignment or transfer, without warranty or
representation that such security may be converted to cash.
(g) A bill of sale for each of the Properties, in the
form of EXHIBIT F annexed hereto (the "BILL OF SALE"),
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conveying, transferring and selling to Purchaser without warranty or
representation all right, title and interest of Seller in and to all
Personal Property relating to the applicable Property and being
transferred pursuant to Section 1 of this Agreement. Seller and
Purchaser agree that no portion of the Purchase Price has been
allocated to, or is otherwise attributable to, the Personal Property.
(h) Notices to Tenants and notices to the vendors or
suppliers under the Contracts assumed by Purchaser, in the forms of
EXHIBITS G-1 and G-2, respectively, annexed hereto (the "TENANT
NOTICES" and the "CONTRACTOR NOTICES"), advising the Tenants and such
vendors or suppliers of the sale of the Properties to Purchaser and
directing that rents and other payments under the Leases in the case of
the Tenant Notices and future communications in the case of the
Contractor Notices thereafter be sent to Purchaser's management agent
as designated therein.
(i) Copies of the resolutions of the Board of
Directors or the Executive Committee thereof of Seller authorizing the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement to be
undertaken by Seller, certified as true and correct by the Secretary or
an Assistant Secretary of Seller.
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(j) Possession of the Properties, subject to the
Permitted Encumbrances, the Leases, the Ground Lease, and any
Unacceptable Encumbrances which have been waived by Purchaser.
(k) State and local Property transfer tax returns
required to be filed in connection with the sale of the Properties
hereunder (the "TRANSFER TAX RETURNS"), and the payment of all transfer
taxes required thereby.
(l) A "FIRPTA CERTIFICATE" signed by Seller in the
form of EXHIBITEH annexed hereto. Purchaser acknowledges and agrees
that upon Seller's delivery of such Certificate, 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.
(m) Letters by Seller, in the form of EXHIBITS I-1
and I-2, respectively, annexed hereto, by which (i) Purchaser deposits
$477,862.50 of the Cash Balance in escrow as security for Seller's
financial liability on account of certain refurbishing work or
allowance therefor which the Tenant under the "Prudential Lease" in the
Westgate I Property may be entitled to require the Landlord thereunder
to carry out or pay (the "REFURBISHING LETTER"); and (ii) Seller
assigns to Purchaser certain rights against Seller's predecessor in
title with respect to the Properties (the
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"ASSIGNMENT OF RIGHTS LETTER")(the Refurbishing Letter and the
Assignment of Rights Letter, collectively, the "SIDE LETTERS").
(n) All files, records, plans and specifications in
Seller's possession relating to the construction, maintenance,
operation and leasing of the Properties and not previously delivered to
Purchaser or not already in the possession of Gale & Wentworth, LLC or
its affiliates.
(o) Letters of non-applicability under the New Jersey
Industrial Site Recovery Act ("ISRA") with respect to the Properties,
if obtained by Seller. Seller's failure to deliver the same shall not
entitle Purchaser to refuse to close under this Agreement, but Seller
represents that it has applied for such letters and will diligently
pursue the obtaining thereof.
(p) An Affidavit of Title in form and substance
reasonably acceptable to Seller and sufficient to enable the Title
Company to omit its standard printed exceptions from the Title
Commitment (assuming that such standard exceptions are the same as
those which would appear in a New York title insurer's owner's or
ground lessee's commitment, as applicable), except to the extent any
thereof are Permitted Encumbrances and except further that Seller shall
not be required thereby to incur any obligation to remedy title defects
beyond its obligations under Section 6.2.
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(q) All other documents and items Seller is required
to deliver pursuant to the provisions of this Agreement.
SECTION 10. DOCUMENTS AND ITEMS TO BE DELIVERED BY PURCHASER AT CLOSING
10.1 At the Closing, Purchaser shall execute, acknowledge
and/or deliver, as applicable, the following to Seller or the Title Company, as
applicable:
(a) The Purchase Price, subject to apportionments,
discounts and credits (if any) and adjustments (if any), as provided in
this Agreement.
(b) The Bill of Sale.
(c) The Ground Lease Assignment.
(d) The Lease Assignment, the Contract and License
Assignment, and the Intangible Property
Assignment.
(e) The Side Letters.
(f) A Certificate executed by the manager or other
appropriate officer of Purchaser or of its constituent members,
certifying as to the consents of the members of
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Purchaser authorizing the execution, delivery, and performance of this
Agreement by Purchaser (true and correct copies of which shall be
attached thereto) and as to the authority and signatures of those
individuals executing any documents or instruments on behalf of
Purchaser in connection with the transactions contemplated herein.
(g) The Tenant Notices.
(h) The Transfer Tax Returns.
(i) All other documents and items Purchaser is
required to deliver pursuant to the provisions of this Agreement.
SECTION 10A. TAX CERTIORARI
Seller shall, at Closing, assign to Purchaser, without representation,
warranty or recourse of any kind, all of 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 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 Seller. 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
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attributable to the tax year in which the Closing occurs shall be divided
between Seller and Purchaser in accordance with the apportionment of taxes
pursuant to the provisions of this Agreement, after deducting therefrom a pro
rata share of all expenses, including, without limitation, reasonable 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 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, the execution of any
and all consents or other documents, and the undertaking of any act necessary
for the collection of such refund by the party entitled thereto. All tax refunds
to be paid to either party after the Closing as contemplated under this Section
10A shall be net of any amounts due to Tenants on account of any such tax
refunds, and Seller and Purchaser shall jointly determine such amount(s) (if
any) due Tenants and direct the Seller's tax protest or certiorari counsel to
deduct such amounts from the gross tax refund and forward the same to the
appropriate
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Tenant(s) prior to making any payment to Seller or Purchaser (as the case may
be). The provisions of this Section 10A shall survive the Closing.
SECTION 11. AS IS
11.1 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.
11.2 This Agreement, as written, the Side Letters and other
Exhibits and Schedules hereto, and the escrow letter agreement being entered
into among the parties and Escrow Agent concurrently herewith, contain all the
terms of the agreement entered into between the parties as of the date hereof,
and Purchaser acknowledges that neither Seller nor any of "SELLER'S AFFILIATES"
(as hereinafter defined), nor any of their respective agents or representatives,
have made any representations or held out any inducements to Purchaser, and
Seller hereby specifically disclaims any representations, oral or written, past,
present or future, other than those specifically set forth in this Agreement.
Without limiting the generality of the foregoing, Purchaser has not relied on
any representations or warranties, and neither Seller nor any of Seller's
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 or the Ground Lease, (c) the
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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 (including environmental 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; (1)
the viability or financial condition of any Tenant; (m) the status of the
leasing market in which the Properties are located; or (n) the actual or
projected income or operating expenses of the Properties.
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11.3 Purchaser acknowledges that Seller has 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" (as hereinafter
defined) by Seller or Seller's Affiliates, or any of their agents or
representatives, may have been prepared by third parties and may not be the work
product of Seller and/or any of Seller's Affiliates; (b) neither Seller nor any
of Seller's 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 this
Agreement; (c) except for the copies of the Leases, the Contracts, and the
Ground Lease, all other 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 and without Seller having
been obligated to deliver or make available any thereof; (d) except as
specifically set forth in this Agreement, 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 Seller or any of Seller's Affiliates, or any of their
agents or representatives; (e) except as specifically set forth in this
Agreement, Seller expressly disclaims any representations or warranties with
respect to the accuracy or completeness of the Property Information; and
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(f) except as specifically set forth in this Agreement, Purchaser hereby
releases Seller and Seller's Affiliates, and their respective agents and
representatives, from any and all liability with respect to the accuracy and
completeness of the Property Information.
11.4 Purchaser, or anyone claiming by, through or under
Purchaser, hereby fully and irrevocably releases Seller and Seller's Affiliates,
and their agents and representatives, from any and all claims that it may now
have or hereafter acquire against Seller or Seller's 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
construction-related omissions on or in the Properties, or any other conditions
(whether patent, latent or otherwise) affecting the Properties, except for
claims against Seller based upon any representations, warranties, covenants,
obligations and/or liabilities of Seller expressly provided in this Agreement
and, as to the same, as such claims against Seller are or may be limited by the
provisions of this Agreement with respect to survival, damages, remedies, and
the like.
11.5 Purchaser acknowledges that, it has inspected the
Properties, has become fully acquainted with and accepted their condition, and
has reviewed, to the extent necessary in its discretion, all the Property
Information. Seller shall not be liable or bound in any manner by any oral or
written "setups" or
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information pertaining to the Properties or the rents furnished by Seller,
Seller's Affiliates, their agents or representatives, any real estate broker, or
other person.
11.6 The provisions of this Section 11 shall survive the
termination of this Agreement and the Closing.
SECTION 12. BROKER
12.1 Purchaser represents and warrants to Seller and Seller
represents and warrants to Purchaser that neither has dealt with any broker in
connection with the Properties and the transactions described herein, except for
Ivan M. Dochter of Amedex, L.P. (the "BROKER"). Seller shall pay the commission,
if any, due and owing to the Broker pursuant to a separate agreement. Purchaser
agrees to indemnify, defend and hold Seller harmless from and against any and
all claims, causes of action, losses, costs, expenses, damages or liabilities,
including reasonable attorneys' fees and disbursements, which Seller 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 such claim or
claims are based in whole or in part on dealings or agreements with Purchaser.
Seller agrees 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,
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incur or be exposed to by reason of any claim or claims by Broker and any other
broker, finder or other person, for fees, commissions or other compensation
arising out of the transactions contemplated in this Agreement, if such claim or
claims are based in whole or in part on dealings or agreements with Seller.
12.2 The obligations and representations and warranties
contained in this Section 12 shall survive the termination of this Agreement and
the Closing.
SECTION 13. INDEMNIFICATION
13.1 PURCHASER'S INDEMNIFICATION. Purchaser hereby indemnifies
and agrees to hold and save Seller harmless of and from any and all loss, cost,
damage, injury or expense arising out of or in any way related to (a) claims for
injury to or death of persons, or damage to property, occurring at any of the
Properties on or after the Closing Date, and (b) any claims arising out of or
related to the ownership, operation, management, control or conduct of the
business of any of the Properties on or after the Closing Date, and (b) any and
all brokerage commissions which may become payable to any broker with respect to
any extension or renewal term of any Lease beyond the term of such Lease in
effect as of the date hereof (any such currently effective Lease term, a
"CURRENT TERM"), or any expansion of the space demised under any Lease;
provided, however, that notwithstanding clause (b) immediately preceding,
Purchaser shall not be responsible for any leasing commission
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which may be due to the broker who procured, or assisted in procuring, the
renewal of the Lease with the Tenant of the 700 Tower (the "EDS 700 RENEWAL" and
the "EDS 700 RENEWAL COMMISSION").
13.2 SELLER'S INDEMNIFICATION. Seller hereby indemnifies and
agrees to hold and save Purchaser harmless of and from any and all loss, cost,
damage, injury or expense arising out of or in any way related to (a) claims for
injury to or death of persons, or damage to property, occurring at any of the
Properties prior to the Closing Date, and (b) any claims arising out of or
related to the ownership, operation, management, control or conduct of the
business of any of the Properties prior to the Closing Date, and (c) any and all
accrued and unpaid leasing commissions due or to become due to any broker with
respect to the Current Term of any Lease, but not with respect to any extension
or renewal of any Current Term, or with respect to any expansion of the space
demised under any Lease; provided, however, that notwithstanding clause (c)
immediately preceding, Seller, and not Purchaser, shall be liable for the EDS
700 Renewal Commission, which Seller agrees to pay if, as, and when the same is
due and payable pursuant to Seller's agreement with the broker who procured, or
assisted in procuring, the EDS 700 Renewal, and Seller hereby indemnifies and
agrees to hold Purchaser harmless therefrom. The foregoing proviso shall not be
deemed to create any third party beneficiary rights in favor of such broker and
is for the benefit of Purchaser only.
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13.3 SURVIVAL. The provisions of this Section 13 shall survive
the Closing.
SECTION 14. ACCESS TO RECORDS
14.1 For a period of five years subsequent to the Closing
Date, Seller, Seller's Affiliates, and Seller's and their employees, agents and
representatives shall be entitled to access during business hours to all
documents, books and records given to Purchaser by Seller 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 or control.
SECTION 15. NOTICES
15.1 All notices, elections, consents, approvals, demands,
objections, requests or other communications which Seller or Purchaser may be
required or desire to give pursuant to, under or by virtue of this Agreement
must be in writing and sent (a) by first class U.S. certified or registered
mail, return receipt requested, with postage prepaid; (b) by overnight U.S.
Express Mail or by reputable overnight courier 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 a confirmatory
copy is
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also sent by overnight U.S. Express Mail or reputable overnight courier service
within the next two 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 third 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 overnight U.S. Express
Mail, overnight courier delivery, or hand delivery; or (iii) the date it is
delivered to the other party if sent by telecopier, provided a confirmatory copy
is sent by overnight U.S. Express Mail or reputable overnight courier service
within the next two business days. For purposes of this Section 15.1, the
addresses of the parties shall be as follows:
IF TO SELLER:
New Valley Corporation
100 S.E. Second Street
32nd Floor
Miami, Florida
Attention: Richard J. Lampen
Executive Vice President
and General Counsel
Telecopier No.: (305) 579-8016
- with a copy to -
--------------
Fischbein Badillo Wagner Harding
909 Third Avenue
New York, New York 10022
Attention: Howard A. Kalka, Esq.
Telecopier No. 212-644-7485
- and -
New Valley Realty
590 Madison Avenue
33rd Floor
New York, NY 10022
Attention: Bennett Borko
Telecopier No. (212) 409-2069
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If to purchaser:
----------------
PW/MS Op Sub I, LLC
c/o Gale & Wentworth, Inc.
200 Campus Drive
Suite 200
Florham Park, New Jersey 07932
Attention: Mr. Eugene P. Diaz
Telecopier No. (973) 301-9501
- with a copy to -
--------------
Kelley Drye & Warren LLP
5 Sylvan Way
Parsippany, New Jersey 07054
Attention: Jay R. Kolmar, Esq.
Telecopier No. (973) 539-3167
IF TO ESCROW AGENT:
Fischbein Badillo Wagner Harding
909 Third Avenue
New York, New York 10022
Attention: Howard A. Kalka, Esq.
Telecopier No. 212-644-7485
15.2 Seller or Purchaser 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 15.
15.3 Notices and other communications given by the attorneys,
respectively, for Seller or Purchaser shall be deemed given by, respectively,
Seller or Purchaser.
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SECTION 16. CONDITIONS PRECEDENT TO CLOSING; TENANT ESTOPPELS;
MORTGAGEE NEGOTIATIONS
16.1 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 16.3:
(a) The representations and warranties of Seller
contained herein shall, subject to the provisions of Section 7.1(d), be
true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though they were restated on
and as of such date except to the extent they specifically relate to
another date, in which case they shall be true and correct in all
material respects as of such date, and except that the Tenant Rep and
the Violations Rep speak only as of the date hereof, they shall not be
deemed restated as of the Closing Date, and the truth and correctness
of the Tenant Rep and/or the Violations Rep as of the Closing Date
shall not be a condition to Purchaser's obligations to purchase the
Properties in accordance with the terms and conditions hereof;
(b) Seller shall be ready, willing and able to
deliver title to the Properties in accordance with the terms and
conditions of this Agreement;
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(c) the Title Company (or any other reputable title
insurer licensed to do business in the states in which the Properties
are located) shall be ready, willing and able to issue title insurance
to Purchaser in accordance with the terms and conditions of this
Agreement at the Title Company's standard rates (unless Seller shall
elect to pay any charges above such standard rates);
(d) the "TENANT ESTOPPELS" (as hereinafter defined)
obtained by Purchaser, if any, shall not be materially, adversely
inconsistent (when viewed on an aggregate basis with respect to each
Property) with the information as to the demised premises, base rent,
and expiration date for the related Leases set forth in Part 2 of the
Rent Roll annexed hereto as SCHEDULE 2;
(e) Seller shall have delivered all of the documents
and other items required pursuant to Section 9, and shall in all
material respects have performed all of the other covenants,
undertakings and obligations and complied with all of the conditions
required by this Agreement to be performed or complied with by Seller
at or prior to the Closing; and
(f) Purchaser shall not have exercised any right of
Purchaser hereunder to terminate this Agreement.
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16.2 Seller's 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 16.3:
(a) the representations and warranties of Purchaser
contained herein shall be true and correct in all material respects on
and as of the Closing Date, with the same force and effect as though
they were restated on and as of such date except to the extent they
speak as of the date of this Agreement or specifically relate to
another date, in which case they shall be true and correct in all
material respects as of such date;
(b) Purchaser shall have paid to Seller the funds
required to be paid hereunder;
(c) Purchaser shall have delivered all of the
documents and other items required pursuant to Section 10, and shall in
all material respects have performed all of the other covenants,
undertakings and obligations and complied with all of the conditions
required by this Agreement to be performed or complied with by
Purchaser at or prior to the Closing; and
(d) Seller shall not have exercised any right of
Seller hereunder to terminate this Agreement.
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16.3 In the event that any condition contained in Section 16.1
or 16.2 is not satisfied, then, unless such failure is a default by Purchaser
under Section 18.2 or a willful failure or refusal by Seller pursuant to Section
18.3, 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 as permitted under this Section 16, 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 if
Purchaser terminates this Agreement because a condition contained in Section
16.1 is not satisfied, then Purchaser shall be entitled to the return of the
Downpayment, provided Purchaser is not otherwise in default hereunder. Nothing
contained in this Section 16.3 shall be construed so as to confer 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 16.1 or 16.2.
16.4 Seller has heretofore delivered to Purchaser copies of
two estoppel letters, each dated August 11, 1998, from Federal Insurance
Company, one with respect to such tenant's demised premises at the Westgate I
Property and one with respect to such tenant's demised premises at the Westgate
II Property.
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Purchaser acknowledges that it has read such letters and that the
same are satisfactory to Purchaser, and Purchaser agrees that no further
estoppel letters shall be requested or sought by Purchaser or Seller from such
tenant. Purchaser acknowledges that it will use its own efforts to obtain
estoppel letters or certificates from the other Tenants ("TENANT ESTOPPELS"),
that Seller is not obligated to request or obtain any such Tenant Estoppels, and
that the obtaining of such Tenant Estoppels is not a condition to Purchaser's
obligations to close title hereunder. Purchaser shall promptly furnish Seller
with copies of all such Tenant Estoppels obtained by Purchaser, if any.
16.5 Seller acknowledges that Purchaser has advised Seller
that it is in negotiations with the holder of the Mortgages to purchase the same
at a discount, and that such negotiations may result in a mortgage purchase
agreement whereby Purchaser may be required to post a non-refundable $2.5
million downpayment with such holder (the "MORTGAGE PURCHASE DOWNPAYMENT").
Seller agrees that such negotiations and the entry into any such agreement shall
not give rise to any lender liability claims by Seller. Purchaser acknowledges
that, by reason of such negotiations, it, and not Seller, shall be responsible
for requesting and obtaining, and Purchaser hereby undertakes to obtain, the
necessary "pay-off letters" from the holder of the Mortgages and the necessary
cooperation from such holder in order to enable and permit the Mortgages to be
prepaid and discharged at the Closing on the initially designated Closing Date;
provided, however, that the Mortgages need not be paid off
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and discharged until the actual Closing Date. If for any reason such letters and
cooperation are not obtained, then Purchaser shall nonetheless close hereunder
by accepting title to the Properties subject to the Mortgages, and the payment
of the portion of the Purchase Price provided for in clause A. of Section 2.1(a)
shall be made by Purchaser's so accepting title.
16.6 Seller also acknowledges that Purchaser has advised
Seller that it is also in negotiation with the holder of the Mortgages or its
affiliate to purchase fee title to the 700 Tower Land. Purchaser acknowledges
that, accordingly, it will accept the assignment of the 700 Tower Ground Lease
regardless of whether such assignment complies with the terms of such lease or
has been consented to by the lessor thereunder.
16.7 Purchaser confirms that its obligations to close title
hereunder are in no way contingent on its success in purchasing the Mortgages or
in purchasing the fee title to the 700 Tower Land.
SECTION 17. OPERATION OF THE PROPERTIES PRIOR TO THE CLOSING DATE
17.1 Between the date hereof and the Closing Date, Seller
agrees to cause its managing agents for the Properties to continue to operate
and 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
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the good will of all suppliers and tenants. In connection therewith:
(a) Seller shall not modify, extend, renew, or cancel
any Lease or enter into any new lease of all or any portion of the
Properties without Purchaser's prior consent in each instance.
(b) If Seller shall enter into any new leases for any
of the Properties or any portion of any thereof as permitted hereunder,
or if there shall be any permitted extensions or renewals of any
existing Leases, whether or not such existing Leases provide for their
extension or renewal, or if there shall be any expansion or
modification of any of the Leases (each, a "NEW LEASE"), then Seller
shall keep accurate records of all expenses (collectively, "NEW LEASE
EXPENSES") incurred in connection with each New Lease. At the Closing,
Purchaser shall reimburse Seller for all New Lease Expenses theretofore
paid by Seller, if any, except that if the term of any New Lease shall
have commenced prior to the Closing Date, then the New Lease Expenses
attributable to such New Lease shall be amortized over the term
thereof, and Seller shall be responsible for such New Lease Expenses
allocable to the period prior to the Closing Date. The provisions of
this Section 17.1(a)(ii) shall survive the Closing.
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(c) Subject to Section 17.1(a), Seller reserves the
right, but shall not be obligated, to institute proceedings for
monetary judgments only against any Tenant (but not to terminate such
Tenant's Lease) as a result of a default by such Tenant prior to the
Closing Date. Seller makes no representations and assumes no
responsibility with respect to the continued occupancy of the
Properties or any part thereof by any Tenant. The vacating of a Tenant
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 a
holdover tenant or in default under its Lease on the Closing Date and
Purchaser shall accept title subject to such holding over or default
without credit against, or reduction of, the Purchase Price.
(d) Seller shall not modify, extend, renew, or cancel
(except as a result of a default by the other party thereunder) any
Contract, or enter into any new contract with respect to any of the
Properties, without Purchaser's prior consent in each instance, which
consent shall not be unreasonably withheld, delayed, or conditioned by
Purchaser; provided, however, that Purchaser's consent shall not be
required to the aforesaid actions if such Contract as modified,
extended, or renewed, or such new contract, may be terminated at any
time on not more than 60 days' prior notice by Seller, or its successor
or assign, without any penalty.
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(e) Seller shall keep in force and effect with
respect to the Properties all of the insurance policies currently
carried by Seller therefor, as set forth on SCHEDULE 6 annexed hereto,
or policies providing similar coverage.
(f) From the date hereof until the Closing, Seller
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 for the tax year in which the Closing occurs.
SECTION 18. REMEDIES
18.1 If the Closing fails to occur by reason of 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 Seller, may terminate this Agreement by notice to Seller. If
Purchaser so elects to terminate this Agreement, then neither party shall have
any further rights, obligations or liabilities hereunder except for the
Surviving Obligations, and except that Purchaser shall be entitled to the return
of the Downpayment; provided, however, that Purchaser is not otherwise in
default hereunder. Except as expressly set forth in this Agreement, Purchaser
hereby
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expressly and irrevocably waives, relinquishes and releases any other right or
remedy available to it at law, in equity or otherwise by reason of Seller's
inability to perform its obligations hereunder.
18.2 In the event of a default hereunder by Purchaser, or if
the Closing fails to occur by reason of Purchaser's failure or refusal to
perform its obligations hereunder, then Seller may terminate this Agreement by
notice to Purchaser. If Seller so elects to terminate this Agreement, then this
Agreement shall terminate and Seller's sole remedy shall be to retain the
Downpayment as liquidated damages for all loss, damage and expenses suffered by
Seller, it being agreed that Seller's 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.
18.3 If the Closing fails to occur by reason of Seller's
willful and wrongful refusal to execute and deliver the Deeds, the Lease
Assignment, the Contract and License Assignment, the Intangible Property
Assignment, the Ground Lease Assignment, the 700 Tower Deed, the Bill of Sale,
the Tenant Notices, the Contractor Notices, the Transfer Tax Returns, the FIRPTA
Certificate, and the Side Letters, then, subject to the provisions of the last
sentence of this Section 18.3, Purchaser, as its sole remedy hereunder, may (a)
terminate this Agreement by notice to Seller and receive the return of the
Downpayment, or
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(b) seek specific performance of this Agreement from Seller but with a reduction
in the Purchase Price in the amount of $2.5 million, such amount being a penalty
for such default corresponding to the amount of the Mortgage Purchase
Downpayment and to which Seller and Purchaser hereby expressly consent in
advance. As a condition precedent to Purchaser exercising any right it may have
to bring an action for specific performance as a result of Seller's willful and
wrongful refusal to execute and deliver the Deeds, the Lease Assignment, and the
other documents referred to in the immediately preceding sentence, Purchaser
must commence such an action within 30 days after the occurrence of such
default. Purchaser agrees that its failure timely to commence such an action for
specific performance within such 30 day period shall be deemed a waiver by it of
its right to commence such an action. If Purchaser shall timely commence and
diligently prosecute such action for specific performance, but, for any reason
other than Purchaser's failure or neglect diligently to prosecute such action in
accordance with applicable law, the court having jurisdiction of such action
shall enter a final judgment, the effect of which shall be to refuse to grant
specific performance to Purchaser, then Seller agrees that Purchaser shall be
entitled to receive the return of the Downpayment and to bring an action seeking
to recover from Seller, as liquidated damages, and not as a penalty, Seller
hereby acknowledging that Purchaser's damages are impossible to ascertain, the
amount of $2.5 million. Any such action for damages by Purchaser may be brought
in the same action as or concurrently with the action for specific performance,
but as an
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action seeking the award of monetary damages only in the event specific
performance is denied by the court having jurisdiction over the action for
specific performance. If any such action for monetary damages is not so brought
by Purchaser, then Purchaser must commence such an action within 30 days after
the entry of a final judgment denying specific performance to Purchaser, and
Purchaser agrees that its failure timely to commence such an action within such
30 day period shall be deemed an irrevocable waiver by it of its right to
commence such an action.
SECTION 19. CASUALTY; CONDEMNATION
19.1 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, Seller shall notify Purchaser of such fact and, except
as hereinafter provided, Purchaser shall have the option to terminate this
Agreement upon notice to Seller given not later than 10 business days after
receipt of Seller's notice. If this Agreement is so terminated, then the
provisions of Section 19.4 shall apply. If (a) Purchaser does not elect to so
terminate this Agreement, or (b) there is damage to or destruction of a portion
of a Property, which is not material, then Purchaser shall close title as
provided in this Agreement and, at the Closing, Seller shall, unless Seller
shall have 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, less the amount of all costs incurred by Seller
in
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connection with the repair of such damage or destruction, and (B) assign and
transfer to Purchaser (without recourse) all right, title and interest of Seller
in and to any uncollected insurance proceeds which Seller 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 10% or more of the Purchase Price
allocated to such Property pursuant to Section 2.1 hereof, as reasonably
estimated by an independent engineer selected by Seller and reasonably approved
by Purchaser, or (b) any Tenant under a Lease demising in excess of 25% of the
rentable area of such damaged Property shall have irrevocably terminated its
Lease on account of such damage or destruction.
19.2 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), then Seller shall notify Purchaser of such fact and
Purchaser shall have the option to terminate this Agreement upon notice to the
Seller given not later than 10 business days after receipt of Seller's notice.
If this Agreement is so terminated, then the provisions of Section 19.4 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, Seller shall assign (without recourse) all of
its rights in connection with such taking to Purchaser, and shall pay over to
Purchaser, and Purchaser shall
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be entitled to receive and keep, the proceeds of all awards for such taking by
eminent domain or condemnation collected by Seller. A "SIGNIFICANT" portion of a
Property means a taking (i) of any portion of the Buildings in excess of 10% of
the rentable area thereof, (ii) which reduces the remaining available number of
parking spaces at such Property below the minimum legally required, (iii) which
materially interferes with access to or from such Property, if no alternative
means of access is reasonably available, or (iv) if any Tenant under a Lease
demising in excess of 25% of the rentable area of such Property shall have
irrevocably terminated its Lease on account of such condemnation.
19.3 Notwithstanding anything contained in Section 19.1 and
Section 19.2 to the contrary, if this Agreement is not terminated as provided in
Section 19.1 or Section 19.2 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, then Seller's obligation to pay over to
Purchaser those proceeds paid to Seller prior to the Closing shall be limited to
the amount of the Purchase Price so allocated to such Property, and 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 Seller shall be entitled to that portion of the proceeds in
excess of the Purchase Price, which agreement shall survive the Closing.
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19.4 If Purchaser elects to terminate this Agreement pursuant
to Section 19.1 or 19.2, then neither party shall have any further rights,
obligations or liabilities hereunder except for the Surviving Obligations, and
except that Purchaser shall be entitled to the return of the Downpayment;
provided, however, that Purchaser is not otherwise in default hereunder.
SECTION 20. [INTENTIONALLY DELETED]
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SECTION 20A. ESCROW
20A.1 Escrow Agent shall hold the Downpayment and all interest
accrued thereon, if any, in escrow and shall dispose of the Downpayment only in
accordance with the provisions of this Section 20A. Unless otherwise stated
hereinbelow, (a) all references to the Downpayment shall include such accrued
interest, if any; and (b) all references to the Downpayment and the disposition
thereof shall be qualified by reference to Section 2.2 so as to give effect to
corresponding adjustments of the Downpayment sum pursuant to Section 2.2 in the
event of a permitted partial termination of this Agreement.
20A.2 Escrow Agent shall deliver the Downpayment to Seller or
Purchaser, as the case may be, as follows:
(a) to Seller, upon completion of the Closing;
or
(b) to Seller, after receipt of Seller's demand in
which Seller certifies either that (i) Purchaser has defaulted under
this Agreement, or (ii) this Agreement has been otherwise terminated or
canceled, and Seller is thereby entitled to receive the Downpayment;
but Escrow Agent shall not honor Seller's demand until more than 10
days after Escrow Agent has given a copy of Seller's demand to
Purchaser in accordance with Section 20A.3(a), nor
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thereafter if Escrow Agent receives a Notice of Objection from
Purchaser within such 10 day period; or
(c) to Purchaser, after receipt of Purchaser's demand
in which Purchaser certifies either that (i) Seller has defaulted under
this Agreement, or (ii) this Agreement has been otherwise terminated or
canceled, and Purchaser is thereby entitled to receive the Downpayment;
but Escrow Agent shall not honor Purchaser's demand until more than 10
days after Escrow Agent has given a copy of Purchaser's demand to
Seller in accordance with Section 20A.3(a), nor thereafter if Escrow
Agent receives a Notice of Objection from Seller within such 10 day
period.
Upon delivery of the Downpayment, Escrow Agent shall be
relieved of all liability hereunder with respect to the Downpayment. Escrow
Agent shall deliver the Downpayment, 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.
20A.3 (a) Upon receipt of a written demand from Seller or
Purchaser under Section 20A.2(b) or (c), Escrow Agent shall send a copy of such
demand to the other party. Within 10 days after the date of receiving same, but
not thereafter, the other party may object to delivery of the Downpayment to the
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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 Downpayment until Escrow Agent receives a
written agreement of Purchaser and Seller jointly directing the disbursement of
the Downpayment, in which event Escrow Agent shall disburse the Downpayment 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 Downpayment into any court of competent jurisdiction
and bringing an action of interpleader or other appropriate proceeding; and/or
(iii) in the event of any litigation between Seller and Purchaser, to deposit
the Downpayment 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 20A.2(b) or (c), or Notice of
Objection under Section 20A.3(a)), notwithstanding anything to the contrary
herein, Escrow Agent may hold and apply the Downpayment pursuant to Section
20A.3(a)(i), (ii) or (iii) and may decline to take any other action whatsoever.
In the event the Downpayment is deposited in a court by Escrow Agent pursuant to
Section 20A.3(a)(ii) or (iii), Escrow
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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
Downpayment, (i) Purchaser and Seller shall pay the reasonable attorney's fees
and costs incurred by Escrow Agent (which such parties shall share equally, but
for which such parties shall be jointly and severally liable to Escrow Agent)
for any litigation in which Escrow Agent is named as, or becomes, a party, and
(ii) as between Purchaser and Seller, the non-prevailing party shall pay the
reasonable attorneys' fees and costs of the prevailing party.
20A.4 Notwithstanding anything to the contrary in this
Agreement, within one 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
Downpayment; and Escrow Agent shall dispose of such interest as and with the
Downpayment pursuant to this Agreement. Escrow Agent may not commingle the
Downpayment with any other funds held by Escrow Agent. Escrow Agent may convert
the Downpayment from the Approved Investment into a non-interest-bearing demand
account at an Approved Institution as follows:
(a) at any time within seven days prior to the
initially scheduled Closing Date; or
(b) if the initially scheduled (or any
subsequently scheduled) Closing Date is accelerated or
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extended, at any time within seven days prior to the accelerated or
extended Closing Date (provided, however, that Seller and Purchaser
shall give Escrow Agent timely notice of any such acceleration or
extension and that Escrow Agent may hold the Downpayment in a
non-interest-bearing demand account at an Approved Institution if
Seller and Purchaser do not give Escrow Agent timely notice of any such
adjournment).
20A.5 As used herein, the term "APPROVED INVESTMENT" means (a)
any interest-bearing demand account or money market fund in Republic National
Bank of New York, or in any other institution otherwise approved by both Seller
and Purchaser (collectively, an "APPROVED INSTITUTION"), or (b) any other
investment approved by both Seller 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.
20A.6 Escrow Agent shall have no duties or responsibilities
except those set forth herein, which the parties hereto agree are ministerial in
nature. Seller 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, willful misconduct, or gross negligence,
Escrow Agent shall have no liability of any kind
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whatsoever arising out of or in connection with its activity as Escrow Agent.
Seller 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 services rendered by
Escrow Agent to itself) which may be incurred by reason of its acting as Escrow
Agent, provided the same are not the result of Escrow Agent's willful default,
misconduct or gross negligence. Escrow Agent may charge against the Downpayment
any amounts owed to it under the foregoing indemnity or may withhold the
delivery of the Downpayment as security for any unliquidated claim, or both.
20A.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
15.
20A.8 Simultaneously with their execution and delivery of this
Agreement, Purchaser and Seller shall furnish Escrow Agent with duly completed
W-9 Forms setting forth their true Federal Taxpayer Identification Numbers so
that Escrow Agent may file appropriate income tax information returns with
respect to any interest earned on the Downpayment or other income from the
Approved Investment. The party ultimately entitled to any such accrued interest
shall be the party responsible for the payment of any tax due thereon.
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20A.9 Seller and Purchaser waive any claim of conflict of
interest by reason of Escrow Agent's actions in its capacity as such under this
Agreement. Purchaser hereby acknowledges that Escrow Agent is the attorney for
Seller, and agrees that Escrow Agent may represent Seller in connection with any
and all matters, including without limitation, the transactions 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.
20A.10 Any amendment of this Agreement which could alter or
otherwise affect Escrow Agent's obligations hereunder shall 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.
20A.11 The provisions of this Section 20A shall survive the
termination of this Agreement and the Closing.
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SECTION 21. MISCELLANEOUS
21.1 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 this Agreement shall be effective,
unless the same shall be in writing and signed by or on behalf of the party to
be charged.
21.2 (a) 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.
(b) This Agreement may not be assigned by Purchaser
without Seller's prior written consent, except once and then only to (i) an
entity which is owned and controlled by Paine Webber, Morgan Stanley, and Gale &
Wentworth, or (ii) an entity which has a net worth of not less than $30 million,
and which in either case accepts and approves this Agreement in writing and
assumes in writing Purchaser's obligations under this Agreement (but which
assumption shall not be deemed to release Purchaser therefrom). Any such
assignment shall include Purchaser's rights and interest in and to the
Downpayment. Notice of any such assignment, together with an originally executed
counterpart of the instrument of assignment and assumption between Purchaser and
such assignee, shall be provided to Seller at least five business days before
the Closing Date. Any permitted assignment of this
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Agreement by Purchaser shall not entitle Purchaser or its assignee to any
adjournment of the Closing or to any reissuance of the ISRA non-applicability
letters or to any re-filing of the Transfer Tax Returns if any thereof were
pre-filed with the applicable governmental authority. In the case of any
permitted assignment of this Agreement by Purchaser, Purchaser may assign this
Agreement in part (i.e., as to the right to purchase the New Jersey Properties
only or the Michigan Properties only); provided, however, that any such partial
assignment shall not amend Section 2.2 and Purchaser hereby expressly and
absolutely and unconditionally guarantees to Seller that it will close on ALL of
the Properties in the event for any reason (other than a reason which would
entitle Purchaser to terminate this Agreement with respect to all the Properties
as provided herein) its permitted assignee fails or refuse to close with respect
to the Properties in respect of which it has received an assignment of
Purchaser's rights hereunder. Any permitted assignee of Purchaser hereunder
shall not be entitled to re-assign this Agreement and any actual or purported
re-assignment hereof shall be null and void and shall not bind Seller in any
manner.
(c) Purchaser shall pay or be responsible and liable
for any transfer taxes which may be due under applicable state or local law by
reason of any permitted assignment by Purchaser of this Agreement, which
obligation shall survive the Closing.
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21.3 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 the transactions contemplated hereby 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 Seller or the party drafting
this Agreement.
21.4 Except as otherwise expressly provided herein,
Purchaser's acceptance of the Deeds and the Lease Assignment shall be deemed a
discharge of all of the obligations of Seller hereunder and all of Seller's
representations, warranties, covenants and agreements herein shall merge in the
documents and agreements executed at the Closing and shall not survive the
Closing.
21.5 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 Seller (collectively, "SELLER'S AFFILIATES"), arising out
of or in connection with this Agreement or the transactions contemplated hereby.
Purchaser agrees to look solely to Seller
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and its 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 Seller's 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
21.5, 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 Seller's Affiliates, and hereby unconditionally and irrevocably releases
and discharges Seller's Affiliates from any and all liability whatsoever which
may now or hereafter accrue in favor of Purchaser against Seller's Affiliates,
in connection with or arising out of this Agreement or the transactions
contemplated hereby. The provisions of this Section 21.5 shall survive the
termination of this Agreement and the Closing.
21.6 This Agreement may be executed in one or more
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute but one and the same
instrument.
21.7 Each of the Exhibits and Schedules referred to herein and
attached hereto is incorporated herein by this reference.
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21.8 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.
21.9 This Agreement shall be governed by and interpreted and
enforced in accordance with the internal laws of the State of New York, without
giving effect to principles of conflicts of law, except that any action for
specific performance with respect to the conveyance of the Properties shall be
governed by the substantive law of the respective states in which the Properties
are located.
21.10 Unless otherwise specified herein, (a) references to
persons or parties include their permitted successors and assigns; (b) 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"; (c) the
words "hereto", "herein", "hereof" and "hereunder", and words of similar import,
refer to this Agreement in its entirety; and (d) unless otherwise specified
herein, all references to Sections are to Sections of this Agreement.
21.11 As used in this Agreement, the term "PROPERTY
INFORMATION" shall mean all information and documents in any way relating to the
Properties, the operation thereof or the sale thereof (including, without
limitation, Leases, Contracts and
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Licenses) furnished to, or otherwise made available for review by, Purchaser or
its directors, officers employees, affiliates, partners, members, brokers,
agents or other representatives, including attorneys, accountants, contractors,
consultants, engineers and financial advisors (collectively, "PURCHASER'S
REPRESENTATIVES"), by Seller or any of Seller's Affiliates, or Seller's or their
agents or representatives, including, consultants, brokers or advisors.
21.12 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, except that the provisions and intent of Section 2.2
shall be respected.
21.13 SELLER AND PURCHASER HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER ARISING IN TORT OR CONTRACT) BROUGHT
BY EITHER AGAINST THE OTHER ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.
SELLER:
NEW VALLEY CORPORATION, a Delaware
corporation
By: /s/ Richard J. Lampen
--------------------------------
Name: Richard J. Lampen
Title: (Executive Vice President)
PURCHASER:
PW/MS OP SUB I, LLC, a Delaware
limited liability company
By: /s/ Kevin D. Cox
--------------------------------
Name: Kevin D. Cox
Title: Managing Member
By: /s/ Jeffrey Gronning
--------------------------------
Name: Jeffrey Gronning
Title: Managing Member
FISCHBEIN BADILLO WAGNER HARDING
is executing this Agreement, as
Escrow Agent, solely for the purpose
of agreeing to the provisions of
Section 20A:
By: /s/ Benjamin Suckewer
--------------------------------
Name: Benjamin Suckewer
Title: Counsel
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EXHIBIT 99.1
PRESS RELEASE
-------------
NEW VALLEY CORPORATION SELLS OFFICE BUILDINGS FOR $112 MILLION
----------------------------------------------------------------
MIAMI, FL, SEPTEMBER 29, 1998 -- New Valley Corporation (OTC: NVYL)
today announced that its New Valley Realty division has completed the sale of
four office buildings located in New Jersey and Michigan to institutional
investors for approximately $112 million. New Valley received approximately $13
million in cash from the transaction, as the office buildings were subject to
$99 million of mortgage financing which was retired at closing.
New Valley is principally engaged in investment banking and brokerage
through Ladenburg, Thalmann & Co. Inc. in real estate development in Russia
through BrookeMil Ltd., and in ownership and management of commercial real
estate in the U.S. through its New Valley Realty division.
