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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): April 15, 1998
Mark Centers Trust
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-12002 23-2715194
- ---------------------------- ----------- ----------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
600 Third Avenue
Kingston, PA 18704
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (717) 288-4581
-------------
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Item 5. Other Events.
On April 15, 1998, Mark Centers Trust, a Maryland real estate
investment trust (the "Registrant"), and Mark Centers Limited Partnership, a
Delaware limited partnership and majority-owned subsidiary of the Registrant of
which the Registrant also serves as the general partner (the "Operating
Partnership"), entered into a Contribution and Share Purchase Agreement (the
"Contribution Agreement") pursuant to which the Registrant has agreed, subject
to the satisfaction or waiver of the conditions set forth in the Contribution
Agreement, to acquire fee title to or substantially all of the ownership
interests in 12 retail shopping centers, five multi-family apartment complexes
and a related management company owned by real estate investment partnerships
and related entities in which RD Capital, Inc., a New York corporation ("RD
Capital"), or its affiliates serves as the general partner or in another similar
management capacity. In addition, one or more newly formed investment limited
partnerships of which affiliates of RD Capital are the general partner will make
a $100.0 million cash equity investment in the Registrant.
RD Capital is a fully integrated real estate operating company
focused primarily on the acquisition, redevelopment, ownership and management of
neighborhood and community shopping centers in the East and Midwest regions of
the United States. The retail shopping centers to be contributed to the
Registrant comprise approximately 2.2 million square feet of gross leasable area
("GLA"), and the apartment complexes contain 2,327 units. If the transaction is
consummated, the Registrant's portfolio will increase to 51 retail properties
and five multi-family apartment complexes in 16 states in the East, Midwest and
Southeast regions of the United States.
In exchange for the shopping centers, apartment complexes and
management company, the Operating Partnership will issue approximately 11.3
million Operating Partnership limited partnership interests ("Units"), each of
which is exchangeable, on a one-for-one basis, for common shares of beneficial
interest of the Registrant ("Shares"). In consideration for the $100.0 million
cash investment, the Registrant will issue approximately 13.3 million Shares.
The Units and the Shares to be issued to RD Capital and its affiliates have been
valued on the basis of $7.50 per Share.
The Contribution Agreement also provides that Ross Dworman
and Kenneth Bernstein of RD Capital will become the Chief Executive Officer and
President, respectively, of the Registrant. Marvin Slomowitz, currently Chairman
of the Board of Trustees and Chief Executive Officer of the Registrant, will
resign as Chairman and Chief Executive Officer but will remain on the Board of
Trustees. Messrs. Dworman, Bernstein and two designees of RD Capital, and Mr.
Slomowitz and two designees of the current Board
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of Trustees will serve on the Board of Trustees assuming the transaction is
consummated. The Registrant also will change its name to Acadia Realty Trust,
effective upon closing of the transaction.
Consummation of the aforementioned transactions is contingent
upon the satisfaction of a number of conditions, including, but not limited to,
approval by the Registrant's shareholders at a meeting to be called for that
purpose, and other customary conditions.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
10.1 Contribution and Share Purchase Agreement dated as of April
15, 1998 among Mark Centers Trust, Mark Centers Limited
Partnership, the Contributing Owners and Contributing
Entities named therein, RD Properties, L.P. VI, RD
Properties, L.P. VIA and RD Properties, L.P. VIB.
99.1 The Registrant's Press Release dated April 16, 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 thereunto duly authorized.
Dated: April 20, 1998 MARK CENTERS TRUST
By: /s/ Joshua Kane
--------------------------------
Name: Joshua Kane
Title: Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description of Document Page
- ------ ----------------------- ----
10.1 Contribution and Share Purchase Agreement
dated as of April 15, 1998 among Mark
Centers Trust, Mark Centers Limited
Partnership, the Contributing Owners and
Contributing Entities named therein , RD
Properties, L.P. VI, RD Properties, L.P. VIA
and RD Properties, L.P.
VIB.
99.1 The Registrant's Press Release dated April 16,
1998.
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<PAGE>
CONTRIBUTION AND SHARE PURCHASE AGREEMENT
(Real Estate Partnership Interests,
Fee Simple Interests
and Other Assets)
by and between
The Contributing Owners Identified on Exhibit "A"
The Contributing Entities Identified on Exhibit "A-1"
RD Properties, L.P. VI
RD Properties, L.P. VIA and
RD Properties, L.P. VIB
and
Mark Centers Limited Partnership
and Mark Centers Trust
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<TABLE>
<CAPTION>
Table of Contents
Section Caption Page
<S> <C> <C>
1. Contribution; Premises; Cash Investment for the Common Shares...................................3
2. Contribution Consideration; Cash Investment.....................................................4
3. Existing Mortgages; Other Liabilities to be Discharged at Closing...............................7
4. Closing.........................................................................................8
5. Condition of Title and Related Matters.........................................................14
6. Possession; Agreements and Leases..............................................................18
7. Adjustments to Contribution Consideration......................................................20
8. Conditions to Closing..........................................................................24
9. Representations and Warranties of Owners.......................................................28
10. Representations and Warranties of Contributing Owners; Representations and
Warranties of the Funds........................................................................45
11. Representations and Warranties of the Partnership and the Trust................................49
12. Additional Agreements..........................................................................67
13. Termination, Amendment and Waiver..............................................................85
14. Notices........................................................................................87
15. Fire or Other Casualty.........................................................................89
16. Condemnation...................................................................................90
17. Brokers........................................................................................91
18. Successors and Assigns.........................................................................91
19. Captions or Headings; Cross-References.........................................................91
20. Amendments.....................................................................................91
21. Applicable Law.................................................................................91
22. Maintenance of Records.........................................................................92
23. Survival of Representations, Warranties and Covenants..........................................92
24. Indemnification................................................................................93
25. Fees and Expenses..............................................................................97
26. Counterparts...................................................................................98
</TABLE>
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Exhibits
Exhibit A Contributing Owners; Contributing Entities; Contributed
Management Contracts
Exhibit A-1 Development Property
Exhibit B Restated Partnership Agreement
Exhibit C Premises
Exhibit D Development and Elmwood Expansion and Conditions to
Issuance of Additional Operating Partnership Interests
Exhibit E Registration Rights and Lock-Up Agreement
Exhibit F Assignment of Ground Lease
Exhibit G Bill of Sale, Assignment and Assumption Agreement
Exhibit H Assumption of Sales Agreements
Exhibit I-1 Assignment and Assumption of Contributed Management
Contracts
Exhibit I-2 Assignment of Contributed Notes
Exhibit J Second Amendment to Partnership Agreement
Exhibit K Tenant Estoppel Certificate
Exhibit L Owner Major Tenants
Exhibit M Contributing Owners Subject to Registration Rights and Lock-Up
Agreement
Exhibit N Trust Major Tenants
Exhibit O Investment Letter
Exhibit P Non-Compete Agreements
Exhibit Q Right of First Offer Agreement
Exhibit R Assignment and Assumption Agreement of RDC Office Leases
ii
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Schedules
Schedule 1(c) (ii) Acadia Management Company LLC and Sound View
Management LLC Personal Property
Schedule 2(a) Allocation of Contribution Consideration
Schedule 3(a) Existing Mortgages; Remaining Mortgages
Schedule 3(a)-1 Partnership Mortgage Indebtedness to be Satisfied
Schedule 3(b) Discharged Liabilities
Schedule 4(k) Third Party Partners
Schedule 4(k)-1 Premises Excluded from Target RDC NOI
Schedule 5(a) List of Title Commitments and Permitted Encumbrances
Schedule 5(b) Surveys
Schedule 6(a) Leases
Schedule 7(a)(x) Remaining Mortgage Escrows
Schedule 9(b) Required Partner Consents and Approvals
Schedule 9(c) Other Consents and Approvals
Schedule 9(d) Significant Agreements
Schedule 9(f) Litigation
Schedule 9(i)(i) Violations
Schedule 9(i)(ii) Notices of Proceedings
Schedule 9(i)(iii) Unperformed Obligations
Schedule 9(i)(v) Compliance with Insurance Company
Policies
Schedule 9(j) Environmental Reports
Schedule 9(k) Engineering Reports
Schedule 9(k)(iii) Private Water and Sanitary Sewer
Schedule 9(l)(i) Real Estate Tax Proceedings
Schedule 9(l)(ii) Tax Parcels
Schedule 9(l)(iii) Notices of Assessments
Schedule 9(m)-1 Rights of First Refusal
Schedule 9(m)-2 Rent Roll
Schedule 9(m)-3 Lease Exceptions
Schedule 9(m)-4 Accrued and Unpaid Lease Obligations
Schedule 9(n)-1 Lease Rights; Access
Schedule 9(n)-2 Other Lease Purchase Options and Agreements
Schedule 9(p) Insurance Policies
Schedule 9(q) Non-Terminating Contracts
Schedule 9(r) Employee Instruments
Schedule 9(s) Employee Benefit Plans
Schedule 10(b)(v) Names and Addresses of the Partners of the Fund;
Conditions Precedent to Capital Contributions
Schedule 10(b)(vi) Fund Litigation
Schedule 11(a) Information Concerning Subsidiaries
Schedule 11(g)(i) Additional Options, Warrants and Rights
Schedule 11(g)(ii) Operating Partnership Interests Owned by Trust
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Schedule 11(g)(iii) Other Equity Interests and Investments
Schedule 11(k)(ii) Pending Tax Proceedings
Schedule 11(l) Undisclosed Liabilities
Schedule 11(m) Trust Litigation
Schedule 11(o)(i) Trust Compliance with Applicable Laws
Schedule 11(o)(ii) Notices of Violations of Ordinances, Public
Regulations, etc.
Schedule 11(o)(iii) Trust Compliance with Insurance Obligations
Schedule 11(o)(vi) Trust Unperformed Obligations
Schedule 11(p) Trust Environmental Reports
Schedule 11(q) Trust Engineering Reports
Schedule 11(q)(ii) Flood Hazard Premises
Schedule 11(q)(iii) Exceptions to Engineering Reports; Private Water and
Sanitary Sewer
Schedule 11(r)(i) Trust Real Estate Tax Proceedings
Schedule 11(r)(ii) Tax Parcels
Schedule 11(r)(iii) Trust Notice of Assessments
Schedule 11(s)-1 Partnership Leases
Schedule 11(s)-2 Trust Rent Roll
Schedule 11(s)-3 Partnership Lease Exceptions
Schedule 11(s)-4 Trust Accrued and Unpaid Lease Obligations
Schedule 11(t)-1 Partnership Lease Rights; Access
Schedule 11(t)-2 Other Partnership Lease Purchase Options and
Agreements
Schedule 11(u) Insurance Policies
Schedule 11(v) Non Terminating Trust Contracts
Schedule 11(w) Employee Instruments
Schedule 11(x) Employee Benefit Plans
Schedule 11(z) Trust Financial Statement Exceptions
Schedule 11(aa) Trust Affiliate Transactions
Schedule 12(a)(v) Assumed Office Leases
Schedule 12(i)(v) Permitted Additional Premises Indebtedness
Schedule 12(i)(viii) Fund Property Subject to Option
Schedule 12(j)(ix) Property Subject to Right of First Offer Agreement
iv
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DEFINITIONS
Section
Term Number
- ---- ------
1996 Form 10-K.......................................................11(g)(i)
Acquisition Proposal.................................................12(f)(i)
Acquisition Property................................................Recital F
Actions...........................................................9(r)(ii)(C)
Agreement of Sale..................................................12(i)(vii)
Applicable Laws......................................................9(i)(iv)
Cash Investment..........................................................2(c)
Cash Investment Shares...................................................1(d)
Claim...............................................................12(h)(ii)
Closing Date.............................................................4(a)
Code.....................................................................4(d)
Common Shares.......................................................Recital E
Consolidated Trust......................................................11(l)
Contracts.............................................................9(q)(i)
Contributed Management Contracts....................................Recital A
Contributed Notes...................................................Recital A
Contributed Properties..............................................Recital A
Contributing Entity..............................................Introduction
Contributing Entity's Premises......................................Recital B
Contributing Owner...............................................Introduction
Contribution Price.......................................................2(a)
Contribution Consideration...............................................2(a)
Deed................................................................4(b)(vii)
Development Property................................................Recital F
Discharged Liabilities...................................................3(b)
Disclosing Party....................................................12(m)(ii)
Economic Terms.......................................................12(i)(x)
Economic Terms....................................................12(j)(viii)
Elmwood Expansion........................................................2(b)
Employee Benefit Plan.................................................9(s)(i)
Engineering Report.......................................................9(k)
Environmental Report.....................................................9(j)
Environmental Reports...................................................11(p)
Environmental Claim......................................................9(j)
Environmental Laws.......................................................9(j)
ERISA.................................................................9(s)(i)
ERISA Affiliate.......................................................9(s)(i)
Escrow Agent.............................................................4(i)
Exchange Act.............................................................2(b)
Exchange Act Filings....................................................11(e)
Existing Note............................................................7(e)
Existing Mortgage...................................................11(o)(ii)
Existing Mortgages.......................................................3(a)
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FFO...............................................................13(a)(viii)
GAAP.................................................................11(z)(i)
Gap Undertaking..........................................................4(j)
GLA..................................................................12(i)(x)
Hazardous Materials......................................................9(j)
Improvements..........................................................9(n)(v)
Incentive Plan.......................................................11(g)(i)
Indemnified Parties.................................................12(h)(ii)
Indemnitee..............................................................24(d)
Indemnitor..............................................................24(d)
Industrial Establishment.............................................8(a)(vi)
Interests...........................................................Recital A
Interim Premises..................................................12(i)(viii)
Interim Premises Cost.............................................12(i)(viii)
IRS..................................................................9(s)(ii)
ISRA.................................................................8(a)(vi)
KB.......................................................................4(k)
Knowledge..................................................................23
Leases...................................................................6(a)
Limited Partnership Agreement............................................2(d)
Loan Repayment Documents.................................................4(i)
Losses..................................................................24(a)
Market Price.............................................................2(b)
Mark Centers Group...................................................11(k)(i)
Material Part...........................................................16(a)
MEPPA Plan...........................................................9(s)(iv)
NJDEPE...............................................................8(a)(vi)
Non-Compete Agreements..................................................12(c)
Notice of Breach...........................................................23
Offering Notice.................................................12(g)(iii)(A)
Operating Partnership Interests..........................................2(a)
Owner...............................................................Recital B
Owner Major Tenants......................................................6(c)
Partnership......................................................Introduction
Partnership Record Date..................................................2(f)
Partnership Significant Agreement.......................................11(d)
Partnership Service Agreements.......................................11(v)(i)
Partnership Leases...................................................11(s)(i)
Pennsylvania Contributing Owners....................................Recital C
Pension Plan........................................................9(s)(iii)
Permitted Encumbrances................................................5(a)(i)
Personal Property....................................................1(c)(ii)
PGBC.................................................................9(s)(ii)
Pre-Closing Month.....................................................7(a)(v)
Premises............................................................Recital B
Proxy Statement.........................................................12(d)
RD.......................................................................4(k)
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RDC......................................................................2(a)
RDC Designees...........................................................12(a)
RDC Group Debt Amount................................................12(g)(i)
RDC Group...............................................................12(g)
RDC Material Adverse Effect.......................................13(a)(viii)
Release Date............................................................24(g)
Remaining Contributing Owners.......................................Recital C
Remaining Mortgages......................................................3(a)
Rent Roll...........................................................9(m)(iii)
Rents............................................................9(m)(iii)(D)
Restated Partnership Agreement...........................................1(a)
Restricted Period...................................................12(g)(ii)
Right of First Offering Agreement...................................12(i)(ix)
Sale Agreement......................................................Recital F
Securities Act...........................................................2(e)
Security Deposits........................................................6(a)
Service Agreements.......................................................6(b)
Significant Agreement....................................................9(d)
Subsidiary..............................................................11(a)
Superior Proposal....................................................12(f)(i)
Survey...................................................................5(b)
Surveys.............................................................11(o)(ii)
Survival Period............................................................23
Surviving Indemnities......................................................23
Target RDC NOI....................................................13(a)(viii)
Target Trust FFO....................................................13(a)(ix)
Tax Returns.......................................................11(k)(v)(B)
Tax Payment.........................................................12(g)(ii)
Taxes.............................................................11(k)(v)(A)
Tenant...........................................................9(m)(iii)(B)
Tenant Estoppel Certificates.............................................6(c)
Third Party Partner Agreement............................................4(k)
Title Company............................................................4(j)
Trust............................................................Introduction
Trust Designees.........................................................12(a)
Trust Employee Benefit Plan..........................................11(x)(i)
Trust Engineering Report.............................................11(q)(i)
Trust ERISA Affiliate................................................11(x)(i)
Trust Major Tenants................................................8(c)(xiii)
Trust Material Adverse Effect.......................................13(a)(ix)
Trust MEPPA Plan....................................................11(x)(iv)
Trust Rent Roll....................................................11(s)(iii)
Trust Pension Plans................................................11(x)(iii)
Trust Portfolio.........................................................11(l)
Trust Property..........................................................11(l)
Warrantor...................................................................9
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CONTRIBUTION AND SHARE PURCHASE AGREEMENT
(Real Estate Partnership Interests, Fee Simple Estates
and Other Assets)
This Agreement is made as of the ____ day of April, 1998, by and among
the parties identified as Contributing Owners on Exhibit "A" (individually, a
"Contributing Owner" and collectively, the "Contributing Owners"), the parties
identified as Contributing Entities on Exhibit "A" (individually, a
"Contributing Entity" and collectively, the "Contributing Entities"), RD
PROPERTIES, L.P. VI, RD PROPERTIES, L.P. VIA and RD PROPERTIES, L.P. VIB, each a
Delaware limited partnership (individually, a "Fund" and collectively, the
"Funds"), MARK CENTERS LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Partnership"), and MARK CENTERS TRUST, a Maryland real estate investment trust
(the "Trust").
INTRODUCTION
A. Each Contributing Owner owns, and will own immediately prior to
Closing (as defined herein), a partnership interest, a membership interest or
capital stock (the "Interests") in one or more Contributing Entities which owns
either (i) title to or a ground leasehold interest in the properties (the
"Contributed Properties") which are owned directly or indirectly by one or more
of certain of the Contributing Owners, (ii) property management contracts with
respect to properties which are not Contributed Properties (the "Contributed
Management Contracts") or (iii) unsecured notes pertaining to certain
Contributed Properties (the "Contributed Notes"). The percentage interests owned
by each Contributing Owner in each Contributing Entity or in the Contributed
Properties, Contributed Management Contracts or Contributed Notes are set forth
on Exhibit "A". Except as set forth on Exhibit "A," the Contributing Owners
listed on Exhibit "A" in the aggregate own 100% of the partnership interests,
membership interests or capital stock in each Contributing Entity and are all of
the partners of such Contributing Entity, and own 100% of the interests in the
Contributed Properties, the Contributed Management Contracts and the Contributed
Notes.
B. Each Contributing Entity is a limited partnership, general
partnership, limited liability company or corporation and is the owner or ground
leasee of: (i) the property or properties identified as the property of such
Contributing Entity on Exhibit "A" (individually and collectively with the
Contributed Properties, the "Premises" and, as to each Contributing Entity, the
"Contributing Entity's Premises"); (ii) the Contributed Management Contracts
identified on Exhibit "A"; or (iii) the Contributed Notes identified on Exhibit
"A". The Contributing Entities, with respect to the Contributing Entity's
Premises, the Contributing Owners, as to the Contributed Properties, and the
Contributing Owners or Contributed
<PAGE>
Entities, as to the Contributed Management Contracts and the Contributed Notes,
are sometimes herein referred to individually as "Owner" and collectively as
"Owners."
C. It is intended that pursuant to this and other contemporaneously
executed agreements and assignments, the Partnership will acquire from the
Contributing Owners at Closing 100% of the interests in the Contributing
Entities, other than with respect to the Pennsylvania Contributing Entity (as
hereinafter defined), and the Contributed Properties (or the ground leasehold
interest in the Premises as described elsewhere herein). It is also intended
that pursuant to this Agreement and the Restated Partnership Agreement (as
defined below) the Partnership will acquire from the Contributing Owners which
own 100% of the interests in RD Abington Associates Limited Partnership (the
"Pennsylvania Contributing Entity"), an eighty-nine percent (89%) interest in
capital and ninety-nine percent (99%) interest in profits and losses as the sole
general partner in the Pennsylvania Contributing Entity and that such
Contributing Owners in the Pennsylvania Contributing Entity (the "Remaining
Contributing Owners") will immediately thereafter be the only partners other
than the Partnership in the Pennsylvania Contributing Entity, and the Remaining
Contributing Owners will immediately thereafter continue to own in the aggregate
an eleven percent (11%) interest in capital and a one percent (1%) interest in
profits and losses in the Pennsylvania Contributing Entity.
D. It is also intended that pursuant to this and other
contemporaneously executed agreements, the Partnership or its designee will
acquire at Closing the Contributed Management Contracts and the Contributed
Notes from certain Owners.
E. It is also intended that pursuant to this and other
contemporaneously executed agreements, the Funds will collectively purchase and
acquire from the Trust, and the Trust will issue and deliver to the Funds,
Common Shares of Beneficial Interest of the Trust, $0.01 per share ("Common
Shares"), in consideration of a cash investment to be made by the Funds.
F. In connection with the transactions described herein, the
Partnership also will be obligated to acquire from certain of the Contributing
Owners, and such Contributing Owners will be obligated to contribute to the
Partnership, such Contributing Owners' Interests in Kips Bay Development, L.P.,
which holds fee simple title to the Premises described on Exhibit "A- 1" (the
"Development Property"), and in DFD Development Limited Partnership, which owns
the leasehold interest in the Development Property, pending satisfaction, or the
waiver thereof by the Partnership, of certain conditions relating to the
completion of the Development Property, as described on Exhibit "D".
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained and intending to be legally bound, hereby agree as
follows:
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1. Contribution; Premises; Cash Investment for the Common Shares.
(a) The Contributing Owners agree to contribute to the
Partnership, and the Partnership agrees to accept from the Contributing Owners,
upon the terms and conditions hereinafter set forth, the Interests. The
Partnership and each Remaining Contributing Owner in the Pennsylvania
Contributing Entity shall cause the Partnership Agreement of the Pennsylvania
Contributing Entity to be substantially in the form of the Amended and Restated
Limited Partnership Agreement (the "Restated Partnership Agreement"), a copy of
which is attached to this Agreement as Exhibit "B". To the extent any one or
more of the Contributed Properties are being contributed by means of the
contribution by the Contributing Owners of 100% of the Interests of a
Contributing Entity, the Partnership shall direct that a portion of the
Interests shall be contributed to a designee of the Partnership in lieu of the
Partnership and such Interests are held by such designee (or another entity
affiliated with the Partnership) for a period of at least one (1) year.
(b) To the extent a Contributed Property or interest therein
is to be contributed to the Partnership or to its designee other than by a
contribution by the Contributing Owners of Interests in the Contributing Entity
which owns such Contributed Property or interest therein, the Contributing
Owners shall cause each such Contributing Entity to deliver to the Partnership,
and such Contributing Entity agrees to deliver to the Partnership, and the
Partnership agrees to accept from the Contributing Entity, upon the terms and
conditions hereinafter set forth, a deed for such Contributing Entity's Premises
evidencing succession to fee simple title to the Premises by the Partnership or
other entity designated herein by the Partnership, subject only to the Permitted
Encumbrances (as hereinafter defined), and in the case of Port Bay Associates
and RD Branch Associates, L.P., an assignment of the ground leasehold interest
of each such Contributing Entity in the respective Premises, constituting each
such Contributing Entity's respective entire right, title and interest in and to
such Premises. Additionally, as to each Contributing Entity which owns a
Contributed Management Contract or a Contributed Note, the Contributing Owners
of such Contributing Entity shall cause each such Contributing Entity to assign
to the Partnership, and each such Contributing Entity agrees to assign to the
Partnership, upon the terms and subject to the conditions hereinafter set forth,
all right, title and interest in, to and under the Contributed Management
Contracts and the Contributed Notes.
(c) All of the Premises consist of:
(i) all those certain lots or pieces of ground
described on Exhibit "C" and the buildings and improvements located thereon; the
Premises also include (A) all easements, rights-of-way or use, privileges,
licenses, appurtenances, interests and other rights of each Owner appurtenant to
or benefitting the Premises, including, without limitation, such Owner's
interest as lessee under any ground leases; (B) all right, title and interest of
any Owner in and to any land lying in the bed of any streets, roads, or avenues,
opened or unopened, existing or proposed, vacated or hereafter to be vacated,
public or private in front
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of, behind or adjoining the Premises and also as they extend beyond the Premises
for ingress, egress and regress to or from the Premises or any part thereof and
for the installation, replacement, maintenance and use of utility facilities;
(C) all right, title and interest of each Owner in and to any award made for
condemnation of the Premises as provided in Section 16 hereof (or to be made in
lieu thereof) and in and to any unpaid award for damage to the Premises by
reason of change of grade of any street, road, highway, avenue or alley, or
otherwise; (D) all of each Owner's rights to connect with and to utilize, for
service to the Premises or any part thereof, any private or public utility
facilities as may now or hereafter be within or without the boundaries of the
Premises; (E) the Owner's interest in the Leases (as hereafter defined); (F) all
licenses, permits, certificates of occupancy and governmental approvals with
respect to the Premises; (G) all trade names used in connection with the
Premises; (H) to the extent in the Owner's possession after exercising diligent
efforts to obtain the same, all plans and specifications for improvements to the
Premises, including approved site plans; (I) all of each Owner's right, title
and interest in and to all contracts (including, but not limited to, option
agreements and agreements of sale to acquire real property and Service
Agreements (as hereinafter defined)), warranties and guarantees, if any, with
regard to the foregoing and the Personal Property (as hereinafter defined) and
contracts to which each Owner is a party or to which it has the benefit and
which relates to or inures, directly or indirectly, to the benefit of the
Premises; (J) all of each Owner's right, title and interest in and to insurance
proceeds by reason of a loss insured under any insurance policy and which relate
to or inure, directly or indirectly, to the benefit of the Premises; and (K) all
and singular the mineral rights, waters, water courses, rights, liberties,
privileges, hereditaments and appurtenances whatsoever belonging to the Premises
or in any way appertaining thereto and the reversions and remainders, rents,
issues and profits thereof; and
(ii) the fixtures, furnishings, equipment and other
items of personal property owned by each Owner and located on or used in
connection with the operation of such Owner's Premises and, in the case of
Acadia Management Company LLC and Sound View Management LLC, owned by such
entities and located at their offices or used in connection with the performance
of their respective obligations under the Contributed Management Contracts,
including, but not limited to, that personal property set forth on Schedule 1
(c) (ii) (the "Personal Property").
(d) The Funds hereby agree to purchase and acquire from the
Trust, and the Trust hereby agrees to issue and deliver to the Funds, upon the
terms and subject to the conditions hereinafter set forth, an aggregate of
13,333,333 Common Shares (the "Cash Investment Shares") which, upon issuance,
shall be duly authorized, validly issued, fully paid and non-assessable.
2. Contribution Consideration; Cash Investment.
(a) The aggregate consideration (the "Contribution
Consideration") to be given by the Partnership to the Contributing Owners (other
than in respect of the Development
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Property and the Elmwood Expansion (as hereinafter defined)) shall consist of:
(i) the assumption of the Remaining Mortgages pursuant to Section 3 hereof and
(ii) the issuance of 11,333,333 limited partnership interests in the Partnership
("Operating Partnership Interests"), each of which shall be exchangeable, on a
one-for-one basis, for Common Shares, subject to the restrictions and on the
basis set forth in the Agreement of Limited Partnership of the Partnership
(including, without limitation, those provisions providing for adjustment in the
number of Common Shares into which Operating Partnership Interests are
convertible upon certain changes in the capitalization of the Trust). No
amendment to the Agreement of Limited Partnership of the Partnership after the
date hereof shall adversely modify the exchange rights of the holders of
Operating Partnership Interests without the requisite consent of the holders
thereof obtained in accordance with the terms of the Agreement of Limited
Partnership of the Partnership, except such modifications as may be necessary to
comply with law. The number of Operating Partnership Interests to be given by
the Partnership to each Owner (the "Contribution Price") for the Interests, the
Contributed Properties, the Contributed Management Contracts and the Contributed
Notes shall be the number or percentage set forth next to the name of such Owner
on Schedule 2(a). The allocation of the Contribution Consideration among the
Premises, the personal property to be contributed pursuant to this Agreement,
the Contributed Management Contracts and the Contributed Notes shall be as set
forth on Schedule 2(a); provided, however, that RD Capital, Inc., a Delaware
corporation ("RDC"), shall be authorized by each of the Owners which are
signatories hereto to adjust the allocation of the Contribution Consideration as
set forth on Schedule 2(a) upon two (2) business days prior notice to the
Partnership (and by their execution of this Agreement, each of the Owners does
hereby acknowledge and agree that RDC has been granted such authority and does
hereby indemnify and hold the Trust and the Partnership harmless from and
against the exercise by RDC of any such authority).
(b) In addition to the Contribution Consideration: (i) upon
satisfaction of the conditions set forth on Exhibit "D" to the extent satisfied
on or prior to January 1, 2000, and the contribution of the Interests owned by
the Contributing Owners in Kip's Bay Development, L.P., which holds fee simple
title to the Development Property, and in DFD Development Limited Partnership,
which owns the leasehold interest in the Development Property, all in accordance
with the terms and conditions of this Agreement as if the interests in and to
Development Property as aforesaid had been contributed to the Partnership on the
Closing Date (including, but not limited to, the making of representations and
warranties by the general partners of each of Kip's Bay Development, L.P. and
DFD Development Limited Partnership which own the Development Property and the
leasehold interest therein on the date the Contributing Owners' Interests are
contributed to the Partnership); and (ii) upon satisfaction of the conditions
set forth on Exhibit "D" relating to the Premises described on Exhibit "D" (the
"Elmwood Expansion"), the Partnership shall issue such number of Operating
Partnership Interests to the Contributing Owners, as shall equal the quotient
obtained by (x) dividing $5.5 million, subject to adjustment, (in the case of
the Development Property) and $2.75 million (in the case of the Elmwood
Expansion) and (y) the average Market Price (as hereinafter defined) of the
Common Shares for the twenty (20) consecutive trading days ending upon the date
the
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Interests in respect of the Development Property are contributed to the
Partnership and upon satisfaction of the conditions set forth on Exhibit "D"
relating to the Elmwood Expansion, as the case may be. The term "Market Price"
means, as of any day, the closing sale price of the Common Shares on such day on
the New York Stock Exchange or the American Stock Exchange (or if the Common
Shares shall not then be listed on either such exchange, such closing sales
price on the principal (determined by highest volume average for a period of 20
consecutive business days prior to the day as to which "Market Price" is being
determined) national securities exchange (as defined in the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) on which the Common Shares may
then be listed or, if there shall have been no sales on such exchange or
exchanges on such day, the closing sales price of the Common Shares on such day
on the Nasdaq Stock Market National Market or, if there shall have been no sales
on such day on the Nasdaq Stock Market National Market, or if the Common Shares
are not included on the Nasdaq Stock Market National Market, the average of the
closing bid price at the end of such date quoted by three independent market
makers as reported by the Nasdaq Stock Market or, if the Common Shares shall not
then be so listed, the average of the closing bid prices at the end of the day
quoted by three independent market makers in the over-the-counter market as
reported by the Nasdaq Stock Market by the National Quotation Bureau, Inc. or by
any successor organization. The parties acknowledge that the purchase price for
the Development Property set forth in clause (x) of this subsection 2(b) is
based upon $57,000,000 principal amount of indebtedness encumbering the
Development Property on the date the Development Property is to be contributed
to the Partnership. The purchase price for the Development Property shall be
increased or decreased, as the case may be, by an amount equal to 25% of any
increase or decrease in the $57,000,000 of such indebtedness, determined as of
the date the Development Property is contributed to the Partnership. If the
conditions set forth in Exhibit "D" concerning the Development Property are not
satisfied on or prior to January 1, 2000, the obligation of the Partnership and
of the Contributing Owners to acquire and sell, respectively, the Interests of
the Contributing Owners in Kip's Bay Development, L.P. and DFD Development
Limited Partnership shall become null and void.
(c) In consideration for the issuance of the Cash Investment
Shares, the Funds shall collectively pay at Closing to the Trust or to its
designee(s) which shall be identified to the Funds at least two (2) business
days prior to the Closing by the Trust or the Partnership the aggregate sum of
$100,000,000 (the "Cash Investment"), which shall be paid by wire transfer to
the account or accounts as designated to the Funds in writing at least two (2)
business days prior to the Closing by the Trust or the Partnership. The number
of Cash Investment Shares to be issued and delivered to any Fund shall be in the
same proportion that the portion of the Cash Investment paid by such Fund shall
bear to the total Cash Investment.
(d) In the event that, prior to Closing, the outstanding
Common Shares are changed by reason of a reorganization, merger, consolidation,
recapitalization, reclassification, share split-up, combination or exchange of
Common Shares and the like (not including the issuance of Common Shares on the
conversion of other securities of the Trust which are
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outstanding on the date of the Agreement and which are convertible into Common
Shares), an adjustment in the number of Common Shares into which the Operating
Partnership Interests issuable hereunder are convertible, an adjustment in the
number of Cash Investment Shares, and an adjustment in the number of Operating
Partnership Interests in the manner provided in the Agreement of Limited
Partnership, as amended, of the Partnership (the "Limited Partnership
Agreement"), shall be made to reflect such adjustment in the Company's
capitalization.
(e) Each Contributing Owner and each Fund acknowledges and
confirms that: (i) none of the Operating Partnership Interests, the Common
Shares into which the Operating Partnership Interests may be converted or the
Cash Investment Shares have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state securities laws; (ii) there is no
obligation to register the Operating Partnership Interests, the Common Shares or
the Cash Investment Shares except pursuant to a certain Registration Rights and
Lock-Up Agreement attached hereto as Exhibit "E"; and (iii) none of the
Operating Partnership Interests, the Common Shares into which the Operating
Partnership Interests may be converted or Cash Investment Shares may be sold or
otherwise transferred by such Owner or Fund unless pursuant to registration
under the Securities Act and state securities laws or an exemption therefrom and
then only in accordance with this Agreement and the Agreement of Limited
Partnership of the Partnership. Each Owner and each Fund by execution of this
Agreement hereby acknowledges, represents and warrants that the Operating
Partnership Interests being acquired by such Owner and the Cash Investment
Shares being acquired by such Fund hereunder are being acquired by such Owner
and such Fund, respectively, for its, his or her own account and not for the
account of any other person or persons, for investment and not with a view to
the disposition thereof in violation of the Securities Act.
(f) With respect to the first Partnership Record Date (defined
below) on or after the Closing for distributions by the Partnership, the Owners
receiving Operating Partnership Interests shall receive distributions payable
with respect to the Operating Partnership Interests on a pro rata basis based
upon the number of days during the calendar quarter preceding such Partnership
Record Date that the Owners receiving Operating Partnership Interests held
Operating Partnership Interests. "Partnership Record Date" shall mean the record
date established by the general partner for any particular distribution of
Operating Cash Flow or Capital Cash Flow as defined in and pursuant to the
Limited Partnership Agreement which record date shall be the same as the record
date established by the general partner for distribution to its shareholders of
some or all of their portion of such distribution.
3. Existing Mortgages; Other Liabilities to be Discharged at Closing.
(a) As of Closing, the Premises shall be encumbered by the
lien of those certain Mortgages (collectively, the "Existing Mortgages")
described on Schedule 3(a) to this Agreement, which shall constitute the only
indebtedness secured by a mortgage on the
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Premises as of the Closing other than as permitted in accordance with subsection
12(i)(v) hereof . At Closing, the Partnership shall cause the payment and
discharge, solely from the net proceeds of the Cash Investment: (i) of all
amounts then due and payable (or such portion of the amount due and payable as
designated on Schedule 3(a)) under each Existing Mortgage (whether in respect of
principal, accrued interest, prepaid real estate taxes or otherwise, (but
specifically excluding prepayment penalties, if any, not set forth on Schedule
3(a) and accelerated or prepaid principal)) other than those Existing Mortgages
designated on Schedule 3(a) to remain outstanding in whole or in part (the
"Remaining Mortgages") and (ii) of all amounts then due and payable (or such
portion of the amount due and payable as designated on Schedule 3(a)-1) under
each mortgage as to which the Partnership or a Subsidiary (as defined herein)
thereof is the mortgagor and which is identified on Schedule 3(a)-1.
Notwithstanding anything contained herein to the contrary, in the event that
prior to Closing, the mortgagee of a Remaining Mortgage described on Schedule
3(a) shall require prepayment of such Remaining Mortgage, whether in whole or in
part, or shall require the payment of an assumption fee or other fee or payment
as a condition to obtaining a requisite consent without which there would occur
a default under a Remaining Mortgage, the Partnership shall be under no
obligation to provide for such prepayment, even if the failure to make such
prepayment would cause a termination of this Agreement, but shall be obligated
to pay such other assumption fees and other payments, but only to the extent set
forth on Schedule 3(a).
(b) At or immediately following Closing, the Owners shall
cause the payment and discharge from the net proceeds of the Cash Investment of
each of the liabilities and obligations of the Owners described on Schedule 3(b)
(collectively, the "Discharged Liabilities") (which Discharged Liabilities shall
include the amounts to be paid and discharged by the Owners under all of the
Existing Mortgages, other than the Remaining Mortgages, as provided in paragraph
3(a) hereof).
4. Closing.
(a) Closing shall be held within five (5) days following the
satisfaction of all conditions to Closing as set forth in Section 8 hereof, but
in no event later than October 30, 1998 (the "Closing Date"), commencing at
10:00 a.m. at the offices of Battle Fowler LLP, 75 East 55th Street, New York,
New York, unless the Contributing Owners, the Trust and the Partnership shall
have otherwise agreed in writing.
(b) Closing is the event during which, among other things:
(i) the Partnership shall deliver the Contribution
Consideration to the Owners for the Interests, the Contributed Properties, the
Contributed Management Contracts and the Contributed Notes;
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(ii) the Owners shall deliver to the Partnership an
assignment of the Interests, the Contributed Properties, the Contributed
Management Contracts and the Contributed Notes;
(iii) the Owners receiving Operating Partnership
Interests in the Partnership shall sign and deliver the Second Amendment to the
Agreement of Limited Partnership of the Partnership as limited partners (which
will evidence the Operating Partnership Interests given by the Partnership to
such Owners as part of the Contribution Consideration);
(iv) the Funds shall pay the Cash Investment to the
Trust, and the Trust shall issue and deliver the Cash Investment Shares to the
Funds;
(v) the Partnership and the Remaining Contributing
Owners of the Pennsylvania Contributing Entity shall sign and deliver the
Restated Partnership Agreement;
(vi) the Trust shall provide to the Owners copies of
resolutions of the Board of Trustees of the Trust, certified as true and correct
by the Secretary of the Trust, authorizing the execution and delivery of this
Agreement and each of the other agreements and interests contemplated hereby and
the performance of the Trust's and Partnership's obligations as contemplated
hereby and thereby; and
(vii) the parties will sign and deliver such other
documents and instruments as may be required pursuant to this Agreement. Closing
is also the event during which, among other things, each Contributing Entity
shall deliver to the Partnership the deeds (either special warranty deed with
limited covenants or bargain and sale deed with covenant against grantor's acts
or such comparable form of deed as may be the customary means of conveyance in
the jurisdiction in which the Premises (individually, a "Deed", collectively,
the "Deeds") of such Contributing Entity is located), bills of sale and other
documents to be delivered by each Contributing Entity hereunder, each without
representation or warranty other than as set forth in this Agreement.
(c) At or after Closing, the Contributing Owners and the
Contributing Entities shall execute and deliver to the Partnership and Trust, or
other entity designated by the Partnership or Trust, and the Partnership and
Trust shall execute and deliver to the Contributing Owners, such other documents
or instruments as in the reasonable opinion of the respective counsel for the
Trust and the Partnership and for the Contributing Owners may be necessary to
effectuate the transactions described in this Agreement and to transfer the
Interests, Contributed Properties, Contributed Management Contracts and
Contributed Notes, and to issue and deliver the Operating Partnership Interests
and the Cash Investment Shares as contemplated by this Agreement.
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(d) The Partnership and the Contributing Owners acknowledge
that upon the contribution of the Interests at Closing hereunder, certain of the
Contributing Entities that are partnerships will terminate for federal tax
purposes under ss.708(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), and a final partnership tax return will be filed. The Contributing
Owners of such terminating Contributing Entities shall prepare such final
partnership tax returns and deliver them to the Partnership for review and
approval (which approval shall not unreasonably be withheld) prior to filing.
(e) At the Closing and on the Closing Date, and in addition to
any other obligation which an Owner may have in connection with the Closing,
each Contributing Entity as to its Premises and each Contributing Owner as to
its Contributed Property shall do or perform the following:
(i) To the extent the Premises is being conveyed by a
Deed in fee simple rather than by a contribution of Interests, execute and
deliver to the Partnership (or to the Partnership's designee), a Deed, in
recordable form dated as of the date of Closing, evidencing the succession to
fee simple title to the Premises by the Partnership or other entity designated
by the Partnership, subject only to the Permitted Encumbrances (as hereinafter
defined).
(ii) Execute and deliver to the Partnership an
assignment, in recordable form and substantially in the form of Exhibit "F,"
whereby any ground lease or leasehold estate created by such ground lease is
assigned by a Contributing Owner or Contributing Entity to the Partnership, or
any other entity designated by the Partnership (other than through a
contribution of Interests of the Contributing Owner which is the ground lessee),
subject only to the Permitted Encumbrances. Such Contributing Entity will also
obtain and deliver to the Partnership any consents necessary to effectuate such
assignment.
(iii) Execute and deliver to the Partnership a Bill
of Sale and Assignment, substantially in the form of Exhibit "G,"; (A)
transferring title to the Personal Property to the Partnership or its designee,
free and clear of all liens, claims and encumbrances, except the Permitted
Encumbrances, and including a warranty of title by the relevant Owner with
respect to the Premises and the Contributing Owners as to their respective
Contributed Properties, but excluding all other warranties, of any nature or
kind, except to the extent specifically set forth in this Agreement; (B)
assigning (1) all of such Contributing Entity's and such Contributing Owner's
rights and interest under the Service Agreements (as hereinafter defined),
together with the original or duplicate original of each such Service Agreement
to the extent in the possession of the Owner, (2) intangible property of the
Owner to the extent required to be transferred to the Partnership by this
Agreement, (3) warranties and guaranties relating to or inuring, directly or
indirectly, to the benefit, directly or indirectly, of the Premises and (4)
other assets to be transferred and assigned hereunder; and (C) assigning the
Contributing Entity's interest, and as to the Contributed Properties, the
Contributing Owners' interests in all existing Leases then in effect, which Bill
of Sale and
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Assignment shall contain an assumption by the Partnership of the Contributing
Entity's, and as to the Contributed Properties, the Contributing Owners'
obligations arising after the Closing.
(iv) Deliver the originals, to the extent in the
Owner's possession after exercising diligent efforts to obtain the same, of all
Leases and amendments thereto directly to the Partnership, or copies thereof
certified as true, correct and complete by the Owners.
(v) Deliver the originals, to the extent in the
Owner's possession after exercising diligent efforts to obtain the same, of all
ground leases and amendments thereto under which a Contributing Entity is a
lessee, or copies thereof certified as true, correct and complete by the Owners.
(vi) Execute and deliver a notice (suitable for
reproduction) to the tenants advising of the transfer of the Premises to the
Partnership and advising the tenants to pay all future rentals to the
Partnership or other entity designated by the Partnership.
(vii) Pursuant to Section 6, or pursuant to other
actions as may be required, deliver to the Partnership all tenant deposits,
including security deposits and other deposits, together with interest thereon
if required by law, contract or otherwise with respect to the Premises.
(viii) Cause to be furnished and delivered to the
Partnership the title policy or title commitments in accordance with Section
5(a)(i).
(ix) Deliver or make available to the Partnership
copies of building plans and specifications, including, but not limited to,
approved site plans, for the Premises, to the extent in the Owner's possession
after exercising diligent efforts to obtain the same.
(x) Deliver possession of the Premises to the
Partnership, subject only to the rights of tenants under their respective Leases
and the Permitted Encumbrances.
(xi) Deliver or make available to the Partnership
copies of all certificates of occupancy, licenses, permits, authorizations and
approvals, to the extent that such certificates of occupancy, licenses, permits
authorizations and approvals are in the Owner's possession or under its control
after exercising diligent efforts to obtain the same, required by law and issued
by all governmental authorities having jurisdiction over the Premises, together
with copies of all certificates issued by any local board of fire underwriters
(or other body exercising similar functions) if, and to the extent that, such
fire underwriters' certificates are in the Contributing Entity's (or, as to the
Contributing Properties, the Contributing Owners') possession or control, and
the original or copies of each bill together with proof of payment thereof (if
any of the same have been paid) for current real estate and personal property
taxes.
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(xii) Deliver to the Partnership a Non-Foreign
Transferor Certificate, certifying that each Contributing Owner is neither a
"foreign person" within the meaning of Section 1445(f) of the Code nor a
"foreign partner" within the meaning of Section 1446 of the Code.
(xiii) Deliver to the Partnership the legal opinions
of each of Battle Fowler LLP, local counsel and general counsel to Acadia
Management Company, LLC, Sound View Management, LLC and RDC in form and
substance reasonably satisfactory to the Trust and the Partnership.
(xiv) if applicable, execute and deliver to the
Partnership an Assignment, substantially in the form attached hereto as Exhibit
"H," assigning its rights and obligations under any Agreement of Sale as to
which the Partnership exercises an election under subsection 12(i)(vii).
(xv) Execute and deliver to the Partnership such
other documents or instruments as in the reasonable opinion of counsel for the
Partnership may be necessary to effectuate the transactions described in this
Agreement and to transfer title to the Premises as contemplated by this
Agreement.
(f) At the Closing and on the Closing Date, and in addition to
any other obligation which an Owner may have in connection with the Closing,
each Contributing Owner, as to its Contributed Management Contracts and
Contributed Notes, if any, shall assign to the Partnership or its designee,
pursuant to agreements of assignment and assumption in substantially the forms
of Exhibit "I-1" and Exhibit "I-2," respectively, all of its rights and
obligations under the Contributed Management Contracts and Contributed Notes.
(g) At the Closing and on the Closing Date, the Funds shall
wire transfer to the Trust or to its designees their respective allocable share
of the Cash Investment.
(h) At the Closing and on the Closing Date, and in addition to
any other obligation which the Trust or the Partnership may have in connection
with the Closing, the Partnership and the Trust shall do or perform the
following:
(i) Execute and deliver to the Owners a Second
Amendment to the Agreement of Limited Partnership of the Partnership,
substantially in the form of Exhibit "J", evidencing the issuance of the
Operating Partnership Interests as a portion of the Contribution Consideration
and other matters.
(ii) Deliver to the Funds certificates representing
their respective allocable share of the Cash Investment Shares.
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(iii) Deliver to those of the Owners to whom
Operating Partnership Interests are to be issued, to the Funds and to the
Contributing Entities as to which Interests therein are not being contributed
but whose assets are being assigned to the Trust or the Partnership at Closing,
the opinion of Cozen and O'Connor in form and substance reasonably satisfactory
to RDC on behalf of the Owners and the Funds.
(iv) Execute and deliver to the Maryland Department
of Assessments and Taxation an Amendment to the Trust's Amended and Restated
Declaration of Trust reflecting, among other things, a change in the name of the
Trust as approved by the shareholders at the Special Meeting (as hereinafter
defined) and such other amendments as shall be approved by the shareholders at
the Special Meeting and as required by this Agreement.
(v) Execute and deliver to Owners an assignment and
assumption agreement substantially in the form of Exhibit "R" evidencing the
assignment and assumption of the office leases set forth on Schedule 12(a)(v).
(i) Each Owner shall use its best efforts to cause an escrow,
with New York Land Title Services, Inc. (the "Escrow Agent") as escrowee, to be
created at Closing for purposes of releasing the liens of Existing Mortgages
(other than the Remaining Mortgages). Each Owner shall use its best efforts to
cause documents reflecting the payment of indebtedness and release of liens
securing Existing Mortgages other than the Remaining Mortgages (the "Loan
Repayment Documents") to be delivered to the Escrow Agent on or before the
Closing Date.
(j) This transaction shall be closed by means of a so-called
"New York Style Closing," with the concurrent delivery of the documents of
title, transfer of Interests, Contributed Management Contracts, Contributed
Properties and Premises, delivery of the title policies or marked-up title
commitments, the delivery of the Contribution Consideration and delivery of the
Cash Investment and the Cash Investment Shares. The Contributing Owners, as to
their respective Premises, and the Contributing Entities, jointly and severally
as to all of the Premises, shall provide, if required by New York Land Title
Services, Inc. (the "Title Company"), an undertaking (the "Gap Undertaking") to
the Title Company necessary to effectuate the New York Style Closing, in form
and content reasonably acceptable to those providing the Gap Undertaking.
(k) The parties acknowledge that, as of the date hereof, the
Owners do not have all consents necessary to consummate the transactions
contemplated by this Agreement. Ross Dworman ("RD") and Kenneth Bernstein ("KB")
shall diligently exercise all commercially reasonable efforts to obtain all
necessary consents, waivers and approvals from third parties, including, but not
limited to those third party partners identified on Schedule 4(k), constituting
either (i) those parties who are not signatories hereto but whose consent is
necessary to consummate the transactions contemplated hereby and to confirm the
due and
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valid execution and delivery of this Agreement by the Contributing Entities to
which such third party partners are partners or (ii) those parties who are not
signatories hereto on the date hereof but who are Owners and who are
contemplated to be contributing their Interests to the Partnership or its
designee as aforesaid, such that either: (A) 100% of the Interests of each
Contributing Entity shall be contributed to the Partnership at Closing as
contemplated by the Agreement (and such that such third party partners shall
become signatories to this Agreement as Contributing Owners to the extent their
signature is required or shall become signatories to an Agreement and Power of
Attorney (the "Third Party Partner Agreement") to the extent their signature to
this Agreement is not required) or (B) fee simple title to the Contributed
Property can be conveyed by deed to the Partnership or its designee or the
Contributed Management Contract or Contributed Note can be assigned, to the
extent such conveyance or assignment requires approval or consent by such third
parties. In the event RD and KB are unable to obtain the requisite consents,
waivers or approvals from any such third party and, as a consequence thereof,
the Premises, the Contributed Management Contracts or the Contributed Notes
cannot be conveyed, or 100% of the Interests of a Contributing Entity cannot be
contributed to the Partnership as contemplated hereby, and provided that this
Agreement is not otherwise terminated by the Trust to the extent permitted by
Section 13(a), the Partnership shall accept the contribution of only those
Interests in respect of a Contributing Entity from the Contributing Owners,
although constituting less than 100% of the interests in such Contributing
Entity, and those Premises, Contributed Management Contracts and Contributed
Notes for which all necessary consents, waivers and approvals have been
obtained. In such event, the total consideration payable hereunder shall be
reduced by the Contribution Consideration attributable to such Interests,
Contributed Property, Contributed Management Contract or Contributed Note, as
the case may be, as set forth on Schedule 2(a).
5. Condition of Title and Related Matters.
(a) Title. (i) At Closing, title to the Premises shall be such
as will be insured, solely in the Partnership's name (or in the name of the
Partnership's designee as grantee of such Premises), as good and marketable (at
the Partnership's expense) by the Title Company at regular rates pursuant to the
standard stipulations and conditions of the 1970 Form B ALTA Policy of Owner's
Title Insurance as revised in 1984, if available or such other form which is
promulgated as a matter of law or state insurance regulations, and as the same
may be modified by such endorsements, affirmative coverage and other matters
reasonably required by the Partnership, free and clear of all liens and
encumbrances, except for the Permitted Encumbrances. The term "Permitted
Encumbrances" as to each Premises shall mean (i) the liens of real estate taxes,
personal property taxes, water charges, and sewer charges, provided the same are
not yet due and payable, but subject to adjustment as provided herein; (ii) the
rights of those parties occupying space at any of the improvements, as tenants
only, pursuant to Leases existing on the date hereof and Leases approved
hereunder; (iii)(A) those restrictions, covenants, agreements, easements,
matters and things affecting title to the Premises as of the date hereof and
more particularly described in the marked-up title commitments delivered to the
Partnership prior to the date hereof and listed on Schedule 5(a); provided,
however, if the
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Trust discovers prior to the date hereof any exception on such title commitments
(or any other exception that is subsequently arising) which the Trust has
identified in writing to the Contributing Entity or Contributing Owner, as the
case may be, on or prior to the date hereof or if such exception arises after
the date hereof, within five (5) business days of the Trust's discovery thereof,
and such exception materially affects the value or marketability of the Premises
or materially impairs the use of the Premises for its current use, then such
exception shall not be deemed a Permitted Encumbrance, provided further that the
Contributing Entity or Contributing Owner, as the case may be, may, at its
election, undertake to eliminate such unacceptable exceptions, (it being agreed,
however, that the Contributing Entity or Contributing Owner, as the case may be,
shall be obligated to eliminate those unacceptable exceptions constituting (A)
final, unappealable judgments against such Contributing Entity or Contributing
Owner, as the case may be, (B) mortgages or other liens which can be satisfied
by payment of a liquidated amount, other than the Remaining Mortgages, (C)
exceptions which can be removed by payments not to exceed $25,000 for each
Contributed Property and not to exceed $100,000 in the aggregate for all title
defects, and (D) payments to the mortgagees which are currently required
pursuant to existing loan documents in order to cause the mortgagees to consent
to the Partnership assuming the Remaining Mortgages), and except as provided
below (or as provided in the immediately proceeding parenthetical), the
Contributing Entity or Contributing Owner, as the case may be, shall have no
obligation to incur any expense or bring any action in connection with curing
such title exceptions. The Contributing Entity or Contributing Owner, as the
case may be, in its discretion, may adjourn the Closing for up to sixty (60)
days in order to eliminate such unacceptable exceptions. If after complying with
the foregoing requirements, the Contributing Entity or Contributing Owner, as
the case may be, is unable to or elects not to eliminate all unacceptable
exceptions in accordance with the terms of this Agreement on or before such
adjourned date for the Closing, then the Partnership shall elect to (x) if such
unacceptable exceptions results in an RDC Material Adverse Effect, terminate
this Agreement in accordance with Section 13(a)(viii), (y) terminate this
Agreement only as to such Contributing Property (provided, however, that if this
Agreement is terminated as to such Contributing Property, then for purposes of
an RDC Material Adverse Effect thereafter, the FFO attributable to the first
Contributed Property (or Premises) as to which the Partnership exercises its
right to terminate this Agreement shall not be considered for calculating Target
RDC NOI), and the contribution thereof by the Owner or the Interests of the
corresponding Contributing Owners in their respective capacities as such,
whereupon this Agreement shall become null and void as to such Contributing
Owner (with respect to the applicable Contributing Entity) or Contributed
Property, and neither the Partnership nor such Contributing Owner or
Contributing Entity in its respective capacities as such shall have any further
rights or obligations under this Agreement with respect to such Premises, or
such Contributing Owner's Interest in such Contributing Entity or Contributed
Property and the total consideration payable hereunder shall be reduced by the
Contribution Consideration attributable to such Premises set forth on Schedule
2(a), or (z) to accept title subject to such unacceptable exceptions and receive
no credit against or reduction of the consideration to be given to the
Contributor hereunder; (iv) any other easements, covenants and restrictions
which are entered into with the consent of the Trust after the date hereof, such
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consent not to be unreasonably withheld, delayed or conditioned; (v) any and all
laws, statutes, ordinances, codes, rules, regulations, requirements, or
executive mandates affecting the Premises, including, without limitation, those
related to zoning and land use, as of the date hereof; (vi) the state of facts
shown on the surveys listed on Schedule 5(b) for each of the individual
properties comprising the Premises and any other state of facts which a recent
and accurate survey of the Premises would actually show, provided that same does
not materially impair the use of the Premises as it is currently being used and
does not render title uninsurable at standard rates; (vii) the Service
Agreements; (viii) any installment not yet due and payable of assessments
imposed after the date hereof and affecting the Premises or any portion thereof;
(ix) any utility company rights, easements and franchises to maintain poles,
lines, wires, cables, pipes, boxes and other fixtures and facilities in, over,
under or upon the Premises, provided the same do not impair, other than a de
minimis manner, the present use of the Premises; (x) any prohibition against the
interference with the natural and unobstructed flow of any applicable brook
crossing the Premises or other riparian rights, provided the same does not
materially impair the use of the Premises as it is currently being used and does
not render title uninsurable at standard rates; (xi) such matters as the Title
Company shall be willing, without special premium, to omit as exceptions to
coverage, including minor variations between record lines and tax lot lines; and
(xii) the lien of the Existing Mortgages on those Premises encumbered by the
Existing Mortgages as of the date hereof (but on the terms and conditions of
this Agreement); provided, however, that the title insurance policy to be issued
promptly following Closing and consistent with the title commitments described
above will not show as a lien or encumbrance any mortgage, including an Existing
Mortgage, other than a Remaining Mortgage. At Closing, title to the Personal
Property associated with each Premises shall only be subject to the Permitted
Encumbrances as to such Premises and, with respect to a Contributing Entity's
Personal Property, shall be transferred to the Partnership (or to the
Partnership's designee). The Contributing Entities (and with respect to the
Contributed Properties, the Contributing Owners) and the Partnership shall
deliver to the Title Company such commercially reasonable instruments as the
Escrow Agent requires to issue non- imputation and other endorsements and other
coverages, in such form as the Partnership reasonably requires. The premiums and
other costs of title insurance shall be borne by the Partnership and paid at
Closing.
(ii) In all cases in which there is an Existing
Mortgage which is not a Remaining Mortgage, the Contributing Entity or
Contributing Owners, as the case may be, shall diligently exercise commercially
reasonable efforts to cause the Loan Repayment Documents to be placed in escrow
with the Escrow Agent, the terms of the escrow to be reasonably acceptable to
the Partnership. In the event the Contributing Entity shall only cause the
holder of such Existing Mortgage to deliver a pay-off statement or agreement,
such Contributing Entity shall cause the Title Company to commit to omit such
Existing Mortgage as an exception to the title policy at Closing upon timely
payment of the amount indicated on the pay-off statement.
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(iii) If title to any Premises is not, at Closing,
insurable as set forth in this subsection 5(a), and, as a result thereof, this
Agreement is not otherwise terminated to the extent permitted by subsection
13(a)(viii) hereof, the Partnership shall nonetheless be obligated to consummate
the transactions contemplated hereby (subject to the prior satisfaction of all
conditions precedent to such obligation or the waiver thereof), but may elect,
as its sole right and remedy, to terminate this Agreement only as to such
Premises and the contribution thereof by the Owner thereof or the Interests of
the corresponding Contributing Owners in their respective capacities as such,
whereupon this Agreement shall become null and void as to such Contributing
Owner (with respect to the applicable Contributing Entity or Contributed
Property), and neither the Partnership nor such Contributing Owner or
Contributing Entity in their respective capacities as such shall have any
further rights or obligations under this Agreement with respect to such Premises
or such Contributing Owner's Interests in such Contributing Entity or
Contributed Property. In such event, the total Contribution Consideration
payable hereunder shall be reduced by that portion of the Contribution
Consideration allocated to the Premises or Interests of the Contributing Owners
in respect thereof as set forth on Schedule 2(a).
(b) Survey. Schedule 5(b) sets forth a true, correct and
complete list of each available existing as-built survey (the "Survey") of the
Premises. At Closing, the Premises shall be subject to no condition or other
state of facts which is less favorable to the Partnership, as reasonably
determined by the Partnership, than the condition and state of facts set forth
on any Survey delivered to the Partnership with respect to such Premises (other
than changes to those Premises identified on Schedule 5(b) as being under
construction).
(c) UCC Searches. The Owners shall deliver to the Partnership
prior to Closing searches, dated no earlier than thirty (30) days from the
Closing Date, of all Uniform Commercial Code financing statements filed against
the Contributing Entities, the Contributing Owners identified on Exhibit "A",
the Contributed Properties, the Premises or the Personal Property, in each case
filed with the Secretary of State and/or county clerk in the state and county in
which the Contributing Entities have been formed, the Contributing Owners are
domiciled and the Contributed Properties and Premises are located, together with
tax lien searches in all such jurisdictions. It is a condition to Closing by the
Partnership that such searches, or new searches conducted prior to Closing,
reveal that, other than the Permitted Encumbrances, there are no bankruptcies,
actions, claims or liens against any of such parties or affecting or encumbering
or which might encumber the Interests, the Premises, the Personal Property or
any other interest in the Premises which will continue after Closing and which,
individually or in the aggregate, could constitute an RDC Material Adverse
Effect (as defined in Section 13(a)(viii)).
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6. Possession; Agreements and Leases.
(a) At Closing, each Owner will transfer to the Partnership
(or to the Partnership's designee) possession of such Owner's Premises and the
Personal Property as to such Premises subject to the leases for the Premises all
as previously disclosed by the Owners to the Partnership (other than those
leases which expire or are terminated or modified as contemplated by the
provisions of this subsection set forth below) and any new leases entered into
after the date hereof (hereinafter collectively, the "Leases"), all of which
Leases which are in existence on the date hereof being listed on Schedule
9(m)-2, and will assign to the Partnership (or to the Partnership's designee as
the case may be) the landlord's interest in each Lease and any guarantees with
regard to each Lease (all of which are identified on Schedule 9(m)-2. Set forth
on Schedule 6(a) is a description of each arrangement by which brokers are
entitled to be paid leasing brokerage commissions, finders or referral fees or
similar commissions. The Owners shall be obligated to pay at or prior to Closing
all accrued and unpaid leasing commissions, finders or referral fees or similar
commission due on or prior to Closing with respect to Leases existing on the
date hereof (other than those identified on Schedule 12 (i) (v)) or, at such
Owner's option, either (i) deposit a sufficient amount of cash at Closing with
the Partnership to pay such commissions and fees when due and payable or (ii)
reduce at Closing the number of Operating Partnership Interests otherwise
issuable by the Partnership to such Owner constituting such Owner's allocable
share of the Contribution Consideration by an amount (based upon $7.50 per
Operating Partnership Interest) equal to the amount the Partnership will be
obligated to pay for such commissions and fees when due and payable. Subject to
the limitations set forth in Sections 23 and 24 hereof, the Warrantors also
agree to jointly and severally indemnify, defend and hold the Partnership
harmless from and against any payments of any such commissions and fees payable
after Closing with respect to or on account of the Leases set forth on Schedule
9(m)-2, except to the extent set forth in the immediately succeeding sentences.
The Partnership, or its designee, shall, by its acceptance of such assignment,
be deemed to have assumed and promised to observe and perform all covenants and
obligations of the landlord under the Leases thereafter arising, including, but
not limited to, the assumption of any obligations of a Contributing Entity
associated with tenant security deposits and interest thereon, all of which are
listed on Schedule 9(m)-2 (the "Security Deposits"), and the obligation to pay
leasing brokerage commissions, finders or referral fees or similar commission
with respect to or on account of the renewal of Leases set forth on Schedule
9(m)-2, on or after the Closing Date or on account of new leases executed on or
after the date hereof. Each Contributing Entity and each Contributing Owner as
to the Contributed Properties covenants that after the date hereof, such Owner
shall not have entered into new Leases or modified or terminated any Lease
(except by reason of a default by the tenant thereunder) except as hereafter
provided in Section 12(i).
(b) Except as set forth on Schedule 9(d), there are no
existing service agreements (hereinafter collectively, and together with any
substitute contract mentioned below, called the "Service Agreements") which are
not terminable without cause or penalty upon not more than thirty (30) days'
notice. The Owners have advised the Partnership of
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existing Service Agreements and, except as set forth in Section 9 below, the
termination of any of the Service Agreements prior to Closing by reason of the
expiration of its term or by reason of a default thereunder shall not excuse the
Partnership from its obligation to complete Closing and to pay the full
Contribution Consideration, provided that if the service in question is
necessary or appropriate to the proper operation of any Premises or the
performance of a Contributed Management Contract, as the case may be, the Owner
of such Premises or of the Contributed Management Contract, as the case may be,
will obtain a substitute contract on terms reasonably acceptable to the
Partnership prior to Closing. All rights and interests under the Service
Agreements will be assigned by the Owners to the Partnership (or to the
Partnership's designee) at Closing by an assignment as described in Section
4(e)(iv), and the Partnership (or its designee) shall be deemed, by its
acceptance of such assignment, to have assumed and promised to observe and
perform all obligations of the Owners thereunder arising after Closing.
(c) Each Owner agrees to diligently exercise commercially
reasonable efforts to cause each tenant whose name is designated on Exhibit "L"
("Owner Major Tenants") to deliver to the Partnership at or prior to Closing a
written statement ("Tenant Estoppel Certificate") substantially in the form of
Exhibit "K" attached hereto. If an Owner fails to obtain a Tenant Estoppel
Certificate from an Owner Major Tenant of the Premises of such Owner, after
using commercially reasonable efforts to obtain the same, then such Owner shall
deliver a certificate representing to the Partnership the facts that are to be
covered by the Tenant Estoppel Certificates. The Owner's representations shall
be deemed for all purposes hereunder to have been made under Section 9, and
shall terminate as to any Owner Major Tenant as to which a Tenant Estoppel
Certificate from such Owner Major Tenant shall have been subsequently delivered
to the Trust so long as such Tenant Estoppel Certificate confirms in all
respects the representations of the Owner concerning such Owner Major Tenant in
the Owner's certificate previously delivered to the Trust.
(d) All realty transfer taxes or sales taxes accruing or
payable regarding the contribution of the Premises of such Owner's Contributed
Entity or Contributed Property shall be payable by the Partnership. It is not
expected that any realty transfer taxes or sales taxes shall accrue or be
payable regarding the contribution of Interests. However, if any realty transfer
tax or sales tax accrues or is payable in connection with the contribution of
Interests, such realty transfer tax or sales tax shall be payable by the
Partnership. If any inquiry or proceeding shall be commenced with respect to
realty transfer taxes or sales taxes in connection with this transaction
relating to the Interests, the Partnership will not enter into any settlement or
make any payment of such realty transfer taxes or sales taxes without the
approval of the Contributing Owners against whom the tax has been assessed;
provided, however, that if the pendency of any such proceeding threatens the
Partnership's title to the Interests or title to any Premises or creates a risk
of material liability to the Partnership, the Partnership may require the
posting of a bond or other collateral during the pendency of such proceeding, or
take any other action reasonably necessary to protect its interests. If any
inquiry or proceeding shall be commenced with respect to realty transfer taxes
or sales taxes in
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connection with this transaction relating to the Contributed Properties
contributed by the Contributing Owners, and the portion of the taxes subject to
such inquiry or proceeding is that typically paid by the seller of the real
property in accordance with the custom of the locale in which the real property
in question is located, such Contributing Owners shall undertake and shall be
entitled to respond to such inquiry and defend such proceeding, and the
Partnership will not enter into any settlement or make any payment of such
realty transfer taxes or sales taxes without the approval of the Contributing
Owners which have contributed interests in the Contributed Properties; provided,
however, that if the pendency of any such proceeding threatens the Partnership's
title to the Premises contributed by the Contributing Owners or creates a risk
of material liability to the Partnership, the Partnership may require the
posting of a bond or other collateral by one or more of the Contributing Owners
during the pendency of such proceeding, or take any other action necessary to
protect its interests.
7. Adjustments to Contribution Consideration.
(a) (i) Taxes, Rents, etc. Real estate taxes (on the basis of
the due dates of the tax bills for the period for which such taxes are assessed)
on the Premises, personal property taxes on the Personal Property, minimum water
and sewer rentals, rents, including, without limitation, expense pass throughs,
percentage rents, income from and expenses for electricity and other sums paid
by tenants, licensees and concessionaires and collected by the Owners prior to
Closing under the Leases, payments due under the Service Agreements which are to
be assigned to the Partnership, prepaid license fees, utility deposits and other
charges for licenses and permits for the Premises which will remain in effect
for the Partnership's benefit after Closing, rental under any ground lease,
municipal rubbish removal charges, lease rejection awards made in any bankruptcy
proceedings of a tenant, and prepaid insurance premiums for insurance which will
remain in effect for the Partnership's benefit after Closing, if any, shall be
apportioned pro rata between the Owners and the Partnership on a per diem basis
as of midnight on the day before the Closing Date, so that the Owners shall bear
all expenses with respect to the Premises and benefit from all items of income
with respect to the Premises through the day before the Closing Date. To the
extent that the amounts of the items to be adjusted are not reasonably
ascertainable as of the Closing Date, they shall be adjusted as promptly after
the Closing Date as the amounts thereof are ascertained.
(ii) All rents and other sums collected by the
Partnership after the Closing Date, up to the respective amounts currently due
the Partnership from time to time, will be retained by the Partnership and
applied on account of the rents and other sums due to the Partnership. At
Closing, the Owners shall identify all tenants which are in arrears in the
payment of rent or other sums due under the Leases on the Closing Date. If any
tenant shall pay to the Partnership after the Closing Date a sum in excess of
all rents and other sums which have accrued to the Partnership, and which excess
sum is on account of arrearages which became due prior to Closing, the
Partnership will remit to the Owner of such Premises such excess net of a
proportionate share of the cost of collection based on the relative amounts
recovered by each of the Owners and the Partnership, to be applied on account of
the
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arrearages due to the Owner. The Owners shall not bring any suit or other
proceeding against any tenant currently in occupancy under the Leases after the
Closing Date on account of rental delinquencies. The Partnership assumes no
obligation to collect or enforce the payment of any such moneys which may be
owing to an Owner. If the Partnership employs an agent to collect rent under the
Leases after Closing, such agent shall have the right to deduct and retain from
the Owners' share of any rent or other payments received by the Partnership
after the Closing Date a pro rata share of the compensation payable to such
agent by the Partnership, based on the relative amounts recovered by each party.
(iii) Any refunds received by the Partnership under
any of the Service Agreements on account of payments which are applicable to
periods prior to the Closing Date shall be apportioned and paid by the
Partnership to the Owners.
(iv) All amounts collected from tenants pursuant to
provisions in the Leases (or in any reciprocal easement agreements) on account
of real estate taxes shall be transferred to the Partnership on the Closing
Date, subject to any prior rights of mortgagees with respect to the Remaining
Mortgages. The Owners shall be responsible for the collection of all such
amounts up to the Closing Date and the Partnership shall be responsible for the
collection of all such amounts from and after the Closing Date. At Closing, the
difference between the aggregate amount collectable by an Owner under the Leases
and reciprocal easement agreements on account of real estate taxes for the tax
period in which the prorated taxes are due, and the amount of real estate taxes
for the Premises for the tax period in which the Closing Date occurs, shall be
credited through a cash adjustment to the Owner or the Partnership, as
applicable.
(v) Common area maintenance expenses which by the
terms of the Leases (or any reciprocal easement agreements) are recoverable in
whole or in part from tenants of the Premises (or parties to reciprocal easement
agreements) shall be calculated on the basis of the actual expenses incurred by
the parties as of the Closing Date. The Owner shall be responsible for the
collection of all such amounts up to the Closing Date and the Partnership shall
be responsible for the collection of all such amounts from and after the Closing
Date. The Owners and the Partnership recognize that the common area maintenance
expense contributions made by tenants or parties to reciprocal easement
agreements during the month in which Closing occurs will be applied by the
Owners for the common area maintenance expenses incurred for the Premises during
the month which precedes the month in which Closing occurs (the "Pre-Closing
Month"). Notwithstanding such application, items of common area maintenance
expense and income shall be prorated as of the Closing Date in conformity with
generally accepted accounting principles applied on an accrual basis of
accounting excluding straight lining of rent, except that the parties shall
defer the cash adjustment to be made to the Partnership which arises from an
Owners' application of the common area maintenance expense contributions made
during the month in which Closing occurs to the expenses incurred during the
Pre-Closing Month until the year-end common area maintenance reconciliation is
made under the Leases. If an Owner shall have failed to have
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paid common area maintenance expenses incurred for any period prior to the
Pre-Closing Month, or if an Owner shall have collected payments for such
expenses for periods beyond Closing, then there shall be a credit to the
Partnership in the form of a cash adjustment for the amount of such expense or
excess.
(vi) If the apportionment of any percentage rents,
"escalation" payments relating to operating expenses, merchant's association
dues or fees for promotion, income and expenses for electricity or other
payments received by the Partnership after the Closing Date from a tenant under
any of the Leases on account of periods prior to the Closing Date or on account
of sums which are attributable to expenses incurred by the landlord for periods
of time prior to the Closing Date, cannot be precisely determined at the Closing
Date, the Owner and the Partnership shall reasonably estimate the apportionment
of such sums pro rata between the Partnership and the Owner on a per diem basis
as of the Closing Date. A post-closing adjustment and apportionments between the
Owner and the Partnership shall be made, if necessary, between the Partnership
and the Owner for such apportioned items when the amounts thereof can be
ascertained.
(vii) The apportionment of "percentage rent", and the
amounts due by the Partnership to the Owners, respectively, under each of the
Leases for "percentage rent", shall be made or paid with respect to the lease
year (as defined in such Lease) in which the Closing Date falls and the
post-Closing adjustment shall be made at the time that the accounting for the
tenant's percentage rent obligation for the lease year is determined under the
Lease. The amount to be apportioned shall be the total of the amounts collected
by both the Partnership and the Owner as percentage rent for such percentage
rent lease year. The Owner's portion thereof shall be an amount which bears the
same ratio to the total percentage rent for the applicable percentage rent lease
year as the number of days up to but excluding the Closing Date in such
percentage rent lease year shall bear to the full number of days in such
percentage rent lease year; and the Partnership shall be entitled to retain the
remaining portion.
(viii) If bills for real estate taxes on the Premises
have not been issued as of the Closing Date, and if the amount of real estate
taxes for the then current tax fiscal year is not then known, the apportionment
of real estate taxes shall be made at Closing on the basis of the prior year's
real estate taxes and a post-Closing adjustment shall be made when the actual
amounts are ascertained.
(ix) If, at Closing, the Premises or any part thereof
is affected by an assessment which is payable in installments of which the first
installment is then a charge or lien, or has been paid, then all unpaid
installments of such assessments shall be prorated between the parties as of the
date of Closing as follows: the Owner shall be responsible for those
installments thereof for years prior to the year in which Closing occurs and the
Partnership shall be responsible for those installments thereof for years
following the year in which Closing occurs; the installment due for the year in
which Closing occurs shall be prorated between the parties on a per diem basis.
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(x) Any credit due to the Partnership pursuant to
this Paragraph 7(a) shall be paid, at the option of the Owners, either (i) in
cash to the Partnership at Closing and not applied as a credit against the
Contribution Price or (ii) by reduction at Closing in the number of Operating
Partnership Interests otherwise constituting Contribution Consideration by an
amount (based upon $7.50 per Operating Partnership Interest) equal to the amount
of the adjustment. Any credit due to the Owners pursuant to this Paragraph 7(a)
shall be paid by the Partnership to the Owners at Closing as an addition to the
Contribution Price, at the Owner's election either (i) in cash or (ii) by the
issuance of additional Operating Partnership Interests valued on the basis of
the Market Price per Common Share averaged for twenty (20) consecutive trading
days ending upon the date when the additional Operating Partnership Interests
are issued into which each Operating Partnership Interest may be exchanged;
provided that in no event will the issuance of additional Operating Partnership
Interests to the Owners cause the Trust to own less than 51% of the total number
of Operating Partnership Interests to be issued and outstanding immediately
following Closing . In addition to the foregoing, all amounts held in escrow at
Closing by a mortgagee of a Remaining Mortgage, shall be assigned at Closing by
the Owner which is the mortgagor of such Remaining Mortgage to the Partnership
upon payment to such Owner by the Partnership of an amount in cash equal to the
amount of the escrow at the Closing less amounts held in escrow to fund
obligations to which the Owners have contractually agreed herein to remain
liable following the Closing. The amounts escrowed by mortgagees of Remaining
Mortgages on the date hereof are as set forth on Schedule 7(a)(x). Any amounts
due to either party under this Agreement shall be promptly paid to the party
entitled thereto within ten (10) business days of the final reconciliation of
the amount due.
(b) Security Deposits. The total sum of all tenant security
deposits, together with all interest earned thereon as of the Closing Date which
the Owner is obligated to pay to tenants, shall be transferred to the
Partnership or its designee at Closing and not as a credit against the
Contribution Price.
(c) Utility Meter Readings. At Closing, the Owners shall pay
all charges for the water, electric, gas and other utility meters servicing the
Premises (other than meters measuring exclusively utility consumption which is
to be paid in full by tenants under Leases) apportioned on the basis of the
prior month's readings. When the charges for the month during which Closing
occurs are ascertained, the parties shall make any necessary post-Closing
adjustments. The apportionment of items of expense and income for tenant
contributions on account of utilities shall be handled in the same manner as
items of expense and income for tenant contributions for common area maintenance
are handled as described in subparagraph 7(a)(v) above.
(d) Tenant Improvement Costs. The Owners shall pay at or prior
to Closing all tenant improvement costs, tenant allowances and other bona fide
third party costs, fees and expenses incurred or to be incurred in respect of
Leases entered into on or before the date hereof (including, but not limited to,
fees due to developers, construction managers and others,
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but excluding costs, fees and expenses in connection with (i) the Elmwood
Expansion and (ii) pertaining to those properties identified on Schedule
12(i)(v), which costs, fees and expenses pertaining to the Premises described in
clauses (i) and (ii) are to be paid by the Partnership) or at such Owner's
option, either (i) deposit a sufficient amount of cash at Closing with the
Partnership to pay such costs, fees and expenses or (ii) reduce at Closing the
number of Operating Partnership Interests otherwise issuable by the Partnership
to such Owner constituting such Owner's allocable share of the Contribution
Consideration by an amount (based upon $7.50 per Operating Partnership Interest)
equal to the amount the Partnership will be obligated to pay for such costs,
fees and expenses when due and payable. Subject to the limitations set forth in
Sections 23 and 24, the Warrantors agree to jointly and severally indemnify,
defend and hold the Partnership harmless from and against any liability
associated with such costs, fees and expenses. If Closing occurs, the
Partnership shall pay all tenant improvement costs, tenant allowances, and other
bona fide third-party costs and expenses actually incurred in connection with
procuring the tenant for those Leases entered into after the date hereof.
(e) Interest on Existing Mortgage. Interest under the notes
secured by the Remaining Mortgages (the "Existing Note") is payable monthly or
quarterly in arrears. Therefore, the interest portion of the monthly or
quarterly payment to be made to the holder of an Existing Note on the Closing
Date, if Closing occurs on the first day of a calendar month or quarter, or to
be made on the first day of the first calendar month or first quarter after the
Closing Date, if Closing does not occur on the first day of a month or quarter,
shall be apportioned on a per diem basis for the monthly or quarterly period
preceding such payment, and the Partnership shall be paid at Closing for the
portion of such interest payment attributable to the period occurring prior to
the Closing Date. The Partnership shall pay, at or prior to Closing, any
assumption fees payable to a holder of a Remaining Mortgage in consideration of
its consent to the transfer of the Premises to the Partnership subject to the
Remaining Mortgage, but only to the extent the assumption fee is set forth on
Schedule 3(a).
8. Conditions to Closing.
(a) The obligation of the Trust and the Partnership to
consummate Closing hereunder is conditioned upon the following:
(i) All representations and warranties of all Owners
and of the Fund shall be true in all material respects as of the date hereof and
as of the Closing Date.
(ii) Each Owner and the Fund shall have performed all
of its respective covenants and obligations to be performed at or prior to
Closing, including, but not limited to, the payment of the Cash Investment by
the Funds.
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(iii) The Title Company shall be unconditionally
committed to issue, promptly following Closing, policies of title insurance or
binding marked-up commitments to issue title insurance policies described in
subsection 5(a)(i).
(iv) Except as permitted by subsection 6(c), Tenant
Estoppel Certificates acceptable to the Partnership shall have been obtained
from no less than 75% of the Owner Major Tenants and Owner's certificates as
described in subsection 6(c) shall have been delivered for Leases of all other
Owner Major Tenants, which certificates shall be subject to the limitations set
forth in Sections 23 and 24.
(v) Estoppel Certificates reasonably acceptable to
the Partnership shall have been obtained from lessors under any ground lease to
be assigned.
(vi) For each portion of any Contributing Owner's
Premises located in the State of New Jersey and that constitutes an "Industrial
Establishment" within the meaning of the Industrial Site Recovery Act, New
Jersey Statutes annotated Sections 13:1K-6, et seq., as amended ("ISRA") if any,
a Contributing Owner of such Premises shall have delivered to the Partnership
(or to its designee) on or before Closing, a negative declaration approved by
the New Jersey Department of Environmental Protection and Energy ("NJDEPE")
pursuant to ISRA. For each portion of any Contributing Owner's Premises located
in the State of New Jersey (other then vacant land) and which does not
constitute an "Industrial Establishment" within the meaning of ISRA, the
Contributing Owner shall deliver to the Partnership (or to its designee) on or
before Closing, a determination issued by the NJDEPE that ISRA is not applicable
to the transactions contemplated by this Agreement.
(vii) RD and KB shall have executed and delivered to
the Partnership the Non-Compete Agreement to which reference is made in
subsection 12(c).
(viii) (a) Each Contributing Owner who will receive
Operating Partnership Interests as all or part of the Contribution Consideration
shall have executed and delivered to the Trust the Investment Letter to which
reference is made in subsection 12(b).
(ix) Each Fund, as to those Cash Investment Shares
for which a proxy shall not have been granted by such Fund to the partners
thereof, shall have executed and delivered to the Trust the Voting Trust
Agreement and, as to all Cash Investment Shares, the Investment Letter to which
reference is made in subsection 12(b).
(x) Each Contributing Owner set forth on Exhibit "M"
and each Fund shall have executed and delivered the Registration Rights and
Lock-Up Agreement to which reference is made in subsection 2(e).
(xi) The Owners and the Funds shall have delivered
the legal opinions of Battle Fowler LLP, local counsel and general counsel to
Acadia Management Company
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LLC, Sound View Management LLC and RDC, to which reference is made in subsection
4(a)(xiii).
(xii) Within thirty (30) days from the date hereof,
the Funds shall have received binding irrevocable written commitments from
equity owners (evidenced by execution of partnership agreements of the Funds) to
make not less than an aggregate of $100,000,000 in capital contributions for
purposes of funding the Cash Investment, subject only to the conditions
precedent set forth on Schedule 10(b)(v).
(xiii) The shareholders of the Trust shall have
approved this Agreement and the transactions contemplated hereby as required by
Maryland law, the rules of the New York Stock Exchange (or such other principal
exchange on which the Common Shares shall then be listed), and the Trust's
Amended and Restated Declaration of Trust.
(xiv) Bear Stearns & Co. Inc. shall have delivered
its opinion to the Trust's Board of Trustees that the Agreement and the
transactions contemplated by the Agreement are fair to the Trust's shareholders
from a financial point of view.
(xv) No preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority shall be in effect at Closing which would prevent the
consummation of the transactions contemplated by this Agreement.
(xvi) To the extent the assumption by the Partnership
of the obligations under any Remaining Mortgage is conditioned upon the payment
of any assumption fees other than principal or interest outstanding under such
Remaining Mortgage, the Partnership shall have paid such fees to the extent set
forth on Schedule 3(a), and the Contributing Owner which is the owner of the
Premises subject to such Remaining Mortgage shall have paid all other assumption
fees from sources other than the Contribution Consideration or the Cash
Investment.
(xvii) The Remaining Contributing Owners of the
Pennsylvania Contributing Entity shall have executed and delivered the Restated
Partnership Agreement.
(xviii) Each Owner to whom the Operating Partnership
Interests shall be issued hereunder shall have executed and delivered the Second
Amendment to the Agreement of Limited Partnership of the Partnership.
(xix) Each Owner which is not a signatory hereto
shall have executed and delivered to the Trust Third Party Partner Agreement to
the extent such Owner has consented to the transactions contemplated by this
Agreement.
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(xx) The Owners and the Funds shall have obtained all
necessary third-party consents, waivers and/or approvals.
(xxi) Each of the other documents and instruments
required by this Agreement to be delivered to the Partnership or the Trust at
Closing shall have been delivered
The Partnership, for itself and on behalf of the
Trust, may waive any condition to Closing in whole or in part (other than the
condition set forth in subsection 8(a)(xx)). As to any failure of a condition
affecting one or more of the Contributed Properties, Contributed Management
Contracts, Contributed Notes, Premises or Interests, and provided that this
Agreement is not otherwise terminated by the Trust to the extent permitted by
Section 13(a) hereof, the Partnership may decline to acquire only those
Interests, Premises, Contributed Properties, Contributed Management Contracts
and Contributed Notes as to which a condition to Closing has failed, and to
consummate Closing as to the remaining Interests, Premises, Contributed
Properties, Contributed Management Contracts and Contributed Notes; provided,
however, that, except as contemplated by subsection 4(k), if the Partnership
declines to acquire certain Interests, Premises, Contributed Properties,
Contributed Management Contracts or Contributed Notes by reason of the failure
of a condition to Closing, the Partnership shall be obligated to decline to
acquire all Interests and Premises affected by the failure of such condition
(and in such event, the total consideration payable hereunder shall be reduced
by the Contribution Consideration attributable to such Interests, Contributed
Property, Contributed Management Contracts or Contributed Notes, as the case may
be, as set forth on Schedule 2(a)).
(b) The obligation of the Contributing Owners and of the Fund
to consummate Closing hereunder is conditioned upon the following:
(i) All representations and warranties of the
Partnership and the Trust shall be true in all material respects as of the date
hereof and as of the Closing Date;
(ii) The Partnership and the Trust each shall have
performed all of its respective covenants and obligations to be performed at or
prior to Closing;
(iii) All necessary Partnership and Trust actions
shall have been taken to confirm and ratify the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
including, but not limited to, receipt of requisite approval from the Trust's
shareholders;
(iv) No preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority shall be in effect at Closing which would prevent the
consummation of the transactions contemplated hereby; and
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(v) The Partnership shall have executed and delivered
to the Contributing Owners, to the Funds and to the partners of the Funds listed
on Schedule "M" the Registration Rights and Lock-Up Agreement to which reference
is made in subsection 2(e).
(vi) The Partnership shall have delivered the legal
opinion of Cozen and O'Connor to which reference is made in Section 4(h)(ii).
(vii) The Partnership shall have executed and
delivered the Restated Partnership Agreement.
(viii) The Trust, as general partner of the
Partnership, shall have executed and delivered the Second Amendment to the
Agreement of Limited Partnership of the Partnership.
(ix) The Board of Trustees shall have taken all
necessary action to authorize as an exemption from the Excess Share Limitations
provided in the Amended and Restated Declaration of Trust the issuance of the
Cash Investment Shares and Operating Partnership Interests to be issued
hereunder.
(x) The Trust shall not have revoked its prior
election pursuant to Section 856(c)(1) of the Code to be taxed as a REIT and
shall be in material compliance with all applicable federal income tax laws,
rules and regulations, including the Internal Revenue Code of 1986, as amended
(the "Code"), necessary to permit it to be taxed as a REIT; and any immaterial
non-compliance shall not prevent the Trust from being classified as a REIT. The
Trust shall not have taken any action or have failed to take any action which
would reasonably be expected to, alone or in conjunction with any other factors,
result in the loss of its status as a REIT for federal income tax purposes.
(xi) Each of the other documents and instruments
required by this Agreement to be delivered to the Owners or the Funds at Closing
shall have been delivered.
(xii) The Partnership shall have delivered to RDC
Tenant Estoppel Certificates executed by the tenants whose names are designated
on Exhibit "N" ("Trust Major Tenants"), or if Tenant Estoppel Certificates are
delivered as to less than seventy-five percent (75%) of such Trust Major
Tenants, than a certificate of the Partnership representing to the Owners the
facts that are to be covered by the Tenant Estoppel Certificates, which
certificate shall be subject to the limitations set forth in Sections 23 and 24.
RDC, for itself and on behalf of all of the Owners,
may waive any condition to Closing in whole or in part.
9. Representations and Warranties of Owners. The following
representations and warranties, severally as to each Contributing Entity and
such Contributing Entity's Premises,
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Contributed Management Contracts and Contributed Notes, are made jointly and
severally by (i) such Contributing Entity, (ii) each Contributing Owner which is
a general partner of such Contributing Entity which is a partnership, each
managing member and the managers, if any, of such Contributing Entity which is a
limited liability company, and the principal or controlling shareholder and
board of directors of such Contributing Entity which is a corporation, (iii) RD
and (iv) KB and, severally as to each Owner which is a signatory to this
Agreement and which is not a Contributing Entity, jointly and severally by (i)
such Owner, (ii) RDC and (iii) KB (except that where any such representation and
warranty is made to the knowledge of RD or KB or such Contributing Entity's or
Contributing Owner's general partner, member, manager, shareholder or board of
directors or such Owner, as the case may be, such representation is made
severally by each as to his, her or its own knowledge). The foregoing parties
making the representations and warranties are hereinafter referred to
individually as a "Warrantor" and collectively as "Warrantors." Each Warrantor
represents and warrants to the Trust and the Partnership as follows:
(a) Organization; Authority. Each Contributing Entity which is
a partnership is a partnership duly formed, validly subsisting and in good
standing under the laws of its jurisdiction of formation and has the requisite
partnership power and authority to enter into and perform its obligations under
this Agreement. Each Contributing Entity which is a limited liability company is
a limited liability company duly formed and subsisting under the laws of its
jurisdiction of formation and has the requisite power and authority to enter
into and perform its obligations under this Agreement. Each Contributing Entity
which is a corporation is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to enter into and to perform its
obligations under this Agreement. Each Contributing Entity has all power and
authority to own and lease its Premises and carry on its business as it is now
being conducted.
(b) Due Authorization; Binding Agreement. Except as to those
Owners identified on Schedule 9(b), for which a consent from one or more of such
Owner's partners, shareholders or members must be obtained under the
organizational document of such Owner and as to which RD and KB are obligated to
use commercially reasonable efforts to obtain pursuant to Section 4(k), the
execution, delivery and performance of this Agreement by each Owner and of each
of the other agreements and instruments to be executed and delivered in
connection herewith have been duly and validly authorized by all necessary
action of the Owner. This Agreement has been duly executed and delivered by each
such Owner, or an authorized representative of each such Owner and constitutes a
legal, valid and binding obligation of such Owner, enforceable against such
Owner in accordance with the terms hereof.
(c) Consents and Approvals. No consent, waiver, approval or
authorization of, or filing, registration or qualification with, or notice to,
any governmental unit or any other person is required to be made, obtained or
given by any such Owner prior to or as a condition
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to the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, except as have been made,
obtained or given or except as set forth on Schedule 9(c), all of which shall
have been made, obtained or given on or prior to Closing, or as set forth on
Schedule 9(b) for which a consent from one or more of such Owner's partners,
shareholders or members must be obtained under the organizational document of
such Owner and as to which RD and KB are obligated to use commercially
reasonable efforts to obtain pursuant to Section 4(k).
(d) No Violation. None of the execution, delivery or
performance of this Agreement by each such Owner does or will, with or without
the giving of notice, lapse of time or both, (i) violate, conflict with or
constitute a default under any term or condition of (A) except as to those
Owners identified on Schedule 9(b), for which a consent from one or more of such
Owner's partners, shareholders or members must be obtained under the
organizational document of such Owner and as to which RD and KB are obligated to
use commercially reasonable efforts to obtain pursuant to Section 4(k), the
organizational documents of such Owner or any material provision of any
Significant Agreement (as defined below) or other agreement to which such Owner
is a party or by which it or its assets or properties are bound, or (B) any
terms or provisions of any judgment, decree, order, statute, injunction, rule or
regulation of a governmental unit applicable to such Owner or (ii) result in the
creation of any lien or other encumbrance upon the assets or properties of such
Owner.
For purposes hereof, "Significant Agreement" means
and includes any of the following to which a Contributing Entity is a party or
by which a Contributing Entity or any of its assets or properties may be bound,
in each such case as amended and currently in effect, inclusive of any waivers
relating thereto:
(i) all agreements, instruments and documents
evidencing, securing, or pertaining to the contractual obligations of a
Contributing Entity that involve annual payments or receipts in excess of
$25,000 (including, but not limited to, Contributed Management Contracts and
Contributed Notes);
(ii) all leases where the Contributing Entity is the
lessee (including capital leases) which are not terminable without penalty on
not more than ninety (90) days' notice and that involve annual payments and
receipts in excess of $25,000;
(iii) all ground leases where the Contributing Entity
is a ground lessee;
(iv) all reciprocal easement agreements affecting the
Premises; and
(v) all agreements representing obligations for
borrowed money in excess of $25,000.
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There are no Significant Agreements of any Contributing Entity other than the
Existing Mortgages, the Leases, agreements which are Permitted Encumbrances, the
Service Agreements, the Contributed Management Contracts, the Contributed Notes
and any other agreement set forth in Schedule 9(d).
(e) Absence of Undisclosed Liabilities and Contractual
Obligations. Except for immaterial liabilities arising in the ordinary course of
business, which shall not exceed $250,000 in the aggregate as to all of the
Contributing Entities, and except for those matters disclosed in this Agreement
and the Exhibits and Schedules hereto, no Contributing Entities have any
liabilities of any nature, whether matured or unmatured, fixed or contingent,
which would have, individually or in the aggregate, a material adverse effect
upon the Owner or such Owner's Premises.
(f) Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to such Warrantor's knowledge,
threatened in writing before any court, governmental unit or any arbitrator
against any Owner or its assets or properties or with respect to the
transactions contemplated by this Agreement except the matters, if any, set
forth on Schedule 9(f), none of which, individually or in the aggregate, would
have a material adverse effect or would prohibit or restrain the consummation of
the transactions contemplated hereby.
(g) Attachment, Execution, Etc. No attachments, execution
proceedings, assignments for the benefit or creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or, to the knowledge of the
Warrantors, threatened in writing against any Owner or any of its assets, nor
are any of such proceedings contemplated by any Owner.
(h) All Equity Owners. Except as set forth on Schedule 4(k),
the Contributing Owners are all of the partners, members or shareholders of the
Contributing Entities or hold all of the equity interests in the Contributed
Properties.
(i) Operation of Premises; Compliance with Laws; Violations,
Etc.
(i) As to each Contributing Entity, such Contributing
Entity's sole business is the operation and ownership of its Premises. Except
for the violations set forth on Schedule 9(i)(i), none of which, individually or
in the aggregate, are material, each Owner has complied in all material respects
with all laws applicable to the conduct of the business of such Owner and the
Owner's use and operation of its Premises and has obtained all licenses,
certificates, approvals and permits required for the conduct thereof, (1) except
where the failure to do so would not have, individually or in the aggregate, an
RDC Material Adverse Effect on the Owners or the Premises taken as a whole, (2)
except as described in engineering reports delivered to the Partnership in
connection with this Agreement, and (3) except to the extent that non-compliance
is a result of a change after the date hereof in the interpretation or
enforcement of existing laws and regulations and such Owner, before such change,
reasonably
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believed that it was in compliance. Such licenses, certificates, approvals and
permits are in full force and effect, such Owner has not taken any action that
would (or failed to take any action the omission of which would) result in the
revocation of such licenses, certificates, approvals or permits and such Owner
has not received any notice of violation from any federal, state or municipal
entity or notice of an intention by any such government entity to modify or
revoke any certificate, approval, license or permit issued by it to such Owner
that in each case has not been cured or otherwise resolved to the satisfaction
of such government entity, except where such failure or such action would not
have a material adverse effect on such Owners or the Premises taken as a whole.
(ii) Except as set forth on Schedule 9(i)(ii), no
such Owner has received and, to the knowledge of Warrantors, none of Owner's
employees has received any written notice with respect to such Owner's Premises
or associated parking rights from any public authority concerning any eminent
domain or condemnation proceeding, or any uncorrected violation of any
ordinance, public regulation, statute, permit, site plan approval, plan of
development, zoning or subdivision regulation, parking requirement or urban
redevelopment plan applicable to the Premises; and, except for the Permitted
Encumbrances, neither such Owner nor, to the knowledge of Warrantors, any
previous owner of the Premises, has sold, transferred, conveyed, or entered into
any agreement regarding transfer of "air rights," "excess floor area ratio,"
parking rights or other development rights relating to the Premises.
(iii) Except as set forth on Schedule 9(i)(iii), each
such Owner has complied with all work orders, requirements and demands of each
and every insurance company insuring all or any part of the Premises.
(iv) To the knowledge of Warrantors, the continued
maintenance, operation and use of any buildings, structures or other
improvements on the Premises for their respective present purposes will not
violate in a material manner any federal, state, county or municipal laws,
ordinances, orders, codes, regulations or requirements affecting all or any
portion of the Premises, including, without limitation, housing, building,
safety, health, environmental, fire or zoning ordinances, codes and regulations
of the respective jurisdictions within which the Premises are located
(collectively, "Applicable Laws"), or the certificate(s) of occupancy issued for
the Premises.
(v) Except as set forth on Schedule 9(i)(v), there
are no material unperformed obligations relative to the Premises outstanding
pursuant to any written agreements with any governmental or quasi-governmental
body or authority.
(j) Environmental Matters. Each Owner has obtained and
delivered to the Partnership the environmental report listed next to the name of
such Owner on Schedule 9(j) (the "Environmental Report"). Except as disclosed in
the Environmental Report, (i) such Owner has not done anything to cause or
permit and, to the knowledge of Warrantors, no other
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person or entity has done anything to cause or permit Hazardous Materials (as
defined below) to be now, or in the past, located on, in or under the Premises
or released into the environment, or discharged, placed or disposed of at, on or
under the Premises (except in small amounts used in the ordinary course for the
operation or maintenance of the Premises by such Owner in accordance with all
applicable laws or used by tenants of the Premises in the ordinary course of
operation of their business, which use by tenants is, and has been, to the
knowledge of Warrantors, in accordance with all Applicable Laws); (ii) except as
set forth on Schedule 9(j), to the knowledge of Warrantors, there are no
underground storage tanks located at the Premises now or in the past; (iii) such
Owner has not done anything to cause or permit and, to the knowledge of
Warrantors, no other person or entity has done anything to cause or permit the
Premises to be used to store, treat or dispose of Hazardous Materials (except in
small amounts used in the ordinary course for the operation or maintenance of
the Premises by such Owner in accordance with all Applicable Laws or used by
tenants of the Premises in the ordinary course of operation of their business,
which use by tenants is, and has been, to the knowledge of Warrantors, in
accordance with all Applicable Laws); and (iv) such Owner has not done anything
to cause or permit and, to the knowledge of Warrantors, no other person or
entity has done anything to cause or permit the Premises and its prior uses to
fail to materially comply with, at all times, any applicable Environmental Laws
(as defined below) or any other governmental law, regulation or requirement
relating to environmental matters or Hazardous Materials. Except as described in
the Environmental Reports, there currently exist no facts or circumstances that
could reasonably be expected to give rise to a material non-compliance with
Environmental Laws, material environmental liability or material Environmental
Claim (as defined below).
The term "Hazardous Materials" shall mean any substance, material,
waste, gas or particulate matter which is regulated by any local governmental
authority, the State or Commonwealth in which the subject Premises is located,
or the United States Government, including, but not limited to, any material or
substance which is or contains: (i) a "hazardous waste", "hazardous material",
"hazardous substance", "extremely hazardous waste", or "restricted hazardous
waste" or words of similar import, as defined under any provision of any
applicable Environmental Law; (ii) petroleum or petroleum products; (iii)
asbestos; (iv) polychlorinated biphenyls; (v) radioactive material; (vi) radon
gas; (vii) a "hazardous substance" designated pursuant to Section 311 of the
Clean Water Act, 33 U.S.C. ss.1251 et seq. (33 U.S.C. ss.1317); (viii) a
"hazardous waste" defined pursuant to Section 1004 of the Resource Conservation
and Recovery Act, 42 U.S.C. ss.6901 et seq. (42 U.S.C. ss.6903); or (ix) a
"hazardous substance" defined pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss.9601 et
seq. (42 U.S.C. ss.9601). The term "Environmental Laws" shall mean all statutes
specifically described in the foregoing sentence and all federal, state and
local environmental health and safety statutes, ordinances, codes, rules,
regulations, orders and decrees regulating, relating to or imposing liability or
standards concerning or in connection with Hazardous Materials. The term
"Environmental Claim" shall mean any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, lien, notice of non-compliance or
violation, investigation or proceeding relating
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in any way to any applicable Environmental Law or any permit issued under any
such applicable Environmental Law including, without limitation, (a) by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment as a result of the presence of Hazardous
Materials.
(k) Engineering Matters.
(i) Each Owner has obtained and delivered to the
Partnership the engineering report(s) listed next to the name of such Owner on
Schedule 9(k) (the "Engineering Report"). Except as disclosed in the Engineering
Report, there are neither material patent nor, to the knowledge of Warrantors,
latent defects in, mechanical failures of or damages to the Improvements (as
hereinafter defined), including the roof, structure, elevators, walls, heating,
ventilation, air conditioning, plumbing, electrical, drainage, fire alarm,
communications, sprinkler, security and exhaust systems, or other improvements
on or forming a part of the Premises, all of which, to the knowledge of
Warrantors, have been constructed in a good and workerlike manner consistent
with generally accepted practices for first-class construction. Except as
described in the Engineering Report, to the knowledge of Warrantors, all of the
personal property used in connection with the operation of the Premises and all
improvements thereon are in good condition and working order, ordinary wear and
tear excepted.
(ii) All telephone and other public utilities and all
storm water drainage required by law or necessary for the operation of the
Premises (A) except as to the Premises described on Schedule 5(b), are
installed, connected and operating, with all installation and connection charges
paid in full, including, without limitation, connection and the permanent right
to discharge sanitary waste into the collector system of the appropriate sewer
authority, (B) are being utilized in compliance with all applicable governmental
and environmental protection authorities' laws, rules, regulations and
requirements, and (C) are adequate and, to the knowledge of Warrantors, will
continue to be adequate to service the Premises as improved and presently used.
To the knowledge of Warrantors, no moratorium, proceeding or other fact or
condition exists which (x) threatens to impair continued furnishing of such
services to the Premises at regular rates and fees, or (y) could result in the
discontinuance of such services presently available or necessary. Except as set
forth on Schedule 9(k)(iii), water and sanitary sewer are public.
(l) Real Estate Taxes and Assessments.
(i) The copies of the real property tax bills for the
Premises for the current tax year which have been furnished by each such Owner
to the Partnership are true, correct and complete copies of all of such tax
bills. All real estate taxes due and payable as of
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the Closing have been paid in full and, except as set forth on Schedule 9(l)(i),
there are no pending or, to the knowledge of Warrantors, threatened proceedings
for an increase in the assessed valuation of the Premises for the current or
prior tax years.
(ii) Except as set forth on Schedule 9(l)(ii), the
Premises alone constitute one or more entire tax parcel(s) for real estate tax
purposes, and are not taxed as part of a larger tax parcel.
(iii) Except as set forth on Schedule 9(l)(iii), no
Owner has received any written notice that, and the Warrantors have no knowledge
that: (A) public improvements in the nature of off-site improvement, or
otherwise, have been ordered to be made or have heretofore been assessed; and
(B) special or general assessments (other than regular, annual real estate
taxes) are pending against or affecting the Premises or are being considered in
formal municipal or quasi-municipal proceedings.
(m) Leases
(i) Except for the Leases (and any seasonal sales
leases which will be terminated prior to Closing), no Owner has entered into any
contracts for the sale or leasing of the Premises or any portion thereof. There
are no outstanding rights of first refusal or options to purchase all or any
portion of the Premises except as set forth in Schedule 9(m)-1, none of which
becomes exercisable solely by reason of the transactions contemplated by this
Agreement, and except for those rights and options pertaining to portions of any
Premises constituting less than 5,000 square feet of gross leaseable area. The
exercise of termination rights by one or more tenants under Leases pursuant to
rights to terminate for reasons other than casualty or condemnation or a default
by the Owner of the Premises will not have an RDC Material Adverse Effect on all
Premises in the aggregate or the cash flow therefrom, taken in the aggregate.
(ii) Subject to the right of governmental and law
enforcement authorities to enter the Premises for lawful business, as of the
Closing, no persons or entities, other than such Owner and the tenants under the
Leases and their permitted subtenants and licensees, shall have any right to the
possession, use or occupancy of the Premises or any portion thereof for any
reason whatsoever.
(iii) Schedule 9(m)-2 (the "Rent Roll") is true and
correct in all material respects as of the date noted thereon and discloses all
Leases. The Leases include all subleases, tenancies, licenses and other rights
of occupancy or use for all or any portion of the Premises pursuant to which
such Owner is landlord or licensor, all as amended, renewed and extended to the
date of the Rent Roll, whether oral or written. There has been no material
adverse change in the information set forth in the Rent Roll between the
effective date of the Rent Roll and date of Closing. The Rent Roll specifies at
least the following information as to each Lease:
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(A) a description (by rentable square feet)
of the leased space;
(B) the name of the current tenant of the
space (the "Tenant");
(C) the expiration dates of the current term
and any renewal terms thereof;
(D) the basic and additional rents (which
include all escalators, pass-throughs of taxes, expenses or other items, and
percentage rents, and all other sums payable by the Tenant to the lessor,
including, without limitation, utility charges) during the original and any
renewal terms thereof (collectively, "Rents"), and the extent of any
delinquencies thereof and the period of delinquency;
(E) rights of tenants for early termination
other than by reason of casualty or condemnation; and
(F) rights of tenants to purchase the
Premises, if any;
(iv) Each Security Deposit has been and is held (or
applied) by Owner or its agent in compliance with the respective Lease and
applicable law. There are no unfulfilled obligations as to Security Deposits to
tenants under Leases the terms of which have expired or been terminated and
there is no suit, action or other claim made, or, to the knowledge of
Warrantors, pending or threatened with respect to any such Security Deposit,
except as set forth on Schedule 9(m)-2.
(v) The following is true with respect to each Lease:
(A) the Lease is valid and subsisting and in
full force and effect in accordance with its terms. No Lease has been modified,
in writing or otherwise, except as set forth on the Tenant Estoppel Certificate
for such Lease and Schedule 9(m)-2;
(B) except as set forth on Schedule 9(m)-4,
all obligations of the lessor thereunder arising on or prior to the date hereof
have been performed and paid for in full by such Owner on or prior to Closing;
(C) except as set forth in Schedule 9(m)-3
and except for delinquencies in payment of rent of less than thirty (30) days,
to the knowledge of Warrantors, there has been no material default on the part
of the tenant thereunder or event which, with the giving of notice or the lapse
of time, or both, would constitute a default on the part of the tenant
thereunder and, except as set forth in Schedule 9(m)-3 the tenant has not
asserted in writing and, to the knowledge of Warrantors, has no defense to or
offset or claim against its rent or the performance of its other obligations
under the Lease;
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(D) except as set forth on Schedule 9(m)-3,
no tenant has prepaid any rent for more than one (1) month if the lease term has
commenced and two (2) months if the lease term has not yet commenced.
(E) except as set forth on Schedule 9(m)-3,
the Warrantors have no knowledge of any tenant or any guarantor of a Lease to an
Owner Major Tenant being or becoming unable or unwilling to perform any of its
obligations under the Lease for any reason;
(F) to the knowledge of Warrantors, except
as set forth on Schedule 9(m)-3, no other person has released or discharged any
guarantor, voluntarily or involuntarily or by operation of law, from any
obligation with respect to the Lease that such guarantor has guaranteed except
in accordance with the terms of such guarantee;
(G) at the time of Closing, no rents will
have been assigned, pledged or encumbered except to the Existing Mortgagee of
each Premises;
(H) except as set forth on Schedule 9(m)-3,
all of the Leases are assignable by such Owner without the consent of any other
party (except the Existing Mortgagee of the Premises) (all of which consents
shall be obtained at or prior to Closing) and after such assignment all rights
and benefits thereunder shall automatically inure to the benefit of the
Partnership or its designee and the Partnership or such designee shall assume
all such obligations thereunder from and after the Closing Date; and
(I) except as set forth on Schedule 9(m)-3,
no Owner owns, directly or indirectly, (1) five percent (5%) or more of the
total combined earnings of all classes of stock entitled to vote, or five
percent (5%) or more of the total number of shares of all classes of stock, of
any tenant of the Premises or (2) an interest of five percent (5%) or more in
the assets or net profits of any tenant of the Premises.
(vi) Except as set forth in Schedule 9(m)-3, there
has been no material default or event which, with the giving of notice or the
lapse of time, or both, would constitute a default on the part of the Owner as
lessee under any ground lease.
(n) Title
(i) Such Owner has indefeasible, good and marketable
legal and equitable title to its respective interest in the Premises such as
will be insured as such by the Escrow Agent on the form of Owner's Policy
specified in subsection 5(a), subject only to the Permitted Encumbrances and the
Leases.
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(ii) There is no pending or, to the knowledge of
Warrantors, threatened eminent domain proceeding affecting the Premises or any
part thereof or affecting the sidewalks or any streets or public ways in front
of or adjoining the Premises.
(iii) There has been no material violation by such
Owner or the Premises of any provision, condition or agreement contained in any
restrictive covenant, cross- easement agreement or similar instrument or
agreement affecting the Premises or any portion thereof, which would have a
material adverse effect on such Owner or such Premises.
(iv) (A) The Premises enjoys the benefit of all
easements and cross- easements necessary for operating the Premises as currently
operated, and (B) all such easements and cross-easements are in full force and
effect, will survive the transactions contemplated by this Agreement and will
inure to the benefit of the Partnership.
(v) The Personal Property located on the Premises,
other than that owned by tenants, utility companies or contractors, is owned or
leased by such Owner or by an affiliate which is also an Owner hereunder or
which is separately contributing such Personal Property to the Partnership or
its designee, includes all the types and approximate quantities of personal
property heretofore owned or leased by such Owner and used in the ownership,
operation and maintenance of the improvements located on the Premises (the
"Improvements") and, if owned or leased by such Owner, is, or as of Closing will
be owned or leased by such Owner free and clear of any liens or security
interests of any kind, except for Permitted Encumbrances.
(vi) Except as set forth on Schedule 9(n)-1, the
Premises are located along and have unimpeded access to one or more adjoining
public streets. To the knowledge of Warrantors, any curb-cut and street-opening
permits or licenses required for vehicular access to and from the Premises to
any adjoining street or to any parking spaces utilized in connection with the
Premises have been obtained and paid for by the Owner, are in full force and
effect and shall inure to the benefit of the Partnership. To the knowledge of
Warrantors, no fact or condition exists which would result in the termination or
material impairment of access to the Premises from adjoining public or private
streets or ways.
(vii) To the knowledge of Warrantors, each Premises
is an independent unit which does not now rely on any facilities (other than
facilities covered by Permitted Encumbrances including, without limitation, any
reciprocal easement agreements or facilities of municipalities or public utility
and water companies and other than parking areas which the Premises makes legal
use of under any reciprocal easement agreements) located on any property not
included in such Premises to fulfill any municipal or governmental requirement
or for the furnishing to the Premises of any essential building systems or
utilities or services.
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(viii) (A) Except as set forth on Schedule 9(n)-2,
and on Schedule 9(m)-1 to the extent set forth in the Leases and except for
Permitted Encumbrances, and other than rights of first refusal or options to
purchase pertaining to portions of any Premises constituting less than 5,000
square feet of gross leaseable area, there are no purchase contracts, options,
or any other agreements of any kind, written or oral, recorded or unrecorded,
whereby any person or entity other than the Partnership will have acquired or
will have any basis to assert any right, title or interest in, or right to
possession, use, enjoyment or proceeds of all or a portion of the Premises. (B)
Except as set forth on Schedule 9(n)-1 or 9(n)-2 where such right survives
Closing, at Closing there will not be any rights, subscriptions, warrants,
options, conversion rights or agreements of any kind outstanding to purchase or
to otherwise acquire any interest or profit participation of any kind in the
Premises (or any portion thereof).
(o) Financial Matters
(i) There is no income derived from the Premises
other than rental income and interest income. All the rental income derived from
the Premises constitutes "rent from real property" as defined in ss.856(d)(1) of
the Code. All the interest income derived from the operation of the Premises
constitutes "interest" as defined in ss.856(c)(2)(B) of the Code.
(ii) The Owners covenant that Owners' profit from
electricity distributed by the Owners to tenants under the Leases is in
compliance with all Applicable Laws and that the provision by landlords of
electricity to their tenants in this manner is usual and customary in the
geographical area in which the Premises are located. The Owners also represent
that the profits received by the landlord from the sale of the electricity to
its tenants does not exceed in any year one percent (1%) of the total amount
received or accrued during the year.
(p) Insurance
(i) Schedule 9(p) sets forth an accurate and complete
list of the insurance policies relating to the Premises or any part thereof and
naming the Owner for such Premises as an insured; all such policies are in full
force and effect and all premiums thereunder have been paid to the extent due;
and no notice of cancellation has been received with respect thereto and, to the
knowledge of Warrantors, none is threatened in writing.
(ii) No Owner has received any notice from any
insurance company of any defect or inaccuracies in any of the Premises, or any
parts thereof, which would adversely affect the insurability of any of the
Premises, or would increase the cost of insurance beyond that which would
ordinarily and customarily be charged for similar properties in the vicinity of
such Premises. All of the Premises are fully insured in accordance with prudent
and customary practice.
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(q) Service Agreements; Contributed Management Contracts;
Contributed Notes
(i) A current, complete and correct copy of each
Service Agreement has been delivered to the Partnership and there are no
material construction, management, leasing, service, equipment, supply,
maintenance or concession agreements (oral or written, formal or informal) with
respect to or affecting all or any portion of the Premises (collectively,
"Contracts") except as delivered to the Partnership. Each Service Agreement is
valid and binding and as of Closing all amounts due and payable on or prior to
the Closing Date will have been paid. Neither any such Owner nor any of its
agents is in default under any Service Agreement or has received any written
notice from any party to any Service Agreement claiming the existence of any
default or breach thereunder which would have a material adverse effect on such
Owner or the Premises and no event or omission has occurred which, with the
giving of notice or the lapse of time or both would constitute such a default.
Except as disclosed on Schedule 9(q), all Contracts are terminable without cause
on thirty (30) days' notice or less without payment of any penalty or
termination payment.
(ii) A current, complete and correct copy of each
Contributed Management Contract, to the extent available on the date hereof, has
been delivered to the Partnership and otherwise shall be delivered to the
Partnership on or prior to Closing. Each Contributed Management Contract is (or
will be, as applicable) valid and binding and, as of Closing, all amounts due
and payable on or prior to Closing will have been paid and all obligations to be
performed on or prior to Closing will have been performed. Neither any Owner nor
any of its agents is in default under any Contributed Management Contract nor
has any of the foregoing received written notice from any party thereto claiming
the existence of any default or breach thereunder which would give rise to a
termination of such Contributed Management Contract, and no event or omission
has occurred which, with the giving of notice of the lapse of time or both,
would constitute such a default.
(iii) A current, complete and correct copy of each
Contributed Note has been delivered to the Partnership. Each Contributed Note is
valid and binding and, as of Closing, all amounts due and payable on or prior to
Closing in respect of the Contributed Note shall have been paid and all
obligations to be performed on or prior to Closing by the obligor thereunder
will have been performed. The obligor is not in default under any Contributed
Note, and no event or omission has occurred which, with the giving of notice of
the lapse of time or both, would constitute such a default.
(r) Employee and Employment Matters
(i) There are no collective bargaining agreements or
other agreements requiring arbitration of employment disputes, or employment
agreements or severance agreements which have not been fully performed, to which
any Owner is a party or by which it is bound. Set forth on Schedule 9(r) is also
a list of all employees of each such
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Owner, broken down by location, together with their title, original date of
hire, length of service and vacation benefits accrued to date (if payable in
cash upon termination of employment), and a list of all other individuals
employed by such Owner as independent contractors and who are expected to
perform services for the Owner, if any. Each such Owner has previously delivered
to the Partnership true and correct copies of all of the documents referred to
on Schedule 9(r) and all of the personnel policies, employee and/or supervisor
handbooks, procedures and forms of employment applications relating to the
employees of each such Owner. Except as set forth on Schedule 9(r), there is no
union representing or purporting to represent any of the employees of any such
Owner and each such Owner is not subject to or currently negotiating any
collective bargaining agreements with any union representing or purporting to
represent the employees of any of the foregoing.
(ii) Except as set forth on Schedule 9(r):
(A) There are no strikes, slow downs or
other work stoppages, grievance proceedings, arbitrations, labor disputes or
representation questions pending or, to the knowledge of Warrantors, threatened
against or involving any such Owner;
(B) To the knowledge of Warrantors, each
such Owner has complied in all material respects with all laws relating to
labor, employment and employment practices, including, without limitation, any
provisions thereof relating to wages, hours and other terms of employment,
collective bargaining, nondiscrimination, and the payment of social security,
unemployment compensation and similar taxes, and such Owner is not (1) liable
for any arrearages of wages or any taxes or penalties for failure to comply with
any of the foregoing or (2) delinquent in the payment of any severance, salary,
bonus, commission or other direct or indirect compensation for services
performed by any employee to the date hereof, or any amount required to be
reimbursed to any employee or former employee; and
(C) There are no charges, suits, actions,
administrative proceedings, investigations and/or claims pending or, to the
knowledge of Warrantors, threatened against such Owner, whether domestic or
foreign, before any court, governmental agency, department, board or
instrumentality, or before any arbitrator (collectively "Actions"), concerning
or in any way relating to the employees or employment practices of such Owner
with respect thereto, including, without limitation, Actions involving unfair
labor practices, wrongful discharge and/or any other restrictions on the right
of the Owner to terminate its employees, employment discrimination, occupational
safety and health, and workers' compensation.
Except as shown on Schedule 9(r), there are no express or implied
agreements, policies, practices, or procedures, whether written or oral,
pursuant to which any employee of any Owner is not terminable at will.
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Except as may be a liability not assumed by the Partnership or any
affiliate thereof (and as to which the Partnership shall be entitled to
indemnification hereunder), no Owner is a party to any oral or written (A)
agreement with any executive officer or other key employee of such Owner (1) the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving such Owner of the nature of the
transactions contemplated by this Agreement, (2) providing any term of
employment or compensation guarantee extending for a period longer than one
year, or (3) providing severance benefits or other benefits after the
termination of employment of such executive officer or key employee regardless
of the reason for such termination of employment; or (B) agreement or plan,
including, without limitation, any stock option plan, stock appreciation right
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
No Owner has taken any action which required or, taken together with
the transactions contemplated hereby, would require the giving of any notice
under the Worker Adjustment Retraining and Notification Act or any comparable
state or local law or regulation.
(s) ERISA; Benefit Plans.
(i) Neither any Owner nor any ERISA Affiliate (as
hereinafter defined) maintains, sponsors, contributes to or has any liability
under any agreement, plan, practice or program, whether written or oral,
providing for bonus payments, child or dependent care benefits, death benefits,
accidental death and dismemberment benefits, deferred compensation benefits,
disability or other wage continuation benefits, educational assistance or
tuition benefits, health benefits, paid holidays benefits, incentive
compensation payments, leave of absence rights, medical expense payments,
reimbursement benefits, profit sharing, pension plan (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
benefits or other benefits, retiree medical or retiree life insurance benefits,
stock option, stock appreciation rights or stock purchase benefits, severance or
termination pay or benefits (including post-employment consulting arrangements
or benefits), or vacation benefits, except as set forth on Schedule 9(s). The
items set forth on Schedule 9(s) are individually referred to as an "Employee
Benefit Plan" and collectively referred to as "Employee Benefit Plans". Schedule
9(s) includes, but is not limited to, each plan maintained by each such Owner or
an ERISA Affiliate (as hereinafter defined), which is an "an employee benefit
plan" as such term is defined in Section 3(3) of ERISA, other than a
"multi-employer plan" within the meaning of Section 3(37) of ERISA. Each such
Owner has delivered to the Partnership a true and complete copy of each Employee
Benefit Plan, including all texts, amendments and other agreements (whether
formal or informal) adopted in connection therewith. No employee or former
beneficiary thereof participates in or has any rights to benefits with respect
to employment with such Owner under any agreement, plan, practice, or program
not listed on Schedule 9(s), other than a multi-employer plan. No person who is
not a
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current or former employee (or a beneficiary thereof) of such Owner participates
in or is entitled to any benefits under any Employee Benefit Plan listed on
Schedule 9(s). For purposes of this Agreement, "ERISA Affiliate" means each
person, company and trade or business which together with the Owner, are treated
as a single employer under Section 414(b), (c), (m), (n) and (o) of the Code.
(ii) Each Employee Benefit Plan has complied and
currently complies in form, and in all material respects in operation and
administration, with all applicable provisions of applicable law, including the
Code and ERISA and any contractual obligation. Each such Owner has delivered to
the Partnership with respect to each Employee Benefit Plan subject to ERISA true
and correct copies of (A) the annual return/report (Form 5500 Series) with
attached schedules and a financial statement for the three most recent fiscal
years, (B) the summary plan descriptions and all written announcements or
disclosures to participants, (C) the most recent Internal Revenue Service
("IRS") determination letter, (D) each written description intended to describe
any Employee Benefit Plan and (E) all correspondence from the IRS, Department of
Labor and the Pension Guaranty Benefit Corporation ("PGBC").
(iii) Each Employee Benefit Plan intended to be tax
qualified under Section 401(a) of the Code has been determined by the IRS to be
so qualified and each trust created thereunder has been determined to be exempt
from tax and, to the knowledge of Warrantors, nothing has occurred which would
cause the loss of such qualification or tax-exempt status. With respect to each
Employee Benefit Plan that is subject to Section 412 of the Code or Title IV of
ERISA (collectively, "Pension Plan") there has been no failure to make any
contribution or pay any amount due as required by Section 412 of the Code,
Section 302 of ERISA or the terms of any such Pension Plan, and no request or
receipt of any funding waiver has been requested or received from the IRS. The
present value of the benefit liabilities (as defined in ERISA) of each Pension
Plan that is subject to Title IV of ERISA, as of any determination date, is less
than the fair market value of the assets of such Pension Plan, all determined
using the actuarial assumptions that would be used by PBGC in the event of a
termination of the Pension Plan on such determination date. Within the past five
(5) years, neither any Owner nor any ERISA Affiliate has transferred any assets
or liabilities of a Pension Plan subject to Section 412 of the Code which had,
at the date of such transfer, accrued benefits in excess of the fair market
value of its assets as of any determination date, determined using the actuarial
assumptions that would be used by PBGC in the event of a termination of the
Pension Plan on such determination date or has engaged in a transaction which
may reasonably be subject to Section 4212(c) or 4069 of ERISA. There has been no
reportable event (as defined in Section 4043 of ERISA) within the last five (5)
years. Such Owner does not sponsor, maintain or have obligations, direct,
contingent or otherwise, with respect to any Employee Benefit Plan that is
subject to the laws of any country other than the laws of the United States.
With respect to the Employee Benefit Plans subject to Title I Part 4 of ERISA or
Section 4975 of the Code, neither such Owner nor any other person has (i)
engaged in a "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA which would subject the Partnership, the Trust or
such Owner to liability for a material
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tax or penalty imposed by Section 4975 of the Code or Section 502 of ERISA, or
(ii) committed a breach of its fiduciary duties (as defined in Section 404 of
ERISA) which could subject the Partnership, the Trust or such Owner to any
material liability. Except as required by law, neither such Owner nor any ERISA
Affiliate has made any written or other binding commitment to amend any Employee
Benefit Plan.
(iv) No Employee Benefit Plan provides for
post-employment medical, health or life insurance benefits for present or future
retirees or present or future terminated employees, except for continuation
coverage provided pursuant to the requirements of Section 4980B of the Code or
Sections 601-608 of ERISA or a similar state law, or continued coverage under an
insurance policy for a period not to exceed sixty days (60) following
termination of employment. Each Owner and its respective ERISA Affiliates have
complied in all material respects with the notice and contribution requirements
of Section 4980(B) of the Code and Sections 601-608 of ERISA. Any contribution
or payment required to be made by such Owner to or on behalf of any Employee
Benefit Plan has been made on or before its due date. Adequate accruals for all
contributions or payments required to be made by such Owner to or on behalf of
any Employee Benefit Plan and multi-employer pension plan to which the Owner
and/or any of its ERISA Affiliates makes contributions to or has any liabilities
with respect thereto ("MEPPA Plan") for all periods prior to December 31, 1997
have been made on the books and records of such Owner and the same will be
reflected on any financial statements of such Owner delivered to the Trust on or
after the date hereof.
(v) With respect to the Employee Benefit Plans, no
actions, suits or claims: (i) with respect to the assets or liabilities thereof
(other than routine claims for benefits); (ii) against any such Owner or an
ERISA Affiliate; or (iii) against any fiduciary with respect to any Employee
Benefit Plan are pending or threatened in writing, and Warrantors have no
knowledge of any facts which could be reasonably be expected to give rise to or
result in any such actions, suits or claims. Neither any such Owner nor any
ERISA Affiliate: (i) has incurred a complete or partial withdrawal, as those
terms are defined in Section 4203 or 4205, respectively, of ERISA with respect
to which there remains any outstanding liability; (ii) has engaged or intends to
engage in a transaction or course of conduct which could result in liability
under Title IV of ERISA to a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA; (iii) has any outstanding liability under Title IV of
ERISA, contingent or otherwise; or (iv) will incur any liability with respect to
any Employee Benefit Plan or MEPPA Plan solely as a result of undertaking the
transactions contemplated by this Agreement.
(t) Financial Statements; Cash Flow.
(i) The unaudited operating statements of each of the
Contributing Entities previously delivered to the Partnership fairly presented,
in all material respects, the results of operations (excluding non-cash
adjustments), net operating income and cash flows of each of the Contributing
Entities to which they relate for the periods set forth therein.
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(ii) Except as otherwise disclosed elsewhere herein
or in any Exhibit or Schedule hereto, since the date of the last unaudited
operating statements of each of the Contributing Entities delivered to the
Partnership, there has been no change in the aggregate cash flow of all of the
Premises and no variation in the aggregate income from all of the Leases which
could, in either case, constitute an RDC Material Adverse Effect and, since the
date of said last unaudited operating statements, each of the Premises has been
operated in the ordinary course of business consistent with past practice.
10. Representations and Warranties of Contributing Owners;
Representations and Warranties of the Funds.
(a) Representations and Warranties of Contributing Owners.
Each Contributing Owner executing this Agreement severally, and not jointly and
severally, and each of KB and RD, jointly and severally with each such Owner,
represents and warrants to the Trust and the Partnership, as follows:
(i) Organization; Authority. Each Contributing Owner
which is other than a natural person is either (A) in the case of Contributing
Owners which are corporations, duly incorporated and in good standing or
subsisting (to the extent applicable) under the laws of its jurisdiction of
incorporation, or (B) in the case of Contributing Owners which are partnerships,
limited liability companies or trusts, a partnership, limited liability company
or trust, as the case may be, duly formed and in good standing or subsisting (to
the extent applicable) under the laws of its jurisdiction of formation. Each
Contributing Owner which is other than a natural person is duly qualified and in
good standing in each jurisdiction in which such qualification is necessary,
except where the failure to be so qualified would not have a material adverse
effect on the Contributing Owner, the Interests or the Premises. Each
Contributing Owner has the requisite authority to enter into and perform this
Agreement.
(ii) Due Authorization; Binding Agreement. Except as
to those Owners identified on Schedule 9(b), for which a consent from one or
more of such Owner's partners, shareholders or members must be obtained under
the organizational document of such Owner and as to which RD and KB are
obligated to use commercially reasonable efforts to obtain pursuant to Section
4(k), the execution, delivery and performance of this Agreement by each
Contributing Owner and of each of the other agreements and instruments to be
executed and delivered in connection herewith have been duly and validly
authorized by all necessary action of such Contributing Owner. This Agreement
has been duly executed and delivered by such Contributing Owner, or an
authorized representative of such Contributing Owner, and constitutes a legal,
valid and binding obligation of such Contributing Owner enforceable against the
Contributing Owner in accordance with the terms hereof.
(iii) Consents and Approvals. Except as to those
Owners identified on Schedule 9(b), for which a consent from one or more of such
Owner's partners, shareholders or members must be obtained under the
organizational document of such Owner
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and as to which RD and KB are obligated to use commercially reasonable efforts
to obtain pursuant to Section 4(k), no consent, waiver, approval or
authorization of, or filing, registration or qualification with, or notice to,
any governmental unit or any other person is required to be made, obtained or
given by such Contributing Owner prior to or as a condition to the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, except such as have been obtained. Without
limiting the foregoing, all consents required under the organizational documents
of each Contributing Owner for the due and valid execution and delivery of the
Agreement by the Contributing Owner and for the performance of the transactions
contemplated hereby have been obtained.
(iv) No Violation. None of the execution, delivery or
performance of this Agreement by such Contributing Owner will, on the date
hereof and at Closing, and with or without the giving of notice, lapse of time
or both, (A) violate, conflict with or constitute a default under any term or
condition of, (1) except as to those Owners identified on Schedule 9(b), for
which a consent from one or more of such Owner's partners, shareholders or
members must be obtained under the organizational document of such Owner and as
to which RD and KB are obligated to use commercially reasonable efforts to
obtain pursuant to Section 4(k), as to Contributing Owners which are not natural
persons, the organizational documents of such Contributing Owner, or (2) any
material provision of any terms or provision of any judgment, decree, order,
statute, injunction, rule or regulation of a governmental unit applicable to
such Contributing Owner or any Significant Agreement to which such Contributing
Owner is a party or by which it or its assets or properties are bound or (B)
result in the creation of any lien or other encumbrance upon the Interests of
such Contributing Owner.
(v) Ownership of the Contributed Interests. Prior to
and at Closing, the Contributing Owner will be the sole owner of the Interests
contributed by such Contributing Owner to the Partnership and, at Closing, will
deliver title to such Interests, free and clear of all liens, encumbrances and
security interests. To the knowledge of the Contributing Owner, the Contributing
Owner's Interests have been issued in compliance with the partnership agreements
(as then in effect) of the Contributing Entity.
(vi) Foreign Person. The Contributing Entity is
neither a "foreign person" within the meaning of Section 1445(f) of the Code nor
a "foreign partner" within the meaning of Section 1446 of the Code.
(vii) No Attachments, Etc. No attachments, execution
proceedings, assignments for the benefit or creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or, to the knowledge of the
Contributing Owner, threatened against the Contributing Owner or any of its
assets nor are any of such proceedings contemplated by the Contributing Owner
which would affect the ability of the Contributing Owner to perform under this
Agreement.
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(b) Representations and Warranties of the Funds. Each Fund,
severally and not jointly (other than as provided in subsection 9(b)(v)(B), in
which case, jointly and severally), and KB and RD, jointly and severally with
each Fund, hereby represents and warrants to the Trust and the Partnership as
follows:
(i) The Fund is duly formed, validly subsisting and
in good standing under the laws of its jurisdiction of formation, and is duly
qualified and in good standing in each jurisdiction in which such qualification
is necessary, except where the failure to be so qualified would not have a
material adverse effect on the Fund. The Fund has the requisite power and
authority to enter into this Agreement and to perform the transactions
contemplated hereby.
(ii) Due Authorization; Binding Agreement. The
execution, delivery and performance of this Agreement by the Fund and of each of
the other agreements and instruments to be executed and delivered in connection
herewith have been duly and validly authorized by all necessary partnership
action and proceedings. This Agreement has been duly executed and delivered by
the Fund, or its authorized representative, and constitutes a legal, valid and
binding obligation of the Fund, enforceable against it in accordance with its
terms.
(iii) Consents and Approvals. No consent, waiver,
approval or authorization of, or filing, registration or qualification with, or
notice to, any governmental unit or any other person is required to be made,
obtained or given by the Fund prior to, or as a condition to the execution,
delivery and performance of this Agreement, except such as has been obtained.
Without limiting the foregoing, the Fund has received all necessary consents and
approvals from its equity holders with respect to the execution and delivery of
this Agreement and the transactions contemplated hereby.
(iv) No Violation. None of the execution, delivery or
performance of this Agreement by the Fund will, on the date hereof and at
Closing, and with or without the giving of notice, lapse of time or both
violate, conflict with or constitute a default under any term or condition of
the partnership agreement, certificate of incorporation, bylaws or other
constituent or organizational documents of the Fund or any material term or
provision of any agreement or instrument to which the Fund is a party or by
which its properties or assets are bound, or any material term or provision of
any judgment, decree, order, statute, injunction, rule or regulation of a
governmental unit applicable to the Fund or any Significant Agreement to which
the Fund is a party or by which it or its assets or properties are bound.
(v) Irrevocable Commitments for Cash Investment;
Deposit of Cash Investment.
(A) The persons whose names and addresses
are set forth on Schedule 10(b)(v) constitute all of the equity owners of the
Fund as of the date hereof, and the commitment set forth opposite such equity
owner's name accurately sets forth the binding,
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irrevocable commitment by such equity owner to make a capital contribution to
the Fund on or prior to the date hereof, subject only to the conditions
precedent set forth in the partnership agreement of the Fund, and which
conditions precedent, as excerpted from such partnership agreements, are listed
on Schedule 10(b)(v). Each Fund covenants and agrees that it shall not establish
any additional conditions precedent to the obligation of any equity owner to
make a capital contribution, or modify in any adverse respect any condition
precedent set forth on Schedule 10(b)(v). Each such equity owner has duly
executed all necessary agreements and instruments establishing such equity
owner's commitment to make the capital contribution set forth opposite such
equity owner's name on Schedule 10(b)(v), and each such agreement is enforceable
against each equity owner in accordance with its terms. The general partner of
the Fund has received no notice from any equity owner contesting or disputing
such equity owner's obligations to make the capital contribution set forth
opposite such equity owner's name, and the Fund is not aware of any facts or
sets of circumstances which would lead the Fund to reasonably conclude that any
equity owner would breach or default in such equity owner's obligations or
become unable to meet its obligations to make the capital contribution such
equity owner is obligated to make on or prior to the Closing Date.
(B) The Funds jointly and severally
represent and warrant and hereby covenant and agree that on the date hereof and
at all time between the date hereof and the Closing Date, the Funds shall have
an aggregate net worth, giving effect to all liabilities and other obligations,
whether known or unknown, liquidated or unliquidated, contingent or otherwise,
of not less than $10,000,000. Each Fund shall promptly notify the Trust in
writing of any dispute or challenge by any equity owner as to its obligations
under the organizational documents of such Fund or under the agreements pursuant
to which the equity owner has agreed to make the capital contribution set forth
opposite such equity owner's name, or a default by any such equity owner in the
performance or observance by such equity owner of its obligations thereunder. RD
and KB each covenants and agrees to use commercially reasonable efforts to cause
each agreement or instrument pursuant to which each equity owner is irrevocably
obligated to make a capital contribution to a Fund in the amount set forth
opposite such equity owner's name on Schedule 10(b)(v) to provide that, if the
Closing shall occur notwithstanding the failure of such equity owner to make the
capital contribution to the Fund which such equity owner is obligated to make,
the Partnership shall have a legal right to enforce the rights of such Fund to
compel such equity owner to make its capital contribution, or, if after having
exercised commercially reasonable efforts, RD and KB cannot cause any such
instrument or agreement to vest such right in the Partnership, then the general
partner of each Fund shall enter into an agreement to provide the Partnership
with the right to direct and compel the general partner to enforce such Fund's
rights to compel such equity owner to make its capital contribution. Each Fund
also shall deliver to the Trust all agreements and other instruments received by
such Fund evidencing any obligation or commitment from any person or entity
which is not an equity owner of such Fund on the date hereof to make a capital
contribution to such Fund or to otherwise become an equity owner of such Fund.
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(vi) Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to the Fund's knowledge, threatened
before any court, governmental unit or any arbitrator against the Fund or any of
its assets or properties or with respect to the transactions contemplated by
this Agreement and except for the matters, if any, set forth on Schedule
10(b)(vi), none of which matters would have a material adverse effect on the
Fund or any of its assets or properties, or which would prohibit or restrain the
consummation of the transactions contemplated hereby.
11. Representations and Warranties of the Partnership and the Trust.
The Partnership and the Trust jointly and severally hereby represent and warrant
to the Owners as follows (the Owners hereby acknowledge and agree that any
reference to a Schedule in this Section 11 shall be deemed to be modified by,
and the information, if any, set forth therein shall be deemed to include, the
information disclosed in the Exchange Act Filings regardless of whether express
reference thereto is made herein or therein):
(a) Organization; Authority. The Partnership is a partnership
duly formed, validly subsisting and in good standing under the laws of the State
of Delaware. The Trust is a duly formed and validly subsisting real estate
investment trust in good standing under the laws of the State of Maryland. The
Trust and the Partnership each has full power and authority to own and lease
their real properties and to carry on their business as it is now being
conducted. Schedule 11(a) sets forth the name of each subsidiary of the Trust or
the Partnership (whether owned directly or indirectly through one or more
intermediaries) (individually, a "Subsidiary" and collectively, "Subsidiaries").
All of the outstanding shares of capital stock of, or other equity interests in,
each of the Subsidiaries owned by the Trust or the Partnership are duly
authorized, validly issued, fully paid and nonassessable, and are owned,
directly or indirectly, by the Trust or the Partnership, free and clear of all
liens except as set forth on Schedule 11(a). The following information for each
Subsidiary is set forth in Schedule 11(a), if applicable: (i) its name and
jurisdiction of incorporation or organization, (ii) the type of and interest
held by the Trust or the Partnership in the Subsidiary and, in the case of
Subsidiaries, the partnership agreement or other organizational documents of the
Subsidiary, and (iii) any loans from the Trust or the Partnership to, or
priority payments due to the Trust or the Partnership from, the Subsidiary, and
the rate of return thereon. Except as set forth on Schedule 11(a), there are no
existing options, warrants, calls, subscriptions, convertible securities or
other rights, agreements or commitments which obligate the Trust or any of the
Subsidiaries to issue, transfer or sell any shares of capital stock or equity
interests in any of the Subsidiaries.
(b) Due Authorization; Binding Agreement. The execution,
delivery and performance of this Agreement by the Partnership and the Trust and
of each of the other agreements and instruments to be executed and delivered in
connection herewith have been duly and validly authorized by all necessary
action. This Agreement has been duly executed and delivered by the authorized
representatives of the Partnership and the Trust and constitutes a legal, valid
and binding obligation of each, enforceable against each in accordance with its
terms.
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(c) Consents and Approvals. No consent, waiver, approval or
authorization of, or filing, registration or qualification with, or notice to
any governmental unit or any other person is required to be made, obtained or
given by the Partnership or the Trust prior to or as a condition to the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, except as shall have been obtained by Closing.
(d) No Violation. None of the execution, delivery or
performance of this Agreement by the Partnership or the Trust does or will, with
or without the giving of notice, lapse of time or both, (i) violate, conflict
with or constitute a default under any term or condition of (A) the
organizational documents of the Partnership or the Trust or any material
provision of any Partnership Significant Agreement (as defined below) or other
agreement to which the Partnership or Trust is a party or by which it or its
assets or properties are bound, or (B) any terms or provisions of any judgment,
decree, order, statute, injunction, rule or regulation of a governmental unit
applicable to the Partnership or the Trust or (ii) result in the creation of any
lien or other encumbrance upon the assets or properties of the Partnership or
the Trust. Neither the Trust, the Partnership nor any of its Subsidiaries is in
material default under or in violation of any provision of its organizational
documents.
For purposes hereof, "Partnership Significant
Agreement" means and includes any agreement or instrument which is required to
be filed as an exhibit to any filings by the Trust under the Exchange Act.
(e) Securities Filings. The Partnership and the Trust have
previously delivered or made available to RDC on behalf of the Owners (i) the
Trust's Annual Report on Form 10-K for each of the fiscal years ended December
31, 1996, 1995 and 1994, and (ii) copies of the Trust's Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997, all as filed with the Commission (collectively, the
"Exchange Act Filings"). As of their respective filing dates with the
Commission, the Exchange Act Filings complied as to form in all material
respects with the applicable requirements of the Exchange Act, and the
respective rules and regulations promulgated thereunder, and the Exchange Act
Filings did not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No event has occurred since the filing of the Trust's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1997 which is
required to be disclosed in a report filed either by the Partnership or the
Trust pursuant to Section 13 or 15(d) of the Exchange Act which has not been so
disclosed. To the knowledge of the Trust, there is no unresolved violation or
position asserted in writing by any governmental authority with respect to any
of the Exchange Act Filings. Except as disclosed in the Exchange Act Filings:
(A) the Trust and each of its Subsidiaries has conducted its business only in
the ordinary course of business, consistent with past practice and (B) all
material assets of the Trust are owned by the Trust, directly or indirectly
through the Partnership or their respective Subsidiaries.
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(f) Status of Securities. The Operating Partnership Interests
to be issued to the Contributing Owners in accordance with Schedule 2(a), and
the Cash Investment Shares will be, when issued pursuant to this Agreement, duly
authorized, validly issued, fully paid and non-assessable, free and clear of all
liens, claims, security interests, pledges and encumbrances. The Common Shares
to be issued upon conversion or exchange of the Operating Partnership Interests
will be, when issued, duly authorized, validly issued, fully paid and
non-assessable, and no liability shall attach to the owner thereof. The issuance
of Operating Partnership Interests hereunder will not give any shareholder in
the Trust or any limited partner in the Partnership the right to demand payment
for Common Shares or Operating Partnership Interests (as the case may be) under
applicable law or give rise to any preemptive or similar rights.
(g) (i) Authorized Capital of Trust and Operating Partnership
Interests. The authorized capital of the Trust on the date hereof consists of
50,000,000 Common Shares. As of December 31, 1997, there were 8,554,177 shares
of Common Shares issued and outstanding. All such issued and outstanding Common
Shares are duly authorized, validly issued, fully paid, nonassessable and free
of preemptive rights. The Trust has no outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities the holders of which have the
right to vote) with the shareholders of the Trust on any matter. Except for the
options awarded under the Trust's 1994 Share Option Plan (the "Incentive Plan"),
the Trust's 1994 Non-Employee Trustees' Share Option Plan, the Trust's
Restricted Share Plan and the Trust's Dividend Reinvestment Plan, there are no
existing options, warrants, calls, subscriptions, convertible securities, or
other rights, agreements or commitments which obligate the Trust to issue,
transfer or sell any Common Shares or other equity interests of the Trust or the
Partnership except: (A) as disclosed in the Trust's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996 (the "1996 Form 10-K"); (B) as
disclosed on Schedule 11(g)(i); and (c) with respect to the right to receive
Operating Partnership Interests and Common Shares as provided in this Agreement.
The consummation of the transactions contemplated by this Agreement will not
give rise to any preemptive rights or anti-dilution rights exercisable by any
holder of Common Shares except for any such rights which have been waived.
(ii) Schedule 11(g)(ii) sets forth the number of
Operating Partnership Interests which will be outstanding and owned by the Trust
and each person who is a limited partner of the Partnership as of the date
hereof immediately after the Closing (and giving effect to the transactions
contemplated hereby). Except as provided on Schedule 11(g)(ii), as contemplated
by this Agreement, and as disclosed in the 1996 Form 10-K, there will be no
other Operating Partnership Interests issued or outstanding, or any other form
of general or limited partnership interest of the Partnership issued or
outstanding, immediately after the Closing. As of the Closing Date, the
Partnership will not have issued or granted securities convertible into
interests in the Partnership, and will not be a party to any outstanding
commitments of any kind relating to, or any agreements with respect to,
interests in the
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Partnership, whether issued or unissued, except for contribution agreements
entered into for the acquisition of properties by the Partnership as set forth
on Schedule 11(g)(ii).
(iii) Except as set forth on Schedule 11(g)(iii) and
except for interests in the Subsidiaries of the Trust and the Partnership, none
of the Trust or any of its Subsidiaries owns, directly or indirectly, any
interest or investment (whether equity or debt) in any corporation, partnership,
joint venture, business, trust or other entity (other than investments in
short-term investment securities).
(h) Maryland Takeover Law. The terms of Section 3-602 and
3-702 of the Maryland Corporation Code will not apply to the Owners or to the
Fund with respect to, or to any acquisition of Operating Partnership Interests
and Common Shares pursuant to, this Agreement, or as a result of the exchange or
conversion of Operating Partnership Interests issued hereunder into Common
Shares.
(i) Vote Required. The affirmative vote of the holders of a
majority of the outstanding Common Shares entitled to vote and duly present in
person or by proxy at a meeting duly called (and with each Common Share entitled
to one vote per Common Share) at which a quorum is present is the only vote of
the holders of any class or series of Common Shares necessary to approve, for
the purposes of the rules of the New York Stock Exchange or otherwise, the
transaction contemplated by this Agreement, including, without limitation, the
issuance of Common Shares or the exchange of Operating Partnership Interests
issued hereunder for Common Shares.
(j) Exemption from Ownership Restrictions. The Board of
Trustees of the Trust shall have adopted resolutions on or prior to Closing,
exempting the Fund from the ownership restrictions under Section 6.6 of the
Amended and Restated Declaration of Trust of the Trust.
(k) Tax Matters.
(i) REIT Status. The Trust, beginning with its
taxable year ended December 31, 1993 and through December 31, 1997: (A) has been
subject to taxation as a REIT within the meaning of the Code and has satisfied
all requirements to qualify as a REIT within the meaning of the Code, (B) to its
knowledge, has operated in such a manner as to qualify as a REIT for the tax
year ending December 31, 1998, and (C) to its knowledge, has not taken or
omitted to take any action which would reasonably be expected to result in a
successful challenge by the Internal Revenue Service to its status as a REIT,
and to the knowledge of the Trust, no such challenge is pending or threatened.
Neither the Trust, the Partnership nor any Subsidiary of the Trust or the
Partnership (collectively, the "Mark Centers Group") holds any asset that is
subject to a consent filed pursuant to Section 341(f) of the Code and the
regulations thereunder.
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(ii) Tax Returns. To the knowledge of the Trust, each
member of the Mark Centers Group has (A) timely filed with the appropriate
taxing authority all Tax Returns required to be filed by it (after giving effect
to any filing extension granted by any governmental authority) and such Tax
Returns were complete and accurate in all material respects and (B) has paid all
Taxes shown as owed by each member of the Mark Centers Group on any Tax Return,
other than Taxes being contested in good faith and for which adequate reserves
have been taken. No member of the Mark Centers Group has executed or filed with
the Internal Revenue Service or any other taxing authority any agreement now in
effect extending the period for assessment or collection of any Tax. Except as
set forth in Schedule 11(k)(ii), no member of the Mark Centers Group is a party
to any material pending action or proceeding by any taxing authority for
assessment or collection of any Tax, and to the knowledge of the Trust, no
material claim for assessment or collection of any Tax has been asserted in
writing against it. Except as set forth on Schedule 11(k)(ii), to the knowledge
of the Trust, no claim has been made in writing by any authority in a
jurisdiction in which a member of the Mark Centers Group does not file Tax
Returns that such member is or may be subject to taxation by such jurisdiction.
Except as set forth in Schedule 11(k)(ii), there is no material dispute or claim
concerning any Tax liability of a member of the Mark Centers Group claimed or
raised by any taxing authority in writing, and no member of the Mark Centers
Group or the Subsidiaries has entered into or intends to enter into any
agreements with any taxing authority, including but not limited to, closing
agreements.
(iii) Certain Tax Liabilities. Since January 1, 1997,
no member of the Mark Centers Group has incurred (A) any material liability for
Taxes under Sections 856(b), 860(c) or 4981 of the Code, or (B) a material
liability for Taxes other than Taxes incurred in connection with the ordinary
course of business.
(iv) Tax Status of Subsidiaries. Each Subsidiary
organized as a partnership, including, without limitation, the Partnership (and
any other Subsidiary that files tax returns as a partnership for federal income
tax purposes) is not and has never been a publicly traded partnership within the
meaning of Section 7704 of the Code and the regulations promulgated thereunder.
(v) Definitions. For purposes of this Section 11(k),
the following defined terms shall have the meanings set forth below:
(A) "Taxes" means all taxes, charges, fees,
levies or other assessments, including, without limitation, all net income,
gross income, gross receipts, sales, use, service, service use, ad valorem,
transfer, franchise, profits, license, lease, withholding, social security,
payroll, employment, excise, estimated, severance, stamp, recording, occupation,
real and personal property, gift, windfall profits or other taxes, customs,
duties, fees, assessments or other similar charges, whether computed on a
separate consolidated, unitary, combined or other basis, together with any
interest, fines, penalties, additions to tax
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or other additional amounts imposed thereof or with respect thereto, in each and
every case, imposed by any taxing authority (domestic or foreign).
(B) "Tax Returns" means all federal, state,
local and foreign income, franchise, sales and other tax returns.
(l) Absence of Undisclosed Liabilities and Contractual
Obligations. Except for immaterial liabilities arising in the ordinary course of
business, which shall not exceed $250,000 in the aggregate as to the Trust, the
Partnership and their respective Subsidiaries on a consolidated basis
(collectively, the "Consolidated Trust") and except for those matters disclosed
in this Agreement, the Exhibits and Schedules hereto, the Exchange Act Filings
or Schedule 11(1), none of the Trust, the Partnership or any of their respective
Subsidiaries has any liabilities of any nature, whether matured or unmatured,
fixed or contingent, which would have, individually or in the aggregate, a
material adverse effect upon the Consolidated Trust, or upon the real property
interests in which the Consolidated Trust holds fee title or a leasehold
interest as ground lessee (individually, a "Trust Property" and collectively,
the "Trust Portfolio"), taken as a whole.
(m) Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to the Trust's knowledge, threatened
before any court, governmental unit or any arbitrator against the Trust, the
Partnership or any of their respective Subsidiaries or their respective assets
or properties or with respect to the transactions contemplated by this Agreement
except as disclosed in the Exchange Act filings, and except for the matters, if
any, set forth on Schedule 11(m), none of which matters set forth on such
Schedule, individually or in the aggregate, would have a material adverse effect
on the Consolidated Trust or the Trust Portfolio or would prohibit or restrain
the consummation of the transactions contemplated hereby. There are no material
facts concerning any allegations made against the Trust in any litigation
disclosed in the Exchange Act filings or on Schedule 11(m) which have not
already been disclosed in pleadings filed on or prior to the date hereof or
during discovery conducted on or prior to the date hereof.
(n) Attachment, Execution, Etc. No attachments, execution
proceedings, assignments for the benefit or creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or, to the knowledge of the
Trust, threatened against the Trust, the Partnership or any of their respective
Subsidiaries or any of their respective assets, nor are any of such proceedings
contemplated by any of the foregoing.
(o) Compliance with Laws; Violations, Etc.
(i) Except for the violations set forth on Schedule
11(o)(i), none of which, individually or in the aggregate, are material, the
Consolidated Trust has complied in all material respects with all laws
applicable to the conduct of its business and its use and operation of the
Partnership Portfolio, and has obtained all licenses, certificates, approvals
and
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permits required for the conduct thereof, (1) except where the failure to do so
would not have, individually or in the aggregate, a Trust Material Adverse
Effect on the Consolidated Trust or the Partnership Portfolio, (2) except as
described in engineering reports delivered by the Partnership to RDC, on behalf
of the Owners, in connection with this Agreement, and (3) except to the extent
that non-compliance is a result of a change after the date hereof in the
interpretation or enforcement of existing laws and regulations and the Trust,
before such change, reasonably believed that the Consolidated Trust was in
compliance. Such licenses, certificates, approvals and permits are in full force
and effect, the Trust and the Partnership have not taken any action that would
(or failed to take any action the omission of which would) result in the
revocation of such licenses, certificates, approvals or permits, and the Trust
and the Partnership have not received any written notice of violation from any
federal, state or municipal entity or notice of an intention by any such
government entity to modify or revoke any certificate, approval, license or
permit issued by it to the Trust, the Partnership or any of their respective
Subsidiaries that in each case has not been cured or otherwise resolved to the
satisfaction of such government entity, except where such failure or such action
would not have a material adverse effect on the Consolidated Trust or the Trust
Portfolio.
(ii) Except as set forth on Schedule 11(o)(ii),
neither the Trust nor the Partnership has received any written notice and, to
the knowledge of the Trust, none of the Trust's or Partnership's employees has
received any written notice with respect to any Trust Property or associated
parking rights from any public authority concerning any eminent domain or
condemnation proceeding, or any uncorrected violation of any ordinance, public
regulation, statute, permit, site plan approval, plan of development, zoning or
subdivision regulation, parking requirement or urban redevelopment plan
applicable to such Trust Property; and, except for the Permitted Encumbrances
(which, for purposes of this Section 11, shall have the meaning of Permitted
Encumbrances as set forth in subsection 3(a) hereof except that the terms
"Premises" shall refer to a Trust Property, "Leases" shall refer to Partnership
Leases, the "surveys" shall refer to those delivered by the Partnership to RDC,
and "Existing Mortgage" shall refer to all mortgage indebtedness encumbering the
subject Trust Property, none of the Partnership, the Trust or any of their
respective Subsidiaries or, to the knowledge of the Trust, any previous owner of
the Trust Property, has sold, transferred, conveyed, or entered into any
agreement regarding transfer of "air rights," "excess floor area ratio," parking
rights or other development rights relating to the Trust Property.
(iii) Except as set forth on Schedule 11(o)(iii), the
Partnership has complied with all work orders, requirements and demands of each
and every insurance company insuring all or any part of the Trust Portfolio.
(iv) To the knowledge of the Trust, the continued
maintenance, operation and use of any buildings, structures or other
improvements on the Trust Portfolio for their respective present purposes will
not violate in a material manner any Applicable Laws or the certificate(s) of
occupancy issued for the Trust Portfolio.
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(v) Except as set forth on Schedule 11(o)(v), there
are no material unperformed obligations relative to the Trust Portfolio
outstanding pursuant to any written agreements with any governmental or
quasi-governmental body or authority.
(p) Environmental Matters. The Partnership has delivered to
RDC, on behalf of the Owners, the environmental reports listed on Schedule 11(p)
(the "Environmental Reports"). Except as disclosed in the Environmental Reports
or in the Exchange Act Filings, (i) none of the Trust, the Partnership or any of
their respective Subsidiaries has done anything to cause or permit and, to the
knowledge of the Trust, no other person or entity has done anything to cause or
permit Hazardous Materials to be now, or in the past, located on, in or under
any Trust Property or released into the environment, or discharged, placed or
disposed of at, on or under any Trust Property (except in small amounts used in
the ordinary course for the operation or maintenance of the Trust Property by
the Partnership in accordance with all applicable laws or used by tenants of the
Trust Property in the ordinary course of operation of their business, which use
by tenants is, and has been, to the knowledge of the Trust, in accordance with
all Applicable Laws); (ii) except as set forth on Schedule 11(p), to the
knowledge of the Trust, there are no underground storage tanks located at any
Trust Property now or in the past; (iii) none of the Trust, the Partnership or
any of their respective Subsidiaries has done anything to cause or permit and,
to the knowledge of the Trust, no other person or entity has done anything to
cause or permit any Trust Property to be used to store, treat or dispose of
Hazardous Materials (except in small amounts used in the ordinary course for the
operation or maintenance of the Trust Property by the Partnership in accordance
with all Applicable Laws or used by tenants of the Trust Property in the
ordinary course of operation of their business, which use by tenants is, and has
been, to the knowledge of the Trust, in accordance with all Applicable Laws);
and (iv) none of the Trust, the Partnership or any of their respective
Subsidiaries has done anything to cause or permit and, to the knowledge of the
Trust, no other person or entity has done anything to cause or permit any Trust
Property and its prior uses to fail to materially comply with, at all times, any
applicable Environmental Laws or any other governmental law, regulation or
requirement relating to environmental matters or Hazardous Materials. Except as
described in the Environmental Reports or in the Exchange Act Filings, there
currently exist no facts or circumstances that could reasonably be expected to
give rise to a material non-compliance with Environmental Laws, material
environmental liability or material Environmental Claim.
(q) Engineering Matters.
(i) The Partnership has obtained and delivered to
RDC, on behalf of the Owners, the engineering report(s) listed on Schedule 11(q)
(the "Trust Engineering Report"). Except as disclosed in the Trust Engineering
Reports or in the Exchange Act Filings, there are neither material patent nor,
to the knowledge of the Trust, latent defects in, mechanical failures of or
damages to the Improvements, including the roof, structure, elevators, walls,
heating, ventilation, air conditioning, plumbing, electrical, drainage, fire
alarm, communications, sprinkler, security and exhaust systems, or other
improvements on or
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forming a part of any Trust Property, all of which, to the knowledge of the
Trust, have been constructed in a good and workerlike manner consistent with
generally accepted practices for first-class construction. Except as described
in the Trust Engineering Reports or in the Exchange Act Filings, to the
knowledge of the Trust, all of the personal property used in connection with the
operation of any Trust Property and all improvements thereon are in good
condition and working order, ordinary wear and tear excepted.
(ii) Except as set forth on Schedule 11(q)(ii), no
portion of the buildings on any such Trust Property are located in an area
designated by any governmental entity as a flood hazard area.
(iii) All telephone and other public utilities and
all storm water drainage required by law or necessary for the operation of each
Trust Property (A) except as to the Trust Property described on Schedule
11(q)(iii), are installed, connected and operating, with all installation and
connection charges paid in full, including, without limitation, connection and
the permanent right to discharge sanitary waste into the collector system of the
appropriate sewer authority, (B) are being utilized in compliance with all
applicable governmental and environmental protection authorities' laws, rules,
regulations and requirements, and (C) are adequate and, to the knowledge of the
Trust, will continue to be adequate to service the Trust Property as improved
and presently used. To the knowledge of the Trust, no moratorium, proceeding or
other fact or condition exists which (x) threatens to impair continued
furnishing of such services to the Trust Property at regular rates and fees, or
(y) could result in the discontinuance of such services presently available or
necessary. Except as set forth on Schedule 11(q)(iii), water and sanitary sewer
are public.
(r) Real Estate Taxes and Assessments.
(i) The copies of the real property tax bills for
each Trust Property for the current tax year which have been furnished by the
Partnership to RDC on behalf of the Owners are true, correct and complete copies
of all of such tax bills. All real estate taxes due and payable as of the
Closing have been paid in full and, except as set forth on Schedule 11(r)(i),
there are no pending or, to the knowledge of the Trust, threatened proceedings
for an increase in the assessed valuation of any Trust Property for the current
or prior tax years.
(ii) Except as set forth on Schedule 11(r)(ii), each
Trust Property alone constitutes one or more entire tax parcel(s) for real
estate tax purposes, and is not taxed as part of a larger tax parcel.
(iii) Except as set forth on Schedule 11(r)(iii),
neither the Trust nor the Partnership has received any written notice that, and
the Trust has no knowledge that: (A) public improvements in the nature of
off-site improvement, or otherwise, have been ordered to be made or have
heretofore been assessed; and (B) special or general assessments (other than
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regular, annual real estate taxes) are pending against or affecting any Trust
Property or are being considered in formal municipal or quasi-municipal
proceedings.
(s) Leases
(i) Except for the leases for any Trust Property or
portion thereof and any new leases entered into after the date hereof
(collectively, the "Partnership Leases"), all of which Partnership Leases which
are in existence on the date hereof being listed on Schedule 11(s)(i), neither
the Partnership nor any Subsidiary of the Trust or the Partnership has entered
into any contracts for the sale or leasing of any Trust Property or any portion
thereof. There are no outstanding rights of first refusal or options to purchase
all or any portion of any Trust Property or rights of early termination by
tenants other than by reason of casualty or condemnation except as set forth in
Schedule 11(s)-1, none of which becomes exercisable solely by reason of the
transactions contemplated by this Agreement, and except for those rights and
options pertaining to portions of any Trust Property constituting less than
5,000 square feet of gross leaseable area. Except as set forth on Schedule
11(s)-1, the exercise of termination rights by one or more tenants under
Partnership Leases pursuant to rights to terminate for reasons other than
casualty or condemnation or a default by the Partnership will not have a Trust
Material Adverse Effect on the Trust Portfolio in the aggregate or the cash flow
therefrom, taken in the aggregate.
(ii) Subject to the right of governmental and law
enforcement authorities to enter a Trust Property for lawful business, as of the
Closing, no persons or entities, other than the Partnership and the tenants
under the Partnership Leases and their permitted subtenants and licensees, shall
have any right to the possession, use or occupancy of any Trust Property or any
portion thereof for any reason whatsoever.
(iii) Schedule 11(s)-2 (the "Trust Rent Roll") is
true and correct in all material respects as of the date noted thereon and
discloses all Partnership Leases. The Partnership Leases include all subleases,
tenancies, licenses and other rights of occupancy or use for all or any portion
of the Trust Property pursuant to which the Partnership or any Subsidiary of the
Trust or of the Partnership is landlord or licensor, all as amended, renewed and
extended to the date of the Trust Rent Roll, whether oral or written. There has
been no material change in the information set forth in the Trust Rent Roll
between the effective date of the Trust Rent Roll and date of Closing. The Trust
Rent Roll specifies at least the following information as to each Lease:
(A) a description (by rentable square feet)
of the leased space;
(B) the name of the current Tenant;
(C) the expiration dates of the current
term; and
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(D) the basic and additional Rents during
the original and any renewal terms thereof and the extent of any delinquencies
thereof and the period of delinquency.
(iv) Each Security Deposit has been and is held (or
applied) by the Partnership or its agent in compliance with the respective
Partnership Lease and applicable law. There are no unfulfilled obligations as to
Security Deposits to tenants under Partnership Leases the terms of which have
expired or been terminated and there is no suit, action or other claim made, or,
to the knowledge of the Trust, pending or threatened with respect to any such
Security Deposit, except as set forth on Schedule 11(s)-2.
(v) The following is true with respect to each
Partnership Lease:
(A) the Partnership Lease is valid and
subsisting and in full force and effect in accordance with its terms. No
Partnership Lease has been modified, in writing or otherwise, except as set
forth on the tenant estoppel certificate for such Lease and Schedule 11(s)-3;
(B) except as set forth on Schedule 11(s)-4,
all obligations of the lessor thereunder arising on or prior to the date hereof
and required to be performed prior to the date hereof have been performed on a
timely basis;
(C) except as set forth in Schedule 11(s)-3
and except for delinquencies in payment of rent of less than thirty (30) days,
to the knowledge of the Trust, there has been no material default on the part of
the tenant thereunder or event which, with the giving of notice or the lapse of
time, or both, would constitute a default on the part of the tenant thereunder
and, except as set forth in Schedule 11(s)-3 the tenant has not asserted and, to
the knowledge of the Trust, has no defense to or offset or claim against its
rent or the performance of its other obligations under the Partnership Lease;
(D) except as set forth on Schedule 11(s)-3,
no tenant has prepaid any rent for more than one (1) month if the lease term has
commenced and two (2) months if the lease term has not yet commenced;
(E) except as set forth on Schedule 11(s)-3,
the Trust has no knowledge of any tenant or any guarantor of a Partnership Lease
to a Trust Major Tenant being or becoming unable or unwilling to perform any of
its obligations under the Partnership Lease for any reason;
(F) to the knowledge of the Trust, except as
set forth on Schedule 11(s)-3, no other person has released or discharged any
guarantor, voluntarily or involuntarily or by operation of law, from any
obligation with respect to the Partnership Lease that such guarantor has
guaranteed except in accordance with the terms of such guarantee;
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(G) at the time of Closing, no rents will
have been assigned, pledged or encumbered except to an existing mortgagee of a
Trust Property; and
(H) except as set forth on Schedule 11(s)-3,
no Trustee of the Trust or executive officer of the Trust owns, directly or
indirectly, (1) five percent (5%) or more of the total combined earnings of all
classes of stock entitled to vote, or five percent (5%) or more of the total
number of shares of all classes of stock, of any tenant of a Trust Property or
(2) an interest of five percent (5%) or more in the assets or net profits of any
tenant of a Trust Property, including all the types and approximate quantities
of Improvements owned or leased by the Trust, the Partnership or such
Subsidiary.
(vi) Except as set forth in Schedule 11(s)-3, there
has been no material default or event which, with the giving of notice or the
lapse of time, or both, would constitute a default on the part of the
Partnership, the Trust or any of their respective Subsidiaries as lessee under
any ground lease.
(t) Title
(i) The Partnership or a Subsidiary of the Trust or
the Partnership has indefeasible, good and marketable legal and equitable title
to its respective interest in each Trust Property as insured by the title policy
pertaining to such Trust Property as previously delivered by the Partnership to
RDC on behalf of the Owners.
(ii) There is no pending or, to the knowledge of the
Trust, threatened eminent domain proceeding affecting any Trust Property or any
part thereof or affecting the sidewalks or any streets or public ways in front
of or adjoining any Trust Property.
(iii) There has been no material violation by the
Partnership or the Trust Property of any provision, condition or agreement
contained in any restrictive covenant, cross-easement agreement or similar
instrument or agreement affecting the Trust Property or any portion thereof,
which would have a material adverse effect on the Consolidated Trust or the
Trust Portfolio.
(iv) (A) Each Trust Property enjoys the benefit of
all easements and cross-easements necessary for operating the Trust Property as
currently operated, and (B) all such easements and cross-easements are in full
force and effect, and will survive the transactions contemplated by this
Agreement.
(v) The personal property located on each Trust
Property, other than that owned by tenants, utility companies or contractors, is
owned or leased by the Trust, the Partnership or a Subsidiary of the Trust or
the Partnership free and clear of any liens or security interests of any kind,
except for liens and encumbrances in favor of mortgagees of the Trust, the
Partnership or a Subsidiary of either.
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(vi) Except as set forth on Schedule 11(t)-1, each
Trust Property is located along and has unimpeded access to one or more
adjoining public streets. To the knowledge of the Trust, any curb-cut and
street-opening permits or licenses required for vehicular access to and from a
Trust Property to any adjoining street or to any parking spaces utilized in
connection with the Trust Property have been obtained and paid for by the
Consolidated Trust, and are in full force and effect. To the knowledge of the
Trust, no fact or condition exists which would result in the termination or
material impairment of access to a Trust Property from adjoining public or
private streets or ways.
(vii) To the knowledge of the Trust, each Trust
Property is an independent unit which does not now rely on any facilities (other
than facilities covered by Permitted Encumbrances including, without limitation,
any reciprocal easement agreements or facilities of municipalities or public
utility and water companies and other than parking areas which the Trust
Property makes legal use of under any reciprocal easement agreements) located on
any property not included in such Trust Property to fulfill any municipal or
governmental requirement or for the furnishing to the Trust Property of any
essential building systems or utilities or services.
(viii) Except as set forth on Schedule 11(t)-2, and
on Schedule 11(s)-1 to the extent set forth in the Partnership Leases and except
for Permitted Encumbrances, and other than rights of first refusal or options to
purchase pertaining to portions of any Trust Property constituting less than
5,000 square feet of gross leaseable area, there are no purchase contracts,
options, or any other agreements of any kind, written or oral, recorded or
unrecorded, whereby any person or entity other than the Partnership will have
acquired or will have any basis to assert any right, title or interest in, or
right to possession, use, enjoyment or proceeds of all or a portion of the Trust
Property.
(u) Insurance
(i) Schedule 11(u) sets forth an accurate and
complete list of the insurance policies relating to the Partnership Portfolio or
any part thereof and naming the Partnership as an insured; all such policies are
in full force and effect and all premiums thereunder have been paid to the
extent due; and no notice of cancellation has been received with respect thereto
and, to the knowledge of the Trust, none is threatened.
(ii) None of the Trust, the Partnership or any of
their respective Subsidiaries has received any notice from any insurance company
of any defect or inaccuracies in any of the insurance policies, or any parts
thereof, which would adversely affect the insurability of any Trust Property, or
would increase the cost of insurance beyond that which would ordinarily and
customarily be charged for similar properties in the vicinity of any Trust
Property. All of the Partnership Portfolio is fully insured in accordance with
prudent and customary practice.
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(v) Service Agreements
(i) A current, complete copy of each Partnership
Service Agreement (collectively, "Partnership Service Agreements") has been
delivered to RDC, on behalf of the Owners and there are no material
construction, management, leasing, service, equipment, supply, maintenance or
concession agreements (oral or written, formal or informal) with respect to or
affecting all or any portion of the Trust Property except as delivered to RDC.
Each Partnership Service Agreement is valid and binding and as of Closing all
amounts due and payable thereunder will have been paid. Neither the Partnership
nor any of its agents is in default under any Partnership Service Agreement or
has received any written notice from any party to any Partnership Service
Agreement claiming the existence of any default or breach thereunder which would
have a material adverse effect on the Consolidated Trust or the Trust Portfolio
and no event or omission has occurred which, with the giving of notice or the
lapse of time or both would constitute such a default. Except as set forth on
Schedule 11(v), each Partnership Service Agreement may be terminated without
cause upon thirty (30) days' notice or less without the payment of a penalty or
termination payment, and each Partnership Service Agreement is with third
parties unaffiliated with the Consolidated Trust.
(w) Employee and Employment Matters
(i) Set forth on Schedule 11(w) is a list of:
(A) All collective bargaining agreements and
other agreements requiring arbitration of employment disputes, and any written
amendments thereto, as well as all arbitration awards decided under any such
agreements, and all oral assurances or modifications, past practices, and/or
arrangements made in relation thereto, to which the Trust, the Partnership or
any Subsidiary of either is a party or by which it is bound; and
(B) All employment agreements, and all
severance agreements which have not been fully performed, to which the Trust,
the Partnership or any Subsidiary of either is a party or by which it is bound.
Set forth on Schedule 11(w) is also a list of all employees of the Trust, the
Partnership or any Subsidiary of either, and a list of all other individuals
employed by the Trust, the Partnership or any Subsidiary of either. Each of the
Trust, the Partnership and each Subsidiary of either has previously delivered to
RD true and correct copies of all of the documents referred to on Schedule 11(w)
and all of the personnel policies, employee and/or supervisor handbooks,
procedures and forms of employment applications relating to the employees of the
Trust, the Partnership or any Subsidiary of either. There is no union
representing or purporting to represent any of the employees of the Trust, the
Partnership or any Subsidiary of either and the Trust, the Partnership and each
Subsidiary of either is not subject to or currently negotiating any collective
bargaining agreements with any union representing or purporting to represent the
employees of any of the foregoing.
(ii) Except as set forth on Schedule 11(w):
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(A) There are no strikes, slow downs or
other work stoppages, grievance proceedings, arbitrations, labor disputes or
representation questions pending or, to the knowledge of the Trust, threatened
against or involving the Trust, the Partnership or any Subsidiary of either;
(B) To the knowledge of Trust, each of the
Trust, the Partnership and each Subsidiary of either has complied in all
material respects with all laws relating to labor, employment and employment
practices, including, without limitation, any provisions thereof relating to
wages, hours and other terms of employment, collective bargaining,
nondiscrimination, and the payment of social security, unemployment compensation
and similar taxes, and none of the Trust, the Partnership or any Subsidiary of
either is (1) liable for any arrearages of wages or any taxes or penalties for
failure to comply with any of the foregoing or (2) delinquent in the payment of
any severance, salary, bonus, commission or other direct or indirect
compensation for services performed by any employee to the date hereof, or any
amount required to be reimbursed to any employee or former employee; and
(C) There are no Actions concerning or in
any way relating to the employees or employment practices of the Trust, the
Partnership or any Subsidiary of either, including, without limitation, Actions
involving unfair labor practices, wrongful discharge and/or any other
restrictions on the right of the Owner to terminate its employees, employment
discrimination, occupational safety and health, and workers' compensation.
Except as shown on Schedule 11(w), there are no express or implied
agreements, policies, practices, or procedures, whether written or oral,
pursuant to which any employee of the Trust, the Partnership or any Subsidiary
of either is not terminable at will.
Except as set forth on Schedule 11(w), none of the Trust, the
Partnership or any Subsidiary of either is a party to any oral or written (A)
agreement with any executive officer or other key employee of the Trust, the
Partnership or any Subsidiary of either (1) the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving the Trust, the Partnership or any Subsidiary of either
of the nature of the transactions contemplated by this Agreement, (2) providing
any term of employment or compensation guarantee extending for a period longer
than one year, or (3) providing severance benefits or other benefits after the
termination of employment of such executive officer or key employee regardless
of the reason for such termination of employment; or (B) agreement or plan,
including, without limitation, any stock option plan, stock appreciation right
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
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None of the Trust, the Partnership or any Subsidiary of either has
taken any action which required or, taken together with the transactions
contemplated hereby, would require the giving of any notice under the Worker
Adjustment Retraining and Notification Act or any comparable state or local law
or regulation.
(x) ERISA; Benefit Plans.
(i) None of the Trust, the Partnership or any
Subsidiary of either nor any Trust ERISA Affiliate (as hereinafter defined)
maintains, sponsors, contributes to or has any liability under any agreement,
plan, practice or program, whether written or oral, providing for bonus
payments, child or dependent care benefits, death benefits, accidental death and
dismemberment benefits, deferred compensation benefits, disability or other wage
continuation benefits, educational assistance or tuition benefits, health
benefits, paid holidays benefits, incentive compensation payments, leave of
absence rights, medical expense payments, reimbursement benefits, profit
sharing, pension plan of ERISA benefits or other benefits, retiree medical or
retiree life insurance benefits, stock option, stock appreciation rights or
stock purchase benefits, severance or termination pay or benefits (including
post-employment consulting arrangements or benefits), or vacation benefits,
except as set forth on Schedule 11(x). The items set forth on Schedule 11(x) are
individually referred to as "Trust Employee Benefit Plan" and collectively
referred to as "Trust Employee Benefit Plans". Schedule 11(x) includes, but is
not limited to, each plan maintained by the Trust, the Partnership or any
Subsidiary of either or a Trust ERISA Affiliate (as hereinafter defined), which
is an "an employee benefit plan" as such term is defined in Section 3(3) of
ERISA, other than a "multi-employer plan" within the meaning of Section 3(37) of
ERISA. The Trust has delivered to RD a true and complete copy of each Trust
Employee Benefit Plan, including all texts, amendments and other agreements
(whether formal or informal) adopted in connection therewith. No employee or
former employee or any beneficiary thereof participates in or has any rights to
benefits with respect to employment with the Trust under any agreement, plan,
practice, or program not listed on Schedule 11(x), other than a multi-employer
plan. No person who is not a current or former employee (or a beneficiary
thereof) of the Trust, the Partnership or any Subsidiary of either participates
in or is entitled to any benefits under any Trust Employee Benefit Plan listed
on Schedule 11(x). For purposes of this Agreement, "Trust ERISA Affiliate" means
each person, company and trade or business which together with the Trust, the
Partnership or any Subsidiary of either, are treated as a single employer under
Section 414(b), (c), (m), (n) and (o) of the Code.
(ii) Each Trust Employee Benefit Plan has complied
and currently complies in form, and in all material respects in operation and
administration, with all applicable provisions of applicable law, including the
Code and ERISA and any contractual obligation. The Trust has delivered to RDC
with respect to each Trust Employee Benefit Plan subject to ERISA true and
correct copies of (A) the annual return/report (Form 5500 Series) with attached
schedules and a financial statement for the three most recent fiscal years, (B)
the summary plan descriptions and all written announcements or disclosures to
participants,
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(C) the most recent (IRS) determination letter, (D) each written description
intended to describe any Trust Employee Benefit Plan and (E) all correspondence
from the IRS, Department of Labor and PGBC.
(iii) Each Trust Employee Benefit Plan intended to be
tax qualified under Section 401(a) of the Code has been determined by the IRS to
be so qualified and each trust created thereunder has been determined to be
exempt from tax and, to the knowledge of the Trust, nothing has occurred which
would cause the loss of such qualification or tax-exempt status. With respect to
each Trust Employee Benefit Plan that is subject to Section 412 of the Code or
Title IV of ERISA (collectively, "Trust Pension Plans") there has been no
failure to make any contribution or pay any amount due as required by Section
412 of the Code, Section 302 of ERISA or the terms of any such Pension Plan, and
no request or receipt of any funding waiver has been requested or received from
the IRS. The present value of the benefit liabilities (as defined in ERISA) of
each Trust Pension Plan that is subject to Title IV of ERISA, as of any
determination date, is less than the fair market value of the assets of such
Pension Plan, all determined using the actuarial assumptions that would be used
by PBGC in the event of a termination of the Trust Pension Plan on such
determination date. Within the past five (5) years, none of the Trust, the
Partnership or any Subsidiary of either nor any Trust ERISA Affiliate has
transferred any assets or liabilities of a Trust Pension Plan subject to Section
412 of the Code which had, at the date of such transfer, accrued benefits in
excess of the fair market value of its assets as of any determination date,
determined using the actuarial assumptions that would be used by PBGC in the
event of a termination of the Trust Pension Plan on such determination date or
has engaged in a transaction which may reasonably be subject to Section 4212(c)
or 4069 of ERISA. There has been no reportable event (as defined in Section 4043
of ERISA) within the last five (5) years. None of the Trust, the Partnership or
any Subsidiary of either sponsors, maintains or has obligations, direct,
contingent or otherwise, with respect to any Trust Employee Benefit Plan that is
subject to the laws of any country other than the laws of the United States.
With respect to the Trust Employee Benefit Plans subject to Title I Part 4 of
ERISA or Section 4975 of the Code, none of the Trust, the Partnership or any
Subsidiary of either nor any other person has (i) engaged in a "prohibited
transaction" within the meaning of Section 4975 of the Code or Section 406 of
ERISA which would subject the Partnership or the Trust to liability for a
material tax or penalty imposed by Section 4975 of the Code or Section 502 of
ERISA, or (ii) committed a breach of its fiduciary duties (as defined in Section
404 of ERISA) which could subject the Partnership or the Trust to any material
liability. Except as required by law, none of the Trust, the Partnership or any
Subsidiary of either nor any Trust ERISA Affiliate has made any written or other
binding commitment to amend any Trust Employee Benefit Plan.
(iv) No Trust Employee Benefit Plan provides for
post-employment medical, health or life insurance benefits for present or future
retirees or present or future terminated employees, except for continuation
coverage provided pursuant to the requirements of Section 4980B of the Code or
Sections 601-608 of ERISA or a similar state law, or continued coverage under an
insurance policy for a period not to exceed sixty days (60)
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following termination of employment. The Trust and its respective ERISA
Affiliates have complied in all material respects with the notice and
contribution requirements of Section 4980(B) of the Code and Sections 601-608 of
ERISA. Any contribution or payment required to be made by such Owner to or on
behalf of any Trust Employee Benefit Plan has been made on or before its due
date. Adequate accruals for all contributions or payments required to be made by
the Trust, the Partnership and each Subsidiary of either to or on behalf of any
Trust Employee Benefit Plan and multi-employer pension plan to which any of the
foregoing and/or any of its Trust ERISA Affiliates makes contributions to or has
any liabilities with respect thereto ("Trust MEPPA Plan") for all periods prior
to December 31, 1997 have been made on the Warranted Balance Sheet.
(v) With respect to the Trust Employee Benefit Plans,
no actions, suits or claims: (i) with respect to the assets or liabilities
thereof (other than routine claims for benefits); (ii) against the Trust or an
Trust ERISA Affiliate; or (iii) against any fiduciary with respect to any Trust
Employee Benefit Plan are pending or threatened, and the Trust has no knowledge
of any facts which could be reasonably be expected to give rise to or result in
any such actions, suits or claims. Neither the Trust nor any Trust ERISA
Affiliate: (i) has incurred a complete or partial withdrawal, as those terms are
defined in Section 4203 or 4205, respectively, of ERISA; (ii) has engaged or
intends to engage in a transaction or course of conduct which could result in
liability under Title IV of ERISA to a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA; (iii) has any outstanding liability under Title IV
of ERISA, contingent or otherwise; or (iv) will incur any liability with respect
to any Trust Employee Benefit Plan or Trust MEPPA Plan solely as a result of
undertaking the transactions contemplated by this Agreement.
(y) Cash Flow. Except as otherwise disclosed elsewhere herein
or in any Exhibit or Schedule hereto, since the last audited consolidated
financial statements of the Trust, there has been no change in the aggregate
cash flow of the Trust Portfolio and no variation in the aggregate income from
all of the Partnership Leases which, in either case, constitutes a Trust
Material Adverse Effect and, since the date of said last audited financial
statements, each Trust Property has been operated in the ordinary course of
business consistent with past practice.
(z) SEC and Other Documents.
(i) Except as set forth in Schedule 11(z), each of
the balance sheets included in or incorporated by reference into the Exchange
Act Filings (including the related notes and schedules) fairly presented in all
material respects the financial position of the entity or entities to which it
relates as of its date and each of the statements of operations, stockholders'
equity (deficit) and cash flows included in or incorporated by reference into
the Exchange Act Filings (including any related notes and schedules) fairly in
all material respects presented the results of operations, retained earnings or
cash flows, as the case may be, of the entity or entities to which it relates
for the periods set forth therein, in each case in accordance
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with United States generally accepted accounting principles ("GAAP")
consistently applied during the periods involved except as may be noted therein
and except, in the case of the unaudited statements, normal recurring year-end
adjustments.
(ii) Except as disclosed in the Exchange Act filings,
in Schedule 11(z) or in any other Schedule to this Agreement, since September
30, 1997, the Trust and each of its Subsidiaries has conducted its business only
in the ordinary course of such business and has not (i) sold or acquired any
real estate or interest therein, (ii) leased all or substantially all of any
property, (iii) entered into any financing arrangements in connection therewith,
(iv) granted an option to purchase or lease all or substantially all of any
property or (v) entered into a contract, letter of intent, term sheet or other
similar instrument to do any of the foregoing and there has not been any change,
circumstance or event that has resulted in a material adverse effect on the
business, properties, results of operations or financial condition of the Trust,
the Partnership and its Subsidiaries, taken as a whole.
(aa) Affiliate Transactions. Schedule 11(aa) sets forth a
complete and accurate list of (i) all relationships and transactions, series of
related transactions or currently proposed transactions or series of related
transactions entered into by the Trust or any of its Subsidiaries since December
31, 1996, which are of the type required to be disclosed by the Trust pursuant
to Item 404 of Regulation S-K of the Securities Act, the Exchange Act and the
rules and regulations promulgated thereunder and (ii) all agreements,
arrangements or policies of the Trust and/or the Subsidiaries of the Trust
(including the Partnership) concerning transactions with Affiliates or other
conflicts of interest. Each agreement, arrangement or policy described in clause
(ii) hereof and set forth in Schedule 11(aa) is in full force and effect, and
the Trust, each of its Subsidiaries, and the other parties thereto are in
compliance therewith, or such compliance has been waived by the Trust's Board of
Trustees as set forth in Schedule 11(aa). A true and complete copy of all
agreements or contracts relating to any such transaction has been made available
for inspection by the Owners.
12. Additional Agreements.
(a) Board Representation; Appointment of Executive Officers.
The Board of Trustees of the Trust covenants and agrees that at the Closing
Date, the Trust shall be governed by a Board of Trustees consisting of seven (7)
Trustees. At the Closing, the Board of Trustees of the Trust shall appoint four
(4) Trustees, two of whom shall be RD and KB, and two of whom shall be
designated by RDC and who shall be neither officers nor employees of the Trust,
the Partnership or of any Contributing Owner or Contributing Entity (the "RDC
Designees") (provided also that the RDC Designees shall be reasonably acceptable
to the Board of Trustees of the Trust, which acceptance shall not unreasonably
be withheld), and the Board of Trustees of the Trust shall also appoint two (2)
Trustees (provided that such designees shall be reasonably acceptable to RD and
KB, which acceptance shall not unreasonably be withheld) (the "Trust
Designees"). The appointment of the RDC Designees and the Trust Designees shall
be effective until the 1999 Annual Meeting of Shareholders of the Trust and
until their
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successors are duly elected and qualified. Concurrently at the Closing, the
Trustees of the Trust, other than the Trust Designees (if they are then
incumbent Trustees) and Marvin L. Slomowitz, shall resign as Trustees from the
Trust, Marvin L. Slomowitz shall resign as Chief Executive Officer and the Board
of Trustees shall appoint RD and KB to serve as Chief Executive Officer and
President, respectively.
(b) Voting Trust Agreement; Investment Letter. At the Closing,
each Fund shall execute and deliver to each of its partners a proxy, appointing
each partner such Fund's proxy with respect to those Cash Investment Shares to
which such partner would be entitled upon a dissolution of such Fund and the
distribution of the Cash Investment Shares to such partner as a liquidating
distribution, with authority to consent or withhold consent, in such partner's
sole discretion, with respect to any matter as to which shareholders may act
pursuant to the Declaration of Trust and By-laws of the Trust; provided,
however, that if any partner of a Fund determines not to accept such Fund's
proxy as to those Cash Investment Shares to which it would otherwise be
entitled, then such Fund shall enter into a Voting Trust Agreement with the
Trust, appointing the Board of Trustees of the Trust (so long as KB and RD are
Trustees and executive officers of the Trust) as Voting Trustee with respect to
those Cash Investment Shares to which such Fund would otherwise be entitled to
vote, with authority to consent or withhold consent, in the Board of Trustees'
sole discretion, with respect to any matter as to which shareholders may act
pursuant to the Declaration of Trust and By-laws of the Trust. At Closing, each
Fund and each Contributing Owner to whom Operating Partnership Interests shall
be issued as part of the Contribution Consideration, shall execute and deliver
to the Trust and the Partnership an investment letter in the form attached as
Exhibit "O."
(c) Non-Compete Agreements. At Closing, RD and KB shall enter
into the non-compete agreements with the Partnership and the Trust in the form
attached as Exhibit "P" (the "Non-Compete Agreements").
(d) Proxy Statement; Listing on New York Stock Exchange. As
promptly as reasonably practicable after execution of this Agreement, the Trust,
at its expense, shall prepare and file with the Commission under the Exchange
Act, and shall use its best efforts to have approved by the Commission, a proxy
statement with respect to the meeting of the Trust's shareholders referred to in
subsection 12(e) (the "Proxy Statement"). Each of the Contributing Owners and
each Fund covenants and agrees to cooperate with the Trust in providing such
information as the Trust deems necessary to comply with the rules and
regulations of the Commission with respect to the Proxy Statement (including,
but not limited to, such information as the Trust deems necessary to respond to
any comments issued from time to time by the Commission staff concerning the
Proxy Statement and audited financial statements prepared in accordance with
generally accepted accounting principles and as may be required by the rules and
regulations of the Commission, and which shall reflect no material adverse
change in the financial condition or results of operations of the Contributing
Entities, and which the Warrantors covenant shall confirm as accurate the net
operating income of each
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Premises, each Contributed Management Contract and each Contributed Note, all as
reflected in the unaudited operating statements of each of the Contribution
Entities previously delivered to the Partnership). The Trust and each of the
Contributing Owners and each Fund agrees that the information provided by each
for inclusion in the Proxy Statement shall not, when the Proxy Statement is
first mailed to the Trust's shareholders and at the Closing Date, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in order to make such information, in light of the circumstances in
which it is made, not misleading. The Trust shall notify RDC, on behalf of the
Contributing Owners and the Funds, as promptly as reasonably practicable of the
receipt of any comments of the Commission and of any request by the Commission
for amendments or supplements to the Proxy Statement, and will supply RDC, on
behalf of the Contributing Owners and the Funds, with copies of all
correspondence between the Trust and/or its representatives, on the one hand,
and the Commission or the members of its staff or any other appropriate
government official, on the other hand, with respect to the Proxy Statement.
Each party shall use its best efforts to obtain and furnish the information
required to be included in the Proxy Statement; shall use commercially
reasonable efforts to respond promptly to any comments made by the Commission
with respect to the Proxy Statement, form of proxy, and any preliminary version
thereof, and the Trust shall cause the Proxy Statement and related form of proxy
to be mailed to its shareholders at the earliest practicable time. The parties
agree to correct, as promptly as practicable and, in any event, prior to the
date of the meeting of the Trust's shareholders referred to in subsection 12(e)
hereof, any such information provided by them for use in the Proxy Statement
which shall have become materially false or misleading. Subject to the
limitations set forth in Sections 23 and 24, the Trust covenants and agrees that
the Cash Investment Shares and the Common Shares issuable from time to time upon
conversion or exchange of the Operating Partnership Interests shall be listed on
the New York Stock Exchange or on such other principal exchange as the Common
Shares shall generally be listed on the Closing Date.
(e) Meeting of Shareholders of the Trust. The Trust shall take
all action necessary, in accordance with the Maryland Law and its Amended and
Restated Declaration of Trust and By-laws, to duly call, give notice of and
convene a meeting of its shareholders, as promptly as practicable, to consider
and vote upon (i) amendments to its Amended and Restated Declaration of Trust
authorizing a change in the Trust's name, the creation of a newly authorized
class of preferred stock and an increase in the number of Common Shares which
the Trust is authorized to issue, to be effective immediately upon the Closing;
and (ii) the approval and adoption of this Agreement and the transactions
contemplated hereby, including, but not limited to the Cash Investment and the
issuance of the Cash Investment Shares. The Proxy Statement shall contain the
determinations and affirmative recommendation of the Board of Trustees as to
each of the proposals set forth in this subsection 12(e).
(f) No Solicitation by the Trust.
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(i) The Trust shall not, directly or indirectly,
through any officer, director, employee, representative or agent of the Trust,
the Partnership or any of its Subsidiaries, solicit or encourage (including by
way of furnishing information) the initiation of any inquiries or proposals
regarding any merger, amalgamation, take-over bid, reorganization, sale of
substantial assets, sale of Common Shares or Operating Partnership Interests
(including, without limitation, by way of a tender offer) or similar transaction
involving the Trust or the Partnership (any of the foregoing inquiries or
proposals being referred to herein as an "Acquisition Proposal"); provided,
however, that nothing contained in this Agreement shall prevent the Board of
Trustees of the Trust, after consultation with its financial advisors, and after
receiving advice from outside counsel to the effect that the Board of Trustees
of the Trust is required to do so in order to discharge properly its fiduciary
duties, from considering, negotiating, approving and recommending to the
shareholders of the Trust and to the limited partners of the Partnership an
unsolicited bona fide Acquisition Proposal which the Board of Trustees of the
Trust determines in good faith would result in a transaction more favorable to
the shareholders of the Trust and to the limited partners of the Partnership
than the transaction contemplated by this Agreement (any such Acquisition
Proposal being referred to herein as a "Superior Proposal").
(ii) The Trust shall immediately notify RDC after
receipt of any Acquisition Proposal or any request for nonpublic information
relating to the Trust, the Partnership or any of their respective Subsidiaries
in connection with an Acquisition Proposal or for access to the properties,
books or records of the Trust, the Partnership or any of their respective
Subsidiaries by any person or entity that informs the Board of Trustees that it
is considering making, or has made, an Acquisition Proposal. Such notice to RDC
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contract.
(iii) If the Board of Trustees of the Trust receives
a request for material nonpublic information by a party who makes a bona fide
Acquisition Proposal and the Board of Trustees of the Trust determines that such
proposal is a Superior Proposal, then, and only in such case, the Trust may,
subject to the execution of a confidentiality agreement, provide such party with
access to information regarding the Trust.
(iv) The Trust shall immediately cease and cause to
be terminated any existing discussions or negotiations with any parties (other
than with the Contributing Owners and Contributing Entities) conducted
heretofore with respect to any of the foregoing.
(v) The Trust shall ensure that the officers,
directors, trustees and employees of the Trust, the Partnership and their
respective Subsidiaries and any investment banker or other advisor or
representative retained by the Trust are aware of the restrictions described in
this subsection 12(g), and shall be responsible for any breach of this Section
by such bankers, advisors and representatives.
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(vi) In the event the Board of Trustees of the Trust
determines, in accordance with its fiduciary obligations, to execute an
agreement constituting a Superior Proposal prior to the Closing or within twelve
(12) months after the termination by the Trust of this Agreement other than by
reason of Sections 13(a)(i), (ii), (iii), (iv), (vi) or (viii), then upon the
execution of a definitive binding agreement between the Trust and the third
party providing for the consummation of the Superior Proposal and containing the
affirmative recommendation of a majority of the Board of Trustees as to the
Superior Proposal, and provided that the Owners shall have not theretofore
breached or otherwise been in default of any obligation or condition to
consummate the transactions contemplated by this Agreement which would give rise
to the Trust's right to terminate this Agreement pursuant to Section 13(a)(i),
(ii), (iii), (iv), (vi) or (viii), the Trust shall pay to RDC or to its
designees in cash the sum of One Million Seven Hundred Fifty Thousand Dollars as
liquidated damages, and not as a penalty, in addition to any other amounts
payable under Section 13(b).
(g) Agreements Respecting Contributed Properties and Remaining
Existing Mortgages. The parties acknowledge that the Contributing Owners to whom
Operating Partnership Interests will be issued in exchange for Interests
(collectively, the "RDC Group") have structured the transactions contemplated by
this Agreement to defer recognition of gain for federal income tax purposes at
Closing, and to maintain such deferral thereafter to the extent provided herein
based upon the agreement of the Trust and the Partnership to abide by certain
covenants set forth in this Agreement. Based upon the foregoing, the Trust and
the Partnership hereby covenant as follows:
(i) Guaranty or Indemnity. At Closing, or at any time
subsequent thereto in accordance with the terms hereof, the Trust and the
Partnership and its respective Subsidiaries will permit the RDC Group to
guarantee, or indemnify the Trust, the Partnership and their respective
Subsidiaries for, the "bottom" portion (i.e., the least risky portion) of
indebtedness of the Partnership. In the event that other partners of the
Partnership or any Subsidiary (including future contributors) similarly require
a guarantee or indemnity of indebtedness of the Trust, the Partnership and/or
their respective Subsidiaries to defer the recognition of gain for federal
income tax purposes resulting from the contribution of property to the
Partnership, and such guarantee of indemnity of indebtedness is the "bottom"
portion of the indebtedness of the Partnership, then all such partners
(including the RDC Group) shall share pari pasu in the "bottom" portion of such
indebtedness. Notwithstanding the previous sentence, the Trust and the
Partnership agree to maintain (or make available for the benefit of the RDC
Group) (i) during the Restricted Period (as defined below) an amount of
indebtedness equal to $50,000,000, and (ii) after the Restricted Period any debt
encumbering the Contributed Properties, solely for the RDC Group to guarantee
(or indemnify the Trust, the Partnership or their respective Subsidiaries for
such indebtedness (the "RDC Group Debt Amount")). In the event that the RDC
Group guarantees or indemnifies the Trust, the Partnership, or their respective
Subsidiaries with respect to indebtedness encumbering any property of the Trust,
the Partnership or any Subsidiary, such indebtedness shall not exceed 60% of the
fair market value of such property, as determined by a majority of the
disinterested
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Trustees of the Trust. The Trust and the Partnership agree, and shall cause
their respective Subsidiaries to agree, to take any and all action reasonably
designed so that the execution of each guarantee or indemnity by the RDC Group
results in tax basis for such RDC Group for federal income tax purposes.
(ii) No Property Disposition. The Trust and the
Partnership covenant that they shall not sell, transfer, distribute or otherwise
dispose, nor permit any of their respective Subsidiaries to sell, transfer,
distribute or otherwise dispose, of the Contributed Properties (including, but
not limited to, the stock of any corporations) (or the properties, if any, that
are substituted or exchanged for the Contributed Properties) contributed by the
RDC Group, prior to the date set forth on Schedule 12(g)(ii) for such
Contributed Property or stock (the period of restriction for each such property
or stock being the "Restricted Period") other than an exchange or other
disposition which does not cause the RDC Group to recognize gain for federal
income tax purposes (including, without limitation, a transaction pursuant to
Section 1031 of the Code or any successor provision which would not cause such
recognition of gain). Before the end of the applicable Restricted Period, the
Trust, the Partnership or any of their respective Subsidiaries shall have the
right to dispose of or distribute any of the Contributed Properties provided the
Trust, the Partnership and/or such Subsidiary pays to the RDC Group the Tax
Payment (as defined below). Nothing contained in Section 12(g)(ii) shall be
deemed to be construed to limit the rights of any lender or other secured party
to foreclose on, or otherwise dispose of, the Contributed Properties contributed
by the RDC Group or, of the Partnership to dispose of the Contributed Properties
contributed by the RDC Group; provided, however, the Trust, the Partnership
and/or such Subsidiary shall pay to the RDC Group the Tax Payment, if any,
triggered by any taxable disposition of the Contributed Properties contributed
by the RDC Group (other than as a result of a foreclosure) prior to the
expiration of the Restricted Period. The term "Tax Payment" as used herein means
an amount equal to the sum of (A) the federal, state, and local income Taxes
actually payable by the members of the Contributing Owners resulting from the
recognition of gain and (B) an additional payment in an amount equal to the
amount such that, after payment by the members of the Contributing Owners of all
Taxes (including interest and penalties) on amounts received under clause (A)
and this clause (B), the Contributing Owners retain an amount equal to the
amount described in clause (A).
(iii) Right of Redemption.
(A) In the event that after the end of the Restricted Period and
prior to the second anniversary of the termination of the Restricted Period, the
Trust, the Partnership or any of their respective Subsidiaries desires to sell
or otherwise desire to dispose of (through foreclosure or otherwise), or receive
an unsolicited offer to purchase any Contributed Property after the Restricted
Period, which offer the Trust, the Partnership or such Subsidiary wishes to
accept, and provided that the RDC Group has given notice to the Trust in
December of the calendar year immediately preceding the calendar year in which
occurs such proposed sale or disposition to the effect that the RDC Group
desires to receive any Offering
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Notice (as described below) required to be sent during the next calendar year;
the Trust, the Partnership or such Subsidiary shall give notice (the "Offering
Notice") thereof to RDC or such other representatives as may be designated by
the RDC Group from time to time for such purpose. The Offering Notice shall
specify the nature of the sale and the consideration and other terms upon which
it intends to undertake such sale, and shall specify that the failure of the RDC
Group, through its authorized representative, to respond within the time period
set forth below shall be deemed an election by the RDC Group not to purchase the
Contributed Property. Within thirty (30) days from the date of the Offering
Notice, the RDC Group may elect, by written notice to the Trust, to purchase the
Contributed Property. If the RDC Group elects to so purchase the Contributed
Property as aforesaid, then such purchase shall be consummated on the terms and
conditions set forth in the Offering Notice; provided, however, to the extent
that the Contributed Property is then subject to separately allocated debt and
the lender thereof consents to the RDC Group assuming such debt at no cost,
expense or liability to the Trust, the Partnership or any Subsidiary, the Trust
shall cause the Contributed Property to be conveyed to the RDC Group subject to
such debt.
(B) The RDC Group may use their Operating
Partnership Interests as currency, in whole or in part, in connection with the
purchase of the Contributed Property from the Trust, Partnership or any
Subsidiary pursuant to an election made in accordance with Section
12(g)(iii)(A). In addition, as part of a transfer of the Contributed Property
pursuant to a foreclosure proceeding with respect to any debt secured by the
Contributed Property, if the RDC Group can cause the third party which is
otherwise to obtain title to the Property to accept Operating Partnership
Interests, in whole or in part, in lieu of obtaining title to the Contributed
Property (and without modifying any other terms in the agreement of sale or
transfer which has been executed in respect of such Contributed Property), the
RDC Group shall have the right to do so provided that such third party agrees in
writing for the benefit of the Partnership to be bound by all of the terms and
conditions of the Agreement of Limited Partnership of the Partnership and, in
accordance therewith, compliance with all requirements pertaining to a transfer
of Operating Partnership Interests (other than the need to obtain the consent of
the general partner of the Partnership, which consent is deemed to be given
pursuant to the terms of this Section 12(g)(iii)); in such event, title to the
Property shall be transferred to the RDC Group in redemption of the Operating
Partnership Interests described above.
(C) If within the thirty (30) day period
during which the RDC Group has the right to elect to purchase the Contributed
Property under the Offering Notice, the RDC Group does not make the election or
fails to respond to the Offering Notice, the Trust, the Partnership or their
Subsidiary may undertake to sell the Contributed Property on such terms and
conditions as it shall elect; provided, however, that the sale of the
Contributed Property to which the Offering Notice pertains shall not be
consummated at less than ninety percent (90%) of the price as specified in the
Offering Notice unless the Trust, the Partnership or the Subsidiary again offers
the Contributed Property to the RDC Group upon such more favorable terms and
conditions. If the RDC Group notifies the Trust of their intention not to
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purchase the Contributed Property as set forth in the revised Offering Notice,
or if the RDC Group does not respond to the revised Offering Notice within the
prescribed thirty (30) day period, then the Trust, the Partnership or the
Subsidiary may consummate the sale at any time thereafter. In such event, the
RDC Group shall have no further right of redemption as against the party to whom
the Trust, the Partnership or the Subsidiary transferred title to the
Contributed Property; provided, however, that RDC Group's right of redemption
hereunder shall apply to any real property received by the Trust, the
Partnership or a Subsidiary and in an exchange for the Contributed Property,
whether said property represents all or only a part of the consideration for the
transfer of the Contributed Property.
(D) In the event that the RDC Group elects
to purchase the Contributed Property pursuant to this Section 12(g)(iii), the
Trust agrees to cooperate with the RDC Group at no cost, expense or liability to
the Trust to cause debt to be placed on the Contributed Property immediately
prior to the closing of the conveyance of the Contributed Property; provided
that: (1) the RDC Group arranges for such debt at its sole cost and expense; (2)
the RDC Group is unconditionally and irrevocably prepared to close such
conveyance immediately after said closing of the loan; and (3) the RDC Group
agrees to assume the debt and thereafter assumes the same at the closing and the
Trust, the Partnership and all of their respective Subsidiaries are released of
all liability thereunder immediately following the closing of the conveyance of
the Contributed Property.
(iv) Allocation Method. The Partnership covenants
that the "traditional method" (without curative allocations), as defined in
Treas. Reg. 1.704-3(b), of allocating income, gain, loss and deduction to
account for the variation between the fair market value and adjusted basis of
the Contributed Properties for federal income tax purposes, shall be used (i)
with respect to the contribution of the Contributed Properties, and (ii) with
respect to any revaluation of the Property, pursuant to Treas. Reg.
ss.ss.1.704-l(b)(2)(iv)(f), 1.704 l(b)(2)(iv)(g) and 1.704-3(a)(6).
(v) Tax Matters. The Contributing Owners will pay or
provide for payment of all Taxes (excluding all real estate taxes) due and
payable on or after the Closing and will file all Tax Returns and reports
required to be filed on or after the Closing with respect to Taxes imposed in
connection with the ownership and operation of the Contributed Properties for
all taxable periods (or portions thereof) ending on or prior to the Closing.
(h) Indemnification of Trustees and Officers.
(i) Those provisions of the Amended and Restated
Declaration of Trust and By-Laws of the Trust and of the Agreement of Limited
Partnership of the Partnership with respect to indemnification, advancement of
expenses and limitation on liability for the benefit of the trustees, officers,
employees and consultants set forth therein, shall not be amended, repealed, or
otherwise modified for a period of six (6) years after the Closing Date in any
manner that would adversely affect the rights thereunder of individuals
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who at any time prior to the Closing Date were trustees or officers of the Trust
in respect of actions or omissions occurring at or prior to the Closing Date
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law.
(ii) From and after the Effective Time, the Trust and
the Partnership shall indemnify, defend and hold harmless the present and former
officers and trustees of the Trust (collectively, the "Indemnified Parties")
against all losses, expenses, claims, damages or liabilities, or amounts that
are paid in settlement of, or otherwise in connection with, any claim, action,
suit, proceeding or investigation (a "Claim"), based in whole or in part on the
fact that such person is or was a trustee, officer, employee or agent of the
Trust or any Subsidiary thereof (including the Partnership) and arising out of
actions or omissions occurring at or prior to the Closing Date (including,
without limitation, the transactions contemplated by this Agreement), in each
case to the full extent permitted under Maryland law as it pertains to the Trust
and under Delaware law as it pertains to the Partnership (and shall pay in
advance of the final disposition of any action or proceeding to each Indemnified
party to the fullest extent permitted by Maryland law and Delaware law, as the
case may be, upon receipt from the Indemnified Party to whom expenses are
advanced of an undertaking to repay such advances in the event that it shall be
finally judicially determined that indemnification and the payment of such
advances is not permissible under applicable law).
(iii) Without limiting the foregoing, in the event
any Claim is brought against any Indemnified Party (whether arising before or
after the Closing Date) after the Closing Date: (A) the Indemnified Parties may
retain the Trust's regularly engaged independent legal counsel, or other
independent legal counsel satisfactory to them provided that such other counsel
shall be reasonably acceptable to the Trust; (B) the Trust shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; and (C) the Trust will use their
reasonable best efforts to assist in the vigorous defense of any such matter,
provided that the Trust shall not be liable for any settlement of any Claim
effected without its written consent, which consent shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 12(h), upon learning of any such Claim, shall notify the Trust (although
the failure so to notify the Trust shall not relieve the Trust from any
liability which the Trust may have under this Section 12(h) except to the extent
such failure prejudices the Trust, and shall deliver to the Trust and to the
Partnership the undertaking contemplated by the Maryland law and the Delaware
law, respectively). The Indemnified Parties as a group may retain one law firm
(in addition to local counsel) to represent them with respect to each such
matter unless there is, under applicable standards of professional conduct (as
reasonably determined by counsel to the Indemnified Parties), a conflict on any
significant issue between the positions of any two or more Indemnified Parties
in which event, such additional counsel as may be required may be retained by
the Indemnified Parties.
(iv) The Trust shall cause to be maintained in effect
for not less than six (6) years after the Closing Date the current policies of
trustees' and officers' liability
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insurance maintained by the Trust with respect to matters occurring prior to the
Closing Date; provided, however, that the Trust may substitute therefor policies
of substantially similar coverage containing substantially similar terms and
conditions to the extent reasonably available and the Trust shall not be
required to pay an annual premium for such insurance in excess of 200% of the
last annual premium paid prior to the date of this Agreement, but in such case
shall purchase as much coverage as possible for such amount. In addition to, and
not in lieu of any other obligation of the Trust and the Partnership under this
Section 12(h), each of the Trust and the Partnership shall in all events
continue to be obligated under those agreements to which either is a party
pursuant to which either or both of the Trust and the Partnership has agreed to
indemnify and hold harmless the trustees and officers of the Trust on account of
claims and proceedings arising on or prior to the Closing Date.
(v) This Section 12(h) is intended to be for the
benefit of, and shall be enforceable by, the Indemnified Parties, their heirs
and personal representatives, shall be binding on the Trust and its and their
respective successors and assigns, and shall not be amended or modified to
adversely affect any such party without the prior written consent of such party.
(i) Conduct of the Business of the Contributing Entities and
Operation of the Premises Pending the Closing. Between the date hereof and the
Closing Date:
(i) The Owners will not take or suffer or permit any
action which would render untrue any of the representations or warranties of the
Owners herein contained, and not omit to take any action, the omission of which
would render untrue any such representation or warranty;
(ii) The Owners will, at their expense, make all
repairs and replacements, structural and non-structural, which are required with
respect to any portion of the Premises to maintain it in its present condition
ordinary wear and tear excepted. To the extent due and payable on or prior to
Closing, the Owners will pay in full, by the time of the Closing, all bills and
invoices for labor, goods, materials and services of any kind and taxes due and
assessments and utility charges payable relating to the Premises, and each
Contributing Entity shall pay in full at or prior to the Closing, all expenses
theretofore payable connected with the negotiation, execution and delivery of
each Lease, including, without limitation, recording fees required to be paid by
the lessor under any Lease. To the extent any bills, invoices, expenses, taxes,
assessments and other charges pertain to periods prior to the Closing Date but
are not due and payable on or prior to the Closing Date, such items shall be
treated as adjustments to the Contribution Consideration in the manner provided
in Section 7. The Owners shall also complete, at their expense to the extent
that the expenses may not be passed through to tenants, all alterations,
repairs, capital and tenant improvements or other work required to have been
completed by such Owner under any reciprocal easement agreements, Leases and
other agreements to which it is a party, including, without limitation, all
alterations, improvements and other work or allowances therefor required to
prepare space for
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the initial occupancy of each tenant under a Lease. The Owners shall cure, prior
to the Closing Date or, at the Partnership's sole option, as soon after the
Closing Date as is reasonably practical, any violation of Applicable Laws (as
defined in Paragraph 9(h) below) which existed prior to the Closing Date unless
the cost to cure the same shall exceed $125,000 as determined by a contractor
acceptable to the Partnership. If the cost to cure exceeds such amount, and the
Partnership nonetheless exercises its option to compel the Owner to cure the
violation, then the Owner shall have the right to terminate this Agreement, but
only as to such Premises, and the total consideration payable hereunder shall be
reduced by the Contribution Consideration attributable to such Premises as set
forth on Schedule 2(a).
(iii) The Owners shall operate and manage the
Premises in the same manner as it has been operated and managed prior to the
date of this Agreement and in accordance with Applicable Laws. The Owners shall
submit to the Partnership monthly reports of rental collections, occupancy and
vacancies.
(iv) The Owners shall comply with all of the
obligations of the Owners under the Leases, the Existing Mortgages, the Service
Agreements, the Contributed Management Contracts and the Contributed Notes and
all other agreements and contractual arrangements by which the Owners and/or the
Premises are bound or affected. Without in any manner limiting the generality of
the foregoing, the Owners agree timely to pay to the holder of the Existing
Mortgage on or before the Closing Date all amounts of principal, interest,
prepaid real estate taxes, prepaid insurance premiums, and all other sums due
and payable under the Existing Mortgages on or before the Closing Date. The
Owners shall maintain their insurance policies in full force and effect and
shall pay all required premiums and other charges.
(v) The Owners shall not encumber any Contributed
Property with any indebtedness other than for Existing Mortgages unless the
instrument or agreement giving rise to such indebtedness expressly permits the
prepayment of all principal and accrued interest at any time and from time to
time without the payment of any penalty or premium or unless the Owners shall
pay the prepayment penalty and premium. Notwithstanding the foregoing, however:
(A) the Owners shall cause to be paid and
satisfied prior to Closing, all mortgage indebtedness on any Premises other than
an Existing Mortgage; and
(B) the Owners shall be permitted to incur
additional mortgage indebtedness (from affiliates of the Owners or otherwise),
not to exceed the amount, and encumbering only those Contributed Properties,
identified on Schedule 12(i)(v), solely for the purpose of financing the
improvements to such Contributed Properties in accordance with the estimated
construction budgets attached to Schedule 12(i)(v). Such additional indebtedness
(or additional equity contributed to the Contributed Entity (from affiliates of
the Owners or otherwise) in lieu of incurring indebtedness as permitted hereby,
but in no event in excess of
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the amount of additional indebtedness permitted hereby), but only to the extent
the improvements financed thereby have been completed on or prior to the Closing
Date, shall be deemed an Existing Mortgage, to be discharged in accordance with
the terms of subsection 3(a) (provided that no prepayment or other penalties or
fees shall apply to any repayment thereof). The Partnership shall be promptly
notified in advance of the incurrence of any additional mortgage indebtedness
permitted by this clause (B), and shall be advised of all relevant terms and
conditions thereof, all of which shall be commercially reasonable.
(vi) Promptly after receipt thereof by the Owners,
the Owners shall deliver to the Partnership the following:
(A) a copy of any notice of default or
termination given or received under any Existing Mortgage, Lease, Service
Agreement, Contributed Management Contract or Contributed Note;
(B) a copy of any tax bill, notice or
statement of value, or notice of change in a tax rate affecting or relating to
the Premises;
(C) a copy of any notice of an actual or
alleged violation of Applicable Laws; and
(D) a copy of any notice of any condemnation
proceedings with respect to the Premises.
(vii) If a Contributing Owner or another entity in
which RDC or an affiliate of RDC (including, but not limited to, RD and KB) is a
general partner, manager or principal executive officer enters into an agreement
(an "Agreement of Sale") to purchase real property or any interest therein
(including, but not limited to, a leasehold interest as ground lessee), such
Contributing Owner or RDC, on behalf of a proposed purchaser which is not a
Contributing Entity, shall cause the Agreement of Sale to provide that the
purchaser may assign its rights under the Agreement of Sale to the Trust, the
Partnership or to a designee of the Trust, which, upon such assignment,
exercisable at the election of the Trust at Closing as provided below, shall
also assume the purchaser's obligations thereunder. Promptly upon execution of
any Agreement of Sale, a fully executed copy thereof, together with all addenda
and exhibits thereto, shall be delivered to the Trust. The Trust shall have the
right to conduct such due diligence concerning the property which is subject to
the Agreement of Sale as the Trust shall deem advisable and the Agreement of
Sale shall expressly permit the Trust to conduct such due diligence as permitted
hereby. The Trust shall notify RDC at or prior to Closing of its election to
exercise the option to obtain an assignment of the Agreement of Sale and, if
exercised, the proposed purchaser and the Trust (or its designee) shall execute
and deliver an Assignment and Assumption of Sales Agreement as to such Agreement
of Sale in the form of Exhibit "H".
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(viii) If a Contributing Owner or another entity in
which RDC or an affiliate of RDC (including, but not limited to, RD and KB) is a
general partner, manager or principal executive officer acquires (after the date
hereof but prior to Closing) real property or any interest therein (including,
but not limited to, a leasehold interest as ground lessee) (the "Interim
Premises"), the Trust shall have the option, exercisable as set forth below, to
cause the Contributing Owner or such other person which is not then a
Contributing Owner to convey at Closing either fee simple title to the Interim
Premises or 100% of the interests in the Contributing Owner or other person
which owns of record the Interim Premises, on the same terms and subject to the
same conditions (including compliance with all of the conditions to Closing as
set forth in Section 8 hereof) as if the Interim Premises constituted a Premises
or the interests constituted Interests as of the date of this Agreement and as
if the Contributing Owner or other person had executed and delivered this
Agreement as of the date hereof; provided, however, that, at the option of the
Contributing Owner, the consideration shall consist either of cash or Operating
Partnership Interests and, if Operating Partnership Interests, the number of
Operating Partnership Interests to be issued to the Contributing Owners at
Closing (which Operating Partnership Interests shall be allocated among the
Contributing Owners as shall be designated by RDC to the Partnership at Closing)
shall be equal to the quotient obtained by dividing (A) the Interim Premises
Cost and (B) the average of the Market Price (as defined in subsection 2(b)) of
the Common Shares for the twenty (20) consecutive trading days ending on the
Closing Date. The term "Interim Premises Cost" shall mean the sum obtained by
adding (1) the purchase price paid for the Interim Premises as reflected in the
Agreement of Sale pursuant to which the Interim Premises was purchased, plus (2)
brokerage fees, legal fees and due diligence costs and acquisition expenses, and
commissions and other closing costs paid by the purchaser for the Interim
Premises, all as confirmed by the Trust, plus (3) the documented costs, if any,
for renovation or other improvements to the Interim Premises incurred between
the date of purchase and the Closing Date, plus (4) an amount equal to one
percent (1%) of the sum of the amounts determined in clauses (1) through (3)
above for each month which has elapsed between the date the Interim Premises was
purchased and the Closing Date (or a pro rata portion of such one percent (1%)
on the basis of the number of days elapsed for any partial month), but in no
event less than an aggregate of three percent (3%), and by subtracting from such
sum all indebtedness assumed by the Partnership (or by its designee) in
connection with the acquisition of the Interim Premises or the interests
(including, but not limited to, mortgage indebtedness). The purchase price shall
be adjusted at Closing subject to normal closing adjustments in accordance with
local custom. Without limiting anything in this subsection 12(i) (viii), the
aforementioned option with respect to an Interim Premises shall be similarly
granted by RD Properties, L.P. VI and exercisable by the Trust, with respect to
the property described on Schedule 12(i) (viii).
(ix) The Owners agree that at Closing they shall
cause to be delivered to the Partnership from the holder of the fee interest in
the real property identified on Schedule 12(i)(viii) and any Interim Premises an
agreement, in the form of Exhibit "Q" (the "Right of First Offer Agreement"),
granting to the Partnership a right of first offer to purchase such real
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property on the terms and subject to the conditions set forth in the Right of
First Offer Agreement.
(x) Subject to Section 6, the Owners and the
Partnership agree that as to proposed new Leases to be entered into for more
than 10,000 square feet of gross leasable area ("GLA"), the Owner will submit
its completed standard lease request form prior to negotiating the Lease, and
the Partnership shall have three (3) business days after receipt of such form in
which to object to or propose modifications to such proposed Lease. The
Partnership's failure to respond to the notice shall be deemed an acceptance of
the terms of such Lease. The Owner agrees to obtain the Partnership's approval
of any subsequent modifications to such economic terms and the Partnership shall
not unreasonably withhold, delay or condition its consent to such subsequent
modification, provided that the Owner shall have the right to make customary
modifications to its standard lease form so long as such modifications do not
affect the following terms (collectively the "Economic Terms"): (i) the term,
(ii) square footage, (iii) tenant improvement or tenant allowance amounts, (iv)
rent, (v) percentage rent or (vi) the obligation to pay a proportionate share of
taxes or common area maintenance (except to the extent that the Owner
customarily caps such charges or allows certain other modifications to the scope
of inclusions in common area maintenance clauses). The Owner shall have the
right to modify the terms of an existing Lease provided that the Owner first
gives to the Partnership prior written notice of any proposed modifications to
the Economic Terms of the existing Lease. The Partnership shall have three (3)
business days after receipt of such notice to object to or propose modifications
to the proposed terms. The Partnership's failure to object to such proposed
modification within such three (3) business day period shall be deemed an
acceptance of the terms of such modification to the existing Lease. The
termination of any of the Leases prior to Closing as permitted herein shall not
excuse the Partnership from its obligation to complete Closing and to pay the
full Contribution Price, except as set forth in subsection 13(a)(vii) below.
(j) Conduct of the Business of the Trust and Partnership
Pending the Closing. Between the date hereof and the Closing Date:
(i) The Trust and the Partnership will not take or
suffer or permit any action which would render untrue any of the representations
and warranties of the Trust or Partnership herein contained, and not omit to
take any action, the omission of which would render untrue any of such
representations or warranties; and
(ii) The Partnership will, at its expense, make all
repairs and replacements, structural and non-structural, which are required with
respect to any portion of the Partnership Portfolio to maintain it in its
present condition, ordinary wear and tear excepted, including, without
limitation, all alterations, improvements or other work required to have been
completed by the Consolidated Trust under any reciprocal easement agreements,
Partnership Leases and other agreements to which it is a party, including,
without limitation,
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all alterations, improvements and other work or allowances therefor required to
prepare space for the initial occupancy of each tenant under a Partnership
Lease.
(iii) The Partnership will operate and manage the
Partnership Portfolio in the same manner as it has been operated and managed
prior to the date of this Agreement and in accordance with Applicable Laws. The
Partnership shall submit to RDC, on behalf of the Contributing Owners, monthly
reports of rental collections, occupancy and vacancies.
(iv) The Partnership will comply with all of its
obligations under the Partnership Leases, the Partnership's mortgages, the
Partnership Service Agreements and all other agreements and contractual
arrangements by which the Partnership and/or the Partnership Portfolio are bound
or affected. The Partnership shall not enter into any new Partnership Service
Agreement without first obtaining the prior approval of RDC, which approval
shall not be unreasonably withheld, delayed or conditioned, unless the new
Partnership Service Agreement is entered into in the ordinary course of business
and provides that the Partnership may terminate the Partnership Service
Agreement upon thirty (30) days' notice without the payment of a penalty or
termination payment. Failure by RDC to respond to any request for an approval or
consent for a period of five days from the date of such request shall be
conclusive evidence of its approval as to the new Partnership Service Agreement.
The Partnership shall maintain its insurance policies in full force and effect
and shall pay all required premiums and other charges.
(v) The Partnership shall not encumber any property
of the Trust with any indebtedness from the date hereof through the Closing Date
without first obtaining the prior written consent of RD, which consent shall not
be unreasonably withheld.
(vi) Neither the Trust nor the Partnership shall
declare, set aside or pay any cash dividends or make any other cash
distributions to its shareholders or partners on account of their Common Shares
or Operating Partnership Interests other than dividends by the Trust and
distributions by the Partnership which the Trust determines are necessary to
comply with and maintain its status as a REIT.
(vii) Promptly after receipt thereof by the
Partnership, the Partnership shall deliver to RDC, on behalf of the Contributing
Owners, the following:
(A) a copy of any notice of default given or
received under any Partnership Mortgage, Partnership Leases or Partnership
Service Agreements or any notices of termination given for any Partnership
Lease;
(B) a copy of any tax bill, notice or
statement of value, or notice of change in a tax rate affecting or relating to
the Trust Portfolio;
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(C) a copy of any notice of an actual or
alleged violation of Applicable Laws; and
(D) a copy of any notice of any condemnation
proceedings with respect to the Trust Portfolio.
(viii) The Owner and the Partnership agree that as to
proposed new Partnership Leases to be entered into for more than 10,000 square
feet GLA, the Partnership will submit its completed standard lease request form
prior to negotiating the Partnership Lease, and RDC, on behalf of the
Contributing Owners, shall have three (3) business days after receipt of such
form in which to object to or propose modifications to such proposed Partnership
Lease. RDC's failure to respond to the notice shall be deemed an acceptance of
the terms of such Partnership Lease. The Partnership agrees to obtain RDC's
approval of any subsequent modifications to such economic terms and RDC shall
not unreasonably withhold, delay or condition its consent to such subsequent
modification, provided that the Partnership shall have the right to make
customary modifications to its standard lease form so long as such modifications
do not affect the following terms (collectively the "Economic Terms"): (i) the
term, (ii) square footage, (iii) tenant improvement or tenant allowance amounts,
(iv) rent, (v) percentage rent or (vi) the obligation to pay a proportionate
share of taxes or common area maintenance (except to the extent that the
Partnership customarily caps such charges or allows certain other modifications
to the scope of inclusions in common area maintenance clauses). The Partnership
shall have the right to modify the terms of an existing Partnership Lease
provided that the Partnership first gives to RDC, on behalf of the Contributing
Owners, prior written notice of any proposed modifications to the Economic Terms
of the existing Partnership Lease. RDC shall have three (3) business days after
receipt of such notice to object to or propose modifications to the proposed
terms. RDC's failure to object to such proposed modification within such three
(3) business day period shall be deemed an acceptance of the terms of such
modification to the existing Partnership Lease. The termination of any of the
Partnership Leases prior to Closing as permitted herein shall not excuse the
Owners from their obligations to complete Closing except as set forth in
subsection 13(a)(ix) below.
(k) Conduct of the Funds Pending the Closing. Between the date
hereof and the Closing Date, none of the Funds will take or suffer or permit any
action which would render untrue any of its representations or warranties herein
contained, and not omit to take any action, the omission of which would render
untrue any such representation or warranty.
(l) Covenants Regarding Affiliated Transactions. The
Contributing Owners hereby covenant and agree that, except as otherwise
expressly contemplated or otherwise provided by the terms of this Agreement,
commencing upon the Closing Date and ending on the third anniversary of the
Closing Date, the consummation by the Trust or the Partnership of any
transaction between the Partnership, the Trust or any Subsidiary of the
Partnership or the Trust, on the one hand, and RD or KB, or any of their
designees to the Board of Trustees or any of their respective affiliates, on the
other hand, shall require approval by a majority of the
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then disinterested Trustees of the Trust; provided, however, that the foregoing
shall in no event be deemed to prevent or otherwise impair the exercise by the
Board of Trustees of its rights and the fulfillment of its obligations under
applicable law in respect of corporate opportunities, interested transactions
and similar conflicts or alleged conflicts of interest involving the Trust, the
Partnership or any of their respective affiliates.
(m) Right of RDC to Market Trust Property. The Trust and the
Partnership covenant and agree that following: (i) receipt by the Trust of
evidence reasonably satisfactory to the Trust that the Fund has obtained binding
irrevocable commitments from its partners to make capital contributions in an
aggregate amount not less than $50,000,000 in respect of the Cash Investment and
(ii) receipt by the Partnership of evidence reasonably satisfactory to the
Partnership that sufficient consents have been obtained pursuant to the
obligations of RD and KB under Section 4(k) such that the Partnership shall not
be entitled to terminate this Agreement pursuant to Section 13 (a)(viii), then
RD, on behalf of the Trust and the Partnership, shall be entitled to negotiate
and execute agreements concerning the disposition and/or financing of Trust
Property; provided that: (A) none of the Trust, the Partnership nor any
Subsidiary of either shall have any obligations to any third parties under any
such agreements (including, but not limited to the obligation to sell property
or borrow funds) unless and until the Closing shall have occurred; (B) none of
the Trust, the Partnership nor any Subsidiary of either shall incur any cost or
expense in connection with any rights granted RDC under this Section 12(m)
unless and until the Closing shall have occurred; (C) neither RDC nor any agent
or affiliate of RDC shall represent itself as an agent of or otherwise act on
behalf of the Trust, the Partnership or any Subsidiary, nor have any authority
to bind any of the foregoing except upon consummation of the Closing Date (and
subject to any approvals or ratifications that must be obtained from the Board
of Trustees of the Trust or from the general partner of the Partnership
following the Closing Date; and (D) the Warrantors [and the Fund] shall jointly
and severally indemnify and hold the Trust, the Partnership and each Subsidiary
harmless from and against any and all costs, expenses, damages, liabilities,
claims, demands and actions (including reasonable attorneys' fees and expenses)
arising by reason of any agreement or purported agreement or by reason of any
action by RDC or any of its agents under this Section 12(m) if the Closing shall
not occur.
(n) Access to Information; Confidentiality.
(i) The Trust and the Partnership, on the one hand,
and the Contributing Owners and Funds, on the other hand, each shall cause their
representatives, officers, directors, trustees, employees, auditors and other
agents, to afford to each other and to their respective officers, employees and
agents, complete and unimpeded access at all reasonable times to, from the date
of this Agreement until the Closing Date, their officers, employees, agents,
properties, records and contracts, and shall furnish such other party all
financial, operating or other data and information as such party, through its
officers, employees or agents, may request.
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(ii) In the event that transactions contemplated by
this Agreement are not consummated, no party may disclose, use or otherwise
employ the confidential information of another party in its business or
otherwise unless the party disclosing, using or otherwise employing such
information (the "Disclosing Party") shall establish either that the information
(A) came into the possession of the Disclosing Party on a nonconfidential basis
from a source other than the party asserting the confidentiality of such
information or from another party which is not known by the Disclosing Party to
be bound by a confidentiality or other obligation of secrecy to the party
asserting the confidentiality of the information or (B) has become generally
available to the public other than as a result of the breach by the Disclosing
Party of its obligations hereunder. In addition to the foregoing, a Disclosing
Party may disclose confidential information of another party if required by law;
provided, however, that the Disclosing Party shall (x) give as much notice to
the other party as is practicable prior to making such disclosure, (y) cooperate
with the other party at the other party's cost and expense to obtain an
appropriate protective order or other reliable insurance to prevent or limit the
disclosure of the confidential information and (z) disclose only that portion of
the confidential information as such party, with the advice of its counsel,
deems necessary to comply with applicable law.
(o) Public Announcements. The Partnership and the Trust, on
the one hand, and RDC (for itself, all of the Owners and the Funds), on the
other hand, will consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby, and no party shall issue any press release or
make any such public announcement prior to such consultation, except as may be
required by law, the Commission or by the securities exchange on which the
Common Shares are then traded.
(p) Notification of Certain Matters. The Trust and the
Partnership shall give prompt written notice to RDC, and the Owners and the
Funds shall given prompt written notice to the Trust, of (a) the obtaining by it
of actual knowledge of any fact or (b) the occurrence, or failure to occur, of
any event (of which such party has actual knowledge) which fact would cause, or
which occurrence or failure to occur would be likely to cause, (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (ii) any material failure of the Trust,
the Partnership, any Owner or any Fund, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder.
(q) Future Issuances of Convertible Preferred Stock. The Trust
covenants and agrees that if, following Closing, the Board of Trustees
determines, in the exercise of its duties, that it is in the interests of the
Trust and its shareholders to engage in an offering of preferred stock
convertible into Common Shares, then upon commencement of any such offering, the
Trust shall use commercially reasonable efforts to provide to those of the
equity owners of the Fund who are equity owners of the Fund on the Closing Date,
a right of first preference to purchase such convertible preferred stock, on
terms and conditions which will be
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identical to the offer and sale of the preferred stock to investors other than
such equity owners; provided that such right of first purchase shall be made
only if and to the extent permitted by all applicable federal and state
securities laws, rules and regulations, and provided that the terms of any such
rights of first preference shall be only in the manner determined fair and
equitable to the Trust.
13. Termination, Amendment and Waiver.
(a) Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, by written notice promptly
given to the other parties hereto, at any time prior to the Closing Date,
whether prior to or after approval by the shareholders of the Trust:
(i) By mutual written consent of the Board of
Trustees of the Trust and the Board of Directors of RDC, acting on behalf of all
of the Owners; or
(ii) By either the Board of Trustees of the Trust or
by RDC, on behalf of all of the Owners, if a court of competent jurisdiction or
governmental, regulatory administrative agency or commission shall have issued
an order, decree or ruling or shall have taken any other action, in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable; or
(iii) By either the Board of Trustees of the Trust or
by RDC, on behalf of all of the Owners, if the Closing Date shall not have
occurred on or before October 30, 1998, unless the absence of such occurrence
shall be due to the failure of the party seeking to terminate this Agreement to
perform in all material respects each of its obligations under this Agreement
required to be performed by it prior to the Closing Date; or
(iv) By either the Board of Trustees of the Trust or
by RDC, on behalf of all of the Owners, if at the Shareholders meeting referred
to in subsection 12(e) hereof (including any adjournment thereof) this Agreement
and the transactions contemplated hereby shall fail to be approved and adopted
by the requisite vote of shareholders of the Trust as required by the applicable
law; or
(v) By either the Board of Trustees of the Trust or
by RDC, on behalf of all of the Owners, if the Trust consummates a transaction
constituting a Superior Proposal.
(vi) By the Board of Trustees of the Trust, if the
Contributing Owners, Contributing Entities or any Fund fail to perform in all
material respects their obligations under this Agreement; or
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(vii) By RDC, on behalf of all of the Owners, if the
Trust and the Partnership fail to perform in all material respects their
respective obligations under this Agreement; or
(viii) By the Trust, if there shall have occurred an
RDC Material Adverse Effect. For purposes of this Agreement, the term "RDC
Material Adverse Effect" shall mean a change in the business, assets,
properties, results of operations, financial condition or prospects of the
Owners or the Premises taken as a whole since the date of this Agreement which
can reasonably be expected to result in a reduction of the aggregate net
operating income ("NOI") from the Premises, the Contributed Management
Contracts, the Contributed Notes and other assets to be transferred by the
Owners to the Partnership pursuant to this Agreement, taken as a whole, by more
than 10% of the Target RDC NOI. The term Target RDC NOI shall mean the actual
aggregate net operating income from operations of all of the Premises, for the
twelve months ended December 31, 1997 as reflected in the unaudited operating
statements of each of the Contributing Entities previously delivered by the
Owners to the Partnership; provided, however, that with respect to determining
an "RDC Material Adverse Effect," the NOI with respect to each Premises
described on Schedule 13(a)(viii), but only if such Premises is not contributed
(by a contribution of Interest or otherwise as provided herein), shall not be
considered for purposes of calculating Target RDC NOI.
(ix) By RDC, on behalf of all of the Owners, if there
shall have occurred a Trust Material Adverse Effect. For purposes of this
Agreement, the term "Trust Material Adverse Effect" shall mean a change in the
business, assets, properties, results of operations, financial condition or
prospects of the Trust Portfolio taken as a whole since the date of this
Agreement which can reasonably be expected to result in a reduction of the
aggregate FFO from the Trust Portfolio taken as a whole by more than 20% of the
Target Trust FFO. The term Target Trust FFO shall mean the actual aggregate FFO
from operations of all of the Trust Portfolio real properties for the twelve
months ended December 31, 1997.
The aforementioned termination may occur notwithstanding approval of this
Agreement by the shareholders of the Trust.
(b) Effect of Termination. In the event of a termination of
this Agreement and abandonment of the transactions as contemplated hereby
pursuant to subsection 13(a), this Agreement shall become void, and, except as
provided in this subsection 13(b) and subsection 12(f), there shall be no
liability on the part of any of the parties hereto or of any of their respective
officers, directors, trustees, employees, agents or shareholders, regardless of
whether such termination and abandonment arose out of a breach of this Agreement
by any party or for any other reasons. Notwithstanding the termination of this
Agreement and the abandonment of the transactions contemplated hereby, nothing
in this Section 13(b) shall relieve (i) any party which is a signatory hereto
from any liability for any wilful breach or wilful default by such party of any
provision of this Agreement (including, but not limited to, attorneys' fees and
costs, court costs and other costs and expenses incurred in litigating the
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cause of action and in enforcing its rights hereunder) (it being acknowledged by
the parties hereto that a termination of this Agreement by the Trust or by RDC
pursuant to subsection 13(a)(v) shall not be deemed a wilful breach or wilful
default by the Trust) or (ii) the Trust from its obligation to make the payment
to RDC, on behalf and for the benefit of the Owners as provided in subsection
12(f) hereof. In addition to the foregoing: (x) in the event of a termination of
this Agreement by the Trust pursuant to subsection 13(a)(vi), RD, KB and the
Contributing Owners who are signatories to this Agreement shall be jointly and
severally liable for and shall promptly pay to the Trust and the Partnership all
out-of-pocket expenses and costs incurred by the Trust and the Partnership in
connection with this Agreement and the fulfillment of all obligations hereby,
including, but not limited to, legal, accounting, investment banking and
appraisal fees and due diligence costs and expenses and printing costs and
expenses associated with printing and mailing of the Proxy Statement; and (y) in
the event of a termination of this Agreement by RDC, on behalf of all other
Owners, pursuant to subsection 13(a)(iv) or subsection 13(a)(vii) or a
termination of this Agreement by RDC, on behalf of all other Owners, or by the
Trust, in each case pursuant to subsection 13(a)(v), the Partnership and the
Trust shall be jointly and severally liable for and shall promptly pay to RDC,
on behalf and for the benefit of the Contributing Owners, all out-of-pocket
expenses, costs and fees incurred by the Contributing Owners in connection with
this Agreement and the fulfillment of their obligations and the transactions
contemplated hereunder including, but not limited to, due diligence costs and
expenses, legal, accounting, investment banking fees and environmental and
engineering fees and costs (but excluding costs and expenses incurred in
connection with the formation and capitalization of the Funds); provided,
however, that (A) in no event shall any payments under subsection 13(b)(x) or
(y) exceed $1,250,000; and (B) in no event shall the Trust or Partnership be
obligated to make any payment if the termination of this Agreement by RDC, on
behalf and of the Owners, pursuant to subsection 13(a)(vii) arises by reason of
a breach of the representations set forth in subsection 11(m).
14. Notices.
(a) All notices, demands, requests or other communications
required or permitted under the terms of this Agreement shall be in writing and,
unless and until otherwise specified in a written notice by any party addressed
to and delivered in the manner set forth in this Section 14, shall be sent to
the parties at the following addresses:
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if intended for the Owners:
RD Capital, Inc.
805 Third Avenue
9th Floor
New York, NY 10022
Attention: Kenneth F. Bernstein, Chief
Operating Officer
Telecopy: (212) 421-2290
with a copy delivered in the
manner provided to:
Martin L. Edelman, Esquire
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Telecopy: (212) 856-7808
-and-
Robert Masters, Esquire
Acadia Management Company LLC
20 Soundview Marketplace
Port Washington, NY 11050
Telecopy: (516) 767-8834
if intended for the Trust or
the Partnership:
Mark Centers Trust
600 Third Avenue
Kingston, PA 18704-1679
Attention: Joshua Kane, Senior Vice President
Telecopy: (717) 288-1028
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with a copy sent in the
manner provided to:
Steven N. Haas, Esquire
Cozen and O'Connor
The Atrium
1900 Market Street
Philadelphia, PA 19103
Telecopy: (215) 665-2013
(b) Each such notice, demand, request or other communication
shall be deemed to have been properly served for all purposes if: (i) hand
delivered against a written receipt of delivery; (ii) mailed by registered or
certified mail of the United States Postal Service, return receipt requested,
postage prepaid; (iii) delivered to a nationally recognized overnight courier
service for next business day delivery, to its addressee at the address set
forth above in this Section; or (iv) delivered via telecopier or facsimile
transmission to the facsimile number listed in this Section, provided, however,
that if such communication is given via telecopier or facsimile transmission, an
original counterpart of such communication shall concurrently be sent in either
the manner specified in clause (i), (ii) or (iii) of this subsection (b).
(c) Each such notice, demand, request or other communication
shall be deemed to have been received by its addressee upon the earlier of: (i)
actual receipt or refusal by the addressee (by facsimile or otherwise); or (ii)
two (2) business days after deposit thereof at any main or branch United States
post office, if sent in accordance with clause (ii) of subsection 14(b), and one
(1) business day after delivery to the courier if sent pursuant to clause (iii)
of subsection 14(b).
15. Fire or Other Casualty.
(a) Each Owner shall maintain in full force and effect until
the Closing Date the fire and extended coverage insurance policies now in effect
on the Premises of such Owner.
(b) In the event that any building on the Premises shall have
been materially damaged by fire or other casualty in excess of $500,000 and (X)
tenants comprising 90% of the damaged Premises do not have a right (or have
waived their right) to terminate their Leases as a result of such casualty and
such tenants are not subject to rent insurance or (Y) the Premises cannot be
restored on a timely basis solely because the proceeds of insurance of such
Premises are insufficient to permit restoration of such Premises and the
Contributing Entities were not willing to jointly and severally indemnify and
hold harmless the Partnership for the shortfall, the Trust and the Partnership
shall have the right to terminate this Agreement as to such Premises by written
notice to such Owner. In the event of such termination, none of the Partnership,
the Trust or such Owner shall have any further rights or obligations under this
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Agreement and as to such Premises or such Contributing Owners' Interests in the
Owner of such Premises, this Agreement shall be null and void; but as to all
other parties and as to any other Premises, this Agreement shall remain in full
force and effect and the total contribution payable hereunder shall be reduced
by the Contribution Consideration attributable to such Premises as set forth on
Schedule 2(a). If this Agreement is not so terminated or if such casualty is
unknown to the Partnership, then the proceeds of the insurance policies
attributable to the Premises or the Personal Property paid by the insurer(s) and
either (i) received by such Owner prior to Closing and not used by such Owner
for the repair of the Premises or the Personal Property (and the Partnership
hereby authorizes each Owner to use the proceeds for such purpose), or (ii) not
held by the holder of the Existing Mortgage nor applied against the Existing
Mortgage, shall be part of the assets of the Owner contributed to the
Partnership at Closing and, in either such event, there shall be no reduction in
the Contribution Consideration by reason of any such unpaid claim. If with
respect to the Premises of an Owner (i) the Trust and the Partnership do not
exercise their right to terminate this Agreement as provided in this subsection
or (ii) if such casualty as described in this subsection is unknown to the Trust
or the Partnership, and the proceeds of the insurance policies attributable to
such Premises or the Personal Property have not been paid as of Closing by the
insurer(s), such Owner shall assign to the Partnership its entire interest in,
and right to receive all insurance proceeds payable in connection with such
casualty. The assignment of such interest and right shall be part of the assets
of such Owner transferred to the Partnership at Closing. There shall not be any
reduction in the Contribution Consideration by reason of such assignment.
(c) Each Owner will certify to the Trust and the Partnership
at Closing that to its knowledge, no damage by fire or other casualty has
occurred, or, if such has occurred, will describe in writing the nature and
extent of such damage and whether such damage has been restored.
16. Condemnation.
(a) If any of the Premises or any "material part" thereof
shall be taken by the exercise of the power of eminent domain after the date
hereof and prior to Closing, this Agreement may be terminated by the Trust and
the Partnership as to such Premises by written notice to the applicable Owners.
In the event of such termination, none of the Trust, the Partnership or such
Owner shall have any further rights or obligations under this Agreement and as
to such Premises or such Owner's Contributing Owner in their capacity as such,
and this Agreement shall be null and void, but as to all other parties and as to
any other Premises, this Agreement shall remain in full force and effect and the
total contribution payable hereunder shall be reduced by the Contribution
Consideration attributable to such Premises as set forth on Schedule 2(a). The
term "material part" means the institution of any proceedings, judicial,
administrative or otherwise, which would (i) reasonably be expected to reduce
the aggregate useable square footage of the Premises by at least 25% of gross
leasable area (ii) entitle one or more tenants occupying at least 25% of gross
leasable area to terminate its lease and such tenant does not waive such right
prior to Closing, (iii) cause access to the Premises to
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be taken or materially diminished (i.e., such taking does not provide access to
a publicly dedicated street or is an impediment to traffic flow from and to the
Premises) or (iv) result in parking no longer being in compliance with
applicable zoning laws and the Contributing Entity is unable to remedy such
non-compliance prior to Closing. If this Agreement as to such Premises or
Interests of the Contributing Owners in such Owner is not so terminated, then
this Agreement as to such Premises or Interests shall continue in full force and
effect and there shall be no reduction in the Contribution Consideration. As of
Closing, each Owner shall cause all of such Owner's rights and claims to any
awards arising therefrom as well as the amount of any money theretofore received
by such Owner on account thereof (and not retained by the holder of the Existing
Mortgage), net of any expenses incurred by such Owner, including, without limit
thereto, reasonable counsel fees, in collecting the award to be part of the
assets of such Owner. As of Closing, each Owner shall transfer to the
Partnership all of such Owner's rights and claims to any awards arising
therefrom as well as the amount of any money theretofore received by such Owner
on account thereof (and not retained by the holder of the Existing Mortgage),
net of any expenses incurred by such Owner, including, without limit thereto,
reasonable counsel fees, in collecting the award. With respect to any such
taking after the date of this Agreement, the affected Owner shall furnish to the
Partnership a copy of the declaration of taking promptly after Owner's receipt
thereof.
(b) Each Owner will certify to the Trust and the Partnership
at Closing that no such taking has occurred, or, if such has occurred, will
describe in writing the nature and extent of such taking.
17. Brokers. The Trust, the Partnership and each Owner represents and
warrants to the other that he, she or it has dealt with no broker or other
intermediary in connection with the transactions contemplated by this Agreement
other than Bear, Stearns & Co., Inc., on behalf of the Trust, and Donaldson,
Lufkin & Jenrette, on behalf of the Owners. In the event that any broker or
other intermediary claims to have dealt with any of the Owners or with the Trust
or the Partnership in connection with the transactions contemplated by this
Agreement, to have introduced the Interests or the Premises to the Trust or the
Partnership for contribution, or to have been the inducing cause of the
contribution, each of the Contributing Owners and the Trust and the Partnership
shall indemnify, defend and save the others harmless from and against any claim
for commission or compensation by such broker or other intermediary, as well as
all costs and liabilities incurred by the others by reason thereof, if its
representation or warranty above is false.
18. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective heirs, executors, personal
representatives, successors and assigns. Except to the extent this Agreement
contemplates that one or more Subsidiaries of the Trust may act as designee of
the Partnership to receive title to certain of the Premises, this Agreement and
the rights arising hereunder may not be assigned by any party without the
consent of the other parties hereto.
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19. Captions or Headings; Cross-References. The captions or headings of
the Sections of this Agreement are for convenience only, and shall not control
or affect the meaning or construction of any of the terms or provisions of this
Agreement. References in this Agreement to Sections and subsections are
references to Sections and subsections of this Agreement, unless expressly
stated to the contrary. References in this Agreement to Exhibits and Schedules
are, unless expressly stated to the contrary, references to Exhibits and
Schedules to this Agreement, each of which is part of this Agreement.
20. Amendments. No change, alteration, amendment, modification or
waiver of any of the terms or provisions of this Agreement shall be valid,
unless in writing and signed by the parties to this Agreement who are or will be
affected thereby.
21. Applicable Law. This Agreement shall be governed and construed
according to the laws of the jurisdiction in which the Premises is located as to
the contribution of such Premises and by the laws of the State of Maryland as to
all other matters arising hereunder.
22. Maintenance of Records. Each Owner shall deliver at Closing to the
Partnership, and the Partnership shall maintain or cause each Owner to maintain
at the Premises or at an office of the Partnership, all tenant files, tenant
correspondence, operating and capital budgets, blueprints, plans and
specifications, drawings and studies of the Premises in its possession after
exercising diligent efforts to obtain the same, for a period of seven (7) years
after Closing. Each Contributing Owner, upon reasonable prior notice to the
Partnership, shall for a period of seven (7) years after the Closing have access
to such records at any reasonable time and from time to time during normal
business hours and shall be entitled to copy such records at its expense.
23. Survival of Representations, Warranties and Covenants. All
covenants (other than those as to which performance thereof as a condition to
Closing have been expressly waived by the party entitled thereto), and all
representations and warranties contained in this Agreement, shall survive
Closing; provided, however, that no claim for a breach of any representation or
warranty or covenant contained in this Agreement (other than: (w) those
contained in subsection 10(a)(v); (x) a breach by the Trust of its covenant to
make the Tax Payment; (y) the breach by the Trust to make the payment required
by subsection 12(f) or required by subsection 13(b)(y) if required to be so
paid; and (z) a breach by RD, KB or the Contributing Owners who are signatories
hereto of their covenant to make the payment required by subsection 13(b)(x) if
required to be so paid (clauses (w) through (z) collectively, the "Surviving
Indemnities"), which shall survive indefinitely), may be maintained by any party
alleging such breach or misrepresentation unless such aggrieved party shall have
delivered a written notice ("Notice of Breach") specifying the details (to the
extent known at such time) of such claimed breach to the alleged breaching party
within: (A) as to breaches of representations and warranties (other than as
contained in clause (w) above), one (1) year from the Closing Date and (B), as
to breaches or defaults in covenants (other than those in clauses (x) through
(z) above), one year from the date the obligation to
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<PAGE>
perform the covenant to which the breach or default pertains first arises (the
"Survival Period"). For purposes of this Agreement, the term "knowledge" shall
mean: (i) with respect to each Contributing Owner which is other than a natural
person, the actual knowledge of the Chief Executive Officer, Chief Operating
Officer and Chief Financial Officer of such Contributing Owner or of the general
partner of the Fund, as well as the knowledge which such person would reasonably
be expected to have in the exercise of his duties on behalf of such Contributing
Owner; (ii) with respect to the Partnership and the Trust, the actual knowledge
of the Chief Executive Officer, Chief Operating Officer and Chief Financial
Officer of the Trust, as well as the knowledge which such person would
reasonably be expected to have in the exercise of his duties on behalf of the
Trust, including as general partner of the Partnership; (iii) with respect to
each natural person who is also a chief executive officer, chief operating
officer or chief financial officer of a corporation, of a general partner of a
partnership or of a manager of a limited liability company which is a
Contributing Owner or a Fund, then the actual knowledge of such person as well
as the knowledge which such person would reasonably be expected to have in the
exercise of his duties in the foregoing capacity on behalf of such Contributing
Owner or Fund; and (iv) with respect to each natural person other than as
described in clause (iii) above, the actual knowledge of such person. Each
representation, warranty, covenant and agreement contained herein, and each
exception thereto, is independent of all other warranties, representations,
covenants, agreements and exceptions contained therein (whether covering an
identical or related subject matter) and must be independently and separately
complied with and satisfied. No such representation or warranty shall be deemed
to have been waived, affected or impaired by any investigation made by the party
to whom such representation or warranty is given hereunder.
24. Indemnification.
(a) To the extent and in the manner provided in this Section
24 after the Closing, each of the Warrantors, jointly and severally, hereby
agrees to indemnify and hold harmless the Trust, the Partnership, each
Subsidiary of the Trust or of the Partnership or any of their respective heirs,
successors, employees, officers, agents, trustees, directors, personal
representatives and assigns, from, against and in respect of all demands,
claims, actions or causes of action, assessments, taxes, losses, fines,
penalties, damages, liabilities, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses costs of litigation and
reasonable fees and expenses of accountants and including any such fees, costs
and expenses with respect to any actions to enforce the terms of this Section
24(a)) and charges (collectively, "Losses") sustained or incurred by any of the
foregoing:
(i) as a result of or arising out of any inaccuracy
in or breach of any representation or warranty of any of the Contributing Owners
in this Agreement or breach of any covenant or agreement to be performed
post-Closing by any of the Contributing Owners pursuant to this Agreement, any
assignment or other agreement (other than the Third Party Partner Agreement, in
the case of which the Trust shall seek recourse solely against RD, KB and the
signatory to such Third Party Partner Agreement, jointly and severally)
transferring
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<PAGE>
assets or property (or interests therein), or in any other agreement with
respect to the assignment, conveyance, contribution or transfer of the Premises
(or interest therein), assets, agreements, rights or other instruments conveyed,
assigned, contributed or otherwise transferred to the Trust, the Partnership or
any Subsidiary of the Trust or the Partnership; or
(ii) obligations (1) accruing and arising prior to
the Closing Date (or arising after the Closing Date but pertaining to the period
prior to the Closing Date) under the Leases, ground leases, Service Agreements,
Sales Agreements, Agreements of Sale and any and all contracts as to which any
of the Contributing Owners are parties or by which any of them are bound or (2)
accruing or arising prior to the Closing Date (or arising after the Closing Date
but pertaining to the period prior to the Closing Date) with respect to the
ownership, operation or use of the Premises and, in each of the cases described
in clauses (1) and (2) above, except to the extent expressly assumed by the
Partnership or its designee by the terms of this Agreement and/or the Schedules
or transfer documents to be executed in connection with the Closing (in the
forms of the Exhibits attached hereto or otherwise).
(b) To the extent and in the manner provided in this Section
24 after the Closing, the Partnership and the Trust agree to and shall indemnify
and hold harmless the Owners and their respective heirs, successors, employees,
officers, agents, trustees, directors, personal representatives and assigns
from, against and in respect of any and all Losses sustained or incurred by any
of the foregoing:
(i) as a result of or arising out of any inaccuracy
in or breach of any representation or warranty of any of the Trust, Partnership,
or Subsidiary of the Trust in this Agreement or breach of any covenant or
agreement to be performed post-Closing by any of the Trust, Partnership,
Subsidiary of the Trust pursuant to this Agreement, in any assignment or other
agreement transferring assets or property (or interests) therein, or in any
other agreement with respect to the assignment, conveyance, contribution or
transfer of the Premises (or interest therein), assets, agreements, rights or
other instruments conveyed, assigned, contributed or otherwise transferred to
the Trust, the Partnership or any Subsidiary of the Trust or the Partnership; or
(ii) obligations (1) accruing and arising after the
Closing Date (other than those arising after the Closing Date and pertaining to
the period prior to the Closing Date) under the Leases, ground leases, Service
Agreements, Sales Agreements and any and all contracts as to which any of the
Contributing Owners or Contributing Parties are parties or by which any of them
are bound or (2) accruing or arising after the Closing Date with respect to the
ownership, operation or use of the Premises and, in each of the cases described
in clauses (1) and (2) above, which are assumed by the Partnership or its
designee by the terms of this Agreement and/or the Schedules or transfer
documents to be executed in connection with the Closing (in the forms of the
Exhibits attached hereto or otherwise); or
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<PAGE>
(iii) as a result of the breach of any representation
or warranty by the Partnership or the Trust in connection with the assumption of
any of the Remaining Mortgages or the breach after the Closing Date of any
representation, warranty or covenant contained in any documents, instruments or
agreements evidencing or relating to the Remaining Mortgages, or any
modification, renewal, extension, supplement or replacement thereof.
(c) To the extent and in the manner provided in this Section
24 after the Closing, each Fund, severally, and KB and RD, jointly and severally
with each Fund (except that as to breaches arising under subsection 10(b)(v)(B),
the Funds, jointly and severally, and KB and RD, jointly and severally with the
Funds), hereby agrees to indemnify and hold harmless the Trust, the Partnership,
each Subsidiary of the Trust or of the Partnership or any of their respective
heirs, successors, employees, officers, agents, trustees, directors, personal
representatives and assigns, from, against and in respect of all Losses
sustained or incurred as a result of or arising out of any inaccuracy in or
breach of any representation or warranty of the Fund in this Agreement or breach
of any covenant or agreement to be performed post- Closing by the Fund.
(d) If a claim arises as to which a party hereto is entitled
to indemnification hereunder (an "Indemnitee"), such Indemnitee shall give
prompt notice of such claim to the party obligated to indemnify the Indemnitee
(an "Indemnitor") specifying the details of such claim of Loss (as to which
notice to the Partnership shall be considered sufficient notice as to all
Indemnitors who are obligated to indemnify the Indemnitee together with the
Partnership and as to which notice to RD shall be considered sufficient notice
as to all Indemnitors who are obligated to indemnify the Indemnitee together
with RD); provided, however, that the failure to provide notice as aforesaid
shall not relieve an Indemnitor from its indemnification obligations hereunder
unless, and only to the extent, that such failure materially prejudices the
Indemnitor's defense with regard to such claim.
(e) Notwithstanding anything herein to the contrary:
(i) Other than Losses attributable to the Surviving
Indemnities, no claim for indemnity may be maintained with respect to Losses
under subsection 24(a)(i), 24(b)(i) or 24(c) unless an Indemnitee shall have
delivered the written notice required by subsection 24(c) to the Indemnitor on
or before the expiration of the Survival Period;
(ii) the obligation of any Warrantors to indemnify
any party hereunder for a Loss shall be reduced to the extent that the
Partnership is entitled to payment for all or a portion of such Loss under any
title insurance policy or policies issued to the Partnership hereunder;
(iii) the liability of any Contributing Owner signing
this Agreement or the Third Party Partner Agreement (other than RD, KB or RDC)
hereunder shall be limited to Losses directly from or arising out of the breach
by him, her or it of his, her or its
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<PAGE>
representations and warranties contained in Section 10 hereof or in the Third
Party Partner Agreement;
(iv) The Trust, the Partnership and their respective
Subsidiaries shall not be entitled to seek indemnification for Losses under
Section 24(a) and Section 24(c) hereunder until the aggregate amount of Losses
shall equal $500,000, in which event the Trust, the Partnership and their
respective Subsidiaries shall be entitled to seek indemnification for the total
amount of Losses; provided, however, that the aggregate amount of Losses
attributable to the Surviving Indemnity described in clause (z) of Section 23
shall be recoverable without regard to the foregoing limitation (and the amount
of such Losses shall not be credited against the $500,000 deductible);
(v) The Contributing Owners and the Funds shall not
be entitled to seek indemnification for Losses under Section 24(b) hereunder
until the aggregate amount of Losses shall equal $500,000, in which event the
Contributing Owners and the Funds shall be entitled to seek indemnification for
the total amount of Losses; provided, however, that the aggregate amount of
Losses attributable to the Surviving Indemnities described in clauses (x) and
(y) of Section 23 shall be recoverable without regard to the foregoing
limitation (and the amount of such Losses shall not be credited against the
$500,000 deductible); and
(vi) The total amount of Losses to which the Trust,
the Partnership and their respective Subsidiaries shall be entitled to
indemnification under Section 24(a) and 24(c) hereunder shall not exceed
$5,000,000, and the total amount of Losses to which the Contributing Owners and
the Funds shall be entitled to indemnification under Section 24(b) hereunder
shall not exceed $5,000,000; provided, however, that for purposes of calculating
the maximum amount of indemnifiable Losses, Losses attributable to the Surviving
Indemnities described in clauses (w), (x), (y) and (z) shall be excluded.
(f) Recourse for the indemnity obligations of the Contributing
Owners (including, but not limited to, RD and KB) set forth in subsection 24(a)
above shall be limited solely to the Indemnity Collateral (as defined below).
Recourse for the indemnity obligations of the Trust and the Partnership set
forth in subsection 24(b) shall be, at the option of the Indemnitee, to
Operating Partnership Interests or Common Shares (in each case valued at the
Market Price on the date on which the indemnification obligation is finally
established), or cash. Indemnity Collateral shall be, with respect to any
Contributing Owner: (i) the Operating Partnership Interests acquired by such
Contributing Owner in connection with the consummation of the transactions
contemplated hereby; (ii) any Common Shares received by such Contributing Owner
as a result of the exchange of Operating Partnership Interests for Common
Shares; and (iii) cash or in-kind distributions, share splits or other
securities received or receivable with respect to the Common Shares or Operating
Partnership Interests as described in clauses (i) and (ii) above.
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<PAGE>
(g) With respect to the indemnity obligations of RD, KB and
RDC set forth under subsection 24(a) hereof, RD, KB and RDC hereby grant to the
Indemnified Parties, a first and prior lien upon and a continuing security
interest in the Indemnity Collateral and in any proceeds or substitution
thereof, whether now existing or hereafter acquired. Any transfers permitted by
the Agreement of Limited Partnership of the Partnership or otherwise by RD, KB
or RDC of their Operating Partnership Interests or their Shares which may be
received by them upon exchange of their Operating Partnership Interests shall
expressly remain subject to the liens and security interests granted hereby
until and unless such liens and security interests are released in accordance
with the provisions of this subsection 24(g). In connection with the grant of
such security interests, RD, KB and RDC on the date of Closing shall deliver
such instruments, including stock transfer powers duly endorsed in blank, as
shall be necessary to grant to the Trust and the Partnership a fully perfected
first priority security interest in any Common Shares that may, after the date
hereof, be issued to such persons by share dividend, split or similar
distribution, and shall execute and deliver UCC Financing Statements and such
other documents and take such other action necessary to grant to the Trust and
the Partnership a fully perfected first priority security interest in all of
their respective Operating Partnership Interests. In the event RD, KB or RDC are
determined to have an indemnification obligation pursuant to Section 24 hereof,
then each Indemnified Party shall have all of the rights now or hereafter
existing under applicable law, and all rights as a secured creditor under the
Uniform Commercial Code in all relevant jurisdictions, and each of RD, KB and
RDC agrees to take all such actions as may be reasonably requested of them by an
Indemnified Party to insure that the Indemnified Party can realize on such
security interest. The liens and security interests with respect to one hundred
percent (100%) in fair market value of the Indemnity Collateral granted
hereunder shall not be released until the expiration of one (1) year from the
Closing Date (the "Release Date"); provided, however, that if a claim for
indemnification under Section 24 hereof has been made and is continuing at the
Release Date, that amount of the Indemnity Collateral otherwise to be released
at the Release Date, and equal to 200% of the amount of such claim shall not be
released until the final disposition of such indemnification claim. Upon
satisfaction of the conditions to the release of the liens and security
interests and the Indemnity Collateral, the Trust and the Partnership shall
prepare and file all documents and shall take all other action necessary to
release such security interests in the indemnity collateral, as applicable.
(h) If notice of a claim for indemnification under subsection
24(c) is asserted under this Section 24, the person or entity to whom such
notice of a claim is asserted shall have the right, at its own expense, to
participate in the defense of any Claim asserted which resulted in the claim for
indemnification, and if such right is exercised, the party shall cooperate in
the defense of such Claim. If a Claim is asserted which is subject to possible
indemnification under this Section 24, the person against whom such Claim is
asserted shall give prompt notice thereof to such Indemnitor; provided, however,
that the failure to so provide prompt notice shall not relieve such indemnitor
from the indemnification obligations hereunder unless and to the extent such
failure materially prejudices the indemnitor's defense with regard to such
claim. Indemnification of the Indemnified Parties pursuant to this Section
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<PAGE>
24 shall be the exclusive remedy of the Indemnified Parties for any breach of
any representation, obligation, warranty or covenant of any of the Contributing
Owners and the liability of all such parties shall be limited as expressly
provided in this Section 24.
25. Fees and Expenses. Except to the extent expressly provided in this
Agreement or in any Exhibit hereto to the contrary:
(a) each party shall bear its own fees, costs and expenses in
connection with the negotiation, execution and delivery of this Agreement and
the performance of its obligations hereunder;
(b) provided, however, that if Closing shall occur, the due
diligence, legal, accounting, investment banking, environmental, engineering and
other third party out-of-pocket fees, costs and expenses incurred by RDC, the
Owners and the Funds (other than any fees, costs and expenses incurred in
connection with the formation and capitalization of the Funds) in connection
with negotiation, execution and delivery of this Agreement, the performance of
their respective obligations hereunder and the consummation by them of the
transactions provided for herein, shall be borne by the Trust and the
Partnership.
26. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all together shall constitute one and
the same Agreement.
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<PAGE>
Signature page to Contribution
and Share Purchase Agreement
IN WITNESS WHEREOF, the parties hereto, intending legally to be bound,
have executed this Agreement as of the day and year first above written.
MARK CENTERS TRUST
By: /s/ Marvin L. Slomowitz
-------------------------------------
Its: Chief Executive Officer
MARK CENTERS LIMITED PARTNERSHIP
By: Mark Centers Trust, General Partner
By: /s/ Marvin Slomowitz
-------------------------------
Its: Chief Executive Officer
RD CAPITAL, INC.
By: /s/ Ross Dworman
-----------------------------------
Name: Ross Dworman
Title: President
/s/ Ross Dworman
----------------------------------------------
Ross Dworman
/s/ Kenneth F. Bernstein
----------------------------------------------
Kenneth F. Bernstein
<PAGE>
Signature page to Contribution
and Share Purchase Agreement
RD ABSECON ASSOCIATES, L.P.
By: RD Absecon, Inc., individually and as
General Partner of RD Absecon
Associates, L.P.
By: /s/ Kenneth F. Bernstein
--------------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD PROPERTIES, L.P. V
By: RD New York, LLC, General Partner
By: /s/ Kenneth F. Bernstein
-------------------------------
Name: Kenneth F. Bernstein
Title: Member
RD CROSSROADS ASSOCIATES, L.P.
By: RD Crossroads, Inc., General Partner
By: /s/ Kenneth F. Bernstein
-------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
<PAGE>
Signature page to Contribution
and Share Purchase Agreement
PORT BAY ASSOCIATES
By: RD Soundview Associates, L.P.,
Managing General Partner
By: RD Soundview Associates, Inc.,
General Partner
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD SMITHTOWN LLC
By: RD Smithtown Associates, L.P.,
Managing Member
By: RD Smithtown Associates, Inc.,
General Partner
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD ELMWOOD ASSOCIATES, L.P.
By: RD Elmwood Associates, Inc.,
individually and as General Partner of RD
Elmwood Associates, L.P.
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
<PAGE>
Signature page to Contribution
and Share Purchase Agreement
RD PROPERTIES, L.P. III
By: /s/ Ross Dworman
---------------------------------------
Name: Ross Dworman
Title: General Partner
RD TOWN LINE ASSOCIATES LIMITED
PARTNERSHIP
By: RD Townline, Inc., General Partner
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD HOBSON ASSOCIATES, L.P.
By: RD Hobson, Inc., individually and as
General Partner of RD Hobson
Associates, L.P.
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD ABINGTON ASSOCIATES LIMITED
PARTNERSHIP
By: RD Abington, Inc., individually and as
General Partner of RD Abington
Associates Limited Partnership
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
<PAGE>
Signature page to Contribution
and Share Purchase Agreement
RD PROPERTIES, L.P. II
By: /s/ Ross Dworman
---------------------------------------
Name: Ross Dworman
Title: General Partner
RD WOONSOCKET ASSOCIATES LIMITED
PARTNERSHIP
By: RD Woonsocket, Inc., individually and as
General Partner of RD Woonsocket
Associates Limited Partnership
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
EVAN FRAZIER PARTNERS
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD BLOOMFIELD ASSOCIATES LIMITED
PARTNERSHIP
By: RD Bloomfield, Inc., individually and as
General Partner of RD Bloomfield
Associates Limited Partnership
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
<PAGE>
Signature page to Contribution
and Share Purchase Agreement
RD TOWN SQUARE ASSOCIATES LIMITED
PARTNERSHIP
By: /s/ Ross Dworman
-----------------------------------
Name: Ross Dworman
Title: General Partner
RD MERRILLVILLE ASSOCIATES, L.P.
By: RD Merrillville, Inc., General Partner
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD BRANCH ASSOCIATES, L.P.
By: RD Branch, Inc., General Partner
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD WHITEGATE ASSOCIATES LIMITED
PARTNERSHIP
By: RD Whitegate, Inc., individually and as
General Partner of RD Whitegate
Associates Limited Partnership
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
<PAGE>
Signature page to Contribution
and Share Purchase Agreement
G.O. ASSOCIATES LIMITED PARTNERSHIP
By: RD G.O. Properties, Inc., individually
and as General Partner of G.O.
Associates Limited Partnership
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD VILLAGE ASSOCIATES LIMITED
PARTNERSHIP
By: RD Village, Inc., individually and as
General Partner of RD Village Associates
Limited Partnership
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD PROPERTIES, L.P. IV
By: /s/ Ross Dworman
---------------------------------------
Name: Ross Dworman
Title: General Partner
<PAGE>
Signature page to Contribution
and Share Purchase Agreement
RD COLUMBIA ASSOCIATES, L.P.
By: RD Missouri, Inc., individually and as
General Partner of RD Columbia
Associates, L.P.
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
COLUMBIA VGH INVESTORS
By: /s/ Ross Dworman
-------------------------------
Name: Ross Dworman
Title: Managing Partner
MARLEY/OAKWOOD PROPERTIES, INC.
/s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
RD MARLEY PARTNERS
By: RD Marley, Inc., General Partner
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
<PAGE>
Signature page to Contribution
and Share Purchase Agreement
MARLEY ASSOCIATES LIMITED
PARTNERSHIP
By: RD Marley, Inc., General Partner
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
SOUND VIEW MANAGEMENT LLC
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Member
ACADIA MANAGEMENT COMPANY LLC
By: /s/ Kenneth F. Bernstein
-------------------------------
Name: Kenneth F. Bernstein
Title: Member
RD G.O. PROPERTIES, L.P.
By: RD Greenbelt, Inc., General Partner
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Member
<PAGE>
Signature page to Contribution
and Share Purchase Agreement
KCRF, L.L.C.
By: KCRF Management, Inc., Member
By: /s/ Kenneth F. Bernstein
--------------------------------
Name: Kenneth F. Bernstein
Title: Vice President
<PAGE>
MARK CENTERS TRUST ANNOUNCES MERGER WITH RD CAPITAL AND
SIMULTANEOUS $100 MILLION EQUITY INVESTMENT AND
REPORTS FOURTH QUARTER AND 1997 OPERATING RESULTS
KINGSTON, PA, April 16, 1998 -- Mark Centers Trust (NYSE: MCT) (the "Company")
today announced that they have signed a definitive agreement to merge the
Company with RD Capital, Inc. and certain affiliates ("RD Capital"), and
simultaneously, RD Capital will make a $100 million cash investment in the
Company for common stock. RD Capital is a fully integrated real estate operating
company focused primarily on the acquisition, redevelopment, ownership and
management of neighborhood and community shopping centers in the East and
Midwest regions of the United States. The Company's name will be changed to
Acadia Realty Trust to reflect the recapitalization, strategic repositioning and
new management of the Company, and the Company's headquarters will be moved to
New York City.
Transaction Overview:
In exchange for contributing 12 retail shopping centers containing 2.2 million
square feet, five multi-family apartment complexes containing 2,327 units and
their related management company, RD Capital will receive in aggregate 11.3
million operating partnership units which are convertible on a one for one basis
into common stock of the Company. In addition, RD Capital will invest $100
million of cash into the Company in exchange for 13.3 million shares of common
stock to deleverage the combined Company's balance sheet. The common stock and
operating partnership units issued to RD Capital have been valued at $7.50 per
share. Upon consummation of the transaction, the Company's portfolio will
increase to 51 retail properties and 5 multi-family apartment properties in 16
states in the East, Midwest and Southeast regions of the United States. In
addition, the 102 employees of RD Capital will become employees of the Company.
Management Changes:
Upon closing, Ross Dworman and Ken Bernstein of RD Capital will become Chief
Executive Officer and President, respectively, of the Company, and Marvin L.
Slomowitz will step down as Chairman and Chief Executive Officer. The board of
the Company will be reconfigured to seven trustees: Messrs. Dworman and
Bernstein, two independent director designees of RD Capital, Mr. Slomowitz and
two independent director designees of the current board of the Company.
Marvin Slomowitz, current Chairman and CEO of the Company, commented: "We are
thrilled to combine our Company with RD Capital and benefit from their proven
track record of acquiring, renovating and repositioning shopping centers. As a
continuing substantial shareholder and board member, I am confident in Ross and
Ken's ability to create value for the Company's shareholders."
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<PAGE>
Messrs. Dworman and Bernstein have over 30 years of combined real estate
experience and have been working together at RD Capital since 1990. RD Capital
has owned and operated over $500 million of retail and multi-family properties
and specializes in buying and repositioning under-performing real estate assets.
Ross Dworman, founder and Chief Executive Officer of RD Capital, commented: "The
merger of RD Capital and the Company provides a strong platform to create one of
the top shopping center REITs in the country. With improved access to capital,
we intend to employ an aggressive acquisition program to accelerate FFO per
share growth and maximize shareholder value. In addition, we intend to assess
disposition opportunities in order to redeploy capital on a long-term accretive
basis."
Ken Bernstein, President of RD Capital, commented: "New management will
immediately pursue opportunities to increase property level cash flow. By
contributing RD Capital's real estate portfolio, the combined Company is
doubling in size and will benefit from improved overall tenant quality and
geographic diversification."
Definitive Agreement; Dividend:
The definitive agreement between the Company and RD Capital has been unanimously
approved by the Board of Trustees of the Company. The transaction is subject to
the approval of the shareholders of the Company and other customary closing
conditions. The Company intends to promptly file proxy materials and anticipates
submitting the transaction to a shareholder vote in the third quarter of 1998.
In connection with the transaction, Bear, Stearns & Co. Inc. is acting as
financial advisor to the Company and Donaldson, Lufkin & Jenrette Securities
Corporation is acting as financial advisor to RD Capital.
Pursuant to the terms of the definitive agreement, the Company has agreed not to
declare a dividend. The Company is currently utilizing its cash flow and debt
financing to continue to install tenants into its properties. After closing, the
newly reconstituted board of trustees will reassess the Company's dividend
policy in light of the new Company's cash flow and prospects. If the transaction
is not completed, the Company's dividend is currently not expected to be
reinstated for the foreseeable future.
RD Capital Properties:
Retail
<TABLE>
<CAPTION>
Property City State GLA Anchors
- -------- ---- ----- --- -------
<S> <C> <C> <C> <C>
Soundview Port Washington NY 183,000 RKO Theatres, King Kullen
Crossroads Greenburgh NY 310,000 Caldor, Waldbaum's, Barnes & Noble
Smithtown Smithtown NY 85,000 Daffy's, Walgreen, Starbuck's
Branch Smithtown NY 126,000 Grand Union, CVS Drug
Elmwood Elmwood Park NJ 122,000 Grand Union, Walgreen
Absecon Absecon NJ 115,000 A&P, Eckerd Drug, Blockbuster Video
Town Line Rocky Hill CT 193,000 Waldbaum's
Walnut Hill Woonsocket RI 291,000 Shaw's, Sears Roebuck, CVS Drug
Atrium Mall Abington PA 178,000 A&P, Circuit City, TJ Maxx
Bloomfield Bloomfield Hills MI 229,000 TJ Maxx, Old Navy, Office Max,
Burlington Coat
Merrillville Hobart IN 235,000 JC Penney, Toys R Us, TJ Maxx
Hobson West Naperville IL 100,000 Eagle Foods
-------
Total 2,167,000
</TABLE>
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<PAGE>
Multi-Family
Property City State Units
- -------- ---- ----- -----
Marley Run Apartments Baltimore MD 336
Glen Oaks Greenbelt MD 463
Village Apartments Winston-Salem NC 660
GHT Apartments Columbia MO 583
The Colony Columbia MO 285
---
Total 2,327
Fourth Quarter and 1997 Earnings Information:
On a historical comparative basis, FFO for the quarter ended December 31, 1997
was $2,860,000, or $0.28 per share, compared to $3,077,000, or $0.30 per share,
for the quarter ended December 31,1996. Total revenues were essentially level at
$11,297,000 for the fourth quarter of 1997 compared to $11,282,000 for the
fourth quarter of 1996. Interest expense increased $245,000, or $0.02 per share,
to $3,911,000 for fourth quarter 1997 from $3,666,000 for the fourth quarter
1996 primarily attributable to higher average outstanding borrowings related to
development, renovation, expansion and tenant replacement activities.
The Company is continuing its ongoing efforts to install tenants under signed
leases. Construction is currently ongoing at the Mark Plaza for a Redner's
supermarket with an anticipated second quarter 1998 opening. In addition,
construction has commenced on a ten screen Hoyt's Cinema at the Manahawkin
Shopping Center in Manahawkin, New Jersey with completion anticipated during
fourth quarter 1998.
A net loss of $435,000, or $0.05 per share, was incurred for the quarter ended
December 31, 1997 compared to a net loss of $675,000, or $0.08 per share, for
the quarter ended December 31, 1996. The decrease in the net loss experienced
was primarily attributable to a $392,000, or $0.04 per share, adjustment for the
revaluation of property held for sale as of December 31, 1996 and the write-off
of deferred financing costs totalling $190,000, or $0.02 per share, during 1996
following the refinancing of certain debt as well as the above-mentioned
factors.
FFO for the twelve months ended December 31, 1997 was $10,827,000, or $1.06 per
share, compared to $12,372,000, or $1.22 per share, for the twelve months ended
December 31, 1996. A net loss of $1,564,000, or $0.18 per share, was incurred
for the twelve months ended December 31, 1997 compared to a net loss of
$724,000, or $0.08 per share, for the same period in 1996. The increase in the
net loss was primarily attributable to the factors above as well as increases in
depreciation and amortization expenses for 1997 of $370,0000, or $0.04 per
share, relating to the Company's development, expansion and retenanting efforts.
The Company will hold a conference call on Thursday, April 16, 1998 at 3:00 p.m.
eastern standard time. In order to participate, please dial 1-888-214-7566 ten
minutes prior to the call's commencement. A Postview recording of this call will
be available on Friday, April 17, 1998, from 9:00 a.m. to 1:00 p.m. eastern
standard time. Postview may be accessed by dialing 1-800-633-8284 and giving the
reference number of 4168292 when asked.
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<PAGE>
MARK CENTERS TRUST
FINANCIAL AND OPERATING HIGHLIGHTS
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the quarter ended For the year ended
December 31, December 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Funds From Operations
Revenues
Minimum rents (a) $ 8,470 $ 8,520 $33,361 $33,396
Percentage rents 952 998 3,182 2,795
Expense reimbursements 1,617 1,565 6,632 6,559
Other 258 199 1,014 747
------- ------- ------- -------
Total revenue 11,297 11,282 44,189 43,497
------- ------- ------- -------
Expenses
Property operating (b) 2,192 2,276 9,113 9,181
Real estate taxes 1,445 1,336 5,691 5,285
General and administrative 702 692 2,339 2,796
------- ------- ------- -------
Total operating expenses 4,339 4,304 17,143 17,262
------- ------- ------- -------
Operating income 6,958 6,978 27,046 26,235
Interest expense 3,911 3,666 15,444 12,733
Amortization of deferred financing costs 135 183 567 915
Depreciation of non-real estate assets 52 52 208 215
------- ------- ------- -------
Funds from operations $ 2,860 $ 3,077 $10,827 $12,372
======= ======= ======= =======
Funds from operations per share (c) $ 0.28 $ 0.30 $ 1.06 $ 1.22
======= ======= ======= =======
</TABLE>
(a) Excludes income from straight-lining of rents.
(b) Represents all expenses other than depreciation, amortization, write-off
of unbilled rent receivables recognized on a straight-line basis and the
non-cash charge for compensation expense related to the Company's
restricted share plan.
(c) Assumes full conversion of 1,623,000 OP Units into common shares of the
Company for the years ended December 31, 1997 and 1996, respectively, for
a total of 10,177,177 and 10,171,817 shares, respectively.
(d) Net loss per share is computed based on the weighted average number of
shares outstanding for the years ended December 31, 1997 and 1996 of
8,551,930 and 8,546,553, respectively.
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<PAGE>
<TABLE>
<CAPTION>
For the quarter ended For the year ended 6
December 31, December 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Reconciliation of Funds from Operations to Net Income
- -----------------------------------------------------
Funds from operations above $ 2,860 $ 3,077 $10,827 $12,372
Depreciation of real estate and amortization
of leasing costs (3,346) (3,205) (12,993) (12,268)
Straight-line rents and related write-offs (net) -- 63 176 164
(Loss) gain on sale of land -- -- (12) 21
Adjustment (reserve) for environmental -- (125) 245 (425)
remediation costs
Adjustment to carrying value of property held -- (392) -- (392)
for sale
Extraordinary item, write-off of deferred -- (190) -- (190)
financing costs
Minority interest 56 110 217 40
Other non-cash adjustments (5) (13) (24) (46)
----------- -------------- ----------------- -------------
Net loss $ (435) $ (675) $ (1,564) $ (724)
=========== ============== ================= =============
Net loss per share -basic and diluted (d) $ (0.05) $ (0.08) $ (0.18) $ (0.08)
=========== ============== ================= =============
Selected Operating Statistics FQE FQE
- ----------------------------- 12/31/97 9/30/97
Total operating properties 39 39
Total GLA 7,262 7,208
Occupancy percent 86% 85%
Leased percent 89% 89%
Selected Balance Sheet Information
- ----------------------------------
Cash and cash equivalents $ 1,287 $ 1,149
Rental property, at cost 311,688 310,185
Mortgages payable and lines of credit 183,943 183,718
Fixed rate debt:
% of outstanding debt 95% 95%
Weighted average interest rate 8.63% 8.60%
Variable rate debt:
% of outstanding debt 5% 5%
Weighted average interest rate 8.98% 7.73%
Total weighted average interest rate 8.65% 8.51%
</TABLE>
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<PAGE>
Mark Centers Trust is a self-administered equity real estate investment trust
which specializes in the operation, management, leasing, renovation and
acquisition of shopping centers situated in underserved retail markets. Based in
Kingston, Pennsylvania, the Company currently owns and operates 39
properties totaling approximately 7.3 million square feet, including 34
neighborhood and community shopping centers, three enclosed malls and two
mixed-use facilities located in the Northeastern and Southeastern United States.
FOR MORE INFORMATION CONTACT:
- -----------------------------
Mark Centers Trust
Joshua Kane, Senior Vice President & CFO
(717) 288-4581
Website: http://www.markcenters.com
Email: [email protected]
####
