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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): December 14, 1999
KEYSTONE PROPERTY TRUST
(Exact Name of Registrant as Specified in its Charter)
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Maryland 1-12514 84-1246585
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
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200 Four Falls Corporate Center
Suite 208
West Conshohocken, PA 19428
(Address of Principal Executive Offices)(Zip Code)
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Registrant's telephone number, including area code:
(484) 530-1800
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 15, 1999, Keystone Property Trust ("Keystone"), through Keystone
Operating Partnership, L.P. (the "Operating Partnership"), a limited partnership
of which Keystone is the sole general partner and in which Keystone owns an
interest of approximately 55.5% after the consummation of the transaction
discussed herein, announced in a press release attached hereto as Exhibit 99.1
and incorporated herein by reference, the acquisition on December 15, 1999 of
407,100 square foot bulk distribution warehouse located in Carlisle, PA for
approximately $16.0 million (the "Roadway Property"). The purchase price was
funded through the issuance of $1.4 million in Operating Units from the
Operating Partnership valued at $15.26 per unit, a $12.0 million 6-year term
loan from the Prudential Insurance Company of America and cash payments of
approximately $2.5 million. The Roadway Property was constructed in 1988 and is
fully leased to Dana Corporation under a lease that expires in February, 2009.
The Roadway Property has an 8-acre pad site which is fully entitled for a
150,000 square foot expansion.
The Roadway Property was purchased from a private investment partnership
controlled by Jeffrey E. Kelter, Keystone's President and Chief Executive
Officer and certain other employees of the Company. An affiliate of Keystone has
managed the building since its purchase in January 1997. The terms of the
acquisition were approved by a special subcommittee of Keystone Property Trust's
Board of Directors formed specifically to review this related-party transaction.
The Company based its determination of the purchase price of these properties on
the expected cash flow, physical condition, location, competitive advantages,
existing tenancies, and opportunities to retain and attract tenants.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
None.
(b) PRO FORMA FINANCIAL INFORMATION
None.
(c) EXHIBITS
10.1 Agreement of Transfer and Contribution of Partnership Interest
by and among PSPI, Inc. and Jeffrey E. Kelter, John B. Begier,
Charles C. Lee, J. Harold Shannon, and Stephen J. Butte and
Keystone Operating Partnership, L.P.
99.1 Press Release dated December 15, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KEYSTONE PROPERTY TRUST
Date: December 20, 1999 By /s/ JEFFREY E. KELTER
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Jeffrey E. Kelter
President and Chief Executive Officer
Date: December 20, 1999 By /s/ TIMOTHY A. PETERSON
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Timothy A. Peterson
Executive Vice President, Chief
Financial Officer
Date: December 20, 1999 By /s/ TIMOTHY E. MCKENNA
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Timothy E. McKenna
Vice President Finance and Treasurer
(Principal Accounting Officer)
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EXHIBIT 10.1
AGREEMENT FOR TRANSFER AND CONTRIBUTION
OF PARTNERSHIP INTERESTS
THIS AGREEMENT FOR TRANSFER AND CONTRIBUTION OF PARTNERSHIP INTERESTS
(this "Agreement") is made and entered into as of the 10th day of November,
1999, by and among PSPI, Inc. ("General Partner") and each of JEFFREY E. KELTER
("Kelter"), JOHN B. BEGIER ("Begier"), CHARLES C. LEE ("Lee"), J. HAROLD SHANNON
("Shannon") and STEPHEN J. BUTTE ("Butte") (each, a "LIMITED PARTNER", and
collectively, the "LIMITED PARTNERS", with the General Partner and the Limited
Partners sometimes individually being referred to herein as an "OWNER" and
collectively as the "OWNERS"), and KEYSTONE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership ("Assignee").
RECITALS
A. General Partner is the owner of the general partnership interest in
21 Roadway, L.P., a Pennsylvania limited partnership (the "PARTNERSHIP").
B. Limited Partners are the owners of the limited partnership interests
in the Partnership.
C. The partnership interests of each of the Owners in the Partnership
(individually, a "PARTNERSHIP INTEREST", and collectively, the "PARTNERSHIP
INTERESTS") are described in SCHEDULE A attached hereto.
D. The Partnership is the record titleholder to the Premises and the
other Property (as such terms are hereinafter defined).
E. Subject to and in accordance with the terms and conditions of this
Agreement, each of the Owners desires to transfer his/its Partnership Interest
to GP Assignee (defined below) and Assignee, and Assignee desires to acquire the
Partnership Interests.
NOW, THEREFORE, in consideration of the terms, covenants and conditions
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Owners and Assignee
agree as follows:
1. TRANSFER AND CONTRIBUTION OF PARTNERSHIP INTERESTS
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A. INITIAL PARTNERSHIP INTERESTS. Subject to and in accordance
with the terms and conditions of this Agreement, at Closing (as hereinafter
defined) the General Partner shall transfer to a newly-formed single member
limited liability company (in which the single member shall be Assignee) ("GP
Assignee") 99% of its interest in the Partnership's profits and 89% of its
interest in the Partnership's capital and each Limited Partner shall transfer
to Assignee 99% of his interest in the Partnership's profits and 89% of his
interest in the Partnership's capital (collectively, the "INITIAL PARTNERSHIP
INTERESTS"), and Assignee shall accept the transfer of the Initial Partnership
Interests.
B. REMAINING PARTNERSHIP INTERESTS. Subject to and in
accordance with the terms and conditions of this Agreement, at Closing each of
the Owners and Assignee shall enter into (i) a Call Option Agreement in the form
of that attached hereto as EXHIBIT B (the "CALL OPTION AGREEMENT") with respect
to 1% of his/its interest in the Partnership's profits and 11% of his/its
interests in the Partnership's capital (collectively, the "REMAINING PARTNERSHIP
INTERESTS"), pursuant to which Assignee shall have the option (the "CALL
OPTION") to cause all of the Remaining Partnership Interests to be transferred
to Assignee for a designated period (the "CALL PERIOD") on or after the first
(1st) business day after the third (3rd) anniversary of the Closing Date (as
hereinafter defined), and (ii) a Put Option Agreement in the form of that
attached hereto as EXHIBIT C (the "PUT OPTION AGREEMENT") with respect to the
Remaining Partnership Interests, pursuant to which Owners shall have the option
(the "PUT OPTION") to cause all of the Remaining Partnership Interests to be
transferred to Assignee for a designated period (the "PUT PERIOD") after
expiration of the Call Period. Upon the exercise by Assignee or Owners of the
Call Option or the Put Option (alternatively, as the case may be, the "REMAINING
INTEREST OPTION") with respect to the Remaining Partnership Interests, and upon
the satisfaction of all of the applicable terms and conditions set forth herein
and in the Call Option Agreement or the Put Option Agreement (alternatively, as
the case may be, the "OPTION AGREEMENT"), all of the Remaining Partnership
Interests shall be transferred by Owners to Assignee, and Assignee shall accept
such Remaining Partnership Interests.
C. THE PROPERTY. The term "Property" shall mean:
(i) fee title interest in that certain tract of
real estate (THE "LAND") on which is situated a warehouse building, located in
the Township of Middlesex, Cumberland County, Pennsylvania, which Land is
legally described in the attached EXHIBIT D, together with all easements,
covenants, agreements, rights, privileges, tenements, hereditaments and
appurtenances thereto (collectively, the "REAL PROPERTY"); and
(ii) all right, title and interest of the
Partnership in and to any land lying in the bed of any street, alley, road or
avenue (whether open, closed or proposed) within, in front of, behind or
otherwise adjoining the Real Property and, any award made or to be made as a
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result of or in lieu of condemnation, and any award for damage to the Property
or any part thereof by reason of casualty; and
(iii) all of the buildings and other improvements
(collectively, the "IMPROVEMENTS") (the Land and Improvements being collectively
referred to as the "PREMISES"); and
(iv) all fixtures, equipment, machinery, and other
tangible personal property situated in, on, over and under the Premises or used
in connection therewith, owned by the Partnership and which is not owned by the
Tenant under the Lease (as hereinafter defined) (together with the intangible
personal property hereinafter identified in SECTIONS 1.C(V) and 1.C(VI) below,
collectively the "PERSONAL PROPERTY"); and
(v) to the extent in the possession of the
Partnership: all surveys, plans and specifications, soil tests, environmental
reports, appraisals and other documentation for or with respect to the Property;
and such other existing books, records and documents used in connection with the
operation of the Property or any part thereof; and
(vi) all right, title and interest of the
Partnership in and to the Lease and Service Contracts (as such terms are
hereinafter defined) and all other intangible personal property used in
connection with or arising from the business now or hereafter conducted on or
from the Property. A true and correct copy of the Lease Agreement (the "Lease")
dated December 8, 1998 between the Partnership, as Landlord, and Dana
Corporation (the "Tenant"), as Tenant is attached to this Agreement as EXHIBIT
E.
2. CONTRIBUTION VALUE
(i) CONTRIBUTION VALUE FOR THE INITIAL
PARTNERSHIP INTERESTS.
Owners and Assignee agree that the total
value of the Property is deemed to be Sixteen Million Dollars ($16,000,000.00)
(the "PROPERTY Value"). The Contribution Value for the Initial Partnership
Interests (the "IPI PRICE") is eighty-nine percent (89%) of the amount (the "NET
VALUE") by which (a) the Property Value, plus or minus adjustments and
prorations in accordance with the provisions of Section 5.C hereof, exceeds (b)
the Existing Mortgage Debt. The IPI Price shall be paid in OP Units as more
particularly described in Section 2(iv)(a) below, except to the extent
hereinafter provided.
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(ii) CONTRIBUTION VALUE FOR REMAINING PARTNERSHIP
INTEREST. In the event either Assignee or Owners exercise the Remaining
Interest Option in accordance with the terms of the Option Agreement, the amount
to be paid by Assignee for the Remaining Partnership Interests is an amount (the
"OPTION PRICE") equal to eleven percent (11%) of the Net Value. The Option Price
shall be paid in OP Units, except to the extent hereinafter provided.
(iii) EXISTING MORTGAGE DEBT.
(A) At Closing, Assignee shall accept the
Initial Partnership Interests with the Property subject to the Existing
Mortgages and the Existing Mortgage Debt.
(B) "EXISTING MORTGAGES" shall mean the
following documents: commitment letter dated October 23, 1996, as amended,
between Oaktree Investment, L.P. ("Oaktree") and the Partnership; promissory
note dated as of January 16, 1997 in the amount of $14,250,000 from the
Partnership to Oaktree; mortgage, security agreement and Fixture Filings
dated as of January 16, 1997 between the Partnership and Oaktree; First
Amendment to mortgage, security agreement and Fixture Filing dated as of
January 16, 1997 between the Partnership and Oaktree; UCC-1, Financing
Statements between the Partnership and Oaktree; Project Loan Agreement dated
as of January 16, 1997 by and between the Partnership and Oaktree; Assignment
of Rents and Leases dated as of January 16, 1997 from the Partnership to
Oaktree; Agreement of Limited Partners dated as of January 17, 1997 by the
Limited Partners to Oaktree; Certificate and Agreement by Partnership and by
Jeffrey E. Kelter for the benefit of Oaktree dated January 16, 1997; letter
dated January 16, 1997 by the Partnership to Oaktree with respect to no
amendment of Heller loan or loan documents; subordination, non-disturbance
and attornment agreement dated as of the 23 day of December 1996 between
Oaktree and World Pool Corporation; commitment letter dated December 6, 1996
from Heller Financial, Inc. ("Heller") to the Partnership; Promissory Note
dated January 16, 1997 from the Partnership to Heller; UCC-1 Financing
Statements by each of the Limited Partners to Heller (creating a security
interest in the Partnership Interests); Agreement of Principals dated January
16, 1997 by General Partner, Kelter and Kelter to Heller; Pledge and
Assignment of Partnership Interests by the General Partner and by the Limited
Partners to Heller of their respective partnership interests in the
Partnership; Loan Agreement dated January 16, 1997 between the Partnership
and Heller; Hazardous Materials Indemnity Agreement dated January 16, 1997 by
the Partnership, the General Partner and Kelter to Heller; $152,000 Letter of
Credit Reimbursement Agreement by each of the Limited Partners for the
benefit of First Union National Bank; Intercreditor Agreement dated as of
January 16, 1997 by and between Oaktree and Heller.
(C) "Existing Mortgage Debt" shall mean the
current unpaid principal balances of the Existing Mortgages as of the relevant
date, plus the accrued and unpaid interest payable pursuant to the Existing
Mortgages as of the relevant date; and plus all
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prepayment fees and charges (including, without limitation, the Participation)
then due pursuant to the Existing Mortgage if the Existing Mortgages were paid
in full as of the relevant date.
(D) "PARTICIPATION" shall mean the amounts due
and payable by the Partnership to Heller Financial, Inc. pursuant to Sections
1.6, 1.7 and 1.8 of the Loan Agreement dated the 16th day of January,
1997 by and between the Partnership and Heller Financial, Inc.
(iv) OP UNITS.
(a) IPI PRICE. At Closing, Assignee shall
deliver to each Owner an amount of OP Units (the "INITIAL OP UNITS") having an
aggregate OP Unit Value equal (to the nearest whole amount) to the portion of
the IPI Price allocable to the Initial Partnership Interest to be transferred at
Closing by such OP Unit Seller. No fractional OP Units shall be issued to any OP
Unit Seller, and any such amount of the IPI Price represented thereby shall be
paid in cash to the respective OP Unit Seller.
(b) OPTION PRICE. (i) At Closing,
Assignee shall deposit into an escrow (the "OPTION ESCROW") to be established
with the Title Company a written instrument (the "OPTION OP EVIDENCE") reserving
in the name of each OP Unit Seller the number of OP Units having an aggregate OP
Unit Value equal (to the nearest whole amount) to the Option Price, and
Remaining Owners shall deposit with the Title Company the fully executed
Interest Assignments (as hereinafter defined). In connection therewith,
Assignee, Owners and the Title Company shall enter into an Escrow Agreement in
the form of EXHIBIT G hereto (the "ESCROW AGREEMENT").
(ii) Upon the exercise by Assignee or
Owners of the Remaining Interest Option in accordance with the terms of the
Option Agreement, Assignee shall deposit with the Title Company: (1) the OP
Documents (as defined in the Escrow Agreement) evidencing the number of OP Units
(the "OPTION OP UNITS") having an aggregate OP Unit Value equal (to the nearest
whole amount) to the Option Price and (2) the Cash Balance (as hereinafter
defined). Upon receipt of the foregoing, the Title Company shall (pursuant to
the Escrow Agreement) (x) deliver to Owners the OP Documents and the Cash
Balance, and (y) deliver to Assignee the Remaining Interest Assignments, all in
accordance with the terms of the Escrow Agreement. No fractional OP Units shall
be issued to any Owner, and any such amount of the Option Price represented
thereby and the Option Price payable to an Owner who is not an OP Unit Seller
shall be paid in cash (the "CASH BALANCE"). In the event the Call Option is not
exercised by the expiration of the Call Period, and the Put Option is not
exercised by the expiration of the Put Period, (A) the Interest Assignments
shall be returned to Owners, and (B) all other documents on deposit in the
Option Escrow shall be returned to Assignee. Notwithstanding anything to the
contrary contained herein or in any other document executed in connection
herewith, in the event that, upon the exercise of the Interest Option, any
Remaining
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Owner fails to satisfy the requirements of an Accredited Investor, the portion
of the Option Price payable to such Remaining Owner shall be paid entirely in
cash.
(c) REGISTRATION RIGHTS AGREEMENT. The OP Units
received by Owners shall be subject to the restrictions on transferability and
shall have the registration rights as provided in the OP Unit Recipient
Agreement ("REGISTRATION RIGHTS AGREEMENT") attached hereto as EXHIBIT H and in
Assignee's Partnership Agreement.
(d) OP UNITS. As used herein, "OP UNITS" means
units of limited partnership interests in Assignee; "AREIC SHARES" means the
stock of Keystone Property Trust ("AREIC"), a Maryland business trust;
"ASSIGNEE'S PARTNERSHIP AGREEMENT" means the
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Agreement of Limited Partnership of Assignee; and "OP UNIT VALUE" means the
value per OP Unit equal to the average closing price as reported on the American
Stock Exchange (or in the event AREIC is not listed on the American Stock
Exchange, on such other national securities exchange which AREIC's common stock
is listed) for a share of AREIC common stock during the thirty (30) day period
immediately preceding the date which is three (3) business days prior to the
Closing Date.
3. OPERATION OF PROPERTY THROUGH CLOSING OR EARLIER TERMINATION.
Between the date of this Agreement and Closing:
(a) Owners shall, at their expense, enforce the
obligations of the Tenant under the Lease to make all repairs and replacements
which are required with respect to the Improvements to maintain them in their
present condition, except only damage by fire or other casualty.
(b) Owners shall not enter into any agreement to modify,
amend or otherwise alter any of the terms or provisions of the Lease; and Owners
shall not enter into an new lease or other agreement with respect to the use or
occupancy of the Real Property and/or the maintenance or operation thereof,
without the prior written consent of Buyer.
(c) (i) Assignee, its attorneys, accountants,
architects, engineers and other representatives shall be afforded access to the
Real Property and to all books, records and files relating thereto from time to
time prior to Closing for the purposes of inspections, preparation of plans,
taking of measurements, making of surveys, making of appraisals, and generally
for the ascertainment of the condition of the Real Property, including but not
limited to the physical and financial condition of the Real Property; and there
shall be furnished to Assignee all plans and specifications, engineering
reports, feasibility studies, operating statements, governmental permits and
approvals, contracts, leases, surveys, title information and other documentation
concerning the Property in the possession of Owners and/or Owners' management
agent for the Real Property.
(ii) Assignee, its attorneys, accountants and
other representatives, shall be permitted to make and are authorized to make any
searches of governmental records as they deem necessary with respect to the Real
Property; and Owners agree fully to cooperate with Assignee and its attorneys
and other representatives in this regard and to issue any consents or
authorizations required therefor.
(iii) Assignee agrees to indemnify, defend and
reimburse Owners for all costs, expenses (including, without limitation,
attorney's fees, consultant and expert fees
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and court costs) loss and liabilities suffered or incurred by Owners as the
result of any injuries to persons or properties caused by Assignee's entry upon
the Real Property prior to Closing pursuant to the provisions of this Section
3(c). The obligations of Assignee pursuant to this Section 3(c)(iii) shall
survive Closing and/or any termination of this Agreement.
(d) Promptly after receipt thereof by Owners, Owners shall
deliver to Assignee the following:
(i) a copy of any notice of default given or
received under the Lease;
(ii) a copy of any tax bill, notice or
statement of value, or notice of change in a tax rate affecting or relating to
the Real Property;
(iii) a copy of any notice of an actual or
alleged violation; and
(iv) a copy of any notice of Taking.
(e) Owners shall complete and deliver for execution
by the Tenant a written certification in the form required by the Lease ("Tenant
Estoppel Certificate"); and shall use diligent efforts to obtain an executed
Tenant Estoppel Certificate (dated no more than 10 days prior to the Closing
Date) from the Tenant. Owners shall deliver to Assignee a copy of the executed
Tenant Estoppel Certificate promptly after receiving such certificate.
4. STATUS OF TITLE TO PROPERTY
A. STATE OF TITLE. At Closing, (a) the Initial Partnership
Interests shall be free and clear of all liens, charges and encumbrances; (b)
title to the Property shall be subject only to: (i) the Permitted Exceptions;
and (ii) the Existing Mortgages and the Lease; and (c) the Title Company shall
issue the Title Policy Endorsement.
B. DEFINITIONS. "Permitted Exceptions" shall mean the items
specified on Schedule B to the Title Policy (except that item 2 on Schedule B to
the Title Policy shall be deemed to refer to 1999 taxes). "Title Policy" shall
mean the ALTA Owners Policy No. 377985 (SETT-15814), with Date of Policy of
2-18-97; in the amount of $14,000,250. "Title Policy Endorsements" shall mean
(i) an Endorsement to the Title Policy issued by Commonwealth Land Title
Insurance Company (the "Title Company"), updating the Date of Policy to the
Closing Date and waiving as a defense pursuant to Section 3 of the exclusions
from coverage under the policy all acts and knowledge of the Owners; and (ii) an
Endorsement to the Title Policy issued by the Title Company, insuring that the
covenants, conditions and restrictions
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included in the Permitted Encumbrances have not been violated, and that a future
violation thereof will not cause a forfeiture or reversion of Title.
C. OWNER OBLIGATIONS. At Closing, Owners shall execute and deliver
to the Title Company the Affidavit in the form attached hereto as Exhibit I to
cause the Title Company to issue the Title Policy Endorsements; and each Owner
shall cause his/its Partnership Interest to be free and clear of all liens,
charges and encumbrances.
D. TITLE DEFECTS. If any of the conditions with respect to title
set forth in Section 4A above have not been satisfied as of the Closing Date,
Assignee shall have the right, as its exclusive right and remedy, to terminate
this Agreement or to complete Closing without an abatement of the IPI Price or
the Option Price and waive the requirement for the satisfaction of any
unsatisfied condition.
5. CLOSING
A. CLOSING DATE. The "CLOSING" of the transaction contemplated by
this Agreement (that is, the payment of the IPI Price, the transfer of the
Initial Partnership Interests, the issuance of the Initial OP Units and the
satisfaction of such terms and conditions of this Agreement as are required to
take place concurrently therewith in accordance with the terms hereof) shall
occur on the Closing Date at the offices of Owners' counsel. The "CLOSING DATE"
shall be December 14, 1999.
B. CLOSING DOCUMENTS
(i) OWNERS. At Closing, there shall be delivered to
GP Assignee and Assignee fully executed counterparts of each of the following
(each in form and substance reasonably acceptable to Assignee, Owners and their
respective counsel if not attached as an Exhibit to this Agreement):
(a) Assignments of Partnership Interests, duly
executed by each Owner with respect to its/his Partnership Interest, sufficient
to transfer and convey to GP Assignee and Assignee, as applicable, all of the
Initial Partnership Interests (the "INITIAL INTEREST ASSIGNMENTS") and all of
the Remaining Partnership Interests (the "REMAINING INTEREST ASSIGNMENTS") as
required by this Agreement.
(b) A Collateral Assignment of Partnership
Interests and Security Agreement (the "COLLATERAL ASSIGNMENT"), duly executed by
each Owner, collaterally assigning to Assignee the Remaining Partnership
Interests and the interest of Owners in the Option Escrow.
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(c) UCC-1 Financing Statements, sufficient upon
appropriate filing to perfect Assignee's security interest in the Remaining
Partnership Interests and the Option Escrow.
(d) The Title Company Affidavit.
(e) Original executed copies of the Lease and the
Management Contract.
(f) Any bonds, warranties or guaranties which are
in any way applicable to the Property or any part thereof and which are in the
possession of Owners or the Partnership.
(g) For each Owner and for the Partnership, an
affidavit stating, under penalty of perjury, such Owner's and the Partnership's
U.S. taxpayer identification number and that such Owner and the Partnership is
not a foreign person within the meaning of Section 1445 of the Internal Revenue
Code.
(h) A counterpart of the Registration Rights
Agreement executed by each OP Unit Seller.
(i) The Investor Information Sheet, Account
Information and Accredited Investor Questionnaire ("SUBSCRIPTION DOCUMENTS")
attached as Exhibits to the Registration Rights Agreement, executed by each OP
Unit Seller.
(j) A counterpart of an Amended and Restated
Limited Partnership Agreement for the Partnership, in the form attached hereto
as EXHIBIT J executed by each of the Owners (which Agreement provides, inter
alia, for the conversion of the general partnership interest of the General
Partner in the Partnership to a limited partnership interest).
(k) The Call Option Agreement and the Put Option
Agreement, each duly executed by each of the Owners.
(l) Payoff letters from the holders of the
Existing Mortgages stating the amount of the Existing Mortgage Debt (calculated
to the Closing Date).
(m) An original counterpart of the Tenant
Estoppel Certificate and the SNDA.
(o) With respect to each Owner which is a
corporation or a partnership, a certified copy of such Owner's Partnership
Agreement or Articles of Incorporation and a Certificate of Good Standing with
respect to such entity; and if such Owner is a
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corporation, a Resolution of its Board of Directors authorizing this transaction
and a Certificate of Good Standing from the Secretary of State of the state of
incorporation of such Owner.
(p) Uniform Commercial Code Financing Statement
searches with respect to the Partnership.
(q) All other documents reasonably required by
Assignee in order to perfect the contribution, conveyance, transfer and
assignment of the Partnership Interests to Assignee or which would otherwise
be reasonable in connection with the purchase and sale of property similar to
the Property.
(ii) ASSIGNEE. At Closing, GP Assignee and Assignee shall
deliver or cause to be delivered the following:
(a) In the event Assignee does not repay the
Existing Mortgage Indebtedness on the Closing Date, executed Releases from the
holders of the Existing Mortgage Debt. "RELEASES" shall mean written agreements
in form reasonably satisfactory to the Owners pursuant to which the then current
holders of the Existing Mortgages shall agree that the Owners are released from
all personal liability pursuant to the Existing Mortgages.
(b) The cash and OP Units as required pursuant to
SECTION 2 above.
(c) Executed counterparts of any other documents
listed in Section 5.B(i) required to be signed by GP Assignee and Assignee.
(d) An executed counterpart of the Registration
Rights Agreement.
(e) Executed counterparts of such Subscription
Documents as are required to be executed by Assignee.
(f) For AREIC, a corporate resolution authorizing
this transaction and a certificate of good standing from the Secretary of State
of Maryland.
(g) For Assignee, a certified copy of Assignee's
Partnership Agreement and a Certificate of Good Standing from the Secretary of
State of Delaware.
(h) The Option OP Evidence.
(i) Such other documents as may reasonably be
requested by Owner or are otherwise reasonably necessary in order to effectuate
the transactions contemplated hereby.
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C. CLOSING PRORATIONS AND ADJUSTMENTS
(i) A statement of prorations and other adjustments
shall be agreed upon by Assignee and Owners prior to Closing. For purposes of
prorations, GP Assignee and Assignee shall be deemed the owner of all of the
Initial Partnership Interests on the Closing Date. In addition to prorations and
other adjustments that may otherwise be provided for in this Agreement, the
following items are to be prorated or adjusted, as the case may require, as of
the Closing Date:
(a) Since the Tenant under the Lease is obligated
to pay all real estate taxes and assessments, all water, sewer and other utility
charges and all insurance premiums and charges, there shall be no proration or
adjustment of these items at Closing.
(b) The minimum rent payable by Tenant under the
Lease; provided, however, that rent and all other sums which are due and payable
to the Partnership by the Tenant under the Lease but uncollected as of the
Closing shall not be adjusted, but Assignee shall cause the rent and other sums
for the period prior to Closing to be remitted to the Owners if, as and when
collected.
(c) Amounts due and prepayments under the
Management Contract.
(d) Assignable license and permit fees.
(e) Other expenses of operation and similar items
(including, without limitation, payments of under service contracts to which the
Partnership is a party).
(ii) At Closing and at any time prior thereto, the Partnership
shall have the right to spend and/or distribute to Owners any and all of the
cash held by the Partnership; and Assignee shall have no right or interest in or
to such cash.
(iii) Owners shall retain all rights to receive the return of
all sums deposited with and held in escrow by or on behalf of any lender under
the Existing Mortgages, including without limitation tax and insurance escrows,
and any such sums paid to Assignee shall forthwith be remitted to the Owners;
provided, however, that with respect to any of the Existing Mortgages that is
not repaid on the Closing Date, at Owners' option the amount of such deposits
held in escrow, shall be and are hereby assigned to Assignee, and Owners shall
receive a credit on the IPI Price in the amount of such sum. The provisions of
this Section 5C shall not be applicable to any deposits made by the Tenant to
the holder(s) of the Existing Mortgages.
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D. CLOSING AND TRANSACTION COSTS
The closing costs and other costs incurred in
connection with the transactions contemplated by this Agreement shall be paid as
follows: (i) all title insurance premiums (including fees to issue the Title
Endorsement), all fees and costs incurred in connection with the Closing escrow,
all survey costs, all recording and filing fees, all Existing Mortgage Debt and
all costs incurred by Assignee in connection with Assignee's due diligence
investigation of the Property shall be paid by Assignee; (ii) all transfer taxes
(if any), and all fees and costs incurred in connection with the Option Escrow
shall be paid by Assignee; provided, however, that in the event transfer taxes
are assessed pursuant to 72 P.S. Section 8102-c.5(2) or 61 Pa. Code Section
91.202(a)(2) as a result of (a) any actions taken by Owners prior to, on or
after Closing (other than actions taken in connection with the exercise of the
Call Option or Put Option), Owners shall be solely responsible for the payment
of the amount assessed, together with any penalties and interest thereon, or (b)
any actions taken by Assignee on or after Closing. Assignee shall be solely
responsible for the payment of the amount assessed, together with any penalties
and interest thereon; and (iii) each of Assignee and Owners shall be solely
responsible for the payment of its own legal counsel fees.
E. POSSESSION
Upon Closing, Owners shall cause the Partnership
to be in full and complete possession of the Property, subject only to the
rights and possession by the Tenant under the Lease.
F. PRIOR LIABILITIES
In no event shall GP Assignee or Assignee be
deemed to assume, be liable or otherwise responsible for any liabilities of the
Owners or the Partnership for any period prior to Closing incurred or arising
prior to the Closing Date, whether known or unknown, contingent or
noncontingent, other than (i) those amounts for which Assignee is given credit
pursuant to this Agreement, (ii) the Permitted Exceptions, (iii) the Existing
Mortgages and the Existing Mortgage Debt and (iv) the Lease. This Agreement
does not discharge or relieve the Owners from liability or obligation, if any,
whether known or unknown, contingent or noncontingent arising out of or related
to any such Owner's ownership of a Partnership Interest prior to the Closing
Date or the Partnership's ownership of the Property prior to the Closing Date.
G. TAX RETURNS
(i) Owners shall, at their expense, as soon as
is reasonably possible after Closing (and in any event within the time required
by the Code (as hereinafter defined) and applicable state and local laws) cause
to be prepared and filed the Partnership's federal income
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tax return (Form 1065), Pennsylvania income tax return (Form PA 65), and any
other tax returns due for all taxable periods of the Partnership which end on or
before the close of business on the Closing Date. The Owners shall include GP
Assignee and Assignee as partners on the Partnership federal partnership income
tax return for the taxable period ending at the close of business on the Closing
Date and shall provide Assignee with a Form K-1. On such tax return and Form
K-1, Assignee shall be shown as owning the Initial Partnership Interests at the
close of business on the Closing Date, but no items of income, gain, loss or
deduction shall be allocated to Assignee on such tax return or Form K-1.
(ii) Owners shall, at their expense, cause the
Partnership to timely file IRS Form 8308 as required by and conforming to the
requirements set forth in Treasury Regulations Section 1.6050K-1 and Section
6050K of the Code.
(iii) Assignee shall file or cause to be filed
all federal tax returns for any taxable period commencing after the Closing
Date, and any state and local tax return for any taxable period which includes
but does not end on the Closing Date.
(iv) Assignee shall make available to the Owners
(and their authorized representatives) all financial and other information
relating to the Partnership and its operations which Owners reasonably request
in order to enable Owners to file tax returns for the Partnership for the
taxable period of the Partnership ending at the close of business on the Closing
Date. If, at any time after Closing, any of the Partnership's federal,
Pennsylvania or other state or local interim, final or estimated income, excise,
property, franchise or license or other tax returns, reports or documents for
any taxable period beginning before the Closing Date, which return, report or
document was filed or was caused to be filed by Owners, is audited by the
Internal Revenue Service, the Commonwealth of Pennsylvania, or any other
governmental body, or if any other inquiry is made as to the same, Assignee
shall, if it receives notice of such examination or inquiry, promptly forward
the same to Owners and shall cooperate with Owners in permitting Owners to
respond to such examination or inquiry and to resolve any issues presented,
including giving Owners (or their representatives) reasonable access to such
financial or other information as Owners reasonably request to respond to the
audit, examination or inquiry and to resolve any issues presented thereby. All
fees, costs, and expenses incurred in connection with such returns, reports,
documents and audits, and any and all penalties assessed as a result of any such
audits, shall be paid by Owners.
6. CASUALTY LOSS AND CONDEMNATION
(a) Owners agree to enforce the obligations of the Tenant
under the Lease to maintain fire and extended coverage insurance on the Property
until the Closing Date. If at any time prior to the Closing Date any portion of
the Property is destroyed or damaged as a result of fire or other casualty or is
taken by condemnation or eminent domain ("Casualty"), Owners
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shall give notice ("Casualty Notice") thereof to Assignee. If the Property is
the subject of a Casualty, Assignee shall have the right, at its sole option, of
terminating this Agreement unless, (i) the cost fully to repair or restore such
damage is less than Two Hundred Fifty Thousand Dollars ($250,000) and sufficient
insurance proceeds are available fully to restore such damage, and (ii) the
insurance companies issuing the policies have confirmed in writing that such
Casualty is covered by the Policies and that no defense to payment of the claim
exists, and (iii) such Casualty will not result in the Tenant terminating the
Lease and (iv) any loan commitment obtained by Assignee for financing the
Property is not canceled or suspended as a result of such Casualty. In the event
the Property is the subject of a Casualty and Assignee does not have the right
to terminate this Agreement or does not exercise its right to terminate this
Agreement, Owners shall enforce the obligations of the Tenant to repair, rebuild
or replace such Casualty damage pursuant to the provisions of Section 8(e) of
the Lease.
(b) If the Property is the subject of a Casualty but Assignee
does not have the right to terminate this Agreement pursuant to the provisions
of Section 6(a) above (or Assignee does not exercise such right), then Owner
shall have no obligation to repair any Casualty damage and Assignee shall accept
the Property at Closing as damaged or destroyed by the Casualty.
(c) If at any time prior to the Closing Date: a Taking affects
all or any part of the Property, or if any proceeding for a Taking is commenced,
or if notice of the contemplated commencement of a Taking is given, Owners shall
promptly give written notice ("Taking Notice") thereof to Assignee. If the Real
Property is Taken, Assignee shall have the right, at its sole option, of
terminating this Agreement. If a Taking Notice is given to Assignee less than
ten (10) days prior to Closing, at Assignee's option Closing shall be postponed
to a date not earlier than ten (10) days after Assignee's receipt of the Taking
Notice. If a Taking has occurred after the date of this Agreement and prior to
Closing, all awards, damages or other proceeds resulting from such Taking shall
be and remain the property of the Partnership and shall be retained by the
Partnership as of the Closing Date for the benefit of Assignee, together with
the right to receive any such proceeds or damages after the Closing Date.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS; AND CONDITIONS TO
CLOSING.
A. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
OWNERS. Each of the Owners represents, warrants and covenants to Assignee that
the following are true, complete and correct as of the date of this Agreement:
(i) Other than the Lease and the Existing
Mortgage Debt and the Permitted Exceptions, the Partnership has not entered into
any agreement which remains
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outstanding to lease, sell, mortgage or otherwise encumber or dispose of its
interest in the Property or any part thereof, except for this Agreement.
(ii) The Partnership has not received from any
governmental authority written notice of any violation of any zoning, building,
fire or health code or any other statute, ordinance rule or regulation
applicable to the Property.
(iii) SCHEDULE A to this Agreement correctly
lists all of the Partnership Interests in the Partnership, and no other person
or entity owns any partnership interest in the Partnership.
(iv) The Owners do not have knowledge of any
litigation, action, proceeding or investigation pending or threatened against
the Partnership or the Property before any court or governmental department,
commission, board, agency or instrumentality.
(v) Other than the Management Contract, as of
Closing the Partnership will not be bound by any service or other similar
agreements with respect to the purchase of materials, supplies, equipment,
machinery parts, products or services for the Property.
(vi) The Lease is in effect and has not been
amended. The copy of the Lease attached hereto as Exhibit E is a true and
complete copy of the Lease; the Lease has not been amended, modified, or
supplemented; and the Tenant does not have any right to extend or renew the term
of the Lease except as expressly set forth in the Lease. Except as disclosed in
Section 30(b) of the Lease, no commissions to any broker or leasing agent are
due or will become due on account of the Lease or upon extension, renewal or
termination of the original term thereof, or upon the leasing of additional
space in the Property, whether or not pursuant to an option or other rights
contained in such lease. All obligations of the landlord under the Lease which
are to be performed on or before the Closing Date, shall have been performed and
completed at no cost or expense to Assignee; and that all work that is required
to be performed by the Landlord under the Lease shall have been performed and
completed at no cost or expense to Assignee. No default exists on the part of
the Tenant under the Lease. The Tenant has not asserted any claim which could
adversely affect the right of the landlord to collect rent from the Tenant; and
no notice of default or breach on the part of landlord under the Lease has been
received by Owners from the Tenant which have not been cured. To Owner's
knowledge, no right or claim of set-off against rent has been asserted in
writing by the Tenant under the Lease. No security deposit has been paid by the
Tenant under the Lease. Except as set forth in the Lease, the Tenant is not
entitled to any concession, allowance, rebate or refund. The Partnership has not
received any advance payment of rent (other than for the current month) on
account of the Lease. The Tenant has not as of the date of this Agreement, and
shall not as of the Closing Date, have prepaid more than one month's rent under
the Lease. The Lease contains no right, option or right of first refusal to the
Tenant to purchase the Real Property.
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(vii) The Partnership has not received written
notice of any default under the Existing Mortgage Debt. As of the date of this
Agreement, the outstanding principal balance of the Existing Mortgages are as
follows: Heller Financial, Inc. - $2,278,490.34; Oaktree Investment, Inc. -
$10,878,490.34. Except with respect to the Existing Mortgage Debt, the
transactions contemplated by this Agreement will not result in an acceleration
of any indebtedness of the Partnership.
(viii) All federal, state, county, local and
other tax returns required to be filed by or on behalf of the Partnership (the
"TAX Returns") have been timely filed by or on behalf of the Partnership and
when filed were true and correct, and the taxes shown as due thereon were paid.
The federal and state income tax returns of the Partnership have never been
audited by the Internal Revenue Service or any state taxing authority and the
Partnership has not received from the Internal Revenue Service or from any tax
authority of any state, county, local or other jurisdiction any notice of
underpayment of taxes or other deficiency which has not been paid, nor any
objection to any return or report filed by the Partnership. There are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any Tax Return or report for the Partnership.
(ix) Neither the Lease nor the rent or other
amounts payable under the Lease have been assigned, pledged or encumbered other
than to the holders of the Existing Mortgages as collateral security.
(x) No security deposit has been paid by the
Tenant under the Lease.
(xi) All of the books, records, information,
data and other items supplied by Owners to Assignee are true, complete and
correct in all material respects, and fairly and accurately presented the
results of operations of the Property.
(xii) Owners have not received any notice
("Defect Notice") from any insurance company which has issued a policy with
respect to the Property or from any board of fire underwriters (or other body
exercising similar functions) claiming any defects or deficiencies in the
Property or suggesting or requesting the performance of any repairs, alterations
or other work to the Property. To the knowledge of Owners, there has been no
default under any existing service contract binding upon the Partnership.
(xiii) No employee of the Partnership who
performs services at or in connection with the Real Property is covered by an
employment agreement or union contract; and no demand has been made upon Owners
for recognition of a union or collective bargaining agent for the employees of
the Partnership at the Property.
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(xiv) To Owners' knowledge: all certificates of
occupancy required by governmental authorities having jurisdiction have been
issued for the Property, have been paid for, and are in full force and effect;
the buildings and improvements existing on the Real Property are in compliance
with all applicable laws and ordinances governing the construction, use and
occupancy of such buildings; and such buildings and improvements have been
completed and installed in compliance with applicable law.
(xv) The current zoning classification of the
Real Property under the Zoning Code of the Township of Middlesex and to Owners'
knowledge, the use of the buildings and other improvements constituting the Real
Property do not violate the Zoning Code.
(xvi) Seller has no knowledge of any defective
condition, structural or otherwise, with respect to the Improvements.
(xvii) To Owners' knowledge, all real estate
taxes currently due and payable with respect to the Real Property have been
paid; the Real Property constitutes separate tax parcels and are separately
assessed for real estate tax purposes; and there is no proceeding pending for
the adjustment of the assessed valuation of all or any portion of the Property.
(xviii) Owners have not received any notice of
any condemnation proceeding or other proceedings in the nature of eminent domain
("Taking") in connection with the Property, and to Seller's knowledge no Taking
has been threatened.
(xix) Except as otherwise set forth in that
certain Environmental Survey dated December 1, 1998 from EMG to the Partnership,
Owners represent and warrant to Assignee that to the best of Owners' knowledge:
(A) No notice has been issued to the
Partnership that the Property is not in compliance with applicable environmental
statutes, including without limitation: those relating to the construction,
operation, maintenance or repair of any improvements or equipment; the
discharge, emission or release of any item or substance to the air, soil,
surface water or ground water; the discharge of any dredge or fill material to a
wetland or other water of the United States; the storage, treatment, disposal or
handling of any Contaminant; or the construction, operation, maintenance or
repair of aboveground or underground storage tanks (collectively, "Environmental
Laws").
(B) The Partnership has not
generated, stored, treated, disposed of, discharged, released, emitted or
otherwise handled any Contaminant on, over, under, from or in any manner
affecting the Real Property. For the purposes of this subsection (B) only,
"Contaminant" shall not include office equipment, fuel and other similar
products contained in
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vehicles and cleaning solutions and other maintenance materials that are
customarily used or stored incidental to and are reasonably necessary for the
operation or maintenance of the Real Property.
(C) The Property is not listed on
the National Priorities List established pursuant to Section 105(8)(B) of
CERCLA, 42 U.S.C. Section 9605(8)(B), or on any other hazardous site list
promulgated by any federal, state or local government or governmental agency.
(D) No underground storage tanks are
present at the Property.
(E) No civil, criminal or
administrative proceeding is pending or threatened relating to Environmental
Laws or Contaminants on, over, under, from or affecting the Real Property.
(xx) To the extent that any broker engaged by
Owners is entitled to any commission for the transactions contemplated by this
Agreement, Owners shall pay all such commissions and shall indemnify, defend and
save and hold harmless Assignee of and from the obligation to pay any such
commissions.
As used in this Section 7.A, "knowledge" shall
mean the "actual" knowledge of Kelter or Butte; provided, however, that such
parties shall be deemed to have "actual" knowledge of an occurrence or event to
the extent the Partnership, or any of such parties, has received written
notification of such an occurrence or event.
At Closing, Owners shall deliver to Assignee a
Certificate signed by Owners updating to the Closing Date the foregoing
representations and warranties, and disclosing in such Certificate any changes
of circumstance or variations or exceptions to the foregoing representations and
warranties existing as of the Closing Date.
B. REPRESENTATIONS, WARRANTIES AND COVENANTS OF OWNERS WITH
RESPECT TO PARTNERSHIP INTERESTS. Each Owner represents, warrants and covenants
to Assignee, for itself only and not on behalf of any other Owner, that the
following are true, complete and correct as of the date of this Agreement:
(i) Such Owner's Partnership Interest is owned by
such Owner free and clear of all liens, encumbrances and rights of every kind,
and such Owner has the right to assign and transfer such Partnership Interest to
GP Assignee and Assignee. To such Owner's knowledge, no person has asserted any
claims in respect of, or claimed any interest in, such
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Owner's Partnership Interest, and no consent of any third party is needed in
order for such Owner to consummate this transaction.
(ii) Such Owner has not received any notice from
any governmental authority of any ongoing or proposed audit or investigation
relating to the Tax Returns.
(iii) There are no contracts, agreements or
commitments, written or oral, to which such Owner is a party affecting such
Owner's Partnership Interest which would be binding upon Assignee or the
Partnership subsequent to Closing.
(iv) Such Owner has not received any written
notice which remains outstanding of any action, proceeding or investigation
pending or threatened against such Owner before any court or governmental
department, commission, board, agency or instrumentality that can materially
affect the consummation of the transactions contemplated hereby.
(v) Such Owner has full power and authority to
enter into and fully perform and comply with the terms of this Agreement and,
other than with respect to any Owner who is an individual, such Owner is duly
organized, validly existing and qualified and empowered to conduct its business.
Neither the execution and delivery of this Agreement nor its performance by such
Owner will conflict with or result in the breach of any contract, agreement,
law, rule or regulation to which such Owner is a party or by which such Owner is
bound. This Agreement is valid and enforceable against such Owner in accordance
with its terms and each instrument to be executed by such Owner pursuant to this
Agreement or in connection herewith will, when executed and delivered, be valid
and enforceable against such Owner in accordance with its terms.
(vi) Such Owner is not and is not acting on
behalf of an "employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a "plan"
within the meaning of Section 4975 of the Internal Revenue Code of 1986, as
amended (the "CODE"), or an entity deemed to hold "plan assets" within the
meaning of 29 C.F.R. Section 2510.3-101 of any such employee benefit plan or
plans; neither the Partnership Interest of such Owner, nor the Property,
constitute "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101; and
the transfer of such Owner's Partnership Interests, and the consummation of the
transactions contemplated by this Agreement, shall not constitute a prohibited
transaction under Section 406(a)(1) of ERISA or 4975(c)(1)(A) - (c)(1)(D) of the
Code that is not exempt by operation of statute or by operation of a class-wide
prohibited transaction exemption issued by the U.S. Department of Labor.
(vii) Except as otherwise provided herein for the
benefit of Assignee, such Owner shall not, until expiration of the Put Option
provided the Remaining Partnership Interests have not theretofore been
transferred and conveyed to Assignee, sell,
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transfer, contribute, convey, pledge or encumber its/his Remaining Partnership
Interests, or any portion thereof.
As used in this Section 7.B, "knowledge" shall
mean the "actual" (and not constructive) knowledge of such Owner; provided,
however, that such Owner shall be deemed to have "actual" knowledge of an
occurrence or event to the extent such Owner has received written notification
of such an occurrence or event.
C. REPRESENTATIONS AND WARRANTIES OF ASSIGNEE. Assignee
represents and warrants to Owners that the following are true, complete and
correct as of the date of this Agreement and as of the Closing:
(i) Assignee is duly organized, validly existing,
in good standing and qualified and empowered to conduct its business, and has
full power and authority to enter into and fully perform and comply with the
terms of this Agreement. Neither the execution and delivery of this Agreement
nor its performance by Assignee, will conflict with or result in the breach of
any material contract, agreement, law, rule or regulation to which Assignee is a
party or by which Assignee is bound.
(ii) This Agreement is valid and enforceable
against Assignee in accordance with its terms and each instrument to be executed
by Assignee pursuant to this Agreement or the Registration Rights Agreement, or
in connection herewith or therewith, will, when executed and delivered, be valid
and enforceable against Assignee in accordance with its terms.
(iii) Upon Closing, Assignee shall deliver to the
respective OP Unit Sellers good and marketable title to the Initial OP Units
free and clear of all liens, claims, encumbrances, and restrictions, except as
contained in this Agreement, the Registration Rights Agreement and the
Assignee's Partnership Agreement.
(iv) The capitalization of the Assignee is as set
forth in the Assignee's Partnership Agreement. There are no restrictions on the
transfer of the OP Units to be issued hereunder other than those contained
herein and in the Assignee's Partnership Agreement and the Registration Rights
Agreement, and those arising from federal and applicable state securities laws.
All OP Units issued and outstanding in accordance with the terms of this
Agreement are or will be duly authorized and validly issued in accordance with
the terms of the Assignee's Partnership Agreement and in compliance with
applicable laws and are exchangeable into cash or Common Shares of AREIC as
provided in the Assignee's Partnership Agreement. If and when issued, the Common
Shares issuable upon exchange of the OP Units will be duly authorized, validly
issued, fully paid and non-assessable. At the Closing, upon receipt of the
Initial Partnership Interests, the Assignee will have transferred the Initial OP
Units free and clear of all
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liens and the OP Unit Sellers will be admitted as limited partners of Assignee.
The issuance of the Initial OP Units to the OP Unit Sellers at Closing will not
require any approval or consent of any person or entity except any such approval
that shall have been obtained on or prior to Closing.
D. REPRESENTATIONS AND WARRANTIES OF AREIC. By signing this
Agreement as General Partner of Assignee, AREIC represents and warrants to
Owners that the following are true, complete and correct as of the date of this
Agreement and as of the Closing:
(i) AREIC is duly organized, validly existing, in
good standing and qualified and empowered to conduct its business, and has full
power and authority to enter into and fully perform under this Agreement and the
Registration Rights Agreement. Neither the execution and delivery of this
Agreement and the Registration Rights Agreement, nor the performance of AREIC's
obligations hereunder and thereunder, will conflict with or result in the breach
of any material contract, agreement, law, rule or regulation to which AREIC is a
party or by which AREIC is bound.
(ii) In the limited capacity in which this
Agreement is executed by AREIC, this Agreement is valid and enforceable against
AREIC in accordance with its terms and each instrument to be executed by AREIC
pursuant to this Agreement or the Registration Rights Agreement, or in
connection herewith or therewith, will, when executed and delivered, be valid
and enforceable against AREIC in accordance with its terms.
(iii) AREIC will elect to be taxed as a real
estate investment trust for its taxable year ending December 31, 1998 and AREIC
is organized and will be operated in such a manner as to qualify for taxation as
a "real estate investment trust" as defined in Section 856 of the Code for at
least the taxable years ending December 31, 1998 and December 31, 1999.
(iv) To AREIC's knowledge, there are no pending
or threatened actions, suits or proceedings against or affecting AREIC at law or
in equity or before or by any governmental entity which would prevent or impair
the transactions contemplated hereby.
(E) CONDITIONS OF ASSIGNEE'S OBLIGATIONS.
(i) The obligations of Assignee under this
Agreement are subject to the satisfaction at the time of Closing of each of the
following conditions (any one of which may be waived in whole or in part in
writing by Assignee at or prior to Closing):
(A) all of the representations and
warranties by Owners set forth in this Agreement shall be true and correct;
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(B) no representation or warranty by Owners
contained in this Agreement shall contain any untrue statement or shall omit a
material fact necessary to make the statement of fact therein recited not
misleading;
(C) Owners shall have performed all
covenants, agreements and conditions required by this Agreement to be performed
by Owners prior to or as of the Closing Date;
(D) Buyer shall have received the executed
Tenant Estoppel Certificate from the Tenant under the Lease; and
(E) There shall have been no material
adverse change in the condition of the Real Property, except to the extent
otherwise provided in Section 6 above.
(ii) In the event any of the conditions set forth
in Section 8(E) are not satisfied as of the Closing Date, Assignee shall have
the right (in addition to all other rights and remedies available to Assignee
under this Agreement, at law or equity), at Assignee's sole option (by written
notice to Owners) to (i) terminate Assignee's obligations under this Agreement,
or (ii) complete Closing notwithstanding the unsatisfied condition.
8. SURVIVAL.
The warranties, representations and covenants of Owners,
Assignee and AREIC set forth in this Agreement shall survive the execution and
delivery of this Agreement and the Closing.
9. LENDER RELEASE
Assignee shall use its best efforts to obtain the Release from
the holders of the Existing Mortgages and to deliver the Release to Owners at
Closing. In the event that Assignee does not cause the Existing Mortgage Debt to
be repaid on the Closing Date and Assignee has not delivered the Release to
Owners, Assignee shall deliver to Owners an Indemnity Agreement in form and
content reasonably acceptable to Owners and Assignee and their respective
counsel, pursuant to which AREIC and Assignee shall agree to indemnify, defend
and save and hold harmless Owners with respect to any loss, liability, cost or
expense (including counsel fees and court costs) which Owners may incur from and
after the Closing Date by reason of any liability for the Existing Mortgage Debt
and/or pursuant to the terms and provisions of any of the Existing Mortgages.
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10. TERMINATION. To the extent that either Owners or Assignee
exercises its right to terminate this Agreement as expressly set forth above in
this Agreement, such party or parties shall exercise such right of termination
by giving written notice of such exercise to the other party or parties and,
upon the giving of such notice of termination, this Agreement shall terminate
and neither party shall have any further rights or obligations under this
Agreement.
11. DEFAULTS AND REMEDIES
Subject to the limitations contained elsewhere in this
Agreement, (a) Assignee may proceed directly against each Owner in order to
satisfy a claim or judgment made or obtained by Assignee due to the breach of
any representation, warranty, covenant or agreement made by such Owner in this
Agreement or any document, agreement, instrument or certificate delivered
pursuant to the terms of this Agreement; (b) Owners may proceed directly against
Assignee in order to satisfy a claim or judgment made or obtained by Owners due
to the breach of any representation, warranty, covenant or agreement made by
Assignee in this Agreement, or in order to satisfy any claim for indemnification
made by Assignee pursuant to any indemnification obligation of Assignee provided
for in this Agreement or any document, agreement, instrument or certificate
delivered pursuant to the terms of this Agreement; and (c) Owners may proceed
directly against AREIC in order to satisfy a claim or judgment made or obtained
by Owners due to the breach of any representation or warranty made by AREIC in
this Agreement or any document, agreement instrument or certificate delivered
pursuant to the terms of this Agreement.
12. TAX PROTECTION PROVISIONS
A. Assignee agrees that, following the Closing: (i) the
Partnership will not sell or otherwise dispose of the Property in a transaction
in which taxable gain is recognized for a period of two years after the Closing
Date (such period following the Closing Date being referred to herein as the
"TAX PROTECTION PERIOD"), except that the Partnership may sell the Property in
connection with a tax deferred exchange transaction entered into pursuant to
Section 1031 of the Code pursuant to which no taxable gain is recognized by any
Owner; and (ii) if the Partnership intends to sell or otherwise dispose of the
Property in a transaction in which taxable gain is recognized during a period of
five years after the expiration of the Tax Protection Period, the Partnership
shall use its diligent best efforts to effect such sale pursuant to a tax
deferred exchange transaction entered into pursuant to Section 1031 of the Code
pursuant to which no taxable gain is recognized by any Owner. In the event the
Partnership enters into any such tax deferred exchange transaction during the
Tax Protection Period, the provisions of this Section 12 shall apply to the
property received by the Partnership in such transaction for the remainder of
the Tax Protection Period. Notwithstanding the foregoing, the Partnership may
dispose of personal property and fixtures in the ordinary course of business or
in connection with any rehabilitation or remodeling of the Premises.
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B. Unless otherwise agreed to by all of the Owners who receive
OP Units pursuant to this Agreement (such Owners for the purpose of this Section
12B only being herein called "Investors"), the Property Debt (as hereinafter
defined) shall, on the last day of each calendar year during the Tax Protection
Period, equal or exceed the Required Minimum Amount (as hereinafter defined).
All Property Debt shall be allocated among the partners in Purchaser in
accordance with Section 752 of the Code. As used herein, "PROPERTY DEBT" shall
mean, as to each Investor, the aggregate amount of indebtedness guaranteed by
such Investor pursuant to any Debt Guaranties (as hereinafter defined). If, at
any time during the Tax Protection Period, any Investors agree to execute
guaranties and/or other instruments (each, a "DEBT GUARANTY" and together with
any other outstanding Replacement Debt Guaranty, the "DEBT GUARANTIES") directly
guarantying an amount of indebtedness (which may be recourse or nonrecourse and
may be owing to Purchaser or other entities related thereto), in such form as
may be reasonably satisfactory to such Investor, Purchaser and AREIC, by which
such Investors agree to bear the economic risk of loss for an amount of
indebtedness, Purchaser agrees to deliver such Debt Guaranties (upon receipt
thereof from Investors) to the holder of such indebtedness and use reasonable
efforts to cause the holder to acknowledge such Debt Guaranties prior to the
close of the taxable year in which the Debt Guaranties are presented to
Purchaser. As used herein, "REQUIRED MINIMUM AMOUNT" means, as to each Investor,
the amount set forth on Exhibit F attached hereto. Anything to the contrary
notwithstanding, any Investor, upon written notice to the Assignee, may reduce
the Required Minimum Amount as to such Investor to the amount set forth in such
notice. Any such reduction shall be effective as of the first day of the
calendar month following the month in which such notice was given in accordance
with the terms of this Agreement.
C. Notwithstanding anything to the contrary contained herein
or in any document executed in connection herewith, no representations or
warranties are made with respect to the ability of the Owners to maintain their
respective tax bases in the Partnership or the Property, or to avoid the
recognition of gain and the incurrence of tax liability, in connection with the
structure or completion of any of the transactions contemplated hereby, and
Assignee shall have no liability or obligations in connection with any such
occurrences. In amplification of, and not in limitation to, the foregoing, each
Owner hereby acknowledges and agrees that (i) it has sufficient knowledge and
experience in financial, tax and business matters to enable it to evaluate the
merits and risks of investment in the OP Units, and, as to each Investor, such
Investor has the ability to bear the economic risk of acquiring the OP Units;
(ii) the transactions contemplated by this Agreement involve complex tax
consequences for such Owner, and such Owner is relying solely on the advice of
its own tax advisors in evaluating such consequences; (iii) neither Assignee nor
AREIC has made (or shall be deemed to have made) any representations or
warranties as to the tax consequences of such transaction to any Owner; (iv)
references in this Agreement to the intended tax effect of the acquisition of
the Partnership Interests and the other matters described herein shall not be
deemed to imply any representation
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by Assignee as to a particular tax effect that may be obtained by the
Partnership or any Owner; and (v) such Owner remains solely responsible for all
tax matters relating to such Owner.
D. In order to account for the book-tax disparity with respect
to the assets contributed (or deemed contributed) to Assignee by Owners,
Assignee will elect to use the "traditional method" in accordance with Treasury
Regulation Section 1.704-3(b) and shall not use the traditional method with
curative allocations or the remedial method. Assignee shall also cause the
Partnership to elect to use the traditional method in accounting for the
book-tax disparity with respect to the assets treated as contributed to the
Partnership by Owner upon "termination" of the Partnership under Section
708(b)(1) of the Code.
13. INDEMNIFICATIONS
A. BY OWNERS. Each Owner, severally and not jointly and
severally, agrees to indemnify, defend and hold harmless GP Assignee and
Assignee from and against any and all losses, damages, claims, liabilities,
actions, suits, proceedings and costs and expenses of defense thereof, including
reasonable attorneys' fees, suffered or incurred by reason of or arising out of
the breach of such Owner's obligations, representations, warranties and
covenants contained in this Agreement. The liability of each Owner pursuant to
the provisions of this Section 13.A shall be limited, as to each demand, loss,
damage, claim or liability, to the portion thereof which is derived by
multiplying the amount of such item times the percentage interest of such Owner
designated on Exhibit A hereto under the column "Total Partnership Interest".
This indemnity shall survive the Closing and delivery of the Initial Interest
Assignments and shall not be merged therein; PROVIDED, HOWEVER, that each
Owner's liability shall not extend to those liabilities typically assumed by an
assignee in connection with the direct acquisition of a property (as opposed to
the acquisition of partnership interests in a partnership that retains ownership
of a property) nor to liabilities resulting from the physical condition of the
Property (by reason of the fact that Assignee is concluding this transaction
with the Property being in its "as is" "where as" condition as of the Closing
Date and in the context of the disclaimers set forth in Section 14.D below); and
PROVIDED FURTHER that Owners shall have no liability except to the extent the
loss suffered by GP Assignee and Assignee as a result of such claims exceeds
$10,000 in any one instance or $25,000 in the aggregate.
B. BY ASSIGNEE. Assignee agrees to indemnify, defend and hold
harmless Owners from and against all losses, damages, claims, liabilities,
actions, suits, proceedings and expenses of defense thereof, including
reasonable attorneys' fees, suffered or incurred by Owners by reason of or
arising out of the breach of Assignee's or AREIC's obligations, representations,
warranties and covenants contained in this Agreement; provided that Assignee
shall have no liability except to the extent the loss suffered by Owners as a
result of such claims exceeds $10,000 in any one instance or $25,000 in the
aggregate.
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<PAGE>
C. GENERALLY. Each indemnification under this Agreement shall
be subject to the following provisions: The indemnitee shall notify indemnitor
of any such claim against indemnitee within a reasonable time after it has
written notice of such claim, but failure to notify indemnitor shall in no case
prejudice the rights of indemnitee under this Agreement unless indemnitor shall
be prejudiced by such failure and then only to the extent of such prejudice.
Should indemnitor fail to discharge or undertake to defend indemnitee against
such liability within fifteen (15) business days after the indemnitee gives the
indemnitor written notice of the same, then indemnitee may settle such
liability, and indemnitor's liability to indemnitee shall be conclusively
established by such settlement, the amount of such liability to include both the
settlement consideration and the reasonable costs and expenses, including
attorneys' fees, incurred by indemnitee in effecting such settlement.
14. MISCELLANEOUS
A. Between the date of this Agreement and Closing Date,
Assignee and its agents or representatives shall have the right to enter upon
the Property for the purpose of examining, inspecting and testing the Property,
all subject to the terms and provisions of the Lease.
B. Neither this Agreement nor any interest hereunder shall be
assigned or transferred by the Owners. Assignee may assign or otherwise transfer
its interest under this Agreement to an affiliate of Assignee. Except as
provided in the preceding sentence, neither this Agreement nor any interest
hereunder shall be assigned or transferred by Assignee. Subject to the
foregoing, this Agreement shall inure to the benefit of and shall be binding
upon Owners and Assignee and their respective successors and assigns.
C. This Agreement constitutes the entire agreement between
Owner and Assignee with respect to the Partnership Interests, the Lease and the
Property and shall not be modified or amended except in a written document
signed by Owners and Assignee. Any prior agreement or understanding between
Owners and Assignee concerning the Partnership Interests, the Lease or the
Property is hereby rendered null and void.
D. Assignee acknowledges that (i) it and its representatives
have inspected the Property and the Lease and are familiar with the conditions
and terms thereof, and (ii) at Closing, the Initial Partnership Interests will
have been acquired by GP Assignee and Assignee with the Property and the Lease
in an "as is" and "where is" condition, and not in reliance on any agreement,
understanding, condition, warranty or representation made by Owners or any agent
or employee of Owners as to the condition thereof, as to any permitted use
thereof, as to the terms thereof, or as to the income or expense in connection
therewith, and (iii) neither Owners nor any party acting on behalf of Owners
have made or shall be deemed to have made any such agreement, condition,
representation or warranty, except as expressly provided in this Agreement.
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E. For the period of time commencing on the date of this
Agreement and continuing through the first anniversary of the Closing Date, and
without limitation of the other document production otherwise required of Owners
hereunder, Owners shall, from time to time, upon reasonable advance written
notice from Assignee, provide to Assignee and its representatives: (i) access to
all financial and other information pertaining to the period of the
Partnership's ownership and operation of the Property, which information is
relevant and reasonably necessary, in the opinion of Assignee's outside, third
party accountants ("Accountants") to enable Assignee and its Accountants to
prepare financial statements in compliance with any and all of (a) Rule 3-05 or
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission (the
"Commission"), as applicable to Assignee; (b) any other rule issued by the
Commission and applicable to Assignee; and (c) any registration statement,
report or disclosure statement filed with the Commission by, or on behalf of
Assignee; and (ii) a representation letter, in form specified by, or otherwise
satisfactory to the Accountants, signed by the individual(s) responsible for the
Partnership's financial reporting, as prescribed by generally accepted auditing
standards promulgated by the Auditing Standards Division of the American
Institute of Certified Public Accountants, which representation letter may be
required by the Accountants in order to render an opinion concerning the
Partnership's financial statements.
F. In the computation of any period of time provided for in
this Agreement or by law, the day of the act or event from which the period of
time runs shall be excluded, and the last day of such period shall be included,
unless it is a Saturday, Sunday, or legal holiday, in which case the period
shall be deemed to run until the end of the next day which is not a Saturday,
Sunday, or legal holiday.
G. All notices, requests, demands or other communications
required or permitted under this Agreement shall be in writing and delivered
personally or by certified mail, return receipt requested, postage prepaid, by
facsimile transmission, or by overnight courier (such as Federal Express),
addressed as follows:
1. If to Owners, or any of them:
c/o Stephen J. Butte
52 Lockwood Lane
West Chester, PA 19380
Facsimile: 610-692-5759
With a copy to:
Wolf, Block, Schorr and Solis-Cohen LLP
1650 Arch Street - 22nd Floor
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<PAGE>
Philadelphia, Pennsylvania 19103-2097
Attention: Henry F. Miller, Esq.
Facsimile: (215) 977-2182
2. If to Assignee:
c/o Keystone Property Trust
200 Four Falls Corporate Center
Suite 208
West Conshohocken, PA 19428
Attention: Timothy A. Peterson
Facsimile: (484-530-0130)
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<PAGE>
With a copy to:
Connell, Foley & Geiser LLP
85 Livingston Avenue
Roseland, N.J. 07068-1765
Attention: Michael X. McBride, Esq.
Facsimile: (973) 535-9217
All notices given in accordance with the terms hereof shall be deemed given and
received when sent or when delivered personally. Either party hereto may change
the address for receiving notices, requests, demands or other communication by
notice sent in accordance with the terms of this Section.
H. The corporate laws of the State of Delaware will govern all
questions concerning the relative rights and obligations of the parties with
respect to any AREIC Shares acquired or acquirable by the Investors on account
of their OP Units, and the laws of the State of Delaware will govern all other
questions concerning the relative rights and obligations of the Investors as
partners in the partnership or otherwise with respect to the OP Units. All other
questions concerning the construction, validity and interpretation of this
Agreement shall be governed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania.
I. This Agreement may be executed in any number of identical
counterparts, any or all of which may contain the signatures of fewer than all
of the parties but all of which shall be taken together as a single instrument.
[SPACE INTENTIONALLY LEFT BLANK]
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OWNERS:
PSPI, Inc.
By: /s/ STEPHEN J. BUTTE
----------------
Name: Stephen J. Butte,
Title: Vice President
/s/ JEFFREY E. KELTER
-----------------
Name: Jeffrey E. Kelter
/s/ JOHN B. BEGIER
--------------
Name: John B. Begier
/s/ CHARLES C. LEE(SEAL)
--------------------
Name: Charles C. Lee
/s/ J. HAROLD SHANNON
-----------------
Name: J. Harold Shannon
/s/ STEPHEN J. BUTTE
----------------
Name: Stephen J. Butte
ASSIGNEE:
--------
KEYSTONE OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
By: Keystone Property Trust, General
Partner
By: /s/ STEPHEN J. BUTTE
--------------------
Name: Stephen J. Butte
Title: Vice President
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EXHIBIT 99.1
KEYSTONE PROPERTY TRUST
200 FOUR FALLS CORPORATE CENTER, STE. 208
WEST CONSHOHOCKEN, PA 19428
Keystone Property Trust Acquires 407,100 sf Bulk Warehouse For $16
Million in Central PA
Increases Eastern/Central Industrial Ownership to 4.6 msf, Strengthening
Keystone's Leadership Position in the Northeast Distribution Corridor
WEST CONSHOHOCKEN, Pa., Dec. 15 /PRNewswire/ -- Keystone Property Trust
(Amex: KTR) ("Keystone") announced today that it had acquired a 407,100 sf
bulk distribution warehouse in Carlisle, PA for approximately $16 million
from 21 Roadway Limited Partnership. The facility was built in 1988 and is
100% leased for ten years to Dana Corporation, one of the world's largest
independent suppliers to vehicle and engine manufacturers.
21 Roadway Limited Partnership ("21 Roadway") is a private investment
partnership controlled by Jeffrey E. Kelter, Keystone's President and Chief
Executive Officer and certain other employees of the Company. Keystone has
leased and managed the building since its purchase in January 1997. The terms
of the acquisition were approved by a special subcommittee of Keystone
Property Trust's Board of Directors formed specifically to review this
related-party transaction. The purchase was funded with approximately $1.4
million in Keystone Operating Units valued at $15.26 per unit (the average
closing price for the 20 days preceding closing), $2.5 million in cash and
the balance in mortgage financing. 21 Roadway used the cash to pay off
existing encumbrances, with all partners taking OP units for their interest.
Located at the intersection of Interstates 81 and 76, the 407,100 sf
distribution facility has 35' clear ceiling heights, extensive frontage on
the PA Turnpike, on-site parking for 250 trucks and rail service capability.
Commenting on the acquisition, David McBride, Chairman of the Company,
stated, "This property strengthens our distribution platform in the Northeast
Distribution Corridor and further establishes our position as a leading
provider of bulk warehouse space in Pennsylvania. It increases our ownership
in Eastern/Central Pennsylvania, one of our core markets, to 4.6 million
square feet. Furthermore, the facility has substantial development upside
with an eight acre pad site that is fully entitled for 150,000 sf of
expansion space, which we intend to begin developing in the second quarter of
2000."
Keystone Property Trust, with headquarters in West Conshohocken,
Pennsylvania, is a fully-integrated, self-administered and self-managed real
estate investment trust which currently owns 133 industrial and office
properties aggregating 18.7 million square feet in the Eastern United States.
Keystone's industrial portfolio, pro forma for all acquisitions under
contract, will contain approximately 19.0 msf "big box" distribution assets,
with 16.2 msf in-place assets located in the Northeast Distribution Corridor,
which encompasses New Jersey, Central Pennsylvania, Central Ohio, New York
State and Indianapolis. For more information, contact Timothy A. Peterson at
484-530-1888, send email to [email protected]
<PAGE>
or visit the Company web site at www.keystoneproperty.com.
This press release may contain statements which constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements regarding the intent, belief or current
expectations of the Company, its directors, or its officers with respect to
the future operating performance of the Company and the result and the effect
of legal proceedings. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those in
the forward-looking statements as a result of various factors. Important
factors that could cause such differences are described in the Company's
periodic filings with the Securities and Exchange Commission, including the
Company's Form 10-K and quarterly reports on Form 10-Q.
SOURCE Keystone Property Trust
CONTACT: Timothy A. Peterson of Keystone Property Trust, 484-530-1888/
