Exhibit 10.35
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AMENDED AND RESTATED SALE PURCHASE AGREEMENT
BETWEEN
THE READER'S DIGEST ASSOCIATION, INC.,
SELLER
AND
GAP III PROPERTIES LLC AND SUMMIT DEVELOPMENT, LLC,
JOINTLY AS, PURCHASER
DATED AS OF NOVEMBER 18, 2004, BUT EFFECTIVE AS OF SEPTEMBER 10, 2004
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TABLE OF CONTENTS
Page
1. Sale of Premises...............................................1
2. Purchase Price.................................................2
3. Apportionments.................................................5
4. Due Diligence Period and Closing Date..........................8
5. Title; Permitted Encumbrances.................................11
6. Option Premises...............................................14
7. Representations and Warranties................................21
8. Closing Costs.................................................27
9. Conditions Precedent to Closing...............................27
10. Documents to be Delivered by Seller at Closing................29
11. Documents to be Delivered by Purchaser at Closing.............32
12. Operation of the Premises prior to the Closing Date...........33
13. As Is.........................................................35
14. Broker........................................................37
15. Casualty; Condemnation........................................38
16. Remedies......................................................39
17. Purchaser's Access to the Premises............................40
18. Escrow........................................................41
19. Assignment....................................................44
20. Access to Records.............................................45
21. Notices.......................................................45
22. Property Information and Confidentiality......................47
23. Miscellaneous.................................................48
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LIST OF SCHEDULES
1. Definitions
2. Description of the Land
3. Permitted Encumbrances
4. Leases and Security Deposits
5. Actions
6. Contracts
7. Fixtures, Machinery, Equipment and Furniture
8. Description of the Option Parcels
9. Option Permitted Encumbrances
10. Excluded Property
11. Motor Vehicles
12. Escrow Agent Wiring Instructions
13. Environmental Areas of Concern
14. Title Objection Letter
LIST OF EXHIBITS
A Bargain and Sale Deed
B Lease Assignment
C Contract and Permit Assignment
D Bill of Sale
E Notice to Tenants
F Estoppel Certificate
G Seller's FIRPTA Affidavit
H Form of Owner's Title Certificate
I Triple Net Lease
J Mortgage
K RDA Ground Lease Memorandum
L Ground Lease Memorandum
M Gross Lease
N Declaration of Easements and Operating Agreements
O Memorandum of Option
P Memorandum of Interest in Net Profit
Q Memorandum of Triple Net Lease
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THIS AMENDED AND RESTATED SALE PURCHASE AGREEMENT (this "AGREEMENT"),
dated as of November 18, 2004, but effective as of the 10th day of September,
2004 (the "EFFECTIVE DATE"), by and between THE READER'S DIGEST ASSOCIATION,
INC., a Delaware corporation ("SELLER"), and GAP III PROPERTIES LLC, a Delaware
limited liability company, and SUMMIT DEVELOPMENT, LLC, a Connecticut limited
liability company (collectively, the "PURCHASER"). All initially capitalized
terms as used in this Agreement shall, unless otherwise defined in the main body
of this Agreement, have the meanings given to such terms in Schedule 1 attached
hereto.
W I T N E S S E T H
WHEREAS, Seller is the owner of the Premises (as defined below)
located at 480 Bedford Road, Town of New Castle, New York;
WHEREAS, Seller and Purchaser entered into that certain Sale-Purchase
Agreement dated as of September 10, 2004, which Sale-Purchase Agreement has been
amended pursuant to that certain Amendment of Sale-Purchase Agreement dated as
of October 8, 2004, that certain Second Amendment of Sale-Purchase Agreement
dated as of October 15, 2004, that certain Third Amendment of Sale-Purchase
Agreement dated as of October 21, 2004, that certain Fourth Amendment of
Sale-Purchase Agreement dated as of October 27, 2004, that certain Fifth
Amendment of Sale-Purchase Agreement dated as of November 4, 2004, that certain
Sixth Amendment of Sale-Purchase Agreement dated as of November 11, 2004, that
certain Seventh Amendment of Sale-Purchase Agreement dated as of November 15,
2004, that certain Eighth Amendment of Sale-Purchase Agreement dated as of
November 16, 2004, that certain Ninth Amendment of Sale-Purchase Agreement dated
as of November 17, 2004, that certain Tenth Amendment of Sale-Purchase Agreement
dated as of November 17, 2004 and that certain Eleventh Amendment of
Sale-Purchase Agreement (as so amended, the "ORIGINAL SALE-PURCHASE AGREEMENT");
WHEREAS, pursuant to the Original Sale-Purchase Agreement, Purchaser
is to acquire the Premises from Seller; and
WHEREAS, Seller and Purchaser desire to amend and restate in its
entirety the Original Sale-Purchase Agreement.
NOW, THEREFORE, in consideration of ten ($10.00) dollars and the
mutual covenants and agreements hereinafter set forth, and intending to be
legally bound hereby, it is hereby agreed as follows:
1. Sale of Premises. Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase from Seller, at the price and upon the terms
and conditions set forth in this Agreement, fee simple title in and to all of
that certain plot, piece and parcel of land located in the Town of New Castle,
New York, containing approximately 114 acres, as more particularly described in
Schedule 2 annexed hereto and made a part hereof (the "LAND"), together with (i)
the buildings and other improvements situated on the Land (the "BUILDINGS"),
(ii) all right, title and interest of Seller in and to all fixtures, machinery,
equipment, supplies, tools and furniture, used solely in the operation and
maintenance of the Buildings and the Land, identified in Schedule 7 annexed
hereto and made a part hereof (the "FIXTURES") (it being specifically
acknowledged that the items set forth in Schedule 10 annexed hereto and made a
part hereof are not included as part of the Fixtures to be conveyed to Seller
pursuant to this Agreement), (iii) all right, title and interest of Seller in
and to (x) all leases, subleases, licenses, antenna and telecommunications
agreements, as amended from time-to-time prior to the Effective Date or in
accordance herewith, and other occupancy agreements for leasing of space at the
Land and the Buildings, identified in Schedule 4 annexed hereto and made a part
hereof (collectively, the "LEASES"), and (y) all security deposits under the
Leases, whether in the form of cash, collateral, letters of credit or any other
form (collectively, the "SECURITY DEPOSITS"), (iv) all of Seller's right, title
and interest, if any, in and to all certificates of occupancy and other permits,
licenses, authorizations, entitlements, easements, mineral rights, rights in
adjoining public streets and water, and other intangible property, if any,
appurtenant to the Land and the Buildings and all renewals thereof,
substitutions therefore and additions thereto (collectively, the "PERMITS"),
(iv) all of Seller's right, title and interest, if any, in and to all agreements
affecting the Land and the Buildings, and all renewals thereof, substitutions
therefor and additions thereto, including, without limitation, purchase orders,
equipment leases, advertising agreements, franchise agreements, license
agreements and service contracts, warranties and guaranties, to the extent
assignable and subject to Seller obtaining any necessary consents (other than
any labor, employment, management, leasing or brokerage agreements), but
excluding the Leases and such Contracts that Purchaser elects to have terminated
pursuant to Section 10(p) hereof (collectively, the "CONTRACTS"), (v) all of
Seller's right, title and interest, if any, in and to all plans and
specifications for the Buildings, including without limitation construction
drawings, blueprints, design schematics and shop drawings, and any studies,
analyses, reports and other written materials pertaining to the condition of the
Buildings (the "PLANS AND SPECIFICATIONS") and (vi) all of Seller's right, title
and interest in and to the motor vehicles set forth on Schedule 11 attached
hereto and made a part hereof (the "MOTOR VEHICLES"), (the Land, the Buildings,
the Leases and Security Deposits, the Fixtures, the Permits, the Contracts, the
Plans and Specifications and the Motor Vehicles being hereinafter sometimes
collectively referred to as the "PREMISES"). Notwithstanding the foregoing,
Purchaser and Seller agree to cooperate in good faith in order to review
Schedules 7 and 10 prior to Closing in order to determine which items should be
removed from Schedule 10 and added to Schedule 7 as a result of the inclusion of
the improvements located on Parcel A (as such term is defined in the Declaration
of Easements (hereinafter defined) ) as part of the "Premises" following the
date on which those Schedules were prepared.
2. Purchase Price. The purchase price to be paid by Purchaser to
Seller for the Premises (the "PURCHASE PRICE") is Fifty Seven Million Two
Hundred Forty Thousand One Hundred and Four and 17/100 Dollars ($57,240,104.17).
The Purchase Price shall be adjusted in accordance with this Agreement, shall be
subject to apportionment as provided in Section 3, and shall be payable as
follows:
(a) One Hundred Thousand and No/100 Dollars ($100,000.00) (the "LOI
DEPOSIT") within two (2) business days after the Effective Date, by a bank wire
transfer of immediately available funds to an escrow account designated by Weil,
Gotshal & Manges LLP, acting as escrow agent (the "ESCROW AGENT"). The LOI
Deposit shall be held and disbursed by Escrow Agent in accordance with the terms
of Section 18. In the event Purchaser timely elects to terminate this Agreement
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on or prior to the expiration of the Due Diligence Period, the LOI Deposit shall
be delivered to Purchaser not later than the second business day after the
delivery of Purchaser's Termination Notice to Seller.
(b) Nine Hundred Thousand and No/100 Dollars ($900,000.00) (the
"ADDITIONAL DEPOSIT"; the LOI Deposit together with the Additional Deposit and,
to the extent deposited under Section 4(f), the Extension Deposit, being
collectively the "DEPOSIT") within two (2) Business Days after the expiration of
the Due Diligence Period (unless Purchaser terminates this Agreement during the
Due Diligence Period), by a bank wire transfer of immediately available funds to
an escrow account designated by the Escrow Agent. The Deposit shall be held and
disbursed by Escrow Agent in accordance with the terms of Section 18. If the
Closing shall occur, Seller shall be entitled to receive the Deposit, and such
amount shall be credited against the Purchase Price; provided, that any interest
on the Deposit shall accrue to the benefit of Purchaser, and at Purchaser's
option, shall be delivered to Purchaser at the Closing or paid to Seller at the
Closing and credited against the Purchase Price.
(c) The Deposit shall be non-refundable unless (i) Seller defaults in
Seller's obligation to sell the Premises as required by this Agreement, and
Purchaser (A) is not in default with respect to any of Purchaser's obligations
under the Agreement, and (B) is otherwise ready, willing and able to purchase
the Premises on the Closing Date, (ii) Purchaser timely elects to terminate this
Agreement pursuant to the provisions of this Agreement allowing Purchaser to
terminate this Agreement and receive a return of the Deposit (including, without
limitation, the termination of this Agreement by Purchaser pursuant to Section
4(d), Section 5(b)(ii), Section 7(a)(iii), Section 9(c), Section 15(a), Section
15(b) or Section 16(b) hereof), (iii) any of the conditions precedent set forth
in Section 9 of this Agreement are not satisfied or (iv) this Agreement is
terminated pursuant to Section 4(e).
(d) Subject to the apportionments and credits set forth in this
Agreement, Forty Eight Million Five Hundred Thousand and No/100 Dollars
($48,500,000) of the Purchase Price shall be paid at the Closing by bank wire
transfer of immediately available funds to Seller's account or to the account or
accounts of such other party or parties as may be designated by Seller in
writing to Purchaser by the Closing Date; provided, however, that the Deposit
shall be applied towards the payment of such $48,500,000 at the Closing.
(e) The remaining Eight Million Seven Hundred Forty Thousand One
Hundred and Four and 17/100 Dollars ($8,740,104.17) balance of the Purchase
Price shall be paid by Purchaser to Seller, by bank wire transfer of immediately
available funds, not later than the second anniversary of the Closing Date, such
obligation to be evidenced by a Promissory Note in form and substance
satisfactory to each of Seller and Purchaser (the "NOTE"), which Note shall have
an interest rate of 6.965%, compounded annually, and secured by a first mortgage
on the Premises in the form of Exhibit J annexed hereto and made a part hereof
(THE "MORTGAGE"), which Note and Mortgage may be prepaid at any time subject to
a prepayment premium acceptable to Seller and Purchaser. On the Mortgage
Termination Date, Seller shall (i) cause the Mortgage to be released of record
by the delivery to Purchaser of a satisfaction of mortgage duly executed and
notarized by Seller in form reasonably acceptable to Seller and Purchaser or
(ii) upon request of Purchaser and upon compliance by Purchaser with the
provisions of Section 275 of the Real Property Law of the State of New York,
cooperate with Mortgagor to assign the Mortgage to a lender, provided that
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Purchaser pays all reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred by Seller in connection with such
assignment. Purchaser's obligation to pay the indebtedness evidenced by the Note
shall be absolute and unconditional, without any right of set-off or deduction.
(f) As additional consideration for the transactions set forth
herein, Purchaser shall pay to Seller an amount not to exceed One Million and
No/100 Dollars ($1,000,000) (the "ADDITIONAL CONSIDERATION") as follows:
(i) The Additional Consideration shall be paid by wire transfer of
immediately available funds by Purchaser to Seller not later than ninety (90)
days following the Rezoning Date; provided, however, that if the Rezoning Date
does not occur on or before the fourth (4th) anniversary of the Closing Date,
Purchaser's obligation to pay the Additional Consideration to Seller shall
automatically terminate. Notwithstanding the foregoing, in the event (A) the
Premises has not been rezoned for residential or Age Restricted Housing purposes
in a manner which would allow the Premises to be developed substantially in
accordance with the development plan submitted by Purchaser to the applicable
governmental authorities in connection with Purchaser's application to obtain
the Governmental Approvals and (B) Purchaser sells the Premises to an
un-affiliated third party, then Purchaser shall have no obligation to pay the
Additional Consideration to Seller. As used herein, the term "REZONING DATE"
shall mean the date on which all of the following shall have occurred: (1) the
Premises, or a sufficient portion thereof, shall have been rezoned for
residential or Age Restricted Housing purposes in a manner that would permit the
redevelopment of the Premises by Purchaser and Purchaser is willing to proceed
with such redevelopment (the "ACCEPTABLE REZONING"), (2) all applicable time
periods for appeal of such rezoning have expired and (3) all litigation
applicable to the rezoning commenced on or prior to the expiration of such
appeal period is resolved with prejudice or a final non-appealable judgment in
Purchaser's favor has been rendered.
(ii) Except as otherwise set forth in this Section 2(f), Purchaser's
obligation to pay the Additional Consideration to Seller shall be absolute and
unconditional, without any right of set-off or deduction, and shall be secured
by the Mortgage; provided, however, in the event that (1) the Additional
Consideration has not been earned within the first four (4) years of the Closing
Date, and provided that the Additional Consideration earned during such four (4)
year period has been paid to Seller, Seller shall cause the Mortgage to be
released (or assigned in accordance with Section 2(e)), (2) Purchaser has
applied for the Governmental Approvals but such Governmental Approvals are
refused or denied by the applicable authorities, or (3) the Premises has not
been rezoned for residential or Age Restricted Housing purposes in a manner
which would allow the Premises to be developed substantially in accordance with
the development plan submitted by Purchaser to the applicable governmental
authorities in connection with Purchaser's application to obtain the
Governmental Approvals and Purchaser sells the Premises to an un-affiliated
third party, following written request from Purchaser, Seller shall cause the
Mortgage to be released (or assigned in accordance with Section 2(e)) with
respect to any portion of the Premises which is the subject of (x) a bona fide
third party sale or (y) a financing secured by a third party mortgage; provided,
however, that no such release or assignment of the Mortgage pursuant to this
sub-clause (2) shall relieve Purchaser from its obligation to pay to Seller the
Additional Consideration to the extent same is earned pursuant to this Section
2(f).
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(iii) The provisions of this Section 2(f) shall survive the Closing.
3. Apportionments.
(a) The following shall be apportioned between Seller and Purchaser
at the Closing as of 12:01 a.m. of the Closing Date:
(i) general real estate, personal property and ad valorem taxes and
assessments for the Premises (other than same applicable to the RDA Land, which
amounts shall be the responsibility of Seller, in its capacity as lessee, under
the Triple Net Lease) on the basis of the fiscal years, respectively, for which
same have been assessed. If any such taxes or assessments are payable in
installments all installments due through the Closing together with the accrued
but unpaid portion of any other installments not yet due as of the Closing shall
be prorated based on the periods of time covered by such installments as set
forth in Section 3(g) below;
(ii) water, sewer and front foot benefit charges, and charges for
electricity, gas, telephone and other utilities, license and permit fees, in
each case applicable to the Premises;
(iii) value of fuel used in connection with the Premises (to the
extent not accounted for pursuant to clause (ii) above), at Seller's cost,
including any taxes, on the basis of a reading performed within one (1) day
prior to the Closing or as close thereto as reasonably practical by Seller's
supplier;
(iv) rent (including base and additional rent) and other charges
under the Leases;
(v) charges and payments under Contracts not terminated at Closing or
renewals or replacements thereof permitted by this Agreement;
(vi) any prepaid items applicable to the Premises, including, without
limitation, fees for licenses which are transferred to Purchaser at the Closing
and annual permit and inspection fees;
(vii) all other income and expenses relating to the Premises; and
(viii) such other items as are customarily apportioned between
sellers and purchasers of real properties of a type similar to the Premises and
located in the vicinity of the Premises.
(b) If the Closing shall occur before a new real estate tax rate is
fixed for the Land, the apportionment of taxes at the Closing shall be upon the
basis of the old tax rate for the preceding fiscal year applied to the latest
assessed valuation. Promptly after the new tax rate is fixed, the apportionment
of taxes shall be recomputed and any discrepancy resulting from such
recomputation and any errors or omissions in computing apportionments at Closing
shall be promptly corrected and the proper party reimbursed, which obligations
shall survive the Closing in accordance with Section 3(f).
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(c) (i) Any and all Security Deposits, prepaid rent for periods after
Closing and all interest earned thereon shall be a credit to Purchaser at
Closing. Seller shall assign to Purchaser, and shall be entitled to credit for,
the deposits, if any, made by Seller in connection with the provision of
electric, sewer, water, telephone and other utility services to the Premises.
(ii) If on the Closing Date any tenant is in arrears under a Lease in
the payment of rent or Additional Rents (hereinafter defined) or has not paid
the rent or Additional Rents payable by it and which is attributable to the
month in which the Closing occurs (whether or not it is in arrears for such
month on the Closing Date), any rents or Additional Rents received by Purchaser
or Seller from such tenant after the Closing shall be applied to amounts due and
payable by such tenant during the following periods in the following order of
priority: (A) first, to rents and Additional Rents attributable to the month in
which the Closing occurred, (B) second, to rents and Additional Rents
attributable to the month preceding the month in which the Closing occurred and
which are due and payable, and (C) third, to rents and Additional Rents
attributable to the months following the month in which the Closing occurred;
provided, however, if any rental payment specifies that such rental payment is
attributable to a particular period, then such rental payment shall be applied
to the period so specified. If rents or Additional Rents or any portion thereof
received by Seller or Purchaser after the Closing are due and payable to the
other party by reason of this allocation, the appropriate sum shall be promptly
paid to the other party within ten (10) Business Days after receipt thereof.
(iii) If any tenants are required to pay percentage rent, escalation
charges for real estate taxes, parking charges, utility charges, operating
expenses and maintenance escalation rents or charges, cost of living increases
or other charges of a similar nature pursuant to and in connection with any
Lease (collectively, the "ADDITIONAL RENTS"), and any Additional Rents are
collected by Purchaser from a tenant after the Closing Date, then such
Additional Rents shall be equitably apportioned based on the period for which
collected and applied in the same order of priority as is set forth in Section
3(c)(ii) and Purchaser shall promptly pay to Seller out of such sums received
from such tenant the amount specified in the preceding clause (ii) and this
clause (iii).
(iv) In the event Seller and Purchaser cannot agree upon the amount
or method of any apportionments required to be made pursuant to this Section
3(c), then Seller and Purchaser shall make such apportionments to which they
agree at the Closing, and within ten (10) Business Days of the Closing Date,
Purchaser and Seller shall retain a third party expert reasonably acceptable to
both Seller and Purchaser, which third party expert shall conclusively determine
the item or items in dispute, and within ten (10) Business Days of such
determination the proper party shall be reimbursed in accordance with such
determination. Seller and Purchaser shall share equally in the costs and
expenses of any such third party expert. The obligations set forth in this
Section 3(c)(iv) shall survive the Closing for a period of one hundred eighty
(180) days after the Closing Date.
(v) The provisions of this Section 3(c) shall survive the Closing for
a period of one (1) year.
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(d) For purposes of calculating prorations, Purchaser shall be deemed
to be in title to the Premises, and, therefore, entitled to the income therefrom
and responsible for the expenses thereof for the entire day upon which the
Closing occurs. All such prorations shall be made by the parties at Closing on
the basis of the actual number of days of the month which shall have elapsed as
of the day of the Closing and based upon the actual number of days in the month
and a three hundred sixty five (365) day year, and shall be subject to
adjustment in cash after the Closing outside of escrow as and when complete and
accurate information becomes available, if such information is not available at
the Closing. Seller and Purchaser agree to cooperate and use their commercially
reasonable efforts to make such adjustments no later than sixty (60) days after
the Closing (except with respect to property taxes and amounts payable by any
tenant, which shall be adjusted within sixty (60) days after the actual amounts
are known) . In any event, all items (other than property taxes and amounts
payable by any tenant) shall be final and not subject to further adjustment on
the date which is six (6) months after the Closing Date, except as specifically
provided in this Agreement to the contrary. Without limiting the generality of
the foregoing, Seller and Purchaser hereby agree that with respect to any year
end reconciliations of reimbursable expenses under the Leases, Seller and
Purchaser shall cooperate to complete such reconciliations as soon as possible
after the Closing, with Seller responsible for amounts owing to tenants under
the Leases, and entitled to Rents (hereinafter defined) payable by tenants under
the Leases (as the case may be) , with respect to periods prior to the Closing,
and with Purchaser responsible for amounts owing to tenants under the Leases,
and entitled to Rents payable by tenants under the Leases (as the case may be),
with respect to periods from and after the Closing. Purchaser shall receive a
credit at Closing for the prorated amount of all Rent previously paid by tenants
and attributable to any period from and after the Closing Date. Seller shall not
receive a cash credit for any rent due and owing by tenants and not paid as of
the Closing Date but shall be entitled to the rights set forth in Section
3(c)(ii). The provisions of this Section 3(d) shall survive the Closing.
(e) If there is a water meter on the Premises, Seller shall furnish a
reading to a date not more than five (5) Business Days prior to the Closing
Date, and the unfixed water charges and sewer rent, if any, based thereon for
the intervening time shall be apportioned on the basis of such last reading.
(f) If any of the items subject to apportionment under the foregoing
provisions of this Section 3 cannot be apportioned at the Closing because of the
unavailability of the information necessary to compute such apportionment, or if
any errors or omissions in computing apportionments at the Closing are
discovered subsequent to the Closing, then such item shall be reapportioned and
such errors and omissions corrected as soon as practicable after the Closing
Date and the proper party reimbursed, which obligation shall survive the Closing
for a period of one hundred eighty (180) days after the Closing Date as
hereinafter provided. Neither party hereto shall have the right to require a
recomputation of a Closing apportionment or a correction of an error or omission
in a Closing apportionment unless within the aforestated 180-day period either
Purchaser or Seller (i) has obtained the previously unavailable information or
has discovered the error or omission, and (ii) has given notice thereof to the
other party, together with a copy of its good faith recomputation of the
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apportionment and copies of all substantiating information used in such
recomputation. The failure of a party to obtain any previously unavailable
information or discover an error or omission with respect to an item subject to
apportionment hereunder and to give notice thereof as provided above within one
hundred eighty (180) days after the Closing Date shall be deemed a waiver of its
right to cause a recomputation or a correction of an error or omission with
respect to such item after the Closing Date. The provisions of Section 3(f)
shall survive the Closing.
(g) If, on the Effective Date or the Closing Date, the Premises or
any part thereof shall be affected by any assessment or assessments which are or
may become payable in installments, then any such assessment shall be prorated
between the Seller and the Purchaser and shall be divided between Seller and
Purchaser in accordance with the apportionment of taxes pursuant to the
provisions of this Agreement, and all the unpaid installments of any such
assessment which are to become due and payable on or after the Closing Date and
attributable to the period on or after the Closing Date shall be assumed by
Purchaser without abatement of the Purchase Price.
(h) Charges for all electricity, steam, telephone, gas and other
utility services at the Premises (collectively, "UTILITIES") shall be billed to
Seller's account up to the Closing Date and, from and after the Closing Date,
all utilities shall be billed to Purchaser's account. If for any reason such
changeover in billing is not practicable as of the Closing Date, as to any
Utility, such Utility shall be apportioned on the basis of actual current
readings or, if such readings have not been made, on the basis of the most
recent bills that are available. If any apportionment is not based on an actual
current reading, then upon the taking of a subsequent actual reading, the
parties shall, within ten (10) Business Days following notice of the
determination of such actual reading, readjust such apportionment and Seller
shall promptly deliver to Purchaser, or Purchaser shall promptly deliver to
Seller, as the case may be, the amount determined to be due upon such
adjustment. Seller shall use reasonable efforts to schedule utility meter
readings with five (5) business days of the Closing Date.
(i) To the extent the same are ascertainable on the Closing Date, if
the computation of the aforementioned apportionments shows that a net amount is
owed by Seller to Purchaser, such amount shall be credited against the Purchase
Price payable by Purchaser on the Closing Date. To the extent the same are
ascertainable on the Closing Date, if such computation shows that a net amount
is owed by Purchaser to Seller, such amount shall be paid to Seller by Purchaser
on the Closing Date in accordance with Section 2(d).
4. Due Diligence Period and Closing Date.
(a) Notwithstanding anything to the contrary contained herein,
Purchaser and Purchaser's directors, officers, employees, Affiliates, partners,
brokers, agents or other representatives, including, without limitation,
attorneys, accountants, contractors, consultants, engineers, prospective
lenders, the title company insuring Purchaser's title to the Premises (the
"TITLE COMPANY"), advisors and operators and developers of Age Restricted
Housing, homebuilders, prospective tenants, government agencies (including
municipalities and quasi-municipalities), public officials, architects,
surveyors and other persons with whom Purchaser has entered into material
discussions for participation in the redevelopment of the Premises
(collectively, "PURCHASER'S REPRESENTATIVES") shall have until 4:00 p.m. EST on
November 8, 2004 (the "DUE DILIGENCE PERIOD"), to examine title to the Premises,
to inspect the physical and financial condition of the Premises (including,
without limitation, performing environmental tests and inspections and
geotechnical analysis subject to the provisions of Section 17), to review the
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Property Information and to otherwise conduct any due diligence as Purchaser
determines is necessary (in Purchaser's sole discretion). Seller shall
reasonably cooperate with Purchaser's examinations and inspections of the
Premises at no cost to Seller. To the extent available, Seller shall provide
Purchaser and Purchaser's Representatives with copies and/or access to the most
recent survey, the most recent title insurance policy, leases and service
agreements and the most recent real estate tax bills relating to the Premises,
and such other documents in Seller's possession or control that are material to
the operation or condition of the Premises (collectively, the "PROVIDED
DOCUMENTS"), and such other documents relating to the Premises as Purchaser
shall reasonably request to the extent same are in Seller's possession or
control (provided same are not deemed confidential or proprietary by Seller and
are otherwise allowed to be released pursuant to Seller's policies and
procedures), within two (2) Business Days after the Effective Date or two (2)
Business Days after such request, as the case may be. Purchaser's and
Purchaser's Representatives' right (A) to undertake their due diligence
activities, including the review of all Property Information, and (B) to enter
upon the Premises for the purpose of making inspections and tests, shall at all
times be subject to Purchaser's and Purchaser's Representatives' compliance with
the provisions of Section 17 and Section 22 (including, without limitation,
Purchaser's obligations contained therein to obtain and maintain insurance,
indemnify Seller and keep confidential all Property Information obtained by
Purchaser). Neither Purchaser nor Purchaser's Representatives shall contact or
meet with any of Seller's tenants, vendors, employees, consultants or
contractors, or any other entity or person concerning the Premises prior to the
Closing without allowing Seller or Seller's representative to arrange the
contact (whether such contact is in person, by telephone or otherwise) and to be
physically present (if Seller so desires) during such contact or meeting;
provided, however, that Purchaser may directly arrange all contact with
governmental authorities pertaining to Purchaser's Redevelopment Project,
provided that Purchaser shall notify Seller of same and allow Seller or Seller's
representatives to be present (if Seller so desires) during any meetings with
such governmental authorities, and the provisions of this sentence shall survive
the termination of this Agreement. Seller shall cooperate in all reasonable
respects in arranging such meetings or contacts (including, without limitation,
telephone conferences) as are requested by Purchaser.
(b) Prior to the Closing and continuing thereafter, Seller shall
cooperate with and support Purchaser's efforts to obtain Governmental Approvals
for Purchaser's rezoning and redevelopment of the Premises (and, at Purchaser's
option, the Option Parcels), including participation by representatives of
Seller in a reasonable number of meetings with governmental authorities and
taking such other reasonable actions (such as providing written support of
Purchaser's zoning applications) necessary to facilitate obtaining the
Governmental Approvals, provided that (i) Seller shall not be required to incur
any out-of-pocket expenses in connection with such cooperation, unless Purchaser
agrees to reimburse Seller for such expenses, and (ii) Purchaser shall not seek,
and Seller may oppose, any Governmental Approvals or terms or conditions thereof
that would materially interfere with Seller's exercise of its rights under this
Agreement and the agreements and transactions contemplated herein, including
without limitation, the Triple Net Lease and the Gross Lease. The provisions of
this Section 4(b) shall survive the Closing.
(c) Seller shall request, and use reasonable efforts to obtain by the
Closing Date, Estoppel Certificates from Kunhardt Productions, Inc. and
Meserve-Kunhardt Foundation, and any other tenants under Leases, if any, but
9
obtaining Estoppel Certificates from such tenants shall not be a condition to
Purchaser's obligation to close on the Premises.
(d) Purchaser shall have the right, in its sole and absolute
discretion, for any reason or for no reason (including any objections Purchaser
may have with respect to any Listed Permitted Encumbrances or Listed Option
Permitted Encumbrances), to elect to terminate this Agreement by giving written
notice ("PURCHASER'S TERMINATION NOTICE") of such election to Seller at any time
on or prior to the expiration of the Due Diligence Period. If Purchaser shall
timely elect to so terminate this Agreement, this Agreement shall be terminated
and neither party shall have any further rights, obligations or liabilities
hereunder, except as otherwise expressly provided herein (collectively, the
"SURVIVING OBLIGATIONS"), and except that Purchaser shall be entitled to a
return of the LOI Deposit, and all interest accrued thereon, not later than two
(2) Business Days following the date of such termination. If Purchaser fails to
deliver a Purchaser's Termination Notice on or prior to the expiration of the
Due Diligence Period, then Purchaser shall be deemed to have irrevocably waived
the right of termination granted under this Section 4(d), and such right of
termination shall be of no further force or effect.
(e) Seller and Purchaser acknowledge that they have executed and
delivered this Agreement without having finalized the Subsequent Exhibits, which
are in substantially final form as attached hereto. Seller and Purchaser hereby
agree to continue to negotiate the Subsequent Exhibits in good faith and make
such changes as may be reasonably required by the other party prior to Closing.
Notwithstanding the foregoing, (1) the Declaration of Easements shall include,
without limitation, (i) that Seller shall be provided with (x) not less than 700
parking spaces in parking areas 1 and 2 at the Premises and (y) not less than
200 parking spaces in parking areas 4 and 5A at the Premises; provided, however,
(A) Purchaser shall have the right to relocate such parking spaces so long as
following such relocation such parking spaces are reasonably accessible and
convenient to the RDA Premises and (B) in the event applicable zoning
regulations require additional parking spaces for the RDA Premises, Purchaser
shall make the required additional parking spaces available to Seller, and (ii)
Seller shall have the exclusive right to use the Guest House at the Premises and
the adjoining parking garage and apartment (collectively, the "GUEST HOUSE"),
without any obligation to pay rent therefore, until the earlier to occur of the
date (the "GUEST HOUSE ELECTION DATE") that (i) is six (6) months after
Purchaser shall have received all Government Approvals for the Redevelopment
Project and (ii) four (4) years following the Closing Date, and following the
Guest House Election Date, Purchaser may (x) elect to require that Seller vacate
the Guest House or (y) permit Seller to continue to use the Guest House on a
month-to-month basis at the then fair market value rent for the Guest House
(which shall be determined by an appraisal in the event Purchaser and Seller
cannot agree on such fair market value rent and the costs of such appraisal
shall be paid by Purchaser), in which event Seller and Purchaser shall enter
into a lease of the Guest House in form and content acceptable to Purchaser and
Seller (provided, however, (I) in no event shall the provisions of the foregoing
sub-clause (y) require Seller to rent the Guest House from Purchaser and (II)
following the Guest House Election Date Purchaser may terminate Seller's rights
to use the Guest House at any time, in each case except as may otherwise be set
forth in any lease of the Guest House between Purchaser and Seller); (2)
provided that Ground Lessee I consents and there shall be no material adverse
affect with respect to Seller's use or occupancy of the RDA Premises by reason
thereof, the RDA Ground Lease shall provide that in the event the RDA Land is
10
subdivided from the Land (or a valid condominium regime is established having
the same effect as a subdivision of the RDA Land from the Land), then Purchaser
may sell the RDA Land to Ground Lessee I for the sum of one dollar ($1.00), (3)
none of the Ground Lease, the Declaration of Easements or the other Subsequent
Exhibits shall be conditioned upon, or require that, the RDA Land (or any
portion thereof) be subdivided from the Land (whether by actual subdivision, the
formation of a condominium regime or any other transaction or structure having
the same effect of such a subdivision) and (4) the Triple Net Lease shall have
an initial base rent of $15.00 per square foot, with increases every five (5)
years based on CPI increases, not to exceed 2% per annum, compounded annually,
and shall otherwise be triple net in all respects.
(f) The delivery of the Deed and the consummation of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153-0119,
or if required by Purchaser's lender, at the offices of Purchaser's lender's
attorney so long as such office is located in New York, New York, at 10:00 A.M.
on a date, mutually agreed to by Seller and Purchaser, not later than December
20, 2004 (the "SCHEDULED CLOSING DATE"). Notwithstanding the foregoing,
Purchaser shall have the right to extend the Scheduled Closing Date until
December 23, 2004 (the "FIRST EXTENDED CLOSING DATE") if Purchaser shall on or
prior to the Scheduled Closing Date (i) deliver notice of such extension to
Seller and (ii) wire transfer immediately available Federal funds in the amount
of Two Million Dollars ($2,000,000) (the "EXTENSION DEPOSIT") to Escrow Agent
pursuant to the wiring instructions attached hereto as Schedule 12, which
Extension Deposit shall be held and disbursed by Escrow Agent in accordance with
the terms of Section 18. In the event that Purchaser shall have extended the
Scheduled Closing Date until the First Extended Closing Date in accordance with
this Section 4(f), Purchaser shall have the right to extend the First Extended
Closing Date until December 27, 2004 (the "SECOND EXTENDED CLOSING DATE") if
Purchaser shall deliver a notice of such extension to Seller on or prior to the
First Extended Closing Date, in which case, Purchaser shall pay to Seller at the
Closing an amount equal to $9,000 per day for each day following the First
Extended Closing Date through and including the date the Closing shall occur,
which shall in no event be beyond the Second Extended Closing Date (e.g., if the
Closing shall occur on December 24, 2004, Purchaser shall pay to Seller at
Closing an amount equal to $9,000 pursuant to this Section 4(f); and if the
Closing shall occur on December 27, 2004, Purchaser shall pay to Seller at
Closing an amount equal to $36,000 pursuant to this Section 4(f)). Time shall be
of the essence with respect to the parties' obligations to close on the Second
Extended Closing Date.
5. Title; Permitted Encumbrances.
(a) Seller shall convey and Purchaser shall accept title to the
Premises subject only to (i) those matters set forth on Schedule 3 annexed
hereto and made a part hereof (collectively the "LISTED PERMITTED ENCUMBRANCES")
and (ii) the Additional Permitted Encumbrances (defined below). The Listed
Permitted Encumbrances and the Additional Permitted Encumbrances are hereinafter
collectively referred to as the "PERMITTED ENCUMBRANCES".
(b) (i) Purchaser has ordered, at its sole cost and expense, a
commitment for an owner's fee title insurance policy or policies with respect to
the Premises (the "TITLE COMMITMENT") from the Title Company (the "TITLE
COMPANY") and a copy of the Title Commitment, together with true and complete
copies of all instruments giving rise to any defects or exceptions to title to
11
the Premises, has been delivered to Seller and/or Seller's attorneys. Purchaser
has also, at Purchaser's sole cost and expense, ordered a survey (the "SURVEY")
certified to Seller and Purchaser of the Land and the Option Parcels
(hereinafter defined) and a copy of the Survey has been delivered to the Title
Company and Seller's attorneys. Purchaser has identified the existence of
certain Unacceptable Encumbrances as more particularly set forth in that certain
objection letter (the "TITLE OBJECTION LETTER") attached hereto as Schedule 14
and made a part hereof, and Seller has agreed to cause the removal of the
Unacceptable Encumbrances set forth in the Title Objection Letter as exceptions
to title in the Title Commitment prior to Closing (other than the objection set
forth in Section I of the Title Objection Letter referring to tracts and dirt
lanes (now overgrown), which objection has been deemed eliminated by the
delivery of the Survey showing that such tracts and dirt lanes do not run on to,
or otherwise encroach upon, any land adjoining the Premises). Except for the
matters set forth in the Title Objection Letter, Purchaser hereby waives any
right Purchaser may have to raise as objections to title or as grounds for
Purchaser's refusal to close this transaction any Unacceptable Encumbrance
(except as otherwise provided in Section 5(c) with respect to Voluntary
Encumbrances and Monetary Encumbrances) or other title or survey matters, except
to the extent such Unacceptable Encumbrance (i) arises after expiration of the
Due Diligence Period, or (ii) such Unacceptable Encumbrance was not disclosed by
the Survey or the Title Commitment referenced above (the "OTHER ENCUMBRANCES").
If Purchaser becomes aware of any Other Encumbrances, and advises Seller of same
in writing within five (5) Business Days after Purchaser first becomes aware of
same, Seller may, but shall not be obligated to, undertake to eliminate the same
subject to Section 5(c). Seller, in its discretion, may, upon written notice to
Purchaser, adjourn the Closing up to twenty (20) days in order to eliminate any
Unacceptable Encumbrances (provided that Seller shall in all events give
Purchaser at least five (5) Business Days' advance written notice of the
adjourned Closing Date); provided, however, that Seller shall not have the right
to so adjourn the Closing for the purpose of eliminating any Monetary
Encumbrance.
(ii) If Seller is unable or unwilling (subject to Section 5(c)) to
eliminate all Unacceptable Encumbrances and/or Other Encumbrances not waived by
Purchaser, and to convey title in accordance with the terms of this Agreement on
or before the Closing Date (whether or not the Closing is adjourned as provided
in Section 5(a)(i)), Purchaser shall elect not later than five (5) days after
Seller notifies Purchaser that Seller will not remove same, as Purchaser's sole
remedy (except to the extent same is a Voluntary Encumbrance placed on record in
violation of this Agreement) for such inability or unwillingness of Seller,
either (A) to terminate this Agreement by notice given to Seller within such
five (5) day period, in which event this Agreement shall be terminated and
neither party shall have any further rights, obligations or liabilities
hereunder, except for the Surviving Obligations, and except that Purchaser shall
be entitled to a return of the Deposit, and all interest accrued thereon, not
later than two (2) Business Days following the date of such termination, or (B)
to accept title subject to such Unacceptable Encumbrances and Other Encumbrances
and receive no credit against, or reduction of, the Purchase Price, in which
case such Unacceptable Encumbrances and Other Encumbrances will be "ADDITIONAL
PERMITTED ENCUMBRANCES", and Purchaser and Seller shall amend Schedule 3
attached hereto to reflect the same.
(c) Notwithstanding any provision of this Agreement to the contrary,
Seller shall be obligated to cause to be released, satisfied, bonded or
discharged to the reasonable satisfaction of Purchaser (and in any event such
12
that the item shall not be an exception to Purchaser's title policy) all
encumbrances which (1) are a mortgage, deed of trust, security agreement,
financing statement, or any other instrument which evidences or secures
indebtedness created by Seller, (2) are a mechanics' lien or any other lien
(other than the liens created by the instruments described in the preceding
clause (1)) which can be satisfied by the payment of a liquidated sum not to
exceed, in the aggregate $200,000 (which, for the purposes of calculating such
aggregate amount, shall include the cost to satisfy any Monetary Liens on the
Option Premises that are required to be removed pursuant to Section 6(e) hereof)
(the items described in the preceding subclauses (1) and (2) are collectively,
the "MONETARY ENCUMBRANCES"), or (3) are voluntarily recorded or otherwise
placed or permitted to be placed by Seller against the Premises on or following
the Effective Date ("VOLUNTARY ENCUMBRANCES"); provided, however, that Seller
may not voluntarily record or, to the extent within Seller's control, permit to
be placed, any encumbrances against the Premises following the Effective Date
without the prior written consent of Purchaser. Seller shall have no further
obligations to bring any action or proceeding, to make any payments or otherwise
to incur any expense in order to eliminate title encumbrances objected to by
Purchaser.
(d) If on the Closing Date there are any liens or other encumbrances
which Seller must pay or discharge in order to convey to Purchaser such title as
is herein provided to be conveyed, Seller and Purchaser shall reasonably
cooperate with each other to cause the Title Company to discharge such liens or
other encumbrances by application of a portion of the Purchase Price to satisfy
the same in a manner acceptable to the Title Company such that such liens or
other encumbrances do not appear as an exception to Purchaser's title insurance
policy.
(e) If on the Closing Date there shall be conditional bills of sale,
chattel mortgages or security interests filed against the personal property at
the Premises, the same shall not constitute objections to title provided Seller
executes and delivers an affidavit to the effect either (i) that the personal
property covered by said conditional bills of sale, chattel mortgages, or
security interests is no longer in or on the Premises, or (ii) that such
personal property is the property of a tenant of the Premises.
(f) The Premises shall be conveyed to Purchaser subject to the
following agreements to be entered into at Closing, all of which shall be deemed
to be Permitted Encumbrances: (i) ground lease in the form of Exhibit K annexed
hereto and made a part hereof (the "RDA GROUND LEASE") between Purchaser, as
landlord, and an Affiliate of Purchaser designated by Purchaser ("GROUND LESSEE
I"), as tenant, pursuant to which the RDA Land is leased to Ground Lessee I, and
a related Ground Lease Memorandum, with such changes to such form of RDA Ground
Lease and/or Ground Lease Memorandum, as Purchaser shall agree to prior to
Closing so long as such changes do not impose any additional monetary or
material non-monetary obligations on Seller in its capacity as lessee under the
Triple Net Lease (as defined below); (ii) triple net space lease between Ground
Lessee I, as landlord, and Seller, as tenant, subleasing the RDA Land and
leasing the RDA Buildings to Seller (the "TRIPLE NET LEASE") in the form of
Exhibit I annexed hereto and made a part hereof, and a memorandum of the terms
thereof (the "TRIPLE NET LEASE MEMORANDUM") in the form of Exhibit Q annexed
hereto and made a part hereof; (iii) gross space lease in the form of Exhibit M
annexed hereto and made a part hereof (the "GROSS LEASE") between Purchaser, as
landlord, and Seller or an Affiliate of Seller, as tenant (provided, however, if
such tenant is an Affiliate of Seller, Seller shall guaranty, and be primarily
13
liable for, the timely payment and performance of all of such tenant's
obligations under the Gross Lease), leasing approximately 33,526 rentable square
feet of the Premises (consisting of Level B Building 600 and associated common
areas); and (iv) Declaration of Easements and Operating Agreements in the form
of Exhibit N annexed hereto and made a part hereof (the "DECLARATION OF
EASEMENTS"), to be entered into by Purchaser, subjecting the Premises to the
benefits and burdens of the easements and operating agreements set forth
therein.
6. Option Premises.
(a) Option. Upon the terms and conditions herein stated, Seller
(referred to in this Section 6 as "OPTIONOR") hereby grants to Purchaser
(referred to in this Section 6 as "OPTIONEE") an exclusive and irrevocable right
to purchase (each, an "OPTION") any or all of the four parcels described in
Schedule 8 annexed hereto and made a part hereof (each an "OPTION PARCEL" and
collectively, the "OPTION PREMISES") at any time during the four year period
(the "OPTION PERIOD") beginning on the Closing Date and ending at 4:00 PM (EST)
on the day prior to the fourth anniversary of the Closing Date (the "OPTION
TERMINATION DATE"). Notwithstanding the foregoing, in the event this Agreement
is terminated prior to the Closing Date, or the Closing does not occur for any
reason, the grant of the Options set forth herein shall automatically terminate
and be of no further force or effect and Optioner and Optionee shall be relieved
form all further liability or obligations with respect to the Options. On the
Closing Date, Optionor and Optionee shall execute and cause to be recorded a
memorandum (the "MEMORANDUM OF OPTION") in the form attached hereto as Exhibit
O; provided, however, that Optionee hereby covenants and agrees that if the
Options are not exercised by the Option Termination Date, within five (5)
Business Days after the earlier of (x) the Option Termination Date or (y) other
termination of the Options pursuant to this Section 6, Optionee shall execute
and cause to be recorded an unconditional release of the Memorandum of Option in
form reasonably acceptable to Optionor and Optionee. The purchase of the Option
Premises shall be upon the terms and conditions contained in this Section 6.
(i) Purchase Price.
(A) During the Option Period, the purchase price for each Option
Parcel (the "OPTION PURCHASE PRICE") shall be $750,000 (i.e., a total of
$3,000,0000 if the Optionee purchases all four Option Parcels).
(B) In the event Optionee sells an Option Parcel within two (2) years
following the applicable Option Closing Date (other than a sale in which such
Option Parcel is sold as part of a sale of the Premises or part of a sale of two
(2) or more acres of the Premises), Optionee shall pay to Optionor an amount
equal to fifty percent (50%) of the Option Parcel Net Sales Price obtained with
respect to such sale. The amount due to Optionor pursuant to this Section
6(a)(i)(B) shall be paid at the closing of the sale of the applicable Option
Parcel by Optionee. Optionee shall provide Optionor with at least thirty (30)
days advance written notice of the closing date of any such sale, which notice
shall include the purchase price to be paid for the applicable Option Parcel
pursuant to such sale and the costs required to be paid by Optionee to
consummate such sale. On each Option Closing Date, Optionor and Optionee shall
execute and cause to be recorded a memorandum (each a "MEMORANDUM OF INTEREST IN
14
NET PROFIT") of Optionor's interest in Optionee's Net Profit in the form
attached hereto as Exhibit P with respect to the applicable Option Parcel set
forth in this Section 6(a)(i)(B), which Memorandum of Interest in Net Profit
shall be in form reasonably acceptable to both Optionee and Optionor. Optionor
shall pay any recording charges or transfer taxes payable with respect to any
such Memorandum of Interest in Net Profit and any release thereof. Not later
than five (5) Business Days following the receipt by Optionor of a certificate
(a "NET PROFIT TERMINATION CERTIFICATE") from Optionee certifying to Optionor
that no transaction entitling Optionor to a payment pursuant to this Section
6(a)(i)(B) has occurred with respect to an Option Parcel (which Net Profit
Termination Certificate shall in no event be delivered prior to the date that is
one (1) day after the second anniversary of the Option Closing Date for such
Option Parcel), Optionor shall cause to be recorded a release of the Memorandum
of Interest in Net Profit with respect to such Option Parcel; provided, however,
that the recording of any such release shall not prejudice Optionor's rights
with respect to the applicable Net Profit Termination Certificate if same is not
true and correct.
(ii) Exercise of Options. Optionee may exercise an Option for one or
more Option Parcels at any time during the Option Period by delivery of written
notice ("EXERCISE NOTICE") to Optionor, stating that Optionee has elected to
exercise the Option. Time shall be of the essence with respect to the Optionee's
obligation to deliver the Exercise Notice prior to the Option Termination Date.
An Option may be exercised with respect to any one or more of the Option Parcels
at any time during the Option Period in any order or sequence; provided,
however, that a condition to the Optionee's exercise of an Option with respect
to any Option Parcel shall be that such Option Parcel must be used in the
Redevelopment Project and/or for access thereto; provided, however, that it
shall not be a condition to the exercise of any option that Optionee has
received any zoning or Governmental Approvals. If Optionee fails to deliver an
Exercise Notice within the Option Period for any Option Parcel, the Option for
such Option Parcel shall automatically terminate and Optionor and Optionee shall
be relieved from all further liability or obligations with respect to the Option
for such Option Parcel; provided, however, if an Option for one or more Option
Parcels is exercised by the timely delivery to Optionor of an Exercise Notice
during the Option Period, the closing on the sale of the Option Parcel(s) set
forth in such Exercise Notice shall occur in accordance with Section 6(h) hereof
regardless of whether such closing occurs on, prior to or after the expiration
of the Option Period.
(b) Brokers. Optionor and Optionee represent and warrant to each
other that neither party has dealt with a broker in connection with the Options
other than Broker, whose fees shall be paid by Optionor pursuant to a separate
agreement. The provisions of Section 14 of the Agreement shall apply to
brokerage claims with respect to the Option Premises, as well as to brokerage
claims under this Agreement.
(c) Operation of the Option Premises. Optionor shall not build any
material improvements or make any material alterations on or to the Option
Premises or any part thereof during the Option Period. Prior to the Option
Termination Date, the provisions of Section 12 hereof shall apply to the
operation of the Option Premises; provided, however, that Optionor shall have
the rights with respect to leases applicable to the Option Premises set forth in
Section 6(e)(iii) hereof. With respect to each Option Parcel, during the period
from the Effective Date through the Option Termination Date (or the Option
Closing Date if such Option Closing Date is earlier or later than the Option
15
Termination Date), Optionor shall maintain the same casualty and liability
insurance policies (or insurance policies providing coverage which is at least
as favorable) with respect to such Option Parcel that are in place as of the
Effective Date.
(d) Risk of Loss; Casualty; Condemnation.
(i) Risk of Loss. Optionor shall bear the risk of all loss,
destruction or damage to each Option Parcel or any portion thereof from any and
all causes whatsoever until and including the date of the Option Closing
(hereinafter defined) with respect to such Option Parcel. If at any time prior
to the expiration of the Option Period (or prior to the Option Closing Date for
any Option Parcel for which the Option Exercise Notice was given prior to the
expiration of the Option Period but for which the Option Closing Date occurs
after the expiration of the Option Period), all or any portion of an Option
Parcel is damaged as a result of any cause whatsoever, then Optionor shall give
written notice thereof promptly to Optionee; provided, however, Optionor shall
not be required to deliver any such notice with respect to any Option Parcel for
which an Option Closing has occurred. Except as may otherwise be required
pursuant to the terms of any existing lease, Optionor shall have no obligation
to repair or restore any damage to improvements on any Option Parcel; provided,
however, in the event of any damage or destruction occurring with respect to any
Option Parcel prior to the Option Closing, and Optionor does not repair or
restore the damage with respect to such Option Parcel, Optionor shall (x) pay
over to Optionee the proceeds of any insurance collected by Optionor less the
amount of all costs reasonably incurred by Optionee in connection with the
repair of such damage or destruction, (y) assign and transfer to Optionee all
right, title and interest of Optionor in and to any uncollected insurance
proceeds which Optionor may be entitled to receive as a result of such damage or
destruction, and (z) pay over to Optionee the amount of any applicable
deductible.
(ii) Condemnation. If, on or prior to the Option Termination Date,
any Option Parcel shall be condemned or taken in part pursuant to any
governmental or other power of eminent domain, any written notice of taking or
condemnation is issued, or any proceedings are instituted by any governmental
authority having the power of eminent domain, and (i) if the consideration paid
by the condemning authority ("CONDEMNATION AWARD") is paid prior to closing of
the conveyance to Optionee, then the Purchase Price payable for such Option
Parcel shall be reduced by the amount of the Condemnation Award applicable to
such Option Parcel or (ii) if the Condemnation Award is not paid prior to
closing of the conveyance to Optionee, then Optionor shall assign such
Condemnation Award (or such portion thereof applicable to such Option Parcel) to
Optionee. If, on or prior to the Option Termination Date, any Option Parcel
shall be condemned or taken in whole, the Option shall automatically terminate
with respect to such Option Parcel only, but the Option for the Option Parcels
not so condemned or taken shall continue. If at any time prior to the expiration
of the Option Period (or prior to the Option Closing Date for any Option Parcel
for which the Option Exercise Notice was given prior to the expiration of the
Option Period but for which the Option Closing Date occurs after the expiration
of the Option Period), all or any portion of an Option Parcel is taken or
condemned, Optionor shall give written notice thereof promptly to Optionee;
provided, however, Optionor shall not be required to deliver any such notice
with respect to any Option Parcel for which an Option Closing has occurred.
16
(e) Title/Covenant Not To Encumber.
(i) Optionor shall convey the Option Premises subject to (i) the
encumbrances set forth in Schedule 9 annexed hereto and made a part hereof (the
"LISTED OPTION PERMITTED ENCUMBRANCES") and (ii) the Option Additional Permitted
Encumbrances (hereinafter defined). Optionee has ordered, at its sole cost and
expense, a commitment for a title insurance policy or policies insuring the
Options with respect to the Option Premises (the "OPTION TITLE COMMITMENT")from
the Title Company and a copy of the Option Title Commitment, together with true
and complete copies of all instruments giving rise to any defects or exceptions
to title to the Option Premises, has been delivered to Optionor and/or
Optionor's attorneys. Optionee has identified the existence of certain Option
Unacceptable Encumbrances as more particularly set forth in the Title Objection
Letter, and Optionor has agreed to cause the removal of the Option Unacceptable
Encumbrances set forth in the Title Objection Letter as exceptions to title in
the Option Title Commitment prior to Closing (other than the objection set forth
in Section I of the Title Objection Letter referring to tracts and dirt lanes
(now overgown), which objection has been deemed eliminated by the delivery of
the Survey showing that such tracts and dirt lanes do not run on to, or
otherwise encroach upon, any land adjoining the Premises or any Option Parcel).
Optionor shall also, prior to the Closing Date (as the same may be adjourned
pursuant to this Section) either (x) remove or (y) commit in writing that
Optionor shall remove on or prior to the applicable Option Closing Date, any
Monetary Encumbrances applicable to the Option Premises. Optionee hereby waives
any right Optionee may have to raise as objections to title or as grounds for
Optionee's refusal to close this transaction any Option Unacceptable Encumbrance
or other title or survey matters, except to the extent such Option Unacceptable
Encumbrance (i) arises after expiration of the Due Diligence Period, or (ii)
such Option Unacceptable Encumbrance was not disclosed by the Survey or the
Option Title Commitment referenced above (the "OPTION OTHER ENCUMBRANCES"). If,
on or prior to the Closing Date, Optionee becomes aware of any Option Other
Encumbrances, and advises Optionor of same in writing within five (5) Business
Days after Optionee first becomes aware of same, Optionor may, but shall not be
obligated to, (A) undertake to eliminate the same or (B) commit in writing that
Optionor shall eliminate same on or prior to the applicable Option Closing Date
if the option is exercised with respect to the applicable Option Parcel, except
that Optionor shall remove (or commit in writing that Optionor shall remove on
or prior to the applicable Option Closing Date) any Monetary Encumbrances.
Optionor, in its discretion, may, upon written notice to Optionee, adjourn the
Closing up to twenty (20) days in order to eliminate any Option Unacceptable
Encumbrances (provided that Optionee shall in all events give Optionor at least
five (5) Business Days' advance written notice of the adjourned Closing Date);
provided, however, that Optionor shall not have the right to so adjourn the
Closing for the purpose of eliminating any Monetary Encumbrance.
(ii) If Optionor is unable or unwilling (subject to its obligation to
remove (or commit to remove prior to the applicable Option Closing Date)
Monetary Encumbrances) to either (A) eliminate on or prior to the Closing Date
(whether or not the Closing is adjourned as provided in Section 5(a)(i) or
Section 6(e)(i)) or (B) commit in writing on or prior to the Closing Date to
eliminate on or prior to the applicable Option Closing Date in the event of an
exercise of the Option with respect to the applicable Option Parcel, all Option
Unacceptable Encumbrances and/or Option Other Encumbrances not waived by
Optionee, Optionee shall elect not later than five (5) days after Optionor
17
notifies Optionee that Optionor will not remove same, as Optionee's sole remedy
(other than for a violation of Section 6(e)(iii) hereof) for such inability or
unwillingness of Optionor, either (A) to terminate this Agreement by notice
given to Optionor within such five (5) day period, in which event this Agreement
shall be terminated as if Optionee delivered a Purchaser's Termination Notice
pursuant to Section 4(d) hereof and the provisions of Section 4(d) shall apply,
or (B) to proceed with the Closing (and receive no credit against, or reduction
of, the Purchase Price or any reduction in any Option Purchase Price), in which
case such Option Unacceptable Encumbrances and Option Other Encumbrances will be
"OPTION ADDITIONAL PERMITTED Encumbrances", and Optionee and Optionor shall
amend Schedule 9 attached hereto to reflect the same.
(iii) From and after the Closing Date, Optionor shall not encumber
the Option Premises with, or, to the extent within Optionor's control, allow the
Option Premises to be encumbered by, any mortgage, deed of trust, lien,
mechanic's or materialman's lien, easement, right of way, or other right or
encumbrance, without the express written consent of Optionee, which shall not be
unreasonably withheld or delayed, and provided that Optionor shall have the
right to extend or renew any existing lease affecting the Option Premises, and
to enter into new leases affecting the Option Premises, so long as (A) the term
of any such lease shall not be longer than one (1) year, (B) the permitted use
of the applicable Option Parcel under such lease is limited to single family
residential purposes and (C) such lease does not contain any affirmative
landlord obligations to perform capital or other improvements with respect to
the applicable Option Parcel other than customary repair and maintenance
obligations. Within five (5) Business Days following the execution thereof,
Optionor shall give Optionee written notice of any such new lease or renewal or
extension of existing lease, together with a copy of any such lease, renewal or
extension. All rents received under such leases affecting an Option Parcel for
the period prior to the Option Closing Date for such Option Parcel shall belong
exclusively to Optionor. All rents received under such leases affecting an
Option Parcel for the period following the Option Closing Date for such Option
Parcel shall belong exclusively to Optionee. Optionor shall request, and use
reasonable efforts to obtain by the applicable Option Closing Date, Estoppel
Certificates from any tenants under leases, if any, affecting the applicable
Option Parcel(s), but obtaining any such Estoppel Certificates from such tenants
shall not be a condition to the Optionee's obligation to close following
delivery of an Exercise Notice of any Option Parcel.
(iv) If on any Option Closing Date there are any liens or other
encumbrances which Optionor must pay or discharge in order to convey to Optionee
such title as is herein provided to be conveyed, Optionor and Optionee shall
reasonably cooperate with each other to cause the Title Company to discharge
such liens or other encumbrances by application of a portion of the Option
Purchase Price for such Option Parcel to satisfy the same in a manner acceptable
to the Title Company such that such liens or other encumbrances do not appear as
an exception to Optionee's title insurance policy.
(f) Optionee's Right to Enter Option Premises. Optionee and its
employees and agents shall have the right and permission during the Option
Period to enter upon the Option Premises or any part thereof at all reasonable
times and from time to time, upon not less than three (3) days prior notice
(which may be oral), for the purpose, at Optionee's cost and expense, of making
all soil, drainage, utilities, traffic, surveying, engineering and feasibility
and other studies and tests desired by Optionee. Such investigations of the
Option Premises shall be governed by and subject to all provisions of the
18
Agreement pertaining to Optionee's investigations of the Premises, including,
without limitation, Section 17.
(g) Assignability. In the event Optionee assigns its interest in this
Agreement as permitted pursuant to the terms of this Agreement, or if Optionee
conveys its interest in the Premises following the Closing, it shall be a
condition of any such assignment or conveyance that Optionee transfer its rights
in and to the Options to the permitted assignee of this Agreement or the
assignee of the Premises, as the case may be. In the event Optionee fails to
make such assignment, the Options shall automatically terminate and be of no
further force or effect and Optionor and Optionee shall be relieved from all
further liability or obligations with respect to the Options. Notwithstanding
the foregoing, in the event Optionee conveys a portion, but not all, of its
interest in the Premises to an un-affiliated third party, and one or more Option
Parcels are required (i) for access to the portion of the Premises so conveyed
or (ii) in connection with the development plans for the portion of the Premises
so conveyed, then Optionee may assign to such un-affiliated third party the
Option(s) with respect to the Option Parcel(s) that are so required for such
access or redevelopment.
(h) Closing.
(i) Closing Date. The conveyance of each Option Parcel to Optionee
(the "OPTION CLOSING") shall occur on a date mutually agreed to by Optionor and
Optionee (the "OPTION CLOSING DATE") not later than thirty (30) days after
delivery of the Exercise Notice, at the offices of Weil, Gotshal & Manges LLP,
767 Fifth Avenue, New York, New York 10153-0119, or at such other location
mutually agreed to by Optionor and Optionee. Time shall be of the essence with
respect to the parties' obligations to close within fifteen (15) days after the
Option Closing Date.
(ii) Documents to be delivered by Optionor at the Option Closing. At
the Option Closing, Optionor shall execute, acknowledge and/or deliver, as
applicable, the following to Optionee or to the title company insuring
Optionee's title:
(A) A Bargain and Sale Deed (the "OPTION DEED") in the form of the
Deed, conveying fee simple title to the Option Parcel(s) to the Optionee.
(B) An Assignment and Assumption of Leases and Security Deposits (if
applicable) (the "OPTION LEASE ASSIGNMENT") in the form of the Lease Assignment,
assigning Optionor's interest in the Leases and Security Deposits, if any,
affecting the Option Parcel(s).
(C) An Assignment and Assumption of Contracts, Permits, Warranties
and Guaranties (the "OPTION CONTRACT AND PERMIT Assignment") in the form of the
Contract and Permit Assignment, assigning Optionor's interest in any Contracts
affecting the Option Parcel(s) and other interests as set forth therein.
(D) Executed counterparts of Leases and Security Deposits affecting
the Option Parcel(s), as provided in Section 10(d) of this Agreement.
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(E) A bill of sale (the "OPTION BILL OF SALE") in the form of the
Bill of Sale.
(F) Executed notices to the tenants of the Option Parcel(s) in the
form of Exhibit E.
(G) A "FIRPTA" affidavit sworn to by Optionor in the form of Exhibit
G.
(H) New York State Transfer Tax Return.
(I) An owner's affidavit in favor of the title company, substantially
in the form of Exhibit H.
(J) All other documents Optionor is required to deliver pursuant to
the provisions of this Section 6.
(iii) Documents to be Delivered by Optionee at the Option Closing. At
the Option Closing, Optionee shall execute, acknowledge and/or deliver, as
applicable, the following to Optionee:
(A) The Option Purchase Price, subject to apportionments, credits and
adjustments as provided in Section 3 of this Agreement.
(B) The Option Bill of Sale.
(C) The Option Lease Assignment.
(D) The Option Contract and Permit Assignment.
(E) Evidence of Optionee's good standing and authority as provided in
Sections 11(e)-(g) of this Agreement.
(F) New York State Transfer Tax Return.
(G) All other documents Optionee is required to deliver pursuant to
the provisions of this Section 6.
(i) Default.
(i) Optionee's Default. If Optionee shall fail to close in accordance
with the terms of an Option after delivering the Exercise Notice to the Optionor
with respect to one or more Option Parcels or shall otherwise be in breach or
default of any of the terms or conditions of any Option pursuant to this Section
6, then Optionor shall give Optionee written notice specifying the nature of
such failure. Optionee shall have fifteen (15) days from receipt of Optionor's
notice of default within which to cure such failure. If Optionee does not cure
such failure within said fifteen (15) day period, then as Optionor's sole and
exclusive remedy for Optionee's failure to exercise the Options or for any
20
breach or default by Optionee, Optionor may terminate the Options with respect
to all Option Parcels not yet acquired by Optionor.
(ii) Optionor's Default. If Optionor fails to close in accordance
with the terms of any Option, or shall otherwise be in breach or default of any
of the terms or conditions of any Option pursuant to this Section 6, then
Optionee shall give Optionor written notice specifying the nature of the
default. Optionor shall have fifteen (15) days from receipt of Optionee's notice
of default within which to cure the specified default. If Optionor does not cure
such default within said fifteen (15) day period, then Optionee, at its option,
shall have as its sole and exclusive remedy the right to seek specific
performance or injunctive relief, and provided that Optionor does not obtain
title to the applicable Option Parcel(s), Optionor shall reimburse Optionee for
the reasonable actual out-of-pocket expenses incurred by Optionor (i) in
conducting its due diligence with respect to such Option Parcel(s), including,
without limitation, reasonable and actual attorney and consultant fees
associated therewith, and (ii) in obtaining acquisition financing for such
Option Parcels; provided, however, in no event shall Optionor have any
requirement to reimburse Optionee for any such expenses that exceed in the
aggregate $50,000. Other than the reimbursement of expenses pursuant to the
immediately preceding sentence, in no event shall Optionee have the right to
seek monetary damages for Optionor's breach or default. Optionor acknowledges
that, because of the unique nature of the Option Premises, specific performance
or injunctive relief is warranted.
(j) Notices. All notices and other communications under this Section
6 shall be given in accordance with the notice provision set forth in Section 21
of this Agreement.
(k) Survival. Provided that the Closing occurs pursuant to this
Agreement, the provisions of this Section 6 shall survive the Closing Date with
respect to each Option Parcel until the later of (i) the expiration of the
Option Period or (ii) the closing on the sale of any Option Parcel set forth in
an Exercise Notice that is timely delivered to Optionor prior to the expiration
of the Option Period; provided, however, that the provisions of Section
6(a)(i)(B) shall survive with respect to each Option Parcel for a period of
thirty (30) months following the respective Option Closing Date.
7. Representations and Warranties.
(a) (i) Seller represents and warrants to Purchaser as follows:
(A) Seller is a duly formed and validly existing corporation
organized under the laws of the State of Delaware and is duly qualified to do
business and is in good standing in the State of New York.
(B) Seller has obtained all necessary consents, has taken all actions
required by its organizational documents, and has the full legal right, power
and authority to execute and deliver this Agreement and all documents now or
hereafter to be executed by Seller pursuant to this Agreement (collectively, the
"SELLER DOCUMENTS"), to consummate the transaction contemplated hereby, and to
perform its obligations hereunder and under the Seller Documents.
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(C) Neither the entering into of this Agreement, the Seller Documents
nor the consummation of the transactions contemplated hereby will (i) constitute
a default, breach or violation of the organizational documents of Seller or,
with respect to Seller or the Premises, any agreements, contracts or instruments
to which Seller is a party or by which it or the Premises is bound; (ii)
constitute or result in a violation or breach by Seller of any judgment, order,
writ, injunction or decree issued against or imposed upon Seller, or result in a
violation of any applicable law, order, rule or regulation of any governmental
authority (collectively, "LAWS"), or (iii) result in the creation or imposition
of any lien, charge or encumbrance on the Premises, other than any such lien,
charge or encumbrance expressly contemplated hereby.
(D) There are no leases, subleases, licenses or other occupancy
agreements affecting any portion of the Premises on the Effective Date, except
as set forth on Schedule 4 annexed hereto and made a part hereof, and Schedule 4
includes all Security Deposits held by Seller with respect to the Leases. Seller
has delivered to Purchaser true, correct and complete copies of all Leases
(including all amendments and modifications thereto) and other agreements, if
any, between Seller and any tenant of the Premises. To Seller's knowledge, no
party to a Lease is in material default in the performance of any of its
obligations under the Leases. No tenant under any of the Leases has any right or
option to purchase or otherwise acquire the Premises or any portion thereof.
There are no Lease Expenses payable by Seller with respect to any Lease,
including any renewal or expansion options contained therein. No tenant has made
any payment of rent in excess of one (1) month in advance. All improvements
required to be completed by Seller pursuant to the Leases have been completed
and there are no contributions, credits or other sums due from Seller to any
tenant. Each tenant under the Leases has accepted occupancy of its respective
premises set forth therein.
(E) There are no pending, or to Seller's knowledge threatened,
actions, suits, proceedings or investigations to which Seller is a party before
any court or other governmental authority with respect to the Premises, except
as set forth on Schedule 5 annexed hereto and made a part hereof. Seller has
received no written notice of any action, suit, claim, investigation or
proceeding, whether legal or administrative or in mediation or arbitration,
pending, at law or in equity, with respect to the Premises before or by any
court or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, and there are no judgments, decrees or
orders entered on a suit or proceeding with respect to the Premises, except as
set forth on Schedule 5.
(F) Attached hereto as Schedule 6 is a true, correct and complete
list of all material Contracts affecting the Premises or any portion thereof.
Seller has delivered to Purchaser true, correct and complete copies of all
Contracts. To Seller's knowledge, (1) none of the parties to the Contracts is in
material default in the performance of any of its obligations under the
Contracts, nor (2) has any event occurred which, with the giving of notice or
the lapse of time or both, would cause such a material default under the terms
of such Contract.
(G) Seller is not a foreign person within the meaning of Section 1445
of the Internal Revenue Code and Seller agrees to execute any and all documents
22
necessary or reasonably required by the Internal Revenue Service, any other
governmental authority or Purchaser in connection with such declaration.
(H) (i) Seller has not received written notice from any governmental
authority that the use and operation of the Premises is in violation of any laws
or regulations relating to Hazardous Substances (as hereinafter defined) which
has not been resolved or which could reasonably be expected to have a material
or adverse effect on the value or use of the Premises and (ii) except as
disclosed in environmental reports or as otherwise disclosed to Purchaser in
writing, there are no underground storage tanks at the Premises and to Seller's
knowledge the use and operation of the Premises is not in violation of any laws
or regulations relating to Hazardous Substances (as hereinafter defined) which
has not been resolved or which could reasonably be expected to have a material
or adverse effect on the value or use of the Premises. For purposes of this
Agreement, the term "HAZARDOUS SUBSTANCES" means any of the following: (i)
"HAZARDOUS SUBSTANCES" or "TOXIC SUBSTANCES", as those terms are defined by the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601, et seq., or the Hazardous Materials Transportation Act, 49 U.S.C. ss.
1802, all as amended; (ii) "HAZARDOUS WASTES", as that term is defined by the
Resource Convention and Recovery Act, 42 U.S.C. ss. 6902, et seq., as amended;
(iii) any substance, material, chemical or waste defined as a "HAZARDOUS",
"EXTREMELY HAZARDOUS" or "RESTRICTED HAZARDOUS" waste material or substance
under the laws of the State of New York; and (iv) any other material, substance
or waste that is classified as a pollutant, contaminant or hazardous, dangerous
or toxic under any applicable federal, state or local environmental law,
regulations, ordinance or legal requirement (including consent decrees and
administrative orders), as amended, in effect as of the Closing.
(I) Seller is not, and will not become, a person or entity with whom
United States persons or entities are restricted or prohibited from doing
business under regulations of the Office of Foreign Asset Control ("OFAC") of
the Department of the Treasury (including those named on OFAC's specially
designated and blocked persons list) or under any statute, executive order
(including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action and is not engaged and will not engage
in any dealings or transactions or be otherwise associated with such persons or
entities.
(J) Seller has not made, nor has there been threatened in writing
against Seller, a general assignment for the benefit of creditors, filed any
voluntary petition in bankruptcy or suffered the filing of an involuntary
petition by Seller's creditors, suffered the appointment of a receiver to take
possession of any of Seller's assets, suffered the attachment or other judicial
seizure of any of Seller's assets, admitted in writing its inability to pay its
debts as they come due or made an offer of settlement, extension or composition
to its creditors generally.
(K) No written notice of cancellation has been received by Seller
with respect to any insurance affecting the Premises. No insurance company
issuing such insurance has delivered to Seller written notice (i) that any
insurance policy now in effect will not be renewed or (ii) that Seller has
failed to comply with insurance requirements or (iii) that material defects or
inadequacies exist in the Premises, or in any part thereof.
23
(L) No employee of Seller or any property manger providing services
for the Premises shall be entitled to employment by Purchaser by reason of
Purchaser's acquisition of the Premises pursuant to this Agreement.
(M) The Motor Vehicles and, except as disclosed in the Title
Commitment, the Fixtures, are not subject to any liens except those that shall
be discharged at or prior to the Closing.
(N) Seller has no notice of, and to Seller's knowledge there are no,
violations of any building code or similar ordinances applicable to the Premises
or any portion thereof.
(ii) As used in this Agreement, the words "SELLER'S KNOWLEDGE" or
words of similar import shall be deemed to mean, and shall be limited to, the
actual (as distinguished from implied, imputed or constructive) knowledge of
Gary Muller, Vice President - Facilities, and David Walsh, Director of Corporate
Facilities, without such persons having any obligation to make an independent
inquiry or investigation.
(iii) If at or prior to the Closing, (A) Purchaser shall have actual
knowledge (whether through its own efforts, by notice from Seller or otherwise)
that any of the representations or warranties made herein by Seller are untrue,
inaccurate or incorrect and shall give Seller notice thereof at or prior to the
Closing, or (B) Seller shall notify Purchaser that a representation or warranty
made herein by Seller is untrue, inaccurate or incorrect, then Seller may, in
its sole discretion, elect by notice to Purchaser to adjourn the Closing one or
more times for up to thirty (30) days in the aggregate in order to cure or
correct the underlying fact or circumstance that makes such representation or
warranty untrue, inaccurate or incorrect. If any such representation or warranty
is either (1) immaterial, or (2) material but not materially untrue, inaccurate
or incorrect, and is not cured or corrected by Seller on or before the Closing
Date (whether or not the Closing is adjourned as provided above), Purchaser
shall nevertheless be deemed to, and shall, waive such misrepresentation or
breach of warranty and shall consummate the transactions contemplated hereby
without any reduction of or credit against the Purchase Price. If any such
representation or warranty is both (x) material, and (y) materially untrue,
inaccurate or incorrect, and is not cured or corrected by Seller on or before
the Closing Date (whether or not the Closing is adjourned as provided above)
(any matter qualifying under the foregoing clauses (x) and (y), a "MATERIAL
MISREPRESENTATION"), then Purchaser, as its sole remedy for any Material
Misrepresentation, shall elect either (I) to waive such Material Representation
and consummate the transactions contemplated hereby without any reduction of or
credit against the Purchase Price, or (II) to terminate this Agreement by notice
given to Seller on the Closing Date, in which event, this Agreement shall be
terminated and neither party shall have any further rights, obligations or
liabilities hereunder, except for the Surviving Obligations, and except that
Purchaser shall be entitled to the prompt return of the Deposit and all interest
accrued thereon and Purchaser shall be entitled to receive the Due Diligence
Costs from Seller. Purchaser acknowledges and agrees that (x) at or prior to the
Closing, Purchaser's rights and remedies in the event any of Seller's
representations or warranties made in this Agreement are untrue, inaccurate or
incorrect shall be only as provided in this Section 7(a)(iii) and (y) if the
Closing does not occur, and provided that the Deposit shall have been returned
to Purchaser, Purchaser hereby expressly waives, relinquishes and releases all
other rights or remedies available to it at law, in equity or otherwise
24
(including without limitation, the right to seek damages from Seller) as a
result of any of Seller's representations or warranties made in this Agreement
being untrue, inaccurate or incorrect.
(iv) In the event the Closing occurs:
(A) Purchaser hereby expressly waives, relinquishes and releases any
right or remedy available to it at law, in equity or under this Agreement to
make a claim against Seller for damages that Purchaser may incur, or to rescind
this Agreement and the transactions contemplated hereby, as the result of any of
Seller's representations or warranties being untrue, inaccurate or incorrect if
(1) Purchaser knew or is deemed to have known (as defined below) that such
representation or warranty was untrue, inaccurate or incorrect at the time of
the Closing and Purchaser nevertheless closes title hereunder, or (2)
Purchaser's damages as a result of such representation or warranty being untrue,
inaccurate or incorrect are less than $50,000.00, in the aggregate. Purchaser
shall be "DEEMED TO HAVE KNOWN" that a representation or warranty was untrue,
inaccurate or incorrect at the time of the Closing only to the extent that the
Property Information furnished or made available to Purchaser by or on behalf of
Seller contains information which is inconsistent with such representation or
warranty. The provisions of this Section 7(a)(iv) shall survive the Closing.
(B) Notwithstanding anything contained herein to the contrary, if the
Closing shall have occurred and Purchaser shall not have waived, relinquished
and released all rights or remedies available to it at law, in equity or
otherwise as provided hereunder, the aggregate liability of Seller arising
pursuant to or in connection with the representations and warranties (whether
express or implied) of Seller in this Agreement and/or the Seller's Documents
(other than the Declaration of Easements, Gross Lease, RDA Ground Lease, the AEC
Agreement and Triple Net Lease, but including, without limitation, the Deed and
the Contract and License Assignment), shall not exceed $750,000. Subject to the
foregoing, the liability of Seller for damages for any claim by Purchaser under
this Agreement shall be limited to Seller's interest in the Premises (including
sale proceeds).
(v) The representations and warranties of Seller set forth in Section
7(a) (i) and elsewhere in this Agreement shall be true, accurate and correct in
all material respects upon the execution of this Agreement, and at Closing,
Seller shall deliver a certificate certifying that all representations and
warranties of Seller contained in this Agreement are true and correct in all
material respects on and as of the Closing Date with the same effect as if made
on and as of such date, except that (i) the representation and warranty set
forth in Section 7(a)(i)(D) may be amended by Seller to reflect any Leases
entered into after the Effective Date in accordance with this Agreement; and
(ii) the representation and warranty set forth in Section 7(a(i)(F) may be
amended by Seller to reflect any Contracts entered into after the Effective Date
in accordance with this Agreement; and (iii) all of the representations and
warranties set forth in Section 7(a)(i) shall be deemed amended to reflect any
changes thereto of which Seller notifies Purchaser in writing prior to the
Closing, provided that such changes are only those that are permitted to have
occurred under the terms of this Agreement. The representations and warranties
(whether express or implied) of Seller set forth in Section 7(a(i) and elsewhere
in this Agreement, and/or the Closing Documents (including, without limitation,
the Deed) shall remain operative and shall survive the Closing and the execution
25
and delivery of the Deed for a period of six (6) months following the Closing
Date, and no action or claim based thereon shall be commenced after such period.
(b) (i) Purchaser represents and warrants to Seller as follows:
(A) Each of the entities comprising Purchaser are duly formed and
validly existing limited liability companies, and (x) with respect to GAP III
Properties LLC, organized under the laws of the State of Delaware, and (y) with
respect to Summit Development, LLC, organized under the laws of the State of
Connecticut. Purchaser, or the permitted assignee of Purchaser that takes title
to the Premises pursuant to this Agreement on the Closing Date, will be
qualified under the laws of New York to conduct business therein on the Closing
Date.
(B) Purchaser has obtained all necessary consents, has taken all
actions required by its organizational documents, and has the full legal right,
power, authority and financial ability to execute and deliver this Agreement and
all documents now or hereafter to be executed by it pursuant to this Agreement
(collectively, the "PURCHASER'S DOCUMENTS"), to consummate the transactions
contemplated hereby, and to perform its obligations hereunder and under
Purchaser's Documents.
(C) This Agreement and Purchaser's Documents do not and will not
contravene any provision of the organizational documents of Purchaser, any
judgment, order, decree, writ or injunction issued against Purchaser, or any
provision of any Laws applicable to Purchaser. The consummation of the
transactions contemplated hereby will not result in a breach or constitute a
default or event of default by Purchaser under any agreement to which Purchaser
or any of its assets are subject or bound and will not result in a violation of
any Laws applicable to Purchaser.
(D) There are no pending actions, suits, proceedings or
investigations to which Purchaser is a party before any court or other
governmental authority which may have an adverse impact on the transactions
contemplated hereby.
(E) Purchaser (or its permitted assignee) is purchasing the Premises
for its own account and not for the benefit of any other person.
(F) Either (x) Purchaser is not using (i) an "employee benefit plan"
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), (ii) a "plan" (within the meaning of Section
4975 of the Internal Revenue Code of 1986, as amended (the "CODE") or (iii) an
entity whose underlying assets are treated as "plan assets" for purposes of
ERISA by reason of an employee benefit plan's or a plan's investment in such
entity, to fund its purchase of the Premises or (y) the purchase of the Premises
by Purchaser is exempt from the prohibited transaction restrictions of Section
406 of ERISA and Section 4975 of the Code pursuant to a prohibited transaction
statutory or class exemption.
(G) Purchaser is not, and will not become, a person or entity with
whom United States persons or entities are restricted from doing business under
regulations of the OFAC (including those named on OFAC's specially designated
and blocked persons list) or under any statute, executive order (including the
September 24, 2001, Executive Order Blocking Property and Prohibiting
26
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action and is not and will not engage in any dealings or
transactions or be otherwise associated with such persons or entities.
(ii) The representations and warranties of Purchaser set forth in
Section 7(b)(i) and elsewhere in this Agreement shall be true, accurate and
correct in all material respects upon the execution of this Agreement, and at
Closing, Purchaser shall deliver a certificate certifying that all
representations and warranties of Purchaser contained in this Agreement are true
and correct in all material respects on and as of the Closing Date with the same
effect as if made on and as of such date (except to the extent they specifically
relate only to an earlier date), except that the representation and warranty set
forth in Section 7(b)(i)(D) may be amended by Purchaser to reflect any change of
circumstances applicable to such representation or warranty, and shall survive
the Closing for a period of six (6) months following the Closing Date, and no
action or claim based thereon shall be commenced after such period. In the event
any representation or warranty of Purchaser set forth in Section 7(b(i) and
elsewhere in this Agreement shall be untrue, inaccurate or incorrect, and
provided that Seller has not waived the requirement that such representation or
warranty be true, accurate and complete on the Closing Date, then Purchaser may,
in its sole discretion, elect by notice to Seller to adjourn the Closing one or
more times for up to thirty (30) days in the aggregate in order to cure or
correct such untrue, inaccurate or incorrect representation or warranty.
8. Closing Costs. Seller shall pay all transfer taxes payable in
connection with the transfer of the Premises to Purchaser and the consummation
of the transactions contemplated hereby, and shall pay (or cause to be paid) all
transfer taxes payable in connection with the RDA Ground Lease, the Triple Net
Lease or the Gross Lease (if any). The Purchaser shall pay (i) all charges
payable in connection with the recording of the Deed (other than transfer
taxes), the Assignments and the other agreements and instruments to be recorded
pursuant to this Agreement (other than transfer taxes payable in connection with
the RDA Ground Lease, the Triple Net Lease or the Gross Lease (if any) and
recording charges relating to the Triple Net Lease Memorandum, which amounts
shall be paid by Seller), and any other fees or charges resulting from the
recording of the Deed or the transactions contemplated by this Agreement;
provided, however, that all recording charges and transfer taxes with respect to
the Mortgage shall be shared equally by Seller and Purchaser, and (ii) all of
Purchaser's due diligence and financing costs, including, without limitation,
the costs of any new or updated third party reports related thereto, all survey
costs and all title insurance costs and all costs of the Title Company. All
other closing costs, if any, shall be paid by Seller and Purchaser as is
customary for similar conveyances transactions in the State of New York,
provided, however, that (i) Seller and Purchaser shall each be responsible for
the fees and expenses of their respective attorneys and consultants and (ii)
Seller shall pay all costs associated with removing exceptions to title, to the
extent such removal is required by, and subject to the terms and limitations of,
the provisions of Section 5 hereof. The provisions of this Section 8 shall
survive the Closing.
9. Conditions Precedent to Closing.
(a) Purchaser's obligation under this Agreement to purchase the
Premises is subject to the fulfillment of each of the following conditions,
subject, however, to the provisions of Section 9(c):
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(i) Each of the material representations and warranties of Seller
contained herein shall be true, accurate and correct in all material respects as
of the Closing Date (subject to the provisions of Section 7(a)(iv));
(ii) Title to the Premises shall be subject to no exceptions other
than the Permitted Encumbrances. Seller shall have delivered all the documents
required to be executed by Seller and other items required pursuant to Section
10, and shall have performed in all material respects all other covenants,
undertakings and obligations, and complied with all conditions required by this
Agreement to be performed or complied with by the Seller at or prior to the
Closing; and
(iii) Seller shall have delivered all the documents to be executed by
Seller set forth in Section 10.
(b) Seller's obligation under this Agreement to sell the Premises to
Purchaser is subject to the fulfillment of each of the following conditions,
subject, however to the provisions of Section 9(c):
(i) Each of the material representations and warranties of Purchaser
contained herein shall be true, accurate and correct in all material respects as
of the Closing Date (subject to the provisions of Section 7(b)(ii));
(ii) Purchaser shall have delivered the funds required hereunder and
all the documents to be executed by Purchaser set forth in Section 11; and
(iii) Purchaser shall have performed in all material respects all
other covenants, undertakings and obligations, and complied in all material
respects with all conditions required by this Agreement to be performed or
complied with by Purchaser at or prior to the Closing.
(c) In the event that any condition contained in Section 9(a) or (b)
is not satisfied, the party entitled to the satisfaction of such condition as a
condition to its obligation to close title hereunder shall have as its sole
remedy hereunder the right to elect to (i) waive such unsatisfied condition
whereupon title shall close as provided in this Agreement or (ii) terminate this
Agreement or (iii) if such failure of a condition is the result of a breach or
default by the other party under this Agreement, exercise such other remedies as
are permitted by this Agreement. In the event such party elects to terminate
this Agreement, this Agreement shall be terminated and neither party shall have
any further rights, obligations or liabilities hereunder, except for the
Surviving Obligations, and except for such other remedies as are permitted by
this Agreement, and except that if Purchaser terminates this Agreement because a
condition contained in Section 9(a) is not satisfied, then Purchaser shall be
entitled to a return of the Deposit, and accrued interest thereon. Nothing
contained in this Section 9(c) shall be construed so as to bestow any right of
termination upon a party for the failure of a condition to be satisfied unless
such party is expressly entitled to the satisfaction of such condition as
provided in Section 9(a) or (b).
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10. Documents to be Delivered by Seller at Closing. At the Closing,
Seller shall execute, acknowledge and/or deliver, as applicable, the following
to Purchaser or the Title Company (the "CLOSING DOCUMENTS") :
(a) A Bargain and Sale Deed (the "DEED") conveying title to the
Premises in the form of Exhibit A annexed hereto and made a part hereof.
(b) The Assignment and Assumption of Leases and Security Deposits in
the form of Exhibit B annexed hereto and made a part hereof (the "LEASE
ASSIGNMENT").
(c) The Assignment and Assumption of Contracts, Permits, Warranties
and Guaranties in the form of Exhibit C annexed hereto and made a part hereof
(the "CONTRACT AND PERMIT ASSIGNMENT") (the Lease Assignment and the Contract
and Permit Assignment are herein referred to collectively as the "ASSIGNMENTS").
(d) To the extent in Seller's possession or control, executed
counterparts (originals or copies whichever is in Seller's possession or
control) of all Leases, together with all Security Deposits thereunder (other
than Security Deposits in the form of cash which, together with interest accrued
thereon, shall be credited against the Purchase Price in accordance with Section
3(c) (i) hereof) to Purchaser or Purchaser's designee. With respect to any
Security Deposits which are other than cash (e.g., letters of credit or
guarantees), Seller shall execute and deliver to Purchaser at the Closing (at
Seller's sole cost and expense) any appropriate instruments of assignment or
transfer, which assignments and transfers shall be without warranty or
representation by Seller (other than that Seller has not previously assigned
such Security Deposits and to Seller's knowledge such Security Deposits are free
and clear of all liens and other encumbrances) and in a form and substance
reasonably acceptable to Seller and Purchaser; provided that if any Security
Deposits are in the form of non-transferable letters of credits, (i) Seller
shall cooperate with Purchaser after Closing (at Seller's sole cost and expense)
to cause such letters of credits to be amended or replaced to name Purchaser (or
its designee) as the beneficiary thereunder or (ii) if there has been a default
beyond any applicable notice and cure periods with respect to any Lease for
which any such letter of credit is held, and the terms of such Lease permit the
landlord to draw on such letter of credit because of such default, then, if so
requested by Purchaser, Seller shall draw upon such letter of credit and deliver
the proceeds to Purchaser for application in accordance with the provisions of
such Lease, provided that Purchaser indemnifies Landlord for any claims,
actions, proceedings, losses, costs and expenses incurred by Seller by reason of
same.
(e) A bill of sale in the form of Exhibit D annexed hereto and made a
part hereof (the "BILL OF SALE").
(f) Executed notices to the tenants of the Premises in the form of
Exhibit E annexed hereto.
(g) Executed originals of all Estoppel Certificates received by
Seller and not previously delivered to Purchaser.
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(h) To the extent in Seller's possession or control, and not already
located at the Premises, keys, locks and combinations to all entrance doors to,
equipment and utility rooms and safes located in, the Premises.
(i) A "FIRPTA" affidavit sworn to by Seller in the form of Exhibit G
annexed hereto and made a part hereof. Purchaser acknowledges and agrees that
upon Seller's delivery of such affidavit, Purchaser shall not withhold any
portion of the Purchase Price pursuant to Section 1445 of the Internal Revenue
Code of 1986, as amended, and the regulations promulgated thereunder.
(j) The Gross Lease.
(k) The Triple Net Lease and the Triple Net Lease Memorandum.
(l) Written notices in form reasonably satisfactory to Seller and
Purchaser executed by Seller and Purchaser addressed to each party performing
services pursuant to a Contract (other than those Contracts terminated pursuant
to sub-clause (p) below) indicating that the Premises has been sold to Purchaser
and that all rights of Seller thereunder have been assigned to Purchaser.
(m) New York State Transfer Tax Return.
(n) An owner's affidavit in favor of the Title Company, substantially
in the form of Exhibit H.
(o) The Memorandum of Option.
(p) Termination notices to the counterparties under all management
and leasing agreements and any of the other Contracts that Purchaser elects to
have Seller terminate, provided that termination of such other Contracts is
without cost, liability or expense to Seller, which notices shall terminate such
Contracts pursuant to the terms of such Contracts.
(q) Certificates of title to the Motor Vehicles endorsed to
Purchaser.
(r) The Plans and Specifications (to the extent in Seller's
possession or control).
(s) All tenant files, maintenance records and other records with
respect to the operation of the Premises (to the extent in Seller's possession
or control).
(t) Copies of the resolutions of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement certified as
true and correct by the Secretary or Assistant Secretary of Seller and
accompanied by a certificate of such Secretary or Assistant Secretary certifying
as to (i) a good standing certificate issued by the state of incorporation of
Seller, dated within thirty (30) days of the Closing Date; (ii) a good standing
certificate issued by the State of New York, dated within thirty (30) days of
the Closing Date; (iii) an incumbency certificate executed by the Secretary or
Assistant Secretary of Seller with respect to those officers of Seller executing
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any documents or instruments in connection with the transactions contemplated
herein and (iv) the certificate of incorporation of Seller.
(u) All other documents Seller is required to deliver pursuant to the
provisions of this Agreement.
(v) An agreement (the "AEC AGREEMENT") from Seller in favor of
Purchaser in form and substance reasonably acceptable to Seller and Purchaser,
which agreement shall provide that (a) Seller acknowledges that Purchaser has
not had sufficient time to investigate the environmental matters set forth on
Schedule 13 hereto (collectively, the "AECS") prior to the expiration of the Due
Diligence Period and (b) in the event that Purchaser shall notify Seller on or
prior to the six (6) month anniversary of the Closing Date that Purchaser's
environmental consultant has determined that (i) any Hazardous Substances are
discovered with respect to any AECs, (ii) any laws or regulations relating to
Hazardous Substances have been or are being violated with respect to any AECs or
(iii) any remedial action plan or work plan is recommended by Purchaser's
environmental consultant with respect to any AECs (each of the AEC's referred to
in clauses (i), (ii) and (iii) of this clause (b) shall be referred to herein as
an "SPECIFIED AEC"), then Seller shall have right to object to one or more of
the AECs identified as a Specified AEC within ten (10) Business Days after
Purchaser delivers such notice to Seller, in which case Seller and Purchaser
shall retain an environmental consultant reasonably satisfactory to Seller,
Purchaser and Purchaser's mortgagee (the "INDEPENDENT ENVIRONMENTAL CONSULTANT")
to perform such environmental investigations as the Independent Environmental
Consultant deems reasonably necessary in order to determine whether the
Independent Environmental Consultant agrees that one or more of such AECs should
be included as a Specified AEC based on the criteria set forth in clauses (i)
through (iii) above (each Specified AEC which (y) Seller does not object to in
accordance with this paragraph or (z) which the Independent Environmental
Consultant agrees should be identified as a Specified AEC shall be referred to
as an "AGREED UPON AEC"). With respect to each Agreed Upon AEC, Seller shall,
(y) at Seller's sole expense, institute and perform any remedial action plan or
work plan recommended by the Independent Environmental Consultant with respect
to each Agreed Upon AEC and otherwise comply with any laws and regulations
relating to Hazardous Substances in connection with such remedial action plan or
work plan and (z) indemnify, defend and hold harmless, Purchaser from any and
all claims, demands, causes of actions, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorney's and consultant's
fees and disbursements), whether foreseen or unforeseen, asserted against or
incurred by Purchaser with respect to, or arising out of, any claims made by any
third party, including any governmental agency or authority and/or any adjoining
land owner, relating to any Agreed Upon AEC. Notwithstanding anything to the
contrary contained herein (1) Purchaser shall have the right to implement any
additional remedial actions with respect to any Agreed Upon AEC which may be
recommended by Purchaser's environmental consultant so long as Purchaser pays
the incremental costs relating to such additional remedial actions and (2)
Seller shall have no liability or obligation with respect to any AEC that is not
an Agreed Upon AEC.
(w) An agreement (the "CAFETERIA AND FITNESS CENTER AGREEMENT"
between Seller and Purchaser in form and substance reasonably acceptable to
Seller and Purchaser, which agreement shall contain such provisions as currently
set forth in Sections 1.1(a)(ii) and 1.4 (and any provisions relating thereto)
of the form of Declaration of Easements attached as Exhibit N hereto; it being
31
understood and agreed that such Sections 1.1(a) (ii) and 1.4 (and any provisions
relating thereto) shall be removed from the Declaration of Easements to be
delivered at Closing.
(x) A subordination non-disturbance and attornment agreement in favor
of Purchaser's lender in the form required under the Triple Net Lease.
(y) An estoppel certificate in favor of Purchaser's lender in the
form required under the Triple Net Lease.
(z) If required by Purchaser's lender, a subordination agreement
between Seller and Purchaser's lender, which agreement shall subordinate the
lien and terms of the Mortgage to the lien and terms of a mortgage made by
Purchaser in favor of Purchaser's lender, which agreement shall be commercially
reasonable.
(aa) If required by Purchaser's lender, an intercreditor agreement
with respect to the rights of Seller, in its capacity as mortgagee under the
Mortgage, and the rights of Purchaser's lender as (i) mortgagee of the fee
and/or leasehold interest relating to Parcel A (as defined in the Declaration of
Easements) and/or (ii) holder of any pledge of equity interests made by any
direct or indirect owner of Purchaser, which intercreditor agreement shall be
commercially reasonable."
11. Documents to be Delivered by Purchaser at Closing. At the
Closing, Purchaser shall execute, acknowledge and/or deliver, as applicable, the
following to Seller:
(a) The balance of the cash portion of the Purchase Price, subject to
apportionments, credits and adjustments as provided in this Agreement.
(b) The Bill of Sale.
(c) The Assignments.
(d) The Gross Lease, the Triple Net Lease, the Triple Net Lease
Memorandum and the Cafeteria and Fitness Center Agreement.
(e) If Purchaser is a corporation, (i) copies of the certificate of
incorporation of Purchaser and of the resolutions of the board of directors of
Purchaser authorizing the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated by this Agreement
certified as true and correct by the Secretary or Assistant Secretary of
Purchaser; (ii) a good standing certificate issued by the state of incorporation
of Purchaser, dated within thirty (30) days of the Closing Date; (iii) a good
standing certificate issued by the State of New York, dated within thirty (30)
days of the Closing Date; and (iv) an incumbency certificate executed by the
Secretary or Assistant Secretary of Purchaser with respect to those officers of
Purchaser executing any documents or instruments in connection with the
transactions contemplated herein.
(f) If Purchaser is a partnership, copies of Purchaser's partnership
certificate and, if required by law or its partnership agreement, copies of
partnership resolutions and/or consents of the partners authorizing the
execution, delivery and performance of this Agreement and the consummation of
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the transactions contemplated by this Agreement, all certified as true and
correct by a general partner of Purchaser.
(g) If Purchaser is a limited liability company, copies of
resolutions of Purchaser's governing member(s) /manager(s) authorizing all the
transactions contemplated by this Agreement, together with a certificate of the
managing member of Purchaser or similar appropriate documentation certifying as
to (i) the consent of Purchaser authorizing the execution, delivery and
performance of this Agreement and each document, instrument or agreement
executed by Purchaser in connection with this Agreement, (ii) the incumbency of
those officers or other representatives of Purchaser executing any documents or
instruments in connection with the transactions contemplated herein, (iii) the
articles of organization of Purchaser, (iv) a certificate of good standing of
Purchaser from its state of formation (dated no earlier than thirty (30) days
prior to the Closing), and (v) a New York State certificate of good standing
(dated no earlier than thirty (30) days prior to the Closing);
(h) New York Transfer Tax Return.
(i) The Note.
(j) The Mortgage.
(k) The RDA Ground Lease.
(l) The Ground Lease Memorandum.
(m) The Declaration of Easements.
(n) The Option Memorandum.
(o) All other documents Purchaser is required to deliver pursuant to
the provisions of this Agreement.
12. Operation of the Premises prior to the Closing Date. Between the
date hereof and the Closing Date, Seller shall have the right to continue to
manage, operate and maintain the Premises in a manner consistent with the manner
in which the Premises have been operated, managed and maintained prior to the
Effective Date, at Seller's sole cost and expense, subject to the terms and
conditions of this Section 12. In connection therewith:
(a) From and after the Effective Date:
(i) Seller shall provide Purchaser with copies of all material
notices sent or received with respect to any Lease, and shall provide Purchaser
with written notice of any application of any Security Deposits made by Seller
within one (1) Business Day of such application. Seller shall not amend, modify,
extend, renew or cancel, or grant any material consent or waive any material
right under, or enter into any proposed Lease of all or any portion of the
Premises without Purchaser's prior consent in each instance, which consent shall
(A) not be unreasonably withheld or delayed, (including without limitation, with
respect to a lease to F.S.G.T.F. Inc., d/b/a "The Auto Center", currently being
negotiated by Seller, the term of which will not exceed one (1) year) prior to
33
the expiration of the Due Diligence Period, and (B) may be given or withheld in
Purchaser's sole discretion following the expiration of the Due Diligence
Period. In connection with Seller's request for Purchaser's consent under this
Section 12(a)(i), Seller shall promptly provide Purchaser with all information
in Seller's possession or control reasonably requested by Purchaser in
connection with such determination (e.g., term sheets, leases, etc.). Once any
Lease or other document is executed, Seller shall promptly provide Purchaser
with a copy of same. With respect to any proposed action by Seller to be
submitted to Purchaser for its consent pursuant to this Section 12(a)(i),
Purchaser shall consent or deny its consent, with the reasons for any such
denial as to any then existing or proposed Lease within ten (10) days after
receipt by Purchaser of Seller's notice requesting Purchaser's consent to the
proposed action relating to such existing or proposed Lease. Provided that
Seller's notice requesting Purchaser's consent states in capitalized bold face
type "A FAILURE TO RESPOND TO THIS NOTICE WITHIN 10 DAYS SHALL BE DEEMED A
CONSENT TO THE REQUEST SET FORTH HEREIN", if Purchaser fails to reply to
Seller's request for consent pursuant to the provisions of this Section 12(a)(i)
within the above described ten (10) day time period, Purchaser's consent shall
be deemed given to the request in question.
(ii) Seller shall not take any action that would render any
representation made by Seller in this Agreement with respect to the Premises
materially untrue, and if, to Seller's knowledge, any representation made by
Seller in this Agreement becomes materially untrue, Seller shall provide notice
of such untrue representation, in which event the provisions of Section
7(a)(iii) hereof shall apply.
(iii) Seller shall not take any affirmative action that would result
in the cancellation of any material Permit or render any material Permit
invalid.
(iv) Seller shall perform all of the material obligations to be
performed by Seller under the Contracts and the Leases, and shall provide to
Purchaser promptly after the giving or receipt thereof any material notices
received or given pursuant to the Leases or Contracts.
(b) As used herein "LEASE EXPENSES" means the following: (A)
brokerage commissions and fees payable to a third party that is not affiliated
with Seller or to an Affiliate of Seller if same is at market rates as a result
of any Lease, (B) expenses incurred for tenant finish, repairs, leasehold
improvements, equipment, painting, decorating, partitioning and other items to
satisfy the tenant's requirements under a Lease, (C) moving expenses payable by
the landlord under a Lease, (D) other tenant abatements and allowances payable
by the landlord under a Lease, (E) reasonable legal fees for services in
connection with the preparation of documents and other services rendered solely
in connection with the effectuation of the Lease; (F) expenses incurred for the
purpose of satisfying or terminating the obligations of a tenant under a Lease
to the landlord under another lease (whether or not such other lease covers
space in the Premises), and (G) reimbursements to the tenant required under a
Lease for the cost of any of the items described in the preceding clauses (B)
through (F). Seller shall pay prior to Closing, or Purchaser shall receive a
credit at Closing for, all Lease Expenses incurred in connection with a Lease
entered into prior to the Closing Date. The provisions of this Section 12(b)
shall survive the Closing.
34
(c) Notwithstanding anything to the contrary contained in this
Agreement, Seller reserves the right, but is not obligated, to institute summary
proceedings against any tenant or terminate any Lease, in either case, as a
result of a default beyond all applicable notice and grace periods by the tenant
thereunder prior to the Closing Date; provided, however, that during the period
from and after the first day of the Due Diligence Period and continuing through
the Closing Date and provided that this Agreement has not been terminated,
Seller shall not terminate any Lease without Purchaser's prior consent in each
instance.
(d) From and after the Effective Date, Seller shall not amend,
modify, extend, renew or cancel (except as a result of a default beyond any
applicable notice or cure periods by the other party thereunder), or grant any
material consent or waive any material right under, any Contracts (including,
without limitation, any agreements with brokers for leasing any portion of the
Premises), or enter into any new contract or agreement that would become a
Contract without Purchaser's prior consent in each instance, which consent shall
(A) not be unreasonably withheld or delayed prior to the expiration of the Due
Diligence Period, and (B) may be given or withheld in Purchaser's sole
discretion following the expiration of the Due Diligence Period; provided,
however, that Purchaser's consent shall not be required with respect to any of
the aforestated actions if such Contract may be terminated at any time on not
more than sixty (60) days' prior notice by Seller, or its successor, without the
payment of a penalty. In connection with Seller's request for Purchaser's
consent under this Section 12(d), Seller shall promptly provide Purchaser with
all information in Seller's possession or control reasonably requested by
Purchaser in connection with such determination. Once any Contract or other
document is executed, Seller shall promptly provide Purchaser with a copy of
same. With respect to any proposed action by Seller to be submitted to Purchaser
for its consent pursuant to this Section 12(d), Purchaser shall consent or deny
its consent, with the reasons for any such denial as to any then existing or
proposed Contract within ten (10) days after receipt by Purchaser of Seller's
notice requesting Purchaser's consent to the proposed action relating to such
existing or proposed Contract. Provided that Seller's notice requesting
Purchaser's consent states in capitalized bold face type "A FAILURE TO RESPOND
TO THIS NOTICE WITHIN 10 DAYS SHALL BE DEEMED A CONSENT TO THE REQUEST SET FORTH
HEREIN", if Purchaser fails to reply to Seller's request for consent pursuant to
the provisions of this Section 12(d) within the above described ten (10) day
time period, Purchaser's consent shall be deemed given to the request in
question.
In connection with Seller's request for Purchaser's consent under
this Section 12(d), Seller shall provide Purchaser with all information in
Seller's possession reasonably requested by Purchaser and necessary for
Purchaser to make such determination. Once any Contract or other document is
executed, Seller shall promptly provide Purchaser with a copy of same.
13. As Is.
(a) Except for the specific representations and warranties made by
Seller in this Agreement or in the Closing Documents, Purchaser agrees to
purchase the Premises (subject to Purchaser's right to terminate this Agreement
in accordance with the terms of this Agreement) in its "AS IS WHERE IS AND WITH
ALL FAULTS" condition as of the Effective Date, and subject to all latent and
patent defects (whether physical, financial or legal).
35
(b) This Agreement, as written, contains all the terms of the
agreement entered into between the parties as of the Effective Date, and
Purchaser acknowledges that neither Seller nor any of Seller's Affiliates
(hereinafter defined), nor any of their agents or representatives has made any
representations or held out any inducements to Purchaser, and Seller hereby
specifically disclaims any representation, oral or written, past, present or
future, other than those specifically set forth in this Agreement or in the
Closing Documents. Without limiting the generality of the foregoing, Purchaser
has not relied on any representations or warranties, and neither Seller nor any
of Seller's Affiliates, nor any of their agents or representatives has or is
willing to make any representations or warranties, express or implied, other
than as may be expressly set forth in this Agreement or the Closing Documents,
as to (i) the status of title to the Premises, (ii) the Leases, (iii) the
Contracts, (iv) the Permits, (v) the current or future real estate tax
liability, assessment or valuation of the Premises; (vi) the potential
qualification of the Premises for any and all benefits conferred by any Laws
whether for subsidies, special real estate tax treatment, insurance, mortgages
or any other benefits, whether similar or dissimilar to those enumerated; (vii)
the compliance of the Premises in its current or any future state with
applicable Laws or any violations thereof, including, without limitation, those
relating to access for the handicapped, environmental or zoning matters, and the
ability to obtain a change in the zoning or a variance in respect to the
Premises' non compliance, if any, with zoning Laws; (viii) the nature and extent
of any right of way, lease, possession, lien, encumbrance, license, reservation,
condition or otherwise; (ix) the availability of any financing for the purchase,
alteration, rehabilitation or operation of the Premises from any source,
including, without limitation, any government authority or any lender; (x) the
current or future use of the Premises, including, without limitation, the
Premises' use for commercial, residential or general office purposes; (xi) the
present or future structural and physical condition of the Buildings, their
suitability for rehabilitation or renovation, or the need for expenditures for
capital improvements, repairs or replacements thereto; (xii) the viability or
financial condition of any tenant; (xiii) the status of the leasing market in
which the Premises is located; or (xiv) the actual or projected income or
operating expenses of the Premises.
(c) Purchaser acknowledges that Seller will have, unless Purchaser
terminates this Agreement in accordance with Section 4(d), afforded Purchaser
the opportunity for full and complete investigations, examinations and
inspections of the Premises and all Property Information. Seller hereby
represents that the Provided Documents are all of the material documents in
Seller's possession or control that are material to the operation of the
Premises. Subject to the representations and warranties of Seller contained
herein and in the Closing Documents, Purchaser acknowledges and agrees that (i)
the Property Information delivered or made available to Purchaser and
Purchaser's Representatives by Seller or Seller's Affiliates, or any of their
agents or representatives may have been prepared by third parties and may not be
the work product of Seller and/or any of Seller's Affiliates; (ii) neither
Seller nor any of Seller's Affiliates has made any independent investigation or
verification of, or has any knowledge of, the accuracy or completeness of, the
Property Information; (iii) the Property Information delivered or made available
to Purchaser and Purchaser's Representatives is furnished to each of them at the
request, and for the convenience of, Purchaser; (iv) Purchaser is relying solely
on its own investigations, examinations and inspections of the Premises and
those of Purchaser's Representatives and is not relying in any way on the
Property Information furnished by Seller or any of Seller's Affiliates, or any
of their agents or representatives; (v) Seller expressly disclaims any
representations or warranties with respect to the accuracy or completeness of
36
the Property Information and Purchaser releases Seller and Seller's Affiliates,
and their agents and representatives, from any and all liability with respect
thereto; and (vi) any further distribution of the Property Information is
subject to Section 22.
(d) Purchaser or anyone claiming by, through or under Purchaser,
hereby fully and irrevocably releases Seller and Seller's Affiliates, and their
agents and representatives, from any and all claims that it may now have or
hereafter acquire against Seller or Seller's Affiliates, or their agents or
representatives for any cost, loss, liability, damage, expense, action or cause
of action, whether foreseen or unforeseen, arising from or related to any
construction defects, errors or omissions on or in the Premises, the presence of
Hazardous Substances or any other conditions (whether patent, latent or
otherwise) affecting the Premises, except for claims against Seller based upon
any obligations and liabilities of Seller expressly provided in this Agreement
or in any Seller Document. Purchaser further acknowledges and agrees that this
release shall be given full force and effect according to each of its expressed
terms and provisions, including, but not limited to, those relating to unknown
and suspected claims, damages and causes of action. As a material covenant and
condition of this Agreement, Purchaser agrees that in the event of any such
construction defects, errors or omissions, the presence of environmentally
hazardous, toxic or dangerous substances, or any other conditions affecting the
Premises, Purchaser shall look solely to Seller's predecessors in interest or to
such contractors and consultants as may have contracted for work in connection
with the Premises for any redress or relief, except for claims against Seller
based upon any obligations and liabilities of Seller expressly provided in this
Agreement or in any Seller Document. Purchaser further understands that some of
Seller's predecessors in interest or such contractors and consultants may have
filed petitions under the bankruptcy code and Purchaser may have no remedy
against such predecessors, contractors or consultants.
(e) Purchaser's failure, for any reason whatsoever, to elect to
terminate this Agreement pursuant to Section 4(d) shall be deemed an
acknowledgment by Purchaser that Purchaser has inspected the Premises, is
thoroughly acquainted with and accepts its condition (subject to the specific
provisions of this Agreement), and has reviewed, to the extent necessary in its
discretion, all the Property Information. Except for the representations and
warranties made by Seller in this Agreement or in any Seller Document, Seller
shall not be liable or bound in any manner by any oral or written information
pertaining to the Premises or the rents furnished by Seller, Seller's
Affiliates, their agents or representatives, any real estate broker or other
person.
(f) The provisions of this Section 13 shall survive the termination
of this Agreement and the Closing.
14. Broker. Purchaser and Seller represent and warrant to each other
that neither party has dealt with a broker in connection with the Premises and
the transactions described herein other than Cushman & Wakefield, Inc.
("BROKER"), whose fees will be paid by Seller pursuant to a separate agreement
between Seller and Broker. Subject to the foregoing, each party hereto agrees to
indemnify, defend and hold the other harmless from and against any and all
claims, causes of action, losses, costs, expenses, damages or liabilities,
including reasonable attorneys' fees and disbursements, which the other party
may sustain, incur or be exposed to, by reason of any claim or claims by any
broker, finder or other person (other than Broker), for fees, commissions or
37
other compensation arising out of the transactions contemplated in this
Agreement if such claim or claims are based in whole or in part on dealings or
agreements with the indemnifying party. The obligations and representations and
warranties contained in this Section 14 shall survive the termination of this
Agreement and the Closing.
15. Casualty; Condemnation.
(a) Damage or Destruction: If, prior to the Closing Date, A
"MATERIAL" part (as hereinafter defined) of the Premises is damaged or destroyed
by fire or other casualty, Seller shall promptly notify Purchaser of such fact
and, except as hereinafter provided, Purchaser shall have the option to
terminate this Agreement upon notice to Seller given not later than thirty (30)
days after receipt of Seller's notice. If this Agreement is so terminated, the
provisions of Section 15(c) shall apply. If (i) Purchaser does not elect to
terminate this Agreement, or (ii) there is damage to or destruction of an
"IMMATERIAL" part ("IMMATERIAL" is herein deemed to be any damage or destruction
which is not "MATERIAL", as such term is hereinafter defined) of the Premises,
Seller shall, unless Seller has repaired such damage or destruction prior to the
Closing, (x) pay over to Purchaser the proceeds of any insurance collected by
Seller less the amount of all costs reasonably incurred by Seller in connection
with the repair of such damage or destruction, (y) assign and transfer to
Purchaser all right, title and interest of Seller in and to any uncollected
insurance proceeds which Seller may be entitled to receive as a result of such
damage or destruction, and (z) pay over to Purchaser the amount of any
applicable deductible. A "MATERIAL" part of the Premises shall be deemed to have
been damaged or destroyed if the cost of repair or replacement shall be
$1,500,000 or more as reasonably estimated by an independent third-party
reasonably acceptable to Purchaser, or if after repairs the casualty materially
adversely affects access to the Premises. During the period from the Effective
Date through the Closing Date, (i) Seller shall maintain the same casualty and
liability insurance policies (or insurance policies providing coverage which is
at least as favorable) with respect to the Premises that are in place as of the
Effective Date, as disclosed by Seller to Purchaser and (ii) provided that
Purchaser does not have the right to terminate this Agreement for such damage or
destruction, Seller shall not settle any insurance claim for any damage or
destruction to any material part of the Premises.
(b) Condemnation: If, prior to the Closing Date, all or any
"SIGNIFICANT" portion (as hereinafter defined) of the Premises is taken by
eminent domain or condemnation (or is the subject of a pending taking which has
not been consummated), Seller shall promptly notify Purchaser of such fact and
the Purchaser shall have the option to terminate this Agreement upon notice to
the Seller given not later than thirty (30) days after receipt of the Seller's
notice. If this Agreement is so terminated, the provisions of Section 15(c)
shall apply. If Purchaser does not elect to terminate this Agreement, or if an
"INSIGNIFICANT" portion ("insignificant" is herein deemed to be any taking which
is not "SIGNIFICANT", as such term is herein defined) of the Premises is taken
by eminent domain or condemnation, at the Closing, Seller shall assign and
turnover, and Purchaser shall be entitled to receive and keep, all awards or
other proceeds for such taking by eminent domain or condemnation. A
"SIGNIFICANT" portion of the Premises means (i) more than 25,000 square feet of
rentable area (exclusive of the RDA Buildings), or other portion of the Premises
the taking of which would reasonably be anticipated to have a material adverse
effect on Purchaser's intended development of the Premises or (ii) two (2) or
more acres of the Land; provided, however, in no event shall any eminent domain
or condemnation taking in connection with a widening of Roaring Brook Road be
38
deemed to be "SIGNIFICANT." From and after the expiration of the Due Diligence
Period, and provided that Purchaser has not terminated this Agreement pursuant
to Section 15(c) hereof, Purchaser shall have the right to participate in any
condemnation proceedings affecting the Premises, and Seller shall not enter into
any settlement agreement with respect to such proceedings without the prior
consent of Purchaser (which consent shall not be unreasonably withheld); unless
the applicable condemnation or eminent domain proceeding is for the entire
Premises, in which event Purchaser shall have no right to participate in the
condemnation proceedings or approve any related settlement or award.
(c) If Purchaser elects to terminate this Agreement pursuant to
Section 15(a) or 15(b), this Agreement shall be terminated and neither party
shall have any further rights, obligations or liabilities hereunder, except for
the Surviving Obligations, and except that Purchaser shall be entitled to a
return of the Deposit and all accrued interest thereon.
16. Remedies.
(a) If the Closing fails to occur by reason of Purchaser's failure or
refusal to perform its obligations hereunder, then Seller, in addition to any
other remedies available to Seller at law or in equity, may bring an action
against Purchaser for Seller's actual damages and the Deposit shall not be
treated as liquidated damages and shall be applied to the actual damages, if
any, awarded to Seller. Nothing contained herein shall limit or restrict
Seller's ability to pursue any rights or remedies it may have against Purchaser
with respect to the Surviving Obligations. Except as set forth in this Section
16(a) and Section 22(e), Seller hereby expressly waives, relinquishes and
releases any other right or remedy available to it at law, in equity or
otherwise by reason of Purchaser's default hereunder or Purchaser's failure or
refusal to perform its obligations hereunder.
(b) If the Closing fails to occur by reason of Seller's failure or
refusal to perform its obligations hereunder, then Purchaser, in addition to any
other remedies available to Purchaser at law or in equity, may (i) terminate
this Agreement by notice to Seller, in which event Purchaser shall be entitled
to a return of the Deposit and all interest accrued thereon and Purchaser shall
be entitled to receive the Due Diligence Costs from Seller, or (ii) seek
specific performance from Seller. As a condition precedent to Purchaser
exercising any right it may have to bring an action for specific performance as
the result of Seller's failure or refusal to perform its obligations hereunder,
Purchaser must commence such an action within ninety (90) days after the
scheduled Closing Date. Purchaser agrees that its failure to timely commence
such an action for specific performance within such 90-day period shall be
deemed a waiver by it of its right to commence such an action. As used herein,
the term "DUE DILIGENCE Costs" shall mean the lesser of (i) all of Purchaser's
reasonable and actual out-of-pocket third party expenses incurred in connection
with the preparation and negotiation of this Agreement and all reasonable and
actual out-of-pocket third party due diligence costs with respect to the
transactions contemplated herein, including, without limitation, reasonable and
actual attorneys' and consultants' fees in connection therewith, or (ii)
$750,000.
(c) If Closing fails to occur by reason of any breach or inaccuracy
of Seller's representations or warranties, the provisions of Section 16(b) shall
apply, subject to the limitations of Section 7.
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17. Purchaser's Access to the Premises. From and after the Effective
Date through the Closing Date, upon prior notice (which notice may be oral) and
subject to the prior approval of each tenant of Seller, to the extent such
approval is required under the Leases, Purchaser and Purchaser's Representatives
shall have the right to enter upon the Premises for the sole purpose of
inspecting the Premises and making surveys, soil borings, engineering tests and
other investigations, inspections and tests (collectively, "INVESTIGATIONS"),
provided (i) Purchaser shall give Seller not less than two (2) Business Days'
prior notice (which notice may be oral) before the first such entry and one (1)
day's prior notice before each subsequent entry, (ii) the first such notice
shall include sufficient information to permit Seller to review the scope of the
proposed Investigations, and (iii) neither Purchaser nor Purchaser's
Representatives shall permit any borings, drillings or samplings to be done on
the Premises without Seller's prior written consent, which shall not be
unreasonably withheld or delayed. Unless otherwise agreed by Seller, any entry
upon the Premises and all Investigations shall be during the Premises' normal
business hours and at the sole risk and expense of Purchaser and Purchaser's
Representatives, and shall not materially interfere with the activities on or
about the Premises of Seller, its tenants and their employees and invitees.
Purchaser shall:
(a) promptly repair any damage to the Premises resulting from any
such Investigations and replace, refill and regrade any holes made in, or
excavations of, any portion of the Premises used for such Investigations so that
the Premises shall be in the same condition that it existed in prior to such
Investigations;
(b) fully comply with all Laws applicable to the Investigations and
all other activities undertaken in connection therewith;
(c) permit Seller to have a representative present during all
Investigations undertaken hereunder, at Seller's sole cost and expense;
(d) take all actions and implement all protections reasonably
necessary to ensure that all actions taken in connection with the
Investigations, and the equipment, materials, and substances generated, used or
brought onto the Premises pose no threat to the safety or health of persons or
the environment, and cause no damage to the Premises (other than minor damage
necessary for Purchaser's investigations which can and shall be promptly
repaired by Purchaser at Purchaser's sole cost and expense) or other property of
Seller or other persons;
(e) furnish to Seller, at no cost or expense to Seller, copies of all
surveys, soil test results, engineering, asbestos, environmental and other
property specific studies and reports relating to the Investigations (but not
including studies related to the Redevelopment Project) which Purchaser shall
obtain with respect to the Premises promptly after Purchaser's receipt of same;
(f) until the Closing or the earlier termination of this Agreement,
maintain or cause to be maintained, at Purchaser's expense, a policy of
comprehensive general public liability insurance, with a broad form contractual
liability endorsement covering Purchaser's indemnification obligations contained
in Section 17(h), and with a combined single limit of not less than
$1,000,000.00 per occurrence for bodily injury and property damage, automobile
liability coverage including owned and hired vehicles with a combined single
40
limit of $1,000,000.00 per occurrence for bodily injury and property damage, and
an excess umbrella liability policy for bodily injury and property damage in the
amount of an additional $5,000,000.00, insuring Purchaser as named insured and
Seller, Seller's Affiliates, and Seller's tenants as additional insureds,
against any injuries or damages to persons or property that may be caused by (i)
Purchaser's and/or Purchaser's Representatives' entry upon the Premises, (ii)
any Investigations or other activities conducted thereon by Purchaser or
Purchaser's Representatives, and (iii) all other activities undertaken by
Purchaser and/or Purchaser's Representatives at the Premises, all of which
insurance shall be on an "OCCURRENCE FORM" and otherwise in such forms and with
an insurance company reasonably acceptable to Seller, and deliver a copy of the
insurance certificates evidencing such insurance to Seller prior to the first
entry on the Premises;
(g) not allow the Investigations or any and all other activities
undertaken by Purchaser or Purchaser's Representatives with respect to the
Premises to result in any liens, judgments or other encumbrances being filed or
recorded against the Premises, and Purchaser shall, at its sole cost and
expense, promptly discharge of record any such liens or encumbrances that are so
filed or recorded (including, without limitation, liens for services, labor or
materials furnished); and
(h) indemnify and defend Seller and Seller's Affiliates and hold
Seller and Seller's Affiliates harmless from and against any and all claims,
demands, causes of action, losses, damages, liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements),
suffered or incurred by Seller or any of Seller's Affiliates and caused by (i)
Purchaser's and/or Purchaser's Representatives' entry upon the Premises, (ii)
any Investigations or other activities conducted thereon by Purchaser or
Purchaser's Representatives, (iii) any liens or encumbrances filed or recorded
against the Premises as a consequence of the Investigations or any and all other
activities undertaken by Purchaser or Purchaser's Representatives, and/or (iv)
any and all other activities undertaken by Purchaser or Purchaser's
Representatives with respect to the Premises, unless caused by the gross
negligence or willful misconduct of Seller or Seller's Affiliates, and their
respective servants, employees, agents, licensees, tenants and invitees.
(i) Notwithstanding anything to the contrary contained herein,
Purchaser shall have the right to conduct such environmental studies,
investigations, and testing, including so-called Phase II environmental studies
(collectively, the "AEC TESTING"), on or with respect to the Premises from and
after November 18, 2004 which Purchaser deems reasonably necessary with respect
to the AECs or as otherwise may be required by Purchaser's lender. Purchaser
shall conduct such testing in accordance with this Section 17; provided,
however, Seller's consent shall not be required with respect to any AEC Testing.
Seller shall cooperate with Purchaser and its environmental consultant with
respect to the AEC Testing. Purchaser's rights under this Section 17(i) shall
survive the Closing.
The provisions of this Section 17 shall survive the termination of
this Agreement or the Closing, as applicable.
18. Escrow. Escrow Agent shall hold the LOI Deposit and the Deposit
and all interest accrued thereon, if any (collectively, the "FUND") in escrow
and shall dispose of the Fund only in accordance with the following provisions:
41
(a) Escrow Agent shall deliver the Deposit (and the LOI Deposit) to
Seller or Purchaser, as the case may be, as follows:
(i) to Seller, upon completion of the Closing and/or
(ii) to Seller, after receipt of Seller's demand in which Seller
certifies either that (A) Purchaser has defaulted under this Agreement beyond
any applicable notice or cure periods, or (B) this Agreement has been terminated
or cancelled, and Seller is thereby entitled to receive the Deposit; but Escrow
Agent shall not honor Seller's demand until more than ten (10) Business Days
after Escrow Agent has given a copy of Seller's demand to Purchaser in
accordance with Section 18(b)(i), nor thereafter if Escrow Agent receives a
Notice of Objection from Purchaser within such ten (10) Business Day period; or
(iii) to Purchaser, immediately after receipt of Purchaser's demand
on or prior to the expiration of the Due Diligence Period in which Purchaser
certifies that it has terminated the Agreement under Section 4(d); or
(iv) to Purchaser, after receipt of Purchaser's demand in which
Purchaser certifies either that (A) Seller has defaulted under this Agreement
beyond any applicable notice or cure periods, or (B) this Agreement has been
terminated or cancelled, and Purchaser is thereby entitled to receive the
Deposit; but Escrow Agent shall not honor Purchaser's demand until more than ten
(10) Business Days after Escrow Agent has given a copy of Purchaser's demand to
Seller in accordance with Section 18(b)(i), nor thereafter if Escrow Agent
receives a Notice of Objection from Seller within such ten (10) Business Day
period; or
(v) to Purchaser (with respect to the LOI Deposit only), on the
second Business Day after the delivery of Purchaser's Termination Notice to
Seller.
Upon delivery of the Deposit in accordance with this Agreement,
Escrow Agent shall be relieved of all liability hereunder and with respect to
the Deposit. Escrow Agent shall deliver the Deposit, at the election of the
party entitled to receive the same, by (i) a good, unendorsed certified check of
Escrow Agent payable to the order of such party, (ii) an unendorsed official
bank or cashier's check payable to the order of such party, or (iii) a bank wire
transfer of immediately available funds to an account designated in writing to
Escrow Agent by such party.
(b) (i) Upon receipt of a written demand from Seller or Purchaser
under Section 18(a) (ii), (iii) or (iv), Escrow Agent shall send a copy of such
demand to the other party within one (1) Business Day. Within ten (10) Business
Days after the date of receiving same, but not thereafter, the other party may
object (except with respect to a timely demand made pursuant to Section
18(a)(iii)) to delivery of the Deposit to the party making such demand by giving
a notice of objection (a "NOTICE OF Objection") to Escrow Agent. After receiving
a Notice of Objection, Escrow Agent shall immediately send a copy of such Notice
of Objection to the party who made the demand; and thereafter, in its sole and
absolute discretion, Escrow Agent may elect either (A) to continue to hold the
Deposit until Escrow Agent receives a written agreement of Purchaser and Seller
directing the disbursement of the Deposit, in which event Escrow Agent shall
disburse the Deposit in accordance with such agreement; and/or (B) deposit the
42
Deposit and all interest accrued thereon into any court of competent
jurisdiction and bring any action of interpleader or any other proceeding, in
which event, Escrow Agent's duties hereunder shall be terminated; and/or (C) in
the event of any litigation between Seller and Purchaser, to deposit the Deposit
and all interest accrued thereon with the clerk of the court in which such
litigation is pending.
(ii) If Escrow Agent is uncertain for any reason whatsoever as to its
duties or rights hereunder (and whether or not Escrow Agent has received any
written demand under Section 18(a)(ii) or (iv), or Notice of Objection under
Section 18(b)(i)), notwithstanding anything to the contrary herein, Escrow Agent
may hold and apply the Deposit pursuant to Section 18(b)(i)(A), (B) or (C) and
may decline to take any other action whatsoever. In the event the Deposit is
deposited in a court of competent jurisdiction by Escrow Agent pursuant to
Section 18(b)(i)(B) or (C), Escrow Agent shall be entitled to rely upon the
decision of such court. In the event of any dispute whatsoever among the parties
with respect to disposition of the Deposit, Purchaser and Seller shall pay the
reasonable attorney's fees and costs incurred by Escrow Agent (which said
parties shall share equally, but for which said parties shall be jointly and
severally liable) for any litigation in which Escrow Agent is named as, or
becomes, a party.
(c) Notwithstanding anything to the contrary in this Agreement,
within one (1) Business Day after the receipt of the LOI Deposit or the Deposit,
as applicable, Escrow Agent shall place such deposit in an Approved Investment
(as defined below). The interest, if any, which accrues on such Approved
Investment shall not be deemed part of such deposit; and Escrow Agent shall
dispose of such interest at any time and from time to time as directed by
Purchaser. Escrow Agent may not commingle the Fund with any other funds held by
Escrow Agent. Escrow Agent may convert the Fund from the Approved Investment
into cash or a non interest bearing demand account at an Approved Institution as
follows:
(i) at any time within two (2) days prior to the Closing Date; or
(ii) if the Closing Date is accelerated or extended, at any time
within two (2) days prior to the accelerated or extended Closing Date.
(d) As used herein, the term "APPROVED INVESTMENT" means (i) any
interest bearing demand account or money market fund in Citibank of New York,
New York or Washington, D.C. or in any other institution otherwise approved by
both Seller and Purchaser (collectively, an "APPROVED INSTITUTION"), or (ii) any
other investment approved by both Seller and Purchaser. The rate of interest or
yield need not be the maximum available and reinvestment of any matured
investment shall be made in an Approved Investment. Discounts earned shall be
deemed interest for the purpose hereof.
(e) Escrow Agent shall have no duties or responsibilities except
those set forth herein, which the parties hereto agree are ministerial in
nature. Seller and Purchaser acknowledge that Escrow Agent is serving without
compensation, solely as an accommodation to the parties hereto, and except for
Escrow Agent's own willful default, misconduct or gross negligence, Escrow Agent
shall have no liability of any kind whatsoever arising out of or in connection
with its activity as Escrow Agent. Seller and Purchaser jointly and severally
agree to and do hereby indemnify and hold harmless Escrow Agent from all loss,
cost, claim, damage, liability, and expense (including, without limitation,
43
reasonable attorney's fees and disbursements whether paid to retained attorneys
or representing the fair value of legal services rendered to itself) which may
be incurred by reason of its acting as Escrow Agent provided the same is not the
result of Escrow Agent's willful default, misconduct or gross negligence.
(f) Any Notice of Objection, demand or other notice or communication
which may or must be sent, given or made under this Agreement to or by Escrow
Agent shall be sent in accordance with the provisions of Section 21.
(g) Simultaneously with their execution and delivery of this
Agreement, Purchaser and Seller shall furnish Escrow Agent with their true
Federal Taxpayer Identification Numbers so that Escrow Agent may file
appropriate income tax information returns with respect to any interest earned
on the Deposit or other income from the Approved Investment. The Purchaser shall
be responsible for the payment of any tax due with respect to any Approved
Investment.
(h) Any amendment of this Agreement which alters or modifies Escrow
Agent's obligations hereunder will not be effective against or binding upon
Escrow Agent without Escrow Agent's prior consent, which consent may be withheld
in Escrow Agent's sole and absolute discretion.
(i) The provisions of this Section 18 shall survive the termination
of this Agreement and the Closing.
19. Assignment. This Agreement may not be assigned by Purchaser
without the express written consent of Seller; provided, however, Purchaser may
assign all or any portion of its rights under this Agreement, without Seller's
consent, to one or more entities so long as each of such entities is a Permitted
Transferee, provided that a copy of such assignment and assumption is
simultaneously delivered to Seller on or prior to the Closing Date. In the event
that Purchaser shall assign its rights under this Agreement to two or more
Permitted Transferees, Seller shall cooperate in good faith with Purchaser to
amend the forms of Closing Documents attached hereto to, or referred to herein,
accommodate such multiple assignments, including conveying such portions of the
Premises to such Permitted Transferees as Purchaser shall direct. A "PERMITTED
TRANSFEREE" means GAP III Properties, LLC, Summit Development, LLC (each, a
"VENTURER") and any Person Controlling, controlled by or under common control
with a Venturer or both Venturers. In no event shall any consent to an
assignment be deemed or construed to be a consent to any further assignment of
this Agreement, nor shall any assignment relieve Purchaser of its obligations
and liabilities hereunder. As a condition precedent to Purchaser's right to
assign this Agreement as permitted by this Section 19, Purchaser shall provide
Seller with sufficient information to allow Seller to verify that the proposed
assignment complies with this Section. Notwithstanding the foregoing,
Purchaser's rights under this Agreement that relate to the period after the
Closing may be exercised by Purchaser's successors and assigns as owner of the
Premises. Any permitted assignment of this Agreement shall include the Options
under Section 6 hereof. Following the assignment of this Agreement to a
Permitted Transferee pursuant to the terms of this Section 19, such Permitted
Transferee shall be the "PURCHASER" hereunder for all purposes and neither GAP
III Properties, LLC nor Summit Development, LLC shall have any further
liabilities or obligations hereunder. Any purported assignment of this Agreement
44
in violation of this Section 19 shall be null and void and of no force or
effect.
20. Access to Records. For the period equal to the lesser of (a) the
period of time which Purchaser owns the Premises and (b) three (3) years
subsequent to the Closing Date, Seller, Seller's Affiliates and their employees,
agents and representatives shall be entitled to access during reasonable
business hours to all documents, books and records given to Purchaser by Seller
at the Closing for tax and audit purposes, regulatory compliance, and
cooperation with governmental investigations upon reasonable prior notice to
Purchaser, and shall have the right, at its sole cost and expense, to make
copies of such documents, books and records (which copies shall be made without
removing such documents, books and records from Purchaser's offices unless
Purchaser does not have sufficient facilities to make adequate copies thereof),
provided, that (i) Purchaser may, at Purchaser's election, have a representative
of Purchaser attend any such access and (ii) Seller shall use reasonable efforts
to avoid disrupting Purchaser's normal business operations. Seller shall
maintain the contents of all such documents, books and records in confidence,
and except as may be required by law or as may be necessary for tax and audit
purposes, regulatory compliance, and cooperation with governmental
investigations, Seller will not divulge any such information to other persons or
entities except to the extent such information shall be or shall become public
or shall be obtained from other sources. The provisions of this Section 20 shall
survive the Closing.
21. Notices.
(a) All notices, elections, consents, approvals, demands, objections,
requests or other communications which Seller, Purchaser or Escrow Agent may be
required or desire to give pursuant to, under or by virtue of this Agreement
must be in writing (unless otherwise provided in this Agreement) and sent by (i)
by reputable overnight national courier (for next Business Day delivery), or
(ii) facsimile (with a copy thereof deposited on the same day with overnight
express mail or courier as provided above) addressed as follows:
If to Seller:
The Reader's Digest Association, Inc.
Reader's Digest Road
Pleasantville, NY 10570
Attention: Michael Geltzeiler, Senior Vice President
and Chief Financial Officer
Telephone: (914) 244-7515
Telecopy: (914) 244-5665
45
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153-0119
Attention: Philip Rosen, Esq.
Telephone: (212) 310-8604
Telecopy: (212) 310-8007
If to Purchaser:
GAP III Properties LLC
c/o Greenfield Partners LLC
50 North Water Street
South Norwalk, Connecticut 06854
Attention: Barry Marcus
Telephone: (203) 354-5022
Telecopy: (203) 354-5060
with a copy to:
Summit Development, LLC
40 North Water Street
South Norwalk, Connecticut 06854
Attention: Felix Charney
Telephone: (203) 354-1500
Telecopy: (203) 354-1501
with an additional copy to:
Kaye Scholer LLP
425 Park Avenue
New York, New York 10022
Attention: Steve Gliatta, Esq.
Telephone: (212) 836-8618
Telecopy: (212) 836-7156
If to Escrow Agent:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153-0119
Attention: Philip Rosen, Esq.
Telephone: (212) 310-8604
Telecopy: (212) 310-8007
46
Seller, Purchaser or Escrow Agent may designate another addressee or
change its address for notices and other communications hereunder by a notice
given to the other parties in the manner provided in this Section 21. To be
effective, (i) any notice under this Agreement must be in writing, except as
otherwise specifically provided in this Agreement, and (ii) any notice from
Purchaser must be signed by either (a) GAP III Properties, LLC or (b) GAP III
Properties, LLC and Summit Development, LLC; it being understood and agreed that
a notice signed only by GAP III Properties, LLC (and not Summit Development,
LLC) shall be effective as to both purchasers. Notice shall be effective upon
delivery (or refusal of delivery), except that notice by reputable overnight
courier (including Federal Express) shall be deemed given on the first Business
Day after the date delivered to such overnight courier.
22. Property Information and Confidentiality.
(a) Purchaser agrees that, prior to the Closing, all Property
Information shall be kept strictly confidential and shall not, without the prior
consent of Seller, be disclosed by Purchaser or Purchaser's Representatives, in
any manner whatsoever, in whole or in part to any third-party (other than
Purchaser's Representatives and to the extent reasonably necessary, to
Purchaser's lenders, insurers, investors, attorneys, accountants, professional
consultants and prospective lenders, insurers and investors, and such other
persons for which disclosure is reasonably necessary to obtain the Governmental
Approvals and accomplish the Redevelopment Project), and will not be used by
Purchaser or Purchaser's Representatives, directly or indirectly, for any
purpose other than evaluating the Premises. Moreover, Purchaser agrees that,
prior to the Closing, the Property Information will be transmitted only to
Purchaser's Representatives who need to know the Property Information for the
purpose of evaluating the Premises and consummating the transaction hereunder,
and who are informed by the Purchaser of the confidential nature of the Property
Information. The provisions of this Section 22(a) shall (i) in no event apply to
Property Information which is a matter of public record or obtained from other
sources, (ii) not prevent Purchaser or Purchaser's Representatives from
complying with Laws, including, without limitation, governmental regulatory,
disclosure, tax, reporting requirements and any judicial decree, mandate or
order and (iii) not prevent the use of the Property Information in any
arbitration, mediation, judicial or similar proceeding involving a dispute
between Seller and Purchaser with respect to this Agreement or the transactions
contemplated herein.
(b) Purchaser, hereby agrees that between the Effective Date and the
Closing Date, it will not release or cause or permit to be released any press
notices, publicity (oral or written) or advertising promotion relating to, or
otherwise announce or disclose or cause or permit to be announced or disclosed,
in any manner whatsoever, the terms, conditions or substance of this Agreement
or the transactions contemplated herein, without first obtaining the written
consent of Seller. It is understood that the foregoing shall not preclude
Purchaser from discussing the substance or any relevant details of the
transactions contemplated in this Agreement with any of its attorneys,
accountants, professional consultants or potential lenders, as the case may be,
or prevent Purchaser hereto from complying with Laws, including, without
limitation, governmental regulatory, disclosure, tax and reporting requirements.
(c) In the event this Agreement is terminated, Purchaser and
Purchaser's Representatives shall promptly destroy or return to Seller all
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copies of the Property Information referred to in clause (i) of Section 22(d) in
the possession of Purchaser and Purchaser's Representatives.
(d) As used in this Agreement, the term "PROPERTY INFORMATION" shall
mean (i) the Provided Documents and such other information and documents
relating to the Premises, the operation thereof or sale thereof furnished to, or
otherwise made available for review by, Purchaser's Representatives, by Seller
or any of Seller's Affiliates, their agents or representatives, including (A)
any third party reports with respect to the Premises, including, without
limitation, survey, title, environmental, air quality, architectural, and
engineering reports and analyses, and (B) any Contracts, Permits or agreements
relating to the Premises, and (ii) all analyses, reports or other documents
prepared or obtained by Purchaser or Purchaser's Representatives based in whole
or in part on information or documents described in the preceding clause (i). If
requested by Purchaser, Seller agrees to request the issuance by third parties
who have prepared reports for Seller of reliance letters in favor of Purchaser
and Purchaser's lender in respect of such third party reports, as applicable,
provided Seller shall bear no cost or expense in connection therewith.
(e) In addition to any other remedies available to Seller, Seller
shall have the right to seek equitable relief, including, without limitation,
injunctive relief or specific performance, against Purchaser or Purchaser's
Representatives in order to enforce the provisions of this Section 22 and the
second to last sentence of Section 4(a).
(f) The provisions of this Section 22 shall terminate on the earlier
of (i) one (i) year following the termination of this Agreement, or (ii) the
Closing.
23. Miscellaneous.
(a) This Agreement shall not be altered, amended, changed, waived,
terminated or otherwise modified in any respect or particular, and no consent or
approval required pursuant to this Agreement shall be effective, unless the same
shall be in writing and signed by or on behalf of the party to be charged.
Notwithstanding the foregoing, any alteration, amendment, change, waiver,
termination or other modification of this Agreement to be signed by Purchaser
must be signed by either (a) GAP III Properties, LLC or (b) GAP III Properties,
LLC and Summit Development, LLC; it being understood and agreed that any
alteration, amendment, change, waiver, termination or other modification of this
Agreement signed only by GAP III Properties, LLC (and not Summit Development,
LLC) shall be effective as to both purchasers.
(b) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and to their respective heirs, executors,
administrators, successors and permitted assigns.
(c) All prior statements, understandings, representations and
agreements between the parties, oral or written (including, without limitation,
letters of intent, term sheets, brochures and prospectuses), are superseded by
and merged in this Agreement and the other documents entered into between Seller
and Purchaser on or as of the date hereof, which fully and completely expresses
the agreement between them in connection with this transaction and which is
entered into after full investigation, neither party relying upon any statement,
understanding, representation or agreement made by the other not embodied in
48
this Agreement and the other documents entered into between Seller and Purchaser
on or as of the date hereof. This Agreement shall be given a fair and reasonable
construction in accordance with the intentions of the parties hereto, and
without regard to or aid of canons requiring construction against Seller or the
party drafting this Agreement.
(d) Except for the representations, warranties, obligations and
covenants that this Agreement and the Closing Documents expressly state survive
Closing, Purchaser's acceptance of the Deed shall be deemed a discharge of all
of the obligations of Seller hereunder and all of the representations,
warranties, covenants and agreements herein shall merge in the documents and
agreements executed at the Closing.
(e) Purchaser agrees that it does not have and will not assert any
claims or causes of action against any disclosed or undisclosed officer,
director, employee, trustee, shareholder, partner, principal, parent, subsidiary
or other Affiliate of Seller or any officer, director, employee, trustee,
shareholder, partner or principal of any such parent, subsidiary or other
Affiliate (collectively, "SELLER'S AFFILIATES"), arising out of or in connection
with this Agreement or the transactions contemplated hereby. Purchaser agrees to
look solely to Seller's interest in the Premises (including the proceeds of the
sale thereof) for the satisfaction of any liability or obligation arising under
this Agreement or the transactions contemplated hereby, or for the performance
of any of the covenants, warranties or other agreements contained herein, and
further agrees not to sue or otherwise seek to enforce any personal obligation
against any of Seller's Affiliates with respect to any matters arising out of or
in connection with this Agreement or the transactions contemplated hereby.
Without limiting the generality of the foregoing provisions of this Section
23(e), Purchaser hereby unconditionally and irrevocably waives any and all
claims and causes of action of any nature whatsoever it may now or hereafter
have against Seller's Affiliates, and hereby unconditionally and irrevocably
releases and discharges Seller's Affiliates from any and all liability
whatsoever which may now or hereafter accrue in favor of Purchaser against
Seller's Affiliates, in each case in connection with or arising out of this
Agreement or the transactions contemplated hereby. Seller agrees that it does
not have and will not assert any claims or causes of action against any
disclosed or undisclosed officer, director, employee, trustee, shareholder,
partner, principal, parent, subsidiary or other Affiliate of Purchaser or any
officer, director, employee, trustee, shareholder, partner or principal of any
such parent, subsidiary or other Affiliate (collectively, "PURCHASER'S
AFFILIATES"), arising out of or in connection with this Agreement or the
transactions contemplated hereby. Seller hereby unconditionally and irrevocably
waives any and all claims and causes of action of any nature whatsoever it may
now or hereafter have against Purchaser's Affiliates, and hereby unconditionally
and irrevocably releases and discharges Purchaser's Affiliates from any and all
liability whatsoever which may now or hereafter accrue in favor of Seller
against Purchaser's Affiliates, in each case in connection with or arising out
of this Agreement or the transactions contemplated hereby. The provisions of
this Section 23(e) shall survive the termination of this Agreement and the
Closing.
(f) For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined in this
Agreement have the meanings assigned to them in this Agreement and include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include the other genders; (ii) accounting terms not otherwise defined herein
49
have the meanings assigned to them in accordance with generally accepted
accounting principles; (iii) references herein to "Articles", "SECTIONS",
"SUBSECTIONS", "PARAGRAPHS" and other subdivisions without reference to a
document are to designated Articles, Sections, subsections, paragraphs and other
subdivisions of this Agreement; (iv) a reference to a subsection without further
reference to a Section is a reference to such subsection as contained in the
same Section in which the reference appears, and this rule shall also apply to
paragraphs and other subdivisions; (v) a reference to an Exhibit or a Schedule
without a further reference to the document to which the Exhibit or Schedule is
attached is a reference to an Exhibit or Schedule to this Agreement; (vi) the
words "HEREIN", "HEREOF", "HEREUNDER" and other words of similar import refer to
this Agreement as a whole and not to any particular provision; and (vii) the
word "INCLUDING" means "INCLUDING, BUT NOT LIMITED TO".
(g) Purchaser and Seller agree that, wherever this Agreement provides
that Purchaser or Seller must send or give any notice, make an election or take
some other action within a specific time period in order to exercise a right or
remedy it may have hereunder, time shall be of the essence with respect to the
taking of such action, and Purchaser's or Seller's failure to take such action
within the applicable time period shall be deemed to be an irrevocable waiver by
Purchaser or Seller, as applicable, of such right or remedy; provided, however,
in the event the date set forth in this Agreement for the performance of any
action or the exercise any right or remedy shall not be a Business Day, then
such date shall be extended to the immediately following Business Day.
(h) No failure or delay of either party in the exercise of any right
or remedy given to such party hereunder or the waiver by any party of any
condition hereunder for its benefit (unless the time specified herein for
exercise of such right or remedy has expired) shall constitute a waiver of any
other or further right or remedy nor shall any single or partial exercise of any
right or remedy preclude other or further exercise thereof or any other right or
remedy. No waiver by either party of any breach hereunder or failure or refusal
by the other party to comply with its obligations shall be deemed a waiver of
any other or subsequent breach, failure or refusal to so comply.
(i) Neither this Agreement nor any memorandum thereof shall be
recorded and any attempted recordation hereof shall be void and shall constitute
a default, however, the Memorandum of Option with respect to the Options set
forth in Section 6 hereof and any other memorandum required to be recorded
pursuant to the provisions of this Agreement shall be recorded after the
Closing.
(j) This Agreement may be executed in one or more counterparts, each
of which so executed and delivered shall be deemed an original, but all of which
taken together shall constitute but one and the same instrument. Any counterpart
may be executed by facsimile copy and shall be binding on the parties hereto.
(k) Each of the Exhibits and Schedules referred to herein and
attached hereto is incorporated herein by this reference.
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(l) The caption headings in this Agreement are for convenience only
and are not intended to be a part of this Agreement and shall not be construed
to modify, explain or alter any of the terms, covenants or conditions herein
contained.
(m) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of New York applicable to agreements made and to be
performed wholly within said State.
(n) If any provision of this Agreement shall be unenforceable or
invalid, the same shall not affect the remaining provisions of this Agreement
and to this end the provisions of this Agreement are intended to be and shall be
severable.
(o) If any litigation is commenced in connection with this Agreement,
the Prevailing Party in such litigation shall be entitled to reimbursement of
all reasonable attorneys' fees and expenses incurred by such prevailing party in
connection with such litigation from the non-prevailing party. As used herein,
the term "PREVAILING PARTY" shall mean the party that receives or is
substantially awarded a material portion of the claims or other relief sought by
such party as a result of such litigation. In any such litigation, Seller and
Purchaser consent and submit to the exclusive jurisdiction of the courts of the
State of New York located in Westchester County, New York, and waive any defense
or objection to jurisdiction and venue in such courts.
(p) SELLER AND PURCHASER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER ARISING IN TORT OR CONTRACT) BROUGHT BY
EITHER AGAINST THE OTHER ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT.
(q) The provisions of this Section 23 shall survive the Closing.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
SELLER:
THE READER'S DIGEST ASSOCIATION, INC.,
a Delaware corporation
By: /s/ Michael Brizel
----------------------------------------------
Name: Michael Brizel
Title: Senior Vice President
and General Counsel
PURCHASER:
GAP III PROPERTIES LLC,
a Delaware limited liability company
By: /s/ Bary Marcus
----------------------------------------------
Name: Bary Marcus
Title: Senior Vice President
SUMMIT DEVELOPMENT, LLC,
a Connecticut limited liability company
By: /s/ Felix Charney
----------------------------------------------
Name: Felix Charney
Title: Managing Director
Solely for the purpose of agreeing to the provisions
of Section 18:
WEIL, GOTSHAL & MANGES LLP
Escrow Agent
By: /s/ J. Philip Rosen
----------------------------------------------
Name: J. Philip Rosen
Title: Partner