Exhibit 10.51
TABLE OF CONTENTS
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ARTICLE I CONTRIBUTION OF PROPERTY............................................................1
I.1. Contribution and Acquisition of Contributed Property................................1
I.2. Closing.............................................................................1
I.3. Contributor Representative..........................................................1
ARTICLE II EXCHANGE AMOUNT.....................................................................2
II.1. Exchange Amount.....................................................................2
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS..................................2
III.1. Organization and Standing...........................................................2
III.2. Authorization; No Conflicts.........................................................2
III.3. Binding Obligations.................................................................3
III.4. No Litigation.......................................................................3
III.5. Contributed Property................................................................3
III.6. Securities Law Matters..............................................................3
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACADIA AND THE REIT...............................5
IV.1. Organization and Standing...........................................................5
IV.2. Authorization; No Conflicts.........................................................5
IV.3. Binding Obligations.................................................................5
IV.4. No Litigation.......................................................................5
IV.5. The Units...........................................................................6
IV.6. No Tax Audits.......................................................................6
IV.7. Tax Reporting.......................................................................6
IV.8. Capitalization......................................................................6
IV.9. Governmental Consents and Approvals.................................................6
IV.10. Absence of Certain Changes or Events; Undisclosed Liabilities and Agreements........6
ARTICLE V COVENANTS...........................................................................9
V.1. Contributors Covenants..............................................................9
V.2. Survival...........................................................................10
ARTICLE VI CONDITIONS PRECEDENT TO THE CLOSING................................................10
VI.1. Conditions to Obligations of Contributors..........................................10
VI.2. Conditions to Obligations of Acadia................................................11
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TABLE OF CONTENTS
(continued)
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ARTICLE VII DELIVERIES.........................................................................11
ARTICLE VIII SURVIVAL; INDEMNIFICATION..........................................................13
VIII.1. Survival...........................................................................13
VIII.2. Agreement of Contributors to Indemnify.............................................13
VIII.3. Agreement of Acadia to Indemnify...................................................13
VIII.4. Limitation of Liability............................................................14
VIII.5. Conditions of Indemnification......................................................14
ARTICLE IX INTENTIONALLY OMITTED..............................................................15
ARTICLE X CONFIDENTIALITY; TAX MATTERS.......................................................15
X.1. Confidentiality....................................................................15
X.2. No Representation with Regard to Tax Treatment.....................................16
ARTICLE XI MISCELLANEOUS......................................................................16
XI.1. Additional Actions and Documents...................................................16
XI.2. Expenses...........................................................................16
XI.3. Assignment.........................................................................17
XI.4. Entire Agreement; Amendment........................................................17
XI.5. Waiver.............................................................................17
XI.6. Severability.......................................................................17
XI.7. Governing Law......................................................................17
XI.8. Notices............................................................................18
XI.9. Headings...........................................................................19
XI.10. Execution in Counterparts..........................................................19
XI.11. Attorneys' Fees....................................................................19
XI.12. Waiver of Jury Trial...............................................................19
EXHIBITS
Exhibit A - Form of Registration Rights Agreement
Exhibit B - Form of Investor Questionnaire
Exhibit C - Form of Certificate of Units
Exhibit D - Acadia Partnership Agreement
Exhibit E - Form of Assignment of Contributed Property
Exhibit F - Form of Acadia's Opinion of Counsel
Exhibit G - Form of Contributors' Opinion of Counsel
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AGREEMENT OF CONTRIBUTION
BY AND AMONG
ACADIA REALTY LIMITED PARTNERSHIP,
ACADIA REALTY TRUST,
KLAFF REALTY, LP
AND
KLAFF REALTY, LIMITED
FEBRUARY 15, 2005
AGREEMENT OF CONTRIBUTION
THIS AGREEMENT OF CONTRIBUTION (the "Agreement") is entered into
as of February 15, 2005 by and among Acadia Realty Limited Partnership, a
Delaware limited partnership ("Acadia"), Acadia Realty Trust, a Maryland real
estate investment trust (the "REIT"), Klaff Realty, LP, a Delaware limited
partnership, and Klaff Realty, Limited, an Illinois corporation (each a
"Contributor," and collectively, the "Contributors").
RECITALS:
A. The Contributors are engaged in the retail management
services business (the "Retail Services Business") and desire to become limited
partners in Acadia by contributing to Acadia assets, including goodwill, related
to the Retail Services Business, as a going concern (the "Contributed
Property"), and Acadia has agreed to admit the Contributors as limited partners.
B. Acadia and Contributors desire to enter into the
Agreement to set forth certain additional terms and conditions upon which
Contributors will transfer the Contributed Property to Acadia.
ARTICLE I
CONTRIBUTION OF PROPERTY
I.1. CONTRIBUTION AND ACQUISITION OF CONTRIBUTED PROPERTY
Subject to the terms and conditions hereof, Contributors agree
to contribute to Acadia, and Acadia agrees to acquire and accept from
Contributors, all of Contributors' right, title and interest in and to the
Contributed Property in exchange for common units of limited partnership
interest in Acadia with rights, preferences and privileges as set forth in the
partnership agreement of Acadia (the "Units") (the foregoing, together with all
other transactions contemplated by this Agreement being referred to herein as
the "Contribution"). The Contributors have provided, and Acadia acknowledges
receipt of, the Contributed Property as of the Closing Date. The Contribution
shall be consummated, as set forth in Article II hereof, in a transaction
intended to qualify for nonrecognition of gain to Contributors pursuant to
Section 721 of the Internal Revenue Code of 1986, as amended (the "Code").
I.2. CLOSING
The closing of the transactions contemplated by this Agreement
(the "Closing") shall be deemed to have occurred on February 15, 2005 (the
"Closing Date") at the offices of Acadia, upon satisfaction or waiver of the
conditions set forth in Article VI hereof.
I.3. CONTRIBUTOR REPRESENTATIVE
The Contributors hereby appoint Hersch M. Klaff as their
representative in connection with this Agreement (the "Contributor
Representative") and with respect to any
decisions to be made by Contributors under this Agreement, Acadia and the REIT
may rely exclusively on instructions from the Contributor Representative.
ARTICLE II
EXCHANGE AMOUNT
II.1. EXCHANGE AMOUNT
(a) Units Delivered at Closing. In exchange for the
contribution of the Contributed Property, the Contributors shall receive in the
aggregate, at the Closing, 250,000 Units. Each Contributor shall be entitled to
receive the number of Units set forth in Schedule 1 hereto.
(b) Distribution of Units. At the Closing, Acadia shall
issue the Units to the Contributors in accordance with written instructions
provided to Acadia by the Contributor Representative at least two business days
prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
Contributors jointly and severally represent and warrant to
Acadia as follows:
III.1. ORGANIZATION AND STANDING
Each Contributor is a limited partnership, corporation or a
limited liability company, duly formed, validly existing and in good standing
under the laws of its jurisdiction of organization and is duly qualified to do
business in each jurisdiction where the conduct of its business requires
qualification. Each Contributor has the full and unrestricted power and
authority to own, operate and lease its assets, to carry on its business as
currently conducted, to execute and deliver this Agreement, and each other
agreement, instrument or document relating hereto or contemplated hereby or
thereby (the "Other Agreements") to which it is a party and to carry out the
transactions contemplated hereby or thereby.
III.2. AUTHORIZATION; NO CONFLICTS
The execution and delivery of this Agreement and the Other
Agreements by each Contributor and the performance by each Contributor of its
covenants and agreements under this Agreement and the Other Agreements have
been, or at Closing will have been, duly authorized by all necessary action on
the part of such Contributor. The execution, delivery and performance by each
Contributor of this Agreement and each Other Agreement to which such Contributor
is a party, the fulfillment of and compliance with the respective terms and
provisions hereof and thereof, and the consummation by such Contributor of the
transactions contemplated hereby and thereby, do not and will not: (a) conflict
with, or violate any provision of the organization documents of any Contributor;
(b) conflict with, or violate any provision of, any statute, law, ordinance,
regulation, rule, order, writ or injunction having applicability to any
Contributor, any of its assets or the Contributed Property; (c) conflict with,
result in any breach of, or constitute a
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default under the Contributed Property; (d) result in or require the creation or
imposition of or result in the acceleration of any indebtedness or of any
encumbrance of any nature upon, or with respect to, the Contributed Property;
except (in the case of clauses (b), (c) and (d) above) for such conflicts,
violations, breaches or defaults as will not have a material adverse effect on
the Contributed Property or the business or financial condition of any
Contributor or the consummation of this transaction.
III.3. BINDING OBLIGATIONS
This Agreement and each Other Agreement executed and delivered
by each Contributor on or prior to the date hereof constitutes a valid and
binding obligation of such Contributor, enforceable in accordance with its
terms; and each Other Agreement to be executed by each Contributor pursuant
hereto or thereto, when executed and delivered in accordance with the provisions
hereof or thereof, shall be a valid and binding obligation of such Contributor,
enforceable in accordance with its terms.
III.4. NO LITIGATION
There are no actions, suits, claims, arbitrations, proceedings
or investigations pending or, to the knowledge of any Contributor, threatened
against, affecting or involving the Contributed Property, any Contributor or its
businesses or assets, or the transactions contemplated by this Agreement, at law
or in equity, or before or by any court, arbitrator or governmental authority,
domestic or foreign, that could reasonably be expected to have a material
adverse effect on the Contributed Property or the business or financial
condition of any Contributor or to challenge or impair the ability of any
Contributor to consummate the Contribution.
III.5. CONTRIBUTED PROPERTY
(a) The Contributed Property is wholly owned by the
Contributors, free and clear of all liens and encumbrances.
(b) The Contributed Property is in full force and effect and
is the legal, valid and binding obligation of each of the parties thereto,
enforceable against such parties in accordance with its terms. None of the
Contributors is in default, and there exists no condition or act which with the
giving of notice or passage of time or otherwise will cause a default with
respect to the Contributed Property. Except as otherwise disclosed to Acadia, no
Fees under the Contributed Property for any period after the Closing Date shall
have been paid prior to the Closing Date. In no event, however, do the
Contributors represent, warrant, covenant or guaranty the payment of any Fees to
Acadia or the amount of any Fees that Acadia may receive in the future.
III.6. SECURITIES LAW MATTERS
(a) Each Contributor acknowledges that Acadia intends the
offer and issuance of the Units to be exempt from registration under the
Securities Act and applicable state securities laws by virtue of (i) the status
of each Contributor and each equity owner of such Contributor as an Accredited
Investor (as defined below), and (ii) Section 4(2) of the Securities
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Act of 1933, as amended (the "Securities Act") and/or Regulation D promulgated
under Section 4(2) of the Securities Act ("Regulation D"), and that Acadia will
rely in part upon the representations and warranties made by each Contributor in
this Agreement in making the determination that the offer and issuance of the
Units qualify for exemption under Rule 506 of Regulation D as an offer and sale
only to Accredited Investors (as defined below).
(b) Each Contributor, each of such Contributor's equity
owners and each other person or entity who has a right to vote upon or approve
the transactions contemplated hereby or who will receive a distribution of Units
pursuant to Section II.1(b) are "accredited investors" as defined in Regulation
501(a) under Regulation D ("Accredited Investors"). Each Contributor has
provided to Acadia a true, correct and complete copy of such Contributor's
organizational documents.
(c) Each Contributor and each other person or entity who
will receive a distribution of Units pursuant to Section II.1(b) will acquire
the Units for their own account and not with a view to or for sale in connection
with any "distribution" thereof within the meaning of the Securities Act.
(d) Each Contributor and its equity owners have sufficient
knowledge and experience in financial, tax and business matters to enable them
to evaluate the merits and risks of investment in the Units. Each Contributor
and its equity owners have the ability to bear the economic risk of acquiring
the Units. Each Contributor acknowledges that (i) the transactions contemplated
by this Agreement and the Other Agreements involve complex tax consequences for
each Contributor and its equity owners, and each Contributor and its equity
owners are relying solely on the advice of their own tax advisors in evaluating
such consequences, (ii) neither Acadia nor the REIT has made (or shall be deemed
to have made) any representations or warranties as to the tax consequences of
such transaction to any Contributor or any of its equity owners, and (iii)
references in this Agreement to the intended tax effect of the Contribution and
the other matters described herein shall not be deemed to imply any
representation by Acadia or the REIT as to a particular tax effect that may be
obtained by any Contributor or its equity owners. Each Contributor and its
equity owners remain solely responsible for all tax matters relating to each
Contributor and its equity owners.
(e) Each Contributor and each other person or entity who
will receive a distribution of Units pursuant to Section II.1(b) has been
supplied with, or had access to, information to which a reasonable investor
would attach significance in making an investment decision to acquire the Units
and any other information they have requested. Each Contributor and each other
person or entity who will receive a distribution of Units pursuant to Section
II.1(b) has had an opportunity to ask questions of and receive information and
answers from Acadia and the REIT concerning Acadia, the REIT, the Units, and the
common shares of beneficial interest ("Common Shares") into which the Units may
be exchanged, and to assess and evaluate any information supplied to them by
Acadia or the REIT, and all such questions have been answered and all such
information has been provided to their full satisfaction.
(f) Each Contributor and each other person or entity who
will receive a distribution of Units pursuant to Section II.1(b) acknowledges
that the Units are not registered
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under the Securities Act or any state securities laws and cannot be resold
without registration thereunder or exemption therefrom.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACADIA AND THE REIT
A. Acadia Representations. Acadia represents and warrants
to Contributors as follows:
IV.1. ORGANIZATION AND STANDING
Acadia is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the full
and unrestricted partnership power and authority to own, operate and lease its
assets and to carry on its business as currently conducted. Acadia is duly
qualified to conduct business as a foreign limited partnership and is in good
standing in each jurisdiction where the nature of the business conducted by
Acadia or the character of the assets owned, leased or otherwise held by it
makes any such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect upon the business of Acadia
as currently conducted.
IV.2. AUTHORIZATION; NO CONFLICTS
The execution, delivery and performance by Acadia of this
Agreement and each Other Agreement to which Acadia is a party, the fulfillment
of and compliance with the respective terms and provisions hereof and thereof,
and the consummation by Acadia of the transactions contemplated hereby and
thereby, do not and will not: (a) conflict with, or violate any provisions of,
the certificate of limited partnership or agreement of limited partnership of
Acadia; (b) conflict with, or violate any provision of, any statute, law,
ordinance, regulation, rule, order, writ or injunction having applicability to
Acadia or any of its assets; or (c) conflict with, result in any breach of, or
constitute a default under any agreement to which Acadia is a party or by which
it or any of its assets are bound; except (in the case of clauses (b) and (c)
above) for such conflicts, violations, breaches or defaults as will not have a
material adverse effect on the business or financial condition of Acadia or the
consummation of the Acquisition.
IV.3. BINDING OBLIGATIONS
This Agreement and each Other Agreement executed and delivered
by Acadia constitutes a valid and binding obligation of Acadia, enforceable in
accordance with its terms; and each Other Agreement to be executed by Acadia
pursuant hereto or thereto, when executed and delivered in accordance with the
provisions hereof or thereof, shall be a valid and binding obligation of Acadia,
enforceable in accordance with its terms.
IV.4. NO LITIGATION
There are no actions, suits, claims, arbitrations, proceedings
or investigations pending or, to the knowledge of Acadia, threatened against,
affecting or involving Acadia or its business or assets or the transactions
contemplated by this Agreement, at law or in equity, or
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before or by any court, arbitrator or governmental authority, domestic or
foreign, that could reasonably be expected to have a material adverse effect on
the business or financial condition of Acadia or challenge or impair the ability
of Acadia to consummate the Contribution.
IV.5. THE UNITS
At the Closing, the Units to be issued to Contributors pursuant
to Article II hereof will be duly authorized for issuance by Acadia to
Contributors and upon issuance in accordance with this Agreement will be validly
issued, fully paid and non-assessable
IV.6. NO TAX AUDITS
Acadia is not a party to any pending action, audit or proceeding
by any taxing authority for any assessment or collection of any federal, state
or local taxes.
IV.7. TAX REPORTING
Acadia will treat the transfer of the Contributed Property to
Acadia for federal income tax purposes as a contribution that qualifies for
nonrecognition of gain pursuant to Section 721 of the Code. Acadia, however,
makes no representation or warranty that these positions will be respected.
IV.8. CAPITALIZATION
As of September 30, 2004, 29,691,479 common units of limited
partnership ("Common OP Units") were issued and outstanding, of which 29,299,224
Common OP Units are held by the REIT and 392,255 Common OP Units are held by the
limited partners of Acadia. In addition, 1,580 Series A Preferred Units are
issued and outstanding with an aggregate liquidation preference of $1,580,000
and 4,000 Series B Preferred OP Units issued and outstanding with aggregate
liquidation preference of $4,000,000 and will rank pari passu with the Series B
Preferred Units.
IV.9. GOVERNMENTAL CONSENTS AND APPROVALS
Acadia has obtained each and every consent, approval, permit or
order of, and has made each and every filing with, any individual, partnership,
corporation, trust or other entity, government agency or political subdivision
required to be obtained or made in connection with: (A) its execution, delivery
and performance of this Agreement and (B) its consummation of the transactions
contemplated hereby.
IV.10. ABSENCE OF CERTAIN CHANGES OR EVENTS; UNDISCLOSED
LIABILITIES AND AGREEMENTS
Since September 30, 2004:
(a) there has not been any material adverse change in the
financial position or results of operations of Acadia from that reflected in the
consolidated financial statements of the REIT as of September 30, 2004, or any
material adverse change in the business, assets or
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prospects of Acadia (including the imposition of any material adverse regulatory
requirements or the loss of any material permits, licenses or franchises).
(b) there has not been any material damage, destruction or
other casualty loss with respect to property owned or leased by Acadia not
covered by insurance.
(c) Acadia has not conducted its business otherwise than in
the ordinary course.
B. REIT Representations. The REIT hereby represents and
warrants to the Contributors as follows:
(i) Organization, Good Standing, Corporate Power and
Authorization. The REIT is a real estate investment trust duly
organized, validly existing and in good standing under the laws of the
State of Maryland and has full right, power and authority to enter into
this Agreement and to assume and perform all of its obligations. The
REIT is duly qualified to conduct business as a foreign real estate
investment trust and is in good standing in each jurisdiction where the
nature of the business conducted by the REIT or the character of the
assets owned, leased or otherwise held by it makes any such
qualification necessary, except where the failure to be so qualified
would not have a material adverse effect upon the business of the REIT
as currently conducted. The execution and delivery of this Agreement and
the performance by the REIT of its obligations under this Agreement will
require no further action, consent or approval of the REIT's
shareholders or trustees, or of any other individuals or entities in
order to constitute this Agreement as a binding and enforceable
obligation of the REIT.
(ii) Non-contravention. The entry into, performance
of, or compliance with this Agreement by the REIT has not resulted, and
will not result, in any violation of, default under, or acceleration of
any provision of the bylaws or declaration of trust of the REIT or any
provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the filing of notice or lapse of time or both)
any obligation under, or result in the creation or imposition of any
lien, charge, pledge, security interest or other encumbrance upon any of
the property of the REIT pursuant to any provision of any mortgage,
lien, lease, agreement, license or instrument, or violate any law,
regulation, order, arbitration award, judgment or decree to which the
REIT is a party or by which it or its property is bound or violate or
conflict with any other material restriction of any kind or character to
which the REIT is subject.
(iii) Capitalization and Due Authorization. As of
September 30, 2004, the authorized shares of beneficial interest of all
classes of the REIT consisted of 100,000,000 shares of beneficial
interest, par value $.001 per share, all of such shares are initially
classified as "Common Shares" and the issued and outstanding Common
Shares of the REIT consisted of 29,299,224 Common Shares.
(iv) Common Shares. As of the Closing, the Common
Shares issuable upon conversion of the Units will have been duly and
validly authorized by the REIT and will have been duly reserved for
issuance upon such conversion. The Common Shares
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issuable upon conversion of such Common OP Units, when issued upon such
conversion in accordance with their terms, will be validly issued, fully
paid and nonassessable.
(v) Governmental Consents and Approvals. The REIT
has obtained each and every consent, approval, permit or order of, and
has made each and every filing with, any individual, partnership,
corporation, trust or other entity, government agency or political
subdivision required to be obtained or made in connection with: (A) its
execution, delivery and performance of this Agreement and (B) its
consummation of the transactions contemplated hereby.
(vi) Binding Obligations. This Agreement and each
Other Agreement executed and delivered by the REIT constitutes a valid
and binding obligation of the REIT, enforceable in accordance with its
terms; and each Other Agreement to be executed by the REIT pursuant
hereto or thereto, when executed and delivered in accordance with the
provisions hereof or thereof, shall be a valid and binding obligation of
the REIT, enforceable in accordance with its terms.
(vii) SEC Filings. The REIT has filed all forms,
reports, schedules, proxy materials, registration statements and related
prospectuses and supplements and other documents required to be filed by
the REIT with the SEC pursuant to the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") through the date
hereof (collectively, the "REIT SEC Documents") and will cause to be
delivered to Sellers copies of such additional documents as may be filed
with the SEC by the REIT between the date hereof and the Closing Date.
The REIT SEC Documents were, and those additional documents filed
between the date hereof and the Closing will be, prepared and filed in
all material respects in compliance with the rules and regulations
promulgated by the SEC, and do not and will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein in order to make the statements contained therein,
in light of the circumstances under which they were made, not
misleading.
(viii) Financial Statements. The consolidated financial
statements included in the SEC Documents have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the period involved (except as may be indicated
in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q and present fairly (subject in the case of the
unaudited statements, to normal, recurring year-end audit adjustments)
the consolidated financial position of Acadia or the REIT, as
applicable, at the dates thereof and the consolidated results of
operations and cash flows for the periods then ended.
(ix) Absence of Certain Changes or Events. Since
September 30, 2004 there has not been:
(a) any material adverse change in the
financial condition or results of operations of the REIT from
that reflected in the financial statements as of September 30,
2004 included in the REIT SEC Documents or any material adverse
change in the business, assets or prospects of the REIT
(including the
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imposition of any material adverse regulatory requirements or
the loss of any material permits, licenses or franchises);
(b) there has not been any material damage,
destruction or other casualty loss with respect to property
owned or leased by the REIT not covered by insurance; and
(c) the REIT has not conducted its business
otherwise than in the ordinary course.
ARTICLE V
COVENANTS
V.1. CONTRIBUTORS COVENANTS
(a) The Contributors shall cooperate fully in providing any
documentation or information reasonably requested by Acadia in connection with
this transaction.
(b) Except as set forth below or in the Registration Rights
Agreement (as defined below), the Contributors shall (i) not convert any Units
into Common Shares for a period of five (5) years after the Closing Date; and
(ii) not transfer the ownership of any of the Units held by a Contributor to
another person or entity for a period of five (5) years after the Closing.
Notwithstanding the foregoing or anything else to the contrary
contained herein or in the Registration Rights Agreement, the parties to this
Agreement agree that (i) in the event Kenneth F. Bernstein ceases to be the
chief executive officer of either the REIT or Acadia, or (ii) upon the
occurrence of the obligation of Acadia or the REIT to give notice of any event
as set forth in Sections V.2(b) below, the Contributors or their Permitted
Transferees (as defined in the Registration Rights Agreement) shall immediately
be entitled to convert Units into Common Shares and/or sell or otherwise
transfer the ownership of any Units held by a Contributor or Permitted
Transferee without any restriction under or violation of this Agreement or the
Registration Rights Agreement. In addition, if a Registration Statement, as
defined in the Registration Rights Agreement, allowing for the immediate resale
at such time, or from time to time, of the Common Shares, into which the Units
would be convertible, has not been declared effective by the Securities and
Exchange Commission on or before July 15, 2005, or ceases to be effective at any
time thereafter, then, at the Contributors' and/or their Permitted Transferees'
option, all, but not less than all, of the Units shall be redeemable by the
Contributors and/or their Permitted Transferees, at any time by written notice
to Acadia (with such date being referred to as the "Redemption Date") and the
price equal to the greater of (i) sixteen dollars ($16.00) per Unit (subject to
adjustment for stock splits, stock dividends or other similar equitable
adjustments), plus all accrued but unpaid dividends or distributions on such
Units, or (ii) the actual market value of Common Shares into which Units are
convertible as of the Redemption Date.
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V.2. ACADIA COVENANTS
(a) Acadia agrees, in providing its management services in
connection with the Contributed Property, to take reasonable direction from
Klaff Realty, LP as the representative of the owners and managers of the
properties subject to the Contributed Property.
(b) If at any time Acadia and/or REIT proposes to any of its
equity holders:
(i) to effect any capital reorganization or
reclassification of capital securities of the REIT or Acadia;
(ii) to consolidate with, or merge into, any other
company or to transfer its property as an entity or substantially as an
entirety; or
(iii) to effect the liquidation, dissolution or
winding up of the REIT or Acadia,
then, in any one or more of the foregoing cases, Acadia and the
REIT shall give at least thirty (30) days' prior written notice to the
Contributors of the date when the same shall take place.
V.3. SURVIVAL.
The covenants set forth in Article V.1 and V.2 shall survive the
Closing in accordance with their terms.
ARTICLE VI
CONDITIONS PRECEDENT TO THE CLOSING
VI.1. CONDITIONS TO OBLIGATIONS OF CONTRIBUTORS
The obligation of Contributors to consummate the Contribution is
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of Contributors to carry out the provisions of this Agreement
unless such failure is waived in writing by Contributors:
(a) Representations and Warranties. The representations and
warranties made by Acadia and the REIT in Article IV hereof and the statements
contained in any document furnished by Acadia or the REIT in connection with the
Closing pursuant to this Agreement shall be true in all material respects when
made and on and as of the Closing Date as though such representations and
warranties were made on and as of such date, except for any changes therein
contemplated by this Agreement or any Other Agreement.
(b) Legal Proceedings. No action or proceeding by or before
any governmental authority shall have been instituted or threatened (and not
subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate
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the transactions contemplated by this Agreement, other than an action or
proceeding instituted or threatened by any Contributor.
(c) Documents at Closing. All documents required to be
furnished to Contributors hereunder prior to or at the Closing shall have been
so furnished.
VI.2. CONDITIONS TO OBLIGATIONS OF ACADIA
The obligation of Acadia to consummate the Contribution is
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of Acadia to carry out the provisions of this Agreement unless
such failure is waived in writing by Acadia:
(a) Representations and Warranties. The representations and
warranties made by Contributors in Article III of this Agreement and the
statements contained in any document furnished by Contributors or its equity
owners in connection with the Closing pursuant to this Agreement shall be true
in all material respects when made and on and as of the Closing Date as though
such representations and warranties were made on and as of such date, except for
any changes therein contemplated by this Agreement or any Other Agreement.
(b) Legal Proceedings. No action or proceeding by or before
any governmental authority shall have been instituted or threatened (and not
subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions contemplated by
this Agreement other than an action or proceeding instituted or threatened by
Acadia.
(c) Documents at Closing. All documents required to be
furnished to Acadia hereunder prior to or at the Closing shall have been so
furnished.
ARTICLE VII
DELIVERIES
The Closing shall occur simultaneously with the delivery of the
following documents:
A. The Contributors shall deliver:
(a) Authority Documents. Evidence satisfactory to Acadia
that the persons executing the closing documents on behalf of the Contributors
have full right, power and authority to do so, and the following documentation:
(i) Certified copies of Klaff Realty, LP and Klaff Realty, Limited
organizational documents which are true and correct, unamended, and continuing,
and of the incumbency of its officers, (ii) Certificates of Existence and Good
Standing from the Secretary of State of Delaware and the Secretary of State of
Illinois, and (iii) Opinion letter of counsel to Klaff Realty, LP and Klaff
Realty, Limited substantially in the form attached hereto as Exhibit G as to the
following: due authorization and authority of Klaff Realty, LP and Klaff Realty,
Limited to enter into this Agreement and perform their obligations
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hereunder; and noncontravention of the transactions contemplated by this
Agreement with Contributors' organizational documents.
(b) Units Documents. The documents required in connection
with the issuance of the Units, including signature pages to the Partnership
Agreement and the Registration Rights Agreement executed by each Contributor.
Each Contributor shall execute and deliver any other documents as may be
required under applicable federal or state securities laws, including a
reiteration of the representations and covenants set forth in Article III
hereof.
(c) Investor Questionnaires. Investor Questionnaires in the
form attached hereto as Exhibit B.
(d) Assignments. Executed Assignments of Contributed
Property in the form of Exhibit E.
(e) Certifications. Certificates from each of the
Contributors certifying as to the continuing accuracy of the representations and
warranties made by such party.
(f) Miscellaneous. Such other instruments as are reasonably
requested by Acadia.
B. Acadia's Deliveries. At the Closing, Acadia shall
deliver:
(a) Registration Rights Agreement. The Registration Rights
and Lock-up Agreement, substantially in the form attached hereto as Exhibit A,
executed by Acadia and Contributors (the "Registration Rights Agreement");
(b) Certifications. Certificates of Acadia and the REIT
certifying as to continued accuracy of the representations and warranties made
by such party herein, executed by an officer or other authorized signatory of
such party;
(c) Units. Certificates representing the Units in the form
of Exhibit C;
(d) Authority Documents. Evidence reasonably satisfactory to
the Contributors that the person or persons executing the closing documents on
behalf of Acadia and the REIT has full right, power and authority to do so;
(e) Legal Opinion. An Opinion of Acadia and REIT's general
counsel, substantially in the form attached hereto as Exhibit F;
(f) Miscellaneous. Such other documents as reasonably
requested by the Contributors.
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ARTICLE VIII
SURVIVAL; INDEMNIFICATION
VIII.1. SURVIVAL
All representations, warranties, covenants, indemnities and
other agreements of the parties hereto made in this Agreement or in any document
furnished pursuant hereto shall not be extinguished by the Closing, but shall
survive the Closing, as specified in this Section VIII.1. All representations
and warranties of the parties hereto made in this Agreement or in any document
furnished pursuant hereto shall survive for a one (1) year period following the
Closing and shall be extinguished from and after the first anniversary date of
the Closing. All covenants of the parties hereto made in this Agreement shall
survive for the five (5) year period following the Closing and shall be
extinguished from and after the fifth anniversary date of the Closing. No
investigation, audit or inspection made by or on behalf of any party hereto
shall affect the survival of the representations, warranties, covenants,
indemnities and other agreements of the parties hereto. All representations and
warranties of the parties hereto made in this Agreement or in any document
delivered pursuant hereto shall also be deemed made on and as of the Closing
Date.
VIII.2. AGREEMENT OF CONTRIBUTORS TO INDEMNIFY
Subject to the conditions and provisions of this Article VIII,
Contributors hereby jointly and severally agree to indemnify, defend and hold
harmless Acadia and its subsidiaries and affiliates (including, without
limitation, the REIT) and each of their respective officers, directors,
trustees, partners, members, employees, successors and assigns (collectively,
the "Acadia Indemnified Persons") from and against and in respect of all
demands, claims, actions or causes of action, assessments, losses, damages
(including, without limitation, diminution in value), liabilities, costs and
expenses, including, without limitation, interest, penalties and reasonable
attorneys' fees and disbursements (the "Claims"), asserted against, resulting
to, imposed upon or incurred by the Acadia Indemnified Persons, directly or
indirectly, by reason of or resulting from (i) any breach of any representation
or warranty in any material respect made by Contributors in this Agreement or in
any document furnished by or on behalf of Contributors pursuant to this
Agreement or (ii) the Contributed Property which accrued prior to the Closing
Date.
VIII.3. AGREEMENT OF ACADIA TO INDEMNIFY
Subject to the conditions and provisions of this Article VIII,
Acadia hereby agrees to indemnify, defend and hold harmless each Contributor and
its subsidiaries and affiliates and each of their respective officers,
directors, trustees, partners, members, employees, successors and assigns
(collectively, the "Contributor Indemnified Persons"), from and against and in
respect of all Claims asserted against, resulting to, imposed upon or incurred
by the Contributor Indemnified Persons, directly or indirectly, by reason of or
resulting from (i) any breach of any representation or warranty in any material
respect made by Acadia in this Agreement or in any document furnished by or on
behalf of Acadia pursuant to this Agreement, or (ii) the Contributed
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Property which accrued on or after the Closing Date, except to the extent that
such claims directly arise from actions of the Contributors prior to the closing
date.
VIII.4. LIMITATION OF LIABILITY.
Notwithstanding the foregoing or anything else to the contrary
contained herein, subject to the provisions set forth in this Section VIII.4.,
in no event shall Hersch M. Klaff, individually, have any liability to Acadia
Indemnified Persons in excess of $1,000,000, or for any provision of this
Agreement. Notwithstanding the foregoing or anything else to the contrary
contained herein, in no event shall Hersch M. Klaff, individually, have any
monetary liability to Acadia Indemnified Persons at any time while a Contributor
is the record owner of the Units. In addition, notwithstanding anything else to
the contrary contained herein, in no event shall Acadia or any Acadia
Indemnified Person have any right of offset or any other right to limit, in any
manner whatsoever, any of the Contributors' (or their respective assignees' or
successors') rights with respect to Units, including without limitation any
rights under the Registration Rights Agreement. Furthermore, notwithstanding
anything else to the contrary contained herein, in no event shall either (a) the
Contributors, or (b) the Contributors and Hersch M. Klaff, collectively, have
any liability, including Acadia's costs and expenses, to Acadia Indemnified
Persons, in the aggregate, in excess of the lesser of (i) the actual market
value of Units then owned by the Contributors as of the date of any Claim, or
(ii) the amount equal to: (A) $4,000,000, from the Closing Date until February
14, 2006, (B) $3,200,000, from February 15, 2006 until February 14, 2007, (C)
$2,400,000, from February 15, 2007 until February 14, 2008, (D) $1,600,000, from
February 15, 2008 until February 14, 2009, or (E) $800,000, from February 15,
2009 until February 14, 2010. Furthermore, in no event shall any party hereto be
liable for any Claims for any special, indirect, incidental, exemplary,
consequential or punitive damages.
VIII.5. CONDITIONS OF INDEMNIFICATION
The obligations and liabilities of Contributors and Acadia
hereunder with respect to their respective indemnities pursuant to this Article
VIII resulting from any Claim shall be subject to the following terms and
conditions:
(a) The indemnified party shall give prompt written notice
to the indemnifying party of any Claim which is asserted against, resulting to,
imposed upon or incurred by such indemnified party and which may give rise to
liability of the indemnifying party pursuant to this Article VIII, stating (to
the extent known or reasonably anticipated) the nature and basis of such Claim
and the amount thereof.
(b) If the facts pertaining to a Claim arise out of the
Claim of any third party, or if there is any Claim against a third party
available by virtue of the circumstances of the Claim, the indemnifying party
may assume the defense of such action or proceeding at such indemnifying party's
own expense with counsel chosen by the indemnifying party and approved by the
indemnified party, which approval shall not be unreasonably withheld; provided,
however, that the indemnifying party shall not agree to settlement of any such
action or proceeding which provides for any relief other than the payment of
monetary damages or which could have a material precedential impact or effect on
the business or financial condition of the indemnified party without the prior
written consent of the indemnified party; and provided,
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further, that if the indemnified party reasonably determines that a conflict of
interest exists where it is advisable for the indemnified party to be
represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to it which are different from or in addition to those
available to the indemnifying party, then the indemnifying party shall not be
entitled to assume such defense and the indemnified party shall be entitled to
separate counsel at the indemnifying party's expense. If the indemnifying party
is not entitled to assume the defense of such action or proceeding as a result
of the proviso to the preceding sentence, the indemnifying party's counsel shall
be entitled to conduct the indemnifying party's defense and the indemnified
party's counsel shall be entitled to conduct the indemnified party's defense, it
being understood that both such counsel will cooperate with each other to
conduct the defense of such action or proceeding as efficiently as possible. If
the indemnifying party is not so entitled to assume the defense of such action
or does not assume such defense, after having received the notice referred to in
subparagraph (a) above, the indemnifying party will pay the reasonable fees and
expenses of counsel for the indemnified party. In such event, however, the
indemnifying party will not be liable for any settlement effected without the
written consent of the indemnifying party. If an indemnifying party is entitled
to assume, and assumes, the defense of such action or proceeding in accordance
with this paragraph, the indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified party incurred thereafter in connection
with such action or proceeding. Whether or not the indemnifying party chooses to
so defend or prosecute such Claim, all the parties hereto shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith. The
indemnifying party shall be subrogated to all rights and remedies of the
indemnified party.
ARTICLE IX
INTENTIONALLY OMITTED
ARTICLE X
CONFIDENTIALITY; TAX MATTERS
X.1. CONFIDENTIALITY
(a) Information. Before the Closing or if the Closing does
not occur, all information provided by a party hereto (the "Disclosing Party")
to another party hereto (the "Receiving Party") in connection with the
transactions contemplated by this Agreement shall be kept strictly confidential
by such Receiving Party and shall not, without the prior consent of the
Disclosing Party, be disclosed by the Receiving Party or used for any purpose
other than evaluating such transactions. The Receiving Party agrees that such
information shall only be transmitted to such Receiving Party's partners,
officers, directors, trustees, employees, attorneys, accountants, contractors,
consultants, advisors and agents who need to know such information for purposes
of evaluating such transactions and who agree to be bound by these
confidentiality provisions, and each Receiving Party agrees that in the event
the Closing does not take place for
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any reason, the Receiving Party shall return all such information to the
Disclosing Party. The provisions of this section shall not apply to any
information which is a matter of public record or lawfully obtainable from other
sources and shall not prevent either party from complying with applicable laws,
rules, regulations and court orders, including, without limitation, governmental
regulatory, disclosure, tax and reporting requirements. Notwithstanding the
foregoing, the parties may disclose the tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind
related to such tax treatment and tax structure.
(b) Public Notices. Between the date hereof and for a period
ending one (1) year after the Closing Date, no party hereto shall release or
cause or permit to be released any press notices or advertising promotion or
other publicity relating to this transaction without first giving reasonable
notice to, and consulting with, each other party and, as required herein,
obtaining the written consent of each other party. No provisions in this Section
XI.1(b) shall preclude a party from discussing the substance or any relevant
details of such transactions with any of its attorneys, accountants,
professional consultants, lenders, partners, affiliates, investors, or any
prospective lender, partner or investor, as the case may be, or prevent a party
hereto, from complying with laws, rules, regulations and court orders, including
without limitation, governmental regulatory, stock exchange, disclosure, tax and
reporting requirements (including, in the case of Acadia and the REIT,
disclosure by the REIT of information that it determines is necessary or
appropriate in accordance with its obligations as a public company under rules
of the New York Stock Exchange, the Securities and Exchange Commission or other
regulatory body) or making an announcement or making any communication to its
shareholders in accordance with its corporate policy.
X.2. NO REPRESENTATION WITH REGARD TO TAX TREATMENT
Notwithstanding any provision of this Agreement, no party hereto
makes any representation regarding (and shall have no liability with respect to)
the tax consequences to any other party hereto or to any of its direct or
indirect partners of the transactions contemplated herein or in any Other
Agreements.
ARTICLE XI
MISCELLANEOUS
XI.1. ADDITIONAL ACTIONS AND DOCUMENTS
Each of the parties hereto hereby agrees to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents, and will obtain such
consents, as may be necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this Agreement.
XI.2. EXPENSES
Each party hereto shall pay its own expenses incident to this
Agreement and the transactions contemplated hereunder, including all legal and
accounting fees and disbursements. The provisions of this Section XI.2 shall
survive any termination of this Agreement.
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XI.3. ASSIGNMENT
No party hereto shall assign its rights and/or obligations under
this Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of the other parties hereto. Notwithstanding
anything to the contrary in the preceding sentence, at any time after the
Closing Date, Acadia may assign its rights and/or obligations under this
Agreement to an affiliate, or any other person or entity in connection with a
merger, consolidation, sale or contribution of all or substantially all of its
or the REIT's assets, or other similar corporate transaction; provided, that no
assignment pursuant to the preceding clause shall release the assigning party
from its respective liabilities and obligations hereunder.
XI.4. ENTIRE AGREEMENT; AMENDMENT
This Agreement, including the Exhibits and other documents
referred to herein or furnished pursuant hereto, constitute the entire agreement
among the parties hereto with respect to the transactions contemplated herein,
and supersede all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein; provided, that
nothing in this Section XI.4 shall have any effect on the Other Agreements. No
amendment, modification or discharge of this Agreement shall be valid or binding
unless set forth in writing and duly executed and delivered by the party against
whom enforcement of the amendment, modification, or discharge is sought.
XI.5. WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
documents furnished in connection with or pursuant to this Agreement shall
impair any such right, power or privilege or be construed as a waiver of any
default or any acquiescence therein. No single or partial exercise of any such
right, power or privilege shall preclude the further exercise of such right,
power or privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing and signed
by the party against whom enforcement of such waiver is sought and then only to
the extent expressly specified therein.
XI.6. SEVERABILITY
If any part of any provision of this Agreement or any other
agreement or document given pursuant to or in connection with this Agreement
shall be invalid or unenforceable in any respect, such part shall be ineffective
to the extent of such invalidity or unenforceability only, without in any way
affecting the remaining parts of such provision or the remaining provisions of
this Agreement.
XI.7. GOVERNING LAW
This Agreement, the rights and obligations of the parties
hereto, and any claim or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of New York (excluding the
choice of law rules thereof).
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XI.8. NOTICES
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
facsimile, telegram, telecopy or telex, addressed as follows:
(1) If to any Contributor:
Klaff Realty, LP
Klaff Realty, Limited
122 South Michigan Avenue
Chicago, IL 60603
Attention: Hersch M. Klaff
Telephone: 312-360-3102
Facsimile: 312-360-0606
Email: hklaff@klaff.com
With copies to:
Klaff Realty, LP
Klaff Realty, Limited
122 South Michigan Avenue
Chicago, IL 60603
Attention: Martha Amesbury
Telephone: 312-360-3116
Facsimile: 312-360-0606
Email: mamesbury@klaff.com
Allan J. Reich, Esq.
Seyfarth Shaw LLP
55 E. Monroe Street, Suite 4200
Chicago, IL 60603
Telephone: 312-781-8650
Facsimile: 312-269-8869
Email: areich@seyfarth.com
(2) If to Acadia:
Acadia Realty Trust
1311 Mamaroneck Avenue, Suite 260
White Plains, NY 10605
Attention: Joel Braun
Telephone: 914-288-8146
Facsimile: 914-428-3922
Email: jbraun@acadiarealty.com
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With a copy to:
Robert Masters, Esq.
1311 Mamaroneck Avenue, Suite 260
White Plains, NY 10605
Telephone: 914-288-8139
Facsimile: 914-428-3646
Email: rmasters@acadiarealty.com
Each party may designate by notice in writing a new address to
which any notice, demand, request or communication may thereafter be so given,
served or sent. Each notice, demand, request, or communication which shall be
hand delivered, sent, mailed, faxed, telecopied or telexed in the manner
described above, or which shall be delivered to a telegraph company, shall be
deemed sufficiently given, served, sent, received or delivered for all purposes
at such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, the confirmation receipt (with respect to a facsimile), or
(with respect to a telecopy or telex) the answerback being deemed conclusive,
but not exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
XI.9. HEADINGS
Section headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
XI.10. EXECUTION IN COUNTERPARTS
To facilitate execution, this Agreement may be executed in as
many counterparts as may be required. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
XI.11. ATTORNEYS' FEES
Should either party employ attorneys to enforce any of the
provisions hereof, the party against whom any final judgment is entered agrees
to pay the prevailing party all reasonable costs, charges and expenses,
including reasonable attorneys' fees, expended or incurred by the prevailing
party in connection therewith.
XI.12. WAIVER OF JURY TRIAL
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
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ACQUISITION AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE
PROVISIONS OF THIS SECTION XI.12 SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this
Contribution Agreement to be duly executed on their behalf as of the date first
above written.
CONTRIBUTORS:
KLAFF REALTY, LP, a Delaware
limited partnership
By: Klaff Realty, Limited, General Partner
By:
------------------------------------
Name: Hersch M. Klaff
Title: President
KLAFF REALTY, LIMITED, an Illinois
corporation
By:
------------------------------------
Name: Hersch M. Klaff
Title: President
ACADIA:
ACADIA REALTY LIMITED PARTNERSHIP
By: Acadia Realty Trust, General Partner
By:
------------------------------------
Name:
Title:
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REIT:
ACADIA REALTY TRUST
By:
------------------------------------
Name:
Title:
The undersigned hereby joins in the execution of this Agreement
to confirm his agreement with the covenants of Article V(b) and (c); which shall
survive the Closing.
---------------------------------------------
Hersch M. Klaff
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