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EXHIBIT 10.42
CONTRIBUTION AGREEMENT
by and between
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and
TOWER REALTY OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
Dated as of July 31, 1997
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TABLE OF CONTENTS
Page
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RECITALS ............................................................. -1-
1. CONTRIBUTION OF PARTNERSHIP INTEREST AND EXCHANGE FOR OP
UNITS........................................................... -2-
1.1 CONTRIBUTION TRANSACTION................................. -2-
1.2 ISSUANCE OF OP UNITS..................................... -3-
1.3 ADJUSTED CONSIDERATION................................... -3-
1.4 AUTHORIZATION............................................ -3-
1.5 CONTRIBUTION OF CERTAIN RIGHTS........................... -3-
1.6 PRORATIONS............................................... -3-
1.7 TREATMENT AS CONTRIBUTION................................ -4-
2. CLOSING......................................................... -4-
2.1 CONDITIONS PRECEDENT..................................... -4-
2.2 TIME AND PLACE........................................... -5-
2.3 CLOSING DELIVERIES....................................... -6-
2.4 CLOSING COSTS............................................ -6-
3. REPRESENTATIONS, WARRANTIES AND INDEMNITIES..................... -7-
3.1 REPRESENTATIONS AND WARRANTIES OF THE OPERATING
PARTNERSHIP.............................................. -7-
3.2 REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR............ -7-
3.3 INDEMNIFICATION.......................................... -7-
4. COVENANTS....................................................... -8-
4.1 COVENANTS OF CONTRIBUTOR................................. -8-
5. RELEASES AND WAIVERS............................................ -8-
5.1 GENERAL RELEASE OF OPERATING PARTNERSHIP................. -9-
5.2 GENERAL RELEASE OF CONTRIBUTOR........................... -9-
5.3 INTENTIONALLY OMITTED.................................... -9-
5.4 WAIVER OF RIGHTS UNDER PARTNERSHIP AGREEMENT............. -9-
6. POWER OF ATTORNEY............................................... -9-
6.1 GRANT OF POWER OF ATTORNEY............................... -9-
6.2 LIMITATION ON LIABILITY.................................. -10-
7. MISCELLANEOUS................................................... -11-
7.1 FURTHER ASSURANCES....................................... -11-
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7.2 COUNTERPARTS............................................. -11-
7.3 GOVERNING LAW............................................ -11-
7.4 NOTICES.................................................. -11-
EXHIBIT LIST
SECTION FIRST
EXHIBITS REFERENCED
-------- ----------
A Constituent Interests of Contributor's Partnership Interest..... Recital D
B Contribution and Assumption Agreement........................... 1.1
C Form of Quitclaim............................................... 1.1
D Calculation of Number of OP Units............................... 1.2
E Representations, Warranties and Indemnities of Contributor...... 3.2
Attachment 1.................................................... Exchange Rights Agreement
Attachment 2.................................................... Registration Rights Agreement
Attachment 3.................................................... Lock-Up Agreements
Attachment 4.................................................... List of Portfolio Agreements
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (hereinafter referred to as the
"Contribution Agreement") is made and entered into as of July 31, 1997 by and
between Tower Realty Operating Partnership, L.P., a Delaware limited partnership
(the "Operating Partnership"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual (the
"Contributor").
RECITALS
A. The Operating Partnership desires to consolidate the ownership of a
portfolio of office properties (the "Participating Properties") owned or managed
by Tower Equities & Realty Corp. or its affiliates through a series of
transactions (the "Formation Transactions") whereby the Operating Partnership
will acquire direct interests in certain of the Participating Properties (the
"Property Interests") and all of the interests in certain limited partnerships,
certain limited liability companies and certain other entities (collectively,
the "Participating Partnerships and LLCs") which currently own directly or
indirectly the Participating Properties (the "Consolidation").
B. The Formation Transactions relate to the proposed initial public
offering (the "Public Offering") of the common stock, par value $.01 per share
(the "Common Stock") of Tower Realty Trust, Inc., a Maryland corporation (the
"Company"), which will operate as a self-administered and self-managed real
estate investment trust ("REIT") and will be the sole general partner of the
Operating Partnership.
C. The owners of the Property Interests and the partners and members of
the Participating Partnerships and LLCs will either transfer their Property
Interests and interests in the Participating Partnerships and LLCs to the
Company in exchange for cash (the "Cash Participants") or contribute such
interests directly to the Operating Partnership in exchange for an interest in
the Operating Partnership (the "OP Participants").
D. The Contributor owns interests in certain of the Participating
Partnerships and LLCs as set forth on EXHIBIT A (the "Partnerships") which
Partnerships own directly or indirectly interests in certain of the
Participating Properties also as set forth on EXHIBIT A (the "Property" or the
"Properties"). As used herein, "Partnership Agreement" means the partnership
agreement or membership agreement, as applicable, under which each such
Partnership was formed.
E. The Contributor has previously contributed certain interests in the
Partnerships to the Operating Partnership in exchange for OP Units (as defined
below).
F. The Contributor desires to, and the Operating Partnership desires
the Contributor to, contribute to the Operating Partnership, all of its right,
title and interest, as a
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partner (or member) of the Partnerships, including, without limitation, all of
its voting rights and interests in the capital, profits and losses of the
Partnerships or any property distributable therefrom, constituting all of its
interests in the Partnerships (such right, title and interest are hereinafter
collectively referred to as the "Partnership Interest"), in exchange for
partnership units in the Operating Partnership (the "OP Units"), on the terms
and subject to the conditions set forth herein.
G. The Operating Partnership desires to make, and the Contributor
desires to receive, a return of certain contributions previously made by the
Contributor to the Operating Partnership that relate to direct or indirect
interests in certain limited partnerships, limited liability companies and
certain other entities that do not relate to the Consolidation (the "Excluded
Interests").
NOW, THEREFORE, for and in consideration of the foregoing premises, and
the mutual undertakings set forth below, the parties hereto agree as follows:
ARTICLE 1. CONTRIBUTION OF PARTNERSHIP INTEREST AND EXCHANGE FOR
OP UNITS
1.1 CONTRIBUTION TRANSACTION
(a) At the Closing (as defined in ARTICLE 2.2 hereof) and
subject to the terms and conditions contained in this Contribution Agreement,
the Contributor shall transfer to the Operating Partnership, absolutely and
unconditionally, all of its Partnership Interest (as such term is defined in
Recital F herein) not previously contributed to the Operating Partnership. The
contribution of the Contributor's Partnership Interest shall be evidenced by a
"Contribution and Assumption Agreement" for each of the Partnerships in
substantially the form of EXHIBIT B attached hereto. Furthermore, the
Contributor shall execute and have duly acknowledged an individual quitclaim
deed for each property in the form of EXHIBIT C quitclaiming to the Operating
Partnership any direct or indirect ownership interest in and to the Properties.
The parties shall take such additional actions and execute such additional
documentation as may be required by the Partnership Agreement and the Agreement
of Limited Partnership of the Operating Partnership (the "OP Agreement") in
order to effect the transactions contemplated hereby.
(b) At the Closing, and subject to the terms and conditions
set forth in this Contribution Agreement, the Operating Partnership shall
transfer to the Contributor, absolutely and unconditionally, all of the Excluded
Interests (as such term is defined in Recital G herein) previously contributed
by the Contributor to the Operating Partnership.
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1.2 ISSUANCE OF OP UNITS
The Operating Partnership shall, in exchange for the
Partnership Interest and after taking into account the transfer of the Excluded
Interests to the Contributor, increase or decrease the number of OP Units issued
to the Contributor in accordance with EXHIBIT D hereto. The increase or decrease
of OP Units Issued to the Contributor shall be evidenced by either an amendment
(the "Amendment") to the OP Agreement or by certificates relating to such units
(the "Certificates") in either case, as shall be acceptable to the Contributor.
The parties shall take such additional actions and execute such additional
documentation as may be required by the Partnership Agreement and the OP
Agreement in order to effect the transactions contemplated hereby.
1.3 ADJUSTED CONSIDERATION
The Operating Partnership reserves the right not to acquire
any particular interest that constitutes part of the Partnership Interest, if in
good faith the Operating Partnership determines that the ownership of such
interest or the underlying Property would be inappropriate for the Operating
Partnership for any reason whatsoever. Contributor hereby agrees that, in such
event, the number of OP Units to be received by the Contributor pursuant to this
Contribution Agreement may be reduced by an amount determined by ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, in his sole discretion, to reflect the reduction in total value of the
Partnership Interest ultimately contributed by the Contributor.
1.4 AUTHORIZATION
Contributor hereby authorizes ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to make any
and all determinations to be made by him pursuant to ARTICLE 1.3 hereof, and any
and all such determinations shall be final and binding on all parties.
1.5 CONTRIBUTION OF CERTAIN RIGHTS
Effective upon the Closing, the Contributor hereby contributes
to the Operating Partnership all of its rights and interests, if any, including
rights to indemnification in favor of the Contributor, if any, under the
agreements pursuant to which the Contributor or its affiliates initially
acquired the Partnership Interest transferred pursuant to this Contribution
Agreement.
1.6 PRORATIONS
At the Closing, or as promptly as practicable following the
Closing, to the extent such matters are not the right or responsibility of all
tenants of a given Property, all revenue and all charges that are customarily
prorated in transactions of this nature, including accrued rent currently due
and payable, overpaid taxes or fees, real and personal property taxes, common
area maintenance charges and other similar periodic charges payable or
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receivable with respect to such Property shall be ratably prorated between the
partners of the Partnership which holds such Property prior to the Closing and
the Operating Partnership on and after the Closing, effective as of the Closing.
After providing for such prorations, (i) if any of the Partnerships has a
resultant cash surplus, the value of the Contributor's Partnership Interest
shall be increased in proportion to Contributor's ratable share of such cash
surplus and additional OP Units (based on the Mid-Point (as such term is defined
in Exhibit D attached hereto) of the proposed offering prices per share set
forth in the final preliminary prospectus relating to the offering of shares of
Common Stock ) shall be issued to the Contributor as a valuation adjustment to
the consideration to be received by the Contributor pursuant to this
Contribution Agreement, and (ii) if any of the Partnerships has a resultant cash
deficit, the value of the Contributor's Partnership Interest shall be reduced in
proportion to Contributor's ratable share of such cash deficit, and fewer OP
Units shall be issued to the Contributor as a valuation adjustment to the
consideration to be received by the Contributor pursuant to this Contribution
Agreement, unless such deficit is cured prior to the Closing.
1.7 TREATMENT AS CONTRIBUTION
The transfer, assignment and exchange of interests effectuated
with respect to the Operating Partnership, pursuant to this Contribution
Agreement, shall constitute a "Capital Contribution" pursuant to Article IV of
the OP Agreement and is intended to be governed by Section 721(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE 2. CLOSING
2.1 CONDITIONS PRECEDENT
The effectiveness of the Company's registration statement
filed with the Securities and Exchange Commission on Form S-11 (the
"Registration Statement") is a condition precedent to the obligations of all
parties to this Contribution Agreement to effect the transactions contemplated
by this Contribution Agreement on the Closing Date (as defined below).
The obligations of the Operating Partnership to effect the
transactions contemplated hereby shall be subject to the following additional
conditions:
(a) The representations and warranties of the Contributor
contained in this Contribution Agreement shall have been true and correct in all
material respects on the date such representations and warranties were made, and
shall be true and correct in all material respects on the Closing Date as if
made at and as of such date;
(b) Each of the obligations of the Contributor to be performed
by it shall have been duly performed by it on or before the Closing Date;
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(c) Concurrently with the Closing, the Contributor shall have
executed and delivered to the Operating Partnership the documents required to be
delivered pursuant to ARTICLE 2.3 hereof;
(d) The Contributor shall have obtained all necessary consents
or approvals of governmental authorities or third parties to the consummation of
the transactions contemplated hereby;
(e) The Contributor shall not have breached any of its
covenants contained herein in any material respect;
(f) No order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or governmental
or regulatory authority or instrumentality that prohibits the consummation of
the transactions contemplated hereby, and no litigation or governmental
proceeding seeking such an order shall be pending or threatened;
(g) There shall not have occurred between the date hereof and
the Closing Date any material adverse change in any of the Partnerships'
businesses;
(h) All existing management agreements with respect to the
Properties shall have been contributed to the Operating Partnership prior to or
simultaneously with the Closing; and
(i) All management functions with respect to the Properties
presently conducted by Tower Equities & Realty Corp. and its affiliates shall be
assumed by the Operating Partnership or Tower Equities Management, Inc.
2.2 TIME AND PLACE
The date, time and place of the transactions contemplated
hereunder shall be the day the Operating Partnership receives the proceeds from
the Public Offering from the underwriter(s), at 10:00 a.m. in the office of
Battle ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Closing"
or "Closing Date"). The transfers described in ARTICLE 1.1 of this Contribution
Agreement, and all closing deliveries, and the consummation of the Public
Offering, shall be deemed concurrent for all purposes.
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2.3 CLOSING DELIVERIES
At the Closing, the parties shall make, execute, acknowledge
and deliver, or cause to be made, executed, acknowledged and delivered through
the Attorney-in-Fact (see ARTICLE 6.1 below), the legal documents and other
items (collectively, the "Closing Documents") necessary to carry out the
intention of this Contribution Agreement, which Closing Documents and other
items shall include, without limitation, the following:
(i) A Contribution and Assumption Agreement for each
Partnership;
(ii) An individual quitclaim deed for each Property,
fully executed and duly acknowledged from each of the individual
constituent partners and/or members of the Contributor, as required by
the Operating Partnership;
(iii) The Amendment or the Certificates evidencing
the transfer of OP Units to the Contributor;
(iv) American Land Title Assurances ("ALTA") policies
of title insurance with appropriate endorsements and levels of
reinsurance for the Properties issued as of the Closing Date or
endorsements or other assurances that the existing policy or policies
of title insurance are sufficient for purposes of this Contribution
Agreement, which the Contributor shall cause the title company to issue
to the Operating Partnership in a form acceptable to the Operating
Partnership (the "Title Policies") including satisfaction by the
Contributor of any and all title company requirements applicable to it;
(v) The Partnerships' books and records and
securities or other evidences of ownership held by the Contributor; and
(vi) An affidavit from the Contributor stating, under
penalty of perjury, the Contributor's United States Taxpayer
Identification Number and that the Contributor is not a foreign person
pursuant to section 1445(b)(2) of the Code and a comparable affidavit
satisfying California and any other withholding requirements.
(vii) The Exchange Rights Agreement, the Registration
Rights Agreement and the Lock-Up Agreements substantially in the form
attached hereto as ATTACHMENTS 1, 2, and 3, respectively.
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2.4 CLOSING COSTS
The Operating Partnership shall pay any documentary transfer
taxes, escrow charges, title charges and recording taxes or fees incurred in
connection with the transactions contemplated hereby.
ARTICLE 3. REPRESENTATIONS, WARRANTIES AND INDEMNITIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE OPERATING
PARTNERSHIP
The Operating Partnership hereby represents and warrants to
and covenants with the Contributor that:
(a) Organization; Authority. The Operating Partnership has
been duly formed and is validly existing with requisite power to enter this
Contribution Agreement and all agreements contemplated hereby. The persons and
entities executing this Contribution Agreement and all agreements contemplated
hereby on behalf of the Operating Partnership have the power and authority to
enter into this Contribution Agreement and such other contemplated agreements.
(b) Due Authorization. The execution, delivery and performance
by the Operating Partnership of its obligations under this Contribution
Agreement and all agreements contemplated hereby will not contravene any
provision of applicable law, the OP Agreement, charter, declaration of trust or
other constituent document of the Operating Partnership, or any agreement or
other instrument binding upon the Operating Partnership or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over the
Operating Partnership, and no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for the
performance by the Operating Partnership of its obligations under this
Contribution Agreement and all other agreements contemplated hereby.
3.2 REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR
The Contributor represents and warrants to and covenants with
the Operating Partnership as provided in EXHIBIT E attached hereto, and
acknowledges and agrees to be bound by the indemnification provisions contained
therein.
3.3 INDEMNIFICATION
The Operating Partnership shall indemnify and hold harmless
the Contributor (the "Indemnified Contributor Party") from and against any and
all claims, losses, damages, liabilities and expenses, including, without
limitation, amounts paid in settlement, reasonable
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attorneys' fees, costs of investigation and remediation, costs of investigative
judicial or administrative proceedings or appeals therefrom and costs of
attachment or similar bonds (collectively, "Losses") asserted against, imposed
upon or incurred by the Indemnified Contributor Party in connection with: (i)
any breach of a representation or warranty of the Operating Partnership
contained in this Contribution Agreement; and (ii) all fees, costs and expenses
of the Operating Partnership in connection with the transactions contemplated by
this Contribution Agreement, including, without limitation, any and all costs
associated with the transfers contemplated herein.
ARTICLE 4. COVENANTS
4.1 Covenants of Contributor
(a) From the date hereof through the Closing, the Contributor
shall not:
(i) Sell or transfer all or any portion of the
Partnership Interest; or
(ii) Mortgage, pledge or encumber (or permit to
become encumbered) all or any portion of the Partnership Interest.
(b) From the date hereof through the Closing, the Contributor
shall permit each of the Partnerships to conduct its business in the ordinary
course, consistent with past practice, and shall not permit any of the
Partnerships to:
(i) Enter into any material transaction not in the
ordinary course of business;
(ii) Sell or transfer any assets of the Partnerships;
(iii) Mortgage, pledge or encumber (or permit to
become encumbered) any assets of the Partnerships, except (x) liens for
taxes not due, (y) purchase money security interests and (z) mechanics'
liens being disputed by any of the Partnerships in good faith and by
appropriate proceedings;
(iv) Amend, modify or terminate any material
agreements or other instruments to which any of the Partnerships is a
party; or
(v) Materially alter the manner of keeping the
Partnerships' books, accounts or records or the accounting practices
therein reflected.
(c) The Contributor shall use its good faith diligent efforts
to obtain any approvals, waivers or other consents of third parties required to
effect the transactions contemplated by this Contribution Agreement.
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ARTICLE 5. RELEASES AND WAIVERS
Each of the releases and waivers enumerated in this ARTICLE 5
shall become effective only upon the Closing of the contribution and exchange of
the Partnership Interest pursuant to ARTICLES 1 and 2 hereof.
5.1 GENERAL RELEASE OF OPERATING PARTNERSHIP
As of the Closing, the Contributor irrevocably waives,
releases and forever discharges the Operating Partnership and the Operating
Partnership's affiliates, partners (including ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇), agents,
attorneys, successors and assigns of and from any and all charges, complaints,
claims, liabilities, damages, actions, causes of action, losses and costs of any
nature whatsoever (collectively, "Contributor Claims"), known or unknown,
suspected or unsuspected, arising out of or relating to any of the Partnership
Agreements, this Contribution Agreement or any other matter which exists at the
Closing, except for Contributor Claims arising from the breach of any
representation, warranty, covenant or obligation under this Contribution
Agreement.
5.2 GENERAL RELEASE OF CONTRIBUTOR
As of the Closing, the Operating Partnership irrevocably
waives, releases and forever discharges the Contributor and Contributor's
agents, attorneys, successors and assigns of and from any and all charges,
complaints, claims, liabilities, damages, actions, causes of action, losses and
costs of any nature whatsoever (collectively, "Operating Partnership Claims"),
known or unknown, suspected or unsuspected, arising out of or relating to any of
the Partnership Agreements, this Contribution Agreement or any other matter
which exists at the Closing, except for Operating Partnership Claims arising
from the breach of any representation, warranty, covenant or obligation under
this Contribution Agreement or any supplemental representations and warranties
agreement entered into as of the Closing Date by and among the Contributor,
certain other continuing investors in the Operating Partnership and the
Operating Partnership.
5.3 INTENTIONALLY OMITTED
5.4 WAIVER OF RIGHTS UNDER PARTNERSHIP AGREEMENT
As of the Closing, the Contributor waives and relinquishes all
rights and benefits otherwise afforded to Contributor under the Partnership
Agreements including, without limitation, any right to consent to or approve of
the sale or contribution by the other partners (or members) of the Partnerships
of their partnership interests to the Company or the Operating Partnership.
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ARTICLE 6. POWER OF ATTORNEY
6.1 GRANT OF POWER OF ATTORNEY
Contributor does hereby irrevocably appoint the Operating
Partnership (or its designee) and each of them individually and any successor
thereof from time to time (such Operating Partnership or designee or any such
successor of any of them acting in his, her or its capacity as attorney-in-fact
pursuant hereto, the "Attorney-in-Fact") as the true and lawful attorney-in-fact
and agent of Contributor, to act in the name, place and stead of Contributor to
make, execute, acknowledge and deliver all such other contracts, orders,
receipts, notices, requests, instructions, certificates, consents, letters and
other writings (including, without limitation, the execution of any Closing
Documents or other documents relating to the acquisition by the Operating
Partnership of Contributor's Partnership Interest), to provide information to
the Securities and Exchange Commission and others about the transactions
contemplated hereby and, in general, to do all things and to take all actions
which the Attorney-in-Fact in its sole discretion may consider necessary or
proper in connection with or to carry out the transactions contemplated by this
Contribution Agreement, as fully as could Contributor if personally present and
acting. Further, Contributor hereby grants to Attorney-in-Fact a proxy (the
"Proxy") to vote Contributor's Partnership Interest on any matter related to the
Formation Transactions presented to the partners of any of the Partnerships for
a vote, including, but not limited to, the transfer of interests in any of the
Partnerships by the other partners.
Each of the Power of Attorney and Proxy and all authority
granted hereby shall be coupled with an interest and therefore shall be
irrevocable and shall not be terminated by any act of Contributor, by operation
of law or by the occurrence of any other event or events, and if any other such
act or events shall occur before the completion of the transactions contemplated
by this Contribution Agreement, the Attorney-in-Fact shall nevertheless be
authorized and directed to complete all such transactions as if such other act
or events had not occurred and regardless of notice thereof. Contributor agrees
that, at the request of the Operating Partnership, it will promptly execute a
separate power of attorney and proxy on the same terms set forth in this ARTICLE
6, such execution to be witnessed and notarized. Contributor hereby authorizes
the reliance of third parties on each of the Power of Attorney and Proxy.
Contributor acknowledges that the Operating Partnership has,
and any designee or successor thereof acting as Attorney-in-Fact may have, an
economic interest in the transactions contemplated by this Contribution
Agreement.
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6.2 LIMITATION ON LIABILITY
It is understood that the Attorney-in-Fact assumes no
responsibility or liability to any person by virtue of the Power of Attorney or
Proxy granted by Contributor hereby. The Attorney-in-Fact makes no
representations with respect to and shall have no responsibility for the
Formation Transactions or the Public Offering, or the acquisition of the
Partnership Interest by the Operating Partnership and shall not be liable for
any error or judgment or for any act done or omitted or for any mistake of fact
or law except for its own gross negligence or bad faith. Contributor agrees to
indemnify the Attorney-in-Fact for and to hold the Attorney-in-Fact harmless
against any loss, claim, damage or liability incurred on its part arising out of
or in connection with it acting as the Attorney-in-Fact under the Power of
Attorney or Proxy created by Contributor hereby, as well as the cost and expense
of investigating and defending against any such loss, claim, damage or
liability, except to the extent such loss, claim, damage or liability is due to
the gross negligence or bad faith of the Attorney-in-Fact. Contributor agrees
that the Attorney-in-Fact may consult with counsel of its own choice (who may be
counsel for Operating Partnership or its successors or affiliates), and it shall
have full and complete authorization and protection for any action taken or
suffered by it hereunder in good faith and in accordance with the opinion of
such counsel. It is understood that the Attorney-in-Fact may, without breaching
any express or implied obligation to Contributor hereunder, release, amend or
modify any other power of attorney or proxy granted by any other person under
any related agreement.
ARTICLE 7. MISCELLANEOUS
7.1 FURTHER ASSURANCES.
The Contributor shall take such other actions and execute such
additional documents following the Closing as the Operating Partnership may
reasonably request in order to effect the transactions contemplated hereby.
7.2 COUNTERPARTS
This Contribution Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.3 GOVERNING LAW
This Contribution Agreement shall be governed by the internal
laws of the State of New York, without regard to the conflicts of laws
provisions thereof.
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7.4 NOTICES
Any notice to be given hereunder by any party to the other
shall be given in writing by personal delivery or by registered or certified
mail, postage prepaid, return receipt requested, and shall be deemed
communicated as of the date of personal delivery (including delivery by
overnight courier). Mailed notices shall be addressed as set forth below, but
any party may change the address set forth below by written notice to other
parties in accordance with this paragraph.
To the Contributor:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o Feldman Equities
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
To the Operating Partnership:
Tower Realty Operating Partnership, L.P.
c/o Tower Realty Trust, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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IN WITNESS WHEREOF, the parties have executed this
Contribution Agreement as of the date first written above.
OPERATING PARTNERSHIP:
Tower Realty Operating Partnership, L.P.
By: Tower Realty Trust, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board, Chief
Executive Officer and President
CONTRIBUTOR:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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EXHIBIT A
CONSTITUENT INTERESTS OF
▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ (THE "CONTRIBUTOR") PARTNERSHIP INTEREST
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PARTNERSHIPS IN WHICH CONTRIBUTOR PARTNERSHIPS IN WHICH CONTRIBUTOR PROPERTIES HELD BY THE PARTNERSHIPS
HOLDS A DIRECT INTEREST* HOLDS AN INDIRECT INTEREST
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2800 Company, L.L.C. 2800 Associates, L.P. 2800 North Central
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* Corporations owned by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ that hold interests in any of the
Properties shall contribute the partnership interests held by such
corporations to the Operating Partnership.
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EXHIBIT B
CONTRIBUTION AND ASSUMPTION AGREEMENT
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby assigns,
transfers, contributes and conveys to Tower Realty Operating Partnership, L.P.,
a Delaware limited partnership (the "Operating Partnership"), its entire legal
and beneficial right, title and interest in and to ____________________________,
a __________________________ (the "Partnership"), including, without limitation,
all right, title and interest, if any, of the undersigned in and to the assets
of the Partnership and the right to receive distributions of money, profits and
other assets from the Partnership, presently existing or hereafter at any time
arising or accruing (such right, title and interest are hereinafter collectively
referred to as the "Partnership Interest"), TO HAVE AND TO HOLD the same unto
the Operating Partnership, its successors and assigns, forever.
Upon the execution and delivery hereof, the Operating
Partnership assumes all obligations in respect of the Partnership Interest.
The Partnership owns certain real property as described in
Attachment 1 attached hereto.
Executed: 8-1, 1997
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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EXHIBIT C
FORM OF QUITCLAIM
Order No.
Escrow No.
Loan No.
WHEN RECORDED MAIL TO:
--------------------------------------------------------------------------------
MAIL TAX STATEMENTS TO: SPACE ABOVE THIS LINE FOR RECORDER'S USE
DOCUMENTARY TRANSFER TAX $ ................
........... Computed on the consideration
or value of property conveyed;
OR
........... Computed on the consideration
or value less liens or
encumbrances remaining at time
of sale.
---------------------------------------------
Signature of Declarant of Agent determining
tax -- Firm name
--------------------------------------------------------------------------------
QUITCLAIM DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
do(es) hereby REMISE, RELEASE and FOREVER QUITCLAIM to
Tower Realty Operating Partnership, L.P., a Delaware limited partnership
the real property in the City of ____________, County of _____________, State of
_____________, described as
Dated _____________ ___________________________________
___________________________________
___________________________________
▇-▇
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
)
COUNTY OF )
On __________________________________________________________________ before me,
_______________________________________________________________________________,
personally appeared ____________________________________________________________
_______________________________________________________________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s) or the entity upon behalf of which the person(s) acted,
executed the instrument.
WITNESS my hand and official seal.
Signature ______________________________ (This area for official notarial seal)
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EXHIBIT D
CALCULATION OF NUMBER OF OP UNITS
The number of OP units to be issued to Contributor shall be
calculated as follows:
$600,000/Mid-Point
For purposes of this Contribution Agreement, the "Mid-Point"
means the median of the proposed per share price range for the Common Stock as
set forth in the Preliminary Prospectus.
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EXHIBIT E
REPRESENTATIONS, WARRANTIES AND INDEMNITIES
OF CONTRIBUTOR
ARTICLE 1. ADDITIONAL DEFINED TERMS
1.1 For purposes of this EXHIBIT E, the following terms have
the meanings set forth below. Terms which are not defined below shall have the
meaning set forth for those terms as defined in the Contribution Agreement to
which this EXHIBIT E is attached:
ACTIONS: Means all actions, complaints, charges, accusations,
investigations, petitions, suits or other proceedings, whether civil or
criminal, at law or in equity, or before any arbitrator or Governmental Entity.
CLAIMS: Means claims, disputes, actions, suits, arbitrations,
proceedings or investigations (collectively, "Claims") pending or, to Knowledge,
threatened that directly or indirectly affect any of the Contributor, the
Partnerships or the Properties.
CONTRIBUTION AGREEMENT: Means the Contribution Agreement to
which this EXHIBIT E is attached.
GOVERNMENTAL ENTITY: Means any government or agency, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
INDEMNIFYING PARTY: Means any party required to indemnify any
other party under ARTICLE 3.2 of this EXHIBIT E or under the indemnification
provisions substantially identical to ARTICLE 3.2 hereof in the other Portfolio
Agreements.
KNOWLEDGE: Means, with respect to any representation or
warranty so indicated, the actual knowledge, upon reasonable investigation and
inquiry in good faith, of the signatory to the Contribution Agreement.
LIENS: Means, with respect to any real and personal property,
all mortgages, pledges, liens, options, charges, security interests,
restrictions, prior assignments, encumbrances, covenants, encroachments,
assessments, rights of others, licenses, easements, liabilities or claims of any
kind or nature whatsoever, direct or indirect, including, without limitation,
interests in or claims to revenues generated by such property.
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇: Means (a) Liens, or deposits made to secure
the release of such Liens, securing taxes, the payment of which is not
delinquent or the payment of which is actively being contested in good faith by
appropriate proceedings diligently pursued;
(b) Zoning laws and ordinances generally applicable to the
districts in which the Properties are located which are not violated by the
existing structures or present uses thereof;
(c) Liens imposed by laws, such as carriers', warehousemen's
and mechanics' liens, and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings diligently
pursued;
(d) non-exclusive easements for public utilities, minor
encroachments, rights of access or other non-monetary matters that do not have a
material adverse effect upon, or materially interfere with the use of, the
Properties; and
(e) any exceptions contained in the Title Policies.
PERSON: Means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or governmental entity.
PORTFOLIO AGREEMENTS: Means the agreements, including the
Contribution Agreement, listed on ATTACHMENT 1 hereto, which contemplate the
transfer of partnership and/or limited liability company membership interests in
certain of the Participating Partnerships and LLCs from any entity directly or
indirectly owned by Contributor to the Company and the Operating Partnership.
PROSPECTUS: Means the Company's Form S-11 Registration
Statement.
REIT STOCK: Shall have the meaning set forth in the OP
Agreement.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTOR
The Contributor represents and warrants to the Operating
Partnership as set forth below in this ARTICLE 2. Notwithstanding any other
provision of the Contribution Agreement or this EXHIBIT E, the Contributor makes
representations, warranties and indemnities only with respect to: (i) the
Properties identified on EXHIBIT A to the Contribution Agreement (the "Property"
or the "Properties"), and (ii) the interests in the Partnerships to be
transferred by the Contributor.
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2.1 ORGANIZATION; AUTHORITY. The Contributor (A) if a natural
person, has the legal capacity to enter the Contribution Agreement; if not a
natural person, is duly formed, validly existing and in good standing (to the
extent applicable) under the laws of the jurisdiction of its formation, and (B)
has all requisite power and authority to own, lease or operate its property and
to carry on its business as presently conducted and, to the extent required
under applicable law, is qualified to do business and is in good standing in
each jurisdiction in which the nature of its business or the character of its
property make such qualification necessary.
2.2 DUE AUTHORIZATION. The execution, delivery and performance
of the Contribution Agreement by the Contributor has been duly and validly
authorized by all necessary action of the Contributor. This Contribution
Agreement and each agreement, document and instrument executed and delivered by
or on behalf of the Contributor pursuant to this Contribution Agreement
constitutes, or when executed and delivered will constitute, the legal, valid
and binding obligation of the Contributor, each enforceable against the
Contributor in accordance with its terms, as such enforceability may be limited
by bankruptcy or the application of equitable principles.
2.3 CONSENTS AND APPROVALS. No consent, waiver, approval or
authorization of any third party is required to be obtained by the Contributor
in connection with the execution, delivery and performance of the Contribution
Agreement and the transactions contemplated hereby, except any of the foregoing
that shall have been satisfied prior to the Closing Date.
2.4 OWNERSHIP OF THE PARTNERSHIP INTERESTS. The Contributor is
the sole owner of the Partnership Interest and has good and valid title to such
Partnership Interest, free and clear of all Liens, other than Permitted Liens.
2.5 PARTNERSHIP INTEREST. The Partnership Interest constitutes
all of the issued and outstanding interests owned by the Contributor in the
Partnerships. The Partnership Interest is validly issued, fully paid and
non-assessable, and was not issued in violation of any preemptive rights. The
Partnership Interest has been issued in compliance with applicable law and the
relevant Partnership Agreements (as then in effect). There are no rights,
subscriptions, warrants, options, conversion rights, preemptive rights or
agreements of any kind outstanding to purchase or to otherwise acquire any of
the interests which comprise the Partnership Interest or any securities or
obligations of any kind convertible into any of the interests which comprise the
Partnership Interest or other equity interests or profit participation of any
kind in the Partnerships. At the Closing, upon receipt of the consideration, the
Contributor will have transferred the Partnership Interest free and clear of all
security interests, mortgages, pledges, liens, encumbrances, claims and equities
to the Operating Partnership.
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2.6 NO VIOLATION. None of the execution, delivery or
performance of the Contribution Agreement and the transactions contemplated
hereby does or will, with or without the giving of notice, lapse of time, or
both, (i) violate, conflict with, result in a breach of, or constitute a default
under or give to others any right of termination or cancellation of (A) the
organizational documents, including the charters and bylaws, if any, of the
Contributor, (B) any material agreement, document or instrument to which the
Contributor is a party or by which the Contributor or its Property is bound or
(C) any term or provision of any judgment, order, writ, injunction, or decree of
any governmental or regulatory authority binding on the Contributor or by which
the Contributor or any of its assets or properties are bound or subject or (ii)
result in the creation of any Lien, other than a Permitted Lien, upon the
Property or the Partnership Interest.
2.7 NON-FOREIGN STATUS. The Contributor is not a foreign
person, foreign corporation, foreign partnership, foreign trust or foreign
estate (as defined in the Code), and is, therefore, not subject to the
provisions of the Code relating to the withholding of sales proceeds to foreign
persons.
2.8 WITHHOLDING. The Contributor shall execute at Closing such
certificates or affidavits reasonably necessary to document the inapplicability
of any federal or state withholding provisions. If Contributor fails to provide
such certificates or affidavits, the Operating Partnership may withhold a
portion of any payments otherwise to be made to the Contributor as required by
the Code or New York law.
2.9 INVESTMENT PURPOSES. The Contributor acknowledges his, her
or its understanding that the offering and sale of the OP Units to be acquired
pursuant to the Contribution Agreement are intended to be exempt from
registration under the Securities Act of 1933, as amended, and the rules and
regulations in effect thereunder (the "Act"). In furtherance thereof, the
Contributor represents and warrants to the Company as follows:
2.9.1 INVESTMENT. The Contributor is acquiring the OP
Units solely for his, her or its own account for the purpose of investment and
not as a nominee or agent for any other person and not with a view to, or for
offer or sale in connection with, any distribution of any thereof. The
Contributor agrees and acknowledges that he, she or it will not, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (hereinafter, "Transfer") any of the OP Units unless (i) the Transfer
is pursuant to an effective registration statement under the Act and
qualification or other compliance under applicable blue sky or state securities
laws, or (ii) counsel for the Contributor (which counsel shall be reasonably
acceptable to the Operating Partnership) shall have furnished the Operating
Partnership with an opinion, reasonably satisfactory in form and substance to
the Operating Partnership to the effect that no such registration is required
because of the availability of an exemption from registration under the Act and
qualification or other compliance under applicable blue sky or state securities
laws.
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26
2.9.2 KNOWLEDGE. The Contributor is knowledgeable,
sophisticated and experienced in business and financial matters; the Contributor
has previously invested in securities similar to the OP Units and fully
understands the limitations on transfer imposed by the Federal securities laws
and as described in the Contribution Agreement. The Contributor is able to bear
the economic risk of holding the OP Units for an indefinite period and is able
to afford the complete loss of his, her or its investment in the OP Units; the
Contributor has received and reviewed all information and documents about or
pertaining to the Company, the Operating Partnership, the business and prospects
of the Company and the Operating Partnership and the issuance of the OP Units as
the Contributor deems necessary or desirable, and has been given the opportunity
to obtain any additional information or documents and to ask questions and
receive answers about such information and documents, the Company, the Operating
Partnership, the business and prospects of the Company and the Operating
Partnership and the OP Units which the Contributor deems necessary or desirable
to evaluate the merits and risks related to his, her or its investment in the OP
Units; and the Contributor understands and has taken cognizance of all risk
factors related to the purchase of the OP Units.
2.9.3 HOLDING PERIOD. The Contributor acknowledges
that he, she or it has been advised that (i) the OP Units and the common stock
of the Company into which the OP Units may be exchanged in certain circumstances
(the "Common Stock") must be held indefinitely, and the Contributor must
continue to bear the economic risk of the investment in the OP Units (and any
Common Stock that might be exchanged therefor) unless they are subsequently
registered under the Act or an exemption from such registration is available,
(ii) a restrictive legend in the form hereafter set forth shall be placed on the
certificates representing the OP Units (and any Common Stock that might be
exchanged therefor), and (iii) a notation shall be made in the appropriate
records of the Operating Partnership (and the Company) indicating that the OP
Units (and any Common Stock that might be exchanged therefor) are subject to
restrictions on transfer.
2.9.4 ACCREDITED INVESTOR. If the Contributor is an
individual, such individual is an "accredited investor" (as such term is defined
in Rule 501(a) of Regulation D under the Act) and as such:
(i) is a director or executive officer of
the Company; or
(ii) has an individual net worth, or joint
net worth with his or her spouse, in excess of $1,000,000; or
(iii) had an individual annual adjusted
gross income in excess of $200,000 in each of the two most recent years
and reasonably expects to have annual adjusted gross income in excess
of $200,000 in the current year; or
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27
(iv) had a joint income with his spouse in
excess of $300,000 in each of the two most recent years and reasonably
expects to have an annual adjusted gross income, with his spouse, in
excess of $300,000 in the current year.
If the Contributor is not an individual, it is an "accredited
investor" (as such term is defined in Rule 501(a) of Regulation D under the
Act).
2.9.5 LEGENDING. Each certificate representing the OP
Units (and any Common Stock that might be exchanged therefor) shall bear the
following legend:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO
THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
In addition, the Common Stock for which the OP Units might be
exchanged shall also bear a legend which generally provides the following:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE
OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS
EXPRESSLY PROVIDED IN THE CORPORATION'S CHARTER, (1) NO PERSON MAY
BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION'S
COMMON STOCK IN EXCESS OF 9.8% (BY VALUE OR BY NUMBER OF SHARES,
WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING COMMON STOCK OF THE
CORPORATION; (2) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN
COMMON STOCK THAT WOULD RESULT IN THE CORPORATION BEING "CLOSELY HELD"
UNDER SECTION 856(H) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO
FAIL TO QUALIFY AS A REIT; AND (3) NO PERSON MAY TRANSFER COMMON STOCK
IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION
BEING OWNED BY FEWER THAN 100 PERSONS. ANY
E-6
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PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO
BENEFICIALLY OR CONSTRUCTIVELY OWN COMMON STOCK WHICH CAUSES OR WILL
CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN COMMON STOCK IN
EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE
CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE
VIOLATED, THE COMMON STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY
TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE
CHARITABLE BENEFICIARIES. IN ADDITION, THE CORPORATION MAY REDEEM
SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF
DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES
THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE
RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF
CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS
DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL CAPITALIZED TERMS IN THIS
LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS
THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING
THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH
HOLDER OF COMMON STOCK ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH
A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION.
2.10 LITIGATION. There are no Claims which could reasonably be
anticipated to result in damages in excess of $50,000 pending or, to Knowledge,
threatened that directly or indirectly affect the Contributor, the Partnerships,
the Properties or the Formation Transactions, nor has any such claim been
pending or, to Knowledge, threatened as of the Closing.
2.11 NO BROKERS. Neither the Contributor nor any of its
respective officers, directors or employees has employed or made any agreement
with any broker, finder or similar agent or any person or firm which will result
in the obligation of the Operating Partnership or any of its affiliates to pay
any finder's fee, brokerage fees or commissions or similar payment in connection
with the transactions contemplated by the Contribution Agreement.
2.12 SOLVENCY. The Contributor has been and will be solvent at
all times prior to and immediately following the transfer of the Partnership
Interest to the Operating Partnership.
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2.13 NO MISREPRESENTATIONS. No representation, warranty or
statement made, or information provided, by the Contributor in the Contribution
Agreement or in any other document or instrument furnished or to be furnished by
or on behalf of the Contributor pursuant hereto or as contemplated hereby (i)
contains or will contain any untrue statement of a material fact or (ii) omits
or will omit to state a material fact necessary to make the statements contained
herein or therein not misleading. For purposes of the preceding sentence,
materiality shall be determined with reference to the total portfolio of real
properties and other interests to be transferred pursuant to the Operating
Partnership pursuant to the Formation Transactions.
ARTICLE 3. INDEMNIFICATION
3.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; REMEDY FOR
BREACH.
(a) Subject to ARTICLE 3.6, all representations and warranties
contained in this EXHIBIT E or in any Schedule or certificate delivered pursuant
hereto shall survive the Closing.
(b) Notwithstanding anything to the contrary in the
Contribution Agreement or this EXHIBIT E, no party hereto shall be liable under
this EXHIBIT E or the Contribution Agreement for monetary damages (or otherwise)
for breach of any of its representations and warranties contained in this
EXHIBIT E or the Contribution Agreement, or in any Schedule, certificate or
affidavit delivered by it pursuant thereto, other than pursuant to the
succeeding provisions of this ARTICLE 3.
3.2 GENERAL INDEMNIFICATION
(a) The Contributor shall indemnify and hold harmless the
Operating Partnership, the Company, and their affiliates and each of their
respective directors, officers, employees, agents, representatives and
affiliates (each of which is an "Indemnified Party") from and against any and
all claims, losses, damages, liabilities and expenses, including, without
limitation, amounts paid in settlement, reasonable attorneys' fees, costs of
investigation, costs of investigative, judicial or administrative proceedings or
appeals therefrom, and costs of attachment or similar bonds (collectively,
"Losses"), asserted against, imposed upon or incurred by the Indemnified Party
in connection with or as a result of any breach of a representation or warranty
of the Contributor contained in the Contribution Agreement or in any Schedule,
certificate or affidavit delivered by the Contributor pursuant to the
Contribution Agreement.
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(b) The Contributor shall indemnify and hold harmless the
Indemnified Parties from and against any and all Losses, asserted against,
imposed upon or incurred by the Indemnified Parties in connection with or as a
result of:
(i) all fees and expenses of the Contributor in
connection with the transactions contemplated by the Contribution
Agreement;
(ii) any liabilities or obligations incurred, arising
from or out of, in connection with or as a result of the failure of the
Contributor to obtain all consents required to consummate the
transactions contemplated by the Contribution Agreement; or
(iii) any breach of any representation, warranty or
covenant set forth in the Contribution Agreement.
3.3 PAYMENT OF INDEMNIFICATION. The Contributor may satisfy
its obligations hereunder by the prompt delivery (paid promptly as and when
expenses are incurred) to an Indemnified Party of OP Units, subject to the
limits on ownership and transfer of REIT Stock set forth in the Company's
articles of incorporation. Any OP Units delivered to an Indemnified Party
hereunder shall be valued based upon the initial public offering price of the
Company's Common Stock.
3.4 NOTICE AND DEFENSE BY CLAIMS. As soon as reasonably
practicable after receipt by the Indemnified Party of notice of any liability or
claim incurred by or asserted against the Indemnified Party that is subject to
indemnification under this ARTICLE 3, the Indemnified Party shall give notice
thereof to the Contributor. The Indemnified Party may at its option demand
indemnity under this ARTICLE 3 as soon as a claim has been threatened by a third
party, regardless of whether an actual Loss has been suffered, so long as the
Indemnified Party shall in good faith determine that such claim is not frivolous
and that the Indemnified Party may be liable for, or otherwise incur, a Loss as
a result thereof and shall give notice of such determination to the Contributor.
The Indemnified Party shall permit the Contributor, at its option and expense,
to assume the defense of any such claim by counsel selected by the Contributor
and reasonably satisfactory to the Indemnified Party, and to settle or otherwise
dispose of the same; PROVIDED, HOWEVER, that the Indemnified Party may at all
times participate in such defense at its expense; and PROVIDED FURTHER, HOWEVER,
that the Contributor shall not, in defense of any such claim, except with the
prior written consent of the Indemnified Party in its sole and absolute
discretion, consent to the entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff in question to the Indemnified Party and its affiliates a
release of all liabilities in respect of such claims, or that does not result
only in the payment of money damages. If the Contributor shall fail to undertake
such defense within 30 days after such notice, or within such shorter time as
may be reasonable under the circumstances, then the Indemnified Party shall have
the right to
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undertake the defense, compromise or settlement of such liability or claim on
behalf of and for the account of the Contributor.
3.5 LIMITATIONS ON INDEMNIFICATION UNDER ARTICLE 3.
Notwithstanding anything contained herein to the contrary, the Contributor shall
not be liable or obligated to make payments under this ARTICLE 3 with respect to
any Property or Partnership Interest to the extent such payments in the
aggregate would exceed the value of the OP Units (based upon the initial public
offering price of the Common Stock) received by the Contributor at the Closing.
Notwithstanding anything contained herein to the contrary, the Indemnified
Parties shall look first to the Contributor's OP Units for indemnification under
this ARTICLE 3 and then to the Contributor's other assets.
3.6 LIMITATION PERIOD.
(a) Notwithstanding the foregoing, any claim for
indemnification under ARTICLE 3.2 hereof must be asserted in writing by the
Indemnified Party, stating the nature of the Losses and the basis for
indemnification therefor within one year after the Closing.
(b) If so asserted in writing prior to the applicable
expiration date, such claims for indemnification shall survive until resolved by
mutual agreement between the Contributor and the Indemnified Party or by
judicial determination. Any claim for indemnification not so asserted in writing
prior to the applicable expiration date shall not thereafter be asserted and
shall forever be waived.
3.7 RESERVATION OF CONTRIBUTOR RIGHTS. Notwithstanding
anything else in this Contribution Agreement to the contrary, the Contributor
reserves unto itself all rights and remedies (including rights to seek
contribution) against any third party indemnitors, prior property owners or
occupants, and contributors to any contamination, for which the Partnerships
have been indemnified by the Contributor hereunder. To the extent the
Contributor's rights against any such third party owners, occupants, indemnitors
or contributors may be materially prejudiced by actions or inactions by any
owner or occupant of the Properties after the Closing, the Contributor's
indemnity obligation shall be reduced in accordance with the effect of the
actions or inactions which so prejudiced the Contributor's rights.
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