EXECUTION VERSION

 

PURCHASE AND SALE AGREEMENT

 

 

 

BETWEEN

 

 

EACH PARTY LISTED AS A “SELLER” ON SCHEDULE I

 

 

AS SELLERS

 

 

 

AND

 

 

 

SINATRA PROPERTIES LLC

 

 

 

AS PURCHASER

 

 

 

 

TABLE OF CONTENTS

Page

Article I DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1 Article II PURCHASE AND
SALE; PURCHASE PRICE AND DEPOSIT 2 2.1        Purchase and Sale 2
2.2        Purchase Price and Deposit 2 2.3        Escrow Provisions Regarding
Deposit 3 2.4        All or Nothing Basis 4 2.5        Assumption Loan
Properties 4 Article III DILIGENCE; SERVICE CONTRACTS; BROKERAGE 8
3.1        Diligence 8 3.2        Proprietary Information 9 3.3        Service
Contracts 9 3.4        Brokerage 10 Article IV TITLE 10 4.1        Acceptance of
Title as of the Effective Date 10 4.2        Title Updates 10
4.3        Permitted Exceptions 11 4.4        Mortgages, Voluntary Liens, Tax
Liens and Monetary Liens 12 4.5        New Exceptions 13 4.6        Violations
14 4.7        Assignment of Regency Mortgage 14 4.8        Regency Property 15
Article V CLOSING 15 5.1        Closing Date 15 5.2        Seller Closing
Deliveries 16 5.3        Purchaser Closing Deliveries 17 5.4        Prorations
and Adjustments 18 5.5        Closing Costs 22 Article VI REPRESENTATIONS AND
WARRANTIES OF SELLERS AND PURCHASER 22 6.1        Sellers’ Representations 23
6.2        Subsequent Changes; Updates to Disclosure Schedules 26
6.3        Purchaser’s Representations 27 6.4        Survival 28 Article VII
COVENANTS OF SELLERS AND PURCHASER 28 7.1        Operation of Properties 28
7.2        Assumption Loans 29 7.3        Pierre Property 29 7.4        Leases
30 7.5        New Contracts 30 7.6        Voluntary New Exceptions 30
7.7        Notice of Breach 30 7.8        Tax Contests 31 7.9        Bulk Sales
31 7.10      Notice of Litigation, Violations and Regarding Property Tax Matters
32 7.11      Cooperation with Financing 32 7.12      Employees 32
7.13      Acquisition Proposals; Change in Recommendation 33 7.14      Proxy
Statement 37 7.15      Trust Shareholders Meeting 37 7.16      PSE&G Approval 38
7.17      Current Certificates of Occupancy 38 Article VIII CONDITIONS PRECEDENT
TO CLOSING 39 8.1        Purchaser’s Conditions to Closing 39
8.2        Sellers’ Conditions to Closing 39 8.3        Mutual Condition to
Closing 39 Article IX TERMINATION 40 9.1        Termination of this Agreement 40
9.2        Consequences of Termination 40 Article X DEFAULTS AND REMEDIES 43
10.1      Purchaser Default 43 10.2      Seller Default 43 Article XI CASUALTY
OR CONDEMNATION 44 11.1      Casualty/Condemnation 44 Article XII
INDEMNIFICATION AND SURVIVAL PROVISIONS 45 12.1      Survival; Certain
Limitations 45 12.2      Indemnification by Sellers 45 12.3      Indemnification
by Purchaser 46 12.4      Damages Definition; Additional Limitations 46
12.5      REIT Savings Clause 47 12.6      Indemnification Procedures 48

ii 

 

 

Page

    12.7      Exclusive Remedy 50 12.8      Manner of Payment 51
12.9      Survival 51 Article XIII AS-IS SALE AND PURCHASE 51 13.1      AS-IS 51
13.2      No Representations 51 13.3      No Implied Warranties 52
13.4      Documents and Information Supplied by Sellers 52 13.5      Assumption
and Release 52 13.6      Survival 53 Article XIV MISCELLANEOUS 53
14.1      Binding Effect 53 14.2      Counterparts; Facsimile and Electronic
Signatures 53 14.3      Further Assurances 53 14.4      Recording 53
14.5      Relationship of Parties 54 14.6      Exhibits; Annexes; Schedules 54
14.7      Construction 54 14.8      Number and Gender of Words 54
14.9      Successors and Assigns 54 14.10    Multiple Purchasers 54
14.11    Third-Party Beneficiaries 54 14.12    No Personal Liability 55
14.13    Time of the Essence 55 14.14    Waiver 55 14.15    Entire Agreement 55
14.16    Amendments 55 14.17    Severability 55 14.18    Governing Law and Venue
55 14.19    WAIVER OF JURY TRIAL 56 14.20    Confidentiality 56 14.21    Notices
57 14.22    Joint and Several 58 14.23    1031 Exchange 58 14.24    Prevailing
Party’s Attorneys’ Fees 59 14.25    Survival 59

iii 

 

EXHIBITS, ANNEXES AND SCHEDULES

EXHIBITS   Exhibit A* Legal Descriptions Exhibit B* Form of Escrow Agreement
Exhibit C-1* Form of New Jersey Deed Exhibit C-2* Form of New York Deed Exhibit
D* Form of Bill of Sale Exhibit E* Form of Assignment and Assumption of Leases
Exhibit F* Form of General Assignment and Assumption Exhibit G* Form of Closing
Certificate Exhibit H* Form of Certification of Non-Foreign Status Exhibit I*
Form of Bulk Sales Escrow Agreement Exhibit J* Form of Voting Agreement ANNEXES
  Annex 1 Defined Terms SCHEDULES   Schedule I Apartment Complex Names and
Addresses; Sellers; Allocated Purchase Prices Schedule II* Third-Party Reports
Schedule III* Title Commitments and Surveys Schedule IV* Certain Personal
Property Schedule 2.5* Assumption Loans and Assumption Loan Documents Schedule
5.4.1.3* Utility Deposits Schedule 6.1.4* Legal Proceedings Schedule 6.1.5*
Condemnation Schedule 6.1.7* Rent Roll and Security Deposits Schedule 6.1.8*
Service Contracts Schedule 6.1.9* Violations Schedule 6.1.15* Tax Contests
Schedule 6.1.16* Permit Issues Schedule 7.12* Retained Employees

 

*These exhibits and schedules have been omitted.  Upon the request of the
Securities and Exchange Commission, First Real Estate Investment Trust of New
Jersey agrees to furnish copies of the omitted exhibits and schedules.

 

 

 

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is entered into as of the
14th day of January, 2020 (the “Effective Date”), by and among each party listed
as a “Seller” on Schedule I attached hereto, each having a principal address at
c/o First Real Estate Investment Trust of New Jersey, 505 Main Street,
Hackensack, New Jersey 07601 (each, a “Seller”; and, collectively, “Sellers”)
and Sinatra Properties LLC, a Delaware limited liability company, having a
principal address at c/o Kushner Companies, 666 Fifth Avenue, 15th Floor, New
York, New York 10103 (“Purchaser”).

NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
Sellers and Purchaser hereby agree as follows:

RECITALS

Each Seller owns the Land (as defined below) associated with the Apartment
Complex listed opposite its name on Schedule I, as more particularly described
in Exhibit A attached hereto, together with the Apartment Complex (as defined
below) located thereon and identified on Schedule I, and Sellers desire to sell,
and Purchaser desires to purchase, all of Sellers’ respective right, title and
interest in and to such Land, the Apartment Complexes and certain property
related to the Apartment Complexes, on the terms and conditions set forth below.
The term “Property” as used herein means: (A) the Land on which each Apartment
Complex is located, (B) the Improvements (as defined below) constituting such
Apartment Complex and (C) the Fixtures and Tangible Personal Property
(including, without limitation, the personal property listed on Schedule IV),
Leases, Intangibles and Assigned Contracts (as such terms are defined below)
relating to such Apartment Complex.

The board of trustees of the Trust (the “Trust Board”) has (a) determined and
declared that this Agreement and the Transactions are advisable and in the best
interests of the Trust and the holders of shares of beneficial interest without
par value of the Trust (the “Trust Shareholders”), (b) approved the execution,
delivery and performance by the Trust of this Agreement and the consummation of
the Transactions, (c) resolved to recommend approval of this Agreement and the
consummation of the Transactions by the Trust Shareholders (such recommendation,
the “Trust Board Recommendation”) and (d) directed that this Agreement be
submitted to the Trust Shareholders for their approval at a duly held meeting of
such shareholders for such purpose (the “Trust Shareholders Meeting”).

Simultaneously with the execution and delivery of this Agreement, each of the
trustees of the Trust has entered into a Voting Agreement with Purchaser in
substantially the form attached hereto as Exhibit J that provides, among other
things, that the shares of beneficial interest of the Trust owned by such Trust
Shareholders will be voted at the Trust Shareholders Meeting in favor of
approval of this Agreement.

Article I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION

All capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in Annex 1 attached hereto. All uses of the word
“including” shall mean “including, without limitation” unless the context shall
indicate otherwise. All references to Sections, subsections, paragraphs,
Schedules, attachments and Exhibits are to sections, subsections, paragraphs,
schedules, attachments and exhibits in or to this Agreement unless otherwise
specified. All schedules, exhibits and attachments attached or annexed to this
Agreement are incorporated in this Agreement as if fully set forth herein.
Unless otherwise specified, the words “hereof”, “herein” and “hereunder” and
words of similar import when used in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
specified, all meanings attributed to defined terms herein are equally
applicable to both the singular and plural forms of the terms so defined.
References to “from” or “through” any date mean, unless otherwise specified,
from and including or through and including such date, respectively.   When this
Agreement provides that something shall be subject to a party’s consent or
approval, the same shall mean the consent or approval shall be de determined at
such party’s sole and absolute discretion, except to the extent that an
alternative standard is expressly set forth herein. The provisions of this
Article I shall survive the Closing and any earlier termination of this
Agreement.

Article II
PURCHASE AND SALE; PURCHASE PRICE AND DEPOSIT

2.1       Purchase and Sale. Each Seller agrees to sell and convey all of such
Seller’s right, title and interest in the Property or Properties owned by such
Seller to Purchaser and Purchaser agrees to purchase the same from Sellers, all
in accordance with and subject to the terms and conditions set forth in this
Agreement.

2.2       Purchase Price and Deposit.

2.2.1       The total purchase price (the “Purchase Price”) for the Properties
shall be an amount equal to Two Hundred Sixty-Six Million Five Hundred Thousand
Dollars ($266,500,000), payable by Purchaser as follows:

2.2.1.1       On the Effective Date, Purchaser shall deliver to Royal Abstract
of New Jersey LLC (in such capacity, “Escrow Agent”) as an earnest money deposit
(the “Deposit”), at Purchaser’s option, either (i) a cash deposit by wire
transfer of immediately available funds in the amount of Fifteen Million Dollars
($15,000,000) (such cash deposit, together with all interest accrued thereon,
the “Cash Deposit”) or (ii) an unconditional, irrevocable letter of credit in
the amount of Fifteen Million Dollars ($15,000,000) naming the Trust as
beneficiary (such letter of credit, the “Deposit LOC”). The Deposit shall be
non-refundable, except as otherwise expressly set forth herein. If Purchaser
elects that the Deposit be in the form of a Deposit LOC, then such Deposit LOC
shall be issued by Valley National Bank, shall be for a term which expires at
least thirty (30) days after the Outside Closing Date, shall otherwise be in a
form satisfactory to Sellers and shall be held and disposed of by Escrow Agent
as provided in this Section 2.2, Section 2.3 and the Escrow Agreement. Such
Deposit LOC shall provide that the Trust will be entitled to draw thereon upon
the Trust’s written certification to the issuer of the Deposit LOC that it is
authorized to do so in accordance with the provisions of Section 2.3 and the
Escrow Agreement. Notwithstanding anything to the contrary contained herein, if
at any time while Escrow Agent is holding the Deposit LOC the same is scheduled
to expire within thirty (30) days, then unless

2 

 

Purchaser has delivered to the Escrow Agent, with a copy to Sellers, an
amendment to such Deposit LOC extending the expiration date thereof for at least
ninety (90) days, Escrow Agent shall be authorized and is hereby required upon
receipt of written demand from the Trust to deliver such Deposit LOC to the
Trust, and the Trust is hereby authorized to present such Deposit LOC for
payment and to deliver the proceeds thereof to Escrow Agent to hold such
proceeds as a Cash Deposit pursuant to the terms of this Agreement and the
Escrow Agreement. If Escrow Agent is holding a Deposit LOC and pursuant to the
terms of this Agreement Sellers are entitled to receive the Deposit as
liquidated damages or otherwise, then Escrow Agent shall, upon its receipt of a
written directive from the Trust and the expiration of the time period set forth
in the Escrow Agreement, deliver such Deposit LOC to the Trust who shall be
permitted upon such delivery to present such Deposit LOC for payment. If Escrow
Agent is holding a Deposit LOC and the Closing occurs, or if the Closing does
not occur and Purchaser is entitled to a return of the Deposit pursuant to this
Agreement, then Escrow Agent shall, upon its receipt of a written directive from
Purchaser and the expiration of the time period set forth in the Escrow
Agreement, deliver such Deposit LOC to Purchaser, and the Trust shall deliver a
letter of surrender addressed to the issuer of the Deposit LOC. If Escrow Agent
is holding a Cash Deposit, then the Purchaser shall direct Escrow Agent to
release the Cash Deposit to Sellers at the Closing by wire transfer of
immediately available funds in accordance with Sellers’ wire instructions to be
delivered by Sellers to Purchaser and Escrow Agent prior to the Closing (the
“Sellers’ Wire Instructions”).

2.2.1.2       The balance of the Purchase Price (which, if the Deposit is in the
form of a Cash Deposit, shall mean the entire Purchase Price less the Cash
Deposit, and if the Deposit is in the form of a Deposit LOC, shall mean the
entire Purchase Price), subject to prorations and/or adjustments required by
this Agreement to be made at the Closing, and less the outstanding principal
balance of the Assumption Loans as of the Closing Date, shall be paid by
Purchaser to Sellers at the Closing in cash by wire transfer of immediately
available funds in accordance with the Sellers’ Wire Instructions.

2.2.2       Each of Sellers and Purchaser agree that (i) the Purchase Price
shall be allocated among the Properties as set forth on Schedule I (the portions
of the Purchase Price so allocated, the “Allocated Purchase Prices”) and (ii)
the Allocated Purchase Prices have been arrived at by a process of arm’s-length
negotiations, and the parties specifically agree to the Allocated Purchase
Prices as final and binding and will consistently reflect those allocations on
their respective federal, state and local tax returns, including any state,
county and other local transfer or sales tax declarations or forms to be filed
in connection with the Transactions.

2.2.3       All currency amounts set forth in this Agreement are expressed in
United States Dollars.

2.3       Escrow Provisions Regarding Deposit.

2.3.1       The Deposit shall be held and applied by Escrow Agent in accordance
with the applicable terms of this Agreement, including Section 2.2.1.1 and
Section 9.2., and that certain Escrow Agreement among Escrow Agent, Sellers and
Purchaser being executed on the Effective Date in the form of Exhibit B (as the
same may be supplemented, amended, restated or otherwise modified from time to
time, the “Escrow Agreement”).

3 

 

2.3.2       The parties shall deliver to Escrow Agent an executed copy of this
Agreement.

2.4       All or Nothing Basis. Purchaser acknowledges and agrees that, except
as otherwise expressly set forth herein, (i) the sale of the Properties shall be
on an “all or nothing” basis, (ii) Purchaser shall have no right, and Sellers
shall have no obligation, to exclude any single Property from the Transactions,
and (iii) any termination of this Agreement pursuant to the terms hereof shall
constitute a termination of this Agreement as to all of the Properties.

2.5       Assumption Loan Properties.

2.5.1       The Sellers that own the Assumption Loan Properties (the “Assumption
Loan Sellers”) are borrowers with respect to certain loans (collectively, the
“Assumption Loans”) made by the lenders (collectively, the “Assumption Loan
Lenders”) and in the original principal amounts set forth on Schedule 2.5. The
Assumption Loans are evidenced by the documents listed on Schedule 2.5 (the
“Assumption Loan Documents”). The Assumption Loan encumbering the Berdan
Property is referred to herein as the “Berdan Loan” and the Assumption Loan
encumbering the Pierre Property is referred to herein as the “Pierre Loan”.

2.5.2       Purchaser shall assume the Assumption Loans and the Assumption Loan
Documents at Closing pursuant to, and subject to the further terms of, this
Section 2.5. Purchaser hereby acknowledges that it has reviewed the Assumption
Loan Documents and, subject to the further terms of this Section 2.5, agrees to
use good faith efforts to promptly satisfy all conditions that each of the
Assumption Loan Lenders may require in order to cause the Loan Assumption and
Release to be effective (collectively, the “Loan Assumption Requirements”).
Without limiting the foregoing, Purchaser hereby agrees (i) to cooperate in a
commercially reasonably manner with all requests made by or on behalf of each of
the Assumption Loan Lenders for information regarding Purchaser, any Replacement
Loan Guarantor and their respective direct and indirect owners (including
providing all financial statements, organizational documents, tax returns,
background information regarding direct and indirect owners of Purchaser and
other information and documents requested by each of the Assumption Loan Lenders
and/or required to be provided under the Loan Assumption Requirements), (ii)
subject to the further provisions of this Section 2.5, to execute and/or deliver
all documentation reasonably requested by the Assumption Loan Lenders and/or
required to be executed and/or delivered under the Loan Assumption Requirements
and (iii) to cause one or more creditworthy Persons that are reasonably
acceptable to each of the Assumption Loan Lenders and satisfy the applicable
Loan Assumption Requirements (a “Replacement Loan Guarantor”) to enter into
replacement guaranties and indemnities. Purchaser shall assume the Assumption
Loans and the Assumption Loan Documents in their existing form (subject to the
provisions of Section 7.3 with respect to the Pierre Loan), subject to (x) any
modifications to the Assumption Loan Documents required by the Assumption Loan
Lenders that do not materially and unreasonably increase the liabilities or
obligations imposed by the applicable Assumption Loan Documents upon the
borrower or guarantor thereunder over those that presently exist under such
Assumption Loan Documents (y) modifications necessary to reflect the change in
identity of the borrowers and the guarantors and (z) reasonable changes thereto
requested by Purchaser permitting estate planning transfers of direct and
indirect interests in such borrowers and Replacement Loan Guarantors (the
“Required Estate Planning Changes”).

4 

 

Sellers acknowledges that Purchaser may also request from the Assumption Loan
Lenders changes to the Assumption Loan Documents to (A) permit the transfer of
an indirect interest in Purchaser to an institutional provider of preferred
equity in the Purchaser, and the transfer to such member of the common equity in
Purchaser and (B) provide Purchaser with a so-called “free, one time assumption
right”, provided that the failure of an Assumption Loan Lender to agree to any
such requested changes, other than the Required Estate Planning Changes (as
provided in Section 2.5.7 below), shall not be a condition to Purchaser’s
obligation to assume an Assumption Loan. Sellers agree, subject to the further
terms of this Section 2.5, to reasonably cooperate and use good faith efforts to
assist Purchaser (provided that, except to the set forth in Section 2.5.5 below,
Sellers shall have no obligation to incur any expense other than the fees and
expenses of its own attorneys) in connection with the Loan Assumption and
Release.

2.5.3       Without limiting Purchaser’s obligations set forth above, Purchaser
shall, not later than five (5) Business Days after being provided with the form
of application required by each Assumption Loan Lender to obtain the applicable
Loan Assumption and Release (the “Loan Assumption Application Submittal
Deadline”), submit directly to the applicable Assumption Loan Lender a completed
application, together with all documents, information and payments required in
connection therewith (collectively, the “Loan Assumption Application”), and
shall simultaneously therewith provide Sellers with a copy of its transmittal
cover letter demonstrating its timely submission of such materials (provided
that Section 2.5.5 below shall apply with respect to the payment of any Loan
Assumption Fees and Assumption Loan Lender Ancillary Costs). Purchaser
acknowledges and agrees that Purchaser is solely responsible for the preparation
of the Loan Assumption Applications and the collection of all materials,
documents, certificates, financial statements, signatures, and other items
required to be submitted in connection with the Loan Assumption Applications,
including any and all related payments, other than any required information
regarding the applicable Properties or the Sellers that the Assumption Loan
Lenders require Sellers to provide.

2.5.4       Purchaser shall expeditiously pursue each Loan Assumption Approval
and Loan Assumption and Release and shall (and shall cause any Replacement Loan
Guarantor to) use its good faith efforts to promptly satisfy and comply with the
Loan Assumption Requirements and any and all other assumption guidelines of an
Assumption Loan Lender in connection with the applicable Loan Assumption and
Release. Purchaser shall be responsible, at its sole cost and expense, for
correcting and re-submitting any deficiencies noted by any of the Assumption
Loan Lenders in connection with the Loan Assumption Application no later than
three (3) Business Days after notification such Assumption Loan Lender of such
deficiency. Purchaser shall (x) keep Sellers reasonably apprised on a current
basis of all communications with any Assumption Loan Lender, and shall provide
Sellers with a copy of all correspondence (which may be redacted to remove any
financial or other confidential information concerning Purchaser, any
Replacement Loan Guarantor or any Affiliate thereof) to or from any of the
Assumption Loan Lenders with respect to any Loan Assumption Applications, Loan
Assumption Approval and/or the Loan Assumption and Release no later than three
(3) Business Days after receipt of such correspondence from, or delivery of such
correspondence to, any Assumption Loan Lender and (y) permit the applicable
Sellers to participate in any discussions with the Assumption Loan Lenders (and
nothing herein shall prohibit the applicable Sellers from directly contacting
and communicating with the Assumption Loan Lenders, provided that Purchaser
shall be advised of a Seller’s intent to directly

5 

 

contact or communicate with an Assumption Loan Lender concerning a Loan
Assumption Application and be provided the opportunity to participate in any
such communications).

2.5.5       Purchaser, on the one hand, and Pierre Property Seller (with respect
to the Pierre Property only) or Berdan Property Seller (with respect to the
Berdan Property only), on the other hand, shall each pay fifty percent (50%) of
all Loan Assumption Fees imposed or charged by the Assumption Loan Lenders in
connection with the Loan Assumption Applications and the Loan Assumption and
Releases; provided, however, that (i) with respect to the Berdan Property, in no
event shall each of Purchaser, on the one hand, and Berdan Property Seller, on
the other hand, be obligated in respect of Loan Assumption Fees to pay more than
0.50% of the outstanding principal balance of the Berdan Loan as of the Closing
Date (being each party’s “Berdan Loan Assumption Fee Cap”), and (ii) with
respect to the Pierre Property, in no event shall each of Purchaser, on the one
hand, and Pierre Property Seller, on the other hand, be obligated to pay in
respect of Loan Assumption Fees more than 0.50% of the outstanding principal
balance of the Pierre Loan as of the Closing Date (being each party’s “Pierre
Loan Assumption Cap”; each of the Berdan Loan Assumption Fee Cap and the Pierre
Loan Assumption Fee cap being a “Loan Assumption Fee Cap” and collectively, the
“Loan Assumption Fee Caps”) (however, a party may elect in its sole discretion
to pay amounts in excess of one or both Loan Assumption Fee Caps).
Notwithstanding the foregoing, but subject to Section 7.3, (a) Purchaser shall
be solely responsible for all Assumption Loan Lender Ancillary Costs and (b)
each party shall be responsible for the costs and expenses of its own attorneys
in connection with all Loan Assumption Applications and pursuing the Loan
Assumption Approvals and Loan Assumption and Releases. All Loan Assumption Fees
and Assumption Loan Lender Ancillary Costs shall be paid when due, whether
before, at or after the Closing and whether or not the Closing occurs.

2.5.6       At Closing, and without limiting Purchaser’s obligations under this
Section 2.5, but subject to Section 2.5.7, (i) Purchaser shall be responsible
for (x) replacing (and increasing to the extent required by any of the
Assumption Loan Lenders) all reserves, impounds and other accounts required to
be maintained in connection with the Assumption Loans, to the extent such
existing reserves, impounds and other accounts are not assigned to Purchaser and
(y) funding any additional reserves, impounds or accounts required by the
Assumption Loan Lenders in connection with the Assumption Loans, (ii) Purchaser
(or if required by the applicable Assumption Loan Lender, an SPE Entity) shall
assume each Assumption Loan, (iii) Purchaser shall deliver to each Assumption
Loan Lender replacement guaranties and indemnities in connection with each Loan
Assumption in the form required by the applicable Assumption Loan Lender and
(iv) the existing guarantors and indemnitors shall be released from all
liability under the existing guaranties and indemnities given under such
Assumption Loans all other Assumption Loan Documents (collectively, the
foregoing (i), (ii), (iii) and (iv) referred to herein as “Loan Assumption and
Release”).

2.5.7       Notwithstanding the foregoing provisions of this Section 2.5, if (i)
an Assumption Loan Lender formally denies Purchaser’s Assumption Loan
Application or Purchaser has not received the Loan Assumption Approval with
respect to one or both of the Loan Assumption Applications by February 28, 2020,
then at any time thereafter (until such time that Purchaser receives the
applicable Loan Assumption Approval(s)), Sellers or Purchaser may elect, by
written notice to the other party, to terminate this Agreement solely with
respect to the

6 

 

applicable Property or Properties; (ii) notwithstanding Purchaser’s compliance
with Section 2.5.4 above, an Assumption Loan Lender formally denies Purchaser’s
Assumption Loan Application, refuses to adopt any of the Required Estate
Planning Changes or requires, as a condition to granting any Loan Assumption
Approval or Loan Assumption and Release, any modifications to the Assumption
Loan Documents that materially and unreasonably increase the liabilities or
obligations imposed by the applicable Assumption Loan Documents upon the
borrower or guarantor thereunder over those that presently exist under such
Assumption Loan Documents (including, without limitation, an increase in the
amount of any required escrows or reserves or the imposition of any requirement
for new escrows or reserves), which modifications are not acceptable to
Purchaser, then Purchaser may elect, by written notice to Sellers, to terminate
this Agreement solely with respect to the applicable Property or Properties, or
(iii) the amount of any Loan Assumption Fee payable with respect to the Berdan
Loan or the Pierre Loan exceeds the aggregate Assumption Fee Caps with respect
to such Loan and no party elects, within ten (10) days after notification from
the applicable Assumption Loan Lender to the applicable Seller and Purchaser of
the amount of the Assumption Loan Fee it is requiring, to pay such amounts in
excess of such Assumption Fee Caps as are necessary in order that the Assumption
Loan Fee for such Assumption Loan will be paid in full, then either party hereto
may elect, by written notice to the other party hereto, to terminate this
Agreement solely with respect to the applicable Property. Upon any termination
election pursuant to this Section 2.5.7, (a) this Agreement shall be deemed
automatically terminated solely with respect to the applicable Property(ies)
(and the applicable Property(ies) shall no longer constitute a “Property” for
the purposes of this Agreement) effective as of Sellers’ notice to Purchaser, or
Purchaser’s notice to Sellers, of such election, (b) such Property(ies) shall be
excluded from the property to be sold by Sellers to Purchaser at the Closing,
(c) the Purchase Price payable by Purchaser at the Closing shall be reduced by
an amount equal to the Allocated Purchase Price allocated to such Property(ies)
as set forth on Schedule I and (d) all of Sellers’ representations, warranties,
covenants, liabilities and obligations, and Purchaser’s rights, with respect to
such Property(ies) shall be void and of no further force and effect (without
limiting the respective rights and obligations of the parties with respect to
the other Properties and except for matters which expressly survive the
termination of this Agreement). In addition, if any Assumption Loan Lender,
after having issued a Loan Assumption Approval, fails to deliver on or prior to
the Closing Date a Loan Assumption and Release, then, unless the parties in
their sole discretion elect to extend the Closing Date with respect to the
applicable Property, this Agreement shall be deemed automatically terminated
solely with respect to the applicable Property(ies) and the provisions of the
immediately preceding sentence shall apply; provided that nothing in this
sentence shall relieve Purchaser of its obligations under (and subject to) this
Section 2.5 to expeditiously pursue each Loan Assumption Approval and Loan
Assumption and Release and use good faith efforts to promptly satisfy and comply
with the Loan Assumption Requirements and any and all other assumption
guidelines of an Assumption Loan Lender in connection with the applicable Loan
Assumption and Release.

2.5.8       The provisions of this Section 2.5 shall survive the Closing and any
earlier termination of this Agreement.

7 

 

Article III
DILIGENCE; SERVICE CONTRACTS; BROKERAGE

3.1       Diligence.

3.1.1       Purchaser acknowledges and agrees that prior to the Effective Date
(i) Sellers have (x) granted Purchaser and its agents and representatives access
to the Data Site and (y) afforded Purchaser and each of its agents and
representatives an opportunity to review the Properties, including each of the
Apartment Complexes and the documentation, contracts, agreements, reports,
financials and other information related thereto provided in the Data Site or
otherwise made available to Purchaser by Sellers (collectively, the “Materials”)
and (ii) Purchaser has (x) had the opportunity to review all Materials and all
Third Party Reports provided in the Data Site or otherwise made available to or
obtained by Purchaser, (y) conducted and obtained such independent analyses,
studies (including environmental studies and analyses concerning the presence of
lead, asbestos, water intrusion, fungal growth, PCBs, radon and any other
Hazardous Materials (and any resulting damage) at, on in or about the
Properties), investigations and inspections as it deems appropriate in
connection with the Properties and (z) completed all such reviews, and all of
its due diligence, investigations and inspections with respect to the
Properties, to its satisfaction. Subject to Section 8.1 and without prejudice to
Purchaser’s rights with respect to the Sellers’ Representations, Purchaser
agrees and acknowledges that Purchaser shall acquire the Properties at the
Closing subject to the risk that Purchaser has failed to completely and
adequately review and consider any or all of the Third-Party Reports or other
Materials, obtain and review any other information relating to the Properties or
conduct physical and/or other investigations or inspections of the Properties.
By executing this Agreement, Purchaser acknowledges that it has completed its
inspections and studies of all of the Properties to the extent necessary to
determine whether to proceed with the transactions contemplated hereby and it
has no rights to object to any due diligence matters except as expressly
provided in this Agreement.

3.1.2       Purchaser acknowledges and agrees that any and all Materials
(including any Third-Party Reports) provided to it by any Seller or any Person
acting on behalf of any Seller, or any other Person which prepared or provided
any of the Materials, have been provided subject to the terms of Article XIII.

3.1.3       Prior to the Closing, Purchaser shall have the right, subject to the
terms and conditions of the Access Agreement (including, without limitation,
compliance with the insurance requirements thereunder), to conduct on-site
non-invasive physical and environmental examinations, inspections, tests,
studies, evaluations and investigations at the Properties (collectively,
“Physical Due Diligence”) in accordance with the terms of this Section 3.1.3,
subject to the following limitations:

3.1.3.1       access to the Properties shall be during normal working hours upon
at least twenty-four (24) hours’ notice to Sellers, and Sellers and their
respective representatives shall have the right to accompany Purchaser during
any such entry and Physical Due Diligence;

3.1.3.2       such access and Physical Due Diligence shall not unreasonably
interfere with the operation or occupancy of any Property or any portion thereof
(whether by any

8 

 

Tenant, invitee, guest or any other Person), and all such inspections shall be
conducted in accordance with Sellers’ safety and privacy requirements and
subject to the rights of any Tenants;

3.1.3.3       Purchaser shall provide to Sellers in advance the names, addresses
and scope of work for each consultant, contractor and agent who will be
conducting Physical Due Diligence at any Property, and the scope of work shall
be subject to Sellers’ prior written consent (which consent shall not be
unreasonably withheld or delayed);

3.1.3.4       Purchaser shall not contact any Tenant without Sellers’ prior
written consent, and, if required by Sellers no such contact shall be
established without Sellers’ participation in such meeting or other interaction;

3.1.3.5       no invasive testing shall be conducted at any Property without
Sellers’ prior written consent, which may be granted or withheld in Sellers’
sole discretion;

3.1.3.6       Purchaser shall promptly repair any damage to the Properties
caused by any Physical Due Diligence; and

3.1.3.7       all Physical Due Diligence shall be at Purchaser’s sole expense
and shall be in accordance with all applicable legal requirements.

3.1.4       Purchaser shall indemnify, defend and hold harmless the Seller
Indemnified Parties from and against any and all Damages (including claims for
mechanics’ and materialmen’s liens) in connection with or arising out of any
entry onto, or review, investigations or inspections of, the Properties by or on
behalf of Purchaser, other than any Damages arising solely out of (i) the acts
or omissions of the Seller Indemnified Parties or (ii) the mere discovery by
Purchaser of pre-existing conditions at any Property.

3.1.5       The provisions of this Section 3.1 shall survive the Closing and any
earlier termination of this Agreement.

3.2       Proprietary Information. Purchaser acknowledges that the Materials are
proprietary and confidential and the Materials shall be subject to the terms and
conditions set forth in Section 14.20 hereof. In the event of termination of
this Agreement, Purchaser shall promptly return to Sellers all of the Materials.
Purchaser’s obligations under this Section 3.2 shall survive the termination of
this Agreement.

3.3       Service Contracts. Until the Closing Date, Seller shall not enter into
any new Service Contracts or amend or modify, in any material respect, any
existing Service Contracts, unless such new, amended or modified, as applicable,
Service Contract (i) is terminable upon not more than thirty (30) days’ notice
without penalty or (ii) is otherwise consented to by Purchaser in its reasonable
discretion (which consent shall be deemed to be granted if Purchaser does not
reply to a request therefor within five (5) Business Days following delivery of
any such request). Purchaser shall assume all Service Contracts from and after
the Closing Date, other than the 2020 Pool Management Agreement with North
Jersey Pool Management, LLC (operating as American Pool) in respect of the
Regency Property (the “Regency Pool Contract”). With respect to the Regency Pool
Contract, and if Sellers and Purchaser have been unable to obtain any consent to
the

9 

 

assignment and assumption of any other Service Contracts required by the terms
of such Service Contracts, Sellers shall deliver a notice to the vendor of each
applicable Service Contract terminating such Service Contract (with respect to
the Properties, if such Service Contract covers one or more of the Properties as
well as other properties) as of the Closing Date, and Sellers shall be
responsible for any fees or expenses relating to such termination. Each Service
Contract, other than the Regency Pool Contract, shall constitute an Assigned
Contract and Purchaser shall assume each such Service Contract pursuant to the
General Assignment and Assumption at the Closing, in each case, subject to the
receipt of any required consent (it being understood that the receipt of any
such required consent shall not constitute a condition to Purchaser’s obligation
to consummate the Closing in accordance with the terms of this Agreement).

3.4       Brokerage. Each of Sellers and Purchaser represents and warrants to
the other that it has not dealt with or utilized the services of any real estate
broker, investment banker, sales person or finder in connection with this
Agreement, other than the services of HFF Securities LP, in its capacity as
financial advisor to Sellers (“HFF”). Sellers shall pay any and all fees that
may be due and payable to HFF in connection with the Transactions pursuant to a
separate agreement with HFF. Each party agrees that its indemnity obligations
pursuant to Section 12.2 or Section 12.3, as applicable, shall cover any Damages
arising from the breach of its representation set forth in this Section 3.4. The
provisions of this Section 3.4 shall survive the Closing and any earlier
termination of this Agreement.

Article IV
TITLE

4.1       Acceptance of Title as of the Effective Date. The parties acknowledge
and agree that Royal Abstract of New Jersey LLC (or with respect to the Regency
Property, Royal Abstract of New York LLC) (as applicable, the “Title Company”)
has made available to Purchaser commitments for title insurance (collectively,
the “Title Commitments”) addressing the status of title to each Property as of a
date prior to the Effective Date, including (to the extent available) copies of
Liens and Encumbrances that are indicated as Property-specific exceptions to
title in such title commitments. Each of the Title Commitments is set forth on
Schedule III. The parties acknowledge and agree that Purchaser has received for
each Property a survey that meets the Minimum Standard Detail Requirements for
ALTA/NSPS Land Title Surveys in effect as of the Effective Date. Each of the
Surveys, including all revisions made prior to the Effective Date, is identified
on Schedule III (such surveys are referred to herein as the “Surveys”).
Purchaser hereby acknowledges and agrees that, except as provided in Section 4.4
below, all Liens or Encumbrances disclosed in the Title Commitments or the
Surveys set forth on Schedule III are deemed to be a Permitted Exception
hereunder, and that Seller shall not be obligated to Remove any such Liens or
Encumbrances.

4.2       Title Updates. Purchaser may order (w) updates to, continuations of
and/or supplements to any of the Title Commitments, (x) updates or supplements
to the Surveys and/or (y) new surveys with respect to any of the Properties
(each of the foregoing, a “Title Update”), in each case, at Purchaser’s sole
cost and expense. Purchaser shall instruct any title company and any surveyor
provider to simultaneously deliver directly to Purchaser and Sellers (and their
respective counsel referenced in Section 14.21 of this Agreement) copies of each
Title Update

10 

 

(including tax and departmental searches) ordered by Purchaser or otherwise
issued by any title company or any surveyor, and copies of all underlying
documentation referenced as an exception therein.

4.3       Permitted Exceptions. With respect to each Property, the Land and the
Improvements shall be conveyed subject to the following, all of which shall be
deemed “Permitted Exceptions” with respect to such Property:

4.3.1       All matters shown on any Title Commitment (including, without
limitation, the items identified in the final paragraph of this Section 4.3)
other than Mortgages (subject to Section 4.3.5 below), Other Monetary Liens (but
only to the extent provided under Section 4.4), Voluntary Liens and Tax Liens;

4.3.2       All matters shown on any Survey other than Voluntary Liens;

4.3.3       All matters shown on any new or updated survey obtained by Purchaser
and all matters which would be disclosed by an accurate new or updated survey;

4.3.4       The standard printed exceptions appearing on the applicable Title
Policy;

4.3.5       the Liens created by the Assumption Loan Documents evidencing or
securing any Assumption Loan;

4.3.6       The rights of any Tenants, as tenants only, under their respective
Leases affecting such Property;

4.3.7       Applicable federal, state and local laws, ordinances and
governmental regulations, including building and zoning laws, ordinances and
regulations, now or hereafter affecting such Property;

4.3.8       Customary utility and other easements which (A) are not encroached
on by any Improvements located at the applicable Property, (B) are within and do
not violate any setback requirements or restrictions and (C) do not materially
and adversely impact the current use or value of the applicable Property;

4.3.9       Liens for real estate Taxes or assessments which are not yet due and
payable;

4.3.10       Any easements or other liens and encumbrances the applicable Seller
is obligated to grant on such Property pursuant to any applicable Title Document
or applicable law;

4.3.11       Any Liens and Encumbrances that become Permitted Exceptions
pursuant to Section 4.5 or any other express provision of this Agreement.

Following the Effective Date and until the Closing, Sellers shall use
commercially reasonable efforts to cause, with respect to the Berdan Property,
recordation in the applicable land records Ordinance No. 35, 2011 of the
Township of Wayne “An Ordinance to Vacate and

11 

 

Extinguish the Public’s Interest in Hazen Court Located within the Township of
Wayne”, provided that] Purchaser acknowledges and agrees that the failure of
such ordinance to be recorded and/or the failure of the Title Policy for the
Berdan Policy to insure title with respect to any portion of such property that
lies within the bed of any street, road or highway, including, without
limitation, Hazen Court, shall be a Permitted Exception. Purchaser further
acknowledges and agrees that the Developer’s Agreement made between Borough of
Red Bank, Station Place at Red Bank, LLC and G.S. Realty Corp. dated May 22,
2013 shall be Permitted Exception in respect of the Station Place Property and
that the Developer’s Agreement made between Township of Rockaway and the Trust
dated July 26, 2004, as amended, shall be a Permitted Exception in respect of
the Boulders Property. Purchaser agrees that the Trust may enter into that
certain Easement Agreement with the Bergen County Historical Society in respect
of the Steuben Arms Property in the form previously delivered to Purchaser and
the same shall be considered a Permitted Exception.

4.4       Mortgages, Voluntary Liens, Tax Liens and Monetary Liens. It is
understood and agreed that any deed of trust and/or mortgage recorded against
any Property, or any portion thereof, which secures any indebtedness for
borrowed money (but, for the avoidance of doubt, excluding any deed of trust
and/or mortgage and/or other instruments securing any Assumption Loan) (each
such deed of trust or mortgage, together with any related security agreement or
instrument with respect to the indebtedness secured thereby, a “Mortgage”) shall
not be deemed a Permitted Exception and shall be paid off, satisfied and/or
discharged either prior to the Closing or from proceeds of the Purchase Price at
the Closing. In addition, the applicable Seller shall cause any Other Monetary
Lien, Voluntary Lien, and/or Tax Lien which is recorded against any Property (or
any portion thereof) to be Removed at or prior to the Closing; provided,
however, that such Seller shall have no obligation under this Agreement to
expend (i) in the aggregate with respect to the Sole-Owned Properties, more than
one percent (1%) of the aggregate amount of the Allocated Purchase Prices for
the Sole-Owned Properties, (ii) with respect to the Pierre Property, more than
one percent (1%) of the amount of the Allocated Purchase Price for the Pierre
Property and (iii) with respect to the Westwood Hills Property, more than one
percent (1%) of the amount of the Allocated Purchase Price for the Westwood
Hills Property, in each case in order to Remove Other Monetary Liens. If, at any
time prior to the Closing Date, any Title Update discloses any Other Monetary
Lien, Voluntary Lien, Tax Lien or Violation, Purchaser shall notify Sellers in
writing of such Other Monetary Lien Voluntary Lien, Tax Lien or Violation, as
applicable, not later than the date that is the earlier of (i) three (3)
Business Days after the date of its receipt of such Title Update and (ii) the
Closing Date. In the event the applicable Seller fails to cause any Mortgage,
Other Monetary Lien, Voluntary Lien of an ascertainable amount that can be
Removed by the payment of money and/or Tax Lien, in each case, required to be
Removed by Sellers pursuant to this Section 4.4 to be Removed or pay any amount
required to be paid by Sellers with respect to any Violations pursuant to
Section 4.6, in each case, at or prior to the Closing, Purchaser shall have the
right, without limitation on any other rights or remedy available to Purchaser
hereunder, to apply a portion of the Purchase Price at the Closing in an amount
necessary to Remove such Mortgage, Other Monetary Lien, Voluntary Lien and/or
Tax Lien in order to Remove such item or to pay such amount required to be paid
by such Seller with respect to any Violations pursuant to Section 4.6, as
applicable.

12 

 

4.5       New Exceptions.

4.5.1       If any Title Update discloses any additional items, which (i) are
not caused by or the result of any act or fault of Purchaser, any Affiliate of
Purchaser or any Purchaser Consultant, (ii) are not Mortgages, Tax Liens,
Voluntary Liens or Other Monetary Liens (which are covered by Section 4.4) or
Violations (which are covered by Section 4.6), (iii) are not items that
constitute Permitted Exceptions under Section 4.3, and (iv) are not disclosed in
any prior Title Update (but subject to rights of Purchaser with respect to such
prior Title Update) (each, a “New Exception”), Purchaser shall notify Sellers in
writing of Purchaser’s approval or disapproval of such New Exception not later
than the date that is the earlier (such earlier date, the “New Exception Review
Period Expiration Date”) of (i) three (3) Business Days after the date of its
receipt of such Title Update and (ii) the Closing Date.

4.5.2       If Purchaser fails to deliver written notice of its approval or
disapproval of any New Exception on or prior to the New Exception Review Period
Expiration Date, or if it approves any New Exception, such New Exception shall
be deemed to be a Permitted Exception.

4.5.3       If Purchaser delivers written notice of its disapproval of any New
Exception on or prior to the New Exception Review Period Expiration Date, such
New Exception shall constitute an “Objected New Exception” and the applicable
Seller may, in such Seller’s sole discretion, notify Purchaser as to whether it
elects to attempt to Remove such New Exception. For the avoidance of doubt, the
failure to Remove any Objected New Exception shall not be deemed to constitute a
breach of any covenant or warranty of any Seller under this Agreement.

4.5.4       If (A) the applicable Seller does not elect, pursuant to Section
4.5.3, to attempt to Remove any Objected New Exception, or are unable, prior to
the Outside Closing Date, to Remove any Objected New Exception, or (B) such
Seller does not elect, pursuant to Section 4.4, to attempt to remove any Other
Monetary Lien which it is not obligated to Remove, under such Section 4.4, then
Purchaser shall have the right, as its exclusive remedy, to elect to either (i)
waive its objection to such Objected New Exception or Other Monetary Lien and
proceed with the Transactions without a reduction in the Purchase Price, in
which event Purchaser shall be deemed to have approved such Objected New
Exception or Other Monetary Lien and such Objected New Exception or Other
Monetary Lien shall constitute a Permitted Exception, or (ii) elect, by written
notice to Sellers, to terminate this Agreement solely with respect to the
applicable Property (which is subject to the applicable Objected New Exception
or Other Monetary Lien) and, upon any such election, (a) this Agreement shall be
deemed automatically terminated solely with respect to the applicable Property
(and the applicable Property shall no longer constitute a “Property” for the
purposes of this Agreement) effective as of Purchaser’s notice to Sellers of
such election, (b) such Property shall be excluded from the property to be sold
by Sellers to Purchaser at the Closing, (c) the Purchase Price payable by
Purchaser at the Closing shall be reduced by an amount equal to the Allocated
Purchase Price allocated to such Property as set forth on Schedule I and (d) all
of Sellers’ representations, warranties, covenants, liabilities and obligations,
and Purchaser’s rights, with respect to such Property shall be void and of no
further force and effect (without limiting the respective rights and obligations
of the parties with respect to the other Properties and except for matters which
expressly survive the termination of this Agreement).

13 

 

4.5.5       Notwithstanding the foregoing provisions of this Section 4.5, if the
Closing occurs, Purchaser shall be deemed to have accepted any New Exception as
a Permitted Exception and shall have no further rights or remedies with respect
to such New Exception except as otherwise set forth in this Agreement.

4.6       Violations. Sellers shall have no obligation to cure or remove any
Violations (including, without limitation, any matters identified in any
Certificate of Inspection (Green Card) for any of the Properties) nor to cure or
remove any noted or issued conditions which could give rise to any Violations,
except that (i) Sellers shall be responsible for any penalties or fines issued
prior to the Effective Date in connection with any Violations and (ii)
notwithstanding anything to the contrary in this Agreement, if to the Knowledge
of any Seller, such Seller received prior to the Effective Date written notice
of any Violation (which had not been cured or dismissed prior to the Effective
Date) which was not identified on Schedule 6.1.9 hereto in breach of Section
6.1.9, and Purchaser obtains Knowledge of the same and notifies Sellers of the
same prior to the Closing Date, then, at such Seller’s option, such Seller shall
either (x) cure or remove any such Violation (whether before of or after the
Closing) or (y) indemnify Purchaser for the actual and reasonable out-of-pocket
costs and expenses incurred by Purchaser after the Closing to cure or remove
such Violation. For the avoidance of doubt, the cure or removal of any Violation
pursuant to clause (ii) of the immediately preceding sentence (whether by a
Seller or Purchaser) shall not constitute a condition to Purchaser’s obligation
to consummate the Closing in accordance with the terms of this Agreement. This
Section 4.6 shall survive the Closing.

4.7       Assignment of Regency Mortgage. Regency Property Owner shall use
commercially reasonable efforts to cause its current mortgage lender (the
“Existing Regency Mortgage Lender”) to assign (the “Regency Mortgage
Assignment”) to Purchaser’s lending institution, at Closing, the lien of the
Existing Regency Mortgage Lender’s mortgage (the “Existing Regency Mortgage”)
and the note(s) secured by such Existing Regency Mortgage (the “Existing Regency
Note”) pursuant to customary documentation (including, without limitation, an
assignment of the Existing Regency Mortgage, an allonge with respect to the
Existing Regency Note and delivery of the original Existing Regency Note (or an
affidavit to the effect that the same is lost or destroyed)). Notwithstanding
the foregoing, (a) Regency Property Owner shall not be obligated to pay any fee
or cost to the Existing Regency Mortgage Lender, including any attorneys’ fees
due to Existing Regency Mortgage Lender’s counsel, incur any expense in respect
of the Regency Mortgage Assignment or the recording thereof (all of the
foregoing fees, costs and expenses, collectively, the “Regency Mortgage
Assignment Costs”) or incur any liability in connection therewith, (b) Purchaser
shall be responsible for payment of all Regency Mortgage Assignment Costs, and
(c) the failure of the Existing Regency Mortgage Lender to deliver the Regency
Mortgage Assignment shall not be deemed a default or a failure of a condition to
Closing and shall in no way alter Purchaser’s obligations hereunder to acquire
the Regency Property for its full Allocated Purchase Price. Such assignment
shall be made without representation, warranty or recourse whatsoever. If the
Regency Mortgage Assignment occurs, (A) the liens securing the Existing Regency
Mortgage Loan (as the same may be amended and assigned) will be deemed approved
by Purchaser and to be Permitted Exceptions and (B) the Regency Property will be
conveyed subject to such liens as the same may be amended and assigned.

14 

 

4.8       Regency Property. Sellers and Purchaser acknowledge that as of the
Effective Date record title to a one one-hundredth percent (.01%)
tenancy-in-common interest in the Regency Property may be held by an entity
other than Regency Property Owner (the “Regency Ownership Defect”). Following
the Effective Date, Regency Property Owner and Purchaser shall cooperate with
each other and with the Title Company in order to resolve the Regency Ownership
Defect (including, without limitation, by seeking a corrective deed or other
conveyance from Regency Property Owner’s predecessors-in-title) such that the
Title Company shall be willing to insure upon the consummation of the Closing
that Purchaser owns one hundred percent (100%) of the Regency Property, provided
that in connection with such efforts neither party hereunder shall be required
to pay any amount to any predecessor-in-title. Regency Property Owner and
Purchaser agree that if as of the tenth (10th) day prior to the scheduled date
for the Trust Shareholders Meeting (as to which Purchaser shall have been
notified pursuant to Section 7.15), and notwithstanding Regency Property Owner’s
and Purchaser’s efforts, the Title Company cannot commit (determined without
regard to the existence of the Regency Ownership Defect) that upon the
consummation of the Closing it will insure that Purchaser owns one hundred
percent (100%) of the Regency Property without taking exception for the Regency
Ownership Defect, then Purchaser shall have the right, as its exclusive remedy,
to elect to either (i) waive the Regency Ownership Defect and proceed with the
Transactions without a reduction in the Purchase Price, or (ii) elect to
terminate this Agreement solely with respect to the Regency Property and, upon
any such election, (a) this Agreement shall be deemed automatically terminated
solely with respect to the Regency Property (and the Regency Property shall no
longer constitute a “Property” for the purposes of this Agreement) effective as
of Purchaser’s election, (b) the Regency Property shall be excluded from the
property to be sold by Sellers to Purchaser at the Closing, (c) the Purchase
Price payable by Purchaser at the Closing shall be reduced by an amount equal to
the Allocated Purchase Price allocated to the Regency Property as set forth on
Schedule I and (d) all of Sellers’ representations, warranties, covenants,
liabilities and obligations, and Purchaser’s rights, with respect to the Regency
Property shall be void and of no further force and effect (without limiting the
respective rights and obligations of the parties with respect to the other
Properties and except for matters which expressly survive the termination of
this Agreement). If Purchaser shall fail to notify Regency Property Owner of it
election of clause (i) or (ii) under the immediately preceding sentence by the
tenth (10th) day prior to the scheduled date for the Trust Shareholders Meeting,
then Purchaser shall be deemed to have elected clause (i). Notwithstanding
anything to the contrary contained in this Agreement, unless and until a
corrective deed is delivered as aforesaid, the term “Regency Property”, as used
herein, shall, where appropriate, and assuming that the Regency Ownership Defect
exists, refer to the Regency Property Owner’s 99.99% tenancy-in-common interest
in the Regency Property, and if the Closing shall occur prior to the delivery of
a corrective deed, the conveyance documents in respect of the Regency Property
shall be appropriately modified, as necessary, to reflect Regency Property
Owner’s 99.99% tenancy-in-common interest in the Regency Property.

Article V
CLOSING

5.1       Closing Date. The Closing shall occur on the second (2nd) Business Day
after satisfaction or waiver of the conditions set forth in Article VIII (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of such

15 

 

conditions), but in no event prior to March 14, 2020, or on such other date or
time as Sellers and Purchaser may mutually agree in writing, through an escrow
with Escrow Agent, whereby Sellers, Purchaser and their attorneys need not be
physically present at the Closing and may deliver documents by courier or other
means.

5.2       Seller Closing Deliveries. Sellers shall deliver (or cause to be
delivered) to Escrow Agent each of the following items at or prior to the
Closing:

5.2.1       With respect to each Property, a Deed, in the form attached as
Exhibit C-1 or C-2, as applicable, executed by the applicable Seller, with
Purchaser or the applicable Designee, if applicable, as grantee;

5.2.2       With respect to each Property, a Bill of Sale, in the form attached
as Exhibit D, executed by the applicable Seller for the benefit of Purchaser or
the applicable Designee, if applicable;

5.2.3       With respect to each Property, an Assignment and Assumption of
Leases, in the form attached as Exhibit E, executed by the applicable Seller,
with Purchaser and the applicable Designee, if applicable, as the counterparty
(each, an “Assignment and Assumption of Leases”)

5.2.4       With respect to each Property, a General Assignment and Assumption
Agreement, in the form attached as Exhibit F, executed by the applicable Seller,
with Purchaser and the applicable Designee, if applicable, as the counterparty
(each, a “General Assignment and Assumption”);

5.2.5       The Closing Certificate executed by Sellers;

5.2.6       Sellers’ counterpart signature to the closing statement prepared by
Escrow Agent which shall include the applicable prorations and adjustments
calculated in accordance with the terms of this Agreement (the “Closing
Statement”);

5.2.7       With respect to each Seller, a certification of such Seller’s
non-foreign status pursuant to Section 1445 of the Code, in the form attached as
Exhibit H, executed by such Seller (each, a “FIRPTA Affidavit”);

5.2.8       With respect to each Property, a customary form of owner’s title
affidavit, executed by the applicable Seller;

5.2.9       With respect to each Property, any applicable Transfer Tax Forms,
and with respect to each Property other than the Regency Property, an Affidavit
of Consideration for Use by Seller (Form RTF-1) and a Seller’s Residency
Certification/Exemption Form (Form GIT/REP-3), in each case executed by the
applicable Seller (if applicable);

5.2.10       With respect to each Seller, resolutions, certificates of good
standing and such other organizational documents as the Title Company may
reasonably require to evidence such Seller’s authority to consummate the
Transactions;

16 

 

5.2.11       A true, correct and complete copy of an updated Rent Roll, security
deposit list and an aged receivables report, each as of a date that is no
earlier than the last day of the month preceding the month in which the Closing
Date occurs;

5.2.12       Reasonable evidence that (i) the Management Agreements have been
terminated with respect to each Property and (ii) each Service Contract required
to be terminated by Sellers pursuant to Section 3.3 has been terminated;

5.2.13       Any transfer documents required to be executed and delivered
pursuant to any Permitted Exceptions in connection with the Transactions;

5.2.14       The applicable Seller shall join with Purchaser to execute a notice
in form and content reasonably satisfactory to Purchaser and Sellers which
Purchaser shall send to each tenant under each of the Leases informing such
tenant of the sale of the applicable Apartment Complex and of the assignment to
Purchaser of such Seller’s interest in, and obligations under, the Leases
(including, if applicable any security deposits) and directing that all rent and
other sums payable after the Closing under each such Lease shall be paid as set
forth in the notice;

5.2.15       With respect to each Property (other than the Regency Property),
(i) a notification by the applicable Seller to the New Jersey Department of
Community Affairs (Division of Codes and Standards, Bureau of Housing
Inspection) advising of the sale on the Closing Date of the applicable Apartment
Complex by such Seller to Purchaser and (ii) a copy of the most recent
Certificate of Inspection (Green Card) in respect of such Property and the
Certificate of Registration for such Property issued by the New Jersey
Department of Community Affairs and

5.2.16       Tenant files and copies of the Assumption Loan Documents to the
extent in Sellers’ possession.

5.3       Purchaser Closing Deliveries. Purchaser shall deliver (or cause to be
delivered) to Escrow Agent each of the following at or prior to the Closing:

5.3.1       The full Purchase Price (less the Deposit, if in the form of a Cash
Deposit), plus or minus (as applicable) the adjustments or prorations required
by this Agreement;

5.3.2       A countersigned counterpart of each Assignment and Assumption of
Leases;

5.3.3       A countersigned counterpart of each General Assignment and
Assumption;

5.3.4       The Closing Certificate executed by Purchaser;

5.3.5       Purchaser’s counterpart signature to the Closing Statement;

5.3.6       With respect to each Property, any applicable Transfer Tax Forms,
and with respect to each Property other than the Regency Property, an Affidavit
of Consideration for Use by Buyer (Form RTF-1EE), in each case executed by
Purchaser (if applicable);

17 

 

5.3.7       Purchaser shall join with each Seller to execute a notice in form
and content reasonably satisfactory to Purchaser and such Seller which Purchaser
shall send to each tenant under each of the Leases informing such tenant of the
sale of the applicable Apartment Complex and of the assignment to Purchaser of
such Seller’s interest in, and obligations under, the Leases (including, if
applicable any security deposits) and directing that all rent and other sums
payable after the Closing under each such Lease shall be paid as set forth in
the notice;

5.3.8       With respect to each Property (other than the Regency Property), a
completed Certificate of Registration (Form BHI 4) identifying Purchaser as the
new owner of such Property pursuant to the New Jersey Hotel and Multiple
Dwelling Law N.J.S.A. 55: 13A-1 et seq., which shall be promptly filed following
the Closing (no more than 20 days following the Closing Date) with the New
Jersey Department of Community Affairs, Division of Codes and Standards, Bureau
of Housing Inspection;

5.3.9       Resolutions, certificates of good standing and such other
organizational documents as the Title Company may reasonably require to evidence
Purchaser’s authority to consummate the Transactions;

5.3.10       All documents, instruments, guaranties and other items or funds
required by each Assumption Loan Lender to effect the Loan Assumption and
Release; and

5.3.11       If any such documents require Purchaser’s counterpart signatures,
Purchaser’s counterpart signatures to the documents described in Section 5.2.13.

5.4       Prorations and Adjustments.

5.4.1       General. All normal and customarily proratable items, including
collected rents, Taxes and other operating costs and expenses, shall be
prorated, subject to the below terms of this Section 5.4.1, as of 11:59 p.m.
(Eastern time) on the day immediately prior to the Closing Date, the parties
agreeing that Sellers shall be entitled to or responsible for, as applicable,
all such items attributable to the period up to the Closing Date (and credited
for any amounts paid by Sellers with respect to any period on or after the
Closing Date) and Purchaser shall be entitled to or responsible for, as
applicable, all such items attributable to the period on and after the Closing
Date (in each case, except as otherwise expressly set forth below in this
Section 5.4.1). The items to be so prorated shall include the following (and
shall be prorated as set forth below):

5.4.1.1       Items with respect to Leases.

(a)       All collected rent or other sums and charges payable by any Tenant
under any Lease and other collected income and revenues from the Properties
shall be prorated as of 11:59 p.m. (Eastern time) on the day immediately prior
to the Closing Date on the basis of the actual number of days of the month (or
other applicable time period) which shall have elapsed as of the Closing Date.
Purchaser shall receive all collected rent, income and revenues attributable to
dates from and after the Closing Date. Sellers shall receive all collected rent,
income and revenues attributable to dates prior to the Closing Date.

18 

 

(b)       No proration shall be made at the Closing with respect to any rent
which has not been collected as of the Closing Date (“Uncollected Rent”).
However, Purchaser shall pay Sellers all Uncollected Rent (to the extent
attributable to periods prior to the Closing Date and net of reasonable costs of
collection; any Uncollected Rents attributable to a time period that includes
days prior to the Closing Date and following the Closing Date, and any
reasonable costs of collection with respect to the same, shall be prorated
between Purchaser and Sellers based upon the number of days each owned the
Properties during such time period) as and when collected by Purchaser, subject
to the further provisions of this Section 5.4.1.1(b). Purchaser agrees to bill
the applicable Tenants for all Uncollected Rents and to take reasonable actions
(which shall not include an obligation to commence legal action) to collect all
Uncollected Rents. Purchaser’s collection of any Uncollected Rents (which does
not include a statement by the payor thereof identifying the period to which it
attributable) shall be applied in the following order and priority: (i) first,
in payment of rent for the month in which the Closing Date occurs, and with such
amounts being prorated between Purchaser and Sellers based upon the number of
days each owned the applicable Property during the month in which the Closing
Date occurs, (ii) second, in payment of rent for any period which commenced
after the Closing Date, and (iv) third, in payment of rent for any periods which
commenced prior to the Closing Date.

(c)       At the Closing, Purchaser shall receive a credit for the amount of any
cash Security Deposits provided for under the Leases to be held by Sellers, less
any amounts previously applied by Sellers in accordance with the terms of the
applicable Lease and applicable law, and any interest earned thereon which by
law or the terms of the Leases is required to be paid or refunded to the
applicable Tenants, and Sellers shall be permitted to retain the balance of
interest accrued thereon.

(d)       At the Closing, Purchaser shall receive a credit in the amount of One
Thousand Dollars ($1,000) per apartment for each apartment which (x) is vacant
on the Closing Date and shall have been vacant for at least thirty (30) days
prior to the Closing Date and (y) shall not be in rentable condition (i.e., not
broom-clean, fully painted and otherwise rentable) as of the Closing Date.

5.4.1.2       Real Estate Taxes. Any real estate ad valorem or similar taxes for
each Property, or any installment of assessments payable in installments in
respect of each Property which installment is payable in the calendar year in
which the Closing Date occurs, shall be prorated as of 11:59 p.m. (Eastern time)
on the day immediately prior to the Closing Date, on the basis of the actual
number of days of the month (or other applicable time period) which shall have
elapsed as of the Closing Date. The proration of real property taxes or
installments of assessments shall be based upon the assessed valuation and tax
rate figures for the year in which the Closing Date occurs or the amount of such
installments, as applicable, to the extent the same are available; provided,
however, that, in the event that actual figures (whether for the assessed value
of any Property, the tax rate, or the amount of such assessments) are not
available as of the Closing Date, the proration at the Closing shall be made
using figures from the preceding year or based on the most recent installment
payment, subject to adjustment pursuant to Section 5.4.3.

5.4.1.3       Utilities. Any and all utility charges for which any Seller is
liable with respect to each Property, if any, shall be tentatively prorated as
of the Closing on the basis of

19 

 

the most recent meter reading occurring prior to the Closing or, if unmetered,
on the basis of the most recent bill for such utility, subject to adjustment
pursuant to Section 5.4.3. Sellers shall receive a credit for all deposits
transferred to Purchaser at the Closing or which remain on deposit as of the
Closing for the benefit of Purchaser with respect to any utility service (a list
of utility deposits posted by Sellers in respect of the Properties as of the
Effective Date is attached hereto as Schedule 5.4.1.3).

5.4.1.4       Assigned Contracts. All amounts payable under Assigned Contracts
(other than any utilities prorated pursuant to Section 5.4.1.3) shall be
prorated as of 11:59 p.m. (Eastern time) on the day immediately prior to the
Closing Date on the basis of the actual number of days of the month (or other
applicable time period) which shall have elapsed as of the Closing Date.

5.4.1.5       Seller Insurance Policies. Each of Sellers and Purchaser
acknowledge and agree that none of the insurance policies maintained by Sellers
in respect of the Properties (the “Seller Insurance Policies”) shall be assigned
to Purchaser (but without limiting the terms of Article XI), and Purchaser shall
be responsible for arranging for its own insurance for the Properties as of the
Closing Date (and the obtaining of any such insurance, and any particular terms
and conditions of any such insurance, shall not constitute a condition to
Purchaser’s obligation to consummate the Closing in accordance with the terms of
this Agreement). Accordingly, no proration or adjustment shall be made between
Sellers and Purchaser with respect to the Seller Insurance Policies.

5.4.1.6       Assumption Loans. Sellers shall be responsible for all principal
required to be paid under the terms of the Assumption Loan Documents prior to
11:59 p.m. (Eastern time) on the day immediately prior to the Closing Date,
together with all interest accrued under, and any other amounts due and payable
under, the Assumption Loans prior to 11:59 p.m. (Eastern time) on the day
immediately prior to the Closing Date (excluding any Loan Assumption Fees and
Assumption Loan Lender Ancillary Costs, which shall be paid as provided in
Section 2.5.5 above) and (ii) Purchaser shall be responsible for the payment of
all principal required to be paid from and after 11:59 p.m. (Eastern time) on
the day immediately prior to the Closing Date, together with all interest
accruing under, and any other amounts due and payable under, each Assumption
Loan from and after 11:59 p.m. (Eastern time) on the day immediately prior to
the Closing Date. Further, Sellers shall be credited for and Purchaser shall be
charged for all amounts held in reserves, impounds and other accounts maintained
in connection with the Assumption Loans as of 11:59 p.m. (Eastern time) on the
day immediately prior to the Closing Date, to the extent assigned to Purchaser
(or its Affiliates), except that Sellers shall assign to Purchaser (or its
Affiliates) but shall not be entitled to a credit for (x) the “Pierre
Towers-Damage Reimb. Escrow” (listed on Schedule 2.5) held by the lender under
the Pierre Loan (provided that if any sums are released from such escrow to
Purchaser from and after the Closing Date, then Purchaser shall promptly deliver
such amount to the Pierre Property Seller) and (y) for the “Berdan Court—Green
Improvements Escrow- Reserve” (listed on Schedule 2.5) held by the lender under
the Berdan Loan.

5.4.1.7       Prepaid Amounts. Purchaser shall receive a credit in the amount of
the prepaid “Allowance” paid by CSC ServiceWorks, Inc. in connection with the
leasing of

20 

 

laundry facilities at several of the Properties, to the extent properly
allocable to the period on or after the Closing.

5.4.1.8       PSE&G Agreement. Purchaser shall receive a credit in the amount
equal to the unpaid balance owed to PSE&G under the PSE&G Agreement as of the
Closing Date.

5.4.1.9       Other Operating Expenses. All other costs and expenses incurred in
connection with the ownership and operation of the Properties that are
customarily prorated shall be prorated as of 11:59 p.m. (Eastern time) on the
day immediately prior to the Closing Date, with Sellers paying all such
operating expenses accruing with respect to any time period prior to the Closing
Date and Purchaser paying all such operating expenses accruing with respect to
any time period from and after the Closing Date.

5.4.2       Proration Schedule. No later than one (1) Business Day prior to the
Closing Date, the parties shall jointly prepare a proration schedule setting
forth the prorations to be made at the Closing pursuant to Section 5.4.1, which
proration schedule shall be reflected on the Closing Statement and, subject to
Section 5.4.3, shall be final with respect to the items set forth therein. The
parties shall attempt in good faith to reconcile any differences or disputes
regarding the proration schedule; provided, however, that, if the parties are
unable (despite good-faith efforts) to agree upon any item on the proration
schedule, then Sellers’ good-faith estimate of any such item shall prevail for
purposes of the Closing and pending any adjustment pursuant to Section 5.4.3.

5.4.3       Post-Closing Adjustments.

5.4.3.1       To the extent applicable, Sellers and Purchaser, acting in good
faith, shall reconcile with each other within ninety (90) days following the
Closing Date the amounts prorated and adjusted pursuant to this Section 5.4
using any new or updated information, including the reconciliation of estimated
amounts with actual amounts, the correction of any errors and the inclusion of
any items which should have been included as of the Closing Date; provided,
however, if such final proration cannot be reasonably completed with respect to
any Taxes or assessments in respect of any Property within such ninety (90) day
period, because the amounts of any such Taxes or assessments for any applicable
period are not yet known, then such final proration shall be completed as soon
as such amounts are actually known (and Purchaser shall, promptly upon receipt,
deliver to Sellers all such documents and information received by Purchaser
after the Closing as may be necessary for Sellers to confirm the amounts of
Taxes and assessments for the purposes of the final adjustments pursuant to this
Section 5.4.3).

5.4.3.2       In the event the parties have not agreed with respect to any
adjustments required to be made pursuant to this Section 5.4.3 within thirty
(30) days following the expiration of such ninety (90) day period (or such
longer period required to determine the amounts with respect to any Taxes or
assessments), upon application by either party Wilkin & Guttenplan P.C. shall
determine any such adjustment which has not theretofore been agreed to between
the parties. The charges of such accountant shall be borne by the party that
does not prevail in such dispute. All adjustments to be made as a result of the
final adjustments (whether based on the mutual agreement of the parties or based
on the determination of a certified public accountant) shall be paid to the
party entitled to such adjustment within thirty (30) days after the final
determination thereof. Neither party shall have any obligation to re-adjust any
items prorated

21 

 

and adjusted pursuant to this Section 5.4 after the expiration of the applicable
periods set forth in this Section 5.4.3..

5.4.4       The provisions of this Section 5.4 shall survive the Closing.

5.5     Closing Costs.

5.5.1       Sellers Costs. Sellers shall be responsible for payment of the
following costs and expenses of the Transactions: (i) all fees of Sellers’
attorneys, accountants and other consultants; (ii) one-half of the fees and
expenses of the Escrow Agent; (iii) fifty percent (50%) of all Loan Assumption
Fees (subject to the Loan Assumption Fee Caps); and (iv) all transfer taxes,
deed taxes, sales taxes, stamp taxes or similar taxes imposed on Sellers
pursuant to N.J.S.A. 45:15-5 et seq. (with respect to the Properties other than
the Regency Property) and pursuant to § 1400 et seq. of the New York State Tax
Law (with respect to the Regency Property), and the applicable implementing
regulations with respect to the Transactions (“Transfer Taxes”).

5.5.2       Purchaser Costs. Purchaser shall be responsible for payment of the
following costs and expenses of the Transactions (and shall reimburse Sellers at
the Closing, to the extent any such costs and expenses have been paid by Sellers
prior to the Closing): (i) all fees of Purchaser’s attorneys, accountants and
other consultants; (ii) one-half of the fees and expenses of the Escrow Agent;
(iii) all fees, costs and expenses incurred in connection with Purchaser’s due
diligence; (iv) all costs of the Title Commitments, the Surveys ordered (before
or after the Effective Date) in connection with the Transactions, any Title
Updates and the Third-Party Reports (but, with respect to Third-Party Reports,
only to the extent Purchaser’s lender utilized such Third-Party Report or
another report by the same vendor based on such Third-Party Report); (v) all
state, city, county and municipal recording fees and all related charges, costs
and expenses in connection with the recording of the Deeds; (vi) the premiums
for each Title Policy; (vii) any and all costs incurred in connection with the
issuance of any endorsements to the Title Policies, the issuance of any lender
policies of title insurance and the cost of any and all endorsements to any such
policies; and (viii) the so-called “mansion tax,” if any, payable with respect
to the Transactions pursuant to N.J.S.A. 45:15-7.2 and its applicable
implementing regulations; (ix) fifty percent (50%) of all Loan Assumption Fees
(subject to the Loan Assumption Fee Caps) and all Assumption Loan Lender
Ancillary Costs; and (x) all reasonable and customary ministerial costs charged
by a counterparty to the Assigned Contracts in connection with the assignment of
such Assigned Contracts to Purchaser.

5.5.3       The terms and provisions of this Section 5.5 shall survive the
Closing and any earlier termination of this Agreement.

Article VI
REPRESENTATIONS AND WARRANTIES OF SELLERS AND PURCHASER

The disclosure schedules attached hereto (the “Disclosure Schedules”) are
arranged in sections and subsections corresponding to the numbered and lettered
sections and subsections contained in this Agreement to which such sections and
subsections of the Disclosure Schedules relate. An exception to a representation
or warranty in this Article VI set forth in the Disclosure Schedules effectively
modifies the corresponding representation or warranty in this Article VI;

22 

 

provided that any fact or condition disclosed in any section or subsection of
the Disclosure Schedules in such a way as to make its relevance to a
representation or representations made elsewhere in this Agreement, or
information called for by another section or subsection of the Disclosure
Schedules, reasonably apparent shall be deemed to be an exception to such
representation or representations and to be disclosed on such other section or
subsection of such Disclosure Schedules notwithstanding the omission of a
reference or cross-reference thereto. Any fact or item disclosed in any section
of the Disclosure Schedules shall not be deemed, solely by reason of such
inclusion, to be material and shall not be employed as a point of reference in
determining any standard of materiality under this Agreement.

6.1       Sellers’ Representations. Each Seller hereby makes, as of the
Effective Date (except as otherwise expressly set forth below) and, subject to
Section 6.2, as of the Closing Date (except as otherwise expressly set forth
below), the following representations and warranties to Purchaser, subject to
the qualifications and exceptions set forth below:

6.1.1       Organization and Authority. Such Seller has been duly organized and
is validly existing under the laws of the state of its formation, and to the
extent such Seller’s Property is located in a state other than such state of
formation, then such Seller is duly authorized to do business in the state in
which its Property is located. Such Seller has the full right, power and
authority to enter into this Agreement and the Seller Closing Documents to which
it will be a party and, subject, in the case of the Trust, to the affirmative
vote (in person or by proxy) of a majority of the votes cast by the holders of a
majority of the outstanding shares of beneficial interest without par value of
the Trust present (in person or represented by proxy) at a duly called meeting
of such holders (the “Trust Shareholder Approval”), to consummate or cause to be
consummated the Transactions, and (other than the Trust Shareholder Approval)
all such actions have been duly and validly authorized by such Seller. The Trust
Shareholder Approval is the only vote of the holders of any class or series of
voting securities of the Trust that may be required to approve and adopt this
Agreement and the Transactions. The person signing this Agreement and the Seller
Closing Documents and all other agreements, documents and instruments required
to be signed by such Seller pursuant to the terms of this Agreement, on behalf
of such Seller is (or at the time it signs such agreements, documents and
instruments will be) authorized to do so, and this Agreement, the Seller Closing
Documents and such other agreements, documents and instruments, do or (when
executed) will constitute the legal, valid and binding obligations of such
Seller and are or (when executed) will be enforceable against such Seller in
accordance with their terms, except as such enforceability may be affected by
applicable bankruptcy, insolvency or other similar laws affecting creditors’
rights generally.

6.1.2       No Conflicts. The execution, delivery and performance of this
Agreement and the Seller Closing Documents by such Seller, and the consummation
of the Transactions by such Seller will not: (a) conflict with or result in a
breach of any terms, conditions or provisions of the organizational documents
governing such Seller; (b) result in a breach or acceleration of or constitute a
default or event of termination (with or without the giving of notice, the
passage of time or otherwise) under the provisions of any agreement or
instrument by which such Seller is bound; (c) subject to Section 7.17, other
than obtaining the Trust Shareholder Approval and the filing with the Securities
and Exchange Commission (the “SEC”) of a proxy statement (as amended or
supplemented from time to time, the “Proxy Statement”) relating to the
solicitation

23 

 

of such approval, the approval of the Assumption Loan Lenders in respect of the
Assumption Loan Properties and the approval of PSE&G in respect of the Pierre
PSE&G Agreement (the “PSE&G Approval”), require the consent or approval of any
third party, including any governmental authority (other than any such consents
or approvals that have been obtained) or (d) subject to Section 7.17, result in
a violation or breach of any legal requirement applicable to such Seller or by
which such Seller or such Seller’s Property or Properties are bound.

6.1.3       No Bankruptcy. Such Seller has not made a general assignment for the
benefit of creditors, filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by its creditors, suffered the appointment of
a receiver to take possession of all, or substantially all, of its assets,
admitted in writing its inability to pay its debts as they generally come due or
made an offer of settlement, extension or composition to its creditors
generally.

6.1.4       Legal Proceedings. Other than as described on Schedule 6.1.4
attached hereto, no litigation is pending or, to such Seller’s Knowledge,
threatened against such Seller or with respect to such Seller’s Property or
Properties (other than any “slip and fall” and other immaterial litigation
covered by insurance).

6.1.5       Condemnation. Other than as described on Schedule 6.1.5 attached
hereto, no pending or, to such Seller’s Knowledge, threatened condemnation or
eminent domain proceedings exist with respect to such Seller’s Property or
Properties as of the Effective Date.

6.1.6       Prohibited Person. Such Seller is not (i) a Person that is listed in
the Annex to, or is otherwise subject to the provisions of, Executive Order No.
13224 on Terrorist Financing (effective September 24, 2001) (the “Executive
Order”); (ii) a Person that is named as a “specially designated national” or
“blocked person” on the most current list published by the U.S. Treasury
Department’s Office of Foreign Assets Control (“OFAC”) at its official website,
http://www.treas.gov/offices/enforcement/ofac; or (iii) to such Seller’s
Knowledge, a Person owned or controlled by, or acting for or on behalf of any
person or entity that is listed in the Annex to, or is otherwise subject to the
provisions of, the Executive Order, or a Person that is otherwise the target of
any economic sanctions program currently administered by OFAC.

6.1.7       Rent Roll. Attached hereto as Schedule 6.1.7 is a true, correct and
complete copy of the rent roll(s), as of the last day of the month preceding the
month in which the Effective Date occurs, with respect to such Seller’s Property
or Properties (the “Rent Roll”). It is acknowledged and understood that the
foregoing representations and warranties in this Section 6.1.7 are not made as
of the Closing Date (and are only made as of the Effective Date). The Rent Roll
contains true, correct and complete list, as of the last day of the month
preceding the month in which the Effective Date occurs, of (i) the names of all
tenants of such Seller’s Property or Properties and (ii) those apartments which
were vacant at such Seller’s Property or Properties. Also attached as part of
Schedule 6.1.7 is a true, correct and complete list, as of the last day of the
month preceding the month in which the Effective Date occurs, of the Security
Deposits under the Leases being held by such Seller.

6.1.8       Service Contracts. Such Seller has made available to Purchaser
complete and correct copies of the Service Contracts to which such Seller is a
party, including any

24 

 

amendments thereto. There are no Service Contracts in respect of such Seller’s
Property or Properties except as listed on Schedule 6.1.8. There are no material
defaults beyond the expiration of any applicable notice and/or cure periods by
Seller or the other party under any existing service contracts except as listed
on Schedule 6.1.8. Other than defaults described on Schedule 6.1.8 attached
hereto, neither such Seller nor, to such Seller’s Knowledge, any other party is
in default in any material respect under any of the Service Contracts to which
such Seller is a party.

6.1.9       Violations. Other than as described on Schedule 6.1.9, to such
Seller’s Knowledge, such Seller has not received any written notice of a
violation of any applicable fire, health, building, use, occupancy or zoning
laws, regulations, ordinances and codes with respect to such Seller’s Property
or Properties which has not been cured or dismissed.

6.1.10       Assumption Loans. All of the material Assumption Loan Documents
related to such Seller’s Property or Properties that are in effect as of the
Effective Date are identified on Schedule 2.5. To the extent such Seller is an
Assumption Loan Seller it has made available to Purchaser true, correct and
complete copies of all material Assumption Loan Documents applicable to its
Property or Properties in effect as of the Effective Date. To such Seller’s
Knowledge, as of the Effective Date, such Assumption Loan Documents are in full
force and effect. As of the Effective Date, such Assumption Loan Seller has not
received any written notice from any of the Assumption Loan Lenders asserting a
default under such Assumption Loan Documents that remains uncured. To such
Seller’s Knowledge, as of the Effective Date, the principal amounts outstanding
under the Assumption Loan Documents with respect to the Pierre Property is
$48,000,000 and with respect to the Berdan Property is $28,815,000. To such
Seller’s Knowledge, as of January 10, 2020, other than the escrows and reserves
listed on Schedule 2.5, there are no escrows and/or reserves in connection with
the Assumption Loans or required under the Assumption Loan Documents. To such
Seller’s Knowledge, as of the Effective Date, the amount held in each of the
escrows and/or reserves required under the Assumption Loan Documents is as set
forth on Schedule 2.5.

6.1.11       Leases. Such Seller has made available to Purchaser for Purchaser’s
review in the Data Site or otherwise, or delivered to Purchaser, true and
complete and accurate copies of all Leases affecting such Seller’s Property or
Properties.

6.1.12       ERISA. Such Seller does not hold “plan assets” within the meaning
of 29 C.F.R. 2510.3 101, as modified by Section 3(42) of the Employee Retirement
Income Security Act of 1974, as amended.

6.1.13       Environmental Matters. Except (i) with respect to any matter
disclosed in any environmental assessment report made available by Sellers to
Purchaser (including any such report listed on Schedule II attached hereto),
(ii) expressly disclosed in writing to Purchaser prior to the Effective Date
(including in any Materials provided in the Data Site prior to the Effective
Date) or (iii) with respect to any matter disclosed in any report prepared by
Purchaser or Purchaser’s Consultants as of the Effective Date, no Seller has, to
such Seller’s Knowledge, received any written notice from any governmental
authority or other Person of (x) any existing, pending or threatened claims,
actions, suits, liabilities, proceedings or investigations related to the
presence, release, discharge, spillage or disposal of any Hazardous Substance or
contamination of

25 

 

soil or water by any Hazardous Substance with respect to such Seller’s Property
in any court or before any state, federal or other governmental agency or
private arbitration tribunal or (y) any violations of any Environmental Laws
with respect to such Seller’s Property which have not been cured.

6.1.14       Employment Matters. There are no union agreements or collective
bargaining agreements affecting such Seller’s Property or Properties. None of
the employees employed by such Seller or at such Seller’s Property or Properties
are employed pursuant to a union or “prevailing wage” agreement or contract.

6.1.15       Taxes. Except as set forth on Schedule 6.1.15, as of the date
hereof neither such Seller nor to such Seller’s Knowledge, any municipality
currently is protesting or challenging the assessed value of its Property or
Properties for real estate tax purposes. To such Seller’s Knowledge, such Seller
has received no notices of any revaluation or reassessment for such Seller’s
Property or Properties. 

6.1.16       Permits. Except as set forth on Schedule 6.1.16, to such Seller’s
Knowledge, such Seller has not received written notice (i) of any default under
any of the Permits which has not been cured, (ii) that any of the Permits will
be revoked or will not be renewed, or (iii) that any license or permit not held
by such Seller is required to be held by such Seller in order for such Seller’s
Property or Properties to comply with legal requirements.

6.1.17       Ownership of Personal Property. Sellers are the owners of all
Fixtures and Tangible Personal Property and Intangibles free and clear of all
liens, claims or encumbrances, except for Permitted Exceptions, liens, claims
and security interests that will be released at or prior to the Closing and
liens securing the Assumption Loans.

The term “Seller’s Knowledge”, or words of similar import in this Agreement,
shall be deemed to refer exclusively to matters within the actual, present and
conscious knowledge of (i) with respect to Seller’s Representation in Sections
6.1.4, 6.1.5, 6.1.8, 6.1.9, 6.1.13 and 6.1.15, Mike O’Dea, and (ii) with respect
to Seller’s Representations in Sections 6.1.6 and 6.1.10, Allan Tubin.
(collectively, “Seller Knowledge Individuals”), without any obligation to
investigate or review any files or other information in the possession or
otherwise available to any Seller, make inquiries of other Persons or take any
other actions in connection with any of the representations and warranties
contained in this Agreement. Neither the actual, present or conscious knowledge
of any other Person, nor the constructive knowledge of the Seller Knowledge
Individuals or of any other Person, shall be imputed to the Seller Knowledge
Individuals. No Seller Knowledge Individual is a party to this Agreement or
shall be subject to any personal liability hereunder.

6.2       Subsequent Changes; Updates to Disclosure Schedules. Notwithstanding
anything to the contrary in this Agreement, Sellers shall have the right to
amend or supplement the Disclosure Schedules from time to time without
Purchaser’s consent to the extent that the Disclosure Schedules need to be
amended or supplemented to maintain the truth or accuracy of the applicable
representation or warranty or the information disclosed therein as of the
Closing Date (to the extent applicable), by providing a written copy of such
amendment or supplement to Purchaser. If at any time prior to the Closing
Sellers make any such amendment or supplement to the Disclosure Schedules such
amendment or supplement shall constitute a “New Disclosure

26 

 

Item”, except to the extent such amendment or supplement arises from (i) any
change to the Rent Roll or list of security deposits between the Effective Date
and the Closing Date, (ii) any notice of a violation of any laws, regulations,
ordinances or codes or concerning any license or Permit delivered to a Seller
(subject to Section 4.6), (iii) any Tenant’s default under any Lease or any
counterparty’s default under any Service Contract, (iv) any Service Contract
which is not an Assigned Contract or (v) any act of a Seller which does not
constitute or arise out of the breach by any Seller or its Affiliates of
Sellers’ obligation hereunder (in which case such amendment or supplement shall
not constitute a New Disclosure Item for any purposes under this Agreement
(including for the purposes of the definition of “Material Adverse Effect”)).
Sellers shall have the right (but no obligation) to elect to attempt to cure the
fact or circumstance giving rise to any New Disclosure Item at any time prior to
the Closing.

6.3       Purchaser’s Representations. Purchaser hereby makes, as of the
Effective Date and as of the Closing Date, the following representations and
warranties to each Seller, subject to the qualifications and exceptions set
forth below:

6.3.1       Organization and Authority. Purchaser is a limited liability
company, has been duly organized and is validly existing under the laws of the
State of Delaware, and is in good standing under the law of the State of
Delaware. Purchaser has the full right, power and authority to enter into this
Agreement and to consummate or cause to be consummated the Transactions, and all
such actions have been duly and validly authorized by Purchaser. The person
signing this Agreement, the Purchaser Closing Documents and all other
agreements, documents and instruments required to be signed by Purchaser
pursuant to the terms of this Agreement, on behalf of Purchaser is authorized to
do so, and this Agreement, the Purchaser Closing Documents and such other
agreements, documents and instruments, do or (when executed) will constitute the
legal, valid and binding obligations of Purchaser and are or (when executed)
will be enforceable against Purchaser in accordance with their terms, except as
such enforceability may be affected by applicable bankruptcy, insolvency or
other similar laws affecting creditors’ rights generally.

6.3.2       No Conflicts. The execution, delivery and performance of this
Agreement and the Purchaser Closing Documents by Purchaser and the consummation
of the Transactions by Purchaser will not: (a) conflict with or result in a
breach of any terms, conditions or provisions of the organizational documents
governing Purchaser; (b) result in a breach or acceleration of or constitute a
default or event of termination (with or without the giving of notice, the
passage of time or otherwise) under the provisions of any agreement or
instrument by which Purchaser is bound; (c) subject to Section 7.17, other than
obtaining the approval of the Assumption Loan Lenders in respect of the
Assumption Loan Properties and the PSE&G Approval, require the consent or
approval of any third party, including any governmental authority (other than
any such consents or approvals that have been obtained); or (d) subject to
Section 7.17, result in a violation or breach, in any material respect, of any
legal requirement applicable to Purchaser or by which Purchaser is bound.

6.3.3       No Bankruptcy. Purchaser has not made a general assignment for the
benefit of creditors, filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by its creditors, suffered the appointment of
a receiver to take possession of all, or substantially all, of its assets,
admitted in writing its inability to pay its debts as they

27 

 

generally come due or made an offer of settlement, extension or composition to
its creditors generally.

6.3.4       Legal Proceedings. No litigation is pending or, to Purchaser’s
Knowledge, threatened against Purchaser or its Affiliates which has had or would
reasonably be expected to have a material adverse effect on Purchaser’s ability
to consummate the Transactions.

6.3.5 Loan Applications. Within the three (3) year period immediately preceding
the Effective Date, neither Purchaser nor any of its Affiliates has been
rejected for a loan application (including an application for an assumption of a
loan) for any multifamily property.

6.3.6       Prohibited Person. Purchaser is not (i) a Person that is listed in
the Annex to, or is otherwise subject to the provisions of, the Executive Order;
(ii) a Person that is named as a “specially designated national” or “blocked
person” on the most current list published by OFAC at its official website,
http://www.treas.gov/offices/enforcement/ofac; or (iii) to Purchaser’s
Knowledge, a Person owned or controlled by, or acting for or on behalf of any
person or entity that is listed in the Annex to, or is otherwise subject to the
provisions of, the Executive Order, or a Person that is otherwise the target of
any economic sanctions program currently administered by OFAC. To Purchaser’s
Knowledge, the funds transferred by Purchaser to Sellers pursuant to this
Agreement are not, and will not be, the property of, or beneficially owned,
directly or indirectly, by any Persons described in any of clauses (i) through
(iii) of the immediately preceding sentence or the proceeds of specified
unlawful activity as defined by 18 U.S.C. §1956(c)(7).

The term “Purchaser’s Knowledge”, or words of similar import in this Agreement,
shall be deemed to refer exclusively to matters within the actual, present and
conscious knowledge of Laurent Morali or Ben Curtiss (collectively, “Purchaser
Knowledge Individuals”), without any obligation to investigate or review any
files or other information in the possession or otherwise available to any
Purchaser, make inquiries of other Persons or take any other actions in
connection with any of the representations and warranties contained in this
Agreement. Neither the actual, present or conscious knowledge of any other
Person, nor the constructive knowledge of the Purchaser Knowledge Individuals or
of any other Person, shall be imputed to the Purchaser Knowledge Individuals. No
Purchaser Knowledge Individual is a party to this Agreement or shall be subject
to any personal liability hereunder.

6.4       Survival. The provisions of this Article VI shall survive the Closing.

Article VII
COVENANTS OF SELLERS AND PURCHASER

7.1       Operation of Properties. Between the Effective Date and the earlier of
the termination of this Agreement and the Closing Date (the “Pre-Closing
Period”), each Seller shall conduct its business with respect to the applicable
Property or Properties in the ordinary course of its business consistent with
past

28 

 

practice, including continuing to (i) comply, in all material respects, with the
Assigned Contracts and the Leases and use commercially reasonable efforts to
enforce its rights under the Assigned Contracts and the Leases, (ii) maintain,
or cause to be maintained, its Property or Properties in the ordinary course of
its business consistent with past practice, (iii) maintain, or cause to be
maintained, insurance coverage in full force and effect with respect to its
Property or Properties in the ordinary course of its business consistent with
past practice, (iv) not cause or initiate any zoning changes, and (v) use
commercially reasonable efforts to maintain, or cause to be maintained, in full
force and effect all licenses and permits required to be held by such Seller in
order for such Seller’s Property or Properties to comply with legal
requirements. Purchaser acknowledges and agrees that, notwithstanding the
foregoing or anything else in this Agreement to the contrary, Sellers shall
terminate the Management Agreements with respect to each Property in connection
with the Closing.

7.2       Assumption Loans. Subject to Section 7.3, between the Effective Date
and the Closing Date, Sellers shall not amend, modify, extend, renew or
terminate any Assumption Loan Document in any manner that increases the
obligations or potential liability of, or reduces the rights and benefits of the
borrowers, guarantors and/or indemnitors thereunder, in each case, other than in
a de minimis respect, without Purchaser’s written consent, which consent shall
not be unreasonably withheld, conditioned or delayed.

7.3       Pierre Property. Pierre Property Seller has advised Purchaser that the
indirect owners of the Pierre Property are considering converting their indirect
ownership of the Pierre Property into direct tenancy-in-common interests in the
Pierre Property (which tenancy-in-common interests may be held through one or
more entities; the owners of such tenancy-in-common interests after the TIC
Conversion, the “TIC Owners”). Purchaser acknowledges and agrees that Pierre
Property Seller shall be permitted, at any time prior to the Closing, to
transfer ownership of the Pierre Property to the TIC Owners, as
tenants-in-common (the “TIC Conversion”); provided that (i) Purchaser is
provided with notice promptly following the consummation of the TIC Conversion
that it has occurred, (ii) in connection with the TIC Conversion, each TIC Owner
executes a joinder to this Agreement pursuant to which it agrees to become a
party to this Agreement on such terms and conditions that the conditions set
forth in clause (v) below shall be satisfied (and which joinder shall include,
without limitation, the obligation to deliver to Purchaser a Deed to such TIC
Owner’s tenancy-in-common interest in the Pierre Property), (iii) Purchaser
shall incur no obligations, liabilities, costs or expenses in connection with
the TIC Conversion, (iv) the Closing shall not be delayed by reason of the
implementation of the TIC Conversion, (v) by virtue of the TIC Conversion, none
of Purchaser’s rights under this Agreement shall be affected or diminished, or
its obligations affected or increased, other than to a de minimis extent.
Purchaser acknowledges that in connection with the TIC Conversion, if any,
Pierre Property Seller shall be permitted to modify the loan documents
evidencing the Pierre Loan as shall be reasonably necessary to implement the TIC
Conversion and reflect the joint ownership of the Pierre Property by the TIC
Owners resulting from the TIC Conversion, provided that such loan documents
shall provide that upon the consummation of the sale of the Pierre Property to
Purchaser pursuant to this Agreement, such loan documents shall (subject to any
changes thereto consistent with the provisions of Section 2.5.2) revert to their
existing form and provide for the ownership of the Pierre Property by a single
party. Pierre Property Seller has received a verbal approval from the Pierre
Property lender to the TIC Conversion. If the TIC Conversion shall have not been
consummated on or prior to TIC Conversion Deadline, then, notwithstanding
anything to the contrary contained herein, this Agreement (if not theretofore
terminated with respect to the Pierre Property pursuant to Section 2.5.7) shall
automatically terminate solely with respect to the Pierre Property. Upon any
such

29 

 

termination pursuant to this Section 7.3, (a) this Agreement shall be deemed
automatically terminated solely with respect to the Pierre Property (and the
Pierre Property shall no longer constitute a “Property” for the purposes of this
Agreement) effective as of such termination, (b) the Pierre Property shall be
excluded from the property to be sold by Sellers to Purchaser at the Closing,
(c) the Purchase Price payable by Purchaser at the Closing shall be reduced by
an amount equal to the Allocated Purchase Price allocated to the Pierre Property
as set forth on Schedule I, (d) all of Sellers’ representations, warranties,
covenants, liabilities and obligations, and Purchaser’s rights, with respect to
the Pierre Property shall be void and of no further force and effect (without
limiting the respective rights and obligations of the parties with respect to
the other Properties and except for matters which expressly survive the
termination of this Agreement) and (e) the Pierre Property Seller shall
reimburse Purchaser for any reasonable out-of-pocket Assumption Loan Lender
Ancillary Costs incurred by Purchaser in connection with the Pierre Loan and for
the actual and reasonable costs and expenses of Purchaser’s own attorneys in
connection with the Loan Assumption Applications and pursuing the Loan
Assumption Approval and Loan Assumption and Releases, in each case in respect of
the Pierre Loan.

7.4       Leases. Between the Effective Date and the Closing Date, (i) Sellers
have the right to enter into any New Lease Documents in the ordinary course of
business consistent with past practice; provided, however, that Sellers shall
not enter into any New Lease Documents with Affiliates of Sellers or for any
leases of any apartment units for a term greater than one (1) year, in each case
without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld, delayed or conditioned, and (ii) Sellers shall deliver a
copy of each such New Lease Document to Purchaser promptly upon the execution
and delivery thereof.

7.5       New Contracts. Between the Effective Date and the Closing Date,
Sellers shall not, except as permitted by Section 3.3, Section 7.1, Section 7.2,
Section 7.3 and Section 7.4, enter into any new contract, or amend any existing
contract affecting the Properties (excluding Service Contracts with Persons who
are not Affiliates of any Seller entered into prior to the date of delivery
thereof to Purchaser pursuant to Section 3.3) (“New Contracts”) without
Purchaser’s prior written consent, not to be unreasonably withheld, delayed or
conditioned; provided that any Seller may, without Purchaser’s prior written
consent, enter into any New Contract that (i) is necessary (A) to prevent
material damage or loss to property (B) to prevent imminent danger to people at
or near an Apartment Complex or (C) as a result of an emergency at such
Apartment Complex, as long as Seller provides Purchaser with a copy of any such
New Contract promptly, or (ii) is entered into in the ordinary course of
business for maintenance, repairs or operation of any Property, is assignable to
and terminable by Purchaser (upon not more than thirty (30) days’ notice) at no
cost to Purchaser, and Seller promptly provides Purchaser with a copy of any
such New Contract. Each New Contract entered into pursuant to Section 7.5 shall
constitute an Assigned Contract if the same remains in effect on the Closing
Date.

7.6       Voluntary New Exceptions. Between the Effective Date and the Closing
Date, Sellers shall not grant any voluntary New Exceptions.

7.7       Notice of Breach. If, at or prior to the Closing, any Purchaser
Knowledge Individual has knowledge that any of the Sellers’ Representations are
untrue, inaccurate or

30 

 

incorrect in any material respect, Purchaser shall deliver written notice to
Sellers thereof within five (5) Business Days of obtaining such knowledge (but,
in any event, prior to the Closing).

7.8       Tax Contests.

7.8.1       Taxable Period Terminating Prior to the Closing Date. Other than as
disclosed on Schedule 6.1.15, Sellers shall not commence, continue or settle any
proceedings to contest any Taxes for any taxable period which terminates prior
to the Closing Date. Sellers shall be entitled to any refunds or abatements of
Taxes awarded pursuant to any proceedings to contest taxes which relate to any
taxable periods which terminate prior to the Closing Date.

7.8.2       Taxable Period Including the Closing Date. Other than as disclosed
on Schedule 6.1.15, neither party shall have the right to commence, continue or
settle any proceedings to contest any Taxes for any taxable period which
includes the Closing Date. Any refunds or abatements awarded in such proceedings
shall be used first to reimburse the applicable party for the reasonable costs
and expenses incurred by in contesting such Taxes, and the remainder of such
refunds or abatements shall be prorated between Sellers and Purchaser as of
11:59 p.m. (Eastern time) on the day immediately prior to the Closing Date,
based upon actual days in the applicable taxable period prior to and after the
Closing Date. Promptly upon receipt of any such refund or abatement, Purchaser
shall pay the applicable prorated amount to Sellers.

7.8.3       Cooperation. Sellers and Purchaser shall use commercially reasonable
efforts to cooperate with the party contesting any Taxes pursuant to, and in
accordance with, this Section 7.8 (at no cost or expense to the non-contesting
party, other than any de minimis cost or expense or any cost or expense which
the requesting party agrees to reimburse pursuant to an agreement mutually
acceptable to the parties).

7.8.4       Survival. This Section 7.8 shall survive the Closing.

7.9       Bulk Sales. No later than sixty (60) days after the Effective Date,
(a) each Seller (other than Regency Property Seller) shall execute and deliver
to Purchaser a completed Asset Transfer Tax Declaration (TTD) form and all other
information necessary for Purchaser to complete a notice form C-9600 (“Bulk
Transfer Notice”) to the New Jersey Division of Taxation, Bulk Sales Unit (the
“Bulk Sales Unit”). Provided Purchaser has filed the Bulk Transfer Notice with
the Bulk Sales Unit and the Bulk Sales Unit has replied in writing received by
Purchaser prior to the Closing, Purchaser shall have the right to hold back the
portion of the Purchase Price that is required by the Bulk Sales Unit in its
reply (“Response Letter”) to the Bulk Transfer Notice (the “Division Escrow”),
which amount shall be held in escrow by Purchaser’s counsel, pursuant to an
escrow agreement in the form attached hereto as Exhibit I (the “Bulk Sales
Escrow Agreement”). In no event shall the Closing be cancelled, delayed or
postponed in order to afford additional time to receive a Response Letter,
provided that Seller shall have the right to communicate directly with the Bulk
Sales Unit concerning the amount of any Division Escrow that may be imposed. The
Division Escrow shall be held by Purchaser’s counsel in an interest bearing
account utilizing Sellers’ (other than Regency Property Seller’s) taxpayer
identification numbers. Interest accrued on the Division Escrow shall not be
deemed to be part of the Division Escrow and shall be remitted to the applicable
Seller from time to time, on request from such Seller only, subject to the terms
of the Bulk Sales Escrow Agreement. Purchaser shall have no right, title or
interest in or to the

31 

 

Division Escrow and shall have no right to demand or receive payment of all or
any portion of the Division Escrow. Purchaser and Sellers agree to be bound by
the escrow or disbursement requirements imposed by the Bulk Sales Unit. Upon
demand by the Bulk Sales Unit, Purchaser’s counsel shall disburse to the Bulk
Sales Unit such amounts from the Division Escrow as the Bulk Sales Unit shall
require. Any remaining balance of funds in the Division Escrow shall be
disbursed to the applicable Seller only after the Bulk Sales Unit has authorized
the release of such funds in writing and upon such Seller’s written request to
Purchaser’s counsel and simultaneous notice to Purchaser of such request.
Sellers shall cooperate reasonably with Purchaser in Purchaser’s undertaking to
comply with the New Jersey Bulk Sales Act.

7.10       Notice of Litigation, Violations and Regarding Property Tax Matters.
If, prior to the Closing, any Seller receives written notice of (i) any new
litigation not disclosed on Schedule 6.1.4 with respect to any Property (other
than any “slip and fall” and other immaterial litigation covered by insurance),
(ii) any new material violation not disclosed on Schedule 6.1.9 of any
applicable fire, health, building, use, occupancy or zoning laws, regulations,
ordinances and codes with respect to any Property or (iii) any reevaluation or
reassessment with respect to any Property, or of any real estate tax appeal
being commenced by a municipality in respect of any Property, Sellers shall
promptly deliver written notice to Purchaser thereof.

7.11       Cooperation with Financing. Upon Purchaser’s request, Sellers shall
reasonably cooperate with Purchaser, at no cost or expense to Sellers, in
Purchaser’s and its permitted designees’ obtaining financing for the Properties
where a loan is not being assumed (e.g., by providing access to such Properties
for property tours subject to the terms and conditions contained herein),
provided that Sellers shall not be obligated to make any payments or
accommodations in connection therewith. In connection therewith, but without
limitation of the foregoing, Sellers shall promptly provide to Purchaser,
without recourse or warranty of any kind, additional information in the
possession or control of Sellers related to the Properties to the extent
reasonably requested by any of Purchaser’s lenders, subject to any
confidentiality restrictions contained herein or in any other binding
agreements.

7.12       Employees.

7.12.1       Until the first (1st) anniversary of the Closing Date, Purchaser
shall not, through its manager, employees, agents, representatives or any other
Person, directly or indirectly, solicit any of the employees of Sellers
identified on Schedule 7.12 hereof (the “Retained Employees”) for employment
without the applicable Seller’s prior written consent, which may be withheld in
their sole discretion.

7.12.2       Each Seller shall terminate the employment of all of its employees
effective as of the Closing (provided the Retained Employees may be re-employed
by one or more Affiliates of the Sellers or their managing agent(s)). Prior to
the Closing, Purchaser, directly or through its manager, employees, agents,
representatives or any other Person, may contact any of the Sellers’ employees
that are not Retained Employees for the sole purpose of soliciting them for
employment from and after the Closing, and Purchaser may offer employment to all
such employees, other than the Retained Employees, subject to the Closing and
commencing as of the effective time of the Closing (the terminated Employees who
accept such offers of employment are referred to

32 

 

collectively herein as the “Rehired Employees”). Each Seller shall be
responsible for, and shall defend, indemnify and hold harmless Purchaser
Indemnified Parties from and against any losses incurred by any Purchaser
Indemnified Parties in respect of, all accrued salary and benefits of such
Seller’s employees which relate to the period prior to the Closing Date. Each
Seller shall take all such action as may be necessary to permit the termination
of the employment of all of its employees effective as of the Closing without
any liability on the part of Purchaser therefor, including the giving of any
notice required to be given under the WARN Act. Purchaser shall defend,
indemnify and hold harmless Seller Indemnified Parties from and against any
losses incurred by any Seller Indemnified Parties under the WARN Act as a result
of Purchaser’s termination of any Rehired Employee following the Closing. As
used herein, “WARN Act” shall mean the Worker’s Adjustment and Retraining
Notification Act, 29 U.S.C. § 2101, et seq., as well as the rules and
regulations thereto, set forth in 20 CFR 639, et seq., and any similar state and
local laws, as amended from time to time, and any regulations, rules and
guidance issued pursuant thereto.

7.12.3       The provisions of this Section 7.12 shall survive the Closing.

7.13       Acquisition Proposals; Change in Recommendation.

7.13.1       Except as expressly permitted by this Section 7.13, during the
Pre-Closing Period, the Sellers shall not, and shall use their reasonable best
efforts to cause their respective Affiliates and Representatives not to,
directly or indirectly, (i) initiate, solicit or knowingly encourage or
knowingly facilitate the making of any Acquisition Proposal or any inquiry,
proposal or request for information that could reasonably be expected to lead
to, or result in, an Acquisition Proposal, (ii) other than informing Third
Parties of the existence of the provisions contained in this Section 7.13,
engage in, continue or otherwise participate in negotiations or discussions
with, or furnish any non-public information (or access thereto) concerning the
Sellers or any of their respective Affiliates to, any Third Party in connection
with, or for the purpose of encouraging or facilitating, an Acquisition
Proposal, (iii) recommend, approve, authorize or enter into any letter of
intent, memorandum of understanding, acquisition agreement, agreement in
principle or similar agreement with respect to an Acquisition Proposal, other
than an Acceptable Confidentiality Agreement (an “Alternative Acquisition
Agreement”) or (iv) approve, authorize or agree to do any of the foregoing.
Promptly following the execution of this Agreement, the Sellers shall, and shall
direct their respective Representatives to, cease and cause to be terminated any
solicitation and any and all existing activities, discussions or negotiations
with any Person conducted heretofore with respect to any Acquisition Proposal or
any inquiry or request for information that could reasonably be expected to lead
to, or result in, an Acquisition Proposal. In furtherance of the foregoing,
promptly following the execution and delivery of this Agreement, the Sellers
will (i) request that each Third Party and its representatives that has, prior
to the execution and delivery of this Agreement, executed a confidentiality
agreement in connection with such Person’s consideration of making an
Acquisition Proposal, to promptly return or destroy all non-public information
related to the Properties furnished to such Person by or on behalf of the
Sellers or any of their respective Affiliates prior to the date of this
Agreement and (ii) immediately terminate all physical and electronic data room
access for such Persons and their representatives to diligence or other
information regarding the Properties. The Sellers shall not modify, amend, or
terminate, or waive, release or assign, any provisions of, any confidentiality
or standstill agreement (or any

33 

 

similar agreement) to which the Sellers or any of their respective Affiliates is
a party relating to any such Acquisition Proposal and shall enforce the
provisions of any such agreement; provided, however, that the Trust shall be
permitted on a confidential basis to release or waive any explicit or implicit
standstill obligations solely to the extent necessary to permit the party
referred to therein to submit an Acquisition Proposal to the Board of Trustees
of the Trust on a confidential basis. The Trust shall provide written notice to
Purchaser of waiver or release of any standstill by the Trust, including
disclosure of the identities of the parties thereto and circumstances relating
thereto. For the avoidance of doubt and notwithstanding anything to the contrary
contained in this Agreement, in no event shall (x) any Third Party or its
representatives be required to return or destroy any non-public information
related to the properties of the Trust (other than the Properties) or the Trust
as a whole to the extent that such Third Party is considering or pursuing a
strategic transaction in respect of such properties of the Trust (other than the
Properties) and (y) the Trust or any other Person be required to terminate all
physical and electronic data room access for any Third Party or its
representatives to diligence or other information regarding the properties of
the Trust (other than the Properties).

7.13.2       Notwithstanding anything to the contrary contained in this
Agreement, if prior to obtaining the Trust Shareholder Approval, the Trust
receives a bona fide written Acquisition Proposal (which Acquisition Proposal
was made after the date of this Agreement and did not result from a breach of
this Section 7.13), and the Trust Board determines in good faith, after
consultation with its financial advisors and outside legal counsel, that such
Acquisition Proposal constitutes, or could reasonably be expected to lead to, a
Superior Proposal, then the Trust and its Representatives may: (i) furnish any
information with respect to the Trust and its subsidiaries and access thereto to
any Third Party making such Acquisition Proposal; provided that (A) prior to
furnishing any such information, the Trust receives from such Third Party an
executed Acceptable Confidentiality Agreement and (B) any such non-public
information so furnished has been previously provided or otherwise made
available (including through the Data Site) to Purchaser or is provided or
otherwise made available (including through the Data Site) to Purchaser
concurrently with it being so furnished to such Third Party or (ii) participate
or engage in negotiations or discussions with the Third Party making such
Acquisition Proposal and its Representatives regarding such Acquisition
Proposal.

7.13.3       Except as set forth in this Section 7.13, neither the Trust Board
nor any committee thereof shall (a)(i) withhold or withdraw (or modify, amend or
qualify in a manner adverse to Purchaser), or propose publicly to withhold or
withdraw (or modify, amend or qualify in a manner adverse to Purchaser), the
Trust Board Recommendation, (ii) approve, recommend or declare advisable, or
propose publicly to approve, recommend or declare advisable, any Acquisition
Proposal, or (iii) fail to include the Trust Board Recommendation in the Proxy
Statement when disseminated to the Trust Shareholders (any such action being
referred to as a “Change in Recommendation”) or (b) cause or permit the Trust to
enter into any Alternative Acquisition Agreement.

7.13.4       Notwithstanding anything to the contrary contained in this
Agreement, at any time prior to obtaining the Trust Shareholder Approval, if, in
response to a bona fide written Acquisition Proposal made after the date of this
Agreement and not withdrawn, the Trust Board determines in good faith (after
consultation with its outside legal counsel and financial advisors)

34 

 

that (i) such Acquisition Proposal constitutes a Superior Proposal and (ii) the
failure to take an action set forth in clause (x) or (y) would reasonably be
expected to be inconsistent with its fiduciary duties under applicable law, then
the Trust Board may (x) make a Change in Recommendation or (y) terminate this
Agreement pursuant to Section 9.1.5 in order to enter into an Alternative
Acquisition Agreement with respect to such Superior Proposal; provided that in
either such case (A) the Trust shall have provided to Purchaser four (4)
Business Days’ prior written notice (the “Superior Proposal Notice”) (which
notice shall not constitute a Change in Recommendation) advising the Purchaser
that the Trust intends to take such action (and specifying, in reasonable
detail, the material terms and conditions of any such Superior Proposal) and
providing Purchaser with a copy of the most current version of the Alternative
Acquisition Agreement and any other documents containing the material terms of
such Superior Proposal (provided that the Purchaser shall be required to keep
all such documents and their terms confidential in accordance with the terms of
the Confidentiality Agreement), and (B):

(1)       during such four (4) Business Day period, if requested by Purchaser,
the Trust Board and its Representatives shall negotiate in good faith with
Purchaser regarding changes to the terms of this Agreement and any other
proposals made by Purchaser intended by Purchaser to cause such Acquisition
Proposal to no longer constitute a Superior Proposal; and

(2)       the Trust Board shall have considered in good faith any and all
adjustments to this Agreement (including any change to the price terms hereof)
and any other agreements that may be proposed in writing by Purchaser (the
“Proposed Changed Terms”) no later than 5:00 p.m., New York City time, on the
fourth (4th) Business Day of such four (4) Business Day period and shall have
determined in good faith (after consultation with its outside legal counsel and
financial advisors) that (x) such Acquisition Proposal would continue to
constitute a Superior Proposal if such Proposed Changed Terms were to be given
effect, and (y) the failure to make the Change in Recommendation or terminate
this Agreement pursuant to Section 9.1.5 would reasonably be expected to be
inconsistent with the Trust Board’s fiduciary duties under applicable law.

For the avoidance of doubt, any material revisions to an Acquisition Proposal
subject to the terms of this Section 7.13.4 shall constitute a new Acquisition
Proposal and shall in each case require the Trust to deliver to Purchaser a new
Superior Proposal Notice, except that the references to four (4) Business Days
in this Section 7.13.4 shall be deemed to be two (2) Business Days, and the
provisions of this Section 7.13.4 shall otherwise apply as modified thereby.

7.13.5       Notwithstanding anything to the contrary contained in this
Agreement, at any time prior to obtaining the Trust Shareholder Approval, the
Trust Board may make a Change in Recommendation in response to an Intervening
Event if (i) the Trust Board determines in good faith, after consultation with
its outside legal counsel, that the failure to do so would reasonably be
expected to be inconsistent with the Trust Board’s fiduciary duties under
applicable law, (ii) (A) the Trust shall have provided Purchaser four (4)
Business Days’ prior written notice (which notice shall not constitute a Change
in Recommendation) advising Purchaser that the Trust intends to make a Change in
Recommendation (and specifying, in reasonable detail, the Intervening Event)

35 

 

(provided that the Purchaser shall be required to keep all such information
confidential in accordance with the terms of the Confidentiality Agreement), and
(B):

(1)       during such four (4) Business Day period, if requested by Purchaser,
the Trust and its Representatives shall negotiate in good faith with Purchaser
regarding any changes to the terms of this Agreement and any other proposals
made by Purchaser so that a Change in Recommendation would no longer be
necessary; and

(2)       the Trust Board shall have considered in good faith any and all
adjustments to this Agreement (including any change to the price terms hereof)
and any other agreements that may be proposed by Purchaser no later than 5:00
p.m., New York City time, on the fourth (4th) Business Day of such four (4)
Business Day period and shall have determined in good faith (after consultation
with its outside legal counsel and financial advisors) that the failure to make
a Change in Recommendation in response to such Intervening Event would
reasonably be expected to be inconsistent with its fiduciary duties under
applicable law. 

For the avoidance of doubt, in the event of any material change in any event,
circumstance, change, development, occurrence or fact relating to such
Intervening Event (other than in respect of any revisions proposed or proposals
made by Purchaser as referred to above), a new notice shall be required from the
Company pursuant to Section 7.13.5(ii), except that the references to four (4)
Business Days in this Section 7.13.5 shall be deemed to be two (2) Business
Days, and the provisions of this Section 7.13.5 shall otherwise apply to the
Intervening Event as modified thereby.

7.13.6       During the Pre-Closing Period, the Trust shall (i) in the event
that the Trust receives any Acquisition Proposal or any request for information
or inquiry that contemplates or that could reasonably be expected to lead to an
Acquisition Proposal, advise Purchaser as promptly as practicable (and in any
event within 48 hours after the receipt thereof) of the receipt of such
Acquisition Proposal, request or inquiry, the material terms and conditions
thereof and the identity of the Person making such Acquisition Proposal, request
or inquiry, (ii) provide to Purchaser copies of such Acquisition Proposal and
other substantive correspondence relating to such Acquisition Proposal, request
or inquiry made in writing, and (iii) thereafter, keep Purchaser reasonably
informed on a reasonably current basis regarding the status, material details
and material terms of any such Acquisition Proposal and any discussions and
negotiations concerning the material terms and conditions thereof, including
unredacted copies of any proposed Alternative Acquisition Agreements and any
other writings or media (whether or not electronic) containing any material
terms or conditions of any Acquisition Proposal.

7.13.7       Nothing contained in this Agreement or the Confidentiality
Agreement shall prohibit the Trust or the Trust Board, directly or indirectly
through their respective Representatives, from (i) taking and disclosing to the
Trust Shareholders any position contemplated by Rule 14d-9, Rule 14e-2(a) or
Item 1012(a) of Regulation M-A promulgated under the Exchange Act, (ii) making
any “stop, look and listen” communication to the Trust Shareholders pursuant to
Rule 14d-9(f) promulgated under the Exchange Act or (iii) making any disclosure
to the Trust Shareholders that the Trust has determined in good faith (after
consultation with its

36 

 

outside legal counsel) is required by applicable law; provided that this Section
7.13.7 shall not be deemed to permit the Trust Board to make a Change in
Recommendation except to the extent permitted by Sections 7.13.3 - 7.13.5;
provided, further, that nothing in this Section 7.13 shall prohibit the Trust
from contacting and engaging in any discussions with any Person or group or
their respective Representatives who has made an Acquisition Proposal solely for
the purpose of (x) clarifying such Acquisition Proposal and the terms thereof or
(y) determining whether such Person intends to provide any documents (or
additional documents) containing the terms and conditions of such Acquisition
Proposal.

7.14       Proxy Statement As promptly as reasonably practicable after the
execution of this Agreement, the Trust shall prepare the Proxy Statement in
preliminary form and file it with the SEC. Subject to Section 7.13, the Trust
Board shall make the Trust Board Recommendation to the Trust Shareholders and
shall include such recommendation in the Proxy Statement.  Each party shall
furnish all information concerning itself and its Affiliates that is required to
be included in the Proxy Statement or that is customarily included in proxy
statements prepared in connection with transactions of the type contemplated by
this Agreement, and each party covenants that none of the information supplied
or to be supplied by it for inclusion or incorporation in the Proxy Statement
will, at the date it is filed with the SEC or first mailed to the Trust
Shareholders or at the time of the Trust Shareholders Meeting or at the time of
any amendment or supplement thereof, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. Each party shall promptly correct any
information provided by it for use in the Proxy Statement if and to the extent
such information shall have become false or misleading in any material respect.
The Trust shall notify Purchaser promptly upon the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Proxy Statement and shall supply Purchaser with copies of
all written correspondence between the Trust or any of its Representatives, on
the one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Statement. The Trust shall use its reasonable best efforts to respond as
promptly as reasonably practicable to any comments received from the SEC or its
staff concerning the Proxy Statement and to resolve such comments with the SEC,
and shall use its reasonable best efforts to cause the Proxy Statement to be
disseminated to the Trust Shareholders as promptly as reasonably practicable
after the resolution of any such comments. Prior to the filing of the Proxy
Statement (or any amendment or supplement thereto) or any dissemination thereof
to the Trust Shareholders, or responding to any comments from the SEC or its
staff with respect thereto, the Trust shall provide Purchaser with a reasonable
opportunity to review and to propose comments on such document or response,
which the Trust shall consider in good faith. Purchaser shall provide to the
Trust all information concerning Purchaser and its Affiliates as may be
reasonably requested by the Trust in connection with the Proxy Statement and
shall otherwise assist and cooperate with the Trust in the preparation of the
Proxy Statement and the resolution of any comments thereto received from the SEC
or its staff.

7.15       Trust Shareholders Meeting. The Trust shall, as promptly as
practicable after the date on which the Trust learns that the Proxy Statement
will not be reviewed by the SEC or that the SEC has no further comments on the
Proxy Statement, take all action required under applicable law and the Trust’s
organizational documents necessary to promptly and duly call, give notice of,

37 

 

convene and hold as promptly as practicable the Trust Shareholders Meeting;
provided that the Trust may (a) delay filing its definitive Proxy Statement and
calling, giving notice of, convening and holding the Trust Shareholders Meeting
until, with respect to each Loan Assumption Property, either (i) receipt of the
Loan Assumption Approval or (ii) a termination of this Agreement with respect to
such Property pursuant to Section 2.5.7, and (b) postpone or adjourn such
meeting solely (i) to the extent required by applicable law (including as
necessary to ensure that any required supplement or amendment to the Proxy
Statement is provided to the Trust Shareholders within a reasonable amount of
time in advance of the Trust Shareholders Meeting), (ii) with the written
consent of Purchaser (which consent shall not be unreasonably withheld,
conditioned or delayed), (iii) to allow reasonable additional time to solicit
additional proxies to the extent the Trust reasonably believes necessary in
order to obtain the Trust Shareholder Approval or (iv) in the absence of a
quorum. Subject to Section 7.13, the Trust shall use reasonable best efforts to
solicit from the Trust Shareholders proxies in favor of the approval of this
Agreement and the Transactions and obtain the Trust Shareholder Approval. The
Trust shall notify Purchaser promptly following the filing its definitive Proxy
Statement and calling of the Trust Shareholders Meeting of the scheduled date
for the Trust Shareholders Meeting. The Trust shall keep Purchaser updated with
respect to proxy solicitation results as requested by Purchaser. For the
avoidance of doubt, the Trust shall not be required to hold the Trust
Shareholders Meeting if this Agreement is terminated before the meeting is held.

7.16       PSE&G Approval. Sellers and Purchaser shall reasonably cooperate with
one another to obtain the PSE&G Approval prior to the Closing.

7.17       Current Certificates of Occupancy. Following the Effective Date, with
respect to each Property (other than the Regency Property), but only to the
extent required under applicable law in connection with the sale of such
Property, Sellers shall apply for a current certificate of occupancy for such
Property and/or such departmental inspections as may be required by the
municipality where such Property is located. Purchaser shall reasonably
cooperate with Seller in completing any such applications. The parties hereto
agree that Sellers shall be solely responsible for all related application and
filing fees. If, as a result of any related inspection or review process, a
municipality requires the performance of any repairs, other remedial work or
undertaking of any other action in respect of a Property, then Purchaser shall
be solely responsible to perform such work and the cost thereof. Notwithstanding
the foregoing, and for the avoidance of doubt, the parties hereto acknowledge
that the issuance of any such certificate of occupancy, permit or other evidence
of other inspections, or performance and/or completion of any such repairs or
other work shall not constitute a condition to Purchaser’s obligation to
consummate the Closing in accordance with the terms of this Agreement and shall
not give rise to any right to adjourn or delay the consummation of the Closing.
The parties hereto further acknowledge and agree that Sellers shall not be
liable for any penalties or fines that may be imposed by any municipality to the
extent any such certificates, permits or other evidence of other inspections, or
performance and/or completion of any such repairs or other work shall not be
obtained, performed or completed prior the Closing, and Purchaser shall
indemnify Sellers from and against the same. The provisions of this Section 7.17
shall survive the Closing.

38 

 

Article VIII
CONDITIONS PRECEDENT TO CLOSING

8.1       Purchaser’s Conditions to Closing. The obligations of Purchaser to
consummate the Closing are subject to the satisfaction (or waiver by Purchaser
in writing) of the following conditions as of the Closing Date:

8.1.1       Representations and Warranties. Each of the Sellers’ Representations
shall be true in all respects (without regard to qualifications based on
materiality) as of the Closing Date (except to the extent expressly made as of
an earlier date, in which case as of such earlier date), except where the
failure to be true and correct would not reasonably be expected to have a
Material Adverse Effect (it being agreed that no modification to the Disclosure
Schedules permitted under Section 6.2 shall be deemed to cause a Sellers’
Representation to cease to be true for purposes of this Section 8.1.1, nor shall
any such modification be taken into account in determining whether there is a
Material Adverse Effect, unless such modification constitutes a New Disclosure
Item and Seller fails to cure such New Disclosure Item on or before the Closing
Date). For purposes of this Section 8.1.1, the Sellers’ Representations in
Section 6.1.8 shall be deemed to apply only to Service Contracts that are
Assigned Contracts.

8.1.2       Covenants and Agreements. Sellers shall have performed and complied
in all material respects with all covenants and agreements required by this
Agreement to be performed and complied with by them prior to or on the Closing
Date, including delivery of the items listed in Section 5.2.

8.1.3       Title Company. The Title Company shall be prepared, and irrevocably
committed, to issue a Title Policy in the form required hereunder with respect
to each Property, subject only to the Permitted Exceptions and subject to the
terms of Section 4.5.4,

8.2       Sellers’ Conditions to Closing. The obligations of Sellers to
consummate the Closing are subject to the satisfaction (or waiver by each Seller
in writing) of the following conditions as of the Closing Date:

8.2.1       Representations and Warranties. Each of the Purchaser’s
Representations shall be true in all material respects (without regard to
qualifications based on materiality) as of the Closing Date (except to the
extent expressly made as of an earlier date, in which case as of such earlier
date).

8.2.2       Covenants and Agreements. Purchaser shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed and complied with by it prior to or on the
Closing Date, including delivery of the items listed in Section 5.3.

8.3       Mutual Condition to Closing. The respective obligations of each of the
parties to effect the Transactions shall be subject to the satisfaction of the
following condition as of the Outside Closing Date:

39 

 

8.3.1       No Legal Prohibition. No law shall be in effect and no order shall
have been entered, in each case, that (i) restrains, enjoins or prohibits the
performance of all or any part of this Agreement or the consummation of the
Transactions, or (ii) declares unlawful this Agreement or the consummation of
the Transactions.

8.3.2       Termination of Agreement. This Agreement shall not have been
terminated in its entirety in accordance with any provision of this Agreement.

8.3.3       Trust Shareholder Approval. The Trust Shareholder Approval shall
have been obtained.

Article IX
TERMINATION

9.1       Termination of this Agreement. This Agreement may be terminated and
the Transactions may be abandoned at any time on or before the Closing, in each
of the following instances:

9.1.1       Mutual Consent. At any time prior to the Closing, by mutual written
agreement of Sellers and Purchaser.

9.1.2       Delay. By either party by written notice to the other party if the
Closing shall not have been consummated by the Outside Closing Date, provided,
however, that the right to terminate this Agreement under this Section 9.1.2
shall not be available to any party whose action or failure to act has been a
principal cause of or directly resulted in the failure of the Closing to have
been consummated on or prior to such date and such action or failure to act
constitutes a breach of this Agreement.

9.1.3       Default. By either party pursuant to, and in accordance with, its
rights under Article X.

9.1.4       Trust Shareholder Approval. By either party if the Trust
Shareholders Meeting shall have been held and the Trust Shareholder Approval is
not obtained at the Trust Shareholders Meeting (or at any adjournment or
postponement thereof).

9.1.5       Superior Proposal. By Sellers if prior to obtaining the Trust
Shareholder Approval (w) the Trust Board has determined that an Acquisition
Proposal constitutes a Superior Proposal; (x) the Trust has complied in all
material respects with its obligations in Section 7.13.4; (y) the Trust pays, or
causes to be paid, to Purchaser the Termination Fee payable pursuant to Section
9.2.6 prior to or concurrently with such termination; and (z) substantially
concurrently with such termination, the Trust enters into a definitive
Alternative Acquisition Agreement in respect of such Superior Proposal.

9.1.6       Change of Recommendation. By Purchaser prior to the obtaining the
Trust Shareholder Approval if a Change in Recommendation shall have occurred.

9.2       Consequences of Termination.

40 

 

9.2.1       If this Agreement is terminated pursuant to Section 9.1.1, then this
Agreement shall immediately terminate, without further action by any of the
parties, Escrow Agent shall return the Deposit to Purchaser, and neither Sellers
nor Purchaser shall have any further obligation or liability to the other except
with respect to those provisions of this Agreement which expressly survive a
termination of this Agreement.

9.2.2       If this Agreement is terminated by Purchaser pursuant to Section
9.1.2, then this Agreement shall immediately terminate, without further action
by any of the parties, Escrow Agent shall return to return the Deposit to
Purchaser, and neither Sellers nor Purchaser shall have any further obligation
or liability to the other except with respect to those provisions of this
Agreement which expressly survive a termination of this Agreement.

9.2.3       If this Agreement is terminated by Sellers pursuant to Section
9.1.2, then this Agreement shall immediately terminate, without further action
by any of the parties, Escrow Agent shall deliver the Deposit to Sellers, if
applicable pursuant to Article X, and otherwise to Purchaser, and neither
Sellers nor Purchasers shall have any further obligation or liability to the
other except with respect to those provisions of this Agreement which expressly
survive a termination of this Agreement.

9.2.4       If this Agreement is terminated by either party pursuant to Section
9.1.3, then this Agreement shall immediately terminate, without further action
by any of the parties, Escrow Agent shall deliver the Deposit to the party
entitled thereto pursuant to Article X, and neither Sellers nor Purchaser shall
have any further obligation or liability to the other except with respect to
those provisions of this Agreement which expressly survive a termination of this
Agreement.

9.2.5       If this Agreement is terminated by either party pursuant to Section
9.1.4, then (x) this Agreement shall immediately terminate, without further
action by any of the parties, Escrow Agent shall return to return the Deposit to
Purchaser, and neither Sellers nor Purchaser shall have any further obligation
or liability to the other except with respect to those provisions of this
Agreement which expressly survive a termination of this Agreement and (y) the
Trust shall promptly pay (or cause to be paid to) Purchaser, no later than the
five (5) Business Days following receipt from Purchaser of request therefor
accompanied by documentation with respect thereto, the reasonable and documented
out-of-pocket fees and expenses (including, without limitation, reasonable legal
fees of outside counsel) incurred by Purchaser in connection with this Agreement
or the Transactions, provided that in no event shall the Trust be required to
reimburse Purchaser for any amounts in excess of Two Million Dollars
($2,000,000) (such amount, subject to the foregoing cap, the "Purchaser Expense
Reimbursement").

9.2.6       If this Agreement is terminated by Sellers pursuant to Section 9.1.5
then (x) this Agreement shall immediately terminate, without further action by
any of the parties, Escrow Agent shall return to return the Deposit to
Purchaser, and neither Sellers nor Purchaser shall have any further obligation
or liability to the other except with respect to those provisions of this
Agreement which expressly survive a termination of this Agreement, (y) prior to
or concurrently with such termination, the Trust shall pay (or cause to be paid
to) Purchaser a fee in the amount of Three Million Five Hundred Thousand Dollars
$3,500,000 (the “Termination Fee” and, together

41 

 

with the Purchaser Expense Reimbursement, the "Termination Payments") and (z)
the Trust shall promptly pay (or cause to be paid to) Purchaser, no later than
the five (5) Business Days following receipt from Purchaser of request therefor
accompanied by documentation with respect thereto, the Purchaser Expense
Reimbursement.

9.2.7       If this Agreement is terminated by Purchaser pursuant to Section
9.1.6, then (x) this Agreement shall immediately terminate, without further
action by any of the parties, Escrow Agent shall return to return the Deposit to
Purchaser, and neither Sellers nor Purchaser shall have any further obligation
or liability to the other except with respect to those provisions of this
Agreement which expressly survive a termination of this Agreement, (y) the Trust
shall promptly pay (or cause to be paid to) Purchaser, but in no event later
than two (2) Business Days after termination of this Agreement, the Termination
Fee and (z) the Trust shall promptly pay (or cause to be paid to) Purchaser, no
later than the five (5) Business Days following receipt from Purchaser of
request therefor accompanied by documentation with respect thereto, the
Purchaser Expense Reimbursement.

9.2.8       If this Agreement is terminated (i) (A) by either party pursuant to
Section 9.1.2 (but in the case of a termination by the Sellers, only if at such
time Purchaser would not be prohibited from terminating this Agreement pursuant
to the proviso in Section 9.1.2), (B) by Purchaser pursuant to Section 9.1.3 or
(C) by either party pursuant to Section 9.1.4, (ii) at any time on or after the
date of this Agreement and prior to such termination a bona fide Acquisition
Proposal shall have become publicly known and not publicly withdrawn prior to
such termination, and (iii) within twelve (12) months after the date of such
termination, (A) the Trust (and/or one or more of its subsidiaries) enters into
an Alternative Acquisition Agreement providing for an Acquisition Transaction or
(B) an Acquisition Transaction is consummated, then, the Trust shall pay (or
cause to be paid to) Purchaser (in addition to return of the Deposit to
Purchaser, if applicable, pursuant to Section 9.2.2, Section 9.2.3, Section
9.2.4 or Section 9.2.5) (1) the Termination Fee (less any amounts previously
paid pursuant to Section 10.2(x)) concurrently with the consummation of any such
Acquisition Transaction and (2) no later than the five (5) Business Days
following receipt from Purchaser of request therefor accompanied by
documentation with respect thereto, the Purchaser Expense Reimbursement (less
any amounts previously paid pursuant to Section 9.2.5).

9.2.9       Notwithstanding anything in this Agreement to the contrary, (a) if
and to the extent Purchaser is entitled to receive any Termination Payments
pursuant to Sections 9.2.5, 9.2.6, 9.2.7 or 9.2.8, payment of the applicable
Termination Payments (and to the extent expressly provided herein, return of the
Deposit to Purchaser, if applicable) shall be the sole and exclusive remedy of
Purchaser or any of its Affiliates or its or their respective Representatives
against the Sellers and any of their respective former, current or future
officers, directors, partners, shareholders (or other equityholders), managers,
members or Affiliates (collectively, the “Trust Related Parties”), and, upon
payment of the applicable Termination Payments, none of the Trust Related
Parties shall have any further liability or obligation relating to or arising
out of this Agreement or the Transactions, and (b) the maximum aggregate amount
that Purchaser (or its designee) is entitled to receive in respect of any loss
and all losses suffered as a result of the failure of the Transactions to be
consummated or for any breach or failure to perform hereunder shall be an amount
equal to the Termination Payments.

42 

 

9.2.10       The Sellers acknowledge that the agreements contained in this
Section 9.2 are an integral part of the Transactions and that without such
provisions Purchaser would not have entered into this Agreement. For the
avoidance of doubt, the terms and provisions of this Section 9.2 are subject to
the terms and provisions of Article X. The provisions of this Article IX shall
survive any termination of this Agreement.

9.2.11       Notwithstanding anything to the contrary in this Agreement, the
parties hereby acknowledge and agree that in no event shall the Trust be
required to pay (or cause to be paid) the Termination Fee on more than one
occasion, whether nor not the Termination Fee may be payable under more than one
provision of this Agreement at the same or at different times and the occurrence
of different events, and in no event shall the Trust be required to pay (or
cause to be paid) an aggregate amount in excess of Two Million Dollars
($2,000,000) in respect of the Purchaser Expense Reimbursement, whether nor not
the Purchaser Expense Reimbursement may be payable under more than one provision
of this Agreement at the same or at different times and the occurrence of
different events.

Article X
DEFAULTS AND REMEDIES

10.1       Purchaser Default. If there is a Purchaser Default prior to the
consummation of the Closing, then, at Sellers’ election and as Sellers’
exclusive remedy, Sellers may terminate this Agreement by giving written notice
thereof to Purchaser, in which event Purchaser shall forfeit the Deposit to
Sellers and Escrow Agent shall deliver the Deposit to Sellers as liquidated
damages (the parties agreeing that (x) Sellers’ losses resulting from a
termination due to a Purchaser Default would be difficult to quantify, and (y)
such sum is not a penalty, but rather a reasonable measure of Sellers’ damages
resulting from a termination due to a Purchaser Default). SELLERS ACKNOWLEDGE
AND AGREE THAT THIS SECTION 10.1 IS INTENDED TO AND DOES LIMIT THE REMEDIES
AVAILABLE TO SELLERS AND SHALL BE SELLERS’ EXCLUSIVE REMEDIES AGAINST PURCHASER
HEREUNDER AND BOTH AT LAW AND IN EQUITY ARISING FROM OR RELATED TO A PURCHASER
DEFAULT PRIOR TO THE CONSUMMATION OF THE CLOSING. For the purposes of this
Agreement, the term “Purchaser Default” shall mean the occurrence of either of
the following: (x) the conditions to Purchaser’s obligations to consummate the
Transactions set forth in Article VIII have been satisfied and Purchaser
defaults on its obligations under Section 5.3; or (y) Purchaser defaults in any
material respect on any of its other performance obligations under this
Agreement or has breached any of the Purchaser’s Representations, such default
or breach results in the closing conditions set forth in Section 8.2 not being
satisfied as of the Outside Closing Date and such default or breach is not cured
within five (5) days after written notice from Sellers.

10.2       Seller Default. If there is a Seller Default prior to the
consummation of the Closing, then, at Purchaser’s election and as Purchaser’s
exclusive remedy, Purchaser may either (i) terminate this Agreement by giving
written notice thereof to Sellers, in which event Escrow Agent shall return the
Deposit to Purchaser, and neither Sellers nor Purchaser shall have any further
obligation or liability to the other except with respect to those provisions of
this Agreement which expressly survive a termination of this Agreement
(including, for the avoidance of doubt, the provisions contain in Section 9.2);
or (ii) subject to the conditions below, seek specific

43 

 

performance of Sellers’ obligation to consummate the Transactions pursuant to
and in accordance with this Agreement (but without seeking or collecting any
damages, provided that, if specific performance is not available with respect to
any Property due to a Seller having sold or transferred such Property to a third
party, then (x) Purchaser shall be entitled to pursue an action against the
Sellers for Purchaser’s actual damages (but not punitive damages or
consequential damages) as a result of such default related to such Property and
(y) Purchaser also shall have the right to terminate this Agreement, in which
event the Deposit shall be returned to Purchaser. Purchaser may seek specific
performance of Sellers’ obligation to consummate the Transactions only if, as a
condition precedent to initiating such litigation for specific performance, (a)
Purchaser shall not be in default under this Agreement and (b) Purchaser shall
file suit therefor with the applicable court(s) on or before the date that is
ninety (90) days of the occurrence of the applicable Seller Default. If
Purchaser is entitled and fails to file an action for specific performance
within such ninety (90)-day period, then Purchaser shall be deemed to have
elected to terminate this Agreement and receive a return of the Deposit in
accordance with clause (i) above. PURCHASER ACKNOWLEDGES AND AGREES THAT SECTION
9.2 AND THIS SECTION 10.2 ARE INTENDED TO AND DO LIMIT THE REMEDIES AVAILABLE TO
PURCHASER AND SHALL BE PURCHASER’S EXCLUSIVE REMEDIES AGAINST SELLERS HEREUNDER
AND BOTH AT LAW AND IN EQUITY, ARISING FROM OR RELATED TO A SELLER DEFAULT PRIOR
TO THE CONSUMMATION OF THE CLOSING. For the purposes of this Agreement, the term
“Seller Default” shall mean the occurrence of any of the following: (A) the
conditions to Sellers’ obligations to consummate the Transactions set forth in
Article VIII have been satisfied and Sellers default on their obligations under
Section 5.2; or (B) Sellers default in any material respect on any of their
other performance obligations under this Agreement or have breached any of the
Sellers’ Representations, such default or breach results in a Material Adverse
Effect, and such default or breach is not cured on or prior to the Outside
Closing Date.

Article XI
CASUALTY OR CONDEMNATION

11.1       Casualty/Condemnation. If, on or before the Closing Date, one or more
Properties shall be (i) damaged or destroyed by fire or other casualty or (ii)
taken as a result of (or in lieu of) any condemnation or eminent domain
proceeding, and the same does not constitute a Major Loss or Damage, then
Sellers shall promptly notify Purchaser of the same, and this Agreement shall
remain in full force and effect without any reduction in the Purchase Price,
provided that (A) at the Closing, Purchaser shall be entitled to a reduction in
the Purchase Price with respect to the applicable Apartment Complex equal to the
amount of the deductible under the applicable Seller’s property insurance policy
applicable to such casualty with respect to such Apartment Complex, and (B)
Sellers shall assign to Purchaser all of Sellers’ right, title and interest in
and to any and all (i) claims and insurance proceeds Sellers may have or be
entitled to collect, as applicable, under the Seller Insurance Policies in
connection with such casualty and (ii) condemnation awards Sellers may be
entitled to collect in connection with such condemnation, in each case, pursuant
to an assignment and assumption agreement reasonably acceptable to both Sellers
and Purchaser, and less the amount of such proceeds or awards theretofore used
by Sellers in connection with securing and restoring the applicable Property or
Properties. In the event of a Major Loss or Damage affecting a Property,
Purchaser may terminate this Agreement with respect to such Property by sending
written notice thereof to Sellers within ten (10) Business Days after Sellers
send Purchaser

44 

 

written notice of the occurrence of a Major Loss or Damage (but in no event
later than the Closing Date), and, upon any such election, (a) this Agreement
shall be deemed automatically terminated solely with respect to the applicable
Property (and the applicable Property shall no longer constitute a “Property”
for the purposes of this Agreement) effective as of Purchaser’s notice to
Sellers of such election, (b) such Property shall be excluded from the property
to be sold by Sellers to Purchaser at the Closing, (c) the Purchase Price
payable by Purchaser at the Closing shall be reduced by an amount equal to the
Allocated Purchase Price allocated to such Property as set forth on Schedule I
and (d) all of Sellers’ representations, warranties, covenants, liabilities and
obligations, and Purchaser’s rights, with respect to such Property shall be void
and of no further force and effect (without limiting the respective rights and
obligations of the parties with respect to the other Properties and except for
matters which expressly survive the termination of this Agreement). If Purchaser
does not elect to terminate this Agreement with respect to the applicable
Property within such ten (10) Business Day period, then Purchaser shall be
deemed to have elected to proceed with Closing with respect to the subject
Property, in which event the provisions of the first sentence of this Section
11.1 shall apply. Purchaser and Seller agree that for purposes of the Regency
Property this Section 11.1 is an express agreement to the contrary of Section
5-1311 of the New York General Obligations Law.

Article XII
INDEMNIFICATION AND SURVIVAL PROVISIONS

12.1       Survival; Certain Limitations. All of Sellers’ Representations shall
survive the Closing Date for a period of one hundred eighty (180) days (the
“Survival Period”), provided, however, that the Fundamental Sellers’
Representations and the Purchaser’s Representations shall survive until the
expiration of the applicable statute of limitations, and provided further that
none of the other provisions contained in this Agreement shall survive the
Closing except as otherwise expressly provided herein. Each of the Sellers’
Representations under this Agreement shall automatically be null and void and of
no further force and effect after the Survival Period unless, prior to the end
of the Survival Period, Sellers or Purchaser, as applicable, shall have
delivered a Notice of Claim. Notwithstanding anything to the contrary contained
in this Agreement, (i) no individual claim (or series of related claims arising
out of similar circumstances) shall be permitted hereunder with respect to any
breach of any Sellers’ Representations unless the amount of such claim or claims
(excluding costs and expenses of the Purchaser Indemnified Parties incurred in
connection with making such claim or claims under this Agreement) shall exceed
Thirty Five Thousand Dollars ($35,000) (any such claim or series of claims the
amount of which does not exceed such amount, a “De Minimis Claim”), and (ii) if
Purchaser has actual Knowledge prior to the Closing, that any of the Sellers’
Representations is inaccurate, untrue or incorrect, then, after the Closing,
Purchaser shall not be permitted to make any claim and shall have no recourse,
right of action or claim against Sellers pursuant to this Article XII or
otherwise pursuant to this Agreement, or at law or in equity, and Sellers shall
have no liability or obligation to Purchaser with respect to the breach of such
Sellers’ Representations. For the avoidance of doubt, Sellers acknowledge and
agree that any of Sellers’ covenants that expressly survive the Closing shall
survive indefinitely or for such shorter period of time as may be expressly
provided herein.

12.2       Indemnification by Sellers. Subject to the other provisions of this
Article XII and Section 14.22, after the Closing, Sellers shall indemnify and
hold Purchaser, its Designees, its

45 

 

Affiliates and their respective shareholders, members, managers, partners,
directors, trustees, officers, employees and agents (collectively, the
“Purchaser Indemnified Parties”) harmless from and against any and all Damages
suffered by any of the Purchaser Indemnified Parties (without duplication)
resulting from or arising out of any breach of or inaccuracy in any of the
Sellers’ Representations.

12.3       Indemnification by Purchaser. Subject to the other provisions of this
Article XII, Purchaser shall indemnify and hold each Seller, its Affiliates and
the respective shareholders, members, managers, partners, directors, trustees,
officers employees and agents of each of the foregoing (collectively, the
“Seller Indemnified Parties”) harmless from and against any and all Damages
suffered by any of the Seller Indemnified Parties (without duplication)
resulting from or arising out any breach of or inaccuracy in any of the
Purchaser’s Representations.

12.4       Damages Definition; Additional Limitations. For the purposes of this
Agreement, “Damages” shall mean all actions, suits, proceedings, governmental
investigations, injunctions, demands, charges, claims, judgments, awards,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, fees and expenses
(including court costs and reasonable and documented out-of-pocket attorneys’
and accountants’ fees and expenses); provided, however, that “Damages” shall not
include punitive, consequential, special or indirect damages, including business
interruption, loss of future revenue, profits or income, or loss of business
reputation or diminution in value, except to the extent that such damages are
payable by the party to be indemnified to a third party. In no event shall (x)
the Sole-Owner Sellers’ aggregate liability for Damages pursuant to Section 12.2
exceed one and a half percent (1.5%) of the aggregate amount of the Allocated
Purchase Prices for the Sole-Owned Properties (excluding any Properties in
respect of which this Agreement was terminated prior to the Closing pursuant to
the terms of this Agreement) (“Sole-Owned Properties Seller Maximum Liability”),
and no claim may be made by any Purchaser Indemnified Party, and the Sole-Owner
Sellers shall not be liable for, any payments pursuant to Section 12.2 unless
and until the aggregate amount of Damages incurred or suffered by Purchaser
Indemnified Parties (excluding Damages in connection with the De Minimis Claims)
exceeds one-tenth of a percent (0.1%) of the aggregate amount of the Allocated
Purchase Prices for the Sole-Owned Properties (excluding any Properties in
respect of which this Agreement was terminated prior to the Closing pursuant to
the terms of this Agreement) (“Sole-Owner Properties Seller Floor”), in which
event the Sole-Owner Sellers’ liability respecting such claim(s) shall be for
any amount thereof in excess of the Sole-Owned Properties Seller Floor, subject
to the Sole-Owner Properties Seller Maximum Liability, (y) the Pierre Seller’s
aggregate liability for Damages pursuant to Section 12.2 exceed one and a half
percent (1.5%) of the amount of the Allocated Purchase Price for the Pierre
Property (“Pierre Seller Maximum Liability”), and no claim may be made by any
Purchaser Indemnified Party, and the Pierre Seller shall not be liable for, any
payments pursuant to Section 12.2 unless and until the aggregate amount of
Damages incurred or suffered by Purchaser Indemnified Parties (excluding Damages
in connection with the De Minimis Claims) exceeds one-tenth of a percent (0.1%)
of the amount of the Allocated Purchase Price for the Pierre Property (“Pierre
Seller Floor”), in which event the Pierre Seller’s liability respecting such
claim(s) shall be for any amount thereof in excess of the Pierre Seller Floor,
subject to the Pierre Seller Maximum Liability and (z) the Westwood Hills
Seller’s aggregate liability for Damages pursuant to Section 12.2 exceed one and
a half percent (1.5%) of the amount of the Allocated Purchase Price for the
Westwood Hills

46 

 

Property (“Westwood Hills Seller Maximum Liability”), and no claim may be made
by any Purchaser Indemnified Party, and the Westwood Hills Seller shall not be
liable for, any payments pursuant to Section 12.2 unless and until the aggregate
amount of Damages incurred or suffered by Purchaser Indemnified Parties
(excluding Damages in connection with the De Minimis Claims) exceeds one-tenth
of a percent (0.1%) of the amount of the Allocated Purchase Price for the
Westwood Hills Property (“Westwood Hills Seller Floor”), in which event the
Westwood Hills Seller’s liability respecting such claim(s) shall be for any
amount thereof in excess of the Westwood Hills Seller Floor, subject to the
Westwood Hills Seller Maximum Liability. For the avoidance of doubt, determining
whether the applicable threshold for, or maximum liability in respect of,
indemnification has been met with respect to (a) the Sole-Owned Properties is
independent of the amount of claims for breach or inaccuracy of any Sellers’
Representations with respect to the Pierre Property or the Westwood Hills
Property, (b) the Pierre Property is independent of the amount of claims for
breach or inaccuracy of any Sellers’ Representations with respect to the
Sole-Owned Properties or the Westwood Hills Property and (c) the Westwood Hills
Property is independent of the amount of claims for breach or inaccuracy of any
Sellers’ Representations with respect to the Pierre Property or the Sole-Owned
Properties. In no event will (A) any claims for breach or inaccuracy of any
Sellers’ Representations relating to the Sole-Owned Properties be applied
towards determining whether the applicable threshold for, or maximum liability
in respect of, indemnification has been met with respect to any claims for
breach or inaccuracy of any Sellers’ Representations with respect to the Pierre
Property or the Westwood Hills Property, (B) any claims for breach or inaccuracy
of any Sellers’ Representations relating to the Pierre Property be applied
towards determining whether the applicable threshold for, or maximum liability
in respect of, indemnification has been met with respect to any claims for
breach or inaccuracy of any Sellers’ Representations with respect to the
Sole-Owned Properties or the Westwood Hills Property and (C) any claims for
breach or inaccuracy of any Sellers’ Representations relating to the Westwood
Hills be applied towards determining whether the applicable threshold for, or
maximum liability in respect of, indemnification has been met with respect to
any claims for breach or inaccuracy of any Sellers’ Representations with respect
to the Pierre Property or the Sole-Owned Properties. Notwithstanding anything to
the contrary contained in this Agreement, the liability of Sellers with respect
to the Cap Exclusions shall not be subject to any Seller Floor and Seller
Maximum Liability. For purposes hereof, the term “Cap Exclusions” shall mean the
following: (i) a breach of any Fundamental Sellers’ Representations; (ii) a
breach of any certifications in any FIRPTA Affidavit; and (iii) the
indemnification obligations of Sellers with respect to brokers and brokerage
fees, as set forth in Section 3.4. In furtherance of the foregoing
indemnification provisions, the Trust agrees that if at any time within the six
(6) month period immediately following the Closing its sells all or any part of
its interest in the Baltimore Property, then following such sale it shall retain
liquid assets until the expiration of the Survival Period in an amount
sufficient to satisfy its indemnification obligations pursuant to this Section
12.4 (and if there is a Noticed Claim which remains outstanding following the
expiration of the Survival Period, then in an amount reasonably sufficient to
satisfy its indemnification obligations in respect of such Noticed Claim for so
long as it shall remain outstanding).

12.5       REIT Savings Clause. Notwithstanding anything in this Agreement to
the contrary, in no event shall any amount paid to any Seller Indemnified Party
pursuant to this Agreement (including the Deposit, to the extent Sellers are
entitled thereto pursuant to this

47 

 

Agreement) in any taxable year exceed the maximum amount that can be paid in
such year without causing any Seller Indemnified Party, or any direct or
indirect owner of such Seller Indemnified Party, in each case, which is a real
estate investment trust, to fail to meet the requirements of Sections 856(c)(2)
and (3) of the Code for such year, determined as if the payment of such amount
did not constitute income described in Section 856(C)(2)(A)-(I) and Section
856(C)(3)(A)-(I) of the Code, as determined by Sellers’ independent accountants.
If the maximum amount that can be paid for any taxable year under the preceding
sentence is less than the amount which Purchaser would otherwise be obligated to
pay to the Seller Indemnified Parties pursuant to this Article XII (plus the
amount of the Deposit, to the extent Seller are entitled thereto pursuant to
this Agreement) (the aggregate amount of such deficit, the “Deficit Amount”),
Sellers shall so notify Purchaser, and Purchaser shall place the Deficit Amount
in escrow and shall not execute any instrumentation permitting a release of any
portion thereof to the applicable Seller Indemnified Party, and the applicable
Seller Indemnified Party shall not be entitled to any such amount, unless and
until Purchaser and the escrow holder receive a written request therefor from
Sellers, in which event the escrow holder shall pay such maximum amount. The
obligation of Purchaser and the escrow holder to pay any Deficit Amounts shall
terminate ten (10) years from the date of this Agreement and, upon such date,
the escrow holder shall remit any remaining funds in escrow to Purchaser and
Purchaser shall have no obligation to make any further payments to the Seller
Indemnified Parties notwithstanding that such Deficit Amounts have not been paid
as of such date. For all purposes of this Agreement, (i) the Seller Indemnified
Parties release Purchaser from any claims that may arise from actions taken by
Purchaser at the request of the Seller Indemnified Parties (or their respective
agents) under this Section 12.5, and (ii) the right of the Seller Indemnified
Parties to receive Deficit Amounts shall be limited to the amounts in escrow and
Purchaser shall have no obligation to make any further payments to any Seller
Indemnified Party with respect to such Deficit Amounts.

12.6       Indemnification Procedures.

12.6.1       The party or the parties making a claim for indemnification under
Section 12.2 or Section 12.3 shall be, for purposes of this Agreement, referred
to as the “Indemnified Person” and the party or the parties against whom such
claims are asserted shall be, for purposes of this Agreement, referred to as the
“Indemnifying Person”.

12.6.2       Any Indemnified Person shall make any claim for indemnification
pursuant to Section 12.2 or Section 12.3, as applicable, by notifying the
Indemnifying Person prior to the expiration of the Survival Period by the
delivery of a written notice (each such notice, a “Notice of Claim” and each
such claim identified therein, a “Noticed Claim”) setting forth: (i) the
particular representation and warranty and specifying in reasonable detail the
nature of the claim and the factual and legal basis for any such claim and the
provisions of this Agreement upon which such claim is made; (ii) the dollar
amount of the Damages relating to the Noticed Claim (or a reasonable estimate of
such amount); (iii) the aggregate dollar amount of all prior Noticed Claims by
such Indemnified Person to date (or a reasonable estimate of such amount); (iv)
whether the applicable Seller Floor (if applicable) has been exceeded; and (v)
the aggregate dollar amount of Damages paid by the Indemnifying Person to date.
If Purchaser and Sellers cannot mutually agree upon the settlement of any such
Noticed Claim, the Indemnified Person shall be deemed to have waived its right
to pursue such Noticed Claim (and any right to collect from the Indemnified
Person

48 

 

with respect to such Noticed Claim), unless the Indemnified Person brings a
court action with respect to such Noticed Claim on or prior to the date that is
ninety (90) days after the expiration of the Survival Period.

12.6.3       In the event of any claim, demand, suit, action, arbitration,
investigation, inquiry or proceeding brought by a third party against any
Indemnified Person which is covered by the indemnification provisions of this
Article XII (in each such case, a “Third-Party Claim”), the Indemnified Person
shall promptly cause written notice of the assertion of such Third-Party Claim
to be forwarded to the Indemnifying Person (a “Notice of Third-Party Claim”).
The failure of the Indemnified Person to deliver promptly to the Indemnifying
Person a Notice of Third-Party Claim shall not release, waive or otherwise
affect the Indemnifying Person’s obligations with respect thereto except to the
extent that the Indemnifying Person is actually prejudiced as a result of such
failure. Subject to Section 12.6.4, in the event an Indemnifying Person accepts
and assumes responsibility for indemnification pursuant to this Article XII with
respect to any Third-Party Claim, such Indemnifying Person on behalf of the
Indemnified Person shall have the right to elect to assume control of the
defense of any Third-Party Claim with counsel reasonably acceptable to the
Indemnified Person. The costs and expenses incurred by the Indemnifying Person
in connection with such defense (including reasonable out-of-pocket attorneys’
fees, other professionals’ and experts’ fees and court or arbitration costs)
shall be paid by the Indemnifying Person (subject to the applicable Seller Floor
and Seller Maximum Liability, if applicable). In the event of a conflict of
interest between the Indemnifying Person and the Indemnified Person as to the
defense of any Third-Party Claim for which indemnification is required
hereunder, the Indemnified Person may engage counsel of its own choice to
participate in the defense of such Third-Party Claim (which counsel shall be
reasonably satisfactory to the Indemnifying Person) at the expense of the
Indemnifying Person (subject to the applicable Seller Floor and Seller Maximum
Liability, if applicable). No Indemnified Person shall settle any Third-Party
Claim without the prior approval of the Indemnifying Person, such approval not
to be unreasonably withheld or delayed.

12.6.4       With respect to the defense of any Third-Party Claim, the
Indemnifying Person shall not be entitled to continue control of such defense
and shall pay the costs and expenses incurred by the Indemnified Person in
connection with such defense (subject to the applicable Seller Floor and Seller
Maximum Liability, if applicable) if the Indemnifying Person fails to assume
control of the defense or materially fails to defend such claim.

12.6.5       If the Indemnifying Person has the right to and does elect to
defend any Third-Party Claim, the Indemnifying Person shall: (i) conduct the
defense of such Third-Party Claim actively and diligently and keep the
Indemnified Person reasonably informed of material developments in the
Third-Party Claim at all stages thereof and (ii) to the extent practicable,
permit the Indemnified Person and its counsel to confer with the Indemnifying
Person regarding the conduct of the defense thereof. Each of the Indemnified
Party and the Indemnifying Party will make available to each other and each
other’s counsel and accountants, without charge, all of their and their
Affiliates’ books and records relating or responsive to the Third-Party Claim,
and each party (at its own expense) will render to the other party such
assistance as may be reasonably required in order to ensure the proper and
adequate defense thereof and shall furnish such records, information and
testimony and attend such conferences, discovery proceedings, hearings, trials

49 

 

and appeals as may be reasonably requested by the other party in connection
therewith; provided, however, that the Indemnified Person shall not have an
obligation to disclose any information or documents that are proprietary,
subject to confidentiality restrictions (unless the recipient of such
information signs a confidentiality agreement reasonably acceptable to the
disclosing Indemnified Person) or privileged (including pursuant to any
attorney-client privilege). The Indemnified Person and the Indemnifying Person
shall render to each other, at the sole cost and expense of the Indemnifying
Person such other assistance and cooperation as may reasonably be required to
ensure the proper and adequate defense of such claim or demand.

12.6.6       If the Indemnifying Person has the right to and does elect to
defend any Third-Party Claim, the Indemnifying Person shall have the right to
enter into any settlement of a Third-Party Claim without the consent of the
Indemnified Person, provided that (i) such settlement does not involve any
injunctive or other equitable relief or the contractual equivalent thereof
binding upon the Indemnified Person, (ii) such settlement expressly and
unconditionally releases the Indemnified Person from all liabilities and
obligations with respect to such claim, with prejudice and (iii) such settlement
does not include an admission of wrongdoing by the Indemnified Person; provided,
further, that no settlement by the Indemnifying Person of a Third-Party Claim
shall limit or reduce the right of the Indemnified Person to indemnity hereunder
for all Damages they may incur arising out of or resulting from such Third-Party
Claim to the extent such Indemnified Person is otherwise entitled to be
indemnified pursuant to this Article XII.

12.6.7       The amount of any indemnifiable Damages shall be determined net of
(i) payments recovered by such Indemnified Person under any insurance policy
with respect to such Damages, and (ii) any net prior recovery by such
Indemnified Person from any other third party with respect to such Damages. If
the Indemnifying Person has paid the Indemnified Person pursuant to the
provisions of this Article XII with respect to a claim for which payment of the
type described in clauses (i) and (ii) of the preceding sentence is subsequently
received by the Indemnified Person, the Indemnified Person will promptly pay to
the Indemnifying Person the amount of such duplicative payment (net of any costs
of recovery), provided that the amount of such payment will not exceed the sums
paid by the Indemnifying Person to the Indemnified Person in connection with the
applicable claim.

12.6.8       Sellers and Purchaser shall use reasonable best efforts to (i)
mitigate any Damages, whether by asserting claims against third parties or by
otherwise qualifying for a benefit that would reduce or eliminate Damages for
which indemnification would otherwise be available under this Article XII, and
(ii) recover any Losses from applicable insurance policies or third parties..

12.6.9       The terms of this Section 12.6 are not intended to modify in any
manner the limitations on liability set forth in Section 12.4.

12.7       Exclusive Remedy. Purchaser and Sellers acknowledge and agree that,
following the Closing, the indemnification provisions of this Article XII shall
be the exclusive rights and remedy of Purchaser (and all other Purchaser
Indemnified Parties) and Sellers (and all other Seller Indemnified Parties)
under this Agreement with respect to any breach of the Sellers’ Representations
or the Purchaser’s Representations, respectively.

50 

 

12.8       Manner of Payment. Any indemnification payments required to be made
by Sellers or Purchaser pursuant to this Article XII shall be effected by wire
transfer of immediately available funds to the accounts designated by the other
party, within five (5) days after the final determination thereof.

12.9       Survival. The provisions of this Article XII shall survive the
Closing, subject to the limitations on such survival set forth in Sections 12.1
and 12.6.2 above.

Article XIII
AS-IS SALE AND PURCHASE

Purchaser acknowledges that the provisions of this Article XIII have been
required by Sellers as a material inducement to enter into this Agreement and
the Transactions, and the intent and effect of such provisions have been
explained to Purchaser by Purchaser’s counsel and have been understood and
agreed to by Purchaser.

As a material inducement to Sellers to enter into this Agreement and to convey
the Properties to Purchaser, Purchaser hereby acknowledges and agrees that:

13.1       AS-IS. Subject to the Sellers’ Representations and Sellers’ covenants
expressly set forth in this Agreement and/or the Seller Closing Documents,
Purchaser is purchasing the Properties in their existing condition (whether
physical, financial or otherwise) on the Closing Date, “AS-IS, WHERE-IS, WITH
ALL FAULTS” and has made or has waived all inspections and investigations of the
Properties (and all information and documents relating thereto) and their
respective vicinities which Purchaser believes are necessary to protect its own
interest in, and its contemplated use of, the Properties.

13.2       No Representations. Except (in the case of Sellers) for the Sellers’
Representations and Sellers’ covenants expressly set forth in this Agreement
and/or the Seller Closing Documents, no Seller, Affiliate of any Seller, or
officer, director, partner, member, shareholder, employee, agent,
representative, accountant, advisor, attorney, principal, consultant,
contractor, successor or assign of any Seller or Affiliate thereof (each Seller
and all of the other Persons described above in this sentence, collectively, the
“Exculpated Parties”) has made any representation, warranty, inducement,
promise, agreement, assurance or statement, oral or written, of any kind
whatsoever to Purchaser upon which Purchaser is relying, or in connection with
which Purchaser has made or will make any decisions concerning the Properties or
its vicinity, including with respect to (i) the ownership, operation,
management, leasing, use, condition, value or financial earning capacity of the
Properties or the business of any Seller, (ii) continued occupancy levels,
entitlements, condemnation actions (current or prospective) or casualty events
with respect to the Properties, (iii) the value, or the actual or projected
revenue and expenses, of the Properties, (iv) the current or future real estate
tax liability, assessment or valuation of the Properties, (v) the availability
of any financing for the alteration, renovation or operation of the Properties
from any source, (vi) compliance of the Properties or any Seller with any
applicable law (including any applicable Environmental Law) or contractual or
legal obligations, (vii) the existence or absence of any environmental hazards
or other conditions on the Properties (including the presence of asbestos or
other Hazardous Materials), or (viii) the permissibility, feasibility, or
convertibility of

51 

 

all or any portion of the Properties for any particular use or purpose,
including its present or future prospects for sale, lease, development,
occupancy or suitability as security for financing.

13.3       No Implied Warranties. Except for the Sellers’ Representations, each
Seller hereby specifically disclaims: (i) all warranties implied by law arising
out of or with respect to the execution of this Agreement, any aspect or element
of any Property or the performance of Sellers’ obligations hereunder, including
all implied warranties of merchantability, habitability and/or fitness for a
particular purpose; and (ii) any warranty, guaranty or representation, oral or
written, past, present or future, of, as to, or concerning (x) the nature and
condition of the Properties, including the water, soil and geology, the
suitability thereof and of the Properties for any and all activities and uses
which Purchaser may elect to conduct thereon, the existence or absence of any
environmental hazards or conditions thereon (including to the presence of
asbestos or other Hazardous Materials) or compliance with applicable
Environmental Laws; (y) the nature and extent of any right-of-way, lease,
possession, lien, encumbrance, license, reservation, current or potential
eminent domain proceedings, condition or other matter; or (z) the compliance of
the Properties or their operation with any applicable law.

13.4       Documents and Information Supplied by Seller. Except for the Sellers’
Representations, Purchaser specifically acknowledges and agrees that (i) no
Seller or any other Exculpated Party has made any representation or warranty of
any nature concerning the content, accuracy, truthfulness or completeness of any
documents or information delivered or made available to Purchaser by any Seller
or any other Exculpated Party, including the Materials, or their suitability for
any purpose, (ii) Purchaser shall not in any way be entitled to rely upon the
accuracy, truthfulness or completeness of any such documents or information,
(iii) Purchaser has undertaken such investigations or inspections of the
Properties as Purchaser deems necessary and appropriate, and (iv) Purchaser is
relying solely and exclusively upon such investigations and inspections and not
on the Materials or any other documents or information provided to Purchaser by
any Seller or any other Exculpated Party. As to the Materials, and without
prejudice to Purchaser’s rights with respect to the Sellers’ Representations,
Purchaser specifically acknowledges that they may have been prepared by third
parties with whom Purchaser has no privity, and Purchaser acknowledges and
agrees that no warranty or representation, express or implied, has been made,
nor shall any be deemed to have been made, to Purchaser with respect to any or
all of the Materials, either by any Seller, any other Exculpated Party or by any
third parties that prepared the same. Purchaser acknowledges and agrees that,
except as otherwise expressly set forth in the Sellers’ Representations,
Purchaser shall not have any recourse against any Exculpated Party, and hereby
fully releases each Exculpated Party from any liability, and irrevocably waives
any right to maintain any claim or cause of action against any Exculpated Party,
in the event of incompleteness of, any errors in or omissions from the
Materials.

13.5       Assumption and Release. As of the Closing, and without prejudice to
Purchaser’s rights with respect to the Sellers’ Representations, Purchaser
hereby (i) assumes the risk of all adverse matters, including adverse physical
conditions, defects, including construction defects, and environmental, health,
safety and welfare matters and conditions, which may or may not have been
revealed by Purchaser’s investigation and evaluation of the Properties, and (ii)
fully and irrevocably releases each and every Seller from any and all claims
that Purchaser may have against any Seller for any liability arising from or
related to any matter of any nature relating to, and any

52 

 

condition of, any Property, or any portion thereof, or the purchase of the
Properties by Purchaser from Sellers pursuant to this Agreement, including any
liability arising in connection with any latent or patent construction defects
therein, errors or omissions relating thereto, compliance thereof with
applicable law, the existence or absence of any environmental hazards or
conditions thereon (including the presence of any Hazardous Materials) and other
environmental matters within, under or upon, or in the vicinity of any Property,
any statutory or common law right Purchaser may have to receive disclosures from
Sellers, or any other condition or circumstance affecting any Property, its
financial viability, use or operation. In addition to any liability of which
Purchaser is presently aware or which Purchaser presently suspects to exist,
this release includes all liability of which Purchaser is presently unaware or
which Purchaser does not presently suspect to exist in its favor, including any
such liability which, if known by Purchaser, would materially affect Purchaser’s
release of Sellers pursuant to this Section 13.5.

Notwithstanding anything to the contrary set forth in this Section 13.5, the
foregoing release is not intended to and does not cover (i) any Damages incurred
by any Purchaser Indemnified Parties arising from any breach of the Sellers’
Representations or (ii) any other breach by any Seller of an express covenant of
such Seller under this Agreement or any Seller Closing Documents.

13.6       Survival. The provisions of this Article XIII shall survive the
Closing and any earlier termination of this Agreement.

Article XIV
MISCELLANEOUS

14.1       Binding Effect. This Agreement shall not be binding on either party
until executed by both Purchaser and Sellers.

14.2       Counterparts; Facsimile and Electronic Signatures. This Agreement may
be executed in a number of identical counterparts. This Agreement may be
executed by facsimile signatures or electronic delivery of signatures which
shall be binding on the parties hereto.

14.3       Further Assurances. Each party agrees that it will, upon a request by
the other party, execute and deliver such other documents and take such other
action, whether prior or subsequent to the Closing, as may be reasonably
required to consummate the Transactions pursuant to, and in accordance with, the
terms of this Agreement, provided the same does not result in any increased
liability to such first party or result in any cost or expense to such first
party that it has not expressly undertaken to pay under this Agreement.

14.4       Recording. Purchaser shall not cause or allow this Agreement or any
contract or other document related hereto (other than the Deeds, which Purchaser
shall cause to be recorded in the applicable real property recording offices
after the Closing), nor any memorandum or other evidence hereof, to be recorded
or become a public record without Sellers’ prior written consent, which consent
may be withheld in Sellers’ sole discretion. If Purchaser records this Agreement
or any other memorandum or evidence hereof, Purchaser shall be in material
default of its obligations under this Agreement. Purchaser hereby appoints each
Seller as Purchaser’s attorney-in-fact to prepare and record any documents
necessary to effect the nullification and release of this

53 

 

Agreement or other memorandum or evidence thereof from the public records. This
appointment shall be coupled with an interest and irrevocable and shall survive
the termination of this Agreement.

14.5       Relationship of Parties. Each of each Seller and Purchaser
acknowledges and agrees that the relationship established between the parties
pursuant to this Agreement is only that of a seller and a purchaser of property.
Neither Purchaser nor any Seller is, nor shall either hold itself out to be, the
agent, employee, joint venturer or partner of the other party.

14.6       Exhibits; Annexes; Schedules. All Exhibits, Annexes and Schedules
attached hereto are a part of this Agreement for all purposes.

14.7       Construction. Captions, headings and titles of this Agreement are
solely for convenience of reference and shall in no way affect, limit, amplify,
or modify the terms and provisions of this Agreement. No provision of this
Agreement shall be construed in favor of, or against, any particular party by
reason of any presumption with respect to the drafting of this Agreement; each
party, being represented by counsel, has fully participated in the negotiation
of this instrument.

14.8       Number and Gender of Words. Whenever herein the singular number is
used, the same shall include the plural where appropriate, and words of any
gender shall include each other gender where appropriate.

14.9       Successors and Assigns. Purchaser shall have no right to assign this
Agreement, except to a Designee; provided, however, that Purchaser shall have
the right to direct that deeds and other closing documents be entered into by
one or more affiliates of Purchaser. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.

14.10       Multiple Purchasers. If Purchaser directs any designees to take
title pursuant to and in accordance with Section 14.9, the term “Purchaser”, as
used in this Agreement, shall mean Purchaser and each such Designee and designee
collectively and all of the representations, warranties and covenants of
Purchaser hereunder shall be the representations, warranties and covenants of
Purchaser and each such Designee jointly and severally (and the representation
and warranty contained in the first sentence of Section 6.3.1 with respect to
any Designee shall be deemed supplemented at the Closing to refer to the
applicable entity form and jurisdiction with respect to such Designee).

14.11       Third-Party Beneficiaries. The provisions of this Agreement and of
the other agreements, documents and instruments to be executed and delivered
pursuant hereto are and will be for the benefit of the parties hereto only and
are not for the benefit of any third party, and accordingly, no third party
shall have the right to enforce the provisions of this Agreement or of any such
other agreements, documents or instruments, provided, however, that (i) each
Exculpated Party shall be a third-party beneficiary of Article XIII and (ii)
each Indemnified Person shall be a third-party beneficiary of Article XII.

54 

 

14.12       No Personal Liability. Purchaser acknowledges that this Agreement is
entered into by and among each Seller and Purchaser, and Purchaser agrees that
none of the Seller Indemnified Parties (other than Sellers) shall have any
personal liability under this Agreement or any other agreements, documents or
instruments executed in connection with the Transactions. Each Seller
acknowledges that this Agreement is entered into by and among Purchaser and each
Seller, and each Seller agrees that none of the Purchaser Indemnified Parties
(other than Purchaser) shall have any personal liability under this Agreement or
any other agreements, documents or instruments executed in connection with the
Transactions.

14.13       Time of the Essence. It is expressly agreed by the parties hereto
that time is of the essence with respect to this Agreement and any aspect
thereof.

14.14       Waiver. No delay or omission to exercise any right or power accruing
upon any default, omission, or failure of performance hereunder shall impair any
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. No waiver, amendment, release, or modification of this Agreement
shall be established by conduct, custom, or course of dealing and all waivers
must be in writing and signed by the waiving party.

14.15       Entire Agreement. This Agreement, together with the Confidentiality
Agreement, the Seller Closing Documents and the Purchaser Closing Documents,
embodies the entire agreement between the parties hereto concerning the subject
matter hereof and supersedes all prior conversations, proposals, negotiations,
understandings and contracts, whether written or oral.

14.16       Amendments. This Agreement shall not be amended, altered, changed,
modified, supplemented or rescinded in any manner except by a written contract
executed by all of the parties; provided, that nothing contained in this Section
14.16 shall be deemed to limit or modify Sellers’ rights under Section 6.2.

14.17       Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Agreement shall not be affected or impaired
thereby and (b) the parties shall endeavor in good-faith negotiations to replace
the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

14.18       Governing Law and Venue. This Agreement shall be construed and
enforced in accordance with the laws of the State of New Jersey, without giving
effect to any principles regarding conflict of laws to the extent such
principles would require or permit the application of the laws of another
jurisdiction. Each of each Seller and Purchaser shall submit to the exclusive
jurisdiction of the state courts of the State of New Jersey and to the
jurisdiction of the United States District Court for the District of New Jersey
for the purposes of each and every suit, action or other proceeding arising out
of or based upon this Agreement or the subject matter hereof brought by the
parties, it being expressly understood and agreed that this consent to
jurisdiction shall be self-operative and no further instrument or action, other
than service of process in one of the manners specified in this Agreement or as
otherwise permitted by such law, shall be necessary in order to

55 

 

confer jurisdiction upon a party in any such court. Each of each Seller and
Purchaser shall waive, and agree not to assert, by way of motion, as a defense,
or otherwise, in any suit, action or proceeding brought in any such court, any
claim that such Seller or Purchaser is not subject personally to the
jurisdiction of the above-named courts, that such Seller’s or Purchaser’s
property is exempt or immune from attachment or execution, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court. Notwithstanding the foregoing,
(A) to the extent that any remedy hereunder with respect to the Regency Property
requires that an action be brought in a court in the State of New York, such
action may be commenced and prosecuted in such court and each of Purchaser and
Sellers submit to the jurisdiction of the state courts of the State of New York
and to the jurisdiction of the United States District Court for the Southern
District of New York for such purposes, and (B) to the extent New York law
mandatorily applies in any proceeding referenced in clause (A), New York law
shall govern to such extent.

14.19       WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY
ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT. The
terms and provisions of this Section 14.19 shall survive the Closing and any
earlier termination of this Agreement.

14.20       Confidentiality.

14.20.1       Purchaser acknowledges and agrees that (i) it is subject to the
Confidentiality Agreement, the terms and conditions of which are hereby
incorporated by reference as if fully set forth herein, (ii) notwithstanding
anything in the Confidentiality Agreement to the contrary, the execution and
delivery of this Agreement shall not terminate, or otherwise affect or limit the
terms of, the Confidentiality Agreement, except as expressly stated herein, and
the Confidentiality Agreement shall remain in full force and effect, and (iii)
the existence and terms of this Agreement shall constitute “Evaluation Material”
under, and be held confidential subject to the terms of, the Confidentiality
Agreement. Notwithstanding the above, Purchaser shall have the right to (x)
disclose the foregoing to the officers, directors, members, controlling persons,
employees, attorneys, accountants, lenders, potential equity sources, advisors
and consultants of Purchaser and its affiliates, and (y) make such disclosures
as may be required in connection with soliciting any related consents or
approvals (including in connection with seeking any Loan Assumption Approval) or
by applicable laws.

14.20.2       Sellers shall keep the existence and terms of this Agreement
confidential, provided that Sellers shall have the right to (i) disclose the
foregoing to their respective joint venture partners and affiliates (and joint
venture partners of their respective affiliates) and the officers, directors,
members, controlling persons, employees, attorneys, accountants, lenders,
advisors and consultants of Sellers, the aforesaid joint venture partners and
their respective affiliates and (ii) make such disclosures as may be required in
connection with soliciting any related consents or approvals (including in
connection with seeking any Loan Assumption Approval) or by applicable laws or
by the regulations, rules and policies of any

56 

 

applicable regulatory body or stock exchange, including, without limitation, the
filing of a copy of this Agreement with the Securities and Exchange Commission.

14.21       Notices. All notices, consents, approvals, acceptances, demands,
waivers or other communications required or permitted hereunder must be in
writing to be effective and shall be personally delivered, sent by registered or
certified mail, return receipt requested, delivered via overnight mail (via
Federal Express or similar overnight courier) or delivery by email, and shall be
deemed received upon the date of delivery, if personally delivered, delivered
via overnight mail or delivered by email (provided, however, if such delivery
occurs at any time other than normal business hours on a Business Day at the
location of receipt, the same shall be deemed delivered on the next Business
Day) or three (3) Business Days after the date of posting by U.S. postal
service, if mailed. Notwithstanding the foregoing, email may not be the sole
means of delivery for any notice to be effective. All such notices or
communications shall be addressed as follows:

If to any Seller:                   c/o Hekemian & Co., Inc.

505 Main Street

Hackensack, New Jersey 07601

Attention: Allan Tubin

Email: allan@hekemian.com

 

with a copy to:

 

Paul, Weiss, Rifkind, Wharton & Garrison

1285 Avenue of the Americas

New York, New York 10019

Attention: Bruce Gutenplan and Mitch Berg

Email: bgutenplan@paulweiss.com and mberg@paulweiss.com

 

 

If to Purchaser:                   c/o Kushner Companies

666 Fifth Avenue, 15th Floor

New York, New York 10103

Attention: Ben Curtiss and Emily Wolf

Email: bcurtiss@kushner.com and ewolf@kushner.com

 

with a copy to:

 

Brach Eichler LLC

101 Eisenhower Parkway

Roseland, New Jersey 07068

Attention: Alan R. Hammer

Email: ahammer@bracheichler.com

 

57 

 

Each party shall be entitled to change its address for notices and other
communications required or permitted hereunder from time to time by delivering
to the other party notice thereof in accordance with this Section 14.21. Any
refusal to accept delivery of a notice, shall be deemed to constitute delivery
when delivery was attempted.

14.22       Joint and Several.

14.22.1              The covenants, representations, indemnities and other
obligations of each of the Sole-Owner Sellers under this Agreement shall be
limited to matters related to the Sole-Owner Sellers and such Sellers’
Properties. The Sole-Owner Sellers shall be jointly and severally liable with
respect to such covenants, representations, indemnities and obligations, but
shall not be liable with respect to the representations, covenants, indemnities
and obligations of any Co-Owner Seller or in respect of any Co-Owned Property.

14.22.2              The covenants, representations, indemnities and other
obligations of the Westwood Hills Seller under this Agreement shall be limited
to matters related to the Westwood Hills Seller and the Westwood Hills Property.
Without limiting the foregoing, the Westwood Hills Seller shall not be liable
with respect to the representations, covenants, indemnities and obligations of
the Pierre Property Seller or any Sole-Owner Seller, or in respect of the Pierre
Property or any Sole-Owned Property.

14.22.3       The covenants, representations, indemnities and other obligations
of the Pierre Seller under this Agreement shall be limited to matters related to
the Pierre Seller and the Pierre Property. Without limiting the foregoing, the
Pierre Seller shall not be liable with respect to the representations,
covenants, indemnities and obligations of the Westwood Hills Seller or any
Sole-Owner Seller, or in respect of the Westwood Hills Property or any
Sole-Owned Property.

14.23       1031 Exchange.

14.23.1              Purchaser understands that one or more Sellers may seek to
structure the disposition of one or more of the Properties (including, if
applicable, tenancy-in-common interests in the Pierre Property following any TIC
Conversion) in such a way that will afford the applicable Sellers (or the TIC
Owners) an opportunity to take advantage of the provisions of Section 1031 of
the Code governing tax free exchanges and reorganizations. Purchaser shall
reasonably cooperate with Sellers (or the TIC Owners) (at Sellers’ (or the TIC
Owners’) sole cost and expense) in such efforts. Without limiting the generality
of the foregoing, Purchaser, if directed by one or more Sellers (or TIC Owners),
shall make all payments on account of the Allocated Purchase Price in respect of
the applicable Apartment Complexes (including, at the direction of Sellers, the
allocable portion of the Deposit) (or the portion of the Applicable Purchase
Price allocable to the applicable TIC Owners), to a Qualified Intermediary (as
defined in the Code) and not to Sellers (or the applicable TIC Owners), directly
or indirectly. Each Seller (and TIC Owner) reserves the right, in effectuating
such like-kind exchange, to assign such Seller’s (or TIC Owner’s) rights in, but
not its obligations, under this Agreement to the Qualified Intermediary and
Purchaser hereby consents to such assignment. Purchaser agrees to execute such
reasonable documents and otherwise to cooperate in such respects as may
reasonably be requested by such Seller (or TIC Owner) in order to enable such
Seller (or TIC Owner) to carry out a like-kind exchange as aforesaid. Subject to
Section 7.3 with respect to the Pierre Property, the like kind

58 

 

exchange shall not diminish Purchaser’s rights (or Sellers’ (or TIC Owners’)
liabilities or obligations), nor increase Purchaser’s liabilities or
obligations, in any manner. Subject to Section 14.22, Sellers (and each TIC
Owner) agree to indemnify, defend and hold harmless Purchaser from and against
all loss, liability, damages and disbursements, costs and expenses (including
reasonable counsel fees and disbursements) resulting from a Seller’s (or such
TIC Owner’s) election to structure the disposition of its interests as a
like-kind exchange.

14.23.2              Sellers hereby acknowledges that it is the intent of
Purchaser, in connection with its acquisition of one or more of the Properties,
to potentially take advantage of the provisions of Section 1031 of the Code
governing tax free exchanges and reorganizations. In connection therewith,
Sellers agree and acknowledge that Purchaser may designate that title to one or
more Properties be conveyed to a Qualified Intermediary for the purpose of
completing such an exchange. Sellers agree to reasonably cooperate with
Purchaser and any Qualified Intermediary as shall be reasonably necessary to
complete the exchange, including the execution of any documentation required by
any Qualified Intermediary for purposes of completing the exchange, provided
that such cooperation shall not impose additional liability or expense upon
Sellers. Purchaser acknowledges and agrees that in no event shall any of
Purchaser’s other rights or obligations hereunder, including any rights to
indemnification under this Agreement, be transferred to a Qualified
Intermediary. Purchaser’s exercise of its rights under this Section 14.23.2
shall not delay the Closing or cause any additional expense to Sellers.

14.24       Prevailing Party’s Attorneys’ Fees. In connection with any
litigation initiated by a party hereto against the other party hereto arising
out of this Agreement, the party adjudicated to be the substantially prevailing
party shall be entitled to recover reasonable attorneys’ fees and disbursements
from the other party.

14.25       Survival. The provisions of this Article XIV shall survive the
Closing and any earlier termination of this Agreement (except that the
provisions of Section 14.3 shall not survive any termination of this Agreement).

[Remainder of Page Intentionally Left Blank]

59 

 

NOW, THEREFORE, the parties hereto have executed this Agreement as of the date
first set forth above.

Sellers:

  First Real Estate Investment Trust OF NEW JERSEY,   a New Jersey real estate
investment trust               By: /s/ Robert S. Hekemian, Jr.      Name: Robert
S. Hekemian, Jr.      Title:  President and Chief Executive Officer

 

 

 

 

[Signatures continue on following page]

 

 

 

[Signature Page to Purchase and Sale Agreement]

 

 

 

Berdan Court, LLC,

a Delaware limited liability company

 

By: First Real Estate Investment Trust of New Jersey, a New Jersey real estate
investment trust, its Sole Member and Sole Manager

 

              By: /s/ Robert S. Hekemian, Jr.     Name: Robert S. Hekemian, Jr.
    Title:  President and Chief Executive Officer

[Signatures continue on following page]

 

 

 

[Signature Page to Purchase and Sale Agreement]

 

 

 

Pierre Towers, LLC,

a New Jersey limited liability company

 

By: S and A Commercial Associates Limited Partnership, a Maryland limited
partnership, its sole member

 

By: First Real Estate Investment Trust of New Jersey, a New Jersey real estate
investment trust, its general partner

 

              By: /s/ Robert S. Hekemian, Jr.     Name: Robert S. Hekemian, Jr.
    Title:  President and Chief Executive Officer

 

[Signatures continue on following page]

 

 

 

[Signature Page to Purchase and Sale Agreement]

 

 

 

FREIT Regency, LLC,

a New Jersey limited liability company

 

By: First Real Estate Investment Trust of New Jersey, a New Jersey real estate
investment trust, its sole Member and Manager

 

              By: /s/ Robert S. Hekemian, Jr.     Name: Robert S. Hekemian, Jr.
    Title:  President and Chief Executive Officer

 

[Signatures continue on following page]

 

 

 

[Signature Page to Purchase and Sale Agreement]

 

 

 

Station PlaCE on Monmouth LLC,

a New Jersey limited liability company

 

By: First Real Estate Investment Trust of New Jersey, a New Jersey real estate
investment trust, its sole Member and Manager

 

              By: /s/ Robert S. Hekemian, Jr.     Name: Robert S. Hekemian, Jr.
    Title:  President and Chief Executive Officer

 

 

[Signatures continue on following page]

 

 

 

[Signature Page to Purchase and Sale Agreement]

 

 

 

Westwood Hills, L.L.C.,

a New Jersey limited liability company

 

By: First Real Estate Investment Trust of New Jersey, a New Jersey real estate
investment trust, its managing member

 

              By: /s/ Robert S. Hekemian, Jr.     Name: Robert S. Hekemian, Jr.
    Title:  President and Chief Executive Officer

 

 

 

[Signature Page to Purchase and Sale Agreement]

 

 

Purchaser:

 

SINATRA PROPERTIES LLC,

a Delaware limited liability company

 

              By: /s/ Laurent Morali     Name: Laurent Morali    

Title: Authorized Signatory

 

 

 

 

[Signature Page to Purchase and Sale Agreement]

 

 

 

ANNEX 1

DEFINED TERMS

“Acceptable Confidentiality Agreement” means a confidentiality agreement
containing terms as to confidentiality that are substantially the same, in all
material respects, as those set forth in the Confidentiality Agreement.

“Access Agreement’ means that certain Property Access Agreement dated November
26, 2019, between Sellers and Kushner Realty Acquisition LLC, as the same may
have been, or may hereafter be, supplemented, amended, restated or otherwise
modified.

“Acquisition Proposal” means any indication of interest, offer or proposal,
including any amendment or modification to any existing indication of interest,
offer or proposal, contemplating an Acquisition Transaction (other than, for the
avoidance of doubt, any indication of interest, offer or proposal made or
submitted by or on behalf of Purchaser or one or more of its Affiliates).

“Acquisition Transaction” means any transaction (including any single- or
multi-step transaction) or series of related transactions with any Person or
“group” (as defined in the Exchange Act) involving (x) the issuance to such
Person or “group” or acquisition by such Person or “group” of, or a tender offer
or exchange offer that if consummated would result in such Person or “group”
beneficially owning (within the meaning of Section 13(d) of the Exchange Act),
at least fifty percent (50%) of the outstanding equity interests in the Trust or
(y) the acquisition by such Person or “group” of at least fifty percent (50%) of
the consolidated assets, or assets generating at least fifty percent (50%) of
the consolidated net revenue or consolidated net income, of the Trust and its
subsidiaries, in each case of clauses (x) and (y), whether pursuant to a merger
(including a reverse merger in which the Trust is the surviving entity),
reorganization, recapitalization, consolidation or other business combination,
sale of shares of capital stock, sale of assets, tender offer, exchange offer,
liquidation, dissolution or other similar transaction, other than in each case
of clauses (x) and (y) the Transactions.

“Affiliate” means, with respect to any Person, any other Person which Controls,
is Controlled by or is under common Control with such Person.

“Agreement” shall have the meaning set forth in the introductory paragraph.

“Allocated Purchase Prices” shall have the meaning set forth in Section 2.2.2.

“Apartment Complex” means each of the apartment complexes identified on
Schedule I.

“Assigned Contract” means (i) the Pierre PSE&G Agreement and (ii) each Service
Contract, other than the Regency Pool Contract, subject to receipt of any
required consent to the assignment to Purchaser of the same as of the Closing
Date.

Annex 1-1 

 

“Assumption Loan” shall have the meaning set forth in Section 2.5.

“Assumption Loan Documents” shall have the meaning set forth in Section 2.5.

“Assumption Loan Properties” means, collectively, the Pierre Property and the
Berdan Property.

“Assumption Loan Lender” shall have the meaning set forth in Section 2.5.

“Assumption Loan Lender Ancillary Costs” means, collectively, all costs and
expenses (other than Loan Assumption Fees) to be paid to or on behalf of each
Assumption Loan Lender and to their agents, attorneys or other representatives,
in connection with seeking and obtaining the Loan Assumption and Release,
including additional reserves and escrows, title insurance premiums and fees,
endorsement fees, non-refundable deposits, search fees, closing fees,
recordation fees and legal fees and disbursements.

“Assumption Loan Sellers” shall have the meaning set forth in Section 2.5.

“Baltimore Property” means that certain mixed-use property located at 711 W.
40th Street, Baltimore, Maryland, and commonly known as “The Rotunda”..

“Berdan Loan” shall have the meaning set forth in Section 2.5.1.

“Berdan Loan Assumption Fee Cap” shall have the meaning set forth in Section
2.5.5.

“Berdan Property” means the Apartment Complex named “Berdan Court” on Schedule
I.

“Boulders Property” means the Apartment Complex named “The Boulders at Rockaway”
on Schedule I.

“Bulk Sale Unit” shall have the meaning set forth in Section 7.9.

“Bulk Sales Escrow Agreement” shall have the meaning set forth in Section 7.9.

“Bulk Transfer Notice” shall have the meaning set forth in Section 7.9.

“Business Day” means any day other than a Saturday or Sunday or Federal holiday
or legal holiday in the State of New York.

“Cap Exclusions” shall have the meaning set forth in Section 12.4.

“Cash Deposit” means shall have the meaning set forth in Section 2.2.1.1.

“Closing” means the consummation of the purchase and sale and related
transactions contemplated by this Agreement in accordance with the terms and
conditions of this Agreement.

“Closing Certificate” shall mean a closing certificate in the form attached
hereto as Exhibit G.

Annex 1-2 

 

“Closing Date” means the date on which the Closing occurs.

“Closing Statement” shall have the meaning set forth in Section 5.2.5.

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

“Confidentiality Agreement” means that certain Confidentiality Agreement, dated
July 11, 2019, between the Trust and Kushner Realty Acquisition LLC, as the same
may have been, or may hereafter be, supplemented, amended, restated or otherwise
modified.

“Co-Owned Property” means each of the Pierre Property and the Westwood Hills
Property.

“Co-Owner Sellers” mean, collectively, (i) as to the Pierre Property, the Pierre
Property Seller and (ii) as to the Westwood Hills Property, the Westwood Hills
Seller.

“Control” means, with respect any Person, the possession, directly or
indirectly, of the power to direct the management and policies of such Person,
whether through ownership, voting control, by contract or otherwise.

“Damages” shall have the meaning set forth in Section 12.4.

“Data Site” means the IntraLinks data room titled “Project Sinatra”.

“De Minimis Claim” shall have the meaning set forth in Section 12.1.

“Deed” means, with respect to each Property, a special warranty deed (or with
respect to the Regency Property, a bargain and sale deed without covenants
against grantor’s acts) for each parcel of Land, the related Improvements and
any other real property included in such Property, subject only to the Permitted
Exceptions.

“Deficit Amount” shall have the meaning set forth in Section 12.5.

“Delinquency Report” shall have the meaning set forth in Section 6.1.7.

“Deposit” means shall have the meaning set forth in Section 2.2.1.1.

“Deposit LOC” means shall have the meaning set forth in Section 2.2.1.1.

“Designee” means any Person that is an Affiliate of Purchaser.

“Disclosure Schedules” shall have the meaning set forth in Article VI.

“Division Escrow” shall have the meaning set forth in Section 7.9.

“Effective Date” shall have the meaning set forth in the introductory paragraph.

Annex 1-3 

 

“Encumbrance” means (i) any covenant, condition, restriction, easement, right of
way or other matter affecting title to a Property, and (ii) any encroachment,
easement, right of way or other matter affecting title to a Property as would be
disclosed by an accurate and complete survey that meets the Minimum Standard
Detail Requirements for ALTA/NSPS Land Title Surveys in effect as of the
Effective Date; provided, however, that “Encumbrances” do not include Liens or
Leases.

“Environmental Laws” means the Resource Conservation and Recovery Act (RCRA), 42
U.S.C. Section 6901 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA), 42 U.S.C. Sections 9601 et seq., the
Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic Substances Control
Act, the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Safe Drinking Water
Act 42 U.S.C. Section 300(f) et seq. and all other applicable state, county,
municipal, or, administrative ordinances, rules, regulations, judgments, and
orders relating or pertaining to (A) the protection, preservation or reclamation
of the environment or natural resources or (B) the management, release and
threatened release of hazardous materials.

“Escrow Agent” shall have the meaning set forth in Section 2.2.1.1.

“Escrow Agreement” shall have the meaning set forth in Section 2.3.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Exculpated Parties” shall have the meaning set forth in Section 13.2.

“Executive Order” shall have the meaning set forth in Section 6.1.6.

“Existing Regency Mortgage” shall have the meaning set forth in Section 4.7.

“Existing Regency Mortgage Lender” shall have the meaning set forth in Section
4.7.

“Existing Regency Note” shall have the meaning set forth in Section 4.7.

“HFF” shall have the meaning set forth in Section 3.4.

“FIRPTA Affidavit” shall have the meaning set forth in Section 5.2.7.

“Fixtures and Tangible Personal Property” means all fixtures, furniture,
furnishings, fittings, equipment, machinery, apparatus, appliances and other
articles of tangible personal property located on the Land or in the
Improvements as of the Effective Date or acquired by a Seller prior to the
Closing Date, in each case, used or usable exclusively in connection with the
occupation or operation of all or any portion of the Land or the Improvements;
provided, however, that the term “Fixtures and Tangible Personal Property”
specifically excludes assets that are not owned by Sellers (including assets
owned or leased by any Tenant, any guest or any employee or other person
furnishing goods or services to any portion of any Property).

“Fundamental Sellers’ Representations” means the representations and warranties
under (i) Section 3.4, (ii) Section 6.1.1, (iii) Section 6.1.2,
(iv) Section 6.1.3 and (v) Section 6.1.6.

Annex 1-4 

 

“General Assignment and Assumption” shall have the meaning set forth in Section
5.2.4

“Hazardous Materials” means any and all substances, wastes, materials,
pollutants, contaminants, compounds, chemicals or elements which are defined or
classified as a “hazardous substance,” “hazardous material,” “toxic substance,”
“hazardous waste,” “pollutant,” “contaminant” or words of similar import under
any Environmental Law, including all dibenzodioxins and dibenzofurans,
polychlorinated biphenyls (PCBs), petroleum hydrocarbon, including crude oil or
any derivative thereof, asbestos-containing materials in any form, and radon
gas.

“Hekemian Manager” means Hekemian & Co., a New Jersey corporation.

“Improvements” means all buildings and improvements located on the Land.

“Indemnified Person” shall have the meaning set forth in Section 12.6.1.

“Indemnifying Person” shall have the meaning set forth in Section 12.6.1.

“Intangibles” means, collectively, (i) the rents and other sums due to Sellers
under the Leases, (ii) to the extent assignable, any unapplied Security
Deposits, and (iii) to the extent assignable and used exclusively in the
operation or occupancy of the Apartment Complexes all of Sellers’ right, title
and interest in and to (w) all telephone numbers, names, trade names,
designations, logos, internet websites and domain names and service marks used
in connection with the operation Apartment Complexes (excluding the names or
variations thereof of Sellers and any tenant), (x) all warranties and guaranties
issued to Sellers in connection with the Improvements or the Fixtures and
Tangible Personal Property, (y) all Permits and (z) all plans, drawings and
other items of intangible personal property relating to the ownership or
operation of the Apartment Complexes and owned by any Seller.

“Intervening Event” means an event, circumstance, change, development,
occurrence or fact occurring or arising after the date hereof that was not known
to the Trust Board as of the date of this Agreement (or, if known, the magnitude
or consequences of which were not known or reasonably foreseeable by the Trust
Board as of the date of this Agreement), other than any event, circumstance,
change, development, occurrence or fact in respect of an Acquisition Proposal.

“Land” means all of those certain tracts of land described on Exhibit A,
together with all rights of Sellers’ in and to the easements, rights, privileges
and appurtenances pertaining thereto.

“Lease” means any lease, sublease, license agreement or other occupancy
agreement affecting any Apartment Complex under which any Seller is the
landlord, sublandlord, licensor or grantor.

“Leasing Commissions” mean all leasing commissions, brokers’ commissions and
similar commissions, fees and charges payable by the landlord in connection with
the negotiation, execution and delivery of any Leases.

“Lien” means any mortgage, deed of trust or other consensual lien, a mechanic’s
or any materialman’s lien, a judgment lien, a lien for delinquent real property
taxes or assessments, any

Annex 1-5 

 

other tax or statutory lien, or any other lien, in each case to the extent the
same affects a Property and encumbers the interest of such the applicable Seller
in such Property.

“Loan Assumption and Release” shall have the meaning set forth in Section 2.5.

“Loan Assumption Application” shall have the meaning set forth in Section 2.5.

“Loan Assumption Application Submittal Deadline” shall have the meaning set
forth in Section 2.5.

“Loan Assumption Approval” shall mean an Assumption Loan Lenders’ written
approval of the assumption of the applicable Assumption Loan by Purchaser or an
SPE Entity and the release of the applicable Seller and all existing guarantors
and indemnitors from liability under the applicable Assumption Loan Documents.

“Loan Assumption Fee Caps” shall have the meaning set forth in Section 2.5.5.

“Loan Assumption Fees” means, collectively, all transfer or assumption fees to
be paid to or on behalf of each Assumption Loan Lender in connection with
seeking and obtaining the Loan Assumption and Release (provided that “Loan
Assumption Fees” shall not include Assumption Loan Lender Ancillary Costs). With
respect to the Berdan Loan, the Loan Assumption Fees shall means the “Transfer
Fee” and “Transfer Processing Fee” payable thereunder.

“Major Loss or Damage” means any loss or damage to an Apartment Complex (i)
which in the case of any taking as the result of (or in lieu of) any
condemnation or eminent domain, renders fifteen percent (15%) or more of the
Improvements at such Apartment Complex inaccessible or unusable for their
intended purpose or has a material adverse effect on the access to or parking at
such Apartment Complex, and (ii) with respect to which, in the case of any
damage or destruction to by fire or other casualty, the cost to restore such
Apartment Complex, as reasonably estimated by Sellers, would exceed fifteen
percent (15%) of such Property’s Allocated Purchase Price.

“Management Agreements” means, collectively, (i) that certain Property
Management Agreement, dated January 8, 2018, between Pierre Property Seller and
Hekemian Manager, (ii) that certain Management Agreement, dated November 1,
2001, between the Trust and Hekemian Manager and (iii) that certain Management
Agreement, dated August 26, 2019, between Berdan Court, LLC, a Delaware limited
liability company, and Hekemian Manager, as each of the same may be
supplemented, amended, restated or otherwise modified from time to time.

“Material Adverse Effect” means a material adverse effect on the business,
financial condition or results of operations of the Properties, taken as a
whole.

“Materials” shall have the meaning set forth in Section 3.1.1.

“Mortgage” shall have the meaning set forth in Section 4.4.

“New Disclosure Item” shall have the meaning set forth in Section 6.2.

Annex 1-6 

 

“New Exception” shall have the meaning set forth in Section 4.5.1.

“New Exception Review Period Expiration Date” shall have the meaning set forth
in Section 4.5.1.

“New Lease Document” means each of any (i) amendment, renewal or expansion of
any existing Lease and (ii) any new Lease, in each case, executed in accordance
with the terms of this Agreement after the Effective Date and prior to the
Closing Date.

“Noticed Claim” shall have the meaning set forth in Section 12.6.2.

“Notice of Claim” shall have the meaning set forth in Section 12.6.2.

“Notice of Third-Party Claim” shall have the meaning set forth in Section
12.6.3.

“Objected New Exception” shall have the meaning in Section 4.5.3.

“OFAC” shall have the meaning set forth in Section 6.1.6.

“Other Monetary Lien” means (i) any judgment lien against a Seller or (ii) any
mechanic’s, materialmen’s or other monetary lien or encumbrance (excluding any
of the foregoing liens or encumbrances to the extent they constitute Permitted
Exceptions).

“Outside Closing Date” means June 15, 2020.

“Permitted Exceptions” shall have the meaning set forth in Section 4.3.

“Permit” means, collectively, all permits, licenses, approvals and
authorizations issued by any governmental authority to Sellers in connection
with the Properties.

“Person” means any individual, corporation, proprietorship, firm, partnership,
limited partnership, limited liability company, trust, association or other
entity.

“Pierre Loan” shall have the meaning set forth in Section 2.5.1.

“Pierre Loan Assumption Fee Cap” shall have the meaning set forth in Section
2.5.5.

“Pierre Property” means the Apartment Complex named “Pierre Towers” on Schedule
I.

“Pierre Property Seller” means Pierre Towers LLC, a New Jersey limited liability
company, the current owner of the Pierre Property.

“Pierre Seller Floor” shall have the meaning set forth in Section 12.4.

“Pierre Seller Maximum Liability” shall have the meaning set forth in Section
12.4.

“Pierre PSE&G Agreement” means that certain PSE&G Residential Multifamily
Housing Program Master Customer Agreement, dated June 24, 2016 between Public
Service Electric & Gas Company (“PSE&G”) and Pierre Property Seller.

Annex 1-7 

 

“Physical Due Diligence” shall have the meaning set forth in Section 3.1.3.

“Pre-Closing Period” shall have the meaning set forth in Section 7.1.

“Property” means, collectively, (i) the Land, (ii) the Improvements, (iii) the
Fixtures and Tangible Personal Property, (iv) the Assigned Contracts and (v) the
Intangibles, including all of Sellers’ respective right, title and interest in
and to the Apartment Complexes.

“Proxy Statement” shall have the meaning set forth in Section 6.1.3.

“Purchase Price” shall have the meaning set forth in Section 2.2.1.

“Purchaser” shall have the meaning set forth in the introductory paragraph.

“Purchaser Closing Documents” mean the documents delivered by Purchaser at the
Closing pursuant to this Agreement.

“Purchaser Consultants” means, collectively, all of Purchaser’s agents,
representatives, consultants and/or contractors.

“Purchaser Default” shall have the meaning set forth in Section 10.1.

“Purchaser Expense Reimbursement” shall have the meaning set forth in Section
9.2.5.

“Purchaser Indemnified Parties” shall have the meaning set forth in Section
12.2.

“Purchaser’s Representations” means the representations made by Purchaser that
are set forth in this Agreement, the Purchaser Closing Documents and the Closing
Certificate executed and delivered by Purchaser.

“Regency Mortgage Assignment” shall have the meaning set forth in Section 4.7.

“Regency Mortgage Assignment Costs” shall have the meaning set forth in Section
4.7.

“Regency Ownership Defect” shall have the meaning set forth in Section 4.8.

“Regency Pool Contract” shall have the meaning set forth in Section 3.3.

“Regency Property” means the Apartment Complex named “The Regency Club Towers”
on Schedule I.

“Regency Property Owner” means FREIT Regency LLC, a New Jersey limited liability
company, the current owner of the Regency Property.

“Remove” means, with respect to any matter, that Sellers cause the Title Company
to remove such matter as an exception to, or affirmatively insure over such
matter in, the applicable Title Policy for the benefit of Purchaser, whether
such removal or insurance is made available in consideration of payment,
bonding, indemnity of any Seller or otherwise; provided, however, that

Annex 1-8 

 

the Title Company must also be willing to accept such Seller cure action to
remove or insure over the same matter on the loan policy of Purchaser’s lender.

“Rent Roll” shall have the meaning set forth in Section 6.1.7.

“Replacement Loan Guarantor” shall have the meaning set forth in Section 2.5.

“Representatives” means, with respect to any Person, the directors, officers,
employees, financial advisors, attorneys, accountants (other than independent
public accountants), consultants, agents and other authorized representatives
and advisors of such Person.

“Required Estate Planning Changes” shall have the meaning set forth in Section
2.5.

“Response Letter” shall have the meaning set forth in Section 7.9.

“Retained Employees” shall have the meaning set forth in Section 7.12.1.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Security Deposits” means any and all security deposits providing security for
any Leases and in Sellers’ possession or control or for which Sellers are
responsible under the Leases.

“Seller” and “Sellers” shall have the meanings set forth in the introductory
paragraph.

“Seller Adjournment” shall have the meaning set forth in Section 5.1.

“Seller Closing Documents” mean the documents delivered by Sellers at the
Closing pursuant to this Agreement.

“Seller Default” shall have the meaning set forth in Section 10.2.

“Seller Floor” means each of the Sole-Owned Properties Seller Floor, the Pierre
Seller Floor and the Westwood Hills Seller Floor.

“Seller Indemnified Parties” shall have the meaning set forth in Section 12.3.

“Seller Insurance Policies” shall have the meaning set forth in Section 5.4.1.6.

“Seller Knowledge Individuals” shall have the meaning set forth in Section 6.1.

“Seller Maximum Liability” means each of the Sole-Owned Properties Seller
Maximum Liability, the Pierre Seller Maximum Liability and the Westwood Hills
Seller Maximum Liability.

“Sellers’ Covenants” means all covenants and agreements required by this
Agreement to be performed and complied with by Sellers prior to or on the
Closing Date.

Annex 1-9 

 

“Seller’s Knowledge” shall have the meaning set forth in Section 6.1.

“Sellers’ Representations” means the representations made by Sellers that are
set forth in this Agreement, the Seller Closing Documents and the Closing
Certificate executed and delivered by Sellers.

“Sellers’ Wire Instructions” shall have the meaning set forth in Section
2.2.1.1.

“Service Contracts” means, collectively, all service contracts and other similar
agreements and contracts including, without limitation, contracts with
television, internet and utility providers (but, for the avoidance of doubt,
excluding Leases and the Management Agreements), affecting any Apartment Complex
to which any Seller is a party or by which any Seller is bound.

“Sole-Owner Sellers” means all of the Sellers other than the Westwood Property
Owner and the Pierre Property Seller(s).

“Sole-Owned Properties Seller Floor” shall have the meaning set forth in Section
12.4.

“Sole-Owner Sellers” means all of the Sellers other than the Westwood Property
Owner and the Pierre Property Seller(s).

“Sole-Owned Property” means each Property other than the Co-Owned Properties.

“SPE Entity” shall mean, with respect to each Assumption Loan Property, a single
member, Delaware limited liability company that shall be Purchaser’s Designee to
receive title in respect of such Assumption Loan Property and to assume the
applicable Assumption Loan. Each SPE Entity shall be a wholly-owned subsidiary
of Purchaser, be newly formed as of the Closing, and satisfy the requirements of
each of the Assumption Loan Lenders for a special purpose, bankruptcy remote
borrower pursuant to the Assumption Loan Documents.

“Special Damages” shall have the meaning set forth in Section 10.2.

“Station Place Property” means the Apartment Complex named “Station Place” on
Schedule I.

“Steuben Arms Property” means the Apartment Complex named “Steuben Arms” on
Schedule I.

“Superior Proposal” means a bona fide written Acquisition Proposal made by a
Third Party that the Trust Board determines in its good faith judgment (after
consultation with its financial advisor and outside legal counsel) would, if
consummated, result in a transaction that is more favorable to the Trust
Shareholders from a financial point of view than the Transactions.

“Superior Proposal Notice” shall have the meaning set forth in Section 7.13.5.

“Surveys” shall have the meaning set forth in Section 4.1.

Annex 1-10 

 

“Survival Period” shall have the meaning set forth in Section 12.1.

“Tax Lien” means any liens for Taxes (other than Taxes not yet due and payable)
upon any Property.

“Taxes” means any federal, state, local or foreign real property, personal
property, sales, use, room, occupancy, ad valorem or similar taxes, assessments,
levies, charges or fees imposed by any governmental authority on any Seller with
respect to any Property, including any interest, penalty or fine with respect
thereto, but expressly excluding any federal, state, local or foreign income,
capital gain, gross receipts, capital stock, franchise, profits, estate, gift or
generation skipping tax, transfer, documentary stamp, recording or similar tax,
levy, charge or fee incurred with respect to the Transactions.

“Tenant” means any tenant, subtenant, licensee or other occupant pursuant to any
Lease.

“Termination Fee” shall have the meaning set forth in Section 9.2.6.

“Termination Payments” shall have the meaning set forth in Section 9.2.6.

“Third Party” means any Person or “group” (as defined under Section 13(d) of the
Exchange Act) of Persons, other than the parties hereto or any of their
respective Affiliates or Representatives (solely in their capacity as such).

“Third-Party Claim” shall have the meaning set forth in Section 12.6.3.

“Third-Party Reports” means any reports, studies or other information prepared
or compiled for Purchaser’s use by any consultant or other third party in
connection with Purchaser’s investigation of the Properties, whether ordered by
Sellers or Purchaser, including the Third-Party Reports identified on Schedule
II attached hereto.

“TIC Conversion” shall have the meaning set forth in Section 7.3.

“TIC Conversion Deadline” means February 28, 2020.

“TIC Owners” shall have the meaning set forth in Section 7.3.

“Title Commitments” shall have the meaning set forth in Section 4.1.

“Title Company” shall have the meaning set forth in Section 4.1.

“Title Policy” means, with respect to each Property, a standard American Land
Title Association owner’s title insurance policy for the Land and the
Improvements applicable to such Property issued by the Title Company subject
only to Permitted Exceptions, using the current policy jacket customarily
provided by the Title Company in the applicable state, in an amount equal to the
Allocated Purchase Price allocated to such Property, excluding the personal
property components thereof, subject only to the Permitted Exceptions.

“Title Update” shall have the meaning set forth in Section 4.5.2.

Annex 1-11 

 

“Transactions” means any and all transactions contemplated by the terms of this
Agreement.

“Transfer Taxes” shall have the meaning set forth in Section 5.5.1.

“Transfer Tax Forms” means any and all sales tax or transfer tax forms and
returns, transfer declarations and other similar disclosure forms or notices
required to be executed and/or delivered by any Seller and/or Purchaser pursuant
to applicable law in connection with the consummation of the Transactions.

“Trust” means First Real Estate Investment Trust of New Jersey, a New Jersey
trust, a Seller and a direct or indirect member of the other Sellers.

“Trust Board” shall have the meaning set forth in the recitals.

“Trust Board Recommendation” shall have the meaning set forth in the recitals.

“Trust Shareholder Approval” shall have the meaning set forth in Section 6.1.1.

“Trust Shareholders” shall have the meaning set forth in the recitals.

“Trust Shareholders Meeting” shall have the meaning set forth in the recitals.

“Uncollected Rent” shall have the meaning set forth in Section 5.4.1.1(b).

“Violations” means, with respect to each Property, all fines, penalties and
interest that have accrued on any and all notes or notices of violations of law,
or municipal ordinances, orders, designations or requirements whatsoever noted
in or issued by any federal, state, municipal or other governmental department,
agency or bureau or any other governmental authority having jurisdiction over
the Properties.

“Voluntary Liens” means, with respect to each Property, title exceptions
affecting such Property that are voluntarily created by Sellers or their
respective Affiliates after the Effective Date; provided, however, that the term
“Voluntary Liens” as used in this Agreement shall not include the following: (a)
any Permitted Exceptions; (b) any title exceptions that are approved, waived or
deemed to have been approved or waived by Purchaser pursuant to the terms of
this Agreement or that are created as permitted by, and in accordance with, the
provisions of this Agreement and (c) any judgment liens and mechanics’ and
similar liens.

“WARN Act” shall have the meaning set forth in Section 7.12.2.

“Westwood Hills Property” means the Apartment Complex named “Westwood Hills” on
Schedule I.

“Westwood Hills Seller” means Westwood Hills, LLC, a New Jersey limited
liability company, the current owner of the Westwood Hills Property.

“Westwood Hills Seller Floor” shall have the meaning set forth in Section 12.4

Annex 1-12 

 

“Westwood Hills Seller Maximum Liability” shall have the meaning set forth in
Section 12.4

 

 

 

 

 

 

Annex 1-13 

 

SCHEDULE I

Apartment Complex Names and Addresses; Sellers; Allocated Purchase Prices

  Apartment Complex
Name Apartment Complex Street
Address City & State Seller Allocated purchase
price 1. Berdan Court 2 Hazen Court Wayne, NJ Berdan Court, LLC, a Delaware
limited liability company $42,000,000 2. The Boulders at Rockaway 10 Mount
Pleasant Avenue Rockaway, NJ First Real Estate Investment Trust of New Jersey, a
New Jersey trust $33,000,000 3. Pierre Towers 185 Prospect Avenue Hackensack, NJ
Pierre Towers, LLC, a New Jersey limited liability company $80,500,000 4. The
Regency Club 1200 Regency Court Middletown, NY FREIT Regency, LLC, a New Jersey
limited liability company $27,250,000 5. Station Place 145 Monmouth Street Red
Bank, NJ Station Place on Monmouth, LLC, a New Jersey limited liability company
$16,500,000 6. Steuben Arms 112 Main Street River Edge, NJ First Real Estate
Investment Trust of New Jersey, a New Jersey trust $17,250,000 7. Westwood Hills
5 Sutton Place Westwood, NJ Westwood Hills, LLC, a New Jersey limited liability
company $50,000,000

 

Schedule I-1