Document:

Sale-Purchase Agreement

 

Exhibit 10.1

SALE-PURCHASE AGREEMENT

     AGREEMENT made this 23rd day of December, 2004, by and between NEW VALLEY
CORPORATION, a Delaware corporation having an office at 100 S.E. Second Street,
32nd Floor, Miami, Florida 33131 (“Seller”) and PRINCETON OWNER CORP., a
Delaware corporation having an office c/o Falcon Real Estate Investment
Company, Ltd., 570 Lexington Avenue, New York, New York 10022 (“Purchaser”).

Statement of Facts

     Seller is the owner of the 100 College Road West Property and
the 150 College Road West Property, each located in Princeton,
Plainsboro Township, Middlesex County, New Jersey (collectively the
“Properties” and individually a “Property”). Purchaser desires to
purchase the Properties from Seller.

     Seller and Purchaser now desire to enter into an agreement
whereby, subject to the terms and conditions contained herein,
Seller shall sell the Properties to Purchaser and Purchaser shall
purchase the Properties from Seller.

     Any term defined in this Agreement shall have the meaning
ascribed to it herein, regardless of whether the usage thereof shall
appear in the text before or after the definition of such term.

     NOW, THEREFORE, in consideration of Ten ($10.00) Dollars and the mutual
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties hereto do hereby agree as follows:

     Article 1. Sale of the Properties

     1.1 Seller agrees to sell and convey to Purchaser, and Purchaser agrees to
purchase from Seller, at the price and upon the terms and conditions set forth
in this Agreement:

     (a) all those certain plots, pieces and parcels of land located
in Princeton, Plainsboro Township, Middlesex County, New Jersey,
more particularly described in Schedule 1-A annexed hereto
(collectively, the “100 College Road Land”), together with all
buildings and other improvements situated on such land
(collectively, the “100 College Road Building” and, together with
the 100 College Road Land, the “100 College Road Premises”);

     (b) all those certain plots, pieces and parcels of land located
in Princeton, Plainsboro Township, Middlesex County, New Jersey,
more particularly described in Schedule 1-B annexed hereto
(collectively, the “150 College Road Land”), together with all
buildings and other improvements situated on such land
(collectively, the “150 College Road Building” and, together with
the 150 College Road Land, the “150 College Road Premises”);

     (c) all easements, burdens, rights of way, reservations,
privileges, appurtenances, encumbrances and other estates and rights
of Seller pertaining to the 100

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College Road Premises (collectively, the “100 College Road
Easements”) and/or the 150 College Road Premises (collectively, the
“150 College Road Easements” and, together with the 100 College Road
Easements, the “Included Easements”);

     (d) all right, title and interest of Seller, if any, in and to
all fixtures, machinery, equipment, supplies and other articles of
personal property attached or appurtenant to the 100 College Road
Premises and/or the 150 College Road Premises and/or used in
connection with either or both thereof (collectively, the “Personal
Property”, and respectively, the “100 College Road Personal
Property” and the “150 College Road Personal Property”), which
Personal Property, however, shall be subject to depletions,
replacements and additions in the ordinary course of business and
shall exclude any personal property owned by Seller’s property
manager and/or located within Suite 150 of the 150 College Road
Building (an inventory of the fixtures, furnishings and equipment
included in the Personal Property, subject to depletions,
replacements and additions as hereinbefore set forth, is reproduced
as an exhibit to the form of bill of sale attached to this Agreement
as Exhibit E hereto);

     (e) all right, title and interest of Seller, if any, in and to
the trade names and other intangible property appertaining to the
100 College Road Premises (collectively, the “100 College Road
Intangible Property”) and/or the 150 College Road Premises
(collectively, the “150 College Road Intangible Property” and,
together with the 100 College Road Easements, the “Intangible
Property”);

     (f) all right, title and interest of Seller, if any, in and to
any transferable consents, applications, authorizations, variances,
or waivers, licenses, permits, certificates of occupancy, other
certificates and approvals from any governmental or
quasi-governmental agency, board, department, commission, bureau, or
other instrumentality solely in respect of the 100 College Road
Premises and/or the 150 College Road Premises (collectively, the
“Licenses”, and respectively, the “100 College Road Licenses” and
the “150 College Road Licenses”):and

     (g) all right, title and interest of Seller, if any, in and to
the following (collectively, the “Miscellaneous Interests”, and
respectively, the “100 College Road Miscellaneous Interests” and the
“150 College Road Miscellaneous Interests”):

     (i) the land lying in the bed of any street, road
or avenue, opened or proposed, in front of or adjoining
the 100 College Road Premises and/or the 150 College
Road Premises, to the center line thereof, and in and to
any award to be made in lieu thereof; and

     (ii) any unpaid award for any taking by
condemnation of the 100 College Road Premises and/or the
150 College Road Premises, or for any damage thereto, by
reason of a change of grade of any street, road, or
avenue.

The 100 College Road Premises, the 100 College Road Easements, the 100 College
Road Personal Property, the 100 College Road Intangible Property, the 100
College Road Licenses and the 100 College

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Road Miscellaneous Interests are herein sometimes collectively called the “100
College Road Property”. The 150 College Road Premises, the 150 College Road
Easements, the 150 College Road Personal Property, the 150 College Road
Intangible Property, the 150 College Road Licenses and the 150 College Road
Miscellaneous Interests are herein sometimes collectively called the “150
College Road Property”.

     Article 2. Purchase Price

     2.1 The purchase price to be paid by Purchaser to Seller for the
Properties (the “Purchase Price”) is SEVENTY ONE MILLION FIVE HUNDRED THOUSAND
($71,500,000.00) DOLLARS, payable as follows:

     (a) THREE MILLION ($3,000,000.00) DOLLARS (the “Downpayment”)
has been paid simultaneously with the execution and delivery of this
Agreement by a bank wire transfer of immediately available funds to
an account designated by Fischbein • Badillo • Wagner • Harding LLP
(“Escrow Agent”); and

     (b) the balance of the Purchase Price (the “Cash Balance”),
subject to increase or decrease by the apportionments provided for
in Article 3, shall be payable at the Closing by a bank wire
transfer or transfers of immediately available funds in such amount
to an account or accounts designated by Seller by written direction
to Purchaser given on or before the Closing Date.

The Downpayment shall be held in escrow by Escrow Agent pursuant to the
provisions of Article 20.

     2.2 Notwithstanding anything to the contrary provided herein, Seller shall
convey, and Purchaser shall purchase, all of the Properties in accordance with
the terms and conditions of this Agreement. Except for any right of either
party to terminate this Agreement as and when expressly provided herein, the
failure of Seller to convey all of the Properties, or the failure of Purchaser
to purchase all of the Properties, in accordance with the terms and conditions
of this Agreement shall be a default hereunder and permit the non-defaulting
party to exercise its remedies provided for in this Agreement.

     2.3 No portion of the Purchase Price is for, or allocable to, the sale,
conveyance, or transfer of the Included Easements, the Personal Property, the
Intangible Property, the Approvals, or the Miscellaneous Interests. However,
in the event that any sales or intangible taxes shall become due and payable by
reason of any such sale, conveyance, or transfer, such taxes shall be paid by
Purchaser, which obligation shall survive the Closing.

     Article 3. Apportionments

     3.1 The following shall be apportioned between Seller and Purchaser at the
Closing, as of midnight of the night preceding the Closing on the basis of the
actual number of days of the relevant period and a year of three hundred sixty
five (365) days:

     (a) prepaid rents, Additional Rents and other amounts payable
by Tenants, if, as and when received;

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     (b) to the extent not payable directly by any Tenants under
their Leases, real estate taxes, personal property taxes, water
charges, sewer rents and vault charges, if any, on the basis of the
fiscal years, respectively, for which the same have been assessed;

     (c) the value of fuel stored at the Properties, at Seller’s
cost (including, without limitation, any taxes), on the basis of a
statement from Seller’s supplier;

     (d) charges and payments under Contracts that are transferred
to, and assumed by, Purchaser;

     (e) any prepaid items relating to the Properties (including,
without limitation, fees for Licenses that are transferred to
Purchaser at the Closing and annual inspection fees);

     (f) utilities (including, without limitation, telephone, steam,
electricity and gas), either:

     (i) to the extent that current meter readings are
available, on the basis of such readings; or

     (ii) to the extent that current meter readings are
unavailable, on the basis of the most recently issued
bills therefor, subject to adjustment after the Closing
when the next bills are available;

     (g) transferable deposits with telephone and other utility
companies, and any other persons or entities who supply goods or
services in connection with the Properties, if same are assigned to
Purchaser at the Closing, which deposits shall be credited in their
entirety to Seller;

     (h) annual permit, license and inspection fees, if any, on the
basis of the fiscal year for which levied, if rights thereunder are
transferable to Purchaser;

     (i) itemized supplies on hand in unopened cartons or other
containers, at Seller’s cost plus applicable sales taxes; and

     (j) as to each Property, such other items as are customarily
apportioned between sellers and purchasers of real properties of a
type similar to the Properties and located in the city and state
where the Property is located.

In addition to the foregoing apportionments, Purchaser shall be credited with
the Net Tenant Incentive Reimbursement, determined as set forth in Section 3.7
below.

     3.2 If the Closing shall occur before a new real estate or personal
property tax rate is fixed, then the apportionment of taxes at the Closing
shall be made initially on the basis of the tax rate for the preceding fiscal
year applied to the latest assessed valuation. Promptly after the new tax rate
is fixed, the apportionment of taxes shall be recomputed, any discrepancy
resulting from such recomputation and any errors or omissions in computing
apportionments at Closing shall be promptly corrected and the proper party
shall be reimbursed.

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     3.3 If, on the Closing Date, any Tenant is in arrears in the payment of
rent, or has not paid the rent payable by it for the month in which the Closing
occurs (whether or not it is in arrears for such month on the Closing Date),
any rents received by Purchaser or Seller from such Tenant after the Closing
shall be paid and applied in the following order of priority:

     (a) first, to Seller and Purchaser (to be allocated between
them as provided in Section 3.1), to the extent of all rent due and
payable by such Tenant for the month in which the Closing occurs;

     (b) next, to Purchaser, to the extent of all rent due and
payable by such Tenant for the month after the month in which the
Closing occurs;

     (c) next, to Seller, to the extent of all rent due and payable
by such Tenant for the month prior to the month in which the Closing
occurs;

     (d) next, to Purchaser, to the extent of all rent due and
payable by such Tenant for the month or months after the month
provided for in Section 3.3(b) above; and

     (e) last, to Seller, to the extent of all rent due and payable
by such Tenant for the period prior to the month provided for in
Section 3.3(c) above.

If rents, or any portion thereof, received by Seller or Purchaser after the
Closing are due and payable to the other party by reason of this Section 3.3,
the appropriate sum, less a proportionate share of any reasonable attorneys’
fees and costs and expenses expended in connection with the collection thereof,
shall be promptly paid to the other party.

     3.4 Purchaser shall promptly pay to Seller, out of the first
“pass-through” charges for real estate taxes, operating expenses and/or other
charges of a similar nature (“Additional Rents”) received from each Tenant, the
amount of all Additional Rents that are due and payable by such Tenant with
respect to any period prior to the Closing Date (whether or not such Additional
Rents first became due and payable on or after the Closing Date), less a
proportionate share of any reasonable attorneys’ fees and costs and expenses of
collection thereof. Notwithstanding anything provided herein to the contrary,
if it shall be determined by any court or arbitrator of competent jurisdiction
that any Additional Rents charged to any Tenants prior to the Closing Date were
in excess of what Seller was entitled to charge such Tenants, then, as between
Seller and Purchaser, Seller shall be responsible for reimbursing such Tenants
for any such overcharges, and Purchaser shall have no liability as a result of
any such overcharges. Each of the parties shall cooperate with the other in
all reasonable respects in connection with the preparation and distribution to
the Tenants of reconciliation statements for Additional Rents due for the 2004
calendar year (if such statements are not prepared and distributed by Seller
prior to the Closing) and for the 2005 calendar year, and each party shall
promptly deliver to the other party true and complete copies of all of such
reconciliation statements issued thereby.

     3.5 After the Closing, Seller shall continue to have the right, in its own
name, to demand payment of, and to collect, rent and/or Additional Rent
arrearages owed to Seller by any Tenant, which right shall include the right to
commence and/or continue legal actions or proceedings against any Tenant for
the payment of any such arrearages, provided, however, that Seller shall not
commence or continue any legal action or proceeding to terminate a Tenant’s
tenancy. Seller’s delivery of the Lease Assignment to Purchaser at Closing
shall not constitute a waiver by Seller of such right. Purchaser shall

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cooperate with Seller in all reasonable respects in connection with
Seller’s efforts to collect such rents and/or Additional Rents, and shall take
all reasonable steps, whether before or after the Closing Date, as may be
necessary or desirable in order to carry out the intention of the foregoing,
including, without limitation:

     (a) adding any such arrearages to Purchaser’s bills to such
Tenant for current rental obligations;

     (b) delivering to Seller, upon demand, any relevant books and
records (including, without limitation, any rent and/or Additional
Rent statements, receipted bills and copies of Tenant checks used in
payment of rent and/or Additional Rent);

     (c) executing and delivering to Seller any and all reasonably
required consents or other documents;

     (d) testifying on behalf of Seller at any legal actions or
proceedings in which collection of such rents and/or Additional
Rents has become an issue; and

     (e) performing any other reasonable act that shall be necessary
or desirable in furtherance of Seller’s collection of such rents
and/or Additional Rents.

Purchaser shall not be obligated to incur any out-of-pocket cost or expense in
connection with such cooperation, provided, however, that, if any such action
requested in writing by Seller shall entail such cost and/or expense, then:

     (i) Purchaser shall notify Seller of such cost and/or expense
in writing (including Purchaser’s reasonable estimate of the amount
thereof) prior to taking such action;

     (ii) Purchaser shall nonetheless take such action if Seller
notifies Purchaser that Seller will reimburse Purchaser for the
reasonable, out-of-pocket cost and/or expense thereof; and

     (iii) Seller shall reimburse Purchaser for such reasonable,
out-of-pocket costs and/or expenses promptly after Seller’s receipt
of a reasonable detailed invoice in connection therewith.

If any such Tenant, in response to Seller’s legal actions or proceedings to
recover any such rent and/or Additional Rent arrearages, commences its own
legal action against Seller, or files a counterclaim to Seller’s legal action
or proceeding, and such Tenant’s legal action or counterclaim names Purchaser
as a defendant and relates to the issues raised in Seller’s legal action or
proceeding, then, in such event, Seller shall indemnify, hold harmless and
defend Purchaser with counsel of Seller’s choice and reasonably acceptable to
Purchaser with respect to any such legal action or counterclaim. Purchaser
shall not waive, compromise, settle, release, or discharge any claims against
any Tenants for any past due rents and/or Additional Rent accrued prior to the
Closing Date without Seller’s prior written consent.

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     3.6 If any of the items subject to apportionment under the foregoing
provisions of this Article 3 cannot be apportioned at the Closing because of
the unavailability of the information necessary to compute such apportionment,
or if any errors or omissions in computing apportionments at the Closing are
discovered subsequent to the Closing, then such item shall be reapportioned,
such errors and omissions shall be corrected and the proper party shall be
reimbursed as soon as practicable after the Closing. Neither party shall have
the right to require a recomputation of a Closing apportionment, or the
correction of an error or omission in a Closing apportionment, unless one of
the parties:

     (a) has obtained the previously unavailable information or has
discovered the error or omission; and

     (b) has given notice thereof to the other party, together with
a copy of its good faith recomputation of the apportionment and
copies of all substantiating information used in such recomputation.

The failure of a party to obtain any previously unavailable information or
discover an error or omission with respect to an item subject to apportionment
hereunder and to give notice thereof as provided above after the Closing Date
shall be deemed a waiver of its right to cause a recomputation or a correction
of an error or omission with respect to such item after the Closing Date.

     3.7 Seller has informed Purchaser, and Purchaser confirms its
understanding, that, pursuant to the provisions of the Fourth Amendment to
Lease dated as of September 30, 2004, by and among Seller, as landlord, and
Novo Nordisk Pharmaceuticals, Inc., as tenant, Seller is obligated to:

     (a) reimburse Novo Nordisk Pharmaceuticals, Inc., for all or a
portion of the cost and expense of renovating the premises formerly
occupied by Duane Morris LLP; and

     (b) after the earlier day to occur of June 30, 2005 or the date
upon which ZS Associates, Inc., shall vacate and surrender its
premises in the 100 College Road Building:

     (i) reimburse Novo Nordisk Pharmaceuticals, Inc.,
for all or a portion of the cost and expense of
renovating the premises surrendered by ZS Associates,
Inc.;

     (ii) allow Novo Nordisk Pharmaceuticals, Inc., to
use and occupy the premises surrendered by ZS
Associates, Inc., for three months rent free; and

     (iii) construct a doorway from the fitness facility
located on the first floor of the north wing of the 100
College Road Building to the outside of the Building and
install a key card operated access control system on
such door and on the existing door from the cafeteria
facility to the outside of the Building.

Purchaser hereby acknowledges that its assumption of the Leases at Closing will
include, but not be limited to, the foregoing reimbursement, rent credit and
construction obligations. In exchange therefor,

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Seller shall allow to Purchaser an apportionment credit at closing, pursuant to
Section 3.1 above, in an amount (the “Net Tenant Incentive Reimbursement”)
equal to the difference between:

     (x) One Million Ninety-Five Thousand Nine Hundred Twenty-Six
($1,095,926) Dollars, which the parties agree is a reasonable
estimate of the aggregate cost and expense to be incurred by
Purchaser in connection with such reimbursements, credit and
construction work, without discount or interest factor; less

     (y) if, between the date hereof and the Closing Date, Seller
shall reimburse Novo Nordisk Pharmaceuticals, Inc., in whole or in
part, for a reimbursable cost or expense as described above in this
Section 3.7, allow a rent credit so described to Novo Nordisk
Pharmaceuticals, Inc. and/or construct such doorway, the amount so
reimbursed, credited and/or expended for such construction, as
substantiated to Purchaser’s reasonable satisfaction at or prior to
Closing.

The provisions of this Section 3.7 shall survive the Closing.

     3.8 The provisions of this Article 3 (including, without limitation, the
provision for one party to give notice to the other under Section 3.6
requesting any correction or recomputation of a closing apportionment) shall
survive the Closing for a period of one year, except that the respective rights
and obligations of the parties under Sections 3.4 and 3.5 shall survive the
Closing for the period expiring one year after the respective items of rent
and/or Additional Rent referred to therein shall become due and payable and,
thereafter, during the pendency of any action brought by Seller during such
period against the applicable Tenant.

     Article 4. Closing Date

     4.1 The delivery of the Deed and the consummation of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the offices
of Fischbein • Badillo • Wagner • Harding LLP, 909 Third Avenue, New York, New
York, at 10:00 A.M. on February 3, 2005 (the “Closing Date”), subject only to
such adjournments by Seller and/or Purchaser as are specifically permitted in
this Agreement. In the event of any permitted adjournment by Seller and/or
Purchaser of the initially scheduled Closing Date, the term “Closing Date”
shall then mean the date to which the Closing shall have been adjourned. TIME
SHALL BE OF THE ESSENCE FOR SELLER AND PURCHASER TO CLOSE ON THE CLOSING DATE.

     4.2 In addition to Seller’s other adjournment rights pursuant to this
Agreement, Purchaser and Seller shall each have the right to one or more
adjournments of the Closing for a period or periods not to exceed ten (10)
business days in the aggregate as to each of them. A party desiring to adjourn
the Closing pursuant to this Section 4.2 shall give written notice to such
effect to the other party hereto, specifying the date to which the Closing
shall be adjourned. Such notice may be sent in the manner set forth in Article
15 below or, if the party giving the notice shall so elect, may be given at the
then scheduled Closing. After a party shall have adjourned the Closing for a
period of ten (10) business days pursuant to this Section 4.2, time being of
the essence, such party shall have no further right to adjourn the Closing
pursuant to this Section 4.2.

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          Article 5. Permitted Encumbrances

     5.1 Seller shall convey the Properties, and Purchaser shall accept title
to the Properties, subject only to:

     (i) the Leases;

     (ii) with respect to the 100 College Road Property, that
certain Declaration dated October 18, 1999, recorded in Deed Book
4701, page 1, of the land records of Middlesex County, New Jersey,
as amended and restated by that certain Amended and Restated
Declaration of Easements, Covenants, Conditions and Restrictions
(Initial Village South Parcel) dated May 7, 2001, recorded in Deed
Book 4908, page 299 of the aforementioned land records, as further
amended and restated by that certain Second Amended and Restated
Declaration of Easements, Covenants, Conditions and Restrictions
(Block 3, Lot 1.61 – 100 College Road West) dated December 17, 2003,
recorded in Deed Book 5124, page 282 of the aforementioned land
records and as further amended and restated by that certain Third
Amended and Restated Declaration of Easements, Covenants, Conditions
and Restrictions (Block 3, Lot 1.61 – 100 College Road West) dated
as of October, 2004 and heretofore submitted for recording in the
aforementioned land records (collectively, the “100 College Road
Declaration”);

     (iii) with respect to the 150 College Road Property, that
certain Declaration dated September 6, 2000, recorded in Deed Book
4823, page 574, of the land records of Middlesex County, New Jersey,
as amended and restated by that certain Amended and Restated
Declaration of Easements, Covenants, Conditions and Restrictions
(Village South Parcel II) dated February 7, 2002, recorded in Deed
Book 5017, page 509 of the aforementioned land records, as further
amended and restated by that certain Second Amended and Restated
Declaration of Easements, Covenants, Conditions and Restrictions
(Block 3, Lot 1.62 – 150 College Road West) dated December 12, 2002,
recorded in Deed Book 5124, page 351 of the aforementioned land
records and as amended by that certain First Amendment to the Second
Amended and Restated Declaration of Easements, Covenants, Conditions
and Restrictions (Block 3, Lot 1.62 – 150 College Road West) dated
as of October, 2004 and heretofore submitted for recording in the
aforementioned land records (collectively, the “150 College Road
Declaration”);

     (iv) the lien of taxes not yet due and payable;

     (v) those other matters set forth on Schedule B to the Title
Commitment, which matters are also identified on Schedule 2 hereto,
and those states of facts disclosed in the Surveys; and

     (vi) those matters set forth in any updates of the Title
Commitment, and those states of facts disclosed in any updates of
the Surveys, prior to Closing that are not Unacceptable
Encumbrances.

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All title matters that are permitted pursuant to the foregoing, that are
otherwise expressly permitted pursuant to this Agreement, or that are waived in
writing by Purchaser are collectively called the “Permitted Encumbrances”.

     Article 6.
Title

     6.1 Purchaser has received and reviewed:

     (i) that certain commitment for an owner’s fee title insurance
policy with respect to the 100 College Road Premises and the 150
College Road Premises issued by Trans-County Title Agency, L.L.C. on
behalf of First American Title Insurance Company (the “Title
Company”) dated December 10, 2004, and bearing title number
NCS-132944-NY (the “Title Commitment”); and

     (ii) that certain ALTA/ACSM Land Title Survey of the 100
College Road Premises dated December 6, 2002 and prepared by Schoor
Depalma and that certain ALTA/ACSM Land Title Survey for the 150
College Road Premises dated January 5, 2002 and prepared by Schoor
Depalma (collectively, the “Surveys”).

The cost of the Title Commitment and any updates thereof, the cost of any title
insurance policy or policies issued pursuant thereto and the cost of any
updates of the Surveys shall all be borne and paid by Purchaser. A copy of the
Title Commitment, together with a copy of all of the underlying documents
referred to therein (collectively, the “Title Documents”), and copies of the
Surveys have heretofore been delivered to Purchaser’s attorneys. All liens,
encroachments, encumbrances and other title matters set forth on Schedule 2
hereto, and all states of facts disclosed in the Surveys, shall constitute
Permitted Encumbrances. Purchaser shall have the right to obtain co-insurance
for up to fifty (50%) percent of the coverage from Chicago Title Insurance
Company, provided, however, that the lead title insurance company shall be
First American Title Insurance Company and the term “Title Company”, as used in
this Agreement, shall continue to refer solely to First American Title
Insurance Company.

     6.2 Purchaser shall have the right to cause the Title Company to update
the Title Commitment, and to cause the Surveys to be updated, prior to Closing.
If the Title Commitment and/or the Surveys shall be updated, or otherwise
amended or supplemented, whether or not at Purchaser’s behest, Purchaser shall
deliver written notice to Seller’s attorneys, not later than the earlier to
occur of the Closing Date or five (5) business days after Purchaser’s receipt
of such update, amendment, or supplement, objecting to any new title matters
disclosed by such update, amendment, or supplement. No such notice shall have
any effect hereunder unless the same is accompanied by copies of the update,
amendment, or supplement giving rise to such notice, as well as by copies of
all underlying instruments giving rise to such objections. Notwithstanding
anything to the contrary set forth in this Section 6.2 or elsewhere in this
Agreement, any such new title matter shall not be objectionable hereunder, and
shall be deemed to constitute a Permitted Encumbrance, unless:

     (a) subject to the provisions of Sections 6.4 and 7.2 below,
such title matter materially interferes with the current use or
operation of the applicable Property or Properties, or shall result
in the reduction in the value thereof by more than Two Hundred Fifty
Thousand ($250,000) Dollars;

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     (b) such title matter was not caused by the acts or wrongful
omissions to act of Purchaser; and

     (c) Purchaser shall object to the same, as hereinbefore
provided, in a timely manner, with time of the essence.

Any such new title matters that are properly so objectionable are herein
collectively called the “Unacceptable Encumbrances”.

     6.3 If, subject to the provisions of Section 6.4, Seller is unable to
eliminate all Unacceptable Encumbrances not waived in writing by Purchaser, or
to arrange for title insurance reasonably acceptable to Purchaser insuring
against enforcement of such Unacceptable Encumbrances against, or collection of
the same out of, the applicable Property and omitting such Unacceptable
Encumbrance from the title insurance policy or binder given to Purchaser’s
mortgagee (which shall constitute the elimination of such Unacceptable
Encumbrances for all purposes of this Agreement), in either instance without
any additional charge or additional premium to Purchaser, and to convey title
in accordance with the terms of this Agreement on or before the Closing Date,
then Purchaser shall elect on the Closing Date, as its sole remedy for such
inability of Seller, either:

     (a) to terminate this Agreement by notice given to Seller
pursuant to Section 18.1, in which event the provisions of Section
18.1 shall apply; or

     (b) to accept title subject to such Unacceptable Encumbrances
and receive no credit against, or reduction of, the Purchase Price.

     6.4 Notwithstanding anything to the contrary set forth in this Article 6
or elsewhere in this Agreement, Seller shall not be obligated to bring any
action or proceeding, to make any payments, or otherwise to incur any expense
in order to eliminate any Unacceptable Encumbrance, except that Seller shall
satisfy or pay (as the case may be) all of the following (collectively,
“Liens”):

     (a) any mortgage or other security agreement encumbering either
or both of the Properties, subject to Purchaser’s payment of the
Purchase Price in the manner provided in Section 2.1;

     (b) any real estate taxes and assessments that are a lien
against either or both of the Properties, subject to apportionment
hereunder (except to the extent that the same are to be paid by the
Tenants pursuant to the respective Leases);

     (c) any Unacceptable Encumbrance that shall be susceptible of
cure by the payment of a liquidated sum of money and shall have been
caused by the affirmative act of Seller; and

     (d) any judgments against Seller, or other liens secured by, or
filed against, either or both of the Properties (other than liens
resulting from the acts or omissions of any one or more of the
Tenants, including, without limitation, mechanics’ liens and the
like filed as a result of work done at the behest of a Tenant),
which judgments or liens can be satisfied by the payment of
liquidated amounts not exceeding Two Hundred Fifty Thousand
($250,000) Dollars in the aggregate.

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Without limiting the generality of the preceding provisions of this Section
6.4, for purposes of this Agreement (including, without limitation, Sections
6.1 and 18.1), Seller’s failure or refusal to bring any action or proceeding,
to make any payment, or otherwise to incur any expense (except for Seller’s
obligation to satisfy Liens as aforesaid) in order to eliminate Unacceptable
Encumbrances shall be deemed to constitute the inability of Seller to eliminate
such Unacceptable Encumbrances, and shall not constitute a default by Seller
(willful or otherwise) under this Agreement that would entitle Purchaser to
exercise any of the rights or remedies set forth in Section 18.3 hereof.

     6.5 If, on the Closing Date, there are any Liens or other encumbrances
that Seller must pay or discharge in order to convey to Purchaser such title as
is herein provided to be conveyed, then Seller may use any portion of the
Downpayment or the Cash Balance to satisfy the same, provided that:

     (a) either:

     (i) Seller shall deliver to Purchaser or the Title
Company, at the Closing, instruments in recordable form
and sufficient to satisfy such Liens or other
encumbrances of record and to permit the Title Company
to omit the same from the owner’s fee title insurance
policy (without Purchaser’s payment of any additional
charge or additional premium therefor), together with
the cost of recording or filing said instruments; or

     (ii) Seller, having made arrangements with the
Title Company, shall deposit with the Title Company
sufficient monies acceptable to such company to insure
the obtaining and the recording of such satisfactions;
and

     (b) the Title Company shall actually omit such Liens or other
encumbrances as exceptions from the owner’s fee title insurance
policy and the lender’s mortgage title insurance policy without
Purchaser’s payment of any additional charge or additional premium
therefor.

The existence of any such Liens or other encumbrances shall not be deemed
objections to title if Seller complies with the foregoing requirements.

     6.6 Purchaser, if request is made by Seller at least two (2) business days
prior to the Closing, shall provide at the Closing separate unendorsed
certified or official bank checks, payable to the order of such parties as are
designated by Seller and drawn on, or by, a New York Clearing House Association
member bank, aggregating not more than the Cash Balance, as apportioned, in
order to facilitate the satisfaction or release of any Liens or other
encumbrances. Similarly, at Seller’s election, unpaid Liens for taxes, water
and sewer charges and assessments that are the obligation of Seller to satisfy
and discharge shall not be objections to title, but the amount thereof, plus
interest and penalties thereon, if any, computed to the third (3rd) business
day after the Closing Date, shall be deducted from the Cash Balance and shall
be allowed to Purchaser, subject to the provisions for apportionment of taxes,
water and sewer charges and assessments contained in this Agreement.

     6.7 If, on the Closing Date, there are financing statements, conditional
bills of sale, chattel mortgages, or security interests filed against either or
both of the Properties, such filings shall not constitute objections to title,
provided that:

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     (a) Seller executes and delivers an affidavit to the effect that
either:

     (i) the personal property covered by said financing
statements, conditional bills of sale, chattel
mortgages, or security interests is no longer in or on
such Properties;

     (ii) if such personal property is still in or on
such Properties, it has been fully paid for (and Seller
provides reasonable proof thereof to Purchaser); or

     (iii) such personal property is the property of a
Tenant or other occupant of such Properties; and

     (b) the Title Company omits the same from the owner’s fee title
insurance policy and the lender’s mortgage title insurance policy
without Purchaser’s payment of any additional charge or additional
premium therefor.

     6.8 Any franchise or corporate tax that is open, levied, or imposed
against Seller, or any other owner in the chain of title to either or both of
the Properties, that may be a Lien on the Closing Date shall not be an
objection to title if the Title Company omits the same from the owner’s fee
title insurance policy and the lender’s mortgage title insurance policy without
Purchaser’s payment of any additional charge or additional premium therefor.

     6.9 If a search of title discloses judgments, bankruptcies, or other
returns against other persons or entities having names the same as, or similar
to, that of Seller, then Seller will deliver to Purchaser and the Title Company
an affidavit stating that such judgments, bankruptcies, or other returns are
not against Seller, whereupon, provided that the Title Company omits such
returns as exceptions to its owner’s fee title insurance policy and the
lender’s mortgage title insurance policy without Purchaser’s payment of any
additional charge or additional premium therefor, such returns shall not be
deemed objections to title.

     6.10 Seller shall be entitled to one or more adjournments of the Closing
Date, not exceeding sixty (60) days in the aggregate, in order to dispose of
any Unacceptable Encumbrances that Seller elects or is required to remove,
satisfy, or otherwise discharge, and Purchaser’s obligations to close hereunder
shall remain in full force and effect during such period.

     Article 7. Representations and Warranties

     7.1 Seller represents and warrants to Purchaser as follows:

     (a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.

     (b) Seller has the full legal right, power and authority to
execute and deliver this Agreement and all documents now or
hereafter to be executed by Seller pursuant to this Agreement
(collectively, “Seller’s Documents”), to consummate the transactions
contemplated hereby and to perform its obligations hereunder and
under the Seller’s Documents.

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     (c) The execution and delivery of this Agreement and Seller’s
Documents, as well as the performance of Seller’s obligations
hereunder and thereunder, do not, and will not, contravene any
provision of Seller’s certificate of incorporation or by-laws, or
any judgment, order, decree, writ, or injunction issued against
Seller, and do not require the consent of any governmental or
private party or body (other than the Board of Directors of Seller
or the Executive Committee of such Board of Directors, which consent
has been obtained). The consummation of the transactions
contemplated hereby will not result in a breach of, or constitute a
default or event of default by Seller under, any agreement to which
Seller or any of its assets are subject or bound.

     (d) To Seller’s knowledge, there are no leases, licenses, or
other occupancy agreements affecting any portion of the Properties
on the date hereof, except for the leases, licenses, or other
occupancy agreements listed in Schedule 3 annexed hereto (the
leases, licenses, or other occupancy agreements so scheduled,
collectively, the “Leases”) and except for any subleases or other
occupancy agreements made by the tenants under the Leases. To
Seller’s knowledge, Schedule 3 is a complete list of all leases,
licenses, occupancy agreements and other material documents relating
thereto pursuant to which the tenants of the Properties
(collectively, the “Tenants”) occupy their premises at the same.

     (e) As of the date of this Agreement only, Seller has:

     (i) not received written notice of any offsets
against, defenses to, or claims against the payment of
rent by any Tenant under any of the Leases;

     (ii) neither given nor received any written notice
of default under any of the Leases that remains uncured;
and

     (iii) no knowledge of any material default by
either Seller or any of the Tenants under the Leases
that remains uncured, other than:

     (x) Seller’s delay in arranging a
reduction in the letter of credit held as
security under the Lease of premises at the
150 College Road Premises to Predix
Pharmaceuticals Holdings, Inc. (successor to
Physiome Sciences, Inc.) pursuant to that
certain Third Amendment to Lease Agreement
dated October 14, 2004, by and between New
Valley Corporation and Predix
Pharmaceuticals Holdings, Inc; and

     (y) the withholding of payment of the
rents due for the month of December, 2004,
by Predix Pharmaceuticals Holdings, Inc.

     (f) Seller has not received written notice of any pending
litigations or any pending governmental proceedings to which Seller
is a party with respect to either or both of the Properties.

-14-

 

     (g) Seller has received no written notice that any of the
certificates of occupancy or any other Licenses issued in connection
with the ownership, use and the occupancy of Properties has been
suspended or revoked.

     (h) Seller has no employment contracts or collective bargaining
agreements relating to either or both of the Properties that would
bind Purchaser.

     (i) To Seller’s knowledge, there are no material service
contracts (including, without limitation, management and brokerage
agreements) affecting either or both of the Properties on the date
hereof, except for the contracts set forth on Schedule 5 annexed
hereto (collectively, the “Contracts”). As of the date of this
Agreement only, Seller has neither given nor received any written
notice of default under the Contracts, and to Seller’s knowledge
there are no material defaults under any of the Contracts.

     (j) As of the date of this Agreement only, Seller has received
no written notice of any pending condemnation against either or both
of the Properties or any portion thereof.

     (k) Seller has delivered, or caused to be delivered, to
Purchaser, and/or caused to be posted on the internet website
created by the Broker for reference by prospective purchasers of the
Properties (and Purchaser and its attorneys have been given full
access to such website), true and complete photocopies of all of the
Leases and the Contracts.

     (l) Seller is not a “foreign person” within the meaning of
Section 1445 of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder (“FIRPTA”).

     (m) Seller has not entered into any other contract for the sale
of the Properties or any portion thereof. Further, to Seller’s
knowledge, no person, firm, or entity has any right of first
refusal, right of first offer, or other preferential right to
acquire the Properties or any portion thereof, other than the
purchase right of the Trustees of Princeton University (the
“Trustees”) as set forth in the 100 College Road Declaration and the
150 College Road Declaration. Seller has requested and received a
waiver of such purchase right from the Trustees.

     (n) The sale of the Properties pursuant to this Agreement will
not render Seller insolvent.

     (o) As of the date of this Agreement only, Seller has received
no written notice from any governmental authority of any material
violations of any material laws (including, without limitation, any
material environmental laws) applicable to either or both of the
Properties (“Violations”).

     (p) During the ten (10) year period prior to and including the
date of this Agreement, 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 Seller’s
creditors, suffered the appointment of a receiver to take possession
of all, or substantially all, of Seller’s assets, suffered the
attachment or other judicial seizure of all,

-15-

 

or substantially all, of Seller’s assets, admitted in writing
its inability to pay its debts as they become due, or made an offer
of settlement, extension, or composition to its creditors generally.

     (q) As of the date of this Agreement only, Seller has no
knowledge that any substance brought onto, stored, used, or disposed
of at or from either or both of the Properties during the period of
Seller’s ownership of the Properties, which substance was classified
and recognized as a Hazardous Material under the laws, rules,
regulations, orders, codes and ordinances that were in effect at the
time of such activity, was so brought onto, stored, used and/or
disposed of at or from either or both of the Properties in violation
of any such law, rule, regulation, order, code, or ordinance.

Copies of the Leases, the Contracts and certain other Property Information have
been delivered, or otherwise made available, to Purchaser (including, without
limitation, by posting the same on the website maintained by the Broker with
respect to the Properties). Purchaser acknowledges having received the Leases,
the Contracts and such Property Information, as well as having reviewed, or
having had sufficient opportunity to review, the same. By accepting the Deed,
Purchaser acknowledges its receipt and acceptance, or the availability to it,
of all Property Information delivered or made available to it, and that
Purchaser has reviewed the same to its satisfaction. To the extent that the
copies of the Leases, the Contracts and/or the other Property Information
delivered or made available to Purchaser or its attorneys contain provisions
that are, or information that is, inconsistent with any of the foregoing
representations and warranties, or with any of the information set forth on the
schedules or in the exhibits to this Agreement, the foregoing representations
and warranties, or the applicable schedules and exhibits (as the case may be),
shall be deemed to be modified to the extent necessary to eliminate such
inconsistency and to conform such representations and warranties, or such
schedules and exhibits, to the contents of the Leases, the Contracts and such
Property Information.

     7.2 For all purposes of this Agreement (including, without limitation,
Sections 7.3 and 7.5 below), any representation or warranty made by Seller in
this Agreement (including, without limitation, in Section 7.1 above)
specifically as of the date of this Agreement shall be considered to be untrue
or incorrect only if the same is determined to be untrue or incorrect as of
such date, regardless of any change in facts and circumstance or in Seller’s
knowledge (whichever shall be applicable to the specific representation or
warranty) thereafter, and shall be considered to be repeated at Closing, but
nonetheless limited to the facts and circumstances or Seller’s knowledge
thereof (as the case may be) existing as of the date of this Agreement.
Without intention to limit the generality of the foregoing in any respect, if
Seller shall receive written notice of any new or additional Violations between
the date hereof and the Closing, Seller shall endeavor promptly to furnish
Purchaser with copies thereof, but Seller’s agreement to do so shall not
change, or detract from, the provision contained in Section 7.1(o) that the
representation and warranty relating to Violations set forth therein speaks
only as of the date hereof, nor shall Seller’s failure to furnish copies of any
such notices to Purchaser give rise to any liability on the part of the Seller
or to any rights in favor of Purchaser.

     7.3 If, at or prior to the Closing:

     (a) Purchaser shall acquire knowledge (whether through its own
efforts, by notice from Seller, or otherwise) that any of the
representations or warranties made herein

-16-

 

by Seller is untrue or incorrect, and shall give Seller notice
thereof at or prior to the Closing; or

     (b) Seller shall notify Purchaser that a representation or
warranty made in this Agreement by Seller is untrue or incorrect,

then Purchaser shall nevertheless be deemed to, and shall, waive such
misrepresentation or breach of warranty and shall consummate the transactions
contemplated hereby without any reduction of, or credit against, the Purchase
Price, but only if either:

     (i) all of such representations and warranties are of such a
nature that Purchaser’s actual damages as a result of such
misrepresentations or breaches of warranties would not exceed, in
the aggregate, Two Hundred Fifty Thousand ($250,000.00) Dollars; or

     (ii) Seller cures or corrects such untruth or incorrectness
prior to Closing (and, if Seller so elects, Seller shall have the
right to adjourn the Closing Date from time to time, by written
notice sent to Purchaser or given to Purchaser at the Closing, by
not more than a total of thirty (30) days in order to accomplish the
same).

However, if all of such representations and warranties are of such a nature
that Purchaser’s actual damages as a result of such misrepresentations or
breaches of warranties would exceed, in the aggregate, Two Hundred Fifty
Thousand ($250,000.00) Dollars, and such misrepresentations and/or breaches of
warranties are not cured or corrected by Seller on or before the Closing Date,
then Purchaser, as its sole remedy for any and all such misrepresentations
and/or breaches of warranties, shall elect either:

     (x) to waive such misrepresentations or breaches of warranties
and consummate the transactions contemplated hereby without any
reduction of, or credit against, the Purchase Price; or

     (y) to terminate this Agreement by notice given to Seller on
the Closing Date, in which event this Agreement shall be terminated
and neither party shall have any further rights, obligations, or
liabilities hereunder, except as otherwise expressly provided herein
(collectively, the “Surviving Obligations”), and except that,
provided that Purchaser is not otherwise in default hereunder,
Purchaser shall be entitled to the return of the Downpayment.

     7.4 Purchaser acknowledges, confirms and agrees that:

     (a) at or prior to the Closing, Purchaser’s rights and
remedies, in the event that any representation or warranty made by
Seller in this Agreement are untrue or incorrect, shall be only as
provided in Section 7.3;

     (b) if the Closing does not occur, Purchaser shall be deemed to
have expressly waived, relinquished and released all of the rights
or remedies that might otherwise have been available to Purchaser at
law, in equity, under this Agreement, or otherwise (including,
without limitation, the right to seek specific performance and/or
damages

-17-

 

from Seller) as a result of any of one or more Seller’s
representations or warranties made in this Agreement being untrue or
incorrect; and

     (c) Purchaser shall not be entitled to terminate this Agreement
or to seek any other remedy against Seller in the event that any
representation or warranty made by Seller in this Agreement
(including, without limitation, in Section 7.1 above) specifically
as of the date of this Agreement shall become untrue or incorrect in
any material or immaterial respect by reason of any change in
circumstance or other events occurring after the date hereof.

     7.5 In the event that the Closing occurs, then, notwithstanding anything
contained in this Agreement to the contrary:

     (a) Purchaser shall be deemed to have expressly waived,
relinquished and released any right or remedy that might otherwise
have been available to Purchaser at law, in equity, under this
Agreement, or otherwise to make a claim against Seller for damages
that Purchaser may incur, or to rescind this Agreement and the
transactions contemplated hereby, as the result of the untruth or
incorrectness of any of Seller’s representations or warranties that
survive the Closing, if:

     (i) Purchaser had actual knowledge that such
representation or warranty was untrue or incorrect at
the time of the Closing, and Purchaser nevertheless
closed title hereunder; or

     (ii) Purchaser’s actual damages as a result of such
misrepresentation or breach of warranty are less than
Two Hundred Fifty Thousand ($250,000.00) Dollars in the
aggregate; and

     (b) to the extent that Purchaser shall not have waived,
relinquished and released all rights or remedies that are available
to it at law, in equity, under this Agreement, or otherwise as
provided in Section 7.5(a), the aggregate liability of Seller
arising pursuant to, or in connection with, any surviving
representations, warranties, covenants and other obligations
(whether express or implied) of Seller in this Agreement and/or in
the Seller’s Documents (including the Deed) shall not exceed, in the
aggregate, an amount equal to Two Million ($2,000,000.00) Dollars.

The provisions of this Section 7.5 shall survive the Closing.

     7.6
As used in this Agreement, the words “Seller’s knowledge”, or words of
similar import, shall be deemed to mean, and shall be limited to, the actual
(as distinguished from implied, imputed, or constructive) knowledge of Seller
after, and based solely upon, making inquiry of Bennett P. Borko, an officer of
New Valley Realty, the real estate division of Seller, without such person
having any obligation to make any independent inquiry or investigation other
than inquiries of the management agents for the Properties. Without limiting
the generality of the preceding, knowledge of any matter possessed by the
management agents for the Properties or their affiliates shall not be imputed
to Seller, unless such matter is actually known by Mr. Borko. Furthermore,
references herein to the receipt of any notices by Seller, or terms of similar
import, shall mean written notices actually received by Mr. Borko. No notices
received by Seller’s management agents or by any other of Seller’s agents or
employees shall

-18-

 

be imputed to Seller unless the same have actually been received by Mr.
Borko. Purchaser acknowledges that Mr. Borko’s knowledge is based solely upon
his inquiries of the management agents for the Properties.

     7.7 The representations and warranties of Seller set forth in Section 7.1
and elsewhere in this Agreement, and/or in the Seller’s Documents (including,
without limitation, the Deed), shall not survive the Closing, except that
Seller’s representations and warranties set forth in this Article 7 shall
survive the Closing for a period of one (1) year.

     7.8 Purchaser represents and warrants to Seller as follows:

     (a) Purchaser is a corporation, duly formed, validly existing,
and in good standing under the laws of the State of Delaware.

     (b) Purchaser has the full legal right, power, authority and
financial ability to execute and deliver this Agreement and all
documents now or hereafter to be executed by Purchaser pursuant to
this Agreement (collectively, “Purchaser’s
Documents”), to
consummate the transactions contemplated hereby and to perform its
obligations hereunder and under Purchaser’s Documents.

     (c) The execution and delivery of this Agreement and
Purchaser’s Documents, as well as the performance of Purchaser’s
obligations hereunder and thereunder, do not, and will not,
contravene any provision of the Charter or By-Laws of Purchaser, or
any judgment, order, decree, writ, or injunction issued against
Purchaser, and do not require the consent of any governmental or
private party. The consummation of the transactions contemplated
hereby will not result in a breach of, or constitute a default or
event of default by Purchaser under, any agreement to which
Purchaser or any of its assets are subject or bound.

     (d) There are no material pending actions, suits, proceedings,
or investigations to which Purchaser is a party before any court or
other governmental authority that may have an adverse impact on
Purchaser’s ability to consummate the transactions contemplated
hereby.

     (e) Purchaser has knowledge and experience in financial and
business matters, and is capable of evaluating the merits and risks
of the transactions contemplated by this Agreement.

     (f) Purchaser is not acting, directly or indirectly, for, or on
behalf of, any person, group, entity, or nation named by any
Executive Order or the United States Treasury Department as a
terrorist, “Specially Designated National and Blocked Person,” or
other banned or blocked person, entity, nation, or transaction
pursuant to any law, order, rule, or regulation that is enforced or
administered by the Office of Foreign Assets Control, and is not
engaged in this transaction, directly or indirectly on behalf of, or
instigating or facilitating this transaction, directly or indirectly
on behalf of, any such person, group, entity, or nation.

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The representations and warranties of Purchaser set forth in this Section 7.7
and elsewhere in this Agreement shall survive the Closing and the execution and
delivery of the Deed for a period of one (1) year.

     7.9 Any claim asserted by either party against the other for breach of a
surviving representation or warranty must be asserted by notice given to the
party allegedly in breach thereof prior to the expiration of the applicable
survival period therefor. Such notice shall set forth in reasonable detail the
basis for such claim.

     Article 8. Costs of Transaction.

     8.1 Seller shall be responsible for:

     (a) Seller’s legal fees and expenses attributable to the
transfer of the Properties to Purchaser, including the preparation
and negotiation of this Agreement and the consummation of the
transactions contemplated herein; and

     (b) any transfer taxes imposed by the state and locality in
which the Properties are located in connection with the transfer of
the 100 College Road Premises and the 150 College Road Premises to
Purchaser.

     8.2 Except as otherwise provided in Section 8.1 or Article 12, all costs
and expenses in connection with the transfer of the Properties to Purchaser
shall be the sole responsibility of, and be paid by, Purchaser, including,
without limitation:

     (a) Purchaser’s legal fees and expenses;

     (b) Purchaser’s fee title insurance premiums, recording fees
and expenses, survey costs, and, except as otherwise specifically
set forth in this Agreement, the cost of any affirmative title
insurance and endorsements desired by Purchaser;

     (c) mortgagee title insurance premiums, recording fees, taxes
and expenses with respect to any mortgage financing procured by
Purchaser;

     (d) any transfer or sales taxes, other than the transfer taxes
referred to in Section 8.1(b) above;

     (e) engineering, environmental, inspection and other due
diligence expenses; and

     (f) all other closing expenses that by law or custom are paid
by the purchasers of real property in the State of New Jersey.

     Article 9. Documents and Items to be Delivered at Closing

     9.1 At the Closing, Seller shall execute, acknowledge and/or deliver (or
cause to be delivered), as applicable, the following to Purchaser or the Title
Company, as applicable:

     (a) A Deed conveying fee title to the Properties to Purchaser,
in the form of Exhibit A annexed hereto (the “Deed”).

-20-

 

     (b) An Assignment and Assumption of Leases and Security
Deposits, in the form of Exhibit B annexed hereto (the “Lease
Assignment”), assigning without warranty or representation all of
Seller’s right, title and interest, if any, in and to the Leases,
all guarantees thereof, and the security deposits thereunder in
Seller’s possession, if any.

     (c) An Assignment and Assumption of Contracts, Licenses and
Building Plans, in the form of Exhibit C annexed hereto (the
“Contract and License Assignment”), assigning all of Seller’s right,
title and interest, if any, in and to:

     (i) all of the assignable Licenses;

     (ii) all assignable purchase orders, equipment
leases, advertising agreements, franchise agreements,
license agreements, leasing and brokerage agreements and
other service contracts relating to the operation of the
Properties, to the extent that Purchaser has agreed
under Section 17.2 to assume such Contracts; and

     (iii) all assignable building plans and
specifications and guarantees and warranties for any
real or personal property being transferred pursuant to
this Agreement, to the extent that:

     (x) any such plans and specifications
are in Seller’s possession or control; and

     (y) Seller is the beneficiary of any
such guarantees and warranties.

     (d) An Assignment of Intangible Property in the form of Exhibit
D annexed hereto (the “Intangible Property
Assignment”), assigning
all of Seller’s right, title and interest, if any, in and to
Intangible Property.

     (e) To the extent in Seller’s possession, signed original
copies of all of the Leases and any amendments, guarantees and other
documents relating thereto, together with:

     (i) a schedule of all tenant security deposits
under the Leases and the accrued interest on such
security deposits payable to Tenants that are in the
possession of, or received by, Seller; and

     (ii) a good, unendorsed certified or official bank
check drawn on or by a New York Clearing House
Association member bank payable to the order of
Purchaser, or a credit to Purchaser against the Purchase
Price, in the aggregate amount of such security deposits
and accrued interest thereon payable to Tenants that are
in the possession of, or received by, Seller, less,
however, the amount of any security deposit

-21-

 

applied against a Tenant’s default in conformity
with the provisions of such Tenant’s Lease.

With respect to any security deposits under Leases that are other
than cash, Seller shall execute and deliver to Purchaser at the
Closing, or, if applicable, cause Seller’s lender to execute and
deliver to Purchaser, any appropriate instruments of assignment or
transfer, without warranty or representation that such security may
be converted to cash. The provisions of the preceding sentence
shall survive the Closing.

     (f) A bill of sale, in the form of Exhibit E annexed hereto
(the “Bill of Sale”), conveying, transferring and selling to
Purchaser, without warranty or representation, all right, title and
interest of Seller in and to all Personal Property being transferred
pursuant to Article 1 of this Agreement. Seller and Purchaser agree
that no portion of the Purchase Price has been allocated to, or is
otherwise attributable to, the Personal Property.

     (g) Notices to Tenants and notices to the vendors or suppliers
under the Contracts assumed by Purchaser, in the forms of Exhibit
F-1 and Exhibit F-2, respectively, annexed hereto (the “Tenant
Notices” and the “Contractor Notices”), both:

     (i) advising the Tenants and such vendors or
suppliers of the sale of the Properties to Purchaser;
and

     (ii) directing that rents and other payments under
the Leases, in the case of the Tenant Notices, and
future communications, in the case of the Contractor
Notices, thereafter be sent to Purchaser’s management
agent as designated therein.

     (h) Copies of the resolutions of the Board of Directors or the
Executive Committee thereof of Seller, authorizing the execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated by this Agreement to be undertaken by
Seller, certified as true and correct by the Secretary or an
Assistant Secretary of Seller.

     (i) Possession of the Properties, subject to the Permitted
Encumbrances, the Leases and any Unacceptable Encumbrances that have
been waived in writing by Purchaser.

     (j) State and local property transfer tax returns required to
be filed in connection with the sale of the Properties hereunder
(the “Transfer Tax Returns”), and the payment of all transfer taxes
required thereby.

     (k) A certificate signed by Seller in the form of Exhibit G
annexed hereto (the “FIRPTA Certificate”). Upon Seller’s delivery
of such certificate, Purchaser shall not withhold any portion of the
Purchase Price pursuant to Section 1445 of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder.

-22-

 

     (l) All files, records, plans and specifications in Seller’s
possession relating to the construction, maintenance, operation and
leasing of the Properties and not previously delivered to Purchaser.

     (m) Letters of non-applicability under the New Jersey
Industrial Site Recovery Act (“ISRA”) with respect to the
Properties, if obtained by Seller. Seller’s failure to deliver the
same shall not entitle Purchaser to refuse to close under this
Agreement, but Seller represents that it will duly apply for such
letters and will diligently pursue the obtaining thereof.

     (n) An Affidavit of Title in form and substance sufficient to
enable the Title Company to omit its standard printed exceptions
from the Title Commitment, except to the extent that any thereof are
Permitted Encumbrances and except, further, that Seller shall not be
required thereby to incur any obligation to remedy title defects
beyond its obligations under Article 6.

     (o) All other documents and items Seller is required to deliver
pursuant to the provisions of this Agreement.

     9.2 At the Closing, Purchaser shall execute, acknowledge and/or deliver,
as applicable, the following to Seller or the Title Company, as applicable:

     (a) The Cash Balance, subject to apportionments, credits (if
any) and adjustments (if any), as provided in this Agreement.

     (b) The Deed.

     (c) The Lease Assignment.

     (d) The Contract and License Assignment.

     (e) A certificate executed by the secretary or other
appropriate officer of Purchaser, certifying as to the consents of
the Board of Directors of Purchaser authorizing the execution,
delivery, and performance of this Agreement by Purchaser (true and
correct copies of which shall be attached thereto) and as to the
authority and signatures of those individuals executing any
documents or instruments on behalf of Purchaser in connection with
the transactions contemplated herein.

     (f) The Transfer Tax Returns.

     (g) All other documents and items Purchaser is required to
deliver pursuant to the provisions of this Agreement.

     Article 10. Tax Certiorari

     10.1 Seller shall, at Closing, assign to Purchaser, without
representation, warranty, or recourse of any kind, all of Seller’s right, title
and interest (if any) in and to any then pending protests or reduction
proceedings relating to the assessed valuation of the Properties for any fiscal
tax year(s)

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subsequent to the tax year in which the Closing occurs, whereupon
Purchaser shall be authorized to continue and control the progress of, and to
make all decisions with respect to, any such proceedings.

     10.2 All net tax refunds and credits attributable to any tax year prior to
the tax year in which the Closing occurs shall belong to, and be the property
of, Seller. All net tax refunds and credits attributable to any tax year
subsequent to the tax year in which the Closing occurs shall belong to, and be
the property of, Purchaser. All net tax refunds and credits attributable to
the tax year in which the Closing occurs shall be divided between Seller and
Purchaser in accordance with the apportionment of taxes pursuant to the
provisions of this Agreement, after deducting therefrom a pro rata share of all
expenses (including, without limitation, reasonable counsel fees and
disbursements and consultant’s fees) incurred in obtaining such refund, the
allocation of such expenses to be based upon the total refund obtained in such
proceeding and in any other proceeding simultaneously involved in the trial or
settlement. All tax refunds to be paid to either party after the Closing shall
be net of any amounts due to Tenants on account of any such tax refunds, and
Seller and Purchaser shall jointly determine such amount(s) (if any) due
Tenants and direct the Seller’s tax protest or certiorari counsel to deduct
such amounts from the gross tax refund and forward the same to the appropriate
Tenant(s) prior to making any payment to Seller or Purchaser (as the case may
be).

     10.3 Each party shall cooperate with the other party in connection with
the prosecution of any such proceedings, and take all steps, whether before or
after the Closing Date, that may be necessary to carry out the intention of the
foregoing (including, without limitation, the delivery to the other party, upon
demand, of any relevant books and records (including, without limitation,
receipted tax bills and canceled checks used in payment of such taxes), the
execution of any and all consents or other documents, and the undertaking of
any act necessary for the collection of such refund by the party entitled
thereto).

     10.4 The provisions of this Article 10 shall survive the Closing.

     Article 11. As Is; Due Diligence.

     11.1 Purchaser shall accept title to the Properties on an “AS-IS-WHERE-IS
AND WITH ALL FAULTS” basis, except as otherwise provided herein.

     11.2 This Agreement contains all the terms of the agreement entered into
between the parties as of the date hereof. Purchaser acknowledges that neither
Seller nor any of Seller’s Affiliates, nor any of their respective agents or
representatives, have made any representations, or held out any inducements, to
Purchaser. Seller hereby specifically disclaims any representations, oral or
written, past, present, or future, other than those specifically set forth in
this Agreement. Without limiting the generality of the foregoing, Purchaser has
not relied upon any representations or warranties, and neither Seller nor any
of Seller’s Affiliates, nor any of their agents or representatives, has made,
or is willing to make, any representations or warranties, express or implied,
other than as may be expressly set forth herein, as to any matter or thing,
including, without limitation:

     (a) the status of title to the Properties;

     (b) the Leases, Contracts and Licenses;

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     (c) the current or future real estate tax liability,
assessment, or valuation of the Properties;

     (d) the potential qualification of the Properties for any and
all benefits conferred by any laws, whether for subsidies, special
real estate tax treatment, insurance, mortgages, or any other
benefits, whether similar or dissimilar to those enumerated;

     (e) the compliance of the Properties in their current or any
future state with applicable laws (including, without limitation,
environmental laws) or any violations thereof (including, without
limitation, those relating to access for the handicapped,
environmental, or zoning matters), and the ability to obtain a
change in the zoning or a variance in respect to the Properties’
non-compliance, if any, with zoning laws;

     (f) the existence, nature, significance, impact and/or extent
of any declaration, easement, covenant, condition, restriction,
right-of-way, lease, possession, lien, encumbrance, license,
reservation, condition, or otherwise, regardless of whether or not a
Permitted Encumbrance;

     (g) the availability of any financing for the purchase,
alteration, rehabilitation, or operation of the Properties from any
source (including, without limitation, any government authority or
any lender);

     (h) the current or future use of the Properties;

     (i) the present and future condition and operating state of any
Personal Property, and the present or future structural and physical
condition of the Buildings, their suitability for rehabilitation or
renovation, or the need for expenditures for capital improvements,
repairs, or replacements thereto;

     (j) environmental matters relating to either or both of the
Properties or any portion thereof (including, without limitation,
the presence or absence of any underground storage tanks);

     (k) geological conditions (including, without limitation,
subsurface conditions), drainage and soil conditions (including,
without limitation, the existence of instability, past soil repairs,
soil additions, conditions of soil fill and the sufficiency of any
undershoring);

     (l) the availability of any utilities to either or both of the
Properties (including, without limitation, water, sewage, gas,
electric, telephone and cable television)

     (m) the actual or permitted usages of any adjoining property;

     (n) access to either or both of the Properties or any portion
thereof;

-25-

 

     (o) the value, compliance with plans and specifications, size,
location, age, use, design, quality, description, suitability,
structural integrity, operation, physical condition, or financial
condition of either or both of the Properties or any portion
thereof;

     (p) the merchantability of either or both of the Properties or
any portion thereof, or the suitability or fitness thereof for any
particular purpose or use;

     (q) the viability or financial condition of any Tenant;

     (r) the status of the leasing market in which the Properties
are located;

     (s) the actual or projected income or operating expenses of the
Properties; or

     (t) the tax consequences of acquiring, owning, operating,
maintaining, repairing, restoring, financing, or otherwise dealing
with the Properties.

     11.3 Seller makes no representations or warranties as to whether either or
both of the Properties, or any portion thereof, contains any Hazardous
Materials, or pertaining to the extent, location, or nature of the same.
Further, to the extent that Seller has provided, or may hereafter provide,
Purchaser with information from any inspection, engineering, or environmental
reports concerning dieldrin or any other Hazardous Materials, Seller makes no
representations or warranties with respect to the accuracy or completeness,
methodology of preparation, or otherwise concerning the contents of such
reports. The risk that adverse physical and environmental conditions may not
have been revealed or discovered, and may not be discoverable, by Purchaser’s
investigations shall be upon and with Purchaser. As used in this Agreement,
the term “Hazardous Materials” shall mean petroleum or petroleum products,
radioactive materials, asbestos in any form, dieldrin, polychlorinated
biphenyls, radon gas and any chemicals, materials, or substances defined as, or
included in the definition of, “hazardous substances”, “hazardous waste”,
“hazardous materials”, “extremely hazardous substances”, “toxic substances”,
“toxic pollutants”, “contaminants” or “pollutants” under any applicable
environmental laws, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. § 6901 et
seq., Solid Waste Disposal Act, 42 U.S.C. § 6901 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. § 1251 et seq., the Toxic Substances Control
Act, 15 U.S.C. § 7401 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the
Safe Drinking Water Act, 42 U.S.C. § 3803 et seq., the Oil Pollution Act of
1990, 33 U.S.C. § 2701 et seq., the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. § 136 et seq., the regulations promulgated pursuant
to any of the foregoing and any state and local counterparts or substantial
equivalents thereof.

     11.4 Purchaser acknowledges that Seller has afforded Purchaser with the
opportunity for full and complete investigations, examinations and inspections
of the Properties and all Property Information. Purchaser acknowledges and
agrees that:

     (a) the Property Information delivered or made available to
Purchaser and Purchaser’s Representatives by Seller or Seller’s
Affiliates, or any of their agents or representatives, may have been
prepared by third parties and may not be the work product of Seller
and/or any of Seller’s Affiliates;

-26-

 

     (b) neither Seller nor any of Seller’s Affiliates have made any
independent investigation or verification of, or has any knowledge
of the accuracy or completeness of, the Property Information, except
as and to the extent specifically set forth in this Agreement;

     (c) except for the copies of the Leases and the Contracts, all
other Property Information delivered or made available to Purchaser
and Purchaser’s Representatives has been furnished to each of them
at the request, and for the convenience, of Purchaser and without
Seller having been obligated to deliver or make available any
thereof;

     (d) except as specifically set forth in this Agreement,
Purchaser is relying solely on its own investigations, examinations
and inspections of the Properties and those of Purchaser’s
Representatives, and is not relying in any way on the Property
Information furnished by Seller or any of Seller’s Affiliates, or
any of their agents or representatives;

     (e) except as specifically set forth in this Agreement, Seller
expressly disclaims any representations or warranties with respect
to the accuracy or completeness of the Property Information; and

     (f) except as specifically set forth in this Agreement,
Purchaser hereby releases Seller and Seller’s Affiliates, and their
respective agents and representatives, from any and all liability
with respect to the accuracy and completeness of the Property
Information.

     11.5 Purchaser, or anyone claiming by, through, or under Purchaser, hereby
fully and irrevocably releases Seller and Seller’s Affiliates, and their agents
and representatives, from any and all claims that Purchaser or any such
releasor may now have, or may hereafter acquire, against Seller or Seller’s
Affiliates, or their respective agents or representatives, for any cost, loss,
liability, damage, expense, action, or cause of action, whether foreseen or
unforeseen, arising from, or related to, any construction defects, construction
errors or construction-related omissions on or in the Properties, or any other
conditions (whether patent, latent or otherwise) affecting the Properties,
except for claims against Seller based upon any representations, warranties,
covenants, obligations and/or liabilities of Seller specifically provided in
this Agreement and, as to the same, as such claims against Seller are, or may
be, limited by the provisions of this Agreement with respect to survival,
damages, remedies, and the like.

     11.6 Except for the representations and warranties specifically set forth
in this Agreement, Seller makes no representations or warranties as to the
truth, accuracy, or completeness of the Property Information (including,
without limitation, that the Property Information is complete, accurate, or the
final versions thereof, or that all similar Property Information has been
provided to Purchaser). It is the parties express understanding and agreement
that the Property Information is provided only for Purchaser’s convenience in
making its own examination and determination as to whether it wishes to
purchase the Properties, and, in doing so, except for the representations and
warranties expressly set forth in this Agreement, Purchaser has relied
exclusively on its own independent investigation and evaluation of every aspect
of the Properties, and not on any information supplied by Seller. Purchaser
expressly disclaims any intent to rely upon the Property Information in
connection with the Engineering Inspections and Environmental Inspections, and
agrees that, except for the representations and

-27-

 

warranties expressly set forth in this Agreement, it shall rely solely on
its own independently developed or verified information.

     11.7 Purchaser acknowledges that Seller shall not be liable or bound in
any manner by any oral or written “setups” or information pertaining to the
Properties or the rents furnished by Seller, Seller’s Affiliates, their agents
or representatives, the Broker, any other real estate broker, or any other
person or entity.

     11.8 Between the date of this Agreement and the Closing, Seller shall
allow Purchaser and Purchaser’s Representatives reasonable access to the 100
College Road Premises and the 150 College Road Premises during normal business
hours for the sole purpose of inspecting the physical condition of the same and
conducting non-intrusive physical and environmental tests and inspections
thereof (collectively, the “Inspections”). Purchaser and/or its Representatives
may, at Purchaser’s option, conduct the Inspections on several different dates,
and Purchaser may, at its option, retain different Purchaser’s Representatives
to conduct different aspects of the Inspections, provided, however, that, at
least twenty-four (24) hours prior to any such Inspection, Purchaser shall
provide notice to Seller of its and/or the Purchaser’s Representatives’
intention to conduct such Inspection and the proposed date and time of such
Inspection (which notice may be given by telephone to Seller’s property
management office and need not be given in writing as provided in Article 15).
Seller and/or its representatives shall have the right to accompany Purchaser
and/or Purchaser’s Representatives during any such Inspection.

     11.9 Except with Seller’s prior written consent, which shall not be
unreasonably withheld, conditioned, or delayed, Purchaser and/or Purchaser’s
Representatives shall not conduct any physically intrusive testing, boring,
drilling, sampling, or removing of any portion of either or both of the
Properties (collectively, “Physical Testing”; the term “Inspection”, as
hereinafter used in this Agreement, shall be deemed to include Physical
Testing). If Purchaser and/or Purchaser’s Representatives desire to conduct
any Physical Testing on the Property, Purchaser shall submit a work plan to
Seller along with its request for Seller’s consent to the Physical Testing, and
Seller shall respond to such request within three (3) business days after
Seller’s receipt of such request.

     11.10 Prior to any Inspection (whether or not the same shall involve
Physical Testing), Purchaser and/or Purchaser’s Representatives, at Purchaser’s
own cost and expense, shall obtain any and all permits and authorizations of
whatever nature as are required by law in connection therewith. Purchaser shall
comply, and shall cause Purchaser’s Representatives to comply, with any and all
applicable Federal, state and local laws and regulations in connection with any
Inspection. Prior to conducting any Inspection, Purchaser shall obtain, or
shall cause any Purchaser’s Representative not otherwise included under any
Purchaser’s coverage to obtain, comprehensive liability insurance, insuring any
and all activities and conduct of any such persons while exercising the rights
granted hereunder, and against any adverse consequences of any and all such
activities and conducts, which insurance shall:

     (a) provide for combined single limits of liability of not less
than $5,000,000.00 for personal injury or death and not less then
$1,000,000.00 for property damage;

     (b) contain a contractual liability endorsement that insures
the indemnity obligations contained in this Agreement; and

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     (c) name Seller and Crimson Corporate Services, LLC (property
manager of the Property) as additional insureds.

     11.11 If any portion of either of the Properties (including, without
limitation, improvements, furniture and fixtures) suffers damage by reason of
any Inspection by Purchaser and/or Purchaser’s Representatives, Seller shall
have the right to:

     (a) cause Purchaser, at Purchaser’s sole cost and expense, to
immediately repair all such damage and restore the applicable
Property or Properties to the condition existing prior to such
damage; or

     (b) repair all such damage, restore the applicable Property or
Properties to the condition existing prior to such damage and charge
Purchaser for the actual and reasonable out-of-pocket costs of such
repair and restoration (which costs shall be paid by Purchaser to
Seller within ten (10) days after Purchaser’s receipt of a detailed
written statement from Seller’s vendors therefor).

     11.12 Purchaser shall not suffer, or permit to be enforced against either
or both of the Properties or any part thereof, any mechanics’, materialmen’s,
contractors’, or subcontractors’ lien, or any claim for damage or demand for
damages, arising out of any Inspection by Purchaser and/or Purchaser’s
Representatives. Purchaser shall pay or bond over, or cause to be paid or
bonded over, all such liens, claims and demands within ten (10) days after
receipt of notice thereof. Purchaser shall promptly furnish evidence of payment
or bonding upon Seller’s request.

     11.13 Purchaser shall not unreasonably interfere with, or permit
unreasonable interference with, the quiet enjoyment of all or any portion of
either or both of the Properties by any person occupying, or providing service
at, the same or entitled to use any portion of the same.

     11.14 Purchaser shall indemnify, defend and hold harmless Seller, the
property manager of the Properties and their respective officers, directors,
agents, employees and contractors from and against any and all actual and
direct losses, liabilities, demands, damages, liens, claims, injuries, actions,
out-of-pocket costs, or out-of-pocket expenses, including, without limitation,
reasonable attorneys’ fees, disbursements and court costs, arising out of:

     (a) any access to, or activities (including without limitation
any Inspection) at, either or both of the Properties by Purchaser
and/or Purchaser’s Representatives;

     (b) any release by Purchaser and/or Purchaser’s Representatives
of Hazardous Materials on either or both of the Properties, whether
or not brought onto the same by Purchaser and/or Purchaser’s
Representatives or that exist on the same on the date hereof;

     (c) any breach of this Agreement by Purchaser; or

     (d) any negligent act or omission, or willful misconduct, of
Purchaser and/or Purchaser’s Representatives,

provided, however, that this indemnity shall not extend to protect any of the
foregoing indemnitees from any preexisting liabilities for matters merely
discovered or disturbed by Purchaser and/or Purchaser’s

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Representatives (e.g., latent environmental contamination), so long as
Purchaser and/or Purchaser’s Representatives’ actions do not materially
aggravate any pre-existing liability of such indemnitees.

     11.15 Any Inspection, due diligence investigation, test, study, or other
analysis relating to either or both of the Properties shall be performed at
Purchaser’s sole cost and expense and in compliance with all applicable laws
and regulations. Purchaser shall provide Seller, at Purchaser’s sole cost and
expense, with a copy of any and all written reports, analyses, summaries, or
other similar documents (collectively, “Reports”) produced in connection with
any Inspection.

     11.16 Purchaser shall keep confidential, and shall cause Purchaser’s
Representatives to keep confidential, the results of the Inspection and all
information (including, without limitation, any Reports) acquired or created,
in whole or in part, through the exercise of the rights granted hereunder, and
shall refrain from disclosing or divulging the same to any third party
(including, without limitation, any governmental agency) without Seller’s prior
written consent, which consent may be withheld or conditioned in Seller’s sole
discretion. Notwithstanding the foregoing, however, however, Purchaser may
make such results and/or information available:

     (a) to Purchaser’s Representatives, to the extent that such
disclosure is reasonably appropriate, and to any prospective lender
who may provide financing for Purchaser’s purchase of the
Properties, but only on the condition that Purchaser informs any
such representatives and prospective lender of their obligation
under this Agreement to maintain the confidentiality of such
information (it being agreed that Purchaser shall be liable for such
representatives’ and/or prospective lenders’ failure to maintain the
confidentiality of such confidential information); and

     (b) as required by subpoena, order of any court or applicable
law, provided however, that Seller is immediately notified by
Purchaser of such subpoena, order, or law and is given a reasonable
opportunity to contest, or to object to, the disclosure or to seek
an appropriate protective order.

This Section 11.16 shall not apply to any such confidential information that:

     (i) was in the public domain prior to receipt thereof by
Purchaser from Seller, or that subsequently becomes part of the
public domain, except by the wrongful act or omission of Purchaser
or Purchaser’s Representatives; or

     (ii) is ordered to be disclosed by an order of a court or
governmental administrative agency, or is legally compelled to be
disclosed (by means of interrogatory, deposition, subpoena, civil
investigative demand, or similar process), provided, however, that
Seller is immediately notified by Purchaser of such order or demand
for disclosure and is given a reasonable opportunity to contest or
to object to such order or to seek an appropriate protective order.

     11.17 Unless Seller agrees otherwise in writing, all Property Information
made available to Purchaser by Seller or its agents or representatives, or
coming into Purchaser’s possession or control as a result of the Inspections or
otherwise, is confidential, and shall be governed by the terms of Section 11.16
above.

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     11.18 The provisions of this Article 11 shall survive the termination of
this Agreement and the Closing.

     Article 12. Broker

     12.1 Purchaser represents and warrants to Seller, and Seller represents
and warrants to Purchaser, that neither has dealt with any broker in connection
with the Properties and the transactions described herein, except for Eastdil
Realty Company, L.L.C. (the “Broker”). Seller shall pay the commission, if
any, due and owing to the Broker pursuant to a separate agreement.

     12.2 Purchaser shall indemnify, defend and hold Seller harmless from and
against any and all claims, causes of action, losses, costs, expenses, damages,
or liabilities (including, without limitation, reasonable attorneys’ fees and
disbursements) that Seller shall sustain, incur, or be exposed to by reason of
any claim or claims by any broker, finder, or other person or entity, other
than the Broker, for fees, commissions, or other compensation arising out of
the transactions contemplated in this Agreement, if such claim or claims are
based in whole or in part on dealings or agreements with Purchaser.

     12.3 Seller shall indemnify, defend and hold Purchaser harmless from and
against any and all claims, causes of action, losses, costs, expenses, damages,
or liabilities (including, without limitation, reasonable attorneys’ fees and
disbursements) that Purchaser may sustain, incur, or be exposed to by reason of
any claim or claims by Broker and any other broker, finder or other person or
entity, for fees, commissions, or other compensation arising out of the
transactions contemplated in this Agreement, if such claim or claims are based
in whole or in part on dealings or agreements with Seller.

     12.4 The obligations, and representations and warranties, contained in
this Article 12 shall survive the termination of this Agreement and the
Closing.

     Article 13. Indemnification

     13.1 Purchaser’s Indemnification. Purchaser hereby indemnifies Seller
against, and agrees to hold and save Seller harmless of and from, any and all
loss, cost, damage, injury, or expense arising out of, or in any way related
to:

     (a) claims for injury to, or death of, persons, or damage to
property, occurring at either or both of the Properties on or after
the Closing Date;

     (b) any claims arising out of, or related to, the ownership,
operation, management, control, or conduct of the business of either
or both of the Properties on or after the Closing Date; and

     (c) any and all brokerage commissions that may become payable
to any broker with respect to any extension or renewal term of any
Lease beyond the term of such Lease in effect as of the date hereof
(any such currently effective Lease term, a “Current Term”), or any
expansion of the space demised under any Lease.

     13.2 Seller’s Indemnification. Seller hereby indemnifies Purchaser
against, and agrees to hold and save Purchaser harmless of and from, any and
all loss, cost, damage, injury, or expense arising out of, or in any way
related to:

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     (a) claims for injury to, or death of, persons, or damage to
property, occurring at either or both of the Properties prior to the
Closing Date;

     (b) any claims arising out of, or related to, the ownership,
operation, management, control or conduct of the business of either
or both of the Properties prior to the Closing Date; and

     (c) any and all accrued and unpaid leasing commissions due or
to become due to any broker with respect to the Current Term of any
Lease, but not with respect to:

     (i) any extension or renewal of any Current Term;
or

     (ii)any expansion of the space demised under any Lease.

     13.3 Survival. The provisions of this Article 13 shall survive the Closing.

     Article 14. Access to Records

     14.1 For a period of seven (7) years subsequent to the Closing Date,
Seller, Seller’s Affiliates and Seller’s and Seller’s Affiliates’ respective
employees, agents and representatives shall be entitled to access during
business hours to all documents, books and records given to Purchaser by Seller
at the Closing for tax and audit purposes, regulatory compliance and
cooperation with governmental investigations, upon reasonable prior notice to
Purchaser, and shall have the right, at its sole cost and expense, to make
copies of such documents, books and records to extent such records are still in
Purchaser’s possession or control.

     Article 15. Notices

     15.1 All notices, elections, consents, approvals, demands, objections,
requests, or other communications that Seller or Purchaser may be required or
desire to give pursuant to, under, or by virtue of this Agreement must be in
writing and either:

     (a) except for those notices, elections, consents, approvals,
demands, objections, requests, or other communications permitted or
required by this Agreement to be given by either party to the other
at the Closing, sent by reputable overnight courier service (such as
Federal Express Corporation, Airborne Express, Emery or Purolator;
or

     (b) with respect to those notices, elections, consents,
approvals, demands, objections, requests, or other communications
permitted or required by this Agreement to be given by either party
to the other at the Closing, so given to the other party.

All notices, elections, consents, approvals, demands, objections, requests, or
other communications given at the Closing in compliance with the provisions of
this Article 15 shall be deemed given and received on the Closing Date. All
notices, elections, consents, approvals, demands, objections, requests, or
other communications sent in compliance with the provisions of Section 15.1(a)
above shall be deemed given and received on the date delivered to the other
party or, if applicable, the date upon which delivery is refused, in either
event as recorded in the business records of such overnight courier service.

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     15.2 For purposes of Section 15.1, the addresses of the parties shall be
as follows:

If to Seller:

New Valley Corporation

100 S.E. Second Street

32nd Floor

Miami, Florida 33131

Attention: Richard J. Lampen, Esq.,

        Executive Vice President and General Counsel

- with a copy to - 

Fischbein • Badillo • Wagner • Harding LLP

909 Third Avenue

New York, New York 10022

Attention: Marc S. Intriligator, Esq.

- and - 

New Valley Realty

712 Fifth Avenue

52nd Floor

New York, New York 10019

Attention: Mr. Bennett Borko

If to Purchaser:

Princeton Owner Corp.

c/o Falcon Real Estate Investment Company, LTD

570 Lexington Avenue

New York, New York 10022

Attention: Mr. Kenneth C. Lorman

- with a copy to - 

Shearman & Sterling

599 Lexington Avenue

New York, New York 10022

Attention: Robert W. Fagiola, Esq.

If to Escrow Agent:

Fischbein • Badillo • Wagner • Harding LLP

909 Third Avenue

New York, New York 10022

Attention: Marc S. Intriligator, Esq.

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     15.3 Seller or Purchaser may designate another addressee, or change its
address, for notices and other communications hereunder by a notice given to
the other parties in the manner provided in this Article 15.

     15.4 Notices and other communications given by the attorneys,
respectively, for Seller or Purchaser shall be deemed given by, respectively,
Seller or Purchaser.

     Article 16. Conditions Precedent to Closing; Tenant Estoppels.

     16.1 Purchaser’s obligation under this Agreement to purchase the
Properties is subject to the fulfillment of each of the following conditions,
subject, however, to the provisions of Section 16.3:

     (a) Seller shall be ready, willing and able to deliver title to
the Properties in accordance with the terms and conditions of this
Agreement;

     (b) the Title Company (or any other reputable title insurer
licensed to do business in the states in which the Properties are
located) shall be ready, willing and able to issue title insurance
to Purchaser in accordance with the terms and conditions of this
Agreement at the Title Company’s standard rates (unless Seller shall
elect to pay any charges above such standard rates);

     (c) Seller shall have delivered to Purchaser tenant estoppels
signed by Novo Nordisk Pharmaceuticals, Inc. and American
Re-Insurance Company, dated not more than thirty (30) days prior to
the Closing Date and substantially in the respective forms set forth
as Exhibit H-1 and Exhibit H-2 hereto, together with tenant
estoppels signed by Predix Pharmaceuticals Holdings, Inc., ZS
Associates (if then a tenant of the 100 College Road Premises) and
Patrinely Group, LLC, all dated not more than thirty (30) days prior
to the Closing Date and substantially in the respective forms
required by their Leases, provided, however, that, if Predix
Pharmaceuticals Holdings, Inc., ZS Associates (if then a tenant of
the 100 College Road Premises) and/or Patrinely Group, LLC shall
decline or fail to issue such an estoppel in the required form,
Seller shall have the right to substitute therefor both a seller’s
estoppel and a property manager’s estoppel signed by Seller and its
property manager, dated not more than thirty (30) days prior to the
Closing Date and otherwise in the form required by the applicable
Lease(s);

     (d) Seller shall have delivered all of the documents and other
items required pursuant to Section 9.1, and shall in all material
respects have performed all of the other covenants, undertakings and
obligations, and complied with all of the conditions, required by
this Agreement to be performed or complied with by Seller at or
prior to the Closing; and

     (e) Purchaser shall not have exercised any right of Purchaser
hereunder to terminate this Agreement.

For purposes of Section 16.1(c) above, a tenant estoppel dated not more than
thirty (30) days prior to the originally scheduled Closing Date or any
adjournment thereof shall not be rendered stale as a result of one or more
adjournments of such Closing Date by Purchaser pursuant to Section 4.2 above,

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notwithstanding that such tenant estoppel shall be dated more than thirty (30)
days prior to the adjourned Closing Date.

     16.2 Seller’s obligation under this Agreement to sell the Properties to
Purchaser is subject to the fulfillment of each of the following conditions,
subject, however to the provisions of Section 16.3:

     (a) the representations and warranties of Purchaser contained
herein shall be true and correct in all material respects on and as
of the Closing Date, with the same force and effect as though they
were restated on and as of such date, except to the extent that they
speak as of the date of this Agreement or specifically relate to
another date, in which case they shall be true and correct in all
material respects as of such date;

     (b) Purchaser shall have paid to Seller the funds required to
be paid hereunder; and

     (c) Purchaser shall have delivered all of the documents and
other items required pursuant to Section 9.2, and shall in all
material respects have performed all of the other covenants,
undertakings and obligations, and complied with all of the
conditions, required by this Agreement to be performed or complied
with by Purchaser at or prior to the Closing.

     16.3 In the event that any condition contained in Section 16.1 or 16.2 is
not satisfied, then, unless such failure is a default by Purchaser under
Section 18.2 or a willful failure or refusal by Seller pursuant to Section
18.3, as the case may be, the party entitled to the satisfaction of such
condition as a condition to its obligation to close title hereunder shall have,
as its sole remedy hereunder, the right to elect to:

     (a) waive such unsatisfied condition, whereupon title shall
close as provided in this Agreement; or

     (b) terminate this Agreement.

In the event such party elects to terminate this Agreement as permitted under
this Article 16, then this Agreement shall be terminated and neither party
shall have any further rights, obligations, or liabilities hereunder, except
for the Surviving Obligations, and except that, if Purchaser terminates this
Agreement because a condition contained in Section 16.1 is not satisfied, then
Purchaser shall be entitled to the return of the Downpayment, provided that
Purchaser is not otherwise in default hereunder. Nothing contained in this
Section 16.3 shall be construed so as to confer any right of termination upon a
party for the failure of a condition to be satisfied, unless such party is
expressly entitled to the satisfaction of such condition as provided in Section
16.1 or 16.2.

     16.4 Seller shall use its commercially reasonable efforts to obtain
estoppel letters or certificates from the Tenants as required in Section
16.1(c) above.

     Article 17. Operation of the Properties Prior to the Closing Date.

     17.1 Between the date hereof and the Closing Date, Seller shall cause its
managing agent for the Properties to continue to operate and manage the
Properties in substantially the same manner as they

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were operated and managed prior to the execution and delivery of this
Agreement, including, without limitation, preserving the good will of all
suppliers and tenants, and complying with all applicable laws, ordinances,
rules, regulations and order (subject, however, to the provisions of Section
7.2 hereof with respect to Violations). In connection therewith:

     (a) Seller shall not modify, extend, renew, or cancel any
Lease, or enter into any new lease of all or any portion of the
Properties, without Purchaser’s prior consent in each instance,
which may be granted or withheld in Purchaser’s sole discretion.

     (b) If Seller shall enter into any new leases for either or
both of the Properties, or any portion of thereof, as permitted
hereunder, or if there shall be any permitted extensions or renewals
of any existing Leases, whether or not such existing Leases provide
for their extension or renewal, or if there shall be any expansion
or modification of any of the Leases (each, a “New Lease”), then
Seller shall keep accurate records of all expenses (collectively,
“New Lease Expenses”) incurred in connection with each New Lease.
At the Closing, Purchaser shall reimburse Seller for all New Lease
Expenses theretofore paid by Seller, if any, except that, if the
term of any New Lease shall have commenced prior to the Closing
Date, then the New Lease Expenses attributable to such New Lease
shall be amortized over the term thereof, and Seller shall be
responsible for such New Lease Expenses allocable to the period
prior to the Closing Date. The provisions of this Section 17.1(b)
shall survive the Closing.

     (c) Subject to Section 17.1(a), Seller reserves the right, but
shall not be obligated, to institute proceedings for monetary
judgments only against any Tenant (but not to terminate such
Tenant’s Lease) as a result of a default by such Tenant prior to the
Closing Date. Seller makes no representations, and assumes no
responsibility (subject, however, to the provisions of Section 17.3
below), with respect to the continued occupancy of the Properties or
any part thereof by any Tenant. Subject to the provisions of
Section 17.3 below, the vacating of a Tenant prior to the Closing
Date shall not give rise to any claim on the part of Purchaser.
Further, also subject to the provisions of Section 17.3 below,
Purchaser agrees that it shall not be grounds for Purchaser’s
refusal to close this transaction that any Tenant is a holdover
tenant or in default under its Lease on the Closing Date, and
Purchaser shall accept title subject to such holding over or default
without credit against, or reduction of, the Purchase Price.

     (d) Seller shall not modify, extend, renew, or cancel (except
as a result of a default by the other party thereunder) any
Contract, or enter into any new contract with respect to either or
both of the Properties, without Purchaser’s prior consent in each
instance, which consent shall not be unreasonably withheld, delayed,
or conditioned by Purchaser. However, Purchaser’s consent shall not
be required if such Contract, as modified, extended, or renewed, or
such new contract may be terminated at any time on not more than
thirty (30) days’ prior notice by Seller, or its successor or
assign, without any penalty.

     (e) Seller shall keep in force and effect with respect to the
Properties all of the insurance policies currently carried by Seller
therefor, as set forth on Schedule 6 annexed hereto, or policies
providing similar coverage.

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     (f) From the date hereof until the Closing, Seller shall not
withdraw, settle, or otherwise compromise any protest or reduction
proceedings relating to the assessed valuation of the Properties for
any tax year subsequent to the tax year in which the Closing occurs
or for the tax year in which the Closing occurs.

     17.2 Within five (5) days after the date hereof, Purchaser shall give
Seller written notice identifying which of the Contracts it elects to assume.
Absent notice of such election, Purchaser shall be deemed to have directed
Seller to terminate all of the Contracts. As to those Contracts that Purchaser
so elects not to assume, Seller shall give the notices required to terminate
them effective on or before the Closing Date.

     17.3 Notwithstanding anything to the contrary provided in Section 17.1(c)
above or elsewhere in this Agreement, in the event that, on the Closing Date,
Novo Nordisk Pharmaceuticals, Inc., shall have vacated all or substantially all
of its premises at the Properties (other than as a result of a fire or other
casualty), or shall be in material default under its Lease after the giving of
notice of such default and the expiration of the applicable grace period,
Purchaser shall have the right to terminate this Agreement by giving written
notice thereof to Seller, in which event this Agreement shall be terminated and
neither party shall have any further rights, obligations, or liabilities
hereunder, except for the Surviving Obligations and except that, provided that
Purchaser is not otherwise in default hereunder, Purchaser shall be entitled to
the return of the Downpayment.

     17.4 Seller has further informed Purchaser, and Purchaser further confirms
its understanding, that the Township of Plainsboro currently holds two (2)
standby letters of credit, one in the amount of $32,710.05 and one in the
amount of $395,964.05, that were deposited by Seller to secure a certain two
(2) year maintenance guaranty with regard to certain off-site improvements
related to the Properties and the roadways adjacent to the Properties and an
obligation to complete certain unfinished landscaping on the Properties.
Seller believes that the obligations secured by these letters of credit have
been completely fulfilled and discharged, and that the Township of Plainsboro,
in recognition thereof, will permit such letters of credit to expire by their
terms prior to the Closing Date. If, however, the Township of Plainsboro draws
down either or both of such letters of credit, or demands the replacement
thereof, Seller shall comply in all respects thereby without reimbursement or
contribution by Purchaser. Purchaser shall have no obligation with respect to
the return of these letters of credit, the return of the proceeds thereof if
drawn upon, the posting of new letters of credit in lieu thereof and/or the
performance or completion of the obligations secured thereby. However,
notwithstanding the foregoing, Purchaser and Purchaser’s Representatives shall
cooperate with Seller in all reasonable respects in connection with the
completion of such work, the maintenance of the appropriate landscaping and
other improvements and the return of the letters of credit and/or the proceeds
thereof. Purchaser shall not be obligated to incur any out-of-pocket cost or
expense in connection with such cooperation, provided, however, that, if any
such action requested in writing by Seller shall entail such cost and/or
expense, then:

     (i) Purchaser shall notify Seller of such cost and/or expense
in writing (including Purchaser’s reasonable estimate of the amount
thereof) prior to taking such action;

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     (ii) Purchaser shall nonetheless take such action if Seller
notifies Purchaser that Seller will reimburse Purchaser for the
reasonable, out-of-pocket cost and/or expense thereof; and

     (iii) Seller shall reimburse Purchaser for such reasonable,
out-of-pocket costs and/or expenses promptly after Seller’s receipt
of a reasonable detailed invoice in connection therewith.

Further, to the extent that the installation, maintenance and/or repair of
landscaping or other similar exterior on-site improvements shall be required in
order to comply with Seller’s obligations to the Township of Plainsboro and
obtain the return of the letters of credit or the proceeds thereof, Purchaser
shall allow Seller and its officers, directors, agents, employees and
contractors access to the grounds at the Properties, without charge, for
purposes of performing such obligations. After the expiration or return of
such letters of credit or proceeds thereof, any further installation,
maintenance and/or repair obligations shall be the obligations of Purchaser,
and Seller shall have no further rights or liabilities with respect thereto.
The provisions of this Section 17.4 shall survive the Closing.

     17.5 Seller shall use its reasonable efforts to resolve prior to the
Closing the issues concerning the letter of credit referred to in Section
7.1(e)(iii)(x) above.

     Article 18. Remedies.

     18.1 If the Closing fails to occur by reason of Seller’s inability to
perform its obligations under this Agreement (including, without limitation,
Seller’s inability to eliminate Unacceptable Encumbrances as set forth in
Section 6.4), then Purchaser, as its sole remedy for such inability of Seller,
may terminate this Agreement by notice to Seller. If Purchaser so elects to
terminate this Agreement, then neither party shall have any further rights,
obligations, or liabilities hereunder, except for the Surviving Obligations and
except that, provided that Purchaser is not otherwise in default hereunder,
Purchaser shall be entitled to the return of the Downpayment. Except as
expressly set forth in this Agreement, Purchaser hereby expressly and
irrevocably waives, relinquishes and releases any other right or remedy
available to it, at law, in equity, or otherwise, by reason of Seller’s
inability to perform its obligations hereunder.

     18.2 In the event of a default hereunder by Purchaser, or if the Closing
fails to occur by reason of Purchaser’s failure or refusal to perform its
obligations hereunder, then Seller may terminate this Agreement by notice to
Purchaser. If Seller so elects to terminate this Agreement, then this
Agreement shall terminate, and Seller’s sole remedy shall be to retain the
Downpayment as liquidated damages for all loss, damage and expenses suffered by
Seller, it being agreed that Seller’s damages are impossible to ascertain.
Following such termination, neither party shall have any further rights,
obligations, or liabilities hereunder, except as specifically set forth in this
Agreement.

     18.3 If the Closing fails to occur by reason of Seller’s willful and
wrongful refusal to execute and deliver any one or more of Seller’s Documents
or to perform any of its other obligations hereunder, then, subject to the
provisions of the last sentence of this Section 18.3, Purchaser may, as its
sole remedy hereunder:

     (a) terminate this Agreement by notice to Seller and receive
the return of the Downpayment; or

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     (b) seek specific performance of this Agreement from Seller.

As a condition precedent to Purchaser’s exercise of any right that it may have
to bring an action for specific performance as a result of Seller’s willful and
wrongful refusal to execute and deliver the Seller’s Documents, Purchaser must
commence such an action within sixty (60) days after the occurrence of such
default. Purchaser’s failure timely to commence such an action for specific
performance within such sixty (60) day period, with time of the essence, shall
be deemed a waiver by it of its right to commence such an action. If Purchaser
shall timely commence and diligently prosecute such action for specific
performance, but, for any reason other than Purchaser’s failure or neglect
diligently to prosecute such action in accordance with applicable law, the
court having jurisdiction of such action shall enter a final judgment, the
effect of which shall be to refuse to grant specific performance to Purchaser,
then Seller agrees that Purchaser shall be entitled to terminate this Agreement
by notice given to Seller and receive the return of the Downpayment.

     Article 19. Casualty; Condemnation.

     19.1 Damage or Destruction. If a material part of the Properties is
damaged or destroyed by fire or other casualty, Seller shall notify Purchaser
of such fact and, except as hereinafter provided, Purchaser shall have the
option to terminate this Agreement upon notice to Seller given not later than
ten (10) days after receipt of Seller’s notice. If this Agreement is so
terminated, then the provisions of Section 19.4 shall apply. If Purchaser does
not so terminate this Agreement, or there is damage to, or destruction of, a
portion of a Property that is not material, then Purchaser shall close title as
provided in this Agreement and, at the Closing, Seller shall, unless Seller
shall have repaired such damage or destruction prior to the Closing:

     (a) pay over to Purchaser the proceeds of any insurance
collected by Seller on account of such damage or destruction, plus
the amount of any deductible payable on Seller’s policy as a result
of the loss, less the amount of all costs incurred by Seller in
connection with the repair of such damage or destruction; and

     (b) assign and transfer to Purchaser (without recourse) all
right, title and interest of Seller in and to any uncollected
insurance proceeds that Seller may be entitled to receive on account
of such damage or destruction.

A “material” part of the Properties shall be deemed to have been damaged or
destroyed if the cost of repair or replacement, as reasonably estimated by an
independent engineer selected by Seller and reasonably approved by Purchaser,
shall be Seven Million ($7,000,000) Dollars or more.

     19.2 Condemnation. If, prior to the Closing Date, all or any significant
portion of the Properties is taken by eminent domain or condemnation (or is the
subject of a pending taking that has not been consummated), Seller shall notify
Purchaser of such fact. Purchaser shall thereupon have the option to terminate
this Agreement upon notice to the Seller given not later than ten (10) days
after receipt of Seller’s notice. If this Agreement is so terminated, then the
provisions of Section 19.4 shall apply. If Purchaser does not elect to
terminate this Agreement, or if the portion of the Properties that is taken by
eminent domain or condemnation is not significant, then, at the Closing, Seller
shall assign (without recourse) all of its rights in connection with such
taking to Purchaser, and shall pay over to Purchaser, and Purchaser shall be
entitled to receive and keep, the proceeds of all awards for such taking

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by eminent domain or condemnation collected by Seller. A “significant”
portion of the Properties means a taking:

     (a) of any portion of the Buildings in excess of fifteen (15%)
percent of the aggregate rentable area thereof;

     (b) that reduces the remaining available number of parking
spaces at either or both of the Properties below the minimum legally
required;

     (c) that materially interferes with access to, or egress from,
either or both of the Properties, if no alternative means of access
is reasonably available; or

     (d) if any Tenant under a Lease demising in excess of
twenty-five (25%) percent of the aggregate rentable area of the
Properties shall have irrevocably terminated its Lease on account of
such condemnation.

     19.3 Notwithstanding anything contained in Sections 19.1 and 19.2 to the
contrary, if this Agreement is not terminated as provided in Section 19.1 or
19.2, and the insurance, eminent domain, or condemnation proceeds payable with
respect to the Properties as a result of any casualty or taking exceeds the
Purchase Price, then Seller’s obligation to pay over to Purchaser those
proceeds paid to Seller prior to the Closing shall be limited to the amount of
the Purchase Price, and Seller shall be entitled to retain the remainder of
such proceeds. To the extent that payment of all, or any portion, of such
proceeds does not occur prior to the Closing, the parties agree that Seller
shall be entitled to that portion of the proceeds in excess of the Purchase
Price, which agreement shall survive the Closing.

     19.4 If Purchaser elects to terminate this Agreement pursuant to Section
19.1 or 19.2, then neither party shall have any further rights, obligations, or
liabilities hereunder, except for the Surviving Obligations and except that,
provided Purchaser is not otherwise in default hereunder, Purchaser shall be
entitled to the return of the Downpayment.

     Article 20. Escrow.

     20.1 Escrow Agent shall hold the Downpayment and all interest accrued
thereon, if any, in escrow, and shall dispose of the Downpayment only in
accordance with the provisions of this Article 20. Unless otherwise stated
herein below, all references to the Downpayment shall include such accrued
interest, if any.

     20.2 Escrow Agent shall deliver the Downpayment to Seller or Purchaser, as
the case may be, as follows:

     (a) to Seller, upon completion of the Closing;

     (b) to Seller, after receipt of Seller’s demand in which Seller
certifies either that:

     (i) Purchaser has defaulted under this Agreement;
or

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     (ii) this Agreement has been otherwise terminated
or canceled, and Seller is thereby entitled to receive
the Downpayment,

but Escrow Agent shall not honor Seller’s demand until more than ten
(10) days after Escrow Agent has given a copy of Seller’s demand to
Purchaser in accordance with Section 20.3, nor thereafter if Escrow
Agent receives a Notice of Objection from Purchaser within such ten
(10) day period; or

     (c) to Purchaser, after receipt of Purchaser’s demand in which
Purchaser certifies either that:

     (i) Seller has defaulted under this Agreement, or

     (ii) this Agreement has been otherwise terminated
or canceled, and Purchaser is thereby entitled to
receive the Downpayment,

but Escrow Agent shall not honor Purchaser’s demand until more than
ten (10) days after Escrow Agent has given a copy of Purchaser’s
demand to Seller in accordance with Section 20.3, nor thereafter if
Escrow Agent receives a Notice of Objection from Seller within such
ten (10) day period.

Upon delivery of the Downpayment, Escrow Agent shall be relieved of all
liability hereunder with respect to the Downpayment. Escrow Agent shall
deliver the Downpayment, at the election of the party entitled to receive the
same, by:

     (x) a good, unendorsed certified check of Escrow Agent payable
to the order of such party,

     (y) an unendorsed official bank or cashier’s check payable to
the order of such party, or

     (z) a bank wire transfer of immediately available funds to an
account designated by such party.

     20.3 Upon receipt of a written demand from Seller or Purchaser under
Section 20.2(b) or 20.2(c), Escrow Agent shall send a copy of such demand to
the other party. Within ten (10) days after the date of receiving same, but
not thereafter, the other party may object to delivery of the Downpayment to
the party making such demand by giving a notice of objection (a “Notice of
Objection”) to Escrow Agent. After receiving a Notice of Objection, Escrow
Agent shall send a copy of such Notice of Objection to the party who made the
demand. Thereafter, in its sole and absolute discretion, Escrow Agent may elect
either:

     (a) to continue to hold the Downpayment until Escrow Agent
receives a written agreement of Purchaser and Seller jointly
directing the disbursement of the Downpayment, in which event Escrow
Agent shall disburse the Downpayment in accordance with such
agreement;

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     (b) to take any and all actions as Escrow Agent deems necessary
or desirable, in its sole and absolute discretion, to discharge and
terminate its duties under this Agreement (including, without
limitation, depositing the Downpayment into any court of competent
jurisdiction and bringing an action of interpleader or other
appropriate proceeding); and/or

     (c) in the event of any litigation between Seller and
Purchaser, to deposit the Downpayment with the clerk of the court in
which such litigation is pending.

     20.4 If Escrow Agent is uncertain for any reason whatsoever as to its
duties or rights hereunder, regardless of whether Escrow Agent has received any
written demand under Section 20.2(b) or 20.2(c) or Notice of Objection under
Section 20.3, then, notwithstanding anything to the contrary provided in this
Agreement, Escrow Agent may hold and/or dispose of the Downpayment pursuant to
Section 20.3, and may decline to take any other action whatsoever. In the
event that the Downpayment is deposited in a court by Escrow Agent pursuant to
Section 20.3(b) or 20.3(c), Escrow Agent shall be entitled to rely upon the
decision of such court. In the event of any dispute whatsoever among the
parties with respect to disposition of the Downpayment:

     (a) Purchaser and Seller shall pay the reasonable attorney’s
fees and costs incurred by Escrow Agent (which such parties shall
share equally, but for which such parties shall be jointly and
severally liable to Escrow Agent) for any litigation in which Escrow
Agent is named as, or becomes, a party, and

     (b) as between Purchaser and Seller, the non-prevailing party
shall pay the reasonable attorneys’ fees and costs of the prevailing
party.

     20.5 Notwithstanding anything to the contrary in this Agreement, within
five (5) business days after the date of this Agreement, Escrow Agent shall
place the Downpayment in an Approved Investment. The interest, if any, that
accrues on such Approved Investment shall be deemed part of the Downpayment,
and Escrow Agent shall dispose of such interest as and with the Downpayment
pursuant to this Agreement. Escrow Agent may not commingle the Downpayment
with any other funds held by Escrow Agent. Escrow Agent may convert the
Downpayment from the Approved Investment into a non-interest-bearing demand
account at an Approved Institution as follows:

     (a) at any time within seven (7) days prior to the initially
scheduled Closing Date; or

     (b) if the initially scheduled (or any subsequently scheduled)
Closing Date is accelerated or extended, at any time within seven
(7) days prior to the accelerated or extended Closing Date
(provided, however, that Seller and Purchaser shall give Escrow
Agent timely notice of any such acceleration or extension, and that
Escrow Agent may hold the Downpayment in a non-interest-bearing
demand account at an Approved Institution if Seller and Purchaser do
not give Escrow Agent timely notice of any such adjournment).

     20.6 As used herein, the term “Approved Investment” means:

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     (a) any interest-bearing demand account or money market fund in
Commerce Bank, N.A., or in any other institution otherwise approved
by both Seller and Purchaser (collectively, an “Approved
Institution”); or

     (b) any other investment approved by both Seller and Purchaser.

The rate of interest or yield need not be the maximum available, and deposits,
withdrawals, purchases and reinvestment of any matured investment and sales
shall be made in the sole discretion of Escrow Agent, which shall have no
liability whatsoever therefor. Discounts earned shall be deemed interest for
the purpose hereof.

     20.7 Escrow Agent shall have no duties or responsibilities except those
set forth herein, which the parties hereto agree are ministerial in nature.
Seller and Purchaser acknowledge that Escrow Agent is serving without
compensation, solely as an accommodation to the parties hereto. Consequently,
except for Escrow Agent’s own willful default, willful misconduct, or gross
negligence, Escrow Agent shall have no liability of any kind whatsoever arising
out of, or in connection with, its activity as Escrow Agent. Seller and
Purchaser jointly and severally agree to, and do hereby, indemnify and hold
harmless Escrow Agent from all loss, cost, claim, damage, liability and expense
(including, without limitation, reasonable attorney’s fees and disbursements,
whether paid to retained attorneys or representing the fair value of legal
services rendered by Escrow Agent to itself) that may be incurred by reason of
its acting as Escrow Agent, provided that the same are not the result of Escrow
Agent’s willful default, willful misconduct, or gross negligence. Escrow Agent
may charge against the Downpayment any amounts owed to it under the foregoing
indemnity, may withhold the delivery of the Downpayment as security for any
unliquidated claim, or both.

     20.8 Any Notice of Objection, demand, or other notice or communication
that may or must be sent, given, or made under this Agreement to, or by, Escrow
Agent shall be sent in accordance with the provisions of Article 15.

     20.9 Simultaneously with their execution and delivery of this Agreement,
Purchaser and Seller shall furnish Escrow Agent with duly completed W-9 Forms,
setting forth their true Federal Taxpayer Identification Numbers so that Escrow
Agent may file appropriate income tax information returns with respect to any
interest earned on the Downpayment or other income from the Approved
Investment. The party ultimately entitled to any such accrued interest shall
be the party responsible for the payment of any tax due thereon.

     20.10 Seller and Purchaser waive any claim of conflict of interest by
reason of Escrow Agent’s actions in its capacity as such under this Agreement.
Purchaser hereby acknowledges that Escrow Agent is the attorney for Seller, and
agrees that Escrow Agent may represent Seller in connection with any and all
matters (including, without limitation, the transactions contemplated by this
Agreement and any litigation arising out of this Agreement). However, in no
event shall Purchaser be responsible for payment of any fees incidental to any
such representation.

     20.11 Any amendment of this Agreement that could alter or otherwise affect
Escrow Agent’s obligations hereunder shall not be effective against, or binding
upon, Escrow Agent without Escrow Agent’s prior written consent, which consent
may be withheld in Escrow Agent’s sole and absolute discretion.

-43-

 

     20.12 The provisions of this Article 20 shall survive the termination of
this Agreement and the Closing.

     Article 21. Miscellaneous.

     21.1 This Agreement shall not be altered, amended, changed, waived,
terminated, or otherwise modified in any respect or particular, and no consent
or approval required pursuant to this Agreement shall be effective, unless the
same shall be in writing and signed by or on behalf of the party to be charged.

     21.2 This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.

     21.3 Except as otherwise provided in Section 21.16, this Agreement may not
be assigned by Purchaser without Seller’s prior written consent. Any purported
assignment without such consent shall be null and void, and of no force or
effect. Any assignment made with Seller’s consent shall include all of
Purchaser’s rights and interests in both Properties hereunder (including,
without limitation, all of Purchaser’s rights and interests in and to the
Downpayment), and shall not be effective unless and until the assignee has
assumed in writing all of Purchaser’s obligations under this Agreement. Notice
of any such assignment, together with an originally executed counterpart of the
instrument of assignment and assumption between Purchaser and such assignee,
shall be provided to Seller not more than five (5) business days after the
effective date thereof, and in all events no later than three (3) business days
prior to the Closing Date. Any permitted assignment of this Agreement by
Purchaser shall not entitle Purchaser or its assignee to any adjournment of the
Closing, or to any reissuance of the ISRA non-applicability letters, or to any
reissuance of any Tenant estoppels or to any re-filing of the Transfer Tax
Returns if any thereof were pre-filed with the applicable governmental
authority. Any permitted assignee of Purchaser hereunder shall not be entitled
to re-assign this Agreement without again complying with the provisions of this
Section 21.3, and any actual or purported re-assignment hereof without such
compliance shall be null and void, and of no force or effect. Purchaser shall
pay, or be responsible and liable for paying, any transfer taxes that may be
due under applicable state or local law by reason of any permitted assignment
by Purchaser of this Agreement, which obligation shall survive the Closing.

     21.4 All prior statements, understandings, representations and agreements
between the parties, oral or written, are superseded by and merged in this
Agreement, which alone fully and completely expresses the agreement between
them in connection with the transactions contemplated hereby and which is
entered into after full investigation, neither party relying upon any
statement, understanding, representation, or agreement made by the other not
embodied in this Agreement. This Agreement shall be given a fair and
reasonable construction in accordance with the intentions of the parties
hereto, and without regard to, or aid of, canons requiring construction against
Seller or the party whose attorneys drafted this Agreement.

     21.5 Except as otherwise expressly provided herein, Purchaser’s acceptance
of the Deed shall be deemed a discharge of all of the obligations of Seller
hereunder, and all of Seller’s representations, warranties, covenants and
agreements herein shall merge into Seller’s Documents and shall not survive the
Closing.

-44-

 

     21.6 Purchaser agrees that it does not have, and will not have, any claims
or causes of action against any disclosed or undisclosed officer, director,
employee, trustee, shareholder, partner, principal, parent, subsidiary, or
other affiliate of Seller (collectively, “Seller’s Affiliates”), arising out of
or in connection with this Agreement or the transactions contemplated hereby.
Purchaser agrees to look solely to Seller and its assets for the satisfaction
of any liability or obligation arising under this Agreement or the transactions
contemplated hereby, or for the performance of any of the covenants,
warranties, or other agreements contained herein. Purchaser further agrees not
to sue or otherwise seek to enforce any personal obligation against any of
Seller’s Affiliates with respect to any matters arising out of, or in
connection with, this Agreement and/or the transactions contemplated hereby.
Without limiting the generality of the foregoing provisions of this Section
21.6, Purchaser hereby unconditionally and irrevocably waives any and all
claims and causes of action of any nature whatsoever that it may have now or
hereafter against Seller’s Affiliates, and hereby unconditionally and
irrevocably releases and discharges Seller’s Affiliates from any and all
liability whatsoever that may accrue now or hereafter in favor of Purchaser
against Seller’s Affiliates, in connection with or arising out of this
Agreement or the transactions contemplated hereby. The provisions of this
Section 21.6 shall survive the termination of this Agreement and the Closing.

     21.7 This Agreement may be executed in one or more counterparts, each of
which when executed and delivered shall be deemed an original, but all of which
taken together shall constitute but one and the same instrument.

     21.8 Each of the Exhibits and Schedules referred to herein and attached
hereto is incorporated herein by this reference.

     21.9 The caption headings in this Agreement are for convenience only and
are not intended to be a part of this Agreement, and shall not be construed to
modify, explain, or alter any of the terms, covenants, or conditions herein
contained.

     21.10 This Agreement shall be governed by, and interpreted and enforced in
accordance with, the internal laws of the State of New York, without giving
effect to principles of conflicts of law, except that any action for specific
performance with respect to the conveyance of the Properties shall be governed
by the substantive law of the State of New Jersey.

     21.11 Unless otherwise specified herein:

     (a) references to persons or parties include their permitted
successors and assigns;

     (b) the words “include” or “including”, and words of similar
import, shall be deemed to be followed by the words “but not limited
to” or “without limitation”;

     (c) the words “hereto”, “herein”, “hereof” and “hereunder”, and
words of similar import, refer to this Agreement in its entirety;
and

     (d) unless otherwise specified herein, all references to
Articles and Sections are to Articles and Sections of this
Agreement.

-45-

 

     21.12 As used in this Agreement, the term “Property Information” shall
mean all information and documents in any way relating to the Properties, the
operation thereof, or the sale thereof furnished to, or otherwise made
available for review by, Purchaser or its directors, officers, employees,
affiliates, partners, members, brokers, agents, or other representatives,
including, without limitation, attorneys, accountants, contractors,
consultants, engineers and financial advisors (collectively, “Purchaser’s
Representatives”), by Seller, by any of Seller’s Affiliates, by Seller’s or
Seller’s Affiliates’ respective agents or representatives (including, without
limitation, consultants, brokers, or advisors) and/or by the Broker (including,
without limitation, by listing the same in that certain internet website
created by or on behalf of Broker for purposes of making various of the
Property Information available to prospective purchasers of the Properties.
Without intention to limit the generality of the foregoing in any respect, the
Property Information shall be deemed to include the Leases, the Contracts, the
Title Commitment, the Title Documents and those other materials listed on
Schedule 4 annexed hereto, copies of all of which have been furnished to
Purchaser or its counsel.

     21.13 If any provision of this Agreement shall be unenforceable or
invalid, the same shall not affect the remaining provisions of this Agreement.
To this end, the provisions of this Agreement are intended to be, and shall be,
severable, except that the provisions and intent of Section 2.2 shall be
respected.

     21.14 SELLER AND PURCHASER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER ARISING IN TORT OR CONTRACT) BROUGHT BY
EITHER AGAINST THE OTHER ON ANY MATTER ARISING OUT OF, OR IN ANY WAY CONNECTED
WITH, THIS AGREEMENT.

     21.15 Seller and Purchaser agree that, at either Seller’s or Purchaser’s
sole election, this transaction shall be structured as an exchange of like-kind
properties under Section 1031 of the Internal Revenue Code of 1986, as amended,
and the regulations and proposed regulations thereunder (including, without
limitation, a so-called “reverse like-kind exchange”). The parties further
agree that, if either wishes to make such an election, such party must do so
prior to the Closing Date. If either party so elects, the other party shall
cooperate in all reasonable respects, provided, however, that:

     (a) such other party shall not be obligated to incur any
out-of-pocket cost or expense in connection with such cooperation,
provided, however, that, if any such action requested in writing by
Seller shall entail such cost and/or expense, then:

     (i) such other party shall notify the requesting
party of such cost and/or expense in writing (including
such other party’s reasonable estimate of the amount
thereof) prior to taking such action;

     (ii) such other party shall nonetheless take such
action if the requesting party notifies such other party
that the requesting party will reimburse such other
party for the reasonable, out-of-pocket cost and/or
expense thereof; and

     (iii) the requesting party shall reimburse such
other party for such reasonable, out-of-pocket costs
and/or expenses promptly after the

-46-

 

requesting party’s receipt of a reasonable detailed
invoice in connection therewith; and

     (b) such exchange shall be consummated pursuant to an agreement
that is mutually acceptable to Purchaser and Seller, and that is
executed and delivered prior to the Closing Date.

The electing party shall, in all events, be responsible for all costs and
expenses related to the Section 1031 exchange, and shall fully indemnify,
defend and hold the other party harmless from and against any and all
liability, claims, damages, expenses (including, without limitation, reasonable
attorneys’ fees and paralegal fees), proceedings and causes of action of any
kind or nature whatsoever arising out of, connected with, or in any manner
related to such 1031 exchange that would not have been incurred by the
non-electing party if the transaction were a purchase for cash. The provisions
of the immediately preceding sentence and of Section 21.15(a)(iii) above shall
survive the Closing. Notwithstanding anything to the contrary contained in
this Section 21.15, any exchange shall be consummated through use of a
qualified facilitator or intermediary so that in no event shall Purchaser or
Seller be requested or required to acquire title to any property (other than
the Properties, with respect to Purchaser). In addition, in no event shall
Purchaser or Seller be entitled to any adjournment of the Closing, beyond those
adjournment rights specifically granted to the respective parties pursuant to
the other applicable provisions in this Agreement, in order to implement, or
facilitate the implementation of, the provisions of this Section 21.15.

     21.16 For the purposes only of effectuating a 1031 exchange as
contemplated in Section 21.15, Purchaser may assign this Agreement one time
only to a Purchaser’s Affiliate or to a third party qualified intermediary,
provided, however, that such assignment shall not relieve Purchaser from any of
Purchaser’s obligations under this Agreement or result in a delay of the
Closing. Notwithstanding the provisions of the first sentence of Section 21.3,
such assignment shall not require the consent of Seller, but shall not be
effective unless and until a copy of the instrument of assignment, together
with an agreement of the assignee assuming all of the terms and conditions of
this Agreement to be performed by Purchaser, in form reasonably satisfactory to
Seller’s counsel, shall be delivered to Seller’s counsel. For the purposes
hereof, “Purchaser’s Affiliate” shall mean any entity that has one hundred
(100%) percent of the same direct or indirect ownership as Purchaser. Except
for the first two (2) sentences thereof, all of the provisions of Section 21.3
shall apply to such an assignment. The representations and warranties made by
Purchaser in Section 7.8 shall be deemed to be made with respect to such
assignee by both Purchaser and such assignee both as of the date of such
assignment and as of the Closing Date.

(Signatures begin at the top of the next page.)

-47-

 

     IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.

	 	 	 	 	 
	 	 	NEW VALLEY CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ Bennett P. Borko
	

	 	 	 	

	

	 	 	 	          Bennett P. Borko, Assistant Secretary
	 
	 	 	 	 
	 	 	PRINCETON OWNER CORP.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Howard E. Hallengren
	

	 	 	 	

	

	 	 	 	          Howard E. Hallengren, President

     FISCHBEIN • BADILLO • WAGNER • HARDING LLP is executing this Agreement, as
Escrow Agent, solely for the purpose of agreeing to the provisions of Article
20:

	 	 	 	 	 
	 	 	FISCHBEIN • BADILLO • WAGNER • HARDING LLP
	 
	 	 	 	 
	

	 	By:
	 	/s/ Jonathan Rosenbloom
	

	 	 	 	

	

	 	 	 	     Name: Jonathan Rosenbloom
	

	 	 	 	     Title:  Partner

-48-<PAGE>
                                                                     EXHIBIT 4.1

                  CERTIFICATE OF DESIGNATION SETTING FORTH THE
                     VOTING POWER, PREFERENCES AND RELATIVE,
                           PARTICIPATING, OPTIONAL AND
                              OTHER SPECIAL RIGHTS
                         AND QUALIFICATIONS, LIMITATIONS
                                AND RESTRICTIONS
                                     OF THE
                      SERIES C CONVERTIBLE PREFERRED STOCK
                                       OF
                        SPANISH BROADCASTING SYSTEM, INC.

                             Pursuant to Section 151
                         of the General Corporation Law
                            of the State of Delaware

      Spanish Broadcasting System, Inc. (the "Company"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the board of directors
of the Company (the "Board of Directors") by its Third Amended and Restated
Certificate of Incorporation, as amended and restated (the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors, on September
28, 2004 duly approved and adopted the following resolution (the "Resolution"):

      WHEREAS, the Board of Directors of the Company is authorized by its
Certificate of Incorporation to issue up to one million (1,000,000) shares of
preferred stock in one or more series and, in connection with the creation of
any series, to fix by the resolutions providing for the issuance of shares the
powers, designations, preferences and relative, participating, optional or other
rights of the series and the qualifications, limitations or restrictions
thereof; and

      WHEREAS, it is the desire of the Board of Directors of the Company,
pursuant to such authority, to authorize and fix the terms and provisions of a
series of preferred stock, classes of such series of preferred stock and the
number of shares constituting such classes;

      NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized a series
of preferred stock on the terms and with the provisions herein set forth on
Annex A attached to this resolution.

                                      /s/ Raul Alarcon, Jr.
                                      ---------------------------------
                                      Name:  Raul Alarcon, Jr.
                                      Title: Chairman of the Board of Directors,
                                             Chief Executive Officer and
                                             President

ATTEST:

/s/ Joseph A. Garcia
---------------------------------
Name:  Joseph A. Garcia
Title: Executive Vice President,
       Chief Financial Officer and
       Secretary

<PAGE>

                                     ANNEX A

                      SERIES C CONVERTIBLE PREFERRED STOCK

      The powers, designations, preferences and relative, participating,
optional or other rights of the Series C Convertible Preferred Stock of Spanish
Broadcasting System, Inc. (the "Company") are as follows:

1.    DESIGNATION AND AMOUNT.

      (a)   There is hereby created out of the authorized and unissued shares of
            preferred stock of the Company a series of preferred stock
            designated as the "Series C Convertible Preferred Stock." The number
            of shares constituting such series shall be 600,000 shares, par
            value $0.01 per share, and are referred to as the "Series C
            Preferred Stock."

      (b)   Shares of Series C Preferred Stock that have been issued and
            reacquired in any manner, including shares purchased or redeemed or
            exchanged, shall (upon compliance with any applicable provisions of
            the laws of Delaware) have the status of authorized and unissued
            shares of preferred stock undesignated as to series and may be
            redesignated and reissued as part of any series of preferred stock;
            provided that any issuance of such shares as Series C Preferred
            Stock must be in compliance with the terms hereof.

2.    CERTAIN DEFINITIONS.

            Unless the context otherwise requires, the terms defined in this
      Section 2 shall have, for all purposes of this resolution, the meanings
      herein specified (with terms defined in the singular having comparable
      meanings when used in the plural).

            "Affiliate" of any specified Person means any other Person which
      directly or indirectly through one or more intermediaries controls, or is
      controlled by, or is under common control with, such specified Person. For
      the purposes of this definition, "control" (including, with correlative
      meanings, the terms "controlling," "controlled by," and "under common
      control with"), as used with respect to any Person, means the possession,
      directly or indirectly, of the power to direct or cause the direction of
      the management or policies of such Person, whether through the ownership
      of voting securities, by agreement or otherwise; provided that (a)
      beneficial ownership of at least 10% of the Voting Stock of a Person shall
      be deemed to be control and (b) for purposes of the "Transactions with
      Affiliates" covenant contained in Section 9(b), for so long as Pablo Raul
      Alarcon, Sr. or Raul Alarcon, Jr. are directors, officers or stockholders
      of the Company, they, their respective spouses, lineal descendants and any
      Person controlled by any of them shall be Affiliates of the Company and
      its Subsidiaries.

            "Affiliate Transaction" has the meaning set forth in Section 9(b).

            "Board" or "Board of Directors" shall mean the Board of Directors of
      the Company as from time to time constituted.

            "Business Day" means any day other than a Saturday, a Sunday or a
      day on which banking institutions in the City of New York or at a place of
      payment are authorized by law, regulation or executive order to remain
      closed. If any conversion or payment shall be required by the terms hereof
      to be made on a day that is not a Business Day, such conversion or payment
      shall be made on the immediately succeeding Business Day.

                                        2

<PAGE>

            "Capital Stock" means (i) in the case of a corporation, corporate
      stock, (ii) in the case of an association or business entity, any and all
      shares, interests, participations, rights or other equivalents (however
      designated) of corporate stock, (iii) in the case of a partnership or
      limited liability company, partnership or membership interests (whether
      general or limited) and (iv) any other interest or participation that
      confers on a Person the right to receive a share of the profits and losses
      of, or distributions of assets of, the issuing Person.

            "Certificate of Designation" means this Certificate of Designation
      setting forth the voting power, preferences and relative, participating,
      optional and other special rights and qualifications, limitations and
      restrictions of the Series C Preferred Stock.

            "Certificate of Incorporation" means the Company's Third Amended and
      Restated Certificate of Incorporation, as the same may be amended from
      time to time.

            "Class A Common Stock" means the shares of Class A Common Stock, par
      value $0.0001 per share, of the Company.

            "Class B Common Stock" means the shares of Class B Common Stock, par
      value $0.0001 per share, of the Company.

            "Common Stock" means the Class A Common Stock and Class B Common
      Stock and any other class of common stock of the Company hereafter created
      and any securities of the Company into which such Common Stock may be
      reclassified, exchanged or converted.

            "Communications Act" means the Communications Act of 1934, as
      amended.

            "Conversion Date" has the meaning set forth in Section 6(a)(iii).

            "Conversion Notice" has the meaning set forth in Section 6(b)(i).

            "DGCL" means the Delaware General Corporation Law.

            "Equity Securities" shall mean shares of Common Stock and all other
      securities of the Company which may be convertible into, exchangeable for,
      exercisable for or issued in exchange for or in respect of, shares of
      Common Stock.

            "Excluded Group" has the meaning set forth in Section 8(f).

            "Excluded Issuances" means (i) issuances of options, warrants,
      subscription rights or other rights to acquire Equity Securities granted
      to the Company's employees, officers, directors, consultants or advisors
      under bona fide employee benefit plans or stock option plans adopted by
      the Board of Directors; (ii) issuances of up to 250,000 shares of Class A
      Common Stock upon the exercise of options previously granted to Arnold
      Sheiffer; (iii) issuances of up to 2,700,000 shares of Class A Common
      Stock upon the exercise of warrants previously granted to the
      International Church of the FourSquare Gospel; (iv) shares of Class A
      Common Stock issued upon conversion of the Series C Preferred Stock or the
      exercise of the Warrant; (v) Equity Securities or other capital stock
      issued as consideration for any acquisition of an entity, a business, line
      of business or significant asset; (vi) Common Stock or other Equity
      Securities issued pursuant to any public offering approved by a majority
      of the Board of Directors; or (vii) shares of Common Stock, preferred
      stock or other Equity Securities issued as a stock dividend or upon a
      subdivision of Equity Securities.

                                        3

<PAGE>

            "FCC" means the United States Federal Communications Commission.

            "Holder" means a holder in whose name a share of Series C Preferred
      Stock is registered.

            "Issue Date" means [date of the Merger].

            "Junior Securities" means all classes of common stock of the Company
      and to each other class of Capital Stock or series of preferred stock of
      the Company created after the Issue Date by the Board of Directors of the
      Company the terms of which do not expressly provide that it ranks on a
      parity with the Series C Preferred Stock as to dividend distributions and
      distributions upon the liquidation, winding-up or dissolution of the
      Company.

            "Material Adverse Effect" means a material adverse effect on the
      business, assets, operations or financial or other condition of the
      Company and the Company Subsidiaries taken as a whole.

            "Merger Agreement" means the merger agreement dated as of October
      ___, 2004, by and among, Infinity Media Corporation, Infinity Broadcasting
      Corporation of San Francisco, the Company and SBS Bay Area, LLC.

            "Minimum Investment" means 5,700,000 shares of Class A Common Stock,
      including for this purpose Class A Common Stock issuable upon the
      conversion of any Series C Preferred Stock beneficially owned by the
      Holders, which may include Series C Preferred Stock, if any, outstanding
      following exercise of the Warrant.

            "Parity Securities" has the meaning set forth in Section 3.

            "Permitted Business" means the broadcast radio and television
      business, including cable television and any activity reasonably
      incidental thereto.

            "Person" means any individual, corporation, partnership, joint
      venture, association, joint-stock company, trust, unincorporated
      organization, limited liability company or government or any agency or
      political subdivision thereof (including any subdivision or ongoing
      business of any such entity or substantially all of the assets of such
      entity, subdivision or business).

            "Preemptive Offer" has the meaning set forth in Section 8(a).

            "Preemptive Offer Acceptance Notice" has the meaning set forth in
      Section 8(c).

            "Preemptive Offer Period" has the meaning set forth in Section 8(b).

            "Refused Equity Securities" has the meaning set forth in Section
      8(d).

            "SEC" means the Securities and Exchange Commission.

            "Securities Act" means the Securities Act of 1933, as amended, or
      any similar successor statute and the rules and regulations thereunder.

            "Series A Preferred Stock" means the Company's 10 3/4% Series A
      Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per
      share.

                                        4

<PAGE>

            "Series B Preferred Stock" means the Company's 10 3/4% Series B
      Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per
      share.

            "Series C Preferred Stock" has the meaning set forth in Section
      1(a).

            "Stockholder Agreement" has the meaning set forth in the Merger
      Agreement.

            "Subsidiary" means, with respect to any Person, any corporation,
      association or other business entity of which more than 50% of the total
      voting power of shares of Capital Stock entitled (without regard to the
      occurrence of any contingency) to vote in the election of directors,
      managers or trustees thereof is at the time owned or controlled, directly
      or indirectly, by such Person or one or more of the other Subsidiaries of
      that Person (or a combination thereof).

            "Transfer" means, with respect to any shares of Capital Stock, any
      direct or indirect sale, assignment, pledge, offer or other transfer or
      disposal of any interest in such Capital Stock.

            "Transfer Notice" has the meaning set forth in Section 6(a).

            "Voting Stock" of any Person as of any date means the Capital Stock
      of such Person that is at the time entitled to vote in the election of the
      Board of Directors of such Person.

            "Warrant" has the meaning set forth in the Merger Agreement.

            "Wholly Owned Subsidiary" of any Person means a Subsidiary of such
      Person all of the outstanding Capital Stock or other ownership interests
      of which (other than directors' qualifying shares) shall at the time be
      owned by such Person or by one or more Wholly Owned Subsidiaries of such
      Person and one or more Wholly Owned Subsidiaries of such Person.

3.    RANKING.

            The Series C Preferred Stock shall, with respect to dividend
      distributions and distributions upon the liquidation, winding-up and
      dissolution of the Company, rank (i) subordinate to the Series A Preferred
      Stock and the Series B Preferred Stock; and (ii) subject to certain
      conditions described below, on a parity with the Common Stock and each
      other class or series of capital stock created after the Issue Date by the
      Board of Directors of the Company, the terms of which expressly provide
      that such class or series will rank on a parity with the Series C
      Preferred Stock as to dividend distributions and distributions upon the
      liquidation, winding-up and dissolution of the Company (collectively
      referred to as "Parity Securities").

4.    MANDATORY DIVIDENDS.

            If the Board of Directors declares and pays a dividend in respect of
      any Common Stock, then the Board of Directors shall declare and pay to the
      Holders of the Series C Preferred Stock a mandatory dividend in an amount
      per share of Series C Preferred Stock equal to the number of shares of
      Common Stock into which the Series C Preferred Stock is convertible on the
      record date established by the Board of Directors or under applicable law
      for such dividend multiplied by the per share amount declared and paid in
      respect of each share of Common Stock.

                                        5

<PAGE>

5.    DISSOLUTION.

            (a) In the event of the liquidation, dissolution or winding up of
      the Company occurring prior to December 23, 2008, the Holders of the
      Series C Preferred Stock shall be entitled to receive out of assets of the
      Company available for distribution to stockholders of the Company, prior
      and in preference to any distribution to the holders of any Junior Stock,
      an amount per share equal to $0.01.

            (b) After the distribution described in (a) above is made, if any,
      the Holders of the Series C Preferred Stock shall be entitled to
      participate in the distribution of any amounts available for distribution
      to the holders of the Common Stock in a per share amount equal to the
      number of shares of Common Stock into which the Series C Preferred Stock
      is convertible on the record date established by the Board of Directors or
      under applicable law for such distribution multiplied by the per share
      amount paid in respect of each share of Common Stock.

6.    TRANSFER AND CONVERSION.

            Shares of Series C Preferred Stock may be converted into shares of
      Class A Common Stock, on the terms and conditions set forth in this
      Section 6.

      (a)   Transfers.

            (i)   The Holders of Series C Preferred Stock may not Transfer the
                  shares of Series C Preferred Stock to any Person, other than
                  to an Affiliate, unless the Holder making such Transfer has
                  given the Company written notice of such Holder's intent to
                  Transfer five trading days (or such shorter period as the
                  Company may determine in its sole discretion) prior to such
                  Transfer (the "Transfer Notice"). The Transfer Notice shall be
                  substantially in the form attached hereto as Exhibit A. Any
                  Transfer in violation of this Section 6(a), including, without
                  limitation, the failure to submit a Transfer Notice within the
                  specified time to the Company, shall be null and void.

            (ii)  Upon the Transfer of the shares of the Series C Preferred
                  Stock in accordance with Section 6(a)(i) above to any Person
                  other than an Affiliate of a Holder, every share of Series C
                  Preferred Stock so transferred shall automatically convert
                  into twenty fully paid and non-assessable shares of Class A
                  Common Stock (such number of shares subject to adjustment
                  pursuant to Section 6(g) below).

            (iii) Shares of Series C Preferred Stock Transferred to any Person,
                  other than to an Affiliate of the Holders, shall be deemed
                  converted without further action into shares of Class A Common
                  Stock immediately prior to the close of business on the day
                  (the "Conversion Date"). Immediately prior to the close of
                  business on the Conversion Date, the rights of the holders of
                  such shares of Series C Preferred Stock so transferred as a
                  Holder shall cease, and the Person or Persons entitled to
                  receive the Class A Common Stock issuable upon conversion
                  shall be treated for all purposes as the record holder or
                  holders of such Class A Common Stock as and after such time.

                                        6

<PAGE>

      (b)   Optional Conversion.

            (i)   At the option of the Holders, each share of Series C Preferred
                  Stock held by the Holders shall convert into twenty fully paid
                  and non-assessable shares of Class A Common Stock (such number
                  of shares subject to adjustment pursuant to Section 6(g)
                  below), on the later of (A) the date specified in a written
                  notice delivered to the Company stating that such Holder
                  desires to convert shares of Series C Preferred Stock then
                  outstanding (the "Conversion Notice"), which date must be at
                  least five trading days following delivery of the Conversion
                  Notice unless otherwise determined by the Company in its sole
                  discretion, and (B) the date upon which such converting Holder
                  surrenders such shares of Series C Preferred Stock which such
                  Holder desires to convert, all in accordance with Section
                  6(b)(ii) below.

            (ii)  In order to convert shares of Series C Preferred Stock into
                  Class A Common Stock pursuant to paragraph 6(b)(i) above, the
                  Holders shall:

                  (1)   surrender the certificate or certificates evidencing
                        such of the Holders shares of Series C Preferred Stock
                        to be converted, duly endorsed in blank or accompanied
                        by proper instruments of transfer, at the principal
                        office of the Company or any transfer agent for the
                        Series C Preferred Stock, and

                  (2)   shall give the Conversion Notice to the Company at such
                        office of the election to convert the same and shall
                        state therein the name or names in which the Holders
                        wishes the certificate or certificates for Class A
                        Common Stock to be issued. As soon as practicable
                        thereafter, the Company shall issue and deliver at such
                        office to the Holders or their respective transferee,
                        certificates for the number of whole shares of Class A
                        Common Stock to which such Holders shall be entitled.
                        The Conversion Notice shall be substantially in the form
                        attached hereto as Exhibit B.

      (c)   Effect of Conversion. Upon the conversion of the Series C Preferred
            Stock pursuant to this Section 6, the shares of Series C Preferred
            Stock shall not be transferred on the books of the Company or be
            deemed to be outstanding for any purpose whatsoever and shall
            constitute only the right to receive such number of shares of Class
            A Common Stock as may be issuable on an as converted basis upon such
            conversion upon compliance with the requirements of this Section 6;
            provided, however, that the Holders of Series C Preferred Stock as
            of any record date for the payment of all declared but unpaid
            dividends, if any, on any shares of Series C Preferred Stock shall
            be paid, out of any assets at the time legally available therefor,
            upon conversion of such shares of Series C Preferred Stock into
            shares of Class A Common Stock, but shall not be paid any amounts in
            respect of the Class A Common Stock into which it has been or will
            be converted.

      (d)   Fractions of Shares. No fractional shares of Class A Common Stock
            shall be issued by the Company. In lieu thereof, the Company shall
            pay in cash the fair market value of such fractional share as
            determined in good faith by the Board of Directors. Such conversion
            shall be deemed to have been made as of the date of the Conversion
            Notice and such surrender of the Series C Preferred Stock to be
            converted, and the person or persons entitled to receive the Class A
            Common Stock issuable upon such conversion

                                        7

<PAGE>

            shall be treated for all purposes as the record holder or holders of
            such Class A Common Stock on said date.

      (e)   Adjustments. If the Company at any time (i) subdivides the
            outstanding Common Stock or (ii) issues a stock dividend on its
            outstanding Common Stock, the number of shares of Class A Common
            Stock issuable upon conversion of the Series C Preferred Stock
            immediately prior to such subdivision or the issuance of such stock
            dividend shall be proportionately increased by the same ratio as the
            subdivision or dividend. If the Company at any time combines its
            outstanding Common Stock, the number of shares of Class A Common
            Stock issuable upon conversion of the Series C Preferred Stock
            immediately prior to such combination shall be proportionately
            decreased by the same ratio as the combination. All such adjustments
            described herein shall be effective at the close of business on the
            date of such subdivision, stock dividend or combination, as the case
            may be.

      (f)   Reorganization. In case of any capital reorganization (other than in
            connection with a merger or other reorganization in which the
            Company is not the continuing or surviving entity) or any
            reclassification of the Common Stock, the Series C Preferred Stock
            shall thereafter be convertible into that number of shares of stock
            or other securities or property to which a holder of the number of
            shares of Class A Common Stock deliverable upon conversion of the
            Series C Preferred Stock immediately prior to such reorganization or
            recapitalization would have been entitled upon such reorganization
            or reclassification. In any such case, appropriate adjustment (as
            determined in good faith by the Board of Directors) shall be made in
            the application of the provisions herein set forth with respect to
            the rights, preferences and powers thereafter of the Holders of
            Series C Preferred Stock, such that the provisions set forth herein
            shall thereafter be applicable, as nearly as reasonably may be, in
            relation to any share of stock or other property thereafter
            deliverable upon the conversion.

      (g)   Authorized Shares. The Company shall at all times reserve and keep
            available, out of its authorized but unissued Class A Common Stock,
            solely for the purpose of effecting the conversion of Series C
            Preferred Stock, the full number of shares of Class A Common Stock
            deliverable from time to time upon the conversion of all shares of
            Series C Preferred Stock from time to time outstanding. The Company
            shall from time to time (subject to obtaining necessary Board of
            Directors and stockholder approvals), in accordance with the laws of
            the State of Delaware, increase the authorized amount of its Class A
            Common Stock if at any time the authorized number of shares of Class
            A Common Stock remaining unissued shall not be sufficient to permit
            the conversion of all of the shares of Series C Preferred Stock at
            the time outstanding.

7.    VOTING AND CORPORATE ACTIONS.

      (a)   Voting Rights and Powers.

                                        8

<PAGE>

            (i)   The Holders of Series C Preferred Stock shall be entitled to
                  the number of votes equal to the number of shares of Class A
                  Common Stock into which such shares of Series C Preferred
                  Stock could be converted on the record date for the vote or
                  consent of stockholders or, if no record date is established,
                  at the date such vote is taken or any consent of stockholders
                  solicited, and shall have voting rights and powers equal to
                  the voting rights and powers of the Class A Common Stock on an
                  as-converted basis on all matters brought before the
                  stockholders of the Company.

            (ii)  The Holders of Series C Preferred Stock shall be entitled to
                  notice of any stockholders' meeting in accordance with the
                  Company's by-laws and applicable law and shall vote together
                  with holders of the Common Stock as a single class upon any
                  and all matters submitted to a vote of stockholders, except
                  those matters required by law or this Certificate of
                  Designation to be submitted to a class vote.

            (iii) Notwithstanding the foregoing, any Holder of the shares of the
                  Series C Preferred Stock may deliver to the Company a notice
                  requesting termination of the voting rights provided in
                  Section 6(a)(i) and (ii) of this Certificate of Designation,
                  except voting rights on those matters required by law or this
                  Certificate of Designation to be submitted to a class vote.
                  Immediately following receipt of such notice, the Holders of
                  shares of Series C Preferred Stock shall have no voting
                  rights, except as required by Delaware law and as hereinafter
                  provided.

      (b)   Approval of Certain Corporate Actions. Without the prior approval of
            the Holders, an amendment to the Certificate of Incorporation or
            this Certificate of Designation may not:

            (i)   amend this Certificate of Designation;

            (ii)  alter or change the voting rights or powers of the Series C
                  Preferred Stock or reduce the number of shares of Series C
                  Preferred Stock whose holders must approve any such amendment;

            (iii) adversely affect the preferences, powers or rights of the
                  Holders of Series C Preferred Stock;

            (iv)  increase or decrease the number of authorized shares of the
                  Company designated as Series C Preferred Stock; or

            (v)   amend Section 5.4 of the Certificate of Incorporation.

      (c)   Limitation on Lines of Business. So long as the Holders of Series C
            Preferred Stock beneficially own the Minimum Investment, the Company
            shall not, without the prior approval of the Holders, enter into or
            conduct any business, either directly or through any Subsidiary,
            except for Permitted Businesses.

8.    PREEMPTIVE RIGHTS

      (a)   Preemptive Right. Each Holder of the shares of Series C Preferred
            Stock shall have the right to purchase its pro rata share (as set
            forth below) of Equity Securities (the

                                        9

<PAGE>

            "Preemptive Offer") which the Company may, from time to time,
            propose to sell and issue (subject to such requirements and
            restrictions imposed by the Securities Act of 1933, as amended, and
            state securities laws and to the actual issuance of the Equity
            Securities) after the Issue Date, other than Excluded Issuances. For
            purposes of this Section 8(a), the Holders pro rata share shall be
            the amount of such Equity Securities obtained by applying the
            following ratio against the total number of such Equity Securities
            to be offered by the Company: (i) the number of shares of the Common
            Stock (including all shares of Common Stock issued or issuable upon
            conversion of the Series C Preferred Stock or the exercise of
            outstanding Equity Securities held by the Holders, including the
            Series C Preferred Stock issued pursuant to the Warrant) of which
            the Holder is deemed to be a holder immediately prior to the
            issuance of such Equity Securities, to (ii) the total number of
            shares of Common Stock issued and outstanding (including all shares
            of Common Stock issued or issuable upon conversion of the Series C
            Preferred Stock or the exercise of outstanding Equity Securities
            held by the Holders, including the Series C Preferred Stock issued
            pursuant to the Warrant) immediately prior to the issuance of the
            Equity Securities, determined on a fully diluted basis after giving
            effect to the exercise in full of then outstanding options and
            warrants and the conversion of all securities convertible into
            shares of Common Stock.

      (b)   Notice of Preemptive Offer. In the event the Company proposes to
            undertake an issuance of Equity Securities, it shall give the
            Holders of Series C Preferred Stock written notice of its intention,
            describing the type of Equity Securities and the price and the terms
            upon which the Company proposes to issue the same. The Preemptive
            Offer shall by its terms remain open and irrevocable for a period of
            five Business Days from the date it is received from the Company
            (the "Preemptive Offer Period").

      (c)   Preemptive Offer Acceptance. The Holders of Series C Preferred Stock
            shall have the option, exercisable at any time during the Preemptive
            Offer Period by delivering written notice to the Company (a
            "Preemptive Offer Acceptance Notice"), to purchase its pro rata
            share of Equity Securities. The Company shall notify the Holders
            within five days following the expiration of the Preemptive Offer
            Period of the number or amount of the Holders pro rata share of
            Equity Securities it has subscribed to purchase.

      (d)   Offer of Refused Equity Securities. If the Preemptive Offer
            Acceptance Notice is not given by the Holders of Series C Preferred
            Stock for all of their pro rata share of Equity Securities, the
            Company shall have 180 days from the expiration of the Preemptive
            Offer Period to sell all or any part of such Holders pro rata share
            of Equity Securities as to which the Preemptive Offer Acceptances
            Notice has not been given by the Holders (the "Refused Equity
            Securities") to any other Persons upon the terms and conditions
            including price, which are no more favorable, in the aggregate, to
            such other Persons or less favorable to the Company than those set
            forth in the Preemptive Offer.

      (e)   Closing. Upon the closing of the sale to such other Persons of all
            the Equity Securities, the Holders of Series C Preferred Stock shall
            purchase from the Company, and the Company shall sell to the
            Holders, the pro rata share of Equity Securities with respect to
            which the Preemptive Offer Acceptance Notice was delivered by the
            Holders, at the same terms specified in the Preemptive Offer.

      (f)   Emergency Funding. If the Company determines in good faith that the
            delay occasioned by complying with the procedures contemplated by
            this Section 8 would be prejudicial to the Company or its financial
            condition or business and operations, then the Company

                                       10

<PAGE>

            may before delivering the Preemptive Offer or after delivering the
            Preemptive Offer (but before observing the time periods and other
            procedures set forth in this Section 8), issue or sell all of the
            Equity Securities. If the Company elects to issue Equity Securities
            under this Section 8 before it delivers a Preemptive Offer, then the
            Company shall deliver the Preemptive Offer to the Holders of Series
            C Preferred Stock to which it has not so issued or sold Equity
            Securities (the "Excluded Group") no later than five Business Days
            after the date on which such Equity Securities are issued or sold to
            the Holders. If the Excluded Group delivers a Preemptive Offer
            Acceptance Notice within 10 Business Days and the Company has issued
            or sold the Equity Securities to a Person but not to the Holders,
            then the Company shall issue or sell such number of pro rata shares
            of Equity Securities as the participating members of the Excluded
            Group would have been entitled had the Preemptive Offer been made
            and accepted by such member of the Excluded Group in accordance with
            Sections 8(a) through (d) as promptly as practicable, but in no
            event later than five Business Days following the date of delivery
            of the Preemptive Offer Acceptance Notice, at the same price, and on
            the same terms and conditions as the issuance and sale occurred.

      (g)   Expiration. The rights granted under this Section 8 to the Holders
            of Series C Preferred Stock shall expire upon such time as the
            Holders of Series C Preferred Stock no longer beneficially own the
            Minimum Investment.

9.    CERTAIN COVENANTS

      (a)   Merger, Consolidation, or Sale of Assets. If the Company (i) merges
            or consolidates with or into another corporation or limited
            liability company in which the Company is not the surviving entity
            and by which the shares of the Company's capital stock outstanding
            immediately prior to the merger are converted by virtue of the
            merger into other property, whether in the form of securities, cash,
            or otherwise or (ii) sells or transfers all or substantially all of
            the Company's properties and assets to any other Person, then, a
            provision shall be made so that, upon the basis and the terms and in
            the manner provided in this Certificate of Designation, the Holders
            of Series C Preferred Stock shall be entitled to receive the stock
            or other securities, cash or property which the Holders would have
            been entitled to receive upon such consummation if the Holders had
            converted the shares of Series C Preferred Stock for such shares of
            Class A Common Stock immediately prior thereto. If the per share
            consideration payable to the Holders in connection with any such
            event is in a form other than cash or marketable securities, then
            the value of such consideration shall be determined in good faith by
            the Board of Directors. In all events, appropriate adjustment (as
            determined in good faith by the Board of Directors) shall be made in
            the application of the provisions of this Certificate of Designation
            such that the Holders rights and interest in this Certificate of
            Designation shall be applicable after such event, to the greatest
            extent possible, in relation to any shares or other property
            deliverable after that event.

      (b)   Transactions With Affiliates. Without the prior approval of the
            Holders, the Company shall not, and shall not permit any of its
            Subsidiaries to, make any payment to, or sell, lease, transfer or
            otherwise dispose of any of its properties or assets to, or purchase
            any property or assets from, or enter into or make or amend any
            transaction, contract, agreement, understanding, loan, advance or
            guarantee with, or for the benefit of, any Affiliate (each of the
            foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
            Transaction is on terms that are no less favorable to the Company or
            such Subsidiary than those that would have been obtained in a
            comparable transaction by the Company or such

                                       11

<PAGE>

            Subsidiary with an unrelated Person (ii) with respect to any
            Affiliate Transaction or series of related Affiliate Transactions
            involving aggregate consideration in excess of $2.5 million, such
            Affiliate Transaction or series of Affiliated Transactions has been
            approved by a majority of the members of the Board of Directors that
            are disinterested as to such Affiliate Transaction or series of
            Affiliated Transactions and (iii) with respect to any Affiliate
            Transaction or series of related Affiliate Transactions involving
            aggregate consideration in excess of $10.0 million, an opinion as to
            the fairness to the Company of such Affiliate Transaction or series
            of Affiliated Transactions from a financial point of view issued by
            an accounting, appraisal or investment banking firm of national
            standing; provided that (1) any transaction approved by the Board of
            Directors, with an officer or director of the Company or of any of
            its Subsidiaries in his or her capacity as an officer or director
            entered into in the ordinary course of business; (2) transactions
            between or among the Company and/or its Subsidiaries; (3) payment of
            reasonable directors fees to the Board of Directors and of its
            Subsidiaries; (4) fees and compensation paid to, and indemnity
            provided on behalf of, officers, directors or employees of the
            Company or any of its Subsidiaries, as determined in good faith by
            the Board of Directors of the Company or of any such Subsidiary, to
            the extent the same are reasonable and customary; and (5) agreements
            in effect on the Issue Date and any modification thereto or any
            transaction contemplated thereby (including pursuant to any
            modification thereto) in any replacement agreement therefor so long
            as such modification or replacement is not more disadvantageous to
            the Company in any material respect than the original agreement as
            in effect on the Issue Date, in each case, shall not be deemed to be
            Affiliate Transactions.

      (c)   Reports. Whether or not required by the rules and regulations of the
            SEC, so long as any shares of Series C Preferred Stock are
            outstanding, the Company shall make available to the Holders, upon
            request, (i) all quarterly and annual financial information that
            would be required to be contained in a filing with the SEC on Forms
            10-Q and 10-K if the Company were required to file such Forms,
            including a "Management's Discussion and Analysis of Financial
            Condition and Results of Operations" that describes the financial
            condition and results of operations of the Company and its
            consolidated Subsidiaries (showing in reasonable detail, either on
            the face of the financial statements or in the footnotes thereto and
            in Management's Discussion and Analysis of Financial Condition and
            Results of Operations, the financial condition and results of
            operations of the Company and its Subsidiaries separate from the
            financial information and results of operations of the Subsidiaries
            of the Company) and, with respect to the annual information only, a
            report thereon by the Company certified independent accountants and
            (ii) all current reports that would be required to be filed with the
            SEC on Form 8-K if the Company was required to file such reports, in
            each case within the time periods set forth in the SEC's rules and
            regulations. For purpose of this provision, posting such reports on
            EDGAR or on the Company's website shall constitute making such
            reports available to the Holders. The Company also agrees to provide
            the Holders with such additional information as the Holders may from
            time to time reasonably request.

      (d)   Events of Default. The Company agrees that, so long as the Holders
            of Series C Preferred Stock beneficially own the Minimum Investment,
            the Company shall furnish to the Holders, as soon as possible and
            in any event within five Business Days of obtaining knowledge
            thereof, an officer's certificate specifying the nature and period
            of existence of such condition or event, or specifying the notice
            given or action taken by such holder or Person and the nature of
            such claimed violation, default, event or condition, and what action
            the Company has taken, is taking and proposes to take with respect
            to notice:

                                       12

<PAGE>

            (i)   of any condition or event that constitutes an event of default
                  under the instruments governing the Company's outstanding debt
                  with a principal amount in excess of $50,000,000;

            (ii)  that any Person has given any notice to the Company or any of
                  its Subsidiaries or taken any other action with respect to a
                  claimed default or event or condition that would be required
                  to be disclosed in a current report filed by the Company with
                  the SEC on Form 8-K (Items 1, 2, 4 and 5 of such Form as in
                  effect on the date hereof); or

            (iii) of any condition or event which constitutes a Material Adverse
                  Effect.

      (e)   No Poison Pills. Without the prior approval of the Holders, the
            Company shall not, so long as the Holders of Series C Preferred
            Stock beneficially own the Minimum Investment, create or adopt any
            shareholders rights plan or "poison pill", amend any of its
            organizational documents, or take any similar action that would
            prohibit or materially impede or materially delay the ability of the
            Holders and their Affiliates to acquire additional shares of Capital
            Stock, or to dispose of or sell such Capital Stock, in any manner
            permitted by this Certificate of Designation, the Warrant and the
            Stockholders Agreement; provided that, for avoidance of doubt, the
            foregoing shall not restrict the Company from (a) entering into loan
            agreements that contain customary covenants, including provisions
            permitting acceleration of the related indebtedness upon a change of
            control and (b) issuing debt securities or preferred stock that
            contain customary covenants, including change of control provisions.

      (f)   Limitation on Issuance of Series C Preferred Stock. Without the
            prior approval of the Holders, the Company shall not issue any
            shares of Series C Preferred Stock to any Person other than the
            Infinity Media Corporation, a Delaware corporation, and its
            Affiliates.

10.   AMENDMENT.

            Notwithstanding anything to the contrary in the DGCL, subject to
      Section 9(a), neither this Certificate of Designation nor the Certificate
      of Incorporation shall be amended, altered or repealed (by merger,
      consolidation or otherwise) in any manner that would alter or change the
      powers, preferences or special rights of the Series C Preferred Stock so
      as to affect the Holders thereof adversely without the affirmative vote of
      the Holders of Series C Preferred Stock voting separately as a class.

11.   EXCLUSION OF OTHER RIGHTS.

            Except as may otherwise be required by law, the shares of Series C
      Preferred Stock shall not have any voting powers, preferences and
      relative, participating, optional or other special rights, other than
      those specifically set forth in this Certificate of Designation (as such
      Certificate of Designation may be amended from time to time in accordance
      with the terms hereof) and in the Certificate of Incorporation.

12.   HEADINGS OF SECTIONS.

            The headings of the various sections and subsections hereof are for
      convenience of reference only and shall not affect the interpretation of
      any of the provisions hereof.

                                       13

<PAGE>

                                                                       EXHIBIT A

                               NOTICE OF TRANSFER

      The undersigned, being the registered record holder of the Series C
Convertible Preferred Stock (the "Series C Preferred Stock") of Spanish
Broadcasting System, Inc. (the "Company") hereby gives the Company notice of a
transfer of [number] outstanding shares of Series C Preferred Stock on [date] to
[name of transferee] pursuant to Section 6(a) of the Certificate of Designation
of the Series C Preferred Stock.

Dated: [five trading days prior to the date fixed for transfer]

________________________
Name

________________________
Address
________________________                       ________________________
Please print name and                          (Signature)
address, including zip
code number

Denominations:________

                                       14

<PAGE>

                                                                       EXHIBIT B

                       NOTICE TO EXERCISE CONVERSION RIGHT

      The undersigned, being the registered record holder of the Series C
Convertible Preferred Stock (the "Series C Preferred Stock") of Spanish
Broadcasting System, Inc. (the "Company") irrevocably exercises the right to
convert ____________ outstanding shares of Series C Preferred Stock on
___________, ____, into shares of Class A Common Stock of the Company in
accordance with the terms of the shares of Series C Preferred Stock, and directs
that the shares issuable and deliverable upon the conversion be issued and
delivered in the denominations indicated below to the registered holder hereof
unless a different name has been indicated below.

Dated: [five trading days prior to the date fixed for conversion]

Fill in for registration of shares of
Class A Common Stock if to be issued
otherwise than to the registered holder:

________________________
Name

________________________
Address

________________________                       ________________________
Please print name and                          (Signature)
address, including zip
code number

Denominations:________

                                       15

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