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ARTICLE I
CONTRIBUTION OF
PROPERTY........................................................................1
I.1.
Contribution and Acquisition of Contributed
Property............................................1
I.2.
Closing.........................................................................................1
I.3.
Contributor
Representative......................................................................1
ARTICLE II
EXCHANGE
AMOUNT.................................................................................2
II.1.
Exchange
Amount.................................................................................2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
CONTRIBUTORS..............................................2
III.1.
Organization and
Standing.......................................................................2
III.2.
Authorization; No
Conflicts.....................................................................2
III.3. Binding
Obligations.............................................................................3
III.4. No
Litigation...................................................................................3
III.5.
Contributed
Property............................................................................3
III.6.
Securities Law
Matters..........................................................................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACADIA AND THE
REIT...........................................5
IV.1.
Organization and
Standing.......................................................................5
IV.2.
Authorization; No
Conflicts.....................................................................6
IV.3.
Binding
Obligations.............................................................................6
IV.4. No
Litigation...................................................................................6
IV.5.
Series B
Units..................................................................................6
IV.6. No
Tax
Audits...................................................................................6
IV.7. Tax
Reporting...................................................................................6
IV.8.
Capitalization..................................................................................7
IV.9.
Common OP
Units.................................................................................7
IV.10.
Governmental Consents and
Approvals.............................................................7
IV.11. Absence
of Certain Changes or Events; Undisclosed Liabilities and
Agreements....................7
ARTICLE V
CONTRIBUTORS
COVENANTS..........................................................................9
V.1 Current
Operating
Covenants.....................................................................9
V.2 Long-term
Covenants............................................................................10
V.3
Survival.......................................................................................11
ARTICLE VI
CONDITIONS PRECEDENT TO THE
CLOSING............................................................11
VI.1.
Conditions to Obligations of
Contributors......................................................11
VI.2.
Conditions to Obligations of
Acadia............................................................12
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ARTICLE VII
DELIVERIES.....................................................................................12
ARTICLE VIII SURVIVAL;
INDEMNIFICATION......................................................................14
VIII.1.
Survival.......................................................................................14
VIII.2. Agreement of
Contributors to
Indemnify.........................................................14
VIII.3. Agreement of
Acadia to
Indemnify...............................................................14
VIII.4. Limitation of
Liability........................................................................15
VIII.5
Conditions of
Indemnification..................................................................15
ARTICLE IX
TRANSITION.....................................................................................16
ARTICLE X
CONFIDENTIALITY; TAX
MATTERS...................................................................16
X.1.
Confidentiality................................................................................16
X.2.
No Representation with Regard to Tax
Treatment.................................................17
ARTICLE XI
MISCELLANEOUS..................................................................................17
XI.1.
Additional Actions and
Documents...............................................................17
XI.2.
Expenses.......................................................................................17
XI.3.
Assignment.....................................................................................18
XI.4.
Entire Agreement;
Amendment....................................................................18
XI.5.
Waiver
......................................................................................18
XI.6.
Severability...................................................................................18
XI.7.
Governing
Law..................................................................................18
XI.8.
Notices........................................................................................19
XI.9.
Headings.......................................................................................20
XI.10. Execution
in
Counterparts......................................................................20
XI.11.
Attorneys'
Fees................................................................................20
XI.12. Waiver of
Jury
Trial...........................................................................21
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EXHIBITS
Exhibit A - Form of Registration Rights
Agreement
Exhibit B - Form of Investor
Questionnaire
Exhibit C - Form of Certificate of Series B
Units
Exhibit D - Acadia Partnership
Agreement
Exhibit E - Certificate of Designation
Exhibit F - Form of Consent of Property
Co-Managers
Exhibit G - Form of Assignment of
Contributed Property
Exhibit H - Form of Acadia's Opinion of
Counsel
Exhibit I - Form of Contributors' Opinion
of Counsel
Exhibit J - Sub-Management Agreement
Exhibit K - Co-Investment Agreement
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SCHEDULES
Schedule 1 - List of Owner Entities
Schedule 2 - List of Properties
Schedule 3 - List of Documents comprising
the Owner Entities
and the Contributed Property
Schedule 4 - Schedule of Fees
Schedule 5 - Allocation of Units
Schedule 6 - List of Partners/Members of
Contributors
Schedule 7 - Prepaid Fees
iii
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AGREEMENT OF CONTRIBUTION
by and among
ACADIA REALTY LIMITED PARTNERSHIP,
ACADIA REALTY TRUST
and
KLAFF REALTY, LP
KLAFF REALTY, LIMITED
January ___, 2004
<PAGE>
AGREEMENT OF CONTRIBUTION
THIS AGREEMENT OF CONTRIBUTION (the "Agreement") is entered
into as of January __, 2004 by and among
Acadia Realty Limited Partnership, a
Delaware limited partnership ("Acadia"),
Acadia Realty Trust, a Maryland real
estate investment trust (the "REIT") and
Klaff Realty, LP, a Delaware limited
partnership, and Klaff Realty, Limited, an
Illinois corporation (each a
"Contributor," and collectively, the
"Contributors").
RECITALS:
A. The Contributors are engaged in the retail management
services business (the "Retail Services
Business") and desire to become limited
partners in Acadia by contributing to
Acadia assets, including goodwill, related
to the Retail Services Business, as a going
concern (the "Contributed
Property"), and Acadia has agreed to admit
the Contributors as limited partners.
B. Acadia and Contributors desire to enter into the Agreement
to set forth certain additional terms and
conditions upon which Contributors
will transfer the Contributed Property to
Acadia.
ARTICLE I
CONTRIBUTION OF PROPERTY
I.1. Contribution and Acquisition of Contributed Property
Subject to the terms and conditions hereof, Contributors agree
to contribute to Acadia, and Acadia agrees
to acquire and accept from
Contributors, all of Contributors' right,
title and interest in and to the
Contributed Property in exchange for
Preferred Series B units of limited
partnership interest in Acadia with rights,
preferences and privileges as set
forth in the Certificate of Designation
attached as Exhibit E (the "Series B
Units") (the foregoing, together with all
other transactions contemplated by
this Agreement being referred to herein as
the "Contribution"). The Contribution
shall be consummated, as set forth in
Article II hereof, in a transaction
intended to qualify for nonrecognition of
gain to Contributors pursuant to
Section 721 of the Internal Revenue Code of
1986, as amended (the "Code").
I.2. Closing
The closing of the transactions contemplated by this Agreement
(the "Closing") shall occur on a date (the
"Closing Date") and at a time (the
"Closing Time") and a place (the "Closing
Place") to be mutually agreed to by
the parties hereto, upon satisfaction or
waiver of the conditions set forth in
Article VI hereof.
I.3. Contributor Representative
The Contributors hereby appoint Hersch M. Klaff as their
representative in connection with this
Agreement (the "Contributor
Representative")and with respect to any
decisions to be made by Contributors
under this Agreement, Acadia and the REIT
may rely exclusively on instructions
from the Contributor Representative.
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ARTICLE II
EXCHANGE AMOUNT
II.1. Exchange Amount
(a) Units Delivered at Closing. In exchange for the
contribution of the Contributed Property,
the Contributors shall receive in the
aggregate, at the Closing, a number of
Series B Units (rounded to the nearest
whole number) equal to $4,000,000 divided
by $1,000.00. Each Contributor shall
be entitled to receive the number of Series
B Units set forth in Schedule 5
hereto.
(b) Distribution of Units. At the Closing, Acadia shall issue
the Series B Units to the Contributors in
accordance with written instructions
provided to Acadia by the Contributor
Representative at least two business days
prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
Contributors jointly and severally represent and warrant to
Acadia as follows:
III.1. Organization and Standing
Each Contributor is a limited partnership, corporation or a
limited liability company, duly formed,
validly existing and in good standing
under the laws of its jurisdiction of
organization and is duly qualified to do
business in each jurisdiction where the
conduct of its business requires
qualification. Each Contributor has the
full and unrestricted power and
authority to own, operate and lease its
assets, to carry on its business as
currently conducted, to execute and deliver
this Agreement, and each other
agreement, instrument or document relating
hereto or contemplated hereby or
thereby (the "Other Agreements") to which
it is a party and to carry out the
transactions contemplated hereby or
thereby.
III.2. Authorization; No Conflicts
The execution and delivery of this Agreement and the Other
Agreements by each Contributor and the
performance by each Contributor of its
covenants and agreements under this
Agreement and the Other Agreements have
been, or at Closing will have been, duly
authorized by all necessary action on
the part of such Contributor. Prior to the
Closing, the Contributor shall have
used commercially reasonable efforts to
obtain, with respect to this
transaction, the consents of the general
partners or managers (such general
partners and managers being hereafter
referred to as the "Property Co-Managers")
of the owning entities (the "Owner
Entities") for which the Contributors' Retail
Services Business is providing services
(the "Consents"). The execution,
delivery and performance by each
Contributor of this Agreement and each Other
Agreement to which such Contributor is a
party, the fulfillment of and
compliance with the respective terms and
provisions hereof and thereof, and the
consummation by such Contributor of the
transactions contemplated hereby and
thereby, do not and will not: (a) conflict
with, or violate any provision of the
organization documents of any Contributor;
(b) conflict with, or violate any
provision of, any statute, law, ordinance,
regulation, rule, order, writ or
injunction having applicability to any
Contributor, any of its assets or the
Contributed Property; (c) subject to
obtaining the Consents, conflict with,
result in any breach of, or constitute a
default under the Contributed Property
or any agreement to which any Contributor
or any Contributor's equity owners is
a party or by which it or they or any of
its or their assets are bound; (d)
subject to obtaining the Consents, result
in or require the creation or
imposition of or result in the acceleration
of any indebtedness or of any
encumbrance of any nature upon, or with
respect to, the Contributed Property,
Contributor or any Contributor's equity
owners or any of the assets now owned or
hereafter acquired by any Contributor;
except (in the case of clauses (b), (c)
and (d) above) for such conflicts,
violations, breaches or defaults as will not
have a material adverse effect on the
Contributed Property or the business or
financial condition of any Contributor or
the consummation of this transaction.
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III.3. Binding Obligations
This Agreement and each Other Agreement executed and delivered
by each Contributor on or prior to the date
hereof constitutes a valid and
binding obligation of such Contributor,
enforceable in accordance with its
terms; and each Other Agreement to be
executed by each Contributor pursuant
hereto or thereto, when executed and
delivered in accordance with the provisions
hereof or thereof, shall be a valid and
binding obligation of such Contributor,
enforceable in accordance with its
terms.
III.4. No Litigation
There are no actions, suits, claims, arbitrations, proceedings
or investigations pending or, to the
knowledge of any Contributor, threatened
against, affecting or involving the
Contributed Property, any Contributor or its
businesses or assets, or the transactions
contemplated by this Agreement, at law
or in equity, or before or by any court,
arbitrator or governmental authority,
domestic or foreign, that could reasonably
be expected to have a material
adverse effect on the Contributed Property
or the business or financial
condition of any Contributor or to
challenge or impair the ability of any
Contributor to consummate the
Contribution.
III.5. Contributed Property
(a) Attached hereto as Schedules 1 and 2 are a true, correct
and complete lists respectively of the
Owner Entities and the properties (the
"Properties") for which the Contributors'
Retail Services Business is providing
services.
(b) Attached hereto as Schedule 3 is a true, correct and
complete schedule of all documents
comprising the Owner Entities and Contributed
Property and the Contributors have
delivered to Acadia true, correct and
complete copies of all documents comprising
the Owner Entities and the
Contributed Property and a complete
accounting of all Fees billed and received
with respect to the Contributed Property
for the last 12 months through November
30, 2003.
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(c) To the Contributors' knowledge, the organization documents
of the Owner Entities are in full force and
effect.
(d) Attached hereto as Schedule 4 is a true, correct and
complete schedule of all Fees to which the
Contributors are entitled in
connection with the performance of the
Retail Services Business.
(e) Attached hereto as Schedule 6 is a true, correct and
complete schedule of all partners and
members of the Contributors.
(f) Upon receipt of the Consents, the Contributors have the
right to transfer the Contributed Property
in accordance with the terms of this
Agreement.
(g) The Contributed Property is wholly owned by the
Contributors, free and clear of all liens
and encumbrances.
(h) The Contributed Property is in full force and effect and
is the legal, valid and binding obligation
of each of the parties thereto,
enforceable against such parties in
accordance with its terms. None of the
Contributors is in default, and there
exists no condition or act which with the
giving of notice or passage of time or
otherwise will cause a default with
respect to the Contributed Property. Except
as otherwise listed on Schedule 7,
no Fees under the Contributed Property for
any period after the Closing Date
shall have been paid. In no event, however,
do the Contributors represent,
warrant, covenant or guaranty the payment
of any Fees to Acadia or the amount of
any Fees that Acadia may receive in the
future.
III.6. Securities Law Matters
(a) Each Contributor acknowledges that Acadia intends the
offer and issuance of the Series B Units to
be exempt from registration under
the Securities Act and applicable state
securities laws by virtue of (i) the
status of each Contributor and each equity
owner of such Contributor as an
Accredited Investor (as defined below), and
(ii) Section 4(2) of the Securities
Act of 1933, as amended (the "Securities
Act") and/or Regulation D promulgated
under Section 4(2) of the Securities Act
("Regulation D"), and that Acadia will
rely in part upon the representations and
warranties made by each Contributor in
this Agreement in making the determination
that the offer and issuance of the
Units qualify for exemption under Rule 506
of Regulation D as an offer and sale
only to Accredited Investors (as defined
below).
(b) Each Contributor, each of such Contributor's equity owners
and each other person or entity who has a
right to vote upon or approve the
transactions contemplated hereby or who
will receive a distribution of Series B
Units pursuant to Section II.1(b) are
"accredited investors" as defined in
Regulation 501(a) under Regulation D
("Accredited Investors"). Each Contributor
has provided to Acadia a true, correct and
complete copy of such Contributor's
organizational documents.
(c) Each Contributor and each other person or entity who will
receive a distribution of Series B Units
pursuant to Section II.1(b) will
acquire the Units for their own account and
not with a view to or for sale in
connection with any "distribution" thereof
within the meaning of the Securities
Act.
-4-
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(d) Each Contributor and its equity owners have sufficient
knowledge and experience in financial, tax
and business matters to enable them
to evaluate the merits and risks of
investment in the Series B Units. Each
Contributor and its equity owners have the
ability to bear the economic risk of
acquiring the Series B Units. Each
Contributor acknowledges that (i) the
transactions contemplated by this Agreement
and the Other Agreements involve
complex tax consequences for each
Contributor and its equity owners, and each
Contributor and its equity owners are
relying solely on the advice of their own
tax advisors in evaluating such
consequences, (ii) neither Acadia nor the REIT
has made (or shall be deemed to have made)
any representations or warranties as
to the tax consequences of such transaction
to any Contributor or any of its
equity owners, and (iii) references in this
Agreement to the intended tax effect
of the Contribution and the other matters
described herein shall not be deemed
to imply any representation by Acadia or
the REIT as to a particular tax effect
that may be obtained by any Contributor or
its equity owners. Each Contributor
and its equity owners remain solely
responsible for all tax matters relating to
each Contributor and its equity owners.
(e) Each Contributor and each other person or entity who will
receive a distribution of Series B Units
pursuant to Section II.1(b) has been
supplied with, or had access to,
information to which a reasonable investor
would attach significance in making an
investment decision to acquire the Series
B. Units and any other information they
have requested. Each Contributor and
each other person or entity who will
receive a distribution of Series B Units
pursuant to Section II.1(b) has had an
opportunity to ask questions of and
receive information and answers from Acadia
and the REIT concerning Acadia, the
REIT, the Series B Units, the Common OP
Units (defined below) into which the
Series B Units may be exchanged, and the
common shares of beneficial interest
("Common Shares") into which the Common OP
Units may be exchanged, and to assess
and evaluate any information supplied to
them by Acadia or the REIT, and all
such questions have been answered and all
such information has been provided to
their full satisfaction.
(f) Each Contributor and each other person or entity who will
receive a distribution of Series B Units
pursuant to Section II.1(b)
acknowledges that the Series B Units are
not registered under the Securities Act
or any state securities laws and cannot be
resold without registration
thereunder or exemption therefrom.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACADIA AND THE REIT
A. Acadia Representations. Acadia represents and warrants to
Contributors as follows:
IV.1. Organization and Standing
Acadia is
a limited partnership duly organized, validly
existing and in good standing under the
laws of the State of Delaware and has
the full and unrestricted partnership power
and authority to own, operate and
lease its assets and to carry on its
business as currently conducted. Acadia is
duly qualified to conduct business as a
foreign limited partnership and is in
good standing in each jurisdiction where
the nature of the business conducted by
Acadia or the character of the assets
owned, leased or otherwise held by it
makes any such qualification necessary,
except where the failure to be so
qualified would not have a material adverse
effect upon the business of Acadia
as currently conducted.
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IV.2. Authorization; No Conflicts
The execution, delivery and performance by Acadia of this
Agreement and each Other Agreement to which
Acadia is a party, the fulfillment
of and compliance with the respective terms
and provisions hereof and thereof,
and the consummation by Acadia of the
transactions contemplated hereby and
thereby, do not and will not: (a) conflict
with, or violate any provisions of,
the certificate of limited partnership or
agreement of limited partnership of
Acadia; (b) conflict with, or violate any
provision of, any statute, law,
ordinance, regulation, rule, order, writ or
injunction having applicability to
Acadia or any of its assets; or (c)
conflict with, result in any breach of, or
constitute a default under any agreement to
which Acadia is a party or by which
it or any of its assets are bound; except
(in the case of clauses (b) and (c)
above) for such conflicts, violations,
breaches or defaults as will not have a
material adverse effect on the business or
financial condition of Acadia or the
consummation of the Acquisition.
IV.3. Binding Obligations
This Agreement and each Other Agreement executed and delivered
by Acadia constitutes a valid and binding
obligation of Acadia, enforceable in
accordance with its terms; and each Other
Agreement to be executed by Acadia
pursuant hereto or thereto, when executed
and delivered in accordance with the
provisions hereof or thereof, shall be a
valid and binding obligation of Acadia,
enforceable in accordance with its
terms.
IV.4. No Litigation
There are no actions, suits, claims, arbitrations, proceedings
or investigations pending or, to the
knowledge of Acadia, threatened against,
affecting or involving Acadia or its
business or assets or the transactions
contemplated by this Agreement, at law or
in equity, or before or by any court,
arbitrator or governmental authority,
domestic or foreign, that could reasonably
be expected to have a material adverse
effect on the business or financial
condition of Acadia or challenge or impair
the ability of Acadia to consummate
the Contribution.
IV.5. Series B Units
At the Closing, the Series B Units to be issued to
Contributors pursuant to Article II hereof
will be duly authorized for issuance
by Acadia to Contributors and upon issuance
in accordance with this Agreement
will be validly issued, fully paid and
non-assessable
IV.6. No Tax Audits
Acadia is not a party to any pending action, audit or
proceeding by any taxing authority for any
assessment or collection of any
federal, state or local taxes.
IV.7. Tax Reporting
Acadia will treat the transfer of the Contributed Property to
Acadia for federal income tax purposes as a
contribution that qualifies for
nonrecognition of gain pursuant to Section
721 of the Code. Acadia, however,
makes no representation or warranty that
these positions will be respected.
-6-
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IV.8. Capitalization
As of September 30, 2003, 28,463,083 common units of limited
partnership ("Common OP Units") were issued
and outstanding, of which 27,321,766
Common OP Units are held by the REIT and
1,141,317 Common OP Units are held by
the limited partners of Acadia. In
addition, 2,212 Series A Preferred Units are
issued and outstanding with an aggregate
liquidation preference of $2,212,000
and will rank pari passu with the Series B
Preferred Units.
IV.9. Common OP Units
As of the Closing, the Common OP Units issuable upon
conversion of the Series B Units will have
been duly and validly authorized by
Acadia and the REIT as General Partner and
will have been duly reserved for
issuance upon such conversion.
IV.10. Governmental Consents and Approvals
Acadia has obtained each and every consent, approval, permit
or order of, and has made each and every
filing with, a
