ARTICLE III REPRESENTATIONS AND WARRANT

 

                                                                   Exhibit 10.51

                                TABLE OF CONTENTS

Page ---- ARTICLE I CONTRIBUTION OF PROPERTY............................................................1 I.1. Contribution and Acquisition of Contributed Property................................1 I.2. Closing.............................................................................1 I.3. Contributor Representative..........................................................1 ARTICLE II EXCHANGE AMOUNT.....................................................................2 II.1. Exchange Amount.....................................................................2 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS..................................2 III.1. Organization and Standing...........................................................2 III.2. Authorization; No Conflicts.........................................................2 III.3. Binding Obligations.................................................................3 III.4. No Litigation.......................................................................3 III.5. Contributed Property................................................................3 III.6. Securities Law Matters..............................................................3 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACADIA AND THE REIT...............................5 IV.1. Organization and Standing...........................................................5 IV.2. Authorization; No Conflicts.........................................................5 IV.3. Binding Obligations.................................................................5 IV.4. No Litigation.......................................................................5 IV.5. The Units...........................................................................6 IV.6. No Tax Audits.......................................................................6 IV.7. Tax Reporting.......................................................................6 IV.8. Capitalization......................................................................6 IV.9. Governmental Consents and Approvals.................................................6 IV.10. Absence of Certain Changes or Events; Undisclosed Liabilities and Agreements........6 ARTICLE V COVENANTS...........................................................................9 V.1. Contributors Covenants..............................................................9 V.2. Survival...........................................................................10 ARTICLE VI CONDITIONS PRECEDENT TO THE CLOSING................................................10 VI.1. Conditions to Obligations of Contributors..........................................10 VI.2. Conditions to Obligations of Acadia................................................11
i TABLE OF CONTENTS (continued)
Page ---- ARTICLE VII DELIVERIES.........................................................................11 ARTICLE VIII SURVIVAL; INDEMNIFICATION..........................................................13 VIII.1. Survival...........................................................................13 VIII.2. Agreement of Contributors to Indemnify.............................................13 VIII.3. Agreement of Acadia to Indemnify...................................................13 VIII.4. Limitation of Liability............................................................14 VIII.5. Conditions of Indemnification......................................................14 ARTICLE IX INTENTIONALLY OMITTED..............................................................15 ARTICLE X CONFIDENTIALITY; TAX MATTERS.......................................................15 X.1. Confidentiality....................................................................15 X.2. No Representation with Regard to Tax Treatment.....................................16 ARTICLE XI MISCELLANEOUS......................................................................16 XI.1. Additional Actions and Documents...................................................16 XI.2. Expenses...........................................................................16 XI.3. Assignment.........................................................................17 XI.4. Entire Agreement; Amendment........................................................17 XI.5. Waiver.............................................................................17 XI.6. Severability.......................................................................17 XI.7. Governing Law......................................................................17 XI.8. Notices............................................................................18 XI.9. Headings...........................................................................19 XI.10. Execution in Counterparts..........................................................19 XI.11. Attorneys' Fees....................................................................19 XI.12. Waiver of Jury Trial...............................................................19
EXHIBITS Exhibit A - Form of Registration Rights Agreement Exhibit B - Form of Investor Questionnaire Exhibit C - Form of Certificate of Units Exhibit D - Acadia Partnership Agreement Exhibit E - Form of Assignment of Contributed Property Exhibit F - Form of Acadia's Opinion of Counsel Exhibit G - Form of Contributors' Opinion of Counsel ii AGREEMENT OF CONTRIBUTION BY AND AMONG ACADIA REALTY LIMITED PARTNERSHIP, ACADIA REALTY TRUST, KLAFF REALTY, LP AND KLAFF REALTY, LIMITED FEBRUARY 15, 2005 AGREEMENT OF CONTRIBUTION THIS AGREEMENT OF CONTRIBUTION (the "Agreement") is entered into as of February 15, 2005 by and among Acadia Realty Limited Partnership, a Delaware limited partnership ("Acadia"), Acadia Realty Trust, a Maryland real estate investment trust (the "REIT"), Klaff Realty, LP, a Delaware limited partnership, and Klaff Realty, Limited, an Illinois corporation (each a "Contributor," and collectively, the "Contributors"). RECITALS: A. The Contributors are engaged in the retail management services business (the "Retail Services Business") and desire to become limited partners in Acadia by contributing to Acadia assets, including goodwill, related to the Retail Services Business, as a going concern (the "Contributed Property"), and Acadia has agreed to admit the Contributors as limited partners. B. Acadia and Contributors desire to enter into the Agreement to set forth certain additional terms and conditions upon which Contributors will transfer the Contributed Property to Acadia. ARTICLE I CONTRIBUTION OF PROPERTY I.1. CONTRIBUTION AND ACQUISITION OF CONTRIBUTED PROPERTY Subject to the terms and conditions hereof, Contributors agree to contribute to Acadia, and Acadia agrees to acquire and accept from Contributors, all of Contributors' right, title and interest in and to the Contributed Property in exchange for common units of limited partnership interest in Acadia with rights, preferences and privileges as set forth in the partnership agreement of Acadia (the "Units") (the foregoing, together with all other transactions contemplated by this Agreement being referred to herein as the "Contribution"). The Contributors have provided, and Acadia acknowledges receipt of, the Contributed Property as of the Closing Date. The Contribution shall be consummated, as set forth in Article II hereof, in a transaction intended to qualify for nonrecognition of gain to Contributors pursuant to Section 721 of the Internal Revenue Code of 1986, as amended (the "Code"). I.2. CLOSING The closing of the transactions contemplated by this Agreement (the "Closing") shall be deemed to have occurred on February 15, 2005 (the "Closing Date") at the offices of Acadia, upon satisfaction or waiver of the conditions set forth in Article VI hereof. I.3. CONTRIBUTOR REPRESENTATIVE The Contributors hereby appoint Hersch M. Klaff as their representative in connection with this Agreement (the "Contributor Representative") and with respect to any decisions to be made by Contributors under this Agreement, Acadia and the REIT may rely exclusively on instructions from the Contributor Representative. ARTICLE II EXCHANGE AMOUNT II.1. EXCHANGE AMOUNT (a) Units Delivered at Closing. In exchange for the contribution of the Contributed Property, the Contributors shall receive in the aggregate, at the Closing, 250,000 Units. Each Contributor shall be entitled to receive the number of Units set forth in Schedule 1 hereto. (b) Distribution of Units. At the Closing, Acadia shall issue the Units to the Contributors in accordance with written instructions provided to Acadia by the Contributor Representative at least two business days prior to the Closing. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS Contributors jointly and severally represent and warrant to Acadia as follows: III.1. ORGANIZATION AND STANDING Each Contributor is a limited partnership, corporation or a limited liability company, duly formed, validly existing and in good standing under the laws of its jurisdiction of organization and is duly qualified to do business in each jurisdiction where the conduct of its business requires qualification. Each Contributor has the full and unrestricted power and authority to own, operate and lease its assets, to carry on its business as currently conducted, to execute and deliver this Agreement, and each other agreement, instrument or document relating hereto or contemplated hereby or thereby (the "Other Agreements") to which it is a party and to carry out the transactions contemplated hereby or thereby. III.2. AUTHORIZATION; NO CONFLICTS The execution and delivery of this Agreement and the Other Agreements by each Contributor and the performance by each Contributor of its covenants and agreements under this Agreement and the Other Agreements have been, or at Closing will have been, duly authorized by all necessary action on the part of such Contributor. The execution, delivery and performance by each Contributor of this Agreement and each Other Agreement to which such Contributor is a party, the fulfillment of and compliance with the respective terms and provisions hereof and thereof, and the consummation by such Contributor of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with, or violate any provision of the organization documents of any Contributor; (b) conflict with, or violate any provision of, any statute, law, ordinance, regulation, rule, order, writ or injunction having applicability to any Contributor, any of its assets or the Contributed Property; (c) conflict with, result in any breach of, or constitute a -2- default under the Contributed Property; (d) result in or require the creation or imposition of or result in the acceleration of any indebtedness or of any encumbrance of any nature upon, or with respect to, the Contributed Property; except (in the case of clauses (b), (c) and (d) above) for such conflicts, violations, breaches or defaults as will not have a material adverse effect on the Contributed Property or the business or financial condition of any Contributor or the consummation of this transaction. III.3. BINDING OBLIGATIONS This Agreement and each Other Agreement executed and delivered by each Contributor on or prior to the date hereof constitutes a valid and binding obligation of such Contributor, enforceable in accordance with its terms; and each Other Agreement to be executed by each Contributor pursuant hereto or thereto, when executed and delivered in accordance with the provisions hereof or thereof, shall be a valid and binding obligation of such Contributor, enforceable in accordance with its terms. III.4. NO LITIGATION There are no actions, suits, claims, arbitrations, proceedings or investigations pending or, to the knowledge of any Contributor, threatened against, affecting or involving the Contributed Property, any Contributor or its businesses or assets, or the transactions contemplated by this Agreement, at law or in equity, or before or by any court, arbitrator or governmental authority, domestic or foreign, that could reasonably be expected to have a material adverse effect on the Contributed Property or the business or financial condition of any Contributor or to challenge or impair the ability of any Contributor to consummate the Contribution. III.5. CONTRIBUTED PROPERTY (a) The Contributed Property is wholly owned by the Contributors, free and clear of all liens and encumbrances. (b) The Contributed Property is in full force and effect and is the legal, valid and binding obligation of each of the parties thereto, enforceable against such parties in accordance with its terms. None of the Contributors is in default, and there exists no condition or act which with the giving of notice or passage of time or otherwise will cause a default with respect to the Contributed Property. Except as otherwise disclosed to Acadia, no Fees under the Contributed Property for any period after the Closing Date shall have been paid prior to the Closing Date. In no event, however, do the Contributors represent, warrant, covenant or guaranty the payment of any Fees to Acadia or the amount of any Fees that Acadia may receive in the future. III.6. SECURITIES LAW MATTERS (a) Each Contributor acknowledges that Acadia intends the offer and issuance of the Units to be exempt from registration under the Securities Act and applicable state securities laws by virtue of (i) the status of each Contributor and each equity owner of such Contributor as an Accredited Investor (as defined below), and (ii) Section 4(2) of the Securities -3- Act of 1933, as amended (the "Securities Act") and/or Regulation D promulgated under Section 4(2) of the Securities Act ("Regulation D"), and that Acadia will rely in part upon the representations and warranties made by each Contributor in this Agreement in making the determination that the offer and issuance of the Units qualify for exemption under Rule 506 of Regulation D as an offer and sale only to Accredited Investors (as defined below). (b) Each Contributor, each of such Contributor's equity owners and each other person or entity who has a right to vote upon or approve the transactions contemplated hereby or who will receive a distribution of Units pursuant to Section II.1(b) are "accredited investors" as defined in Regulation 501(a) under Regulation D ("Accredited Investors"). Each Contributor has provided to Acadia a true, correct and complete copy of such Contributor's organizational documents. (c) Each Contributor and each other person or entity who will receive a distribution of Units pursuant to Section II.1(b) will acquire the Units for their own account and not with a view to or for sale in connection with any "distribution" thereof within the meaning of the Securities Act. (d) Each Contributor and its equity owners have sufficient knowledge and experience in financial, tax and business matters to enable them to evaluate the merits and risks of investment in the Units. Each Contributor and its equity owners have the ability to bear the economic risk of acquiring the Units. Each Contributor acknowledges that (i) the transactions contemplated by this Agreement and the Other Agreements involve complex tax consequences for each Contributor and its equity owners, and each Contributor and its equity owners are relying solely on the advice of their own tax advisors in evaluating such consequences, (ii) neither Acadia nor the REIT has made (or shall be deemed to have made) any representations or warranties as to the tax consequences of such transaction to any Contributor or any of its equity owners, and (iii) references in this Agreement to the intended tax effect of the Contribution and the other matters described herein shall not be deemed to imply any representation by Acadia or the REIT as to a particular tax effect that may be obtained by any Contributor or its equity owners. Each Contributor and its equity owners remain solely responsible for all tax matters relating to each Contributor and its equity owners. (e) Each Contributor and each other person or entity who will receive a distribution of Units pursuant to Section II.1(b) has been supplied with, or had access to, information to which a reasonable investor would attach significance in making an investment decision to acquire the Units and any other information they have requested. Each Contributor and each other person or entity who will receive a distribution of Units pursuant to Section II.1(b) has had an opportunity to ask questions of and receive information and answers from Acadia and the REIT concerning Acadia, the REIT, the Units, and the common shares of beneficial interest ("Common Shares") into which the Units may be exchanged, and to assess and evaluate any information supplied to them by Acadia or the REIT, and all such questions have been answered and all such information has been provided to their full satisfaction. (f) Each Contributor and each other person or entity who will receive a distribution of Units pursuant to Section II.1(b) acknowledges that the Units are not registered -4- under the Securities Act or any state securities laws and cannot be resold without registration thereunder or exemption therefrom. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACADIA AND THE REIT A. Acadia Representations. Acadia represents and warrants to Contributors as follows: IV.1. ORGANIZATION AND STANDING Acadia is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware and has the full and unrestricted partnership power and authority to own, operate and lease its assets and to carry on its business as currently conducted. Acadia is duly qualified to conduct business as a foreign limited partnership and is in good standing in each jurisdiction where the nature of the business conducted by Acadia or the character of the assets owned, leased or otherwise held by it makes any such qualification necessary, except where the failure to be so qualified would not have a material adverse effect upon the business of Acadia as currently conducted. IV.2. AUTHORIZATION; NO CONFLICTS The execution, delivery and performance by Acadia of this Agreement and each Other Agreement to which Acadia is a party, the fulfillment of and compliance with the respective terms and provisions hereof and thereof, and the consummation by Acadia of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with, or violate any provisions of, the certificate of limited partnership or agreement of limited partnership of Acadia; (b) conflict with, or violate any provision of, any statute, law, ordinance, regulation, rule, order, writ or injunction having applicability to Acadia or any of its assets; or (c) conflict with, result in any breach of, or constitute a default under any agreement to which Acadia is a party or by which it or any of its assets are bound; except (in the case of clauses (b) and (c) above) for such conflicts, violations, breaches or defaults as will not have a material adverse effect on the business or financial condition of Acadia or the consummation of the Acquisition. IV.3. BINDING OBLIGATIONS This Agreement and each Other Agreement executed and delivered by Acadia constitutes a valid and binding obligation of Acadia, enforceable in accordance with its terms; and each Other Agreement to be executed by Acadia pursuant hereto or thereto, when executed and delivered in accordance with the provisions hereof or thereof, shall be a valid and binding obligation of Acadia, enforceable in accordance with its terms. IV.4. NO LITIGATION There are no actions, suits, claims, arbitrations, proceedings or investigations pending or, to the knowledge of Acadia, threatened against, affecting or involving Acadia or its business or assets or the transactions contemplated by this Agreement, at law or in equity, or -5- before or by any court, arbitrator or governmental authority, domestic or foreign, that could reasonably be expected to have a material adverse effect on the business or financial condition of Acadia or challenge or impair the ability of Acadia to consummate the Contribution. IV.5. THE UNITS At the Closing, the Units to be issued to Contributors pursuant to Article II hereof will be duly authorized for issuance by Acadia to Contributors and upon issuance in accordance with this Agreement will be validly issued, fully paid and non-assessable IV.6. NO TAX AUDITS Acadia is not a party to any pending action, audit or proceeding by any taxing authority for any assessment or collection of any federal, state or local taxes. IV.7. TAX REPORTING Acadia will treat the transfer of the Contributed Property to Acadia for federal income tax purposes as a contribution that qualifies for nonrecognition of gain pursuant to Section 721 of the Code. Acadia, however, makes no representation or warranty that these positions will be respected. IV.8. CAPITALIZATION As of September 30, 2004, 29,691,479 common units of limited partnership ("Common OP Units") were issued and outstanding, of which 29,299,224 Common OP Units are held by the REIT and 392,255 Common OP Units are held by the limited partners of Acadia. In addition, 1,580 Series A Preferred Units are issued and outstanding with an aggregate liquidation preference of $1,580,000 and 4,000 Series B Preferred OP Units issued and outstanding with aggregate liquidation preference of $4,000,000 and will rank pari passu with the Series B Preferred Units. IV.9. GOVERNMENTAL CONSENTS AND APPROVALS Acadia has obtained each and every consent, approval, permit or order of, and has made each and every filing with, any individual, partnership, corporation, trust or other entity, government agency or political subdivision required to be obtained or made in connection with: (A) its execution, delivery and performance of this Agreement and (B) its consummation of the transactions contemplated hereby. IV.10. ABSENCE OF CERTAIN CHANGES OR EVENTS; UNDISCLOSED LIABILITIES AND AGREEMENTS Since September 30, 2004: (a) there has not been any material adverse change in the financial position or results of operations of Acadia from that reflected in the consolidated financial statements of the REIT as of September 30, 2004, or any material adverse change in the business, assets or -6- prospects of Acadia (including the imposition of any material adverse regulatory requirements or the loss of any material permits, licenses or franchises). (b) there has not been any material damage, destruction or other casualty loss with respect to property owned or leased by Acadia not covered by insurance. (c) Acadia has not conducted its business otherwise than in the ordinary course. B. REIT Representations. The REIT hereby represents and warrants to the Contributors as follows: (i) Organization, Good Standing, Corporate Power and Authorization. The REIT is a real estate investment trust duly organized, validly existing and in good standing under the laws of the State of Maryland and has full right, power and authority to enter into this Agreement and to assume and perform all of its obligations. The REIT is duly qualified to conduct business as a foreign real estate investment trust and is in good standing in each jurisdiction where the nature of the business conducted by the REIT or the character of the assets owned, leased or otherwise held by it makes any such qualification necessary, except where the failure to be so qualified would not have a material adverse effect upon the business of the REIT as currently conducted. The execution and delivery of this Agreement and the performance by the REIT of its obligations under this Agreement will require no further action, consent or approval of the REIT's shareholders or trustees, or of any other individuals or entities in order to constitute this Agreement as a binding and enforceable obligation of the REIT. (ii) Non-contravention. The entry into, performance of, or compliance with this Agreement by the REIT has not resulted, and will not result, in any violation of, default under, or acceleration of any provision of the bylaws or declaration of trust of the REIT or any provision of, or result in the acceleration of or entitle any party to accelerate (whether after the filing of notice or lapse of time or both) any obligation under, or result in the creation or imposition of any lien, charge, pledge, security interest or other encumbrance upon any of the property of the REIT pursuant to any provision of any mortgage, lien, lease, agreement, license or instrument, or violate any law, regulation, order, arbitration award, judgment or decree to which the REIT is a party or by which it or its property is bound or violate or conflict with any other material restriction of any kind or character to which the REIT is subject. (iii) Capitalization and Due Authorization. As of September 30, 2004, the authorized shares of beneficial interest of all classes of the REIT consisted of 100,000,000 shares of beneficial interest, par value $.001 per share, all of such shares are initially classified as "Common Shares" and the issued and outstanding Common Shares of the REIT consisted of 29,299,224 Common Shares. (iv) Common Shares. As of the Closing, the Common Shares issuable upon conversion of the Units will have been duly and validly authorized by the REIT and will have been duly reserved for issuance upon such conversion. The Common Shares -7- issuable upon conversion of such Common OP Units, when issued upon such conversion in accordance with their terms, will be validly issued, fully paid and nonassessable. (v) Governmental Consents and Approvals. The REIT has obtained each and every consent, approval, permit or order of, and has made each and every filing with, any individual, partnership, corporation, trust or other entity, government agency or political subdivision required to be obtained or made in connection with: (A) its execution, delivery and performance of this Agreement and (B) its consummation of the transactions contemplated hereby. (vi) Binding Obligations. This Agreement and each Other Agreement executed and delivered by the REIT constitutes a valid and binding obligation of the REIT, enforceable in accordance with its terms; and each Other Agreement to be executed by the REIT pursuant hereto or thereto, when executed and delivered in accordance with the provisions hereof or thereof, shall be a valid and binding obligation of the REIT, enforceable in accordance with its terms. (vii) SEC Filings. The REIT has filed all forms, reports, schedules, proxy materials, registration statements and related prospectuses and supplements and other documents required to be filed by the REIT with the SEC pursuant to the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act") through the date hereof (collectively, the "REIT SEC Documents") and will cause to be delivered to Sellers copies of such additional documents as may be filed with the SEC by the REIT between the date hereof and the Closing Date. The REIT SEC Documents were, and those additional documents filed between the date hereof and the Closing will be, prepared and filed in all material respects in compliance with the rules and regulations promulgated by the SEC, and do not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. (viii) Financial Statements. The consolidated financial statements included in the SEC Documents have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the period involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Form 10-Q and present fairly (subject in the case of the unaudited statements, to normal, recurring year-end audit adjustments) the consolidated financial position of Acadia or the REIT, as applicable, at the dates thereof and the consolidated results of operations and cash flows for the periods then ended. (ix) Absence of Certain Changes or Events. Since September 30, 2004 there has not been: (a) any material adverse change in the financial condition or results of operations of the REIT from that reflected in the financial statements as of September 30, 2004 included in the REIT SEC Documents or any material adverse change in the business, assets or prospects of the REIT (including the -8- imposition of any material adverse regulatory requirements or the loss of any material permits, licenses or franchises); (b) there has not been any material damage, destruction or other casualty loss with respect to property owned or leased by the REIT not covered by insurance; and (c) the REIT has not conducted its business otherwise than in the ordinary course. ARTICLE V COVENANTS V.1. CONTRIBUTORS COVENANTS (a) The Contributors shall cooperate fully in providing any documentation or information reasonably requested by Acadia in connection with this transaction. (b) Except as set forth below or in the Registration Rights Agreement (as defined below), the Contributors shall (i) not convert any Units into Common Shares for a period of five (5) years after the Closing Date; and (ii) not transfer the ownership of any of the Units held by a Contributor to another person or entity for a period of five (5) years after the Closing. Notwithstanding the foregoing or anything else to the contrary contained herein or in the Registration Rights Agreement, the parties to this Agreement agree that (i) in the event Kenneth F. Bernstein ceases to be the chief executive officer of either the REIT or Acadia, or (ii) upon the occurrence of the obligation of Acadia or the REIT to give notice of any event as set forth in Sections V.2(b) below, the Contributors or their Permitted Transferees (as defined in the Registration Rights Agreement) shall immediately be entitled to convert Units into Common Shares and/or sell or otherwise transfer the ownership of any Units held by a Contributor or Permitted Transferee without any restriction under or violation of this Agreement or the Registration Rights Agreement. In addition, if a Registration Statement, as defined in the Registration Rights Agreement, allowing for the immediate resale at such time, or from time to time, of the Common Shares, into which the Units would be convertible, has not been declared effective by the Securities and Exchange Commission on or before July 15, 2005, or ceases to be effective at any time thereafter, then, at the Contributors' and/or their Permitted Transferees' option, all, but not less than all, of the Units shall be redeemable by the Contributors and/or their Permitted Transferees, at any time by written notice to Acadia (with such date being referred to as the "Redemption Date") and the price equal to the greater of (i) sixteen dollars ($16.00) per Unit (subject to adjustment for stock splits, stock dividends or other similar equitable adjustments), plus all accrued but unpaid dividends or distributions on such Units, or (ii) the actual market value of Common Shares into which Units are convertible as of the Redemption Date. -9- V.2. ACADIA COVENANTS (a) Acadia agrees, in providing its management services in connection with the Contributed Property, to take reasonable direction from Klaff Realty, LP as the representative of the owners and managers of the properties subject to the Contributed Property. (b) If at any time Acadia and/or REIT proposes to any of its equity holders: (i) to effect any capital reorganization or reclassification of capital securities of the REIT or Acadia; (ii) to consolidate with, or merge into, any other company or to transfer its property as an entity or substantially as an entirety; or (iii) to effect the liquidation, dissolution or winding up of the REIT or Acadia, then, in any one or more of the foregoing cases, Acadia and the REIT shall give at least thirty (30) days' prior written notice to the Contributors of the date when the same shall take place. V.3. SURVIVAL. The covenants set forth in Article V.1 and V.2 shall survive the Closing in accordance with their terms. ARTICLE VI CONDITIONS PRECEDENT TO THE CLOSING VI.1. CONDITIONS TO OBLIGATIONS OF CONTRIBUTORS The obligation of Contributors to consummate the Contribution is subject to the fulfillment, at or prior to the Closing, of each of the following conditions, and failure to satisfy any such condition shall excuse and discharge all obligations of Contributors to carry out the provisions of this Agreement unless such failure is waived in writing by Contributors: (a) Representations and Warranties. The representations and warranties made by Acadia and the REIT in Article IV hereof and the statements contained in any document furnished by Acadia or the REIT in connection with the Closing pursuant to this Agreement shall be true in all material respects when made and on and as of the Closing Date as though such representations and warranties were made on and as of such date, except for any changes therein contemplated by this Agreement or any Other Agreement. (b) Legal Proceedings. No action or proceeding by or before any governmental authority shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which is reasonably expected to restrain, prohibit or invalidate -10- the transactions contemplated by this Agreement, other than an action or proceeding instituted or threatened by any Contributor. (c) Documents at Closing. All documents required to be furnished to Contributors hereunder prior to or at the Closing shall have been so furnished. VI.2. CONDITIONS TO OBLIGATIONS OF ACADIA The obligation of Acadia to consummate the Contribution is subject to the fulfillment, at or prior to the Closing, of each of the following conditions, and failure to satisfy any such condition shall excuse and discharge all obligations of Acadia to carry out the provisions of this Agreement unless such failure is waived in writing by Acadia: (a) Representations and Warranties. The representations and warranties made by Contributors in Article III of this Agreement and the statements contained in any document furnished by Contributors or its equity owners in connection with the Closing pursuant to this Agreement shall be true in all material respects when made and on and as of the Closing Date as though such representations and warranties were made on and as of such date, except for any changes therein contemplated by this Agreement or any Other Agreement. (b) Legal Proceedings. No action or proceeding by or before any governmental authority shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which is reasonably expected to restrain, prohibit or invalidate the transactions contemplated by this Agreement other than an action or proceeding instituted or threatened by Acadia. (c) Documents at Closing. All documents required to be furnished to Acadia hereunder prior to or at the Closing shall have been so furnished. ARTICLE VII DELIVERIES The Closing shall occur simultaneously with the delivery of the following documents: A. The Contributors shall deliver: (a) Authority Documents. Evidence satisfactory to Acadia that the persons executing the closing documents on behalf of the Contributors have full right, power and authority to do so, and the following documentation: (i) Certified copies of Klaff Realty, LP and Klaff Realty, Limited organizational documents which are true and correct, unamended, and continuing, and of the incumbency of its officers, (ii) Certificates of Existence and Good Standing from the Secretary of State of Delaware and the Secretary of State of Illinois, and (iii) Opinion letter of counsel to Klaff Realty, LP and Klaff Realty, Limited substantially in the form attached hereto as Exhibit G as to the following: due authorization and authority of Klaff Realty, LP and Klaff Realty, Limited to enter into this Agreement and perform their obligations -11- hereunder; and noncontravention of the transactions contemplated by this Agreement with Contributors' organizational documents. (b) Units Documents. The documents required in connection with the issuance of the Units, including signature pages to the Partnership Agreement and the Registration Rights Agreement executed by each Contributor. Each Contributor shall execute and deliver any other documents as may be required under applicable federal or state securities laws, including a reiteration of the representations and covenants set forth in Article III hereof. (c) Investor Questionnaires. Investor Questionnaires in the form attached hereto as Exhibit B. (d) Assignments. Executed Assignments of Contributed Property in the form of Exhibit E. (e) Certifications. Certificates from each of the Contributors certifying as to the continuing accuracy of the representations and warranties made by such party. (f) Miscellaneous. Such other instruments as are reasonably requested by Acadia. B. Acadia's Deliveries. At the Closing, Acadia shall deliver: (a) Registration Rights Agreement. The Registration Rights and Lock-up Agreement, substantially in the form attached hereto as Exhibit A, executed by Acadia and Contributors (the "Registration Rights Agreement"); (b) Certifications. Certificates of Acadia and the REIT certifying as to continued accuracy of the representations and warranties made by such party herein, executed by an officer or other authorized signatory of such party; (c) Units. Certificates representing the Units in the form of Exhibit C; (d) Authority Documents. Evidence reasonably satisfactory to the Contributors that the person or persons executing the closing documents on behalf of Acadia and the REIT has full right, power and authority to do so; (e) Legal Opinion. An Opinion of Acadia and REIT's general counsel, substantially in the form attached hereto as Exhibit F; (f) Miscellaneous. Such other documents as reasonably requested by the Contributors. -12- ARTICLE VIII SURVIVAL; INDEMNIFICATION VIII.1. SURVIVAL All representations, warranties, covenants, indemnities and other agreements of the parties hereto made in this Agreement or in any document furnished pursuant hereto shall not be extinguished by the Closing, but shall survive the Closing, as specified in this Section VIII.1. All representations and warranties of the parties hereto made in this Agreement or in any document furnished pursuant hereto shall survive for a one (1) year period following the Closing and shall be extinguished from and after the first anniversary date of the Closing. All covenants of the parties hereto made in this Agreement shall survive for the five (5) year period following the Closing and shall be extinguished from and after the fifth anniversary date of the Closing. No investigation, audit or inspection made by or on behalf of any party hereto shall affect the survival of the representations, warranties, covenants, indemnities and other agreements of the parties hereto. All representations and warranties of the parties hereto made in this Agreement or in any document delivered pursuant hereto shall also be deemed made on and as of the Closing Date. VIII.2. AGREEMENT OF CONTRIBUTORS TO INDEMNIFY Subject to the conditions and provisions of this Article VIII, Contributors hereby jointly and severally agree to indemnify, defend and hold harmless Acadia and its subsidiaries and affiliates (including, without limitation, the REIT) and each of their respective officers, directors, trustees, partners, members, employees, successors and assigns (collectively, the "Acadia Indemnified Persons") from and against and in respect of all demands, claims, actions or causes of action, assessments, losses, damages (including, without limitation, diminution in value), liabilities, costs and expenses, including, without limitation, interest, penalties and reasonable attorneys' fees and disbursements (the "Claims"), asserted against, resulting to, imposed upon or incurred by the Acadia Indemnified Persons, directly or indirectly, by reason of or resulting from (i) any breach of any representation or warranty in any material respect made by Contributors in this Agreement or in any document furnished by or on behalf of Contributors pursuant to this Agreement or (ii) the Contributed Property which accrued prior to the Closing Date. VIII.3. AGREEMENT OF ACADIA TO INDEMNIFY Subject to the conditions and provisions of this Article VIII, Acadia hereby agrees to indemnify, defend and hold harmless each Contributor and its subsidiaries and affiliates and each of their respective officers, directors, trustees, partners, members, employees, successors and assigns (collectively, the "Contributor Indemnified Persons"), from and against and in respect of all Claims asserted against, resulting to, imposed upon or incurred by the Contributor Indemnified Persons, directly or indirectly, by reason of or resulting from (i) any breach of any representation or warranty in any material respect made by Acadia in this Agreement or in any document furnished by or on behalf of Acadia pursuant to this Agreement, or (ii) the Contributed -13- Property which accrued on or after the Closing Date, except to the extent that such claims directly arise from actions of the Contributors prior to the closing date. VIII.4. LIMITATION OF LIABILITY. Notwithstanding the foregoing or anything else to the contrary contained herein, subject to the provisions set forth in this Section VIII.4., in no event shall Hersch M. Klaff, individually, have any liability to Acadia Indemnified Persons in excess of $1,000,000, or for any provision of this Agreement. Notwithstanding the foregoing or anything else to the contrary contained herein, in no event shall Hersch M. Klaff, individually, have any monetary liability to Acadia Indemnified Persons at any time while a Contributor is the record owner of the Units. In addition, notwithstanding anything else to the contrary contained herein, in no event shall Acadia or any Acadia Indemnified Person have any right of offset or any other right to limit, in any manner whatsoever, any of the Contributors' (or their respective assignees' or successors') rights with respect to Units, including without limitation any rights under the Registration Rights Agreement. Furthermore, notwithstanding anything else to the contrary contained herein, in no event shall either (a) the Contributors, or (b) the Contributors and Hersch M. Klaff, collectively, have any liability, including Acadia's costs and expenses, to Acadia Indemnified Persons, in the aggregate, in excess of the lesser of (i) the actual market value of Units then owned by the Contributors as of the date of any Claim, or (ii) the amount equal to: (A) $4,000,000, from the Closing Date until February 14, 2006, (B) $3,200,000, from February 15, 2006 until February 14, 2007, (C) $2,400,000, from February 15, 2007 until February 14, 2008, (D) $1,600,000, from February 15, 2008 until February 14, 2009, or (E) $800,000, from February 15, 2009 until February 14, 2010. Furthermore, in no event shall any party hereto be liable for any Claims for any special, indirect, incidental, exemplary, consequential or punitive damages. VIII.5. CONDITIONS OF INDEMNIFICATION The obligations and liabilities of Contributors and Acadia hereunder with respect to their respective indemnities pursuant to this Article VIII resulting from any Claim shall be subject to the following terms and conditions: (a) The indemnified party shall give prompt written notice to the indemnifying party of any Claim which is asserted against, resulting to, imposed upon or incurred by such indemnified party and which may give rise to liability of the indemnifying party pursuant to this Article VIII, stating (to the extent known or reasonably anticipated) the nature and basis of such Claim and the amount thereof. (b) If the facts pertaining to a Claim arise out of the Claim of any third party, or if there is any Claim against a third party available by virtue of the circumstances of the Claim, the indemnifying party may assume the defense of such action or proceeding at such indemnifying party's own expense with counsel chosen by the indemnifying party and approved by the indemnified party, which approval shall not be unreasonably withheld; provided, however, that the indemnifying party shall not agree to settlement of any such action or proceeding which provides for any relief other than the payment of monetary damages or which could have a material precedential impact or effect on the business or financial condition of the indemnified party without the prior written consent of the indemnified party; and provided, -14- further, that if the indemnified party reasonably determines that a conflict of interest exists where it is advisable for the indemnified party to be represented by separate counsel or that, upon advice of counsel, there may be legal defenses available to it which are different from or in addition to those available to the indemnifying party, then the indemnifying party shall not be entitled to assume such defense and the indemnified party shall be entitled to separate counsel at the indemnifying party's expense. If the indemnifying party is not entitled to assume the defense of such action or proceeding as a result of the proviso to the preceding sentence, the indemnifying party's counsel shall be entitled to conduct the indemnifying party's defense and the indemnified party's counsel shall be entitled to conduct the indemnified party's defense, it being understood that both such counsel will cooperate with each other to conduct the defense of such action or proceeding as efficiently as possible. If the indemnifying party is not so entitled to assume the defense of such action or does not assume such defense, after having received the notice referred to in subparagraph (a) above, the indemnifying party will pay the reasonable fees and expenses of counsel for the indemnified party. In such event, however, the indemnifying party will not be liable for any settlement effected without the written consent of the indemnifying party. If an indemnifying party is entitled to assume, and assumes, the defense of such action or proceeding in accordance with this paragraph, the indemnifying party shall not be liable for any fees and expenses of counsel for the indemnified party incurred thereafter in connection with such action or proceeding. Whether or not the indemnifying party chooses to so defend or prosecute such Claim, all the parties hereto shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith. The indemnifying party shall be subrogated to all rights and remedies of the indemnified party. ARTICLE IX INTENTIONALLY OMITTED ARTICLE X CONFIDENTIALITY; TAX MATTERS X.1. CONFIDENTIALITY (a) Information. Before the Closing or if the Closing does not occur, all information provided by a party hereto (the "Disclosing Party") to another party hereto (the "Receiving Party") in connection with the transactions contemplated by this Agreement shall be kept strictly confidential by such Receiving Party and shall not, without the prior consent of the Disclosing Party, be disclosed by the Receiving Party or used for any purpose other than evaluating such transactions. The Receiving Party agrees that such information shall only be transmitted to such Receiving Party's partners, officers, directors, trustees, employees, attorneys, accountants, contractors, consultants, advisors and agents who need to know such information for purposes of evaluating such transactions and who agree to be bound by these confidentiality provisions, and each Receiving Party agrees that in the event the Closing does not take place for -15- any reason, the Receiving Party shall return all such information to the Disclosing Party. The provisions of this section shall not apply to any information which is a matter of public record or lawfully obtainable from other sources and shall not prevent either party from complying with applicable laws, rules, regulations and court orders, including, without limitation, governmental regulatory, disclosure, tax and reporting requirements. Notwithstanding the foregoing, the parties may disclose the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind related to such tax treatment and tax structure. (b) Public Notices. Between the date hereof and for a period ending one (1) year after the Closing Date, no party hereto shall release or cause or permit to be released any press notices or advertising promotion or other publicity relating to this transaction without first giving reasonable notice to, and consulting with, each other party and, as required herein, obtaining the written consent of each other party. No provisions in this Section XI.1(b) shall preclude a party from discussing the substance or any relevant details of such transactions with any of its attorneys, accountants, professional consultants, lenders, partners, affiliates, investors, or any prospective lender, partner or investor, as the case may be, or prevent a party hereto, from complying with laws, rules, regulations and court orders, including without limitation, governmental regulatory, stock exchange, disclosure, tax and reporting requirements (including, in the case of Acadia and the REIT, disclosure by the REIT of information that it determines is necessary or appropriate in accordance with its obligations as a public company under rules of the New York Stock Exchange, the Securities and Exchange Commission or other regulatory body) or making an announcement or making any communication to its shareholders in accordance with its corporate policy. X.2. NO REPRESENTATION WITH REGARD TO TAX TREATMENT Notwithstanding any provision of this Agreement, no party hereto makes any representation regarding (and shall have no liability with respect to) the tax consequences to any other party hereto or to any of its direct or indirect partners of the transactions contemplated herein or in any Other Agreements. ARTICLE XI MISCELLANEOUS XI.1. ADDITIONAL ACTIONS AND DOCUMENTS Each of the parties hereto hereby agrees to take or cause to be taken such further actions, to execute, deliver and file or cause to be executed, delivered and filed such further documents, and will obtain such consents, as may be necessary or as may be reasonably requested in order to fully effectuate the purposes, terms and conditions of this Agreement. XI.2. EXPENSES Each party hereto shall pay its own expenses incident to this Agreement and the transactions contemplated hereunder, including all legal and accounting fees and disbursements. The provisions of this Section XI.2 shall survive any termination of this Agreement. -16- XI.3. ASSIGNMENT No party hereto shall assign its rights and/or obligations under this Agreement, in whole or in part, whether by operation of law or otherwise, without the prior written consent of the other parties hereto. Notwithstanding anything to the contrary in the preceding sentence, at any time after the Closing Date, Acadia may assign its rights and/or obligations under this Agreement to an affiliate, or any other person or entity in connection with a merger, consolidation, sale or contribution of all or substantially all of its or the REIT's assets, or other similar corporate transaction; provided, that no assignment pursuant to the preceding clause shall release the assigning party from its respective liabilities and obligations hereunder. XI.4. ENTIRE AGREEMENT; AMENDMENT This Agreement, including the Exhibits and other documents referred to herein or furnished pursuant hereto, constitute the entire agreement among the parties hereto with respect to the transactions contemplated herein, and supersede all prior oral or written agreements, commitments or understandings with respect to the matters provided for herein; provided, that nothing in this Section XI.4 shall have any effect on the Other Agreements. No amendment, modification or discharge of this Agreement shall be valid or binding unless set forth in writing and duly executed and delivered by the party against whom enforcement of the amendment, modification, or discharge is sought. XI.5. WAIVER No delay or failure on the part of any party hereto in exercising any right, power or privilege under this Agreement or under any other documents furnished in connection with or pursuant to this Agreement shall impair any such right, power or privilege or be construed as a waiver of any default or any acquiescence therein. No single or partial exercise of any such right, power or privilege shall preclude the further exercise of such right, power or privilege, or the exercise of any other right, power or privilege. No waiver shall be valid against any party hereto unless made in writing and signed by the party against whom enforcement of such waiver is sought and then only to the extent expressly specified therein. XI.6. SEVERABILITY If any part of any provision of this Agreement or any other agreement or document given pursuant to or in connection with this Agreement shall be invalid or unenforceable in any respect, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provision or the remaining provisions of this Agreement. XI.7. GOVERNING LAW This Agreement, the rights and obligations of the parties hereto, and any claim or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of New York (excluding the choice of law rules thereof). -17- XI.8. NOTICES All notices, demands, requests, or other communications which may be or are required to be given, served, or sent by any party to any other party pursuant to this Agreement shall be in writing and shall be hand delivered, sent by overnight courier or mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or transmitted by facsimile, telegram, telecopy or telex, addressed as follows: (1) If to any Contributor: Klaff Realty, LP Klaff Realty, Limited 122 South Michigan Avenue Chicago, IL 60603 Attention: Hersch M. Klaff Telephone: 312-360-3102 Facsimile: 312-360-0606 Email: [email protected] With copies to: Klaff Realty, LP Klaff Realty, Limited 122 South Michigan Avenue Chicago, IL 60603 Attention: Martha Amesbury Telephone: 312-360-3116 Facsimile: 312-360-0606 Email: [email protected] Allan J. Reich, Esq. Seyfarth Shaw LLP 55 E. Monroe Street, Suite 4200 Chicago, IL 60603 Telephone: 312-781-8650 Facsimile: 312-269-8869 Email: [email protected] (2) If to Acadia: Acadia Realty Trust 1311 Mamaroneck Avenue, Suite 260 White Plains, NY 10605 Attention: Joel Braun Telephone: 914-288-8146 Facsimile: 914-428-3922 Email: [email protected] -18- With a copy to: Robert Masters, Esq. 1311 Mamaroneck Avenue, Suite 260 White Plains, NY 10605 Telephone: 914-288-8139 Facsimile: 914-428-3646 Email: [email protected] Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request, or communication which shall be hand delivered, sent, mailed, faxed, telecopied or telexed in the manner described above, or which shall be delivered to a telegraph company, shall be deemed sufficiently given, served, sent, received or delivered for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the confirmation receipt (with respect to a facsimile), or (with respect to a telecopy or telex) the answerback being deemed conclusive, but not exclusive, evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation. XI.9. HEADINGS Section headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof. XI.10. EXECUTION IN COUNTERPARTS To facilitate execution, this Agreement may be executed in as many counterparts as may be required. It shall not be necessary that the signatures of, or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on each counterpart; but it shall be sufficient that the signature of, or on behalf of, each party, or that the signatures of the persons required to bind any party, appear on one or more of the counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than a number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto. XI.11. ATTORNEYS' FEES Should either party employ attorneys to enforce any of the provisions hereof, the party against whom any final judgment is entered agrees to pay the prevailing party all reasonable costs, charges and expenses, including reasonable attorneys' fees, expended or incurred by the prevailing party in connection therewith. XI.12. WAIVER OF JURY TRIAL TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE -19- ACQUISITION AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE PROVISIONS OF THIS SECTION XI.12 SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT. -20- IN WITNESS WHEREOF, the parties hereto have caused this Contribution Agreement to be duly executed on their behalf as of the date first above written. CONTRIBUTORS: KLAFF REALTY, LP, a Delaware limited partnership By: Klaff Realty, Limited, General Partner By: ------------------------------------ Name: Hersch M. Klaff Title: President KLAFF REALTY, LIMITED, an Illinois corporation By: ------------------------------------ Name: Hersch M. Klaff Title: President ACADIA: ACADIA REALTY LIMITED PARTNERSHIP By: Acadia Realty Trust, General Partner By: ------------------------------------ Name: Title: -21- REIT: ACADIA REALTY TRUST By: ------------------------------------ Name: Title: The undersigned hereby joins in the execution of this Agreement to confirm his agreement with the covenants of Article V(b) and (c); which shall survive the Closing. --------------------------------------------- Hersch M. Klaff -22-

Basic Info X:

Name: ARTICLE III REPRESENTATIONS AND WARRANT
Type: Article Iii Representations and Warrant
Date: May 9, 2005
Company: ACADIA REALTY TRUST
State: Maryland

Other info: