PURCHASE AND SALE AGREEMENT
Execution Version
Property: The Linden at Gramercy Park 245 East 21st Street New York, NY 10010
Between:
LINDEN GRAMERCY HOLDINGS LLC, a New York limited liability company, as Seller
and
GRAMERCY LINDEN PROPCO LLC, a New York limited liability company, as Purchaser
Dated as of March 15, 2023
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Purchase and Sale Agreement (this "Agreement"), the following terms shall have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise, and the terms "controlled by" and "under common control with" shall have correlative meanings. Without limiting the foregoing, a Person shall be deemed to control another Person if such Person owns, directly or indirectly, fifty percent (50%) or more of the equity interests in such other Person.
"Appraised Value" means Forty-One Million Two Hundred Thousand and 00/100 Dollars ($41,200,000.00), as determined pursuant to that certain appraisal report prepared by Greystone Appraisal Associates LLC, dated February 15, 2023 (File No. GAA-2023-NY-1148), a copy of which has been delivered to Purchaser.
"Approved Budget" means any capital budget approved by Purchaser during the Due Diligence Period in connection with Purchaser's underwriting and acquisition analysis of the Property.
"Assignment of Leases" means the Assignment and Assumption of Leases in the form attached hereto as Exhibit E, to be executed and delivered by Seller and Purchaser at Closing, pursuant to which Seller shall assign, and Purchaser shall assume, all of Seller's right, title, and interest in and to the Leases.
"Bill of Sale" means the Bill of Sale in the form attached hereto as Exhibit G, to be executed and delivered by Seller at Closing, conveying to Purchaser all of Seller's right, title, and interest in and to the Personal Property.
"Block and Lot" means Block 899, Lot 42, Borough of Manhattan, City of New York, County of New York, State of New York, as shown on the Tax Map of the City of New York.
"Business Day" means any day other than a Saturday, Sunday, or a day on which commercial banks in the City of New York, State of New York, are required or authorized by law or executive order to be closed for regular banking business. If any period of time or any date provided for in this Agreement shall end or fall on a day that is not a Business Day, such period shall be extended to, or such date shall be deemed to be, the next succeeding Business Day.
"Cap" has the meaning set forth in Section 14.3.
"Closing" means the consummation of the purchase and sale of the Property contemplated by this Agreement, as more fully described in Article 9.
"Closing Date" means the Target Closing Date, or such other date to which the Closing may be extended or adjourned in accordance with the terms and provisions of this Agreement.
"Closing Documents" means, collectively, all documents, instruments, and agreements to be executed and delivered by each party at or prior to the Closing pursuant to Article 9 of this Agreement.
"Contracts" means all service contracts, maintenance agreements, equipment leases, management agreements, and other agreements affecting the ownership, operation, or maintenance of the Property, as more particularly described on the Schedule of Contracts attached hereto as Exhibit D.
"Deed" means the bargain and sale deed with covenants against grantor's acts, substantially in the form attached hereto as Exhibit B, to be executed, acknowledged, and delivered by Seller at Closing, conveying to Purchaser fee simple title to the Land and Improvements, subject only to the Permitted Exceptions.
"Deposit" means the Earnest Money Deposit, together with all interest accrued thereon.
"Due Diligence Materials" means all documents, reports, studies, data, surveys, plans, specifications, financial statements, operating records, and other materials made available by Seller to Purchaser in connection with Purchaser's investigation and evaluation of the Property.
"Due Diligence Period" means the period commencing on the Effective Date and expiring at 5:00 p.m. Eastern Time on April 14, 2023, being a period of thirty (30) calendar days.
"Earnest Money Deposit" means Two Million and 00/100 Dollars ($2,000,000.00), representing five percent (5%) of the Purchase Price, to be deposited by Purchaser with the Escrow Agent in accordance with Article 3.
"Effective Date" means March 15, 2023, being the date on which this Agreement is fully executed and delivered by both Seller and Purchaser.
"Escrow Agent" means Archer & Towne Title Company, located at 60 East 42nd Street, Suite 1840, New York, NY 10165, Attention: Philip Moreno, Title Officer.
"FIRPTA Certificate" means the non-foreign person certification to be delivered by Seller at Closing pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended (the "IRC"), substantially in the form attached hereto as Exhibit H.
"Governmental Authority" means any federal, state, county, municipal, or local government, or any political subdivision, agency, department, commission, board, bureau, court, tribunal, or instrumentality thereof, or any quasi-governmental body or authority exercising any regulatory, taxing, judicial, or administrative function of government.
"Ground-Floor Retail" means the two (2) retail units comprising approximately four thousand eight hundred (4,800) square feet combined, located on the ground floor of the Improvements, and more particularly described on the Rent Roll attached hereto as Exhibit C.
"Improvements" means all buildings, structures, fixtures, and other improvements of every kind and nature now or hereafter situated on the Land, including the approximately one hundred eighty-seven thousand four hundred (187,400) gross square foot building originally constructed in 1928 and comprehensively gut-renovated during the period of 2017–2018, together with all mechanical systems, HVAC equipment, elevators, plumbing, electrical systems, and all other building systems serving the same.
"Intangible Property" means all intangible personal property owned by Seller and used in connection with the ownership, operation, or maintenance of the Property, including all licenses, permits, approvals, certificates of occupancy, warranties, guaranties, plans, specifications, architectural and engineering drawings, trade names, and the right to use the name "The Linden at Gramercy Park."
"Land" means the real property located at 245 East 21st Street, New York, NY 10010, designated as Block 899, Lot 42, Borough of Manhattan, City of New York, County of New York, State of New York, as more particularly described in the legal description attached hereto as Exhibit A, together with all right, title, and interest of Seller in and to all easements, rights-of-way, strips, gores, appurtenances, and privileges belonging or in any way appertaining to the Land, including any right, title, and interest of Seller in and to any streets, alleys, or passages adjoining the Land.
"Leases" means all residential leases (covering two hundred twelve (212) residential units) and commercial leases (covering two (2) retail units) now affecting or relating to all or any portion of the Property, together with all amendments, modifications, extensions, renewals, guaranties, and side letters related thereto.
"Mansion Tax" means the additional real estate transfer tax imposed pursuant to Section 1402-a of the New York Real Property Transfer Law ("NYRTL"), as applicable to the transfer of the Property.
"Material Casualty" has the meaning set forth in Section 12.1.
"NYC RPTT" means the New York City Real Property Transfer Tax imposed pursuant to Title 11, Chapter 21 of the Administrative Code of the City of New York.
"NYS Transfer Tax" means the New York State Real Estate Transfer Tax imposed pursuant to Article 31 of the NYRTL.
"Permitted Exceptions" means those exceptions to title approved or deemed approved by Purchaser in accordance with Article 5 of this Agreement.
"Person" means any individual, corporation, limited liability company, partnership, joint venture, trust, estate, unincorporated association, Governmental Authority, or other entity.
"Personal Property" means all tangible personal property owned by Seller and situated on, attached to, or used in connection with the ownership, operation, or maintenance of the Property, including all furniture, fixtures, equipment, appliances, tools, supplies, and inventory.
"Property" means, collectively, the Land, the Improvements, the Personal Property, the Leases, the Contracts, and the Intangible Property.
"Purchase Price" means Forty Million and 00/100 Dollars ($40,000,000.00), as set forth in Section 2.3.
"Purchaser" means Gramercy Linden PropCo LLC, a New York limited liability company, and its permitted successors and assigns.
"Purchaser's Counsel" means Calderwood & Harkness LLP, located at 280 Park Avenue, New York, NY 10017.
"Rent Roll" means the rent roll attached hereto as Exhibit C, dated as of January 2023, setting forth a listing of all Leases, the tenants thereunder, the rental rates applicable thereto, and the occupancy status of the Property, which Rent Roll reflects an occupancy rate of ninety-six and two-tenths percent (96.2%) as of its date.
"Seller" means Linden Gramercy Holdings LLC, a New York limited liability company, and its permitted successors and assigns.
"Seller's Counsel" means Reedmore & Pratt LLP, located at 575 Madison Avenue, 20th Floor, New York, NY 10022, Attention: David Ochoa, Partner.
"Target Closing Date" means May 30, 2023.
"Tenant Notification Letters" means the letters in the form attached hereto as Exhibit J, to be delivered by Seller (or, at Seller's direction, by Purchaser) to all tenants of the Property at or promptly following Closing, notifying such tenants of the change of ownership, the assignment of security deposits, and the new management contact information.
"Title Commitment" means that certain title commitment identified as Title Commitment No. AT-2023-MN-0041872, issued or to be issued by the Title Company in connection with the transaction contemplated hereby.
"Title Company" means Archer & Towne Title Company, located at 60 East 42nd Street, Suite 1840, New York, NY 10165.
"Title Policy" means an owner's policy of title insurance in the amount of the Purchase Price (Forty Million and 00/100 Dollars ($40,000,000.00)), to be issued by the Title Company at Closing, insuring Purchaser's fee simple interest in the Land and Improvements, subject only to the Permitted Exceptions.
Section 1.2 — Rules of Construction
(a) Whenever the context so requires, words of the masculine gender shall include the feminine and neuter genders, words of the feminine gender shall include the masculine and neuter genders, and words of the neuter gender shall include the masculine and feminine genders.
(b) Words importing the singular number shall include the plural number, and vice versa.
(c) The headings and captions of the Articles, Sections, and other subdivisions of this Agreement are for convenience of reference only and shall not limit, expand, or otherwise affect the construction or interpretation of any provision of this Agreement.
(d) References herein to "Articles," "Sections," "Exhibits," and "Schedules" are references to articles, sections, exhibits, and schedules of and to this Agreement, unless the context otherwise requires.
(e) References to "this Agreement" include all Exhibits and Schedules attached hereto, each of which is incorporated herein by this reference.
(f) The word "including" (and correlative words such as "include" and "includes") means "including without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(g) This Agreement shall be construed and interpreted in accordance with the laws of the State of New York, without regard to principles of conflicts of law.
(h) Each party acknowledges that it has been represented by counsel in connection with the negotiation and execution of this Agreement, and this Agreement shall not be construed more strictly against any party by reason of such party having drafted or prepared this Agreement or any portion thereof.
(i) The words "herein," "hereof," "hereunder," "hereby," and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, or other subdivision.
(j) All references to currency amounts shall mean lawful money of the United States of America.
ARTICLE 2 — PURCHASE AND SALE
Section 2.1 — Agreement to Sell and Purchase
Subject to and in accordance with the terms and conditions set forth in this Agreement, Seller agrees to sell, convey, transfer, and assign to Purchaser, and Purchaser agrees to purchase and acquire from Seller, the Property, for the Purchase Price. The Property is commonly known as "The Linden at Gramercy Park," located at 245 East 21st Street, New York, NY 10010, and consists of a Class A multifamily residential property comprising two hundred twelve (212) residential units and two (2) ground-floor retail units containing approximately four thousand eight hundred (4,800) square feet combined, housed within a building of approximately one hundred eighty-seven thousand four hundred (187,400) gross square feet. The building was originally constructed in 1928 and was the subject of a comprehensive gut renovation during the period of 2017–2018. The conveyance of the Property shall be subject to and upon the terms and conditions more fully set forth herein.
Section 2.2 — Components of the Property
The term "Property" as used in this Agreement shall include the following components:
(a) Land. The Land, designated as Block 899, Lot 42, Borough of Manhattan, City of New York, County of New York, State of New York, as more particularly described in the legal description attached hereto as Exhibit A, together with all easements, rights-of-way, strips, gores, appurtenances, and privileges belonging or in any way appertaining thereto.
(b) Improvements. All buildings, structures, fixtures, and other improvements of every kind and nature now situated on the Land, including the approximately 187,400 gross square foot building and all mechanical, electrical, plumbing, HVAC, elevator, and other building systems located therein or thereon.
(c) Personal Property. All tangible personal property owned by Seller and situated on, attached to, or used in connection with the ownership, operation, or maintenance of the Land and Improvements, including furniture, fixtures, equipment, appliances, tools, supplies, and inventory located at the Property.
(d) Leases. All of Seller's right, title, and interest in and to all existing Leases affecting the Property, including two hundred twelve (212) residential leases and two (2) commercial retail leases, together with all amendments, modifications, extensions, renewals, guaranties, and side letters related thereto, and all rents, income, receipts, revenues, security deposits, and other sums due or to become due thereunder.
(e) Contracts. All of Seller's right, title, and interest in and to all assignable service, maintenance, management, and equipment contracts and other agreements affecting the ownership, operation, or maintenance of the Property, as more particularly described on the Schedule of Contracts attached hereto as Exhibit D.
(f) Intangible Property. All of Seller's right, title, and interest in and to all intangible personal property used in connection with the Property, including all licenses, permits, approvals, certificates of occupancy, warranties, guaranties, plans, specifications, architectural and engineering drawings, trade names, and the right to use the name "The Linden at Gramercy Park," to the extent assignable without the consent of third parties or, where required, subject to the receipt of such consent.
Section 2.3 — Purchase Price
The purchase price for the Property shall be Forty Million and 00/100 Dollars ($40,000,000.00) (the "Purchase Price"), payable as follows:
(a) Earnest Money Deposit. The Earnest Money Deposit in the amount of Two Million and 00/100 Dollars ($2,000,000.00) shall be delivered by Purchaser to the Escrow Agent in accordance with Article 3 and shall be credited against the Purchase Price at Closing.
(b) Balance at Closing. At Closing, Purchaser shall pay to Seller the balance of the Purchase Price, being Thirty-Eight Million and 00/100 Dollars ($38,000,000.00) (subject to prorations and adjustments as set forth in Article 10), by wire transfer of immediately available federal funds to an account designated by Seller in writing not less than two (2) Business Days prior to the Closing Date.
Section 2.4 — Allocation of Purchase Price
The parties shall use commercially reasonable efforts to agree, prior to Closing, upon an allocation of the Purchase Price among the Land, the Improvements, the Personal Property, and the Intangible Property for federal, state, and local tax reporting purposes. Such allocation shall be consistent with the requirements of Section 1060 of the IRC to the extent applicable and shall be binding on both parties for all tax reporting purposes. In the event the parties are unable to agree upon such allocation prior to Closing, each party shall be free to make its own reasonable allocation, provided that each party shall promptly notify the other of any such allocation and shall not take a position on any tax return that is inconsistent with any allocation agreed upon by the parties.
ARTICLE 3 — EARNEST MONEY DEPOSIT
Section 3.1 — Amount and Delivery
Within two (2) Business Days following the Effective Date, Purchaser shall deliver to the Escrow Agent (Archer & Towne Title Company, 60 East 42nd Street, Suite 1840, New York, NY 10165, Attention: Philip Moreno, Title Officer) the Earnest Money Deposit in the amount of Two Million and 00/100 Dollars ($2,000,000.00) by wire transfer of immediately available federal funds to the account designated in writing by the Escrow Agent. Purchaser's failure to timely deliver the Earnest Money Deposit shall constitute a material default by Purchaser under this Agreement, and Seller shall have the right to terminate this Agreement by delivering written notice to Purchaser, whereupon this Agreement shall be null and void and neither party shall have any further rights or obligations hereunder except for those obligations that expressly survive termination.
Section 3.2 — Investment of Deposit
The Escrow Agent shall hold the Earnest Money Deposit in a federally insured interest-bearing escrow account at a commercial bank reasonably acceptable to both Seller and Purchaser. All interest accruing on the Earnest Money Deposit shall be for the account of, and shall be reported for income tax purposes under the taxpayer identification number of, the party ultimately entitled to receive the Earnest Money Deposit pursuant to the terms of this Agreement. The Escrow Agent shall not commingle the Earnest Money Deposit with any other funds. The parties acknowledge that the Escrow Agent shall not be responsible for any loss of principal or interest resulting from the insolvency of the depository institution or from market fluctuations.
Section 3.3 — Deposit Becomes Non-Refundable
(a) During the Due Diligence Period. The Earnest Money Deposit shall be fully refundable to Purchaser at any time during the Due Diligence Period (through and including 5:00 p.m. Eastern Time on April 14, 2023). During such period, Purchaser may terminate this Agreement for any reason or no reason in accordance with Section 4.4, and upon such termination, the Escrow Agent shall promptly return the Earnest Money Deposit (together with all accrued interest thereon) to Purchaser.
(b) After Expiration of the Due Diligence Period. Upon the expiration of the Due Diligence Period without Purchaser's termination of this Agreement, the Earnest Money Deposit shall become non-refundable to Purchaser, except in the following circumstances: (i) a material default by Seller under this Agreement that is not cured within the applicable cure period; (ii) the failure of any condition to Purchaser's obligation to close set forth in Section 8.1; or (iii) as otherwise expressly provided in this Agreement (including Purchaser's termination rights under Sections 12.1 and 12.3). In no event shall the Earnest Money Deposit be refundable to Purchaser following Purchaser's default under this Agreement.
Section 3.4 — Application at Closing
At Closing, the Earnest Money Deposit (together with all accrued interest thereon) shall be applied as a credit against the Purchase Price, and the Escrow Agent shall disburse the Earnest Money Deposit to Seller (or as otherwise directed in the closing statement executed by the parties) simultaneously with the completion of the Closing.
Section 3.5 — Escrow Agent Provisions
(a) Limited Liability. The Escrow Agent has agreed to act as escrow agent hereunder solely as an accommodation to the parties. The Escrow Agent shall have no liability to either party except in the event of the Escrow Agent's willful misconduct or gross negligence. The Escrow Agent shall not be required to defend any legal proceeding that may be instituted against it with respect to the Earnest Money Deposit unless the Escrow Agent is indemnified to its reasonable satisfaction.
(b) Interpleader. In the event of any dispute between Seller and Purchaser as to the disposition of the Earnest Money Deposit, the Escrow Agent shall have the right, at its sole election, to deposit the Earnest Money Deposit with the clerk of any court of competent jurisdiction in the County of New York, State of New York, in an action of interpleader, and upon such deposit, the Escrow Agent shall be relieved of all further liability and obligation with respect to the Earnest Money Deposit.
(c) Indemnification. Seller and Purchaser hereby jointly and severally agree to indemnify, defend, and hold harmless the Escrow Agent from and against any and all losses, costs, damages, claims, and expenses (including reasonable attorneys' fees) incurred by the Escrow Agent in connection with its performance of its duties hereunder, except to the extent arising from the Escrow Agent's willful misconduct or gross negligence.
(d) Dispute Resolution. In the event the Escrow Agent receives conflicting instructions from Seller and Purchaser regarding the disposition of the Earnest Money Deposit, the Escrow Agent shall not be required to take any action and may continue to hold the Earnest Money Deposit until (i) the Escrow Agent receives joint written instructions from both Seller and Purchaser, (ii) the Escrow Agent receives a final, non-appealable order of a court of competent jurisdiction directing the disposition of the Earnest Money Deposit, or (iii) the Escrow Agent elects to deposit the Earnest Money Deposit in an interpleader action as described above.
(e) Stakeholder. The Escrow Agent is acting solely as a stakeholder at the request of the parties and for their convenience. The Escrow Agent shall not be deemed to be the agent of either Seller or Purchaser.
(f) Escrow Agent's Address. All communications and deliveries to the Escrow Agent shall be addressed to: Archer & Towne Title Company, 60 East 42nd Street, Suite 1840, New York, NY 10165, Attention: Philip Moreno, Title Officer.
ARTICLE 4 — DUE DILIGENCE
Section 4.1 — Due Diligence Period
The Due Diligence Period shall commence on the Effective Date (March 15, 2023) and shall expire at 5:00 p.m. Eastern Time on April 14, 2023, being a period of thirty (30) calendar days. During the Due Diligence Period, Purchaser shall have the right to investigate and inspect the Property in all respects, including its physical and environmental condition, the financial performance and operating history of the Property, all Leases and Contracts, title and survey matters, zoning and land use compliance, and all other matters that Purchaser deems relevant to its acquisition of the Property. Seller acknowledges and agrees that Purchaser's investigation and inspection during the Due Diligence Period shall be conducted at Purchaser's sole cost and expense.
Section 4.2 — Access to Property
(a) During the Due Diligence Period and continuing through Closing, Seller shall provide Purchaser and its authorized agents, consultants, engineers, architects, contractors, and representatives with reasonable access to the Property during normal business hours for the purpose of conducting physical inspections, environmental assessments (including Phase I and, if warranted, Phase II environmental site assessments), engineering studies, property condition assessments, and other investigations, provided that Purchaser shall give Seller not less than forty-eight (48) hours' prior written or telephonic notice of each proposed inspection or investigation.
(b) Purchaser shall conduct all inspections in a manner that minimizes interference with the operation of the Property and the rights of tenants, and Purchaser shall not contact any tenant directly without Seller's prior written consent. Seller or Seller's representative shall have the right, but not the obligation, to accompany Purchaser and its agents during any inspection.
(c) Prior to conducting any physical inspection of the Property, Purchaser shall deliver to Seller evidence of commercial general liability insurance maintained by Purchaser (or its agent or consultant conducting the inspection) in an amount of not less than Two Million and 00/100 Dollars ($2,000,000.00) per occurrence and Five Million and 00/100 Dollars ($5,000,000.00) in the aggregate, naming Seller and its members, managers, and agents as additional insureds. Such insurance policy shall be issued by an insurance company licensed to do business in the State of New York and rated at least "A-/VIII" by A.M. Best Company.
(d) Purchaser shall not perform any invasive or destructive testing (including boring, sampling, or drilling) without Seller's prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed, provided that Seller may impose reasonable conditions on such testing.
Section 4.3 — Due Diligence Materials
Seller shall deliver or make available to Purchaser (in hard copy or through an electronic data room), within five (5) Business Days of the Effective Date, the following Due Diligence Materials, to the extent in Seller's possession or reasonable control:
(a) Leases. Complete copies of all Leases affecting the Property, including two hundred twelve (212) residential leases and two (2) retail leases, together with all amendments, modifications, extensions, renewals, guaranties, and side letters related thereto.
(b) Rent Roll. A rent roll current as of January 2023, in the form attached hereto as Exhibit C, reflecting an occupancy rate of ninety-six and two-tenths percent (96.2%) and setting forth, for each unit, the tenant name, unit number, unit type, square footage, lease commencement and expiration dates, monthly rent, security deposit amount, and any outstanding arrearages.
(c) Operating Statements. Trailing twelve (12) month operating statements for calendar year 2022, setting forth all income and expenses of the Property, including the following summary financial information:
(i) Gross Potential Rent (Residential): $5,680,000
(ii) Gross Potential Rent (Retail): $384,000
(iii) Total Operating Expenses: $3,735,568 (including real estate taxes of $1,420,000)
(iv) In-Place Net Operating Income: $2,240,000
(d) Real Estate Tax Bills. Real estate tax bills for the Property for calendar year 2022, reflecting actual real estate taxes of One Million Four Hundred Twenty Thousand and 00/100 Dollars ($1,420,000.00).
(e) Contracts. Complete copies of all Contracts, including service contracts, maintenance agreements, equipment leases, management agreements, and other agreements affecting the ownership, operation, or maintenance of the Property.
(f) Environmental Reports. All existing environmental reports, assessments, and studies relating to the Property, including Phase I and Phase II environmental site assessments, if any.
(g) Title and Survey. Copies of all existing title insurance policies and surveys relating to the Property.
(h) Building Plans and Certificates. Building plans, specifications, as-built drawings, certificates of occupancy, and temporary certificates of occupancy for the Property, including documentation relating to the 2017–2018 gut renovation.
(i) Insurance. Copies of all insurance policies covering the Property and a summary of all insurance claims filed during the preceding three (3) years.
(j) Capital Expenditure Records. Capital expenditure records for the Property, including complete documentation of the 2017–2018 gut renovation at a cost of approximately Eight Million Two Hundred Thousand and 00/100 Dollars ($8,200,000.00), including construction contracts, change orders, certificates of completion, and warranties.
(k) Organizational Documents. Organizational documents of Seller, Linden Gramercy Holdings LLC, a New York limited liability company, including the certificate of formation, operating agreement, and evidence that Marcus Steinfeld is the Managing Member of Seller with full authority to execute this Agreement and consummate the transactions contemplated hereby.
(l) Litigation. A description of any pending or, to Seller's knowledge, threatened litigation, arbitration, administrative proceeding, or governmental investigation affecting the Property or Seller's interest therein.
Section 4.4 — Purchaser's Right to Terminate
If, during the Due Diligence Period, Purchaser determines, in its sole and absolute discretion, that the Property is not acceptable to Purchaser for any reason or no reason, Purchaser may terminate this Agreement by delivering written notice of termination (the "Termination Notice") to Seller and the Escrow Agent on or before the expiration of the Due Diligence Period (i.e., on or before 5:00 p.m. Eastern Time on April 14, 2023). Upon delivery of a valid Termination Notice, (a) the Escrow Agent shall promptly return the Earnest Money Deposit (together with all accrued interest thereon) to Purchaser, (b) this Agreement shall be null and void and of no further force or effect, and (c) neither party shall have any further rights, obligations, or liabilities hereunder, except for those obligations that by their terms expressly survive the termination of this Agreement, including the obligations set forth in Sections 4.6, 4.7, and 18.13.
Section 4.5 — Effect of Expiration Without Termination
If Purchaser does not deliver a Termination Notice to Seller and the Escrow Agent on or before the expiration of the Due Diligence Period (5:00 p.m. Eastern Time on April 14, 2023), then Purchaser shall be conclusively deemed to have approved its due diligence investigation and inspection of the Property in all respects and to have elected to proceed to Closing in accordance with the terms of this Agreement. Upon such expiration, the Earnest Money Deposit shall thereupon become non-refundable to Purchaser, subject to the exceptions set forth in Section 3.3(b).
Section 4.6 — Confidentiality
Purchaser shall treat all Due Diligence Materials, inspection results, reports, analyses, and other information obtained by Purchaser in connection with its investigation and inspection of the Property as confidential and proprietary information. Purchaser shall not disclose any such information to any Person other than Purchaser's lenders, prospective lenders, investors, prospective investors (including Briarwood Family Office LLC, Cedarpoint Capital Partners LLC, and Halcyon Ridge Investments LP, as members of Purchaser's parent entity, Gramercy Linden JV LLC, a Delaware limited liability company), counsel (including Calderwood & Harkness LLP), accountants, engineers, architects, environmental consultants, and other professional advisors engaged by Purchaser in connection with the transaction contemplated hereby (collectively, "Permitted Recipients"), provided that Purchaser shall require each Permitted Recipient to maintain the confidentiality of such information. This confidentiality obligation shall survive the termination of this Agreement for a period of two (2) years. In the event that this Agreement is terminated, Purchaser shall promptly return or destroy all Due Diligence Materials in Purchaser's possession or control and shall certify in writing to Seller that such return or destruction has been completed.
Section 4.7 — Indemnification for Inspections
Purchaser shall indemnify, defend, and hold Seller, its members, managers, officers, agents, employees, and contractors harmless from and against any and all claims, demands, causes of action, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and disbursements) arising out of or resulting from Purchaser's inspections, investigations, and testing of the Property, including any damage to the Property or injury to any person caused by Purchaser's negligence or willful misconduct, but excluding any claims arising from (a) the mere discovery of pre-existing conditions at the Property, or (b) Seller's negligence or willful misconduct. Purchaser shall restore the Property to substantially the same condition existing prior to any physical testing or inspection conducted by or on behalf of Purchaser. This indemnification obligation shall survive the Closing or the earlier termination of this Agreement.
ARTICLE 5 — TITLE AND SURVEY
Section 5.1 — Title Commitment
Purchaser has ordered a title commitment from the Title Company, Archer & Towne Title Company (Title Commitment No. AT-2023-MN-0041872), to be issued during the Due Diligence Period. Purchaser acknowledges that the Title Commitment was issued on April 11, 2023. The Title Company shall issue an owner's policy of title insurance in the amount of Forty Million and 00/100 Dollars ($40,000,000.00), insuring Purchaser's fee simple interest in the Land and Improvements, subject only to the Permitted Exceptions. Purchaser acknowledges that it intends to separately order a lender's title insurance policy in favor of Pinnacle Fidelity Bank, N.A. (or its designee), in the amount of Twenty-Six Million and 00/100 Dollars ($26,000,000.00), in connection with Purchaser's anticipated senior acquisition loan. The cost of such lender's policy shall be borne solely by Purchaser.
Section 5.2 — Title Objections
(a) Purchaser shall deliver to Seller written notice of any objections to the state of title as disclosed by the Title Commitment and/or the survey (the "Title Objection Notice") within twenty (20) days after receipt of the Title Commitment and survey by Purchaser. Any exception to title shown in the Title Commitment or on the survey to which Purchaser does not object within such twenty (20) day period shall be deemed a Permitted Exception.
(b) Upon receipt of Purchaser's Title Objection Notice, Seller shall have ten (10) Business Days within which to notify Purchaser in writing whether Seller elects to cure, or cause to be cured, any or all of the title objections set forth in the Title Objection Notice. Seller shall have no obligation to cure any title defect or exception, except for the Mandatory Cure Items described in Section 5.2(c) below.
(c) Mandatory Cure Items. Notwithstanding anything to the contrary in this Agreement, Seller shall be obligated to cure, remove, or cause to be removed at or prior to Closing (and may use proceeds of the Purchase Price for such purpose) the following items (collectively, the "Mandatory Cure Items"): (i) all mortgages, deeds of trust, and monetary liens of a definite or ascertainable amount created by, through, or under Seller; (ii) judgments against Seller; (iii) mechanics' liens arising from work ordered by Seller; and (iv) delinquent real estate taxes and assessments.
(d) If Seller elects not to cure any title objection that is not a Mandatory Cure Item, Purchaser shall have the right, exercisable within ten (10) Business Days after receipt of Seller's notice, to either (i) terminate this Agreement by delivering written notice to Seller and the Escrow Agent, in which event the Escrow Agent shall promptly return the Earnest Money Deposit (together with all accrued interest) to Purchaser and this Agreement shall be null and void except for surviving obligations, or (ii) waive such title objection and proceed to Closing, in which event such objection shall be deemed a Permitted Exception.
Section 5.3 — Permitted Exceptions
If Purchaser does not object to any exception to title shown in the Title Commitment or on the survey within the time period specified in Section 5.2(a), or if Seller elects not to cure a title objection and Purchaser does not terminate this Agreement within the time period specified in Section 5.2(d), such exceptions shall be deemed "Permitted Exceptions." The Permitted Exceptions shall include, in any event, the following:
(a) Zoning ordinances, building codes, and other governmental regulations affecting the Property that are not violated by the existing Improvements or the current use and occupancy of the Property.
(b) The rights of tenants under existing Leases, as tenants only, without any option to purchase.
(c) Real estate taxes and assessments that are a lien but not yet due and payable as of the Closing Date.
(d) Utility easements of record that do not materially impair the use, occupancy, or value of the Property.
(e) Such other matters as may be approved in writing by Purchaser or deemed approved pursuant to this Article 5.
Section 5.4 — Survey
Purchaser shall have the right, at Purchaser's sole cost and expense, to obtain or update an ALTA/NSPS Land Title Survey of the Property, prepared by a licensed surveyor acceptable to Purchaser and the Title Company, in accordance with the current Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys. Any survey objections shall be treated under the same objection and cure procedure set forth in Section 5.2.
Section 5.5 — Title Policy
At Closing, the Title Company shall issue the Title Policy, being an owner's policy of title insurance in the form of a standard ALTA Owner's Policy (2021 Form), insuring Purchaser's fee simple interest in the Land and Improvements in the amount of Forty Million and 00/100 Dollars ($40,000,000.00), subject only to the Permitted Exceptions. Seller shall deliver to the Title Company at or prior to Closing such affidavits, indemnities, and other documents as the Title Company may reasonably require to facilitate the issuance of the Title Policy, including a standard owner's title affidavit in form and substance reasonably acceptable to the Title Company.
ARTICLE 6 — REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as of the Effective Date and as of the Closing Date (subject to the bring-down provisions set forth in Section 8.1(a)) as follows:
Section 6.1 — Organization and Authority
Seller is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of New York. Marcus Steinfeld is the Managing Member of Seller and has full power and authority to execute and deliver this Agreement and all documents, instruments, and agreements to be executed and delivered by Seller in connection with the transactions contemplated hereby, and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement and all documents to be executed and delivered by Seller in connection herewith have been duly authorized by all necessary action on the part of Seller and its members. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate, conflict with, or result in a breach of any provision of Seller's certificate of formation, operating agreement, or any other organizational document.
Section 6.2 — No Conflicts
Neither the execution and delivery of this Agreement by Seller, nor the consummation of the transactions contemplated hereby, will (a) violate any provision of any law, statute, rule, regulation, order, writ, judgment, injunction, or decree of any Governmental Authority applicable to Seller or the Property, (b) conflict with or result in a breach of, or constitute a default (or an event that, with the giving of notice, the passage of time, or both, would constitute a default) under, any agreement, instrument, license, permit, or other obligation to which Seller is a party or by which Seller or the Property is bound, or (c) result in the creation or imposition of any lien, charge, or encumbrance on the Property other than the Permitted Exceptions.
Section 6.3 — Title to Property
Seller holds good and marketable fee simple title to the Land and Improvements, free and clear of all liens, encumbrances, mortgages, deeds of trust, security interests, claims, restrictions, rights-of-way, options, and other defects or clouds on title, other than the Permitted Exceptions. Seller has good and marketable title to the Personal Property, free and clear of all liens, security interests, and encumbrances. No Person other than Seller has any ownership interest in the Property.
Section 6.4 — Leases
(a) The Rent Roll attached hereto as Exhibit C is true, complete, and correct in all material respects as of its date (January 2023). The Property consists of two hundred twelve (212) residential units and two (2) retail units containing approximately four thousand eight hundred (4,800) square feet combined.
(b) As of the date of the Rent Roll, the occupancy rate of the Property is ninety-six and two-tenths percent (96.2%).
(c) To Seller's knowledge, no tenant is in material default under any Lease, and Seller has not delivered to any tenant any written notice of default that remains uncured. Seller has not received written notice from any tenant alleging a material default by Seller (as landlord) under any Lease that remains uncured.
(d) There are no lease modifications, amendments, side agreements, concessions, or arrangements affecting any Lease other than those reflected in the copies of the Leases delivered or made available to Purchaser as part of the Due Diligence Materials.
(e) All security deposits required under the Leases are held by Seller in compliance with the requirements of Section 7-103 of the New York General Obligations Law and all other applicable laws, and the amount of each such security deposit is as set forth on the Rent Roll.
(f) Seller has not assigned, pledged, hypothecated, or otherwise encumbered the Leases or any rents or other sums due thereunder, except to the extent of any existing mortgage or financing that will be discharged at Closing.
Section 6.5 — Contracts
The Schedule of Contracts attached hereto as Exhibit D is true, complete, and correct in all material respects. Seller is not in material default under any Contract, and Seller has not received written notice from any counterparty alleging a material default by Seller under any Contract. To Seller's knowledge, no counterparty to any Contract is in material default thereunder. All Contracts are terminable on thirty (30) days' notice without premium or penalty, except as otherwise specifically noted on the Schedule of Contracts.
Section 6.6 — Litigation
There is no pending, or, to Seller's knowledge, threatened, litigation, arbitration, administrative proceeding, or governmental investigation affecting the Property or Seller's ability to consummate the transactions contemplated by this Agreement. Seller has not received any written notice of any such proceeding from any Governmental Authority or other Person.
Section 6.7 — Compliance with Law
To Seller's knowledge, the Property is in material compliance with all applicable laws, ordinances, rules, regulations, codes, and orders of all Governmental Authorities, including zoning and land use laws, building codes, fire codes, health and safety regulations, and the Americans with Disabilities Act of 1990, as amended. To Seller's knowledge, there are no outstanding violations, citations, or notices of violation issued by any Governmental Authority with respect to the Property. To the extent the Property or any portion thereof constitutes a non-conforming use under applicable zoning laws, Seller has disclosed such non-conforming use status to Purchaser as part of the Due Diligence Materials.
Section 6.8 — Environmental Matters
(a) To Seller's knowledge, no hazardous substances (as defined under applicable federal, state, or local environmental laws, including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), and Article 27 of the New York Environmental Conservation Law) have been released, generated, manufactured, treated, stored, or disposed of on, under, in, or about the Property in violation of any applicable environmental law.
(b) Seller has not received any notice, order, demand, complaint, or claim from any Governmental Authority or any other Person regarding any actual or alleged violation of any environmental law affecting the Property, or regarding any actual or threatened release of hazardous substances on, under, or from the Property.
(c) Seller has delivered to Purchaser all existing environmental reports, assessments, and studies relating to the Property that are in Seller's possession or control.
Section 6.9 — Tax Matters
All real estate taxes, assessments, and governmental charges with respect to the Property that are currently due and payable have been paid in full or will be paid in full at or prior to Closing. Real estate taxes for the Property for calendar year 2022 were One Million Four Hundred Twenty Thousand and 00/100 Dollars ($1,420,000.00). There are no pending or threatened tax certiorari proceedings or appeals with respect to the assessed value of the Property, and Seller has not filed any application for reduction of the assessed value of the Property.
Section 6.10 — Insurance
Seller maintains property and liability insurance covering the Property with reputable insurance companies in amounts and coverages customarily maintained for similar properties in the New York metropolitan area. No material uninsured or underinsured casualty has occurred at the Property. Seller has not received any written notice from any insurance company of cancellation, non-renewal, or material change in coverage with respect to any insurance policy covering the Property.
Section 6.11 — No Condemnation
To Seller's knowledge, no condemnation, eminent domain, or similar proceeding is pending or threatened against the Property or any portion thereof. Seller has not received any notice of any intention to acquire the Property or any portion thereof by condemnation, eminent domain, or any other form of governmental taking.
Section 6.12 — FIRPTA
Seller is not a "foreign person" within the meaning of Section 1445 of the IRC or a "foreign trust" within the meaning of Section 7701(a)(31) of the IRC. Seller will deliver at Closing the FIRPTA Certificate in the form attached hereto as Exhibit H.
Section 6.13 — No Bankruptcy
No bankruptcy, insolvency, reorganization, arrangement, moratorium, receivership, or similar proceeding under any federal or state law has been filed by or against Seller, and no such proceeding is pending, threatened, or contemplated. Seller has not made an assignment for the benefit of creditors, nor has Seller admitted in writing its inability to pay its debts as they become due.
Section 6.14 — OFAC / Anti-Money Laundering
Seller is not, and is not acting directly or indirectly on behalf of, any Person or entity identified on, or owned or controlled by any Person or entity identified on, any list maintained by the United States Department of the Treasury's Office of Foreign Assets Control ("OFAC"), including the Specially Designated Nationals and blocked Persons List, or any other list of sanctioned or prohibited Persons maintained by the United States government. Seller is not engaged in, and the proceeds of this transaction will not be used to finance, any activity that would constitute a violation of the International Emergency Economic Powers Act, the Trading with the Enemy Act, the USA PATRIOT Act, Executive Order 13224, or any other applicable anti-money laundering or anti-terrorism law or regulation.
Section 6.15 — Seller's Knowledge
As used in this Agreement, the phrases "to Seller's knowledge," "to the knowledge of Seller," or words of similar import, shall mean the actual knowledge of Marcus Steinfeld (as Managing Member of Seller), without any duty of inquiry or investigation on the part of such individual. There shall be no personal liability on the part of Marcus Steinfeld arising out of any of Seller's representations or warranties made herein or in any document executed or delivered in connection with this Agreement.
Section 6.16 — Survival
The representations and warranties of Seller set forth in this Article 6 shall survive the Closing for a period of twelve (12) months following the Closing Date. No claim for a breach of any representation or warranty of Seller may be commenced after the expiration of such twelve (12) month period, and upon such expiration, Seller shall have no further liability with respect to such representations and warranties.
ARTICLE 7 — REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the Effective Date and as of the Closing Date (subject to the bring-down provisions set forth in Section 8.2(a)) as follows:
Section 7.1 — Organization and Authority
Purchaser is (or upon formation will be) a limited liability company duly organized, validly existing, and in good standing under the laws of the State of New York. Purchaser is a wholly owned subsidiary of Gramercy Linden JV LLC, a Delaware limited liability company. Purchaser has full power and authority to execute and deliver this Agreement and all documents, instruments, and agreements to be executed and delivered by Purchaser in connection with the transactions contemplated hereby, and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement and all documents to be executed and delivered by Purchaser in connection herewith have been duly authorized by all necessary action on the part of Purchaser and its members.
Section 7.2 — No Conflicts