ANCILLARY DOCUMENTATION. Purchaser and Seller covenant and agree that they shall diligently and in good faith, during the Examination Period, negotiate and attempt to agree upon the terms of the following instruments, which will be delivered at or before Closing in accordance with the terms hereof: 1. An agreement (the “Right of First Offer Agreement”) to be recorded at Closing in the public records of ▇▇▇▇▇▇ County, Maryland, which shall provide the Purchaser a right of first offer with respect to the sale of any parcel out of the Seller’s Remainder Property which is now or hereafter may be zoned for or otherwise entitled to be developed as a multifamily rental apartment project (including, without limitation, Parcels E and D described on Exhibit J hereto) (collectively, the “ROFO Property”), in accordance with the terms and provisions hereafter set forth: (A) The Right of First Offer Agreement shall continue in full force and effect from the Closing Date until the earlier to occur of (x) the date that is five (5) years thereafter and (y) the date upon which Seller no longer holds any fee interest in any portion of the Seller’s Remainder Property (the “ROFO Term”), at which point the Right of First Offer Agreement shall automatically terminate. If any ROFO Property is sold in more than one (1) conveyance, Purchaser shall have a Right of First Offer with respect to each separate conveyance. (B) If, prior to the end of the ROFO Term, Seller elects to sell, transfer, exchange or otherwise dispose of, to any third party, any or all of the ROFO Property, then Seller shall give Purchaser written notice of such election (the “Offer Notice”). The Offer Notice will set forth a description of the ROFO Property, or portions thereof (the “Offered ROFO Property”) potentially being transferred, together with the proposed sales price and all other material terms and conditions of the proposed sale. Purchaser shall then have ten (10) business days from the date of the Offer Notice to give Seller written notice that it shall purchase the ROFO Property upon the terms set forth in the Offer Notice by executing and returning the Offer Notice (the “Offer Notice Acceptance Period”). If Purchaser accepts Seller’s offer contained in the Offer Notice, Purchaser and Seller shall use good faith, diligent, and commercially reasonable efforts to enter into a written agreement for the purchase and sale of the Offered ROFO Property (which agreement shall be based upon the terms and conditions set forth in the Offer Notice, including timing for closing(s), and otherwise in form and substance similar to this Contract, to the extent applicable) within thirty (30) days after Purchaser’s execution and delivery of the Offer Notice to the Seller (the “Offer Agreement Period”). If Purchaser rejects Seller’s offer in writing or fails to execute and return the Offer Notice within the Offer Notice Acceptance Period, or fails to execute a written agreement to purchase the applicable Offered ROFO Property from Seller within the Offer Agreement Period, Seller shall be free to offer such Offered ROFO Property on the same terms and purchase price (or on the same terms with a higher price) as offered to Purchaser, to any other person or persons unrelated to the Seller pursuant to an arms-length transaction and to negotiate for the sale of such Offered ROFO Property on such terms and conditions as Seller may, in its discretion, determine, and if Seller shall convey the Offered ROFO Property to an unrelated person on such terms and at such price, the Purchaser’s Right of First Offer with respect to such Offered ROFO Property shall be deemed terminated and of no further force and effect. However, if Seller determines at any time to sell the Offered ROFO Property to a third party for a price that is less than the purchase price set forth in the original Offer Notice to the Purchaser (such original purchase price, the “Offered Price”), then Seller shall be obligated to provide another Offer Notice to the Purchaser with respect to such sale price, and the Purchaser shall have all rights in connection therewith as are set forth in this Section 1.04(d) (1) (B); provided that if such purchase price reduction is reasonably based on either (a) a reduction in unit yield for such parcel from the unit yield established reasonably and in good faith as the basis for the Offered Price, pursuant to the final determination under the applicable governmental authority’s entitlements process (which such reduction was not approved pursuant to the request of the Seller), or (b) a material adverse property condition unknown to Seller at the time of such Offer Notice, then Seller shall have no obligation to provide another Offer Notice to Purchaser related to the purchase price reduction, and Purchaser shall have no rights under this Section 1.04(d)(1)(B) with respect to such transaction. Notwithstanding the foregoing, the parties acknowledge and agree that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇. (together with any trust established by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇. for estate planning purposes, “DPS”) may undertake to own and develop the ROFO Property (or any portion thereof) himself or through an entity: (x) in which DPS has a direct or indirect ownership interest of fifty percent (50%) or more, or (y) which is directly or indirectly managed (in the capacity of general partner or managing member) or controlled by a subsidiary entity in which DPS has a direct or indirect ownership interest, as the case may be, without being required to deliver an Offer Notice to Purchaser or being subject to the Right of First Offer in any other manner. In such event, DPS shall provide reasonable evidence of his interest in any such entity to Purchaser within a reasonable period of time after Purchaser’s request. (C) Purchaser’s rejection of or failure to execute an Offer Notice or revised Offer Notice with respect to any one or more offers to sell Offered ROFO Property shall not be deemed a rejection or waiver of its Right of First Offer with respect to any other, different Offered ROFO Property. Any Offer Notice or revised Offer Notice provided by Seller shall represent a bona fide offer in good faith. 2. A temporary construction easement agreement to be recorded at Closing in the public records of ▇▇▇▇▇▇ County, Maryland (the “Construction Easement Agreement”) to provide Purchaser and its agents, consultants, contractors and employees access to the Property over and across such portions of the Seller’s Remainder Property as may be reasonably necessary for certain materials deliveries, contractor parking, and project staging and phasing during construction of the Project. 3. An agreement (“Common Infrastructure Agreement”) regarding Seller’s obligations and deadlines to complete, at its sole cost and expense (including payment of any water and sewer front foot benefit charges associated with the Property): (x) mass grading of the Site; (y) utility hook-ups stubbed to the boundary line of the Site; and (z) completion of the portions of St. Margaret’s Boulevard, Banbury Drive, and an unnamed roadway (the “Connecting Road”) adjacent to the western boundary line of the Site, more particularly described or as shown on Exhibit K attached hereto and incorporated herein (collectively items (x), (y) and (z), “Seller’s Infrastructure Work”) (provided that, on or prior to the last day of the Examination Period, Purchaser and Seller shall agree upon and append to this Contract an amended Exhibit K that sets forth: (A) specifications and required completion dates for the Seller’s Infrastructure Work with additional particularity and (B) specifications for all other infrastructure work to be completed by the Purchaser (the “Purchaser’s Infrastructure Work”) with respect to the development of the Property). Notwithstanding the foregoing, Purchaser shall pay Purchaser’s Share of the Connecting Road (defined hereinbelow) pursuant to the terms of the Common Infrastructure Agreement, and shall be obligated pursuant to the Common Infrastructure Agreement to complete the Purchaser’s Infrastructure Work substantially as set forth in Exhibit K. For purposes hereof, “Purchaser’s Share of the Connecting Road” shall mean an amount equal to one-half (1/2) of all actual and reasonable out-of-pocket costs incurred by Seller with respect to development, installation and construction of the Connecting Road, payment of which is evidenced by such documentation as may be reasonably acceptable to the Purchaser. Seller covenants and agrees that a portion of the Seller’s Infrastructure Work shall be completed prior to the Closing Date, as set forth in Exhibit K, and Seller shall complete the remainder of the Seller’s Infrastructure Work in accordance with the terms of the Common Infrastructure Agreement from and after Closing. Any reference in the Common Infrastructure Agreement as drafted during the Examination Period to such portion of the Seller’s Infrastructure Work completed prior to Closing, shall, at Closing, be deleted from the form of the Common Infrastructure Agreement. The Common Infrastructure Agreement shall require that Seller provide reasonable security to Purchaser for the timely completion of any work to be performed following Closing, in the form of either (as determined in the reasonable discretion of Purchaser) an escrow holdback, a letter of credit from a banking institution reasonably approved by Purchaser, or a guaranty from an affiliate of Seller reasonably acceptable to Purchaser.
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Sources: Contract for the Purchase of Real Property (CNL Growth Properties, Inc.)
ANCILLARY DOCUMENTATION. Purchaser and Seller covenant and agree that they shall diligently and in good faith, during the Examination Period, negotiate and attempt to agree upon the terms of the following instruments, which will be delivered at or before Closing in accordance with the terms hereof:
1. An agreement (the “Right of First Offer Agreement”) to be recorded at Closing in the public records of ▇▇▇▇▇▇ County, Maryland, which shall provide the Purchaser a right of first offer with respect to the sale of any parcel out of the Seller’s Remainder Property which is now or hereafter may be zoned for or otherwise entitled to be developed as a multifamily rental apartment project (including, without limitation, Parcels E and D described on Exhibit J hereto) (collectively, the “ROFO Property”), in accordance with the terms and provisions hereafter set forth:
(A) The Right of First Offer Agreement shall continue in full force and effect from the Closing Date until the earlier to occur of (x) the date that is five (5) years thereafter and (y) the date upon which Seller no longer holds any fee interest in any portion of the Seller’s Remainder Property (the “ROFO Term”), at which point the Right of First Offer Agreement shall automatically terminate. If any ROFO Property is sold in more than one (1) conveyance, Purchaser shall have a Right of First Offer with respect to each separate conveyance.
(B) If, prior to the end of the ROFO Term, Seller elects to sell, transfer, exchange or otherwise dispose of, to any third party, any or all of the ROFO Property, then Seller shall give Purchaser written notice of such election (the “Offer Notice”). The Offer Notice will set forth a description of the ROFO Property, or portions thereof (the “Offered ROFO Property”) potentially being transferred, together with the proposed sales price and all other material terms and conditions of the proposed sale. Purchaser shall then have ten (10) business days from the date of the Offer Notice to give Seller written notice that it shall purchase the ROFO Property upon the terms set forth in the Offer Notice by executing and returning the Offer Notice (the “Offer Notice Acceptance Period”). If Purchaser accepts Seller’s offer contained in the Offer Notice, Purchaser and Seller shall use good faith, diligent, and commercially reasonable efforts to enter into a written agreement for the purchase and sale of the Offered ROFO Property (which agreement shall be based upon the terms and conditions set forth in the Offer Notice, including timing for closing(s), and otherwise in form and substance similar to this Contract, to the extent applicable) within thirty (30) days after Purchaser’s execution and delivery of the Offer Notice to the Seller (the “Offer Agreement Period”). If Purchaser rejects Seller’s offer in writing or fails to execute and return the Offer Notice within the Offer Notice Acceptance Period, or fails to execute a written agreement to purchase the applicable Offered ROFO Property from Seller within the Offer Agreement Period, Seller shall be free to offer such Offered ROFO Property on the same terms and purchase price (or on the same terms with a higher price) as offered to Purchaser, to any other person or persons unrelated to the Seller pursuant to an arms-length transaction and to negotiate for the sale of such Offered ROFO Property on such terms and conditions as Seller may, in its discretion, determine, and if Seller shall convey the Offered ROFO Property to an unrelated person on such terms and at such price, the Purchaser’s Right of First Offer with respect to such Offered ROFO Property shall be deemed terminated and of no further force and effect. However, if Seller determines at any time to sell the Offered ROFO Property to a third party for a price that is less than the purchase price set forth in the original Offer Notice to the Purchaser (such original purchase price, the “Offered Price”), then Seller shall be obligated to provide another Offer Notice to the Purchaser with respect to such sale price, and the Purchaser shall have all rights in connection therewith as are set forth in this Section 1.04(d) (1) (B); provided that if such purchase price reduction is reasonably based on either (a) a reduction in unit yield for such parcel from the unit yield established reasonably and in good faith as the basis for the Offered Price, pursuant to the final determination under the applicable governmental authority’s entitlements process (which such reduction was not approved pursuant to the request of the Seller), or (b) a material adverse property condition unknown to Seller at the time of such Offer Notice, then Seller shall have no obligation to provide another Offer Notice to Purchaser related to the purchase price reduction, and Purchaser shall have no rights under this Section 1.04(d)(1)(B) with respect to such transaction. Notwithstanding the foregoing, the parties acknowledge and agree that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇. (together with any trust established by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇. for estate planning purposes, “DPS”) may undertake to own and develop the ROFO Property (or any portion thereof) himself or through an entity: (x) in which DPS has a direct or indirect ownership interest of fifty percent (50%) or more, or (y) which is directly or indirectly managed (in the capacity of general partner or managing member) or controlled by a subsidiary entity in which DPS has a direct or indirect ownership interest, as the case may be, without being required to deliver an Offer Notice to Purchaser or being subject to the Right of First Offer in any other manner. In such event, DPS shall provide reasonable evidence of his interest in any such entity to Purchaser within a reasonable period of time after Purchaser’s request.
(C) Purchaser’s rejection of or failure to execute an Offer Notice or revised Offer Notice with respect to any one or more offers to sell Offered ROFO Property shall not be deemed a rejection or waiver of its Right of First Offer with respect to any other, different Offered ROFO Property. Any Offer Notice or revised Offer Notice provided by Seller shall represent a bona fide offer in good faith.
2. A temporary construction easement agreement to be recorded at Closing in the public records of ▇▇▇▇▇▇ County, Maryland (the “Construction Easement Agreement”) to provide Purchaser and its agents, consultants, contractors and employees access to the Property over and across such portions of the Seller’s Remainder Property as may be reasonably necessary for certain materials deliveries, contractor parking, and project staging and phasing during construction of the Project.
3. An agreement (“Common Infrastructure Agreement”) regarding Seller’s obligations and deadlines to complete, at its sole cost and expense (including payment of any water and sewer front foot benefit charges associated with the Property): (x) mass grading of the Site; (y) utility hook-ups stubbed to the boundary line of the Site; and (z) completion of the portions of St. Margaret’s Boulevard, Banbury Drive, and an unnamed roadway (the “Connecting Road”) adjacent to the western boundary line of the Site, more particularly described or as shown on Exhibit K attached hereto and incorporated herein (collectively items (x), (y) and (z), “Seller’s Infrastructure Work”) (provided that, on or prior to the last day of the Examination Period, Purchaser and Seller shall agree upon and append to this Contract an amended Exhibit K that sets forth: (A) specifications and required completion dates for the Seller’s Infrastructure Work with additional particularity and (B) specifications for all other infrastructure work to be completed by the Purchaser (the “Purchaser’s Infrastructure Work”) with respect to the development of the Property). Notwithstanding the foregoing, Purchaser shall pay Purchaser’s Share of the Connecting Road (defined hereinbelow) pursuant to the terms of the Common Infrastructure Agreement, and shall be obligated pursuant to the Common Infrastructure Agreement to complete the Purchaser’s Infrastructure Work substantially as set forth in Exhibit K. For purposes hereof, “Purchaser’s Share of the Connecting Road” shall mean an amount equal to one-half (1/2) of all actual and reasonable out-of-pocket costs incurred by Seller with respect to development, installation and construction of the Connecting Road, payment of which is evidenced by such documentation as may be reasonably acceptable to the Purchaser. Seller covenants and agrees that a portion of the Seller’s Infrastructure Work shall be completed prior to the Closing Date, as set forth in Exhibit K, and Seller shall complete the remainder of the Seller’s Infrastructure Work in accordance with the terms of the Common Infrastructure Agreement from and after Closing. Any reference in the Common Infrastructure Agreement as drafted during the Examination Period to such portion of the Seller’s Infrastructure Work completed prior to Closing, shall, at Closing, be deleted from the form of the Common Infrastructure Agreement. The Common Infrastructure Agreement shall require that Seller provide reasonable security to Purchaser for the timely completion of any work to be performed following Closing, in the form of either (as determined in the reasonable discretion of Purchaser) an escrow holdback, a letter of credit from a banking institution reasonably approved by Purchaser, or a guaranty from an affiliate of Seller reasonably acceptable to Purchaser.
4. An Agreement regarding Purchaser’s post-Closing obligations (the “Post-Closing Agreement”) that obligates the Purchaser to:
(A) use commercially reasonable and diligent efforts to obtain all grading permits, building permits, zoning permits, and other permits and approvals which are required by any Laws and Agreements applicable to the development and construction of the Project and otherwise necessary for the construction and operation of the Project.
(B) commence the Project no later than one (1) year after receipt of Final Approvals (“Commencement Date”) and complete construction of the Project no later than three (3) years after the Commencement Date (such date, the “Completion Date”) (each of the Commencement Date and the Completion Date being extended commensurate with the length of any commencement or construction delays resulting from a event of force majeure (as hereafter defined) or a government moratorium preventing the Purchaser from commencing or completing the Project). If Purchaser shall fail to commence construction of the Project by the Commencement Date, then Seller shall have the right, but not the obligation, to purchase the Property from Purchaser at a price equal to the Failure to Commence Purchase Price (defined below) which buy-back right may be exercised by Seller delivering written notice thereof no later than sixty (60) days following the Commencement Date (provided that if the Purchaser shall commence construction of the Project within such 60-day period, and construction activity at the Property is continual for at least thirty (30) days thereafter, Seller’s right to exercise its buy-back right hereunder in connection with the Purchaser’s failure to commence construction shall terminate). If Purchaser shall fail to complete the Project (such completion being evidenced by the issuance by the appropriate governmental authority of final certificates of occupancy for the Project) by the Completion Date, then Seller shall have the right, but not the obligation, to purchase the Property from Purchaser for a price equal to the Failure to Complete Purchase Price (defined below) which buy-back right may be exercised by Seller delivering written notice thereof no later than sixty (60) days following the Completion Date (provided that if the Purchaser shall complete construction of the Project within such 60-day period, Seller’s right to exercise its buy-back right hereunder in connection with the Purchaser’s failure to complete construction shall terminate). For purposes of the Post-Closing Agreement, “Failure to Commence Purchase Price” shall mean the buy-back price payable by Seller that takes into account the Purchase Price for the Property plus interest at a rate of 3% per annum on the Purchase Price; and “Failure to Complete Purchase Price” shall mean the buy-back price payable by Seller that takes into account the Purchase Price for the Property, plus 3% per annum on such the Purchase Price, plus the actual cost of improvements completed by Purchaser. For purposes of this Contract, force majeure shall be defined as extreme weather, act of war, terrorism or vandalism, casualty or condemnation, labor strife, shortage of materials or other causes beyond the reasonable control of Purchaser. Seller and Purchaser acknowledge and agree that the Post-Closing Agreement will provide that any mortgage lien imposed on the Property by the Purchaser shall be subordinate in priority to the Seller’s rights pursuant to this subsection (B), and upon the consummation of the Seller’s buy-back right hereunder, the Property shall be conveyed to Seller free and clear of any mortgage lien.
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