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EXHIBIT 10.4
CONTRIBUTION AGREEMENT
BY AND AMONG
▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ REAL ESTATE OPPORTUNITY PARTNERS LIMITED
PARTNERSHIP
▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ REAL ESTATE OPPORTUNITY PARTNERS LIMITED
PARTNERSHIP II
▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ REAL ESTATE OPPORTUNITY PARTNERS LIMITED
PARTNERSHIP III
▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ REAL ESTATE OPPORTUNITY PARTNERS LIMITED
PARTNERSHIP IV
EQUITY OFFICE HOLDINGS, L.L.C.
EQUITY GROUP INVESTMENTS, INC.
AND
EOP OPERATING LIMITED PARTNERSHIP
DATED AS OF APRIL 30, 1997
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (hereinafter referred to as the "Contribution
Agreement") is made and entered into as of April 30, 1997 by and among EOP
Operating Limited Partnership, a Delaware limited partnership (the "Operating
Partnership") and each of ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners
Limited Partnership, an Illinois limited partnership ("Opportunity Partnership
I"); ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners Limited Partnership
II, an Illinois limited partnership ("Opportunity Partnership II");
▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners Limited Partnership III, an
Illinois limited partnership ("Opportunity Partnership III"); ▇▇▇▇/▇▇▇▇▇▇▇
▇▇▇▇▇ Real Estate Opportunity Partners Limited Partnership IV, an Illinois
limited partnership ("Opportunity Partnership IV" and, together with
Opportunity Partnership I, Opportunity Partnership II and Opportunity
Partnership III, the "Opportunity Partnerships"); Equity Office Holdings,
L.L.C., a Delaware limited liability company ("EOH"); and Equity Group
Investments, Inc., an Illinois corporation ("EGI" and, together with EOH,
"Equity Office"). Each of the Opportunity Partnerships, EOH and EGI may be
referred to herein individually as a "Contributor" and, collectively, as the
"Contributors." Capitalized terms used but not defined herein shall have the
meaning ascribed to them in the Glossary attached hereto.
RECITALS
A. Each of the Opportunity Partnerships owns or will, as of the Closing
Date (as defined in Section 2.2 below), own the unencumbered direct or indirect
ownership interests in certain limited partnerships, limited liability
companies and other entities (collectively, the "Titleholders"), as identified
in the attached Exhibits ▇-▇, ▇-▇, ▇-▇ or A-4 (the "Titleholder Interests").
B. Each of the Titleholders will have been, as of the Closing Date,
validly formed pursuant to a limited partnership agreement, limited liability
company agreement or other agreement (each an "Organizational Document"), to
hold or acquire fee simple or beneficial title to, a ground leasehold estate
in, or a mortgage interest in, a discrete office or garage property
(individually, a "Property" and collectively, the "Properties"), as generally
identified in the attached Exhibit B.
C. The Opportunity Partnerships desire to contribute the Titleholder
Interests to the Operating Partnership in consideration for units evidencing an
ownership interest in the Operating Partnership ("Units").
D. Equity Office desires to contribute to the Operating Partnership, also
in consideration for Units, all of its right, title and interest in certain
assets, personal property and management contracts as identified on Exhibit C
constituting all of the assets (except only for the Excluded Assets referenced
in said Exhibit C) and liabilities relating to Equity Office's office and
parking management and leasing businesses (inclusive of the assets and
liabilities of EOH's subsidiary entities, Equity Office Properties, L.L.C. and
Equity Capital Holdings, L.L.C.) for the period from and after the Closing Date
hereunder (collectively, the "Management Business").
E. The purpose and intent of this Contribution Agreement is to set forth
the terms and conditions pursuant to which the foregoing contributions shall
occur.
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TERMS OF AGREEMENT
NOW, THEREFORE, for and in consideration of the foregoing premises, and
the mutual undertakings set forth below, the parties hereto agree as follows:
1. CONTRIBUTION OF TITLEHOLDER INTERESTS AND MANAGEMENT BUSINESS IN
EXCHANGE FOR UNITS
1.1 CONTRIBUTIONS TO THE OPERATING PARTNERSHIP.
(a) At the Closing and subject to the terms and conditions contained
herein, each Opportunity Partnership shall contribute or cause to be
contributed to the Operating Partnership all of its Titleholder Interests and
other property interests described herein (for each Opportunity Partnership,
collectively its "Contributed Opportunity Partnership Assets") by executing,
acknowledging and delivering the following:
1. One or several Assignment and Assumption Agreements
substantially in the form attached hereto as Exhibit D as required
to transfer all of the Titleholder Interests owned by such
Opportunity Partnership (each an "Assignment and Assumption
Agreement");
2. A ▇▇▇▇ of sale conveying to the Operating Partnership all
personal property owned by the Opportunity Partnership; exclusive of
cash required to be distributed to the partners of such Opportunity
Partnership in order to permit the ZML REIT therein to make a
distribution to its shareholders immediately prior to the Closing in
an amount sufficient to satisfy the distribution requirements
applicable to REITs for avoidance of the payment of any federal
income or excise tax (the "Required REIT Distribution") and any
additional sum which such Opportunity Partnership elects to
distribute thereafter to its partners from the proceeds of its prior
sale of non-office assets; but including, without limitation, all
personal property owned by the Opportunity Partnership and used in
connection with the ownership or operation of the Properties,
substantially in the form attached hereto as Exhibit E (each a "▇▇▇▇
of Sale");
3. An Assignment and Assumption of Intangible Rights Agreement
substantially in the form attached hereto as Exhibit F (the
"Assignment and Assumption of Intangible Rights");
4. Stock certificates or other indicia of ownership in the
Titleholders (or interests therein) and promissory notes, if any,
held by the Opportunity Partnership, assigned or endorsed in blank;
and
5. Amended and Restated Agreement of Limited Partnership for the
Operating Partnership (the "OP Agreement") substantially in the form
attached hereto as Exhibit G.
(b) At the Closing and subject to the terms and conditions contained
herein, Equity Office shall contribute or cause to be contributed to the
Operating Partnership the Management Business by executing, acknowledging and
delivering the following:
1. An Assignment and Assumption of Management Business Agreement
substantially in the form attached hereto as Exhibit H (the
"Assignment and Assumption of Management Business Agreement");
2. A ▇▇▇▇ of sale assigning to the Operating Partnership all
personal property (other than the "Excluded Assets" as described in
Exhibit C hereto) now or hereafter owned by Equity Office in
connection with the Management Business substantially in the form
attached hereto as Exhibit I (the "Management Business ▇▇▇▇ of
Sale");
3. As required in the discretion of the Operating Partnership's
counsel, assignments and assumptions of leasehold estates, together
with any necessary consents of landlords; and
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4. The OP Agreement.
(c) At the Closing and subject to the terms and conditions contained
herein, the Operating Partnership will accept the contributions made by or on
behalf of the Opportunity Partnerships and Equity Office by executing,
acknowledging and delivering each of the foregoing documents requiring its
signature and shall prepare Exhibit A to the OP Agreement in order to reflect
the issuance of Units in accordance with the provisions of this Agreement.
(d) The parties hereto shall take such additional actions and execute such
additional documentation as may be required by the Organizational Documents,
the OP Agreement or, in the reasonable judgment of counsel to the Operating
Partnership, in order to effect fully the transactions contemplated hereby,
including, without limitation, amendments to the Organizational Documents as
required to admit the Operating Partnership or its designee as the owner of the
Titleholder Interests in lieu of an Opportunity Partnership.
1.2 CALCULATION OF UNITS TO BE ISSUED.
Subject to Section 1.3 below, the Operating Partnership shall at Closing,
in consideration for the Contributed Opportunity Partnership Assets or the
Management Business, as the case may be, transfer to each Contributor a number
of Units equal to the product of:
(x) the quotient of
(i) the Adjusted Consideration (as defined below)
for each such Contributor
divided by
(ii) the sum of the Adjusted Consideration for all
Contributors (without regard to the proceeds from the IPO)
multiplied by
(y) the excess of
(i) the quotient of
(A) the number of shares of beneficial
interest (without regard to any overallotment option) of
Equity Office Properties Trust, a Maryland real estate
investment trust (the "Company" and the "Common Shares")
sold to the public in the initial public offering of such
shares, when and if it occurs (the "IPO")
divided by
(B) the fractional ownership interest
(expressed in decimal form) in the Operating Partnership
that the Common Shares sold in the IPO represent upon
their issuance (without regard to any overallotment
option)
over
(ii) the number of Common Shares sold in the IPO
(without regard to any overallotment option).
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1.3 ADJUSTED CONSIDERATION.
(a) The "Initial Consideration" for the real and tangible personal
property interests included in each Opportunity Partnership's Contributed
Opportunity Partnership Assets has been determined and fixed, on a collective
basis, as of December 31, 1996 (the "Initial Valuation Date") to be the dollar
amount so designated on Exhibit ▇-▇, ▇-▇, ▇-▇ or A-4. In order to determine
the final valuation amount (the "Adjusted Consideration") for each Opportunity
Partnership's contribution to the Operating Partnership, its Initial
Consideration amount shall be increased or decreased as of the last day of the
calendar month first preceding the month in which the preliminary prospectus
used in connection with the IPO is dated (the "Final Valuation Date") as
follows:
first: by adding the amount of its cash then on hand (exclusive of cash
held for the account of third parties) after deduction of (x) the
sum which the Contributor estimates to be required to be distributed
to its partners in order to make any Required REIT Distribution and
(y) any additional sum which the Contributor elects to distribute
thereafter to its partners from the proceeds of its prior sale of
non-office assets;
second: by adding the value (which shall be determined in good faith by
the Operating Partnership and reasonably acceptable to such
Contributor) of all intangible non-real estate assets (exclusive of
cash and accounts receivable) to be contributed by such Contributor
hereunder;
third: by adding or deducting, as appropriate, a credit or charge
(determined in good faith by the Operating Partnership and
reasonably acceptable to the Contributor) reflective of the amount
by which the terms of the Contributor's mortgage indebtedness are
above or below prevailing market terms;
fourth: by deducting the principal amount of all then-outstanding
mortgage indebtedness of such Contributor (exclusive of such
indebtedness having a remaining term of less than one year);
fifth: by adding or deducting, as appropriate, the Net Proration Amount;
sixth: by deducting the amount of any unexpended capital transaction
proceeds paid to the Opportunity Partnership after the Initial
Valuation Date and prior to the Final Valuation Date as a result of
an insurance recovery or condemnation or assignment in lieu of
condemnation;
seventh: by adding or deducting, as appropriate, the amount by which the
Consolidation Expenses paid or reserved by such Contributor exceeded
or was less than such Contributor's proportionate share of all such
Consolidation Expenses which were paid or reserved prior to the
Final Valuation Date by all of the Contributors (calculated in the
same proportion as its Initial Consideration amount bears to the
aggregate of all Initial Consideration amounts) (each Contributor's
"Proportionate Expense Allocation Adjustment:);
eighth: by deducting, in the case of Opportunity Partnership I, the
Initial Consideration amounts for any Properties sold subsequent to
the Initial Valuation Date and prior to the Final Valuation Date
(being the aggregate sum of $66,625,000 for Barton Oaks and 8383
Wilshire); and
ninth: by adding the gross purchase price for any Properties acquired by
such Contributor subsequent to the Initial Valuation Date and prior
to the Final Valuation Date.
The parties agree that, inasmuch as Properties acquired or optioned subsequent
to the Final Valuation Date will be purchased, in part, from cash balances
reflected in clause first above and are not included in the Initial
Consideration amounts, no adjustment is required to be made in the calculation
of the Adjusted Consideration for Properties that may be acquired or optioned
subsequent to the Final Valuation Date, notwithstanding that those Properties
shall be included within the definition of the Opportunity Partnership's
Contributed Opportunity Partnership Assets and in the determination of such
Opportunity Partnership's Titleholder Interests.
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(b) The "Adjusted Consideration" for the Management Business is One
Hundred Sixty Million Dollars ($160,000,000) and shall not be subject to
adjustment, except only for any required Proportionate Expense Allocation
Adjustment which Equity Office does not pay in cash at or prior to Closing.
1.4 TREATMENT AS CONTRIBUTION.
The transfer, assignment and exchange of interests effectuated with
respect to the Operating Partnership pursuant to this Contribution Agreement
shall constitute a "Capital Contribution" pursuant to Article IV of the OP
Agreement and is intended to be governed by Section 721(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. CLOSING
2.1 CONDITIONS PRECEDENT.
The closing of the Company's IPO on or before March 31, 1998, is a
condition precedent to the obligations of all parties to this Contribution
Agreement to effect the transactions contemplated hereunder.
In addition to the foregoing, the Operating Partnership shall not be
obligated to close hereunder absent satisfaction of the following additional
conditions precedent if such failure is, in the judgment of the Operating
Partnership, either intentional or likely to have a Material Adverse Effect on
the Operating Partnership or its future operations:
(a) The representations and warranties of each of the Contributors
contained herein shall have been true and correct on the date such
representations and warranties were made, and shall be true and correct on the
Closing Date as if made at and as of such date;
(b) Each of the obligations hereunder of each of the Contributors shall
have been duly performed on or before the Closing Date;
(c) Concurrently with the Closing, each of the Contributors shall have
executed and delivered to the Operating Partnership the documents required to
be delivered hereunder;
(d) Except as otherwise permitted herein, each of the Contributors shall
have obtained all consents or approvals of any Governmental Entity or third
party to the consummation of the transactions contemplated hereunder or in the
Proxy Solicitation;
(e) No order, statute, rule, regulation, executive order, injunction,
stay, decree or restraining order shall have been enacted, entered, promulgated
or enforced by any court of competent jurisdiction or Governmental Entity that
prohibits the consummation of the transactions contemplated herein, and no
litigation or governmental proceeding seeking any such order shall be pending
or threatened in writing; and
(f) There shall not have occurred between the date hereof and the Closing
Date any adverse change in any Titleholder's assets, business, financial
condition, results of operations or prospects or the Management Business.
2.2 TIME AND PLACE.
The date, time and place of the transactions contemplated hereunder be the
day the Operating Partnership receives the proceeds from the IPO at 10:00 a.m.
in the office of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Closing" or "Closing Date"); provided that
if the Closing has not occurred on or prior to March 31, 1998, then any
Contributor or the Operating Partnership may terminate this Contribution
Agreement upon written notice delivered to all other parties hereto and upon
such termination, no party shall have any further rights, obligations or
liabilities hereunder, except for any rights, obligations or liabilities
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expressly surviving the termination of this Contribution Agreement. The
transfers described herein and all closing deliveries, and the consummation of
the IPO, shall be deemed concurrent for all purposes.
2.3 CLOSING DELIVERIES.
At the Closing, the parties shall make, execute, acknowledge and deliver,
or cause to be made, executed, acknowledged and delivered, as appropriate, the
legal documents and other items (collectively the "Closing Documents")
necessary in the judgment of counsel to the Company to carry out the intention
of this Contribution Agreement and the S-11 Registration Statement, which
Closing Documents and other items shall include, without limitation, the
documents described in Section 1.1 above, together with the following:
(i) Each of the Opportunity Partnerships shall deliver, to the Operating
Partnership, the books and records, title insurance policies, leases, lease
files, contracts, stock certificates, original promissory notes, and other
indicia of ownership for the Titleholders and Titleholder Interests in which it
has an ownership interest;
(ii) Equity Office shall deliver to the Operating Partnership all books
and records, stock certificates or other indicia of ownership for assets
included within the definition of the Management Business;
(iii) Each of the Contributors shall deliver to the Operating Partnership
its affidavit stating the Contributor's United States Taxpayer Identification
Number and that the Contributor is not a foreign person pursuant to section
1445(b)(2) of the Code and a comparable affidavit satisfying any other
withholding requirements;
(iv) There shall have been adopted an amendment to each Opportunity
Partnership's Agreement of Limited Partnership substantially in the form
attached hereto as Exhibit ▇-▇, ▇-▇, ▇-▇ or J-4;
(v) Each ZML REIT shall have executed a merger agreement so as to merge
into the Company substantially in the form attached hereto as Exhibit K (the
"Merger Agreement");
(vi) The title policies and endorsements described in Exhibit L hereto,
subject to such exceptions, if any, as may be acceptable to the Company
(collectively the "Title Policies") shall have been issued to the Operating
Partnership, or other proper party as specified in Exhibit L, effective as of
the Closing Date; and
(vii) Endorsement of all other insurance policies (exclusive of insurance
maintained by tenants) naming an Opportunity Partnership or Equity Office as an
insured or other beneficiary shall have been issued in order to substitute the
Operating Partnership in lieu of the Opportunity Partnership or Equity Office.
(viii) Equity Office shall deliver to the Operating Partnership an
estoppel certificate from each ownership entity under each of the material
management contracts comprising the Management Business (collectively the
"Management Contracts") confirming the absence of any material defaults or
claims for indemnification thereunder and consenting to the assignment of the
Management Contracts to the Operating Partnership.
(ix) Equity Office shall contribute to Equity Office Properties
Management Corp. the sum of One Hundred Fifty Thousand Dollars ($150,000), in
cash, as consideration for one hundred percent (100%) of the voting common
stock [representing a five percent (5%) profits interest] in said Equity Office
Properties Management Corp.
2.4 CLOSING COSTS.
The Operating Partnership shall pay any documentary transfer taxes, escrow
charges, title charges and recording taxes or fees incurred in connection with
the transactions contemplated hereby.
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3. REPRESENTATIONS AND WARRANTIES.
3.1 REPRESENTATIONS AND WARRANTIES OF THE OPERATING PARTNERSHIP.
The Operating Partnership hereby represents and warrants to each of the
Contributors that:
(a) Organization; Authority. The Operating Partnership (i) is duly
formed, validly existing and in good standing under the laws of the
jurisdiction of its formation, and (ii) has all requisite power and authority
to enter into this Contribution Agreement and all agreements contemplated
hereby and to issue the Units. The persons and entities executing this
Contribution Agreement and all agreements contemplated hereby on behalf of the
Operating Partnership have the power and authority to enter into this
Contribution Agreement and such other contemplated agreements.
(b) Due Authorization. The execution, delivery and performance by the
Operating Partnership of its obligations under this Contribution Agreement and
all agreements contemplated hereby will not contravene any provision of
applicable law, the OP Agreement, charter, declaration of trust or other
constituent document of the Operating Partnership or the Company, or any
agreement or other instrument binding upon the Operating Partnership or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Operating Partnership, and no consent, approval,
authorization or order of or qualification with any governmental body or agency
is required for the performance by the Operating Partnership of its obligations
under this Contribution Agreement and all other agreements contemplated hereby.
(c) Solvency. The Operating Partnership has been solvent at all times
prior to and immediately following the transfer of the Units to the
Contributors.
(d) No Violation. None of the execution, delivery or performance of this
Contribution Agreement and the transactions contemplated hereby does or will,
with or without the giving of notice, lapse of time, or both, (i) violate,
conflict with, result in a breach of, or constitute a default under or give to
others any right of termination or cancellation of (A) the OP Agreement, (B)
any material agreement, document or instrument to which the Operating
Partnership is a party or by which the Operating Partnership is bound or (C)
any term or provision of any judgment, order, writ, injunction, or decree of
any Governmental Entity binding on the Operating Partnership or by which the
Operating Partnership or any of its assets or properties are bound or subject
or (ii) result in the creation of any Lien, other than a Permitted Lien, upon
the Units.
(e) Compliance with Laws. To the actual knowledge, without investigation,
of the officers of the Company having a rank of senior vice president or
higher, the Operating Partnership has complied and on the date hereof does
substantially comply in all material respects with all applicable laws,
ordinances, rules and regulations, whether federal, state or local, foreign,
statutory or common, including, without limitation all securities laws. The
Operating Partnership has not been informed of any material violation of any
such laws, rules or regulations, or that any investigation has been commenced
or is contemplated respecting any such possible violation.
(f) Consents and Approvals. No consent, waiver, approval or authorization
of any third party is required to be obtained by the Operating Partnership in
connection with the execution, delivery and performance of this Contribution
Agreement and the transactions contemplated hereby, except any of the foregoing
that shall have been satisfied prior to the Closing Date.
3.2 REPRESENTATIONS AND WARRANTIES OF EACH OF THE OPPORTUNITY
PARTNERSHIPS.
Each Opportunity Partnership makes the following representations and
warranties to the Operating Partnership only with respect to: (i) itself, (ii)
the Properties identified on such Opportunity Partnership's respective Exhibit
▇-▇, ▇-▇, ▇-▇ or A-4 hereto, and (iii) the Titleholder Interests to be
transferred by such Opportunity Partnership.
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(a) Organization; Authority. The Opportunity Partnership (i) is duly
formed, is validly existing and in good standing under the laws of the
jurisdiction of its formation, and (ii) has all requisite power and authority
to own, lease or operate its property and to carry on its business as presently
conducted and, to the extent required under applicable law, is qualified to do
business and is in good standing in each jurisdiction in which the nature of
its business or the character of its property make such qualification
necessary.
(b) Due Authorization. The execution, delivery and performance of the
Contribution Agreement by the Opportunity Partnership has been duly and validly
authorized by all necessary action of the Opportunity Partnership. This
Contribution Agreement and each agreement, document and instrument executed and
delivered by or on behalf of the Opportunity Partnership pursuant to this
Contribution Agreement constitutes, or when executed and delivered will
constitute, the legal, valid and binding obligation of such Opportunity
Partnership, enforceable against such Opportunity Partnership in accordance
with its terms, as such enforceability may be limited by bankruptcy or the
application of equitable principles.
(c) Consents and Approvals. No consent, waiver, approval or authorization
of any third party is required to be obtained by the Opportunity Partnership in
connection with the execution, delivery and performance of this Contribution
Agreement and the transactions contemplated hereby, except any of the foregoing
that shall have been obtained prior to the Closing Date or in respect to
mortgage loans which the Operating Partnership determines, in its sole
discretion, can be re-financed on terms acceptable to it at or within one
hundred eighty (180) days of Closing, unless, in its judgment, failure to
obtain any such consent, waiver, approval or authorization would not have a
Material Adverse Effect on the future operations of the Operating Partnership.
(d) Ownership of the Titleholder Interests. The Opportunity Partnership
is the sole owner of the Titleholder Interests shown as owned by it on the
attached Exhibits ▇-▇, ▇-▇, ▇-▇ or A-4 subject to no adverse claims or
interests other than Permitted Liens and liens, if any, given to secure
mortgage indebtedness otherwise encumbering the Properties. Effective as of
the consummation of the transactions described herein, the Operating
Partnership's title to the Titleholder Interests will be free and clear of any
liens, encumbrances, debts, charges, liabilities or obligations except for
Permitted Liens and liens, if any, given to secure mortgage indebtedness
encumbering the Properties.
(e) Titleholder Interests. The Titleholder Interests constitute all of
the interests owned by the Opportunity Partnership in the Titleholders as set
forth on the attached Exhibits ▇-▇, ▇-▇, ▇-▇ and A-4. Each such Titleholder
Interest is validly issued, fully paid and non-assessable, and was not issued
in violation of any preemptive rights. Each such Titleholder Interest has been
issued in compliance with applicable law and the relevant Organizational
Documents (as then in effect). Except as set forth on Exhibit M attached
hereto, there are no enforceable rights, subscriptions, warrants, options,
conversion rights, preemptive rights or agreements of any kind outstanding to
purchase or to otherwise acquire any of the interests which comprise the
Titleholder Interests or any securities or obligations of any kind convertible
into any of the interests which comprise such Titleholder Interests or other
equity interests or profit participation of any kind in the Titleholders.
(f) No Violation. None of the execution, delivery or performance of this
Contribution Agreement and the transactions contemplated hereby does or will,
with or without the giving of notice, lapse of time, or both, (i) violate,
conflict with, result in a material breach of, or constitute a material default
under or give to others any right of termination or cancellation of (A) the
organizational documents, including the Organizational Documents, charters and
bylaws, if any, of the Opportunity Partnership or the applicable Titleholders,
(B) except as otherwise provided in Section 3.2(c) above, any material
agreement, document or instrument to which the Opportunity Partnership or any
of its Titleholders is a party or by which the Opportunity Partnership or the
applicable Titleholders or its Property is bound or (C) any term or provision
of any judgment, order, writ, injunction, or decree of any Governmental Entity
binding on the Opportunity Partnership or any applicable Titleholder or by
which the Opportunity Partnership or the applicable Titleholder or any of its
assets or properties are bound or subject or (ii) result in the creation of any
Lien, other than a Permitted Lien, upon the Property or any Titleholder
Interest of the Operating Partnership. Nothing contained in this Section 3.2
or elsewhere in this Agreement shall be deemed to constitute a representation
or warranty as to the amount of transfer taxes payable in connection with the
subject transaction.
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(g) Non-foreign Status. The Opportunity Partnership is not a foreign
person, foreign corporation, foreign partnership, foreign trust or foreign
estate (as defined in the Code), and is, therefore, not subject to the
provisions of the Code relating to the withholding of sales proceeds to foreign
persons.
(h) Investment Purposes. The Opportunity Partnership acknowledges its
understanding that the offering and sale of the Units to be acquired pursuant
to this Contribution Agreement are intended to be exempt from registration
under the Securities Act of 1933, as amended, and the rules and regulations in
effect thereunder (the "Act"). In furtherance thereof, the Opportunity
Partnership represents and warrants to the Company that such Opportunity
Partnership is an "accredited investor" (as such term is defined in Rule 501
(a) of Regulation D under the Act) and has no intention of engaging in a public
distribution of such Units.
(i) Compliance with Laws. The applicable Titleholders on the date hereof
comply in all material respects with all applicable laws, ordinances, rules and
regulations, whether federal, state or local, statutory or common where failure
to comply would have a material adverse effect on the Opportunity Partnership
or its Properties taken as a whole, and neither any Titleholder nor, to
Knowledge, any third party has been informed in writing of any continuing
violation in any material respect of any such laws, rules or regulations, or
that any investigation has been commenced and is continuing or is contemplated
respecting any such possible violation.
(j) Eminent Domain. Except as described in the attached Exhibit N, there
is no existing or, to Knowledge, proposed or threatened condemnation, eminent
domain or similar proceeding, or private purchase in lieu of such a proceeding,
which would affect any of the Properties owned by such Opportunity Partnership
in any material respect.
(k) Licenses and Permits. To Knowledge, all material notices, licenses,
permits, certificates and authority of a material nature required for the
continued use, occupancy, management, leasing and operation of the Properties
have been obtained or can be obtained without material cost, are in full force
and effect, are in good standing and (to the extent required in connection with
the transactions contemplated hereby) are assignable to the Operating
Partnership. Neither the applicable Titleholders, nor, to Knowledge, any third
party has taken any action that would (or failed to take any action the
omission of which would) result in the revocation of such notices, licenses,
permits, certificates and authority, that would have a material adverse effect
on the operations of the Properties, nor has any of them received any written
notice of violation from any Governmental Entity or written notice of the
intention of any entity to revoke any of them, that in each case has not been
cured or otherwise resolved to the satisfaction of such Governmental Entity.
(l) Taxes. No tax lien or other charge exists or will exist upon
consummation of the transactions contemplated hereby with respect to any
Property except such tax liens for which the tax is not yet due and payable or
which are the subject of a valid tax protest or tax liens or other charges
which individually or in the aggregate are immaterial in amount.
(m) Real Property.
(i) None of the Opportunity Partnership, the applicable
Titleholders, nor, to Knowledge, any other party to any agreement
affecting any Property, has given or received any notice of default with
respect to any material term or condition of any agreement (other than a
Lease for space) affecting such Property, including, without limitation
any ground lease, which would have a material adverse effect on the
Property, and, no event has occurred or, to Knowledge, is threatened in
writing, which would have a material adverse effect on the Property and
which through the passage of time or the giving of notice, or both, would
constitute a material default thereunder, or except as otherwise provided
in Section 3.2(c) above, would cause the acceleration of any material
obligation of any party thereto or the creation of a Lien upon any asset
of the Opportunity Partnership or the applicable Titleholders, except for
Permitted Liens. For purposes of this Section 3.2, the term "material
agreement" shall be defined with reference to the Property to which such
agreement relates. To Knowledge, such material agreements are valid and
binding and in full force and effect, have not been materially amended,
modified or supplemented since such time as such
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agreements were made available to the Operating Partnership for its
review, except for such amendments, modifications and supplements
heretofore made available to representatives of the Operating
Partnership, and there are no other material agreements (exclusive of
space Leases) with any third parties affecting the Properties which will
survive the Closing and be binding on the Operating Partnership.
(ii) As presently conducted, the operation of the buildings,
fixtures and other improvements located on the Properties is not in
violation in any material respect of any applicable building code, zoning
ordinance or other law or regulation, except for any such violations
which individually or in the aggregate would not have a material adverse
effect on the Opportunity Partnership or its Properties taken as a whole.
(iii) Except as set forth in the reports listed on Exhibit O to
Knowledge, (i) there is presently no noncompliance, liability or other
Claims in connection with Environmental Laws relating to the Properties;
(ii) no notices of any uncorrected violation or alleged violation of any
Environmental Laws relating to the Properties or their use, have been
received by any present owner, or, to Knowledge, by any prior owner,
operator or occupant of the Property; and (iii) there are no writs,
injunctions, decrees, orders or judgments outstanding, or any Claims,
relating to the Environmental Laws and the ownership, use, maintenance or
operation of the Properties. Any instances of noncompliance, notices of
violations, and writs, injunctions, decrees, orders or judgments which
may exist or may be outstanding are of the type that individually or in
the aggregate would not have a material adverse effect on the Opportunity
Partnership or its Properties taken as a whole.
(iv) All material reports of environmental surveys, audits,
investigations and assessments relating to the Properties, including, but
not limited to, the Environmental Reports in the possession or control of
the Opportunity Partnership or its affiliates have been made available to
representatives of the Operating Partnership.
(v) Except as has been disclosed in writing to the Operating
Partnership prior to the date hereof, to Knowledge, all material permits
and licenses required under any Environmental Laws in respect of the
operation of the Properties have been obtained or can be obtained without
material cost and the Properties are in compliance, in all material
respects, with the terms and conditions of such permits and licenses.
(p) Trademarks and Tradenames; Proprietary Rights.
(i) There are no actions or other judicial or administrative
proceedings involving the Opportunity Partnership, the Titleholders, or
the Properties pending, or threatened in writing, that concern any
copyrights, copyright application, trademarks, trademark registrations,
trade names, service marks, service ▇▇▇▇ registrations, trade names and
trade name registrations or any trade secrets being transferred to the
Operating Partnership hereunder (the "Proprietary Rights").
(ii) To Knowledge, the Opportunity Partnership has the right and
authority to use each Proprietary Right necessary in connection with the
operation of the Properties in the manner in which it is currently used,
and to convey such right and authority to the Operating Partnership at
the Closing. To Knowledge, current use of the Proprietary Rights does
not, and did not, conflict with, infringe upon or violate any copyright,
trade secret, trademark or registration of any other person.
(iii) There are no outstanding or, to Knowledge, threatened
disputes or disagreements with respect to any Proprietary Right or any
license, contract, agreement or other commitment, written or oral,
relating to the same.
(q) Litigation and Claims.
(i) Except as identified in Exhibit P hereto (or as may be reserved
for in an amount reasonably acceptable to the Operating Partnership in
the calculation of the Net Proration Amount), there are no
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Claims which could reasonably be anticipated to result in damages in
excess of $50,000 that directly or indirectly affect the Opportunity
Partnership, the applicable Titleholders or the Properties.
(ii) Neither the Opportunity Partnership nor any of its applicable
Titleholders nor any of its Properties are operating under, subject to or
in default with respect to any decision, order, writ, injunction or
decree of any court or federal, state or municipal entity or other
Governmental Entity.
(r) No Brokers. Neither the Opportunity Partnership nor any of its
general partners or the respective officers, directors or employees thereof has
employed or made any agreement with any broker, finder or similar agent or any
person or firm which will result in the obligation of the Operating Partnership
or any of its affiliates to pay any finder's fee, brokerage fees or commissions
or similar payment in connection with the transactions contemplated by this
Contribution Agreement.
(s) Solvency. The Opportunity Partnership has been and will be solvent at
all times prior to and immediately following the transfer of the Titleholder
Interests to the Operating Partnership.
(t) No Misrepresentations. To Knowledge, no representation, warranty or
statement made, or information provided, by the Opportunity Partnership in this
Contribution Agreement or in any other document or instrument furnished or to
be furnished by or on behalf of the Opportunity Partnerships pursuant hereto
(i) contains or will contain any untrue statement of a material fact or (ii)
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading when read together with all other
such documents and instruments.
(u) Partners/Members. The Opportunity Partnership has made available to
the Operating Partnership a true and accurate list of all of the partners,
other equity holders or members or record, as applicable, of (i) the
Opportunity Partnership and (ii) the Titleholders that own, directly or
indirectly, an interest in any of the Properties, together with their
percentage interests in the Opportunity Partnership or each Titleholder.
(v) Insurance. Each Titleholder currently has in place the public
liability, casualty and other insurance coverage with respect to each Property
as the Opportunity Partnership reasonably deems necessary. Each of the
insurance policies with respect to the Properties is in full force and effect
and all premiums due and payable thereunder have been fully paid when due. No
Opportunity Partnership or Titleholder has received from any insurance company
any notices of cancellation or intent to cancel any insurance.
(w) Leases. A true and correct copy of all leases (and all amendments
thereto or modifications thereof) to which a Titleholder is a party or by which
a Titleholder or Property is bound or subject (collectively, the "Leases") has
been delivered to or made available to the Operating Partnership or its
representatives. To Knowledge except as otherwise disclosed to the Operating
Partnership or its representatives, each of the Leases is and will be valid and
binding and is in full force and effect in all material respects. To
Knowledge, except as otherwise disclosed to the Operating Partnership or its
representatives, no party to any Lease has breached or defaulted under the
terms of any Lease, except for such breaches or defaults that would not have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of any Property.
(x) Schedule of Liabilities and Assets. The schedule of liabilities and
assets to be delivered in connection with the calculation of the Net Proration
Amount shall be true, correct and complete in all material respects; provided
that, for these purposes, a liability which has not been asserted in writing or
is otherwise based on a written agreement shall not be deemed to exist unless
it is for goods and services provided or agreed to be provided and shall not
include liabilities for which the Operating Partnership agrees that there are
valid defenses to payment which are reasonably likely to prevail.
(y) Financial Statements; Undisclosed Liabilities. The financial
statements which the Opportunity Partnership provided to the Operating
Partnership have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly presented, in
accordance with the applicable requirements of GAAP, the
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consolidated financial position of such Contributor as of the dates thereof and
the consolidated results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in such financial statements, neither any
Contributor nor any subsidiary has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Contributor or in the notes
thereto and which, individually or in the aggregate, would have a Material
Adverse Effect.
3.3 REPRESENTATIONS AND WARRANTIES OF EQUITY OFFICE.
Each of EOH and EGI makes the following representations and warranties to
the Operating Partnership solely with respect to itself and the Management
Business contributed by it hereunder:
(a) Organization; Authority. Each of EOH and EGI is duly formed, validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its formation, and has all requisite power and authority to
own, lease or operate its property and to carry on its business as presently
conducted and, to the extent required under applicable law, is qualified to do
business and is in good standing in each jurisdiction in which the nature of
its business or the character of its property make such qualification
necessary.
(b) Due Authorization. The execution, delivery and performance of this
Contribution Agreement by each of EOH and EGI has been duly and validly
authorized by all necessary action of each of them. The Contribution Agreement
has been duly executed and delivered by each of EOH and EGI and constitutes a
legal, valid and binding obligation of each of them enforceable against each of
them in accordance with its terms, as such enforceability may be limited by
bankruptcy or the application of equitable principles.
(c) Consents and Approvals. No consent, waiver, approval or authorization
of any third party is required to be obtained by EOH or EGI in connection with
the execution, delivery and performance by any of them of the Contribution
Agreement and the transactions contemplated hereby, except for any of the
foregoing that shall have been obtained prior to the Closing Date.
(d) Ownership of the Management Business. Each of EOH and EGI is the sole
owner of the Management Business to be contributed by it and has not pledged,
assigned, hypothecated or otherwise encumbered such Management Business. EOH is
the successor owner to all portions of the Management Business previously owned
by its subsidiary entities, Equity Captial Holdings, L.L.C. and Equity Office
Properties, L.L.C.
(e) Management Contracts. A true and correct copy of all of the contracts
or other written understandings, to which each of EOH and EGI is a party or by
which EOH and EGI is bound that relate to its Management Business except for
contracts or understandings that are not material to the business and
operations of the Management Business (collectively, the "Management
Contracts") has been delivered to or made available to the Operating
Partnership. Each of the Management Contracts is valid and binding and in full
force and effect in all material respects. No party to the Management
Contracts has breached or defaulted under the terms of any Management Contract,
except for such breaches or defaults that would not have a material adverse
effect on the condition, financial or otherwise, or on the earnings, assets,
business affairs or business prospects of the Management Business.
(f) Permits. To the Knowledge of EOH and EGI, each has such franchises,
certificates, licenses, permits and other authorizations from governmental
political subdivisions or regulatory authorities (collectively "Permits") as
are necessary for the ownership, use, operation and licensing of the Management
Business, except for any Permits for which the failure to possess would not
have a material adverse effect on the condition, financial or otherwise, or on
the earnings, assets, business affairs or business prospects of the Management
Business, and neither EOH nor EGI is in violation of any such material Permit
in any material respect.
(g) Non-Foreign Status. Neither EOH nor EGI is a foreign person, foreign
corporation, foreign partnership, foreign trust or foreign estate (as defined
in the Code), and none of them is, therefore, subject to the provisions of the
Code relating to the withholding of sales proceeds to foreign persons.
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(h) Investment Purposes. Each of EOH and EGI acknowledges its
understanding that the offering and sale of the Units to be acquired pursuant
to the Contribution Agreement are intended to be exempt from registration under
the Act. In furtherance thereof, each of EOH and EGI represents and warrants
only with respect to itself to the Company that it is an "accredited investor"
(as such term is defined in Rule 501(a) of Regulation D under the Act) and has
no intention of engaging in a public distribution of such Units.
(i) No Brokers. Neither EOH nor EGI nor any of its respective officers,
directors or employees has incurred or will incur any liability for any
brokerage fees, commissions or finders' fees that have been paid or may become
payable by the Operating Partnership or any of its affiliates to any broker or
finder engaged by or on behalf of any of them or any of their officers,
directors or employees in connection with the transaction contemplated by this
Contribution Agreement.
(j) Compliance with Laws. Neither EOH nor EGI has received any written
notice of any violation and there are no such violations, of any employment,
environmental, or other regulatory law, order, regulation, or requirement
relating to the Management Business which, individually or in the aggregate,
would have a material adverse effect on the condition, financial or otherwise,
or on the earnings, assets, business affairs or business prospects of the
Management Business.
(k) Insurance. Each of EOH and EGI currently has in place public
liability, casualty and other insurance coverage with respect to the Management
Business as is usual and customary for the conduct of similar businesses. To
the Knowledge of EOH and EGI, each of the insurance policies with respect to
the Management Business is in full force and effect. All premiums due and
payable in respect to such insurance policies have been fully paid when due.
Neither EOH nor EGI has received from any insurance company any notices of
cancellation or intent to cancel any insurance.
(l) Taxes. No tax lien or other charge exists or will exist upon
consummation of the transactions contemplated hereby with respect to the
Management Business except such tax liens for which the tax is not yet due and
payable or tax liens or other charges which individually or in the aggregate
would not have a material adverse effect on the Operating Partnership.
(m) No Violation. None of the execution, delivery or performance of this
Contribution Agreement and the transactions contemplated hereby does or will,
with or without the giving of notice, lapse of time, or both, (i) violate,
conflict with, result in a breach of, or constitute a default under or give to
others any right of termination or cancellation of (A) the organizational
documents of EOH or EGI, (B) any material agreement, document or instrument to
which EOH or EGI or its Management Business is bound or (C) any term or
provision of any judgment, order, writ, injunction, or decree of any
Governmental Entity binding on EOH or EGI or any of its assets or properties or
(ii) result in the creation of any Lien, other than Permitted Liens, upon the
Management Business.
(n) Solvency. Each of EOH and EGI has been and will be solvent at all
times prior to and immediately following the transfer of the Management
Business to the Operating Partnership.
(o) No Misrepresentations. To Knowledge, no representation, warranty or
statement made, or information provided, by EOH, EGI or any Opportunity
Partnership in this Contribution Agreement or in any other document or
instrument furnished or to be furnished by or on behalf of EOH or EGI or any
Opportunity Partnership pursuant hereto (i) contains or will contain any untrue
statement of a material fact or (ii) intentionally omits or will intentionally
omit to state a material fact necessary to make the statements contained herein
or therein not misleading when read together with all other such documents and
instruments.
(p) Schedule of Liabilities and Assets. The schedule of liabilities and
assets which Equity Office hereby agrees to deliver at or prior to Closing,
calculated as of the Final Valuation Date in respect to the Management
Business, shall be true, correct and complete in all material respects;
provided that, for these purposes, a liability which has not been asserted in
writing or is otherwise based on a written agreement shall not be deemed to
exist
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unless it is for goods and services provided or agreed to be provided and shall
not include liabilities for which the Operating Partnership agrees that there
are valid defenses to payment which are reasonably likely to prevail.
3.4 LEGENDING.
Each certificate representing the Units (and any Common Shares that might
be exchanged therefor) shall bear the a legend substantially in the form set
forth below:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE,
TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
In addition, the Common Shares for which the Units might be exchanged
shall also bear a legend which generally provides the following:
THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
COMPANY'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUBJECT TO CERTAIN
FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE COMPANY'S
DECLARATION OF TRUST, (1) NO PERSON MAY BENEFICIALLY OWN OR CONSTRUCTIVELY OWN
THE COMPANY'S COMMON SHARES IN EXCESS OF 9.9% (BY VALUE OR BY NUMBER OF SHARES,
WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING COMMON SHARES OF THE COMPANY;
(2) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN COMMON SHARES THAT WOULD
RESULT IN THE COMPANY BEING "CLOSELY HELD" UNDER SECTION 856(H) OF THE CODE OR
OTHERWISE CAUSE THE COMPANY TO FAIL TO QUALIFY AS A REIT; AND (3) NO PERSON MAY
TRANSFER COMMON SHARES IF SUCH TRANSFER WOULD RESULT IN THE SHARES OF
BENEFICIAL INTEREST OF THE COMPANY BEING OWNED BY FEWER THAN 100 PERSONS. ANY
PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR
CONSTRUCTIVELY OWN COMMON SHARES WHICH CAUSES OR WILL CAUSE A PERSON TO
BENEFICIALLY OR CONSTRUCTIVELY OWN COMMON SHARES IN EXCESS OF THE ABOVE
LIMITATIONS MUST IMMEDIATELY NOTIFY THE COMPANY. IF ANY OF THE RESTRICTIONS ON
TRANSFER OR OWNERSHIP ARE VIOLATED, THE COMMON SHARES REPRESENTED HEREBY WILL
BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR
MORE CHARITABLE BENEFICIARIES. IN ADDITION, THE COMPANY MAY REDEEM SHARES UPON
THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF TRUSTEES IN ITS SOLE
DISCRETION IF THE BOARD OF TRUSTEES DETERMINES THAT OWNERSHIP OR A TRANSFER OR
OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON
THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE
RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL UNDERSCORED TERMS IN
THIS LEGEND HAVE THE MEANINGS DEFINED IN THE DECLARATION OF TRUST OF THE
COMPANY, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH,
INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH
HOLDER OF COMMON SHARES ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A
COPY MAY BE DIRECTED TO THE SECRETARY OF THE COMPANY.
4. COVENANTS OF CONTRIBUTORS
From the date hereof through the Closing, each of the Opportunity
Partnerships shall itself and shall cause each of its Titleholders to conduct
its business and Equity Office shall conduct the Management Business, in each
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case, in the ordinary course, consistent with past practice, and shall not
itself and shall not cause or permit any of its Titleholders to or, in the case
of Equity Office, in respect to the Management Business shall not:
(i) Enter into any material transaction not in the ordinary course of
business;
(ii) Sell or transfer any material assets of the Titleholders or the
Management Business; provided that nothing contained herein shall be deemed to
constitute a limitation on the right of (w) any Opportunity Partnership to
distribute to its partners net proceeds from the sale of non-office assets; (x)
any Opportunity Partnership to distribute to its partners, or reserve for
future distribution to its partners, amounts which it believes to be necessary
for the continued qualification of any limited partner thereof as a real estate
investment trust; (y) EOH and each of its subsidiary entities, Equity Office
Properties, L.L.C. and Equity Capital Holdings, L.L.C., to distribute to their
respective members, and EGI to distribute to its shareholders, cash generated
from the operation of the Management Business for the period prior to the
Closing Date; or (z) Opportunity Partnership I to distribute, directly or
indirectly, to its partners its entire right, title and interest in ZML-Swansea
Mall Limited Partnership;
(iii) Mortgage, pledge or encumber (or permit to become further
encumbered except by Permitted Liens) any Titleholder Interests or the
Management Business;
(iv) Materially amend, modify or terminate any material agreements
(including, without limitation, those agreements which constitute Management
Contracts) or other instruments to which any of the Titleholders or the
Management Business are a party except such agreements or instruments that may
terminate pursuant to their own terms prior to Closing; or
(v) Materially alter the manner of keeping the Titleholders' or the
Management Business' books, accounts or records or the accounting practices
therein reflected.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; REMEDIES;
INDEMNIFICATION.
5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; REMEDY FOR
BREACH.
All of the representations and warranties contained in this Contribution
Agreement or in any document delivered pursuant hereto shall survive the
Closing for a period of one (1) year from and after the Closing. Any claim for
indemnification under Sections 5.3 hereof must be asserted in writing by the
Indemnified Party, as the case may be, stating the nature of the Losses and the
basis for the indemnification therefor within one (1) year from and after the
Closing. If so asserted in writing within one (1) year from and after the
Closing, such claims for indemnification shall survive until resolved by mutual
agreement between the parties to such claim or until final judicial
determination. Any claim for indemnification not so asserted in writing within
one (1) year from and after the Closing shall not thereafter be asserted and
shall forever be waived.
5.2 INDEMNIFICATION BY OPERATING PARTNERSHIP.
The Operating Partnership hereby agrees to indemnify and hold harmless
each of the Opportunity Partnerships, each of their constituent partners,
Equity Office, its members and shareholders and each of their respective
directors, members, managers, officers, employees, agents, representatives and
affiliates (each an "Indemnified Contributor Party") of and from and against
any and all Losses asserted against, imposed upon or incurred by the
Indemnified Contributor Party in connection with: (i) any breach of a
representation or warranty of the Operating Partnership contained in this
Contribution Agreement; (ii) any liabilities or obligations incurred, arising
from or out of, in connection with or as a result of any Claims made or Actions
brought by or against the Opportunity Partnership, the Titleholders, the
Properties or an Indemnified Contributor Party, that arise from or out of, in
connection with or as a result of any Contamination of the Properties
regardless of when or how occurring, except to the extent, and only to the
extent, such Losses arise from a breach of a representation and warranty of the
Indemnified Contributor Party under Section 3.2 hereof; (iii) the operation or
ownership of the Properties or the Titleholder Interests, whether before or
after Closing (except to the extent such loss is attributable to a breach of a
representation or warranty of the Indemnified Contributor Party contained
herein); and (iv) all fees, costs and
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expenses incurred in connection with the actions contemplated by this
Contribution Agreement, including without limitation any and all costs
associated with the transfers contemplated herein.
5.3 INDEMNIFICATION BY CONTRIBUTORS.
Each Contributor hereby agrees to indemnify and hold harmless the
Operating Partnership and its affiliates and each of their respective
directors, managers, officers, employees, agents, representatives and
affiliates (each of which is an "Indemnified Party") from and against any and
all losses, claims, liabilities, damages, costs and expenses ("Loss") asserted
against, imposed upon or incurred by the Indemnified Party in connection with
or as a result of any breach of a representation or warranty of such
Contributor contained in this Contribution Agreement or in any document
delivered by the Contributor pursuant to this Contribution Agreement (with any
such breach being determined solely for purposes of this Section 5.3 without
regard to whether such breach has a Material Adverse Effect on the Operating
Partnership).
In addition, EOH and EGI hereby agree to indemnify and hold harmless the
Operating Partnership from and against any and all Losses asserted against,
imposed upon or incurred by the Operating Partnership as a result of its
ownership or operation of the Management Business but only to the extent that
such Losses are attributable to the period prior to the Closing Date.
5.4 NOTICE AND DEFENSE OF CLAIMS.
As soon as reasonably practicable after receipt by the Indemnified Party
of notice of any liability or claim incurred by or asserted against the
Indemnified Party that is subject to indemnification under this Section 5, the
Indemnified Party shall give notice thereof to the Contributor, including
liabilities or claims to be applied against the indemnification threshold
established pursuant to Section 5.5 hereof. The Indemnified Party may at its
option demand indemnity under this Section 5 as soon as a claim has been
threatened by a third party, regardless of whether any actual Losses have been
suffered, so long as the Indemnified Party shall in good faith determine that
such claim is not frivolous and that the Indemnified Party may be liable for,
or otherwise incur, Losses as a result thereof and shall give notice of such
determination to the Contributor. The Indemnified Party shall permit the
Contributor, at its option and expense, to assume the defense of any such claim
by counsel selected by the Contributor and reasonably satisfactory to the
Indemnified Party, and to settle or otherwise dispose of the same; provided,
however, that the Indemnified Party may at all times participate in such
defense at its expense; and provided further, however, that the Contributor
shall not, in defense of any such claim, except with the prior written consent
of the Indemnified Party in its sole and absolute discretion, consent to the
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff in question
to the Indemnified Party and its affiliates a release of all liabilities in
respect of such claims, or that does not result only in the payment of money
damages. If the Contributor shall fail to undertake such defense within 30
days after such notice, or within such shorter time as may be reasonable under
the circumstances, then the Indemnified Party shall have the right to undertake
the defense, compromise or settlement of such liability or claim on behalf of
and for the account of the Contributor.
5.5 LIMITATIONS ON AND THRESHOLD FOR INDEMNIFICATION
(a) No Contributor shall be liable under Sections 3.2, 3.3 or 5.3 hereof
unless and until the aggregate amount recoverable from Indemnifying Parties
under the indemnification provisions set forth in Section 5.3 exceeds
$250,000; provided, however, that once the total amount recoverable from
Indemnifying Parties exceeds $250,000 in the aggregate, the Contributor's
obligation under Section 5.3 hereof shall be for the full amount of such
obligation.
(b) Notwithstanding anything contained herein to the contrary, no
Opportunity Partnership shall be liable or obligated to make payments under
this Agreement or any document delivered pursuant to its terms to the extent
such payments when aggregated with any payments made by its parent ZML REIT
under Section 6.3 of the Merger Agreement would exceed the net realizable value
(calculated from time to time as of the date or dates on
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which claims are paid hereunder) of one percent (1%) of the Shares issued or
which may be issued in exchange for Units issued to such Opportunity
Partnership pursuant to Section 1.3 hereof.
(c) Notwithstanding anything contained herein to the contrary, neither EOH
nor EGI, shall individually or collectively be liable pursuant to this
Agreement for an amount which is greater than Fifteen Million Dollars
($15,000,000) in the aggregate.
6. MISCELLANEOUS
6.1 FURTHER ASSURANCES.
Each of the Contributors shall take such other actions and execute such
additional documents following the Closing as the Operating Partnership may
reasonably request in order to effect the transactions contemplated hereby.
6.2 COUNTERPARTS.
This Contribution Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
6.3 GOVERNING LAW.
This Contribution Agreement shall be governed by the internal laws of the
State of Illinois, without regard to the choice of law provisions thereof.
6.4 NOTICES.
Any notice to be given hereunder by any party to the other shall be given
in writing by personal delivery or by registered or certified mail, postage
prepaid, return receipt requested, and shall be deemed communicated as of the
date of personal delivery (including delivery by overnight courier). Mailed
notices shall be addressed as set forth below, but any party may change the
address set forth below by written notice to other parties in accordance with
this Section 7.4.
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TO THE OPPORTUNITY PARTNERSHIPS: TO EQUITY OFFICE:
▇/▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇/▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, ▇.▇.
Two North Riverside Plaza Two North Riverside Plaza
Suite 1515 Suite 1515
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇.▇▇▇.▇▇▇▇ Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇ Fax: ▇▇▇.▇▇▇.▇▇▇▇
TO THE OPERATING PARTNERSHIP:
c/o Equity Office Properties Trust
Two ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Chief Legal Counsel
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
IN WITNESS WHEREOF, the parties have executed this Contribution Agreement
as of the date first written above.
"OPERATING PARTNERSHIP"
EOP OPERATING LIMITED PARTNERSHIP,
a Delaware limited partnership
By: EQUITY OFFICE PROPERTIES TRUST,
a Maryland real estate investment trust
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Executive Vice President
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"CONTRIBUTOR"
▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners Limited Partnership, an
Illinois limited partnership
By: ZML Partners Limited Partnership, an Illinois limited partnership, its
general partner
By: ZM Investors Limited Partnership, an Illinois limited partnership, its
general partner
By: ZM, Inc., an Illinois corporation, its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Its: Vice President
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▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners Limited Partnership II, an
Illinois limited partnership
By: ZML Partners Limited Partnership II, an Illinois limited partnership, its
general partner
By: ZM Investors Limited Partnership II, an Illinois limited partnership,
its general partner
By: ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇, Inc., an Illinois corporation,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Its: Vice President
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▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners Limited Partnership III, an
Illinois limited partnership
By: ZML Partners Limited Partnership III, an Illinois limited partnership, its
general partner
By: ZM Investors Limited Partnership III, an Illinois limited partnership,
its general partner
By: ▇▇▇▇/▇▇▇▇▇▇▇ III, Inc., an Illinois corporation,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Its: Vice President
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▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners Limited Partnership IV, an
Illinois limited partnership
By: ZML Partners Limited Partnership IV, an Illinois limited partnership, its
general partner
By: ZM Investors Limited Partnership IV, an Illinois limited partnership,
its general partner
By: ▇▇▇▇/▇▇▇▇▇▇▇ ▇▇, Inc., an Illinois corporation,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Its: Vice President
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EQUITY OFFICE HOLDINGS, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: Vice President
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EQUITY GROUP INVESTMENTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Its: Vice President
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SCHEDULE OF EXHIBITS TO CONTRIBUTION AGREEMENT
Exhibit A-1 Constituent Interests of Opportunity Partnership I Titleholder Interests
Exhibit A-2 Constituent Interests of Opportunity Partnership II Titleholder Interests
Exhibit A-3 Constituent Interests of Opportunity Partnership III Titleholder Interests
Exhibit A-4 Constituent Interests of Opportunity Partnership IV Titleholder Interests
Exhibit B Titleholders' Real Property Interests
Exhibit C Management Business
Exhibit D Opportunity Partnership Assignment and Assumption Agreement
Exhibit E ▇▇▇▇ of Sale
Exhibit F Assignment and Assumption of Intangible Rights
Exhibit G Amended and Restated Agreement of Limited Partnership for the Operating Partnership
Exhibit H Assignment and Assumption of Management Business Agreement
Exhibit I Management Business ▇▇▇▇ of Sale
Exhibit J-1 Amendment to Partnership Agreement for Opportunity Partnership 1
Exhibit J-2 Amendment to Partnership Agreement for Opportunity Partnership 2
Exhibit J-3 Amendment to Partnership Agreement for Opportunity Partnership 3
Exhibit J-4 Amendment to Partnership Agreement for Opportunity Partnership 4
Exhibit K Merger Agreement
Exhibit L Title Policies
Exhibit M Schedule of Third Party Rights to Acquire Interests in Titleholders
Exhibit N Pending Condemnations
Exhibit O Schedule of Environmental Reports
Exhibit P Schedule of Pending Claims
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EXHIBIT C
TO
CONTRIBUTION AGREEMENT
MANAGEMENT BUSINESS TO BE CONTRIBUTED
Management Agreements:
As specified on Schedule C-1 as attached
Office Personal Property:
1. All Office furniture and Equipment of EOH and EOP.
2. All Telephone System Equipment of EOH and EOP.
3. All Data Processing Systems and Equipment of EOH and EOP.
4. All Deposits held by EOH and EOP for the account of third parties.
Insurance Reserve:
Amounts held as a reserve against payment of future health insurance claims of
employees.
Excluded Assets:
(a) income tax refunds;
(b) Equity Office's corporate records, including without limitation,
Limited Liability Company Agreements, minute books and other records
having to do exclusively with the legal organization of Equity Office;
(c) except as specified above, all cash, cash equivalents and accounts
receivable;
(d) all leasing commissions due Equity Office as a result of leases,
extensions or amendments which are identified in a schedule of
"protected transactions" to be submitted to the Operating Partnership
at the Closing but only if such leases, extensions or amendments are
executed on or before the sixtieth (60th) day after the Closing Date;
(e) all other management fees, acquisition fees, leasing/supervisory
fees, development fees, engineering, consulting or other fees due
Equity Office for services rendered prior to the Closing Date; and
(f) the benefit of all insurance policies to the extent they insure the
Management Business prior to the Closing Date.
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GLOSSARY
The following terms have the meanings set forth below. Terms which are
not defined below shall have the meaning set forth for those terms as defined
in the Contribution Agreement:
Actions: Means all actions, complaints, charges, accusations,
investigations, petitions, suits or other proceedings, whether civil or
criminal, at law or in equity, or before any arbitrator or Governmental Entity.
Claims: Means claims, disputes, actions, suits, arbitrations, proceedings
or investigations pending or, to Knowledge, threatened in writing that directly
or indirectly affect any of the Contributors, the Titleholders, the Properties
or the Management Business.
Consolidation Expenses: Means all costs and expenses incurred in
structuring and consummating the consolidation of the four Opportunity
Partnerships and the merger of the four ZML REITs (collectively, the
"Consolidation") including, but not limited to, legal fees, accounting fees and
all other costs and expenses in connection with (a) the formation and
organization of the Operating Partnerships and the Company, (b) the structuring
of the terms and conditions of the Consolidation, (c) the offering and issuance
of the Units and common shares in the Company, (d) all steps taken to conduct
the transaction in compliance with applicable federal and state corporate,
partnership, securities and other laws, (e) the receipt of all necessary
consents and approvals, including those required from regulatory bodies on or
before (and remaining in effect at the consummation of) the Consolidation, (f)
the solicitation of consents from the Investors in each of the ZML REITs and
the Opportunity Partnerships to participate in the Consolidation, (g) the
acquisition by the Operating Partnership in the Consolidation of the assets and
the existing liabilities of each of the Operating Partnerships, (h) fairness
opinions, and (i) engagement of any financial advisor to the shareholders of
the ZML REITs or owners of Units in the Opportunity Partnerships.
Contamination: Means emissions, discharges, releases or threatened
releases of "Hazardous Materials," substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, ground water or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of substances, pollutants, contaminants or
hazardous or toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature.
Environmental Law: Means all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, demands, approvals,
authorizations and similar items of all governmental agencies, departments,
commissions, boards, bureaus or instrumentalities of the United States, states
and political subdivisions thereof and all applicable judicial, administrative
and regulatory decrees, judgments and orders relating to the protection of
human health or the environment as in effect on the Closing Date, including all
requirements as of the Closing Date, including but not limited to those
pertaining to reporting, licensing, permitting, investigation, removal and
remediation of Contamination, including without limitation: (x) the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. Section 1251), the Safe
Drinking Water Act (42 U.S.C. 300 et seq.), the Toxic Substances Control Act
(15 U.S.C. 2601 et seq.), the Endangered Species Act (16 U.S.C. 1531 et seq.),
the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. 1001
et seq.), and (y) applicable state and local statutory and regulatory schemes
pertaining to hazardous materials.
Governmental Entity: Means any government or agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
Hazardous Material: Means any substance:
(i) the presence of which requires investigation or remediation under any
Environmental Law action or policy, administrative request or civil complaint
under the foregoing or under common law; or
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(ii) which is controlled, regulated or prohibited under any Environmental
Law as in effect as of the Closing Date, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.); or
(iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and as of the
Closing Date is regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, or any state
or any political subdivision thereof having or asserting jurisdiction over the
Properties; or
(iv) the presence of which on, under or about, a Property poses a hazard
to the health or safety of persons on or about such Property; or
(v) which contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenyls (PCBs) or asbestos or asbestos-containing materials
or urea formaldehyde foam insulation; or
(vi) radon gas.
Indemnifying Party: Means any party required to indemnify any other party
under Section 5.3 hereof.
Knowledge: Means, with respect to any representation or warranty so
indicated (whether or not made by Equity Office or an Opportunity Partnership),
the actual knowledge (without any imputation or the obligation to make any
investigation whatsoever) of every regional manager and every officer
(including the Chairman of the Board) of Equity Office Holdings, L.L.C., Equity
Office Properties, L.L.C. Equity Capital Holdings, L.L.C. or Equity Group
Investments, Inc. whose title is Senior Vice President or higher.
Known Contamination: Means Contamination currently existing on or
affecting the applicable Property as of the Closing, and which such
Contamination is disclosed in environmental reports received by the Contributor
or the Titleholders on or before the Closing (the "Environmental Reports").
Lease: All Leases affecting one or several of the Properties to which a
Titleholder is a lessor or by which a Titleholder or Property is bound or
subject.
Liens: Means, with respect to any real and personal property, all
mortgages, pledges, liens, options, charges, security interests, restrictions,
prior assignments, encumbrances, covenants, encroachments, assessments, rights
of others, licenses, easements, liabilities or claims of any kind or nature
whatsoever, direct or indirect, including, without limitation, interests in or
claims to revenues generated by such property.
Losses: Means, any and all claims, losses, damages, liabilities and
expenses, including, without limitation, amounts paid in settlement, reasonable
attorneys' fees, costs of investigation and remediation, costs of
investigative, judicial or administrative proceedings or appeals therefrom, and
costs of attachment or similar bonds.
"Material Adverse Effect" means the consequence of any event,
circumstance, occurrence or condition which, either individually or together
with all other such events, circumstances, occurrences or conditions described
in Section 2.1, in the judgment of the Company, is likely to have a material
adverse effect on the assets, business, financial condition, results of
operations or prospects of the Operating Partnership and its subsidiaries,
taken as a whole; provided that, for these purposes, an insured casualty loss
or a taking by way of condemnation or assignment in lieu of condemnation shall
not be considered in determining whether there has been a Material Adverse
Effect.
Net Proration Amount: Means, for each Opportunity Partnership's
Contributed Opportunity Partnership Assets, a sum calculated in accordance with
a proration schedule prepared by such Opportunity Partnership, but subject to
the Operating Partnership's reasonable approval, calculated as of the Final
Valuation Date describing all then-known liabilities (exclusive of liabilities
for mortgage indebtedness then having a term greater than one year) and
receivables of such Contributor and its affiliated Titleholders [which, for
these purposes may be estimated in good
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faith and shall be deemed to include as an asset any sums held in escrow for
the payment of real estate taxes, insurance or other costs of ownership or
operation of the Properties and may be subject to creation of such reserves
and, in the case of accounts receivables, such credit quality adjustments as
the Contributor and the Operating Partnership reasonably deem appropriate].
Permitted Liens: Means (a) Liens, or deposits made to secure the release
of such Liens, securing taxes, the payment of which is not delinquent or the
payment of which is actively being contested in good faith by appropriate
proceedings diligently pursued;
(b) Zoning laws and ordinances generally applicable to the districts in
which the Properties are located which are not violated, to any material
extent, by the existing structures or present uses thereof;
(c) Liens imposed by laws, such as carriers', warehousemen's and
mechanics' liens, and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings diligently
pursued;
(d) non-exclusive easements for public utilities, minor encroachments,
rights of access or other non-monetary matters that do not have a material
adverse effect upon, or materially interfere with the use of, the Properties;
(e) any exceptions contained in the Title Policies; and
(f) Liens arising through the Operating Partnership.
Person: Means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or governmental entity.
REIT Shares: Shall have the meaning set forth in the OP Agreement.
S-11 Registration Statement: Means the Company's S-11 Registration
Statement for the offering of Common Shares filed with the Securities and
Exchange Commission under date of May 7, 1997, as it may be amended from time
to time.
Third-Party Management Business: Collectively, all Management Contracts
with ownership entities whose beneficial owners include entities which are not
direct or indirect partners in an Opportunity Partnership; and the Management
Contract for the Plaza at LaJolla Village.
ZML REIT: Shall mean any of ZML Investors, Inc., ZML Investors II, Inc.,
▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate Opportunity Partners III Trust or ▇▇▇▇/▇▇▇▇▇▇▇
▇▇▇▇▇ Real Estate Opportunity Partners IV Trust, each of which is a limited
partner of Opportunity Partnership I, Opportunity Partnership II, Opportunity
Partnership III or Opportunity Partnership IV respectively (collectively, the
"ZML REITs").