Exhibit 2.1
CONTRIBUTION AGREEMENT
Between
COPT ACQUISITIONS, INC.
And
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP
Dated as of September 30, 1998
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THE SECURITIES REFERENCED HEREIN HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
CONFIRMED THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISK OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
TABLE OF CONTENTS
1. DEFINITIONS..............................................................................................2
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2. CONTRIBUTION.............................................................................................7
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3. CONTRIBUTION CONSIDERATION...............................................................................8
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4. LP UNITS; INVESTOR MATERIALS.............................................................................9
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5. PARTNERSHIP LIABILITIES AND SALES OF REAL PROPERTY......................................................11
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6. CLOSING.................................................................................................15
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7. CONTRIBUTOR'S DELIVERIES................................................................................15
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8. INSPECTION PERIOD.......................................................................................15
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9. TITLE AND SURVEY MATTERS................................................................................17
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10. REPRESENTATIONS AND WARRANTIES AS TO THE REAL PROPERTY..................................................18
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11. REPRESENTATIONS AS TO SECURITIES AND RELATED MATTERS....................................................24
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12. COVENANTS OF CONTRIBUTOR................................................................................28
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13. ENVIRONMENTAL WARRANTIES AND AGREEMENTS.................................................................30
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14. ADDITIONAL CONDITIONS PRECEDENT TO CLOSING..............................................................35
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15. LEASES-CONDITIONS PRECEDENT AND WARRANTIES WITH RESPECT THERETO.........................................37
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16. CLOSING DELIVERIES......................................................................................39
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17. PRORATIONS AND ADJUSTMENTS..............................................................................43
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18. CLOSING EXPENSES........................................................................................45
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19. DESTRUCTION, LOSS OR DIMINUTION OF REAL PROPERTY........................................................46
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20. DEFAULT; INDEMNITY......................................................................................47
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21. SUCCESSORS AND ASSIGNS..................................................................................49
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22. LITIGATION..............................................................................................50
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23. NOTICES.................................................................................................50
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24. BENEFIT.................................................................................................51
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25. LIMITATION OF LIABILITY.................................................................................52
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26. BROKERAGE...............................................................................................52
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27. REASONABLE EFFORTS......................................................................................52
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28. INTENTIONALLY OMITTED...................................................................................52
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29. INTENTIONALLY OMITTED...................................................................................52
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30. MISCELLANEOUS...........................................................................................52
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LIST OF EXHIBITS LIST OF SCHEDULES
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A Legal Description of the Real Property 4.1.2 LP Units Schedule
B Personal Property 5.2 Real Property Contacts
C Investor Materials 10.4 Service Contracts
D Contributor's Deliveries 10.15 Real Estate Tax Matters
E SEC Reporting Requirements 10.17 Lease Controversies
F Audit Representation Letter 10.19 Assumed Indebtedness
G Intentionally Omitted 11.1.2 Ownership Interests
H Declarant Estoppel Certificates 13.2.6 Tanks
15.1.8 Broker's Commissions
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THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and entered into
as of the 30th day of September, 1998 (the "Contract Date"), by and among M.O.R.
XXIX ASSOCIATES LIMITED PARTNERSHIP, a Maryland limited partnership
("Contributor"), the other parties, if any, identified on the signature page
hereto (collectively, together with Contributor, the "LP Unit Recipients") and
COPT ACQUISITIONS, INC., a Delaware corporation ("Acquiror").
Background
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A. Contributor is the owner of certain Real Property (as defined below)
which includes that certain building (the "Building"), containing 160,000 net
rentable square feet, located in Rivers Corporate Park and commonly known as
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. The Building is leased by Contributor
to the United States of America ("Government") pursuant to a Lease for Real
Property dated January 1, 1998 (the "Government Lease") for office purposes. In
this Agreement, the term "Real Property" shall mean: (i) a leasehold estate in
that certain parcel of land described on Exhibit A attached hereto (the "Land"),
together with all rights, easements and interests appurtenant thereto,
including, but not limited to, any streets or other public ways adjacent to the
Land and any water or mineral rights owned by, or leased to, Contributor; (ii)
all improvements located on the Land, including, but not limited to, the
Building, and all other structures, systems, and utilities associated with, and
utilized by, Contributor in the ownership and operation of the Building (all
such improvements being collectively referred to herein as the "Improvements"),
but excluding improvements, if any, owned by NELPP or Government; (iii) all
personal property of every nature and description owned by Contributor
(excluding Inventory (as defined below)) and either (A) located on or in the
Land or Improvements, or (B) used in connection with the operation and
maintenance of the Real Property (collectively, the "Personal Property"),
including, without limitation, all (if any) personal property listed on Exhibit
B attached hereto; (iv) all building materials, supplies, hardware, carpeting
and other inventory owned by Contributor and maintained in connection with
Contributor's ownership and operation of the Land and/or Improvements
(collectively, the "Inventory"); (v) all intangible property owned by
Contributor used or useful in connection with the foregoing including, without
limitation, all trademarks, tradenames, development rights, entitlements,
contract rights, tenant improvement loans, guarantees, licenses, permits and
warranties (collectively, the "Intangible Personal Property"); and (vi)
Contributor's interest in the Government Lease.
B. The leasehold estate described in clause (i) of the preceding
paragraph was created by that certain Amended & Restated Ground Lease, dated as
of May 2, 1985, by and between New England Life Pension Properties II: a Real
Estate Limited Partnership ("NELPP"), as lessor, and Contributor, as lessee, as
amended by that certain First Amendment to Ground Lease, dated December 24,
1986, and as further amended by that certain Second Amendment to Ground Lease,
dated October 15, 1997 (collectively, the "Ground Lease").
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C. Contributor and Acquiror desire to enter into this Agreement
relating to the contribution and conveyance of the Real Property in exchange for
LP Units (as defined below).
Agreement
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NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the parties agree as follows:
1. DEFINITIONS.
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All terms which are not otherwise defined in this Agreement
shall have the meaning set forth in this Section 1.
1.1. "Accredited Investor" shall have the meaning set forth in
Regulation D promulgated under the Securities Act of 1933, as amended.
1.2. "Acquiror" shall have the meaning set forth in the
opening paragraph of this Agreement.
1.3. "Acquiror Indemnified Parties" shall have the meaning set
forth in Section 13.3.
1.4. "Acquiror's Conditions Precedent" shall mean all
conditions precedent to Acquiror's obligations to close as set forth in this
Agreement.
1.5. "Acquiror's Reasonable Costs" shall mean all reasonable
out-of-pocket costs and expenses incurred by Acquiror in connection with this
Agreement and the Real Property, including, but not limited to, legal fees,
title company charges, engineering fees, environmental consultant's fees,
architects' and surveyors' fees and other similar charges.
1.6. "Additional Rent" shall have the meaning set forth in
Section 15.1.6.
1.7. "Adverse Tax Consequence" shall have the meaning set
forth in Section 5.3.2.
1.8. "Affiliate(s)" shall have the meaning set forth in
Section 21.
1.9. "Amendment"shall have the meaning set forth in Section
4.1.1.
1.10. "Assigned Contracts" shall have the meaning set forth in
Section 16.1.4.
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1.11. "Assumed Indebtedness" shall mean the outstanding
principal balance of the indebtedness of Contributor as of the Closing Date with
respect to the Real Property, as described on Schedule 10.19 attached hereto,
which indebtedness shall be the only indebtedness assumed by Acquiror in
connection with the transaction contemplated hereby. The Assumed Indebtedness is
evidenced and secured by the Existing Loan Documents.
1.12. "Base Rent" shall have the meaning set forth in Section
15.1.6.
1.13. "Broker" shall have the meaning set forth in Section 26.
1.14. "Building" shall have the meaning set forth in the
recitals to this Agreement.
1.15. "CERCLA" shall have the meaning set forth in Section
13.1.1.
1.16. "Closing" or "Closing Date" shall have the meaning set
forth in Section 6 below.
1.17. "Closing Statement" shall have the meaning set forth in
Section 16.1.12.
1.18. "Code" shall have the meaning set forth in Section
5.3.1.
1.19. "Contract Date" shall have the meaning set forth in the
opening paragraph to this Agreement.
1.20. "Contribution Consideration" shall have the meaning set
forth in Section 3.
1.21. "Contributor" shall have the meaning set forth in the
opening paragraph to this Agreement.
1.22. "Contributor's Condition Precedent" shall mean all
conditions precedent to Contributor's obligations to close as set forth in this
Agreement.
1.23. "Contributor's Deliveries" shall have the meaning set
forth in Section 7.
1.24. "Conversion Shares" shall have the meaning set forth in
Section 4.1.4.
1.25. "Damage" shall have the meaning set forth in Section 19.
1.26. "Delinquent Rents" shall have the meaning set forth in
Section 17.9.
1.27. "Deposit" shall have the meaning set forth in Section
3.2.1.
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1.28. "Designee" shall have the meaning set forth in Section
8.3.2.(c).
1.29. "Disapproved Exception" shall have the meaning set forth
in Section 9.2.
1.30. "Eminent Domain" shall have the meaning set forth in
Section 19.
1.31. "Environmental Law(s)" shall have the meaning set forth
in Section 13.1.1
1.32. "Environmental Permits" shall have the meaning set forth
in Section 13.1.2.
1.33. "Exchange" shall have the meaning set forth in Section
5.4.
1.34. "Existing Loan Documents" shall mean the documents
evidencing or securing the Assumed Indebtedness, as described on Schedule 10.19.
1.35. "Government" shall have the meaning set forth in the
recitals to this Agreement.
1.36. "Governmental Authority/Authorities" shall mean any
agency, commission, department or body of any municipal, township, county,
local, state or federal governmental or quasi-governmental regulatory unit,
entity or authority having jurisdiction or authority over all or any portion of
the Real Property or the management, operation, use or improvement thereof.
1.37. "Government Lease" shall have the meaning set forth in
the recitals to this Agreement.
1.38. "Ground Lease" shall have the meaning set forth in the
recitals to this Agreement.
1.39. "Hazardous Conditions" shall have the meaning set forth
in Section 13.1.3.
1.40. "Hazardous Material(s)" shall have the meaning set forth
in Section 13.1.4.
1.41. "Improvements" shall have the meaning set forth in the
recitals to this Agreement.
1.42. "Indemnified Parties" shall have the meaning set forth
in Section 20.3.
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1.43. "Informational Materials" shall have the meaning set
forth in Section 11.1.8 below.
1.44. "Interest Holder(s)" shall mean any direct and indirect
partners, shareholders and members of Contributor.
1.45. "Intangible Personal Property" shall have the meaning
set forth in the recitals to this Agreement.
1.46. "Investor Materials" shall have the meaning set forth in
Section 4.1.3.
1.47. "Inventory" shall have the meaning set forth in the
recitals to this Agreement.
1.48. "Land" shall have the meaning set forth in the recitals
to this Agreement.
1.49. "Lender's Approvals" shall have the meaning set forth in
Section 14.1.7.
1.50. "Lock-Up Period," as to the LP Units issued at the
Closing, shall mean the period equal to the longer of (a) one (1) year following
the Closing, and (b) the date on which a registration statement filed in respect
of such LP Units issued to the LP Unit Recipients pursuant to the Registration
Rights Agreement is declared effective.
1.51. "Losses" shall have the meaning set forth in Section
13.3.
1.52. "LP Units" shall mean the common units in the UPREIT.
1.53. "LP Unit Amount" shall have the meaning set forth in
Section 3.2.3 below.
1.54. "LP Unit Recipients" shall have the meaning set forth in
the opening paragraph to this Agreement.
1.55. "Maximum Amount" shall have the meaning set forth in
Section 5.1.2.
1.56. "NELPP" shall have the meaning set forth in the recitals
to this Agreement.
1.57. "NELPP Agreement" shall have the meaning set forth in
Section 14.1.2.
1.58. "Net Asset Value" shall have the meaning set forth in
Section 3.1.
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1.59. "Non-Recognition Code Provisions" shall have the meaning
set forth in Section 5.1.1.
1.60. "Non-Taxable Disposition Period" shall mean the five (5)
year period commencing on the Closing Date and ending on the fifth anniversary
of the Closing Date, as such period may be sooner terminated in accordance with
Section 5.
1.61. "Partnership Agreement" shall mean the agreement of
limited partnership of the UPREIT, as amended from time to time prior to and
including the Contract Date.
1.62. "PCBs" shall have the meaning set forth in Section
13.1.4(a).
1.63. "Permitted Exceptions" shall have the meaning set forth
in Section 9.2.
1.64. "Personal Property" shall have the meaning set forth in
the recitals to this Agreement.
1.65. "RCRA" shall have the meaning set forth in Section
13.1.1.
1.66. "Real Property Contacts" shall mean the individuals or
entitles designated on Schedule 5.2.
1.67. "Real Property" shall have the meaning set forth in the
recitals to this Agreement.
1.68. "Records" shall mean all books, records, tax returns,
correspondence, financial data, leases, and all other documents and matters,
public or private, maintained by Contributor or its agents, relating to receipts
and expenditures pertaining to all of the Real Property for the three most
recent full calendar years and the current calendar year and all contracts,
rental agreements and all other documents and matters, public or private,
maintained by Contributor or its agents, relating to operations of the Real
Property.
1.69. "Registration Rights Agreement" shall mean the
Registration Rights Agreement dated March 16, 1998, the benefits of which shall
be conferred upon the LP Unit Recipients at the Closing.
1.70. "Regulatory Violation Notice" shall have the meaning set
forth in Section 4.1.3.
1.71. "REIT" means Corporate Office Properties Trust, a ,
publicly traded Maryland real estate investment trust.
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1.72. "Release" shall have the meaning set forth in Section
13.1.5.
1.73. "Remedial Action" shall have the meaning set forth in
Section 10.1.6.
1.74. "Remedial Costs" shall have the meaning set forth in
Section 10.1.7.
1.75. "Schedules" shall have the meaning set forth in Section
10.
1.76. "SEC" shall mean the Securities and Exchange Commission.
1.77. "Securities Act" shall mean the Securities Act of 1933,
as amended.
1.78. "Spokesperson" shall have the meaning set forth in
Section 5.3.2.
1.79. "Tank(s)" shall have the meaning set forth in Section
13.1.8.
1.80. "Taxes" shall have the meaning set forth in Section
11.1.4.2.
1.81. "Tax ▇▇▇▇" shall have the meaning set forth in Section
10.1.15.
1.82. "Tax Related Event" and "Tax Related Notice" shall have
the meanings set forth in Section 5.3.1.
1.83. "Tax Return" shall have the meaning set forth in Section
11.1.2.3.
1.84. "Tenant Estoppel Certificate" shall have the meaning set
forth in Section 15.2 of this Agreement.
1.85. "Title Company" shall mean Commonwealth Land Title
Insurance Company.
1.86. "Title Report" shall have the meaning set forth in
Section 9.2.
1.87. "Unit Price" shall mean $10.50.
1.88. "UPREIT" means Corporate Office Properties, L.P.. a
Delaware limited partnership.
2. CONTRIBUTION.
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2.1. Assignment to the UPREIT. It shall be a Contributor's
Condition Precedent that, immediately prior to the Closing, Acquiror assign its
entire right, title and interest in, to and under this Agreement to the UPREIT,
and that the sole general partner of the UPREIT
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shall be the REIT. Simultaneously with, and in all events subject to and
conditional upon, the consummation of such assignment, the UPREIT shall assume
all of Acquiror's obligations and responsibilities under this Agreement. Pending
such assignment, Acquiror shall not constitute the agent of the UPREIT
hereunder. Following the assignment, the UPREIT may, in its sole and absolute
discretion, direct Contributor to transfer all or some of the Real Property to
one or more Affiliates of the REIT or the UPREIT.
2.2. Contribution. At the Closing, Contributor agrees to
contribute and convey to the UPREIT, and Acquiror agrees to cause the UPREIT to
accept and take from Contributor, on the terms and conditions set forth in this
Agreement, all of Contributor's right, title and interest in and to the Real
Property.
3. CONTRIBUTION CONSIDERATION. In consideration of the contribution of
the Real Property, and subject to the terms of this Agreement, at the Closing,
the UPREIT shall (a) acquire the Real Property under and subject to the Assumed
Indebtedness, and (b) issue LP Units having an aggregate value equal to the Net
Asset Value of the Real Property. Such consideration shall be referred to in
this Agreement as the "Contribution Consideration."
3.1. Net Asset Value. The "Net Asset Value" of the Real
Property equals Eleven Million Four Hundred Thirty-Six Thousand Four Hundred
Twelve Dollars ($11,436,412) less the Assumed Indebtedness (as such amount is
updated on the Closing Date from the amount shown Schedule 10.19). The Net Asset
Value shall be further adjusted by the positive or negative adjustments and
prorations described in Section 17 below, all of which shall be adjusted as of
the Closing Date.
3.2. Payment of Contribution Consideration. The Contribution
Consideration shall be allocated and paid as follows:
3.2.1. Acquiror has deposited with the Title Company
One Hundred Twenty Five Thousand and 00/100 Dollars ($125,000.00) (the
"Deposit"). The Deposit shall be held by the Title Company in accordance with
the terms of Section 30.9 hereof. If the Closing occurs, the Deposit and any
interest earned on the Deposit shall be refunded to Acquiror at the time of
Closing; otherwise the Deposit and any interest earned on the Deposit shall be
paid to the party entitled to the Deposit pursuant to the terms of this
Agreement.
3.2.2. The UPREIT shall acquire the Real Property
subject to the Assumed Indebtedness at the time of the Closing. Contributor
acknowledges and agrees that Contributor shall be solely responsible for any and
all costs associated with the UPREIT's assumption of the Assumed Indebtedness
(such as assumption fees, costs and expenses of the holder of the Existing Loan
Documents, etc.).
3.2.3. UPREIT shall issue LP Units having an
aggregate value equal to the Net Asset Value of the Real Property. Such value
shall be referred to as the "LP Unit
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Amount." If the above-described calculation of Contribution Consideration would
result in a fractional number of LP Units to be delivered to Contributor, the
UPREIT shall round that fraction up or down, as the case may be, to the nearest
whole number of LP Units.
4. LP UNITS; INVESTOR MATERIALS.
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4.1. LP Units Generally.
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4.1.1. The LP Units shall be redeemable for shares of
common stock of the REIT or cash (or a combination thereof) in accordance with
the procedures described in the Partnership Agreement. Contributor acknowledges
that the LP Units are not certificated and that, therefore, the issuance of the
LP Units shall be evidenced by the execution and delivery of an amendment to the
Partnership Agreement, which amendment shall be executed and delivered by the
REIT at the Closing (the "Amendment").
4.1.2. Contributor hereby directs the UPREIT to
deliver the LP Units at the Closing issued in the names of, and for distribution
to, those LP Unit Recipients set forth on Schedule 4.1.2 attached hereto. Each
LP Unit Recipient shall receive the number of LP Units set forth on said
Schedule.
4.1.3. Contributor, as LP Unit Recipient, has caused
its beneficial owners to sign Exhibit C attached hereto, which provides, among
other things, information concerning Contributor's and its beneficial owners
status as Accredited Investors. Contributor shall provide or cause to be
provided to Acquiror, or to any other party designated by Acquiror, such other
information and documentation as may reasonably be requested by Acquiror in
furtherance of the issuance of the LP Units as contemplated hereby (together
with the information provided on Exhibit C, the "Investor Materials").
Notwithstanding anything contained in this Agreement to the contrary, in the
event that, in the reasonable opinion of Acquiror, based on advice of its
securities counsel, (x) any such person or entity providing Investor Materials
is not considered an Accredited Investor, (y) the proposed issuance of LP Units
hereunder might not qualify for the exemption from the registration requirements
of Section 5 of the Securities Act, or (z) the proposed issuance of LP Units
hereunder would violate any applicable federal or state securities laws, rules
or regulations, or any tax related or other legal rules, agreements or
constraints applicable to Acquiror, the REIT or the UPREIT, Acquiror shall so
advise Contributor, in writing (the "Regulatory Violation Notice") within five
(5) business days after such determination is made. In the event a Regulatory
Violation Notice is delivered for the reason set forth in clause (x) above, the
interest of each and every person or other entity with respect to which Acquiror
delivers a Regulatory Violation Notice shall be redeemed by Contributor (or
Contributor shall otherwise cause such person or other entity to no longer have
a direct or indirect interest in Contributor), at no cost to any or all of
Acquiror, the REIT and the UPREIT, at least two business days prior to the
Closing Date. In the event of any such redemption, Schedule 4.1.2 shall be
revised to reflect the updated list of LP Unit Recipients and the revised
ownership percentages in the Real Property resulting from such redemption. In
the event a Regulatory
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Violation Notice is delivered for another reason, this Agreement shall terminate
and no party shall have any further liability hereunder except (i) as otherwise
expressly set forth in this Agreement and (ii) to the extent a breach of this
Agreement gives rise to, or becomes the basis for, the Regulatory Violation
Notice.
4.1.4. Contributor hereby covenants and agrees that
it shall deliver or shall cause each of its partners, shareholders, members and
any other LP Unit Recipients to deliver to Acquiror, or to any other party
designated by Acquiror, any documentation that may be required under the
Partnership Agreement or any charter document of the REIT, and such other
information and documentation as may reasonably be requested by Acquiror, at
such time as any LP Units are redeemed for shares of common stock of the REIT
("Conversion Shares"). The preceding covenant shall survive the Closing.
4.2. Certain Informational Materials. Contributor and the
other LP Unit Recipients hereby acknowledge and agree that the ownership of LP
Units by them and their respective rights and obligations as limited partners of
the UPREIT (including, without limitation, their right to transfer, encumber,
pledge and exchange LP Units) shall be subject to all of the express
limitations, terms, provisions and restrictions set forth in this Agreement and
in the Partnership Agreement. In that regard, Contributor and each of the other
LP Unit Recipients hereby covenants and agrees that, at the Closing, it shall
execute any and all documentation reasonably required by the UPREIT and the REIT
to formally memorialize the foregoing. Contributor and each of the other LP Unit
Recipients acknowledges that it has received and reviewed, prior to the Contract
Date, (i) the Partnership Agreement, (ii) the charter documents and bylaws of
the REIT, (iii) the REIT's Form 10-K for the year ended December 31, 1997, (iv)
all Form 10-Qs and Form 8-Ks that have been filed by the REIT since December 31,
1997, and (v) copies of all material press releases, proxy statements and
reports to shareholders issued since December 31, 1997, and has otherwise had an
opportunity to conduct a due diligence review of the affairs of the UPREIT and
the REIT and has been afforded the opportunity to ask questions of, and receive
additional information from, the REIT regarding the REIT and the UPREIT.
4.3. Lock-Up Period. Each of the LP Unit Recipients agrees
that for the Lock-Up Period, it shall not, in any way or to any extent, redeem
(pursuant to the Partnership Agreement or otherwise), sell, transfer, assign,
pledge or encumber, or otherwise convey any or all of the LP Units delivered to
it in connection with this transaction and, if applicable, any Conversion
Shares.
4.4. Transfer Requirements. After the Lock-Up Period, each LP
Unit Recipient may only sell, transfer, assign, pledge or encumber, or otherwise
convey any or all of the LP Units delivered to it and, if applicable, any
Conversion Shares, in strict compliance with this Agreement, the Partnership
Agreement, the charter documents of the REIT, the registration and other
provisions of the Securities Act (and the rules promulgated thereunder), any
state securities laws, the rules of the New York Stock Exchange and the
Registration Rights
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Agreement, in each case as may be applicable. A legend may be placed on the face
of the certificates evidencing the Conversion Shares to notify the holder of the
restrictions on transfer under applicable federal or state securities laws. The
provisions of this Section 4.4 shall survive the Closing.
4.5. From and after the expiration of the Lock-Up Period, the
aggregate amount of common stock of the REIT that the LP Unit Recipient may sell
during any 10-trading day period shall not exceed 30 percent (30%) of the
average of the daily trading volume of such stock (as reported in The Wall
Street Journal) for the 30 trading days immediately preceding the date on which
the first sale of such stock during any such 10-day period occurs.
4.6. Intentionally Omitted.
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5. PARTNERSHIP LIABILITIES AND SALES OF REAL PROPERTY.
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5.1. Disposition Obligations. Subject to this Section 5.1 and
the provisions of Section 5.2 hereof, during the Non-Taxable Disposition Period,
the UPREIT shall use its good faith, reasonable and diligent efforts:
5.1.1. To cause any sale or other voluntary
disposition (other than through a deed in lieu of foreclosure, a foreclosure
action, or an act of eminent domain) of the Real Property (and all assets
received in exchange for the Real Property in which the REIT or the UPREIT has
an adjusted tax basis substituted from that of the Real Property) to qualify
completely for non-recognition of gain under the Code for all LP Unit Recipients
(for example, by means of exchanges contemplated under Code Sections 351, 354,
355, 368, 721, 1031 (but only if there is no "boot") or 1033), in the manner as
the Code provides from time to time (the "Non-Recognition Code Provisions");
provided, however, that the foregoing shall not require the REIT and UPREIT, in
their sole and absolute discretion, to sell, or otherwise dispose of, or prevent
the REIT and UPREIT, in their sole and absolute discretion, from selling or
otherwise disposing of, the Real Property in a transaction that would result in
a loss for federal income tax purposes;
5.1.2. To maintain, on a continuous basis, an amount
of indebtedness for which Contributor (including, for this purpose, the Interest
Holders in Contributor or transferees of Contributor, collectively) bears or is
deemed to bear the "economic risk of loss" within the meaning of Treasury
Regulation Section 1.752-2(a) (including through the use of guarantee
arrangements or arrangements providing for the imposition of a deficit
restoration obligation on Contributor pursuant to an amendment to the
Partnership Agreement) or which is allocated to Contributor pursuant to Treasury
Regulation Section 1.752-3(a) equal to 7,000,000 (the "Maximum Amount");
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5.1.3. To avoid a distribution of property that would
cause Contributor to recognize income or gain in excess of $50,000 pursuant to
the provisions of either or both of Code Sections 704(c)(1)(B) and 737;
5.1.4. To avoid a termination of the UPREIT pursuant
to the provisions of Code Section 708(b)(1)(B); and
5.1.5. As long as Contributor remains as a partner of
the UPREIT, the REIT and/or UPREIT agree to utilize the "traditional method,"
without curative allocations (as contemplated for in the Partnership Agreement),
of allocating gain and depreciation under Code Section 704(c) for the Real
Property.
In all events, the Non-Taxable Disposition Period shall
terminate, and the provisions of this Section 5 only shall automatically be
rendered null and void and shall be of no further force or effect, as of the
occurrence of an amendment or other material revision to Code Section 1031 or
the Treasury Regulations promulgated thereunder, which amendment or revision
materially and, with respect to the REIT and the UPREIT, adversely alters the
tax-treatment of "like-kind" exchanges of real estate pursuant to such
provisions.
The provisions of this Section 5.1 shall survive the Closing.
5.2. Limitation on Disposition Obligations. Notwithstanding
the provisions of Section 5.1, the obligation of the UPREIT to undertake those
activities set forth in Sections 5.1.1-5.1.4 hereof shall, in all events, be
subject to, and otherwise interpreted consistent with, the REIT's fiduciary and
statutory obligations to all partners (both present and future) in the UPREIT,
and to its stockholders, both present and future. Further, for purposes of this
Section 5 and except as otherwise provided in Section 5.3, the LP Unit
Recipients agree that neither the REIT nor the UPREIT shall be required to
obtain any approval, consent or waiver from, or take direction from, or
otherwise communicate with, any person or representative or entity concerning
the Real Property, other than those certain persons (the "Real Property
Contacts") designated on Schedule 5.2 attached hereto (and at the addresses set
forth therein). Notification of the Real Property Contacts for the Real Property
shall constitute sufficient and effective notification to all Interest Holders
associated with the Real Property, and written communications from the Real
Property Contacts for the Real Property shall bind all Interest Holders
associated with, related to, or having an interest in, the Real Property. The
provisions of this Section 5.2 shall survive the Closing.
5.3. Notice of Certain Transactions.
------------------------------
5.3.1. In the event, on or before the expiration of
the Non-Taxable Disposition Period, the UPREIT expects any of the following
(each, a "Tax-Related Event") to occur: (A) a post-Closing sale of the Real
Property; (B) a reduction in the amount of indebtedness to an amount that is
less than the Maximum Amount; or (C) an attempt by the
12
UPREIT to effect a transfer of the Real Property as permitted by Section 5.1.1
above, but the terms of Section 1031 of the Internal Revenue Code of 1986, as
amended (the "Code") or the regulations promulgated thereunder have changed such
that the mechanics for implementing a tax-deferred exchange of real estate are
materially and adversely altered (whether with respect to the timing required to
identify and close upon an exchange property or otherwise) from those mechanics
in place as of the Contract Date, and, in any case, provided that the
obligations of the REIT and the UPREIT under Section 5 shall not have otherwise
terminated by the terms of such Section, then the UPREIT shall give written
notice of such Tax-Related Event (a "Tax-Related Notice") to the Real Property
Contacts as soon as practicable after the occurrence of such event becomes
reasonably likely, or, if later, on the date on which the UPREIT is, in the
reasonable judgment of its securities counsel, legally permitted, under
applicable federal and state securities laws and regulations, and the rules and
regulations of the New York Stock Exchange, to disseminate such Tax-Related
Notice to the Real Property Contacts.
5.3.2. Upon their receipt of a Tax-Related Notice,
the Real Property Contacts shall designate a single spokesperson from among them
to represent the Interest Holders in connection with the Tax-Related Event that
triggered the delivery of such Tax-Related Notice (the "Spokesperson"). Each LP
Unit Recipient hereby irrevocably appoints any Spokesperson so designated as
their attorney-in-fact, with full power to grant in the name of and on behalf of
such LP Unit Recipient, any and all consents, waivers, approvals, and to execute
any and all documents required or appropriate to be executed, whether with
respect to this Agreement, the Partnership Agreement or otherwise; provided,
however, that such attorney-in-fact may only act within the scope necessitated
by the Tax-Related Event giving rise to the appointment of such Spokesperson.
The UPREIT and the REIT shall be entitled to rely on the first written notice
either of them receives that designates a Spokesperson with respect to a given
Tax-Related Event, and shall be under no obligation to deal with any person
other than the Spokesperson so designated in connection with the subject
Tax-Related Event as it relates to any LP Unit Recipient. The UPREIT and the
REIT shall have no obligation to deal with any person or entity whatsoever in
connection with a Tax-Related Event unless and until a Spokesperson is properly
designated. The UPREIT and the REIT, and their respective independent
accountants, attorneys and other representatives and advisors, shall cooperate
with the Spokesperson in order to consider strategies proposed by or through the
Spokesperson (it being understood that neither the REIT nor the UPREIT shall
have any obligation whatsoever to propose any such strategies), on behalf of any
affected LP Unit Recipient, which strategies are designed or intended to defer
or mitigate any recognition of gain under the Code by any LP Unit Recipient or
any shareholder or partner in any LP Unit Recipient (any such gain recognition
being referred to herein as an "Adverse Tax Consequence") that may result from a
Tax-Related Event, whether such strategies involve any or all of the LP Unit
Recipients (including Contributor) on a basis independent of the REIT and
UPREIT, or in conjunction with the REIT or the UPREIT. Each party shall pay its
own fees and expenses incurred in connection with the procedure delineated in
this Section 5.3.2. Under this Section 5.3.2, the UPREIT and the REIT are only
obligated to cooperate with the Spokesperson on behalf of any LP Unit Recipient
(or any partner, shareholder or member of any LP Unit Recipient) who may be
facing an Adverse Tax Consequence, in
13
connection with such LP Unit Recipient's determination of the efficacy of
tax-deferral or tax-mitigation alternatives proposed by or through the
Spokesperson that may involve the REIT or the UPREIT. In no event shall either
the REIT or the UPREIT be required to incur any expense (other than the cost of
professional fees and expenses and administrative expenses incurred in complying
with this Section 5.3) in connection with its cooperation under this Section
5.3, nor shall any transaction duly approved by the Board of Directors of the
REIT that results in a Tax-Related Event be required to be suspended, postponed,
impeded or otherwise adversely affected by virtue of any potential Adverse Tax
Consequence. The provisions of this Section 5.3 shall survive the Closing.
5.4. 721 Exchange. The parties acknowledge that Contributor
intends to treat the contribution and conveyance of the Real Property in
exchange for LP Units (the "Exchange") as a tax-free partnership contribution
pursuant to Section 721 of the Code. Acquiror, the UPREIT and the REIT shall
cooperate in all reasonable respects with Contributor to effectuate such
Exchange; provided, however, that:
5.4.1. The Closing shall not be extended or delayed
by reason of such Exchange, unless Acquiror has breached its obligations to
Contributor under this Agreement;
5.4.2. None of Acquiror, the UPREIT or the REIT shall
be required to incur any additional extraordinary (as opposed to a normal,
customary and recurring) cost or expense as a result of such Exchange, other
than the cost of Acquiror's counsel in connection with the preparation of this
Agreement and the other documents contemplated by this Agreement.
Notwithstanding anything to the contrary in the foregoing sentence, the UPREIT
and the REIT shall be responsible for costs associated with any IRS audit made
directly of either or both of the UPREIT and the REIT relating to their
respective operations (as opposed to an audit that is ancillary to an audit made
of any or all of the entities comprising Contributor). Contributor hereby
covenants and agrees that it shall, promptly on demand, reimburse Acquiror, the
UPREIT or the REIT for any additional extraordinary cost or expense (as opposed
to a normal, customary and recurring cost or expense, such as the analysis or
computation related to the manner in which depreciation and built-in gain are
allocated amongst the LP Unit Recipients), including, but not limited to,
reasonable attorneys' fees (e.g. those in excess of the cost of Acquiror's
counsel in connection with the preparation of this Agreement and the other
documents contemplated by this Agreement), actually incurred by any or all of
Acquiror, the UPREIT and the REIT (i) as a result of the characterization of the
contribution of the Real Property pursuant to this Agreement as a tax-free
partnership contribution pursuant to Section 721 of the Code, or (ii) which is
directly attributable to the Exchange;
5.4.3. Subject to the UPREIT's and the REIT's
performance and fulfillment in all material respects of the express covenants
and conditions contained in this Agreement, none of Acquiror, the UPREIT or the
REIT warrant, nor shall any of them be responsible for, the federal, state or
local tax consequences to Contributor, any or all of the Interest Holders and
any or all of the LP Unit Recipients resulting from either (i) the transactions
14
contemplated by this Agreement or (ii) the allocation, if any, of losses and
liabilities of the UPREIT to Contributor or any of the Interest Holders in
Contributor under the Partnership Agreement, the Code or Treasury Regulations
promulgated under the Code; and
5.4.4. Except as otherwise expressly set forth in
this Agreement and in the documents executed and delivered by Acquiror at the
Closing, none of Acquiror, the UPREIT nor the REIT shall incur any liability
under any document or agreement required to be executed or delivered in
connection with such Exchange.
The provisions of this Section 5.4 shall survive the Closing.
6. CLOSING. Except as otherwise provided in this Agreement, the closing
of the transaction contemplated by this Agreement (the "Closing") shall take
place on the date (the "Closing Date") specified by Acquiror upon not less than
three (3) days prior notice to Contributor, provided that the Closing Date shall
occur no later than fifteen (15) days after the Contract Date. The Closing shall
take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at such other place as may be mutually agreed
upon by the parties, or in escrow at the offices of the Title Company if
mutually agreed upon by the parties.
7. CONTRIBUTOR'S DELIVERIES. To the extent in Contributor's possession
or control, Contributor shall continue to make available to Acquiror, from and
after the Contract Date, at reasonable times and upon reasonable notice, all
documents, contracts, information, Records and exhibits pertinent to the
transaction that is the subject of this Agreement, including, but not limited
to, the documents listed as "Contributor's Deliveries" on Exhibit D attached
hereto.
8. INSPECTION PERIOD.
-----------------
8.1. Basic Real Property Inspection. From and after
Contract Date, at reasonable times and upon reasonable notice, Acquiror, its
agents and representatives shall be entitled to conduct inspections of the
Real Property, which will include the rights to: (1) enter upon the Land and
Improvements to perform inspections and tests of any and all of the Real
Property, including, but not limited to, inspection, evaluation and testing
of the heating, ventilation and air-conditioning systems and all components
thereof, all structural and mechanical systems within the Improvements,
including, but not limited to, sprinkler systems, power lines and panels, air
lines and compressors, automatic doors, tanks, pumps, plumbing and all
equipment, vehicles, and Personal Property; (ii) examine and copy any and all
Records; (iii) make investigations with regard to zoning, environmental
(including, but not limited to, an environmental assessment as specified in
Section 8.2, which includes, but is not limited to, an analysis of the
presence of any asbestos, chlordane, formaldehyde or other Hazardous Material
in, under or upon the Real Property, or any underground storage tanks on, or
under, the Land), building, code, regulatory and other legal or governmental
requirements; (iv) make or obtain
15
market studies and real estate tax analyses; and (v) interview Government with
respect to its current and prospective occupancies. Without limitation of the
foregoing, Acquiror or its designated independent or other accountants may audit
the Financial Statements(as defined in Exhibit D attached hereto), and
Contributor shall supply such documentation as Acquiror or its accountants may
reasonably request in order to complete such audit.
8.2. Environmental Assessment. From and after Contract Date,
at reasonable times and upon reasonable notice,, Acquiror or Acquiror's agent(s)
shall have the right to employ one or more environmental consultants or other
professional(s) to perform or complete such environmental inspections and
assessments of the Real Property as Acquiror deems necessary or desirable;
provided, however, that Acquiror shall not perform a "Phase II" environmental
assessment or undertake any other invasive physical tests at the Property
without first obtaining Contributor's approval to do so, which approval shall
not be unreasonably withheld or delayed. Acquiror and its consultants shall also
have the right to undertake or complete a technical review of all documentation,
reports, plans, studies and information in possession or control of Contributor,
or its past or present environmental consultants, concerning or in any way
related to the environmental condition of the Real Property. In order to
facilitate the assessments and technical review, Contributor shall extend its
full cooperation (but without third party expense to Contributor) to Acquiror
and its environmental consultants, including, without limitation, providing
access to all files and fully and completely answering all questions (to the
best of its knowledge).
8.3. Acquiror's Undertaking. Acquiror hereby covenants and
agrees that it shall cause all studies, investigations and inspections performed
at the Real Property pursuant to this Section 8 to be performed in a manner that
does not materially or unreasonably disturb or disrupt the tenancies at or
business operations of the Real Property. In the event that, as a result of
Acquiror's exercise of its rights under Sections 8.1 and 8.2, physical damage
occurs to the Real Property, then Acquiror shall promptly repair such damage, at
Acquiror's sole cost and expense, so as to return the Real Property to
substantially the same condition as exists on the Contract Date. Acquiror hereby
indemnifies, protects, defends and holds Contributor harmless from and against
any and all losses, damages, claims, causes of action, judgments, damages, costs
and expenses that Contributor actually suffers or incurs as a direct result of
any physical damage caused to, in, or at the Real Property during the course of,
or as a result of, any or all of the studies, investigations and inspections
that Acquiror elects to perform (or causes to be performed) pursuant to this
Section 8.
8.4. Confidentiality. Each party agrees to maintain in
confidence, and not to disclose to Government or Government's employees, the
information contained in this Agreement or pertaining to the transaction
contemplated hereby and the information and data furnished or made available by
Contributor to Acquiror, its agents and representatives in connection with
Acquiror's investigation of the Real Property and the transactions contemplated
by this Agreement; provided, however, that each party, its agents and
representatives may disclose such information and data (i) to such party's
accountants, attorneys, existing or
16
prospective lenders, investment bankers, accountants, underwriters, ratings
agencies, partners, consultants and other advisors in connection with the
transactions contemplated by this Agreement to the extent that such
representatives reasonably need to know (in the disclosing party's reasonable
discretion) such information and data in order to assist, and perform services
on behalf of, the disclosing party; (ii) to the extent required by or
appropriate under any applicable statute, law, regulation or Governmental
Authority (including, but not limited to, Form 8-K and other reports and filings
required by the SEC and other regulatory entities, as described in Exhibit E
attached hereto) or by the New York Stock Exchange in connection with the
listing of the Conversion Shares; (iii) in connection with any litigation that
may arise between the parties in connection with the transactions contemplated
by this Agreement or otherwise relating to the Real Property or any of them;
(iv) to the extent such disclosure is required or appropriate in connection with
any securities offering or other capital markets or financing transaction
undertaken by the REIT; (v) to the extent such information and data become
generally available to the public other than as a result of disclosure by such
party or its agents or representatives; (vi) to the extent such information and
data become available to such party or its agents or representatives from a
third party who, insofar as is known to such party, is not subject to a
confidentiality obligation to the other party hereunder; and (vii) to the extent
necessary in order to comply with each party's respective covenants, agreements
and obligations under this Agreement. In the event the transactions contemplated
by this Agreement shall not be consummated, such confidentiality shall be
maintained indefinitely. Furthermore, Contributor and Acquiror acknowledge that,
notwithstanding any contrary term of this Section 8.4, Acquiror shall have the
right to conduct interviews of Government, and the disclosure of the existence
of this Agreement to Government shall not constitute a breach of the above
restriction. Acquiror shall also have the right to issue a press release upon
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
9. TITLE AND SURVEY MATTERS
------------------------
9.1. Title. At the Closing, Contributor shall have a good and
marketable title to the leasehold estate in the Real Property, insurable as such
(at regular rates), free and clear of all liens, claims and encumbrances except
for the Permitted Exceptions. Without limiting the requirements of the preceding
sentence, Acquiror acknowledges that the Ground Lease is not evidenced of record
by a memorandum of lease or other similar instrument. From and after the date of
this Agreement, Contributor shall not take any action, or fail to take any
action, that would cause such estate to be subject to any exceptions or
objections, other than the Permitted Exceptions.
9.2. Title Report/Survey. On or before the Contract Date,
Acquiror has furnished Contributor with a preliminary title report issued by the
Title Company covering the Real Property (the "Title Report") and a written
notice specifying those title exceptions which are not acceptable to Acquiror,
which objection may include matters shown on any updated or re-certified survey
which Acquiror may obtain (the "Disapproved Exceptions"). Acquiror's failure to
designate as one of the Disapproved Exceptions a title exception shown on the
Title
17
Report shall constitute Acquiror's approval of such title exception (all such
title exceptions shall be the "Permitted Exceptions"). Contributor shall use
commercially reasonable efforts to cause the removal of all Disapproved
Exceptions on or before the Closing Date, except that (i) Contributor shall have
no obligation to cause the removal of any Disapproved Exception created by
NELPP, and (ii) liens of an ascertainable amount and other items which can be
removed by the payment of money shall be paid and discharged by Contributor at
or before the Closing. Acquiror shall have the rights set forth in Section 9.4
if any Disapproved Exceptions cannot be removed by Contributor at or prior to
the Closing.
9.3. Title A Condition Precedent. It shall be an Acquiror's
Condition Precedent that the marked-up Title Report delivered on the Closing
Date shall be in the form described in this Section 9 and have all standard and
general printed exceptions deleted so as to afford full "extended form
coverage," and shall further include (provided such endorsements are
commercially available in the State in which the Real Property is located) an
owner's comprehensive endorsement, an endorsement certifying that the bills for
the real estate taxes pertaining to the Land and Improvements do not include
taxes pertaining to any other real estate, an access endorsement, a contiguity
endorsement, if applicable, a subdivision or plat act endorsement, a survey
endorsement, a Fairway endorsement, a creditors' rights endorsement and any
other customary commercially available endorsements.
9.4. Failure Regarding Disapproved Exceptions. If Contributor
is unable to correct or remove, or has no obligation to correct and remove, any
Disapproved Exception in accordance with the requirements of this Section 9,
Acquiror shall have the option of either (i) completing the Closing subject to
such Disapproved Exceptions without any abatement of the Contribution
Consideration (except that, Acquiror shall have the right to pay out of the
Contribution Consideration liens of an ascertainable amount and any other items
which can be removed by the payment of money (excluding any of the foregoing
voluntarily created by NELPP), or (ii) being immediately paid the Deposit and,
except in the case where the Disapproved Exception was created by NELPP, being
reimbursed for the Acquiror's Reasonable Costs, in which case the parties shall
be released from all liability or obligation to the other and this Agreement
shall then and thereafter be null and void.
10. REPRESENTATIONS AND WARRANTIES AS TO THE REAL PROPERTY. Except (A)
as otherwise set forth in the written schedules attached to this Agreement (the
"Schedules") which set forth the exceptions to the representations and
warranties contained in this Section 10 and certain other information called for
by this Agreement (unless otherwise specified, (i) each reference in this
Agreement to any numbered schedule is a reference to that numbered schedule
which is included in the Schedules and (ii) no disclosure made in any particular
numbered schedule of the Schedules shall be deemed made in any other numbered
schedule of the Schedules unless expressly made therein (by cross-reference or
otherwise)), and (B) as expressly set forth in any document delivered to
Acquiror by Contributor or NELPP prior to the Closing, Contributor represents
and warrants to Acquiror that the following matters are true and correct as of
the Contract Date, in all material respects, and
18
shall be true and correct as of the Closing Date, in all material respects, and
further covenants as follows:
10.1. Title. Contributor is the owner of the leasehold estate
created by the Ground Lease, and, other than with respect to the Permitted
Exceptions, has good and marketable title to such leasehold estate, insurable as
such (at regular rates), free and clear of all mortgages and security interests
(other than the Assumed Indebtedness), leases, agreements and tenancies (other
than the Government Lease), licenses, claims, options, options to purchase,
liens, covenants, conditions, restrictions, rights-of-way, easements, judgments
and other matters affecting title to the Real Property, but the Ground Lease is
not evidenced of record by a memorandum of lease or other similar instrument.
The Ground Lease is in full force and effect strictly according to the terms set
forth therein, and has not been modified, amended, or altered, in writing or
otherwise. All obligations of Contributor under the Ground Lease that have
accrued to the date hereof have been performed or waived. Contributor is not,
and, to the best knowledge of Contributor, NELPP is not, in default under the
Ground Lease, and there has not occurred any event which, with the giving of
notice and/or the passage of time, or both, would constitute a default by
Contributor or, to the best knowledge of Contributor, by NELPP, thereunder.
10.2. Contributor's Deliveries. To the best knowledge of
Contributor, all of Contributor's Deliveries listed on Exhibit D attached hereto
and all other items delivered by Contributor pursuant to this Agreement are
true, accurate, correct and complete in all material respects, and fairly
present the information set forth in a manner that is not misleading. The copies
of all documents and other agreements delivered or furnished and made available
by Contributor to Acquiror pursuant to this Agreement constitute all of and the
only leases and other agreements relating to or affecting the ownership and
operation of the Real Property, there being no "side" or other agreements,
written or oral, in force or effect, to which Contributor is a party or to which
the Real Property is subject.
10.3. Defaults. To the best knowledge of Contributor,
Contributor is not in default under any of the documents, recorded or
unrecorded, referred to in the Title Report, nor has Contributor received any
written notice alleging the existence of any such default. To the best knowledge
of Contributor, Contributor is not in default under any of the Major Repair
Contracts, Contracts or Governmental Approvals (as such terms are defined in
Exhibit D attached hereto), nor has Contributor received any written notice
alleging the existence of any such default. It shall be an Acquiror's Condition
Precedent that Contributor shall have obtained and delivered to Acquiror, on or
prior to the Closing Date, declarant estoppel certificates, dated no earlier
than 30 days prior to the Closing Date, from each of entities identified on
Exhibit H. Such estoppel certificates shall be certified to Acquiror and any
other party reasonably designated by Acquiror. If Contributor (despite its
commercially reasonable efforts) is unable to obtain such estoppel Certificates,
Acquiror's sole remedy shall be to either (i) terminate this Agreement because
of non-satisfaction of an Acquiror's Condition Precedent; or (ii) proceed to
close and accept Contributor's own estoppel certificates with respect to the
matters covered thereby, so executed by Contributor and tailored in a manner
mutually and reasonably acceptable
19
to Acquiror and Contributor, to reflect its issuance by Contributor. Such
estoppel certificate shall be substantially in the form attached hereto as
Exhibit H.
10.4. Contracts. There are no contracts of any kind relating
to the management, leasing, operation, maintenance or repair of the Real
Property, except those Contracts listed on Schedule 10.4 attached hereto. To the
best knowledge of Contributor, Contributor has performed all obligations
required to be performed by it, and is not in default, under any of such
Contracts. All the Contracts may, by the express terms thereof, (i) be assigned
to Acquiror, by notice to such effect, to the appropriate contract party without
penalty or other payment by Contributor or Acquiror, and (ii) be terminated
without penalty or other payment by Contributor (or its assignee or successor)
upon no more than 30 days' prior notice.
10.5. Physical Condition. To the best knowledge of
Contributor, there is no existing patent or latent structural or other material
physical defect in the condition of the Real Property, or any component or
portion thereof, that would or could impair or impose costs upon the use,
occupancy or operation of the Real Property, and that has not been fully
corrected. To the best knowledge of Contributor, there is no material defect in
the Improvements, the structural elements thereof, the mechanical systems
(including, without limitation, all HVAC Systems, plumbing, electrical,
elevator, security, utility and sprinkler systems) therein, or the roof of the
Building, nor has Contributor received any written notice from Government or any
other party alleging the existence of any such material defect.
10.6. Utilities. To the best knowledge of Contributor, all
water, sewer, gas, electric, telephone, drainage and other utility equipment,
facilities and services required by law or necessary for the operation of the
Real Property as they are now being operated, and as required for operation of
the Building, are installed and connected pursuant to valid permits, are
adequate to service the Real Property, and are in good operating condition. To
the best knowledge of Contributor, no fact or condition exists that would or
could result in the termination or impairment of the furnishing of service to
the Real Property of water, sewer, gas, electric, telephone, drainage or other
such utility services. Contributor has paid all amounts owing for utility
services as of the most recent billing period. To the best knowledge of
Contributor, the utility equipment servicing the Real Property is in material
compliance with all applicable governmental laws, rules and regulations.
10.7. Improvements. To the best knowledge of Contributor, the
Improvements were completed and installed in substantial accordance with the
Plans (as defined in Exhibit D attached hereto), which were approved by all
Governmental Authorities having jurisdiction thereover, and do not violate any
governmental laws, ordinances, rules or regulations.
10.8. Employees. Contributor does not employ any persons at
the Real Property. With respect to the Real Property, neither Contributor nor
any affiliate of Contributor are a party to, nor is the Real Property subject
to, any collective bargaining or other agreement or
20
understanding with any labor union, and neither Contributor nor any affiliate of
Contributor are privy to or involved in any labor or union controversy or other
similar interaction of any kind.
10.9. Compliance with Laws and Codes. To the best knowledge of
Contributor, the Real Property, and the use and operation of any or all of them
are (or the use and operation of any component, portion or area of the Real
Property is) in material compliance with all applicable municipal and other
governmental laws, ordinances, regulations, codes, licenses, permits and
authorizations, and there are presently and validly in effect all licenses,
permits and other authorizations necessary (including, without limitation,
certificates of occupancy) for the use, occupancy and operation of the Real
Property as they are presently being operated, whether required of Contributor
or Government. Without limiting the foregoing, to the best knowledge of
Contributor, the Real Property complies in all material respects with all
applicable requirements of the Americans With Disabilities Act of 1990 (42
U.S.C.A. ss.12101 et seq.). Contributor has no knowledge that any heating or
other burning equipment located at or used in connection with the Real Property
violates any law or regulation of any Governmental Authorities having
jurisdiction over the Real Property. The Real Property is zoned by the
municipality in which it is located so as to permit the uses and structures
thereon, in a manner that accommodates and is compatible in all material
respects with the Building and Improvements as they presently exist. The Real
Property is not a non-conforming use or non-conforming structure under
applicable present zoning laws. To the best knowledge of Contributor, no zoning,
subdivision, environmental, Hazardous Material, building code, health, fire,
safety or other law, order or regulation is violated by the continued
maintenance, operation or use of any Improvements or parking areas in or at the
Real Property, and no notice of any such violation has been issued to
Contributor by any Governmental Authority having jurisdiction over the Real
Property. All driveway entrances and exits to Real Property are permanent, and
no special access or other permits are required to maintain same. All existing
streets and other improvements, including water lines, sewer lines, sidewalks,
curbing and streets at Real Property have been, or will be, paid for prior to
the Closing (to the extent due and owing as of the date thereof) and either
enter the Real Property through adjoining public streets, or, if they enter
through private lands, do so in accordance with valid, irrevocable easements
running with the ownership of the Real Property.
10.10. Litigation. There are no pending or, to the best
knowledge of Contributor, threatened judicial, municipal or administrative
proceedings affecting Contributor or the Real Property, or in which Contributor
is or will be a party by reason of Contributor's ownership or operation of the
Real Property or any portion thereof, including, without limitation, proceedings
for or involving collections, condemnation, eminent domain, alleged building
code or environmental or zoning violations, or personal injuries or property
damage alleged to have occurred on the Real Property or by reason of the
condition, use of, or operations on, the Real Property. No attachments,
execution proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy, reorganization or other proceedings are pending against Contributor,
or to the best knowledge of Contributor, threatened against Contributor or
pending against any Interest Holder, nor are any of such proceedings
contemplated by Contributor.
21
10.11. Insurance. Contributor now has in force customary and
commercially reasonable amounts of property, liability and business interruption
insurance relating to the Real Property from established and reputable insurers.
Contributor has not received any notice from any insurance carrier, nor is
Contributor aware of, any defects or inadequacies in the Real Property that, if
not corrected, would result in termination of insurance coverage or increase in
the normal and customary cost thereof.
10.12. Financial Information. All audited Financial Statements
delivered by Contributor have been compiled in accordance with generally
accepted accounting principles and accurately set forth the results of the
operation of the Real Property for the periods covered. All of Contributor's
Records, are complete, accurate, true and correct in all material respects.
There has been no material adverse change in the financial condition or
operation of the Real Property since the period covered by the Financial
Statements.
10.13. Re-Zoning. There is not now pending, and Contributor
has no knowledge of, any threatened proceeding for the re-zoning of the Real
Property or any portion thereof, or the taking of any other action by
governmental authorities that would have an adverse or material impact on the
value of the Real Property or use thereof.
10.14. Personal Property. The Personal Property listed in
Exhibit B attached hereto is all of the personal property owned by Contributor
and used in (or necessary for) the operation of the Real Property. To the best
knowledge of Contributor, all such Personal Property is in good and operable
condition and repair, and free of material defects.
10.15. Real Estate Taxes. True and complete copies of the most
recent real estate tax bills (the "Tax ▇▇▇▇(s)") for, and the only Tax Bills
applicable to, the Real Property have been delivered to Acquiror. Except as set
forth on Schedule 10.15 attached hereto, Contributor has not received notice of
and does not have any actual knowledge of any proposed increase in the assessed
valuation or rate of taxation of the Real Property from that reflected in the
most recent Tax Bills. Except as described on Schedule 10.15 attached hereto,
there is not now pending, and Contributor will not, without the prior written
consent of Acquiror (which consent shall not be unreasonably withheld or
delayed), institute prior to the Closing Date, any proceeding or application for
a reduction in the real estate tax assessment of the Real Property or any other
relief for any tax year. There are no outstanding agreements with attorneys or
consultants with respect to the Tax Bills that will be binding on Acquiror or
the Real Property after the Closing. Other than the amounts disclosed by the Tax
Bills, no other real estate taxes have been, or, to the best knowledge of
Contributor, will be, assessed against the Real Property, or any portion
thereof, in respect of the year 1998 or any prior year, and no special
assessments of any kind (special, bond or otherwise) are or have been levied
against the Real Property, or any portion thereof, that are or will be
outstanding or unpaid at the Closing (to the extent due and owing as of the date
thereof). Contributor is not delinquent in the payment of any real estate taxes
presently due and owing with respect to the Real Property.
22
10.16. Easements and Other Agreements. To the best knowledge
of Contributor, Contributor is not in material default in complying with the
terms and provisions of any of the covenants, conditions, restrictions,
rights-of-way or easements constituting one or more of the Permitted Exceptions.
10.17. Lease Controversies. Except as described in Schedule
10.17 attached hereto, no controversy, complaint, negotiation or renegotiation,
proceeding, suit or litigation relating to the Government Lease is pending or,
to the best knowledge of Contributor, threatened, whether in any tribunal or
informally. Contributor is and shall remain responsible after the Closing Date
for defending (or continuing) any such suit, proceeding or other matter relating
to periods prior to the Closing Date, and all damages, loss, expenses and costs
related thereto.
10.18. Soil Condition. To the best knowledge of Contributor,
the soil condition of the Land is such that it will support all of the
Improvements for the foreseeable life of the Improvements, without the need for
unusual or new sub-surface excavations, fill, footings, caissons or other
installations. To the best knowledge of Contributor, the Improvements, as built,
were constructed in a manner compatible with the soil condition at the time of
construction, and all necessary excavations, fill, footings, caissons or other
installations were then and have since been provided.
10.19. Existing Loan Documents. Schedule 10.19 attached hereto
sets forth a true, correct and complete listing of all of the promissory notes,
mortgages and other loan documents evidencing or securing the Assumed
Indebtedness (the "Existing Loan Documents"), and Contributor has delivered
true, correct and complete copies of the Existing Loan Documents to Acquiror
prior to the date hereof as part of Contributor's Deliveries. Contributor has
complied with (and, prior to the Closing, shall continue to comply with) the
terms of, and all notices or correspondence received from the holder of the
Existing Loan Documents. Contributor has paid (and, at all times prior to the
Closing, shall pay) all sums due under the Existing Loan Documents. The Existing
Loan Documents are in full force and effect. Except as set forth on Schedule
10.19, Contributor is not in default under the Existing Loan Documents, and
there has not occurred any event which, with the giving of notice and/or the
passage of time, or both, would constitute a default by Contributor thereunder.
The outstanding principal amount of the Assumed Indebtedness is accurately set
forth on Schedule 10.19. Following Acquiror's assumption thereof, Acquiror will
be entitled to prepay the Assumed Indebtedness by the payment of the outstanding
principal amount and the accrued interest as of the date of prepayment without
incurring any additional costs, fees or expenses (other than Acquiror's legal
fees).
10.20. Condemnation. Contributor has no knowledge of any
pending or contemplated condemnation or other governmental taking proceedings
affecting all or any part of the Real Property.
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10.21. Disclosure. To the best knowledge of Contributor, no
representation or warranty made by Contributor in this Agreement, and no
Schedule contained in this Agreement, contains any untrue statement of a
material fact, or omits to state a material fact necessary in order to make the
statements contained therein not misleading or necessary in order to provide a
prospective acquiror of the Real Property with adequate information as to the
Real Property and its management, operation, maintenance and repair. There is no
fact known to Contributor which has, or which could reasonably have been
foreseen by Contributor as likely to have, an adverse effect on the management,
operation, maintenance and repair of the Real Property which has not been
disclosed herein or in any Schedule.
Whenever a representation and warranty in this Section 10 or
elsewhere in this Agreement is qualified by "to the best knowledge of
Contributor," or a similar phrase, it shall mean the actual, not imputed or
constructive, knowledge of ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, both of
Manekin Corporation, without any obligation on such individual's part to make
any independent investigation of the matters being represented and warranted.
The representations and warranties in this Section 10 shall be
deemed remade by Contributor as of the Closing Date with the same force and
effect as if in fact specifically remade at that time. Such representations and
warranties shall survive the Closing for a period of one year; provided,
however, that Acquiror shall not be entitled to bring a claim with respect to
any representation and warranty during such one year period if, on or prior to
the Closing Date, Acquiror acquired actual, not imputed or constructive,
knowledge that the applicable representation and warranty was not true in all
material respects as of the Closing Date.
11. REPRESENTATIONS AS TO SECURITIES AND RELATED MATTERS.
----------------------------------------------------
11.1. Contributor and LP Unit Recipients. Contributor
represents and warrants to Acquiror that the following matters are true and
correct as of the Contract Date, in all material respects, and shall be true and
correct as of the Closing Date, in all material respects, and covenant as
follows; and each LP Unit Recipient represents and warrants (but only as to
itself) to Acquiror that the matters set forth in Sections 11.1.1 and 11.1.5 are
true and correct, in all material respects, as of the Contract Date and shall be
true and correct as of the Closing Date, in all material respects, and covenant
as follows:
11.1.1. Authority. The execution and delivery of this
Agreement by Contributor and each of the LP Unit Recipients, and the performance
of this Agreement by Contributor and each of the LP Unit Recipients, have been
duly authorized by Contributor and the each of the LP Unit Recipients,
respectively, and this Agreement is binding on Contributor and each of the LP
Unit Recipients and enforceable against them in accordance with its terms. No
consent of any creditor, investor, partner, shareholder, tenant-in-common,
judicial or administrative body, Governmental Authority, or other governmental
body or agency, or other party to such execution, delivery and performance by
Contributor or any LP Unit Recipient is required. Neither the execution of this
Agreement nor the consummation of the transactions
24
contemplated hereby will (i) result in a breach of, default under, or
acceleration of, any agreement to which Contributor or any LP Unit Recipient is
a party or by which Contributor, any LP Unit Recipient or the Real Property are
bound; or (ii) violate any restriction, court order, agreement or other legal
obligation to which Contributor, any LP Unit Recipient and/or the Real Property
are subject.
11.1.2. Partnership and Tax-Related Issues.
----------------------------------
11.1.2.1 Contributor is, and at all times
has been, properly treated as a partnership for federal income tax purposes and
not as an "association" or "publicly traded partnership" taxable as a
corporation.
11.1.2.2 No partner of Contributor has
pledged or otherwise encumbered its partnership interest in Contributor. The
beneficial ownership interest of Contributor, as LP Unit Recipient, including
the percentage of ownership, is as reflected on Schedule 11.1.2 attached hereto.
11.1.2.3 Contributor has filed or caused to
be filed in a timely manner (within any applicable extension periods) all tax,
information or other returns required to be filed by the Code or by applicable
state, or local tax laws (collectively, "Tax Returns"). Such Tax Returns are
true, correct and complete in all respects; and all federal, state or local
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, unemployment, disability, personal property, sales, use,
transfer, registration, estimated, or other tax of any kind whatsoever,
including any interest, penalty or other addition thereto, whether disputed or
not, (collectively, "Taxes") due, and Taxes due in respect of any person for
which Contributor had an obligation to withhold and/or otherwise pay over Taxes,
have been timely paid in full or will be timely paid in full by the due date
thereof (and whether or not shown on a Tax Return). With respect to any taxable
year for which a statute of limitations (or similar provision) has not yet run,
none of the Tax Returns of Contributor has been audited by a government or
taxing authority, nor is any such audit or other proceeding in process, pending,
threatened (either in writing or verbally, formally or informally) or expected
to be asserted with respect to Taxes (or the collection of Taxes) of
Contributor, and Contributor has not received notice (either in writing or
verbally, formally or informally) or expects to receive notice that it has not
filed a Tax Return or not paid Taxes required to be filed, withheld, or paid by
it. Contributor has disclosed on its federal income tax returns all positions
taken therein that could give rise to a substantial understatement penalty
within the meaning of Code Section 6662. No claim has ever been made by an
authority in a jurisdiction where Contributor does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction.
11.1.3. Holding Periods; Use; Capital Expenditures.
For purposes of Code Sections 1223 and 857, Contributor has held the Real
Property for no less than four years prior to the Closing Date. During the
four-year period preceding the Closing Date, Contributor held the Real Property
exclusively for the production of rental income and never held the Real
25
Property primarily for sale in the ordinary course of Contributor's trade or
business. If, at any time or from time to time during the four-year period
preceding the Closing Date, Contributor has made capital expenditures with
respect to the Real Property, and such expenditures are includible in the
adjusted tax basis of the Real Property for federal income tax purposes, then
the aggregate amount of all such capital expenditures made during that four-year
period are less than the amount that is 30% of the Net Asset Value.
11.1.4. United States Person. Contributor is a
"United States Person" within the meaning of Section 1445(f)(3) of the Code, as
amended, and shall execute and deliver an "Entity Transferor" certification at
Closing.
11.1.5. Investment Representation. Each LP Unit
Recipient represents that its LP Units are being acquired by it with the present
intention of holding such LP Units for purposes of investment, and not with a
view towards sale or any other distribution. Each LP Unit Recipient recognizes
that it may be required to bear the economic risk of an investment in the LP
Units for an indefinite period of time. Contributor and each LP Unit Recipient
is an Accredited Investor. Contributor and each LP Unit Recipient has such
knowledge and experience in financial and business matters so as to be fully
capable of evaluating the merits and risks of an investment in the LP Units. No
LP Units will be issued, delivered or distributed to any person or entity who
either (1) is a resident of the State of California or New York or (ii) is other
than an Accredited Investor with respect to whom there has been delivered to
Acquiror satisfactory Investor Materials confirming the status of such person or
entity as an Accredited Investor. Each LP Unit Recipient has been furnished with
the informational materials described in Section 4.2 above (collectively, the
"Informational Materials"), and has read and reviewed the Informational
Materials and understands the contents thereof. The LP Unit Recipients have been
afforded the opportunity to ask questions of those persons they consider
appropriate and to obtain any additional information they desire in respect of
the LP Units and the business, operations, conditions (financial and otherwise)
and current prospects of the UPREIT and the REIT. The LP Unit Recipients have
consulted their own financial, legal and tax advisors with respect to the
economic, legal and tax consequences of delivery of the LP Units and have not
relied on the Informational Materials, Acquiror, the UPREIT, the REIT or any of
their officers, directors, affiliates or professional advisors for such advice
as to such consequences. All of the Interest Holders in Contributor are
Accredited Investors. No Contributor or LP Unit Recipient requires the consent
of any Interest Holder in order to consummate the transactions contemplated by
this Agreement, including, without limitation, to amend any partnership
agreement, operating agreement, charter or other Governing document of
Contributor or any LP Unit Recipient. All of Contributor and LP Unit Recipient
are domiciled in (and, in the case of non-individual LP Unit Recipient or
Contributor, formed under the laws of) the State of Maryland.
The representations and warranties in this Section 11.1 shall
be deemed remade by Contributor as of the Closing Date with the same force and
effect as if in fact specifically remade at that time. Such representations and
warranties shall survive the Closing.
26
11.2. Acquiror. Acquiror represents and warrants to
Contributor that the following matters are true and correct as of the Contract
Date, in all material respects, and shall be true and correct as of the Closing
Date, in all material respects:
11.2.1. The UPREIT is a limited partnership duly
authorized and validly existing under Delaware law. The performance of this
Agreement by the UPREIT has been duly authorized by the REIT in accordance with
the Partnership Agreement, and, upon the assignment of this Agreement to the
UPREIT, this Agreement will be binding on the UPREIT and enforceable against it
in accordance with its terms. The UPREIT has been at all times, and presently
intends to continue to be, classified as a partnership or a publicly traded
partnership taxable as a partnership for federal income tax purposes and not an
association taxable as a corporation or a publicly traded partnership taxable as
a corporation.
11.2.2. Acquiror is a corporation duly authorized and
validly existing under Delaware law. The execution and delivery of this
Agreement by Acquiror, and the performance of this Agreement by Acquiror, has
been duly authorized by Acquiror, and this Agreement is binding on Acquiror and
enforceable against it in accordance with its terms. No consent of any creditor,
investor, partner, shareholder, judicial or administrative body, Governmental
Authority, or other governmental body or agency, or other party to such
execution, delivery and performance by Acquiror is required. Neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in a breach of, default under, or
acceleration of, any agreement to which Acquiror is a party or by which Acquiror
is bound; or (ii) violate any restriction, court order, agreement or other legal
obligation to which Acquiror is subject.
11.2.3. The REIT is a real estate investment trust
duly authorized and validly existing under Maryland law. The performance of this
Agreement by the REIT, as general partner of the UPREIT, has been duly
authorized by the REIT, and this Agreement is binding on the REIT, as general
partner of the UPREIT, and enforceable against it, as general partner of the
UPREIT, in accordance with its terms.
11.2.4. Acquiror has available to it unrestricted
funds which it may use in its sole discretion to comply with the provisions of
this Agreement. Acquiror acknowledges and agrees that its obligations hereunder
are not contingent upon Acquiror obtaining third party financing.
11.2.5. To the best knowledge of the Acquiror, all
documents and other materials delivered by Acquiror in connection with this
Agreement are true, accurate, correct and complete in all material respects, and
fairly present the information set forth in a manner that is not misleading.
27
The representations and warranties in this Section 11.2 shall
be deemed remade by Contributor as of the Closing Date with the same force and
effect as if in fact specifically remade at that time. Such representations and
warranties shall survive the Closing.
12. COVENANTS OF CONTRIBUTOR. Effective as of the execution of this
Agreement, Contributor hereby covenants with Acquiror as follows:
12.1. Ground Lease; New Leases. Contributor shall not amend or
terminate either the Ground Lease or the Government Lease, nor shall Contributor
execute any new lease, license, or other agreement affecting the ownership or
operation of all or any portion of the Real Property or for personal property,
equipment, or vehicles, without in each case Acquiror's prior written approval,
which approval shall not be unreasonably withheld or delayed.
12.2. New Contracts. Contributor shall not enter into any
contract with respect to the ownership and operation of all or any portion of
the Real Property that will survive the Closing, or that would otherwise affect
the use, operation or enjoyment of the Real Property, without Acquiror's prior
written approval, which approval may granted or denied in Acquiror's sole
discretion, except for service contracts entered into in the ordinary course of
business that are terminable, without penalty, on not more than 30 days' notice,
for which no approval shall be required.
12.3. Insurance. The insurance policies described in Section
10.11 above shall remain continuously in force through and including the Closing
Date.
12.4. Operation of Real Property. Contributor shall operate
and manage the Real Property in a first class manner, maintaining present
services (including, but not limited to, pest control), and shall maintain the
Real Property in good repair and working order; shall keep on hand sufficient
materials, supplies, equipment and other Personal Property for the efficient
operation and management of the Real Property in a first class manner; and shall
perform, when due, all of Contributor's obligations under the Existing Loan
Documents, the Government Lease, Contracts, Governmental Approvals and other
agreements relating to the Real Property and otherwise in accordance with
applicable laws, ordinances, rules and regulations affecting the Real Property.
None of the Personal Property, fixtures or Inventory shall be removed from the
Real Property, unless replaced by personal property, fixtures or inventory of
equal or greater utility and value.
12.5. Pre-Closing Expenses. Contributor has paid or will pay
or cause to be paid in full, prior to the Closing, all bills and invoices
received prior to the Closing Date for labor, goods, material and services of
any kind relating to the Real Property and utility charges for the period prior
to the Closing. Contributor shall pay to Acquiror promptly upon demand all bills
and invoices received after the Closing Date for labor, goods, material and
services of any kind relating to the Real Property and utility charges for the
period prior to the Closing. Except as the parties may otherwise agree herein,
any alterations, installations, decorations and other
28
work required to be performed under any and all agreements affecting the Real
Property have been or will, by the Closing, be completed and paid for in full.
12.6. Good Faith. All actions required pursuant to this
Agreement that are necessary to effectuate the transaction contemplated herein
will be taken promptly and in good faith by Contributor, and Contributor shall
furnish Acquiror with such documents or further assurances as Acquiror may
reasonably require.
12.7. No Assignment. After the Contract Date and prior to the
Closing, Contributor shall not assign, alienate, lien, encumber or otherwise
transfer all or any part of the Real Property or any interest therein.
12.8. Availability of Records, Audit Representation Letter.
----------------------------------------------------
12.8.1. Upon Acquiror's reasonable request, for a
period of two years after the Closing, Contributor shall (i) make the Records
available to Acquiror for inspection, copying and audit by Acquiror's designated
accountants; and (ii) cooperate with Acquiror (without any third party expense
to Contributor) in obtaining any and all permits, licenses, authorizations, and
other Governmental Approvals necessary for the operation of the Real Property.
Without limitation of the foregoing in this Section 12.8, Contributor agrees to
abide by the terms of Exhibit E attached hereto. At any time before or within
two years after the Closing, Contributor further agrees to provide to the
Acquiror's designated independent auditor, upon the reasonable request of
Acquiror or such auditor, (x) access (to the same extent to which Acquiror would
be entitled to such access) to the books and records of the Real Property and
all related information (including the information listed on Exhibit E)
regarding the period for which Acquiror is required to have the Real Property
audited under the regulations of the SEC, and (y) a representation letter
delivered by Contributor regarding the books and records of the Real Property,
in substantially the form as attached hereto as Exhibit F.
12.8.2. In addition, during such two year period
Contributor shall provide, and cooperate in all reasonable respects in
providing, Acquiror with copies of, or access to, such factual information as
may be reasonably requested by Acquiror, and in the possession or control of
Contributor, to enable the REIT to issue one or more press releases concerning
the transaction that is the subject of this Agreement, to file a Current Report
on Form 8-K (as specified on Exhibit E attached hereto), if, as and when such
filing may be required by the SEC and to make any other filings that may be
required by any Governmental Authority. The obligation of Contributor to
cooperate in providing Acquiror with such information for Acquiror to file its
Current Report on Form 8-K shall survive the Closing.
12.9. Change in Conditions. Contributor shall promptly notify
Acquiror of any change in any condition with respect to the Real Property or of
the occurrence of any event or circumstance that makes any representation or
warranty of Contributor to Acquiror under this Agreement untrue or misleading,
or any covenant of Acquiror under this Agreement incapable or
29
less likely of being performed, it being understood that Contributor's
obligation to provide notice to Acquiror under this Section 12.9 shall in no way
relieve Contributor of any liability for a breach by Contributor of any of its
representations, warranties or covenants under this Agreement.
12.10. Partnership Structure. From the Contract Date through
and including the Closing Date, Contributor shall maintain the same composition
of its partners, shareholders and members as the case may be, as exists on the
Contract Date, unless otherwise expressly provided in this Agreement or
consented to by Acquiror in writing.
12.11. Cure of Violations. On or before the Closing Date,
Contributor shall exercise commercially reasonable efforts to cure (or escrow
sufficient funds at the Closing with the Title Company to cure) (i) all
violation(s) of law, code, ordinance or regulation that are the subject of any
written notice issued by a Governmental Authority with respect to the Real
Property after the Contract Date, and (ii) legal deficiencies discovered at or
in the Real Property after the Contract Date and before the Closing.
All covenants made in this Agreement by Contributor shall survive the
Closing for a period of two years, or such longer period as expressly provided
in any such covenant.
13. ENVIRONMENTAL WARRANTIES AND AGREEMENTS
---------------------------------------
13.1. Definitions. Unless the context otherwise requires:
13.1.1. "Environmental Law" or "Environmental
Laws" shall mean all applicable past, present or future federal, state and
local statutes, regulations, directives, ordinances, rules, court orders,
decrees, arbitration awards and the common law, which pertain to
environmental matters, contamination of any type whatsoever or health and
safety matters, as such have been amended, modified or supplemented from time
to time (including all present and future amendments thereto and
re-authorizations thereof). Environmental Laws include, without limitation,
those relating to: (1) the manufacture, processing, use, distribution,
treatment, storage, disposal, generation or transportation of Hazardous
Materials; (ii) air, soil, surface, subsurface, groundwater or noise
pollution; (iii) Releases; (iv) protection of wildlife, endangered species,
wetlands or natural resources; (v) Tanks; (vi) health and safety of employees
and other persons; and (vil) notification requirements relating to the
foregoing. Without limiting the above, Environmental Law also includes the
following: (i) the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Sections. 9601 et seq.), as amended ("CERCLA"); (ii)
the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act (42 U.S. C. Sections 6901 et seq.), as amended ("RCRA"); (iii)
the Emergency Planning and Community Right to Know Act of 1986 (42 U.S.C.
Sections 11001 et seq.), as amended; (iv) the Clean Air Act (42 U.S.C.
Sections 7401 et seq.), as amended; (v) the Clean Water Act (33 U.S.C.
Section 1251 et seq.), as amended; (vi) the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), as amended; (vii) the Hazardous Materials
Transportation Act (49 U.S.C. Sections 1801 et seq.), as
30
amended; (viii) the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. Section 136 et seq.), as amended; (ix) the Federal Safe Drinking Water
Act (42 U.S. C. Section 300f et seq.), as amended; (x) the Federal Radon and
Indoor Air Quality Research Act (42 U.S.C. Section 7401 note, et seq.), (xi)
the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), as
amended; (xii) any state, county, municipal or local statutes, laws or
ordinances similar or analogous to (including counterparts of) any of the
statutes listed above; and (xiii) any rules, regulations, directives, orders
or the like adopted pursuant to or implementing any of the above.
13.1.2. "Environmental Permit" or "Environmental
Permits" shall mean licenses, certificates, permits, directives, requirements,
registrations, government approvals, agreements, authorizations, and consents
which are required under or are issued pursuant to an Environmental Law or are
otherwise required by Governmental Authorities.
13.1.3. "Hazardous Conditions" refers to the
existence or presence of any Hazardous Materials on, in, under, or at, the Real
Property (including air, soil and groundwater) or any portion of any of them.
13.1.4. "Hazardous Material" or "Hazardous Materials"
shall mean any chemical, pollutant, contaminant, pesticide, petroleum or
petroleum product or by product, radioactive substance, solid waste (hazardous
or extremely hazardous), special, dangerous or toxic waste, substance, chemical
or material regulated, listed, limited or prohibited under an Environmental Law,
including without limitation: (i) friable or damaged asbestos,
asbestos-containing material, presumed asbestos-containing material,
polychlorinated biphenyls ("PCBs"), solvents and waste oil; (ii) any "hazardous
substance" as defined under CERCLA; and (iii) any "hazardous waste" as defined
under RCRA.
13.1.5. "Release" means any spill, discharge, leak,
migration, emission, escape, injection, dumping or other release or threatened
release of any Hazardous Material into the environment, whether or not
notification or reporting to any Governmental Authority was or is required.
Release includes, without limitation, historical releases and the meaning of
Release as defined under CERCLA.
13.1.6. "Remedial Action" shall mean any and all
corrective or remedial action, preventative measures, response, removal,
transport, disposal, clean-up, abatement, treatment and monitoring of Hazardous
Materials or Hazardous Conditions, whether voluntary or mandatory, and includes
all studies, assessments, reports or investigations performed in connection
therewith to determine if such actions are necessary or appropriate (including
investigations performed to determine the progress or status of any such
actions), all occurring on or after the Contract Date.
13.1.7. "Remedial Costs" shall include all costs,
liabilities, expenses and fees incurred on or after the date of this Agreement
in connection with Remedial Action, including but not limited to: (i) the fees
of environmental consultants and contractors; (ii)
31
reasonable attorneys' fees (including compensation for in-house and corporate
counsel provided such compensation does not exceed customary rates for
comparable services); (iii) the costs associated with the preparation of
reports, and laboratory analysis (including charges for expedited results if
reasonably necessary); (iv) regulatory, permitting and review fees; (v) costs of
soil and/or water treatment (including groundwater monitoring) and/or transport
and disposal; and (iv) the cost of supplies, equipment, material and utilities
used in connection with Remedial Action
13.1.8. "Tank" or "Tanks" means above-ground and
underground storage tanks, vessels and related equipment, including appurtenant
pipes, lines and fixtures containing or previously containing any Hazardous
Material or fraction thereof.
13.2. Warranties. Contributor hereby represents and warrants,
with respect to the Real Property, that the following matters are true and
correct as of the Contract Date, in all material respects, and shall be true and
correct as of the Closing Date, in all material respects:
13.2.1. Contributor have made available or delivered
to Acquiror originals (or true, complete and accurate copies) of all of the
documents in their possession, custody or control, which documents include
and/or relate to:
(a) All approvals, plans, specifications,
test borings, percolation tests, engineering studies, surveys or other
environmental data concerning the Real Property;
(b) All permits (including Environmental
Permits), approvals, registrations, Tank registration and/or closure
documentation, certificates, applications, notices, orders, directives, legal
pleadings, correspondence or other documents of any nature that Contributor, any
tenant of Contributor, any of Contributor's predecessors-in-title or any tenant
of Contributor's predecessors-in-title have submitted to, or received from, any
Governmental Authority regarding the Real Property and their use, compliance or
non-compliance with Environmental Laws; and
(c) The results of any investigation of the
Real Property including, but not limited to, Phase I or Phase II site
assessments, asbestos inspection and/or removal reports, tests or investigations
of soil or other substrate air, groundwater, surface water, or the building
interior, and any testing or investigation results relating to the removal or
abandonment of any Tanks from the Real Property.
13.2.2. To the best knowledge of Contributor, the
Real Property has been and continues to be owned and operated in material
compliance with all Environmental Laws and Environmental Permits.
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13.2.3. To the best knowledge of Contributor, there
have been no past and there are no pending or threatened: (i) claims,
complaints, notices, correspondence or requests for information received by
Contributor with respect to any violation or alleged violation of any
Environmental Law or Environmental Permit or with respect to any corrective or
remedial action for or cleanup of the Real Property or any portion thereof; and
(ii) written correspondence, claims, complaints, notices, or requests for
information from or to Contributor regarding any actual, potential or alleged
liability or obligation under or violation of any Environmental Law or
Environmental Permit with respect to the Real Property or any portion thereof.
13.2.4. To the best knowledge of Contributor, there
have been no Releases and there does not exist a threatened Release of a
Hazardous Material on, in, under or at the Real Property or any portion thereof.
13.2.5. The Real Property is not listed or, to the
best knowledge of Contributor, proposed or nominated for listing on the National
Priorities List pursuant to CERCLA, the Comprehensive Environmental Response and
Liability Information System or on any other similar list of sites under
analogous state laws.
13.2.6. Except as listed and described on Schedule
13.2.6, to the best knowledge of Contributor, there are no Tanks at, on or under
the Real Property. Contributor has not removed, closed or abandoned any Tanks at
the Real Property, and Contributor has no knowledge of the existence,
abandonment, closure or removal of Tanks at the Real Property.
13.2.7. To the best knowledge of Contributor, there
are no PCBs or friable or damaged asbestos at the Real Property.
13.2.8. To the best knowledge of Contributor, there
has been no storage, treatment, disposal, generation, transportation or Release
of any Hazardous Materials by Contributor or its predecessors in interest, or by
any other person or entity for which Contributor is or may be held responsible,
at, on, under, or about the Real Property (or any portion thereof) in violation
of, or which could give rise to any claim, obligation or liability under,
Environmental Laws.
The representations and warranties in this Section 13.2 shall
be deemed remade by Contributor as of the Closing Date with the same force and
effect as if in fact specifically remade at that time. Such representations and
warranties shall survive the Closing for a period of one year; provided,
however, that Acquiror shall not be entitled to bring a claim with respect to
any representation and warranty during such one year period if, on or prior to
the Closing Date, Acquiror acquired actual knowledge that the applicable
representation and warranty was not true in all material respects as of the
Closing Date.
13.3. Indemnity. Notwithstanding anything to the contrary in
this Agreement, with respect to Real Property, Contributor and each LP Unit
Recipient, jointly and severally,
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agree to and do hereby indemnify, defend and hold harmless Acquiror, the UPREIT
and the REIT and each of their respective partners, officers, directors,
shareholders, agents and employees, and each of their successors and assigns
(collectively, the "Acquiror Indemnified Parties"), from and against any and all
claims, losses, demands, liabilities, suits, administrative proceedings, causes
of action, costs and damages suffered by any Acquiror Indemnified Party, but
excluding consequential damages, and reasonable attorneys' fees of counsel
selected by any Acquiror Indemnified Party and other costs of defense, incurred,
arising against, or suffered by any Acquiror Indemnified Party, both known and
unknown, present and future, at law or in equity (collectively, "Losses"),
arising out of, by virtue of or related in any way to, a breach of any
representation, warranty or covenant set forth in Section 13, whether discovered
before or after the Closing.
Without limiting the generality of the foregoing, the
indemnification obligations set forth in the preceding paragraph shall include,
without limitation: (i) any and all Remedial Costs associated with any Tank,
Hazardous Material, Hazardous Condition or any Release; (ii) to the maximum
extent allowed by law, all fines and/or penalties that may be imposed in
connection with any Tank or the existence of any Hazardous Material on, at,
under, near, in or about the Real Property; (iii) the defense of any claim made
by any individual or entity (including any government, governmental agency or
entity) concerning any of the foregoing, which defense shall be conducted by
counsel and with the assistance of environmental advisors and consultants, in
all cases subject to the prior written approval of Acquiror; and (iv) reasonable
attorneys' fees and costs and environmental advisors' and consultants' fees
incurred by any of the Acquiror Indemnified Parties with respect to enforcing
its rights under this indemnification provision.
13.4. Reservation of Rights
---------------------
13.4.1. Intentionally omitted.
13.4.2. Acquiror shall have the right, but not the
obligation, to seek recovery for Losses it may incur, including, but not limited
to, all of its rights to (x) assert claims, causes of action, demands and suits
against any third party concerning Losses which Acquiror has incurred or may
incur in the future relating to the Real Property subject to this Agreement; (y)
retain control of any such third-party actions; and (z) retain in full any and
all amounts recovered thereby.
13.4.3. In the event of any litigation pursuant to
this Section 13, the prevailing party shall be entitled to recover its
reasonable attorney, consultant and witness fees and litigation costs from the
other party. All of the provisions of this Section 13, including, but not
limited to, any and all indemnities, shall survive the Closing to the extent
expressly set forth herein.
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14. ADDITIONAL CONDITIONS PRECEDENT TO CLOSING.
------------------------------------------
14.1. Acquiror's Additional Conditions Precedent. In addition
to the other conditions enumerated in this Agreement, the following shall be
Acquiror's Conditions Precedent:
14.1.1. Physical Condition. The physical condition of
Real Property shall be substantially the same on the Closing Date as on the
Contract Date, reasonable wear and tear excepted, unless the alteration of said
physical condition is the result of Damage. Without limiting the generality of
the foregoing, the parties acknowledge and agree that the failure by Contributor
to cure any violation described in Section 12.11 shall be a failure of this
condition precedent.
14.1.2. Pending Actions. At the Closing, there shall
be no administrative agency, litigation or governmental proceeding of any kind
whatsoever, pending or threatened with respect to the Real Property, (i) that,
after the Closing, would, in Acquiror's sole and absolute discretion, materially
and adversely affect the value or marketability of the Real Property or the
ability of Acquiror to operate the Real Property in the manner it is being
operated on the Contract Date, or (ii) for the purpose of enjoining or
preventing, or which question the validity or legality of, the transaction
contemplated hereby.
14.1.3. Intentionally Omitted.
14.1.4. Intentionally Omitted.
14.1.5. Flood Insurance. As of the Closing Date, if
the Real Property is located in a flood plain, Acquiror shall have obtained
flood plain insurance in form and substance acceptable to Acquiror.
14.1.6. Intentionally Omitted.
14.1.7. Assumed Indebtedness. Contributor shall
provide to Acquiror letters from each of the holders of the Existing Loan
Documents dated no earlier than two (2) days prior to the Closing Date,
approving the transfer of the Real Property to the UPREIT subject to the Assumed
Indebtedness, (i) setting forth the amount of principal and interest outstanding
on the Closing Date and confirming that there are no other amounts due
thereunder, and (ii) stating that any default under any of the Existing Loan
Documents will be resolved between Contributor and such holder. Such letters
shall be referred to collectively as the "Lender's Approvals."
14.1.8. Owners. The composition of partners,
shareholders and members of Contributor on the Closing Date shall be the same as
on the Contract Date.
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14.1.9. Bankruptcy. As of the Closing Date, neither
Contributor nor the Real Property shall be the subject of any bankruptcy
proceeding for which approval of this transaction has not been given and issued
by the applicable bankruptcy court.
14.1.10. Representations and Warranties True. The
representations and warranties of Contributor contained in this Agreement shall
be true and correct as of the Closing Date, in all material respects, as though
such representations and warranties were made on such date.
14.1.11. Covenants Performed. All covenants of
Contributor required to be performed on or prior to the Closing Date shall have
been performed, in all material respects .
14.1.12. Simultaneous Closing. The closing of the
transaction contemplated by that certain Purchase and Sale Agreement, dated of
even date herewith, by and between Acquiror and NELPP (the "NELPP Agreement")
shall occur simultaneously with the Closing contemplated hereunder.
14.2. Contributor's Additional Conditions Precedent. In
addition to the other conditions enumerated in this Agreement, including without
limitation the condition set forth in Section 2.1, the following shall be
Contributor's Conditions Precedent:
14.2.1. Representations and Warranties. The
representations and warranties of Acquiror contained in this Agreement shall be
true and correct as of the Closing Date, in all material respects, as though
such representations and warranties were made on such date.
14.2.2. Covenants. All covenants of Acquiror required
to be performed on or prior to the Closing Date shall have been performed, in
all material respects.
14.2.3. Simultaneous Closing. The transaction
contemplated by the NELPP Agreement shall occur simultaneously with the Closing
contemplated hereunder.
14.2.4. Pending Actions. At the Closing, there shall
be no administrative agency, litigation or governmental proceeding of any kind
whatsoever, pending or threatened, for the purpose of enjoining or preventing,
or which question the validity or legality of, the transaction contemplated
hereby.
14.2.5. Bankruptcy. As of the Closing Date, neither
Acquiror, the REIT nor the UPREIT shall be the subject of any bankruptcy
proceeding for which approval of this transaction has not been given and issued
by the applicable bankruptcy court.
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15. LEASES-CONDITIONS PRECEDENT AND WARRANTIES WITH RESPECT THERETO.
---------------------------------------------------------------
15.1. Warranties as to Leases. With respect to the tenancy of
Government, Contributor represents and warrants to Acquiror that the following
matters are true and correct as of the Contract Date, in all material respects,
and shall be true and correct as of the Closing Date, in all material respects:
15.1.1. There is no lease, license agreement or
occupancy agreement, either written or oral, granting any person or entity the
right to occupy all or any portion of the Land and/or Improvements other than
the Government Lease. Assuming Government is bound thereby, the Government Lease
is in full force and effect strictly according to the terms set forth therein
and in the Rent Roll (as defined in Exhibit D attached hereto), and has not been
modified, amended, or altered, in writing or otherwise. Government is legally
required to pay all sums and perform all obligations set forth in the Government
Lease, without concessions, abatements, offsets or other bases for relief or
adjustment, except as set forth expressly in the Government Lease;
15.1.2. All obligations of the lessor under the
Government Lease that accrue to the date hereof have been performed, including,
but not limited to, all required tenant improvements, cash or other inducements,
rent abatements or moratoria, installations and construction (for which payment
in full has been made in all cases), and Government has unconditionally accepted
lessor's performance of such obligations. Government has not asserted any
offsets, defenses or claims available against rent payable by it or other
performance or obligations otherwise due from it under the Government Lease;
15.1.3. Government is not in default under or is in
arrears in the payment of any sums or in the performance of any obligations
required of it under the Government Lease (but Acquiror acknowledges that
Government pays its Base Rent for each month at the end of such month).
Government has not prepaid any rent or other charges;
15.1.4. During the 18-month period immediately
preceding the Contract Date, and continuing thereafter to and through the
Closing Date: (i) Government has not, at any time, been more than 30 days
delinquent in its respective payment of any and all sums due under the terms of
the Government Lease; (ii) Government has not requested that Contributor provide
Government with any reduction in the Government's monetary obligations under the
Government Lease; (iii) Government has not expressed to Contributor (whether
orally or in writing) any weakness or material decline in Government's financial
condition, nor has Government requested that Contributor, in its capacity as
landlord, permit the Government to sublease its leased premises, or assign the
Government Lease, or terminate the Government Lease on an accelerated basis;
(iv) Contributor has not written off any delinquent sums owed by Government to
satisfy its obligation to contribute to the payment of real estate taxes, common
area maintenance charges, and insurance premiums; and (v) Contributor has not
had (nor is it
37
currently engaged in) any dispute (whether of a formal or an informal nature)
with Government concerning Government's obligations to make payments under the
terms of the Government Lease toward real estate taxes, insurance premiums and
common area maintenance charges or other charges imposed under the Government
Lease;
15.1.5. Contributor has no reason to believe that
Government is, or may become, unable or unwilling to perform any or all of its
obligations under the Government Lease, whether for financial or legal reasons
or otherwise;
15.1.6. Neither base rent ("Base Rent"), nor
regularly payable estimated tenant contributions or operating expenses,
insurance premiums, real estate taxes, common area charges, and similar or other
"pass through" or non-base rent items including, without limitation,
cost-of-living or so-called "C.P.I." or other such adjustments (collectively
"Additional Rent"), nor any other item payable by Government under the
Government Lease has been heretofore prepaid for more than one month nor shall
it be prepaid between the Contract Date and the Closing Date for more than one
month;
15.1.7. There is no guarantor of the Government
Lease;
15.1.8. Except as set forth on Schedule 15.1.8, there
are no brokers' commissions, finders' fees, or other charges payable or to
become payable to any third party on behalf of Contributor as a result of or in
connection with the Government Lease or any transaction related thereto,
including, but not limited to, any exercised or unexercised option(s) to expand
or renew. The amounts of such brokers' commissions, finders' fees, or other
charges are accurately set forth on Schedule 15.1.8;
15.1.9. There is no security deposit provided for
under the Government Lease;
15.1.10. Contributor shall pay, and retain sole and
exclusive responsibility for, all expenses due on or before the Closing Date
connected with or arising out of the negotiation, execution and delivery of the
Government Lease, including, without limitation, brokers' commissions, leasing
fees and recording fees (as well as the cost of all tenant improvements not paid
for by Government), and Contributor shall be deemed to have certified and
warranted payment thereof to Acquiror at the Closing;
15.1.11. Government has not, by virtue of the
Government Lease or any other agreement or understanding, any purchase option
with respect to the Real Property, or any portion thereof, or any right of first
refusal to purchase the Real Property, or a portion thereof, whether triggered
by the transactions contemplated by this Agreement or by a subsequent sale of
the Real Property or a portion thereof. Government has not, by virtue of the
Government Lease or any other agreement or understanding, any of the following:
(a) the right or option to expand its tenancy into space at the Real Property
other than the space that such Government is currently
38
occupying; or (b) the right or option to contract the space at the Real Property
that such Government is currently occupying; and
15.1.12. (A) To the best knowledge of Contributor,
Government has not sublet its leased premises; (B) no assignment of any interest
in the Government Lease has been made by Government; and (C) there are no
outstanding requests from Government to Contributor, requesting any consent to
an assignment of the Government Lease or to a sublease of all or some portion of
Government's leased premises.
The representations and warranties in this Section 15.1 shall
be deemed remade by Contributor as of the Closing Date with the same force and
effect as if in fact specifically remade at that time. Such representations and
warranties shall survive the Closing for a period of one year, except for the
representation and warranty set forth in Section 15.1.8 which shall survive for
four (4) years; provided, however, that Acquiror shall not be entitled to bring
a claim with respect to any representation and warranty during such one year
period if, on or prior to the Closing Date, Acquiror acquired actual knowledge
that the applicable representation and warranty was not true in all material
respects as of the Closing Date.
15.2. Estoppel Certificates from Government. It shall be an
Acquiror's Condition Precedent that Contributor shall have obtained and
delivered to Acquiror, on or prior to the Closing Date, a tenant's estoppel
certificate (the "Tenant Estoppel Certificate"), dated no earlier than 30 days
prior to the Closing Date, from the Government. The Tenant Estoppel Certificate
shall be certified to Acquiror and any other party reasonably designated by
Acquiror. If Contributor (despite its commercially reasonable efforts) is unable
to obtain an Tenant Estoppel Certificate from Government, Acquiror's sole remedy
shall be to either (i) terminate this Agreement because of non-satisfaction of
an Acquiror's Condition Precedent; or (ii) proceed to close and accept
Contributor's own Tenant Estoppel Certificate with respect to the Government
Lease (and any Tenant Estoppel Certificate so executed by Contributor shall also
be tailored, in a manner mutually and reasonably acceptable to Acquiror and
Contributor, to reflect its issuance by the landlord, rather than Government).
16. CLOSING DELIVERIES.
------------------
16.1. Contributor's Deliveries. At the Closing (or such other
times as may be specified below), Contributor shall deliver or cause to be
delivered to Acquiror the following, each in form and substance reasonably
acceptable to Contributor and Acquiror and their respective counsel:
16.1.1. Assignment of Ground Lease. An Assignment of
Ground Lease executed by Contributor conveying the leasehold estate in the Real
Property to Acquiror free and clear of all liens, claims and encumbrances except
for the Permitted Exceptions and corresponding state, county and municipal
transfer tax declaration forms, if applicable;
39
16.1.2. ▇▇▇▇ of Sale. Special Warranty ▇▇▇▇ of Sale
executed by Contributor assigning, conveying and warranting to Acquiror title to
the Personal Property and Inventory, free and clear of all encumbrances, other
than the Permitted Exceptions, and assignments of title to all vehicles, if any,
included in the Personal Property, together with the original certificates of
title thereto;
16.1.3. General Assignment. An assignment executed by
Contributor to Acquiror of all right, title and interest of Contributor and its
agents in and to the Intangible Personal Property (including, but not limited
to, the Governmental Approvals);
16.1.4. Assignment of Contracts. An assignment
executed by Contributor and Acquiror assigning to Acquiror Contributor's right,
title and interest in and to those of the Contracts that will remain in effect
after Closing (the "Assigned Contracts"), with (i) the agreement of Contributor
and each LP Unit Recipient, jointly and severally, to indemnify, protect, defend
and hold the Acquiror Indemnified Parties harmless from and against any and all
claims, damages, losses, suits, proceedings, costs and expenses (including, but
not limited to, reasonable attorneys' fees) arising in connection with the
Assigned Contracts and relating to the period of time prior to Closing and (ii)
the corresponding agreement of Acquiror to indemnify, protect, defend and hold
Contributor harmless for claims arising in connection with the Assigned
Contracts and relating to the period of time from and after the Closing.
Contributor shall also assign (i) all guarantees and warranties given to
Contributor in connection with the operation. construction, improvement,
alteration or repair of the Real Property, and (ii) the management agreement for
the Real Property (and secure the manager's consent to the termination of such
agreement at the end of the month in which the Closing Date occurs);
16.1.5. Assignment of Leases and Estoppel
Certificates. An assignment executed by Contributor and Acquiror assigning
Contributor's right, title and interest in and to the Government Lease
(including all deposits thereunder), with the reciprocal indemnity provisions
described in Section 16.1.4 and an indemnity with respect to the subject matter
of Section 15.1.8 and Section 26, together with the Tenant Estoppel Certificate
of Government in conformity with Section 15.2;
16.1.6. Lender's Approvals. The Lender's Approvals
from the holders of all of the Assumed Indebtedness in conformity with Section
11.1.7.
16.1.7. Keys. Keys to all locks located at the Real
Property;
16.1.8. Affidavit of Title and ALTA Statement. As to
the Real Property, an Affidavit of Title (or comparable document) as required by
the Title Company in the State of Maryland as a condition to the deletion of the
general exceptions of Schedule B, Section 2 of each Title Report, executed by
Contributor, as applicable, and in form and substance acceptable to the Title
Company and to Acquiror (as if the Ground Lease was evidenced of record by a
memorandum of lease or other similar instrument);
40
16.1.9. Letter to Government. A letter executed by
Contributor and, if applicable, its management agent, addressed to Government,
in form provided by Acquiror, notifying Government of the transfer of the Real
Property and directing payment of all rents accruing after the Closing Date to
be made to Acquiror or at its direction;
16.1.10. Intentionally Omitted;
16.1.11. Original Documents. To the extent not
previously delivered to Acquiror, originals of the Government Lease, Assigned
Contracts and Governmental Approvals (or, with respect to the Assigned Contracts
and Governmental Approvals only, if the originals have been lost or destroyed,
copies certified by Contributor as true, correct and complete);
16.1.12. Closing Statement. A closing statement
conforming to the proration and other relevant provisions of this Agreement (the
"Closing Statement") duly executed by Contributor;
16.1.13. Plans and Specifications. All plans and
specifications relating to the Real Property in Contributor's possession and
control or otherwise available to Contributor;
16.1.14. Tax Bills. Copies of the most currently
available Tax Bills to the extent not previously delivered to Acquiror;
16.1.15. Entity Transfer Certificate. Entity transfer
certifications confirming that Contributor is a "United States Person" within
the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended;
16.1.16. Rent Roll. A Rent Roll, prepared as of the
Closing Date, certified by Contributor to be true, complete and correct through
the Closing Date;
16.1.17. Registration Rights Confirmation. An
acknowledgment by the REIT that Contributor is entitled to the benefits of the
Registration Rights Agreement as result of its admission as a limited partner in
the UPREIT;
16.1.18. Partnership Agreement. The documents that
are referred to in the Partnership Agreement (as amended) in connection with the
admission of an additional limited partner (including, but not limited to, the
Amendment), each of such documents to be duly executed by Contributor or other
person or entity receiving LP Units hereunder;
16.1.19. LP Units Schedule. The LP Units Schedule set
forth on Schedule 4.1.2, duly executed by Contributor;
41
16.1.20. Certificates of Occupancy. Currently valid
certificates of occupancy (or comparable permits or licenses) with respect to
the entirety of Real Property;
16.1.21. Closing Certificate. A certificate, signed
by Contributor and the LP Unit Recipients, certifying to the UPREIT that the
representations and warranties of Contributor and the LP Unit Recipients,
respectively, contained in this Agreement are true and correct as of the Closing
Date and that all covenants required to be performed by Contributor and the LP
Unit Recipients, respectively, prior to the Closing Date have been performed;
16.1.22. Other. Such other documents and instruments
as may reasonably be required by Acquiror (including, without limitation, those
of Contributor's Deliveries in Contributor's possession or control that have not
previously been delivered to Acquiror), its (or its underwriters' or lenders')
counsel or the Title Company and that may be necessary to consummate the
transaction that is the subject of this Agreement and to otherwise give effect
to the agreements of the parties hereto.
After the Closing, Contributor shall execute and deliver to Acquiror
such further documents and instruments as Acquiror shall reasonably request to
effect this transaction and otherwise effect the agreements of the parties
hereto.
16.2. Acquiror's Deliveries. Unless previously delivered to
Contributor, at the Closing (or such other times as may be specified below),
Acquiror shall cause to be delivered to Contributor the following, each in form
and substance reasonably acceptable to Contributor and Acquiror and their
respective counsel:
16.2.1. Registration Confirmation. A statement from
the UPREIT confirming the registration of the LP Units in the books and records
of the UPREIT;
16.2.2. Partnership Agreement. A copy of the
Partnership Agreement, duly certified by the secretary of the REIT as true,
complete and correct;
16.2.3. Amendment. The Amendment, duly executed by
the REIT;
16.2.4. Organizational Documents. A copy certified by
the Secretary of State of the State of Delaware and Maryland, respectively, of
the Articles of Incorporation of Acquiror and the REIT and a good standing
certificate for Acquiror and the REIT; (ii) a copy certified by the Secretary of
State of the State of Delaware of the certificate of limited partnership of the
UPREIT; and (iii) a copy, certified by the secretary of the REIT, of the
resolution of the REIT's board of directors, authorizing the transaction
described herein;
16.2.5. Closing Statement. The Closing Statement,
duly executed by the UPREIT;
42
16.2.6. Intentionally Omitted;
16.2.7. Assignment. The assignment by Acquiror of its
rights and obligations hereunder to the UPREIT;
16.2.8. LP Units Schedule. The LP Units Schedule set
forth on Schedule 4.1.2, duly executed by the UPREIT;
16.2.9. Government Letter. A letter to Government
described in Section 16.1.9 above, duly executed by the UPREIT; and
16.2.10. Other. Such other documents and instruments
as may reasonably be required by Contributor, the LP Unit Recipient or its or
their respective counsel or the Title Company and that are necessary to
consummate the transaction which is the subject of this Agreement and to
otherwise effect the agreements of the parties hereto.
After Closing, Acquiror shall execute and deliver to Contributor such
further documents and instruments as Contributor shall reasonably request to
effect this transaction and otherwise effect the agreements of the parties
hereto.
17. PRORATIONS AND ADJUSTMENTS. The following shall be prorated and
adjusted between Contributor and Acquiror as of the Closing Date, except as
otherwise specified:
17.1. The amount of the unspent reserve account established
under the Government Lease (which amount equals $21,710.81 as of the Contract
Date) shall be reimbursed to Acquiror;
17.2. Acquiror and Contributor shall divide the cost of
transfer taxes or recording charges, if any, equally between them, and
Contributor shall reimburse Acquiror in the amount of sales taxes that are due
and payable as a result of the transfer of the Personal Property and/or the
Inventory, if any. Each party's respective obligations to pay or reimburse such
taxes shall survive the Closing;
17.3. Water, electricity, sewer, gas, telephone and other
utility charges shall be prorated based, to the extent practicable, on final
meter readings and final invoices, or, in the event final readings and invoices
are not available, based on the most currently available billing information,
and reprorated upon issuance of final utility bills;
17.4. Amounts paid or payable under any Assigned Contracts
shall be prorated based, to the extent practicable, on final invoices, or, in
the event final invoices are not available. based on the most currently
available billing information, and reprorated upon issuance of final invoices;
43
17.5. All real estate, personal property and ad valorem taxes
applicable to the Real Property and levied with respect to tax year 1998 shall
be prorated as of the Closing Date (but not any delinquent charges or interest,
all of which shall be paid by Contributor), utilizing the actual final Tax Bills
for those Real Property. Prior to or at the Closing, Contributor shall pay or
have paid all Tax Bills that are due and payable prior to or on the Closing Date
and shall furnish evidence of such payment to Acquiror and the Title Company.
Each party's respective obligations to reprorate real estate taxes shall survive
the Closing;
17.6. All assessments, general or special, shall be prorated
as of the Closing Date on a "due date" basis such that Contributor shall be
responsible for any installments of assessments which are first due or payable
prior to the Closing Date and Acquiror shall be responsible for any installments
of assessments which are first due or payable on or after the Closing Date;
17.7. Commissions of leasing and rental agents for the
Government Lease entered into as of or prior to the Closing Date, whether with
respect to base lease term, future expansions, renewals, or otherwise, shall be
paid in full at or prior to the Closing by Contributor, without contribution or
proration from Acquiror, except (i) those commissions set forth on Schedule
15.1.8 which become due on or before December 31, 1998, which commissions shall
be prorated, and (ii) those commissions set forth on Schedule 15.1.8 which
become due after December 31, 1998, which commissions shall be paid by Acquiror
when and if due;
17.8. The amount of any payments to be made by the Government
between the Closing Date and December 31, 1998 on account of tenant improvement
work performed by Contributor shall be reimbursed by Acquiror to Contributor at
Closing (based on an amount of $8,604.50 per month, which amount shall be
$25,813.50);
17.9. All Base Rents and other charges, including, without
limitation, all Additional Rent, shall be prorated as of the Closing Date. At
the time(s) of final calculation and collection from Government of Additional
Rent for 1998, there shall be a re-proration between Contributor and Acquiror as
to Additional Rent adjustments, with such re-prorations being payable to the
appropriate recipient in cash. Such re-proration shall be paid upon Acquiror's
presentation of its final accounting to Contributor, certified as to accuracy by
Acquiror. At the Closing, no "Delinquent Rents" (rents or other charges that are
due as of the Closing) shall be prorated in favor of Contributor. The parties'
respective obligations to reprorate Additional Rent shall survive the Closing.
Notwithstanding the foregoing, Acquiror shall use reasonable efforts after the
Closing Date to collect any Delinquent Rents due to Contributor from Government,
but Acquiror shall not be required to ▇▇▇ Government. All rents and other
charges received by (or for the benefit of) Acquiror from Government after the
Closing shall be first applied against current and past due obligations owed to,
or for the benefit of, Acquiror (with respect to those obligations accruing
subsequent to the Closing Date), and any excess shall be delivered to
Contributor, but only to the extent of amounts in default and owed to, and for
the benefit of, Contributor for the period prior to the Closing Date. In no
event, however, shall any sums be
44
paid to Contributor to the extent Contributor have been previously reimbursed
for such default out of any security deposit and security deposits have been
appropriately prorated hereunder;
17.10. Distributions in respect of the LP Units acquired by
the LP Unit Recipients shall begin to accrue from and after the Closing Date
(notwithstanding the fact that such date may not be the applicable Record Date
under the Partnership Agreement), and the amount of distributions paid or to be
paid to the LP Unit Recipients for any quarter shall be prorated accordingly;
17.11. The Contribution Consideration and the Purchase Price
(as defined in the NELPP Agreement), each of which reflect the value that
Contributor and Acquiror and NELPP and Acquiror, respectively, place upon
Contributor's interest in the Real Property and NELPP's interest in the Real
Property, respectively, as of the Contract Date, shall be adjusted to give
effect to all of the applicable terms and conditions of the Ground Lease and the
Existing Loan Documents. The purpose of the foregoing adjustment, which
Contributor and Acquiror agree is required by virtue of the Ground Lease and the
Existing Loan Documents, is to ensure that the value of Contributor's interest
in the Real Property is accurately reflected as of the Closing Date.
Notwithstanding the foregoing, in no event shall the sum of the Contribution
Consideration and the Purchase Price as of the Closing Date exceed the sum of
the Contribution Consideration and the Purchase Price as of the Contract Date.
Following the adjustment described in this Section 17.11 and the consummation of
the transaction contemplated hereby, Acquiror shall have no obligation to
Contributor for any sum due under, or in connection with, the Ground Lease or
the Existing Loan Documents.
17.12. Such other items that are customarily prorated in
transactions of this nature shall be ratably prorated.
For purposes of calculating prorations, Acquiror shall be deemed to be
in title to the Real Property, and therefore entitled to the income therefrom
and responsible for the expenses thereof, for the entire Closing Date. All such
prorations shall be made on the basis of the actual number of days of the year
and month that shall have elapsed as of the Closing Date. Bills received after
the Closing that relate to expenses incurred, services performed or other
amounts allocable to the period prior to the Closing Date shall be paid, in
cash, by Contributor, to the extent due and owing. Bills received by Contributor
after the Closing Date that relate to expenses incurred, services performed or
other amounts allocable to the period on or after the Closing Date, shall be
paid, in cash, by the Acquiror, to the extent due and owing.
18. CLOSING EXPENSES. Contributor will pay the entire cost of all
release fees, prepayment fees and any other fees in connection with the payoff,
release and satisfaction of the Assumed Indebtedness, one-half of any escrows
hereunder, and all fees imposed by its accountants and attorneys in connection
with this Agreement and the transaction contemplated hereunder. The provisions
of this Section 18 shall survive the Closing without time limitation.
45
19. DESTRUCTION, LOSS OR DIMINUTION OF REAL PROPERTY. If, prior to the
Closing, all or any portion of the Real Property is damaged by fire or other
natural casualty (collectively, "Damage"), or is taken or made subject to
condemnation, eminent domain or other governmental acquisition proceedings
(collectively, "Eminent Domain"), then the following procedures shall apply:
19.1. If the aggregate cost of repair or replacement in
connection with any Damage at the Real Property or the value of the Eminent
Domain (collectively, "repair and/or replacement") is $50,000 or less, in the
mutual and reasonable opinions of Acquiror and Contributor, Acquiror shall close
and take the Real Property in question as diminished by the Damage or Eminent
Domain, as the case may be, subject to a reduction in the Contribution
Consideration otherwise due at the Closing, in the full amount of the cost of
repair and/or replacement. Any casualty insurance or condemnation proceeds shall
be the sole property of Contributor.
19.2. If the aggregate cost of repair and/or replacement at
the Real Property is greater than $50,000, in the mutual and reasonable opinions
of Acquiror and Contributor, then Acquiror, in its sole and absolute discretion,
may elect any of the following options: (i) Acquiror may terminate this
Agreement by written notice to Contributor, and neither party shall have any
further liability to the other under this Agreement, except as otherwise
provided herein; or (ii) Acquiror may proceed to close on all of the Real
Property, subject to (1) a reduction in the Contribution Consideration equal to
$50,000 otherwise due at the Closing, and (2) an assignment of the proceeds of
Contributor's casualty insurance proceeds for all Damage (or condemnation awards
for any Eminent Domain) in excess of $50,000, together with payment to Acquiror
by Contributor of any uninsured or deductible amount not covered by such
proceeds. In such latter event, Contributor shall fully cooperate with Acquiror
in the adjustment and settlement of the insurance claim or governmental
acquisition proceeding and if, as of the Closing, the insurance proceeds (or
condemnation award) assignable to Acquiror shall not have been collected from
the insurer or Governmental Authority, then a cash credit in the amount thereof
shall be given to Acquiror, to be repaid to Contributor out of and upon
Acquiror's actual receipt of insurance proceeds (or condemnation award). The
proceeds and benefits under any rent loss or business interruption policies
attributable to the period following the Closing shall likewise be transferred
and paid over (and, if applicable, likewise credited on an interim basis) to
Acquiror.
19.3. In the event of a dispute between Contributor and
Acquiror with respect to the cost of repair and/or replacement with respect to
the matters set forth in this Section 19, an engineer designated by Contributor
and an engineer designated by Acquiror shall select an independent engineer
licensed to practice in the jurisdiction where the Real Property in question is
located who shall resolve such dispute. All fees, costs and expenses of such
third engineer so selected shall be shared equally by Acquiror and Contributor.
46
20. DEFAULT; INDEMNITY.
------------------
20.1. Default by Contributor. If (i) any of Contributor's
representations and warranties contained herein shall not be true and correct,
in all material respects, on the Contract Date, (ii) Contributor fails to
perform any of the covenants and agreements contained herein to be performed by
Contributor within the time for performance as specified herein (including
Contributor's obligation to close), or (iii) any of the Acquiror's Conditions
Precedent shall not have been satisfied as of the Closing Date, then Acquiror
may elect either to (x) terminate Acquiror's obligations under this Agreement by
written notice to Contributor, in which event Acquiror shall retain all rights
and remedies available to it, or (y) close and, except in the case of clause
(iii) above, file an action for either or both of specific performance and
damages to compel Contributor to cure all or any of such default(s), in whole or
in part, whereupon Acquiror shall be entitled to deduct from the Contribution
Consideration, the cost of such action and cure, and all reasonable expenses
incurred by Acquiror in connection therewith, including, but not limited to,
reasonable attorneys' fees. Notwithstanding anything to the contrary herein and
in addition to any other remedies of Acquiror, Acquiror shall be entitled to
recover actual (but not consequential) damages suffered by Acquiror by reason of
Contributor's defaults hereunder and/or any delay occasioned thereby, including
Acquiror's Reasonable Costs.
20.2. Default by Acquiror. In the event Acquiror defaults in
its obligations to acquire the Real Property, then Contributor's sole and
exclusive remedy shall be to terminate this Agreement and retain the Deposit as
liquidated damages. Contributor shall have no other remedy for any default by
Acquiror. Acquiror and Contributor acknowledge that the damages to Contributor
resulting from Acquiror's breach would be difficult, if not impossible, to
ascertain with any accuracy, and that the liquidated damage amount set forth in
this Section 20.2 represents both parties' best efforts to approximate such
potential damages.
20.3. Indemnification.
---------------
20.3.1. Acquiror, the REIT and the UPREIT.
Contributor and each LP Unit Recipient, jointly and severally, agree to and do
hereby indemnify, defend and hold harmless Acquiror, the Acquiror Indemnified
Parties from and against any and all Losses arising out of, by virtue of or
related in any way to, a breach of any representation, warranty or covenant of
Contributor set forth in this Agreement, whether discovered before or after the
Closing.
20.3.2. Contributor and the LP Unit Recipients.
Acquiror agrees to and does hereby indemnify, defend and hold harmless
Contributor and the LP Unit Recipients and each of their respective partners,
officers, directors, shareholders, agents and employees, and each of their
successors and assigns, from and against any and all Losses arising out of, by
virtue of or related in any way to, a breach of any representation, warranty or
covenant of Acquiror set forth in this Agreement, whether discovered before or
after the Closing.
20.3.3. Limitations.
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20.3.3.1 ACQUIROR ACKNOWLEDGES THAT NEITHER
CONTRIBUTOR NOR ANY OF THE LP UNIT RECIPIENTS IS MAKING ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO
ANY MATTERS CONCERNING THE REAL PROPERTY OR THE TRANSACTIONS CONTEMPLATED HEREBY
OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. ACQUIROR FURTHER
ACKNOWLEDGES AND AGREES THAT, PROVIDED IT HAS THE OPPORTUNITY TO PERFORM THE
INSPECTIONS CONTEMPLATED BY SECTION 8 OF THIS AGREEMENT, IT WILL HAVE BEEN GIVEN
A FULL OPPORTUNITY TO EXAMINE THE REAL PROPERTY AND, EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT (INCLUDING THE REPRESENTATIONS AND WARRANTIES AND THE
INDEMNIFICATION PROVISIONS RELATING THERETO), IS RELYING UPON ITS OWN
INDEPENDENT INVESTIGATION AND ANALYSIS OF THE REAL PROPERTY AS IT DEEMS
NECESSARY OR APPROPRIATE.
20.3.3.2 The indemnification obligations
hereunder shall be limited to claims made prior to the last date of survival of
the applicable representation, warranty or covenant referred to in this
Agreement (and the absence of any express survival period shall be construed to
mean that such representation, warranty or covenant survives without limit).
20.3.3.3 The amount of the indemnifying
party's liability under this Agreement shall be determined taking into account
(A) any applicable insurance proceeds actually received by the indemnified
party, and (B) any other savings realized in connection with such liability that
actually reduce the overall impact of the Losses upon the indemnified party.
20.3.3.4 Notwithstanding anything in this
Agreement to the contrary, neither Contributor nor any LP Unit Recipient shall
have any liability to any Acquiror Indemnified Party for any breach of a
representation, warranty or covenant hereunder, or under any law applicable to
the Real Property or the transaction contemplated hereby, unless the valid
claims for all such breaches collectively aggregate more than $60,000, in which
event the full amount of such valid claims shall be actionable, up to the cap
set forth in the following sentence (except for any claim based on fraud by
Contributor or any LP Unit Recipient in connection with this Agreement, which
claim shall not be subject to the limitations of this Section 20.3.3.4).
Further, any recovery against Contributor or any LP Unit Recipient for any
breach of a representation, warranty or covenant hereunder, or under any law
applicable to the Real Property or the transaction contemplated hereby, shall be
limited to each Acquiror Indemnified Party's actual damages and to an amount
which, when combined with any and all other recovery from Contributor and the LP
Units Recipients, shall not exceed $300,000 in the aggregate (except for any
recovery based on fraud by Contributor or any LP Unit Recipient in connection
with this Agreement, which recovery shall not be subject to the limitations of
this Section 20.3.3.4).
48
20.3.3.5 Notwithstanding anything in this
Agreement to the contrary, Acquiror shall not have any liability to Contributor
or any LP Unit Recipient for any breach of a representation, warranty or
covenant hereunder, or under any law applicable to the Real Property or the
transaction contemplated hereby, unless the valid claims for all such breaches
collectively aggregate more than $60,000, in which event the full amount of such
valid claims shall be actionable, up to the cap set forth in the following
sentence (except for any claim based on fraud by Acquiror in connection with
this Agreement, which claim shall not be subject to the limitations of this
Section 20.3.3.5). Further, any recovery against Acquiror for any breach of a
representation, warranty or covenant hereunder, or under any law applicable to
the Real Property or the transaction contemplated hereby, shall be limited to
Contributor's and each LP Unit Recipient's actual damages and to an amount
which, when combined with any and all other recovery from Acquiror, shall not
exceed $300,000 in the aggregate (except for any recovery based on fraud by
Acquiror in connection with this Agreement, which recovery shall not be subject
to the limitations of this Section 20.3.3.5).
20.3.3.6 Each indemnified party shall give
reasonably prompt notice to each indemnifying party of any action or proceeding
commenced against the indemnified party in respect of which indemnity may be
sought hereunder, but failure so to notify an indemnifying party (i) shall not
relieve it from any liability which it may have under any indemnity provided
herein unless and to the extent it did not otherwise learn of such action and
the lack of notice by the indemnified party results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) shall not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party hereunder other than its indemnification obligation. If the indemnifying
party so elects within a reasonable time after receipt of such notice, the
indemnifying party may assume the defense of such action or proceeding at such
indemnifying party's own expense with counsel chosen by the indemnifying party;
provided, however, that, if such indemnified party or parties reasonably
determine that a conflict of interest exists where it is advisable for such
indemnified party or parties to be represented by separate counsel or that, upon
advice of counsel, there may be legal defenses available to them which are
different from or in addition to those available to the indemnifying party, then
the indemnifying party shall not be entitled to separate counsel at the
indemnifying party's expense. If an indemnifying party is not so entitled to
assume the defense of such action or does not assume such defense, after having
received the notice referred to in the first sentence of this Section 20.3.3.6,
the indemnifying party or parties will pay the reasonable fees and expenses of
counsel for the indemnified party or parties. In such event however, no
indemnifying party will be liable for any settlement effected without the
written consent of such indemnifying party. If an indemnifying party is entitled
to assume, and assumes, the defense of such action or proceeding in accordance
with this Section, such indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified parties incurred thereafter in
connection with such action or proceeding.
21. SUCCESSORS AND ASSIGNS. The terms, conditions and covenants of this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective
49
nominees, successors, beneficiaries and assigns; provided, however, no direct or
indirect conveyance, assignment or transfer of any interest whatsoever of, in or
to the Real Property or of this Agreement shall be made by Contributor during
the term of this Agreement. Subject to the provisions of Section 2.1 hereof,
Acquiror may assign all or any of its right, title and interest under this
Agreement to the UPREIT, the REIT or to any corporate or partnership entity
affiliated with, or related to, the UPREIT or the REIT ("Affiliate"). For
purposes of this Agreement, an Affiliate shall, without limitation, include any
entity having common ownership or management with Acquiror or the REIT,
including, but not limited to, the UPREIT. No such assignee shall accrue any
obligations or liabilities hereunder until the effective date of such
assignment. In addition to its right of assignment, Acquiror shall also have the
right, exercisable prior to the Closing, to designate any Affiliate, as the
grantee or transferee of any or all of the conveyances, transfers and
assignments to be made by Contributor at the Closing hereunder, independent of,
or in addition to, any assignment of this Agreement. In the event of an
assignment of this Agreement by Acquiror (but not in the event of the
designation of any Affiliate), its assignee shall be deemed to be the Acquiror
hereunder for all purposes hereof, and shall have all rights of Acquiror
hereunder (including but not limited to, the right of further assignment), and
the assignor shall be released from all liability hereunder. In the event that
an Affiliate shall be designated as a transferee hereunder, that transferee
shall have the benefit of all of the representations and rights which, by the
terms of this Agreement, are incorporated in or related to the conveyance in
question.
22. LITIGATION. In the event of litigation between the parties with
respect to the Real Property, this Agreement, the performance of their
respective obligations hereunder or the effect of a termination under this
Agreement, the losing party shall pay all costs and expenses incurred by the
prevailing party in connection with such litigation, including, but not limited
to, reasonable attorneys' fees of counsel selected by the prevailing party. The
parties hereby further acknowledge and agree that in the event of litigation
between them, as contemplated above, and the resolution of that litigation
through compromise, settlement, or partial judgment, the court before which such
litigation is initially brought shall have the right to allocate responsibility,
between Contributor and Acquiror, for all costs and expenses (including, but not
limited to, attorneys' reasonable fees) incurred by both Contributor and
Acquiror in the pursuit of that litigation resolved through compromise,
settlement or partial judgment. Notwithstanding any provision of this Agreement
to the contrary, the obligations of the parties under this Section 22 shall
survive termination of this Agreement and the Closing, if applicable.
23. NOTICES. Any notice, demand or request which may be permitted,
required or desired to be given in connection therewith shall be given in
writing and directed to Contributor and Acquiror as follows:
50
Contributor: M.O.R. XXIX Associates Limited Partnership
c/o Manekin Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, P.A.
its attorneys: Twentieth Floor
▇▇▇▇▇▇▇ Center South
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Acquiror: COPT ACQUISITIONS, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to
its attorneys: ▇▇▇▇▇▇, ▇▇▇▇▇ & BOCKIUS LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notices shall be deemed properly delivered and received when and if
either (i) personally delivered, including via facsimile; or (ii) on the first
business day after deposit with a commercial overnight courier for delivery on
the next business day. Any party may change its address for delivery of notices
by properly notifying the others pursuant to this Section 23.
24. BENEFIT. This Agreement is for the benefit only of the parties
hereto and their nominees, successors, beneficiaries and assignees as permitted
in Section 21 above and no other person or entity shall be entitled to rely
hereon, receive any benefit herefrom or enforce against any party hereto any
provision hereof.
51
25. LIMITATION OF LIABILITY. All liabilities and obligations of
Acquiror under this Agreement shall be those of Acquiror only. Subject to the
consummation of the Assignment, Contributor shall not, under any circumstances,
look to any person or entity other than Acquiror, including, but not limited to,
any Affiliate of Acquiror, for performance or satisfaction of Acquiror's
obligations and liabilities in connection with this Agreement. Without limiting
the foregoing, none of the REIT or any Affiliate of Acquiror or their respective
members, partners and shareholders shall incur any liability under any document
or agreement required in connection with this Agreement, and Acquiror shall not
be required (in connection with this Agreement) to execute any document or
agreement. that does not expressly exculpate and release such parties and theirs
respective successors, assigns, affiliates, officers, shareholders, partners,
employees, agents and representatives from any liability or obligation arising
out of, or in connection with, this Agreement. Except as otherwise specifically
provided in this Agreement, none of the UPREIT, the REIT and Acquiror shall
assume or discharge any debts, obligations, liabilities or commitments of
Contributor or NELPP, whether accrued now or hereafter, fixed or contingent,
known or unknown.
26. BROKERAGE. Acquiror and Contributor each represents to the other
that it has not dealt with any broker or agent in connection with this
transaction other than the Manekin Corporation ("Broker"). Contributor shall pay
Broker a commission pursuant to a separate agreement, if, as and when the
Closing occurs, but not otherwise. Each party hereby indemnifies and holds
harmless the other party from all loss, cost and expense (including reasonable
attorneys' fees) arising out of a breach of its representation or undertaking
set forth in this Section 26. The provisions of this Section 26 shall survive
Closing or the termination of this Agreement.
27. REASONABLE EFFORTS. Contributor and Acquiror shall use their
reasonable, diligent and good faith efforts, and shall cooperate with and assist
each other in their efforts, to obtain any and all consents and approvals of
third parties (including, but not limited to, governmental authorities) to the
transaction contemplated hereby, and to otherwise perform as may be necessary or
otherwise reasonably requested by the other party to effectuate the transfer of
the Real Property to Acquiror in accordance with, and to otherwise carry out the
purposes of, this Agreement.
28. INTENTIONALLY OMITTED.
---------------------
29. INTENTIONALLY OMITTED.
---------------------
30. MISCELLANEOUS.
-------------
30.1. Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the transaction contemplated
herein, and all prior or contemporaneous oral agreements, understandings,
representations and statements, and all prior
52
written agreements, understandings, letters of intent and proposals are merged
into this Agreement. Neither this Agreement nor any provisions hereof may be
waived, modified,
amended, discharged or terminated except by an instrument in writing signed by
the party against which the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument.
30.2. Time of the Essence. Time is of the essence of this
Agreement. If any, date herein set forth for the performance of any obligations
by Contributor or Acquiror or for the delivery of any instrument or notice as
herein provided should be on a Saturday, Sunday or legal holiday, the compliance
with such obligations or delivery shall be deemed acceptable on the next
business day following such Saturday, Sunday or legal holiday. As used herein,
the term "legal holiday" means any state or federal holiday for which financial
institutions or post offices are Generally closed in the Commonwealth of
Pennsylvania for observance thereof.
30.3. Conditions Precedent. The obligations of the parties to
consummate the transactions contemplated hereby are subject to the express
conditions precedent set forth in this Agreement, each of which is for the sole
benefit of the applicable party and may be waived at any time by written notice
thereof from such party to the other. The waiver of any particular condition
precedent shall not constitute the waiver of any other.
30.4. Construction. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of the fact
that it may have been prepared by counsel for one of the parties, it being
recognized that both Contributor and Acquiror have contributed substantially and
materially to the preparation of this Agreement. The headings of various
Sections in this Agreement are for convenience only, and are not to be utilized
in construing the content or meaning of the substantive provisions hereof.
30.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland.
30.6. Partial Invalidity. The provisions hereof shall be
deemed independent and severable, and the invalidity or partial invalidity or
enforceability of any one provision shall not affect the validity of
enforceability of any other provision hereof.
30.7. Expenses. Except and to the extent as otherwise
expressly provided to the contrary herein, Acquiror and Contributor shall each
bear its own respective costs and expenses relating to the transactions
contemplated hereby, including, without limitation, fees and expenses of legal
counsel or other representatives for the services used, hired or connected with
the proposed transactions mentioned above.
30.8. Intentionally Omitted.
53
30.9. Escrow Provisions. Title Company shall hold the Deposit
in accordance with the terms and provisions of this Agreement, subject to the
following:
30.9.1. Obligations. Title Company undertakes to
perform only such duties as are expressly set forth in this Agreement and no
implied duties or obligations shall be read into this Agreement against Title
Company.
30.9.2. Reliance. Title Company may act in reliance
upon any writing or instrument or signature which it, in good faith, believes,
and any statement or assertion contained in such writing or instrument, and may
assume that any person purporting to give any writing, notice, advice or
instrument in connection with the provisions of this Agreement has been duly
authorized to do so. Title Company shall not be liable in any manner for the
sufficiency or correctness as to form, manner and execution, or validity of any
instrument deposited in escrow, nor as to the identity, authority, or right of
any person executing the same, and Title Company's duties under this Agreement
shall be limited to those provided in this Agreement.
30.9.3. Disputes. If the parties (including Title
Company) shall be in disagreement about the interpretation of this Agreement, or
about their respective rights and obligations, or the propriety of any action
contemplated by Title Company, or the application of the Deposit, Title Company
shall hold the Deposit until the receipt of written instructions from both
Acquiror and Contributor or a final order of a court of competent jurisdiction.
In addition, in any such event, Title Company may, but shall not be required to,
file an action in interpleader to resolve the disagreement. Title Company shall
be indemnified for all costs and reasonable attorneys' fees in its capacity as
Title Company in connection with any such interpleader action and shall be fully
protected in suspending all or part of its activities under this Agreement until
a final judgment in the interpleader action is received.
30.9.4. Counsel. Title Company may consult with
counsel of its own choice and have full and complete authorization and
protection in accordance with the opinion of such counsel. Title Company shall
otherwise not be liable for any mistakes of fact or errors of judgment, or for
any acts or omissions of any kind, unless caused by its negligence or willful
misconduct.
30.10. Certain Securities Matters. No sale of LP Units is
intended by the parties by virtue of their execution of this Agreement. Any sale
of LP Units referred to in this Agreement will occur, if at all, upon the
Closing.
30.11. Counterparts. This Agreement may be executed in any
number of identical counterparts, any of which may contain the signatures of
less than all parties, and all of which together shall constitute a single
agreement.
30.12. Calculation of Time Periods. Notwithstanding anything
to the contrary contained in this Agreement, any period of time provided for in
this Agreement that is intended
54
to expire on or prior to the Closing Date, but that would extend beyond the
Closing Date if permitted to run its full term, shall be deemed to expire upon
the Closing.
[SIGNATURE PAGE FOLLOWS THIS PAGE]
55
IN WITNESS WHEREOF, the parties hereto have executed this
Contribution Agreement the day and year first above written
Contributor and LP Unit Recipient:
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP,
a Maryland limited partnership
By: RA & DM, Inc., its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President
Acquiror:
COPT ACQUISITIONS, INC., a Delaware corporation
By:
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, III, President
56
IN WITNESS WHEREOF, the parties hereto have executed this
Contribution Agreement the day and year first above written
Contributor and LP Unit Recipient:
M.O.R. XXIX ASSOCIATES LIMITED PARTNERSHIP,
a Maryland limited partnership
By: RA & DM, Inc., its general partner
By:
-------------------------------
Name:
Its:
Acquiror:
COPT ACQUISITIONS, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
56
Exhibit "A"
Legal Description
BEING known and designated as Parcel A, as shown on Plat entitled,
"Columbia, Rivers Corporate Park, ▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇, ▇, ▇, ▇ and
Lot 1, Sheets 3 and 4 of 6", and recorded among the Land Records of ▇▇▇▇▇▇
County, Maryland, as Plat Nos. 6017 and 6018, which Parcel A is more
particularly described as follows, according to a survey by KCI Technologies,
Inc. dated September 23, 1998;
BEGINNING for the same at a point on the northwesterly right of way of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ feet wide, said point being known as point number 1307, as
shown on a plat entitled "Rivers Corporate Park, Section, Area 2, Parcels A, B,
C, D, and Lot 1", sheet 3 of 6 and recorded among the Plat Records of ▇▇▇▇▇▇
County as Plat Number 6017; thence binding on said right of way line and also
running along the outline of Parcel A, as shown on said plat and also shown on a
plat entitled "Rivers ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇ Parcels A, B, C, D, and
Lot 1", sheet 4 of 6 and recorded among the Plat Records of ▇▇▇▇▇▇ County as
Plat Number 6018.
1. South 47 degrees 54 minutes 07 seconds West 425.20 feet; thence
2. By a curve to the right, with a radius 25.00 feet an arc length of
21.42 feet, said curve having a chord bearing South 72 degrees 26
minutes 51 seconds West 20.77 feet, thence
3. By a curve to the left, with a radius 59.00 feet and an arc length
256.28 feet, said curve having a chord bearing South 27 degrees 26
minutes 44 seconds East 97.32 feet, thence leaving said right of way
line and still running along the outline of said Parcel A as shown on
Plat Number 6018
4. Due South 381.74 feet, thence
5. South 56 degrees 31 minutes 45 seconds East 315.00 feet, thence
6. South 26 degrees 57 minutes 27 seconds West 320.00 feet, thence
7. South 87 degrees 41 minutes 59 seconds West 280.09 feet, thence
8. North 56 degrees 31 minutes 45 seconds West 290.11 feet, thence
9. North 24 degrees 58 minutes 08 seconds East 289.01 feet, thence
10. North 42 degrees 08 minutes 15 seconds West 84.96 feet, thence
11. ▇▇▇ ▇▇▇▇ 365.00 feet, thence
12. North 08 degrees 20 minutes 55 seconds West 482.11 feet, thence
13. North 30 degrees 51 minutes 28 seconds East 370.44 feet, thence
14. Due East 210.00 feet, thence
15. North 62 degrees 07 minutes 19 seconds East 156.12 feet, thence
16. North 76 degrees 16 minutes 58 seconds East 261.46 feet, thence
17. South 55 degrees 47 minutes 01 seconds East 329.67 feet to the point
of beginning.
CONTAINING 20.3011 acres or land more of less.
Exhibit B
Personal Property
None
B-1
Investor Materials
1) The undersigned, the sole owner of the general partnership interest in M.O.R.
XXIX Associates Limited Partnership, a Maryland limited partnership, hereby
certifies that each and every one of its equity owners are accredited investors
because each such owner has an individual net worth, or such owner and its
spouse have a joint net worth, in excess of $1,000,000. The term "net worth" as
used in the preceding sentence means the excess of total assets at fair market
value, including home and personal property, over total liabilities.
RA & DM, Inc., a Maryland Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President
Each of the undersigned hereby certifies that he together with the
other are the sole equity owners of RA & DM, Inc., a Maryland corporation, and
that he has an individual net worth, or he together with his spouse have a joint
net worth, in excess of $1,000,000. The term "net worth" as used in the
preceding sentence means the excess of total assets at fair market value,
including home and personal property, over total liabilities.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
2) The undersigned, the beneficial owner of all of the limited partnership
interests in M.O.R. XXIX Associates Limited Partnership, a Maryland limited
partnership, hereby certifies that it is a partnership, not formed for the
specific purpose of acquiring limited partnership interests in M.O.R. XXIX
Associates Limited Partnership, with total assets in excess of $5,000,000. The
term "total assets" as used in the preceding sentence means the aggregate
current fair market value of the undersigned's assets.
M.R.U. Limited Partnership, a Maryland Limited Partnership
By: RA & DM, Inc., a Maryland corporation, its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President
Exhibit D
Contributor's Deliveries
1. Copies of the Government Lease.
2. A rent roll (the "Rent Roll") indicating all Base Rent,
escalations, "pass-throughs" (including, but not limited to, real estate taxes,
utilities, insurance and/or operating expenses), Additional Rent, rent
adjustments (including, but not limited to, Consumer Price Index, or other
adjustments) construction allowances, abatements, concessions, lease
commencement and expiration dates, renewal or expansion options, options to
purchase, cancellation rights, security and/or other deposits in connection with
the Government Lease.
3. Intentionally omitted.
4. Copies of all hazard, rent loss, liability and other
insurance policies currently in force with respect to the Real Property and/or
Contributor's business (the "Existing Insurance Policies").
5. Copies of audited financial statements and all income and
expense statements, year-end financial and monthly and annual operating
statements (collectively, the "Financial Statements") for the Real Property for
calendar years 1995, 1996, 1997 and, to the extent available, 1998. Contributor
shall deliver to Acquiror all Financial Statements prepared in the ordinary
course of business promptly upon preparation thereof relating to periods prior
to Closing, even if prepared after Closing.
6. Copies of all engineering and architectural plans and
specifications, drawings, studies and surveys relating to the Real Property
(collectively the "Plans"), in Contributor's possession or control, and copies
of any reports or studies (including, but not limited to, inspection reports of
governmental authorities or insurance carriers), in Contributor's possession or
control, in respect of the physical condition or operation of the Real Property
or recommended improvements thereto.
7. Copies of the ▇▇▇▇ or bills issued for the years 1995,
1996, 1997 and, if available, 1998, for all real estate taxes and personal
property taxes and copies of any and all notices pertaining to real estate taxes
or assessments applicable to the Real Property. Contributor shall promptly
deliver to Acquiror copies of any such bills or notices received by Contributor
after the Contract Date, even if received after Closing.
D-1
8. Copies of all brokerage commission, management, leasing,
maintenance, repair, service, pest control and supply contracts (including,
without limitation, janitorial, elevator, scavenger, laundry and landscaping
agreements), equipment rental agreements and master antenna agreements (if
applicable), and any other contracts or agreements relating to or affecting the
Real Property (other than Major Repair Contracts, as defined herein) or which
will be binding upon the Real Property or Acquiror subsequent to Closing, all as
amended (the "Contracts").
9. Copies of all contracts for repairs or capital replacements
to be performed at the Real Property, or covering, such work performed during
the two (2) years immediately preceding the Contract Date for a contract price
in excess of $10,000.00 ("Major Repair Contracts").
10. Copies of all certificates of occupancy, licenses,
permits, authorizations and approvals required by law or by any governmental
authority having Jurisdiction thereover in respect of the Real Property, or any
portion thereof, occupancy thereof or any present use thereof (the "Governmental
Approvals").
11. Copies of any operating budgets for the Real Property for
the years 1996, 1997, and 1998.
12. Copies of the documents pursuant to which Contributor is
organized and operates its business, together with proof of the authority of the
signatory or signatories of this Agreement on behalf of Contributor to execute
this Agreement.
13. Copies of all guarantees, warranties and other documents
or instruments evidencing or relating to the Intangible Personal Property.
14. Copies of all unrecorded easements and licenses of
Contributor for the benefit of the Real Property or portion thereof or of third
parties burdening the Real Property or portion thereof.
15. Copies of all of the Existing Loan Documents (as defined
in the body of this Agreement) and any correspondence or notices pertaining
thereto.
D-2
Exhibit E
SEC Reporting Requirements
For the period of time commencing on the date of the Contribution
Agreement and continuing through the second anniversary of the Closing Date,
Contributor shall, from time to time, upon reasonable advance notice from the
REIT, provide the REIT and its representatives, agents and employees with access
to all financial and other information in its possession or with respect to
which it has reasonable access pertaining to the period of Contributor's
ownership and operation of the Real Property, which information is relevant and
reasonably necessary, in the opinion of the REITs outside, third party
accountants (the "Accountants"), to enable the REIT and its Accountants to
prepare financial statements in compliance with any or all of (a) Rule 3-14 of
Regulation X-X of the Securities and Exchange Commission (the "Commission"); (b)
any other rule issued by the Commission and applicable to REIT; and (c) any
registration statement, report or disclosure statement filed with the Commission
by, or on behalf of the REIT; provided, however, that in any such event(s), the
UPREIT shall reimburse Contributor for those third party, out-of-pocket costs
and expenses that Contributor incur in order to comply with the foregoing
requirements. Contributor acknowledges and agrees that the following is a
representative description of the information and documentation that the REIT
and the Accountants may require in order to comply with (a), (b) and (c) above.
Contributor shall provide such information, and documentation on a per-Real
Property basis, if available.
1. Rent rolls for the calendar month in which the closing occurs and the
eleven (11) calendar months immediately preceding the calendar month in
which the Closing occurs;
2. Contributor's written analysis of both (a) scheduled increases in base
rent required under the Government Lease, and (b) rent concessions
granted in the Government Lease, and the straight line effect of (a)
and (b);
3. Contributor's internally-prepared Financial Statements;
4. Access to the Government Lease;
5. Contributor's budgeted annual and monthly income and expenses, compared
to actual annual and monthly income and expenses;
6. Most currently available real estate tax bills;
7. Access to Contributor's cash receipt journal(s) and bank statements for
the Real Property;
8. Contributor's general ledger with respect to the Real Property;
E-1
9. Contributor's schedule of expense reimbursements required under the
Government Lease;
10. Schedule of those items of repairs and maintenance performed by, or at
the direction of Contributor, during Contributor's final fiscal year in
which Contributor owns and operates the Real Property (the "Final
Fiscal Year");
11. Schedule of those capital improvements and fixed asset additions made
by, or at the direction of, Contributor during the Final Fiscal Year;
12. Access to Contributor's invoices with respect to expenditures made
during the Final Fiscal Year; and
13. Access (during normal and customary business hours) to responsible
personnel to answer accounting questions.
E-2
Exhibit F
Audit Representation Letter
[Date]
Dear Sirs:
We are writing at your request to confirm our understanding that your
audit of the statement of operating income for the year ended December 31, 1997,
was made for the purpose of expressing an opinion as to whether the statement of
operating income presents fairly, in all material respects, the results of
operations of [Name of Real Property] in conformity with generally accepted
accounting principles. In connection with your audit we confirm, to the best of
our knowledge and belief, the following representations made during your audit.
1. All financial records, board minutes and data related to the
property have been made available to you.
2. There have been no:
a. Irregularities involving any member of management or
employees who have significant roles in the system of internal
accounting control structure.
b. Irregularities involving other employees that could have a
material effect on the financial statements.
c. Communications from regulatory agencies concerning
noncompliance with, or deficiencies in, financial reporting
practices that could have a material effect on the financial
statements.
d. Violations or possible violations of laws or regulations,
the effects of which should be considered for disclosure in
the financial statements or as a basis for recording a loss
contingency.
3. There are no:
a. Unasserted claims or assessments that are probable of
assertion and must be disclosed in accordance with Statement
of Financial Accounting Standards No. 5.
F-1
b. Material liabilities or gain or loss contingencies
(including oral and written guarantees) that are required to
be accrued or disclosed by Statement of Financial Accounting
Standards No. 5.
c. Material transactions that have not been properly recorded
in the accounting records underlying the financial statements.
d. Events that have occurred subsequent to December 31, 1997
in the financial statements that would require adjustment to,
or disclosure in, the financial statements, except for the
sale which you are aware of.
4. Appropriate adjustment, when material, has been made for:
a. Uncollectible amounts recorded under lease contracts.
b. Rental income received in advance.
c. Rent concessions, abatements, or rent holidays.
5. The Company has complied with all aspects of contractual agreements
that would have a material effect on the financial statements in the event of
noncompliance.
6. All significant related party transactions have been properly
recorded or disclosed in the financial statements.
7. In the opinion of the undersigned the _____________ and
______________ financial information provided to you contains all adjustments
necessary for a fair presentation of operating income.
By:
[Contributor/Contributor's Manager]
F-2
Exhibit H
HRD Declarant Estoppel Certificate
To: M.O.R. XXIX Associates Limited Partnership ("M.O.R."), ground tenant
under that certain Amended and Restated Ground Lease dated May 2, 1985,
by and between New England Life Pension Properties II ("NELPP"), as
lessor and M.O.R., as lessee, as amended by that certain First
Amendment to Ground Lease, dated December 24, 1986, and as further
amended by that certain Second Amendment to Ground Lease, dated October
15, 1997.
The undersigned hereby certifies to and for the benefit of M.O.R., the
tenant occupying that certain lot or parcel of ground situate in the
Sixth Election District of ▇▇▇▇▇▇ County, in the State of Maryland, and
better described in the Deed attached hereto as Exhibit "1", as
follows:
1. The undersigned is the Grantor under the Deed attached hereto as
Exhibit "1".
2. As of the date hereof, neither NELPP nor any occupant of the
aforementioned property is in any way in breach or violation of any of
the covenants and/or restrictions contained in Exhibit "A" of the
aforementioned Deed including, but not limited to, the specific
property use restrictions contained therein, and the covenant requiring
NELPP to have installed, and to operate and maintain upon NELPP's
property, the supplemental street lighting required therein, such
lighting having been also subject to approval by the Architectural
Review Committee.
3. The undersigned is also party to that certain Rivers Corporate Park
Declaration of Covenants, Conditions and Restrictions dated December
18, 1981 ("Declaration"), and recorded among the Land Records of ▇▇▇▇▇▇
County in Liber 1083, folio 392, a copy of which is attached hereto as
Exhibit "2".
4. As of the date hereof, neither NELPP nor any occupant of the
aforementioned property is in any way in breach or violation of any of
the covenants, conditions, restrictions and required approvals
contained in the Declaration, including, but not limited to:
a. The specific property use restrictions contained in Exhibit
"B" of the Declaration;
b. The fifty-foot building height restriction contained in
Section 4.3;
c. The above-surface restrictions for pipes, cables and lines and
the approval requirement regarding auxiliary machinery,
equipment or facilities contained in Section 4.4;
H-1
d. The parking restrictions contained in Section 4.5;
e. The loading and outside storage restrictions and approval
requirements contained in Section 4.6;
f. The approval requirements regarding signage contained in
Section 4.7;
g. The ground vibration restriction contained in Section 4.8;
h. The landscaping covenants and approval requirements contained
in Section 4.15;
i. The plan and specification approval requirements contained in
Section 5.4 and the general construction requirements
contained in Article V;
j. The temporary structure restrictions and approval requirements
contained in Section 5.12;
k. The front, back and rear setback restrictions contained in
Section 6.1; and
l. The resubdivision restrictions and approval requirements
contained in Section 12.2.
5. As of the date hereof, neither NELPP nor any occupant of the
aforementioned property owes any fees for the cost of any abatement or
removal of violations or breaches of any of the restrictions contained
in the Declaration (as such are permitted under Article X of the
Declaration), and no liens have been placed upon the aforementioned
property as also permitted under Article X of the Declaration.
6. The statements contained herein may be relied upon by M.O.R. and NELPP
and any of their respective affiliates, subsidiaries, successors and/or
assigns.
7. The undersigned signatory signing this Certificate on behalf of HRD has
all requisite authority to do so.
DATED: ___________________, 1998
HRD:
By: _______________________________
Print Name:
Print Title:
H-2
CPRA Declarant Estoppel Certificate
To: M.O.R. XXIX Associates Limited Partnership ("M.O.R."), ground tenant
under that certain Amended and Restated Ground Lease dated May 2, 1985,
by and between New England Life Pension Properties II ("NELPP"), as
lessor and M.O.R., as lessee, as amended by that certain First
Amendment to Ground Lease, dated December 24, 1986, and as further
amended by that certain Second Amendment to Ground Lease, dated October
15, 1997.
The undersigned hereby certifies to and for the benefit of M.O.R., the
tenant occupying that certain lot or parcel of ground situate in the
Sixth Election District of ▇▇▇▇▇▇ County, in the State of Maryland, a
description of which is attached hereto as Exhibit "A", as follows:
1. The undersigned is the Grantor under a Deed, Agreement and Declaration
of Covenants, Easements, Charges and Liens dated December 13, 1966
("Deed"), and recorded among the Land Records of ▇▇▇▇▇▇ County in Liber
463, folio 158, between The Columbia Parks and Recreation Association,
Inc. ("CPRA") as Grantor and C. ▇▇▇▇▇▇ ▇▇▇▇ as Grantee and HRD, a copy
of which is attached hereto as Exhibit "B".
2. As of the date hereof, NELPP or the occupant of the aforementioned
property have paid all Annual Charges (as that term is used in the
Deed) applicable to NELPP's property, and any applicable interest or
costs owed thereon, that have been assessed against the Assessable
Property (as that term is used in the Deed and applies to NELPP's
property) and CPRA is not currently attempting to enforce any liens,
nor is it preparing to file such, against NELPP's property.
3. The request for CPRA's completion of this Certificate is made pursuant
to Section 2.06 of the Deed, wherein CPRA has agreed to furnish a
written certificate within a reasonable period of time.
4. The statements contained herein may be relied upon by M.O.R. and NELPP
and any of their respective affiliates, subsidiaries, successors and/or
assigns.
H-3
5. The undersigned signatory signing this Certificate on behalf of CPRA
has all requisite authority to do so.
DATED: ___________________, 1998
CPRA:
By: _______________________________
Print Name:
Print Title:
H-4
Schedule 4.1.2
LP Units Distribution At Closing
Ownership Percentage
LP Unit Recipient in the Real Property Number of LP Units
----------------- -------------------- ------------------
Contributor 100% All LP Units Issued At The
Closing
Schedule 5.2
Real Property Contacts
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇
Schedule 10.4
Service Contract
See attached list
Schedule 10.15
Real Estate Matters
None
Schedule 10.17
Lease Controversies
None
Schedule 10.19
Assumed Indebtedness
Existing Loan Documents - NELPP First Mortgage
----------------------------------------------
A.Purchase Money Deed of Trust and Security Agreement dated December
28, 1984 by and between New England Life Pension Properties II; A Real Estate
Limited Partnership ("NELPP") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Original Trustees") for the benefit of Mercantile-Safe Deposit and Trust
Company ("Mercantile") recorded in Liber 1314 at 166.
B.Parcel A Deed of Trust Note in the original principal amount of
$2,750,000.00 dated December 28, 1984 made by M.O.R. XXIX Associates Limited
Partnership ("M.O.R. XXIX") for the benefit of Mercantile.
C.First Modification to Deed of Trust recorded in Liber 1354 at folio
488.
D.Modification to the Note.
E.Deed of Appointment of Substitute Trustee recorded in Liber 1354 at
folio 491.
F.Second Modification to Deed of Trust recorded in Liber 1354 at folio
493.
Existing Loan Documents - NELPP Second Mortgage
-----------------------------------------------
1. Second Deed of Trust and Security Agreement dated May 1, 1986 and
recorded in Liber 1473 at page 292.
2. Note dated May 1, 1986 made by M.O.R. XXIX for the benefit of NELPP.
Description of Defaults if any
------------------------------
None
Outstanding Principal Amount as of October 30, 1998
---------------------------------------------------
First Note balance $8,814,621.00
Second Note balance $1,000,000.00
Schedule 11.1.2
Ownership Interests
Beneficial Owner of Partnership Interest Type of Interest Ownership Interest
---------------------------------------- ---------------- ------------------
RA & DM, Inc. General Partner 1%
M.R.U. Limited Partnership Limited Partner 99%
Schedule 13.2.6
Tanks
None
Schedule 15.1.8
Broker's Commissions
Year Broker Annual Payment
---- ------ --------------
1998 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇/Frames $38,304
▇▇▇▇▇ & Co. $13,032
1999 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇/Frames $32,720
▇▇▇▇▇ & Co. $13,032
2000 ▇▇▇▇▇ & Co. $13,032
2001 ▇▇▇▇▇ & Co. $13,032
2002 ▇▇▇▇▇ & Co. $13,032