EXHIBIT 10.15
CAPITAL AUTOMOTIVE L.P.
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AGREEMENT FOR CONTRIBUTION OF INTERESTS
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November 24, 1997
TABLE OF CONTENTS
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Page
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I. CONTRIBUTION OF INTERESTS.......................................... -1-
1.1 Certain Definitions...................................... -1-
1.2 Contribution............................................. -3-
1.3 Consideration for Contribution........................... -3-
1.4 [Intentionally omitted].................................. -3-
1.5 Subject to Partnership Agreement......................... -3-
1.6 Capitalized Terms........................................ -3-
II. ADJUSTMENTS........................................................ -3-
2.1 Unit Adjustment.......................................... -3-
2.2 Adjustments with Respect to Units........................ -4-
III. REDEMPTION OF UNITS................................................ -4-
3.1 Redemption Right; Limit on Redemptions................... -4-
3.2 Registered Shares........................................ -4-
IV. OPERATION OF PROPERTY THROUGH CLOSING.............................. -4-
4.1 Business Practice........................................ -4-
4.2 No Sale or Encumbrance................................... -5-
4.3 Leases, Service Contracts and Management Contracts....... -5-
4.4 Termination of Leases; New Company Leases................ -5-
4.5 Compliance............................................... -5-
4.6 Notice of Inaccuracy or Incompleteness................... -5-
4.7 Access................................................... -6-
4.8 Insurance................................................ -6-
4.9 Fulfillment of Obligation................................ -6-
4.10 Financial Statements and Reports......................... -6-
V. STATUS OF TITLE TO PROPERTY........................................ -6-
5.1 State of Title........................................... -6-
5.2 Preliminary Evidence of Title............................ -6-
5.3 Title Defects............................................ -8-
VI. CLOSING PRORATIONS AND ADJUSTMENTS................................. -9-
6.1 Prorations and Adjustments............................... -9-
VII. CLOSING............................................................ -10-
7.1 Closing Date............................................. -10-
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7.2 Closing Documents........................................ -10-
7.3 Conditions to the Partnership's Obligation to Close...... -14-
7.4 Conditions to the Contributor's Obligation to Close...... -16-
7.5 Transaction Costs........................................ -16-
VIII. CASUALTY LOSS AND CONDEMNATION................................... -17-
8.1 Casualty................................................. -17-
8.2 Condemnation or Taking................................... -17-
IX. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS............... -18-
9.1 Organization............................................. -18-
9.2 Authority................................................ -18-
9.3 Interest in Contributed Properties....................... -18-
9.4 Investment............................................... -19-
9.5 Title to the Properties.................................. -20-
9.6 No Defaults.............................................. -21-
9.7 No Litigation; No Condemnation........................... -21-
9.8 No Violation............................................. -21-
9.9 Required Obligations..................................... -22-
9.10 Condition of Properties.................................. -22-
9.11 Warranties............................................... -22-
9.12 Utilities................................................ -22-
9.13 Zoning................................................... -22-
9.14 Improvements............................................. -22-
9.15 Environmental Matters.................................... -23-
9.16 Insurance................................................ -25-
9.17 Management............................................... -25-
9.18 Compliance............................................... -25-
9.19 Leases; Rent Rolls....................................... -25-
9.20 Service Contracts; Management Contracts.................. -27-
9.21 Permits.................................................. -27-
9.22 Financial Statements..................................... -28-
9.23 Undisclosed Liabilities.................................. -28-
9.24 Contracts................................................ -28-
9.25 Tax Matters.............................................. -28-
9.26 Employee Benefit Liabilities............................. -28-
9.27 [Intentionally Omitted].................................. -28-
9.28 Taxes.................................................... -29-
9.29 Special Filings.......................................... -29-
9.30 [Intentionally Omitted].................................. -29-
9.31 Books and Records........................................ -29-
9.32 No Brokers............................................... -29-
9.33 All Material Information................................. -29-
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9.34 Survival of Warranties.................................. -30-
X. [INTENTIONALLY OMITTED]............................................ -30-
XI. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PARTNERSHIP...................................................... -30-
11.1 Organization, Good Standing and Qualification........... -30-
11.2 Authorization........................................... -30-
11.3 No Violation............................................ -31-
11.4 Public Offering......................................... -31-
11.5 Tax Status.............................................. -31-
11.6 No Litigation........................................... -31-
11.7 No Brokers.............................................. -31-
11.8 Survival................................................ -31-
XII. COVENANTS........................................................ -32-
12.1 Covenants of the Company and the Partnership............ -32-
12.2 Covenants of the Contributors and the Contributing
Entities................................................ -34-
12.3 No Claim Against Contributed Property................... -35-
12.4 DRO Election; Bottom Guaranty Election.................. -35-
XIII. DUE DILIGENCE PERIOD............................................. -37-
13.1 Due Diligence Period.................................... -37-
13.2 Access to Properties and Materials...................... -37-
13.3 Adjustment Following Due Diligence...................... -37-
XIV. DEFAULTS AND REMEDIES............................................ -38-
14.1 Indemnification by Contributors......................... -38-
14.2 Remedies................................................ -39-
14.3 Indemnification by the Company and the Partnership...... -40-
14.4 Indemnification Procedures.............................. -40-
XV. MISCELLANEOUS.................................................... -43-
15.1 Assignment.............................................. -43-
15.2 Entire Agreement........................................ -43-
15.3 Notices................................................. -43-
15.4 Governing Law........................................... -45-
15.5 Litigation Costs........................................ -45-
15.6 Counterparts............................................ -45-
15.7 Offer and Acceptance.................................... -45-
15.8 Arbitration............................................. -46-
EXHIBITS
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A. Partnership Agreement
4.4 (a) Form of Company Lease
4.4 (c) Guaranty and Subordination Agreement
7.2.1(i) Investor Questionnaires
7.2.1(p) Lender's Estoppel Certificate
7.2.1(q) Opinion of Contributor's Counsel
7.2.2(f) Opinion of Company Counsel
SCHEDULES
DISCLOSURE SCHEDULE
I. Contributors (Names and Addresses)
1.2 Schedule of Properties; Ownership Interests in Properties
and Contribution Amounts
1.3(a) Schedule of Units Issued in Consideration for Each Property
1.3(b) Mortgage Debt
4.1 Prior Occupants
4.4(b) Guaranties
5.1 Permitted Exceptions
9.6 Material Defaults
9.13 Zoning
9.15.5(a) The Treatment, Storage and Disposal Locations for Substances
of Concern
9.15.5(b) Storage Tanks
9.15.5(c) Existence of Asbestos
9.15.9(f) Environmental Permits and Authorizations
9.16 Insurance
9.19 Lease Disclosures
9.19.2 Leases and Rent Rolls
9.19.13 Other Landlords
9.20(a) Service Contracts
9.20(b) Management Contracts
9.23 Assumed Liabilities of Contributors
9.24 Contracts
9.26 Employee Benefit Plans/Employment Contracts/Employee Benefit
Liabilities
12.1.5 Restrictions on Sale and/or Financing of Specified
Properties
12.4.5 Limitations on Indebtedness
14.2.1 Indemnitors
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CAPITAL AUTOMOTIVE L.P.
AGREEMENT FOR CONTRIBUTION OF INTERESTS
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THIS AGREEMENT FOR CONTRIBUTION OF INTERESTS (the "Agreement") is made
and entered into as of this 24th day of November 1997, by and among the persons
and entities named on Schedule I hereto consisting of all of the owners of an
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interest in any of the Properties listed on Schedule 1.2 (each individually, a
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"Contributor" and, if more than one Contributor, collectively, the
"Contributors"), and CAPITAL AUTOMOTIVE REIT, a Maryland real estate investment
trust (the "Company"), having offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on its own behalf, and CAPITAL AUTOMOTIVE L.P., a
Delaware limited partnership (the "Partnership"), having offices at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
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A. The Partnership was formed on November 13, 1997. At the Closing,
the Limited Partnership Agreement, as amended and restated, will be
substantially in the form appended hereto as Exhibit A (the "Partnership
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Agreement"). The Partnership is intended to result in an umbrella partnership
real estate investment trust in which the Company shall be the sole general
partner (the "General Partner") and shall hold the number of Units (as
hereinafter defined) of partnership interest set forth in Schedule A to the
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Partnership Agreement.
B. Each Contributor has such interest in the real property and
improvements as is set forth opposite its name on Schedule 1.2 hereto. Each
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Contributor is the legal and beneficial owner of fee simple title to all of the
real property and improvements set forth on such Schedule 1.2 hereto (including
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the residual interests in any tenant improvements thereon), which are
individually referred to as a "Property" and collectively, the "Properties."
C. Each Contributor desires to transfer all of its interest in each
of the Properties set forth on Schedule 1.2 to the Partnership in exchange for
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Units (as hereafter defined) in the Partnership in the amounts set forth in
Schedule 1.3(a) upon and subject to the terms and conditions of this Agreement.
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NOW THEREFORE, in consideration of and in reliance upon the above
Recitals, the terms, covenants and conditions contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
I. CONTRIBUTION OF INTERESTS
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1.1 Certain Definitions. For purposes of this Agreement:
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1.1.1 "Units" means units of limited partnership
interest in the Partnership, including the limited
partnership interests held by the Company and
those to be issued to the Contributors pursuant to
this Agreement. The Units to be issued to the
Contributors pursuant to this Agreement are
sometimes referred to herein as the "Initial
Units."
1.1.2 "Shares" means the common shares of beneficial
interest, par value $.01 per share, of the
Company.
1.1.3 "Initial Shares" means the Shares of the Company
registered under the Securities Act of 1933, as
amended (the "Act"), pursuant to a registration
statement on Form S-11 (the "Registration
Statement") to be filed with the Securities and
Exchange Commission (the "Commission") on or about
November 1997.
1.1.4 "Affiliate" means with respect to any Person, (i)
any Person that holds direct or indirect
beneficial ownership (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as
amended) of voting securities or other voting
interests representing at least five percent (5%)
of the outstanding voting power of a Person or
equity securities or other equity interests
representing at least five percent (5%) of the
outstanding equity securities or interests in a
Person, or (ii) any Person that directly, or
indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with such Person.
1.1.5 A "Person" shall mean and include natural persons,
corporations, limited partnerships, general
partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts,
Indian tribes or other organizations, whether or
not legal entities, and governments and agencies
and political subdivisions thereof.
1.1.6 For purposes of this Agreement, the "knowledge" of
a party shall mean the actual knowledge of such
party's officers, senior executives, managing
partners, general partners, majority shareholders,
key employees or their equivalents.
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1.2 Contribution. Subject to the terms and conditions of this
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Agreement, at the Closing (as hereinafter defined), each Contributor shall
convey and transfer its entire right, title and interest in the Properties
identified on Schedule 1.2 to the Partnership, excluding items of movable
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personal property attached to the Property that relate to the business conducted
on the Property and may readily be removed from the Property without material
damage whether or not such items are "fixtures," ("Excluded Personal Property").
The interests and Properties to be transferred as herein provided are
hereinafter collectively referred to as the "Contribution."
1.3 Consideration for Contribution. In consideration for the
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Contribution, the Partnership shall issue to each Contributor, or to such
partners and beneficial owners of the Contributor as the Contributor shall
designate in writing (the "Designees"), the number of Units in consideration for
each Property as set forth on Schedule 1.3(a) hereto. The number of Units to be
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issued in consideration for each Property (the "Contribution Value") shall be
the quotient of the Contribution Amount for such Property (as defined hereafter)
minus the Mortgage Debt (as defined hereafter) encumbering such Property divided
by the Market Price (as defined hereafter). The parties agree that, as of the
date hereof and as of the Closing Date, each Initial Unit has a fair market
value equal to the initial price to the public of the Initial Shares at the time
and date the Registration Statement is declared effective by the Commission (the
"Market Price"). The Contributors represent and warrant that each Property is
subject to mortgage indebtedness set forth opposite the description of such
Property on Schedule 1.3(b) of this Agreement, which mortgage indebtedness shall
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be the principal balance of, plus the accrued interest on, the mortgages
encumbering such Property at the Closing Date (the "Mortgage Debt"). For
purposes of this Agreement, "Contribution Amount" means the acquisition cost of
any Property, as stated on Schedule 1.3(a) plus the amount of the Closing Costs
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(as defined in Section 7.5.1), which total shall be used to calculate the number
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of Units to be issued to the Contributors at the Closing in exchange for their
contribution of such Property to the Partnership.
1.4 [Intentionally omitted]
1.5 Subject to Partnership Agreement. The Units issued pursuant
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to this Agreement shall be subject in all respects to the terms and provisions
of the Partnership Agreement.
1.6 Capitalized Terms. Capitalized terms used in this Agreement
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that are not otherwise defined herein shall have, unless otherwise indicated,
the meanings assigned to them in the Partnership Agreement.
II. ADJUSTMENTS
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2.1 Unit Adjustment. The number of Units issuable as consideration
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for the Properties will be adjusted as follows: (a) to the extent the total
Mortgage Debt on a Property is different from the amount on Schedule 1.3(b)
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("Different Mortgage Debt"), an adjustment shall be made to the number of Units
to be issued to the Contributors hereunder, by dividing the total dollar amount
of the Different Mortgage Debt by the Market Price and the quotient thereof
shall be
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the number by which the number of Units issuable pursuant to this Agreement
shall be reduced if the Mortgage Debt exceeds the scheduled amount, or increased
if the Mortgage Debt is less than the scheduled amount; and (b) pursuant to
Sections 7.2.1(o), 7.5.1, 8.1, 8.2, 13.3 and 15.7 of this Agreement, as
applicable.
2.2 Adjustments with Respect to Units In the event of any stock
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split, stock dividend, reclassification, recapitalization or other adjustment in
respect of the outstanding Shares prior to the Closing Date, the number of Units
to be issued to the Contributors will be proportionately adjusted so that the
Units will equate to the Shares on a one-to-one basis.
III. REDEMPTION OF UNITS
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Anything in the Partnership Agreement to the contrary notwithstanding,
the following provisions shall apply:
3.1 Redemption Right; Limit on Redemptions. The Contributors shall
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have the right to require the Partnership to redeem all or a portion of the
Units held by such Contributor (the "Redemption Event") on or after the date
which is two (2) years after the date that the Registration Statement is
declared effective by the Commission (the "Effective Date") in accordance with
and subject to the limitations set forth in Section 8.05 of the Partnership
Agreement.
3.2 Registered Shares. If the Company exercises its option to
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deliver Shares pursuant to Section 8.05 of the Partnership Agreement upon a
Redemption Event, the Company shall deliver to the Contributor Shares that have
been registered for resale under the Act pursuant to a registration statement on
Form S-3 (or equivalent form of registration statement then in effect) declared
effective by the Commission.
IV. OPERATION OF PROPERTY THROUGH CLOSING
-------------------------------------
Through the Closing Date:
4.1 Business Practice. Except as otherwise provided in this Article
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4, the Contributors shall continue, or shall cause any Affiliate, tenant, or
third party managing, maintaining or occupying, as the case may be, any of the
Properties as shall be designated by the Partnership or the Company (referred to
herein individually as a "Prior Occupant" and collectively as the "Prior
Occupants") to continue, to manage, maintain and operate the Properties in
accordance with sound and prudent business practices and keep the Properties and
the tangible personal property thereon in good condition and repair, ordinary
wear and tear excepted. The Contributors shall instruct such Prior Occupant not
to make any change in its management, maintenance or operation of the Properties
or in its normal and customary other practices. The Prior Occupants are
identified on Schedule 4.1 to this Agreement.
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4.2 No Sale or Encumbrance. None of the Contributors shall sell,
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mortgage, pledge, hypothecate or otherwise transfer or dispose of all, or any
part of any Property or any interest therein, nor shall any Contributor
initiate, consent to, approve or otherwise take any action with respect to
zoning or any other governmental rules or regulations presently applicable to
all or any part of any Property, nor shall any Contributor permit any new
limited or general partners, shareholders or members to be admitted to any
Contributor.
4.3 Leases, Service Contracts and Management Contracts. Except as
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provided in Section 4.4, the Contributors shall not, nor shall they cause or
permit any Prior Occupant to, terminate, modify, extend, amend or renew any
Lease (as defined in Section 6.1.3 hereof), Service Contract (as defined in
Section 9.20 hereof), Management Contract (as defined in Section 9.20 hereof) or
enter into any new Lease (other than the Company Lease pursuant to Section 4.4
of this Agreement) or Service Contract without the prior written consent of the
Company or the Partnership; provided, however, that the failure of the Company
or the Partnership to object to any such action within thirty (30) days after
written notice to it by Contributor shall be deemed to reflect the Company's or
the Partnership's consent thereto. Notwithstanding the foregoing, all Service
Contracts and Management Contracts relating to the respective Properties shall
remain in effect after the Closing Date, except for those Service Contracts and
Management Contracts that the Partnership requires to be terminated as of the
Closing Date.
4.4 Termination of Leases; New Company Leases. Prior to the Closing
-----------------------------------------
Date the Contributors shall cause the termination of all Leases. Simultaneously
with the execution of this Agreement, the Contributors shall cause the Prior
Occupant of each Property, or an Affiliate thereof, to execute and deliver to
the Partnership an occupancy lease with the Partnership for each of the
Properties substantially in the form attached hereto as Exhibit 4.4 (a)
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(referred to hereafter individually as a "Company Lease" and collectively as the
"Company Leases"), on terms and conditions (including Rent (as defined in such
Company Lease)) acceptable to the Partnership. The Base Annual Rent (as defined
in the Company Lease) called for under the Company Lease as set forth on the
Exhibits and Schedules attached to the Company Lease shall be increased by the
proportion that the Closing Costs (as defined in Section 7.5.1) bears to the
acquisition cost of such Property as stated on Schedule 1.3(a).The effective
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date of such Company Leases shall be the Closing Date. The Company Leases shall
be guaranteed as set forth on Schedule 4.4(b) using a Guaranty and Subordination
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Agreement substantially in the form attached hereto as Exhibit 4.4(c).
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4.5 Compliance. None of the Contributors shall knowingly take or
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fail to take any action that will cause the Properties to fail to comply with
any federal, state, municipal and other governmental laws, ordinances,
requirements, rules, regulations, notices, codes and orders, or any agreements,
covenants, conditions, easements and restrictions currently in effect relating
to the Properties.
4.6 Notice of Inaccuracy or Incompleteness. The Contributors shall
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promptly give written notice to the Company of the occurrence of any event
of which Contributors
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have knowledge and which may adversely affect the completeness or accuracy of
any representation or warranty made or to be made by Contributors under or
pursuant to this Agreement.
4.7 Access. The Contributors shall cause the Company and its
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representatives to have reasonable access to the Properties, subject to the
prior rights, if any, of any Prior Occupant; provided, however, that without the
consent of the Contributor, the representatives of the Partnership shall not
disclose to any Prior Occupant the existence of this Agreement or the
transactions contemplated hereby.
4.8 Insurance. The Contributors shall cause the existing insurance
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coverages on the Properties and the business of the Contributors to be
maintained in full force and effect at the Closing Date.
4.9 Fulfillment of Obligation. To the extent any Contributor is
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obligated, pursuant to any contract, agreement, covenant, lease, including any
Lease, or other understanding entered into prior to the date hereof with any
Prior Occupant, governmental subdivision or any other third party, to effect any
construction, make any improvements or take any action, the Contributors shall
cause any such construction, improvements and/or action to be taken, completed
and fully paid for by such Contributor, at its expense, prior to the Closing
Date. No such obligation shall be unfulfilled, and no liability for or payment
in respect of any such obligation shall be unsatisfied as of the Closing Date.
4.10 Financial Statements and Reports. The Contributors shall provide
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to the Company financial statements, agings of accounts receivable, and other
financial, operating or statistical information for each Property upon any
reasonable request of the Company, and the general partner or chief financial
officer, as the case may be, of each Contributor shall certify that, to the best
of his or its knowledge, such financial statements and other reports are true,
accurate and complete in all material respects.
V. STATUS OF TITLE TO PROPERTY
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5.1 State of Title. At Closing, the Contributors shall own,
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beneficially and of record, good and marketable fee simple title to the
Properties, subject only to the mortgages listed on Schedule 9.23 hereto (the
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"Mortgages") and those covenants, conditions and restrictions set forth on
Schedule 5.1 hereto (the "Scheduled Exceptions"). The Mortgages and acceptable
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Scheduled Exceptions are referred to collectively herein as the "Permitted
Exceptions."
5.2 Preliminary Evidence of Title. Within no more than 30 days after
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the date hereof, the Contributors and the Partnership shall obtain, in a form
acceptable to the Partnership, the following documents to evidence the condition
of the title to each of the Properties:
5.2.1 Commitments (the "Title Commitments") to the Partnership for
ALTA Form B (1987) Owner's Title Insurance Policies
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committing to insure, at standard rates, title to each
Property as being good and marketable, subject only to the
Permitted Exceptions, in the amount of the fair market value
of each such Property, issued by a title company acceptable
to the Company and the Partnership (the "Title Insurer").
The Title Commitments shall be effective as of the Closing
Date, and shall reflect that fee simple title is held by the
respective Contributor. Each Owner's Title Insurance Policy
to be issued to the Partnership at Closing pursuant to
Section 7.2.2 below ("Title Insurance Policies") shall
contain an extended coverage endorsement over the general or
standard exceptions which are a part of the printed form of
the policy and subject only to the Permitted Exceptions.
Each Title Insurance Policy shall, in addition, (a) include
provisions for co-insurance, in such amounts of liability
acceptable to the Partnership and the Company; (b) not
contain any Survey exception, (c) not contain any exceptions
for (i) liens for labor or material, whether or not of
record, (ii) parties in possession (other than Prior
Occupants under the Leases, solely as such Prior Occupants),
(iii) unrecorded easements, and (iv) taxes and special
assessments not shown on the public records, (d) provide for
the following endorsements: (i) an access endorsement
insuring that there is direct and unencumbered access to the
Land from all adjacent public streets and roads, (ii) a
survey endorsement insuring that all foundations in place as
of the date of such policy are within the lot lines and
applicable setback lines, that the improvements do not
encroach on adjoining land or any easements, and that there
are no encroachments of improvements from adjoining land on
any or the Properties or any part thereof, (iii) an ALTA
Form 3.1 zoning endorsement insuring that the Properties are
zoned for the buildings and the operation thereof as
contemplated by the terms and provisions of this Agreement,
(iv) a non-imputation endorsement, by which the Title
Insurer waives any defense based upon knowledge of any
person or entity (other than the knowledge of the
Partnership or its designees), (v) each Property constitutes
a separate lot of record and is separately assessed for real
estate tax purposes, (vi) an endorsement commonly referred
to as a "Fairway endorsement," providing among other things,
that the Title Insurer waives any defense based on a
dissolution or termination of the insured partnership or the
formation of a new partnership solely by reason of one or
more transfers of
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all or any part of the partnership interests of any one or
more of the general partners of the insured to the Company
or the Partnership and/or any one or more of the limited
partners of the insured, and/or the transfer of any one or
more of the limited partner's interests to the current
general partner, the Company or the Partnership, and (vii)
such other endorsements as the Partnership and the Company
may reasonably require.
5.2.2 Written results of searches reflecting any liens,
judgements, tax liens, bankruptcies, and open dockets (the
"UCC Searches"), conducted by a company reasonably
acceptable to the Partnership. The UCC Searches shall name
each Contributor, Prior Occupant, and Property, and shall
search the appropriate land records and central filing
office for Uniform Commercial Code financing statements.
5.2.3 Legible copies of all documents of record referred to in any
Title Commitment or disclosed by the UCC Searches, and all
other documents evidencing or, to the extent in the
possession or control of the Contributors, relating to,
matters reflected in any Title Commitment or the UCC
Searches.
5.2.4 Current ALTA/ACSM land title surveys of each of the
Properties (the "Surveys") dated on or after the date of
this Agreement, certified to the Partnership and the Title
Insurer (and such other persons or entities as the
Partnership may designate) by a surveyor registered in the
State where the Property is located. Each Survey shall be
in form and substance acceptable to the Partnership and the
Title Insurer.
5.3 Title Defects. The Partnership shall have the right to review
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the Title Commitments, UCC Searches or Surveys (or any revision or update of any
of them) and to require the Contributor to remove, correct, and cure any defects
in the title or other such matters relating to the title that the Partnership
determines, in its sole discretion, are acceptable and those that are
unacceptable. The Partnership shall notify the Contributors of those matters
listed on Schedule 5.1 that are acceptable, which shall be referred to as the
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"Scheduled Exceptions." The Partnership shall notify the Contributors within
ten (10) business days after the Partnership receives the Title Commitments, UCC
Searches or Surveys, as the case may be, of any such defects or matters that the
Partnership finds to be unacceptable, and, prior to the Closing Date, such
Contributors shall, (i) as to any such exception or other matter of a
nonmonetary nature, use reasonable efforts to remove, correct and cure such
defects or such other matters, and (ii) as to any such defect or other matter of
a monetary nature, cause such lien or encumbrance or other matter to be
discharged and released,
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in each case to the reasonable satisfaction of the Partnership; except that such
Contributor shall not be required to expend more than $50,000 with respect
thereto. If such Contributor fails to remove, correct and cure such defects or
such other matters, the Partnership may, at its option and as its exclusive
remedy, (x) terminate this Agreement, in which event this Agreement, without
further action of the parties, shall become null and void and neither party
shall have any further rights or obligations under this Agreement, (y) terminate
this Agreement with respect to such Property and reduce the number of Units to
be issued by the Contributors to the Contribution Value of such Property, or (z)
elect to accept title to such Property and discharge or release any liens,
encumbrances or other matters of a monetary nature or which may otherwise be
discharged, released or removed by the payment of a monetary sum and deduct from
the number of Initial Units issuable to the Contributors the number of Units
that is equal to the lesser of (a) the quotient of such aggregate monetary sums
paid by the Partnership for the correction, removal and cure of such defects and
other matters (plus expenses in connection therewith) divided by the Market
Price, or (b) $50,000. If the Partnership fails to make any such election, the
Partnership shall be deemed to have elected the option contained in clause (y).
VI. CLOSING PRORATIONS AND ADJUSTMENTS
----------------------------------
6.1 Prorations and Adjustments. All prorations and adjustments
--------------------------
(the "Prorations") with respect to the Property or Properties, for the period up
to and through the Closing Date, shall be the responsibility of or belong to the
Contributors and all such Prorations for the period after the Closing Date shall
be the responsibility of or belong to the tenant under the applicable Company
Lease. The Company and the Partnership shall have no responsibility for, and
will receive no benefit from, the Prorations, and the Contributor shall have
liability for such Prorations. Such Prorations shall include, but not be
limited to, the following:
6.1.1 real estate and personal property taxes and
assessments;
6.1.2 common area maintenance fees and reimbursements for
prior years property taxes payable by Prior Occupants;
6.1.3 the rent payable by Prior Occupants under leases in
effect immediately prior to the Closing Date (the
"Leases") as set forth on Schedule 9.19.2 hereto;
---------------
6.1.4 the full amount of security deposits paid under the
Leases, together with interest thereon if required by
law or otherwise;
6.1.5 water, electric, telephone and all other utility and
fuel charges and those that are meter read will be read
by the appropriate utility and service transferred as
of the Closing Date;
6.1.6 amounts due and prepayments under the Service
Contracts;
-9-
6.1.7 assignable license and permit fees;
6.1.8 other expenses of operation and similar items; and
6.1.9 all or any other disbursements, payments, and
obligations relating to the Property, except for
payments under any Mortgages transferred to the
Partnership at the Closing, the payments for which
shall be obligations of the Partnership as of, but not
before, the Closing Date.
6.1.10 Notwithstanding the foregoing, any refunds of real or
personal property taxes for tax years beginning prior
to the Closing Date shall belong to Contributors, and
if paid to the Partnership shall be promptly refunded
by the Partnership to Contributors in cash.
VII. CLOSING
-------
7.1 Closing Date. The closing of the transactions contemplated
------------
by this Agreement (the "Closing") shall occur at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, at 10:00 a.m. on
January 31, 1998, or such other time or place as shall follow the closing of the
initial public offering of Initial Shares of the Company pursuant to the
Registration Statement, provided that all conditions to Closing have been
satisfied or waived, or at such other time and place as the Contributors and the
Company shall agree in writing, provided, however, that under no circumstances
shall the Closing occur later than March 31, 1998. The "Closing Date" shall be
the date of the Closing.
7.2 Closing Documents
-----------------
7.2.1 Contributors. Not later than five (5) business days
------------
prior to the Closing Date, the Contributors shall
deliver to the Company and the Partnership the
following:
a. deeds and assignments for the Properties;
b. if not previously delivered pursuant to a
waiver by the Company, executed copies of all
Company Leases, effective at Closing;
c. any affidavits, certificates and other
documents (including without limitation non-
imputation affidavits and/or certificates)
that are reasonably
-10-
necessary for the Title Insurer to issue the
Owner's Title Insurance Policies in the form
and condition required by this Agreement;
d. evidence satisfactory to the Partnership that
all mortgages and other indebtedness secured
by the Properties that are not being
specifically assumed by the Partnership have
been paid in full;
e. for each Contributor that is a corporation, a
corporate resolution authorizing the
transactions contemplated by this Agreement,
a certificate of good standing, a certified
copy of the articles of incorporation and
bylaws, and a certificate of incumbency
certifying the titles and signatures of the
corporate officers authorized to consummate
the transactions contemplated hereunder on
behalf of Contributor and such other evidence
of Contributor's power and authority as the
Company reasonably requests;
f. for each Contributor that is a partnership or
a limited liability company, a resolution
authorizing the Contribution in exchange for
the Units the execution of closing documents
and the transactions contemplated by this
Agreement, a certificate of good standing, a
certified copy of the partnership or
operating agreement governing such
Contributor, and a certificate of incumbency
certifying the titles and signatures of the
general partners or members authorized to
consummate the transactions contemplated
hereunder on behalf of Contributor and such
other evidence of power and authority of the
Contributor as the Partnership reasonably
requests;
g. for each Contributor, an affidavit stating,
under penalty of perjury, its U.S. taxpayer
identification number and that it is not a
foreign person within the meaning of Section
1445 of the Internal Revenue Code of 1986, as
amended (the "Code");
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h. a counterpart of the Partnership Agreement
executed by each Contributor;
i. investor questionnaires ("Investor
Questionnaires") in the form attached to this
Agreement as Exhibit 7.2.1(i) executed by
----------------
each Contributor;
j. letters advising Prior Occupants of the
change in ownership of the Properties and
directing Prior Occupants to pay Rent to the
Partnership or as the Partnership may direct;
k. an updated Rent Roll (as defined in Section
9.19.2) as of the Closing Date (including a
listing of all delinquent and prepaid rents);
l. agreements from each Prior Occupant who
leases any Property terminating its Leases
with Contributors;
m. all of the original Leases, written Service
Contracts and Management Contracts and any
and all building plans, surveys, site plans,
engineering plans and studies, utility plans,
landscaping plans, development plans,
specifications drawings, marketing artwork,
construction drawings, soil tests, complete
warranty book including all contractors and
subcontractors and other documentation
concerning all or any part of each Property
to the extent that any of the foregoing
documents are in the possession or control of
Contributors;
n. any bonds, warranties or guaranties which are
in any way applicable to any Property or any
part thereof to the extent any of the
foregoing are in the possession or control of
Contributors;
o. If the Company shall so request, the
Contributor shall deliver to the Company a
letter (an "Estoppel Letter") in a form
acceptable to the Company, dated not more
than thirty (30) days prior to the Closing
Date, from each tenant under each Lease. The
Estoppel Letter shall be fully completed in a
manner
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reasonably satisfactory to the Company, and
with no modifications other than those
reasonably acceptable to the Company. In the
event Estoppel Letters in form and content
reasonably satisfactory to the Company are
not received by the Company and the
Partnership within the time prescribed
herein, then the Partnership and the Company,
at their option and as a non-exclusive
remedy, upon notice to the Contributors, may
immediately terminate this Agreement, or may
terminate this Agreement with respect to the
relevant Property, in which case the number
of Initial Units issuable hereunder as set
forth on Schedule 1.3(a) shall be reduced by
---------------
the Contribution Value of such Property.
p. a certificate in the form attached hereto as
Exhibit 7.2.1(p) (a "Lender's Estoppel
----------------
Certificate") from each mortgagee of each
Contributor and each Property and from any
other person or entity that has, or may have
as a result of the transactions contemplated
hereby, a security interest in any of the
Properties. In the event that the Lender's
Estoppel Certificates in form and content
reasonably satisfactory to the Company are
not received by the Company and the
Partnership within the time period prescribed
herein, then the Partnership and the Company,
at their option and as a non-exclusive
remedy, may terminate this Agreement upon
notice to the Contributor, or may terminate
this Agreement with respect to the relevant
Property, in which case the number of Initial
Units issuable hereunder as set forth on
Schedule 1.3(a) shall be reduced by the
---------------
Contribution Value of such Property.
q. an opinion of Contributor's counsel
substantially in the form attached hereto as
Exhibit 7.2.1(q); and
----------------
r. all other documents reasonably required by
the Company in connection with the
transactions contemplated by this Agreement.
7.2 Partnership. At the Closing, the Partnership shall deliver
-----------
the following:
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a. Initial Units, as required by Sections 1 and
2 of this Agreement;
b. an executed counterpart of the Partnership
Agreement executed by the Company, as the
General Partner of the Partnership;
c. for the Company, a resolution of its Board of
Trustees authorizing the transactions
contemplated hereby and a certificate of good
standing from the State Department of
Assessments and Taxation of the State of
Maryland;
d. for the Partnership, evidence of the
Partnership's authorization of the
transactions contemplated hereby and a
certified copy of the Partnership Agreement
and a Certificate of Limited Partnership
certified by the Secretary of State of
Delaware; and
e. an opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
substantially in the form attached hereto as
Exhibit 7.2.2(f).
----------------
7.3 Conditions to the Partnership's Obligation to Close. At the
---------------------------------------------------
option of the Partnership, the obligations of the Company and the Partnership
under this Agreement are subject to the satisfaction of the following conditions
(unless explicitly waived in writing):
7.3.1 Each Contributor shall have terminated such existing
Management Contracts with any Prior Occupant as have
been specified in writing by the Company or the
Partnership prior to the Closing Date.
7.3.2 Each Contributor shall have terminated all Leases prior
to the Closing Date.
7.3.3 Each Contributor shall have terminated such existing
Service Contracts as have been specified in writing by
the Company or the Partnership prior to the Closing
Date.
7.3.4 Each and every representation and warranty of the
Contributors contained in this Agreement is true,
correct and
-14-
complete in all material respects as of the date hereof
and at all times through the Closing Date.
7.3.5 All Prior Occupants shall be paying rental on all
Properties as set forth in the Estoppel Letter approved
by the Company and sent to each such Prior Occupant.
7.3.6 The Contributors shall have fully performed and
satisfied each and every material obligation, term and
condition to be performed and satisfied by them under
this Agreement.
7.3.7 All consents, authorizations, certificates, Estoppel
Letters, Lender's Estoppel Certificates and approvals
required to be obtained by the Contributors in
connection with the Agreement shall have been obtained,
including but not limited to all consents, approvals
and authorizations (without any conditions or
requirements) required to be obtained under any
Mortgage, deed of trust or other instrument relating to
any of the Properties or pursuant to which any of the
Contributors are bound in order to complete the
transactions contemplated under this Agreement.
7.3.8 The Company shall simultaneously with the Closing close
the initial public offering of the Initial Shares.
7.3.9 The Contributors shall have paid in full such Mortgages
and other indebtedness secured by the Properties as
required by the Company and Partnership and shall have
provided the Company and Partnership with satisfactory
evidence thereof, and to the extent that such Mortgages
are to be paid off following Closing, the mortgagee
shall deliver pay-off letters to the Company and the
Partnership.
7.3.10 The condition of the Property shall not have materially
changed.
7.3.11 The Partnership shall have received an Owner's Title
Insurance Policy (or marked-up commitment therefor) for
each Property insuring fee simple title to such
Property in the amount of the fair market value of such
Property subject only to Permitted Exceptions, and
otherwise in the form and condition required by this
Agreement;
-15-
7.3.12 If the Contributors do not deliver completed
Disclosure Schedules to the Company and Partnership at
--------------------
the time of the execution of this Agreement, the
Contributors shall deliver to the Company and
Partnership all substantially completed Disclosure
----------
Schedules required by this Agreement within fifteen
---------
(15) business days after the date of the execution of
this Agreement.
7.3.13 The Contributor and each Designee shall complete and
deliver to the Company and the Partnership Investor
Questionnaires evidencing such Contributor's or
Designee's qualification as an "accredited investor"
under the Securities Act of 1933, as amended.
7.4 Conditions to the Contributor's Obligation to Close. The
---------------------------------------------------
obligations of the Contributor under this Agreement are subject to the
satisfaction of the following conditions (unless explicitly waived in writing):
7.4.1 Each of the representations and warranties of the
Partnership contained in this Agreement is true,
correct and complete as of the date hereof and at all
times through the Closing Date.
7.4 The Partnership and the Company shall have fully
performed and satisfied each and every obligation, term
and condition to be performed and satisfied by them
under this Agreement.
7.4.3 The Company shall have completed its initial public
offering pursuant to the Registration Statement.
7.4.4 All consents, authorizations and approvals required to
have been obtained by the Company and the Partnership
in connection with this Agreement shall have been
obtained.
7.5 Transaction Costs.
-----------------
7.5.1 The Contributors will pay or bear all costs (including
any recordation and transfer taxes, title insurance,
fees and expenses of going to record) in connection
with the transfer by the Contributors of the Properties
(collectively referred to as the "Closing Costs"). The
Company and the Partnership shall bear the cost of
their due diligence activities. Notwithstanding
anything herein to the contrary, at the option of the
Contributor in lieu of paying the Closing Costs or
-16-
Consent Fees (as defined hereafter), the Contributor
may elect to deduct from the Contribution Value of the
Property, all or part of such Closing Costs or Consent
Fees, by advising the Company to reduce the number of
Units deliverable pursuant to Schedule 1.3(a) by a
---------------
number equal to the quotient determined by dividing (i)
the amount of the Closing Costs or Consent Fees to the
extent not paid by Contributor, by (ii) the Market
Price.
7.5.2 The Contributors will pay or bear all assumption fees,
prepayment penalties, premiums, lender's consent fees
or other such charges ("Consent Fees") imposed in
connection with the transactions contemplated hereby,
and all Consent Fees imposed by all other lenders in
connection with the transactions contemplated hereby.
7.5.3 Except as specified above and elsewhere in this
Agreement, each party shall bear and pay its expenses
in connection with this Agreement and the transactions
contemplated herein, including the fees of their
respective professional advisors.
VIII. CASUALTY LOSS AND CONDEMNATION
------------------------------
8.1 Casualty. Prior to Closing, all risk of loss shall be on
--------
each Contributor. If, prior to Closing, the Properties or any part thereof
shall be destroyed or materially damaged by fire or other casualty, the
Partnership may, at its option, either (i) require the appropriate Contributors
to repair such damage prior to Closing to the reasonable satisfaction of the
Partnership, at no cost or expense to the Company or the Partnership, in which
event the proceeds of any insurance applicable thereto shall be paid to the
Contributor, or (ii) itself settle the loss under all policies of insurance
applicable to the destruction or damage and receive the proceeds of insurance
applicable thereto, and the Contributor shall, at Closing and thereafter,
execute and deliver to the Partnership all required proofs of loss, assignments
of claims and other similar items. Notwithstanding anything herein to the
contrary, in the event such loss or casualty shall constitute a total or
substantial loss or casualty or, in the opinion of the Company, in its sole
discretion, shall render the Property unsuitable for its intended purpose for a
period of ninety (90) days or longer, then the Company and the Partnership, at
their option, may terminate this Agreement with respect to such Property upon
notice to the Contributor, and the number of Units issuable as set forth in
Schedule 1.3(a) with respect to such Property shall be reduced by the
-------------
Contribution Value of such Property.
8.2 Condemnation or Taking. If, prior to Closing, any Property
----------------------
or any part thereof shall be condemned or taken and such condemnation or taking
materially interferes with the existing business use of the Property, the
Company and the Partnership may (i) terminate this
-17-
Agreement either as to all the Properties or solely as to such Property, in the
discretion of the Partnership and the Company, or (ii) complete the transactions
contemplated by this Agreement notwithstanding such condemnation. If the
Company and the Partnership elect to complete the transactions contemplated
hereby, the Partnership shall be entitled to receive the condemnation proceeds
and the appropriate Contributor shall, at Closing and thereafter, execute and
deliver to the Partnership and the Company all required assignments of claims
and other similar items. If the Partnership and the Company elect to terminate
this Agreement, then upon written notice to the Contributors and without further
action of the parties, this Agreement shall become null and void and no party
shall have any rights or obligations under this Agreement. If the Partnership
and the Company elect to terminate this Agreement solely with respect to the
affected Property, the number of Initial Units issuable as set forth in Schedule
--------
1.3(a) with respect to such Property shall be reduced by the Contribution Value
------
of such Property.
IX. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
--------------------------------------------------
The Contributors, jointly and severally, represent and warrant to the
Company and the Partnership that, except as described on the Disclosure
----------
Schedules attached hereto and incorporated by reference herein, the following
---------
are true, complete and correct as of the date of this Agreement and as of the
Closing Date.
9.1 Organization. Each Contributor is duly organized and
------------
validly existing and in good standing under the laws of the state of its
organization, and has all requisite power and authority to own or lease and
operate its properties (including the Properties) and assets and conduct its
business in the manner in which they are being owned or leased and operated and
conducted, as the case may be. Each Contributor is duly qualified and
authorized and is in good standing in all jurisdictions where its ownership,
lease or operation of assets and properties (including the Properties) or the
conduct of its business requires such qualification or authorization.
9.2 Authority. The execution and delivery of this Agreement and
---------
all agreements, documents and instruments contemplated hereby and the
performance of all transactions contemplated herein or therein, have been duly
and validly authorized by all requisite partnership, corporate or trust action,
as the case may be, and by the general partners, board of directors,
stockholders, or trustees of each Contributor, as the case may be. This
Agreement and the agreements, documents and instruments executed and delivered
in connection herewith constitute the legal, valid and binding obligations of
the Contributors, enforceable in accordance with their respective terms. To the
knowledge of the Contributors, no consent, authorization, approval or waiver by
any governmental agency or authority or by any third party is required in
connection with the execution and delivery of, and the performance of the
obligations to be performed under, this Agreement and the documents and
instruments executed and delivered in connection herewith, or if any of the
foregoing is required, it has been obtained.
9.3 Interest in Contributed Properties. Each Contributor is the
----------------------------------
record and beneficial owner of, and has good and marketable title to, the
interests in the Properties set forth
-18-
opposite such Contributor's name on Schedule 1.2, free and clear of all liens,
------------
options, adverse claims or encumbrances, and such interest is not the subject of
any agreement (other than this Agreement) providing for the sale, assignment or
transfer thereof. Such Contributor has the full power, capacity and authority to
sell, transfer and assign the legal and equitable ownership of his/her or its
interest to the Partnership as provided in this Agreement, Schedule 1.2 is true,
------------
complete and accurate in all respects as to each such Contributor, and the
Contributors have not entered into any agreement and have no knowledge of any
agreement or understanding to issue any additional interests in any Contributor
to any other person or entity.
9.4 Investment. Each Contributor hereby represents and warrants
----------
that:
9.4.1 Such Contributor or its Designee is acquiring the Units
issued to him hereunder for investment for his own
account and not as an agent or nominee for any other
person or entity.
9.4.2 Such Contributor or its Designee will not, directly or
indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of such Units (each
such action, a "Transfer") unless (a) such Transfer
complies with the provisions of the Partnership
Agreement, if applicable, and this Agreement, (b)
either (i) the Transfer is pursuant to an effective
registration statement under the Act, or (ii) such
Contributor or its Designee shall have furnished the
Company or the Partnership, as the case may be, with an
opinion of counsel which opinion of counsel shall be
reasonably satisfactory to the Partnership or the
Company, as the case may be, to the effect that no such
registration is required because of the availability of
an exemption from registration under the Act, and (iii)
such Transfer shall be in compliance with any
applicable state or foreign securities and "blue sky"
laws.
9.4.3 Such Contributor or its Designee has been advised by
the Partnership that: (i) neither the offer nor sale of
the Units have been registered under the Act or any
state or foreign securities and "blue sky" laws; (ii)
the Units are characterized as a "restricted security"
under the Act inasmuch as they are being acquired from
the Partnership or the Company, as the case may be, in
a transaction not involving a public offering; (iii)
the Units must be held indefinitely and such
Contributor or its Designee must continue to bear the
economic risk of the investment in the Units, unless
the offer and sale of such Units are subsequently
registered under the Act or an
-19-
exemption from such registration is available and all
applicable state or foreign securities and "blue sky"
laws are complied with; (iv) it is not anticipated that
there will be any public market for the Units in the
foreseeable future; (v) Rule 144 promulgated under the
Act is not presently available with respect to offers
or sales of the securities of the Company or the
Partnership and neither the Company nor the Partnership
has covenanted to make such Rule available nor has it
made any covenants with respect to other rules by which
offers or sales may be made; (vi) when and if the Units
may be disposed of without registration under the Act
in reliance on Rule 144, such disposition can be made
only in limited amounts in accordance with the terms
and conditions of such Rule; and (vii) if the Rule 144
exemption is not available, public offer or sale of the
Units without registration will require the
availability of another exemption under the Act.
9.4.4 Such Contributor or its Designee is (a) an "accredited
investor" as defined in the Act and (b) has such
knowledge, skill and experience in business, financial
and investment matters so that it is capable of
evaluating the merits, risks and consequences of an
investment in the Units and is able to bear the
economic risk of loss of this investment.
9.4.5 Such Contributor or its Designee has been afforded (a)
the opportunity to ask such questions as he/she or it
has deemed necessary of, and to receive answers from,
representatives of the Partnership or the Company, as
the case may be, concerning an investment in the Units
and the merit and risks of investing in the Units and
(b) access to information about the Partnership's and
the Company's financial condition, business, results of
operations and prospects sufficient to enable him to
evaluate his investment in the Units.
9.4.6 Such Contributor or its Designee has relied solely on
its own legal counsel with respect to the federal and
state tax consequences of an investment in the Units
and all related transactions.
9.5 Title to the Properties. The Contributor is the sole owner
-----------------------
beneficially and of record of good, marketable and insurable fee simple title to
the Properties as set forth on Schedule 1.2 free and clear of all liens, claims
------------
or encumbrances except the Permitted Exceptions, and Schedule 1.2 is true,
------------
accurate and complete in all material respects. Between the date hereof and
-20-
the Closing Date, no liens, claims or encumbrances will be created or permitted
to be created on any Property other than the Permitted Exceptions. Prior to or
at the Closing all monetary encumbrances on any Property, other than the
Permitted Exceptions, shall be duly canceled, removed and discharged of record,
and proof thereof satisfactory to the Title Insurer, the Company and the
Partnership shall be delivered to the Company and the Partnership. Except for
Prior Occupants, there are no parties in possession of any part of the
Properties as of the Closing Date, and there are no other rights of possession,
or agreements providing for the sale, assignment or transfer of title to any
Property or portion thereof (other than this Agreement), which have been granted
to any third parties.
9.6 No Defaults. (a) The Contributor is not in default of any
-----------
of its material obligations under any agreement, franchise, license, contract,
deed, Mortgage, lease, instrument, certificate, affidavit or covenant affecting
title to the Properties; (b) there are no contracts or agreements, such as
maintenance, service, or utility contracts affecting the Properties other than
the Service Contracts, and no party to such contracts is in material default or
breach under the terms and conditions thereof; and (c) except for the Permitted
Exceptions and the Service Contracts, there are no contracts, agreements,
liabilities, claims or obligations of any kind or nature relating to the
Properties and to which the Contributors will be bound or the Properties will be
subject after the Closing except as expressly described in Schedule 9.6 attached
------------
hereto.
9.7 No Litigation; No Condemnation. There are no actions,
------------------------------
suits, proceedings or claims pending, or to the knowledge of the Contributor,
threatened or contemplated, with respect to or in any manner affecting the
Properties, or the Contributor's interest therein; or the ability of the
Contributors to complete the transactions contemplated by this Agreement or
which could prevent the Contributor from satisfying its obligations under this
Agreement. None of the Contributors have received notice of any pending or
threatened condemnation or similar proceedings or special assessments affecting
the Properties, or any part thereof.
9.8 No Violation. The execution and delivery of this Agreement
------------
and the agreements, documents and instruments executed and delivered in
connection herewith, the consummation of the transactions contemplated hereby or
thereby, and the operation of any Property shall not: (a) conflict with, or
result in a breach of, the terms, conditions or provisions of, or constitute a
default under, any agreement, contract, Mortgage, deed, lease, license,
franchise or instrument to which each Contributor is a party or is subject or to
which any Property is subject; (b) to Contributor's knowledge, violate any
agreement, contract, Mortgage, deed, lease, license, franchise, restriction,
easement, restrictive covenant, or instrument to which any Contributor or any
Property is subject; (c) to Contributor's knowledge, constitute a violation of
any applicable code, resolution, law, statute, regulation, ordinance, rule,
judgment, decree or order; (d) with respect to each Contributor, violate any
provision of its charter, bylaws or other organizational document; (e) except as
to any indebtedness in respect of which the consent of the lender shall have
been obtained prior to the Closing Date, result in the acceleration of any
indebtedness or any encumbrance pertaining to any Contributor or any Property,
or the cancellation of any contract, agreement, franchise, license, instrument
or lease pertaining to any Property (other than as specifically requested
-21-
by the Company or the Partnership pursuant to this Agreement); or (f) except as
to any Permitted Encumbrances, result in the creation of any lien, encumbrance
or security interest upon any Property. None of the Contributors have received
any written notice of any violation (both as to condition of the Property and
use) of any applicable laws, statutes, ordinances, codes (including, but not
limited to, zoning, building, subdivision, pollution, environmental protection,
water disposal, health, fire and safety engineering codes, and laws and
regulations with respect to the submetering of any utilities serving any
Property), and the rules and regulations of, by governmental authority having
jurisdiction over the Properties.
9.9 Required Obligations. The Contributor has paid and
--------------------
performed all material obligations relating to the Properties required to have
been paid or performed prior to the date hereof and prior to the Closing Date,
including but not limited to all principal installments, interest payments,
taxes, penalties and other charges in connection with all indebtedness relating
to or secured by any of the Properties or an interest in any of the Properties.
9.10 Condition of Properties. Except as disclosed on the
-----------------------
Schedule 9.10, the Contributor has not been notified that the structural,
-------------
mechanical, electrical, plumbing, roofing and other major systems on any
Property and items of equipment and components located thereon, require to be
replaced or are in need of material repair.
9.11 Warranties. The Contributor has not released or modified
----------
any warranties of builders, contractors, manufacturers or other tradespersons
that have been given to the Contributor without the consent of the Company or
the Partnership.
9.12 Utilities. Usable sanitary and storm sewers and public
---------
water, and electrical utilities (collectively, the "Utilities") of adequate
capacity required for the operation of the Properties, are installed in, and are
duly connected to, the Properties and can be used without any charge except the
normal user charges for sanitary sewers and the normal and usual charges imposed
for public water, gas and electric utilities.
9.13 Zoning. Each Property is currently located in the areas
------
zoned for its current use, as indicated on the Schedule 9.13 hereto, which
-------------
classification permits the development, use and operation of the improvements on
such Property as such improvements currently are being used without special
exception or permit. The Contributor has no knowledge of any threat of, and has
not received written notice of, any proceeding to change adversely or down-zone
the existing zoning classification as to any portion of any Property.
9.14 Improvements. To Contributor's knowledge, all improvements
------------
on the Properties have been constructed in accordance with, and substantially
comply with, all requirements of all applicable laws, ordinances, regulations
and orders, including without limitation applicable zoning, building and fire
safety codes and all restrictive covenants, if any, and other easements,
encumbrances or agreements affecting title to any Properties or improvements.
For purposes of this Section 9.14, "substantially" means that Contributor shall
not be permitted to engage in even de
-22-
minimis non-compliance with applicable laws, ordinance, regulations and orders
if such de minimis non-compliance could result in any governmental,
administrative or other authority executing any penalty, fine, remedy or other
disciplinary action against the Contributor or Contributor's Business.
9.15 Environmental Matters.
---------------------
9.15.1 For purposes of this Agreement:
a. "Environmental Claim" means any claim,
action, cause of action, investigation, or
notice (written or oral) by any person or
entity alleging potential liability
(including, without limitation, potential
liability for investigatory costs, cleanup
costs, governmental response costs, natural
resource damages, property damages, personal
injuries, or civil or criminal penalties)
arising out of or resulting from (i) the
actual or alleged presence or release into
the environment of any Substance of Concern
at any location, whether or not owned or
operated by the Contributor, or (ii)
circumstances forming the basis of any actual
or alleged violation of any Environmental
Law.
b. "Environmental Laws" means all federal,
state, local, and foreign laws and
regulations relating to pollution or
protection of human health or the environment
(including, without limitation, ambient air,
surface water, ground water, wetlands, land
surface, subsurface strata, and indoor and
outdoor workplace), including, without
limitation, (i) laws and regulations relating
to emissions, discharges, releases, or
threatened releases of Substances of Concern,
and (ii) common law principles of tort
liability.
c. "Substances of Concern" means chemicals,
pollutants, contaminants, wastes, toxic
substances, hazardous substances, radioactive
materials or genetically modified organisms,
which are, have been or become regulated by
any federal, state or local government
authority including, without limitation, (i)
petroleum or any fraction thereof, (ii)
asbestos, (iii) any substance or material
defined as
-23-
a "hazardous substance" pursuant to (S) 101
of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C.
(S) 9601), or (iv) any substance or material
defined as a "hazardous chemical" pursuant to
the federal Hazard Communication Standard (29
C.F.R. (S) 1910.1200).
9.15.2 To the Contributor's knowledge, the Contributor and
Property are in full compliance with all applicable
Environmental Laws, which compliance includes, but is
not limited to, possession by the Contributor of all
permits and other governmental authorizations required
under applicable Environmental Laws, and compliance
with the terms and conditions thereof. The Contributor
has not received any communication (written or oral),
whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the
Contributor or Property is not in full compliance with
the Environmental Laws, and, to the Contributor's best
knowledge after due inquiry, there are no circumstances
that may prevent or interfere with such full compliance
in the future.
9.15.3 There is no Environmental Claim pending or threatened
against the Contributor or, to the Contributor's best
knowledge after due inquiry, against any person or
entity whose liability for any Environmental Claim the
Contributor has retained or assumed either
contractually or by operation of law.
9.15.4 To the Contributor's knowledge, there are no past or
present actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the
release, emission, discharge, presence, or disposal of
any Substance of Concern, at or relating to any of the
Properties that could form the basis of any
Environmental Claim against the Contributor or, to the
Contributors' best knowledge after due inquiry, against
any person or entity whose liability for any
Environmental Claim the Contributor has retained or
assumed either contractually or by operation of law.
9.15.5 Without in any way limiting the generality of the
foregoing, to the best of Contributor's knowledge, (a)
all on-site and off-
-24-
site locations where the Contributor has treated,
disposed, or arranged for the disposal of Substances of
Concern or stored hazardous wastes (as defined under
the Resource Conservation and Recovery Act or analogous
state laws) are identified in Schedule 9.15.5(a);
------------------
(b) all underground and aboveground storage tanks,
whether or not currently in use, and the capacity and
contents of such tanks, located on any of the
Properties are identified in Schedule 9.15.5(b), and
------------------
except as set forth in Schedule 9.15.5(b) no
------------------
underground or above ground storage tank that has been
removed from any Property, or that is currently located
at any Property, has leaked or is leaking; (c) except
as set forth on Schedule 9.15.5(c), there is no
------------------
asbestos contained in or forming part of any building,
building component, structure or office space on any
Property; (d) no polychlorinated biphenyls (PCBs) are
used or stored on any Property; (e) the Contributor has
previously provided to the Company copies of all
environmental audit reports, Phase I and Phase II
investigation reports, technical reports regarding
environmental sampling results, and similar
environmental reports in the possession of the
Contributor or its contractors or agents relating to
any Property; and (f) all permits and other
governmental authorizations currently held by the
Contributor for any Property pursuant to the
Environmental Laws are identified in Schedule
--------
9.15.5(f).
---------
9.16 Insurance. Schedule 9.16 contains a complete and correct
--------- -------------
description of all policies of insurance presently maintained by the Contributor
with respect to all Properties and the operations thereof. To the knowledge of
the Contributor, the Contributor and the Properties are in compliance with the
requirements of each such policy, there is no violation of any of the provisions
of the insurance policies, and all of such insurance policies are in full force
and effect. The Contributor has not received from any insurance company which
carries underwriters insurance on any Property, or any Board of Fire
Underwriters, any notice of any defect or inadequacy in connection with any
Property or its operation which, since the date of such notice, has not been
corrected.
9.17 Management. Except as disclosed on the Disclosure
---------- ----------
Schedules, on the Closing Date, there are and will be no contract or agreement
---------
in effect between the Contributor and any third party for the management or
leasing of any Property, except for those Management Contracts that the
Partnership does not require to be terminated, and there shall be no leasing
commissions due and owing, or to become due and owing, in connection with any of
the Leases.
-25-
9.18 Compliance. To the Contributor's knowledge, the
----------
Contributor has complied in all material respects with all laws, ordinances,
rules, regulations and orders of all governmental authorities applicable to the
ownership, management, operation, construction, maintenance and repair of any
Property.
9.19 Leases; Rent Rolls. Except as set forth on Schedule 9.19:
------------------ -------------
9.19.1 Copies of all Leases for each of the Properties and all
parts thereof, as amended through the date hereof have
been made available to the Company and the Partnership;
such copies are and shall be, in all material respects,
true, accurate and complete records of all agreements
and understandings with respect to the use or lease of
all or any portion of any of the Properties or
otherwise constituting Leases that are currently
outstanding (as referenced on the Rent Roll) including
all amendments and modifications thereto.
9.19.2 Schedule 9.19.2 (the "Leases and Rent Roll") is a true,
---------------
complete and correct list of all current Leases for the
Properties or any part thereof.
9.19.3 Each of the Leases is in full force and effect,
constitutes the legal, valid and binding obligation of
the Prior Occupant thereunder, enforceable in
accordance with its terms, except as such
enforceability may be limited by bankruptcy and similar
laws affecting the enforcement of creditors' rights
generally or equitable considerations which may affect
a court's exercise of its equitable powers, and has not
been modified, amended or extended.
9.19.4 To the knowledge of the Contributor, none of the Prior
Occupants is in default in the performance or
observance of any of the terms, covenants or conditions
to be kept, observed or performed by it under its Lease
and no event has occurred which, with the lapse of time
or the giving of notice or both, would constitute a
default thereunder.
9.19.5 No Prior Occupant has an option or right of refusal to
purchase any Property or any part thereof.
9.19.6 Except as specified in the Estoppel Letter approved by
the Company and sent to a Prior Occupant, no Prior
Occupant is entitled to any rebate, concession,
deduction or offset.
-26-
9.19.7 Except as specified in the Estoppel Letter approved by
the Company and sent to a Prior Occupant, no Prior
Occupant has paid any rent, additional rent or other
charge of any nature for a period of more than thirty
(30) days in advance.
9.19.8 Except as specified in the Estoppel Letter approved by
the Company and sent to a Prior Occupant, all Prior
Occupants are paying full rental under all Leases.
9.19.9 No Prior Occupant has any claim or basis for any claim
for reduction, deduction or set-off against the
landlord or the rent under such Lease.
9.19.10 No Prior Occupant has given the Contributors, or the
landlords (if different than the Contributors) named in
the Leases, oral or written notice of any intent to
terminate its Lease, no Prior Occupant has refused to
execute and deliver the Occupancy Lease at Closing, or
no Prior Occupant has refused to vacate its premises or
such Property, or otherwise to cease occupancy of its
premises or such Property.
9.19.11 The Contributor is the landlord under the Leases.
9.19.12 The Contributor has performed all obligations,
including repairs, if any, required to be performed by
them, and are not in default under any of the Leases.
9.20 Service Contracts; Management Contracts. Schedule 9.20(a)
--------------------------------------- ----------------
is a list of all employment, union, purchase, service and maintenance
agreements, leasing agreements, listing agreements, equipment leases and any
other agreements, contracts, licenses and permits affecting or pertaining to the
Properties or any part thereof (the "Service Contracts"), and Schedule 9.20(b)
----------------
is a list of all management contracts relating to the Properties (the
"Management Contracts"). The Contributor is not party to any licenses or leases
of personal property or any other contracts or agreements, written or oral, of
any kind or character, relating to the management, operation, maintenance or
repair of any Property, or otherwise, except for the Leases and the Service
Contracts. The Contributor has performed all obligations required to be
performed by them and are not in default under any of the Service Contracts.
Each of the Service Contracts is in full force and effect and constitutes the
legal, valid and binding obligation of the respective parties thereto,
enforceable in accordance with its terms, and has not been modified, amended or
extended.
-27-
9.21 Permits. All permits, licenses, inspections and other
-------
approvals from all applicable governmental authorities having jurisdiction over
the Contributor and the Properties that are necessary in connection with the
operation of the use, ownership and operation of the Properties as they are
currently used, have been obtained and are in full force and effect.
9.22 Financial Statements. The Contributor has delivered to the
--------------------
Partnership and the Company the Financial Statements (as defined in Section
12.2.1) and the related statements of income, changes in equity, and cash flow
and all schedules and the notes thereto. The Financial Statements: (a) present
fairly the financial condition and the results of operations, changes in equity,
and cash flow of each Property, as at the respective dates of and for the
periods referred to in such Financial Statements, all in accordance with
generally accepted accounting principles and standards; (b) reflect the
consistent application of such accounting principles throughout the periods
involved and for each and all Properties; and (c) are true, complete and
correct. Since the latest date of the Financial Statements, there have been no
changes in any of the accounting policies, practices or procedures of the
Contributor.
9.23 Undisclosed Liabilities. Schedule 9.23 hereto is a true,
----------------------- -------------
complete and accurate description of all debts, liabilities and obligations of
the Contributor relating to each of the Properties. There are no debts,
liabilities or obligations (whether known or unknown, disputed or undisputed,
fixed, contingent or otherwise) associated with or relating to any of the
Properties, or secured by any of the Properties, other than those specified and
described on Schedule 9.23 hereto.
-------------
9.24 Contracts. Attached hereto as Schedule 9.24 is a complete
--------- -------------
and accurate list of all contracts, agreements or understandings (whether or not
in writing), other than the Leases, Service Contracts and Management Contracts,
relating to any of the Properties, to which the Contributor is a party or by
which it or any of the Properties is bound.
9.25 Tax Matters. The Contributors or their Designees have
-----------
relied solely on their own counsel for advice on any and all tax matters
relating to this Agreement and have not relied on any advice or representations
of the Company, the Partnership, or their counsel with respect to any tax
matters relating to this Agreement.
9.26 Employee Benefit Liabilities. Except as listed on
-----------------------------
Schedule 9.26, neither the Contributor nor any entity or Affiliate currently or
-------------
previously within a controlled group or under common control with the
Contributor within the meaning of Section 414(b) or (c) of the Code or Section
4001 of the Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended ("Controlled Group Member"), currently sponsors or has previously
sponsored, contributed to, or been obligated to contribute to, any defined
benefit pension plan subject to Title IV of ERISA or any plan subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA ("Pension
Plans"). All Pension Plans are fully funded on a termination basis (using
Pension Benefit Guaranty Corporation assumptions), and each Contributor and
Controlled Group Member has timely made all funding contributions required by
Section 302 or Title IV of ERISA or Section 412 of the Code. No Contributor or
Controlled Group Member has any actual or contingent liability with
-28-
respect to any terminated Pension Plan. Neither the Property nor any other
assets of the Contributor are subject to liens under the Code or ERISA with
respect to any employee benefit plan.
9.27 [Intentionally Omitted]
9.28 Taxes. The Contributor has filed all federal, state and
-----
local tax returns required to be filed by the Contributor. With respect to any
periods prior to the Closing Date, the Contributor (i) has no knowledge of any
unpaid taxes that would create a lien on any Property, and (ii) has paid in full
all taxes and assessments payable or is diligently pursing with the appropriate
authority any dispute the Contributor has regarding any unpaid taxes or
assessments as of the Closing Date.
9.29 Special Filings. The Contributor is not required to submit
---------------
any notice, report or other filing to any governmental or regulatory authority
in connection with the execution, delivery or performance of this Agreement or
any document or instrument executed and delivered in connection herewith or the
consummation of the transactions contemplated hereby other than the filing of
the tax returns required by the terms of this Agreement; and no consent,
approval or authorization of any governmental or regulatory authority is
required to be obtained by the Contributor in connection with the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
9.30 [Intentionally Omitted]
9.31 Books and Records. The books and records of the
-----------------
Contributor with respect to each Property, all of which have been or will be
made available to the Company and the Partnership, are, and will be at all times
until Closing, complete and correct in all material respects. All of such books
and records shall be delivered to the Company prior to the Closing.
9.32 No Brokers. Except as set forth on the Disclosure
----------
Schedule, the Contributor has not dealt with any agent, broker or other person
acting pursuant to express or implied authority of the Contributor, and no
person or entity is entitled to a commission or finder's fee in connection with
the contribution described by this Agreement or will be entitled to make any
claim against the Company, or the Partnership for a commission or finder's fee
by reason of the Contributor having engaged him/her/it.
9.33 All Material Information. With respect to all information,
------------------------
statements, representations and warranties made herein, any agreements or
documents contemplated hereby, any schedules or exhibits hereto, and any
certificates or instruments delivered in connection herewith, the Contributor
hereby represent and warrant that no information, statement, representation or
warranty herein or therein contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which made, not
misleading; or necessary in order to provide the Partnership or the Company with
true, accurate and complete information. The Contributor has no knowledge or
-29-
information of any facts, circumstances or conditions which do or could (whether
by the passage of time or the giving of notice or both) materially and adversely
affect any Property or the operation or intended use of the same.
9.34 Survival of Warranties, Representations and Covenants. The
---------------------- ------------------------------
foregoing representations and warranties shall not be affected by any
investigation or verification made by or on behalf of the Company or the
Partnership. The representations, warranties and covenants of Contributors made
in this Agreement shall survive the Closing and consummation of the transactions
contemplated hereby, and shall remain in full force and effect so long as the
Company or the Partnership provides the Contributor with written notice of any
breach, violation or right to indemnification thereunder within a period ending
24 months from the date of this Agreement, except that in the case of any claim
arising out of the representations or warranties herein relating to Section 9.15
(Environmental Matters) and Section 9.24 (Taxes), and Section 9.26 (Employee
Benefit Liabilities), such representations and warranties shall survive in each
case until the applicable statute of limitations has run. After Closing,
neither the Company nor the Partnership shall prosecute any claim against the
Contributor for a breach of the foregoing representations and warranties if the
Company or the Partnership have obtained actual knowledge of such breach prior
to Closing.
X. [INTENTIONALLY OMITTED]
XI. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PARTNERSHIP
-----------------------------------------------------------------
The Partnership and the Company, jointly and severally, represent and
warrant to the Contributor that the following are true, complete and correct as
of the date of this Agreement and as of the Closing:
11.1 Organization, Good Standing and Qualification. Each of the
---------------------------------------------
Company and the Partnership (i) is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) has all requisite power and authority to carry on its business and own or
lease and operate its assets and properties in the manner in which it is being
conducted and owned or leased and operated, as the case may be, and (ii) is duly
qualified to transact business and is in good standing in all jurisdictions
where its ownership, lease or operation of its properties or assets or the
conduct of its business requires such qualification.
11.2 Authorization. The execution and delivery of this
--------------
Agreement and all agreements, documents and instruments contemplated hereby and
the performance of all transactions contemplated herein or therein, have been
duly and validly authorized by all requisite action by the Company and its board
of trustees; and by all requisite action of the Partnership. This Agreement and
the agreements, documents and instruments executed and delivered in connection
herewith constitute the legal, valid and binding obligation of each of the
Company and the Partnership, enforceable in accordance with their respective
terms, subject to applicable bankruptcy,
-30-
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except to the
extent that rights to indemnification and contribution under or contemplated by
this Agreement or such other agreements may be limited by federal or state
securities laws or public policy relating thereto.
11.3 No Violation. The execution and delivery of this
-------------
Agreement and the agreements, documents and instruments executed and delivered
in connection herewith, the consummation of the transactions hereby or thereby,
and the operation of any Property shall not: (i) conflict with, violate, or
result in a breach of, the terms, conditions or provisions of, or constitute a
default under, any agreement, contract, Mortgage, deed, lease, license,
franchise or instrument to which the Company or the Partnership is a party or is
subject; (ii) constitute a violation of any applicable code, resolution, law,
statute, regulation, ordinance, rule, judgment, decree or order to the Company
or the Partnership; or (iii) violate any provision of the organizational
documents of the Company or the Partnership.
11.4 Public Offering. At the time of Closing, (i) the
----------------
Company's Form S-11 Registration Statement will comply with applicable federal
securities laws and regulations and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
in order to make the statements therein not misleading, and (ii) the Company's
Shares shall be listed and traded on The Nasdaq Stock Market National Market and
there will have been no suspension of trading in such Shares.
11.5 Tax Status. As of the Closing, the Partnership will be
----------
qualified as a partnership for Federal income tax purposes, and the Company will
be qualified as a real estate investment trust organized under the laws of the
State of Maryland.
11.6 No Litigation. Neither the Partnership nor the Company is
-------------
involved in any pending or, to its knowledge, threatened litigation that would
materially or adversely effect its operations or financial condition or the
ability to perform under this Agreement or the Partnership Agreement.
11.7 No Brokers. Except as set forth in the Disclosure
----------
Schedule, neither the Partnership nor the Company has dealt with any agent,
broker or other person acting pursuant to express or implied authority of either
such party, and no person or entity is entitled to a commission or finder's fee
in connection with the transactions contemplated by this Agreement or will be
entitled to make any claim against any Contributor for a commission or finder's
fee by reason of the Company or the Partnership having engaged him/her/it.
11.8 Survival. The representations and warranties of the
--------
Company and the Partnership made in this Section 11 shall survive the Closing
and consummation of the transactions contemplated hereby, and shall remain in
full force and effect so long as the Contributor provides
-31-
the Company or the Partnership with written notice of any breach, violation or
right to indemnification thereunder within a period ending twenty-four (24)
months from the date of this Agreement. After Closing, the Contributor shall
not prosecute any claim against the Company or the Partnership for a breach of
the foregoing representations and warranties if the Contributor obtained
knowledge of such breach prior to Closing.
XII. COVENANTS
---------
12.1 Covenants of the Company and the Partnership. Each of the
--------------------------------------------
Company and the Partnership hereby covenants as follows:
12.1.1 [Intentionally Omitted]
12.1.2 If this Agreement is terminated for any reason, (a) the
Partnership and the Company shall promptly return to
Contributors all materials furnished by Contributors to
the Partnership and the Company pursuant to this
Agreement, and (b) the Partnership and the Company
shall promptly restore the Properties to substantially
the same condition in which they existed immediately
before any physical tests conducted by or on behalf of
the Partnership and the Company pursuant to the
purposes of this Agreement.
12.1.3 Prior to the Closing Date, except as may be required to
be disclosed by law (including federal and state
securities laws, and the rules and regulations
thereunder), regulation or legal process, or unless
otherwise consented to in writing by the Contributors,
which consent shall not be unreasonably withheld, the
Partnership and the Company shall keep all information
learned by the Partnership and the Company in
connection with the Properties or any operation thereof
confidential.
12.1.4 In connection with inspection of the Properties, the
Partnership and the Company shall not unreasonably
interfere with any Prior Occupants or any Contributor's
business operations.
12.1.5 The Partnership shall not sell, repay Mortgage Debt,
finance, refinance or otherwise take any actions that
are prohibited with respect to any specified Properties
to the extent described on Schedule 12.1.5.
----------------
Notwithstanding the provisions of this Section, the
Partnership may (A) at any
-32-
time, sell or exchange one or more of the Properties in
a "like kind exchange" under Section 1031 the Code (or
any successor or similar section) in which no gain is
recognized by the Partnership and reasonable provisions
are made (such as by substituted debt) to avoid
triggering gain to the Contributor, or (B) sell
properties upon the repurchase of the Units for cash,
conversion of the Units to Shares or the transfer of
the Units. Notwithstanding the provisions of this
Section, the Company may sell the Properties which
relate to the: (1) closure of the Dealership on such
Property due to termination of the Franchise Agreement,
(2) sale of the Dealership on such Property, or (3)
closure of the Dealership on such Property for any
reason if a new Dealership does not open on such
Property with 24 months, unless expressly waived by the
Company.
12.1.6 The Partnership shall be entitled from time to time as
necessary to seek and rely on a certificate, signed
either by the Transfer Agent or by the holders of a
majority of the then outstanding Initial Units issued
hereunder to the Contributors, of the basis and at risk
amounts relevant to the provisions of this Section.
12.1.7 For purposes of Section 704(c) of the Code, the
Partnership will use the traditional with ceiling
method of making allocations respecting all properties
contributed to the Partnership at or before the
Closing. For purposes of this Section 12.1.7, upon
disposition of a Property, the Partnership may make a
curative allocation of the type described in Treasury
Regulation Section 1.704-3(c)(3)(iii)(B).
12.1.8 So long as the Contributors and their Permitted
Transferees hold 10% or more of the Initial Units, the
Company agrees that from and after the Closing Date
substantially all of the Company's business for profit
shall be conducted by or through the Partnership;
provided, however, that business may be conducted
through the Company or a Company subsidiary provided
that all labor, services and goods furnished by the
Company or its subsidiary shall be at the cost of such
entity, substantially all of the pecuniary benefit
derived from such activity shall inure to the benefit
of the Partnership, and the Company shall not make any
distributions to its shareholders from any funds, other
than
-33-
distributions that the Company receives from the
Partnership in respect of its Units.
12.1.9 The parties acknowledge and agree that the Contributors
and their affiliates are required under this Agreement
and the Company Leases to provide to the Company
certain confidential financial information (the
"Confidential Information") with respect to the
business conducted on the Leased Properties. The
Company agrees to use the Confidential Information
solely for the purposes of monitoring compliance with
the terms of this Agreement and the Company Leases, and
the Confidential Information shall be disclosed only to
those of the Company's employees, advisors and
consultants to whom it is necessary for such purposes.
Moreover, the Company will use its best efforts to
implement policies and procedures at the Board of
Trustees level so as to minimize the disclosure of
Confidential Information to Trustees having interest in
businesses that compete with the Contributors and their
affiliates.
12.2 Covenants of the Contributors and the Contributing
--------------------------------------------------
Entities. The Contributor hereby covenants and agrees as follows:
--------
12.2.1 [Intentionally Omitted]
12.2.2 If this Agreement is terminated as to all Properties
for any reason, the Contributor shall promptly return
to the Company or the Partnership, as the case may be,
all materials furnished by the Company or the
Partnership, to such Party pursuant to this Agreement.
12.2.3 The Contributor shall keep all information learned by
such party in connection with the Partnership or the
Company or any operation thereof confidential.
12.2.4 On the Closing Date, each Contributor shall enter or
shall cause such other party as is reasonably requested
by the Company or the Partnership to enter into the
Company Leases and such service or other agreements as
the Company and the Partnership shall request.
12.2.5 In the event that facts or circumstances are discovered
or develop that could form the basis of an
Environmental Claim
-34-
with respect to a specific Property or Properties, the
Contributor(s) of such Property or Properties shall
take all actions necessary to fully address such
circumstances, including, without limitation, providing
notice to appropriate governmental authorities;
conducting environmental studies, sampling and testing
procedures; taking remedial action; and modifying
operations or physical facilities to otherwise
eliminate potential liability and ensure full
compliance with the Environmental Laws. Without
limiting the foregoing, each Contributor shall ensure
that it has identified any underground storage tanks
("USTs") used in conjunction with its operations and
that all registration, investigation, remedial action
and technical upgrade requirements have been complied
with fully in respect of each such UST.
12.3 No Claim Against Contributed Property. Each Contributor
-------------------------------------
hereby represents, warrants, covenants and agrees that, as of the Closing Date,
he/she/it: (i) will have no claim of any kind or nature against any Property by
reason of the execution of this Agreement; (ii) hereby waives, releases and
discharges any claim he/she/it has or may have; and (iii) shall not make any
claim or bring any action against any Property or the Company or the Partnership
for or in respect thereof. Notwithstanding Section 9.34, this representation,
warranty, covenant and agreement shall survive the closing of the transactions
contemplated hereby and shall continue in effect.
12.4 DRO Election; Bottom Guaranty Election.
--------------------------------------
12.4.1 The Partnership hereby agrees to send to each
Contributor (the "Annual Notice") who holds Initial
Units the following information on an annual basis at
least 30 days prior to the filing of the tax return of
the Partnership:
a. the amount of the debt secured by the
Partnership's properties and the amount of
the Partnership's total recourse, non-
recourse and partner non-recourse debt as of
the end of the most recent fiscal year;
b. the amount of recourse, nonrecourse, and
partner non-recourse debt allocated to each
such Contributor;
c. the adjusted basis of the Partnership's
properties as of the end of the most recent
fiscal year; and
-35-
d. the projected taxable income or loss of the
Partnership for such fiscal year.
12.4.2 Each Contributor who holds Initial Units, at its
written election but with no obligation to do so, may
affirmatively make on an annual basis (a) a DRO
Election or (b) a Bottom Guaranty Election. Any such
election shall be made by notice delivered to the
Partnership no later than the 30th day after the Annual
Notice was given.
12.4.3 A DRO Election shall state that if the Contributor has
a deficit balance in its capital account following the
liquidation of the Contributor's interest in the
Partnership or the liquidation of the Partnership, as
the case may be, such Contributor shall contribute to
the capital of the Partnership, no later than the end
of the fiscal year during which the Contributor's
interest in the Partnership is liquidated or during
which the Partnership is liquidated, as the case may be
(or, if later, 90 days after the date on which the
Contributor's interest in the Partnership is
liquidated, as the case may be) (the "Liquidation
Date") an amount of money equal to a designated portion
of the deficit in the Contributor's capital account.
The term "liquidation" shall have the meaning given to
it in Treas. Regs. Section 1.704-1.
12.4.4 A Bottom Guaranty Election shall state that if the
Partnership shall be in default with respect to the
Mortgage securing any of the properties of the
Partnership, then the Contributor agrees to contribute
to the capital of the Partnership a designated portion
of the principal balance of such Mortgage (the
"Contribution Limit"); however, such contribution shall
only occur if the mortgage lender shall have exhausted
all of its remedies against such property in order to
collect the amount owing the mortgage lender, and such
Contribution Limit shall be reduced on a dollar-for-
dollar basis for every dollar received by the mortgage
lender from exercising such remedies. Any such
contribution shall be made by the Liquidation Date. For
example, if the amount of the Mortgage were $10,000,000
and the amount of the Contribution Limit were
$1,000,000, the capital contribution would only be
required if the Property were sold in foreclosure and
the proceeds of sale were less than $1,000,000. In the
event that more than one Partner submits
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a Bottom Guaranty Election with respect to the same
debt, the Partnership shall notify each such Partner
and allow such Partners to appropriately modify their
respective Bottom Guaranty Elections.
12.4.5 Limitations on Indebtedness. The Company will use its
----------------------------
best efforts to maintain Mortgage Debt with respect to
the Properties and in the amounts as described on
Schedule 12.4.5, until such time as the number of
---------------
outstanding Units issued to the Contributor hereunder
is not more than the number of Units specified on such
Schedule.
XIII. DUE DILIGENCE PERIOD
--------------------
13.1 Due Diligence Period. The period from the date hereof
--------------------
until the Closing Date is referred to herein as the "Due Diligence Period."
13.2 Access to Properties and Materials. During the Due
----------------------------------
Diligence Period and upon twenty-four (24) hours prior notice, the Company and
the Partnership and their agents, engineers, surveyors, appraisers, auditors,
counsel and other representatives shall have the right to enter upon the
Properties to inspect, examine, survey, obtain engineering inspections and
environmental studies, appraise, and otherwise do that which, in the opinion of
the Partnership and the Company, is necessary to determine the boundaries,
acreage and condition of the Properties and to determine the suitability of the
Properties for the uses intended by the Partnership (including, without
limitation, inspect, review and copy any and all documents in the possession or
control of Contributors, or their respective agents, contractors or employees,
and which pertain to the construction, ownership, title, use, occupancy or
operation of the Properties or any part thereof). During the Due Diligence
Period, the Contributors, at their expense and at such times as will not
unreasonably interfere with the business being conducted on the Property or
hinder the Partnership's due diligence review, shall make available to the
Company and the Partnership copies or originals of all of their respective
books, files and records relating in any way to the Properties, complete copies
(or originals when requested) of all title information and title insurance
policies, easements, leases, brokerage agreements, licenses, permits, surveys,
zoning information, environmental reports, structural reports, violation or
default notices, contracts, tax bills and assessments, information regarding
pending or threatened claims, suits or proceedings, and all consents and other
documents required to be obtained for the completion of the transactions
contemplated hereunder.
13.3 Adjustment Following Due Diligence. If the Company
----------------------------------
determines that one or more representations or warranties or any information
included on any Disclosure Schedule relating to any Property is incomplete or
-------------------
inaccurate in any material respect (the "Non-Conforming Property"), the Company
shall have the option to: (a) proceed with the transactions contemplated hereby,
(b) declare this Agreement null and void in which case no party shall have any
rights or obligations under this Agreement, or (c) terminate this Agreement with
respect to such Non-
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conforming Property and proceed with the transactions hereby with respect to the
other Properties, in which case the number of Units issuable hereunder shall be
reduced by the Contribution Value of such Non-Conforming Property.
Notwithstanding anything herein to the contrary, if the Partnership excercises
its rights under Section 13.3(c) above with respect to any Non-Conforming
Property other than due to a title defect (pursuant to Section 5.3) or a
misrepresentation or breach of any environmental representation, warranty or
covenant (as set forth in Section 9.15), then the Contributors shall have the
option of declaring this Agreement null and void with respect to all Properties.
XIV. DEFAULTS AND REMEDIES
---------------------
14.1 Indemnification by Contributors. The Contributors, jointly
-------------------------------
and severally (each, for purposes of Sections 14.1 and 14.2, a "Contributor
Indemnifying Party"), shall indemnify, defend and hold harmless the Partnership,
the Company and their respective shareholders, partners, trustees, officers,
agents, representatives, employees, Affiliates, successors and assigns
(collectively, for purposes of this paragraph, the "Company Indemnified
Parties") from and against any and all losses, damages, claims, liabilities,
actions, suits, proceedings and costs and expenses of investigation or defense
thereof, including attorneys' fees payable as incurred, arising out of or
relating to any (a) misrepresentation or breach of warranty by such Contributor
Indemnifying Party or nonfulfillment of any covenant or agreement to be
performed or complied with by such Contributor Indemnifying Party under this
Agreement and any agreement, document, instrument, certificate, schedule or
exhibit contemplated hereby; (b) untrue or incomplete statement of a material
fact contained in any statement or information provided by such Contributor
Indemnifying Party or based on any omission to state therein a material fact
required to be stated therein or other information necessary to make the
statements therein not misleading; (c) any debts, liabilities or obligations
(whether known or unknown, disputed or undisputed, fixed, contingent or
otherwise) associated with or relating to any of the Contributor Indemnifying
Parties, their officers, directors, partners, trustees or Affiliates or the
Properties, or secured by any of the Contributor Indemnifying Parties, or by any
of the Properties, except those specified on Schedule 9.23 hereto, including any
-------------
obligations under any of the Leases and Service Contracts, to the extent any
such obligation was to be performed prior to the Closing Date, or was to be
performed after the Closing Date as a result of a breach or default under any of
the Leases or Service Contracts by the Contributor Indemnifying Parties or their
Affiliates prior to the Closing Date; (d) any action taken, or any failure to
act, by such Contributor Indemnifying Party in connection with this transaction
and the transactions contemplated herein constituting a breach of this Agreement
or any agreement, document or instrument contemplated hereby or a breach of a
duty owed to any person, including, without limitation, any action taken to
redeem or otherwise liquidate the interest of certain holders in anticipation of
the transactions contemplated herein, to the extent such action or failure to
act results in a violation (or alleged violation) of applicable laws or of the
fiduciary duties owed to such holders; (e) pollution or threat to human health
or the environment, or any Environmental Claim against any person or entity
whose liability for such Environmental Claim the Contributors have assumed or
retained either contractually or by operation of law, that is related in any way
to any of the Properties, including, without limitation, all on-site and off-
site activities relating to any of the
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Properties involving Substances of Concern, and that occurred, existed, arises
out of conditions or circumstances that occurred or existed, or was caused, in
whole or in part, on or before the Closing Date, whether or not the pollution or
threat to human health or the environment, or the existence of any Environmental
Claim, is known to the Contributor Indemnifying Parties; (f) regardless of
whether it arises as a breach of any representation or warranty, any debts,
liabilities or obligations of the Contributor Indemnifying Parties (whether
known or unknown, disputed or undisputed, fixed, contingent or otherwise) of,
associated with or relating to any asset or property other than the Properties,
except those specified on Schedule 9.23 hereto; and (g) any and all damages and
-------------
expenses incident to any of the foregoing or to the enforcement of this Section
14.2.
14.2 Remedies.
--------
14.2.1 Subject to subsection 14.2.2 and 14.2.3 hereof, after
the Closing hereunder, the Company or the Partnership,
in the event of a breach of any representation or
warranty under Section 9 hereof, also may proceed
against the person or entity identified on Schedule
--------
14.2.1 personally (the "Personal Indemnitor").
------
14.2.2 Each Contributor Indemnifying Party shall be fully
responsible and severally liable for any of the
following and any and all losses, damages, claims,
liabilities, actions, suits, proceedings and costs and
expenses of defense thereof, including attorneys' fees
payable as incurred, arising out of or relating to: (a)
each representation and warranty made by he/she/it
hereunder relating to or associated with title to
his/her/its interest in any Property, his/her/its
ability to convey his interest as contemplated by this
Agreement, and his/her/its representations under
Section 9.4 hereof; (b) regardless of whether it arises
as a breach of any representation or warranty, any
debts, liabilities or obligations (whether known or
unknown, disputed or undisputed, fixed, contingent or
otherwise) of, associated with or relating to any of
the Contributor Indemnifying Parties or the Properties,
or secured by any of the Contributor Indemnifying
Parties or by any of the Properties, except those
specified on Schedule 9.23 hereto, and (c) regardless
-------------
of whether it arises as a breach of any representation
or warranty, any debts, liabilities or obligations of
the Contributor Indemnifying Parties (whether known or
unknown, disputed or undisputed, fixed, contingent or
otherwise) of, associated with or relating to any other
asset or property other than the Properties, except
those specified on Schedule 9.23 hereto.
-------------
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14. 2.3 Each Contributor hereby represents, warrants, covenants
and agrees that he/she/it presently has, a tangible net
worth (such term meaning net worth exclusive of the
value (if any) of goodwill, going concern value and
similar assets, but inclusive of the value of shares of
stock, interests in partnerships and other business
enterprises and similar assets) of not less than the
aggregate Contribution Amounts, minus all Mortgage Debt
for all Properties being acquired by the Partnership
pursuant to this Agreement.
14.3 Indemnification by the Company and the Partnership. The
--------------------------------------------------
Company and the Partnership (each, for purposes of this Section 14.3, a "Company
Indemnifying Party") shall indemnify, defend and hold harmless each Contributor
and their respective shareholders, partners, directors, officers, partners,
agents, employees, Affiliates, successors and assigns (collectively, for
purposes of this paragraph, "Contributor Indemnified Parties") from and against
any and all losses, damages, claims, liabilities, actions, suits, proceeds and
costs and expenses of defense therefore, including attorneys' fees payable as
incurred, arising out of or relating to any (a) misrepresentation or breach of
warranty by such Company Indemnifying Party or nonfulfillment of any covenant or
agreement to be performed or complied with by such Company Indemnifying Party
under this Agreement; (b) untrue or incomplete statement (or allegation by a
third party of an untrue or incomplete statement) of a material fact contained
in any statement or information provided by such Company Indemnifying Party or
based on any omission (or allegation by a third party of an untrue or incomplete
statement) to state therein a material fact required to be stated therein or
other information necessary to make the statements therein not misleading, to
the extent such alleged untrue or incomplete statement or omission was made with
the Company's or the Partnership's knowledge that the statement was untrue or
incomplete or omitted to state a material fact; (c) any debts, liabilities or
obligations (whether known or unknown, disputed or undisputed, fixed, contingent
or otherwise) specified on Schedule 9.23 hereto or arising and incurred after
-------------
the Closing Date (other than as a result of a breach by any Contributor of any
representation, warranty, covenant or agreement hereunder), including the
obligations under any Service Contracts that survive the Closing Date, to the
extent any such obligation is to be performed after the Closing Date, except to
the extent any such obligation is to be performed after the Closing Date as a
result of a breach or default under any of the Leases or Service Contracts by
the Contributor prior to the Closing Date; and (d) any and all damages and
expenses incident to any of the foregoing or to the enforcement of this Section
14.3.
14.4 Indemnification Procedures. All claims for indemnification
--------------------------
under this Article 14 shall be asserted and resolved as follows:
14.4.1 In the event that any Contributor Indemnified Party or
Company Indemnified Party (the "Indemnified Party") has
a Claim against any Contributor Indemnifying Party or
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Company Indemnifying Party obligated to provide
indemnification pursuant to Sections 14.1 or 14.2
hereof, on the one hand, or Section 14.3 hereof, on the
other hand (the "Indemnifying Party"), which does not
involve a claim being asserted against or sought to be
collected by a third party, the Indemnified Party shall
with reasonable promptness send a written notice (the
"Claim Notice") with respect to such claim to the
Indemnifying Party. If the Indemnifying Party does not
notify the Indemnified Party within the fifteen days
thereafter (the "Notice Period") that the Indemnifying
Party disputes such claim, the amount of such claim
shall be conclusively deemed a liability of the
Indemnifying Party hereunder. In case an objection is
made in writing in accordance with this Section 14.4.1,
the Indemnified Party shall have thirty (30) days to
respond in a written statement to the objection. If
after such thirty (30) day period there remains a
dispute as to any claims, the parties shall attempt in
good faith for sixty (60) days to agree upon the rights
of the respective parties with respect to each of such
claims. If the parties should so agree, a memorandum
setting forth such agreement shall be prepared and
signed by both parties.
14.4.2 In the event that any claim for which the Indemnifying
Party would be liable to an Indemnified Party hereunder
is asserted, or any action or proceeding commenced,
against an Indemnified Party by a third party, the
Indemnified Party shall with reasonable promptness
notify the Indemnifying Party of such claim, specifying
the nature of such claim and the amount or the
estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final
amount of such Claim) (the "Third Party Claim Notice").
The Indemnifying Party shall have 30 days from the
receipt of the Claim Notice (the "Third Party Notice
Period") to notify the Indemnified Party (a) whether or
not such party disputes the liability to the
Indemnified Party hereunder with respect to such claim
and (b) if such party does not dispute such liability,
whether or not the Indemnifying Party desires, at the
sole cost and expense of the Indemnifying Party, to
defend against such claim, provided that such party is
hereby authorized (but not obligated) prior to and
during the Third Party Notice Period to file any
motion, answer or other pleading and to take any other
action which the Indemnifying Party shall deem
necessary or appropriate to protect the
-41-
Indemnifying Party's interests. In the event that the
Indemnifying Party notifies the Indemnified Party
within the Third Party Notice Period that the
Indemnifying Party does not dispute the Indemnifying
Party's obligation to indemnify hereunder and desires
to defend the Indemnified Party against such claim,
except as hereinafter provided, such party shall have
the right to defend by appropriate proceedings. No
non-monetary settlement of any such matter shall be
entered into without the written consent of the
Indemnified Party, which consent shall not be
unreasonably withheld; provided that, unless the
Indemnified Party otherwise agrees in writing, such
party may not settle any matter (in whole or in part)
unless such settlement includes a complete and
unconditional release of the Indemnified Party. If the
Indemnified Party desires to participate in, but not
control, any such defense or settlement the Indemnified
Party may do so at its sole cost and expense. If the
Indemnifying Party elects not to defend the Indemnified
Party against such claim, whether by failure of such
party to give the Indemnified Party timely notice as
provided above or otherwise, then the Indemnified
Party, without waiving any rights against such party,
may settle or defend against any such claim in the
Indemnified Party's sole discretion and the Indemnified
Party shall be entitled to recover from the
Indemnifying Party the amount of any settlement or
judgment to the extent the Indemnified Party is
entitled to indemnification and, on an ongoing basis,
all indemnifiable costs and expenses of the Indemnified
Party with respect thereto, including interest from the
date such costs and expenses were incurred.
14.4.3 If at any time, in the reasonable opinion of the
Indemnified Party, notice of which shall be given in
writing to the Indemnifying Party, any such claim seeks
material prospective or other relief which could have a
materially adverse effect on the assets, liabilities,
financial condition, results of operations or business
prospects of any Indemnified Party or in the reasonable
opinion of counsel for the Indemnified Party a conflict
exists, the Indemnified Party shall have the right to
control or assume (as the case may be) the defense of
any such claim and the amount of any judgment or
settlement and the reasonable costs and expenses of
defense shall be included as part of the
indemnification obligations of the Indemnifying Party
hereunder. If the
-42-
Indemnified Party should elect to exercise such right,
the Indemnifying Party shall have the right to
participate in, but not control, the defense of such
claim or demand at the sole cost and expense of the
Indemnifying Party.
14.4.4 Nothing herein shall be deemed to prevent the
Indemnified Party from making a claim, and an
Indemnified Party may make a claim hereunder, for
potential or contingent claims or demands provided the
Claim Notice or Third Party Claim Notice, as the case
may be, sets forth the specific basis for any such
potential or contingent claim or demand to the extent
then feasible and the Indemnified Party has reasonable
grounds to believe that such a claim or demand may be
made.
14.4.5 The Indemnified Party's failure to give reasonably
prompt notice as required by this Section 14.4 of any
actual, threatened or possible claim, demand, action or
proceeding which may give rise to a right of
indemnification hereunder shall not relieve the
Indemnifying Party of any liability which the
Indemnifying Party may have to the Indemnified Party
unless the failure to give such notice materially and
adversely prejudiced the Indemnifying Party or
increases the amount of indemnification which the
Indemnifying Party is obligated to pay hereunder. In
any such event, the amount of indemnification which the
Indemnified Party will be entitled to receive hereunder
shall be reduced to an amount which the Indemnified
Party would have been entitled to receive had such
notice been timely.
XV. MISCELLANEOUS
-------------
15.1 Assignment. Neither this Agreement nor any interest
----------
hereunder may be assigned or transferred by any Contributor, the Company or the
Partnership without the prior written consent of the parties hereto.
15.2 Entire Agreement. Any prior agreement or understanding
----------------
among the parties concerning the subject matter hereof is hereby superseded.
This Agreement constitutes the entire agreement among the parties with respect
to the subject matter hereof and the transactions contemplated herein and shall
not be modified or amended except in a written document signed by all of the
parties hereto.
15.3 Notices. All notices or other communications required or
-------
permitted under this Agreement shall be in writing and delivered personally or
by registered or certified mail,
-43-
return receipt requested, postage prepaid, or by a nationally recognized
overnight courier (such as Federal Express) with receipted delivery. Notices to
the parties shall be addressed as follows:
If to the Contributors to the addresses contained in Schedule I;
----------
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Partnership or to the Company:
Capital Automotive REIT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive Officer
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
-44-
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All notices given in accordance with the terms hereof shall be deemed
effective (a) if delivered in person or by overnight courier, on the business
day it is delivered, and (b if sent by registered or certified mail, three (3)
business days after deposit with the U.S. mail. Any party hereto may change its
address by written notice to all parties hereto sent in accordance with the
terms of this Section and any such Notice of change of address shall be
effective five (5) days after delivery.
15.4 Governing Law. This Agreement shall be governed and
-------------
interpreted in accordance with the laws of the Commonwealth of Virginia without
regard to its principles of conflicts of laws, and any action brought under or
arising out of this Agreement or the matters relating hereto shall be submitted
to the jurisdiction of the United States District Court for the Eastern District
of Virginia. Each party acknowledges and agrees to such jurisdiction.
15.5 Litigation Costs. If there is any legal action or
----------------
proceeding between the parties hereto arising from or based upon this Agreement,
the unsuccessful party to such action or proceeding shall pay to the prevailing
party all litigation costs and expenses, including reasonable attorneys' fees,
incurred by such prevailing party in such action or proceeding and in any appeal
in connection therewith, and if such prevailing party recovers a judgment in any
such action, proceeding or appeal, such costs, expenses and attorneys' fees
shall be included in as part of such judgment.
15.6 Counterparts. This Agreement may be executed in any
------------
number of identical counterparts, any or all of which may contain the signatures
of fewer than all of the parties but all of which shall be taken together as a
single instrument.
15.7 Offer and Acceptance. This Agreement constitutes an offer
--------------------
by the Company and the Partnership which must be accepted, by delivery to the
Company of a duly signed and completed signature page hereof, by all of the
Contributors within five (5) days after the date this Agreement is signed by the
Company and the Partnership.
15.7.1 If, within such time period, less than all of the
persons owning any interest in a Contributor shall have
signed this Agreement, then the Contributor and the
Property owned by such Contributor shall, at the sole
option of the Company, be excluded from the
Contribution hereunder, this Agreement shall remain in
full force and effect as to the other Contributors and
Properties, and an appropriate adjustment
-45-
shall be made with respect to the relevant Property, in
which case the number of Units issuable hereunder as
set forth on Schedule 1.3(a) shall be reduced by the
---------------
Contribution Value of such Property as provided in this
Agreement; if after the expiration of such time period
all of the Contributors execute this Agreement, the
Company, at its sole option, may elect to re-include,
or may continue to exclude, any such Contributor and
Property.
15.7.2 If any Contributor hereunder is not an "accredited
investor" as defined in the Act, then the Company, at
its sole option, may exclude any such Contributors and
any such Property from the Contribution hereunder, this
Agreement shall remain in full force and effect as to
the other Contributors and Properties, and an
appropriate adjustment shall be made with respect to
the relevant Property, in which case the number of
Units issuable hereunder as set forth on Schedule
--------
1.3(a) shall be reduced by the Contribution Value of
------
such Property as provided in this Agreement; if
thereafter all Contributors become accredited
investors, then the Company, at its sole option, may
elect to re-include, or may continue to exclude, any
such Contributors and Property.
15.8 Arbitration. In the event a dispute arises between the
-----------
parties as to any of the requirements of this Agreement or the performance under
this Agreement, which the parties are unable to resolve, the parties agree to
waive the remedy of litigation (except for extraordinary relief in an emergency
situation) and agree that such dispute or disputes shall be determined by
arbitration. Notwithstanding the foregoing, the parties acknowledge and agree
that this Section 15.8 is not intended to create new rights.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal, with the intention that it be a sea ed instrument, as of the date
set forth above.
WITNESS CAPITAL AUTOMOTIVE REIT
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
Name: ___________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: ___________________________ Title: President
CAPITAL AUTOMOTIVE L.P.
WITNESS By: Capital Automotive REIT, as
General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
Name: ___________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: ___________________________ Title: President
WITNESS CONTRIBUTOR:
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
Name: ___________________________ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: ___________________________ Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone #: 301/▇▇▇-▇▇▇▇
Facsimile #: 301/767-0999
Social Security # or TIN: ###-##-####
WITNESS CONTRIBUTOR:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
Name: ___________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: ___________________________ Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone #: 202/▇▇▇-▇▇▇▇
Social Security # or TIN: ###-##-####
SIGNATURES CONTINUED ON THE FOLLOWING PAGE
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WITNESS CONTRIBUTOR:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
Name: ___________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: ___________________________ Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone #: 301/▇▇▇-▇▇▇▇
Facsimile #: 301/767-0999
Social Security # or TIN: ###-##-####
WITNESS CONTRIBUTOR:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
Name: ___________________________ Name: Abby ▇. ▇. ▇▇▇▇▇▇▇
Title: ___________________________ Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. 2007
Telephone #: 202/▇▇▇-▇▇▇▇
Social Security # or TIN: ###-##-####
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CAPITAL AUTOMOTIVE REIT
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November [24], 1997
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Re: Right of Second Offer and Waiver of Deposit of Impositions
Dear Messrs. and Mdms. Cherner:
This letter confirms the agreement of the undersigned entities and you with
respect to the Lease Agreement (the "Lease Agreement") to be entered into
pursuant to the Agreement for Contribution of Interests dated November 24, 1997,
between us and you (the "Contribution Agreement"). All capitalized terms not
defined herein shall have the meanings assigned to them in the Lease Agreement.
1. We agree that, with respect to the right of First Offer during the Lease
Term or an Extension Term, set forth in Section 16.01 of the Lease Agreement,
and as such Section 16.01 is modified herein, we will at all times act and
negotiate in good faith with you.
2. If the Landlord decides to sell the Leased Properties, then in addition
to the procedures of Section 16.01(a), we will notify you of the proposed
purchase price of the Leased Properties and the parties will negotiate in good
faith concerning such a sale to you. If we are unable to reach agreement, we
will have the right for a period of one year to sell the Leased Properties to a
third party for a purchase price greater than or equal to One Hundred Ten
Percent (110%) of the purchase price proposed by us.
3. We agree that the Right to Purchase at End of an Extension Term, set
forth in Section 16.02 of the Lease Agreement, shall apply at the end of the
first 120 month period of the term of the Lease.
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November 24, 1997
Page 2
4. We agree that the deposit of Impositions pursuant to Section 3.04 of the
Leases is hereby irrevocably waived.
5. We agree to waive the requirement to pay a Security Deposit as required
pursuant to Section 2.03 of the Lease Agreement, provided that you provide
equivalent security during the Lease Term by way of a letter of credit on terms
reasonably satisfactory to us.
We acknowledge that you would not enter into the Contribution Agreement dated
November 24, 1997, between us and you, if we had not agreed to the terms of this
letter. This letter shall be binding upon us and our successors and assigns.
CAPITAL AUTOMOTIVE L.P.,
a Delaware limited partnership
By:CAPITAL AUTOMOTIVE REIT,
a Maryland real estate investment trust,
its General Partner
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Title: President
Accepted and agreed this
24th day of November, 1997:
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