EXHIBIT 5.5
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered March 11, 1998, by and
between (i) L&M ▇▇▇▇▇▇▇▇▇▇ CORPORATION, a Maryland Corporation (the "General
Partner") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ (the "Limited
Partners") who are all of the general and limited partners (collectively, the
"Partners") of L and M Development Company Limited Partnership, a Maryland
limited partnership (the "Partnership") (the Partners sometimes hereinafter
referred to collectively as "Contributors"), and (ii) FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP, a Maryland limited partnership (hereinafter referred to as
"FWRLP").
W I T N E S S E T H:
WHEREAS, the Partners own all of the partnership interests (the
"Partnership Interests") of the Partnership, and
WHEREAS, the Partnership is the record and beneficial owner of that
certain parcel of real property containing approximately 841 acres of land as
more particularly described on Exhibit A hereto (collectively, the "Land"),
together with the shopping center known as Elkridge Corners Shopping Center
located in ▇▇▇▇▇▇ County, Maryland, and containing approximately 73,921 square
feet of leasable area and all other buildings and improvements situated thereon
(collectively, the "Building"), and all personal property and fixtures located
therein (other than that owned by tenants) (the "Personalty"), and all
appurtenances, rights, easements, rights-of-way, tenements and hereditaments
incident thereto (the "Additional Property") (the Land, Building, Personalty and
Additional Property are hereinafter collectively referred to as the "Property");
and
WHEREAS, Contributors and FWRLP desire to enter into this Agreement
relating to the contribution by certain Contributors to FWRLP of their
Partnership Interests in exchange for certain interests in FWRLP.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Contribution. Subject to the terms and conditions set forth in this
Agreement, Contributors and FWRLP agree to the contribution by Contributors
to FWRLP (the "Contribution") of all of the Partnership Interests.
2. Consideration.
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(a) In consideration of the Contribution of the Partnership
Interests, FWRLP shall issue common limited partnership units of FWRLP (the
"Units") in an aggregate amount calculated as follows: Eight Million One Hundred
Thousand Dollars ($8,100,000.00) less the outstanding and unpaid principal
balance of the Principal Mutual Loan (as defined below) at the Closing, with the
number of Units determined by dividing the consideration payable to the
Contributors receiving Units by a price per Unit (the "Unit Price") equal to the
lesser of (i) $25.50, or (ii) the average closing price of the common stock of
First Washington Realty Trust, Inc. (the "REIT") for the five (5) business days
immediately preceding the Closing Date, rounded to the nearest one (1). FWRLP
will issue the Units to the Contributors in accordance with the schedule set
forth as Exhibit Q attached hereto.
(b) At Closing, the Partnership Interests shall be contributed
to FWRLP with the Property then being subject to the indebtedness, lien and
operation of the Provident Mutual Loan, including without limitation the
Mortgage (as defined below).
(c) (i) The Property is presently encumbered by a Deed of
Trust and Security Agreement ("Mortgage") from the Partnership, as debtor, for
the benefit of Provident Mutual Life Insurance Company, as secured party (the
"Lender"), which Mortgage secures an original principal indebtness of
$6,250,000.00 with interest thereon payable over the term thereof (which ends on
October 17, 2010) at a fixed interest rate of 8.625% per annum, as evidenced by
a Note from the Partnership to Lender ("Note"). The Mortgage and Note and all
documents and instruments executed in connection therewith are collectively
referred to as the " Provident Mutual Loan." The Provident Mutual Loan requires
equal monthly installments of principal and interest in the amount of the
$_________ per month. The outstanding principal balance under the Provident
Mutual Loan as of December 31, 1997 is approximately $5,970,578.00. Copies of
the Mortgage and Note are attached hereto as Exhibits N and O, respectively.
(ii) FWRLP's obligations under this Agreement shall be expressly
contingent on the condition that FWRLP receive by Closing a letter (the
"Letter") from Lender (i) consenting to the Contribution of the Partnership
Interests and such modifications to the Loan as FWRLP shall determine are
necessary, (ii) confirming that the Provident Mutual Loan is as described
above, (iii) certifying that, to the best knowledge of the Lender, there is
no default or event which with notice or lapse of time, or both, would
constitute a default under the Provident Mutual Loan. At Closing, the
Contributors shall execute an estoppel certificate in favor of FWRLP
certifying that, to the best knowledge of the Contributors, there is no
default, or event of default which with notice or lapse of time, or both,
would constitute a default under the Provident Mutual Loan. The
Contributors shall reasonably cooperate with FWRLP in its efforts to obtain
such Letter from Lender before the end of the Feasibility Period (as
defined below). FWRLP shall be responsible for all costs charged by the
Lender in connection with such consents. If such Letter is not received by
FWRLP by Closing or if Lender
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denies its consent or if Lender's Letter is other than as set forth above and is
not acceptable to FWRLP, FWRLP shall have the right, at its sole election, to
terminate this Agreement by giving written notice thereof to Contributors,
whereupon the Deposit (as defined below), together with interest thereon, shall
be returned to Contributors and neither party shall have any further liability
to the other.
(d) The Contributors and FWRLP will settle any pro rations and
closing adjustments as provided in this Agreement as follows: (i) if
Contributors owe the same, on a net basis, to FWRLP, through a reduction in
Units in an amount equal to the net adjustment divided by the Unit Price,
rounded to the nearest one (1), to be delivered at the Closing, and (ii) if
FWRLP owes the same, on a net basis, to Contributors, through additional Units
in an amount equal to the net adjustment divided by the Unit Price, rounded to
the nearest one (1), to be delivered at the Closing. Contributors acknowledge
and agree that the Units will not be redeemable for cash or exchangeable for
common stock of the REIT for a period of thirteen (13) months after their
issuance, all as more fully discussed in the Confidential Information Statement
(as hereinafter defined), as may be supplemented through the Closing Date,
provided that any such supplement will not materially adversely affect the
Contributors.
(e) Notwithstanding any provision hereof to the contrary, the
Contribution of the Partnership Interests to FWRLP by the Contributors who
receive Units as set forth herein shall constitute a "Capital Contribution"
within the meaning of the FWRLP Partnership Agreement and is intended, to the
fullest extent possible, to be governed by Section 721(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and all parties to this Agreement
will report the transaction evidenced hereby consistently with this Section
2(e). Since the Contribution of the Partnership Interests to FWRLP will
terminate the Partnership for federal income tax purposes, FWRLP agrees that the
Contributors shall have the right and obligation to file final tax returns for
the Partnership as of the Closing Date.
3. Deposit.
(a) Within two (2) business days after the date of delivery to
FWRLP of an original of this Agreement executed by Contributors together with
completed Exhibits hereto (the date of such delivery by Contributors being the
"Acceptance Date"), FWRLP shall deliver to the Title Company, as escrow agent, a
deposit (together with interest earned thereon, the "Deposit") of Fifty Thousand
Dollars ($50,000.00 ) by check payable to the Commercial Settlements, Inc., ▇▇▇▇
▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Title Company").
(b) Within two (2) business days after the end of the
Feasibility Period (as defined in Section 14(b)), Purchaser shall deliver to the
Title Company, as escrow agent, an additional deposit (the "Additional Deposit")
of Fifty Thousand Dollars ($50,000.00) by check payable to the Title Company.
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(c) The Initial Deposit and Additional Deposit and all accrued
interest thereon are hereinafter referred to collectively as the "Deposit." The
Title Company will immediately provide Contributors with written evidence of
receipt of such Deposit. The Title Company shall place the Deposit in an
interest-bearing account within two (2) business days after the date of receipt
thereof, and interest on the Deposit shall accrue to the benefit of the party
entitled to the Deposit pursuant to this Agreement. The Deposit shall be held by
the Title Company pursuant to the terms and conditions of this Agreement.
(d) In the event that, at any time prior to Closing, either of
the General Partners or FWRLP provides Title Company with a certification (a
copy of which shall be delivered contemporaneously to the other party) that the
Contributors or FWRLP, as the case may be, is entitled to the Deposit pursuant
to the terms of this Agreement, Title Company shall deliver the Deposit to such
party within seven (7) business days after receipt of said notice, unless the
other party disputes such certification by written notice to Title Company (a
copy of which shall be delivered contemporaneously to the other party) delivered
within five (5) business days of Title Company's receipt of the initial
certification. In such event, Title Company shall hold the Deposit pending
resolution of such dispute. Any payment of the Deposit to the Contributors shall
be made by certified check payable to the Partnership or wire transfer.
(e) The parties acknowledge that Title Company is acting
solely as a stakeholder at their request and for their convenience, that Title
Company shall not be deemed to be the agent of either of the parties, and Title
Company shall not be liable to either of the parties for any act or omission on
its part unless taken or suffered in bad faith, in willful disregard to this
Agreement or involving gross negligence. The General Partners and FWRLP shall
jointly and severally indemnify and hold Title Company harmless from and against
all costs, claims and expenses, including reasonable attorneys' fees, incurred
in connection with the performance of Title Company's duties hereunder, except
with respect to actions or omissions taken or suffered by Title Company in bad
faith, in willful disregard of this Agreement or involving gross negligence on
the part of Title Company.
4. Closing. Except as otherwise provided in this Agreement, the
Contribution contemplated herein shall be consummated at the "Closing"
(sometimes hereinafter referred to as the "Closing"), which shall take place on
the date (the "Closing Date") specified by FWRLP on not less than five (5)
business days notice to Contributors, provided that the Closing Date shall not
be later than fifteen (15) business days after the end of the Feasibility
Period; provided, however, that if the Lender has not completed all
documentation consenting to the contribution of the Partnership Interests by
such date, then the Closing Date shall be extended for such reasonable time
period as is required to complete same, provided that such extension does not
exceed forty-five (45) days. The Closing shall take place at the offices of
First Washington Realty Limited Partnership, ▇▇▇▇ ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as may mutually agreed upon by
Contributors and FWRLP.
5. Representations and Warranties of Contributors. In order to induce
FWRLP to enter into this Agreement and to issue the Units in consideration for
the Partnership Interests, each Contributor for such Contributor only and for no
other Contributor makes the following representations and warranties, each of
which is material and shall survive Closing without limitation, notwithstanding
any investigation at any time made by or on behalf of FWRLP:
(a) Authority. Such Contributor has the rights, power and
authority to enter into this Agreement and to contribute its Partnership
Interests in accordance with the terms and conditions of this Agreement. Except
for the consents required under the Provident Mutual Loan, no consents of any
persons other than those executing this Agreement as a Contributor are required
for such execution or to cause such Contributor to consummate the transactions
contemplated by this Agreement. This Agreement is the valid and binding
obligation of such Contributor, enforceable against such Contributor in
accordance with its terms.
(b) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) subject to
any approval required under the Provident Mutual Loan, conflict with, or result
in a breach of, the terms, conditions, or provisions of or constitute a default
under any agreement or instrument to which such Contributor is a party or by
which such Contributor is bound, or (ii) subject to any approval required under
the Provident Mutual Loan, violate any restriction, requirement, covenant or
condition to which such Contributor is subject or by which such Contributor is
bound.
(c) Ownership of Interests. Such Contributor owns the
Partnership Interest owned by such Contributor, as set forth in Exhibit P
hereto, free and clear of all liens, charges, encumbrances, restrictive
agreements and assessments other than the provisions of the Partnership
Agreement. Upon the contribution of such Contributor's Partnership Interest to
FWRLP or its designee(s), FWRLP will receive good and absolute title thereto,
free from all liens, charges, encumbrances, restrictive agreements and
assessments whatsoever other than the provisions of the Partnership Agreement.
Such Contributor hereby waives, with respect to the contribution contemplated by
this Agreement, any "right of refusal" or other restriction on transfer set
forth in the Partnership Agreement. There are no outstanding options, contracts,
calls, commitments or demands of any nature relating to the Partnership Interest
of such Contributor.
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(d) Securities Law Matters.
(i) Such Contributor who shall receive the Units is now or, at the
time of Closing, will be, an "accredited investor" as such term is defined
under Rule 501 promulgated under the Securities Act of 1933, as amended
(the "Securities Act");
(ii) Such Contributor's primary residence or principal place of
business is in the State of Maryland;
(iii) Such Contributor is acquiring the Units for such Contributor's
account for investment purposes only and not with a view to distribution;
(iv) Taking into account the information and resources such
Contributor can practically bring to bear on the acquisition of the Units
in FWRLP contemplated hereby, such Contributor is knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions
with respect to investments in securities presenting an investment decision
like that involved in the acquisition of the Units, including investments
in securities issued by FWRLP, and has requested, received, reviewed and
considered all information such Contributor deems relevant in making an
informed decision to acquire the Units (including the Confidential
Information Statement attached hereto which contains the First Amended and
Restated Agreement of Limited Partnership of FWRLP and any Amendments
thereto (the "Partnership Agreement"), except that the Partnership
Agreement has been further amended solely to reflect exchanges of Units for
shares of the REIT's common stock (the "Common Stock") by holders of such
Units in accordance with the terms of the Partnership Agreement);
(v) Such Contributor will not, directly or indirectly, voluntarily
offer, sell, pledge, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of ) any of
the Units except in compliance with the Securities Act and the rules and
regulations promulgated thereunder and with the terms and conditions of the
Partnership Agreement;
(vi) Such Contributor acknowledges that the Units to be issued must be
held unless and until they are subsequently registered under the Securities
Act and under applicable state securities or blue sky laws, unless
exemptions from such registrations are available at the time of resale;
(vii) Prior to the issuance of the Units, such Contributor will
execute all such other documents and instruments as may be reasonably
necessary to allow FWRLP to comply with federal and state securities law
requirements with respect to the issuance of the Units and to comply with
the terms of the Partnership Agreement; and
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(viii) Such Contributor acknowledges and agrees that the Units to be
issued hereunder shall not be redeemable for cash or exchangeable for
Common Stock for a period of thirteen (13) months from and after the date
of issuance to such Contributor.
(e) No Contributor is a person other than a United States
person within the meaning of the Internal Revenue Code of 1986, as amended (the
"Code"). The transaction contemplated herein is not subject to the tax
withholding provisions of Section 3406 of the Code, or Subchapter A of Chapter 3
of the Code or of any other provision of law.
6. Representations and Warranties of the General Partners. In order to
induce FWRLP to enter into this Agreement and to issue the Units in
consideration for the Partnership Interests, the Contributors, jointly and
severally, hereby make the following representations and warranties as of the
date hereof, each of which is material and shall survive Closing for a period of
one (1) year (unless expressly provided that it will survive Closing without
such limitation), notwithstanding any investigation at any time made by or on
behalf of FWRLP:
(a) Authority. The Partnership is a limited partnership duly
organized and in good standing under the laws of the State of Maryland. The copy
of the Partnership' s Partnership Agreement and all Amendments thereto
(collectively, the "Partnership Agreement") including all Certificates of
Limited Partnership and all Amendments thereto and the list of all the Partners
along with their individual Partnership Interests, attached hereto an Exhibit P,
is a true, correct and complete copy thereof. Notwithstanding anything to the
contrary, the representations and warranties contained in this Section 6(a)
shall survive Closing without being subject to the one year limitation.
(b) Title. The Partnership is the sole owner of fee simple
title to the Property.
(c) Compliance with Existing Laws. To the Contributors' actual
knowledge and except as set forth on Exhibit D attached hereto, (i) the
Partnership is not in material violation of, and has materially complied with,
any and all applicable building, zoning, environmental or other ordinances,
statutes or regulations of any governmental agency, in respect to the ownership,
use, maintenance, condition and operation of the Property or any part thereof,
and (ii) the Partnership possesses all material licenses, certificates, permits
and authorizations necessary for the use and operation of the Property in the
manner in which it is currently being operated by the Partnership.
(d) Leases. True, correct and complete copies of all of the leases of
the Property and any amendments thereto (collectively, the "Leases"), have been
delivered to FWRLP. Attached hereto as Exhibit B is a description of all of the
Leases and a current rent schedule ("Rent Schedule") covering the Leases, which
is true and correct
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in all material respects. There are no leases or tenancies of any space in the
Property other than those set forth in Exhibit B or, to the Contributors'
knowledge, any subleases or subtenancies unless otherwise noted therein. Except
as otherwise set forth in Exhibit B or elsewhere in this Agreement:
(i) The Leases are in full force and effect and to the best of the
Contributors' knowledge constitute a legal, valid and binding obligation of
the respective tenants;
(ii) no tenant has an option to purchase the Property or any portion
thereof;
(iii) no renewal or expansion options have been granted to the
tenants, except as provided in the Leases;
(iv) to the best of the Contributors' knowledge, the Partnership is
not in default under any of the Leases;
(v) the rents set forth on the Rent Schedule are
being collected on a current basis and there are no arrearages
in excess of one month, except as indicated in Exhibit B
hereto, nor has any tenant paid any rent, additional rent or
other charge of any nature for a period of more than thirty
(30) days in advance;
(vi) all work for tenant alterations and other work or materials
contracted for by the Partnership and any tenant has been completed by the
Partnership, and all work and materials have been fully paid for or will be
paid for by Closing except as indicated on Exhibit B;
(vii) the Partnership has not sent written notice to any tenant
claiming that such tenant is in default, which default remains uncured, and
to the best of the Contributors' knowledge, no tenant is in default under
its Lease, except as indicated in Exhibit B hereto;
(ix) no action or proceeding instituted against the Partnership by any
tenant is presently pending in any court; and
(x) there are no security deposits other than those set forth in
Exhibit B.
(e) Service Contracts. Attached hereto as Exhibit C is a
complete and correct list of all contracts or agreements relating to the
management, leasing, operation, maintenance or repair of the Property (the
"Service Contracts"). True and correct copies of all of the Service Contracts
have been delivered to FWRLP. Except in the case of a default by the vendor
under a specific Service Contract, no Service Contract will be terminated,
amended, modified or supplemented prior to the Closing
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Date without FWRLP's prior written approval, which approval shall not be
unreasonably withheld, conditioned or delayed (except that any management and
leasing agreements shall be terminated as of Closing).
(f) Tax Bills. The Contributors have delivered true and
correct copies of tax bills issued by any applicable federal, state or local
governmental authority to the Partnership with respect to the Property for the
most recent past and current tax years, and any new assessment received with
respect to a current or future tax year.
(g) Insurance. The Property is insured for its replacement
cost against loss or damage sustained as a result of fire or other casualty and
the Partnership has rent loss insurance in place for the Property. Attached
hereto as Exhibit E is a list of all hazard, liability and other insurance
policies presently affording coverage with respect to the Property. The
Contributors shall maintain in full force and effect all such policies until the
Closing Date, and shall cause the Partnership's insurer to name FWRLP as an
additional insured as a contract party on its rent loss policy with respect to
the Property.
(h) Possession of Property. Possession of the Property shall
be delivered to FWRLP at Closing in its "as is, where is" condition as of the
date of FWRLP's execution of this Agreement, subject to normal wear and tear and
damage by fire or other casualty and the effect of condemnation (subject to
Section 13 herein) excepted.
(i) Tenant Estoppels. The Contributors represent and warrant
that they shall use reasonable good faith efforts to obtain and deliver to FWRLP
a tenant estoppel letter from each tenant in substantially the form attached
hereto as Exhibit F (or in such form as required by FWRLP's mortgage lender)
from each of the tenants of the Property confirming the information set forth in
the Rent Schedule attached as Exhibit B hereto.
(j) Condemnation Proceedings. No condemnation or eminent
domain proceedings are pending or, to the best of the Contributors' knowledge,
threatened against the Property or any part thereof, and neither the Partnership
nor the Contributors has made any commitments to or received any written notice,
of the desire of any public authority or other entity to take or use the
Property or any part thereof whether temporarily or permanently, for easements,
rights-of-way, or other public or quasi-public purposes.
(k) Litigation. Except as set forth on Exhibit G hereto, no
litigation is pending or, to the best of the Contributors' knowledge, threatened
against the Partnership, including administrative actions or orders against the
Partnership relating to governmental regulations, affecting the use, operation
or ownership of the Property or any part thereof as contemplated herein, other
than those being defended by the Partnerships' liability insurers.
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(l) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) subject to
any approval required under the Provident Mutual Loan, conflict with, or result
in a breach of, the terms, conditions or provisions of, or constitute a default
under, any agreement or instrument to which the Partnership is a party or by
which the Partnership or the Property is bound, (ii) subject to the approval
required under the Provident Mutual Loan, violate any restriction, requirement,
covenant or condition to which the Partnership is subject or by which the
Partnership or the Property is bound, or (iii) result in the cancellation of any
contract or lease pertaining to the Property. The representations and warranties
set forth in this Section 6(l) shall survive Closing without being subject to
the one year limitation.
(m) [Intentionally Omitted].
(n) Separate Tax Lot and Subdivision. To the best of the
Contributors' knowledge, the Land is the subject of a separate subdivision, and
the Land is assessed for tax purposes as a separate and distinct parcel.
(o) Hazardous Waste. Except as set forth in the environmental
reports previously delivered to FWRLP, the Contributors have no knowledge of any
discharge, spillage, uncontrolled loss, seepage or filtration (a "Spill") of
oil, petroleum or chemical liquids or solids, liquid or gaseous products or any
hazardous waste or hazardous substance (as those terms are used in the
Comprehensive Environmental Response, Compensation and Liability Act of 1986, as
amended, the Resource Conservation and Recovery Act of 1976, as amended, or in
any other applicable federal, state or local laws, ordinances, rules or
regulations relating to protection of public health, safety or the environment,
as such laws may be amended from time to time) at, upon, under or within the
Land or any contiguous real estate. To the best of the Contributors' knowledge,
there is no proceeding or action pending or threatened by any person or
governmental agency regarding the environmental condition of the Property. To
the Contributors' knowledge, the Building is totally free of friable asbestos
requiring remediation.
(p) Certificates of Occupancy. The Partnership will not amend
any certificates of occupancy for the Property and will maintain them in full
force and effect to the extent that the Partnership is responsible for them. .
(q) Licenses and Permits. The Contributors have received no
notice, nor have any knowledge, that the Partnership is lacking any required
permit or license issued by applicable governmental authorities for operation,
maintenance or ownership of the Property ("Licenses").
(r) Operating Statements. Attached hereto as Exhibit H are
true and correct operating statements of the Property for 1994, 1995, 1996 and
1997. Also attached as Exhibit H is a copy of the 1998 operating budget for the
Property.
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(s) Utilities. To the best of Contributors' knowledge,
adequate, usable public sewers, public water facilities, gas and/or electrical
facilities necessary to the operation of the Property are installed in and are
duly connected to the Property.
(t) Personal Property. Attached hereto as Exhibit I is a true,
correct and complete inventory of all personal property ("Personal Property")
owned by the Partnership, if any, used in the management, maintenance and
operation of the Property (other than trade fixtures or personal property of
tenants).
(u) Leasing Commissions. At Closing there shall be, no
outstanding or contingent leasing commissions or fees payable with respect to
the Property, except as shown on Exhibit K hereto.
(v) Partnership Liabilities. Except for (i) the obligations
and liabilities of the Partnership which FWRLP is taking the Partnership
Interests subject to under Section 2 (c) above, and (ii) any accrued liabilities
and obligations of the Partnership which are being adjusted at Closing pursuant
to Section 12 of this Agreement pursuant to Service Contracts set forth on
Exhibit C hereto, the Partnership shall not have any liabilities or obligations,
either accrued, absolute or contingent or otherwise, which will not be paid or
discharged on or before the Closing Date. In addition, the Partnership has not
received notice of any, and to the best of the knowledge of the Contributors,
there is, as of the date of execution of this Agreement, no basis for any, claim
against (or liability of) the Partnership arising from the business done,
transactions entered into or other events occurring prior to the Closing Date
other than the obligations and liabilities described in the preceding sentence.
(w) Partnership for Tax Purposes. The Partnership is, and at
all times has been, properly treated as a partnership for Federal Income Tax
purposes, and not as an "association" or "publicly traded partnership" taxable
as a corporation. The foregoing representation shall survive Closing without
being subject to the one year limitation.
(x) Taxes. The Partnership has timely filed with the
appropriate taxing authorities all returns (including without limitation
information returns and other material information) in respect of Federal, State
and local taxes (collectively "Taxes") required to be filed by it through the
date hereof and will timely file any such returns required to be filed by it on
or prior to the Closing Date. The returns and other information filed (or to be
filed) are complete and accurate in all material respects. All Taxes of the
Partnership in respect of periods prior to the Closing Date have been timely
paid, or will be timely paid prior to the Closing Date, and the Partnership has
no material liability for Taxes in excess of the amounts so paid. All Taxes that
the Partnership has been required to collect or withhold have been duly
collected or withheld and, to the extent required when due, have been or will be
(prior to Closing Date) duly paid to the proper taxing authority. No audits of
any of the Partnership's federal, state or local returns for Taxes by the
relevant taxing authorities have occurred,
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and no material deficiencies for Taxes of the Partnership have been claimed,
proposed or assessed by any taxing or other governmental authority against the
Partnership. There are no pending or, to the best of knowledge of the
Contributors, threatened audits, investigations or claims for or relating to any
material additional liability to the Partnership in respect of Taxes, and there
are no matters under discussion with any governmental authorities with respect
to Taxes that in reasonable judgement of the Contributors or their counsel, is
likely to result in a material additional liability for Taxes. There are no
liens for taxes (other than for current taxes not yet due and payable) on any of
the assets of the Partnership. The foregoing representations and covenants
contained in this Section 6(x) shall survive Closing without being subject to
the one year limitation.
7. Obligations of Contributors Pending Closing. From and after the date
of this Agreement through the Closing Date, Contributors covenant and agree as
follows:
(a) Maintenance and Operation of Premises. The General Partner
will cause the Property to be maintained in its present order and condition,
normal wear and tear, and damage by fire or other casualty (subject to Section
12) excepted and will cause the continuation of the normal operation thereof,
including the purchase and replacement of fixtures and equipment, and the
continuation of the normal practice with respect to maintenance and repairs so
that the Property will, except for normal wear and tear and damage by fire or
other casualty (subject to Section 12), be in substantially the same physical
condition on the Closing Date as on the date hereof.
(b) Licenses. The General Partner shall use their commercially
reasonable efforts to preserve in force all Licenses and to cause those expiring
to be renewed.
(c) Changes in Representations. The Contributors shall notify
FWRLP promptly, and FWRLP shall notify the Contributors promptly, if either
becomes aware of any occurrence prior to the Closing Date which would make any
of its representations, warranties or covenants contained herein not true in any
material respect.
(d) Obligations as to Leases. The Contributors and the
Partnership shall not, without FWRLP's prior written consent (which consent
shall not be unreasonably withheld), amend, modify, renew or extend any Lease in
any respect unless required by law, or enter into new leases or approve any
assignment of leases or subletting of leased space, or terminate any Lease. If
FWRLP does not respond within five (5) business days of written request for
consent from the Contributors, FWRLP shall be deemed to have consented to such
request. After the end of the Feasibility Period and prior to Closing,
Contributors shall not apply all or any part of the security deposit of any
tenant unless such tenant has vacated the Property.
(e) Obligations as to Provident Mutual Loan. The Contributors
shall not, without FWRLP's prior written consent, (i) prepay, or permit the
Partnership to
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prepay, the Provident Mutual Loan, or (ii) modify or amend, or permit the
Partnership to modify or amend, any of the documents evidencing or securing the
Provident Mutual Loan or otherwise entered into in connection with the Provident
Mutual Loan. Prior to Closing, the Contributors and the Partnership shall make,
or cause the Partnership to make, all payments required to be made under the
Provident Mutual Loan when due, shall perform, or cause the Partnership to
perform, all obligations under the Provident Mutual Loan and shall keep, and
cause the Partnership to keep, the Provident Mutual Loan free from default.
8. Representations and Warranties of FWRLP. In order to induce
Contributors to enter into this Agreement and to contribute the Partnership
Interests to FWRLP, FWRLP, and, as to Sections 8(a), 8(b), 8(e), 8(f) and 8(g),
First Washington Realty Trust, Inc ("REIT") hereby make the following
representations and warranties as of the date hereto, each of which is material
and shall survive Closing, notwithstanding any investigation at any time made by
or on behalf of Contributors:
(a) Authority of FWRLP and the REIT. FWRLP is a limited
partnership duly organized and existing and in good standing under the laws of
the State of Maryland. Subject to the approval of the Board of Directors of the
REIT as set forth in Section 9(a)(ix), FWRLP and the REIT have all necessary
power and authority to execute, deliver and perform this Agreement and
consummate all of the transactions contemplated by this Agreement. Subject to
the approval of the Board of Directors of the REIT as set forth in Section
9(a)(ix), this Agreement is the valid and binding obligation of FWRLP and the
REIT, enforceable against each of them in accordance with its terms.
(b) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument to which FWRLP or the
REIT is a party, (ii) violate any restriction, requirement, covenant or
condition to which the FWRLP or the REIT is subject, and (iii) constitute a
violation of any applicable code, resolution, law, statute, regulation,
ordinance, rule, judgment, decree or order.
(c) Vacant Space. FWRLP hereby further agrees that if any
rentable space in the Property is vacant on the Closing Date, FWRLP shall accept
the Property subject to such vacancy, provided that the vacancy was not
permitted or created by the Contributors or the Partnership in violation of any
restrictions contained in this Agreement.
(d) Disclosure Documents. Attached hereto as Exhibit L is a
true and correct copy of the Confidential Information Statement, as may be
supplemented through the Closing Date provided that any such supplement will not
materially adversely affect the Contributors. The FWRLP Partnership Agreement
(including the Certificate of Limited Partnership), as contained in the
Confidential Information Statement, has not been amended or modified through the
date hereof except as set
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forth in Exhibit L, and, to the knowledge of FWRLP, no default or condition
which, with the passage of time or the giving of notice could become a default,
exists on the part of any party thereunder.
(e) Issuance of Units. The FWRLP Partnership Agreement
provides, or prior to Closing will provide, for the issuance of the Units. The
Units to be issued in connection with the transactions herein contemplated have
been, or prior to their issuance will have been, duly authorized for issuance by
FWRLP to Contributors, and on the date of their issuance will be validly issued,
fully paid and non-assessable.
(f) Partnership Capitalization. The FWRLP Partnership
Agreement (i) is the only agreement among the partners of FWRLP relating to the
organization, operation, or management of FWRLP, (ii) is in full force and
effect, and (iii) has not been amended or modified through the date hereof
except as set forth in Exhibit L hereto and except for certain exchanges of
common units and issuance of additional common units. Upon the Closing, good,
valid and marketable title to the Units shall be vested in the Contributors free
and clear of any limitation, lien, claim, charge, pledge or encumbrance (except
as provided in the FWRLP Partnership Agreement and in this Agreement).
(g) Tax Matters. To the best of FWRLP's knowledge, all
federal, state, local and foreign tax returns and information statements
required to be filed by or on behalf of FWRLP or for which FWRLP may have any
liability have been duly and timely filed (or requests for extensions have been
timely filed, granted and have not expired). To the best of FWRLP's knowledge as
of the date hereof, there is no audit examination, deficiency or refund
litigation or matter in controversy with respect to any taxes that might result
in a determination materially adverse to FWRLP.
(h) Financial Information. The financial statements of FWRLP
and the REIT (including the notes thereto) included in the Confidential
Information Statement, as supplemented through the date hereof, present fairly
the financial position of the respective entity or entities presented therein at
the respective dates indicated and the results of their operations for the
respective periods specified, and except as otherwise stated in any such
registration statement or periodic report, such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis. Since the date of the most recent financial statements
included in the Confidential Information Statement, as supplemented through the
date hereof, there has been no material adverse change, when considered as a
whole, in the financial condition of FWRLP or the REIT.
9. Conditions Precedent to Closing.
(a) It shall be a condition precedent of FWRLP's obligation to
make a full settlement hereunder that each and every one of the following
conditions shall exist on the Closing Date:
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(i) Representations and Warranties. Subject to the
provisions of Section 7(c), Contributors' representations and
warranties hereunder shall be true and correct in all material
respects in the same manner and with the same effect as though
such representations and warranties had been made on and as of
the Closing.
(ii) Zoning. No proceedings shall have occurred or be
pending to change, redesignate or redefine the zoning
classification of the Property to a more restrictive
classification than presently exists on the date of FWRLP's
execution of this Agreement.
(iii) Title. Title to the Property shall be
marketable, good of record, and insurable by the Title Company
at standard rates or less, pursuant to a full coverage ALTA
Form-B (Rev. 1970 and 1984) owner's title insurance policy (or
an unconditional commitment therefor) without any exceptions
("Printed form" or otherwise) other than the Permitted
Exceptions, and in addition, without exception for mechanic's
or materialmen's lien arising from goods, labor or materials
provided to the Property prior to the Closing Date. The
"Permitted Exceptions" are:
(A) the lien of current real estate taxes and special assessments not
yet due and payable; and
(B) such other matters which are listed on Exhibit J attached hereto.
Notwithstanding anything to the contrary contained in this paragraph (B),
the General Partner, at or prior to Closing, shall cause to be satisfied
and released of record all mortgages, deeds of trust, financing statements,
judgments, liens and other matters that may be satisfied by payment of a
liquidated sum and that first appears of record after the date hereof,
other than the Provident Mutual Mortgage.
(iv) Existing Mortgages. Seller shall have delivered
to the Title Company such releases or other instruments
necessary to release of record and beneficially any and all
existing mortgages, deeds of trust, financing statements or
other security documents affecting the Property, other than
the Provident Mutual Mortgage (collectively, the "Existing
Mortgages").
(v) [Intentionally Omitted].
(vi) Leasing Brokerage/Property Management
Agreements. The General Partner shall have terminated, or
cause the Partnership to terminate, any and all leasing
brokerage agreements and property management agreements with
respect to each Property effective as of the
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Closing. All responsibility for dealings with any such brokers
and agents, including the payment of any claims (if deemed
warranted by the Contributors), shall be the sole
responsibility of the Contributors. The Contributors agree
that they will indemnify and hold FWRLP, its successors,
assigns, partners, agents and employees, harmless against any
such claims and/or losses which might be incurred by such
indemnitees or by the Partnership in connection with any
outstanding and/or contingent leasing commissions or fees or
management fees. Notwithstanding anything to the contrary, the
indemnity set forth in this subsection 9(a)(vi) shall survive
Closing without limitation.
(vii) Performance by Contributors. Contributors shall
have complied with and not be in breach of any of their
covenants or obligations under this Agreement.
(viii) Tenant Estoppels. FWRLP shall have received
(a) a tenant estoppel letter in substantially the form
attached hereto as Exhibit F (or in such form and from such
tenants as required by FWRLP's mortgage lender) from, at a
minimum, tenants satisfying the requirements described on
Exhibit F-1, confirming the information set forth in the
Leases and the Rent Schedule attached hereto as Exhibit B for
such tenants and containing no material changes therefrom, and
(b) any subordination and attornment agreements required by
the Lender.
(ix) FWRT Board Approval. The Board of Directors of
FWRT shall have approved this Agreement and the transactions
contemplated hereby. In the event that the aforesaid condition
is not satisfied by the end of the Feasibility Period, FWRLP
may elect to terminate this Agreement by giving Contributors
written notice thereof within one (1) day after the end of the
Feasibility Period in which event the Deposit and any interest
thereon shall be returned to FWRLP and neither party shall
have any further obligations nor liabilities to the other.
(b) Failure of Condition. In the event of the failure by the
Closing Date of any condition precedent set forth above, FWRLP shall notify
Contributors in writing, and if Contributors do not correct such failure (if
valid) within five (5) business days after such notice, then FWRLP, at its sole
election, may (a) terminate this Agreement, in which event the Deposit and any
interest thereon shall be returned to FWRLP and, except as otherwise provided in
Section 17 hereof, neither party shall have any further obligations or
liabilities to the other; or (b) proceed to Closing and, if a default, avail
itself of any legal or equitable remedy FWRLP may have, except as to any default
of Contributors waived in writing by FWRLP or deemed to be waived pursuant to
the provisions of this Agreement on or before the Closing Date; or (c) extend
the Closing Date for such reasonable time period as may be determined by FWRLP
(but in no event for more than one (1) month from the Closing Date then in
effect) in order to permit the satisfaction of any condition precedent not so
fulfilled.
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(c) In the event FWRLP elects to consummate the Closing under
this Agreement despite the failure (which was actually known to FWRLP) of any
representation or warranty of the Contributors herein contained to be true and
correct in all material respects at the time of Closing, then unless
Contributors expressly agree in writing to the contrary at the time of Closing,
FWRLP shall be deemed to have waived any claims against Contributors arising out
of such failure (provided that such failure was not due to the willful
misconduct or bad faith of Contributors), and, in such event, Contributors shall
have no post-Closing liability to FWRLP with respect thereto.
10. Contributors' Deliveries. At the Closing the following documents,
each dated on the Closing Date, shall be delivered to FWRLP:
(a) a Contribution and Assumption Agreement ("Assignment") and
an Amendment to the Partnership Agreement ("Amendment") and Limited Partnership
Certificate, in a recordable from, reasonably satisfactory to FWRLP and the
Contributors, setting forth the assignment by each of the Contributors of their
Partnership Interest and its withdrawal from the Partnership and the
substitution of FWRLP and /or its designee(s) as partners of the Partnership,
which Amendment shall be executed and acknowledged by all the Contributors; at
FWRLP's option, such Assignment and Amendment may contain such other amendments
of the Partnership Agreement as shall be determined by FWRLP, provided that the
Contributors shall execute such Assignment and Amendment solely for the purpose
of (a) assigning their respective Partnership Interests to FWRLP or its
designee(s), and (b) withdrawing from the Partnership.
(b) a release from each Contributor releasing the Partnership
and FWRLP (and its designee(s)) as partners of the Partnership from any
obligations and liabilities with respect to the original formation of the
Partnership, and any other matter arising from business done, transactions
entered into or events occurring prior to the Closing Date (including, without
limitation, liability arising from any breach by any of the Contributors).
(c) An opinion of counsel for Contributors, in from and
substance reasonably acceptable to counsel for FWRLP, to the effect that:
(i) The Partnership is a duly organized and validly
existing in good standing under the laws of the State of
Maryland:
(ii) The execution and delivery of this Agreement and all other
agreements delivered in connection herewith or at the Closing, the
consummation of the transactions herein contemplated, and compliance with
the terms of this Agreement and all other agreements delivered in
connection herewith or at the Closing will not conflict with, or result in
a breach of, any of the terms, conditions or provisions of, or constitute a
default under, any note, indenture, mortgage, deed of trust, contract or
other agreement or instrument to which the Partnership is a party or by
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which the Partnership is bound (and of which counsel has
knowledge) (other than the Provident Mutual Loan), or any law
or order, rule, regulation, writ, injunction or decree of any
government, governmental instrumentality or court, domestic or
foreign;
(iii) Contributors have complete and unrestricted
power to contribute, transfer, assign and deliver to FWRLP and
its designee(s) all of the Partnership Interests to be
contributed and assigned hereunder which are owned and /or
controlled by them, and the Assignment and the Amendment
delivered pursuant to this Section 10 are in form legally
sufficient to vest in FWRLP and its designee(s) good title to
the Partnership Interests described therein; and
(iv) To the best of counsel's knowledge, there is no
litigation or investigation pending or threatened against the
Partnership, or the Property, or any part thereof, which might
result in any material, adverse change pertaining to the
Property or the Partnership, or the operations thereof, or
which questions the validity of any action taken in, under or
in connection with any of the provisions of this Agreement.
(d) a schedule from the Contributors updating the Rent
Schedule for the Property and setting forth all arrearages in rents and all
prepayments of rents;
(e) originally executed Leases and Service Contracts and
copies of books, records, operating reports, files and other materials related
to the ownership, use and operation of the Property, to the extent that any
exist and are in the possession of the Contributors, which obligation shall
survive Closing;
(f) [Intentionally Omitted].
(g) an original letter executed by the General Partner
advising the tenants of the Property of the contribution of the Partnership
Interests to FWRLP and directing that rents and other payments thereafter be
sent to FWRLP or as FWRLP may direct;
(h) possession of the Property from the General Partner in
the condition required by this Agreement, and the keys therefore;
(i) from each Contributor, the Certification of Non-foreign Status as
provided in Treas. Reg. 1.1445-2(b)(2)(iii)(B) or in any other form as may
be required by the Internal Revenue Code or the regulations issued
thereunder;
(j) such other items and instruments from the Contributors as
shall be required by the Title Company in connection with the issuance of its
title insurance
-18-
policy to FWRLP pursuant to Section 9(a)(iii) (including customary owner's
affidavit and non-imputation affidavit);
(k) any and all documents from the Contributors necessary to
release the Deposit from escrow with the Title Company and to have said Deposit
returned to FWRLP;
(l) any other documents required by this Agreement to be delivered by
Contributors; and
(m) an amendment to the Partnership Agreement of FWRLP, in a
form reasonably acceptable to FWRLP and Contributors, admitting the Contributors
who receive Units as limited partners of FWRLP and issuing such Units as
computed in accordance with Exhibit Q hereto.
11. FWRLP's Performance. At the Closing, simultaneously with the
deliveries of Contributors pursuant to the provisions of Section 10 above, FWRLP
shall issue to Contributors the Units in the manner specified in Section 2 and
FWRLP and REIT shall execute and deliver those documents and take such other
actions required to be taken by FWRLP and REIT at Closing as required under this
Agreement, whereupon the Deposit, and any interest accrued thereon, shall be
returned to FWRLP by the Title Company.
12. Settlement Charges; Prorations and Adjustments. FWRLP shall pay for
the title examination, the title insurance premium, notary fees and other such
charges incident to Closing. Any real estate transfer and recording fees and
taxes and documentary stamps in connection with this transaction, if any, shall
be borne by FWRLP; provided, however, that the number of Units issued to
Contributors at the Closing under Section 2(a) hereof shall be reduced by an
amount equal to one-half (1/2) of the real estate transfer and recording fees
and taxes payable by FWRLP divided by the Unit Price. Although Contributors and
FWRLP believe that no real estate transfer or recording taxes will be due in
connection with the transactions contemplated hereby, if it is finally
determined that such taxes are due and payable in connection herewith, then
Contributors shall either (at FWRLP's election) (i) reimburse to FWRLP one-half
(1/2) of such sum paid by FWRLP, or (ii) return/relinquish to FWRLP the number
of Units equal to one-half (1/2) of the taxes paid by FWRLP divided by the Unit
Price, which obligations shall survive Closing without limitation. FWRLP and
Contributors shall each pay its own legal fees related to the preparation of
this Agreement and all documents required to settle the transaction contemplated
hereby. In addition to the foregoing, at the Closing, the following adjustments
and prorations shall be computed as of the Closing Date, as if the transaction
contemplated by this Agreement was a sale of the Property by the Partnership to
FWRLP:
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(a) Taxes. Real estate and personal property taxes shall be
apportioned (based on the fiscal periods for which such taxes are assessed) as
of the Closing Date.
(b) Assessments. All special assessments and other similar
charges which have become a lien upon the Property or any part thereof on or
before the Closing Date and are due and payable through the Closing Date, shall
be paid in full by the Partnership or the Contributors on or prior to the
Closing. However, to the extent the foregoing can be adjusted as of Closing,
they shall, together with all other special assessments or similar charges, be
adjusted as of the Closing Date.
(c) Rent. Rent for the month of , and any month after, Closing
collected by the Partnership prior to Closing shall be apportioned as of the
Closing Date. If any tenant is in arrears in the payment of rent on the Closing
Date, rents received from such tenant after the Closing shall be applied in the
following order of priority: (a) first to the payment of current rent then due;
(b) second, to delinquent rent for any period after the Closing Date; and (c)
third to delinquent rent for any period prior to the Closing Date. FWRLP shall
and does hereby assign to Contributors the right to collect arrearages in rents
due from tenants as of the Closing Date, and FWRLP shall have no obligation to
collect same. If rents or any portion thereof received by Contributors or FWRLP
after the Closing Date are payable to the other party by reason of this
allocation, the appropriate sum, less a proportionate share of any reasonable
attorneys' fee, costs and expenses of collection thereof, shall be promptly paid
to the other party, which obligation shall survive the Closing.
If any tenants are required to pay percentage rents, escalation
charges for real estate taxes, operating expenses, cost-of-living
adjustments or other charges of a similar nature ("Additional Rents") and
any Additional Rents are collected by FWRLP after the Closing which are
attributable in whole or in part to any period prior to the Closing, then
FWRLP shall promptly pay to Contributors their proportionate share thereof,
less a proportionate share of any reasonable attorneys' fees, costs and
expenses of collection thereof, and deliver to Contributors a statement
therefor, if and when the tenant paying the same has made all payments of
rents and Additional Rent then due to FWRLP pursuant to the tenant's Lease,
which obligation shall survive the Closing without limitation. Upon written
request of Contributors (but only until the time of the first
reconciliation), FWRLP shall provide Contributors with the then current
periodic report of the status of collection of such Additional Rents from
such tenants. All allocations of proportionate shares shall be based on the
number of days involved in any adjustment period.
(d) Distributions. The quarterly distributions payable to
Contributors on the Common Units for the first record date after any issuance to
Contributors shall be pro rated based upon the number of days within the quarter
occurring after such issuance to Contributors .
-20-
(e) Debt Service on the Provident Mutual Loan. The amount of
interest payable under the Provident Mutual Loan shall be apportioned as of the
Closing Date.
(f) Miscellaneous. All other charges and fees customarily
prorated and adjusted in similar transactions, including utilities, insurance
premiums and charges for Service Contracts to be assumed by FWRLP, shall be
prorated as of the Closing Date. In the event that accurate prorations and other
adjustments cannot be made at Closing because current bills are not obtainable
or the amount to be adjusted is not yet ascertainable (as, for example, in the
case of utility bills) the parties shall prorate on the best available
information, subject to further adjustment promptly upon receipt of the final
▇▇▇▇ or upon completion of final computations. To the extent that water
consumption or other utility charges may constitute a lien against the Property,
Contributors agree that an appropriate amount in respect of water consumption or
other utility charges may be held in escrow by the Title Company in connection
with its issuance of a title insurance policy to FWRLP. The Contributors shall
use their reasonable efforts to have all utility meters read on the Closing Date
so as to accurately determine its share of current utility bills.
(g) Immediately prior to the Closing, Contributors shall have
the right to cause the Partnership to withdraw from the Partnership's bank
account(s) and distribute to the Contributors an amount equal to all cash within
such bank account(s) as of 11:59 p.m. on the day immediately preceding the
Closing Date.
13. Risk of Loss. The risk of loss or damage to the Property by fire or
other casualty until the Closing shall be borne by the Contributors. If prior to
Closing (i) condemnation proceedings are commenced against all or any portion of
the Property, or (ii) if the Property is damaged by fire or other casualty to
the extent that the cost of repairing such damage shall be Two Hundred Thousand
Dollars ($200,000.00) or more based on the good faith estimate of an independent
contractor selected by the General Partner and reasonably approved by FWRLP, or
(iii) if the Property is damaged by an uninsured risk, or (iv) if the Property
becomes subject to litigation which may deprive FWRLP of any material benefit to
which it would become entitled pursuant to this Agreement, then FWRLP shall have
the right, upon notice in writing to the Contributors delivered within thirty
(30) days after actual notice of such condemnation or fire or other casualty or
litigation, to terminate this Agreement, and thereupon the parties shall be
released and discharged from any further obligations to each other and the
Deposit shall be refunded to FWRLP. If FWRLP does not elect to terminate this
Agreement or in the event of fire or other casualty not giving rise to a right
to terminate this Agreement by FWRLP, FWRLP shall be entitled to an assignment
of all of the proceeds of fire or other casualty insurance proceeds and the rent
insurance proceeds payable with respect to the period after Closing or of the
condemnation award, as the case may be (i.e., such proceeds shall remain in the
Partnership for the benefit of FWRLP), and Contributors shall have no obligation
to repair or restore the Property; provided, however, that the Unit portion of
the Consideration shall be reduced (based on the Unit
-21-
Price per Unit) by an amount equal to the sum of (a) the "deductible" applied by
the Partnership's insurance policy, or (c) if the Partnership is self-insured,
the cost of repairing such damage. FWRLP shall have the right to participate in
the negotiation and settlement of any casualty or condemnation-related claim if
FWRLP does not elect to terminate this Agreement.
14. Inspection of Property.
(a) FWRLP's Right of Inspection. Subject to the rights of
tenants under the Leases, FWRLP shall have the right, at its own risk, cost and
expense, at any time or times prior to Closing, to enter, or cause its agents or
representatives to enter, upon the Property for the purpose of making surveys,
or any tests, investigations and/or studies relating to the Property or FWRLP's
intended acquisition thereof which FWRLP deems appropriate, in its sole
discretion, during reasonable hours and upon reasonable notice to the General
Partner. FWRLP shall further have complete access to all documentation,
agreements and other information in the possession of Contributors related to
the ownership, use and operation of the Property, to the extent it is readily
available to Contributors, and shall have the right to make copies of same.
FWRLP shall not have the right during the Feasibility Period to contact tenants
without the prior consent of the General Partner. FWRLP agrees to repair any
damage to the Property that may be caused by its inspections and to indemnify
and defend Contributors and hold Contributors harmless against any personal
injury or property damage suffered upon the Property as a result of such
inspections.
(b) Feasibility Period. Any other provisions of this Agreement
to the contrary notwithstanding, FWRLP may cause at FWRLP's sole cost and
expense, such boring, engineering, economic, water, sanitary and storm sewer,
utilities, topographic, structural, environmental and other tests,
investigations, market studies and other studies as FWRLP shall elect, subject
to the rights of tenants under the Leases. FWRLP agrees to use all reasonable
efforts to minimize disruption to business operations within the Property during
the course of any entries thereon. In the event that any of the tests,
investigations, market studies and other studies indicate, in FWRLP's sole and
absolute discretion, that FWRLP's plans for the Property would not be feasible
for any reason or no reason, then FWRLP shall have the right, at its sole
election on or before the date which is thirty (30) business days after the
Acceptance Date (such period herein referred to as the "Feasibility Period"), to
terminate this Agreement by giving written notice thereof to the General Partner
in which event this Agreement shall terminate, the Deposit shall be returned to
FWRLP and neither party shall have any further liabilities or obligations to
each other.
(c) Audit. The Contributors hereby agree to allow books and
records related to each Property to be audited (at FWRLP's sole expense) by an
independent, certified public accounting firm selected by FWRLP, and the
Contributors will cooperate and cause its employees and other agents to
cooperate in such auditing process. FWRLP shall provide the General Partner with
prior notice of such audit.
-22-
15. Indemnifications.
(a) Indemnification by Contributors. Each Contributor for such
Contributor only, and for no other Contributor, hereby indemnifies and agrees to
defend and hold harmless FWRLP and its partners and subsidiaries and any
officer, director, employee, agent of any of them, and their respective
successors and assigns from and against any and all claims, expenses, costs,
damages, losses and liabilities (including reasonable attorneys' fees) which may
be asserted against or suffered by any indemnitee, the Partnership or the
Property, or any part thereof, whether before or after the Closing Date, as a
result of, on account of or arising from any breach of any representation,
warranty, covenant or agreement on the part of such Contributor set forth in
Section 5 herein or in any instrument or document related thereto delivered
pursuant to this Agreement. The obligations set forth in this Section 15(a)
shall survive Closing without limitation.
(b) Indemnification by the Contributors. Except for the
indemnifications set forth in Section 15(a) above, the Contributors, jointly and
severally, hereby indemnify and agree to defend and hold harmless FWRLP and its
partners and subsidiaries and any officer, director, employee, agent of any of
them, and their respective successors and assigns from and against any and all
claims, expenses, costs, damages, losses and liabilities (including reasonable
attorneys' fees) which may at any time be asserted against or suffered by, any
indemnitee the Partnership or the Property, or any part thereof, whether before
or after the Closing Date, as a result of, on account of or arising from (i) any
breach of any representation, warranty, covenant or agreement on the part of the
Contributors made herein or in any instrument or document delivered by the
Contributors pursuant to this Agreement, and/or (ii) any obligation, claims,
suit, liability, contract, agreement, debt or encumbrance or other occurrence
created, arising or accruing prior to the Closing Date, regardless of when
asserted, and relating to the Partnership or the Property, or its operations.
Claims within the scope of the indemnity set forth in clause (ii) shall include,
without limitation, any and all liabilities for federal and state income and
other taxes due and payable with respect to any period (or portion thereof)
prior to the Closing Date. The foregoing obligations set forth in this Section
15(b) shall survive Closing without limitation.
(c) Indemnification by FWRLP. FWRLP hereby indemnifies and
agrees to defend and hold harmless Contributors and their respective, heirs,
personal representatives, successors and assigns from and against any and all
claims, expenses, costs, damages, losses and liabilities (including reasonable
attorneys' fees) which may at any time be asserted against or suffered by
Contributors as a result of, on account of or arising from (i) any breach of any
representation, warranty, covenant or agreement on the part of FWRLP or the REIT
made herein or in any instrument or document delivered pursuant to this
Agreement, and/or (ii) any obligation, claims, suit, liability, contract,
agreement, debt or encumbrance or other occurrence created, arising or accruing
after the Closing Date and relating to the Partnership or the Property or its
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operations. The foregoing obligations set forth in this Section 15(c) shall
survive Closing without time limitation.
16. Brokerage Commission. Contributors and FWRLP represent and warrant
to each other that no brokerage fee or real estate commission is or shall be due
or owing in connection with this transaction. Contributors and FWRLP hereby
indemnify and hold the other harmless from any and all claims of any other
broker or agent so claiming based on action or alleged action of the other.
17. Default Provisions; Remedies.
(a) FWRLP's Default. If FWRLP fails to consummate the
Contribution contemplated herein when required to do so pursuant to the
provisions hereof, then the Title Company shall deliver the Deposit to
Contributors as full and complete liquidated damages, and as the exclusive and
sole right and remedy of Contributors, whereupon this Agreement shall terminate
and neither party shall have any further obligations or liabilities to any other
party.
(b) Contributors' Default. Except for any breaches waived in
writing by FWRLP, if Contributors have breached any of their covenants or
obligations under this Agreement or have failed, refused or are unable to
consummate the Contribution contemplated herein by the Closing Date or if any of
the representations and warranties made by Contributors under this Agreement
shall be inaccurate or incorrect in any material respect, then FWRLP shall be
entitled, as FWRLP's sole and exclusive right and remedy, to (i) waive such
breach, default or failure and proceed to Closing without abatement of
consideration under Section 2(a), (ii) extend the Closing for such reasonable
time or times as may be necessary in order to enable Contributors to remedy such
breach, default or failure (not to exceed thirty (30) days), (iii) terminate
this Agreement and obtain the return of the Deposit, and/or (iv) pursue such
remedies as may be available at law or in equity, including without limitation
an action for damages and/or specific performance. In the event that FWRLP
elects to pursue damages and/or specific performance and FWRLP prevails in such
litigation, in addition to any damages or other relief awarded to FWRLP,
Contributors shall be obligated to pay all reasonable legal fees, costs and
expenses incurred by FWRLP.
(c) Default After Closing. The provisions of Sections 17(a)
and (b) above shall not be applicable to any breach or default by a party
occurring or first becoming actually known to the other party after Closing,
and, as to any said breach or default, the non-defaulting party may exercise any
and all remedies available at law or in equity, subject, however, to any
applicable limitations on survival expressly provided for in this Agreement.
18. Registration Rights. The REIT hereby agrees to use its best efforts
to file a registration statement within thirteen (13) months after Closing to
register the issuance and resale, if required, of REIT Common Stock which may be
issued to
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Contributors in exchange for its Units, to use its best efforts to cause such
registration statement to become effective and to keep such registration
continuously effective (subject to certain exceptions) for a period for four (4)
years thereafter; provided, however, that the REIT shall be permitted to
postpone such filing or suspend the effectiveness of such shelf registration
statement for such periods as the REIT reasonably determines are necessary and
advisable in the best interest of the REIT or which are necessary to comply with
securities law requirements (including suspending sales under the shelf
registration statement for such periods as the managing underwriter in an
underwritten offering deems necessary). The obligations of the REIT under this
Section 18 shall survive Closing.
19. Miscellaneous Provisions.
(a) Completeness and Modification. This Agreement (together
with Exhibits A to Q attached hereto) represents the complete understanding
between the parties hereto with respect to the transactions contemplated herein,
and it supersedes all prior discussions, understandings or agreements between
the parties. This Agreement shall not be modified or amended except by an
instrument in writing signed by all of the parties hereto.
(b) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors and
assigns.
(c) Assignment. This Agreement shall not be assignable by
FWRLP without the consent of Contributor, provided that, notwithstanding
anything to the contrary contained in this Agreement, FWRLP shall be entitled to
transfer or, at Closing, cause the Partnership to issue a 1% limited partnership
interest in the Partnership to the REIT or to an entity controlled by,
controlling or under common control with the FWRLP, as long as the Units are
issued to Contributors as required herein. This Agreement shall not be
assignable by Contributors.
(d) Waiver; Modification. Failure by FWRLP or Contributors to insist
upon or enforce any of its rights hereto shall not constitute a waiver or
modification thereof.
(e) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Maryland.
(f) Headings. The headings are herein used for convenience or
reference only and shall not be deemed to vary the content of this Agreement or
the covenants, agreements, representations and warranties herein set forth, or
the scope of any provision hereof.
(g) Continuing Documentation and Access. From and after
Closing, the Contributors shall afford FWRLP reasonable access to any and all
information in their possession concerning the ownership, use and operation of
the Property
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(including the right to copy same at the expense of FWRLP) for purposes of any
tax examination or audit or other similar purpose.
(h) Counterparts. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required; it shall be sufficient
that the signature of, or on behalf of, each party, or that the signatures of
the persons required to bind any party, appear on one or more such counterparts.
All counterparts shall collectively constitute a single agreement.
(i) Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered by hand or
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid or delivered by commercial courier, telecopy or overnight
courier (e.g., Federal Express) against receipt, to the addresses indicated
below:
(i) if to FWRLP:
First Washington Realty Limited Partnership
▇▇▇▇ ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Contributors or the General Partner:
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇, Baetjer and ▇▇▇▇▇▇, LLP
1800 Mercantile Bank & Trust Building
Two ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Such notice shall be deemed given on the date of receipt by
the addressee or the date receipt would have been effectuated if delivery were
not refused. Each party may designate a new address by written notice to the
other in accordance with this Section 19(i).
(j) All Warranties Joint and Several. Except as expressly provided
otherwise in this Agreement, each and every warranty, covenant, undertaking
and
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agreement of the Contributors hereunder shall be deemed a joint and several
warranty, covenant, undertaking and agreement of each person and entity
collectively comprising the Contributors.
(k) Further Assurances. Contributors and FWRLP agree to
execute, acknowledge and deliver any further agreements, documents or
instruments that are reasonably necessary or desirable to carry out the
transactions contemplated by this Agreement.
(l) Business Days. A "business day" shall be Mondays through
Fridays, less and expecting all legal holidays observed by the United States
Government or the Government of the State of Maryland. Any date specified in
this Agreement which does not fall on a business day shall be automatically
extended until the first business day after such date.
20. Post-Closing Agreements of FWRLP.
(a) No Transfer Period. Until the expiration of the period
(the "No Transfer Period") ending on the earlier of (I) such time as all of the
Contributors have redeemed all of the FWRLP Units received by the Contributors
hereunder for cash or for shares of REIT common stock or (II) six (6) years from
the Closing Date, neither FWRLP nor REIT shall allow the sale or transfer of
either the Property or substantially all of the interests in the Partnership,
except for (i) transfers that are fully tax-free to partnerships in which FWRLP
has an interest, (ii) exchanges that are fully tax-free pursuant to Section 1031
of the Code, (iii) involuntary transfers which shall include, without
limitation, a foreclosure, a deed-in-lieu of a foreclosure, a condemnation or a
liquidation of FWRLP or REIT, provided that in the event of a material
condemnation, FWRLP shall use reasonable efforts to reinvest the net
condemnation proceeds in accordance with Section 1033 of the Code and hold the
same until the expiration of the No Transfer Period, and (iv) a sale of all or
substantially all of FWRLP's assets or a merger or consolidation of FWRLP.
(b) Refinance. Until the expiration of the No Transfer Period,
neither FWRLP nor REIT shall allow the Partnership to refinance the Loan for an
amount less than the outstanding principal balance of the Loan as of Closing (as
reduced thereafter by regularly scheduled amortization payments) (the "Minimum
Loan Amount") or to make any payment of principal under the Loan, except as part
of regularly scheduled amortization payments or as otherwise required by the
holder of the Loan or replacement loan under the applicable loan documents, or
to change the terms of the Loan or replacement loan in a manner that would
change the Minimum Loan Amount from nonrecourse to recourse within the meaning
of Section 752 of the Code and the regulations promulgated thereunder.
(c) Section 704(c) Method. FWRLP shall elect the "traditional
method" as described in Treasury Regulation Section 1.704-3(b) with respect to
allocations required by Code Section 704(c) relating to the interests in the
Partnership contributed by the Contributors and the assets of the Partnership.
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(d) Allocation of Excess Nonrecourse Liabilities. For the
purposes of allocating Contributors' share of the "excess nonrecourse
liabilities" (within the meaning of Treasury Regulations Section 1.753(a)(3)) of
FWRLP to the Contributors, FWRLP will allocate (i) the lesser of (A) one-half of
such excess nonrecourse liabilities or (B) the built-in gain in excess of
Section 704(c) "minimum gain", among its partners based upon each partner's
relative share of FWRLP's built-in gain in excess of Section 704(c) "minimum
gain", and (ii) the remainder of such excess nonrecourse liabilities will be
allocated among the partners based on each partner's relative number of FWRLP
Units (taking into account the Contributors' interest in FWRLP). The foregoing
method shall not be modified by FWRLP until the expiration of the No Transfer
Period, without the consent of materially adversely affected Contributors, if
any, is obtained; provided, however, that in the event of a change in the Code,
the Treasury Regulations, or published Internal Revenue Service ("IRS") rulings,
notices or other administrative guidance, or in any private letter ruling issued
to a taxpayer other than FWRLP (any such change, a "Change in Law") such that,
in the reasonable opinion of tax counsel to FWRLP, based on such Change in Law,
either (i) the foregoing method is no longer legally permissible, (ii) or an
alternative method, not previously permitted, which results in more favorable
tax consequences to the Contributors is currently permitted, FWRLP shall be
entitled, without the consent of the Contributors, to adopt an alternative
method, provided further that, in the case of clause (i), FWRLP shall choose the
alternative method that minimizes, to the extent reasonably possible, the
adverse tax consequences to the Contributors.
(e) The provisions of this Section 20 shall survive the
Closing without limitation.
IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement as of the day and year first written above.
FWRLP:
FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP
By: First Washington Realty Trust, Inc.,
WITNESS: Its general partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President
Date of execution: March 11, 1998
WITNESS: CONTRIBUTORS:
L&M ▇▇▇▇▇▇▇▇▇▇ CORPORATION
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/s/_____________________ By: /s/ ▇▇▇▇▇▇ ▇. Martel_____
/s/_____________________ By: /s/ ▇▇▇▇▇▇ ▇. Martel_____
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/________________________ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/________________________ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
Date of execution: , 1998
First Washington Realty Trust, Inc. joins herein solely for the
purpose of making the representations, warranties and covenants contained
in Sections 8(a), 8(b), 8(e), 8(f), 8(g), 11 and 18 hereof.
FIRST WASHINGTON REALTY
WITNESS: TRUST, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President
Date of execution: March 11, 1998
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ACKNOWLEDGE BY TITLE COMPANY
The undersigned Title Company executes this Contribution Agreement
solely to acknowledge receipt of the Deposit pursuant to Paragraph 3 hereof and
to evidence its agreement to serve as escrow agent pursuant to the terms of the
foregoing Agreement.
WITNESS: COMMERCIAL SETTLEMENTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
Date: March 26, 1998
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LIST OF EXHIBITS
EXHIBIT A. Legal Description of Land Recitals
EXHIBIT B. Leases and Rent Schedule Section 6(d)
EXHIBIT C. Service Contracts Section 6(e)
EXHIBIT D. Violations Section 6(c)
EXHIBIT E. Insurance List Section 6(g)
EXHIBIT F. Form of Tenant Estoppel Section 6(i)
EXHIBIT F-1. Tenant Estoppels Section 8(a)(viii)
EXHIBIT G. Litigation Section 6(k)
EXHIBIT H. Operating Statements and Budget Section 6(r)
EXHIBIT I. Personal Property Section 6(t)
EXHIBIT J. Permitted Exceptions Section 9(a)(iii)(B)
EXHIBIT K. Contingent Leasing Commissions Section 6(u)
EXHIBIT L. Confidential Information Statement Section 8(c)
EXHIBIT M. [Intentionally Omitted]
EXHIBIT N. Mortgage Section 2(c)
EXHIBIT O. Note Section 2(c)
EXHIBIT P. Partnership Agreement Section 6(a)
EXHIBIT Q. Allocation of Consideration Section 2(a)
[Contributors and FWRLP to Attach Foregoing at Acceptance of this Agreement]
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