EXHIBIT 99.1
CONTRIBUTION AGREEMENT
METROPOLITAN SQUARE
WASHINGTON, D.C.
SQUARE 224 ASSOCIATES
and
THE OLIVER CARR COMPANY
AND
BOSTON PROPERTIES LIMITED PARTNERSHIP
and
BOSTON PROPERTIES LLC
DATED JUNE 5, 1998
CONTRIBUTION AGREEMENT
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PREAMBLE:
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THIS CONTRIBUTION AGREEMENT (this "AGREEMENT") is made as of the 5th day of
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June, 1998 (the "EFFECTIVE DATE"), by and among: (i) BOSTON PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership ("BPLP"), (ii) BOSTON PROPERTIES
LLC, a Delaware limited liability company ("BPLLC" and, together with BPLP,
collectively, "ACQUIRER"), (iii) SQUARE 224 ASSOCIATES, a District of Columbia
limited partnership ("CONTRIBUTOR"), and (iv) THE OLIVER CARR COMPANY, a
District of Columbia corporation ("CONTRIBUTOR AFFILIATE").
RECITALS:
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A. The Metropolitan Square Associates, a District of Columbia general
partnership ("OWNER"), is the beneficial owner of that certain real property
located at 15th Street, between F and G Streets, N.W., Washington, D.C., and
known as Metropolitan Square (the "PARCEL") as more particularly described in
Exhibit A attached hereto, which term Parcel shall include the land and all
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improvements thereon, together with all rights and appurtenances pertaining to
such land, including, without limitation, (i) all minerals, oil, gas, and other
hydrocarbon substances thereon, (ii) all rights, titles and interests of the
Owner in and to adjacent strips, streets, roads, avenues, alleys and rights-of-
way, public or private, open or proposed, including any rights in vault space
adjacent to or within the boundaries of such land, (iii) all easements,
covenants, privileges, and hereditaments, whether or not of record, and (iv) all
access, air, water, riparian, development, utility, and solar rights.
B. The record owners of the Property are Oliver T. Carr, Jr. and George
H. Beuchert, Jr., as trustees and nominees (collectively the "TRUSTEES"), for
the benefit of Owner. The only partners in Owner are Contributor, which owns a
62% partnership interest in Owner, and LaSalle Fund IV ("LASALLE"), which owns a
38% partnership interest in Owner. Contributor and LaSalle have entered into a
contract whereby, prior to the Closing hereunder, Contributor will repay an
inter-partner loan (the "INTER-PARTNER LOAN") made by LaSalle to Contributor,
and Contributor Affiliate will acquire all partnership interests of LaSalle in
Owner. In order to finance the repayment of the Inter-Partner Loan, Contributor
will obtain a loan in a principal amount of approximately $15,800,000 (the
"SHORT TERM LOAN"). The Short Term Loan will be prepayable without penalty.
C. At Closing hereunder, Contributor and Contributor Affiliate will
contribute their partnership interests in Owner to Acquirer, and the Trustees
simultaneously shall convey legal title to the Property to Owner, in exchange
for the consideration, and upon and subject to the terms and conditions, more
particularly set forth below.
(3)
D. BOSTON PROPERTIES, INC., a Delaware corporation ("BPI"), is the sole
general partner of BPLP. [BPLP] is the managing member of BPLLC.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
A. DEFINITIONS. For purposes of this Agreement, unless the context
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otherwise requires, the following terms shall have the meanings hereinafter set
forth (such meanings to be applicable to the singular and plural forms of such
terms and the masculine and feminine forms of such terms):
(a) "ACCESS AGREEMENT" shall mean the agreement attached hereto as
Exhibit 1(a).
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(b) "ACCREDITED INVESTOR" shall have the meaning given to such term
under Regulation D under the Securities Act of 1933, as amended.
(c) "ACQUIRER" shall have the meaning set forth in the Preamble
above.
(d) "ACQUIRER CLOSING DOCUMENTS" shall mean the documents set forth
in Exhibit 1 (d).
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(e) "ACQUIRER'S DUE DILIGENCE AND CONTRACT COSTS" shall mean,
collectively and in the aggregate, all reasonable costs and expenses (including,
without limitation, reasonable attorneys' and accountants' fees and related
expenses) incurred by Acquirer in connection with (x) Acquirer's investigation
of the Property pursuant to Article 4 hereof or otherwise (including, without
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limitation, costs and expenses for title examination and for the preparation of
surveys, environmental studies and other third party reports), (y) the
preparation and negotiation of this Agreement, the exhibits attached hereto and
the documents to be executed pursuant hereto, and (z) analysis of securities,
tax and other transaction-related issues (including compensation for Acquirer's
in-house counsel provided such compensation is at rates not above customary
rates for comparable services).
(f) "AGREEMENT" shall have the meaning set forth in the Preamble
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above.
(g) "BPI" shall have the meaning set forth in Recital D.
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(h) "BPLLC" shall have the meaning set forth in the Preamble above.
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(i) "BPLP" shall have the meaning set forth in the Preamble above.
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(j) "BUSINESS DAY" shall mean any day excluding Saturday, Sunday and
any day which in the District of Columbia is a legal holiday or a day on which
banking institutions are authorized by law or by other governmental actions to
close.
(k) "CLOSING" shall have the meaning set forth in Section 12.
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(l) "CLOSING DATE" shall have the meaning set forth in Section 12.
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(m) "CONTRACTS" shall have the meaning set forth in Section 7.1(a).
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(n) "CONTRIBUTOR" shall have the meaning set forth in the Preamble
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above.
(o) "CONTRIBUTOR AFFILIATE" shall have the meaning set forth in the
Preamble above.
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(q) "CONTRIBUTOR CLOSING DOCUMENTS" shall mean the documents set
forth in Exhibit 1(p).
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(r) "DEPOSIT" shall have the meaning set forth in Section 3.1.
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(s) "EFFECTIVE DATE" shall mean June 5, 1998.
(t) "ENVIRONMENTAL LAW" shall mean: (i) the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S)(S) 9601
et seq.), as amended; (ii) the Solid Waste Disposal Act, as amended by the
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Resource Conservation and Recovery Act (42 U.S.C. (S)(S) 6901 et seq.), as
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amended; (iii) the Emergency Planning and Community Right to Know Act (42 U.S.C.
(S)(S) 11001 et seq.), as amended; (iv) the Clean Air Act (42 U.S.C. (S)(S) 7401
et seq.), as amended; (v) the Clean Water Act (33 U.S.C. (S)(S) 1251 et seq.),
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as amended; (vi) the Toxic Substances Control Act (15 U.S.C. (S)(S) 2601 et
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seq.), as amended; (vii) the Hazardous Materials Transportation Act (49 U.S.C.
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(S)(S) 1801 et seq.), as amended; (viii) the Federal Insecticide, Fungicide and
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Rodenticide Act (7 U.S.C. (S)(S) 136 et seq.), as amended; (ix) the Safe
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Drinking Water Act (42 U.S.C. (S)(S) 300f et seq.), as amended; (x) any state,
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county, municipal or local statutes, laws or ordinances similar or analogous to
the federal statutes listed in parts (i) - (ix) of this definition; (xi) any
rules, regulations, guidelines, directives, orders or the like adopted pursuant
to or to implement the statutes, laws, ordinances and amendments listed in parts
(i) - (x) of this definition; and (xii) any other law, statute, ordinance,
amendment, rule, regulation, or order relating to environmental matters.
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(t) "ENVIRONMENTAL REPORTS" shall mean the items listed on Exhibit
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1(t) hereto.
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(u) "EQUITABLE LOAN" shall have the meaning set forth in Section 2.6.
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(v) "EQUITY VALUE" shall have the meaning set forth in Section 2.2.
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(w) "ESCROW AGREEMENT" shall have the meaning set forth in Section
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3.1.
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(x) "EXCHANGE VALUE" shall have the meaning set forth in Section 2.2.
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(y) "GOVERNMENTAL AUTHORITIES" shall mean any commission, department
or body of any municipality, township, city, county, state or Federal
governmental unit having jurisdiction over any of the Properties or the
ownership, management, operation, use or improvement thereof.
(z) "HAZARDOUS CONDITIONS" refers to the presence on, in or about any
of the Properties (including ground water) of Hazardous Materials, the
concentration, condition, quantity, location or other characteristics of which
fail to comply with applicable Environmental Laws.
(aa) "HAZARDOUS MATERIAL" shall mean any chemical, substance, waste,
material, equipment or fixture defined as or deemed hazardous, toxic, a
pollutant, a contaminant, or otherwise regulated under any Environmental Law,
including, but not limited to, petroleum and petroleum products, waste oil,
halogenated and non-halogenated solvents, PCBs, and asbestos and asbestos
containing materials.
(bb) "IMPROVEMENTS" shall mean all buildings, parking areas, signs,
driveways, site improvements, structures and other improvements located on the
Parcel.
(cc) "INTER-PARTNER LOAN" shall have the meaning set forth in Recital
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B.
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(dd) "LASALLE" shall have the meaning set forth in Recital B.
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(ee) "LENDERS" shall have the meaning set forth in Section 2.6.
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(ff) "NEW TENANT LEASES" shall have the meaning set forth in Section
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8.1.
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(gg) "OWNER" shall have the meaning set forth in Recital A.
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(hh) "PARCEL" shall have the meaning set forth in Recital A.
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(ii) "PARTNER LOANS" shall have the meaning set forth in Section 2.6.
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(jj) "PARTNERSHIP INTERESTS" shall mean all partnership interests in
Owner.
(kk) "PCBS" shall have the meaning set forth in Section 9.1(e).
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(ll) "PERMITTED EXCEPTIONS" shall mean the exceptions to title set
forth in Exhibit 1(al) hereto.
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(mm) "PERSONAL PROPERTY" shall mean all of Owner's right, title and
interest, if any, in and to: (i) all signs, supplies, maintenance equipment,
appliances, security systems, tools, decorations, furniture, furnishings,
fixtures, equipment, machinery, mechanical systems, landscaping and other
tangible and intangible personal property owned by Owner, located at and/or used
in connection with the leasing, management, operation, maintenance and repair of
the Properties, including, without limitation, the items listed on Exhibit 1(am)
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attached hereto; (ii) all site plans, surveys, plans and specifications,
marketing materials and floor plans relating to the Properties; (iii) all
warranties, guarantees and bonds relating to the Properties; (iv) all permits,
licenses, certificates of occupancy, and other governmental approvals which
relate to the Properties; and (v) any trade names used by Owner in connection
with the Property INCLUDING THE NAME "mETROPOLITAN sQUARE".
(nn) "PROPERTY" shall mean, collectively, the Parcel, the Tenant
Leases and the Personal Property.
(oo) "REGISTRATION RIGHTS AGREEMENT" shall mean an agreement
substantially in the form attached as Exhibit 1 (ao) hereto.
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(pp) "RETAINED INDEBTEDNESS" shall have the meaning set forth in
Section 2.6.
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(qq) "SEC" shall mean the Securities and Exchange Commission.
(rr) "SHORT TERM LOAN" shall have the meaning set forth in Recital B.
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(ss) "SUBSCRIPTION AGREEMENT" shall mean an agreement substantially in
the form attached as Exhibit 1(as) hereto.
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(tt) "TAX PROTECTION AGREEMENT" shall mean an agreement substantially
in the form attached hereto as Exhibit 1(at).
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(uu) "TENANT LEASES" shall mean the leases (and any assignments of
leases or subleases) described in Exhibit 7.1(d)(i) attached hereto and any New
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Tenant Leases.
(vv) "TITLE COMPANY" shall have the meaning set forth in Section 3.1.
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(ww) "TRUSTEES" shall have the meaning set forth in Recital B.
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(xx) "UNITS" shall have the meaning set forth in Section 2.2.
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(yy) "USTS" shall have the meaning set forth in Section 9.1 (d).
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B. ASSIGNMENT; EXCHANGE VALUE.
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A. Upon and subject to the terms and conditions set forth in this
Agreement, Contributor and Contributor Affiliate hereby agree to transfer and
assign 100% of the Partnership Interests to BPLP and BPLLC in the following
manner: (i) before closing, Contributor Affiliate shall acquire LaSalle's 38%
Partnership Interest, and, at Closing, Contributor Affiliate shall contribute a
37% Partnership Interest to BPLP and its remaining 1% Partnership Interest to
BPLLC; and (ii) at Closing, Contributor shall contribute its 62% Partnership
Interest to BPLP. Contributor hereby agrees to cause the Deed described in
Section 13.4 to be conveyed by Trustees to Owner concurrently with the
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contribution of Partnership Interests to BPLP and BPLLC.
B. The parties hereto have agreed upon the "EXCHANGE VALUE" of One
Hundred Seventy-Five Million Dollars ($175,000,000) for 100% of the Partnership
Interests. Upon and subject to the terms and conditions set forth in this
Agreement, at Closing, Contributor and Contributor Affiliate shall receive the
Exchange Value, net of adjustments as set forth herein, in the following manner:
a BPLP and BPLLC shall take the Partnership Interests subject to
the Retained Indebtedness as described herein and BPLP and BPLLC shall receive a
credit towards the Exchange Value in an amount equal to the principal balance of
the Retained Indebtedness, plus all accrued and unpaid interest thereon and any
other fees, charges or other amounts due thereunder; and
b BPLP and BPLLC shall pay Contributor Affiliate $21,200,000 in
cash or other immediately available funds for Contributor Affiliate's 38%
Partnership Interest and shall receive a credit towards the Exchange Value in
such amount; and
c BPLP and BPLLC shall pay for the closing costs and other amounts
incurred in connection with the transactions contemplated by this Agreement as
provided elsewhere herein and shall receive a credit towards the Exchange Value
for the amounts specified in Sections 7.1(f), 7.1(g), 8.7, 13.11, 14.1 and 19 of
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this Agreement; and
d Additional amounts also shall be credited towards the Exchange
Value to the extent provided elsewhere in this Agreement including in Section
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5.2; and
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e BPLP shall pay to Contributor an amount (the "EQUITY VALUE")
equal to the balance of the Exchange Value (reduced by the credits set forth
above in this
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Section), subject to further adjustments as set forth in Article 14 and Article
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18, by issuance to Contributor of exchangeable ownership units in BPLP
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("UNITS"). The Units shall be deemed to be valued for all purposes of this
Agreement at $34.00 per Unit, regardless of the actual value at the time of the
issuance of the Units.
C. Concurrently with the execution of this Agreement, Contributor
has signed a Subscription Agreement.
D. Commencing on the 375th day after the Closing, the Units of BPLP
which are issued to Contributor pursuant to the terms of this Article 2 (i)
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shall be redeemable on the terms set forth in the Amended and Restated Agreement
of Limited Partnership of Boston Properties Limited Partnership, dated as of
June 23, 1997, as amended (the "BPLP PARTNERSHIP AGREEMENT"); and (ii) shall be
transferable by Contributor to any person identified on Exhibit 2.4-1 hereto, or
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who (now or at the time of the transfer) directly or indirectly controls, is
controlled by or is under common control with such a person; provided such
transferee of Units is an Accredited Investor and, prior to any such transfer,
such transferee executes and delivers to BPLP the documents set forth in Exhibit
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2.4-2 hereto. At Closing, Acquirer and BPI will enter into the Registration
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Rights Agreement with Contributor.
E. The parties hereto intend, to the extent permitted by law, that
such exchange shall be treated as a contribution of property in accordance with
Internal Revenue Code Section 721.
F. For purposes of this Agreement, "RETAINED INDEBTEDNESS" shall
mean the following: (i) the Short Term Loan, (ii) certain existing partner loans
made by partners of the Contributor to Contributor and aggregating approximately
$2,600,000 in principal and interest as of the Closing Date (the "PARTNER
LOANS"), and (iii) the existing loan made by The Equitable Life Assurance
Society of the United States in the outstanding principal amount of
approximately $104,500,000 as of the Closing Date, which loan is secured by a
deed of trust lien against the Property (the "EQUITABLE LOAN"). The respective
holders of said Retained Indebtedness are referred to herein as the "LENDERS."
At the Closing, Acquirer shall assume or take the Partnership Interests subject
to the Retained Indebtedness pursuant to assumption or other agreements with the
respective Lenders substantially in the form of Exhibit 2.6 hereto. Acquirer may
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wish to discuss possible modifications of the terms of the Equitable Loan with
the Lender thereunder. Contributor agrees to cooperate in the conduct of any
such discussions prior to the Closing.
G. The parties hereto agree that the Exchange Value shall be
allocated between the land and the Improvements thereon as may be agreed to by
the parties hereto or in the absence of agreement in the same proportion as in
the latest real estate tax bill before the Effective Date. However, no value in
excess of basis shall be allocated to any property classified by Owner as 5 Year
ACRS, 5 Year MACRS, 7 Year MACRS, or 15 Year MACRS property on Owner's federal
income tax returns (collectively, "1245 PROPERTY").
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H. DEPOSIT.
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A. Within two (2) business days after the Effective Date, Acquirer
shall place in escrow with Commercial Settlements, Inc., 1413 K Street, N.W.,
Washington, D.C. 20005 (the "TITLE COMPANY") the sum of $3,600,000, representing
a deposit, and subject to the terms of that certain Escrow Agreement (the
"ESCROW AGREEMENT"), a copy of which is attached hereto as Exhibit 3.1 (the
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deposit, together with accrued interest thereon, is herein referred to as the
"DEPOSIT").
B. The Title Company is hereby directed to invest the Deposit in an
interest-bearing account acceptable to Acquirer. The Deposit shall be
disbursed by the Title Company in accordance with the terms and conditions of
this Agreement and the Escrow Agreement.
C. INSPECTION.
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A. Acquirer acknowledges, understands, and agrees as follows:
a Acquirer is (or is controlled by) a sophisticated investor who is
familiar with properties similar to the Property.
b Except as set forth herein, neither Contributor, Contributor
Affiliate nor any of their agents, brokers, officers, directors, partners, unit
holders, shareholders, or employees has made any representations or warranties
of any kind whatsoever, whether oral or written, express or implied, with
respect to the Partnership Interests and the Property.
c Except as provided herein, BPLP and BPLLC expressly acknowledge
and agree that in connection with the transaction contemplated by this Agreement
the Contributor and Contributor Affiliate have not made and do not make: (i) any
implied or express warranty of merchantability with respect to the Property;
(ii) any implied or express warranty of fitness for a particular purpose with
respect to the Property; and (iii) any implied warranty with respect to the
condition of the Improvements, the past or projected financial condition of the
Property, or the uses permitted on, the development requirements for, or any
other matter or thing relating to all or any portion of the Property.
d Acquirer previously has been afforded the opportunity to make any
and all inspections of the Property and such related matters as Acquirer may
reasonably desire.
B. Prior to the date hereof, Contributor has permitted Acquirer and
its representatives to enter upon and inspect the Property and to conduct soils,
engineering, and any other tests or studies as desired, and Acquirer
acknowledges it has conducted the due diligence it desires to conduct and such
due diligence was conducted at the Acquirer's sole cost and expense. Acquirer
has and shall keep the Property free and clear of any mechanic's or
materialmen's liens
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arising out of any entry, inspection, test, or study conducted by Acquirer or
its representatives, and if Acquirer has not already done so, Acquirer shall
promptly restore the Property to the condition before such entries were made or
inspections, studies, or tests were performed, and shall do so after any future
entries are made or inspections, studies, or tests were performed.
C. Contributor hereby grants to Acquirer, its employees, agents,
consultants and contractors, the right to enter on to the Property for the
purpose of performing such inspections, reviews, surveys, soil tests, hydrology
tests, percolation tests, environmental tests, and other engineering tests or
environmental investigations as Acquirer may reasonably deem appropriate. All
entries by Acquirer onto the Property shall be subject to, and conducted in
accordance with, all applicable laws, and the rights of the current tenants and
other occupants of the Property, so as to avoid any material interference with
the operations of the Property or the rights of tenants or other occupants of
the Property. Further, such entry shall be subject to and conducted in
accordance with the terms of the Access Agreement.
D. Soil, rock, water, asbestos, and other samples taken from the
Property shall remain the property of the Owner. At the request of Contributor,
Acquirer will assist in making arrangements for the lawful disposal of any
contaminated samples and will pay any related transportation or disposal fees,
but only if Contributor signs the manifest and any other documents required in
connection with the disposal of contaminated samples. If Contributor is not
willing to sign the required documentation, Acquirer's only obligation shall be
to return the contaminated samples to Contributor. Any investigation or
inspection conducted by Acquirer or any agent or representative of Acquirer
pursuant to this Agreement in order to verify independently Contributor's
satisfaction of any conditions precedent to Acquirer's obligation hereunder or
to determine whether Contributor's representations and warranties are true and
accurate shall not affect or constitute a waiver by Acquirer of any of
Contributor's obligations hereunder or Acquirer's reliance thereon.
E. Contributor has delivered to Acquirer copies of the items set
forth in Exhibit 4.5 hereto related to the Property. Except as provided in this
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Agreement all third-party documents, reports, studies and other third-party
information or materials delivered or disclosed to Acquirer by Contributor or
Contributor Affiliate (including, without limitation the items set forth in
Exhibit 4.5 which are such third party documents) have been and are being
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provided to Acquirer for informational purposes only and Contributor and
Contributor Affiliate have not made, and are not making, any representation,
warranty or promise of any kind, express or implied, that the matters stated in
such information or materials are accurate. In addition, Contributor agrees to
make available to Acquirer upon request from time to time any other information
reasonably requested by Acquirer relating to Contributor, Contributor Affiliate,
Owner or the Property, and to otherwise cooperate with Acquirer in its
inspection and investigation of Owner and the Property, and Acquirer shall have
the right to make copies of the same, at its own cost and expense. In no event
shall Acquirer be obligated to pay any fees to Contributor or Owner on account
of their making any information available.
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F. TITLE.
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A. Title to the Property at the Closing shall be vested solely in
Owner, good of record and in fact, merchantable, and subject only to the
Permitted Exceptions.
B. Acquirer shall have the right to credit towards the Exchange
Value funds necessary to satisfy any mechanic's liens, mortgages, deeds of trust
or other existing indebtedness, other than the Retained Indebtedness (which
Retained Indebtedness is credited as provided in Section 2.2).
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C. AUTHORITY.
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A. (a) RELATING TO CONTRIBUTOR. Contributor hereby represents,
warrants and covenants to Acquirer that: (i) this Agreement is, and all
"Contributor Closing Documents" to be executed by Contributor will be when
executed by Contributor, binding on and enforceable against Contributor in
accordance with their respective terms; (ii) there are no other consents
required to authorize Contributor's and Contributor Affiliate's entry into and
performance of this Agreement, Contributor Closing Documents and/or the
transactions contemplated hereby or thereby; (iii) the execution and delivery of
this Agreement does not, and the execution and delivery at the Closing of the
Contributor Closing Documents will not, constitute a breach or default under any
agreement by which the Owner, Contributor or Contributor Affiliate is bound, or
by which any of their property is encumbered; (iv) the record owners of the
Property are Oliver T Carr, Jr. and George H. Beuchert, Jr., as trustees and
nominees, for the benefit of Owner; (v) Owner is a duly formed, validly
existing, District of Columbia general partnership the only partners in which
are Contributor and LaSalle; (vi) Contributor and LaSalle have entered into a
contract whereby, prior to the Closing hereunder, Contributor will repay the
Inter-Partner Loan and Contributor Affiliate will acquire, for a price in a
fixed agreed amount, all partnership interests of LaSalle in Owner; (vii) 62% of
the Partnership Interests are owned solely by Contributor, and all of the
Partnership Interests shall be owned immediately prior to the Closing solely by
Contributor and Contributor Affiliate; (viii) except for the security interests
set forth in Exhibit 6.1, Contributor's Partnership Interests are and shall
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remain through the Closing free and clear of any claim, lien, security interest
or other encumbrance, and at the Closing, except for the Short Term Loan, all of
the Partnership Interests shall be free and clear of any claim, lien, security
interest or other encumbrance; (ix) upon Closing no distributions or other
amounts shall be owed by Owner or Acquirer to partners or former partners in
Owner; (x) to Contributor's knowledge, the Property is not subject to any liens
or encumbrances other than the Permitted Exceptions; and (xi) Contributor has
the right and authority to convey, and to cause Contributor Affiliate to convey,
the Partnership Interests as and when provided herein and to cause the
conveyance of the Property as and when provided herein.
RELATING TO CONTRIBUTOR AFFILIATE. Contributor Affiliate
represents and warrants to Acquirer that: (i) this Agreement is, and all
Contributor Closing Documents to be executed and delivered by Contributor
Affiliate will be, when executed by
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Contributor Affiliate, binding on and enforceable against Contributor Affiliate,
in accordance with their respective terms; (ii) Contributor Affiliate is a duly
formed and validly existing corporation under the laws of the District of
Columbia; (iii) this Agreement, the Contributor Closing Documents, and the
transactions contemplated hereby and thereby have been, or will have been prior
to the Closing, approved by all necessary action of Contributor Affiliate; (iv)
the execution and delivery of this Agreement does not, and the execution and
delivery at the Closing of the Contributor Closing Documents will not constitute
a breach or default under any agreement by which Contributor Affiliate is bound;
and (v) at the Closing, Contributor Affiliate shall own (and transfer to BPLP
and BPLLC) a 38% Partnership Interest in Owner upon and subject to the other
terms and conditions hereof.
B. RELATING TO ACQUIRER. Acquirer represents and warrants to
Contributor that: (i) this Agreement is, and all Acquirer Closing Documents to
be executed and delivered by Acquirer will be when executed by Acquirer, binding
on and enforceable against Acquirer, in accordance with their respective terms;
(ii) BPLP is a duly formed and validly existing limited partnership under the
laws of the State of Delaware and is qualified to do business in the District of
Columbia; (iii) BPLLC is a duly formed and validly existing limited liability
company under the laws of the State of Delaware; (iv) this Agreement, the
Acquirer Closing Documents, and the transactions contemplated hereby and thereby
have been, or will have been prior to the Closing, approved by all necessary
action of BPLP and BPLLC; and (v) the execution and delivery of this Agreement
does not, and the execution and delivery at the Closing of the Acquirer Closing
Documents will not, constitute a breach or default under any agreement by which
Acquirer is bound.
C. REPRESENTATIONS AND WARRANTIES.
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A. Contributor represents and warrants to Acquirer:
(a) CONTRACTS. Exhibit 7.1(a) attached hereto is a complete list of
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all current contracts entered into by or binding on Contributor or Owner
relating to the ownership, management, leasing, parking, operation, maintenance
or repair of the Property (such contracts, together with all contracts entered
into after the date hereof pursuant to Section 8.1, are hereinafter collectively
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referred to as the "CONTRACTS"), which list includes the names of the
contracting parties, the dates of the Contracts and a listing of all amendments
to such Contracts. Owner is not in breach of any of its obligations under any of
the Contracts. To Contributor's knowledge, no other party is in breach of any of
its obligations under any of the Contracts.
(b) LEASING COMMISSIONS. Except as provided on Exhibit 7.1(b)
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hereto, on the date of the Closing, there shall be no leasing commissions due or
owing, or to become due and owing, in connection with any of the Tenant Leases;
and Contributor shall pay and discharge in full at or before Closing all
obligations to pay any leasing commissions with respect to the existing Tenant
Leases.
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(c) FINANCIAL INFORMATION. Exhibit 7.1(c) attached hereto identifies
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true and correct audited financial statements including statements of profit and
loss of the Owner with respect to the Property for the last three calendar years
and other financial information. True and complete copies of all of the
documents identified on said Exhibit have been delivered to Acquirer. Such
documents properly reflect the profit and loss from the management, leasing,
maintenance, repair and operation of the Property for such periods.
(d) TENANT LEASES.
(i) Exhibit 7.1(d)(i) attached hereto is a true and complete
-----------------
rent roll and list of all leases or other rights or grants of occupancy
of all or any part of the Property (which are referred to herein as the
"TENANT LEASES") excluding New Tenant Leases. Said Exhibit correctly shows
the name of the tenant, the date of the Tenant Lease and a complete list of
all amendments, side letters, option exercise letters and any other
documents, certificates or instruments which may create future obligations
under any of the Tenant Leases.
(ii) Exhibit 7.1(d)(ii) attached hereto contains a complete list
------------------
of all current rental delinquencies under the Tenant Leases for the
Property as of the close of the month immediately preceding the Effective
Date. Contributor agrees to provide to Acquirer an updated list of rental
delinquencies at Closing which shall be certified by Contributor as true,
correct and complete in all material respects.
(iii) Except as otherwise set forth on Exhibit 7.1(d)(iii), none
-------------------
of the tenants under the Tenant Leases is in default as of the close of the
month immediately preceding the Effective Date as to any monetary
obligation under its Tenant Lease beyond any grace period provided for in
its Tenant Lease and, none of the tenants under the Tenant Leases, to
Contributor's knowledge, is in material default as to any non-monetary
obligation under its Tenant Lease beyond any grace period provided for in
its Tenant Lease nor is any tenant entitled to any rebate, concession,
deduction or offset under its Tenant Lease, except for the Owner's
obligation, if any, to refund any excess estimated payments made by a
tenant on account of operating expenses or real estate taxes.
(iv) Except for security deposits placed with the Owner under the
Tenant Leases, a true and correct list of which is attached hereto as
Exhibit 7.1(d)(iv), none of the tenants has paid to the Owner any rent or
------------------
other charge of any nature under its Tenant Lease or otherwise relating to
the Property for a period of more than thirty (30) days in advance.
(v) To the best of Contributor's knowledge, except as set forth
in Exhibit 7.1(d)(v), the Owner has performed or paid all obligations
-----------------
(including,
-13-
without limitation, performance of all work and payment of all work and
other tenant allowances) required to be performed or paid by it under each
of the Tenant Leases and is not in default of any of its obligations under
any of the Tenant Leases.
(e) CONDEMNATION. Contributor has no knowledge of nor has it
received any written notice of any pending or contemplated condemnation
proceedings affecting all or any part of the Property.
(f) STRUCTURAL. To the best of Contributor's knowledge, except as
disclosed on Exhibit 7.1(f) hereto, there are no existing structural defects in
--------------
any Improvements at the Property. Contributor has received no written notice
from any insurance company or Governmental Authority of any defect or inadequacy
in connection with the Property's structure or systems which has not heretofore
been cured. At or before the Closing, Contributor shall cure (or Acquirer shall
escrow sufficient funds at Closing with the Title Company to cure) all such
written notices issued on or before the Closing. Any amount placed in escrow by
Acquirer as provided in the preceding sentence shall be credited towards the
Exchange Value as provided in Section 2.2.
-----------
(g) ZONING/VIOLATIONS. To the best of Contributor's knowledge, there
is not now pending nor is there any proposed or threatened proceeding for the
rezoning of the Property or any portion thereof. Contributor has no knowledge
of nor has it received any written notice from any Governmental Authority that
any zoning, subdivision, environmental, hazardous waste, building code, health,
fire, safety or other law, order, ordinance or regulation is violated by the
continued maintenance, operation or use of the Property, including, without
limitation, any Improvements located thereon or any parking areas. At or before
the Closing, Contributor shall cure (or Acquirer shall escrow sufficient funds
at Closing with the Title Company to cure) all violation notices issued with
respect to the Property. Any amount placed in escrow by Acquirer as provided in
the preceding sentence shall be credited towards the Exchange Value as provided
in Section 2.2.
-----------
(h) PERMITTED EXCEPTIONS. The Owner has paid all amounts that are
due and payable, and has performed all of its obligations to the extent Owner's
performance currently is due, under all of the covenants, conditions,
restrictions, rights-of-way and easements constituting the Permitted Exceptions
for the Property.
(i) PERMITS, ETC. To the best of Contributor's knowledge, all
permits, licenses, authorizations and certificates of occupancy required by
Governmental Authorities for the management, occupancy, leasing and operation of
the Property are in full force and effect.
(j) LITIGATION. No dispute, proceeding, suit or litigation naming
Contributor or Owner and relating to the Tenant Leases, the Property or any part
thereof is pending or, to the best of Contributor's knowledge, threatened in any
tribunal, except as provided on Exhibit 7.1(j)
--------------
-14-
hereto. To the best of Contributor's knowledge, no other proceeding, suit or
litigation relating to the Tenant Leases, the Property or any part thereof is
pending or threatened in any tribunal. Neither Owner nor Contributor nor
Contributor Affiliate, nor, to Contributor's knowledge, any other partner of the
Owner, is the subject of, or has received any written notice of or threat that
the Owner or any such partner has or will become the subject of, any
reorganization, liquidation, dissolution, receivership or other action or
proceeding under the United States Bankruptcy Code, 11 U.S.C. (S)(S) 101, et
--
seq., or any other federal, state or local laws affecting the rights of debtors
- ----
and/or creditors generally, whether voluntary or involuntary and including,
without limitation, proceedings to set aside or avoid any transfer of any
interest in property or obligations, whether denominated as a fraudulent
conveyance, preferential transfer or otherwise, or to recover the value thereof
or to charge, encumber or impose a lien thereon.
(k) FIRPTA. Neither Contributor, nor Contributor Affiliate nor the
Owner is a "foreign person" within the meaning of Section 1445 of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
(l) INDEBTEDNESS. No material defaults or events of default (as
defined therein) have occurred and are continuing under the terms of any
documents evidencing or securing indebtedness which is secured by the Property
or for which Contributor or Owner is liable.
(m) PARTIES IN POSSESSION. There are no tenants or other parties in
possession of any part of the Property, except tenants under the Tenant Leases
or as may otherwise be set forth in the Permitted Exceptions, and no one other
than tenants under the Tenant Leases or permitted subtenants thereunder have any
right to occupy any part of the Property. The only subtenants consented to by
Owner are identified on Exhibit 7.1(m) hereto.
--------------
(n) MATERIAL CHANGE. Contributor has received no written notice from
any Governmental Authority of any pending or contemplated change in any
regulation, code, ordinance or law, or private restriction applicable to the
Property, or any natural or artificial condition upon or affecting the Property,
or any part thereof, which would result in any material change in the condition
of the Property or any part thereof.
(o) AGREEMENTS AFFECTING PROPERTY. There are no contracts currently
in effect, other than those matters set forth in the Contracts, Tenant Leases,
the documents evidencing and securing the Retained Indebtedness and the
Permitted Exceptions, and any other documents which have been delivered to
Acquirer, (i) for the sale, exchange or transfer of the Property or any portion
thereof, or (ii) for the sale, exchange or transfer of any of the Partnership
Interests.
(p) TAXES. Contributor, Contributor Affiliate, and Owner have filed
all reports and returns required to be filed with respect to all taxes or other
amounts assessed by any
-15-
Governmental Authorities and have paid all such taxes and other amounts and all
penalties or interest thereon.
(q) EMPLOYEES. Owner has no employees and no pension plans or
employee benefit plans.
(r) ACCURACY OF DOCUMENTS. All documents and records to be delivered
pursuant to Section 4.5 are true, correct and complete copies of the documents
-----------
and records purported to be delivered thereunder. The documents and records set
forth in Exhibit 7.1(r) hereto accurately reflect the matters contained therein
--------------
in every material respect.
(s) NOT MISLEADING. Without limiting the representations and
warranties of Contributor herein, the representations and warranties of
Contributor and Contributor Affiliate in Sections 6.1, 7.1, 7.2, 8.4 and 9.1 of
-----------------------------------
this Agreement do not make any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.
B. For purposes of this Agreement, the phrase "to the best of
Contributor's knowledge" or words of similar import, shall mean the actual
knowledge of Richard W. Carr following a reasonable review of his files and
consultation with Linda Cogburn (the Property's building property manager) and
Matthew Stephenson (the Property's building asset manager). The parties
acknowledge that Linda Cogburn and Matthew Stephenson are employees of Carr Real
Estate Services, Inc. and not of Contributor. Contributor represents and
warrants that the persons named in the preceding sentence are reasonably
knowledgeable about the matters with respect to which Contributor is warranting
hereunder.
C. Contributor shall provide written notice to Acquirer at any time
and from time to time after the Effective Date through the Closing if it
acquires any information that any of the representations or warranties made in
this Agreement was inaccurate as of the Effective Date or will be inaccurate in
any material respect as of the Closing.
D. COVENANTS AND ADDITIONAL OBLIGATIONS OF CONTRIBUTOR.
---------------------------------------------------
A. COVENANTS OF CONTRIBUTOR. Contributor agrees that from the date
of this Agreement to the Closing, it and Owner will: (i) operate the Property
only in a commercially reasonable manner, and use its reasonable efforts to
preserve its relations with tenants and others having business dealings with it;
(ii) operate and maintain the Property as required by the Tenant Leases, and
otherwise maintain the Property in its present condition, make all necessary
repairs and replacements (including repairs and replacements to building
systems), and deliver the Property as of the Closing substantially in the
condition it is in on the Effective Date, ordinary wear and tear, and damage by
fire or other casualty excepted; (iii) maintain fire and casualty insurance,
with broad form extended coverage on the Improvements, in an amount for the
Property at least equal to the replacement cost for the Improvements on the
Property, with a
-16-
deductible not in excess of $25,000.00 (such insurance to be canceled by the
Owner promptly after the Closing, subject to resolution of any pending claims
thereunder and with tail insurance if such coverage is claims made coverage);
(iv) maintain rental loss insurance in an amount equal to the reasonably
anticipated income from the Property (rent, common area (and building operation)
charges, and real estate tax and insurance contributions) for a 12-month period
(such insurance to be canceled by the Owner promptly after the Closing, subject
to resolution of any pending claims thereunder and with tail insurance if such
coverage is claims made coverage); (v) not mortgage or encumber any part of the
Property or take or suffer any other action affecting title to the Property, nor
enter into any loan, without the prior written consent of Acquirer which consent
to the Short Term Loan shall not be unreasonably withheld; (vi) not make any
commitment or incur any liability to any labor union, through negotiations or
otherwise, with respect to the Property; (vii) not become a party to any new
licenses, equipment leases, contracts or agreements of any kind relating to the
Property, except such contracts or agreements as will be terminated at or prior
to Closing without cost or expense to Acquirer or contracts which Acquirer
agrees in its sole discretion to assume at Closing, without having obtained in
each case the prior written consent of Acquirer, which consent shall not be
unreasonably withheld or delayed, and any requests for consent shall be
responded to within ten (10) Business Days of receipt of request therefor;
(viii) not cancel or terminate (except for nonpayment of rent in the case of
Tenant Leases), modify or amend any of the Tenant Leases, or accept surrender
thereof, enter into any new leases, or consent to the assignment, subletting or
mortgaging of any lease or space, without having obtained in each case the prior
written consent of Acquirer, which consent shall not be unreasonably withheld or
delayed, and any requests for consent shall be responded to within five (5)
Business Days of receipt of request therefor (any such approved new leases being
herein referred to as "NEW TENANT LEASES"); (ix) execute and deliver in the
ordinary course of business all New Tenant Leases and modifications or
amendments of Tenant Leases approved by Acquirer in accordance with
clause (viii), it being agreed that if Closing occurs hereunder, Acquirer shall
pay for and perform all tenant work and tenant allowances required under New
Tenant Leases and modifications or amendments of Tenant Leases approved by
Acquirer in accordance with clause (viii), and pay any leasing commissions in
connection with all New Tenant Leases and modifications and amendments to Tenant
Leases approved by Acquirer in accordance with clause (viii) (subject to Section
-------
13.11, all other tenant work, tenant allowances and leasing commissions to be
- -----
paid for and/or performed by Contributor); (x) comply with and perform all
provisions and obligations to be complied with and/or performed by the Owner
under the Tenant Leases; (xi) promptly, provide Acquirer with copies of all
written notices delivered or received under the Tenant Leases, sales reports and
correspondence received from tenants, neighboring property owners, any insurance
company which carries insurance on the Property, received from any Governmental
Authorities or from any other person or entity with respect to the Property or
any portion thereof; (xii) use good faith reasonable efforts prior to the
Closing Date to satisfy all conditions to Closing which are within Contributor's
or Contributor's Affiliate's or Owner's power to satisfy; and (xiii) not offer
the Partnership Interests or the Property (or any interest therein) for sale to
any other party or negotiate, solicit or entertain any offers to purchase the
Partnership Interests or the Property (or any interest therein).
-17-
B. PARTNERSHIP INTERESTS. Contributor covenants that neither it nor
Owner nor Contributor Affiliate shall encumber, assign, transfer or convey any
of the Partnership Interests other than in connection with (i) the Short Term
Loan and (ii) the purchase money financing used by Contributor Affiliate to
acquire its 38% Partnership Interest which purchase money financing will be paid
off in full at the Closing out of the funds described in Section 2.2(b) such
--------------
that Acquirer takes the Partnership Interests free of such purchase money
financing; nor will any such person or entity take any action, or omit to take
any action, which would or could adversely affect Owner, the Partnership
Interests or the Property or otherwise adversely affect the rights of Acquirer
under this Agreement.
C. TENANT ESTOPPEL CERTIFICATES. Contributor shall send to each
tenant a letter and an estoppel certificate, each completed acceptably to
Acquirer, substantially in the form attached hereto as Exhibit 8.3 hereto;
-----------
provided that for New Tenant Leases such estoppel certificates shall be in a
form mutually reasonably agreed to by the parties hereto. Contributor shall,
promptly after receipt, deliver to Acquirer copies of all correspondence or
other matters received by Contributor in connection with such estoppel
certificates.
D. TAX APPEALS. Contributor warrants that there is not now pending,
and Contributor agrees that neither it nor Owner will, without the prior written
consent of Acquirer, institute prior to the Closing, any proceeding or
application for a reduction in the real estate tax assessment of the Property
for any tax year unless required by a tenant pursuant to such tenant's Tenant
Lease.
E. TERMINATION OF CONTRACTS. At or prior to the Closing,
Contributor, at its sole cost and expense, shall terminate those Contracts and
management, leasing and other similar agreements relating to the Property except
as otherwise specified on Exhibit 8.5 hereto. Contributor shall pay in full
-----------
prior to the Closing all commissions, fees and other amounts that are or will
become payable under any of such terminated Contracts.
F. FINANCIAL STATEMENTS. As soon as available, but in no event
later than fifteen (15) days after the Closing, Contributor shall make available
to Acquirer and its accountants a statement of income and expense for the
Property from January 1, 1998, through the Closing. Contributor shall cooperate
with Acquirer in any required filings with the SEC, at no expense to
Contributor.
G. CONSTRUCTION. Prior to the Closing, Contributor shall cause
Owner to have completed the roof repair, exterior door replacement, health club
construction, postal room remodeling, planter work, Kastle system upgrades, air
conditioning replacements, and roof lobby redecoration all as more particularly
described in Exhibit 8.7 hereto (or Acquirer shall escrow sufficient funds with
-----------
the Title Company at Closing to complete such work). Any amount placed in
escrow by Acquirer as provided in the preceding sentence shall be credited
towards the Exchange Value as provided in Section 2.2.
-----------
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H. NEW LEASES. Contributor shall proceed in good faith to finalize
leases or amendments with the tenants and on the terms as set forth on Exhibit
-------
8.8 hereto, subject to approval by Acquirer as provided herein.
- ---
I. ENVIRONMENTAL MATTERS.
---------------------
A. REPRESENTATIONS AND WARRANTIES. Contributor represents and
warrants to Acquirer, except as otherwise disclosed in the Environmental
Reports:
a To the best of Contributor's knowledge, there have not been and
there are not now pending or threatened: (i) claims, complaints, notices, or
requests for information received by Contributor or Owner with respect to any
alleged violation of any Environmental Law with respect to the Property; or
(ii) claims, complaints, notices, or requests for information sent to
Contributor or Owner regarding potential or alleged liability under any
Environmental Law with respect to the Property.
b To the best of Contributor's knowledge, no conditions exist at,
on, or under the Property that, with the passage of time or the giving of notice
or both, would constitute a Hazardous Condition or give rise to liability under
any Environmental Law.
c To the best of Contributor's knowledge, Owner is in compliance in
all material respects with all orders, directives, permits, certificates,
approvals, licenses, and other authorizations from applicable Governmental
Authorities, if any, relating to Environmental Laws with respect to the
Property.
d To the best of Contributor's knowledge, there are no above-ground
tanks that are not in compliance with all Environmental Laws or any underground
storage tanks (herein referred to as "USTS") at its Property; and neither
Contributor nor Owner has removed or abandoned any USTs at the Property nor does
Contributor have any knowledge of the existence, abandonment or removal of USTs
at the Property.
e To the best of Contributor's knowledge, there are no
polychlorinated biphenyls ("PCBS") or friable or damaged asbestos at the
Property; nor has Contributor or Owner removed (or required or requested the
removal of) any PCBs or damaged or friable asbestos from the Property, nor does
Contributor have knowledge of the previous existence of any PCBs or damaged or
friable asbestos at the Property.
f To the best of Contributor's knowledge, Exhibit 1(t) contains a
------------
true, complete and accurate listing of all of the following: (i) all material
reports, test results, analytical data, boring logs, and other studies
undertaken by, at the request of or on behalf of Contributor or Owner and/or in
its (or its affiliates' or agents') possession or control with respect to the
Property and the environmental conditions thereof; (ii) all material orders,
directives and notices of Governmental Authorities received by Contributor or
Owner or its agents, consultants
-19-
and contractors in connection with the environmental condition of the Property;
and (iii) all material correspondence to and from Governmental Authorities and
environmental consultants with respect to the environmental condition of the
Property.
B. NO RELEASE. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement shall be construed to release Contributor
or Owner (nor to bar any action by Acquirer to implead Contributor or Owner nor
to bar any other action by Acquirer against Contributor or Owner where Acquirer
or Contributor or Owner may have liability to a third party or any Governmental
Authorities) for an environmental matter or condition which existed at or from
the Property on or prior to the Closing.
C. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRER.
-----------------------------------------------------
A. Acquirer represents and warrants to Contributor:
a BPLP is duly formed and in good standing as a limited partnership
of the State of Delaware and is authorized to do business in the District of
Columbia.
b BPLLC is duly formed and in good standing as a limited liability
company of the State of Delaware.
c Acquirer has all requisite partnership or limited liability
company power and authority to carry on its business as it is currently being
conducted, to accept assignment of the Partnership Interests or conveyance of
fee simple title to the Parcel, as applicable and as herein contemplated, and to
execute, deliver and perform this Agreement and all documents to be executed and
delivered in regard to the consummation of the transactions contemplated hereby
and to perform fully its obligations hereunder and thereunder. The execution,
delivery and performance by Acquirer of this Agreement and all documents to be
executed and delivered in regard to the consummation of the transaction
contemplated hereby have been or will be duly authorized by all necessary
partnership or limited liability company action on the part of Acquirer, and
Acquirer shall, upon request of Contributor, deliver evidence of such authority
at or prior to the Closing.
d This Agreement has been, and all documents to be executed and
delivered in regard to the consummation of the transaction contemplated hereby
will be at or prior to Closing, duly executed and delivered by Acquirer, and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and all documents to be executed
and delivered in regard to the consummation of the transaction contemplated
hereby when so executed and delivered will constitute, legal, valid and binding
obligations of Acquirer, if a party thereto, enforceable against Acquirer, if a
party thereto, in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally
-20-
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
e Neither the execution and delivery of this Agreement, nor
compliance with the terms and provisions hereof on the part of Acquirer, and
consummation of the transactions contemplated hereby, will violate any statute,
license, decree, order or regulation of any Governmental Authority, or will, at
the Closing, breach, conflict with or result in a breach of any of the terms,
conditions or provisions of any material agreement or instrument to which
Acquirer is a party, or by which it is or may be bound, or constitute a default
thereunder, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon, or give to others any interest or
rights in, the Units to be issued under the terms of this Agreement. Acquirer
and BPI have each obtained, or will prior to Closing obtain, all necessary
consents, approvals, orders and authorizations required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein.
f Acquirer has not (i) made a general assignment for the benefit of
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by Acquirer's creditors, (iii) suffered the
appointment of a receiver to take possession of all or substantially all of
Acquirer's assets, (iv) suffered the attachment, or other judicial seizure of
all, or substantially all, of Acquirer's assets, (v) admitted in writing its
inability to pay its debts as they come due, or (vi) made an offer of
settlement, extension or compromise to its creditors generally.
g The Units to be issued to Contributor hereunder have been or will
be prior to Closing authorized for issuance to Contributor and, upon such
issuance, will be validly issued, fully paid and non-assessable and will not be
subject to any preemptive rights upon their issuance.
h No consent, waiver, approval or authorization of, or filing,
registration or qualification with, or notice to, any Governmental Authority or
any other person is required to be made, including, but not limited to, any
governmental bodies, agencies, tenants, partners or lenders, in connection with
the execution, delivery and performance of this Agreement by Acquirer.
i BPLP is classified as a partnership and not as an association
taxable as a corporation for federal income tax purposes.
j BPI, by its execution of this Agreement, represents, warrants and
covenants that it has made an election to qualify as a real estate investment
trust (a "REIT") under the Internal Revenue Code of 1986, as amended (the
"CODE") commencing with its taxable year ending December 31, 1997, and has not
taken, or omitted to take, any action which would reasonably be expected to
result in a challenge to its status as a REIT, and, to the knowledge of BPLP, no
such challenge is pending or threatened.
-21-
k In addition to the Registration Documents filed by BPI (the "BPI
REGISTRATION DOCUMENTS"), BPI has filed timely all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC, and such
reports, schedules and forms comply in all material respects with all applicable
requirements of the Securities Act of 1933 and the Securities and Exchange Act
of 1934 and the rules and regulations promulgated thereunder.
l Since the filing of the latest documents described in subsection
(j) next above, there has not been an occurrence or circumstance that would have
a material adverse effect on the business, properties, assets, financial
condition or results of operations of BPI (a "MATERIAL ADVERSE CHANGE"), nor has
there been any occurrence or circumstance that with the passage of time would
reasonably be expected to result in a Material Adverse Change with respect to
BPI.
m Acquirer agrees to conduct discussions with Metropolitan Life
Insurance Company with respect to future refinancing of the Property, but
Acquirer shall be under no obligation to accept or be subject to any forward
commitment for the refinancing of the Property from Metropolitan Life Insurance
Company or any other lender.
n Without limiting the representations and warranties of Acquirer
herein, the representations and warranties of Acquirer and BPI in Sections 6.2
------------
and 10.1 of this Agreement do not make any untrue statement of a material fact
- --------
or omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
B. Acquirer shall provide to Contributor at Closing an opinion of
counsel to Acquirer, substantially in the form attached hereto as Exhibit 10.2.
------------
C. At the Closing, Acquirer shall enter into the Tax Protection
Agreement with Contributor.
D. CONDITIONS PRECEDENT.
--------------------
A. Acquirer's obligation to accept the assignment or conveyance of
the Partnership Interests hereunder shall be subject to the full and timely
satisfaction of the following conditions (all or any of which may be waived, in
whole or in part, by Acquirer in writing in its sole discretion) at or prior to
the Closing:
(a) Acquirer shall have received confirmation from the title insurer
that there have been no changes in the state of title to the Property since
April 29, 1998 (the effective date of Acquirer's title insurance binder) and
that the title insurer is issuing, at Closing, an owner's title policy
(reflecting the release of any indebtedness other than the Retained Indebtedness
and
-22-
bringing the title current to the date of Closing) without exceptions other than
the Permitted Exceptions; provided that Acquirer shall have complied with the
items identified in Exhibit 11.1(a) which are specified as Acquirer
---------------
requirements. The conditions, set forth in Exhibit 11.1(a) hereto, which are
---------------
specified thereon as Contributor requirements (pertaining to the Title Company's
conditions to issuance of the title insurance policy as required by Acquirer),
shall have been satisfied.
(b) No material licenses, permits or similar authorizations required
by Governmental Authorities relating to the ownership or operation of the
Property shall have been terminated or shall be the subject of any adverse or
potentially adverse proceedings by any Governmental Authorities.
(c) The other representations and warranties made by Contributor in
this Agreement shall be true and correct as of the Closing in all material
respects with the same force and effect as though such representations and
warranties had been made on and as of such date. Contributor shall have
performed all material covenants and obligations and complied with all
conditions, and all material obligations and agreements required by this
Agreement to be performed or complied with by it at or before the Closing.
Contributor shall have executed and delivered to Acquirer a certificate, dated
as of the date of the Closing, to the foregoing effect.
(d) Acquirer shall have received an estoppel certificate, as provided
in Section 8.3, without material changes or additional notations (other than the
work described in Section 8.7), dated not earlier than thirty (30) days prior to
-----------
the Closing, confirming the accuracy of the information set forth in Section
-------
7.1(d) and such estoppel certificate, signed by each tenant pursuant to the
- ------
Tenant Leases; provided that this condition (d) shall be deemed satisfied if (i)
-------------
such estoppel certificates shall have been delivered to Acquirer from the
tenants identified on Exhibit 11.1(d) hereto AND tenants (which include such
---------------
tenants identified on said Exhibit) occupying an aggregate of at least 75% of
the rentable area of the Improvements; and (ii) as to any Tenant Leases for
which no estoppel certificate is delivered to Acquirer as provided above,
Contributor shall have executed and delivered a warranty and indemnity in the
form of Exhibit 11.1(d)-1 hereto confirming the information in the estoppel
-----------------
certificate as required by Section 8.3. Contributor shall not be required to
execute and deliver a warranty and indemnity as described in clause (ii) above,
but if Contributor elects not to execute and deliver such warranty and
indemnity, this condition shall not be satisfied unless Acquirer receives such
estoppel certificates as described above from all tenants of the Improvements.
(e) Acquirer shall have received a written confirmation from each
Lender as set forth in Exhibit 11.1(e) hereto.
---------------
(f) Contributor shall provide estoppel certificates relating to any
covenants or cross-easement agreements affecting the Property, stating that all
such assessments that have become due and payable have been paid and obligations
performed, substantially in the form(s) attached hereto as Exhibit 11.1(f).
---------------
-23-
(g) Contributor shall have obtained and delivered to Acquirer copies
of certificates of occupancy (or the local equivalent) required for the use and
occupancy of the Property of the tenants identified on Exhibit 11.1(g) hereto,
---------------
and certificates of occupancy for all Improvements on the Property and/or all
tenants, as applicable, to the extent there have been any changes from and after
the Effective Date requiring the issuance of a new or amended certificate of
occupancy under applicable law.
(h) Acquirer shall have received an opinion of counsel to Contributor
and Contributor Affiliate and Owner, substantially in the form attached hereto
as Exhibit 11.1(h).
---------------
(i) Contributor shall have delivered to BPLP an executed Subscription
Agreement.
(j) Contributor Affiliate shall have acquired prior to Closing
hereunder all Partnership Interests of LaSalle in Owner, free of any liens,
claims, security interests or encumbrances other than liens incurred in
connection with Contributor Affiliate's purchase money financing of such
Partnership Interests to be paid off at Closing such that Acquirer takes the
Partnership Interests free of such purchase money financing. If this condition
is not satisfied because of defaults by LaSalle in its obligation to sell its
partnership interest in Owner to Contributor Affiliate in accordance with its
contractual obligations with Contributor, (i) Contributor shall diligently
enforce its remedies against LaSalle, and (ii) Acquirer will extend the Closing
Date by up to three (3) months to the extent necessary to allow Contributor to
enforce its remedies against LaSalle.
(k) The Lender under the Equitable Loan shall have executed the
Lender Consent, the Allonge and the Letter of Credit Agreement all substantially
in the forms set forth in Exhibit 11.1(k). Acquirer agrees to provide the letter
---------------
of credit to the extent required by the Letter of Credit Agreement described in
the preceding sentence and to use reasonable good faith efforts to facilitate
obtaining such documents from the Lender under the Equitable Loan at no cost or
risk beyond that provided elsewhere in this Agreement or in the documents
described in the preceding sentence.
(l) The parking garage operator of the Property shall have entered
into an agreement which shall supersede its existing parking agreement and shall
be in the form set forth in Exhibit 11.1(l) hereto.
---------------
(m) Either (i) the building owner and the parking garage operator of
the Willard Building shall have entered into an agreement reasonably
satisfactory to Acquirer to provide the parking as required by the Tenant Lease
with Walrus Corporation (doing business as the Old Ebbitt Grill), or (ii) said
parking requirement shall be deleted from said Tenant Lease.
(n) A review or audit by Acquirer's independent certified public
accounting firm, the scope of which is described on Exhibit 11.1(n) hereto,
---------------
shall not have discovered any
-24-
material inaccuracy in the financial information provided to Acquirer in
connection with this transaction.
(o) All property management and leasing contracts shall terminate at
the Closing.
(p) Contributor shall have obtained and provided at the Closing
written acknowledgments by the payees confirming the payment in full of all
amounts due or to become due to Carr Real Estate Services, Inc. (except with
respect to commissions set forth in Exhibit 7.1(b)), Julien J. Studley, Inc.,
---------------
The Oliver Carr Company, and Carr Capital Corp. with respect to the Property and
any other payees of amounts over $50,000 pursuant to Section 13.11 which are
-------------
reasonably specified by Acquirer.
B. If any condition described in Section 11.1 is not satisfied at
------------
the times required and to the satisfaction of Acquirer, in its sole and absolute
discretion, then Acquirer may, at its sole option, terminate this Agreement by
giving written notice to Contributor; provided that if any such conditions are
not satisfied Contributor at its option may extend the date for satisfaction
thereof by up to ten (10) days by giving written notice thereof to Acquirer and
if any such conditions remain unsatisfied at the end of such extension period,
Acquirer may terminate this Agreement as provided above. Upon termination of
this Agreement under this Section 11.2, the Deposit shall be returned to
------------
ACQUIRER, and neither party shall have any further rights, obligations or
liabilities under this Agreement (other than as set forth in the Access
Agreement and Article 22), except that if the failed condition is due to a
----------
material breach by Contributor of any of its representations, warranties or
obligations hereunder, then Contributor shall be liable to Acquirer for
ACQUIRER's Due Diligence and Contract Costs up to $300,000. The parties hereto
acknowledge that the failure to satisfy any of the conditions precedent in this
Agreement shall not in and of itself constitute a default by Contributor under
this Agreement, unless such failure is caused by Contributor's material breach
of any of its representations, warranties or covenants set forth herein. The
conditions set forth in Section 11.1 are for ACQUIRER's sole benefit, and
------------
ACQUIRER may, in its sole discretion, waive (conditionally or absolutely) the
fulfillment of any one or more of the conditions, or any part thereof.
Contributor shall not take or authorize, directly or indirectly, any action that
modifies or changes the circumstances upon which the conditions set forth in
Section 11.1 were deemed satisfied or waived by ACQUIRER without ACQUIRER's
- ------------
prior written consent.
C. CLOSING. Closing of the transactions contemplated hereby ("CLOSING")
-------
shall be held at the offices of Shaw, Pittman, Potts & Trowbridge, 2300 N
Street, N.W., Washington, D.C. 20037, on or about June 30, 1998, but in no event
later than July 13, 1998 (the "CLOSING DATE"), or on such earlier date as the
parties hereto may mutually agree.
D. CLOSING MATTERS.
---------------
-25-
A. At or before the Closing, Contributor shall cure (or escrow
sufficient funds at Closing with the Title Company to cure) all written notices
described in Section 7.1(f) and issued on or before the date of the Closing.
--------------
B. At or before the Closing, Contributor shall cure (or escrow
sufficient funds at Closing with the Title Company to cure) all violation
notices issued with respect to the Property, as described in Section 7.1(g).
--------------
C. At the Closing, Contributor shall, and shall cause Contributor
Affiliate to, execute and deliver to BPLP and BPLLC respectively assignments of
all of the Partnership Interests, such assignments to be substantially in the
form attached hereto as Exhibit 13.3.
------------
D. At the Closing, Contributor shall cause to be executed and
delivered to Owner a Deed in substantially the form attached hereto as Exhibit
-------
13.4.
- ----
E. At the Closing, Contributor shall provide to Acquirer a written
statement of any information needed to make the Exhibits accurate in all
material respects as of Closing.
F. Contributor shall cause full possession of the Property to remain
with Owner at the Closing, subject only to the Permitted Exceptions; including
the rights of tenants under the Tenant Leases. Acquirer shall be given full
control of Owner at Closing.
G. At the Closing, Acquirer shall execute and deliver (or cause to
be delivered) to Contributor the Acquirer Closing Documents and Contributor and
Contributor Affiliate shall execute and deliver (or cause to be delivered) to
Acquirer the Contributor Closing Documents, and each shall deliver (or cause to
be delivered) to the other such other documents, affidavits and certificates as
may be required by this Agreement.
H. Contributor shall deliver all keys and master keys to all locks
located on the Property, properly tagged for identification, as well as
combinations, card keys and cards for the security systems, if any.
I. BPLP and Contributor shall execute and deliver an Amendment to
the BPLP Partnership Agreement at Closing, substantially in the form attached
hereto as Exhibit 13.9.
------------
J. At the Closing, Contributor shall execute and deliver to the
Title Company, affidavits and indemnity agreements, as required by the Title
Company, substantially in the form attached hereto as Exhibit 13.10.
-------------
K. (a) Acquirer agrees to pay at the Closing the respective amounts
to the persons as specified in Exhibit 13.11, for costs related to the Property
-------------
or this transaction; provided that (i) the aggregate amount of such payments
shall equal $4,850,000, (ii) the persons
-26-
set forth in said Exhibit are not third party beneficiaries of this Agreement,
and (iii) Acquirer shall have no liability with respect to any amounts or
obligations that may be due to said persons set forth in said Exhibit other than
to pay the aforesaid amounts if and when the Closing occurs, and in no event has
Acquirer assumed any direct obligation to any of such persons.
At the Closing, Contributor shall have the right to
designate any costs and expenses relating to the Property or to this transaction
(in addition to the costs payable by Acquirer pursuant to Section 13.11(a)
above) that it would like Acquirer to fund at the Closing, and Acquirer agrees
that it will pay such costs and expenses at the Closing, provided that the
aggregate amount that Acquirer is obligated to fund under this Section 13.11(b),
when added to the amounts funded by Acquirer pursuant to Sections 7.1(f),
7.1(g), 8.7, 14.1, 18 and 19 of this Agreement, shall not exceed the sum of
$3,800,000. All sums paid by Acquirer pursuant to this Section 13.11(b) shall be
credited towards the Exchange Value as set forth in Section 2.2 hereof.
Notwithstanding the foregoing, Acquirer is not assuming any liability to the
payees of any such costs or expenses and no such payee shall be a third-party
beneficiary of this Agreement.
L. The Closing will be effected through a closing instruction to be
mutually reasonably agreed upon. The parties shall use reasonable good faith
efforts to facilitate the Closing and the settlement (immediately before the
Closing hereunder) under the Short Term Loan and Contributor Affiliate's
purchase money financing; provided that in connection therewith Acquirer shall
not be required to incur any cost or risk beyond that provided elsewhere in this
Agreement.
M. ADJUSTMENTS.
-----------
A. The following items of expense shall be adjusted as of midnight
of the day immediately preceding the Closing:
(a) Real estate taxes and personal property taxes. Assessments, if
any, for Improvements completed prior to the Closing, whether assessment
therefor has been levied or not, including any business improvement district
assessments, shall be prorated at the Closing.
(b) Utility charges. If there are meters on the Property measuring
the consumption of utilities which are paid by the Owner and not by any tenant,
Contributor shall, prior to the Closing, cause such meters to be read, and shall
pay promptly all utility bills for which it is liable. Owner shall be liable for
and shall pay all utility bills for services relating to the period from and
after the Closing. To the extent required, reconciliation of such charges under
the terms of the Tenant Leases will be done as soon as possible after Closing.
(c) All charges payable with respect to any Contracts relating to the
Property which continue in effect after the Closing and all other costs and
expenses of operating the Property which are customarily prorated in similar
transactions.
-27-
(d) To the extent that any tenant is entitled to any rebate,
concession, deduction or offset under its Tenant Lease, such entitlement shall
be included as a closing adjustment. Further, to the extent that any tenant is
entitled to future tenant improvements work to be paid for by the landlord under
such tenant's Tenant Lease (other than New Tenant Leases), the amount of
landlord's liability for such work shall be included as a closing adjustment by
credit towards the Exchange Value. Monthly rent and tenant charges (for real
estate taxes, insurance, utilities, common area maintenance and building
expenses) payable by tenants shall be adjusted as of 12:01 a.m. on the day of
the Closing, and any such rent or tenant charges prepaid to the Owner
(including, a pro rata portion of the rent and tenant charges paid for the month
--- ----
in which the Closing occurs) and other credits for the account of tenants shall
be paid to Acquirer by credit towards the Exchange Value. Adjustments will be
made on a reasonable basis for estimated operating expenses paid by Tenants as
additional rent. Rent and such tenant charges which are due but uncollected as
of the Closing shall not be adjusted, but, with respect to tenants whose rent is
no more than six (6) months in arrears, provided Contributor provides in a
timely manner all back-up materials, reconciliations and other information
requested by tenants with respect thereto, Acquirer shall remit promptly to or
on behalf of Contributor any such amounts actually paid by such tenants to
Acquirer (provided that such amounts shall be in excess of the then current rent
and other charges due) within six (6) months after the Closing. Acquirer's
obligations with respect to such delinquent rent and other charges shall be
limited to billing the applicable tenant therefor on no more than six (6)
occasions. Notwithstanding anything to the contrary in the foregoing,
Contributor retains all rights against former tenants whose Tenant Leases have
expired or have been terminated and possession discontinued prior to the
Closing; provided, however, in no event shall Contributor be entitled after the
Closing to institute any litigation or other judicial proceedings against any
tenant that is in occupancy at the Property as of the Closing with respect to
any obligations or liabilities of such tenant relating to the Property or
arising out of such tenant's occupancy thereof. Acquirer shall have no further
obligation or liability to Contributor under this subsection after the
expiration of said six (6) month period. No adjustment shall be made with
respect to percentage or overage rent. Except as otherwise adjusted, Contributor
shall remain responsible and liable to Acquirer to refund to tenants (or
reimburse Acquirer for any refunds to tenants of) any excess payments made by
tenants for real estate taxes (including any arising as a result of tax
appeals), insurance, utility, common area maintenance operating expenses and
building expenses applicable to the period prior to the Closing, such
responsibility and liability to survive Closing until such time as all audit
rights of tenants under Tenant Leases with respect to periods prior to the
Closing shall have expired and all amounts owing to tenants as a result of any
such audits shall have been fully paid by Contributor to the applicable tenant
(directly or by reimbursement to Acquirer). The parties agree that in the event
that any tax appeals relating to the Property, whether now existing or hereafter
filed, results in any rebate of real property or other taxes paid for the
Property, such rebate (after deducting therefrom all costs and expenses of
procuring the same) shall be prorated as of the Closing between Contributor and
Acquirer based on respective periods of ownership.
(e) All prepaid rentals, tenant security deposits, whether cash or
non-cash (including security deposits for tenants who owe rent or other charges
as of the Closing), together
-28-
with all interest required to be paid thereon which has accrued through the
Closing, shall be delivered to BPLP at the Closing. Promptly following the
Closing, Contributor shall cause any tenants who have posted letters of credit
as security deposits issued to any party other than Owner to have such security
deposits amended or re-issued, if necessary, so that they run to the benefit of
Owner, if applicable, as landlord under the Tenant Leases.
(f) Association Assessments. Prepaid association assessments shall be
adjusted as of the Closing by an increase in the Equity Value. Association
assessments which are due and payable as of the Closing shall be paid by
Contributor or allowance therefor made at Closing by a credit towards the
Exchange Value.
(g) Except as otherwise provided in this Agreement, Acquirer shall be
solely responsible for the following: (i) all costs necessary to provide
Acquirer with the required new owner's title policy, as required, for the
Property, including, without limitation, all expenses of examination of title,
conducting settlement, escrow fees, title clearance, title insurance
commitments, endorsements (including, without limitation, zoning, comprehensive
and non-imputation) and premiums; and (ii) all costs of preparation of ALTA
survey for the Property. Acquirer and Contributor shall each pay their
respective legal fees and expenses incurred in connection with the negotiation
of this Agreement and all related documents, and in addressing each such party's
tax and securities issues. Acquirer shall pay the costs of conducting all of its
environmental tests and studies of the Property. Contributor shall pay all costs
associated with (i) repaying any indebtedness secured by the Property except for
the Retained Indebtedness; and (ii) any gains taxes, income taxes or similar
taxes owing as a result of the transactions contemplated hereby. Amounts payable
by Contributor as described above in this section may be funded by Acquirer as
provided in Section 13.11.
-------------
(h) Any costs of state, county, city, local, municipal and township
recording and transfer taxes with respect to the assignment and contribution to
Acquirer of the Partnership Interests and conveyance of the Property shall be
paid by Acquirer.
(i) Notwithstanding any of the foregoing to the contrary, in the
event the net adjustments made pursuant to this Article 14 result in additional
----------
sums being payable to Contributor, the Equity Value shall be increased by such
amount, and in the event the net adjustments made pursuant to this Article 14
----------
result in additional sums being payable by Contributor, the Equity Value shall
be decreased accordingly.
B. DEFAULT BY ACQUIRER. If this transaction fails to close as a result of
-------------------
a material default by the Acquirer with respect to any of the terms of this
Agreement, and such material default continues for a period of ten (10) days
after Contributor notifies BPLP in writing of such default, Contributor's sole
and exclusive remedy for such material default shall be the right to cancel and
terminate this Agreement and receive and retain the Deposit. Unless Contributor
waives the Acquirer's default in writing within five (5) days after the
expiration of the 10-day period specified in the preceding sentence, or such
default is cured within such 10-day period,
-29-
this Agreement shall automatically terminate effective fifteen (15) days after
the notice of default is given without the necessity of further notice being
given. Upon such termination, each party shall be released from all duties or
obligations contained herein and the Title Company shall immediately pay the
Deposit to Contributor as liquidated damages, it being understood and agreed
that Contributor is hereby releasing and/or waiving any right it might have to
either specifically enforce this Agreement or to sue for damages. Contributor
has agreed to this liquidated damage provision because of the difficulty of
ascertaining Contributor's actual damages given the uncertainties of the real
estate market, fluctuating property values and differences of opinion with
respect to such matters.
C. DEFAULT BY CONTRIBUTOR. If any of the representations and warranties
----------------------
made by Contributor in this Agreement are inaccurate or incorrect in any
material respect on the date made or deemed made, or if Contributor fails to
perform its covenants, obligations or agreements under this Agreement and such
failure is not cured on or before the earlier of fifteen (15) days after written
notice by Acquirer to Contributor or the Closing Date, Acquirer shall have the
right, at its sole option, to: (i) terminate this Agreement, whereupon the
Deposit shall be returned to Acquirer, Contributor shall reimburse Acquirer on
demand for all of Acquirer's Due Diligence and Contract Costs up to $300,000 and
neither party shall have any further right or liability to the other under this
Agreement except as may be specifically set forth in the Access Agreement and
Article 22; and/or (ii) pursue any legal or equitable remedies to which Acquirer
- ----------
may be entitled on account of the foregoing, including, without limitation,
specific performance.
D. INDEMNIFICATION.
---------------
A. Contributor hereby agrees to indemnify and hold Acquirer harmless
from and against: (i) any loss, cost, liability or damage suffered or incurred
by Acquirer because any representation or warranty by Contributor shall be false
or misleading in any material respect on the date made or deemed made; (ii) any
loss, cost, liability or damage suffered or incurred by Acquirer because of
Contributor's failure to timely perform any of its covenants, obligations or
agreements under this Agreement; (iii) any and all liabilities, claims, demands,
losses, suits and judgments of any kind or nature (except those items which
under the terms of this Agreement specifically become obligations of Acquirer),
brought by third parties against Acquirer, Owner or the Property and based on
events occurring at or before the Closing and which are in any way related to
the ownership, maintenance or operation of the Property, and all expenses
related thereto, including, but not limited to, court costs and attorneys' fees;
(iv) any and all liabilities, claims, demands, losses, suits and judgments of
any kind or nature brought by LaSalle or any affiliate of LaSalle or any person
claiming by through or under LaSalle or any affiliate of LaSalle which are in
any way related to the Owner, the transactions contemplated by this Agreement,
or the ownership, maintenance or operation of the Property, and all expenses
related thereto, including, but not limited to, court costs and attorneys' fees;
and (v) all reasonable costs and expenses (including reasonable attorneys' fees)
incurred by Acquirer in connection with any action, suit, proceeding, demand,
assessment or judgment incident to any of the matters indemnified against in
this Section 17.1. As to any claim, action or other matter subject to the
------------
-30-
foregoing indemnity, Contributor shall assume the defense thereof with counsel
acceptable to Acquirer. Such claim, action or other matter shall not be settled
without the approval of both Acquirer and Contributor.
B. Acquirer hereby agrees to indemnify and hold Contributor harmless
from and against any loss, cost, liability or damage to person or the
Improvements at the Property suffered or incurred by Contributor as a result of
Acquirer's entry onto the Property prior to Closing, and all reasonable costs
and expenses (including reasonable attorneys' fees) incurred by Contributor in
connection with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this Section 17.2.
------------
Further, provided Closing occurs hereunder, Acquirer hereby agrees to indemnify
and hold Contributor harmless from and against: (i) any loss, cost, liability or
damage suffered or incurred by Contributor because any representation or
warranty by Acquirer shall be false or misleading in any material respect on the
date made or deemed made; (ii) any loss, cost, liability or damage suffered or
incurred by Contributor because of Acquirer's failure to timely perform any of
its covenants, obligations or agreements under this Agreement; (iii) any and all
liabilities, claims, demands, losses, suits and judgments of any kind or nature,
brought by third parties and based on events occurring subsequent to the Closing
and which are in any way related to the ownership, maintenance or operation of
the Property, and all expenses related thereto, including, but not limited to,
court costs and attorneys' fees; and (iv) all reasonable costs and expenses
(including reasonable attorneys' fees) incurred by Contributor in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Section 17.2. As to any claim,
------------
action or other matter subject to the foregoing indemnity, Acquirer shall assume
the defense thereof with counsel acceptable to Contributor. Such claim, action
or other matter shall not be settled without the approval of both Acquirer and
Contributor.
C. DAMAGE, DESTRUCTION OR CONDEMNATION.
-----------------------------------
A. In the event of any loss, damage or destruction to the Property
or any part thereof prior to Closing that would cost $500,000 or less to repair
or replace as estimated by a person or company jointly agreed to by Acquirer and
Contributor, the Equity Value shall be reduced by the estimated cost of such
repairs, the transaction contemplated herein shall be consummated without
further reduction of the Equity Value and Contributor shall receive such
insurance proceeds as are paid on the claim of loss. Notwithstanding the
foregoing, at Acquirer's option, Acquirer may elect to receive all such
insurance proceeds, and in such case, Contributor shall assign to Acquirer its
right to receive said proceeds (and credit Acquirer with any deductible related
thereto) and there shall be no reduction in the Equity Value.
B. If the estimated cost of repairing or replacing any loss, damage
or destruction to the Property exceeds $500,000 as estimated as aforesaid,
Acquirer shall have the right to terminate this Agreement and all rights,
obligations and liabilities of the parties hereto shall thereupon terminate. If,
however, Acquirer elects to consummate the acquisition of the Property, the
Equity Value shall be reduced by the estimated cost of such repairs, the
transaction
-31-
contemplated herein shall be consummated without further reduction of the Equity
Value, and Contributor shall receive such insurance as is paid on the claim of
loss. Notwithstanding the foregoing, at Acquirer's option, Acquirer may elect to
receive all such insurance proceeds, and in such case, Contributor shall assign
to Acquirer its and Owner's right to receive said proceeds (and credit Acquirer
with any deductible related thereto) and there shall be no reduction in the
Equity Value.
C. In the event that any condemnation proceedings are instituted, or
notice of intent to condemn is given, with respect to the Property or any
portion of the Property, Contributor shall promptly notify Acquirer thereof. In
the event that such proposed condemnation could or would have an effect on the
Property or on the use and operation of the Property (the "CONDEMNATION
CONSEQUENCES") estimated by Acquirer to be $500,000 or less, the Equity Value
shall be reduced by the estimated Condemnation Consequences, the transaction
contemplated herein shall be consummated without further reduction of the Equity
Value, and Contributor shall receive any condemnation award or compensation.
Notwithstanding the foregoing, at Acquirer's option, Acquirer may elect to
receive such condemnation award or compensation, and in such case, Contributor
shall assign to Acquirer its right to receive such award or compensation and
there shall be no reduction in the Equity Value.
D. If the value of the Condemnation Consequences is estimated by
Acquirer to be an amount which exceeds $500,000, Acquirer shall have the right
to terminate this Agreement and all rights, obligations and liabilities of the
parties hereto shall thereupon terminate. If, however, Acquirer elects to
consummate the acquisition of the Property, the Equity Value shall be reduced by
the estimated value of the Condemnation Consequences, the transaction
contemplated herein shall be consummated without further reduction of the Equity
Value, and Contributor shall receive such condemnation award or compensation as
is paid on account of the condemnation. Notwithstanding the foregoing, at
Acquirer's option, Acquirer may elect to receive such condemnation award or
compensation, and in such case, Contributor shall assign to Acquirer its right
to receive such award or compensation and there shall be no reduction in the
Equity Value.
E. In the event of termination of this Agreement pursuant to this
Article 18, the Deposit shall be returned to Acquirer and all rights,
- ----------
obligations and liabilities of the parties hereunder shall be released and
discharged other than the obligations set forth in the Access Agreement and
Article 22.
- ----------
F. Contributor shall not agree to or accept any compromise or
condemnation award without obtaining Acquirer's written approval thereof. In the
event Contributor is entitled to receive a compromise or condemnation award
under the terms of this Agreement, Acquirer shall not agree to or accept such
compromise or condemnation award without Contributor's written approval thereof.
For purposes of this Article 18, a condemnation shall be deemed to include any
----------
governmental action which could limit or render inconvenient the current access
to the Property.
-32-
G. BROKERS. Contributor has retained Carr Capital Corporation ("BROKER")
-------
to act as its broker in connection with the transaction contemplated hereby and
shall be responsible for all compensation due to Broker, pursuant to the terms
of a separate agreement. Except as stated in the immediately preceding sentence,
Acquirer and Contributor each represent and warrant to the other that they have
not engaged, and have no knowledge that the other party has engaged, any broker,
finder or other agent which may assert or be entitled to assert a claim for a
commission, finder's fee or other compensation resulting from the transactions
contemplated by this Agreement. Except as set forth in Section 13.11, each party
-------------
agrees to indemnify the other party against claims for any and all fees or
commissions of any broker or finder claimed to be due or payable in connection
with the contribution of the Property to Acquirer based upon such broker's or
finder's dealings with the indemnifying party.
H. MISCELLANEOUS.
-------------
A. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given/received: (i) on the date delivered if delivered personally; (ii) the next
Business Day after deposit with a recognized overnight courier service when
marked for delivery on the next Business Day; (iii) three (3) days after mailing
if sent by registered or certified United States mail, properly addressed and
postage pre-paid; or (iv) upon completion of transmission (which is confirmed by
telephone or a statement generated by the transmitting machine) if sent by
facsimile to compatible equipment in the possession of the recipient, and
addressed to the party for whom it is intended at the address hereinafter set
forth:
(A) IF TO CONTRIBUTOR:
Square 224 Associates
Suite 410
Metropolitan Square
-33-
655 15th Street, N.W.
Washington, D.C. 200036
Attn: Mr. Richard W. Carr
Fax: 202-638-6195
Phone: 202-638-6178
WITH A COPY TO:
Hunton & Willliams
-34-
1900 K Street, N.W.
Washington, D.C. 20006
Attn: John M. Ratino, Esq.
Fax: 202-778-2201
Phone: 202-955-1500
(B) IF TO ACQUIRER:
c/o Boston Properties, Inc.
8 Arlington Street
Boston, MA 02116
-35-
Attn: William J. Wedge, Esq.
Fax: 617-536-4233
Phone: 617-859-2600
WITH A COPY TO:
Boston Properties, Inc.
500 E Street, S.W.
Suite 200
-36-
Washington, D.C. 20024
Attn: Raymond A. Ritchey
Fax: 202-488-8644
Phone: 202-646-7000
AND TO:
Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, D.C. 20037
-37-
Attn: Sheldon J. Weisel, Esq.
Fax: 202-663-8007
Phone: 202-663-8000
Either party may designate a change of address by written notice to the
other in accordance with the provisions set forth above, which notice shall be
given at least ten (10) days before such change of address is to become
effective.
A. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the respective personal representatives, heirs,
successors and assigns of the parties. Contributor shall not have any right to
assign its rights or obligations under this Agreement without the prior written
consent of Acquirer which consent shall not be unreasonably withheld with
respect to a pledge to secure the Lender under the Short Term Loan and
Contributor Affiliate's purchase money financing for its Partnership Interest.
Acquirer shall have no right to assign its rights or obligations under this
Agreement without the prior written consent of Contributor, which consent shall
not be unreasonably withheld. Any assignment or attempted assignment of this
Agreement or the rights and obligations hereunder other than strictly in
accordance with the provisions of this Section 20.2 shall be null and void and
------------
of no force or effect. Notwithstanding the foregoing, any assignment made in
accordance with this Section 20.2 shall not release any of the parties hereto
------------
from any liabilities or obligations hereunder.
B. SURVIVAL. The representations and warranties set forth in
Sections 6.1, 6.2 and 10.1(a) through (j) and in Article 19 of this Agreement,
- ------------ --- ------------------- ----------
and any indemnification related to any of the foregoing (including, without
limitation, any indemnification pursuant to Section 17 hereof), and the
----------
indemnifications in Clauses 17.1(iii) and (iv) and 17.2(iii) (and related costs
----------------------------------------
under Clauses 17.1(v) and 17.2(iv)) shall survive Closing indefinitely, subject
-----------------------------
to any applicable statute of limitations. The parties' responsibility and
liability pursuant to Section 14.1(d) shall survive Closing for the periods
---------------
specified in such Section. All other representations, warranties, covenants,
agreements and indemnities set forth in or made pursuant to this Agreement and
any indemnification related thereto under Section 17 hereof or otherwise shall
----------
remain operative, and shall survive the Closing under this Agreement, only with
respect to claims made in writing not
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later than one (1) year after the Closing. In addition to all rights which
Acquirer may have against Contributor or Contributor Affiliate, Acquirer shall
have the right to set-off any amounts owed by Contributor or Contributor
Affiliate on account of a breach of this Agreement against cash amounts payable
to them at Closing and/or prorata against any dividends or distributions payable
to Contributor any successor holders of the Units issued pursuant to this
Agreement; provided that in the event of any dispute with respect to any set-off
of dividends or distributions, the offset funds shall be placed in a third party
escrow account pending resolution of the dispute.
C. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the District of Columbia, excluding conflicts of
laws principles.
D. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument; provided, however, in no
event shall this Agreement be effective unless and until signed by all parties
hereto.
E. POST CLOSING COOPERATION. Following the Closing and upon
reasonable notice by Contributor, Acquirer covenants and agrees to provide (or
cause to be provided) to the representatives, employees, counsel, accountants
and other authorized agents of Contributor reasonable access, during normal
business hours, to all books and records and other materials with respect to the
Property, including, without limitation, due diligence materials delivered by
Contributor (or its representatives) to Acquirer under this Agreement relating
to periods prior to Closing or any obligation of Contributor under this
Agreement (the "RECORDS AND MATERIALS") in connection with the preparation of
tax returns and financial reporting matters, audits and other business purposes.
In connection therewith, Acquirer covenants and agrees to permit Contributor and
its representatives to examine and copy the Records and Materials to the extent
reasonably requested and at the sole expense of Contributor, provided such
actions do not unreasonably disrupt the normal course of business of Acquirer.
F. RISK OF LOSS. Subject to the provisions of Article 18, the risk
of loss or damage from fire or other casualty until the Closing is assumed by
Contributor and Owner.
G. FURTHER ASSURANCES. Contributor agrees that it will, at any time
and from time to time after the Closing, upon request of Acquirer, do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances as may be required for the better assigning,
transferring, granting, assuring and confirming to Acquirer, or to its
successors and assigns, or for aiding and assisting in collecting and reducing
to possession, any or all of the assets or property being contributed to
Acquirer pursuant to this Agreement. Contributor agrees to grant Acquirer, and
its agents and certified public accountants, access during normal business hours
to Contributor's books and records with respect to the Property for the purpose
of reviewing and auditing the same for a period of one (1) year following the
Closing Date.
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H. RECITALS; EXHIBITS. Each and all of the recitals set forth above
and the exhibits attached hereto are hereby incorporated into this Agreement by
reference.
I. RULES OF CONSTRUCTION. Section captions used in this Agreement
are for convenience only and shall not affect the construction of the Agreement.
All references to "Articles" and "Sections," without reference to a document
other than this Agreement are intended to designate articles and sections of
this Agreement, and the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section, unless specifically designated otherwise. The use of the term
"including" shall mean in all cases "including but not limited to," unless
specifically designated otherwise. No rules of construction against the drafter
of this Agreement shall apply in any interpretation or enforcement of this
Agreement, any documents or certificates executed pursuant hereto, or any
provisions of any of the forgoing.
J. TIME OF ESSENCE. Time is important to all parties in the
performance of this Agreement, and the parties have agreed that strict
compliance is required as to any date set out in this Agreement.
K. PRORATION OF DISTRIBUTIONS. With respect to Units issued pursuant
to this Agreement, the quarterly distributions distributed subsequent to the
issuance of such Units shall be prorated on a per diem on the basis of the
number of days in such quarter occurring from and after the Closing.
L. ENTIRE AGREEMENT. This Agreement and the exhibits attached hereto
----------------
and thereto contain the entire agreement between the parties relating to the
contribution of the Property, all prior negotiations between the parties,
including, without limitation, any letter of intent, access agreement and
confidentiality agreement (including all amendments or modifications thereof),
are merged in this Agreement, and there are no promises, agreements, conditions,
undertakings, warranties or representations, oral or written, express or
implied, between them other than as herein set forth. No change or modification
of this Agreement shall be valid unless the same is in writing and signed by the
parties hereto. No waiver of any of the provisions of this Agreement and other
agreements referred to herein shall be valid unless in writing and signed by the
party against whom it is sought to be enforced.
M. CONFIDENTIALITY.
---------------
A. Except as provided otherwise in this Section 22.1, Acquirer and
------------
Contributor, for the benefit of each other, hereby agree that neither of them
will release or cause or permit to be released to the public any press notices,
publicity (oral or written) or advertising promotion relating to, or otherwise
publicly announce or disclose or cause or permit to be publicly announced or
disclosed, in any manner whatsoever, the terms, conditions or substance of this
Agreement or the transactions contemplated herein, without first obtaining the
consent of the other party hereto which shall not be unreasonably withheld.
Contributor, being aware that
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BPI's securities are traded on the New York Stock Exchange, acknowledges that
Acquirer and BPI may be compelled by legal requirements to issue a public press
release announcing that it has closed under this Agreement and stating the
material terms hereof. Acquirer agrees to send a copy of such press release
directly to Contributor at least 24 hours prior to the time when Acquirer issues
such press release to the public following the Closing; and Contributor consents
to the dissemination of such press release and to all such additional statements
and disclosures Acquirer may reasonably make in responding to inquiries arising
as a result of any such press release. Contributor likewise consents to any
disclosure of this Agreement which Acquirer reasonably believes is required by
law. Acquirer and Contributor will reasonably cooperate with respect to
communications with title companies, the recorder of deeds, tenants and others
as reasonably appropriate to facilitate the transactions contemplated hereby and
an efficient transition in management.
B. It is understood that the foregoing shall not preclude any party from
discussing the substance or any relevant details of the transactions
contemplated in this Agreement on a confidential basis with such party's spouse
or any of its attorneys, accountants, professional consultants, financial
advisors, rating agencies, or potential lenders, as the case may be, or prevent
any party hereto from complying with applicable laws, including, without
limitation, governmental regulatory, disclosure, tax and reporting requirements.
C. Acquirer shall indemnify and hold Contributor harmless, and
Contributor shall indemnify and hold Acquirer and the affiliates of Acquirer
harmless, from and against any and all actual direct claims, demands, causes of
action, losses, damages, liabilities, costs and expenses (including, without
limitation, attorneys' fees and disbursements) suffered or incurred by the other
party and proximately caused by a breach by Acquirer or Contributor, as the case
may be, of the provisions of this Article 22; but this Section 22.3 will not
---------- ------------
entitle either Acquirer, Contributor, Contributor Affiliate, Acquirer's
affiliates or Contributor's affiliates, or any other person or entity, to
recover consequential damages.
D. In addition to any other remedies available to Contributor and
Acquirer, Contributor and Acquirer shall each have the right to seek equitable
relief, including, without limitation, injunctive relief or specific
performance, against the other party or its representatives in order to enforce
the provisions of this Agreement.
E. Notwithstanding any other provision of this Agreement, the provisions
of this Article 22 shall survive the termination of this Agreement for one (1)
year following the Effective Date and shall survive Closing for one (1) year
following the Closing.
[Signature Page to Follow]
[Remainder of Page Intentionally Left Blank]
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SIGNATURE PAGE TO CONTRIBUTION AGREEMENT
(Metropolitan Square)
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
WITNESS:
SQUARE 224 ASSOCIATES, a District of
Columbia limited partnership
By the Oliver Carr Company,
a District of Columbia corporation,
its sole General Partner
_________________________
-42-
By: /s/ Oliver T. Carr, Jr.
Name: ____________________________
Name: Oliver T. Carr, Jr.
Title: Chairman
WITNESS:
THE OLIVER CARR COMPANY,
a District of Columbia corporation
__________________________________
By: /s/ Oliver T. Carr, Jr.
Name: ____________________________
Name: Oliver T. Carr, Jr.
Title: Chairman
-43-
[Signature Page Follows]
[Remainder of Page Intentionally Left Blank]
-44-
SIGNATURE PAGE TO CONTRIBUTION AGREEMENT (continued)
(Metropolitan Square)
WITNESS:
BOSTON PROPERTIES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Boston Properties, Inc.,
its General Partner
___________________________________
By: /s/ Raymond A. Ritchey
----------------------
Name:______________________________
Name: Raymond A. Ritchey
------------------
Title: Executive Vice President
------------------------
-45-
WITNESS:
BOSTON PROPERTIES LLC,
a Delaware limited liability company
By: Boston Properties Limited Partnership,
its Managing Member
By: Boston Properties, Inc.,
its General Partner
_________________________
By: /s/ Raymond A. Ritchey
----------------------
Name:__________________________
Name: Raymond A. Ritchey
------------------
-46-
Title: Executive Vice President
------------------------
-47-
EXHIBITS:
---------
Exhibit A Description of Parcel
Exhibit 1(a) Access Agreement
Exhibit 1(d) Acquirer Closing Documents
Exhibit 1(p) Contributor Closing Documents
Exhibit 1(t) Environmental Reports
Exhibit 1(al) Permitted Exceptions
Exhibit 1(am) Schedule of Personal Property
Exhibit 1(ao) Form of Registration Rights Agreement
Exhibit 1(as) Contributor's Subscription Agreement/Investor
Questionnaire
Exhibit 1(at) Form of Tax Protection Agreement
Exhibit 2.4-1 List of Contributor's direct or indirect Equity Holders
Exhibit 2.4-2 Form of Subsequent Subscription Agreement/Investor
Questionnaire
Exhibit 2.6 Form of Loan Assumption Agreement(s)
Exhibit 3.1 Escrow Agreement
Exhibit 4.5 Information Delivered by Contributor
Exhibit 6.1 Security Interests on Partnership Interests
Exhibit 7.1(a) Schedule of Contracts
Exhibit 7.1(b) Schedule of Leasing Commissions
Exhibit 7.1(c) Owner's Financial Information
Exhibit 7.1(d)(i)-(v) Schedules of Tenant Leases and Related Matters
Exhibit 7.1(f) Structural Defects
Exhibit 7.1(j) Threatened or Pending Disputes, Proceedings, Suits or
Litigation
Exhibit 7.1(m) Subtenants Consented to by Owner
Exhibit 7.1(r) Certain Factual Documents
Exhibit 8.3 Form of Tenant Estoppel Certificate
Exhibit 8.5 Contracts and Amounts to be Assumed by Acquirer
Exhibit 8.7 Construction by Owner
Exhibit 8.8 Leases and Lease Amendments in Process
Exhibit 10.2 Form of Opinion of Counsel to Acquirer
Exhibit 11.1(a) Conditions to Certain Title Insurance Endorsements
Exhibit 11.1(d) Major Tenants (required Estoppel Certificates)
Exhibit 11.1(d)-1 Form of Contributor's Warranty in Lieu of Tenant
Estoppels
Exhibit 11.1(e) Forms of Lender Certifications
Exhibit 11.1(f) Form of Estoppel Certificate(s) for easements and
covenants
Exhibit 11.1(g) Required Certificates of Occupancy (not delivered before
Effective Date)
Exhibit 11.1(h) Form of Opinion of Counsel to Contributor and Contribute
Affiliate
Exhibit 11.1(k) Form of Equitable consent documents (including interests
only)
Exhibit 11.1(l) Terms of Parking Garage Agreement
Exhibit 11.1(n) Scope of Audit
Exhibit 13.3 Form of Assignment of Partnership Interests
Exhibit 13.4 Form of Deed
Exhibit 13.9 Form of Amendment to BPLP Partnership Agreement
Exhibit 13.10 Form of Title Company Affidavit (including non-
imputatioetc.)
Exhibit 13.11 Transaction Costs up to $4,850,000 Payable by Acquirer