CONTRIBUTION AGREEMENT
Between
CORPORATE OFFICE PROPERTIES TRUST AND
CORPORATE OFFICE PROPERTIES, L.P.,
COLLECTIVELY, BUYER
and
THE SELLERS LISTED ON THE
SIGNATURE PAGE TO THIS AGREEMENT
(Constellation Real Estate Portfolio/
Completed Properties)
Dated as of May 14, 1998
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISK OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
TABLE OF CONTENTS
Page
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1. DEFINITIONS.............................................................3
2. ASSIGNMENT AND TRANSFER OF INTERESTS...................................10
3. CONSIDERATION..........................................................10
4. SHARES; INVESTOR MATERIALS; PROXY STATEMENT............................13
5. REIT BOARD OF TRUSTEES; CERTAIN REIT OPERATIONS; RELATED
TRANSACTIONS..........................................................14
6. CLOSING................................................................16
7. SELLER'S DELIVERIES....................................................19
8. INSPECTION PERIOD......................................................19
9. TITLE AND SURVEY MATTERS...............................................21
10. REPRESENTATIONS AND WARRANTIES AS TO PROJECTS.........................22
11. REPRESENTATIONS AS TO INTERESTS/SECURITIES AND RELATED MATTERS........27
12. COVENANTS OF SELLER...................................................31
13. ENVIRONMENTAL WARRANTIES AND AGREEMENTS...............................35
14. ADDITIONAL CONDITIONS PRECEDENT TO CLOSING............................38
15. LEASES-CONDITIONS PRECEDENT AND WARRANTIES WITH RESPECT THERETO.......40
16. CLOSING DELIVERIES....................................................42
17. PRORATIONS AND ADJUSTMENTS............................................47
18. CLOSING EXPENSES......................................................50
19. DESTRUCTION, LOSS OR DIMINUTION OF PROJECTS...........................50
20. DEFAULT...............................................................52
21. SUCCESSORS AND ASSIGNS................................................54
22. LITIGATION............................................................55
23. NOTICES...............................................................55
24. BENEFIT...............................................................56
Page
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25. LIMITATION OF LIABILITY...............................................56
26. BROKERAGE.............................................................57
27. REASONABLE EFFORTS....................................................57
28. MISCELLANEOUS.........................................................57
THIS CONTRIBUTION AGREEMENT is made and entered into as of this 14th day of
May, 1998 (the "Contract Date"), by and between the entities listed on the
signature page to this Agreement as Sellers and also identified on Exhibit
"Sellers" attached hereto (collectively, the "Sellers" and each individually, a
"Seller"), Corporate Office Properties, L.P., a Delaware limited partnership
("COPLP"). and Corporate Office Properties Trust, a Maryland real estate
investment trust ("REIT") (COPLP and the REIT, hereinafter collectively the
"Buyer").
Background
The Sellers, except for CPI (as defined below) only as to Tred Avon (as
defined below), own one hundred percent (100%) of the Interests (the
"Interests") of the entities and limited liability companies identified on
Exhibit "Entities" (the "Entities"). Each Entity (except Tred Avon) is the
record and beneficial owner of its respective Project or Projects (as defined
below) identified on Exhibit "Projects", and CPI is the record and beneficial
owner of fee simple title to the Project known as Brandon (defined below). Tred
Avon is the record and beneficial owner of the Tred Avon Loan Documents (defined
below). The Interest of each Seller (which is such Seller's full capital,
profits, voting and other interest in the subject Entity) in each Entity is set
forth on Exhibit "Sellers".
The Projects include the Land and those certain buildings (the "Buildings"),
each containing that number of net rentable square feet, as specified on Exhibit
"Projects" attached hereto. The Buildings are leased by the Entities (except
Tred Avon) and CPI as to Brandon, to Tenants (as defined below) for office and
retail purposes. Each of the Buildings is commonly known by the respective
street address in the cities, counties and states described on Exhibit
"Projects" attached hereto. For purposes of this Agreement the term, "Projects,"
shall be deemed to mean, on a collective basis with respect to each Entity or
Seller, as applicable: (i) all of the parcels of land identified on Exhibit
"Projects" attached hereto (collectively, the "Land"), together with all rights,
easements and interests appurtenant thereto, including, but not limited to, any
streets or other public ways adjacent to such Land and any water or mineral
rights owned by, or leased to, such Entity or CPI as to Brandon; (ii) all
improvements located on the Land, including, but not limited to, the Buildings,
and all other structures, systems, and utilities associated with, and utilized
by, such Entity, or CPI as to Brandon in the ownership and operation of the
Buildings (all such improvements being collectively referred to herein as the
"Improvements"), but excluding improvements, if any, owned by Tenants of such
applicable Buildings; (iii) all personal property owned by such Seller or
Entity, or CPI as to Brandon and either (A) located on or in the Land or
Improvements, or (B) used in connection with the operation and maintenance of
the Project (collectively, the "Personal Property"); (iv) all building
materials, supplies, hardware, carpeting and other inventory owned by such
Entity or Seller, or CPI as to Brandon and maintained in connection with such
Entity's or CPI's ownership and operation of the Land and/or Improvements
(collectively, the "Inventory"); (v) all trademarks, tradenames, development
rights and entitlements and other intangible property used or useful in
connection with the foregoing (collectively, the "Intangible Personal
Property"), except the right to use the name Constellation; and (vi) such
Entity's interest, and CPI's interest as to Brandon, in all leases and
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other agreements to occupy all or any portion of the Land and/or Improvements in
effect on the Contract Date or into which such Entity or CPI enters prior to the
Closing (as defined below), but pursuant to the express terms of this Agreement
(collectively, the "Leases").
The Sellers and Buyer desire to enter this Agreement relating to the sale by
the Sellers to Buyer of Interests, and the sale by CPI to Buyer of Brandon, in
exchange for cash, debt assumption, and Shares (as defined below) pursuant to
the terms of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties agree as follows:
1. DEFINITIONS.
All terms which are not otherwise defined in this Contribution Agreement
shall have the meaning set forth in this Section 1.
1.1. "Accredited Investor" shall have the meaning set forth in
Regulation D promulgated under the Securities Act of 1933, as amended.
1.2. "Additional Rent" shall have the meaning set forth in Section
15.1.5.
1.3. "Affiliate(s)" shall have the meaning set forth in Section 21.
1.4. "Assumed Indebtedness" shall mean (a) the outstanding principal
balance of the indebtedness as of the Closing Date of those two (2) Entities
identified on Exhibit "Assumed Indebtedness" with respect to those two (2)
Projects identified on Exhibit "Assumed Indebtedness" as such indebtedness is
described (including a statement of the outstanding principal balance as of the
date of this Agreement) on Exhibit "Assumed Indebtedness" and (b) the
outstanding principal balance as of the Closing Date of such portion of the
Satisfied Indebtedness that Buyer, in its sole discretion, elects to assume. The
Assumed Indebtedness identified in clause (a) of the preceding sentence is
evidenced and secured by the Assumed Loan Documents described on Exhibit
"Assumed Loan Documents". Buyer's right to assume the Assumed Indebtedness is
subject to the provisions of Section 3.2.7.
1.5. "Assumed Loan Documents" shall mean the documents evidencing or
securing the Assumed Indebtedness, as described on Exhibit "Assumed Loan
Documents".
1.6. "Base Rent" shall have the meaning set forth in Section 15.1.5.
1.7. "Brandon" shall mean the Project located at 7609 Energy Parkway,
Anne Arundel County, Maryland and identified as Brandon on Exhibit "Projects".
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1.8. "Buildings" shall have the meaning set forth in the recitals to
this Agreement.
1.9. "Buyer" shall mean collectively the REIT (as defined below) and
Corporate Office Properties, L.P., a Delaware limited partnership the sole
general partner of which is the REIT.
1.10. "Buyer Indemnified Parties" shall have the meaning set forth in
Section 13.3.
1.11. "Buyer's Closing Notice" shall have the meaning set forth in
Section 6.1.
1.12. "Buyer's Request" shall have the meaning set forth in Section
6.3.
1.13. "Buyer's Conditions Precedent" shall mean all conditions
precedent to Buyer's obligations to close as set forth in this Agreement.
1.14. "Buyer's Reasonable Costs" shall mean all out-of-pocket costs and
expenses incurred by Buyer in connection with this Agreement and the Projects,
including, but not limited to, legal fees, title company charges, engineering
fees, environmental consultant's fees, architects' and surveyors' fees and other
similar charges.
1.15. "CPI" shall mean Constellation Properties, Inc., a Maryland
corporation.
1.16. "CPI Affiliates" shall mean entities controlled by CPI.
1.17. "Cash Component" shall have the meaning set forth in Section 3.
1.18. "Certification of Default" shall have the meaning set forth in
Section 6.3.
1.19. "Closing" shall mean (a) the occurrence of the events described
in Section 6.1 as to all Sellers, other than the NBP 135 Sellers and Woodlands
Sellers, and defined in Section 6.1 as the First Closing, (b) the occurrence of
the events described in Section 6.2.1 as to the NBP 135 Sellers and defined in
Section 6.2.1 as the NBP 135 Closing, and (c) the occurrence of the events
described in Section 6.2.2 as to Woodlands, and defined in Section 6.2.2 as the
Woodlands Closing.
1.20. "Closing Date" shall mean (a) the date set forth in Section 6.1
as to all Sellers, other than the NBP 135 Sellers and the Woodlands Sellers, and
defined in Section 6.1 as the First Closing Date, (b) the date set forth in
Section 6.2.1 as to the NBP 135 Sellers and defined in Section 6.2.1 as the NBP
135 Closing Date, and (c) the date set forth in Section 6.2.2 as to the
Woodlands Sellers and defined in Section 6.2.2 as the Woodlands Closing Date.
1.21. "Closing Statement" shall have the meaning set forth in Section
16.1.11.
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1.22. "Common Share Amount" shall have the meaning set forth in Section
3.2.3 below.
1.23. "Common Shares" means common shares of the REIT.
1.24. "Consideration" shall have the meaning set forth in Section 3.
1.25. "Constellation Lease" shall have the meaning set forth in Section
5.6.
1.26. "Contract Date" shall mean the date set forth in the first
paragraph of this Agreement.
1.27. "Convertible Preferred Shares" shall mean convertible cumulative
preferred shares of the REIT to be classified and issued by the REIT in
accordance with the Amended and Restated Declaration of Trust of the REIT as
amended. Each Convertible Preferred Share has a liquidation preference of $25.00
and pays a cumulative dividend of 5.5% per year. The dividend shall have a
preference over dividends payable on the Common Shares. Each Convertible
Preferred Share is convertible into Common Shares at an initial conversion price
of $13.335 per Common Share (subject to anti-dilution adjustments) and otherwise
subject to the terms of the Amended and Restated Declaration of Trust of the
REIT, as may be further amended. Convertible Preferred Shares delivered to
Sellers at Closing under this Agreement shall not be converted before two (2)
years after the Closing Date and shall not be converted if such conversion would
result in the Sellers owning, in the aggregate, more than forty-five percent
(45%) in the aggregate of the outstanding Common Shares of the REIT.
Notwithstanding the foregoing, if there is a change in control of the REIT, the
two year prohibition against conversion shall be deemed to have terminated and
the Convertible Preferred Shares may thereafter be converted into Common Shares
(subject, however, to the 45% limitation and to the terms of the Amended and
Restated Declaration of Trust of the REIT, as amended prior to such change in
control).
1.28. "CREG" shall mean Constellation Real Estate Group, Inc., which is
the one hundred percent (100%) direct owner of CPI and a guarantor under certain
indebtedness of the Sellers.
1.29. "Damage" shall have the meaning set forth in Section 19.
1.30. "Delinquent Rents" shall have the meaning set forth in Section
17.9.
1.31. "Development Management Agreement" shall have the meaning set
forth in Section 5.7.
1.32. "Development Projects Acquisition Agreements" shall have the
meaning set forth in Section 5.4.
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1.33. "Disapproved Exception" shall have the meaning set forth in
Section 9.2.
1.34. "Eminent Domain" shall have the meaning set forth in Section 19.
1.35. "Entities" shall mean the Entities identified on Exhibit
"Entities".
1.36. "Environmental Law(s)" shall have the meaning set forth in
Section 13.1.1.
1.37. "Environmental Permits" shall have the meaning set forth in
Section 13.1.2.
1.38. "Escrowee" shall mean the Title Company.
1.39. "Estoppel Certificate" shall have the meaning set forth in
Section 15.2 of this Agreement.
1.40. "Existing Loan Documents" shall mean the Assumed Loan Documents
and the Satisfied Loan Documents.
1.41. "First Closing" shall have the meaning set forth in Section 6.1.
1.42. "First Closing Date" shall have the meaning set forth in Section
6.1.
1.43. "Governmental Authority/Authorities" shall mean any agency,
commission, department or body of any municipal, township, county, local, state
or Federal governmental or quasi-governmental regulatory unit, entity or
authority having jurisdiction or authority over all or any portion of the
Projects or the management, operation, use or improvement thereof.
1.44. "Hazardous Conditions" shall have the meaning set forth in
Section 13.1.3.
1.45. "Hazardous Material(s)" shall have the meaning set forth in
Section 13.1.4.
1.46. "Improvements" shall have the meaning set forth in the recitals
to this Agreement.
1.47. "Informational Materials" shall have the meaning set forth in
Section 11.1.8 below.
1.48. "Intangible Personal Property" shall have the meaning set forth
in the recitals to this Agreement.
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1.49. "Interests" shall have the meaning set forth in the recitals to
this Agreement.
1.50. "Inventory" shall have the meaning set forth in the recitals to
this Agreement.
1.51. "Investor Materials" shall have the meaning set forth in Section
4.1.3.
1.52. "Land" shall have the meaning set forth in the recitals to this
Agreement.
1.53. "Leases" shall have the meaning set forth in the recitals to this
Agreement.
1.54. "Lenders' Approvals" shall have the meaning set forth in Section
14.1.5.
1.55. "Letter of Credit" shall have the meaning set forth in Section
6.3.
1.56. "Losses" shall have the meaning set forth in Section 13.3.
1.57. "NBP 135" shall mean the Entity identified as NBP 135 on Exhibit
"Entities" which owns the Project identified as 135 National Business Park on
Exhibit "Projects".
1.58. "NBP 135 Gross Value" shall have the meaning set forth in Section
3.1.
1.59. "NBP 135 Sellers" shall mean those Sellers who are selling all of
the Interests in NBP 135.
1.60. "NBP 135 Lease Achievement Date" shall have the meaning set forth
in Section 6.2.1 of this Agreement.
1.61. "NBP 135/Woodlands Closing" shall have the meaning set forth in
Section 6.2.
1.62. "NBP 135/Woodlands Closing Date" shall have the meaning set forth
in Section 6.2.
1.63. "Net Asset Value" shall have the meaning set forth in Section
3.1.
1.64. "Net Value Percentage Allocation" shall mean the percentage
assigned to each Project on Exhibit "Net Value Percentage Allocation", the total
percentage of which is one hundred percent (100%). Shares shall be allocated
among the Projects by multiplying the Net Asset Value by the Net Value
Percentage Allocation of each Project.
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1.65. "NOI" shall have the meaning set forth in Section 3.2.
1.66. "Notice of Dispute" shall have the meaning set forth in Section
6.3.
1.67. "Notice of Objection" shall have the meaning set forth at Section
6.3.
1.68. "Option Projects" shall have the meaning set forth in Section
5.5.
1.69. "Option/ROFR Agreements" shall have the meaning set forth in
Section 5.5.
1.70. "Permitted Exceptions" shall have the meaning set forth in
Section 9.2.
1.71. "Personal Property" shall have the meaning set forth in the
recitals to this Agreement.
1.72. "Post-Closing Seller" shall have the meaning set forth in Section
13.3.
1.73. "Preferred Share Amount" shall have the meaning set forth in
Section 3.2.2.
1.74. "Projects" shall have the meaning set forth in the recitals to
this Agreement.
1.75. "Proxy Statement" shall have the meaning set forth in Section
4.5.
1.76. "Records" shall mean all books, records, tax returns,
correspondence, financial data, leases, and all other documents and matters,
public or private, maintained by the Entities, the Sellers or its or their
agents, relating to receipts and expenditures pertaining to all of the Projects
for the three most recent full calendar years and the current calendar year and
all contracts, rental agreements and all other documents and matters, public or
private, maintained by the Entities, the Sellers or its or their agents,
relating to operations of the Projects.
1.77. "Registration Rights Agreement" shall mean the Registration
Rights Agreement in favor of the Sellers to be entered into by the REIT at
Closing in the form attached hereto as Exhibit "Registration Rights Agreement".
1.78. "Regulatory Violation Notice" shall have the meaning set forth in
Section 4.1.3.
1.79. "REIT" means Corporate Office Properties Trust, a Maryland real
estate investment trust, which is the sole general partner of Corporate Office
Properties, L.P.
1.80. "Release" shall have the meaning set forth in Section 13.1.5.
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1.81. "Remedial Action" shall have the meaning set forth in Section
13.1.6.
1.82. "Remedial Costs" shall have the meaning set forth in Section
13.1.7.
1.83. "Satisfied Indebtedness" shall mean the outstanding principal
balance as of the Closing Date of the indebtedness of those Entities identified
on Exhibit "Satisfied Indebtedness" with respect to those Projects identified on
Exhibit "Satisfied Indebtedness" as such indebtedness is described (including a
statement of the outstanding principal balance as of the date of this Agreement)
on Exhibit "Satisfied Indebtedness". The Satisfied Indebtedness is evidenced and
secured by the Satisfied Loan Documents described on Exhibit "Satisfied Loan
Documents". Buyer, in Buyer's sole discretion, shall have the right to assume
any portion of the Satisfied Indebtedness, provided, however, that as to any
such assumed portion, the Entities, Sellers and CREG, as applicable, obligated
under such assumed portion are released from all obligations under such assumed
portion. If Buyer, in Buyer's sole discretion, elects to assume any portion of
the Satisfied Indebtedness, such portion shall become part of the Assumed
Indebtedness, and the amount of Satisfied Indebtedness shall be reduced by an
amount equal to the amount of the outstanding principal of such assumed portion
as of the Closing Date.
1.84. "Satisfied Loan Documents" shall mean the documents evidencing or
securing the Satisfied Indebtedness.
1.85. "SEC" shall mean the Securities and Exchange Commission.
1.86. "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.87. "Sellers" shall mean those persons and entities listed as Sellers
on the signature page to this Agreement and listed on Exhibit "Sellers" .
1.88. "Sellers' Condition Precedent" shall mean all conditions
precedent to Seller's obligations to close as set forth in this Agreement.
1.89. "Seller Indemnified Parties" shall have the meaning set forth in
Section 20.4 of this Agreement.
1.90. "Service Company Agreement" shall have the meaning set forth at
Section 5.3.
1.91. "Shares" shall mean collectively Common Shares and Convertible
Preferred Shares.
1.92. "Tank(s)" shall have the meaning set forth in Section 13.1.9.
1.93. "Taxes" shall have the meaning set forth in Section 11.1.4(b).
1.94. "Tax Returns" shall have the meaning set forth in Section
11.1.4(b).
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1.95. "Tenants" shall have the meaning set forth in Section 15.1.
1.96. "TIF Agreement" shall have the meaning set forth in Section 5.8.
1.97. "Title Company" shall mean Commonwealth Land Title Insurance
Company.
1.98. "Title Reports" shall have the meaning set forth in Section 9.2.
1.99. "Tred Avon" shall mean Tred Lightly Limited Liability Company, a
Maryland limited liability company, which is the holder of the Tred Avon Loan
Documents.
1.100. "Tred Avon Loan Documents" shall mean the notes, deeds of trust
encumbering the Project identified as Tred Avon on Exhibit "Projects", and other
loan documents described on Exhibit "Tred Avon Loan Documents" evidencing and
securing first and second deed of trust loans in the aggregate original
principal amount of $10,000,000.00 from TA Associates Limited Partnership, a
Maryland limited partnership, the owner of Tred Avon, to Tred Avon.
1.101. "Woodlands" shall mean the Entity identified as Woodlands on
Exhibit "Entities" which owns the Project identified as Woodlands I on Exhibit
"Projects".
1.102. "Woodlands Gross Value" shall have the meaning set forth in
Section 3.1.
1.103. "Woodlands Lease Achievement Date" should have the meaning set
forth in Section 6.2.2.
1.104. "Woodlands Sellers" shall mean those Sellers who are selling all
of the Interests in Woodlands.
2. ASSIGNMENT AND TRANSFER OF INTERESTS.
2.1. At Closing, each Seller agrees to assign and transfer to Buyer,
and Buyer agrees to accept and take from each Seller, on the terms and
conditions set forth in this Agreement, all of such Seller's right, title and
interest in the Interests, and CPI agrees to convey to Buyer and Buyer agrees to
accept, CPI's fee simple title interest in Brandon.
3. CONSIDERATION.
Calculations under this Section 3 shall be computed separately for the First
Closing with all Sellers, other than the NBP 135 Sellers and the Woodlands
Sellers under Section 6.1, and for the NBP 135/Woodlands Closing with the
Woodlands Sellers and NBP 135 Sellers under
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Section 6.2 and, with respect to each such Closing, shall relate only to those
Sellers, Interests, and Projects which are the subject of such Closing.
In consideration of the assignment of the Interests to Buyer and conveyance
of Brandon to Buyer, and subject to the terms of this Agreement, at Closing, the
Buyer shall (a) pay to Sellers an amount equal to the Satisfied Indebtedness
(the "Cash Component"), (b) acquire the Interests and Brandon under and subject
to the Assumed Indebtedness and (c) deliver to the Sellers, Shares (consisting
of Seventy-Five percent (75%) Common Shares and Twenty-Five percent (25%)
Convertible Preferred Shares, as more particularly described in Section 3.2
below) having an aggregate value equal to the Net Asset Value (defined below) of
the Projects. Such consideration shall be referred to in this Agreement as the
"Consideration." The Shares issued to the Sellers at Closing shall be issued to
the respective Sellers in the same proportion as the respective Sellers assign
and convey Brandon and the Interests (subject to appropriate rounding to
eliminate fractional Shares), as more particularly described on Exhibit "Share
Schedule", as such allocation may be adjusted on the updated Exhibit Share
Schedule to be prepared by Buyer and to be mutually and reasonably approved by
Sellers and the Buyer at the Closing (the "Updated Exhibit Share Schedule" or
the "Share Schedule").
3.1. The "Net Asset Value" of the Projects (excluding NBP 135 and
Woodlands) equals $142,550,000.00 [and as to NBP 135, $12,150,000.00 (the "NBP
135 Gross Value"), and as to Woodlands, $17,600,000.00 (the "Woodlands Gross
Value"), both subject to adjustment as set forth in Section 3.2.5] less the Cash
Component, less the Assumed Indebtedness with respect to all Projects (as such
amount is reflected in the Exhibit "Assumed Indebtedness" on the Closing Date).
The Net Asset Value shall be further adjusted by the positive or negative
adjustments and prorations described in Section 17 below, all of which shall be
adjusted as of the Closing Date. The Net Asset Value is allocated among the
Projects in accordance with Exhibit "Net Value Percentage Allocation".
3.2. The Consideration shall be determined, allocated and paid by the
Buyer to the Sellers at Closing as follows:
3.2.1. The Cash Component shall be allocated among, and paid to
the Sellers, in accordance with Exhibit "Cash Component Allocation".
3.2.2. Buyer shall acquire the Interests and Brandon subject to
the Assumed Indebtedness at the time of the Closing. Sellers acknowledge and
agree that the Sellers shall be solely responsible for any and all assumption
fees, transfer fees and other costs associated with the Buyer's acquisition of
the Interests subject to the Assumed Indebtedness and, in the event that the
holder of any existing financing on the Projects is unwilling to consent to the
transfer of the Interests, and Buyer elects to proceed to Closing, Sellers shall
be solely responsible for any prepayment penalties in connection the payment of
any such indebtedness.
3.2.3. Buyer shall deliver to Sellers Convertible Preferred Shares
($25 par value per unit) having an aggregate value equal to Twenty-Five percent
(25%) of the Net Asset Value of the Projects. This value expressed in dollars
shall be referred to as the
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"Preferred Share Amount." Divide the Preferred Share Amount by $25 (the par
value of the Convertible Preferred Shares) to determine the number of
Convertible Preferred Shares to be delivered. If this calculation would result
in a fractional number of Convertible Preferred Shares to be delivered to
Sellers, the Buyer shall round that fraction up or down, as the case may be, to
the nearest whole number of Convertible Preferred Shares. The Share Schedule
shall establish the allocation of Convertible Preferred Shares to each Seller.
3.2.4. Buyer shall deliver Common Shares having an aggregate value
equal to Seventy-Five percent (75%) of the Net Asset Value of the Projects. This
value expressed in dollars shall be referred to as the "Common Share Amount".
Divide the Common Share Amount by $10.50 to arrive at the number of Common
Shares to be delivered. If this calculation would result in a fractional number
of Common Shares to be delivered to Seller, the Buyer shall round that fraction
up or down, as the case may be, to the nearest whole number of Common Shares.
The Share Schedule shall establish the allocation of Common Shares to each
Seller.
3.2.5. The NBP 135 Gross Value shall be decreased if the NOI
(defined below) of NBP 135 at the time of the NBP 135/Woodlands Closing is less
than $1,071,807. The Woodlands Gross Value shall be decreased if the NOI for
Woodlands at the time of the NBP 135/Woodlands Closing is less than $1,364,531.
If the NOI of NBP 135 is less than $1,071,807 at the time of the NBP
135/Woodlands Closing, the NBP 135 Gross Value shall equal the NOI of NBP 135 at
the time of the NBP 135/Woodlands Closing divided by a capitalization rate of
8.82%. If the NOI of Woodlands is less than $1,364,531 at the time of the NBP
135/Woodlands Closing, the Woodlands Gross Value shall equal the NOI of
Woodlands at the time of the NBP 135/Woodlands Closing divided by the
capitalization rate of 7.75%. "NOI" means the net operating income for a Project
determined as customarily calculated in the commercial real estate industry for
Projects similar to the Project for which the determination is being made, based
on the annualized operating revenues to be received from the Project from Leases
in effect (with Tenants paying rent) ten (10) days before the NBP 135/Woodlands
Closing Date less the estimated annual operating expenses, including, without
limitation, a management fee of three and one-half percent (3.5%) of revenues, a
structural reserve equal to $.20 per square foot of the Project, and a vacancy
reserve of five percent (5%) of the number of square feet of the Project times
the anticipated average rent per square foot for the Project.
3.2.6. The number of Common Shares at any time held by the
Sellers, in the aggregate, shall not exceed forty-five percent (45%) of the
outstanding Common Shares of the REIT.
3.2.7. Buyer's right to assume the Assumed Indebtedness is subject
to the condition that the Sellers and CREG, as applicable, are released from
their obligations under the Assumed Indebtedness. If, despite Buyer's
commercially reasonable efforts to have the Sellers and CREG released from their
obligations under the Assumed Indebtedness, Buyer is unable to obtain such
release as to Assumed Indebtedness relating to a specific Project, Buyer shall
indemnify the Sellers and CREG, as applicable, obligated on the subject Assumed
Indebtedness
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with respect to the deleted Project, and Sellers and CREG, as applicable, shall
accept such indemnification by Buyer in lieu of a release.
4. SHARES; INVESTOR MATERIALS; PROXY STATEMENT.
4.1.1. Investor Materials. Each Seller, on or before ten (10) days
after the date of this Agreement, shall complete a questionnaire (in
substantially the form set forth in Exhibit "Investor Materials" attached
hereto, the "Investor Materials") providing, among other things, information
concerning each Seller's status as an Accredited Investor, and shall provide or
cause to be provided to Buyer, or to any other party designated by Buyer, such
other information and documentation as may reasonably be requested by Buyer in
furtherance of the issuance of the Shares as contemplated hereby.
Notwithstanding anything contained in this Agreement to the contrary, in the
event that, in the reasonable opinion of Buyer, based on advice of its
securities counsel, (x) any such person or entity providing Investor Materials
is not considered an Accredited Investor, (y) the proposed delivery of Shares
hereunder might not qualify for the exemption from the registration requirements
of Section 5 of the Securities Act, or (z) the proposed delivery of Shares
hereunder would violate any applicable federal or state securities laws, rules
or regulations, or agreements to which the REIT or the Buyer is a party, or any
tax related or other legal rules, agreements or constraints applicable to Buyer
or the REIT, Buyer shall so advise Seller, in writing (the "Regulatory Violation
Notice") within five (5) business days after such determination is made. In the
event a Regulatory Violation Notice is delivered, this Agreement shall terminate
and no party shall have any further liability hereunder except (i) as otherwise
expressly set forth in this Agreement and (ii) to the extent a breach of this
Agreement gives rise to, or becomes the basis for, the Regulatory Violation
Notice.
4.2. Certain Informational Materials. Sellers have been furnished with
the informational materials listed on Exhibit "Informational Materials").
Sellers have read, reviewed and understand the Informational Materials, and have
been afforded the opportunity to ask questions of those persons it considers
appropriate and to obtain any additional information it desires in respect of
the Shares and the business, operations, conditions (financial and otherwise)
and current prospects of the COPLP and the REIT. Sellers consulted their own
financial, legal and tax advisors with respect to the economic, legal and tax
consequences of delivery of the Shares and have not relied on the Informational
Materials, COPLP, the REIT or any of their officers, directors, affiliates or
professional advisors for such advice as to such consequences. Notwithstanding
anything to the contrary contained in this Section 4.2, the effect of any
representations or warranties expressly made by COPLP and the REIT in this
Agreement shall not be diminished, abrogated or compromised by this Section 4.2.
4.3. Transfer Requirements. Sellers may only sell, transfer, assign,
pledge or encumber, or otherwise convey any or all of the Shares, in strict
compliance with the charter documents of the REIT, the registration and other
provisions of the Securities Act (and the rules promulgated thereunder), any
state securities laws, and the Registration Rights Agreement, in each case as
may be applicable. The provisions of this Section 4.3 shall survive the Closing.
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4.4. Registration Rights. At the Closing, the REIT shall execute and
deliver the Registration Rights Agreement to the Sellers.
4.5. Proxy Statement. As promptly as practicable after the execution of
this Agreement, the REIT shall prepare and file with the SEC a Proxy Statement
(the "Proxy Statement") which shall solicit the votes of the REIT's shareholders
with respect to the transactions contemplated hereby. The Proxy Statement shall
include the recommendation of the REIT's Board of Trustees in favor of this
Agreement and the transactions contemplated hereby; provided, however, that the
Board of Trustees may modify or withdraw such recommendation if it believes in
good faith after consultation with legal counsel that the modification or
withdrawal of such recommendation is necessary for the Board to comply with its
fiduciary obligations under applicable law.
5. REIT BOARD OF TRUSTEES; CERTAIN REIT OPERATIONS; RELATED TRANSACTIONS.
5.1. Composition of REIT Board of Trustees. The REIT hereby agrees that
the Proxy Statement will include, as a part of the transaction recommended to,
and to be voted upon by the REIT's shareholders, an arrangement reasonably
satisfactory to Sellers and the REIT whereby immediately following Closing,
Sellers shall have the right to have two representatives of the Sellers (each, a
"Seller Representative") serve as members of the Board of Trustees of the REIT
(the "Board") for as long as Sellers are the owners, in the aggregate, of more
than thirty percent (30%) of the REIT's outstanding Common Shares, and to have
one Seller Representative serve as a member of the Board for as long as Sellers
are the owners, in the aggregate, of less than thirty percent (30%) but more
than fifteen percent (15%) of the REIT's outstanding Common Shares. The initial
Seller Representatives shall be designated by Sellers to the REIT prior to the
filing of the Proxy Statement. The principal terms of the arrangement shall be
as follows. At Closing, the number of members of the Board shall be increased by
two pursuant to Article III, Section 2 of the Bylaws of the REIT, and the two
initial Seller Representatives shall be appointed to the Board pursuant to
Article III, Section 10 of the Bylaws of the REIT. One Seller Representative
shall be appointed for a three-year term, and the other Seller Representative
shall be appointed for a two-year term. Such Seller Representatives shall serve
the foregoing terms without regard to the percentage of Common Shares owned by
Sellers, notwithstanding the first sentence of Section 5.1. One Seller
Representative shall be appointed to the Investment Committee of the Board and
each Seller Representative shall be eligible for appointment to other committees
of the Board. Appropriate provision shall be made to assure that Sellers shall
have the right to designate a replacement for a Seller Representative in the
event of the death, resignation or removal of such person, and for a change in
the number of Board members or otherwise to assure continued representation on
the Board by the Seller Representative(s) in the event a Seller Representative
who has been nominated for election is not re-elected at a time when the Sellers
are entitled to have the Board representation described herein. For purposes of
calculating the percentages of Common Shares outstanding and owned by the
Sellers, it shall be assumed that any Convertible Preferred Shares then owned by
the Sellers have been converted into Common Shares and that such Common Shares
are outstanding and owned by the Sellers.
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5.2. REIT Offices. From and after Closing, the REIT shall maintain
offices in Columbia, Maryland and in the Philadelphia, Pennsylvania vicinity at
such locations as the officers of the REIT shall elect. Initially, general real
estate operations shall be headquartered in the Columbia, Maryland office of the
REIT, and capital markets and acquisitions activities of the REIT shall be
headquartered in the Philadelphia, Pennsylvania office of the REIT.
5.3. Service Company Agreement. Concurrently with the execution of this
Agreement, Buyer and Constellation Real Estate, Inc. ("CREI"), an affiliate of
the Sellers, are entering into an agreement for the acquisition by Buyer, or its
Affiliate, of certain of the assets of CREI, including, without limitation,
tangible and intangible assets, and the Seventy-Five percent (75%) interest of
CREI in Constellation Realty Management LLC (the "Service Company Agreement")
for a purchase price of $2,500,000 payable in Shares. Closing under the Service
Company Agreement is to occur immediately after and on the same day as Closing
under this Agreement. The obligations of Sellers and Buyer to complete Closing
under this Agreement are subject to the completion of closing under the Service
Company Agreement.
5.4. Development Projects. Promptly following the execution of this
Agreement, Buyer and affiliates of the Sellers and other entities shall
negotiate in good faith to enter into two (2) acquisition agreements (the
"Development Projects Acquisition Agreements") for the acquisition by Buyer of
Interests in entities owning development projects in Maryland and Virginia as
will be more particularly described in the Development Projects Acquisition
Agreements. The Development Projects Acquisition Agreements will provide, among
other things, that they shall become effective among the parties thereto upon
the completion of Closing under Section 6.1 of this Agreement.
5.5. Option Projects. Concurrently with the execution of this
Agreement, Buyer and affiliates of the Sellers are entering into two (2) option
agreements with respect to the properties known as Lot 11 of the National
Business Park and Woodlands Two. At Closing, Buyer and the entities owning one
hundred percent (100%) of the interests (except as to the Option Project
identified as "Annapolis Exchange" on Exhibit "Option Projects") in the owners
of the Projects listed on Exhibit "Option Projects" (the "Option Projects"), as
the case may be, are entering into option agreements or option and right of
first refusal agreements (the "Option/ROFR Agreements"), granting to Buyer the
option to acquire one hundred percent (100%) of the interests in the entities
owing such Option Projects and fifty percent (50%) of the interests in Annapolis
Exchange.
5.6. Constellation Lease. At Closing, St. Barnabas Limited Partnership,
a Maryland limited partnership, the Entity owing the Project identified as One
Constellation Centre on Exhibit "Projects" and CPI shall enter into a lease for
CPI's leasing of approximately 48,863 square feet in One Constellation Centre at
a rent of $18.50 per square foot for two (2) years in accordance with the terms
of Exhibit "Constellation Lease" ("Constellation Lease").
5.7. Development Management Agreement. At Closing, Buyer or an
Affiliate of Buyer, as Buyer shall elect, and CPI shall enter into a management
services
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agreement pursuant to which Buyer, or Buyer's Affiliate, shall provide
management services to CPI with respect to CPI's post-Closing real estate
portfolio for an eighteen (18) month period after Closing and shall receive the
following compensation: (a) from the Closing Date through the last day of the
third month after the Closing Date, $250,000.00 per month; (b) from the first
day of the fourth month after the Closing Date through the last day of the sixth
month after the Closing Date, $150,000.00 per month; (c) from the first day of
the seventh month after the Closing Date through the last day of the tenth month
following the Closing Date, $100,000.00 per month, and; (d) from the first day
of the eleventh month following the Closing Date through the last day of the
eighteenth month following the Closing Date, $50,000.00 per month (the
"Development Management Agreement"). The Development Management Agreement shall
be substantially in form of Exhibit "Development Management Agreement".
5.8. TIF Indemnification Agreement. Buyer and CPI shall enter into an
indemnification agreement substantially in the form of the Indemnification
Agreement attached hereto as Exhibit "TIF Indemnification Agreement" (the "TIF
Agreement") for CPI's indemnification of Buyer for certain tax increases
relating to the special tax district and the tax incremental financing affecting
the Projects located in the National Business Park, Anne Arundel County,
Maryland.
6. CLOSING.
6.1. First Closing. The assignment and transfer of the Interests, the
conveyance of Brandon, and the other transactions contemplated herein with
respect to all Sellers except the NBP 135 Sellers and the Woodlands Sellers (the
"First Closing") shall be consummated on the date (the "First Closing Date"),
after the shareholders of the REIT have approved all of the transactions
contemplated by this Agreement, specified by Buyer on not less than seven (7)
days notice to Sellers (the "Buyer's Closing Notice"), provided that the First
Closing Date shall not be sooner than July 1, 1998 or later than thirty (30)
days after the shareholders of the REIT have approved all of the transactions
contemplated by this Agreement. Sellers shall have the right to postpone the
First Closing to a date that is up to five (5) days after the First Closing Date
specified in Buyer's Closing Notice by giving Buyer notice of such postponement.
If the shareholders of the REIT have not approved the transactions contemplated
by this Agreement by October 30, 1998, this Agreement shall terminate and become
null and void, the Letter of Credit shall be returned to the Buyer, and the
parties shall be released from all liability or obligation to the other. The
Closing shall take place at the offices of Saul, Ewing, Remick & Saul LLP,
Centre Square West, 1500 Market Street, 38th Floor, Philadelphia, Pennsylvania
19102, or at such other place as may mutually agreed upon by the parties.
6.2. NBP 135/Woodlands Closing.
6.2.1. The assignment and transfer of the Interests in NBP 135 and
the other transactions contemplated herein with respect to the NBP 135 Sellers
(the "NBP 135 Closing"), shall occur after the First Closing under Section 6.1
of this Agreement, on the date (the "NBP 135 Closing Date") within thirty (30)
days after the "NBP 135 Lease Achievement Date" (defined below) specified by
Buyer on not less than seven (7) days notice to Sellers, but
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not later than December 31, 1998. As used in this Section 6.2.1, "NBP 135 Lease
Achievement Date", shall mean the date on which at least ninety-five percent
(95%) of the rentable area of NBP 135 has been leased to Tenants who or which
have entered into Leases in accordance with Section 12.1 of this Agreement and
have commenced paying rent under such Leases.
6.2.2. The assignment and transfer of the Interests in Woodlands
and the other transactions contemplated herein with respect to Woodlands (the
"Woodlands Closing", which shall occur after the First Closing under Section 6.1
of this Agreement on the date (the "Woodlands Closing Date") within thirty (30)
days after the "Woodlands Lease Achievement Date" (defined below) specified by
Buyer on not less than seven (7) days notice to Sellers, but not later than
December 31, 1998. As used in this Section 6.2.2, "Woodlands Lease Achievement
Date" shall mean the date on which at least ninety-five percent (95%) of the
rental area of Woodlands has been leased to Tenants who or which have entered
into Leases in accordance with Section 12.1 of this Agreement and have commenced
paying rent under such Leases.
6.2.3. Sellers shall provide Buyer with detailed written updates
of leasing activity, lease status, and occupancy and rent payment levels at NBP
135 and Woodlands at least monthly until the NBP 135/Woodlands Closing, shall
permit Buyer to review and copy leasing information for NBP 135 and Woodlands,
and shall give Buyer prompt notice of the date Sellers believe is the Lease
Achievement Date.
6.3. Letter of Credit. On or before thirty (30) days after the date of
this Agreement, Buyer shall deliver to the Title Company, as escrowee (the
"Escrowee"), a non-transferrable, irrevocable standby letter of credit in the
amount of Five Million Dollars ($5,000,000.00) (the "Letter of Credit") issued
by a bank selected by Buyer, naming the Escrowee as the Beneficiary, and having
an expiration date no sooner December 10, 1998. The Letter of Credit shall
provide that the Escrowee may present it for payment only after Escrowee
receives a Certification of Default. The Letter of Credit shall be returned to
Buyer (a) upon Closing, or, (b) within fifteen (15) days after Buyer's request
by simultaneous notice to Escrowee and Sellers ("Buyer's Request"), upon
termination of this Agreement by Buyer under any Section of this Agreement
giving Buyer the right to so terminate (provided that Buyer is not in default
hereunder), or if for any reason other than the default of Buyer, Closing is not
completed under this Agreement, unless Sellers dispute the return of the Letter
of Credit to Buyer by notice of dispute to Escrowee and Buyer (the "Notice of
Dispute") given within ten (10) days after Buyer's Request. If the Escrowee
receives a Notice of Dispute, then the Escrowee shall continue to hold the
Letter of Credit until (a) the Escrowee receives a written notice signed by
Randall M. Griffin or John Harris Gurley, Esquire or Charles E. Garman or Dan R.
Skowronski and Buyer, directing the delivery of the Letter of Credit, or (b) a
final order of court of competent jurisdiction is entered in a proceeding in
which all Sellers and the Buyer are named as parties, directing the delivery of
the Letter of Credit in either of which events described in clause (a) or clause
(b), the Escrowee shall deliver the Letter of Credit in accordance with such
direction.
6.3.1. Upon delivery by Sellers to Escrowee of a notarized default
certificate signed by Randall M. Griffin or John Harris Gurley, Esquire or
Charles E. Garman or
17
Dan R. Skowronski certifying that Buyer has defaulted in the performance of
Buyer's obligations under this Agreement and specifying the alleged default in
the form of Exhibit "Certification of Default" (the "Certification of Default"),
Escrowee shall promptly submit a draft on the Letter of Credit to the issuing
bank. Escrowee shall then hold the proceeds from negotiation of the Letter of
Credit (the "Proceeds") in escrow and shall deposit the Proceeds in a separate,
interest-bearing money market account in a Federally insured bank.
6.3.2. Promptly following receipt of the Certification of Default,
Escrowee shall send a copy thereof to Buyer. If the Escrowee does not receive
from the Buyer written notice of objection (the "Notice of Objection") to the
Certification of Default within fifteen (15) days after the date of Buyer's
receipt of Certification of Default, Escrowee, after the expiration of such
fifteen (15) day period, shall pay the Proceeds, together with all interest
accrued thereon, to the Sellers, which shall be retained by the Sellers as
liquidated damages for any default or breach by Buyer under this Agreement and
Sellers' sole and exclusive remedy against Buyer for any default or breach under
this Agreement. Upon receipt of a Notice of Objection from Buyer, the Escrowee
shall promptly send a copy thereof to Sellers.
6.3.3. If the Escrowee receives a Notice of Objection from Buyer
within such fifteen (15) day period, then the Escrowee shall continue to hold
the Proceeds until (i) the Escrowee receives a written notice signed by Randall
M. Griffin or John Harris Gurley, Esquire or Charles E. Garman or Dan R.
Skowronski and Buyer, directing the disbursement of the Proceeds, or (ii) a
final order of court of competent jurisdiction is entered in a proceeding in
which all Sellers and the Buyer are named as parties, directing the disbursement
of the Proceeds, in either of which events described in clause (i) or clause
(ii), the Escrowee shall disburse the Proceeds in accordance with such
direction. If the Proceeds are paid to the Sellers pursuant to such direction,
the Proceeds shall be retained by Sellers as liquidated damages for any breach
or default by Buyer under this Agreement and as Sellers' sole and exclusive
remedy against Buyer for any breach or default under this Agreement. If the
Escrowee receives a Notice of Objection within the fifteen (15) day period set
forth above, the Escrowee shall have no liability by reason of its failure to
deliver the Proceeds to Sellers until the Escrowee has received the direction of
the nature described in clause (i) or clause (ii) above.
6.3.4. Sellers and Buyer agree that the Proceeds shall constitute
liquidated damages for any breach or default by Buyer of any Buyer's obligations
under this Agreement prior to the Closing Date or due to Buyer's failure to
complete Closing in accordance with the terms of the Agreement, and that
Sellers' receipt of such Proceeds shall be Sellers' sole and exclusive remedy
against Buyer for any such breach or default by Buyer under this Agreement. This
Section 6.3.4 shall not, however, be deemed to alter or impair any rights or
remedies that Sellers may have under this Agreement after Closing has been
completed.
6.3.5. The Escrowee may act upon any instrument or other writing
believed by Escrowee in good faith to be genuine and to be signed and presented
by the proper person, and shall not be liable in connection with the performance
of any duties imposed upon the Escrowee by the provisions of this Agreement,
except for the Escrowee's own willful default or gross negligence. The Escrowee
shall have no duties or responsibilities except those set forth
18
in this Agreement, unless the same is in writing and signed by Buyer and Randall
M. Griffin or John Harris Gurley, Esquire or Charles E. Garman or Dan R.
Skowronski on behalf of Sellers. Buyer and Sellers shall jointly and severally
indemnify and hold Escrowee harmless from and against all costs, claims, and
expenses, including reasonable attorneys' fees, relating to the performance of
Escrowee of Escrowee's obligations under this Agreement, except with respect to
Escrowee's willful default or gross negligence. The Escrowee shall have the
right to continue to hold the Letter of Credit if there is any dispute between
the parties regarding delivery of the Letter of Credit. The Escrowee shall have
the right to pay the Proceeds into court of competent jurisdiction if there is
any dispute between the parties regarding the payment of the Proceeds.
7. SELLER'S DELIVERIES.
To the extent in any Seller's possession or control, each Seller shall
continue to make available to Buyer, from and after the Contract Date, at
reasonable times and upon reasonable notice, all documents, contracts,
information, Records and exhibits pertinent to the transaction that is the
subject of this Agreement, including, but not limited to, the documents listed
as "Seller's Deliveries" on Exhibit "Seller's Deliveries" attached hereto.
8. INSPECTION PERIOD.
8.1. Project Inspection. At all times prior to the Closing, including
times following the Inspection Period, Buyer, its agents and representatives
shall be entitled to conduct an inspection of the Projects, which will include
the rights to: (i) enter upon the Land and Improvements, on reasonable notice to
Seller, to perform inspections and tests of any and all of the Projects,
including, but not limited to, inspection, evaluation and testing of the
heating, ventilation and air-conditioning systems and all components thereof,
all structural and mechanical systems within the Improvements, including, but
not limited to, sprinkler systems, power lines and panels, air lines and
compressors, automatic doors, tanks, pumps, plumbing and all equipment,
vehicles, and Personal Property; (ii) examine and copy any and all Records;
(iii) make investigations with regard to zoning, environmental (including, but
not limited to, an environmental assessment as specified in Section 8.2, which
includes, but is not limited to, an analysis of the presence of any asbestos,
chlordane, formaldehyde or other Hazardous Material in, under or upon the
Projects, or any underground storage tanks on, or under, the Land), building,
code, regulatory and other legal or governmental requirements; (iv) make or
obtain market studies and real estate tax analyses; and (v) interview Tenants
with respect to their current and prospective occupancies. Without limitation of
the foregoing, Buyer or its designated independent or other accountants may
audit the Operating Statements (as defined in Exhibit "Seller's Deliveries"
attached hereto), and Sellers shall supply such documentation as Buyer or its
accountants may reasonably request in order to complete such audit.
Notwithstanding anything to the contrary contained in this Agreement, the effect
of any representations, warranties or undertakings made by Sellers in this
Agreement shall not be diminished, abrogated, or compromised by the foregoing
inspections, environmental assessments or other tests or investigations made by
Buyer.
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8.2. Environmental Assessment. Buyer or Buyer's agent(s) shall have the
right to employ one or more environmental consultants or other professional(s)
to perform or complete such environmental inspections and assessments of the
Projects as Buyer deems necessary or desirable. Buyer and its consultants shall
also have the right to undertake or complete a technical review of all
documentation, reports, plans, studies and information in possession or control
of Sellers, or its past or present environmental consultants, concerning or in
any way related to the environmental condition of the Projects. In order to
facilitate the assessments and technical review, each Seller shall extend its
full cooperation (but without third party expense to such Seller) to Buyer and
its environmental consultants, including, without limitation, providing access
to all files and fully and completely answering all questions.
8.3. Buyer's Undertaking. Buyer hereby covenants and agrees that it
shall cause all studies, investigations and inspections performed at the
Projects pursuant to this Section 8 to be performed in a manner that does not
materially or unreasonably disturb or disrupt the tenancies or business
operations of any of the Projects' Tenants. In the event that, as a result of
Buyer's exercise of its rights under Sections 8.1 and 8.2, physical damage
occurs to any or all of the Projects, then Buyer shall promptly repair such
damage, at Buyer's sole cost and expense, so as to return the Projects to
substantially the same condition as exists on the Contract Date. Buyer hereby
indemnifies, protects, defends and holds each Seller harmless from and against
any and all losses, damages, claims, causes of action, judgments, damages, costs
and expenses that such Seller actually suffers or incurs as a direct result of
any physical damage caused to, in, or at the Projects during the course of, or
as a result of, any or all of the studies, investigations and inspections that
Buyer elects to perform (or causes to be performed) pursuant to this Section 8.
8.4. Confidentiality. Each party agrees to maintain in confidence, and
not to disclose to Tenants or Tenants' employees, the information contained in
this Agreement or pertaining to the transaction contemplated hereby and the
information and data furnished or made available by Sellers to Buyer, its agents
and representatives in connection with Buyer's investigation of the Projects and
the transactions contemplated by this Agreement; provided, however, that each
party, its agents and representatives may disclose such information and data (i)
to such party's accountants, attorneys, existing or prospective lenders,
investment bankers, accountants, underwriters, ratings agencies, partners,
consultants and other advisors in connection with the transactions contemplated
by this Agreement to the extent that such representatives reasonably need to
know (in the disclosing party's reasonable discretion) such information and data
in order to assist, and perform services on behalf of, the disclosing party;
(ii) to the extent required by any applicable statute, law, regulation or
Governmental Authority (including, but not limited to, Form 8-K and other
reports and filings required by the SEC and other regulatory entities, as
described in Exhibit "Securities Reporting Requirements" attached hereto) or by
the New York Stock Exchange in connection with the listing of the Conversion
Shares; (iii) in connection with any litigation that may arise between the
parties in connection with the transactions contemplated by this Agreement or
otherwise relating to the Projects or any of them; (iv) to the extent such
disclosure is required or appropriate in connection with any securities offering
or other capital markets or financing transaction undertaken by the REIT; (v) to
the extent such information and data become generally available to the public
other than as a result of disclosure by such party or its agents or
representatives; and (vi) to the extent
20
such information and data become available to such party or its agents or
representatives from a third party who, insofar as is known to such party, is
not subject to a confidentiality obligation to the other party hereunder; and
(vii) to the extent necessary in order to comply with each party's respective
covenants, agreements and obligations under this Agreement. In the event the
transactions contemplated by this Agreement shall not be consummated, such
confidentiality shall be maintained indefinitely. Furthermore, Sellers and Buyer
acknowledge that, notwithstanding any contrary term of this Section 8.4, Buyer
shall have the right to conduct Tenant interviews during the Inspection Period,
and the disclosure of the existence of this Agreement to the Tenants shall not
constitute a breach of the above restriction. Buyer shall also have the right to
issue a press release mutually acceptable to Buyer and Sellers upon the
execution of this Agreement and consummation of the transactions described in
this Agreement.
9. TITLE AND SURVEY MATTERS.
9.1. Title. At the Closing, Sellers agree that each Entity (except Tred
Avon) and Brandon shall have good and marketable fee simple title to its
Project(s), free and clear of all liens, claims and encumbrances except for the
Permitted Exceptions. From and after the date of this Agreement, Sellers shall
not take any action, or fail to take any action, that would cause title to the
Projects to be subject to any title exceptions or objections, other than the
Permitted Exceptions.
9.2. Title Commitments/Surveys. On or before thirty (30) days after the
Contract Date, Buyer shall furnish Sellers with a preliminary title reports
issued by the Title Company covering the Projects (the "Title Reports") and a
written notice specifying those title exceptions which are not acceptable to
Buyer in Buyer's commercially reasonable judgment, which objection may include
matters shown on any updated or re-certified survey which Buyer may obtain (the
"Disapproved Exceptions"). Buyer's failure to designate as one of the
Disapproved Exceptions a title exception shown on the Title Report shall
constitute Buyer's approval of such title exception (all title exceptions not
designated by Buyer as Disapproved Exceptions are in this Agreement called
"Permitted Exceptions"). The applicable Seller(s) shall use their best efforts
to cause the removal of all Disapproved Exceptions on or before ten (10) days
after Buyer's notice to Seller of such Disapproved Exceptions, except that liens
of an ascertainable amount and other items which can be removed by the payment
of money shall be paid and discharged by Sellers at or before Closing. Within
such ten (10) day period, Seller(s) shall notify Buyer of all Disapproved
Exceptions that Seller(s), after using their best efforts, are unable to remove.
Seller(s)' failure to give Buyer notice of Seller(s)' inability to remove any
Disapproved Exceptions shall constitute such Seller(s)' covenant that such
Disapproved Exceptions shall be removed at or prior to the Closing. Buyer shall
have the rights set forth in Section 9.4 if any Disapproved Exceptions cannot be
removed by the applicable Seller(s) at or prior to the Closing.
9.3. It shall be an Buyer's Condition Precedent that the marked-up
Title Reports delivered on the Closing Date shall be in the form described in
this Section 9.3 and have all standard and general printed exceptions deleted so
as to afford full "extended form coverage," and shall further include an owner's
comprehensive endorsement, an endorsement
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certifying that the bills for the real estate taxes pertaining to the Land and
Improvements do not include taxes pertaining to any other real estate; an access
endorsement; a contiguity endorsement, if applicable; a subdivision or plat act
endorsement; a survey endorsement; a non-imputation endorsement; a Fairway
endorsement; and a creditors' rights endorsement (if available).
9.4. If Sellers are unable to correct or remove any Disapproved
Exceptions in accordance with the requirements of this Section 9, Buyer shall
have the sole option of either (i) completing the Closing subject to such
Disapproved Exceptions without any abatement of the Consideration, except that
liens of an ascertainable amount and other items which can be removed by payment
of money shall be paid and discharged by Sellers or (ii) having the Letter of
Credit returned to Buyer and being immediately paid Buyer's Reasonable Costs
and, in the latter event, the parties shall be released from all liability or
obligation to the other and this Agreement shall then and thereafter be null and
void.
9.5. Tred Avon Loan Documents. At Closing, the Tred Avon Loan Documents
shall be free and clear of all liens, claims, encumbrances and security
interests of any nature, except the portion of the Assumed Indebtedness held by
Provident Bank of Maryland for which the Tred Avon Loan Documents are security,
and shall evidence and secure first and second deeds of trust as described on
Exhibit "Tred Avon Loan Documents" encumbering the Project identified as Tred
Avon on Exhibit "Projects".
10. REPRESENTATIONS AND WARRANTIES AS TO PROJECTS.
10.1. Sellers. The Sellers represent and warrant to Buyer, for
themselves and the Entities, that the following matters are true as of the
Contract Date and shall be true as of the Closing Date and covenant as follows:
10.1.1. Title. The Entities and CPI as to Brandon are the legal
fee simple titleholder of the Projects as more particularly described on Exhibit
"Projects", and, other than with respect to the Permitted Exceptions, have,
good, marketable and insurable title to the Projects, free and clear of all
mortgages and security interests (other than the Assumed Indebtedness and
Satisfied Indebtedness), leases, agreements and tenancies (other than the
Leases), licenses, claims, options, options to purchase, liens, covenants,
conditions, restrictions, rights-of-way, easements, judgments and other matters
affecting title to the Projects. The Projects are the only tangible assets owned
by the Entities. The sole business of each Entity is its ownership and operation
of the Project owned by it.
10.1.2. Seller's Deliveries. All of Seller's Deliveries listed on
Exhibit "Seller's Deliveries" attached hereto and all other items delivered by
Sellers pursuant to this Agreement are true, accurate, correct and complete in
all material respects, and fairly present the information set forth in a manner
that is not misleading. The copies of all documents and other agreements
delivered or furnished and made available by Sellers to Buyer pursuant to this
Agreement constitute all of and the only Leases and other agreements relating to
or affecting the ownership and operation of the Projects, there being no
material "side" or other agreements,
22
written or oral, in force or effect, to which any Seller or Entity is a party or
to which the Project(s) is/are subject.
10.1.3. Defaults. Neither the Entities nor any Seller is in
default under any of the documents, recorded or unrecorded, referred to in the
title commitments. To the knowledge of Sellers, there are no defaults under any
of the Major Repair Contracts, Contracts or Governmental Approvals (as such
terms are defined in Exhibit "Seller's Deliveries" attached hereto).
10.1.4. Contracts. There are no contracts of any kind relating to
the management, leasing, operation, maintenance or repair of any Project, except
the Contract listed on Exhibit "Service Contracts" attached hereto. Each Seller
and each Entity has performed all material obligations required to be performed
by it, and is not in default, under any of such Contracts. The Contract may, by
the express terms thereof be assigned to Buyer by notice to such effect to the
appropriate contract party, without penalty or other payment by Sellers, the
Entities or Buyer.
10.1.5. Improvements. The Improvements were completed and
installed in accordance with the Plans (as defined in Exhibit "Seller's
Deliveries" attached hereto), which were approved by all Governmental
Authorities having jurisdiction thereover, and there are not outstanding any
notices of any material violation of any governmental laws, ordinances, rules or
regulations with respect to such Improvements.
10.1.6. Employees. The Entities do not have any employees.
10.1.7. Compliance with Laws and Codes. The Projects, and the
use and operation of any or all of them are (or the use and operation of any
component, portion or area of any Project is) in material compliance with
applicable municipal and other governmental laws, ordinances, regulations,
codes, licenses, permits and authorizations, and there are presently and
validly in effect all licenses, permits and other authorizations necessary
(including, without limitation, certificates of occupancy) for the use,
occupancy and operation of the Projects as they are presently being operated,
whether required of any Entity or any Tenant. Without limiting the foregoing,
the Projects comply in all material respects with all applicable requirements
of the Americans With Disabilities Act of 1990 (42 U.S.C.A. Section 12101 et
seq.). The Projects are zoned by the municipality in which they are located
so as to permit office and retail uses and structures thereon, in a manner
that accommodates and is fully compatible with the Buildings and Improvements
as they presently exist. No zoning, subdivision, environmental, Hazardous
Material, building code, health, fire, safety or other law, order or
regulation is, or, on the Closing Date will be, violated by the continued
maintenance, operation or use of any Improvements or parking areas in the
Projects, and no notice of any such violation issued by any Governmental
Authority having jurisdiction over the Projects is outstanding. All existing
streets and other improvements, including water lines, sewer lines,
sidewalks, curbing and streets at each Project have been paid for and either
enter such Project through adjoining public streets, or, if they enter
through private lands, do so in accordance with valid, irrevocable easements
running with the ownership of such Project.
23
10.1.8. Litigation. There are no pending (or to the best of each
Seller's knowledge, threatened) judicial, municipal or administrative
proceedings affecting any Entity or any Project, or in which any Seller is or
will be a party by reason of such Entity's ownership or operation of any Project
or any portion thereof, including, without limitation, proceedings for or
involving collections, condemnation, eminent domain, alleged building code or
environmental or zoning violations, or personal injuries or property damage
alleged to have occurred on any Project or by reason of the condition, use of,
or operations on, such Project, except certain litigation to which CPI is a
party, but which is not material to the transfer of any Interests or Brandon by
CPI and is not related to any Project. No attachments, execution proceedings,
assignments for the benefit of creditors, insolvency, bankruptcy, reorganization
or other proceedings are pending against any Entity, any Seller, or to the best
of Seller's knowledge, threatened against any Entity or any Seller, nor are any
of such proceedings contemplated by any Entity or any Seller. In the event any
proceeding of the character described in this Section 10.1.8 is initiated or
threatened against any Entity or Seller prior to the Closing, Sellers shall
promptly advise Buyer thereof in writing, Sellers shall remain responsible
therefor, and Sellers shall indemnify, defend and hold Buyer from any claims,
losses, liabilities and expenses (excluding, without limitation, reasonable
counsel fees) relating to any such occurrence.
10.1.9. Insurance. Each Entity or Seller now has in force
customary and commercially reasonable amounts of property, liability and
business interruption insurance relating to the Projects from established and
reputable insurers. No Entity or Seller has received any notice from any
insurance carrier, nor is any Entity or Seller aware of, any defects or
inadequacies in the Projects that, if not corrected, would result in termination
of insurance coverage or increase in the normal and customary cost thereof.
10.1.10. Financial Information. All Operating Statements (as
defined in Exhibit "Seller's Deliveries" attached hereto) delivered by Sellers,
and all of Sellers' and/or the Entities' Records, are complete, accurate, true
and correct, in all material respects; have been compiled in accordance with
generally accepted accounting principles; and accurately set forth the results
of the operation of the Projects and Entities for the periods covered. There has
been no material adverse change in the financial condition or operation of the
Projects and Entities since the period covered by the Operating Statements.
10.1.11. Re-Zoning. There is not now pending, and neither any
Entity nor any Seller has knowledge of, any threatened proceeding for the
rezoning of any Project or any portion thereof, or the taking of any other
action by governmental authorities that would have any material adverse impact
on the value of any Project or use thereof.
10.1.12. Real Estate Taxes. True and complete copies of the most
recent real estate "Tax Bill(s)" for (and the only real estate tax bills
applicable to) the Projects have been delivered to Buyer. Except as set forth on
Exhibit "Real Estate Tax Matters" attached hereto, no Entity nor Seller has
received notice of and does not have any actual knowledge of any proposed
increase in the assessed valuation or rate of taxation of any or all of the
Projects from that reflected in the most recent Tax Bills. Except as described
on Exhibit "Real Estate Tax
24
Matters" attached hereto, there is not now pending, and no Entity will, without
the prior written consent of Buyer, institute prior to the Closing Date, any
proceeding or application for a reduction in the real estate tax assessment of
any of the Projects or any other relief for any tax year. There are no
outstanding agreements with attorneys or consultants with respect to the Tax
Bills that will be binding on Buyer or any of the Projects after the Closing,
except for Constellation Centre as noted on Exhibit "Real Estate Tax Matters".
Other than the amounts disclosed by the Tax Bills, no other real estate taxes
have been, or will be, assessed against the Projects, or any portion thereof, in
respect of the year 1998 or any prior year, and no special assessments of any
kind (special, bond or otherwise) are or have been levied against the Projects,
or any portion thereof, that are outstanding or unpaid, and, to the best of each
Seller's knowledge, none will be levied prior to the Closing. Each Entity has
paid all real estate taxes presently due and owing with respect to the Projects.
10.1.13. Easements and Other Agreements. To the knowledge of
Sellers, no Entity or Seller is in default in complying with the terms and
provisions of any of the covenants, conditions, restrictions, rights-of-way or
easements constituting one or more of the Permitted Exceptions.
10.1.14. Lease Controversies. Except as described in Exhibit
"Lease Controversies" attached hereto, no material controversy, complaint,
negotiation or renegotiation, proceeding, suit or litigation relating to all or
any of the Leases, is pending or, to the knowledge of Sellers, threatened,
whether in any tribunal or informally. Sellers are and shall remain responsible
after the Closing Date for defending (or continuing) any such suit, proceeding
or other matter relating to periods prior to the Closing Date, and all damages,
loss, expenses and costs related thereto.
10.1.15. Existing Loan Documents. Exhibits "Assumed Loan
Documents" and "Satisfied Loan Documents" set forth true, correct and complete
schedules of all of the notes, deeds of trust, and other loan documents
evidencing or securing the Assumed Indebtedness and Satisfied Indebtedness,
respectively. Sellers have delivered true, correct and complete copies of the
Existing Loan Documents to Buyer prior to the date hereof as part of the
Seller's Deliveries. Each Entity and Seller has complied with (and, prior to the
Closing, shall continue to comply with) the terms of, and all notices or
correspondence received from the holders of, the Existing Loan Documents. Each
Entity and/or Seller has paid (and, at all times prior to the Closing, shall
pay) all sums due under the Existing Loan Documents. No Entity or Seller shall
make any prepayment of any amount due under the Loan Documents. The Existing
Loan Documents are in full force and effect, and, to the best knowledge of each
Seller and each Entity, no Entity nor any Seller is in default thereunder, and
there has not occurred any event which, with the giving of notice and/or the
passage of time, or both, would constitute a default by any Entity or Seller
thereunder or under any of the Existing Loan Documents. The outstanding
principal balance under the Assumed Indebtedness as of the Contract Date is
$13,062,178 ($9,625,148.00 as to the Project known as Cranberry Square and
$3,457,030.00 secured by a security interest in the deed of trust encumbering
the Project known as Tred Avon.)
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10.1.16. Tred Avon Loan Documents. Exhibit "Tred Avon Loan
Documents" attached hereto sets forth a true, correct and complete schedule of
all of the notes, deeds of trust and the other loan documents evidencing or
securing the Tred Avon Indebtedness. Sellers have delivered true, correct and
complete copies of the Tred Avon Loan Documents to Buyer prior to the date
hereof as part of the Seller's Deliveries. TA Associates Limited Partnership has
complied with the terms of, and all notices or correspondence received from the
holder of, the Tred Avon Loan Documents. TA Associates Limited Partnership has
paid all sums due under the Tred Avon Loan Documents. The Tred Avon Loan
Documents are in full force and effect, and to the best knowledge of each Seller
and each Entity, TA Associates Limited Partnership is not in default thereunder,
and there has not occurred any event which, with the giving of notice and/or the
passage of time, or both, would constitute a default by TA Associates Limited
Partnership thereunder or under any of the Tred Avon Loan Documents. The
outstanding principal balance under the Tred Avon Loan Documents on the Contract
Date is $9,659,512.00.
10.1.17. Condemnation. Sellers and the Entities have no knowledge
of any pending or contemplated condemnation or other governmental taking
proceedings affecting all or any part of any or all of the Projects.
10.1.18. Disclosure. No representation or warranty made by any
Seller in this Agreement, no exhibit attached hereto with respect to the
Projects, and no schedule contained in this Agreement contains any untrue
statement of a material fact, or omits to state a material fact necessary in
order to make the statements contained therein not misleading. Except as
otherwise expressly set forth in this Agreement, Seller makes no representation
or warranty, express or implied, as to the physical condition of the Projects,
and Buyer is purchasing the Interests and Brandon with the Projects "AS-IS,
WHERE-IS" as to physical condition.
The representations and warranties in this Section 10 shall be deemed remade
by each Seller as of the Closing Date with the same force and effect as if in
fact specifically remade at that time. The representations and warranties made
in this Section 10 shall survive the Closing for a period of eighteen (18)
months. Notwithstanding anything to the contrary herein, the effect of the
representations and warranties made in this Agreement by Sellers shall not be
diminished, abrogated or deemed to be waived by the inspections, assessments, or
any other investigations made by Buyer.
26
11. REPRESENTATIONS AS TO INTERESTS/SECURITIES AND RELATED MATTERS.
11.1. Sellers. The Sellers represent and warrant to Buyer that the
following matters are true as of the Contract Date and shall be true as of the
Closing Date and covenant as follows:
11.1.1. Authority. Each Seller is duly formed, validly existing,
and in good standing under the laws of Maryland, and has the power and authority
to own the Interests owned by it. The execution and delivery of this Agreement
by Sellers, and the performance of this Agreement by Sellers, have been duly
authorized by Sellers, respectively, and this Agreement is binding on Sellers
and enforceable against them in accordance with its terms. No consent of any
creditor, investor, partner, shareholder, tenant-in-common, judicial or
administrative body, Governmental Authority, or other governmental body or
agency, or other party to such execution, delivery and performance by Sellers is
required. Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in a breach of, default under,
or acceleration of, any agreement to which Sellers are a party or by which
Sellers, or the Projects are bound; or (ii) violate any restriction, court
order, agreement or other legal obligation to which Sellers, and/or any of the
Projects are subject.
11.1.2. Entities. Each Entity is duly formed, validly existing,
and in good standing under the laws of Maryland, and has the power and authority
to own its Project (or, as to Tred Avon, the Tred Avon Loan Documents). Sellers
have delivered to Buyer, as part of Sellers' Deliveries, all of the documents
relating to the formation or governance of the Entities. Each Entity is a single
purpose entity, organized for the sole purpose of owning its Project (or as to
Tred Avon, the Tred Avon Loan Documents).
11.1.3. Interest. The direct and indirect ownership of each Seller
including percentage interests of ownership, is as reflected on Exhibit
"Sellers". The Interests constitute one hundred percent (100%) of the Interests
in the Entities, except Tred Avon in which CPI owns a seventy-five percent (75%)
Interest. Each Seller owns the Interests owned by such Seller, as set forth on
Exhibit "Sellers" hereto, free and clear of all liens, charges, encumbrances,
restrictive agreements and assessments, other than restrictions on transfers and
other similar provisions as set forth in the relevant Partnership Agreement,
which such Seller warrants and represents shall not be violated by the
assignment of Interests contemplated by this Agreement. Upon the assignment of
such Seller's Interest to the Buyer (or its designee(s)), the Buyer will receive
good and absolute title thereto, free from all liens, charges, encumbrances,
restrictive agreements and assessments whatsoever, other than restrictions on
transfers and other similar provisions as set forth in the relevant Partnership
Agreement. Each Seller hereby waives, with respect to the assignment
contemplated by this Agreement, any "right of refusal" or other restriction on
transfer set forth in the Partnership Agreement of any Entity of which such
Seller is a partner. There are no outstanding options, contracts, calls,
commitments or demands of any nature relating to the Interests of any Seller.
27
11.1.4. No Transfers of Interests. There will be no changes in the
composition of any Entity between the date of this Agreement and Closing, except
for transfers by and between entities controlled by CPI ("CPI Affiliates").
Transfers of any Interests to CPI Affiliates shall be subject to this Agreement,
the transferor/assignor Sellers shall not be relieved of their obligations under
this Agreement, and the CPI Affiliates which are transferees/assignees of
Interests shall become Sellers under this Agreement. Sellers shall give Buyer
written notice of such transfers to CPI Affiliates and shall provide Buyer with
copies of all executed documents effecting such transfers.
11.1.5. Tax-Related Issues.
(a) Each Entity is, and at all times has been, properly
treated as a partnership for federal income tax purposes and not as an
"association" or "publicly traded partnership" taxable as a corporation.
(b) Each Entity has filed or caused to be filed in a timely
manner (within any applicable extension periods) all tax, information or other
returns required to be filed by the Code or by applicable state, or local tax
laws (collectively, "Tax Returns"). Such Tax Returns are true, correct and
complete in all respects; and all federal, state or local income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, unemployment, disability, personal property, sales, use, transfer,
registration, estimated, or other tax of any kind whatsoever, including any
interest, penalty or other addition thereto, whether disputed or not,
(collectively, "Taxes") due, and Taxes due in respect of any person for which
the applicable Entity had an obligation to withhold and/or otherwise pay over
Taxes, have been timely paid in full or will be timely paid in full by the due
date thereof (and whether or not shown on a Tax Return). With respect to any
taxable year for which a statute of limitations (or similar provision) has not
yet run, none of the Tax Returns of the applicable Entity has been audited by a
government or taxing authority, nor is any such audit or other proceeding in
process, pending, threatened (either in writing or verbally, formally or
informally) or expected to be asserted with respect to Taxes (or the collection
of Taxes) of the applicable Entity, and no Entity has received notice (either in
writing or verbally, formally or informally) or expects to receive notice that
it has not filed a Tax Return or not paid Taxes required to be filed, withheld,
or paid by it. Each Entity has disclosed on its federal income tax returns all
positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Code Section 6662. No claim has ever been made by
an authority in a jurisdiction where such Entity does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction.
11.1.6. United States Person. Each Entity and each Seller is a "United
States Person" within the meaning of Section 1445(f)(3) of the Code, as amended,
and shall execute and deliver an "Entity Transferor" certification at Closing.
11.1.7. Entity Liabilities. Except for (i) the Assumed Indebtedness,
and (ii) any accrued liabilities and obligations of the Entities that are being
adjusted at the Closing pursuant to Section 17 of this Agreement, the Entities
shall not have any liabilities or obligations, either accrued, absolute,
contingent, or otherwise, which will not be paid or
28
discharged on or before the Closing Date. In addition, except for the claims and
liabilities described in the preceding sentence, neither the Sellers nor the
Entities have received notice of any claim against (or liability of) the
Entities arising from business done, transactions entered into or other events
occurring prior to the Closing Date (and to the best knowledge of the Sellers
and the Entities, no basis for any such claim or liability exists).
11.1.8. Investment Representation. Each Seller has such knowledge
and experience in financial and business matters so as to be fully capable of
evaluating the merits and risks of an investment in the Shares. No Shares will
be issued, delivered or distributed to any person or entity who either (i) is a
resident of the State of California or New York or (ii) is other than an
Accredited Investor with respect to whom there has been delivered to Buyer
satisfactory Investor Materials confirming the status of such person or entity
as an Accredited Investor. Each Seller has been furnished with the informational
materials described in Section 4.2 above (collectively, the "Informational
Materials"), and has read and reviewed the Informational Materials and
understands the contents thereof. The Sellers have been afforded the opportunity
to ask questions of those persons they consider appropriate and to obtain any
additional information they desire in respect of the Shares and the business,
operations, conditions (financial and otherwise) and current prospects of the
Buyer and the REIT. The Sellers have consulted their own financial, legal and
tax advisors with respect to the economic, legal and tax consequences of
delivery of the Shares and have not relied on the Informational Materials,
Buyer, the Buyer, the REIT or any of their officers, directors, affiliates or
professional advisors for such advice as to such consequences. All of the
holders of interests in each Seller are Accredited Investors. No Seller requires
the consent of any interest holder in order to consummate the transactions
contemplated by this Agreement, including, without limitation, to amend any
partnership agreement, operating agreement, charter or other governing document
of such Seller. All of the Sellers are formed under the law of the State of
Maryland, or as to natural individuals, are domiciled in the State of Maryland.
11.1.9. The representations and warranties in this Section 11.1
shall be deemed remade by each Seller, as of the Closing Date with the same
force and effect as if specifically remade at that time. The representations and
warranties made in this Section 11.1 shall survive the Closing without
limitation.
11.2. COPLP and the REIT. COPLP and the REIT represent and warrant to
Sellers that the following matters are true as of the Contract Date and shall be
true as of the Closing Date:
11.2.1. COPLP is a limited partnership validly existing under
the laws of the State of Delaware and has all requisite power to carry on its
business as now conducted. The REIT is the sole general partner of COPLP and
is a duly formed and validly existing Maryland real estate investment trust.
Each of COPLP and the REIT has full power and authority and possesses all
material authorizations and approvals necessary to enable it to execute and
deliver this Agreement and the other documents to be executed by it pursuant
to this Agreement, and perform its obligations hereunder and thereunder. This
Agreement and the other documents to be executed by COPLP and the REIT
pursuant to this Agreement when executed and delivered
29
by COPLP and the REIT will, subject to approval by the shareholders of the
REIT prior to Closing, constitute valid and legally binding obligations of
each of COPLP and the REIT, enforceable against them in accordance with their
respective terms, subject to bankruptcy and insolvency laws, and to equitable
principles which may be imposed by courts.
11.2.2. Subject to approval by the shareholders of the REIT, the
execution, delivery and performance of this Agreement and the other documents to
be executed, delivered and performed pursuant to this Agreement do not and will
not (with or without the passage of time or the giving of notice): (i) violate
or conflict with COPLP's Partnership Agreement or the REIT's Amended and
Restated Declaration of Trust, or any law binding upon COPLP or the REIT; (ii)
violate or conflict with, result in a breach of, or constitute a default or
otherwise cause any loss of benefit under, any agreement or other obligation to
which COPLP or the REIT is a party or by which either of them (or the assets of
either of them) is bound, or give to any other party any rights (including,
without limitation, rights of termination, foreclosure, cancellation or
acceleration) in, or with respect to COPLP or the REIT; or (iii) result in,
require, or permit the creation or imposition of, any restriction, mortgage,
deed of trust, pledge, lien, security interest or other charge, claim or
encumbrance upon, or with respect to, COPLP or the REIT or the assets of either
of them.
11.2.3. There are no actions, suits, claims, proceedings,
investigations or inspections, pending or (to the REIT's knowledge) threatened,
against or affecting COPLP or its Affiliates which could have a material adverse
affect on COPLP and its Affiliates considered as a whole, and to the REIT's
knowledge there are no matters of litigation or governmental proceedings
expected to be brought against it or its Affiliates which could have a material
adverse affect on the financial condition of the REIT and its Affiliates
considered as a whole.
11.2.4. No consent, order, approval or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or agency, domestic or foreign, is
required by or with respect to the COPLP or the REIT in connection with the
execution, delivery and performance of this Agreement and the other documents to
the executed, delivered and performed pursuant to this Agreement.
11.2.5. The Informational Materials did not, as of their
respective dates of filing, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading. There has not been any material adverse change in the
business of COPLP or the REIT since March 31, 1998. Except as may otherwise be
set forth therein, the financial statements (including the notes thereto) of the
REIT set forth in the Informational Materials present fairly the consolidated
financial position of the REIT as at the dates set forth therein and its results
of operations, changes in consolidated stockholder equity and cash flows for
periods covered thereby, all in conformity with United States generally accepted
accounting principles applied on a consistent basis for such periods.
30
11.2.6. The Shares to be issued at Closing will, when issued and
delivered, be duly authorized, validly issued, fully paid, non-assessable shares
of the REIT free from all claims of preemptive rights.
11.2.7. COPLP has been at all times, and presently intends to
continue to be, classified as a partnership for federal income tax purposes and
not an association taxable as a corporation or a publicly traded partnership
taxable as a corporation. The REIT is now, and presently intends to continue to
be classified, as a real estate investment trust under Section 856 of the
Internal Revenue Code of 1986, as amended.
11.2.8. All documents and other papers delivered by or on behalf
of COPLP or the REIT in connection with the transactions contemplated by this
Agreement are accurate and complete in all material respects and are authentic.
No representation or warranty of COPLP or the REIT contained in this Agreement
contains any untrue statement of a material fact or omits to state a fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. Except as described in
this Agreement or in the Informational Materials there is no fact known to COPLP
or the REIT or (other than proposed or enacted legislation, proposed or enacted
regulation, or general economic or real estate industry conditions and changes)
that materially adversely affects or, so far as COPLP and the REIT can
reasonably foresee, materially threatens, the assets, activities, prospects,
financial condition or results of COPLP or the REIT.
11.2.9. The representations and warranties in this Section 11.2
shall be deemed remade by COPLP and REIT as of the Closing Date with the same
force and effect as if remade at Closing. The representations and warranties
made in this Section 11.2 shall survive Closing without limitation.
12. COVENANTS OF SELLER.
Sellers (for themselves and for the Entities) hereby covenant with Buyer as
follows:
12.1. New Leases. Neither the Entities nor CPI as to Brandon shall
amend any Lease or execute any new lease, license, or other agreement affecting
the ownership or operation of all or any portion of the Projects or for personal
property, equipment, or vehicles, without Buyer's prior written approval. The
Tred Avon Loan Documents shall not be amended without the prior written consent
of Buyer. The Existing Loan Documents shall not be amended without the prior
written consent of Buyer. Buyer shall be deemed to have consented to any
document or action under Sections 12.1 or 12.2 for which Sellers have requested
approval by written request (specifying in such request that Buyer must object,
if at all, within five (5) days after receipt) to Buyer if Buyer does not object
to such document or action within five (5) days after receiving such request
from Sellers. No prepayment shall be made under any of loans evidenced or
secured by the Existing Loan Documents.
12.2. New Contracts. Neither the Entities nor CPI shall enter into any
contract with respect to the ownership and operation of all or any portion of
any or all of the Projects that
31
will survive the Closing, or that would otherwise affect the use, operation or
enjoyment of any or all of the Projects, without Buyer's prior written approval,
except for service contracts entered into in the ordinary course of business
that are terminable, without penalty, on not more than 30 days' notice, for
which no consent shall be required.
12.3. Insurance. The insurance policies described in Section 10.1.11
above shall remain continuously in force through and including the Closing Date.
12.4. Operation of Projects. The Entities and CPI as to Brandon shall
operate and manage the Projects in a manner consistent with the manner in which
they are being operated on the Contract Date, maintaining the current level of
services, shall maintain the Projects in good repair and working order; shall
keep on hand sufficient materials, supplies, equipment and other Personal
Property for the efficient operation and management of the Projects in a first
class manner; and shall perform, when due, all of the Entities' obligations
under the Existing Loan Documents, Leases, Contracts, Governmental Approvals and
other agreements relating to the Projects and otherwise in accordance with
applicable laws, ordinances, rules and regulations affecting the Projects.
Except as otherwise specifically provided herein, the Entities and CPI as to
Brandon shall deliver the Projects at Closing in substantially the same
condition as each of them is in on the Contract Date, reasonable wear and tear
excepted. Sellers shall cause Tred Avon to the collect the indebtedness under,
and shall hold the Tred Avon Loan Documents in the manner in which they are
currently being collected and held. Sellers shall cause the Entities to pay when
due all amounts due under Existing Loan Documents and to perform all obligations
of such Entities under the Loan Documents.
12.5. Pre-Closing Expenses. Sellers have paid or will pay or cause to
be paid in full, prior to the Closing, all bills and invoices for labor, goods,
material and services of any kind relating to the Projects and utility charges,
relating to the period prior to the Closing. Except as the parties may otherwise
agree at or prior to Closing, any alterations, installations, decorations and
other work required to be performed under any and all agreements affecting the
Projects have been or will, by the Closing, be completed and paid for in full.
12.6. Good Faith. All actions required pursuant to this Agreement that
are necessary to effectuate the transaction contemplated herein will be taken
promptly and in good faith by Sellers or the Entities, as applicable, and each
Seller shall furnish Buyer with such documents or further assurances as Buyer
may reasonably require.
12.7. No Assignment. After the Contract Date and prior to the Closing,
no Seller shall assign, alienate, lien, encumber or otherwise transfer all or
any part of any or all of the Interests, the Projects or any interest in any or
all of them, except for transfers of Interests to CPI Affiliates. Sellers shall
give Buyer notice of the transfers of any Interests to CPI Affiliates, together
with copies of the signed documents effecting such transfers.
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12.8. Availability of Records, Audit Representation Letter.
12.8.1. Upon Buyer's request, for a period of two years after the
Closing, Sellers shall (i) make the Records available to Buyer for inspection,
copying and audit by Buyer's designated accountants; and (ii) cooperate with
Buyer (without any third party expense to Sellers) in obtaining any and all
permits, licenses, authorizations, and other Governmental Approvals necessary
for the operation of any or all of the Projects. Without limitation of the
foregoing in this Section 12.8, Sellers agree to abide by the terms of Exhibit
"Securities Reporting Requirements" attached hereto. At any time before or
within two years after the Closing, Sellers further agree to provide to the
Buyer's designated independent auditor, upon request of Buyer or such auditor:
(x) access (to the same extent to which Buyer would be entitled to such access)
to the books and records of the Projects and all related information (including
the information listed on Exhibit "Securities Reporting Requirements") regarding
the period for which Buyer is required to have the Project audited under the
regulations of the Securities and Exchange Commission, and (y) a representation
letter delivered by each managing agent of the Projects regarding the books and
records of the Projects, in substantially the form as attached hereto as Exhibit
"Audit Representation Letter".
12.8.2. In addition, Sellers shall provide, and cooperate, in all
respects, in providing, Buyer with copies of, or access to, such factual
information as may be reasonably requested by Buyer, and in the possession or
control of Sellers, to enable the REIT to issue one or more mutually agreed upon
press releases concerning the transaction that is the subject of this Agreement,
to file a Current Report on Form 8-K (as specified on Exhibit "Securities
Reporting Requirements" attached hereto), if, as and when such filing may be
required by the SEC and to make any other filings that may be required by any
Governmental Authority. The obligation of Sellers to cooperate in providing
Buyer with such information for Buyer to file its Current Report on Form 8-K
shall survive the Closing.
12.9. Change in Conditions. Sellers shall promptly notify Buyer of any
change in any condition with respect to any or all of the Entities, the Projects
or of the occurrence of any event or circumstance that makes any representation
or warranty of Sellers to Buyer under this Agreement untrue or misleading, or
any covenant of Buyer under this Agreement incapable or less likely of being
performed, it being understood that Sellers' obligation to provide notice to
Buyer under this Section 12.9 shall in no way relieve Sellers of any liability
for a breach by Sellers of any of its representations, warranties or covenants
under this Agreement.
12.10. Entity Structure. Except for transfers of Interests to CPI
Affiliates, from the Contract Date through and including the Closing Date, the
Entities and Sellers shall maintain the same composition of its partners,
shareholders and members as the case may be, as exists on the Contract Date,
unless otherwise expressly or consented to by Buyer in writing.
12.11. Cure of Violations. On or before the Closing Date, Sellers shall
cure (or escrow sufficient funds at the Closing with the Title Company to cure)
(i) all violation(s) of law, code, ordinance or regulation that are the subject
of any written notice issued by a Governmental
33
Authority with respect to any Project, and (ii) legal deficiencies discovered at
or in any Project before the Closing.
12.12. Tenant Purchase Rights. Exhibit "Tenant Purchase Rights" sets
forth the purchase rights of three (3) Tenants as more particularly described in
Exhibit "Tenant Purchase Rights", a right of first option held by Giant of
Maryland, Inc. ("Giant") with respect to the Cranberry Square Project (the
"Giant Purchase Right"), an option to purchase held by the United States of
America with respect to the One National Business Park Project (the "USA
Purchase Right"), and a right of first refusal held by Green Spring Health
Services, Inc. with respect to the Woodlands I Project (the "Green Spring
Purchase Right").
12.12.1. Buyer agrees to accept the One National Business Park
Project subject to the USA Purchase Right.
12.12.2. Promptly after the Contract Date, Sellers shall notify
Giant of this transaction and the sale of the Interests of the Entity owning the
Cranberry Square Project. The obligation of Buyer to purchase the Interests of
Entity owning Cranberry Square is contingent upon Giant's entering into an
agreement of sale to purchase the Cranberry Square Project on or before the
Closing Date. If, prior to Closing, Giant enters into an agreement to purchase
the Cranberry Square Project or the Interests of the Entity owing the Cranberry
Square Project, the Cranberry Square Project shall be deleted from this
Agreement, this Agreement shall be deemed to have been automatically amended so
as to delete the Project from this Agreement, and Buyer and Sellers shall
proceed to close on the remaining Projects subject to a reduction in the
Consideration by the amount of the Consideration allocated to the Cranberry
Square Project.
12.12.3. Promptly after the Contract Date, Sellers shall notify
Green Spring Health Services, Inc. ("Green Spring") of this transaction and the
sale of the Interests of the Entity owning the Woodlands I Project. Buyer's
obligation to purchase the Interests of the Entity owning the Woodlands I
Project is contingent upon (a) the exercise by Green Spring of the Green Spring
Purchase Right or (b) the waiver by Green Spring on or before the Closing Date
(either in writing or due to the passage of time) of its right, if any, to
purchase the Woodlands I Project pursuant to the terms contemplated by this
Agreement. If Green Spring exercises the Green Spring Purchase Right or does not
waive such right (either in writing or due to the passage of time) on or before
the Closing Date, the Green Spring Purchase Right with respect to the Woodlands
I Project as it relates to the transaction contemplated by this Agreement, the
Woodlands I Project shall be deleted from this Agreement, this Agreement shall
be deemed to have been automatically amended so as to delete the Woodlands I
Project from this Agreement, and Buyer and Sellers shall proceed to close on the
remaining Projects, subject to a reduction in the Consideration by the amount of
the Consideration allocated to the Woodlands I Project.
All covenants made in this Agreement by Sellers shall survive the Closing for a
period of eighteen (18) months.
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13. ENVIRONMENTAL WARRANTIES AND AGREEMENTS.
13.1. Definitions. Unless the context otherwise requires:
13.1.1. "Environmental Law" or "Environmental Laws" shall mean
all applicable past, present or future federal, state and local statutes,
regulations, directives, ordinances, rules, court orders, decrees,
arbitration awards and the common law, which pertain to environmental
matters, contamination of any type whatsoever or health and safety matters,
as such have been amended, modified or supplemented from time to time
(including all present and future amendments thereto and re-authorizations
thereof). Environmental Laws include, without limitation, those relating to:
(i) the manufacture, processing, use, distribution, treatment, storage,
disposal, generation or transportation of Hazardous Materials; (ii) air,
soil, surface, subsurface, groundwater or noise pollution; (iii) Releases;
(iv) protection of wildlife, endangered species, wetlands or natural
resources; (v) Tanks; (vi) health and safety of employees and other persons;
and (vii) notification requirements relating to the foregoing. Without
limiting the above, Environmental Law also includes the following: (i) the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601 et seq.), as amended ("CERCLA"); (ii) the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), as amended ("RCRA"); (iii) the Emergency
Planning and Community Right to Know Act of 1986 (42 U.S.C. Section 11001 et
seq.), as amended; (iv) the Clean Air Act (42 U.S.C. Section 7401 et seq.),
as amended; (v) the Clean Water Act (33 U.S.C. Section 1251 et seq.), as
amended; (vi) the Toxic Substances Control Act (15 U.S.C. Section 2601 et
seq.), as amended; (vii) the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), as amended; (viii) the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), as amended;
(ix) the Federal Safe Drinking Water Act (42 U.S.C. Section 300f et seq.), as
amended; (x) the Federal Radon and Indoor Air Quality Research Act (42 U.S.C.
Section 7401 note, et seq.); (xi) the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), as amended; (xii) any state, county, municipal
or local statutes, laws or ordinances similar or analogous to (including
counterparts of) any of the statutes listed above; and (xiii) any rules,
regulations, directives, orders or the like adopted pursuant to or
implementing any of the above.
13.1.2. "Environmental Permit" or "Environmental Permits" shall
mean licenses, certificates, permits, directives, requirements, registrations,
government approvals, agreements, authorizations, and consents which are
required under or are issued pursuant to an Environmental Law or are otherwise
required by Governmental Authorities.
13.1.3. "Hazardous Conditions" refers to the existence or presence
of any Hazardous Materials on, in, under, or at, the Projects (including air,
soil and groundwater) or any portion of any of them.
13.1.4. "Hazardous Material" or "Hazardous Materials" shall mean:
(a) any chemical, pollutant, contaminant, pesticide,
petroleum or petroleum product or by product, radioactive substance, solid waste
(hazardous or extremely hazardous), special, dangerous or toxic waste,
substance, chemical or material regulated, listed,
35
limited or prohibited under any Environmental Law, including without limitation:
(i) friable or damaged asbestos, asbestos-containing material, presumed
asbestos-containing material, polychlorinated biphenyls ("PCBs"), solvents and
waste oil; (ii) any "hazardous substance" as defined under CERCLA; and (iii) any
"hazardous waste" as defined under RCRA; and
(b) even if not prohibited, listed, limited or regulated by
an Environmental Law, all pollutants, contaminants, hazardous, dangerous or
toxic chemical materials, wastes or any other substances, including without
limitation, any industrial process or pollution control waste (whether or not
hazardous within the meaning of RCRA) which could pose a hazard to the
environment, or the health and safety of any person or impair the use or value
of any portion of the Projects.
13.1.5. "Release" means any spill, discharge, leak, migration,
emission, escape, injection, dumping or other release or threatened release of
any Hazardous Material into the environment, whether or not notification or
reporting to any Governmental Authority was or is required. Release includes,
without limitation, historical releases and the meaning of Release as defined
under CERCLA.
13.1.6. "Remedial Action" shall mean any and all corrective or
remedial action, preventative measures, response, removal, transport, disposal,
clean-up, abatement, treatment and monitoring of Hazardous Materials or
Hazardous Conditions, whether voluntary or mandatory, and includes all studies,
assessments, reports or investigations performed in connection therewith to
determine if such actions are necessary or appropriate (including investigations
performed to determine the progress or status of any such actions), all
occurring on or after the Contract Date.
13.1.7. "Remedial Costs" shall include all costs, liabilities
expenses and fees incurred on or after the date of this Agreement in connection
with Remedial Action, including but not limited to: (i) the fees of
environmental consultants and contractors; (ii) reasonable attorneys' fees
(including compensation for in-house and corporate counsel provided such
compensation does not exceed customary rates for comparable services); (iii) the
costs associated with the preparation of reports, and laboratory analysis
(including charges for expedited results if reasonably necessary); (iv)
regulatory, permitting and review fees; (v) costs of soil and/or water treatment
(including groundwater monitoring) and/or transport and disposal; and (vi) the
cost of supplies, equipment, material and utilities used in connection with
Remedial Action.
13.1.8. "Tank" or "Tanks" means above-ground and underground
storage tanks, vessels and related equipment, including appurtenant pipes, lines
and fixtures containing or previously containing any Hazardous Material or
fraction thereof.
13.2. Warranties. Sellers, for themselves and for the Entities, hereby
represent and warrant as follows with respect to each Project:
36
13.2.1. Sellers and the Entities have made available or delivered
to Buyer originals (or true, complete and accurate copies) of all of the
documents in their possession, custody or control, which documents include
and/or relate to:
(a) All approvals, plans, specifications, test borings,
percolation tests, engineering studies, surveys or other environmental data
concerning the Projects;
(b) All permits (including Environmental Permits), approvals,
registrations, Tank registration and/or closure documentation, certificates,
applications, notices, orders, directives, legal pleadings, correspondence or
other documents of any nature that any Entity or Seller, any tenant of Entity,
any of Entity's predecessors-in-title or any tenant of Entity's
predecessors-in-title have submitted to, or received from, any Governmental
Authority regarding the Projects and their use, compliance or non-compliance
with Environmental Laws; and
(c) The results of any investigation of any of the Projects
including, but not limited to, Phase I or Phase II site assessments, asbestos
inspection and/or removal reports, tests or investigations of soil or other
substrate air, groundwater, surface water, or the building interior, and any
testing or investigation results relating to the removal or abandonment of any
Tanks from the Projects.
13.2.2. To the knowledge of Sellers, each Project is owned and
operated in material compliance with all Environmental Laws and Environmental
Permits.
13.2.3. There are no pending or, to the Sellers' and Entities'
knowledge, threatened: (i) claims, complaints, notices, correspondence or
requests for information received by Sellers or the Entities with respect to any
violation or alleged violation of any Environmental Law or Environmental Permit
or with respect to any corrective or remedial action for or cleanup of the
Project or any portion thereof; and (ii) written correspondence, claims,
complaints, notices, or requests for information from or to Sellers or Entities
regarding any actual, potential or alleged liability or obligation under or
violation of any Environmental Law or Environmental Permit with respect to the
Project or any portion thereof.
13.2.4. To Seller's knowledge, there have been no Releases and
there has not been a threatened Release of a Hazardous Material on, in, under or
at the Project or any portion thereof.
13.2.5. No Project is listed, proposed or nominated for listing on
the National Priorities List pursuant to CERCLA (the "NPL"), the Comprehensive
Environmental Response and Liability Information System ("CERCLIS") or on any
other similar list of sites under analogous state laws.
13.2.6. Except as listed and described on Exhibit "USTs", there
are no Tanks at, on or under the Project. Neither the Sellers nor the Entities
have removed, closed or
37
abandoned any Tanks at the Projects, and neither the Sellers nor the Entities
have any knowledge of the existence, abandonment, closure or removal of Tanks at
the Projects.
13.2.7. To the knowledge of Sellers, there are no PCBs or friable
or damaged asbestos at the Projects.
13.2.8. To the knowledge of Sellers, there has been no storage,
treatment, disposal, generation, transportation or Release of any Hazardous
Materials by any Entity or Seller or by any other person or entity for which any
Seller or Entity is or may be held responsible, at, on, under, or about any
Project (or any portion thereof) in violation of Environmental Laws.
13.3. Indemnity. Notwithstanding anything to the contrary in this
Agreement, with respect to each Project, each of the Sellers, and each of
Sellers' shareholders, partners and members, (collectively, jointly and
severally, "Post Closing Seller") agree to and do hereby indemnify, defend and
hold harmless Buyer, the REIT and each of their respective partners,
shareholders, agents, contractors, employees, officers, directors, trustees,
shareholders, and each of their successors and assigns (collectively, the "Buyer
Indemnified Parties"), from and against any and all liabilities, claims,
demands, suits, administrative proceedings, causes of action, costs, damages,
personal injuries and property damages, losses and expenses, both known and
unknown, present and future, at law or in equity (collectively, "Losses"),
arising out of, by virtue of or related in any way to a breach by Sellers of any
of their representations and warranties under Sections 13.2 through and
including 13.2.8.
Without limiting any of Post-Closing Seller's above indemnification
obligations, Post-Closing Seller further acknowledges and agrees that its
obligation to indemnify the Buyer Indemnified Parties with respect to any breach
by Sellers of their representations and warranties under Sections 13.2 through
and including 13.2.8, includes, without limitation: (i) any and all Remedial
Costs associated with any Tank, Hazardous Material, Hazardous Condition or any
Release; (ii) to the maximum extent allowed by law, all fines and/or penalties
that may be imposed in connection with any Tank or the existence of any
Hazardous Material on, at, under, near, in or about the Projects; (iii) the
defense of any claim made by any individual or entity (including any government,
governmental agency or entity) concerning any of the foregoing, which defense
shall be conducted by counsel and with the assistance of environmental advisors
and consultants, in all cases subject to the prior written approval of Buyer;
and (iv) reasonable attorneys' fees and costs and environmental advisors' and
consultants' fees incurred by any of the Buyer Indemnified Parties with respect
to enforcing its rights under this indemnification provision. This Section 13
shall survive the Closing for a period of thirty (30) months. Indemnification
claims by Buyer under this Section 13.3 are subject to Section 20.3.
14. ADDITIONAL CONDITIONS PRECEDENT TO CLOSING.
14.1. Buyer's Conditions Precedent. In addition to the other conditions
enumerated in this Agreement, the following shall be additional Buyer's
Conditions Precedent:
38
14.1.1. Physical Condition. The physical condition of each Project
shall be substantially the same on the Closing Date as on the Contract Date,
reasonable wear and tear excepted, unless the alteration of said physical
condition is the result of Damage.
14.1.2. Pending Actions. At the Closing, there shall be no
administrative agency, litigation or governmental proceeding of any kind
whatsoever, pending or threatened, that, after the Closing, would, in Buyer's
sole and absolute discretion, materially and adversely affect any Entity or the
value or marketability of any Project or the Projects as a whole, or the ability
of Buyer to operate any or all of the Projects in the manner it is (they are)
being operated on the Contract Date.
14.1.3. Zoning. On the Closing Date, no proceedings shall be
pending or threatened that could or would involve the change, redesignation,
redefinition or other modification of the zoning classifications of (or any
building, environmental, or code requirements applicable to) any or all of the
Projects, or any portion thereof, or any property adjacent to any Project, in a
manner which, in Buyer's sole and absolute discretion, would materially and
adversely affect the value or marketability of any Project.
14.1.4. Flood Insurance. As of the Closing Date, if any Project is
located in a flood plain, Buyer shall have obtained flood plain insurance in
form and substance acceptable to Buyer.
14.1.5. Assumed Indebtedness. Sellers shall provide to Buyer
letters from each of the holders of the Assumed Indebtedness dated no earlier
than 30 days prior to the Closing Date, approving the transfer of the Interests
to the Buyer, setting forth the amount of principal and interest outstanding as
of the Closing Date, and stating that there has not been, and there does not
currently exist, any default under any of the Assumed Indebtedness. Such letters
shall be referred to collectively as the "Lenders' Approvals."
14.1.6. Satisfied Indebtedness. Sellers shall provide to Buyers
payoff letters good through the Closing Date from all holders of the Satisfied
Indebtedness stating the amount required to pay off the Satisfied Indebtedness.
14.1.7. Owners. The composition of partners, shareholders and
members of each Entity and each Seller on the Closing Date shall be the same as
on the Contract Date, except for transfers to CPI Affiliates.
14.1.8. Bankruptcy. As of the Closing Date, no Seller, no Entity
and no Project is the subject of any bankruptcy proceeding for which approval of
this transaction has not been given and issued by the applicable bankruptcy
court.
14.1.9. Representations and Warranties True. The representations
and warranties of Sellers contained in this Agreement shall be true and correct
as of the Closing Date in all material respects, as though such representations
and warranties were made on such date.
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14.1.10. Covenants Performed. All covenants and obligations of
Sellers required to be performed on or prior to the Closing Date shall have been
performed, in all material respects.
14.1.11. Approval by Buyer's Shareholders. REIT's Board of
Trustees and shareholders shall have approved this Agreement and the
consummation of the transactions contemplated by this Agreement.
14.2. Seller's Additional Conditions Precedent. The following shall be
additional Seller's Conditions Precedent:
14.2.1. Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and correct as of
the Closing Date, in all respects, as though such representations and warranties
were made on such date.
14.2.2. Covenants. All covenants of Buyer required to be performed
on or prior to the Closing Date shall have been performed, in all material
respects.
15. LEASES-CONDITIONS PRECEDENT AND WARRANTIES WITH RESPECT THERETO.
15.1. Warranties as to Leases. With respect to each of the tenants
listed on the Rent Roll (as defined in Exhibit "Seller's Deliveries") provided
to Buyer by Sellers and any other tenants leasing space in any or all of the
Projects as of the Closing Date (collectively, the "Tenants"), Sellers, for
themselves and for the Entities, represent and warrant to Buyer as of the
Contract Date and as of the Closing Date as follows:
15.1.1. Each of the Leases is in full force and effect strictly
according to the terms set forth therein and in the Rent Roll, and has not been
modified, amended, or altered, in writing or otherwise. Each Tenant is legally
required to pay all sums and perform all obligations set forth in the Leases,
without concessions, abatements, offsets or other bases for relief or
adjustment;
15.1.2. All obligations of the lessor under the Leases that accrue
to the date of the Closing have been performed, including, but not limited to,
all required tenant improvements, cash or other inducements, rent abatements or
moratoria, installations and construction (for which payment in full has been
made in all cases), and each Tenant has unconditionally accepted lessor's
performance of such obligations. No Tenant has asserted any offsets, defenses or
claims available against rent payable by it or other performance or obligations
otherwise due from it under any Lease;
15.1.3. Other than as shown on the Rent Roll, no Tenant is in
default under or is in arrears in the payment of any sums or in the performance
of any obligations required of it under its Lease. No Tenant has prepaid any
rent or other charges;
40
15.1.4. Each Entity and CPI as to Brandon have no reason to
believe that any Tenant is, or may become, unable or unwilling to perform any or
all of its obligations under its Lease, whether for financial or legal reasons
or otherwise;
15.1.5. Neither base rent ("Base Rent"), nor regularly payable
estimated Tenant contributions or operating expenses, insurance premiums, real
estate taxes, common area charges, and similar or other "pass-through" or
non-base rent items including, without limitation, cost-of-living or so-called
"C.P.I." or other such adjustments (collectively, "Additional Rent"), nor any
other item payable by any Tenant under any Lease has been heretofore prepaid for
more than one month nor shall it be prepaid between the Contract Date and the
Closing Date for more than one month;
15.1.6. No guarantor(s) of any Lease has been released or
discharged, partially or fully, voluntarily or involuntarily, or by operation of
law, from any obligation under or in connection with any Lease or any
transaction related thereto;
15.1.7. Except as specifically disclosed on Exhibit "Commissions,"
there are no brokers' commissions, finders' fees, or other charges payable or to
become payable to any third party on behalf of any Entity as a result of or in
connection with any Lease or any transaction related thereto, including, but not
limited to, any exercised or unexercised option(s) to expand or renew;
15.1.8. Each security deposit provided for under each Lease shall
be fully assigned to Buyer at the Closing. No Tenant or any other party has
asserted any claim (other than for customary refund at the expiration of a
Lease) to all or any part of any security deposit;
15.1.9. Sellers shall pay, and retain sole and exclusive
responsibility for, all expenses due on or before the Closing Date connected
with or arising out of the negotiation, execution and delivery of the Leases,
including, without limitation, brokers' commissions (subject to Section 17.7),
leasing fees and recording fees (as well as the cost of all tenant improvements,
subject to Section 17.7, not paid for by Tenants), and Sellers shall be deemed
to have certified and warranted payment thereof to Buyer at the Closing;
15.1.10. Except as set forth on Exhibit "Tenant Purchase Rights",
no Tenant has, by virtue of its Lease or any other agreement or understanding,
any purchase option with respect to any Project, or any portion thereof, or any
right of first refusal to purchase any Project, or a portion thereof, whether
triggered by the transactions contemplated by this Agreement or by a subsequent
sale of such Project or a portion thereof. Except as set forth on the Rent Roll,
no Tenant has, by virtue of its Lease, or any other agreement or understanding
any of the following: (a) the right or option to expand its tenancy into space
at any Project other than the space that such Tenant is currently occupying; (b)
the right or option to terminate its Lease; and (c) the right or option to
contract the space at any Project that such Tenant is currently occupying;
41
15.1.11. (a) Except as specifically disclosed on the Rent Roll
delivered to Buyer, no Tenant has sublet its leased premises; and (b) there are
no outstanding requests from any Tenants to Seller, requesting any consent to an
assignment of the Tenant's Lease or to a sublease of all or some portion of a
Tenant's leased premises.
Each Seller hereby indemnifies, defends and holds Buyer harmless from and
against all loss, damage, liability, cost, expense (including, but not limited
to, reasonable fees of attorneys of Buyer's choice) and charges which Buyer may
incur, or to which Buyer may become subject, as a consequence of any breach of
the warranties contained in this Section 15. The foregoing indemnity shall
survive the Closing for a period of eighteen (18) months.
15.2. Estoppel Certificates from Tenants. Sellers shall use Sellers'
commercially reasonable efforts to obtain, on or prior to the Closing Date, a
tenant's estoppel certificate from Tenants occupying at least eighty percent
(80%) of each Project (except Tred Avon) or such larger percentage as Buyer's
lender or lenders may require (provided, that Buyer advises Sellers of lender
requirements at least thirty (30) days before Closing) (the "Estoppel
Certificate"), dated no earlier than thirty (30) days prior to the Closing Date,
from each of the Tenants. The Estoppel Certificate shall be certified to Buyer,
the Entity owning the Project in which the applicable Tenant is located, and any
other party designated by Buyer. If Sellers (despite Sellers' required best
efforts) are unable to obtain an Estoppel Certificate from the required
percentage of Tenants Buyer's sole remedy shall be to proceed to close and
accept Seller's own Estoppel Certificate with respect to the Lease and tenancy
for which Sellers fail to procure an Estoppel Certificate from the relevant
Tenant (and any Estoppel Certificate so executed by a Seller shall also be
tailored, in a manner mutually and reasonably acceptable to Buyer and such
Seller, to reflect its issuance by the landlord, rather than the Tenant in
question). Each such Estoppel Certificate shall be substantially in the form
attached hereto as Exhibit "Tenant Estoppel Certificate" or in such other form
as Buyer's lender or lenders may require. At Buyer's request, when Sellers
request the Tenant Estoppels, Sellers shall simultaneously request, and
thereafter Sellers shall use Sellers' commercially reasonable efforts to obtain,
on or before the Closing Date, from each Tenant a subordination, non-disturbance
and attornment agreement in such form and content as Buyer or Buyer's lender may
require.
16. CLOSING DELIVERIES.
16.1. Sellers' Deliveries. At the Closing (or such other times as may
be specified below), Sellers shall deliver or cause to be delivered to Buyer the
following, in form and substance reasonably acceptable to Buyer and Sellers:
16.1.1. Assignment of Interests. As to each Entity, an Assignment
and Assumption Agreement, an Amendment to the Entity Agreement, and an Amendment
to the filed Entity Certificate setting forth the assignment by each of the
Sellers of such Seller's Interests and his, her or its withdrawal from the
Entity and the admission of the Buyer and/or its designee(s) as partners of the
Entity, which amendment shall be executed and acknowledged by all Sellers and
the Buyer.
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16.1.2. Release. A release from each Seller releasing each Entity
and the Buyer (and its designee(s)) as partners of the Entities from any
obligations and liabilities with respect to the original formation of the
Entities, and any other matter arising from business done, transactions entered
into or events occurring prior to the Closing Date.
16.1.3. Opinion. The opinion, in form and substance reasonably
acceptable to Buyer and Buyer's counsel, of Dan R. Skowronski, Esquire, General
Counsel of Constellation Holdings, Inc., to the effect that, providing, or with
respect to:
(a) Each Entity is a duly organized and validly existing
entity in good standing under the laws of the State of Maryland;
(b) (i) the legal existence and good standing of each Entity
and each Seller in Maryland; (ii) the due authorization, execution and delivery
of this Agreement, and the other documents required (under the terms of this
Agreement) to be delivered by each Seller; (iii) that this Agreement and the
other documents required (under the terms of this Agreement) to be delivered by
each Seller, constitute the legal, valid and binding obligations of such Seller,
enforceable against it in accordance with their respective terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws of
general applicability relating to or affecting the enforcement of creditors'
rights and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding of equity or at law;
(c) The execution and delivery of this Agreement and all
other agreements delivered in connection herewith or at the Closing, the
consummation of the transactions herein contemplated, and compliance with the
terms of this Agreement and all other agreements delivered in connection
herewith or at the Closing will not conflict with, or result in a breach of, any
of the terms, conditions or provisions of, or constitute a default under, any
note, indenture, mortgage, deed of trust, contract or other agreement or
instrument to which any Entity is a party or by which any Entity is bound, or
any law or order, rule, regulation, writ, injunction or decree of any
government, governmental instrumentality or court, domestic or foreign; and
(d) There is no litigation or investigation pending or, to
the best of such counsel's knowledge, threatened against any Entity, any
Project, or any part thereof.
16.1.4. Lenders' Approvals and Payoff Letters. The Lenders'
Approvals from all holders of the Assumed Indebtedness in conformity with
Section 14.1.5 and the payoff letters required by Section 14.1.6.
16.1.5. Estoppel Certificates. The Estoppel Certificates of all
Tenants in conformity with Section 15.2;
16.1.6. Keys. Keys to all locks located at each Project;
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16.1.7. Affidavit of Title and ALTA Statement. As to each Project,
an Affidavit of Title (or comparable document) as reasonably required by the
Title Company in the Commonwealth of Pennsylvania as a condition to the deletion
of the general exceptions of Schedule B, Section 2 of each Title Policy,
executed by the applicable Entity or Seller, as applicable, and in form and
substance acceptable to the Title Company and to Buyer;
16.1.8. Letters to Tenants. If requested by Buyer, letters
executed by the applicable Entities and, if applicable, its management agent,
addressed to all Tenants, in form provided by Buyer, notifying all Tenants of
the transfer of control of the Projects and directing payment of all rents
accruing after the Closing Date to be made to Buyer or at its direction;
16.1.9. Title Policies. The title policies (or "marked-up" Title
Reports) issued by the Title Company, dated as of the Closing Date in the amount
of the Consideration allocated to each Project, in accordance with the
requirements of Section 9 (it being understood that CPI as to Brandon will
provide any certificates or undertakings required in order to induce the Title
Company to insure over any "gap" period resulting from any delay in recording of
documents or later-dating the title insurance file);
16.1.10. Original Documents. To the extent not previously
delivered to Buyer, originals of the Leases, Assigned Contracts and Governmental
Approvals;
16.1.11. Closing Statement. A closing statement conforming to the
proration and other relevant provisions of this Agreement (the "Closing
Statement") duly executed by Sellers;
16.1.12. Plans and Specifications. All plans and specifications
relating to the Projects in any Entity's or Seller's possession and control or
otherwise available to any Entity or Seller;
16.1.13. Tax Bills. Copies of the most currently available Tax
Bills to the extent not previously delivered to Buyer;
16.1.14. Entity Transfer Certificate. Entity transfer
certifications confirming that each Seller is a "United States Person" within
the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended;
16.1.15. Rent Roll. A Rent Roll, prepared as of the Closing Date,
certified by the applicable Sellers to be true, complete and correct through the
Closing Date;
16.1.16. Registration Rights Agreement. The Registration Rights
Agreement, dated as of the Closing Date and duly executed by the Sellers;
16.1.17. Share Schedule. The Share Schedule, duly executed by
Sellers;
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16.1.18. Certificates of Occupancy. Currently valid certificates
of occupancy (or comparable permits or licenses), to the extent in Sellers'
possession or control, with respect to the entirety of each Project;
16.1.19. Closing Certificate. A certificate, signed by Sellers,
certifying to the Buyer that the representations and warranties of Sellers
contained in this Agreement are true and correct on all material respects as of
the Closing Date and that all covenants required to be performed by Sellers
prior to the Closing Date have been performed in all material respects;
16.1.20. Resolutions, Consents, Approvals. Certified Resolutions,
consents, and approvals of each Sellers evidencing such Seller's authority to
execute this Agreement and consummate the transactions contemplated by this
Agreement.
16.1.21. Good Standing Certificate. Currently dated good standing
certificates for the Sellers and the Entities.
16.1.22. Deed. Special Warranty Deed, Executed by CPI, in
recordable form conveying Brandon to Buyer free and clear of all liens, claims
and encumbrances except for the Permitted Exceptions.
16.1.23. Bill of Sale. General Warranty Assignment and Bill of
Sale, executed by CPI, assigning, conveying and warranting to Buyer title to the
Personal Property and Inventory as to Brandon, free and clear of all
encumbrances, other than the Permitted Exceptions.
16.1.24. General Assignment. An assignment, executed by CPI to
Buyer, of all right, title and interest of Contributor and its agents in and to
the Intangible Personal Property as to Brandon.
16.1.25. Assignment of Contracts. An assignment, executed by CPI
and Buyer, to Buyer of CPI's right, title and interest in and to those of the
Contracts that will remain in effect after Closing. CPI shall also assign to
Buyer all guarantees and warranties given to CPI in connection with the
operation, construction, improvement, alteration or repair of any or all of
Brandon.
16.1.26. Assignment of Leases and Estoppel Certificates. An
assignment of CPI's right, title and interest in and to the Leases as to Brandon
(including all security deposits and/or other deposits thereunder), with
customary reciprocal indemnity provisions.
16.1.27. Option/ROFR. The signed Option/ROFR Agreements.
16.1.28. Constellation Lease. The signed Constellation Lease.
16.1.29. Development Management Agreement. The signed Development
Management Agreement.
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16.1.30. TIF Agreement. The signed TIF Agreement.
16.1.31. License Agreements. Signed License Agreements in form and
content reasonably acceptable to Sellers and Buyer giving Buyer, and Buyer's
successors and assigns, the right to use the names "National Business Park".
"Constellation Centre", and "Piney Orchard" in connection with the ownership and
operation of those Projects.
16.1.32. Articles of Transfer. Signed articles of transfer to the
extent required by the State Department of Assessments and Taxation of Maryland.
16.1.33. Other. Such other documents and instruments as may
reasonably be required by Buyer (including, without limitation, those of the
Seller's Deliveries in Seller's possession or control that have not previously
been delivered to Buyer), its (or its underwriters' or lenders') counsel or the
Title Company and that may be necessary to consummate the transactions that are
the subject of this Agreement and to otherwise give effect to the agreements of
the parties hereto.
16.2. Buyer's. As a condition precedent to Seller's obligation to close
("Seller's Condition Precedent"), Buyer shall cause to be delivered to Sellers
the following, each in form and substance reasonably acceptable to Sellers and
Buyer and their respective counsel:
16.2.1. The Consideration. The Consideration required to be
delivered by Buyer to Sellers under this Agreement.
16.2.2. Organizational Documents. (i) A copy certified by the
Secretary of State of the State of Maryland of the Declaration of Trust of the
REIT and a good standing certificate for the REIT; (ii) a copy certified by the
Secretary of State of the State of Delaware of the certificate of limited
partnership of the Buyer and a good standing certificate for the Buyer; and
(iii) a copy, certified by the secretary or an assistant secretary of the REIT,
of the resolution of the REIT's board of directors, authorizing the transactions
described herein;
16.2.3. Closing Statement. A Closing Statement, duly executed by
the Buyer;
16.2.4. Registration Rights Agreement. The Registration Rights
Agreement, duly executed by the REIT;
16.2.5. Share Schedule. Share Schedule, duly executed by the
Buyer;
16.2.6. Tenant Letters. If Buyer has requested such letters, the
Tenant Letters, duly executed by the Buyer;
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16.2.7. Opinion. An opinion of counsel for COPLP and the REIT, in
form and substance reasonably satisfactory to Seller and Seller's counsel,
providing or with respect to: (i) the legal existence and good standing of COPLP
and the REIT; (ii) the due authorization, execution and delivery of this
Agreement, and the other documents required (under the terms of this Agreement)
to be delivered by COPLP and the REIT, as applicable; (iii) that the Shares
issued and delivered to Sellers as part of the Consideration have been duly
authorized and validly issued by the REIT and constitute fully paid,
non-assessable shares of the REIT, free from all pre-emptive rights; (iv) that
this Agreement and the other documents required (under the terms of this
Agreement) to be delivered by each of COPLP and the REIT, as applicable,
constitute the legal, valid and binding obligations of COPLP and the REIT,
enforceable against them in accordance with their respective terms, except to
the extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws of
general applicability relating to or affecting the enforcement of creditors'
rights and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding of equity or at law;
16.2.8. ROFR. The signed ROFR Agreements.
16.2.9. Constellation Lease. The signed Constellation Lease;
16.2.10. Development Management Agreement. The signed Development
Management Agreement;
16.2.11. TIF Agreement. The signed TIF Agreement.
16.2.12. Licenses. The licenses referred to in Section 16.1.31.
16.2.13. Articles of Transfer. The articles of transfer referred
to in Section 16.1.32.
16.2.14. Other. Such other documents and instruments as may
reasonably be required by Sellers or its or their respective counsel or the
Title Company and that are necessary to consummate the transaction which is the
subject of this Agreement and to otherwise effect the agreements of the parties
hereto.
17. PRORATIONS AND ADJUSTMENTS.
The following shall be prorated and adjusted between Sellers and Buyer as of
the Closing Date, except as otherwise specified:
17.1. The amount of all security and other Tenant deposits, and
interest due thereon, if any, shall be credited to Buyer;
17.2. Buyer and Sellers shall divide the cost, if any, of any closing
escrows hereunder equally between them;
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17.3. Water, electricity, sewer, gas, telephone and other utility
charges based, to the extent practicable, on final meter readings and final
invoices, or, in the event final readings and invoices are not available, based
on the most currently available billing information, and reprorated upon
issuance of final utility bills;
17.4. Amounts paid or payable under any Assigned Contracts shall be
prorated based, to the extent practicable, on final invoices, or, in the event
final invoices are not available, based on the most currently available billing
information, and reprorated upon issuance of final invoices;
17.5. All real estate, personal property and ad valorem taxes
applicable to the Projects and levied with respect to current tax year shall be
prorated as of the Closing Date, utilizing the actual final Tax Bills for those
Projects. Prior to or at the Closing, Sellers shall pay or have paid all Tax
Bills that are due and payable prior to or on the Closing Date and shall furnish
evidence of such payment to Buyer and the Title Company. Each party's respective
obligations to reprorate real estate taxes shall survive the Closing.
17.6. All assessments, general or special, shall be prorated as of the
Closing Date on a "due date" basis such that the applicable Entity or Seller
shall be responsible for any installments of assessments which are first due or
payable prior to the Closing Date and Buyer shall be responsible for any
installments of assessments which are first due or payable on or after the
Closing Date;
17.7. Commissions of leasing and rental agents for any Lease entered
into as of or prior to the Contract Date, whether with respect to base lease
term or future expansions, shall be paid in full at or prior to the Closing by
Seller, without contribution or proration from Buyer, except for renewal
commissions as disclosed to Buyer in Exhibit "Commissions". As to Leases entered
into between the Contract Date and the Closing Date in accordance with Section
12.1, commissions shall be prorated as of the Closing Date based upon the
portion of the term of the Lease before Closing and the portion of the term of
this Lease after Closing. At Closing, COPT shall reimburse CPI the amount of
leasing commissions payable to unaffiliated third-parties and tenant
improvements costs payable to unaffiliated third-parties incurred by CPI with
respect to Leases entered into, subject to Section 12.1 of this Agreement, after
March 9, 1998 at the Project known as "One Constellation Centre", the amount
claimed for reimbursement evidenced by invoices or paid receipts from such third
parties or other evidence of expense reasonably required by Buyer..
17.8. Current interest under Assumed Indebtedness shall be prorated as
of the Closing Date.
17.9. All Base Rents and other charges, including, without limitation,
all Additional Rent, shall be prorated as of the Closing Date. At the time(s) of
final calculation and collection from Tenants of Additional Rent for 1998, there
shall be a re-proration between Sellers and Buyer as to Additional Rent
adjustments, with such re-prorations being payable to the
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appropriate recipient in cash. Such re-proration shall be paid upon Buyer's
presentation of its final accounting to Seller, certified as to accuracy by
Buyer. At the Closing, no "Delinquent Rents" (rents or other charges that are
due as of the Closing) shall be prorated in favor of Seller. The parties'
respective obligations to reprorate Additional Rent shall survive the Closing.
Notwithstanding the foregoing, Buyer shall use reasonable efforts after the
Closing Date to collect any Delinquent Rents due to Sellers from Tenants, but
Buyer shall not be required to sue any Tenants. All rents and other charges
received by (or for the benefit of) Buyer from any Tenant after the Closing
shall be first applied against current and past due obligations owed to, or for
the benefit of, Buyer (with respect to those obligations accruing subsequent to
the Closing Date), and any excess shall be delivered to Seller, but only to the
extent of amounts in default and owed to, and for the benefit of, Sellers for
the period prior to the Closing Date. In no event, however, shall any sums be
paid to Sellers to the extent Sellers have been previously reimbursed for such
default out of any security deposit and security deposits have been
appropriately prorated hereunder; and
17.10. Such other items that are customarily prorated in transactions
of this nature shall be ratably prorated.
17.11. With respect to the Project known as "Cranberry Square", at
Closing, Buyer shall reimburse CPI amounts expended by CPI from and after March
9, 1998 until the Closing Date on the expansion of the Cranberry Square Project,
subject, however, to the limitation, that the amount payable to CPI under this
Section 17.11 shall not exceed the amount determined by subtracting the costs to
complete the expansion of the Cranberry Square Project after the Closing Date as
reasonably determined by Buyer and Sellers from Two Million Two Hundred Thousand
Dollars ($2,200,000.00). Amounts claimed for reimbursement shall be evidenced by
invoices or paid receipts from third-parties not affiliated with CPI, or other
evidence of expense reasonably required by Buyer.
For purposes of calculating prorations, Buyer shall be deemed, through
control of the Entities, to be in title to the Projects, and therefore entitled
to the income therefrom and responsible for the expenses thereof, for the entire
Closing Date. All such prorations shall be made on the basis of the actual
number of days of the year and month that shall have elapsed as of the Closing
Date. Bills received after the Closing that relate to expenses incurred,
services performed or other amounts allocable to the period prior to the Closing
Date shall be paid, in cash, by Seller, to the extent due and owing. Bills
received by Sellers after the Closing Date that relate to expenses incurred,
services performed or other amounts allocable to the period on or after the
Closing Date, shall be paid, in cash, by the Buyer, to the extent due and owing.
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18. CLOSING EXPENSES.
18.1. Sellers will pay the entire cost of all assumption charges,
release fees, prepayment fees and any other fees or costs in connection with the
assumption, payoff, release and satisfaction of the Assumed Mortgages and the
Satisfied Mortgages, and all fees imposed by its accountants and attorneys and
consultants in connection with this Agreement and the transaction contemplated
hereunder. Buyer will pay the entire cost of the title policies, the Surveys
(inclusive of any updates thereof), and all fees imposed by its accountants,
attorneys, and environmental and engineering consultants.
18.2. Although Seller and Buyer believe that no real estate transfer or
recording fees or taxes will be due in connection with the assignment of the
Interests, if it is finally determined that such taxes are due and payable in
connection herewith, then the Buyer and the Sellers which held Interests the
transfer of which is deemed subject to real estate transfer tax shall divide
equally the costs of contesting such taxes and shall divide equally the full
amount of such taxes if they are finally determined to be payable. This Section
18.2 shall survive Closing.
18.3. Sellers and Buyer shall divide equally all recordation taxes and
fees, and all realty transfer taxes applicable to the conveyance of Brandon.
19. DESTRUCTION, LOSS OR DIMINUTION OF PROJECTS.
If, prior to the Closing, all or any portion of any Project is damaged by
fire or other natural casualty (collectively, "Damage"), or is taken or made
subject to condemnation, eminent domain or other governmental acquisition
proceedings (collectively, "Eminent Domain"), then the following procedures
shall apply:
19.1. If the aggregate cost of repair or replacement in connection with
any Damage at any Project or the value of the Eminent Domain involving any
single Project (collectively, "repair and/or replacement") is $200,000.00 or
less (on a per Project basis), in the mutual and reasonable opinions of Buyer
and Seller, Buyer shall close and take the Project(s) in question as diminished
by the Damage or Eminent Domain, as the case may be, subject to a reduction in
the Contribution Consideration otherwise due at the Closing, in the full amount
of the cost of repair and/or replacement. Any casualty insurance or condemnation
proceeds shall be the sole property of Seller.
19.2. If the aggregate cost of repair and/or replacement at any single
Project is greater than $200,000.00, in the mutual and reasonable opinions of
Buyer and Seller, then Buyer, in its sole and absolute discretion, may elect any
of the following options: (i) Buyer may delete and eliminate from this Agreement
any Project that is in need of repair and/or replacement in excess of
$200,000.00 by giving written notice to Seller, in which event (A) this
Agreement shall be deemed to have been automatically amended so as to eliminate
the deleted Projects herefrom, and (B) Buyer and Sellers shall proceed to close
on the remaining Projects (i.e., the non-deleted Projects) subject to an
appropriate and commensurate reduction in the Consideration (which reduction
shall include, without limitation, an amount equal to the full cost of repair
and/or
50
replacement of any portion of any non-deleted Project that Buyer proceeds to
purchase); or (iii) Buyer may proceed to close on all of the Projects, subject
to (1) a reduction in the Consideration equal to $200,000.00, on a per Project
basis, otherwise due at the Closing and (2) an assignment of the proceeds of
Seller's casualty insurance proceeds for all Damage (or condemnation awards for
any Eminent Domain) in excess of $200,000.00, on a per Project basis, together
with payment to Buyer by Sellers of any uninsured or deductible amount not
covered by such proceeds. In such event, Sellers shall fully cooperate with
Buyer in the adjustment and settlement of the insurance claim or governmental
acquisition proceeding and if, as of the Closing, the insurance proceeds (or
condemnation award) assignable to Buyer shall not have been collected from the
insurer or Governmental Authority, then a cash credit in the amount thereof
shall be given to Buyer, to be repaid to Sellers out of and upon Buyer's actual
receipt of insurance proceeds. The proceeds and benefits under any rent loss or
business interruption policies attributable to the period following the Closing
shall likewise be transferred and paid over (and, if applicable, likewise
credited on an interim basis) to Buyer.
19.3. In the event of a dispute between Sellers and Buyer with respect
to the cost of repair and/or replacement with respect to the matters set forth
in this Section 19, an engineer designated by Sellers and an engineer designated
by Buyer shall select an independent engineer licensed to practice in the
jurisdiction where the Project in question is located who shall resolve such
dispute. All fees, costs and expenses of such third engineer so selected shall
be shared equally by Buyer and Seller.
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20. DEFAULT.
20.1. Default by Seller. If any of Sellers' representations and
warranties contained herein shall not be true and correct on the Contract Date
and continuing thereafter through and including the Closing Date, or if any
Seller fails to perform any of the covenants and agreements contained herein to
be performed by such Seller within the time for performance as specified herein
(including Seller's obligation to close), or if any of the Buyer's Conditions
Precedent shall not have been satisfied, Buyer may elect either to (i) terminate
Buyer's obligations under this Agreement by written notice to Sellers, in which
event Buyer shall retain all rights and remedies available to it; or (ii) close,
in which event Buyer may file an action for either or both of specific
performance and damages to compel Sellers to cure all or any of such default(s),
in whole or in part, whereupon Buyer shall be entitled to deduct from the
Consideration, the cost of such action and cure, and all reasonable expenses
incurred by Buyer in connection therewith, including, but not limited to,
attorneys' fees of Buyer's counsel. Notwithstanding anything to the contrary
herein and in addition to any other remedies of Buyer, Buyer shall be entitled
to recover actual (but not consequential) damages suffered by Buyer by reason of
Seller's defaults hereunder and/or any delay occasioned thereby, including,
without limitation, Buyer's Reasonable Costs. The remedies of Buyer set forth in
this Section 20.1 shall be in addition to remedies otherwise applicable or
provided in this Agreement or otherwise available to Buyer at law or in equity,
including, without limitation, specific performance, it being understood that
Buyer's rights and remedies under this Agreement shall always be non-exclusive
and cumulative and that the exercise of one remedy or form of relief available
to Buyer hereunder shall not be exclusive or constitute a waiver of any other.
Buyer's remedies under this Section 20.1 shall not be limited by Section 20.3.
20.2. Default by Buyer. In the event Buyer defaults in its obligations
to acquire the Interests and Brandon, then Sellers' sole and exclusive remedy
shall be to cause the Escrowee to deliver the Proceeds, together with all
interest earned thereon, to Seller, the amount thereof being fixed and
liquidated damages, it being understood that Sellers' actual damages in the
event of such default are difficult to ascertain and that such proceeds
represent the parties' best current estimate of such damages. Sellers shall have
no other remedy for any default by Buyer prior to Closing.
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20.3. Indemnification of Buyer.
20.3.1. Indemnification. Each of Seller and each of Seller's
shareholders, members and partners, jointly and severally, as the case may be,
shall and does hereby indemnify, protect, defend and hold the Buyer Indemnified
Parties harmless from and against any claims, losses, demands, liabilities,
suits, costs and damages suffered by the Buyer Indemnified Parties, including
consequential as well as actual damages and attorneys' fees of counsel selected
by the Buyer Indemnified Parties and other costs of defense, incurred, arising
against, or suffered by, the Buyer Indemnified Parties or its assigns as a
direct or indirect consequence of (i) any breach of any representation, warranty
or covenant made in this Agreement by Seller, or any other default by Seller,
whether discovered before or after the Closing or (ii) any default claim, action
or omission arising or alleging to arise under the Existing Loan Documents and
relating to the period prior to the Closing, whether asserted before or after
the Closing. This indemnification obligation shall expire eighteen (18) months
from the Closing Date, except as to claims under Section 13 of this Agreement
which may be made until thirty (30) months after the date of this Agreement, and
except as to claims under Section 11.1 which may be made until the expiration of
the time period under the statute of limitation applicable to such claims..
20.3.2. Limitation of Claims. No claims for indemnification under
this Agreement may be asserted by Buyer Indemnified Parties against the Sellers
until the aggregate amount of such indemnification claims exceeds $125,000.00,
whereupon all such amounts may be claimed.
20.4. Indemnification of Sellers.
20.4.1. Indemnification. Buyer shall indemnify, protect, defend
and hold Sellers' and each of Sellers' shareholders, members and partners (the
"Seller Indemnified Parties") harmless from and against any claims, losses,
demands, liabilities, suits, costs and damages suffered by the Seller
Indemnified Parties, including consequential as well as actual damages and
attorneys' fees of counsel selected by the Seller Indemnified Parties and other
costs of defense, incurred, arising against, or suffered by, the Seller
Indemnified Parties or its assigns as a direct or indirect consequence of any
breach of any representation, warranty or covenant made in this Agreement by
Buyer, or any other default by Buyer, whether discovered before or after the
Closing. This indemnification obligation shall survive Closing.
20.5. Buyer Notice and Right to Cure. Anything contained in this
Agreement to the contrary notwithstanding, any thing or act which would
otherwise be a default hereunder by Buyer shall not be a default unless Sellers
shall have given Buyer notice of such default, and Buyer shall have failed to
cure the same within thirty (30) days after such notice. No notice of default
shall be required in the case of Buyer's default in failing to complete Closing
on the required Closing Date.
20.6. Sellers' Notice and Right to Cure. Anything contained in this
Agreement to the contrary notwithstanding, any thing or act which would
otherwise be a default
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hereunder by Sellers shall not be a default unless Buyer shall have given
Sellers notice of such default, and Sellers shall have failed to cure the same
within thirty (30) days after such notice. No notice of default shall be
required in the case of Sellers' default in failing to complete Closing on the
required Closing Date.
21. SUCCESSORS AND ASSIGNS.
The terms, conditions and covenants of this Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective nominees,
successors, beneficiaries and assigns; provided, however, no direct or indirect
conveyance, assignment or transfer of any interest whatsoever of, in or to any
or all of the Projects or of this Agreement shall be made by Sellers during the
term of this Agreement except to CPI Affiliates, as permitted in Section 11.1.4.
Buyer may assign all or any of its right, title and interest under this
Agreement to the Buyer, the REIT or to any corporate or partnership entity
affiliated with, or related to, the Buyer or the REIT ("Affiliate"). For
purposes of this Agreement, an Affiliate shall, without limitation, include any
entity having common ownership or management with Buyer or the REIT. No such
assignee shall accrue any obligations or liabilities hereunder until the
effective date of such assignment. In addition to its right of assignment, Buyer
shall also have the right, exercisable at or prior to the Closing, to designate
any Affiliate, as the contract party under any contract to be entered into at
Closing pursuant to the terms of this Agreement by Buyer, or as the grantee or
transferee of any or all of the conveyances, transfers and assignments to be
made by Sellers at the Closing hereunder, independent of, or in addition to, any
assignment of this Agreement. In the event of an assignment of this Agreement by
Buyer (but not in the event of the designation of any Affiliate), its assignee
shall be deemed to be the Buyer hereunder for all purposes hereof, and shall
have all rights of Buyer hereunder (including, but not limited to, the right of
further assignment). In the event that an Affiliate shall be designated as a
transferee hereunder, that transferee shall have the benefit of all of the
representations and rights which, by the terms of this Agreement, are
incorporated in or relate to the conveyance in question.
54
22. LITIGATION.
Sellers and Buyer waive all rights to a jury trial with respect to any
disputes relating to this Agreement, whether arising before or after Closing. In
the event of litigation between the parties with respect to any Project, this
Agreement, the performance of their respective obligations hereunder or the
effect of a termination under this Agreement, the losing party shall pay all
costs and expenses incurred by the prevailing party in connection with such
litigation, including, but not limited to, reasonable attorneys' fees of counsel
selected by the prevailing party. The parties hereby further acknowledge and
agree that in the event of litigation between them, as contemplated above, and
the resolution of that litigation through compromise, settlement, or partial
judgment, the court before which such litigation is initially brought shall have
the right to allocate responsibility, between Sellers and Buyer, for all costs
and expenses (including, but not limited to, attorneys' reasonable fees)
incurred by both Sellers and Buyer in the pursuit of that litigation resolved
through compromise, settlement or partial judgment. Notwithstanding any
provision of this Agreement to the contrary, the obligations of the parties
under this Section 22 shall survive termination of this Agreement and the
Closing, if applicable.
23. NOTICES.
Any notice, demand or request which may be permitted, required or desired to
be given in connection therewith shall be given in writing and directed to
Sellers and Buyer as follows:
Sellers:
Constellation Real Estate, Inc.
8815 Centre Park Drive - Suite 400
Columbia, MD 21045
Attention: General Counsel
and
Constellation Holdings, Inc.
250 West Pratt Street
Baltimore, MD 21201-2423
Attention: Dan R. Skowronski, Esquire
With a copy to its attorneys:
Stephen L. Owen, Esquire
Piper & Marbury LLP
36 South Charles Street
Baltimore, MD 21201-3018
55
Buyer:
Corporate Office Properties Trust
One Logan Square, Suite 1105
Philadelphia, PA 19103
Attention: Clay W. Hamlin, III
President and Chief Executive Officer
With a copy to its attorneys:
F. Michael Wysocki, Esquire
Saul, Ewing, Remick & Saul LLP
Centre Square West
1500 Market Street - 38th Floor
Philadelphia, PA 19102
Notices shall be deemed properly delivered and received when and if either (i)
personally delivered, including via facsimile; or (ii) on the first business day
after deposit with a commercial overnight courier for delivery on the next
business day. Any party may change its address for delivery of notices by
properly notifying the others pursuant to this Section 23.
24. BENEFIT.
This Agreement is for the benefit only of the parties hereto and their
nominees, successors, beneficiaries and assignees as permitted in Section 21
above and no other person or entity shall be entitled to rely hereon, receive
any benefit herefrom or enforce against any party hereto any provision hereof.
25. LIMITATION OF LIABILITY.
25.1. Upon the Closing, neither the REIT nor the Buyer shall assume or
undertake to pay, satisfy or discharge any liabilities, obligations or
commitments of Sellers other than those specifically agreed to between the
parties and set forth in this Agreement. Except as otherwise specifically
provided in this Agreement, neither the REIT nor the Buyer shall assume or
discharge any debts, obligations, liabilities or commitments of Seller, whether
accrued now or hereafter, fixed or contingent, known or unknown. Neither the
holders of Shares nor the trustees, officers, employees or agents of the REIT
shall be liable under this Agreement and all parties hereto shall look solely to
the REIT assets for the payment of any claim or for the performance of any
obligation of the REIT as a party to this Agreement, both in its own capacity
and in its capacity as a general partner of the Buyer.
25.2. None of the shareholders, directors, officers, employees or
agents of the Sellers shall be liable under this Agreement and all parties
hereto shall look solely to the Sellers' assets for the payment of any claim or
for the performance of any obligation of the Sellers as a party to this
Agreement.
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26. BROKERAGE.
Each party hereto represents and warrants to the other that it has dealt
with no brokers or finders in connection with this transaction and that no
broker, finder or other party is entitled to a commission, finder's fee or other
similar compensation as a result hereof, except Legg Mason Real Estate Services,
Inc. under separate agreement with Buyer. Buyer shall pay to Legg Mason Real
Estate Services, Inc. the compensation payable to it with respect to this
transaction. Sellers hereby indemnify, protect and defend and hold Buyer
harmless from and against all losses, claims, costs, expenses, damages
(including, but not limited to, attorneys' fees of counsel selected by Buyer)
resulting or arising from the claims of any broker, finder or other such party,
claiming by, through or under the acts or agreements of any Seller. Buyer hereby
indemnifies, defends and holds each Seller harmless from and against all losses,
claims, costs, expenses, damages (including, but not limited to, attorneys' fees
of counsel selected by such Seller) resulting or arising from the claims of any
broker, finder or other such party claiming by, through or under acts or
agreements of Buyer. This Section 26 shall survive any termination of this
Agreement and the Closing, if applicable.
27. REASONABLE EFFORTS.
Sellers and Buyer shall use their reasonable, diligent and good faith
efforts, and shall cooperate with and assist each other in their efforts, to
obtain any and all consents and approvals of third parties (including, but not
limited to, governmental authorities) to the transaction contemplated hereby,
and to otherwise perform as may be necessary or otherwise reasonably requested
by the other party to effectuate and carry out the purposes of, this Agreement.
28. MISCELLANEOUS.
28.1. Entire Agreement. This Agreement, the Services Company Agreement,
and the two option agreements described above constitute the entire
understanding between the parties with respect to the transaction contemplated
herein, and all prior or contemporaneous oral agreements, understandings,
representations and statements, and all prior written agreements,
understandings, letters of intent and proposals are merged into this Agreement.
Neither this Agreement nor any provisions hereof may be waived, modified,
amended, discharged or terminated except by an instrument in writing signed by
the party against which the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument.
28.2. Time of the Essence. Time is of the essence of this Agreement. If
any date herein set forth for the performance of any obligations by Sellers or
Buyer or for the delivery of any instrument or notice as herein provided should
be on a Saturday, Sunday or legal holiday, the compliance with such obligations
or delivery shall be deemed acceptable on the next business day following such
Saturday, Sunday or legal holiday. As used herein, the term "legal holiday"
means any state or federal holiday for which financial institutions or post
offices are generally closed in the State of Maryland for observance thereof.
57
28.3. Conditions Precedent. 28.3.1. The obligations of Buyer to make
the payments and deliver the Shares as described in Section 3 above and to close
the transaction contemplated herein are subject to the express Buyer's
Conditions Precedent set forth in this Agreement, each of which is for the sole
benefit of Buyer and may be waived at any time by written notice thereof from
Buyer to Seller. The waiver of any particular Buyer's Condition Precedent shall
not constitute the waiver of any other.
28.3.2. The obligations of Sellers to close the transaction
contemplated herein are subject to the express Sellers' Condition Precedent set
forth in this Agreement, each of which is for the sole benefit of Sellers and
may be waived at any time by written notice thereof from Sellers to Buyer. The
waiver of any particular Sellers' Condition Precedent shall not constitute the
waiver of any other.
28.4. Construction. This Agreement shall not be construed more strictly
against one party than against the other merely by virtue of the fact that it
may have been prepared by counsel for one of the parties, it being recognized
that both Sellers and Buyer have contributed substantially and materially to the
preparation of this Agreement. The headings of various Sections in this
Agreement are for convenience only, and are not to be utilized in construing the
content or meaning of the substantive provisions hereof.
28.5. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland.
28.6. Partial Invalidity. The provisions hereof shall be deemed
independent and severable, and the invalidity or partial invalidity or
enforceability of any one provision shall not affect the validity of
enforceability of any other provision hereof.
28.7. Expenses. Except and to the extent as otherwise expressly
provided to the contrary herein, Buyer and Sellers shall each bear its own
respective costs and expenses relating to the transactions contemplated hereby,
including, without limitation, fees and expenses of legal counsel or other
representatives for the services used, hired or connected with the proposed
transactions mentioned above.
28.8. Control of Defense Counsel. Each indemnified party shall give
reasonably prompt notice to each indemnifying party of any action or proceeding
commenced against the indemnified party in respect of which indemnity may be
sought hereunder, but failure so to notify an indemnifying party (i) shall not
relieve it from any liability which it may have under any indemnity provided
herein unless and to the extent it did not otherwise learn of such action and
the lack of notice by the indemnified party results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) shall not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party hereunder other than its indemnification obligation if the indemnifying
party so elects within a reasonable time after receipt of such notice, the
indemnifying party may assume the defense of such action or proceeding at such
indemnifying party's own expense with counsel chosen by the indemnifying
58
party; provided, however, that, if such indemnified party or parties reasonably
determine that a conflict of interest exists where it is advisable for such
indemnified party or parties to be represented by separate counsel or that, upon
advice of counsel, there may be legal defenses available to them which are
different from or in addition to those available to the indemnifying party, then
the indemnifying party shall not be entitled to one separate counsel at the
indemnifying party's expense. If an indemnifying party is not so entitled to
assume the defense of such action or does not assume such defense, after having
received the notice referred to in the first sentence of this Section 28.8 , the
indemnifying party or parties will pay the reasonable fees and expenses of
counsel for the indemnified party or parties. In such event however, no
indemnifying party will be liable for any settlement effected without the
written consent of such indemnifying party. If an indemnifying party is entitled
to assume, and assumes, the defense of such action or proceeding in accordance
with this Section, such indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified parties incurred thereafter in
connection with such action or proceeding.
28.9. Waiver of Conditions Precedent. Buyer and Sellers shall each have
the right, in its sole and absolute discretion, to waive any Condition Precedent
for its benefit contained in this Agreement.
28.10. Certain Securities Matters. No sale of Shares is intended by the
parties by virtue of their execution of this Agreement.
28.11. Counterparts. This Agreement may be executed in any number of
identical counterparts, any of which may contain the signatures of less than all
parties, and all of which together shall constitute a single agreement.
28.12. Calculation of Time Periods. Notwithstanding anything to the
contrary contained in this Agreement, any period of time provided for in this
Agreement that is intended to expire on or prior to the Closing Date, but that
would extend beyond the Closing Date if permitted to run its full term, shall be
deemed to expire upon the Closing.
59
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Acquisition Agreement on the date first above written.
Buyer:
CORPORATE OFFICE PROPERTIES,
L.P.
By: Corporate Office Properties Trust,
its sole general partner
BY: /s/ Clay W. Hamlin, III
-------------------------------------
Clay W. Hamlin, III, President and
Chief Executive Officer
[SIGNATURES CONTINUED ON NEXT PAGE]
60
SELLERS:
CONSTELLATION PROPERTIES, INC.
a Maryland corporation
BY: /s/ Randall M. Griffin
--------------------------------------
Printed Name: Randall M. Griffin
Title: President
NBP-I LIMITED PARTNERSHIP
a Maryland limited partnership
BY: Constellation Properties, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
NBP-II LIMITED PARTNERSHIP
a Maryland limited partnership
BY: Constellation Properties, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
NBP-IV, LLC
a Maryland limited liability company
BY: CPI National Business Park IV, Inc.,
a Maryland corporation, Member
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
61
ST. BARNABAS LIMITED PARTNERSHIP
a Maryland limited partnership
BY: Constellation Properties, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
BY: CPO Constellation Centre, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
LAUREL TOWER ASSOCIATES LIMITED
PARTNERSHIP
a Maryland limited partnership
BY: Constellation Properties, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
BY: CPO Laurel Tower, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
62
THREE CENTRE PARK ASSOCIATES LIMITED
PARTNERSHIP
a Maryland limited partnership
BY: Constellation Properties, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
BY: CPO Three Centre Park, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
63
BROWN'S WHARF LIMITED PARTNERSHIP
a Maryland limited partnership
BY: Constellation Properties, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
BY: CPI Brown's Wharf, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
CRANBERRY-140 LIMITED PARTNERSHIP
a Maryland limited partnership
BY: Constellation Properties, Inc.,
a Maryland corporation, General Partner
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
TRED LIGHTLY LIMITED LIABILITY COMPANY
a Maryland limited liability company
BY: CPI Tred Avon, Inc.
a Maryland corporation, Member
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
CONSTELLATION GATESPRING, LLC
a Maryland limited partnership
BY: CPI Gatespring, Inc.,
a Maryland corporation, Member
BY: /s/ Randall M. Griffin
-------------------------------------
Printed Name: Randall M. Griffin
Title: President
64