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.
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 Xxxxxxx (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 Xxxxxxx, 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 Xxxxxxx; (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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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
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the name Constellation; and (vi) such Entity's interest, and CPI's interest as
to Xxxxxxx, in all leases and 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
Xxxxxxx, 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.
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1.7. "Xxxxxxx" shall mean the Project located at 0000
Xxxxxx Xxxxxxx, Xxxx Xxxxxxx Xxxxxx, Xxxxxxxx and identified as Xxxxxxx on
Exhibit "Projects".
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.
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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.
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. "XXXX" 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.
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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.
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.
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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.
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 recital
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.
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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.
1.65. "NOI" shall have the meaning set forth in Section 3.2.
1.66. "Notice of Dispute" shall have the meaning set forth i
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
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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 ful
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.
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 XXXX, 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.
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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).
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".
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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 Xxxxxxx.
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 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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
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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 Xxxxxxx 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 "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
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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 XXXX, as applicable, are released
from their obligations under the Assumed Indebtedness. If, despite Buyer's
commercially reasonable efforts to have the Sellers and XXXX released from thei
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 XXXX, as applicable, obligated on the subject Assumed
Indebtedness with respect to the deleted Project, and Sellers and XXXX, as
applicable, shall accept such indemnification by Buyer in lieu of a release.
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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 Xxx 00 xx xxx Xxxxxxxx
Xxxxxxxx Xxxx xxx Xxxxxxxxx Xxx. 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").
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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 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 Xxxxxxx, 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, Xxxxxx &
Xxxx LLP, Centre Square West, 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, or at such other place as may mutually agreed upon by the
parties.
6.2. NBP 135/Woodlands Closing.
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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 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
Xxxxxxx X. Xxxxxxx or Xxxx Xxxxxx Xxxxxx, Esquire or
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Xxxxxxx X. Xxxxxx or Xxx X. Xxxxxxxxxx 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 Xxxxxxx X. Xxxxxxx or Xxxx Xxxxxx Xxxxxx, Esquire
or Xxxxxxx X. Xxxxxx or Xxx X. Xxxxxxxxxx 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 b
Xxxxxxx X. Xxxxxxx or Xxxx Xxxxxx Xxxxxx, Esquire or Xxxxxxx X. Xxxxxx or Xxx X.
Xxxxxxxxxx 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
19
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 in
this Agreement, unless the same is in writing and signed by Buyer and Xxxxxxx X.
Xxxxxxx or Xxxx Xxxxxx Xxxxxx, Esquire or Xxxxxxx X. Xxxxxx or Xxx X. Xxxxxxxxxx
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
20
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.
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
21
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 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 Xxxxxxx 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
22
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 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".
23
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 Xxxxxxx 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, 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
24
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. ss.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.
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 Xxxxxxx 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.
25
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
mpst recent real estate "Tax Xxxx(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 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
26
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.)
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.
27
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 Xxxxxxx 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.
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.
28
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.
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 loca
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,
29
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 collectio
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 discharged on or
before the Closing Date. In addition, except for the claims and liabilitie
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
30
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 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
31
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 o
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 perform nce 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 o
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.
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
32
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 Xxxxxxx
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 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
Xxxxxxx 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,
33
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 Xxxxxxx 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 obtainin
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 providin
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.
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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 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 inwriting 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 no
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
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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.
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. xx.xx. 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. xx.xx. 6901 et seq.), as amended ("RCRA"); (iii) the Emergency
Planning and Community Right to Know Act of 1986 (42 U.S.C. xx.xx. 11001 et
seq.), as amended; (iv) the Clean Air Act (42 U.S.C. xx.xx. 7401 et seq.), as
amended; (v) the Clean Water Act (33 U.S.C. ss.1251 et seq.), as amended; (vi)
the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), as amended; (vii)
the Hazardous Materials Transportation Act (49 U.S.C. xx.xx. 1801 et seq.), as
amended; (viii) the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
ss. 136 et seq.), as amended;(ix) the Federal Safe Drinking Water Act (42 U.S.C.
ss. 300f et seq.), as amended; (x) the Federal Radon and Indoor Air Quality
Research Act (42 U.S.C. ss. 7401 note, et seq.); (xi) the Occupational Safety
and Health Act (29 U.S.C. ss. 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.
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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, 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
38
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:
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.
39
13.2.4. To Seller's knowledge, there have been no Release
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 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
40
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:
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."
41
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.
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:
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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;
15.1.4. Each Entity and CPI as to Xxxxxxx 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;
43
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;
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
44
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.
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 Xxx X. Xxxxxxxxxx,
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;
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(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;
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 Xxxxxxx 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);
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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;
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.
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16.1.22. Deed. Special Warranty Deed, Executed by CPI, in
recordable form conveying Xxxxxxx to Buyer free and clear of all liens, claims
and encumbrances except for the Permitted Exceptions.
16.1.23. Xxxx of Sale. General Warranty Assignment and Xxxx of
Sale, executed by CPI, assigning, conveying and warranting to Buyer title to the
Personal Property and Inventory as to Xxxxxxx, 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 Xxxxxxx.
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
Xxxxxxx.
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 Xxxxxxx
(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.
16.1.30. TIF Agreement. The signed TIF Agreement.
16.1.31. License Agreements. Signed License Agreements in form a
nd content reasonably acceptable to Sellers and Buyer giving Buye r, 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 A ssessments 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
48
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 obligationclose
("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 limite
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;
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
49
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;
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;
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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
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 xxx 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
51
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.
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
52
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
Xxxxxxx.
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 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
53
period following the Closingshall 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.
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 Xxxxxxx, 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 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 an
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.
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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 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.
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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.
0000 Xxxxxx Xxxx Xxxxx - Xxxxx 000
Xxxxxxxx, XX 00000
Attention: General Counsel
and
Constellation Holdings, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxx X. Xxxxxxxxxx, Esquire
57
With a copy to its attorneys:
Xxxxxxx X. Xxxx, Esquire
Piper & Marbury LLP
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Buyer:
Corporate Office Properties Trust
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, III
President and Chief Executive
Officer
With a copy to its attorneys:
F. Xxxxxxx Xxxxxxx, Esquire
Saul, Ewing, Xxxxxx & Xxxx LLP
Centre Square West
0000 Xxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
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
58
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.
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 Xxxx Xxxxx Real Estate Services,
Inc. under separate agreement with Buyer. Buyer shall pay to Xxxx Xxxxx 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.
59
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.
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
60
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 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.
61
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:_________________________________
Xxxx X. Xxxxxx, III, President
and Chief Executive Officer
62
JOINDER BY ESCROWEE
Commonwealth Land Title Insurance Company, intending to be legally
bound, joins in this Agreement to evidence its agreement to act as Escrowee
under this Agreement and to be bound by the provisions of this Agreement
applicable to Escrowee.
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By: ______________________________
Name:
Title:
SCHEDULE OF EXHIBITS
Exhibit "Sellers"
Exhibit "Net Value Percentage Allocation"
Exhibit "Entities"
Exhibit "Registration Rights Agreement"
Exhibit "Projects"
Exhibit "Share Schedule"
Exhibit "Cash Component Allocation" Exhibit "Assumed Indebtedness"
Exhibit "Satisfied Indebtedness" Exhibit "Investor Materials" Exhibit
"Certification of Default" Exhibit "Informational Materials" Exhibit
"Seller's Deliveries" Exhibit "Permitted Exceptions" Exhibit "Service
Contracts" Exhibit "Real Estate Tax Matters" Exhibit "Lease
Controversies" Exhibit "Assumed Loan Documents" Exhibit "Satisfied Loan
Documents" Exhibit "Tred Avon Loan Documents" Exhibit "Securities
Reporting Requirements" Exhibit "Audit Representation Letter" Exhibit
"USTs" Exhibit "Tenant Estoppel Certificate" Exhibit "Option Projects"
Exhibit "Tenant Purchase Rights" Exhibit "Constellation Lease " Exhibit
"TIF Agreement" Exhibit "Commissions" Exhibit "Development Management
Agreement"
EXHIBIT "SELLERS"
EXHIBIT "NET VALUE PERCENTAGE ALLOCATION"
EXHIBIT "ENTITIES"
EXHIBIT "REGISTRATION RIGHTS AGREEMENT"
EXHIBIT "PROJECTS"
EXHIBIT "CONSTELLATION LEASE"
EXHIBIT "SHARE SCHEDULE"
EXHIBIT "CASH COMPONENT ALLOCATION"
EXHIBIT "ASSUMED INDEBTEDNESS"
EXHIBIT "ASSUMED LOAN DOCUMENTS"
EXHIBIT "SATISFIED INDEBTEDNESS"
EXHIBIT "SATISFIED LOAN DOCUMENTS"
EXHIBIT "TRED AVON LOAN DOCUMENTS"
EXHIBIT "INVESTOR MATERIALS"
CORPORATE OFFICE PROPERTIES TRUST
INVESTOR QUESTIONNAIRE
---------------------------------------------------------------------
ALL INFORMATION HEREIN WILL BE TREATED CONFIDENTIALLY UNLESS
REQUIRED BY COURT ORDER OR OTHERWISE REQUIRED BY THE
CORPORATE OFFICE PROPERTIES TRUST (THE "REIT")
TO DEMONSTRATE THE AVAILABILITY OF EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF RELEVANT FEDERAL AND STATE LAWS GOVERNING
THE OFFER AND SALE OF THE SECURITIES.
--------------------------------------------------------------------
Corporate Office Properties Trust
Xxx Xxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
The information contained herein is being furnished to you in order for
you to determine whether (i) the undersigned may receive Common Shares and
Convertible Preferred Shares of the REIT (collectively, the "Securities") as
contemplated by the Acquisition Agreement between Corporate Office Properties,
L.P. (the "UPREIT") and the other signatories thereto with respect to the
acquisition of the Interests in the entities owning the portfolio of
Constellation Real Estate, Inc., Columbia, Maryland (the "Agreement"), and (ii)
the undersigned's subscription for the Securities as evidenced by the execution
of the Agreement may be accepted by you in accordance with the requirements of
Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and
Regulation D promulgated thereunder ("Regulation D"). The undersigned
understands that you will rely on the information contained herein for purposes
of, among other things, determining whether the undersigned is an "Accredited
Investor" as such term is defined in Regulation D. The undersigned also
understands that this Questionnaire is not an offer of the Securities or any
other securities to the undersigned.
The undersigned understands that its answers will at all times be kept
confidential unless required by court order or otherwise required by the REIT or
UPREIT to demonstrate the availability of exemptions from the registration
requirements of relevant federal and state laws governing the offer and sale of
the Securities. By signing this Investor Questionnaire, the undersigned agrees
that the REIT may present this Investor Questionnaire to such parties as either
deems appropriate if called upon under law to establish the availability under
federal or state laws of an exemption from registration of the offer and sale of
the Securities.
-----------
INSTRUCTIONS
(A) Complete either Section I or Section II, whichever is applicable,
on pages 3-7.
(B) On page 8, date and sign where indicated. If the investor is a
corporation, a Notary Public must complete and sign on page 9.
Please print or type your answers. If the answer to any question is
"No" or "Not Applicable," please so state. Please provide information for every
investor, using a separate questionnaire for each. Please do not confuse
individual assets or income with assets or income of a trust, corporation or
partnership in which you have an interest; do, however, list the value of your
interest in such entities.
INDIVIDUALS MUST COMPLETE SECTION I
AND
CORPORATIONS, ENTITIES AND OTHER ENTITIES MUST COMPLETE
SECTION II
ALL QUESTIONS IN THE APPROPRIATE SECTION MUST BE ANSWERED -
SECTION I. QUESTIONS FOR INDIVIDUALS
1. Name:______________________________________ Age:____________
U.S. Citizen: Yes_____ No_____
Number of Dependents:_____ Social Security No.:_________________________________
2. Are you acquiring the Securities of the UPREIT for your own account?
Yes_____ No_____
If no, please specify:
3. Method of Investment Qualification: An individual will qualify as an
Accredited Investor if he or she meets any one of the following requirements.
Please indicate if you meet any of the following requirements:
(A) I am a natural person and had an individual income in excess
of $200,000 in each of the two most recent years and
reasonably expect an income in excess of $200,000 in the
current year. For these purposes, "income" means my individual
adjusted gross income for federal income tax purposes, plus
(i) any deduction for long term capital gains; (ii) any
deduction for depletion; (iii) any exclusion for interest; and
(iv) any losses of a partnership allocated to an individual
limited partner.
Yes_____ No_____
2
(B) I am a natural person and had a joint income with my spouse in
excess of $300,000 in each of the two most recent years and
reasonably expect a joint income with my spouse in excess of
$300,000 in the current year. For these purposes, "income"
shall be determined as set forth in Section 3(A) above.
Yes_____ No_____
(C) I am a natural person and had an individual net worth on the
date hereof (or joint net worth with my spouse) in excess of
$1 million (including my home, home furnishings and
automobiles).
Yes_____ No_____
(D) I am a director, executive officer or general partner of the REIT.
Yes_____ No_____
I understand that the UPREIT and the REIT will rely upon the accuracy and
completeness of my responses to the foregoing questions and I represent and
warrant to the UPREIT and the REIT as follows:
(a) The answers to the above questions are complete and correct
and may be relied upon by the UPREIT and the REIT in
determining whether the undersigned is an Accredited Investor.
(b) I will immediately notify the UPREIT and the REIT of any
material change in any statement made herein occurring prior
to the closing of any subscription for the Securities.
(c) The acquisition of the Securities will be solely for my
account, and not for the account of any other person or with a
view toward transfer, resale, assignment, fractionalization or
distribution thereof.
SECTION II. QUESTIONS FOR CORPORATIONS, ENTITIES AND OTHER ENTITIES
1. Name and Nature (e.g., limited partnership, corporation,
trust, limited liability company) of Entity:
2. Date of Organization:
3. State of Organization:
4. Taxpayer Identification No.:
5. Accredited Investor Suitability Requirements.
(A) Has the subscribing entity been formed for the specific purpose of
investing in the Securities?
Yes_____ No_____
3
(B) If your answer to question A is "No," INITIAL OR CHECK
whichever of the following statements is applicable to the
subscribing entity; if your answer to question A is "Yes" or
if none of the statements in clause (1) below is applicable,
the subscribing entity must be able to certify to statement
(2) below in order to qualify as an Accredited Investor.
(1) The undersigned entity certifies that it is an Accredited Investor
because it is:
(i) a bank as defined in Section 3(a)(2) of the Act, or a
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Act, whether acting in an individual or fiduciary
capacity;
Yes_____ No_____
(ii) a broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934;
Yes_____ No_____
(iii) an insurance company as defined in Section 2(13) of the Act
Yes_____ No_____
(iv) an investment company registered under the Investment
Company Act of 1940;
Yes_____ No_____
(v) a business development company as defined in Section 2(a)
(48) of the Investment Company Act of 1940;
Yes_____ No_____
(vi) a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958;
Yes_____ No_____
(vii) a plan established by a state or its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees provided that
such employee benefit plan has total assets in excess of $5,000,000;
Yes_____ No_____
4
(viii) an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, provided that the
investment decision is made by a plan fiduciary, as defined in Section
3(21) of such Act, and the plan fiduciary is either a bank, insurance
company or registered investment adviser or provided that the employee
benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, the investment decisions are made solely by persons
that are Accredited Investors (if a self-directed plan with more than
one investment account, (1) each participant must maintain a separate
investment account within the plan, and (2) the funds of the separate
investment accounts within the plan must not be commingled);
Yes_____ No_____
(ix) a private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
Yes_____ No_____
(x) an organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, a corporation, a
Massachusetts or similar business trust, or partnership, not formed for
the specific purpose of acquiring the Securities, with total assets in
excess of $5,000,000; or
Yes_____ No_____
(xi) a trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of investing in the Securities, whose
subscription is directed by a sophisticated person as defined in Rule
506(b)(2)(ii) promulgated under the Act.
Yes_____ No_____
(2) The undersigned entity certifies that it is an Accredited Investor
because each of its stockholders, partners or other equity holders meets at
least one of the following conditions:
(i) It is a natural person and had an individual net worth at
the time of subscription for (or joint net worth with spouse) in excess
of $1 million (including my home, home furnishings and automobiles).
Yes_____ No_____
(ii) It is a natural person and had an individual income
(without including any income of my spouse) in excess of $200,000 (or
joint income with my spouse in excess of $300,000) in each of the two
most recent years and reasonably expect an individual income in excess
of $200,000 (or joint income with my spouse in excess of $300,000) in
the current year. For these purposes, "income" means my individual
adjusted gross income for federal income tax purposes, plus (i) any
deduction for long term capital gains; (ii) any deduction for
depletion; (iii) any exclusion for interest; and (iv) any losses of a
partnership allocated to an individual limited partner.
Yes_____ No_____
5
(iii) The stockholder, interest holder or other equity holder
is a corporation, partnership, trust or other entity which meets the
description of at least one of the organizations specified in statement
B(1) above or whose stockholders, partners, beneficiaries or other
equity holders meet at least one of the descriptions in this statement
B(2).
Yes_____ No_____
6. The undersigned entity has all requisite authority to acquire the
Securities referenced in, and to enter into, the Subscription Agreement.
Yes_____ No_____
The undersigned understands that the UPREIT and the REIT will rely upon the
accuracy and completeness of its responses to the foregoing questions and
represents and warrants to the UPREIT and the REIT as follows:
(a) The answers to the above questions are complete and correct
and may be relied upon by the UPREIT and the REIT in
determining whether the undersigned is an Accredited Investor.
(b) The undersigned will immediately notify the UPREIT and the
REIT of any material change in any statement made herein
occurring prior to the closing of any offering by the
undersigned of the Securities.
(c) The undersigned is able to bear the economic risk of an
investment in the Securities of the size contemplated. In
making this statement, consideration has been given to whether
the undersigned can afford to hold the investment for an
indefinite period of time and whether the undersigned can
afford a complete loss of its investment. The undersigned
offers as evidence of its ability to bear the economic risk
the information contained in this Investor Questionnaire.
(d) The acquisition of the Securities will be solely for the
undersigned's account, and not for the account of any other
person or with a view toward transfer, resale, assignment,
fractionalization or distribution thereof.
6
IN WITNESS WHEREOF, the undersigned has executed this Investor
Questionnaire this ______ day of _______________, 199___ and declare that it is
truthful and correct.
INDIVIDUALS CORPORATIONS, ENTITIES AND
OTHER ENTITIES
Signature of Investor Name of Entity
Authorized Signature
PRINT Name of Investor PRINT Name and Title of Person Signing
Address: Address:
7
ACKNOWLEDGMENT FOR CORPORATE INVESTOR
STATE OF __________________ )
) SS
COUNTY OF __________________ )
On this ______ day of __________________, 199___, before me personally
appeared ____________________________ to me known, who, being first by me duly
sworn, did depose and say that (s)he resides at _____________________________
that (s)he is the ______________ of ________________________, the corporation
described in and which executed the above instrument; that [the corporation has
no seal]* [(s)he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it is so affixed by order of the
Board of Directors of said corporation]*, and that (s)he signed his(her) name
thereto by order of said corporation's Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------------------
Notary Public:
My Commission Expires:
[SEAL]
-------------------------------
* Strike out whichever bracketed clause does not apply.
EXHIBIT "INFORMATIONAL MATERIALS"
The following documents filed to date by the REIT with the Securities
and Exchange Commission pursuant to either the Securities Exchange Act of 1934,
as amended or the Securities Act of 1933, as amended:
1. Annual Report on Form 10-K for the year ended December 31, 1997;
2. Proxy Statement dated February 11, 1998; and,
3. Prospectus dated April 22, 1998 included in Registration Statement
Number 333-47465 filed pursuant to Rule 424(b).
EXHIBIT "SELLER'S DELIVERIES"
1. Copies of any and all Leases and all other agreements
affecting the Projects.
2. A rent roll (the "Rent Roll") indicating all Tenants, spaces
occupied and vacant (including the square footage thereof), Base Rent,
escalations, "pass-throughs" (including, but not limited to, real estate taxes,
utilities, insurance and/or operating expenses), Additional Rent, rent
adjustments (including, but not limited to, Consumer Price Index, or other
adjustments) construction allowances, abatements, concessions, lease
commencement and expiration dates, renewal or expansion options, options to
purchase, cancellation rights, security and/or other deposits.
3. A schedule of all employees of Sellers engaged in the operation or
maintenance of the Projects or Contributor's business, setting forth in respect
of each employee: such employee's name, position, duties, current salary or
wages, Christmas or other bonus, fringe benefits, accrued vacation time and sick
leave, and information as to any other compensation in cash or in kind to which
such employee may be entitled.
4. Copies of all hazard, rent loss, liability and other insurance
policies currently in force with respect to the Projects and/or Contributor's
business (the "Existing Insurance Policies").
5. Copies of all income and expense statements, year-end financial and
monthly and annual operating statements (the "Operating Statements") for the
Projects for calendar years 1995, 1996, 1997 and, to the extent available, 1998.
Sellers shall deliver to Acquiror all Operating Statements prepared in the
ordinary course of business promptly upon preparation thereof relating to
periods prior to Closing, even if prepared after Closing.
6, Copies of all engineering and architectural plans and
specifications, drawings, studies and surveys relating to the Projects
(collectively the "Plans"), in Contributor's possession or control, and copies
of any reports or studies (including, but not limited to, inspection reports of
governmental authorities or insurance carriers), in Contributor's possession or
control, in respect of the physical condition or operation of the Projects or
recommended improvements thereto.
7. Copies of the xxxx or bills issued for the years 1995, 1996, 1997
and, if available, 1998, for all real estate taxes and personal property taxes
and copies of any and all notices pertaining to real estate taxes or assessments
applicable to the Projects (the "Tax Bills"). Sellers shall promptly deliver to
Acquiror copies of any such bills or notices received by Sellers after the
Contract Date, even if received after Closing.
8. Copies of all brokerage commission, management, leasing,
maintenance, repair, service, pest control and supply contracts (including,
without limitation, janitorial, elevator, scavenger, laundry and landscaping
agreements), equipment rental agreements and master antenna agreements (if
applicable), and any other contracts or agreements relating to or affecting the
Projects (other than Major Repair Contracts, as defined herein) or which will be
binding upon the Projects or Acquiror subsequent to Closing, all as amended (the
"Contracts").
9. Copies of all contracts for repairs or capital replacements to be
performed at the Projects, or covering such work performed during the two (2)
years immediately preceding the Contract Date for a contract price in excess of
$10,000.00 "Major Repair Contracts").
10. Copies of all certificates of occupancy, licenses, permits,
authorizations and approvals required by law or by any governmental authority
having jurisdiction thereover in respect of the Projects, or any portion
thereof, occupancy thereof or any present use thereof (the "Governmental
Approvals").
11. Copies of any operating budgets for the Projects for the years
1996, 1997, and 1998.
12. Copies of the documents pursuant to which Sellers is organized and
operates its business, together with proof of the authority of the signatory or
signatories of this Agreement on behalf of Sellers to execute this Agreement.
13. Copies of all guarantees, warranties and other documents or
instruments evidencing or relating to the Intangible Personal Property.
14. Copies of all unrecorded easements and licenses of Sellers for the
benefit of any Project or portion thereof or of third parties burdening any
Project or portion thereof.
15. Copies of all of the organizational documents pertaining to each
Entity (including all partnership agreements, as amended, certificates of
limited partnership and any other documents pertaining to the organization,
operation or management of each Entity).
16. Copies of all of the Existing Loan Documents (as defined in the
body of this Agreement) and any correspondence or notices pertaining thereto.
2
EXHIBIT "TENANT PURCHASE RIGHTS"
EXHIBIT "SERVICE CONTRACTS"
EXHIBIT "REAL ESTATE TAX MATTERS"
EXHIBIT "LEASE CONTROVERSIES"
EXHIBIT "SECURITIES REPORTING REQUIREMENTS"
For the period of time commencing on the date of the Acquisition
Agreement and continuing through the second anniversary of the Closing Date,
Sellers shall, from time to time, upon reasonable advance notice from the REIT,
provide the REIT and its representatives, agents and employees with access to
all financial and other information in its possession or with respect to which
it has reasonable access pertaining to the period of Seller's ownership and
operation of the Projects, which information is relevant and reasonably
necessary, in the opinion of the REIT's outside, third party accountants (the
"Accountants"), to enable the REIT and its Accountants to prepare financial
statements in compliance with any or all of (a) Rule 3-14 of Regulation S-X of
the Securities and Exchange Commission (the "Commission"); (b) any other rule
issued by the Commission and applicable to the REIT; and (c) any registration
statement, report or disclosure statement filed with the Commission by, or on
behalf of, the REIT; provided, however, that in any such event(s), the UPREIT
shall reimburse Sellers for those third party, out-of-pocket costs and expenses
that Sellers incur in order to comply with the foregoing requirements. Sellers
acknowledge and agree that the following is a representative description of the
information and documentation that the REIT and the Accountants may require in
order to comply with (a), (b) and (c) above. Sellers shall provide such
information, and documentation on a per-Project basis, if available.
1. Rent rolls for the calendar month in which the Closing occurs and
the eleven (11) calendar months immediately preceding the calendar month in
which the Closing occurs;
2. Seller's written analysis of both (a) scheduled increases in base
rent required under any Leases in effect on the Closing Date; and (b) rent
concessions imposed those Leases, and the straight line effect of (a) and (b);
3. Seller's internally-prepared Operating Statements;
4. Access to Leases;
5. Seller's budgeted annual and monthly income and expenses, compared
to actual annual and monthly income and expenses;
6. Most currently available real estate tax bills;
7. Access to Seller's cash receipt journal(s) and bank statements for
the Projects;
8. Seller's general ledger with respect to the Projects;
9. Seller's schedule of expense reimbursements required under Leases in
effect on the Closing Date;
10. Schedule of those items of repairs and maintenance performed by, or
at the direction of Seller, during Seller's final fiscal year in which Seller
owns and operates the Projects (the "Final Fiscal Year");
11. Schedule of those capital improvements and fixed asset additions
made by, or at the direction of, Seller during the Final Fiscal Year;
12. Access to Seller's invoices with respect to expenditures made
during the Final Fiscal Year; and
13. Access (during normal and customary business hours) to responsible
personnel to answer accounting questions.
EXHIBIT "AUDIT REPRESENTATION LETTER"
[Date]
Dear Sirs:
We are writing at your request to confirm our understanding that your
audit of the statement of operating income for the year ended
_____________________, ______, was made for the purpose of expressing an opinion
as to whether the statement of operating income presents fairly, in all material
respects, the results of operations of [Name of Project] in conformity with
generally accepted accounting principles. In connection with your audit we
confirm, to the best of our knowledge and belief, the following representations
made during your audit.
1. All financial records, board minutes and data related to the
property have been made available to you.
2. There have been no:
(a) Irregularities involving any member of management or
employees who have significant roles in the system of internal accounting
control structure.
(b) Irregularities involving other employees that could have a
material effect on the financial statements.
(c) Communications from regulatory agencies concerning
noncompliance with, or deficiencies in, financial reporting practices that could
have a material effect on the financial statements.
(d) Violations or possible violations of laws or regulations,
the effects of which should be considered for disclosure in the financial
statements or as a basis for recording a loss contingency.
3. There are no:
(a) Unasserted claims or assessments that are probable of
assertion and must be disclosed in accordance with Statement of Financial
Accounting Standards No. 5.
(b) Material liabilities or gain or loss contingencies
(including oral and written guarantees) that are required to be accrued or
disclosed by Statement of Financial Accounting Standards No. 5.
(c) Material transactions that have not been properly recorded
in the accounting records underlying the financial statements.
(d) Events that have occurred subsequent to
___________________, ___________ in the financial statements that would require
adjustment to or disclosure in the financial statements, except for the sale
which you are aware of.
4. Appropriate adjustment, when material, has been made for:
(a) Uncollectible amounts recorded under lease contracts.
(b) Rental income received in advance.
(c) Rent concessions, abatements, or rent holidays.
5. The Company has complied with all aspects of contractual agreements
that would have a material effect on the financial statements in the event of
noncompliance.
6. All significant related party transactions have been properly
recorded or disclosed in the financial statements.
7. In the opinion of the undersigned the ____________ and _____________
financial information provided to you contains all adjustments necessary for a
fair presentation of operating income.
By:
[Seller/Seller's Manager]
EXHIBIT "USTS"
EXHIBIT "TENANT ESTOPPEL CERTIFICATE"
To:
(Lease to be Attached)
The undersigned, ______________________________________ ("Tenant"),
hereby certifies that:
(a) Annexed hereto as Exhibit "A" is a true and correct copy
of the lease ("Lease"), dated as of the _____ day of _______________, 19___, by
and between the undersigned, as tenant ("Tenant"), and
_____________________________________________ as landlord ("Landlord"), covering
certain [insert type of property] space ("Premises") in the building located at
_________________________________ ("Building"). The net rentable square footage
of the Premises is ________________________.
(b) The Lease is valid and in full force and effect on the
date hereof. The term of the Lease commenced on ____________, 19___, and the
termination date of the present term of the Lease, excluding renewals, is
__________________, 19___.
(c) There are no other agreements between Landlord and Tenant
with respect to the Premises.
(d) There are no uncured defaults on the part of Tenant or on
the part of Landlord under the Lease, and no event has occurred and no condition
exists which, with the giving of notice or the lapse of time, or both, will
constitute a default under the Lease.
(e) Fixed Rent payable by Tenant presently is $______________
per month and no such rent has been paid more than thirty (30) days in advance
of its due date. Tenant's security deposit is
$---------------.
(f) Additional Rent (including Tenant's share of tax increases
and cost of living increases) payable by Tenant presently is $______________ per
month and no such rent has been paid more than thirty (30) days in advance of
its due date.
(g) Tenant claims no present charge, lien or claim of offset
under the Lease or otherwise, against rents or other charges due or to become
due thereunder.
(h) Tenant has accepted possession of the Premises and any
improvements required by the terms of the Lease to be made by the lessor
thereunder have been completed to the satisfaction of Tenant.
(i) The address for notices to be sent to Tenant is as set
forth in the Lease.
(j) This Estoppel Certificate may be relied upon by any
prospective purchaser or encumbrancer of the Building.
(k) Tenant has no right of first refusal, option or other
right to purchase the Premises or the Building, nor does Tenant have any right
to unilaterally cancel the Lease. Tenant has no renewal options or expansion
options.
(l) Rents payable pursuant to the Lease are not based upon the
income or profits of Tenant.
(m) There is not a material amount of personal property
demised to the Tenant under or in connection with the Lease.
(n) Except for services customarily provided by landlords in
the geographic area of the Premises, there are no services furnished to the
Tenant in connection with the lease of the Premises.
(o) The Lease was not entered into in connection with a sale/
leaseback transaction.
(p) There are no subleases under or in connection with the
Lease.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Estoppel Certificate on the _____ day of ______________, 19____.
------------------------------------
(Tenant)
By: ______________________________
2
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371015.6 9/4/98
371015.6 9/4/98
EXHIBIT "CERTIFICATION OF DEFAULT"
[CONSTELLATION REAL ESTATE LETTERHEAD]
[DATE]
VIA FEDERAL EXPRESS
Commonwealth Land Title Insurance Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: M. Xxxxxx Xxxxxxx, Esquire
Re: Certification of Default under that certain Contribution Agreement dated
as of May ____, 1998 for the Constellation Real Estate Portfolio/Completed
Properties
Dear Xx. Xxxxxxx:
Commonwealth Land Title Insurance Company ("Escrowee") is the escrow
agent under the Contribution Agreement described above (the "Contribution
Agreement"). In such capacity, Escrowee is presently holding that certain
$5,000,000 letter of credit issued by ____________________ (the "Issuer") for
the benefit of Escrowee (the "Letter of Credit") in escrow under and subject to
the terms of the Contribution Agreement. Capitalized terms which are not
otherwise defined in this letter shall have the meaning set forth in the
Contribution Agreement.
You are hereby advised, and the undersigned hereby certifies, that
Buyer has defaulted in the performance of Buyer's obligations under the
Contribution Agreement by __________________________________ [INSERT HERE
DETAILED DESCRIPTION OF NATURE OF ALLEGED DEFAULT]. As required by Section 6.3.1
of the Contribution Agreement, you are hereby directed to submit a draft on the
Letter of Credit in the amount of $5,000,000 to the Issuer, and to hold such
Proceeds in escrow in accordance with the terms of the Contribution Agreement in
a separate, interest bearing, money market account in a federally insured bank.
This notice constitutes a Certification of Default as defined in the
Contribution Agreement.
[INSERT SIGNATURE BLOCK; MUST BE
SIGNED BY XXXXXXX X. XXXXXXX,
XXXX XXXXXX XXXXXX,
XXXXXXX X. XXXXXX OR
XXX X. XXXXXXXXXX AND NOTARIZE]
cc: Xxxx X. Xxxxxx, III (via Federal Express)
F. Xxxxxxx Xxxxxxx, Esquire (via Federal Express)
STATE OF MARYLAND
COUNTY OF ____________________
On this _____ day of __________, 1998, before me, the undersigned
officer, personally appeared ____________________________, known to me (or
satisfactorily proven) to be the person who executed the Certification of
Default and acknowledged that he is the _______________________ of
___________________________ and that he executed the same for the purposes
therein contained on behalf of the corporation by signing his name as such
officer.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal.
------------------------------------
Notary Public
EXHIBIT "OPTION PROJECTS"
All documents listed below are attached.
1. National Business Park
5 Year Option and Right of First Refusal
2. Xxxxx'x Wharf adjacent land - Right of First Refusal
3. Xxxxxxxxxxxxx Xxxxxx Xxxx 0 and 2 - Right of First Refusal
4. Annapolis Exchange
2 Year Option to Purchase (LLC Member interests)
EXHIBIT "COMMISSIONS"
TABLE OF CONTENTS
Page
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
25. LIMITATION OF LIABILITY...................................................56
26. BROKERAGE.................................................................57
27. REASONABLE EFFORTS........................................................57
28. MISCELLANEOUS.............................................................57
