CONTRIBUTION AGREEMENT
Owner: Xxxxxxxxx Corporate Center
Associates, Xxxxxxxxx
Corporate Center IV
Associates Limited
Partnership and Xxxxxxxxx
Corporate Center V
Associates Limited
Partnership, Illinois
limited partnerships which
are, respectively, the sole
beneficiaries of the land
trusts which own title to
the Real Property.
Operating Partnership: BEACON PROPERTIES, L.P.
Dated as of: MARCH 20, 1997
Property: XXXXXXXXX XXXXXXXXX XXXXXX,
XXXXXXXXXXX, XXXXXXXX 00000
TABLE OF CONTENTS
Section Page
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1. Defined Terms 1
2. Contribution of Property; Agreed Value 5
3. Deposit 11
4. Delivery of Materials for Review 11
5. Contingencies 13
6. Title 14
7 Closing Requirements 14
8. Closing Deliveries 17
9. Closing Costs and Prorations 22
10. Notice to Tenants 24
11. Default 25
12. Owner's Representations and Warranties 25
13. Operating Partnership's Representations, Warranties and Covenants 29
14. Actions After the Effective Date 33
15. Use of Proceeds to Clear Title 35
16. Survival 36
17. Damage to Property 36
18. Brokerage Commission 37
19. Disclosure; Audit Right 37
20. Option 38
21. Successors and Assigns 38
22. Entire Agreement 38
23. Attorneys' Fees 38
24. Notices 38
25. Exhibits and Defined Terms 39
26. Time 39
27. Applicable Law 39
i
28. No Oral Modification or Waiver 39
29. No Recording 39
30. Counterparts 39
31. Books and Records 39
Exhibits
Exhibit A Legal Description
Exhibit B Schedule of Personal Property
Exhibit C Schedule of Contributors
Exhibit D Form of Lock-Up Agreement
Exhibit E Registration Rights Agreement
Exhibit F Prospective Subscription Questionnaire
Exhibit G Foreign Persons Agreement
Exhibit H Allocation of Value
Exhibit I Schedule of Leases and Rent Roll
Exhibit J Contracts
Exhibit K Escrow Agreement
Exhibit L-1 Form of Tenant Estoppel Certificate
Exhibit L-2 Form of Owner Estoppel Certificate
Exhibit M Mandatory Estoppels
Exhibit N Lease Commissions
Exhibit O Legal Proceedings
Exhibit P Intentionally Deleted
Exhibit Q New Leases
ii
Operating Partnership and Owner hereby enter into this
Contribution Agreement (this "Agreement") as of the Effective Date.
1. Defined Terms.
a. The terms listed below shall have the following meanings
throughout this Agreement:
Agreed Value: $180,500,000.00 minus (i) the principal
balance of the Loans on the date of Closing,
including the Redemption Notes, and plus or minus
(ii) any closing costs and net prorations.
Beneficiaries: Xxxxxxxxx Corporate Center Associates, an Illinois
limited partnership, as to the Parcel 1 Trust and the
Parcel 3 Trust; Xxxxxxxxx Corporate Center IV
Associates Limited Partnership as to the Parcel 4
Trust; and Xxxxxxxxx Corporate Center V Associates
Limited Partnership as to the Parcel 5 Trust.
Business Day: Any day on which banking institutions in
Chicago, Illinois and Boston, Massachusetts, are open
for the transaction of banking business.
Closing Date: On or before April 15, 1997.
Contracts: Contracts means agreements relating to all service,
maintenance, supply, construction, utility, parking
and management contracts affecting the construction,
use, ownership, maintenance and/or operation of the
Property (expressly excluding the Leases), except
those agreements which as of the date hereof have
been fully performed.
Contract Rights: Any rights of Owner, as owner of the Property, in
and to the Contracts.
Contributors: Those Partners who become holders of Units in
connection with the closing of the transaction
contemplated hereby and the liquidation of the
Beneficiaries.
Deposit: Five Million and 00/100 Dollars ($5,000,000.00).
Description of Five interconnected ten-story office buildings at
Buildings: Wolf Road and 22nd Street, Westchester, Illinois
collectively known as Xxxxxxxxx Corporate Center.
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Effective Date: The date all parties have executed this Agreement,
and a fully executed copy has been delivered to each
of Owner and Operating Partnership.
Escrow Holder: The Title Company.
Improvements: All Buildings and other improvements located on or
affixed to the Land, including, without limitation,
any and all utility, plumbing, electrical, heating,
air-conditioning and ventilation lines, systems, and
boilers.
Intangible All intangible and mixed property used in connection
Rights: with or relating to the Property, including without
limitation all representations, warranties,
guarantees, indemnities, bonds, approvals, licenses,
applications, permits, plans, drawings,
specifications, surveys, maps, engineering reports
and other technical descriptions, environmental
reports (including, without limitation, the
Environmental Reports, as defined in Section 4.a
below), the trade name "Xxxxxxxxx Corporate Center",
and right to insurance proceeds for any unrepaired
losses as provided for herein and similar property,
other than the Contract Rights and the Leases. The
term Intangible Rights shall exclude all telephone
numbers of Xxxxxxxx and Associates L.P., the right to
delinquent rents due on or before Closing and the
right to the bankruptcy claim regarding Demert and
Xxxxxxxxx, Inc. (a former tenant no longer in
possession or having a right of possession).
Land: That certain parcel of land in Westchester, Xxxx
County, Illinois described on Exhibit A attached
hereto and made a part hereof containing
approximately 38.5 acres and more particularly
described on Exhibit A, together with all rights and
interests appurtenant thereto, including, without
limitation, any water and mineral rights, development
rights, air rights, easements and rights-of-way.
Leasing Costs: Legal expenses, space planning and architectural
fees, tenant improvement costs, moving allowances,
and leasing commissions.
Loans: (a) The Loan evidenced by a Promissory Note in favor
of Aetna Life Insurance Company dated April 11, 1988,
in the original principal sum of $55,000,000; and
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(b) the Loan evidenced by a Promissory Note in favor
of Aetna Life Insurance Company dated July 30, 1990,
in the original principal sum of $29,000,000, (items
(a) and (b) together being referred to herein as the
"Aetna Loans");
(c) That certain loan from American National Bank and
Trust Company of Chicago and the Northern Trust
Company to Xxxxxxxxx Corporate Center IV Associates
L.P. dated as of March 31, 1995 in the original sum
of $25,000,000;
(d) That certain loan from American National Bank and
Trust Company of Chicago and the Northern Trust
Company to Xxxxxxxxx Corporate Center V Associates
L.P. dated as of June 27, 1996 in the original sum of
$27,000,000;
(e) That certain $1,520,000 second mortgage loan
dated March 22, 1995 in favor of Xxxxxxxxx Executive
Suites LLC.
(f) The Redemption Loans.
Operating Beacon Properties, L.P., a Delaware limited
Partnership: partnership of which Beacon Properties Corporation, a
Maryland corporation, is the sole general partner.
Operating c/o Beacon Properties Corporation
Partnership's 00 Xxxxx Xxxxx
Address: Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Senior Vice President
Owner: Collectively, jointly and severally, the
Beneficiaries of the Trusts.
Owner's Address: c/x Xxxxxxxx and Associates L.P., Agent
One Xxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, President
Partners: Those individuals and entities who are general or
limited partners in the Beneficiaries, as set forth
on Exhibit C attached hereto and made a part hereof.
Personal All tangible personal property interests of Owner
Property: (but excluding office furniture, fixtures and
equipment of Xxxxxxxx and Associates L.P.) in any way
relating directly or indirectly to the
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Real Property, including all furniture, fixtures,
equipment, machinery, furnishings, carpets, drapes,
blinds and mini-blinds, service and maintenance
equipment, tools, signs, telephones and other
communication equipment, intercom equipment and
systems, construction inventory, vehicles and
replacement parts set forth on Exhibit B attached
hereto and made a part hereof and any replacements
thereof and the Intangible Rights.
Property: The Real Property, the Personal Property and the
Contract Rights.
Property Xxxxxxxxx Corporate Center
Location Westchester, Xxxx County, Illinois
City, County and
State)
Real Property: The Land and the Improvements.
Redemption Notes: Promissory notes issued by Owner to certain Partners
pursuant to the Interest Purchase
Securities Laws: Any federal or state securities, blue sky or
similar law, rule or regulation or the interpretation
thereof, which governs or is applicable to the
prospective issuance of Units pursuant to this
Agreement or to the conversion of such Units as
contemplated by the Registration Rights Agreement.
Title Company: Commonwealth Land Title Insurance Company
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Trusts: As to Parcels 1 and 2, LaSalle National Trust, N.A.,
not individually but as Successor Trustee under a
Trust Agreement dated March 26, 1984 and known as
Trust No. 107822 (the "Parcel 1 Trust"); as to Parcel
3, LaSalle National Trust, N.A., not individually but
as Successor Trustee under a Trust Agreement dated
March 14, 1988 and known as Trust No. 103063 (the
"Parcel 3 Trust"); as to Parcel 4, LaSalle National
Trust, N.A., not individually but as Successor
Trustee under a Trust Agreement dated February 9,
1990 and known as Trust No. 115264 (the "Parcel 4
Trust"); and as to Parcel 5, LaSalle National Trust,
N.A., not individually but as Successor Trustee under
a Trust Agreement dated February 9, 1990 and known as
Trust No. 115265 (the "Parcel 5 Trust").
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Units: Limited partner interests in the Operating
Partnership.
2. Contribution of Property; Agreed Value.
Owner desires to contribute the Property to Operating Partnership in exchange
for Units and Operating Partnership desires to accept the Property from Owner,
subject to all of the terms, covenants and conditions hereinafter set forth in
this Agreement.
Prior to the Closing Date, the Owner shall purchase from the Partners
who are not Contributors such Partners' interests in the Beneficiaries for the
Redemption Notes (the "Interest Purchase"). The Redemption Notes shall be issued
to the Partners selling their interests pursuant to this section. At the Closing
Date, the Operating Partnership shall satisfy the Redemption Notes provided the
same does not result in the value of the Units to be issued being below
$32,500,000.00. Owner acknowledges that the Partner Approval required by Section
5(d) of this Agreement shall be obtained subsequent to the Interest Purchase and
further acknowledges that the Operating Partnership will offer to issue Units
pursuant to this Agreement only to the Contributors.
a. Agreed Value. Operating Partnership shall issue to the
Partnerships at Closing the number of Units equal to the Agreed Value divided by
the average closing sales price on the New York Stock Exchange ("NYSE") of
Beacon Property Corporation's (the "Company") common stock $.01 par value (the
"Common Stock") for the ten (10) consecutive trading days ending on the second
business day immediately preceding the Closing Date (the "Average Stock Price"),
provided that if the Closing occurs on or before April 15, 1997, the Agreed
Value shall be divided by the lesser of (w) the Average Stock Price, (x) the
said average closing sales price of the Common Stock for the twenty (20)
consecutive trading days ending on the second business day immediately preceding
Closing Date or (y) the offering price of Common Stock in any supplemental stock
offering of the Company made between the date hereof and the Closing Date. In
that connection the following provisions shall apply:
(i) Redemption of Units. In addition to the Special
Redemption Right described in subsection (vii) below,
the Units, at any time after the first anniversary
and in accordance with the terms of the Amended and
Restated Agreement of Limited Partnership of the
Operating Partnership, shall be redeemable for cash,
or at the Company's option, on a one for one basis in
exchange for shares of Common Stock.
(ii) Restrictions: No Contributor shall sell, offer or
contract to sell, grant any option to purchase,
pledge, redeem (other than pursuant to the Special
Redemption Right), convert, distribute or otherwise
dispose of all or any portion of the Units issued
hereunder for a period of one (1) year from the
Closing Date. The foregoing
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restriction shall not apply to involuntary transfers
resulting from death, bankruptcy or the like, but
shall continue to apply after any such involuntary
transfer. This restriction shall not apply to shares
of Common Stock currently held by the Contributors or
acquired by the Contributors in the open market. At
Closing, Owner shall execute a so-called "lock up"
agreement containing the foregoing restrictions in
the form of Exhibit D hereto and in connection with
the distribution of the Units upon dissolution shall
require each Contributor to agree to be bound
thereby.
(iii) Registration Rights: The Company will grant certain
registration rights to the Contributors in accordance
with terms of that certain Registration Rights
Agreement attached as Exhibit E hereto.
(iv) Units. Owner acknowledges that any Units offered
hereby are being offered without registration under
the Securities Act of 1933, as amended (the
"Securities Act"), and the securities laws of certain
states. The Units are being offered in reliance on an
exemption from registration under Regulation D of the
Securities Act ("Regulation D") and similar state law
exemptions. Owner further acknowledges that, to
satisfy the requirements of these exemptions,
Operating Partnership must determine whether a
prospective holder of Units meets the Regulation D
and state law definitions of "accredited investor"
before selling (or, in some states, offering)
securities to such prospective holder. Owner shall
deliver to Operating Partnership on or before April
3, 1997, subscriber questionnaires in the form set
forth in Exhibit J attached hereto and incorporated
herein completed and signed by each Contributor.
Additionally, in the event of any change in any
securities or related law or interpretation thereof
after the date of this Agreement, Owner shall deliver
to Operating Partnership, upon Operating
Partnership's request, such other information,
certificates and materials as Operating Partnership
shall reasonably request. It shall be a condition
precedent to Operating Partnership's and Owner's
obligations under this Agreement that there shall
have been no change in any securities or related law
or interpretation thereof that would render
consummation of conveyance of the Property as
contemplated by this Agreement a violation of law or
interpretation thereof.
Within fifteen (15) days following the Effective Date hereof, Xxxxxxxxx
Corporate Center Associates, on behalf of all of the Beneficiaries, shall notify
Operating Partnership in writing that:
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(a) each of the Beneficiaries has adopted a
Plan of Liquidation as required under the terms of
this Agreement, to take effect if and when the
Closing occurs;
(b) the state of residence (or organization)
of each Offeree, and such other information as
Operating Partnership may request in order to assure
compliance with the Securities Laws.
(v) Partnership Agreement; Admission. Operating
Partnership represents and warrants to Owner that a
true and complete copy of the limited partnership
agreement of Operating Partnership in effect as of
the date of this Agreement (the "Partnership
Agreement") has been delivered to Owner. Operating
Partnership agrees that between the date hereof and
Closing, it will not amend the Partnership Agreement
without Owner's consent which shall not be
unreasonably withheld or delayed. Upon liquidation of
each Beneficiary, the general partner of Operating
Partnership (i) shall consent to the admission of
each Contributor as a limited partner in Operating
Partnership and (ii) upon execution and delivery by
each such Contributor of an amendment to the
Partnership Agreement providing for (x) the
acceptance of the Units to be delivered to it
pursuant to the terms of this Agreement and
containing an agreement to be bound by all terms and
conditions of the Partnership Agreement, and (y) a
Schedule showing the "Value" of each portion of the
Property as the "704(c) Value" of such Property for
purposes of the Partnership Agreement, in form and
substance reasonably satisfactory to Operating
Partnership (the "Amendment"), and shall add the name
of each such Contributor as a limited partner to the
books and records of Operating Partnership. Operating
Partnership agrees that no other documentation shall
be required to effect such admission pursuant to the
Partnership Agreement unless required by any law,
rule or regulation or interpretation thereof becoming
effective after the date hereof, and Operating
Partnership agrees to take the actions required of it
pursuant to Section 4.4 of the Partnership Agreement
in respect of the contribution to be made by Owner.
In the event any partner of the Operating Partnership
exercises its rights under Section 4.4, Operating
Partnership shall immediately notify Owner, who shall
have the right, within five (5) days of receipt of
such notice to terminate this Agreement whereupon the
Deposit shall be returned to Operating Partnership,
this Agreement shall terminate and neither party
shall have further rights or remedies hereunder. The
Amendment shall also provide that Operating
Partnership shall use any convention permitted by law
and selected by the general
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partner of Operating Partnership to make the
allocations contemplated in Section 12.2(C) of the
Partnership Agreement in respect of the issuance of
Units to be made pursuant to this Agreement, except
that capital gains and losses shall be allocated to
all the holders of Units in accordance with their
interests on the date of the transaction giving rise
to the capital gain or loss, and Operating
Partnership shall use the traditional method
(specified in Regulation s.1.704-3(b)) to allocate
book-tax differences with respect to the contribution
of the Property to Operating Partnership.
(vi) Special Redemption Right. Each Contributor shall have
a one-time right (the "Special Redemption Right") to
require the Operating Partnership to redeem for cash
all or any portion of the Units issued to such
Contributor upon liquidation of each Beneficiary. The
Special Redemption Right shall be exercised by
written notice given by Owner to the Operating
Partnership on or before the date which is thirty
(30) days following the Closing (each such
Contributor being referred to herein as a "Redeeming
Partner" and each such notice being referred to
herein as a "Special Redemption Notice"). Each
Special Redemption Notice shall specify the number of
Units designated by the applicable Redeeming Partner
to be redeemed. On or before the date which is
forty-five (45) days following the Closing, the
Operating Partnership shall redeem the designated
portion of each Redeeming Partner's Units for cash
based on the same price per Unit as was determined at
Closing in accordance with the provisions of Section
2(a) (that is, without further adjustment based upon
post-closing fluctuations in the share price of the
Company). If the redemption of all of the Units which
are the subject of Special Redemption Notices would
result in there remaining outstanding Units issued to
Contributors hereunder having a value of less than
Thirty-Two Million Five Hundred Thousand Dollars
($32,500,000.00) (based on the Closing price per
Unit, as aforesaid), then the Operating Partnership
shall redeem an aggregate number of Units which,
following such redemption, would leave remaining
Units issued to Contributors hereunder having a value
of Thirty-Two Million Five Hundred Thousand Dollars
($32,500,000.00), and the number of Units to be
redeemed from each Redeeming Partner shall be
prorated among the Redeeming Partners as follows: (X)
first, Units shall be redeemed from each Redeeming
Partner in an amount equal to the lesser of (i) the
number of Units the Redeeming Partner offered for
redemption and (ii) the number of Units received by
the redeeming Partner from the Owner times a fraction
the numerator of which is the maximum number of Units
the Operating Partnership is
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required to redeem pursuant to this provision and the
denominator of which is the total Units issued to
Owners and (Y) any remaining Units the Operating
Partnership is required to redeem in excess of the
number of Units to be redeemed pursuant to (X) (the
"Remaining Redemption Units") shall be allocated to
each Redeeming Partner in an amount equal to the
number of Units the Redeeming Partner gave a Special
Redemption Notice in regard to less the Units
required to be redeemed from such Redeeming Partner
pursuant to (X) above (the "Remaining Offered Units")
times a fraction the numerator of which is the
Remaining Redemption Units and the denominator of
which is the Remaining Offered Units of all Redeeming
Partners. The total number of Units to be redeemed
from each Remaining Partner shall be rounded to the
nearest whole number of Units (but in no event shall
be in excess of the number of Units offered for
Redemption). Each Redeeming Partner shall execute
such documents as the Company may reasonably require
in connection with the redemption of the Units.
b. The Loans. It is the intention of the parties that the
Contribution shall be made subject to the Loans provided the Aetna Loans can be
renegotiated to terms which contain a "market" rate of interest, as determined
by the Operating Partnership in its reasonable judgment. Prior to Closing,
Operating Partnership and Owner shall endeavor to obtain the approval of the
holders of the Loans to the transfer of the Property to the Operating
Partnership subject to the Loans and to adjust the terms of the Aetna Loans to
current market provisions and an increase in the principal thereof to
$106,000,000. If Aetna refuses to grant such consent on terms satisfactory to
Operating Partnership, either Owner or Operating Partnership shall be entitled
to seek a commitment for refinancing of the Aetna Loans in an amount not less
than $106,000,000 secured by the Property, containing non-recourse provisions
similar to the Aetna Loans, and otherwise on terms mutually satisfactory to
Owner and Operating Partnership. Any and all costs and expenses incurred in
connection with the assumption of the Aetna Loans including any assumption fee
or fee associated with a change in interest rates or increase in principal shall
be borne by Owner. In the event such fee or any other fees imposed by Aetna
exceeds $6,500,000 in the aggregate Owner may terminate this Agreement by
written notice to Operating Partnership given prior to the Closing. In addition,
Owner shall not be responsible for any other fees or commissions due third
parties in connection with the Aetna loan. In the event approval for such
assumptions is not obtained, or refinancing commitments not obtained, prior to
the Closing, either party may terminate this Agreement whereupon the Deposit
shall be returned to Operating Partnership and, except for covenants expressly
stated to survive, this Agreement shall terminate without further recourse or
remedy to either party hereto.
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c. Real Property. Owner shall contribute the Real Property to
Operating Partnership, and Operating Partnership shall accept the Real Property
from Owner, on all of the mutual terms, covenants and conditions hereinafter set
forth in this Agreement. Owner shall cause the fee title to the Real Property to
be contributed to Operating Partnership by four (4) good and sufficient
Trustee's Deeds (the "Deeds") from the Trustees of the Trusts in form and
substance reasonably satisfactory to Operating Partnership and Owner.
d. Leases. Owner shall assign to Operating Partnership all of
its right, title and interest in and to all of the leases, occupancy agreements,
or licenses of space in the Real Property, together with any amendments of any
of the foregoing set forth on Exhibit I attached hereto as well as any New
Leases, as hereinafter defined (collectively "Leases"), and Operating
Partnership shall assume all obligations under the same, pursuant to an
Assignment and Assumption Agreement (the "Lease Assignment") in form and
substance reasonably satisfactory to Operating Partnership and Owner.
e. Contract Rights. Attached hereto as Exhibit J is a complete
list of the Contracts, full and complete copies of which have been delivered to
the Operating Partnership. Those Contracts marked with an asterisk on Exhibit J
are those Contracts which Operating Partnership desires to be terminated by
Owner prior to Closing. Owner shall send notice of termination of such
unapproved Contracts prior to Closing, it being agreed that in any event all
management agreements and leasing agreements for the Real Property shall be
terminated by the Closing Date. Owner shall assign to Operating Partnership
Owner's interest in the Contract Rights which relate to those Contracts not
being terminated (the Approved Contracts), and Operating Partnership shall
assume the same pursuant to a Contract Rights Assignment (the "Contract
Assignment") in form and substance reasonably satisfactory to Operating
Partnership and Owner.
f. Other Interests. All other interests of Owner in the
Property (including, without limitation, the Personal Property) shall be
contributed by Owner to Operating Partnership pursuant to a Xxxx of Sale and
General Instrument of Transfer (the "General Instrument of Transfer") in form
and substance reasonably satisfactory to Operating Partnership and Owner.
3. Deposit. On the second business day after the Effective
Date, Operating Partnership shall deposit with the Escrow Holder, by wire
transfer to Escrow Holder's account, the sum of Five Million and 00/100 Dollars
($5,000,000.00) as a deposit on account of the Agreed Value. The Escrow Holder
shall hold the Deposit pursuant to the terms of an escrow agreement (the "Escrow
Agreement") in the form attached hereto as Exhibit K. Interest earned on the
Deposit shall become a part thereof and shall be payable to the party receiving
the Deposit. The party receiving the interest on the Deposit shall bear the
costs and
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expenses, if any, charged by the Escrow Holder; provided, however, that in the
event of any dispute between Operating Partnership and Owner involving the
Escrow Holder, the losing party shall bear all the costs and expenses, if any,
of the Escrow Holder in connection with the resolution of such dispute. If
Operating Partnership shall fail to wire the Deposit to the Escrow Holder as
herein required, this Agreement shall automatically terminate and be null and
void, without recourse to the parties hereto. At Closing, the Deposit shall be
returned to Operating Partnership.
4. Delivery of Materials for Review.
In connection with Operating Partnership's investigation of
the Property, Owner has delivered, the documents ("Documents") set forth below
which are in Owner's possession or the possession of Owner's property manager or
are reasonably obtainable by Owner:
a. Environmental Reports. Copies of any and all soils, ground
water and environmental reports concerning the Property ("Environmental
Reports"), including, without limitation, the Environmental Reports prepared in
connection with the any mortgage or similar encumbrance now encumbering all or
any portion of the Property.
b. Building Information. Copies of any and all architectural
and engineering reports, as-built plans and specifications, the most recent
as-built surveys, permits, licenses, applications, violation notices,
certificates of occupancy, pending letters of intent for leasing space in the
Real Property, a list of all current litigation and pending claims, inspection
reports and/or approvals concerning the Property, all agreements with any
abutters to the Property, including summaries of any existing agreements with
said abutters that are oral rather than written.
c. Leases. Copies of all Leases, including all summaries
thereof, and copies of all material information contained in Owner's or Owner's
property manager's leasing files with respect to the Leases or any prospective
tenants.
d. Contract Rights. Copies of the Contracts, including
summaries of any Contracts that are oral rather than written.
e. Approvals. Copies of all governmental licenses, permits,
approvals, certificates and filings which have been obtained with respect to the
Property ("Approvals") and, where applicable, certificates evidencing compliance
therewith. The Approvals shall include, but not be limited to, environmental
notification forms and impact reports, facade maintenance agreements, historic
approvals, linkage agreements, licenses and permits required by any
environmental laws, and certifications, rezonings, general plan amendments,
parcel maps, development agreements, permits, licenses, and applications.
f. Title Policies and Surveys. A copy of Owner's most recent
owner's title policy on the Property, all endorsements to such policy, and (to
the extent in Owner's
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possession) copies of any lender's title policies issued to the holder of
outstanding mortgage indebtedness on the Property. A copy of the most recent as
built survey(s) covering the Property.
g. Books and Records. Copies of the appropriate materials
necessary to establish the operating history of the Property, including without
limitation copies of property tax bills, utility bills, insurance policies, the
most current rent roll, financial statements and balance sheets for calendar
years 1993 through 1996, inclusive, and balance sheets audited if such audited
statements exist and otherwise unaudited, and year to date statements and
balance sheets for 1997 (all such financial statements and balance sheets
collectively referred to as "Financial Statements"), monthly property operating
and/or management reports for the 12 months preceding the Effective Date, and a
list of all deposits, and similar records concerning the Property from 1993
through the present.
h. Other Material Documents. Copies of all other materials and
other information contained in Owner's or Owner's property manager's files, to
the extent the same are requested from time to time in writing by Operating
Partnership or its counsel and are reasonably material to Operating
Partnership's due diligence investigation of the Property.
i. Insurance Policies. Copies of all insurance policies, both
liability and casualty, relating to the Property in currently in effect and a
current loss report print-out with respect to such policies.
j. Loans. True and complete copies of all documents evidencing
the loans and security given therefor.
5. Contingencies.
(a) Inspection. Operating Partnership acknowledges that it has
conducted its own thorough investigation of the Property including, without
limitation, an examination of all structural and mechanical aspects thereof, a
review of any and all documentation with respect to the Property (including
without limitation, its income and expenses, the Loans, real estate tax status,
all Leases and tenant files, records of repairs and capital improvements,
examination of the title to the Property), conducting of tests to determine the
presence or absence of hazardous waste, asbestos, radon and other similar
materials and substances, obtaining current "as built" surveys thereof, and
determining the compliance of the Property with all applicable laws, rules,
codes and regulations. Operating Partnership hereby confirms that it is
satisfied with its investigation of the Property and accordingly, and except as
otherwise set forth in this Agreement shall have no further claims against
Owner, and the Contribution Agreement and Operating Partnership's obligations to
close hereunder are not subject to any further review period contingency.
Further, all corporate and partnership action necessary to authorize the
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execution of this Agreement by the Operating Partnership and the performance of
its obligations hereunder have been taken.
(b) Property Availability. Owner shall continue to make the
Property available to Operating Partnership and its agents, consultants and
engineers during normal business hours to update the results of inspections and
tests as Operating Partnership deems appropriate. Operating Partnership hereby
agrees to indemnify, defend and hold Owner harmless from and against any and all
loss, cost or damage to the Property arising out of actions taken by Operating
Partnership or its agents, engineers or consultants.
(c) Illinois Responsible Property Transfer Act. Owner hereby
represents and warrants to Operating Partnership that neither the Property nor
the transfer of the Property pursuant to this Agreement is subject to the
Illinois Responsible Property Transfer Act ("RPTA"). On the Closing Date, Owner
shall deliver to Operating Partnership an affidavit stating that as of the
Closing Date neither the Property nor the transfer of the Property pursuant to
this Agreement is subject to the RPTA.
(d) Partner Approval. It shall be a condition of Owner's
obligation hereunder that, (i) to the extent required by the respective
partnership agreements of Owner, consent be obtained from the requisite number
of Partners at or prior to Closing, and (ii) agreement be obtained from limited
partners who are "unaccredited investors" to have their partnership interest
redeemed by Owner. If such consent and agreement is not obtained, Owner shall
notify Operating Partnership in writing whereupon the Deposit shall be returned
to Operating Partnership and this Agreement will terminate and the parties shall
be without further recourse or remedy, except as otherwise provided hereunder.
Owner acknowledges that any consent required by this Section 5(d) shall be
solicited subsequent to the Interest Purchase and further acknowledges that the
Operating Partnership will offer to issue Units to Owner pursuant to this
Agreement for distribution only to the Contributors.
6. Title.
a. Title Commitment; Survey. Operating Partnership
acknowledges that it has received title insurance commitments from the Title
Company and surveys for the Property. Subject to Owner satisfying the standard
requirements set forth in Schedule B-1 to said commitments, as previously
forwarded to Owner's counsel, Operating Partnership shall close title subject to
the exceptions set forth in said title commitments and the surveys.
b. Later Changes Relating to Title. Operating Partnership
shall have the right to approve or disapprove any exceptions to title that could
have a material adverse effect on the value of the Property and that arise or
occur during the period (the
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"Interim Period") which begins after the date and time of the title commitment
and ends at the time of recording the Deed from Owner to Operating Partnership
in connection with the Closing hereunder. If Operating Partnership disapproves
of any such exception to title, then Operating Partnership shall give to Owner a
notice to such effect. Owner by written notice to Operating Partnership may
elect to cure or not cure such matters within five (5) days of such notice from
Operating Partnership. If Owner elects to cure such matters, it shall so advise
Operating Partnership and the Closing shall be extended for a period not to
exceed thirty (30) days. In the event Owner does not elect to cure such matter,
Operating Partnership shall have the right to accept title subject to such
matter without adjustment of the Purchase Price, or terminate the Agreement
whereupon the Deposit shall be returned to Operating Partnership and neither
party shall have further recourse hereunder. Notwithstanding the foregoing Owner
hereby agrees that it shall remove, and shall not object to (i) a mortgage or
related security documents or similar encumbrance given to secure indebtedness
for money borrowed, or (ii) involuntary encumbrances which may be discharged by
the payment of money, or bonding in lieu thereof (or, with respect to mechanics
liens only, by obtaining affirmative coverage from the Title Company in form
satisfactory to Operating Partnership), in the amount of $250,000 in the
aggregate.
7. Closing Requirements.
a. The Closing. On the Closing Date, all matters to be
performed under this Agreement incident to the sale of the Property, and the
payment of the Agreed Value (collectively, the "Closing") shall be performed at
the offices of the Escrow Holder, 00 X. XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, or
other mutually acceptable location. The Closing shall commence on the day
preceding the Closing Date at 10:00 a.m. All documents to be delivered at the
Closing and all payments to be made shall be delivered to the Escrow Holder on
the Closing Date, in escrow, pending the prompt recording of the Deed and other
instruments as are required to be recorded to effect the transfer and conveyance
of the Property, upon which recording, and confirmation from the Title Company
that it is prepared to issue an owner's policy of title insurance in the form of
the Specimen Title Policy, insuring the Operating Partnership's title to the
Real Property in the amount of $180,500,000, all instruments and funds shall
then be delivered out of escrow; provided, however, that the Deed shall not be
recorded and such other instruments, funds, and other Closing deliveries shall
be returned by the Escrow Holder to the party which delivered them in the event
that on the Closing Date (i) Owner shall be unable to give title, or to make
conveyance, or to deliver possession, all as herein provided, (ii) the Title
Requirements shall not be satisfied to the satisfaction of the Title Company,
(iii) Owner has not satisfied its obligations or is otherwise in default
hereunder, or (iv) the Property does not conform to the provisions of Section
7.b. hereof, and the provisions of Section 7.c hereof shall then be applicable.
It is acknowledged that time is of the essence of this Agreement. Owner and
Operating Partnership agree (subject to lender approval) to cooperate in good
faith to accomplish the Closing in the so-called "New York style" (that is,
where the Owner's title policy, closing funds and Units are to
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be released from escrow prior to recording of the Deed), but each acknowledges
that a New York style closing shall not be required by this Agreement.
b. Possession and Condition of the Property . Without limiting
the generality of the foregoing, at Closing full possession of the Real Property
free of all tenants and occupants, except for tenants and occupants under the
Leases and the New Leases, is to be delivered, said Property to be then (i) in
substantially the same condition as it is on the date hereof, reasonable use and
wear thereof excepted and except as otherwise provided in Section 17, (ii) in
substantially the same compliance with applicable laws and regulations as at
February 1, 1987, and (iii) in compliance with the provisions of Section 6
hereof. Operating Partnership and/or Operating Partnership's agents shall be
entitled to inspect the Property prior to the delivery of the Deed in order to
determine whether the condition thereof complies with the terms hereof.
c. Extension to Cure. If on the Closing Date Owner shall be
unable to give title, or to make the contribution, or to deliver possession, all
as herein provided, or if on the Closing Date the Property does not conform to
the provisions of Section 7.b. for reasons beyond Owner's reasonable control,
Owner, in its sole discretion, may give notice to Operating Partnership, on or
before the Closing Date, that it elects to use reasonable efforts to cure all
impediments which cause it to be unable to give title, make conveyance or
deliver possession as aforesaid, all as herein provided. Operating Partnership
shall thereupon have the option, to be exercised by notice to Owner given on or
before the third (3rd) business day following receipt of such notice from Owner,
(i) to terminate this Agreement, whereupon Escrow Holder shall return the
Deposit to Operating Partnership and all obligations of the parties hereto shall
cease without recourse to the parties hereto except as otherwise expressly set
forth herein, (ii) to exercise its election under Section 7.e, or (iii) to
extend the Closing Date for a period (the "Owner's Extension Period") of up to
thirty (30) days to permit Owner to cure as aforesaid. In the event that
Operating Partnership shall fail to timely give the aforesaid notice then
Operating Partnership shall be deemed to have elected the option in the
foregoing clause (i).
d. Termination. If at the expiration of the Owner's Extension
Period Owner shall have failed so to give title, make conveyance, deliver
possession, or make the Property conform, as the case may be, all as herein
provided, or if at any time during the period of this Agreement or any extension
thereof, the holder of a mortgage on the Real Property shall refuse to permit
insurance proceeds, if any, to be used for such purposes, then, subject to
Operating Partnership's rights under Section 7.e, this Agreement shall
terminate, whereupon Escrow Holder shall return the Deposit to Operating
Partnership and all obligations of the parties hereto shall cease without
recourse to the parties hereto except as otherwise specifically set forth
herein.
e. Operating Partnership's Election. Operating Partnership
shall have the election, on the original or any extended Closing Date, to accept
such title as Owner
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can deliver to the Property in its then condition and to pay therefor the Agreed
Value without deduction (except to the extent necessary to clear title of (i)
any mortgages or related security documents given or similar encumbrance to
secure indebtedness for money borrowed other than the Loans, (ii) any mechanic's
lien not insured over, or (iii) involuntary liens encumbrances which may be
discharged by the payment of a definite or ascertainable amount of money, or
bonding in lieu thereof, in the amount of $250,000 in the aggregate), in which
case Owner shall convey such title by delivering the Deed subject to the
conditions contained in this Agreement.
f. Accuracy of Representations and Warranties. It is a
condition to Operating Partnership's obligations to proceed to Closing that all
of the representations and warranties of the Owner hereunder are true and
correct in all material respects as of the Closing Date (and subject to any
update or modification thereof as hereinafter provided) and the Owner has
performed all of its covenants hereunder. If any material condition to Operating
Partnership's obligations hereunder is not fulfilled, Operating Partnership
shall have no obligation to proceed to Closing. For purposes of this clause (f),
a material condition shall include, without limitation, any condition(s) which
cannot be cured by the payment of $250,000 in the aggregate.
g. Securities Laws. It shall be a condition of Closing that
there shall be no change in applicable securities laws, or any regulations or
judicial decisions thereunder which would adversely affect the practical
realization of the intended benefits of this Agreement by either party.
h. Status of Contributors. It shall be a condition of Closing
that there shall be no change in the status of any Contributor which would cause
the issuance of any of the Units to be in violation of applicable Securities
Laws.
8. Closing Deliveries.
a. Owner's Deliveries. Owner shall deliver or cause to be
delivered the following documents to Operating Partnership at Closing (the
receipt of all the following by Operating Partnership shall be a precondition to
Operating Partnership's obligation to complete the Closing):
(1) The duly executed and acknowledged Deeds.
(2) The original, signed Leases (or copies thereof if
originals are not available) as well as Owner's
tenant lease files, and the rent roll for the current
month (showing no material adverse change from the
rent roll attached hereto as Exhibit I, each
certified by Owner as being true and correct as of
the Closing. For purposes of this clause (2), a
material adverse change shall include, without
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limitation, any reduction in revenue of $250,000 or
more, in the aggregate.
(3) All tenant security deposits including any interest
earned thereon to the extent required under any
Lease. If any tenant security deposit is in the form
of a letter of credit, Owner shall use reasonable
efforts, after the Closing, to obtain and deliver an
amendment thereto or a replacement letter of credit
naming Operating Partnership as beneficiary. If any
such letter of credit has not been so amended or
replaced as of the Closing, at Closing Owner shall
enter or shall cause Xxxxxxxx and Associates L.P.
("Manager") to enter into an agency agreement with
Operating Partnership pursuant to which Owner (or
Manager, as the case may be) will acknowledge that
any such letter of credit is in the name of Owner (or
Manager, as the case may be) as agent for Operating
Partnership, and that Owner or Manager as the case
may be will, as agent for Operating Partnership,
present and draw upon such letter of credit upon
demand by Operating Partnership provided Owner and
Manager are indemnified for all actions taken at the
request of Operating Partnership and are reimbursed
for all costs in connection therewith. The
obligations of Owner and Manager with respect to such
letter of credit security deposits shall survive the
Closing.
(4) A certification duly executed by Owner under penalty
of perjury stating that Owner is not a "foreign
person" within the meaning of Section 1445 of the
Internal Revenue Code of 1986, as amended. If Owner
shall fail or be unable to deliver the same, then
Operating Partnership shall have the right to
withhold such portion of the Agreed Value as may be
necessary, in the opinion of Operating Partnership or
its counsel, to comply with said Section 1445.
(5) Originals (or copies thereof if originals are not
available) of all documents and materials assigned
pursuant to the Contract Assignment.
(6) Originals (if available) of all other Documents which
will be binding upon the Operating Partnership
following the Closing if not already provided,
together with all updates and modifications thereof
and additions thereto through the Closing, and all
other books and records of Owner pertaining in a
material way to the operation and management of the
Property, all certified as being true, complete and
correct by Owner.
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(7) A certificate by Owner to Operating Partnership to
the effect that all of the representations and
warranties of Owner hereunder, as the same may be
modified or updated as set forth herein, remain true
and correct in all material respects as of the
Closing.
(8) Executed and acknowledged counterparts of the General
Instrument of Transfer.
(9) Such affidavits and indemnities, including a standard
owner's affidavit, as the Title Company may
reasonably require to provide extended coverage and
in order to omit from any title insurance policy
issued to Operating Partnership or Operating
Partnership's mortgagee exceptions for (i) parties in
possession (except for tenants under the Leases) and
(ii) mechanic's liens created by or through Owner.
(10) Any trust, corporate, partnership or other
authorization documents necessary to record the Deed.
(11) All necessary consents from the constituent partners
in Owner to the extent such consents are required in
connection with the consummation of the transactions
contemplated by this Agreement.
(12) Evidence of the authority of any individuals or
constituent partners in Owner to execute any
instruments executed and delivered by Owner at
Closing.
(13) Estoppel certificates from tenants of the Property
dated no earlier than thirty (30) days prior to the
Closing Date ("Tenant Estoppels") in the form
attached as Exhibit L-1 hereto (containing no
information which, in Operating Partnership's
reasonable judgment, represents an adverse deviation
from the status of the Lease previously disclosed to
Operating Partnership as of February 1, 1997) from
(i) all tenants identified on Exhibit M hereto as
"Mandatory Estoppels" and (ii) sufficient additional
Tenant Estoppels so as to represent, when added to
the aggregate square footage demised to the Tenants
from whom Tenant Estoppels are obtained as required
by clauses (i) and (ii) of this paragraph, ninety
percent (90%) of the space demised under the Leases.
Owner shall use diligent efforts to obtain Tenant
Estoppels from all tenants. Owner shall provide
Operating Partnership with all executed Tenant
Estoppels and a list of the missing Tenant Estoppels
five (5) business days prior to the Closing Date. To
the extent Tenant Estoppels are received for less
than ninety percent (90%) of the space demised under
the Leases, Owner shall provide, to the extent
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factually true, Owner estoppel certificates in the
form attached as Exhibit L-2 for tenants to the
extent necessary to achieve the ninety percent (90%)
threshold (but Owner shall not be required to provide
estoppel certificates representing more than fifteen
percent (15%) of the demised space). In no event
shall Owner estoppel certificates be substituted for
Mandatory Estoppels. If Owner is unable to deliver
such Owner's estoppel letters because the required
information is untrue (such as a tenant being in
default), Operating Partnership shall have the right
to terminate this Agreement, obtain a return of the
Deposit and neither party shall have further rights
or remedies, except as otherwise provided hereunder.
(14) Evidence of the termination of Owner's property
manager and any leasing agent for the Property.
(15) Evidence satisfactory to Operating Partnership and
Title Company that all real estate taxes, sewer and
water rates and charges, special assessments and
betterments, and any utility charges the non-payment
of which could result in a lien upon the Property
have been paid, to the extent the same are then due
and payable (except for special assessments which may
be paid in installments).
(16) Any of the following which are requested by Operating
Partnership and in the possession of or reasonably
available to Owner: any and all keys, lock and safe
combinations, training and instruction manuals
relating to the maintenance, and operation of the
Property, and copies of books and records.
(17) Evidence reasonably satisfactory to Operating
Partnership that Owner has sent notices of
termination of all Contracts other than the Approved
Contracts.
(18) If the Approved Contracts include any contract for
the construction of tenant improvements to be
assigned by Owner to Operating Partnership, (i)
subject to Operating Partnership's obligations set
forth in Exhibit Q, evidence of payment by Owner of
all amounts incurred thereunder through the Closing
Date, including without limitation receipts and lien
waivers from the general contractor and all
subcontractors thereunder (or, to the extent lien
waivers are not available, such indemnification and
other documentation as shall be required by the Title
Company in order to provide Operating Partnership and
its Lender(s) with affirmative coverage under their
respective title policies), and (ii) if the contract
does not by its
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terms permit assignment, that the contractor consents
to such assignment. In addition, with respect to any
such construction contract having an aggregate
contract price of more than $25,000, Owner shall
represent to Operating Partnership the amounts
theretofore paid under such contract and, to the best
of Owner's knowledge, that (i) the contract is free
from default by such contractor or by Owner as
"owner" thereunder; (ii) all amounts theretofore paid
under such contract; (iii) the contractor has no
claims against the Owner other than for quantified
unpaid amounts; and (iv) the amount of the contract
sum not then due and payable, which representation
shall be treated for all purposes as a representation
made in Section 12 hereof.
(19) Any discharges, releases, other documents or other
conditions required by the Title Company as Owner's
Title Requirements under the Title Commitment are
received or satisfied (and, in addition, it shall be
a condition to Operating Partnership's obligation to
purchase the Property that all of the other Title
Requirements contained in the Title Commitment are
satisfied, other than those Title Requirements which
are personal to Operating Partnership), in each
instance, to the reasonable satisfaction of Title
Company so as to enable Title Company to issue the
owner's title policy in the form of the Specimen
Title Policy.
(20) Subject to the limitations set forth in Section 2(b),
payment of any fees or charges imposed in connection
with the assumption of the Loans, prepayment of any
of the Loans.
(21) Payoff letters in form and substance acceptable to
the Operating Partnership from the holders of the
Loans (other than the Aetna Loans) being assumed.
(22) A "lock up" agreement from each Contributor
containing the restrictions set forth in Paragraph
2(a)(iii) above (which agreement may be incorporated
in the form of assignments to be executed by the
Owner in connection with the liquidation of the
Beneficiaries, subject to the reasonable review and
approval of Operating Partnership).
(23) Documents required by Paragraph 2(a) hereof.
(24) The RPTA Affidavit described in paragraph 5(e)(i)
hereof.
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(25) Such other instruments as Operating Partnership may
reasonably request, provided the same are not
inconsistent with the terms of this Agreement.
If Owner shall be unable to deliver the originals of any of
the Leases, Approved Contracts or other Documents, and if Operating Partnership
shall have need to establish the authenticity of any such Leases, Approved
Contracts or other Documents in connection with any dispute, or legal,
administrative or other proceeding, Owner agrees that upon request by Operating
Partnership at any time, Owner shall provide such affidavits with respect to the
authenticity of any such Leases, Approved Contracts or other Documents as
Operating Partnership shall request. Such obligation to provide affidavits as
aforesaid shall survive the Closing.
b. Mutual Deliveries. Operating Partnership and Owner shall
deliver or cause to be delivered the following at the Closing:
(1) Executed and acknowledged counterparts of the Contract
Assignment.
(2) Executed and acknowledged counterparts of the Lease
Assignment.
(3) A closing statement reflecting the adjustments made at the
Closing and described in Section 9 hereof.
(4) Agreements in the form and substance reasonably
satisfactory to the parties between the Lenders, and Owner and
Operating Partnership related to the acquisition of the
Property "subject to the Loans.
(5) Documents called for by Section 2(a) hereof.
c. Operating Partnership's Deliveries. On the Closing Date,
Operating Partnership shall deliver at the Closing in escrow with the Title
Company:
(1) All documents required of Operating Partnership or the
Company called for by Section 2(a) hereof; and
(2) Such other instruments as Owner may reasonably request.
9. Closing Costs and Prorations. At Closing, closing costs
shall be paid and prorations made as follows:
a. Closing Costs. Owner shall pay any state, county, or local
transfer taxes. Operating Partnership shall pay any recording costs customarily
paid by purchasers of commercial real estate in the Chicago metropolitan area,
and the title insurance
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premium for the owner's title insurance policy issued at Closing to Operating
Partnership by the Title Company and the costs for the Survey. Operating
Partnership and Owner shall each pay one half of any escrow fee charged by the
Title Company.
b. Prorations. The Agreed Value shall be subject to the
following prorations which, at the election of Owner, shall be made in cash and
shall not affect the number of Units issued to Owner:
(1) Taxes. Real property taxes and general, and
special assessments shall be prorated through the Closing Date
on the basis of the fiscal year for such taxes and
assessments. To the extent Owner has undertaken to obtain any
real estate tax abatement, the amount of the net proceeds of
such tax abatement shall be prorated through the Closing Date,
if, as and when such proceeds are paid by the applicable
governmental taxing authority (it being understood that to the
extent any tenant leasing space in the Real Property shall be
entitled to any portion of such tax abatement, that such
portion shall be turned over to Operating Partnership to remit
to such tenant and shall be deducted from any tax abatement
proceeds in connection with calculating the net proceeds
thereof). At Closing, Operating Partnership shall be deemed to
have assumed the obligation of Owner to pay $100,000 in each
of the years 1997 and 1998 to Xxxxx & Xxxxxxx for that firm's
legal representation of Owner regarding real estate tax
assessments for those years.
(2) Rents. Prepaid rent, nondelinquent base rents,
additional rents in the nature of operating expense recoveries
and tax reimbursements under the Leases shall be prorated as
of the Closing Date. Rents collected after the Closing Date
from tenants whose rental was delinquent on the Closing Date,
shall be deemed to apply first to current rental due at the
time of payment and second to the rentals which were
delinquent on the Closing Date. Unpaid and delinquent rents,
to which Owner is entitled, shall be turned over promptly to
Owner if collected by Operating Partnership after the Closing
Date, less any reasonable collection costs actually incurred
by Operating Partnership. Operating Partnership agrees to use
good faith efforts to attempt to collect such rents but shall
not be obligated to terminate any lease or initiate any legal
proceedings. As of the Closing Date, Operating Partnership
shall be entitled to a credit for any tenant security deposits
and interest thereon, if any, and any other amounts due
tenants' pursuant to such security deposits unless such
security deposits are assigned pursuant to Section 8 or have
been previously applied by Owner (an "Applied Security
Deposit"). Owner hereby indemnifies Operating Partnership,
effective from and after the Closing, for the amount of any
Applied Security Deposit and interest, if any, payable thereon
under the applicable Lease applied in violation of any
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Lease, as to which the Tenant under the applicable Lease does
not supply a Tenant Estoppel acknowledging that the security
deposit has become an Applied Security Deposit. In the event
that any additional rent or the calculation thereof is subject
to adjustment pursuant to the terms and provisions of any
Lease (e.g., year-end adjustments to escalation charges and
the like), then after the amount of such additional rent is
finally determined by Operating Partnership and Owner, the
parties shall make the proper adjustments so that the
proration of rents will be accurate based upon the actual
amount of additional rent collected for the period in
question, and payment shall be made promptly to Operating
Partnership or Owner, whichever may be entitled to such
payment, by the other party for the purpose of making such
adjustment.
(3) Utilities. Charges and assessments for sewer and
water and other utilities, including charges for consumption
of electricity, steam and gas shall be apportioned by
Operating Partnership and Owner as of the Closing Date based
on final readings therefor as of the Closing Date (or, if such
final readings have not been obtained, based upon estimates of
the amounts that will be due and payable on the next payment
date). During the 60-day period following the Closing, to the
extent not payable by Tenants, Owner and Operating Partnership
shall recalculate the foregoing adjustments based upon actual
final invoices.
(4) Adjustment of Contracts. Payments required or
received under all Approved Contracts (and unapproved
Contracts, the termination of which is not effective until
after Closing), shall be apportioned by Operating Partnership
and Owner as of the Closing Date, provided, however, that
Owner shall be entitled to reimbursement at Closing for all
Leasing Costs incurred and paid pursuant to any New Lease.
(5) The Loans. Interest due under the Loans shall be
prorated as of the Closing Date.
(6) Construction Inventory. Operating Partnership
shall pay to Owner the sum of $123,160 for the construction
inventory listed on Exhibit B attached hereto.
c. Owner's Payment Obligation. Except as otherwise provided
for herein, all expenses, taxes, fees, charges and assessment of every type
relating to the Property and accruing for any period prior to the Closing shall
be paid promptly by Owner except to the extent that Operating Partnership
received credit therefor at the Closing.
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d. Post Closing Cooperation. After the Closing Operating
Partnership and Owner shall cooperate with each other, and shall cause their
respective property managers for the Property to cooperate with each other,
including without limitation making available books and records for the
Property, in order to respond to any Tenant inquiry concerning, challenge to or
audit of, any operating expense or similar additional rent or rent escalation
item.
The provisions of this Section 9 shall survive Closing.
10. Notice to Tenants. At Closing, Operating Partnership and
Owner shall notify tenants under the Leases in writing of Operating
Partnership's acquisition of the Property, which notices shall be in the form
and substance reasonably satisfactory to Operating Partnership and Owner.
11. Default.
a. Operating Partnership's Default. In the event that this
Agreement does not close due to a default by Operating Partnership, Owner shall
retain the Deposit as liquidated damages, and not as a penalty, and this shall
be Owner's sole and exclusive remedy. The parties agree that Owner's actual
damages would be difficult or impossible to determine if Operating Partnership
defaults, and the Deposit is the best estimate of the amount of damages Owner
would suffer. Owner and Operating Partnership agree that if the Deposit is so
retained by Owner pursuant to this Section 11(a), it shall be paid 60% to
Xxxxxxxxx Corporate Center Associates, 20% to Xxxxxxxxx Corporate Center IV
Associates Limited Partnership and 20% to Xxxxxxxxx Corporate Center V
Associates Limited Partnership.
b. Owner's Default. In the event that this Agreement does not
close as a result of a default by Owner, Operating Partnership shall have the
election (i) to terminate this Agreement, secure a refund of its Deposit and be
reimbursed all costs incurred by Buyer in connection with this transaction, (ii)
seek equitable relief, including specific performance of this Agreement, or
(iii) waive the default and proceed to Closing.
12. Owner's Representations and Warranties. Owner hereby makes
the following representations and warranties to Operating Partnership as of the
Effective Date, which representations and warranties shall survive Closing for
one (1) year:
a. Delivery of Written Materials. All Documents and other
written materials (including, without limitation, the Exhibits to this
Agreement) which Owner has delivered or shall deliver to Operating Partnership
pursuant this Agreement are and shall be complete in all material respects, and
Owner shall deliver or cause to be delivered all such Documents and other
written materials to Operating Partnership pursuant to Section 4 and Section 8
hereof. The copies of the Leases, the Contracts and the Financial
-24-
Statements now or hereafter delivered to Owner are true and accurate in all
material respects.
b. Other Agreements. On the Closing Date there will be no
material contracts, agreements or understandings oral or written, with any
person affecting the Property which have not been fully performed except the
Approved Contracts, the Leases, the Approvals, the exceptions to title to the
Property.
c. Due Authorization. Subject to the consent and agreement
referred to in paragraph 5(d), Owner has all necessary power and authority to
own and use its properties and to transact the business in which it is engaged,
and has full power and authority to enter into this Agreement, to execute and
deliver the documents and instruments required of Owner herein, and to perform
its obligations hereunder. Owner is duly authorized to execute and deliver, and
perform this Agreement and all documents and instruments and transactions
contemplated hereby or incidental hereto.
d. Intentionally deleted.
e. No Conflict. The execution and delivery of, and
consummation of the transactions contemplated by this Agreement is not
prohibited by, and will not conflict with, constitute grounds for termination
of, or result in the breach of any of the Leases or the Contract Rights or any
other agreement or instrument to which Owner is now a party or otherwise
subject.
f. Leases. (i) Attached hereto as Exhibit I is a full and
complete list of the Leases and any amendments thereto or modifications thereof
and of all other rental or occupancy agreement entered into by Owner with
respect to or affecting the Property, (ii) a full and complete copy of each
Lease and any and all amendments thereto and modifications thereof have been
made available to Operating Partnership, (iii) there are no brokerage fees,
commission or any other payments owed or payable by the Lessor under any of the
Leases, now or in the future, to any parties in connection with any of the
Leases, except for commissions that may become payable for future, unexercised
renewals, extensions or expansions of Leases, a complete list of which is set
forth on Exhibit N or Exhibit Q, the responsibility for which Operating
Partnership shall assume, (iv) no rentals or other amounts due under the Leases
have been paid more than one (1) month in advance (except for rent paid upon
execution of Leases which have not yet commenced, as indicated on Exhibit I),
(v) the transactions contemplated in this Agreement will not cause or constitute
a breach or default under any of the Leases; (vi) except as set forth on Exhibit
I, no security or other deposits of any type have been paid by any of the
Tenants under any of the Leases; (vii) to Owner's knowledge the Leases are in
full force and effect; (viii) except as set forth in Exhibit I to Owner's
knowledge no tenant is delinquent in its obligation to pay rent or other charges
under its Lease and no material breaches or defaults of any of the terms and
provisions of any of the Leases by the Owner or the Tenant thereunder exists;
(ix) except as set forth in Exhibit I or provided
-25-
in the Lease, there are no outstanding tenant improvement obligations, rent
credits or lease concessions due tenants under the Leases, and (x) none of the
tenants under the Leases has asserted any defenses, set-offs or claims in
connection with any of the Leases;
g. Contracts. There are no service or maintenance contracts or
other Contracts of agreements now in force between Owner and any other party
with respect to or affecting the Property, except for the Contracts set forth on
Exhibit J attached hereto and made a part hereof and except for an either oral
or written agreement from the owner of property across 00xx Xxxxxx to contribute
to the traffic light maintenance costs, and Owner has made available for
Operating Partnership's inspection full and complete copies of all of the
Contracts and all amendments thereto. There are no agreements with any abutters
to the Property, oral or written, except as described on Part II of Exhibit J
attached hereto.
h. Notices. Owner has received no written notice or citation
(a "Notice"):
(1) From any federal, state, county or municipal authority
alleging any fire, health, safety, building, pollution, environmental,
zoning or other violation of any law, regulation, permit, order or
directive in respect of the Property or any part thereof, which has not
been entirely corrected;
(2) From any insurance company or bonding company of any
defects or inadequacies in the Property or any part thereof, which
would adversely affect the insurability of the same or of any
termination or threatened termination of any policy of insurance or
bond.
If any such Notice is received by Owner prior to Closing, Owner shall
notify Operating Partnership promptly thereof and provide a copy of
such Notice to Operating Partnership.
i. Legal Proceedings. Except as set forth on Exhibit O hereto,
there are no actions, suits or proceedings, pending, or, to Owner's knowledge,
threatened before any court, commission, agency or other administrative
authority against, or affecting Owner or the Property which are not covered by
insurance maintained by Owner.
j. No Employees. Owner does not directly employ any employees
who work at the Property, or, if Owner does employ employees who work at the
Property, the employment of all such employees shall be terminated at Closing.
k. No Adverse Facts. Owner has no actual knowledge of any
structural or material defects to the Property.
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l. Union Contracts. There are no union contracts or collective
bargaining agreements in force affecting Owner or the Property, except with
regard to janitorial services.
m. Hazardous Materials. Owner has delivered to Operating
Partnership all reports in Owner's possession or control related to hazardous
materials. Owner has never used, generated, processed, stored, released,
discharged, transported, handled or disposed of any hazardous matter, hazardous
waste or hazardous substance on, in or in connection with the Property except in
compliance with all applicable laws, and, to Owner's actual knowledge, no prior
owner or operator of the Property has used, generated, processed, stored,
released, discharged, transported, handled or disposed of such waste or
substance on or in the Property. To Owner's actual knowledge, no such hazardous
matter, hazardous waste or hazardous substance is now or has ever been used,
generated, processed, stored, released, discharged, transported, handled or
disposed of on or in the Property except in compliance with all applicable laws.
For the purposes of this paragraph, "hazardous matter", "hazardous waste" and
"hazardous substance" shall mean any material which may be dangerous to health
or to the environment, including without implied limitation all "hazardous
matter", "hazardous materials," "hazardous substances," and "oil" as defined in
any applicable federal, state or local law, rule, order or regulation relating
to the protection of human health and the environment or hazardous or toxic
substances or wastes, pollutants or contaminants, including all of the following
statutes and their implementing regulations:
(A) Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. s.9601 et seq;
(B) Toxic Substances Control Act, 15 U.S.C. s.2601 et
seq;
(C) Federal Insecticide, Fungicide, and Rodenticide Act,
7 U.S.C. s.136;
(D) Federal Water Pollution Control Act, 33 U.S.C.
s.1251 et seq;
(E) Federal Solid Waste Disposal Act, 42 U.S.C. s.6901
et seq;
(F) Clean Air Act, 42 U.S.C. s.7401 et seq;
(G) Applicable laws and regulations of the State of
Illinois relating to hazardous matter, substances or
wastes, waste oil, and air or water quality.
n Assessments. There are no special assessments filed, pending
or, to Owner's actual knowledge, proposed, against the Premises or any portion
thereof, including, without limitation, any street improvement or special
district assessments.
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o [Intentionally Omitted]
p. The Loans. True and complete copies of all documents
evidencing the Loans have been delivered to Operating Partnership. The Loans are
in full force and effect, and Owner is not in default thereunder. The
outstanding principal balance of the Loans excluding the Redemption Notes as of
this date is $126,458,603.69. Owner intends to draw an additional $6,500,000
under the Loan on Building IV (which sum is included in the calculation of
Agreed Value). Other than with respect to the Aetna Loans there are no breakage
costs, prepayment penalties or premiums, assumption fees or like charges which
will be due or payable in connection with the transactions contemplated hereby,
and the Loans (other than the Aetna Loans) may be prepaid at any time.
q. Updating of Schedules, Exhibits, Representations and
Warranties. Owner shall have the right to modify, update and supplement all
representations, warranties, exhibits and schedules attached to or delivered in
connection with this Agreement through the Closing Date, solely with respect to
events occurring after the Effective Date which were not within the reasonable
control of Owner or of which Owner first became aware after the Effective Date,
to the extent required to make such representations, warranties, exhibits and
schedules true, accurate and complete in light of such events; provided,
however, that if any such modification, update or supplement has, in Operating
Partnership's sole judgment, a material adverse effect on the condition or value
of the Property, Operating Partnership shall have the right, as its sole remedy
(unless the same otherwise constitutes or is caused by an intentional default by
Owner hereunder), to terminate this Agreement by notifying Owner, in writing.
For purposes of this clause (q), the term material adverse effect shall include,
without limitation, any condition or state of facts the cost of which exceeds
$250,000 in the aggregate.
r. Village Inspection. Owner and Operating Partnership are
aware that the Village of Westchester requires an inspection of the Property
upon a sale and imposes a fee of $.05 per square foot of space inspected. The
applicable ordinance has been determined to be unconstitutional by the Illinois
Attorney General. Nevertheless, Owner hereby indemnifies and holds Operating
Partnership harmless from any and all loss, cost, claim or damage, including
without limitation the payments of such fee and the repair of any matters
discovered in any subsequent inspection of the Property under such provision,
and any and all fines imposed for failure to so comply. Owner shall not be
required, however, to resolve the matter prior to Closing unless resolution is
necessary to obtain documentary stamps or record the deed.
13. Operating Partnership's Representations, Warranties and
Covenants. Operating Partnership hereby makes the following representations and
warranties to Owner as of the Effective Date:
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a. Due Authorization. Upon satisfaction of the Contingency
described in Section 5(c), Operating Partnership has full power to execute,
deliver and carry out the terms and provisions of this Agreement and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and the individual(s) executing this Agreement on behalf of
Operating Partnership has the authority to bind Operating Partnership to the
terms and conditions of this Agreement.
b. Enforceability. Upon satisfaction of the Contingency
described in Section 5(c), this Agreement and all documents required hereby to
be executed by Operating Partnership, when so executed, shall be legal, valid,
and binding obligations of Operating Partnership, enforceable against Operating
Partnership in accordance with their respective terms.
c. Deferral of Contributor's Gain. If Operating Partnership
(i) fails to maintain for a period of ten (10) years from the Closing Date
nonrecourse indebtedness ("Nonrecourse Debt") such that the amount of such
indebtedness includable by each of the Contributors in each such Contributor's
respective Federal income tax basis for its interest in Operating Partnership is
at least equal to the respective amounts (the "Nonrecourse Built-in Gain") for
such Contributor set forth in the NBG Schedule (as hereinafter defined and
including adjustments thereto pursuant to the third sentence of the fifth
paragraph of this Section 13.c.) (a "Basis Event"), or (ii) sells or otherwise
transfers any portion of the Property prior to the tenth (10th) anniversary of
the Closing Date in a taxable transaction or a non-taxable transaction with
"boot" (a "Sale Event"), then Operating Partnership shall pay to each
Contributor an amount equal to the Tax Payment, calculated in the manner
provided below in this Section 13.c. Each of the events described in the
preceding sentence is herein referred to as a "Gain Recognition Event". Subject
to the remaining terms of this Section 13.c. below, Operating Partnership's
obligation to maintain Nonrecourse Debt includable in a Contributor's Federal
income tax basis for its interest in Operating Partnership shall cease with
respect to each particular Contributor as to that portion of the Nonrecourse
Built-in Gain attributable to the portion of any Property sold or otherwise
transferred by Operating Partnership in a taxable transaction, or, as the case
may be, if there is a non-taxable transaction with boot, as to that portion, if
any, of the Nonrecourse Built-in Gain as to which gain was recognized.
The Tax Payment payable by Operating Partnership to a Contributor
affected by a Sale Event shall be an amount equal to the product of (i) the
Applicable Percentage (as defined below) on the date of the Sale Event, and (ii)
the tax (computed as provided below) on (A) the gain required to be allocated to
the Contributor under Internal Revenue Code Section 704(c) as a result of the
Sale Event minus (B) any passive loss carryforwards at the time of the Sale
Event attributable to the Property which may be available to offset such gain.
The "Applicable Percentage" for purposes of this paragraph shall be 100%,
reducing by 10% on each anniversary of the Closing. Thus, if a Sale Event
occurred between the fifth and sixth anniversaries of the Closing, Operating
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Partnership would be required to pay fifty percent (50%) of the amount
determined under clause (ii).
The Tax Payment payable by the Operating Partnership to a
Contributor affected by a Basis Event shall be an amount equal to the product of
(i) the Applicable Percentage on the date of the Basis Event and (ii) the tax
(computed as provided below) on (A) the gain recognized by the Contributor as a
result of the deemed cash distribution to the Contributor due to the Basis Event
minus (B) any passive loss carryforwards at the time of the Basis Event
attributable to the Property which may be available to offset such gain. The
"Applicable Percentage" for purposes of this paragraph shall be 100%. For
purposes of the Applicable Percentage under this paragraph, a Basis Event shall
be deemed to occur when the payment, repayment, refinancing or other event
occurred which resulted in a reduction in Nonrecourse Debt basis allocable to
the Contributor despite the fact that the occurrence of a Basis Event may not be
determined until the end of Operating Partnership's tax year pursuant to the
provisions of the applicable regulations promulgated pursuant to the Internal
Revenue Code. Nothing in the preceding sentence shall be deemed to affect the
fact that a failure to maintain adequate Nonrecourse Debt may in some instances
be determined only as of the end of Operating Partnership's tax year.
For purposes of computing the Tax Payment, the tax on the
relevant amount of gain or income shall be computed on the basis of the highest
stated marginal federal and state tax rates applicable to the type of gain or
income resulting from the Sale or Basis Event regardless of the amount of tax
actually paid or incurred by the Contributor, except that in determining such
taxes a deduction shall be made for the tax benefit attributable to the
deduction for federal income tax purposes of the assumed state income tax, with
the tax benefit calculated based upon the highest stated marginal federal income
tax rates. For the purposes hereof, the highest applicable stated marginal rate
shall be the highest rate (based on the type of gain or income) stated as a
number (i.e., a percentage), determined without regard to phase-outs, use of tax
tables, and other matters which may affect or result in a different effective
marginal rate. For example, for the above purposes, the highest stated marginal
rate for an individual as of the date hereof (and, for purposes of this example,
without regard to any retroactive changes which may be made in the applicable
law after the date hereof) is 39.6% for ordinary income and 28% for capital
gains.
Within ten (10) days after the date hereof, Owner shall
deliver to Operating Partnership a schedule of the Nonrecourse Built-in Gain
(i.e., the "negative capital account") attributable to each Owner as of December
31, 1996. No later than September 30, 1997, Owner shall deliver to Operating
Partnership a schedule (the "NBG Schedule") of the negative capital accounts for
each Contributor in each Owner as of the Closing (but reflecting any cash
distribution on liquidation of Owner) and the sum of these amounts as to all
Owners shall be the Nonrecourse Built-in Gain as to each Contributor. The sum of
the Nonrecourse Built-in Gain for all Contributors shall not
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exceed $55,000,000 and, should the sum on the NBG Schedule exceed such amount,
the Nonrecourse Built-in Gain of each Contributor shall be reduced
proportionally (in proportion to their respective negative capital account(s))
to the extent necessary to make the total Nonrecourse Built-in Gain for purposes
of the NBG Schedule no more than $55,000,000. Operating Partnership is relying
on the information provided in Schedule NBG as to the amount of Nonrecourse
Built-in Gain, and the occurrence of a Basis Event, and thus Operating
Partnership's responsibility for Tax Payments with respect thereto, shall be
limited based upon the amounts set forth in Schedule NBG (as adjusted pursuant
to the immediately preceding sentence) notwithstanding that a Contributor's
actual amount may be greater than the amounts set forth in Schedule NBG (as
adjusted pursuant to the immediately preceding sentence); however, if the amount
of any Contributor's actual negative capital account as of the Closing (as
adjusted for any cash distribution on liquidation of the Owner) is less than
that shown on Schedule NBG (as adjusted pursuant to the immediately preceding
sentence) the occurrence of a Basis Event, and thus the requirement and amount
of any Tax Payment, shall be based upon the actual amounts.
Within ten (10) days after the date hereof the parties hereto
shall agree on an Exhibit H to be attached hereto, which Exhibit H shall be the
agreed value allocation to each Owner of the aggregate gross value of the Real
Property.
Each Contributor shall, upon request of Operating Partnership,
provide it with copies of such tax returns, schedules and other information
reasonably requested by Operating Partnership to enable it to make any necessary
calculations hereunder, including, without limitation, copies of state and
federal tax returns and schedules of passive loss carryforwards. In lieu of
providing such information, a Contributor may instead provide a certification
from a certified public accountant reasonably acceptable to Operating
Partnership as to the Tax Payment due to such Contributor, such certification to
include reasonable detail as to the calculation thereof and any assumptions and
other material matters with respect thereto.
Any Tax Payment hereunder shall be payable by Operating
Partnership on or before the later of (i) March 15th of the calendar year
following a Gain Recognition Event or (ii) twenty-five (25) days after the
Contributor has provided the information required under the preceding provisions
of this Section 13.c. as to the calculation of any Tax Payment, provided that if
as a result of a Gain Recognition Event a Contributor is required to make
estimated tax payments in excess of the estimated tax payments it would have had
to make to qualify under the applicable safe harbor rules, then appropriate
portions of the Tax Payment shall be made to Contributor in the amount of such
excess on the later of (x) ten (10) days before each such estimated tax payment
is due, and (y) ten (10) days after the Contributor has provided Operating
Partnership with the amount of such excess then due, including reasonable detail
as to the calculation thereof. Any Tax Payment not made when due hereunder shall
bear interest and late payment penalties in the same amount as would be imposed
by the Internal Revenue Service on a tax not paid
-31-
when due. The Contributor shall also be entitled to recover all costs of
collection including reasonable attorneys' fees.
The provisions of this Section 13.c. shall apply only to the circumstances
specifically defined as either a Basis Event or a Sale Event and shall not apply
to, and no Tax Payment shall be payable as a result of, any tax consequences
arising from any other transaction or event or as a result of any transfer by,
or any other act, action or omission of, any Contributor.
Operating Partnership agrees that to the extent of any conflict between the
terms of this Section 13.c. and Section 7.1D of the Partnership Agreement,
Section 13 of this Agreement shall control. The provisions of this Section 13.c.
shall survive the Closing and shall continue without regard to the limits set
forth in Section 16 hereof. The payments required to be made to a Contributor
pursuant to this Section 13.c. shall be the sole and exclusive remedy available
to a Contributor in the event of a Gain Recognition Event.
d. If the Closing shall occur, the provisions of Section 11
and 16 hereof shall not limit the liability of Operating Partnership for breach
of the foregoing representations, warranties and covenants.
14. Actions After the Effective Date. The parties covenant to
do the following through the Closing Date.
a. Title. Owner shall not make any changes in the condition of
title to the Property from and after the Effective Date which will not be
released and removed at Closing, except with Operating Partnership's advance
written consent, which consent shall not be unreasonably withheld or delayed.
b. Maintenance and Operation of Property. Owner shall continue
to operate, maintain and insure the Property consistent with the present
business and operations thereof and in a first-class manner, and Owner shall
maintain the Buildings, improvements, utilities, and systems that comprise or
that are upon the Property in good condition and repair, normal wear and tear
and casualty (subject to the provisions of Section 17 below) excepted, it being
the intention of the parties hereto that the general operations of the Property
shall not be changed between the date hereof and the date of Closing; and to the
extent any of the building systems should break or otherwise become
dysfunctional, Owner shall cause the same to be repaired and put in good working
order prior to the Closing Date. Owner shall maintain all existing insurance
property and casualty insurance coverages (or similar replacements thereof) and
liability insurance in an amount of no less than $10,000,000 in full force and
effect until the Closing. Owner shall not enter into any new Contract or
equipment lease which will survive the Closing without the prior written consent
of Operating Partnership, which consent shall not be unreasonably withheld with
respect to any such proposed Contract or equipment lease
-32-
that may be terminated with thirty (30) days notice. Any such Contract or
equipment lease approved by Operating Partnership shall be deemed an Approved
Contract. Except as provided in Exhibit Q, Owner shall complete all tenant
improvement work and pay all brokerage commissions with respect to any leases
entered into prior to the date of this Agreement.
c. Intentionally Deleted.
d. Entry; Operating Partnership's Inspection. Operating
Partnership and its agents, employees and contractors may enter the Property for
purposes of inspection and survey and conducting soils, engineering and other
tests. Operating Partnership shall perform any testing or inspection of the
Property only after Operating Partnership has provided to Owner certificates of
insurance or other evidence reasonably satisfactory to Owner that Operating
Partnership and its consultant, agent or representative carries general
liability insurance in an amount of at least Three Million Dollars ($3,000,000)
together with evidence of adequate worker's compensation insurance. Operating
Partnership shall perform the testing and inspection of the Property at such
times and so as to cause no unreasonable disturbance of the operation of the
Property and the possession thereof by the tenants. Owner shall have the right,
at its option, to cause Owner's representative to be present at all inspections,
reviews and examinations conducted on the Property by Operating Partnership.
Operating Partnership shall give to Owner one (1) business day's advance notice
of any such inspections, reviews or examinations. Operating Partnership shall
repair any damage and indemnify, defend and hold Owner harmless from any cost,
claim or expense arising from such entry by Operating Partnership or from the
performance of any such tests by Operating Partnership, except that Operating
Partnership's agreements as set forth in this sentence shall not extend to any
pre-existing condition that is discovered by Operating Partnership to be present
on, under or about the Property. The obligations of Operating Partnership set
forth in the immediately preceding sentence shall survive the Closing or any
earlier termination of this Agreement. Operating Partnership may also enter the
Property for the purpose of conducting interviews with existing tenants under
the Leases, but entry for such purpose shall be made only with prior appointment
with Owner or Owner's management agent for the Property, and Owner shall have
the right to have its representative accompany Operating Partnership on any such
interview.
e. Leasing. In order to provide for an efficient process for
the approval of any New Lease (hereinafter defined), Owner shall meet with
Operating Partnership from time to time to discuss leasing parameters and lease
proposals. As any proposal for a New Lease is received by Owner, it shall notify
Operating Partnership and afford Operating Partnership an opportunity to comment
upon the proposal to Owner prior to Owner responding to such proposal. Owner,
however, shall not be bound by the comments or suggestions of Operating
Partnership. Owner, however, shall not enter into any new Lease or any amendment
or modification to any Lease except as may be required pursuant to such Lease
(any of the foregoing and those leases set forth in Exhibit Q
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attached hereto a "New Lease") of the Property or any portion thereof, or any
construction contract for the construction of tenant improvements in connection
with any proposed Lease, except in compliance with this Section 14.e. A copy of
each New Lease proposed to be entered into by Owner after the Effective Date
will be submitted to Operating Partnership for its approval prior to execution
by Owner, together with a reasonably detailed budget setting forth the Leasing
Costs to be incurred in connection with such New Lease, and a copy of any
proposed construction contract for the construction of tenant improvements in
connection with such proposed New Lease, together with a full disclosure of any
affiliation between Owner and the proposed tenant or contractor. Operating
Partnership shall notify Owner in writing within five (5) business days after
its receipt of each such proposed New Lease, budget, and construction contract,
if applicable, either of its approval or disapproval thereof, including of the
leasing costs to be incurred in connection therewith and of any such
construction contract. In the event Operating Partnership informs Owner that
Operating Partnership does not approve any such proposed New Lease, which
approval shall not be unreasonably withheld or delayed, Owner shall not enter
into such New Lease, or any such construction contract, as the case may be. In
the event Operating Partnership fails to notify Owner in writing of its approval
or disapproval of any such proposed New Lease or contract within the five-day
time period for such purpose set forth above, such failure shall be deemed the
approval by Operating Partnership of such New Lease, budget and contract. Upon
the approval or deemed approval of any such construction contract, if the work
under such contract is not complete as of the Closing Date, such contract shall
be treated for all purposes as an Approved Contract. If Operating Partnership
approves, or is deemed to have approved of, any New Lease, Leasing Costs
incurred by Owner in connection therewith in an amount not to exceed the amount
of such Leasing Costs approved or deemed approved by Operating Partnership as
provided herein, shall, if a Closing shall occur, be the obligation of Operating
Partnership, and to the extent that Owner has theretofore expended any sums for
any of the foregoing, Operating Partnership shall, subject to such limitation,
reimburse Owner at Closing for the amount of any such sums expended.
In connection with the New Leases, Owner has an existing
contract with Xxxxxxxxx Construction Company for tenant improvement work at the
Property. Owner shall terminate that contract at or prior to the Closing Date
except with respect to work in process on the Closing Date and authorized in
accordance with the prior paragraph.
f. Subordination Non-Disturbance, and Attornment Agreements.
To the extent required by Aetna, Owner shall seek Subordination, Non-Disturbance
and Attornment Agreements from Tenants under Leases and New Leases, in such form
as may be required by Aetna for execution and delivery by such Tenants on or
before the Closing (or, if a Lease requires a particular form of SNDA, in the
form required by such Lease).
15. Use of Proceeds to Clear Title. Any unpaid taxes,
assessments, water charges and sewer rents, together with the interest and
penalties thereon to Closing
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Date, and any other liens and encumbrances which Owner is obligated to pay and
discharge together with the cost of recording and filing any instruments
necessary to discharge such liens and encumbrances of record, may be paid out of
the proceeds of the monies payable on the Closing Date if Owner delivers to
Operating Partnership on the Closing Date official bills for such taxes,
assessments, water charges, sewer rents, interest and penalties and instruments
in recordable form sufficient to discharge any other liens and encumbrances of
record and Operating Partnership's title company agrees to insure against such
liens or encumbrances.
16. Survival. Unless otherwise expressly stated to the
contrary, the remedies for breach of representations and warranties of Owner
contained in Section 12 hereof and the terms, covenants and indemnities
contained in this Agreement required to be operative after delivery of the Deed
shall survive delivery of the Deed for one (1) year after the Closing, and, to
the extent notice of breach has been sent within such one (1) year period and an
action has been commenced within ninety (90) days thereafter, until final
unappealable adjudication thereof, and shall not be deemed to have been merged
in the Deed. Owner agrees to indemnify and hold Operating Partnership harmless
from and against any and all claim, loss, liability or expense (including
reasonable counsel fees) incurred in connection with or arising out of the
breach of any representation, warranty or agreement of Owner contained in this
Agreement. The representations and warranties of the Owner which by the terms of
this Agreement survive the Closing shall be enforceable against Xxxxxxxx Family
Limited Partnership (PFLP). For the period set forth above, the PFLP shall not,
by its act or omission, dispose of or encumber the Units delivered to it
pursuant to this Agreement and the liquidation of the respective Owners in a
manner which will reduce the unencumbered value of Units held by PFLP below
$5,000,000.00.
Unless otherwise expressly stated to the contrary, the
representations and warranties of Operating Partnership contained in Section 13
hereof and the terms, covenants and indemnities contained in this Agreement
required to be operative after delivery of the Deed shall survive for one (1)
year after the Closing and shall not be deemed to have merged into the Deed.
Operating Partnership agrees to indemnify and hold Owner harmless from and
against any and all claims, loss, liability or expense (including reasonable
counsel fees) incurred in connection with or arising out of breach of any
representation, warranty, easement or agreement of Operating Partnership
contained in this Agreement.
17. Damage to Property. If the Property or any part thereof
(i) is damaged by casualty or (ii) is taken by exercise of the power of eminent
domain prior to the Closing Date, and in the case of either such casualty or
taking the damage to the Property exceeds $250,000, as reasonably determined by
Operating Partnership, Operating Partnership may terminate by notice given to
Owner within thirty (30) days of the date Owner gives notice to Operating
Partnership of such casualty or taking. If Operating Partnership does not so
terminate this Agreement or such damage does not exceed $250,000 the parties
shall proceed to Closing without any reduction in the Agreed
-35-
Value except as specifically provided below. At the Closing, Owner shall assign
to Operating Partnership all insurance proceeds arising from the casualty (to
the extent not applied to any restoration relating thereto), together with a
credit against the Agreed Value equal to the deductible amount under the
applicable insurance policy, or pay over or assign to Operating Partnership all
awards recovered or recoverable on account of such taking.
18. Brokerage Commission. Owner and Operating Partnership each
warrant to the other party that its sole contact with the other party or the
Property regarding this transaction has been directly with the other party other
than Xxxxxxxx and Associates L.P. (the "Owner's Broker"). Owner shall be
responsible for any fees or commissions payable to the Broker. Owner and
Operating Partnership further warrant to each other that, except as set forth
above, no broker or finder can properly claim a right to a commission or
finder's fee based upon contacts between the claimant and the warranting party
with respect to the other party or the Property. Owner and Operating Partnership
shall indemnify, defend and hold the other party harmless from and against any
loss, cost or expense, including, but not limited to, attorneys' fees and court
costs, resulting from any claim for a fee or commission by any broker or finder
in connection with the Property and this Agreement resulting from the
indemnifying party's actions. The foregoing indemnities shall survive the
Closing and shall not be subject to the general one (1) year limitation on
survival of representations and warranties.
19. Disclosure; Audit Right.
a. Public Disclosure of Agreement. Owner acknowledges that
Beacon Properties Corporation, the general partner of Operating Partnership, is
a publicly owned corporation subject to regulation by the Securities and
Exchange Commission ("SEC"), and that the regulations of the SEC may require
that Operating Partnership disclose the existence of this Agreement and the
contents of some or all of the Documents delivered by Owner. Accordingly, Owner
expressly consents to the disclosure of the terms and conditions of this
transaction, this Agreement itself, and terms of any Document which Operating
Partnership in good faith believes should be disclosed in connection with
fulfillment of its disclosure requirements under SEC regulations. In addition,
Operating Partnership and Owner shall have the right to issue press releases
announcing this transaction at any time after the date hereof. Each shall be
entitled to a prior review of the other's press release.
b. Right to Audit. Pursuant to Section 4.g hereof, Owner is
obligated to deliver to Operating Partnership certain financial statements and
balance sheets for the Property. In order to comply with SEC regulations,
Operating Partnership may need the right prior to or subsequent to Closing, to
conduct an audit of Owner's books and records for the Property in conformity
with Section 3.14 of SEC Regulation SX for 1994, 1995, 1996 and/or for Owner's
period of ownership in 1997, at Operating Partnership's sole cost and expense.
Owner hereby agrees to permit Operating Partnership and Operating
-36-
Partnership's accountants access to such books and records (including those
maintained by Owner's management agent for the Property) and to cooperate with
Operating Partnership, and to cause Owner's accountants to cooperate with
Operating Partnership, at no cost to Owner, to enable such audit to be
performed. Operating Partnership agrees that no information disclosed in such
audit will alter any obligation of Owner. The provisions of this Section 19.b
shall survive the Closing indefinitely.
20. Successors and Assigns. The terms, covenants and
conditions herein contained shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto. Operating Partnership may
assign its rights and obligations hereunder to any affiliate of Beacon
Properties Corporation or to any entity in which Operating Partnership, and/or
any affiliate of Beacon Properties Corporation, have an economic interest.
Except for the assignment permitted by the preceding sentence, Operating
Partnership may not assign Operating Partnership's rights hereunder to any party
without Owner's consent. No such assignment shall relieve Operating Partnership
named herein of any liability to Owner.
21. Entire Agreement. This Agreement and the Confidentiality
Agreement contain all of the covenants, conditions and agreements between the
parties and shall supersede all prior correspondence, agreements and
understandings, both verbal and written. The parties intend that this Agreement
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence may be introduced in any proceeding involving this Agreement.
22. Attorneys' Fees. In the event of any litigation regarding
the rights and obligations under this Agreement or in the Escrow Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees and court
costs. Each party shall bear its own attorneys' fees in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereunder.
23. Notices. All notices required to be given pursuant to the
terms hereof shall be in writing and delivered by registered or certified mail
(with postage prepaid and return receipt requested), or by overnight delivery
service or private commercial courier which provides receipt of delivery (such
as Federal Express) or via facsimile transmission (with confirmation copy sent
by overnight delivery service), and any notice so delivered shall be deemed
given upon receipt or refusal of delivery, whichever shall first occur,
addressed to Owner at Owner's Address, with a courtesy copy to Xxxxxx X. Xxxxx,
Esq., Jenner & Block, Xxx XXX Xxxxx, Xxxxxxx, Xxxxxxxx 00000 and to Xxxxx Xxxxx,
Esq. Jenner & Block, Xxx XXX Xxxxx, Xxxxxxx, Xxxxxxxx 00000; and to Operating
Partnership at Operating Partnership's Address, with a courtesy copy to Jordan
X. Xxxxxxx, Esq., Goulston & Storrs, P.C., 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000-0000 and to Xxxxxxx X. Xxxx, Esq. General Counsel, Beacon
Properties Corporation, 00 Xxxxx Xxxxx, Xxxxxx, XX 00000. The foregoing
addresses may be changed by written notice to the other party as provided
herein.
-37-
24. Exhibits and Defined Terms. All exhibits attached hereto
are incorporated herein by reference thereto. All of the terms and definitions
set forth in the Defined Terms section are incorporated in this Agreement by
reference thereto.
25. Time. Time is of the essence of every provision herein
contained. When the last day for the performance of any act permitted or
required hereunder falls on any day which is not a business day in the Chicago,
Illinois or Boston, Massachusetts, such act may be performed on the next
business day in said city.
26. Applicable Law. This Agreement shall be governed by the
laws of the State of Illinois.
27. No Oral Modification or Waiver. This Agreement may not be
changed or amended orally, but only by an agreement in writing. No waiver shall
be effective hereunder unless given in writing, and waiver shall not be inferred
from any conduct of either party.
28. No Recording. Operating Partnership agrees that it shall
not record this Agreement or any summary of the provisions thereof. Any such
recording shall automatically render this Agreement null and void.
29. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
30. Books and Records. From and after Closing, Owner shall
have the right to inspect and otherwise have access to any books and records for
the Property to the extent necessary for Owner to complete any tax returns or to
reconcile any payments or credits for real estate taxes, common area expenses or
other similar items.
-38-
THE FOLLOWING PAGES ARE THE SIGNATURE PAGES FOR THAT CERTAIN
CONTRIBUTION AGREEMENT BETWEEN THE PARTIES DESCRIBED BELOW
DATED AS OF MARCH __, 1997
IN WITNESS WHEREOF, the parties hereto have executed one or more copies of this
Agreement under seal the day and year first above written.
"Owner"
XXXXXXXXX CORPORATE CENTER ASSOCIATES, an Illinois limited
partnership
By: Xxxxxxxx Family Limited Partnership, an Illinois
limited partnership, its sole general partner
By: The Xxxxxx Xxxxxxxx Revocable Trust under
agreement dated May 26, 1978, General
Partner
By: _____________________________________
Xxxxxx Xxxxxxxx, Trustee
XXXXXXXXX CORPORATE CENTER IV ASSOCIATES, an Illinois
limited partnership
By: Xxxxxxxx Family Limited Partnership, an Illinois
limited partnership, its sole general partner
By: The Xxxxxx Xxxxxxxx Revocable Trust under
agreement dated May 26, 1978, General
Partner
By: _____________________________________
Xxxxxx Xxxxxxxx, Trustee
THE FOLLOWING PAGES ARE THE SIGNATURE PAGES FOR THAT CERTAIN CONTRIBUTION
AGREEMENT BETWEEN THE PARTIES DESCRIBED BELOW DATED AS OF MARCH __, 1997
XXXXXXXXX CORPORATE CENTER
V ASSOCIATES, an Illinois limited
partnership
By: Xxxxxxxx Family Limited Partnership, an Illinois
limited partnership, its sole general partner
By: The Xxxxxx Xxxxxxxx Revocable Trust under
agreement dated May 26, 1978, General
Partner
By: _____________________________________
Xxxxxx Xxxxxxxx, Trustee
"Operating Partnership"
BEACON PROPERTIES, L.P.
By: Beacon Properties Corporation, General Partner
By: ______________________________________________
Xxxxxxx X. Xxxxxxx
Senior Vice President
EXHIBIT K
ESCROW AGREEMENT
To: Commonwealth Land Title Insurance Company
Re: Contribution Agreement dated __________, 1997 (the
"Agreement") by and between Xxxxxxxxx Corporate Center
Associates, Xxxxxxxxx Corporate Center IV Associates Limited
Partnership, and Xxxxxxxxx Corporate Center V Associates
Limited Partnership (collectively, "Owner"), and Beacon
Properties, L.P., a Delaware limited partnership ("Operating
Partnership"), with respect to the purchase and sale of
Xxxxxxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxx 00000
Date: ____________, 1997
Gentlemen:
Commonwealth Land Title Insurance Company is hereby requested to act as escrow
holder for the above referenced transaction pursuant to and in accordance with
this Escrow Agreement (this "Agreement"). Capitalized terms used herein without
definition which are defined in the Agreement, a copy of which is delivered
herewith, shall have the meanings ascribed to them therein. Without limiting the
generality of the foregoing, Commonwealth Land Title Insurance Company is hereby
deemed to be the "Escrow Holder" within the meaning of the Purchase Agreement.
1. On or before ____, 1997 Operating Partnership shall deposit with Escrow
Holder the sum of Five Million and 00/100 Dollars ($5,000,000.00) pursuant to
the Agreement, which is to be held in an interest-bearing account with The First
National Bank of Boston or other bank acceptable to Operating Partnership and
Owner. Such cash deposit, together with all interest earned thereon, shall
hereinafter be referred to as the "Deposit".
2. Operating Partnership's tax identification number is 00-0000000. Owner's tax
identification numbers are Xxxxxxxxx Corporate Center Associates 00-0000000;
Xxxxxxxxx Corporate Center IV Associates Limited Partnership 00-0000000;
Xxxxxxxxx Corporate Center V Associates Limited Partnership 00-0000000. Wiring
instructions for each of Escrow Holder, Operating Partnership and Owner are
attached hereto as Schedule A.
3. If Operating Partnership shall terminate the Purchase Agreement or the
Purchase Agreement shall terminate in accordance with its terms, Operating
Partnership may so notify Escrow Holder in writing (the "Operating Partnership's
Deposit Notice"), with a copy of such notice to Owner. If within ten (10) days
after the date of the Operating Partnership's Deposit Notice Owner has not given
Escrow Holder a Dispute Notice in accordance with in Section 6 below, Escrow
Holder shall pay over the Deposit to Operating Partnership, whereupon this
Agreement shall terminate.
4. If Owner shall have a right to retain the Deposit pursuant to Section 11.a of
the Purchase Agreement by reason of Operating Partnership's default, Owner may
so notify Escrow Holder in writing (the "Owner's Deposit Notice"), with a copy
of such notice to Operating Partnership. If within ten (10) days after the date
of the Owner's Deposit Notice, Operating Partnership has not given Escrow Holder
a Dispute Notice in accordance with Section 6 below, Escrow Holder shall pay
over the Deposit to Owner, whereupon this Agreement shall terminate.
5. Upon the occurrence of the Closing, Operating Partnership and Owner shall
jointly notify Escrow Holder thereof in writing, and Escrow Holder shall release
the Deposit to Operating Partnership, whereupon this Agreement shall terminate.
6. If at any time hereafter either Operating Partnership or Owner (the "Notice
Party") shall deliver to the other (the "Recipient") and to Escrow Holder a
written notice (given in accordance with either Paragraph 3 or 4 hereof)
asserting that the Notice Party is entitled to the Deposit (a "Demand Notice"),
the Demand Notice shall include a copy of the notice to given to the Recipient
pursuant to the Agreement and a statement, on which Escrow Holder may rely, that
the Notice Party has notified the Recipient that the Notice Party is entitled to
the Deposit. Escrow Holder shall, ten (10) days after receipt of a Demand
Notice, deliver the Deposit in accordance with Section 3 or Section 4 hereof, as
applicable, unless within said period of ten (10) days the Recipient shall give
written notice to Escrow Holder and the Notice Party that it disputes the Notice
Party's claim to the Deposit (a "Dispute Notice"), in which case Escrow Holder
shall retain the Deposit until it receives written instructions executed by both
Owner and Operating Partnership as to the disposition and disbursement of the
Deposit, or until ordered by final court order, decree or judgment, which has
not been appealed, to deliver the Deposit to a particular party, in which event
the Deposit shall be delivered in accordance with such notice, instruction,
order, decree or judgment.
7. The duties of the Escrow Holder shall be determined solely by the express
provisions of this Agreement and are purely ministerial in nature. The Escrow
Holder is not charging a fee for performing its services under this Agreement.
If there is any dispute between the parties hereto as to whether or not the
Escrow Holder is obligated to disburse or release the Deposit held under and
pursuant to this Agreement, the Escrow Holder shall not be obligated to make
such disbursement or delivery, but in such event shall hold the Deposit until
receipt by the Escrow Holder of (i) an
authorization in writing signed by all persons having an interest in said
dispute, directing the disposition of the Deposit, or (ii) a final judgment
regarding the rights of the parties in an appropriate legal proceeding. The
Escrow Holder is authorized by Operating Partnership and Owner to interplead all
interested parties in any court having jurisdiction and to deposit the Deposit
with the clerk of any such court, and thereupon the Escrow Holder shall be fully
relieved and discharged of any further responsibility under this Agreement.
8. Upon disbursement of the Deposit in accordance with this Agreement, all
rights and obligations of the Escrow Holder shall be deemed to have been
satisfied and Operating Partnership and Owner shall have no recourse against the
Escrow Holder.
9. The Escrow Holder shall not be liable for any mistake of fact or error of
judgment or any acts or omissions of any kind unless caused by its willful
misconduct or gross negligence. The parties hereto each release the Escrow
Holder from liability for any act done or omitted to be done by the Escrow
Holder in good faith in the performance of its obligations and duties hereunder.
The Escrow Holder shall be entitled to rely on any instrument or signature
believed by it to be genuine and may assume that any person purporting to give
any writing, notice, or instruction in connection with this Agreement is duly
authorized to do so by the party on whose behalf of such writing, notice, or
instruction is given.
10. The undersigned hereby jointly and severally indemnify, the Escrow Holder
for and hold it harmless against any loss, liability, or expense incurred
without negligence or bad faith on the part of the Escrow Holder arising out of
or in connection with the acceptance of or the performance of its duties under
this Agreement ("Indemnified Expenses"), as well as the costs and expenses,
including reasonable attorneys' fees and disbursements, of defending against any
claim or liability arising under this Agreement; provided, however, that if the
Indemnified Expense is incurred because of the fault of either the Operating
Partnership or Owner then the party at fault shall be responsible for the cost.
11. This Agreement shall be construed in accordance with the laws of State of
Illinois.
12. This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
13. This Agreement may not be changed or modified except as agreed in a writing
signed by each of the parties hereto. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective heirs, successors and
assigns.
14. All notices required to be given pursuant to the terms hereof shall be in
writing and delivered by registered or certified mail (with postage prepaid,
return receipt requested) or by overnight delivery service or private commercial
courier (such as Federal Express), addressed to Owner and Operating Partnership
and to the parties entitled to copies as provided in the Agreement and to Escrow
Holder at _______________________, Boston, Massachusetts, Attention:
______________, Esq. Any notice so given shall be deemed given upon receipt or
refusal of delivery, whichever shall first occur.
15. As between the Operating Partnership and Owner, in the event of any
inconsistency between the terms of this Agreement and the Purchase Agreement,
the terms of the Purchase Agreement shall control.
The foregoing is executed under seal as of the date first above written.
THE OWNER:
XXXXXXXXX CORPORATE CENTER
ASSOCIATES, an Illinois limited
partnership
By their counsel Jenner & Block
By:________________________
XXXXXXXXX CORPORATE CENTER
IV ASSOCIATES, an Illinois limited
partnership
By their counsel Jenner & Block
By:________________________
XXXXXXXXX CORPORATE CENTER
V ASSOCIATES, an Illinois limited
partnership
By their counsel Jenner & Block
By:________________________
"Operating Partnership"
BEACON PROPERTIES, L.P.
By: Beacon Properties Corporation, General Partner
By:___________________________
Xxxxxxx X. Xxxxxxx
Senior Vice President
The foregoing is agreed to
as of this day of ____________, 1997.
COMMONWEALTH LAND
TITLE INSURANCE COMPANY
By:__________________________________
Title:
