FORMATION/CONTRIBUTION AGREEMENT
THIS FORMATION/CONTRIBUTION AGREEMENT dated as of the 7th day of September
1997 by and among ROYALE INVESTMENTS, INC., a Minnesota corporation ("Royale"),
H/SIC CORPORATION, a Delaware corporation ("H/SIC"), STRATEGIC FACILITY
INVESTORS, INC., a Delaware corporation ("Strategic"), the sole general partner
of BLUE XXXX INVESTMENT COMPANY, L.P., a Delaware limited partnership ("Blue
Xxxx, X.X."); SOUTH BRUNSWICK INVESTMENT COMPANY, LLC, a New Jersey limited
liability company ("SBIC"), a general partner of SOUTH BRUNSWICK INVESTORS,
L.P., a Delaware limited partnership ("Brunswick, L.P."), COMCOURT INVESTMENT
CORPORATION, a Pennsylvania corporation ("ComCourt Corporation"), the sole
general partner of COMCOURT INVESTORS, L.P., a Delaware limited partnership
("ComCourt Investors, L.P."), and GATEWAY XXXXXXX DEVELOPMENT CORPORATION, a
Pennsylvania corporation ("Gateway"), the sole general partner of 0000 XXXXX
XXXXX, L.P., a Pennsylvania limited partnership ("Flank, L.P.").
1. Definitions:
All terms not otherwise defined in this Formation/Contribution Agreement
shall have the meanings set forth in this Section 1.
"Advisory Agreement" means the existing Amended and Restated REIT Advisory
Agreement dated as of November 22, 1995 between Royale and Crown, attached
hereto as Exhibit "Advisory Agreement".
"Agreement" shall mean this Formation/Contribution Agreement.
"Blue Xxxx, X.X." shall mean Blue Xxxx Investment Company, L.P., a Delaware
limited partnership.
"Brunswick, L.P." shall mean South Brunswick Investors, L.P., a Delaware
limited partnership.
"Closing" shall mean the closing of the Transactions.
"Closing Date" shall mean a date which occurs on or before one hundred
twenty (120) days after the date of this Agreement, and shall be the earliest
date at which the conditions precedent to Closing can or have been satisfied.
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"Code" shall mean the Internal Revenue Code of 1986 as amended.
"ComCourt Corporation" shall mean ComCourt Investment Corporation, a
Pennsylvania corporation, the sole general partner of ComCourt Investors.
"ComCourt Investors, L.P." shall mean ComCourt Investors, L.P., a Delaware
limited partnership.
"Common Units" shall mean 3,181,818 common partnership units in the UPREIT
in the aggregate (which, together with the Preferred Units, shall be the
aggregate consideration for the Contributed Interests, Retained Interests, and
H/SIC Assets). The Common Units will have a distribution yield equal to the
dividend yield of Royale Common Stock and will be convertible into Royale Common
Stock initially on a one for one basis (subject to the anti-dilution
adjustments) and otherwise will have the terms and conditions set forth in the
UPREIT Agreement.
"Contributed Interests" shall mean 89% of the H/SIC Partnership Interests
(including, without limitation, the H/SIC Partnerships Interests of the H/SIC
General Partners) in each of Blue Xxxx, ComCourt Investors, L.P. and Flank, and
100% of the H/SIC Partnerships Interests in Brunswick, L.P. to be contributed to
the UPREIT at Closing in exchange for Common Units and Preferred Units.
"Contributors" shall mean the H/SIC Partners.
"Coopers" shall mean Coopers & Xxxxxxx, L.L.P.
"Crown" shall mean Crown Advisors, Inc., a Minnesota corporation.
"Flank, L.P." shall mean 0000 Xxxxx Xxxxx, L.P., a Pennsylvania limited
partnership.
"Gateway" shall mean Gateway Xxxxxxx Development Corporation, a
Pennsylvania corporation, the sole general partner of Flank, L.P. and Central
Pennsylvania, L.P.
"H/SIC" shall mean H/SIC Corporation, a Delaware corporation owned equally
by Xxx X. Xxxxxxx and Xxxx X. Xxxxxx, III.
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"H/SIC Assets" shall mean H/SIC's furniture, fixtures, equipment,
proprietary assets, and rights to compensation for services performed after
Closing under H/SIC's management contracts.
"H/SIC General Partners" shall mean Strategic, Gateway, SBIC, and ComCourt
Corporation.
"H/SIC Limited Partners" shall mean the limited partners of the H/SIC
Partnerships, as such limited partners are more particularly identified on
Exhibit "H/SIC Partners".
"H/SIC Partners" shall mean all of the general and limited partners of the
H/SIC Partnerships, as more particularly identified, with each of their
respective partnership interests, on "Exhibit H/SIC Partners".
"H/SIC Partnerships" shall mean, collectively, Blue Xxxx, X.X., Brunswick,
L.P., ComCourt Investors, L.P., and Flank, L.P. "H/SIC Partnership" shall mean
any one (1) of the H/SIC Partnerships.
"H/SIC Partnership Agreements shall mean collectively, the limited
partnership agreements of Blue Xxxx, X.X., Brunswick, L.P., ComCourt Investors,
L.P. and Flank, L.P. "H/SIC Partnership Agreement" shall mean any one (1) of the
H/SIC Partnership Agreements.
"H/SIC Partnership Interests" shall mean all of the partnership interests
of the H/SIC Partners in the H/SIC Partnerships.
"H/SIC Properties" shall mean, collectively, the nine (9) office properties
totalling approximately 1,480,436 net rentable square feet owned by the H/SIC
Partnerships, as more fully identified on Exhibit "H/SIC Properties". "H/SIC
Property" shall mean any one (1) of the H/SIC Properties.
"H/SIC Properties Indebtedness" shall mean approximately $99,000,000 of
mortgage debt secured by the H/SIC Properties at the time of Closing. The H/SIC
Properties Indebtedness will be prepayable and will bear interest at a fixed
rate of 7.5% per year and will be on other terms acceptable to the H/SIC General
Partners and Royale. The general terms of the "H/SIC Properties Indebtedness"
are set forth on Exhibit "H/SIC Properties Indebtedness".
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"H/SIC Corporation Shareholders" shall mean Xxx X. Xxxxxxx and Xxxx X.
Xxxxxx, III, the owners of common stock of H/SIC.
"Management Agreement" means the agreement to be entered into at Closing
between Royale and Newco, a to be formed corporation owned by Xxxxxx Xxxx and
Xxxx Xxxxxxxx, pursuant to which Newco will manage all of Royale's net leased
retail proper ties. The Management Agreement is set forth in Exhibit "Management
Agreement".
"Pennsylvania H/SIC Partnerships" shall mean Blue Xxxx, X.X., ComCourt
Investors, L.P. and Flank, L.P.
"Pennsylvania H/SIC Limited Partners" shall mean the limited partners of
Blue Xxxx, X.X., ComCourt Investors, L.P. and Flank, L.P.
"Pennsylvania H/SIC Partnership Agreements" shall mean the limited
partnership agreements of Blue Xxxx, X.X., ComCourt Investors, L.P. and Flank,
L.P.
"Pennsylvania H/SIC Properties" shall mean the real estate owned by Blue
Xxxx, X.X., ComCourt Investors, L.P. and Flank, L.P.
"Preferred Units" shall mean convertible preferred partnership units of the
UPREIT with an aggregate face value of $52,500,000.00 and a distribution yield
of 6.5% per year (which, together with the Common Units, shall be the aggregate
consideration for the Contributed Interests, Retained Interests, and H/SIC
Assets). Preferred Units will be convertible into Common Units or Royale Common
Stock at an initial conversion price of $7.00 per Common Unit or share of Royale
Common Stock (subject to anti dilution adjustments), and will otherwise have the
terms and conditions set forth in the UPREIT Agreement. Preferred Units issued
at Closing may not be converted prior to the second anniversary of the Closing.
"Registration Rights Agreement" shall mean an agreement between Royale and
the H/SIC Partners pursuant to which Royale shall give the H/SIC Partners
certain registration rights (commonly known as demand, shelf, and piggyback
registration rights) with respect to Royale Common Stock to induce the H/SIC
Partners to contribute the H/SIC Partnership Interests.
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"Retained Interests Closing" shall mean the second closing which will take
place on the date which is three (3) years and one (1) month after the Closing
Date at which second closing the Retained Interests shall be contributed to the
UPREIT in exchange for Common Units and Preferred Units.
"Retained Interests" shall mean 11% of the H/SIC Partnership Interests held
by Pennsylvania H/SIC Limited Partners not contributed in exchange for Units and
Preferred Units at Closing, but contributed at the Retained Interests Closing in
consideration for Common Units and Preferred Units.
"Royale" shall mean Royale Investments, Inc., a Minnesota corporation which
qualifies as a real estate investment trust pursuant to Section 856 of the Code.
Royale shall be an internally managed and advised real estate investment trust.
"Royale Acquisition Facility" shall mean the financing to be arranged by
H/SIC for Royale for acquisitions of additional properties after the Closing,
which financing is more particularly described on Exhibit "Royale Acquisition
Facility".
"Royale Common Stock" shall mean the common stock of Royale. Royale Common
Stock is publicly traded.
"Royale Properties" shall mean all of the net leased retail properties
owned by Royale as of the date of this Agreement as more particularly described
on Exhibit "Royale Properties."
"Royale Properties Indebtedness" shall mean the mortgage debt secured by
the Royale Properties and more particularly described on Exhibit "Royale
Properties Indebtedness."
"Strategic" shall mean Strategic Facility Investors, Inc., a Delaware
corporation in the sole general partner of Blue Xxxx.
"SBIC" shall mean South Brunswick Investment Company, LLC, a New Jersey
limited liability company a general partner of Brunswick, L.P.
"Transactions" shall mean collectively all of the transactions contemplated
by this Agreement.
"UPREIT" shall mean First Commercial, L.P., a Delaware limited partnership
whose one percent (1%) sole general
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partner shall be Royale and which will be the operating partnership or umbrella
partnership in Royale's umbrella partnership real estate investment trust
structure. UPREIT shall also include (a) any entity or entities (limited
partnerships, corporations, or limited liability companies) controlled by the
UPREIT or Royale and designated by the UPREIT to acquire any of the H/SIC
Partnership Interests contributed by the H/SIC Partners in exchange for Common
Units and Preferred Units, and (b) any directly or indirectly wholly owned
subsidiary entities of First Commercial, L.P. designated by First Commercial,
L.P. to enter into agreements relating to real estate or to own real estate for
and on behalf of First Commercial, L.P.
"UPREIT Agreement" shall mean the limited partnership agreement of the
UPREIT which shall provide that Royale shall be the one percent (1%) sole
general partner and whose provisions shall be the customary provisions typically
found in the limited partnership agreements of operating partnerships in an
umbrella partnership real estate investment trust structure, with such changes
that may be necessary or desirable to reflect the specific terms of the
Transactions and shall otherwise be in form and substance reasonably
satisfactory to the H/SIC Partners and Royale. Certain general terms of the
UPREIT Agreement are set forth on Exhibit "UPREIT Agreement Terms."
2. General: Intention of the Parties.
Royale, H/SIC, Strategic, SBIC, Gateway, and ComCourt Corporation are
entering into this Agreement for the purpose of setting forth the terms of the
Transactions pursuant to which the parties shall create an UPREIT. The UPREIT
shall acquire the H/SIC Partnership Interests contributed by the H/SIC Partners
in exchange for Common Units and Preferred Units.
3. Structure.
Royale and the H/SIC General Partners shall form the UPREIT prior to
Closing. Pursuant to the terms of this Formation/Contribution Agreement,
(a) The UPREIT will acquire the H/SIC Partnership Interests (including,
without limitation, the H/SIC Partnership Interests of the H/SIC General
Partners).
(b) H/SIC will transfer the H/SIC Assets to Royale in accordance with
Exhibit "H/SIC Management Transfer".
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The UPREIT, through the H/SIC Partnerships, will have controlling ownership of
the H/SIC Properties, and will focus on acquiring and operating commercial real
estate properties.
4. Board of Directors: Senior Management.
(a) As a part of the Transactions. the Board of Directors of Royale will,
at Closing, be expanded to seven (7) members. Four (4) of the Directors will be
Directors nominated by the H/SIC General Partners; two (2) of the Directors
nominated by the H/SIC General Partners shall be Independent Directors (as
defined in Royale's bylaws). Three of the Directors shall be Directors nominated
by the Board of Directors of Royale as constituted before Closing; two (2) of
the Directors nominated by the Board of Directors of Royale as constituted
before Closing shall be Independent Directors. Xxx X. Xxxxxxx shall be the
Chairman of the Board of Directors of Royale, and Xxxxxx Xxxx shall be the Vice
Chairman of the Board of Directors of Royale.
(b) At Closing, the officers of Royale shall be the Officers set forth on
Exhibit "Senior Management." At Closing, Royale and Xxxx X. Xxxxxx, III will
enter into an employment agreement, in the form set forth in Exhibit "Senior
Management." The powers, duties and responsibilities of the officers of Royale
shall be as set forth in the bylaws of Royale or as established by the Board of
Directors of Royale.
5. Royale Offices.
From and after the Closing Date, Royale will maintain offices at 0000 Xxxx
Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000 and Xxx Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (or, with respect to the Philadelphia office,
at such location in the Philadelphia, Pennsylvania vicinity as Royale shall
select).
6. Advisory Agreement; Crown; Management Agreement.
(a) At Closing, Crown shall transfer and assign to Royale, free and clear
of all liens and encumbrances (other than the National City debt to be assumed
by Royale), all of Crown's assets, including without limitation, the Advisory
Agreement and all Royale Common Stock owned by Crown, and Royale shall purchase
such assets and terminate the Advisory Agreement effective as of Closing. At
Closing, Royale shall pay to Crown all accrued and unpaid fees due under the
Advisory Agreement through Closing. In consideration for such transfer
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and assignment and for Crown relinquishing all of its rights (if any) for
present and future compensation under the Advisory Agreement, including, without
limitation, any other compensation in connection with the Transactions, Crown
shall be paid at Closing an amount equal to One Million Three Hundred Fifty
Thousand Dollars ($1,350,000) plus the value. (computed at $5.50 per share) of
any Royale Common Stock transferred by Crown to Royale less Crown's National
City debt in the amount of approximately $240,000 to be assumed by Royale. The
net amount determined by the immediately preceding sentence shall be paid by
Royale to Crown at Closing by the delivery of the number of shares of Royale
Common Stock determined by dividing such net amount by $5.50 per share. Crown
shall have piggyback registration rights with respect to such shares on terms
mutually acceptable to Crown and Royale.
(b) At Closing, Royale shall cause the Management Agreement to be executed
and delivered.
7. Consideration for Contribution of H/SIC Partnership Interests and
Transfer of H/SIC Assets; Retained Interests.
(a) (1) Royale, the H/SIC General Partners, and H/SIC have agreed that the
net equity value of each of the H/SIC Properties, after deducting the amount of
the H/SIC Properties Indebtedness, is as set forth on Exhibit "H/SIC
Properties." and the value attributable to the H/SIC Assets is as set forth on
Exhibit "H/SIC Management Transfer".
(2) As consideration for the contribution of the H/SIC Partnership
Interests to the UPREIT and the transfer of H/SIC Assets to Royale, the H/SIC
Partners and H/SIC shall receive at the times specified in Section 7(b) and
Section 7(c), in the aggregate (A) 3,181,818 Common Units and (B) Preferred
Units with a face value of $52,500.000. Royale, the H/SIC General Partners and
H/SIC agree that the aggregate number of Common Units and the aggregate face
value of the Preferred Units are to be divided among the H/SIC Partnerships and
H/SIC as set forth on Exhibit "H/SIC Properties," and Exhibit "H/SIC Management
Transfer" based on the net equity value of the H/SIC Properly owned by a
specific H/SIC Partnership and on the value attributed to the H/SIC Assets in
each case as shown on such Exhibits.
(b) (1) In consideration for the contribution of the Contributed Interests
at Closing, the H/SIC Partners in each H/SIC Partnership shall receive at
Closing Common Units and Preferred Units (divided among the H/SIC Partnerships
in
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accordance with Exhibit "H/SIC Properties") distributed to each of the H/SIC
Partners in accordance with "Exhibit "H/SIC Partners Unit Consideration." In
consideration for the transfer of H/SIC Assets to Royale at Closing, H/SIC shall
receive Common Units and Preferred Units at Closing in accordance with Exhibit
"H/SIC Management Transfer"; H/SIC shall have registration rights with respect
to Royale Common Stock on terms mutually acceptable to H/SIC and Royale.
(2) Upon the contribution of the Contributed Interests to the UPREIT at the
Closing, the Contributors holding the Retained Interests (the "Retained
Partners") and the UPREIT shall enter into an amended and restated limited
partnership agreement (the "Amended Pennsylvania H/SIC Partnership H/SIC
Partnership Agreement") for the Pennsylvania H/SIC Partnerships containing such
terms and conditions as are mutually agreeable to the UPREIT and the Retained
Partners. The Amended Pennsylvania H/SIC Partnership Agreements shall provide,
among other terms, that (A) the UPREIT (or its designee) is the general partner
of the Pennsylvania H/SIC Partnerships and shall have exclusive authority to
manage the Pennsylvania H/SIC Properties and the Pennsylvania H/SIC
Partnerships, including without limitation the expenditure of funds and the
distribution of cash flow, (B) the Retained Partners shall be limited partners
and shall have no personal liability for any debts, obligations or claims of the
Pennsylvania H/SIC Partnerships, and (C) the Retained Partners shall, in the
aggregate, have a capital interest in the Pennsylvania H/SIC Partnerships equal
to 11% of the aggregate capital of the Partnership. The Retained Partners shall
retain full right, title and interest in and to the Retained Interests until the
Retained Interests Closing.
(c) (1) In consideration for the contribution of the Retained Interests by
the Retained Partners at the Retained Interests Closing, the Retained Partners
will receive Common Units and Preferred Units at the Retained Interests Closing
distributed among the Retained Partners in accordance with Exhibit "H/SIC
Partners Unit Consideration".
(2) At the Retained Interests Closing, the Retained Partners shall (A)
execute, acknowledge and deliver to the UPREIT substantially the same documents
set forth in Section 20(b) and 20(c) with respect to the Retained Interests,
each dated as of the date of the Retained Interests Closing and (B) execute an
affidavit setting forth that all of the representations and warranties set forth
in Section 9 (including, without limitation, subsection 9(d) relating to
securities law matters) relating to the Retained Interests are true and cor-
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rect in all material respects on the date of the Retained Interests Closing.
(d) At Closing, the Contributed Interests shall be contributed to the
UPREIT with the H/SIC Properties then being subject to the H/SIC Properties
Indebtedness.
(e) The contribution of the H/SIC Partnership Interests pursuant to this
Agreement shall constitute a capital contribution under the UPREIT Agreement and
is intended, except as otherwise required under Section 707 of the Code, to be
governed by Section 721(a) of the Code, and the UPREIT, the H/SIC Partnerships,
and Royale will report such contribution consistently with this Section. Because
the contribution of the Contributed Interests will terminate the H/SIC
Partnerships for federal income tax purposes, the parties to this Agreement
agree that the H/SIC General Partners shall have the right and obligation to
file final tax returns for the H/SIC Partnerships. The H/SIC Partnerships shall
not terminate for any other purpose and shall continue to exist after Closing,
each H/SIC Partnership continuing to own the H/SIC Property owned by such H/SIC
Partnership.
(f) Subject to compliance with applicable federal and state securities law
requirements and Code requirements applicable to real estate investment trusts,
the H/SIC Partners and H/SIC may elect to receive Royale Common Stock in lieu of
Common Units by giving the H/SIC General Partners notice of such election at
least ten (10) days before Closing or, as to the Retained Interests, at least
ten (10) days before the Retained Interests Closing.
8. Closing.
Closing will take place on the Closing Date, commencing on 10:00 a.m. on
the Closing Date at the offices of Saul, Ewing, Xxxxxx & Xxxx, Three Westlakes,
Suite 150, 0000 Xxxxxxxxx Xxxxx, Xxxxxx, XX 00000, or at such other place as
Royale and the H/SIC General Partners shall agree.
9. H/SIC Partners Authorization: Representations and Warranties of
Contributors.
Attached hereto as Exhibit "H/SIC Partners Authorization Agreement" are
brief summaries of agreements (the "H/SIC Partners Authorization Agreements") of
the H/SIC Partners authorizing the Transactions and authorizing the H/SIC
General Partners to proceed with the implementation and consummation of
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the Transactions. As part of the H/SIC Partners Authorization Agreements, each
Contributor, for himself, herself, or itself, shall make the following
representations and warranties to Royale and the H/SIC General Partners for such
Contributor only and for no other Contributor, all of which shall survive
Closing:
(a) Authority. Such Contributor has the right, power and authority to
enter into this Agreement and to contribute such Contributor's H/SIC
Partnership Interests in accordance with the terms and conditions of this
Agreement. This Agreement is the valid and binding obligation of such
Contributor, enforceable against such Contributor in accordance with its
terms.
(b) No Defaults. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) conflict
with or result in a breach of, the terms, conditions, or provisions of or
constitute a default under any agreement or instrument to which such
Contributor is a party or by which such Contributor is bound, (ii) subject
to any approval required under the H/SIC Properties Indebtedness, violate
any restriction, requirement, covenant or condition to which such
Contributor is subject or by which such Contributor is bound or (iii)
constitute in violation of any code, resolution, law, statute regulation,
ordinance, rule, judgment, decree or order to which such Contributor is
subject or by which such Contributor is bound.
(c) Ownership of Interests. Such Contributor owns the H/SIC
Partnership Interests owned by such Contributor, as set forth on Exhibit
"H/SIC Partners" hereto, free and clear of all liens, charges,
encumbrances, restrictive agreements and assessments, other than
restrictions on transfers and other similar provisions as set forth in the
relevant H/SIC Partnership Agreement. Upon the contribution of such
Contributor's H/SIC Partnership interest (or a portion thereof) to the
UPREIT (or its designee(s)), the UPREIT will receive good and absolute
title thereto, free from all liens, charges, encumbrances, restrictive
agreements and assessments, whatsoever, other than restrictions on
transfers and other similar provisions as set forth in the relevant H/SIC
Partnership Agreement. Such Contributor hereby waives, with respect to the
contribution contemplated by this Agreement, any "right of refusal" or
other restriction on transfer set forth in the H/SIC Partnership Agreement
of any H/SIC Partnership of which such
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Contributor is a partner. There are no outstanding options, contracts,
calls, commitments or demands of any nature relating to the H/SIC
Partnership Interests of such Contributor.
(d) Securities Law Matters.
(1) Such Contributor is an "accredited investor" as such term is
defined under Rule 501 promulgated under the Securities Act of 1933, as
amended (the "Securities Act");
(2) Such Contributor's primary residence or principal place of
business is in the state set forth on Exhibit "H/SIC Partners";
(3) Such Contributor is acquiring the Common Units and Preferred Units
or Royale Common Stock for such Contributor's account for investment
purposes only and not with a present view to distribution;
(4) Taking into account the information and resources such Contributor
can practically bring to bear on the acquisition of the Common Units and
Preferred Units in the UPREIT or Royale Common Stock contemplated hereby,
such Contributor is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in
securities presenting an investment decision like that involved in the
acquisition of the Common Units and Preferred Units or Royale Common Stock,
including investments in securities issued by the UPREIT or Royale, and has
requested, received, reviewed and considered all information such
Contributor deems relevant in making an informed decision to acquire the
Common Units and the Preferred Units, or Royale Common Stock;
(5) Such Contributor will not, directly or indirectly, voluntarily
offer, sell, pledge, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of) any of
the Common Units and Preferred Units or Royale Common Stock except in
compliance with the Securities Act and the rules and regulation promulgated
thereunder and with the terms and conditions of this Contribution
Agreement;
(6) Such Contributor acknowledges that the Common Units and Preferred
Units or Royale Common Stock to be
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issued must be held and may not be sold unless they are subject to an
effective registration statement under the Securities Act and under
applicable state securities or blue sky laws, unless exemptions from such
registrations are available at the time of resale;
(7) Prior to the issuance of the Common Units and Preferred Units or
Royale Common Stock, such Contributor will execute all such other documents
and instruments as may be reasonably necessary to allow, the UPREIT, Royale
and the H/SIC General Partners to comply with federal and state securities
law requirements with respect to the issuance of the Common Units and
Preferred Units or Royale Common Stock and to comply with the terms of this
Agreement;
(8) As required by the Pennsylvania Securities Act of 1972, if such
Contributor is a resident of, or has his, her or its principal place of
business in the Commonwealth of Pennsylvania, such Contributor shall not
resell his, her or its Common Units or Preferred Units or Royale Common
Stock for a period of twelve (12) months from and after the date of their
issuance to such Contributor other than in accordance with such Act;
(9) Except as otherwise provided in Section 7(f), such Contributor
acknowledges and agrees that (A) the Common Units to be issued hereunder
(whether at Closing or the Retained Interests Closing) shall not be
exchangeable or exchanged for Royale Common Stock for a period of thirteen
(13) months from and after the date of issuance to such Contributor, (B)
Preferred Units to be issued at Closing shall not be exchangeable or
exchanged for Royale Common Stock for a period of twenty five (25) months
from and after the Closing Date, and (C) Preferred Units to be issued at
the Retained Interests Closing shall not be exchangeable or exchanged for
Royale Common Stock for a period of thirteen (13) months from and after the
date of the Retained Interests Closing.
10. Representations and Warranties of the H/SIC General Partners.
Unless otherwise specifically set forth in this Section 10, the
representations, warranties and covenants set forth in this Section 10 shall, as
to each H/SIC General Partner be applicable only to (i) the H/SIC Partnership of
which such H/SIC General Partner is a General Partner, and (ii) only
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as to the H/SIC Property owned by the H/SIC Partnership of which such H/SIC
General Partner is a general partner.
Each H/SIC General Partner represents and warrants to Royale, and covenants
with Royale, which representations, warranties and covenants are true and
correct on the date hereof, shall be materially true and correct at Closing, and
shall survive Closing, as follows:
(a) Authority. The H/SIC Partnership is a limited partnership duly
organized and in good standing under the laws of the State of Delaware
(Pennsylvania for Flank), and is authorized to do business in the
Commonwealth of Pennsylvania or the State of New Jersey, to the extent such
authorization is required under the laws of such states. The copy of the
H/SIC Partnership's Partnership. Agreement and all Amendments thereto
(collectively, the "H/SIC Partnership Agreement") including all
certificates of limited partnership and all amendments thereto delivered,
or to be delivered, to Royale and the list of all of the H/SIC Partners
along with their individual H/SIC Partnership Interests, attached hereto an
Exhibit "H/SIC Partners", are true, correct and complete copies thereof as
of the date delivered.
(b) Title. The H/SIC Partnership is the sole owner of fee simple title
to the H/SIC Property.
(c) Compliance with Existing Laws. To H/SIC General Partner's
knowledge and, except as set forth on Exhibit "H/SIC Properties
Violations", attached hereto, (i) the H/SIC Partnership is not in
violation, in any material respect, of any material building, zoning,
environmental or other ordinances, statutes or regulations of any
governmental agency, in respect to the ownership, use, maintenance,
condition and operation of the H/SIC Property or any part thereof, and (ii)
the H/SIC Partnership possesses all material licenses, certificates,
permits and authorizations necessary for the use and operation of the H/SIC
Property in the manner in which it is currently being operated by the H/SIC
Partnership, and the requisite certificates of the fire marshals or board
of fire underwriters have been issued for the Property.
(d) Leases. True, correct and complete copies of all of the leases of
the H/SIC Property and any amendments thereto (collectively, the "H/SIC
Leases"), have been, or will be, delivered to Royale. Attached hereto as
Exhibit
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"H/SIC Leases" is a description of all of the H/SIC Leases and a current
rent schedule ("H/SIC Rent Schedule") covering the H/SIC Leases, which is
true and correct in all material respects. There are no leases or tenancies
of any space in the H/SIC Property other than those set forth in Exhibit
"H/SIC Leases" or, to the H/SIC General Partner's knowledge, any subleases
or subtenancies unless otherwise noted therein. Except as otherwise set
forth in Exhibit "H/SIC Leases" or elsewhere in this Agreement:
(1) The H/SIC Leases are in full force and effect and constitute a
legal, valid and binding obligation of the respective tenants;
(2) No tenant has an option to purchase the H/SIC Property or any
portion thereof;
(3) No renewal or expansion options have been granted to the tenants,
except as provided in the H/SIC Leases;
(4) To the H/SIC General Partner's knowledge, the H/SIC Partnership is
not in material default under any of the H/SIC Leases;
(5) The rents set forth on the H/SIC Rent Schedule are being collected
on a current basis and there are no arrearages in excess of one month,
except as indicated in Exhibit "H/SIC Leases" hereto, nor has any tenant
paid any rent, additional rent or other charge of any nature for a period
of more than thirty (30) days in advance;
(6) The H/SIC Partnership has not sent written notice to any tenant
claiming that such tenant is in default, which default remains uncured, and
the General Partner's knowledge, no tenant is in default under its Lease,
except as indicated in Exhibit "H/SIC Leases" hereto;
(7) No action or proceeding instituted against the H/SIC Partnership
by any tenant is presently pending in any court; and
(8) There are no security deposits other than those set forth in
Exhibit "H/SIC Leases".
-16-
(e) Service Contracts. Attached hereto as Exhibit "H/SIC Properties
Service Contracts" is a complete and correct list of all contracts or
agreements relating to the management, leasing, operation, maintenance or
repair of the H/SIC Property (the "H/SIC Service Contracts"). True and
correct copies of all of the H/SIC Service Contracts have been delivered to
Royale. Except in the case of a default by the vendor under a specific
Service Contract, no H/SIC Contract will be terminated, or materially
amended or modified prior to the Closing Date without Royale's prior
written approval, which approval shall not be unreasonably withheld,
conditioned or delayed.
(f) Tax Bills. The H/SIC General Partner has delivered to Royale true
and correct copies of tax bills issued by any applicable federal, state or
local governmental authority and received by the H/SIC General Partner with
respect to the H/SIC Property for the most recent past and current tax
years, and any new assessment received with respect to a current or future
tax year.
(g) Insurance. Attached hereto as Exhibit "H/SIC Properties Insurance"
is a list of all hazard, liability and other insurance policies presently
affording coverage with respect to the H/SIC Property. The General Partners
shall maintain in fall force and effect all such or equivalent policies
until the Closing Date.
(h) Tenant Estoppels. The H/SIC General Partner represents and
warrants that it shall use reasonable good faith efforts (without cost or
liability to the H/SIC Partners or the H/SIC Partnerships) to obtain and
deliver to Royale a tenant estoppel letter from each tenant in the general
form required by real estate investment trust purchasers of leased real
estate (or in such form or containing such information as may be required
by the lease of such tenant) from each of the tenants of the H/SIC Property
confirming the information set forth in the H/SIC Rent Schedule.
(i) Condemnation Proceedings. No condemnation or eminent domain
proceedings are pending or, to the best of the H/SIC General Partner's
knowledge, threatened against the H/SIC Property or any part thereof, and
neither the H/SIC Partnership nor the H/SIC General Partner has made any
commitments to or received any notice, oral or written, of the desire of
any public authority or other entity to take or use the H/SIC Property or
any part thereof
-17-
whether temporarily or permanently, for easements, right-of-way, or other
public or quasi public purposes, except as set forth in the Permitted
Exceptions.
(j) Litigation. Except as set forth on Exhibit "H/SIC Litigation"
hereto, no litigation is pending or, to the best of the H/SIC General
Partner's knowledge, threatened, including administrative actions or orders
relating to governmental regulations, against the Partnership or affecting
the use, operation or ownership of the H/SIC Property or any part thereof
as contemplated herein.
(k) No Defaults. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) subject to
any approval that may be required under the H/SIC Properties Indebtedness
or any H/SIC Partnership Agreement, conflict with, or result in a breach
of, the terms, conditions or provisions of, or constitute a default under,
any agreement or instrument to which the H/SIC Partnership is a party or by
which the H/SIC Partnership or the H/SIC Property is bound, (ii) subject to
any approval required under the H/SIC Properties Indebtedness or any H/SIC
Partnership Agreement, violate any restriction, requirement, covenant or
condition to which the H/SIC Partnership is subject or by which the H/SIC
Partnership or the H/SIC Property is bound, (iii) constitute a violation of
any applicable code, resolution, law, statute, regulation, ordinance, rule,
judgment, decree or order applicable to the H/SIC Partnership, or (iv)
result in the cancellation of any contract or lease pertaining to the H/SIC
Property.
(l) Environmental Matters. Except as set forth on Exhibit "H/SIC
Environmental Matters", the H/SIC General Partners have no knowledge of any
material release, discharge, spillage, uncontrolled loss, seepage or
filtration of oil, petroleum or chemical liquids or solids, liquid or
gaseous products or any hazardous waste or hazardous substance (as those
terms are used in the Comprehensive Environmental Response, Compensation
and Liability Act of 1986, as amended, the Resource Conservation and
Recovery Act of 1976, as amended, or in any other applicable federal, state
or local laws, ordinances, rules or regulations relating to protection of
public health, safety or the environment, as such laws may be amended from
time to time) at, upon, under or within the H/SIC Property. Except as set
forth on Exhibit "H/SIC Environmental Matters", to the General Partner's
knowledge, there is no
-18-
proceeding or action pending or threatened by any person or governmental
agency regarding the environmental condition of the H/SIC Property.
(m) Certificates of Occupancy. The H/SIC Partnership will not amend in
any material manner any certificates of occupancy for the H/SIC Property
and will maintain them in fall force and effect to the extent that the
H/SIC Partnership is responsible for them.
(n) Personal Property. Attached hereto as Exhibit "H/SIC Personal
Property" and complete inventory of all personal property ('H/SIC Personal
Property"), if any, used in the management, maintenance and operation of
the H/SIC Property (other than trade fixtures or personal property of
tenants).
(o) Leasing Commissions. There are, and at Closing shall be, no
outstanding or contingent leasing commissions or fees payable with respect
to the H/SIC Property.
(p) Partnership Liabilities. Except for (i) the obligations and
liabilities of the H/SIC Partnership which the UPREIT is taking the H/SIC
Partnership Interests subject to under Section 7(d) above, and (ii) any
accrued liabilities and obligations of the H/SIC Partnership which are
being adjusted at Closing pursuant to Section 22(d) of this Agreement, the
H/SIC Partnership shall not have any liabilities or obligations, either
accrued, absolute or contingent or otherwise, which will not be paid or
discharged on or before the Closing Date. In addition, except for the
claims and liabilities described in the preceding sentence or otherwise
described or disclosed in this Agreement (including the Exhibits hereto),
the H/SIC Partnership has not received notice of any, and to the knowledge
of the H/SIC General Partner, there is, as of the date of execution of this
Agreement, no basis for any, claim against (or liability of) the
Partnership arising from the business done, transactions entered into or
other events occurring prior to the Closing Date which will not be
discharged by the H/SIC Partnership before the Closing Date.
(q) Partnership for Tax Purposes. The H/SIC Partnership is, and at all
times has been, properly treated as a partnership for federal income tax
purposes, and not as an "association" or "publicly traded partnership"
taxable as a corporation.
-19-
(r) Taxes. Each of the H/SIC Partnership and any predecessor of the
H/SIC Partnership has timely filed with the appropriate taxing authorities
all returns (including without limitation information returns and other
material information) in respect of Federal, State and local taxes
(collectively "Taxes") required to be filed through the date hereof and
will timely file any such returns required to be filed on or prior to the
Closing Date. The returns and other information filed (or to be filed) are
complete and accurate in all material respects. All Taxes of the H/SIC
Partnership in respect of periods beginning before the Closing Date have
been timely paid, or will be timely paid prior to the Closing Date, and the
H/SIC Partnership has no material liability for Taxes in excess of the
amounts so paid. All Taxes that the H/SIC Partnership has been required to
collect or withhold have been duly collected or withheld and, to the extent
required when due, have been or will be (prior to Closing Date) duly paid
to the proper taxing authority. No audits of any of the H/SIC Partnership's
federal, state or local returns for Taxes by the relevant taxing
authorities have occurred, and no material deficiencies for Taxes of the
H/SIC Partnership have been claimed, proposed or assessed by any taxing or
other governmental authority against the H/SIC Partnership. There are no
pending or, to the best of knowledge of the H/SIC General Partner,
threatened audits, investigations or claims for or relating to any material
additional liability to the H/SIC Partnership in respect of Taxes, and
there are no matters under discussion with any governmental authorities
with respect to Taxes that in reasonable judgment of the H/SIC General
Partner or its counsel, is likely to result in a material additional
liability for Taxes. To the knowledge of the H/SIC General Partner there
are no liens for Taxes (other than for current taxes not yet due and
payable) on any of the assets of the H/SIC Partnership. No Contributor is a
person other than a United States person within the meaning of the Code.
The transaction contemplated herein is not subject to the tax withholding
provisions of Section 3406 of the Code, or Subchapter A of Chapter 3 of the
Code or of any other provision of law.
(s) Disclosure. No representation or warranty made by the H/SIC
General Partners in this Agreement or in any documents delivered or to be
delivered by the H/SIC General Partners contains any untrue statement of a
material fact, or omits to state a material fact necessary in order to make
the statements contained therein not misleading,
-20-
or necessary in order to provide adequate information as to the H/SIC
Partnerships and the H/SIC Properties and their management, operation,
maintenance and repair. All items delivered or to be delivered by the H/SIC
General Partners pursuant to the terms of this Agreement are true, correct
and complete in all material respects, and fairly present the information
set forth therein in a manner that is not misleading.
11. Obligations of General Partners Pending Closing. From and after the
date of this Agreement through the Closing Date, each H/SIC General Partner,
only with respect to the H/SIC Partnership of which such H/SIC General Partner
is a general partner and the H/SIC Property owned by the H/SIC Partnership of
which such H/SIC General Partner is a general partner, covenants and agrees as
follows:
(a) Maintenance and Operation of Property. The H/SIC General Partner
will cause the H/SIC Property to be maintained in its present order and
condition, normal wear and tear, and damage by fire or other casualty
(subject to Section 16) excepted and will cause the continuation of the
normal operation thereof, including the purchase and replacement of
fixtures and equipment, and the continuation of the normal practice with
respect to maintenance and repairs so that the H/SIC Property will, except
for normal wear and tear and damage by fire or other casualty (subject to
Section 16), be in substantially the same condition on the Closing Date as
on the date hereof.
(b) Compliance with Governmental Requirements. The H/SIC General
Partner shall use its commercially reasonable efforts to cause the Property
to be in material compliance with governmental requirements.
(c) Changes in Representations. The H/SIC General Partner shall notify
Royale promptly, and Royale shall notify the H/SIC General Partner
promptly, if either becomes aware of any occurrence prior to the Closing
Date which would make any of its representations, warranties or covenants
contained herein not true in any material respect.
(d) Obligations as to H/SIC Leases. The H/SIC General Partner shall
not, without Royale's prior written consent (which consent shall not be
unreasonably withheld conditioned or delayed), amend, modify, renew or
extend any H/SIC Lease in any material respect unless required bylaw, or
enter into new leases or approve any assignment
-21-
of leases or subletting of leased space, or terminate any Lease.
(e) Obligations as to H/SIC Properties Indebtedness. The H/SIC General
Partner shall make, or cause the H/SIC Partnership to make, all payments
required to be made under the H/SIC Properties Indebtedness when due; shall
perform, or cause the H/SIC Partnership to perform, all obligations under
the H/SIC Properties Indebtedness and shall keep, and cause the H/SIC
Partnership to keep, the H/SIC Properties Indebtedness free from default.
(f) No Other Indebtedness. Subject to the H/SIC Properties
Indebtedness, the H/SIC General Partner shall not incur any indebtedness,
other than current accounts payable in the day-to-day operation of the
H/SIC Properties.
(g) No Solicitation. The H/SIC General Partner will not solicit or
undertake any recapitalization, business combination or other transaction,
or engage in any discussions or negotiations with respect thereto, or
furnish information (other than as required by law or this Agreement) that
would be inconsistent with the Transactions.
12. Representations and Warranties of Royale. Royale represents and
warrants to the H/SIC Partners, and covenants with the H/SIC Partners which
representations, warranties and covenants are true and correct on the date
hereof, shall be true and correct at Closing and shall survive Closing, as
follows:
(a) Authority of Royale. Royale is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Minnesota and is duly authorized to do business and own properties in all
jurisdictions in which it does business and owns properties. Royale has all
necessary power and authority to execute, deliver and perform this
Agreement and consummate all of the Transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement and
the Transactions have been approved and duly authorized by all necessary
action of Royale. This Agreement is the valid and binding obligation of
Royale, enforceable against Royale in accordance with its terms.
(b) No Defaults. Neither the execution of this Agreement nor the
consummation of the Transactions contem-
-22-
plated hereby will: (i) subject to any approval required under the Royale
Properties Indebtedness, conflict with, or result in a breach of, the
terms, conditions or provisions of, or constitute a default under, any
agreement or instrument to which Royale is a party, (ii) subject to any
approval required under the Royale Properties Indebtedness, violate any
restriction, requirement, covenant or condition to which the Royale is
subject, or (iii) constitute a violation of any applicable code,
resolution, law, statute, regulation, ordinance, rule, judgment, decree or
order. Royale has made all filings required to be made under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and all such 1934 Act
filings are true, correct and complete.
(c) Royale Common Stock. All shares of Royale Common Stock
exchangeable for Common Units issued in connection with the Transactions
will be duly authorized, validly issued, fully paid and non assessable. All
issued and outstanding shares of Royale Common Stock were issued in
compliance with, or in transactions exempt from, the registration
requirements of applicable federal and state securities laws. Royale has an
authorized capitalization consisting of 50,000,000 shares of stock, of
which 30,000,000 shares are classified as Royale Common Stock, $.01 par
value per share, and 20,000,000 shares are unclassified. There are issued
and outstanding 1,420,000 shares of Royale Common Stock. All such
outstanding shares have been nonassessable. There are no outstanding
options, warrants, rights, calls, commitments, conversion rights, rights of
exchange, plans or other agreements of any character providing for the
purchase, issuance or sale of any shares of the capital stock of Royale,
other than the Directors' Stock Option Plan as described in the 1996 Form
10-KSB filed by Royale pursuant to the 1934 Act.
(d) Litigation. Except as set forth on Exhibit "Royale Litigation",
there is no action or proceeding pending or, to the knowledge of Royale,
threatened against Royale or any subsidiary before any court or
administrative agency which would result in any material adverse change in
the business or financial condition of Royale.
(e) Corporate Documents. The copies of the articles of incorporation
of Royale and bylaws of Royale, the copy of the Advisory Agreement, and the
copies of all other books and records of Royale delivered, or to be
delivered to the H/SIC General Partners, are true, correct and com-
-23-
plete copies thereof as of the date delivered. There are no employment
agreements, consulting agreements, advisory agreements or similar
agreements, other than the Advisory Agreement.
(f) Title; Royale Properties Indebtedness. Royale is the sole owner of
fee simple title to the Royale Properties. Royale is not in default under
the Royale Properties Indebtedness. Royale has delivered, or shall deliver,
copies of the Royale Properties Indebtedness documents to the H/SIC General
Partners.
(g) Compliance with Existing Laws. To Royale's knowledge and except as
set forth on Exhibit "Royale Violations" attached hereto, (i) Royale is not
in violation, in any material respect, of any material building, zoning,
environmental or other ordinances, statutes or regulations of any
governmental agency, in respect to the ownership, use, maintenance,
condition and operation of the Royale Properties or any part thereof, and
(ii) Royale possesses all material licenses, certificates, permits and
authorizations necessary for the use and operation of the Royale Properties
in the manner in which they are currently being operated by Royale, and the
requisite certificates of the fire marshals or board of fire underwriters
have been issued for the Royale Properties.
(h) Leases. True, correct and complete copies of all of the leases of
the Royale Properties and any amendments thereto (collectively, the "Royale
Leases"), have been delivered to the H/SIC General Partners. Attached
hereto as Exhibit "Royale Leases" is a description of all of the Royale
Leases and a current rent schedule ("Royale Rent Schedule") covering the
Leases, which is true and correct in all material respects. There are no
leases or tenancies of any space in the Property other than those set forth
in Exhibit "Royale Leases" or, to Royale's knowledge, any subleases or
subtenancies unless otherwise noted therein. Except as otherwise set forth
in Exhibit "Royale Leases" or elsewhere in this Agreement:
(i) The Royale Leases are in full force and effect and constitute
a legal, valid and binding obligation of the respective tenants;
(ii) No tenant has an option to purchase the Royale Properties or
any portion thereof,
-24-
except as otherwise set forth in Exhibit "Royale Purchase Options";
(iii) No renewal or expansion options have been granted to the
tenants, except as provided in the Royale Leases;
(iv) To Royale's knowledge, Royale is not in material default
under any of the Leases;
(v) The rents set forth on the Royale Rent Schedule are being
collected on a current basis and there are no arrearages in excess of
one month, except as indicated in Exhibit "Royale Leases" hereto, nor
has any tenant paid any rent, additional rent or other charge of any
nature for a period of more than thirty (30) days in advance;
(vi) Royale has not sent written notice to any tenant claiming
that such tenant is in default, which default remains uncured, and to
Royale's knowledge, no tenant is in default under its Lease, except as
indicated in Exhibit "Royale Leases";
(vii) No action or proceeding instituted against Royale by any
tenant is presently pending in any court; and
(viii) There are no security deposits other than those set forth
in Exhibit "Royale Leases".
(i) Service Contracts. Attached hereto as Exhibit "Royale Service
Contracts" is a complete and correct list of all contracts or agreements
relating to the management, leasing, operation, maintenance or repair of
the Royale Properties (the "Royale Service Contracts"). True and correct
copies of all of the Royale Service Contracts have been delivered to H/SIC
General Partners. Except in the case of a default by the vendor under a
specific Royale Service Contract, no Royale Service Contract will be
terminated, or materially amended or modified prior to the Closing Date
without H/SIC's prior written approval, which approval shall not be
unreasonably withheld, conditioned or delayed.
-25-
(j) Tax Bills. Royale has delivered to the H/SIC General Partners true
and correct copies of tax bills issued by any applicable federal, state or
local governmental authority and received by Royale with respect to the
Royale Properties for the most recent past and current tax years, and any
new assessment received with respect to a current or future tax year.
(k) Insurance. Attached hereto as Exhibit "Royale Properties
Insurance" is a list of all hazard, liability and other insurance policies
presently affording coverage with respect to the Royale Properties. Royale
shall maintain in full force and effect all such (or equivalent) policies
until the Closing Date.
(l) Tenant Estoppels. Royale represents and warrants that it shall use
reasonable good faith efforts (without cost or liability to Royale) to
obtain and deliver to H/SIC General Partners a tenant estoppel letter from
each tenant in the general form required by real estate investment trust
purchasers of leased real estate (or in such form or containing such
information as may be required by the lease of such tenant) from each of
the tenants of the Royale Properties confirming the information set forth
in the Royale Rent Schedule.
(m) Condemnation Proceedings. No condemnation or eminent domain
proceedings are pending or, to the best of the Royale's knowledge,
threatened against the Royale Properties or any part thereof, and Royale
has not made any commitments to or received any notice, oral or written, of
the desire of any public authority or other entity to take or use the
Property or any part thereof whether temporarily or permanently, for
easements, rights-of-way, or other public or quasi-public purposes, except
as set forth in the Permitted Exceptions.
(n) No Defaults. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) subject to
any approval required under the Royale Properties Indebtedness, conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument to which Royale is
a party or by which the Royale or the Royale Properties are bound, (ii)
subject to any approval required under the Royale Properties Indebtedness,
violate any restriction, requirement, covenant or condition to which Royale
is subject or by which Royale or
-26-
the Royale Properties are bound, (iii) constitute a violation of any
applicable code, resolution, law, statute, regulation, ordinance, rule,
judgment, decree or order applicable to Royale, or (iv) result in the
cancellation of any contract or lease pertaining to the Royale Properties.
(o) Environmental Matters. Except as set forth on Exhibit "Royale
Environmental Matters", Royale has no knowledge of any discharge, spillage,
uncontrolled loss, seepage or filtration of oil, petroleum or chemical
liquids or solids, liquid or gaseous products or any hazardous waste or
hazardous substance (as those terms are used in the Comprehensive
Environmental Response, Compensation and Liability Act of 1986, as amended,
the Resource Conservation and Recovery Act of 1976, as amended, or in any
other applicable federal, state or local laws, ordinances, rules or
regulations relating to protection of public health, safety or the
environment, as such laws may be amended from time to time) at, upon, under
or within the Land or any contiguous real estate. Except as set forth on
Exhibit "Royale Environmental Matters" to Royale's knowledge, there is no
proceeding or action pending or threatened by any person or governmental
agency regarding the environmental condition of the Property. To Royale's
knowledge, the Royale Properties are free of friable asbestos requiring
remediation.
(p) Certificates of Occupancy. Royale will not amend any certificates
of occupancy for the Royale Properties and will maintain them in full force
and effect to the extent that Royale is responsible for them.
(q) Personal Property. Attached hereto as Exhibit "Royale Personal
Property" is a true, correct and complete inventory of all personal
property ("Royale Personal Property"), if any, used in the management,
maintenance and operation of the Royale Properties (other than trade
fixtures or personal property of tenants).
(r) Leasing Commissions. There are, and at Closing shall be, no
outstanding or contingent leasing commissions or fees payable with respect
to the Royale Properties.
(s) Real Estate Investment Trust for Tax Purposes. Subject to
information provided by Royale to Coopers & Xxxxxxx, Royale (1) is
complying and, at all times has complied with, all requirements applicable
to real estate investment trusts under Section 856 of the Code, and (2) is,
-27-
and at all times has been, property treated as a real estate investment
trust under Section 856 of the Code for federal income tax purposes.
(t) Taxes. Royale and any predecessor of Royale have timely filed with
the appropriate taxing authorities all returns (including without
limitation information returns and other material information) in respect
of Taxes required to be filed through the date hereof and will timely file
any such returns required to be filed on or prior to the Closing Date. The
returns and other information filed (or to be filed) are complete and
accurate in all material respects. All Taxes of Royale in respect of
periods beginning before the Closing Date have been timely paid, or will be
timely paid prior to the Closing Date, and the Royale has no material
liability for Taxes in excess of the amounts so paid. All Taxes that Royale
has been required to collect or withhold have been duly collected or
withheld and, to the extent required when due, have been or will be (prior
to Closing Date) duly paid to the proper taxing authority. No audits of any
of Royale's federal, state or local returns for Taxes by the relevant
taxing authorities have occurred, and no material deficiencies for Taxes of
Royale have been claimed, proposed or assessed by any taxing or other
governmental authority against Royale. There are no pending or, to the best
of knowledge of Royale, threatened audits, investigations or claims for or
relating to any material additional liability to the Partnership in respect
of Taxes, and there are no matters under discussion with any governmental
authorities with respect to Taxes that in reasonable judgment of Royale or
its counsel, is likely to result in a material additional liability for
Taxes. To the knowledge of Royale, there are no liens for Taxes (other than
for current taxes not yet due and payable) on any of the assets of Royale.
(u) Fairness Opinion. Royale has received a satisfactory "fairness
opinion" from a reputable Financial advisor selected by Royale's Board of
Directors with respect to the Transactions.
(v) Disclosure. No representation or warranty made by Royale in this
Agreement or in any documents delivered or to be delivered by Royale
contains any untrue statement of a material fact, or omits to state a
material fact necessary in order to make the statements contained therein
not misleading or necessary in order to provide adequate
-28-
information as to Royale and the Royale Properties and its and their
management, operation, maintenance and repair. All items delivered or to be
delivered by Royale pursuant to this Agreement are true, correct and
complete in all material respects, and fairly present the information set
forth therein in a manner that is not misleading.
13. Obligations of Royale Pending Closing. From and after the date of this
Agreement through the Closing Date, Royale covenants and agrees as follows:
(a) Maintenance and Operation of Royale Properties and Royale
Business. Royale shall continue to own the properties owned by it and to
operate its business as a real estate investment trust as Royale's business
is currently operated. Royale will cause the Royale Properties to be
maintained in their present order and condition, normal wear and tear, and
damage by fire or other casualty (subject to Section 16) excepted and will
cause the continuation of the normal operation thereof, including the
purchase and replacement of fixtures and equipment, and the continuation of
the normal practice with respect to maintenance and repairs so that the
Royale Properties will, except for normal wear and tear and damage by fire
or other casualty (subject to Section 16), be in substantially the same
condition on the Closing Date as on the date hereof.
(b) Government Requirements. Royale shall use its commercially
reasonable efforts to comply with governmental requirements applicable to
Royale.
(c) Changes in Representations. Royale shall notify the H/SIC General
Partners promptly, and the H/SIC General Partners shall notify Royale
promptly, if either becomes aware of any occurrence prior to the Closing
Date which would make any of its representations, warranties or covenants
contained herein not true in any material respect.
(d) Obligations as to Royale Leases and Other Documents. Royale shall
not, without H/SIC's prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed), amend, modify, renew or
extend any Royale Lease in any material respect unless required by law, or
enter into new leases or approve any assignment of leases or subletting of
leased space, or terminate any Royale Leases. Royale shall not, without
H/SIC's prior written consent, amend the articles of incorporation or
-29-
bylaws of Royale, or the Advisory Agreement, or enter into any employment,
consulting, advisory or similar agreements.
(e) Obligations as to Royale Properties Indebtedness. Royale shall
not, without H/SIC's prior written consent, (i) prepay the Royale
Properties Indebtedness, or (ii) modify or amend, or permit any of the
documents evidencing or securing the Royale Properties Indebtedness or
otherwise entered into in connection with the Royale Properties
Indebtedness to be amended or modified. Royale shall make all payments
required to be made under the Royale Properties Indebtedness when due,
shall perform all obligations under the Royale Properties Indebtedness and
shall keep the Royale Properties Indebtedness free from default.
(f) No Other Indebtedness. Royale shall not incur any indebtedness,
other than current accounts payable in the day-to-day operation of the
Royale Properties.
(g) No Solicitation. Royale will not solicit or undertake any
recapitalization, business combination or other transaction or engage in
any discussions or negotiations with respect thereto, or furnish
information (other than as required by law or this Agreement) that would be
inconsistent with the Transactions.
14. Title; H/SIC Properties.
(a) At Closing, the H/SIC Properties shall be free and clear of all
liens, covenants, restrictions, easements, encumbrances, and other title
exceptions or objections excepting, however, the "H/SIC Permitted
Exceptions" (hereinafter defined). Title to the H/SIC Properties at Closing
shall be good and marketable and such as will be insured by Commonwealth
Land Title Insurance Company at regular rates for regular risks, with such
endorsements as the H/SIC General Partners shall reasonably require.
(b) As to each H/SIC Property, the "H/SIC Permitted Exceptions" are:
(i) real estate taxes and assessments not yet due and payable;
(ii) covenants, restrictions, easements and other similar
agreements, provided that the
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same are not violated by existing improvements or the current use and
operation of an H/SIC Property, or if so violated that the same do not
materially impair the value of the H/SIC Property and that the
violation of the same will not result in a forfeiture or reversion of
title;
(iii) zoning laws, ordinances and regulations, building codes and
other governmental laws, regulations, rules and orders affecting such
H/SIC Property, provided that the same are not violated by existing
improvements or the current use and operation of the H/SIC Property,
or if so violated that the same do not materially impair the value of
the H/SIC Property or that such violation will not result in a
forfeiture or reversion of title;
(iv) any minor imperfection of title which (1) does not affect
the current use, operation or enjoyment of an H/SIC Property, (2) does
not render title to such H/SIC Property unmarketable or uninsurable,
and (3) does not materially impair the value of the H/SIC Property;
(v) the H/SIC Properties Indebtedness encumbering such H/SIC
Property;
(vi) the H/SIC Leases with respect to such H/SIC Property.
(c) From and after the date of this Agreement, the H/SIC General
Partners shall not take any action, or fail to take any action, that would
cause title to the H/SIC Properties to be subject to any title exceptions
or objections, other than the H/SIC Permitted Exceptions.
15. Title; Royale Properties.
(a) At Closing, the Royale Properties shall be free and clear of all
liens, covenants, restrictions, easements, encumbrances, and other title
exceptions or objections excepting, however, the "Royale Permitted
Exceptions" (hereinafter defined). Title to the Royale Properties at
Closing shall be good and marketable and such as will be insured by
Commonwealth Land Title Insurance Company at regular rates for regular
risks, with such en-
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dorsements as the H/SIC General Partners shall reasonably require.
(b) As to each Royale Property, the "Royale Permitted Exceptions" are:
(i) real estate taxes and assessments not yet due and payable;
(ii) covenants, restrictions, easements and other similar
agreements, provided that the same are not violated by existing
improvements or the current use and operation of an Royale Property,
or if so violated that the same do not materially impair the value of
the Royale Property and that the violation of the same will not result
in a forfeiture or reversion of title;
(iii) zoning laws, ordinances and regulations, building codes and
other governmental laws, regulations, rules and orders affecting such
Royale Property, provided that the same are not violated by existing
improvements or the current use and operation of an Royale Property,
or if so violated that the same do not materially impair the value of
the Royale Property or that such violation will not result in a
forfeiture or reversion of title;
(iv) any minor imperfection of title which (1) does not affect
the current use, operation or enjoyment of an Royale Property, (2)
does not render title to such Royale Property unmarketable or
uninsurable, and (3) does not materially impair the value of the
Royale Property;
(v) the Royale Properties Indebtedness encumbering such Royale
Property;
(vi) the Royale Leases with respect to such Royale Property.
(c) From and after the date of this Agreement, Royale shall not take
any action, or fail to take any action, that would cause title to the
Royale Properties to be subject to any title exceptions or objections,
other than the Royale Permitted Exceptions.
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16. Risk of Loss. If prior to Closing (i) condemnation proceedings are
commenced against all or any portion of the H/SIC Properties or the Royale
Properties (other than a de minimis condemnation, which shall mean a
condemnation which does not materially and adversely affect and parking or
access area of the H/SIC Properties and does not have a material adverse affect
on the value of the H/SIC Properties or the Royale Properties), or (ii) if the
H/SIC Properties or the Royal Properties are damaged by an uninsured casualty to
the extent that the cost of repairing such damage shall be Five Hundred Thousand
Dollars ($500,000.00) or more based on the good faith estimate of an independent
contractor selected by the H/SIC General Partners and reasonably approved by
Royale, then the H/SIC General Partners and Royale shall have the right, upon
notice in writing to the other party delivered within forty five (45) days after
actual notice of such condemnation or fire or other casualty to terminate this
Agreement, and thereupon the parties shall be released and discharged from any
further obligations to each other. If this Agreement is not terminated or in the
event of fire or other casualty or condemnation not giving rise to a right to
terminate this Agreement, all of the proceeds of fire or other casualty
insurance proceeds and the rent insurance proceeds payable with respect to the
period after Closing or, of the condemnation award, as the case may be, shall
remain with the entity owning the affected property.
17. Mutual Conditions. Neither the H/SIC General Partners, H/SIC, nor
Royale will be obligated to complete or cause to be completed the transactions
contemplated by this Agreement unless the following conditions have been
satisfied prior to or at the Closing, unless waived by the H/SIC General
Partners, H/SIC, and Royale:
(a) No order to restrain, enjoin or otherwise prevent the consummation
of this Agreement or the Transactions shall have been entered by any court
or administrative body and shall remain in full force and effect (other
than order sought by any of the parties to this Agreement).
(b) The obligations to consummate the transactions contemplated hereby
shall not have been terminated pursuant to Section 30 hereof.
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18. Conditions Precedent to Obligations of H/SIC General Partners and
H/SIC. The obligations of the H/SIC General Partners and H/SIC to consummate the
transactions contemplated by this Agreement are subject to the fulfillment,
prior to or upon the Closing Date, of the following conditions precedent, unless
waived by the H/SIC General Partners and H/SIC:
(a) Royale and Crown shall have complied with and performed in all
material respects all of the covenants contained in this Agreement to be
performed by Royale at or prior to the Closing Date. Without limitation on
the other obligations of Royale under this Agreement, all actions required
under Section 4 of this Agreement shall have been taken and shall be in
effect concurrent with Closing.
(b) From and after the date hereof, there shall have been no material
adverse change in the business or financial condition of Royale. For the
purpose hereof, a material adverse change shall only mean a change which
results in a significant diminution of the value of any of the Royale
Properties or of Royale as a whole; and the following shall be deemed not
to be a material adverse change: (i) changes in the ordinary course of
business which are not in the aggregate material adverse, and (ii) changes
resulting from general economic conditions.
(c) Royale shall have obtained from tenants occupying at least eighty
percent (80%) of each of the Royale Properties an estoppel certificate in
accordance with Section 12(l).
(d) Royale shall have delivered to the H/SIC General Partners a letter
from each of the holders of the Royale Properties Indebtedness dated no
earlier than thirty (30) days prior to the Closing, stating the outstanding
principal balance under the mortgage held by such holder, and accrued
interest thereon, if any, and stating that there has not been, and there
does not currently exist any default under the Royale Properties
Indebtedness.
(e) The representations and warranties set forth in Section 9 and
Section 12 shall be true and accurate in all material respects on and as of
the Closing Date with the same force and effect as if they had been made at
the Closing Date.
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(f) Title policies, in the form contemplated by Sections 14 and
Section 15 of this Agreement, shall have been delivered to the UPREIT as to
the H/SIC Properties and the state of title of the Royale Properties shall
be as set provided in Section 15.
(g) The Registration Rights Agreement and the UPREIT Agreement shall
have been executed and delivered by all required parties.
(h) The H/SIC Properties Indebtedness shall have been obtained, funded
and closed.
(i) All consents and approvals necessary under the H/SIC Properties
Indebtedness documents shall have been obtained.
(j) The H/SIC Partners shall have delivered all documents required to
be delivered by the H/SIC Partners under this Agreement and otherwise to
consummate the Transactions.
(k) Royale shall have executed and delivered, or caused to be executed
and delivered, all documents contemplated by this Agreement to be executed
by Royale or caused to be executed by Royale or as necessary or desirable
to consummate the Transactions.
19. Conditions Precedent to Royale's Obligations.
The obligations of Royale and Crown to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or upon
the Closing Date, of the following conditions precedent, unless waived by
Royale.
(a) The H/SIC General Partners and H/SIC shall have complied with and
performed in all material respects all of the covenants contained in this
Agreement to be performed by the H/SIC General Partners at or prior to the
Closing Date.
(b) From and after the date hereof, there shall have been no material
adverse change in the business or financial condition of the H/SIC
Partnerships or H/SIC.
(c) The H/SIC General Partners shall have obtained from tenants
occupying at least eighty percent (80%) of
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each of the H/SIC Properties an estoppel certificate in accordance with
Section 10(h).
(d) The H/SIC General Partners shall have delivered to Royale a letter
from each of the holders of the H/SIC Properties Indebtedness dated no
earlier than thirty (30) days prior to the Closing, approving the
conveyance of the H/SIC Partnership Interests to the UPREIT, and stating
that there has not been, and there does not currently exist any default
under the H/SIC Properties Indebtedness.
(e) The H/SIC General Partners shall have received a commitment from a
reputable lender for the Royale Acquisition Facility.
(f) The representations and warranties set forth in Section 10 shall
be true and accurate in all material respects on and as of the Closing Date
with the same force and effect as if they had been made at the Closing
Date.
(g) The H/SIC General Partners shall have executed and delivered, or
caused to be executed and delivered, all documents contemplated by this
Agreement to be executed by the H/SIC Partners or caused to be executed by
the H/SIC Partners or as necessary or desirable to consummate the
Transactions.
20. Deliveries by H/SIC General Partners. At Closing, the H/SIC General
Partners shall deliver, or cause the delivery of, the following documents:
(a) The UPREIT Agreement.
(b) Contribution and assumption agreements ("Assignments") and
amendments to partnership agreements and limited partnership certificates
("Amendments") setting forth the assignment by each of the Contributors of
their Contributed Interests and his, her or its withdrawal from the H/SIC
Partnerships (or reduction in interest, in the case of Contributors holding
Retained Interests) and the admission of UPREIT (and/or its designee(s)) as
partners of the H/SIC Partnerships, which Assignments and Amendments shall
be executed and acknowledged by the Contributors and the UPREIT (or its
designees).
(c) A release from each Contributor releasing the H/SIC Partnerships
and the UPREIT (and its designee(s)) as partners of the H/SIC Partnerships
from any obligations
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and liabilities with respect to the original formation of the H/SIC
Partnerships, and any other matter arising from business done, transactions
entered into or events occurring prior to the Closing Date.
(d) The original H/SIC Leases and schedule from the H/SIC General
Partners updating the H/SIC Rent Schedule for the H/SIC Properties and
setting forth all arrearages in rents and all prepayments of rents.
(e) An original letter executed by the H/SIC General Partners advising
the tenants of the H/SIC Properties of the change in control and management
of the H/SIC Properties and directing that rents and other payments
thereafter be sent to the UPREIT or as UPREIT may direct.
(f) Possession of the H/SIC Properties from the H/SIC General Partners
in the condition required by this Agreement, and the keys therefor.
(g) From each Contributor, a certification of non-foreign status as
required by the Code.
(h) The Registration Rights Agreement.
(i) All such documents and instruments (including, without limitation,
an accredited investor's questionnaire from each of the Contributors for
the purposes of confirming accredited investor status) as may be reasonably
required to allow the UPREIT or Royale to comply with federal and state
securities law requirements with respect to the issuance of the Common
Units and Preferred Units or Royale Common Stock, as the case may be.
(j) Such other documents and items (including, without limitation,
legal opinions customarily delivered in transactions similar to the
Transactions) as may be reasonably required under the terms of this
Agreement or relating to the Transactions to reasonably effect the purposes
of this Agreement or consummate the Transactions.
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21. Royale Performance and Deliveries by Royale. At the Closing,
simultaneously with the deliveries pursuant to the provisions of Section 20
above, the UPREIT shall issue to Contributors the Common Units and Preferred
Units in the amount and manner specified in Section 7, and the UPREIT (or its
designee) and Royale shall execute and deliver those documents (including
without limitation those documents described in Section 20 above to which the
UPREIT (or its designees) or Royale is a party or a required signatory) and take
such other actions required to be taken by Royale at Closing as required under
this Agreement. Without limitation on the foregoing provisions of this Section
21 Royale shall deliver, or cause the delivery of the following documents:
(a) The original signed Royale Leases and a schedule updating the
Royale Rent Schedule for the Royale Properties and setting forth all
arrearages in rents and all prepayments of rents.
(b) Originally executed Royale Service Contracts and copies of books,
records, operating reports, files and other materials related to the
ownership, use and operation of the Royale Properties, to the extent that
any exist and are in the possession of Royale.
(c) The Registration Rights Agreement.
(d) A transfer and assignment agreement by Crown to Royale
transferring all of Crown's assets to Royale in accordance with Section 6,
and Royale's written confirmation of the termination of the Advisory
Agreement.
(e) The Management Agreement in accordance with Section 6.
(f) Then currently dated and effective resolutions of the Board of
Directors of Royale authorizing this Agreement and the Transactions, and
the execution and delivery by Royale of all documents necessary or
desirable to consummate the Transactions.
(g) All of the corporate and financial books and records of Royale.
(h) Such other documents and items (including, without limitation,
legal opinions customarily in delivered in transactions similar to the
Transactions) as may be reasonably required under the terms of this
Agreement or re-
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lating to the Transactions to reasonably effect the purposes of this
Agreement or to consummate the Transactions.
22. Closing Charges; Prorations and Adjustments.
(a) Royale or H/SIC General Partners on behalf of the H/SIC
Partnerships and out of the funds of such H/SIC Partnerships), as the case
may be, shall pay the title examination charges, the title insurance
premium, survey costs, environmental assessment charges, notary fees and
other such charges relating to the Royale Properties and the H/SIC
Properties respectively.
(b) Although H/SIC General Partners and Royale believe that no real
estate transfer or recording fees or taxes will be due in connection with
the contribution of the H/SIC Partnership Interests, if it is finally
determined that such taxes are due and payable in connection herewith, then
the H/SIC Partnership for which the transfer of whose H/SIC Partnership
Interests shall be deemed subject to real estate transfer tax shall pay the
costs of contesting such taxes and shall pay the full amount of such taxes
if they are finally determined to be payable. (c) The H/SIC General
Partners and Royale shall each pay their own due diligence costs and legal,
brokerage, lenders', investment banking and accounting costs and fees
related to the Transaction and preparation of this Agreement and all
documents required to settle the transaction contemplated hereby.
(d) With respect to each of the H/SIC Properties, as of the 11:59 p.m.
of the calendar day immediately preceding the Closing Date, there shall be
apportioned between the H/SIC Partnership owning such H/SIC Property and
the UPREIT (1) rent under the H/SIC Leases, (2) interest under the H/SIC
Properties Indebtedness, (3) taxes, insurance and operating expenses of
such H/SIC Property to the extent borne by the owning H/SIC Partnership,
and (4) payments with respect to the items listed in the preceding clause
(3) that are received from tenants to the extent prepaid (including all
security deposits) or paid in arrears to the owning H/SIC Partnership. All
management agreements between the H/SIC Partnerships and H/SIC (or any
affiliate) shall be terminated as of Closing Date, and all fees due under
such agreements through Closing shall be paid by the H/SIC Partnership. Any
amount due pursuant to this Section 22(d) shall be paid in cash at the
Clos-
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ing. To the extent that the amount of the items to be adjusted are not
reasonably ascertainable as of the Closing Date, such as tenant chargebacks
or collections for tenant reimbursements, they shall be adjusted promptly
after the determination of the amount thereof.
(e) It is acknowledged and agreed that, on or prior to the Closing,
the H/SIC General Partners shall cause the H/SIC Partnerships to distribute
to the H/SIC Partners all cash and assets of the Partnership other than the
H/SIC Properties.
23. Partnership Liabilities and Sales of H/SIC Properties.
(a) Subject to the provisions of Section 23(b) hereof, for a period of
three (3) years following the Closing Date (the "Non Taxable Disposition
Period"), Royale and the UPREIT shall use their good faith, reasonable and
diligent efforts:
(1) to cause any sale or other voluntary disposition (other than
through a deed in lieu of foreclosure, a foreclosure action, or an act
of eminent domain) of the H/SIC Properties to qualify for
non-recognition of gain under the Code, whether by means of exchanges
contemplated under Code Sections 351, 354, 355, 368, 721, 1031, 1033,
or otherwise; provided, however, that the foregoing shall not require
Royale and the UPREIT, in their sole and absolute discretion, to sell,
or otherwise dispose of, or prevent Royale and the UPREIT in their
sole and absolute discretion, from selling or otherwise disposing of
any of the H/SIC Properties in transactions qualifying for
non-recognition of loss;
(2) to avoid a distribution of property that would cause any
Contributor to recognize income or gain pursuant to the provisions of
either or both of Code Sections 704(c)(1)(B) and 737; and
(3) to avoid a termination of the UPREIT pursuant to the
provisions of Code Section 708(b)(1)(B).
(b) Notwithstanding the above provisions of Section 23(a), the
obligation of either or both of Royale and the UPREIT to undertake those
activities set forth in Section 23(a) hereof shall, in all events, be
subject to, and oth-
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erwise interpreted consistent with Royale's fiduciary and statutory
obligations to all partners (both present and future) in the UPREIT, and to
its stockholders, both present and future. Notwithstanding the preceding
sentence, however, the UPREIT and/or Royale shall use every reasonable
effort (but shall not be required) to engage in a non-taxable disposition
of an H/SIC Property.
(c) In addition to the foregoing, and again consistent with and
subject to Royale's fiduciary, statutory and other obligations to all
partners (present and future) in the UPREIT, and to all of Royale's
stockholders, and likewise in all events consistent with and subject to the
exercise of sound and prudent business judgment in furtherance of the
interests of all such partners and stockholders, for a period of three (3)
years after the Closing Date, the UPREIT and Royale shall use their
respective good faith, reasonable and diligent efforts to deal with the
aggregate of non-recourse indebtedness ("Aggregate Debt") secured by the
H/SIC Properties ("Project Specific Mortgages") and excess non-recourse
indebtedness secured by properties owned by the UPREIT other than the H/SIC
Properties ("Other Mortgages") in such manner as shall provide Contributors
that collective allocation of taxable basis derived from either or both of
Project-Specific and Other Mortgages that is set forth in Exhibit "Schedule
of H/SIC Debt Allocations." In the event that Royale or the UPREIT
determines, during the three (3) year period following the Closing, that it
is necessary or desirable to pay down or retire all or any balance due
under the Project-Specific Mortgages or Other Mortgages, then the Royale
and the UPREIT shall be free to do so, subject to the terms of Section
23(d). In addition, Royale and the UPREIT shall be free from time to time
and at any time to make scheduled periodic and other payments required
under the Project Specific Mortgages and Other Mortgages, without notice or
accountability to any Contributor.
(d) At Closing, the UPREIT and Royale shall confirm, in writing, to
the Contributors their respective acknowledgments of, and agreements to
comply with, the undertakings set forth in Sections 23(a), 23(b), 23(c) and
23(d).
(1) In the event, on or before the third anniversary of the
Closing Date, of (each, a "Tax-Related Event"): (A) a post-Closing
sale of an H/SIC Property occurs; or (B) an attempt by the UPREIT to
effect an H/SIC Property transfer as permitted by Section 23(a)
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above occurs, but the terms of Section 1031 of the Code or the
regulations promulgated thereunder have changed such that the
mechanics for implementing a tax-deferred exchange of real estate are
materially and adversely altered (whether with respect to the timing
required to identify and close upon an exchange property or otherwise)
from those mechanics in place as of the date of this Agreement, and,
in any case, provided that the obligations of the Royale and the
UPREIT under Section 23 shall not have otherwise terminated by the
terms of such Section, the H/SIC shall give written notice of such
Tax-Related Event (a "Tax-Related Notice") to the relevant
Contributors for the subject H/SIC Property as soon as practicable
after the occurrence of such event becomes reasonably likely, or, if
later, on the date on which the UPREIT is, in the reasonable judgment
of its securities counsel, legally permitted, under applicable federal
and state securities laws and regulations, and the rules and
regulations of any securities exchange on which Royale Common Stock
may be listed, to disseminate such Tax-Related Notice to such
Contributors.
(2) Upon their receipt of a Tax-Related Notice, the Contributors
who were H/SIC Partners in the affected H/SIC Property shall designate
Xxx Xxxxxxx, or if he is unable or unwilling to serve, a person
selected by a majority in H/SIC Partnership Interests of the
Contributors who were H/SIC Partners in the affected H/SIC Property to
represent them in connection with the Tax-Related Event that triggers
the delivery of the applicable Tax-Related Notice (the
"Spokesperson"). The UPREIT and Royale shall be entitled to rely on
the first written notice either of them receives that designates a
Spokesperson with respect to a given Tax-Related Event, and shall be
under no obligation to deal with any person other than that
Spokesperson in connection with the subject Tax-Related Event. The
UPREIT and Royale shall have no obligation to deal with any person or
entity whatsoever in connection with a Tax-Related Event unless and
until a Spokesperson is properly designated. The UPREIT and Royale and
their respective independent accountants, attorneys and other
representatives and advisors, shall cooperate With the Spokesperson in
order to consider strategies proposed by or through the Spokesperson
(it being understood that neither Royale or the UPREIT shall have any
obligation what-
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soever to propose any such strategies), on behalf of affected
Contributors, which strategies are designed or intended to defer or
mitigate any recognition of gain under the Code by any Contributor or
any shareholder or partner in any Contributor (any such gain
recognition being referred to herein as an "Adverse Tax Consequence")
that may result from a Tax-Related Event, whether such strategies
involve any or all of the Contributors on a basis independent of
Royale and the UPREIT, or in conjunction with Royale and the UPREIT.
The requesting party shall pay its own fees and expenses, and the fees
and expenses of Royale and the UPREIT, incurred in connection with the
procedure delineated in this Section 23(d)(2). Under this Section
23(d), the UPREIT and Royale are only obligated to cooperate with the
Spokesperson on behalf of any Contributor (or any partner, shareholder
or member of any Contributor) who may be facing an Adverse Tax
Consequence, in connection with such Contributor's determination of
the efficacy of tax-deferral or tax-mitigation alternatives proposed
by or through the Spokesperson that may involve Royale or the UPREIT.
In no event shall either Royale or the UPREIT be required to incur any
expense (other than administrative expenses incurred in complying with
this Section 23(d)(2)) in connection its cooperation under this
Section 23(d)(2), nor shall any transaction duly approved by the Board
of Directors of Royale that results in a Tax-Related Event be required
to be suspended, postponed, impeded or otherwise adversely affected by
virtue of any potential Adverse Tax Consequence.
(e) The provisions of this Section 23 shall not be amended or modified
without the consent of (1) the H/SIC General Partners and (2) other
Contributors holding at least seventy percent (70%) of the H/SIC
Partnership Interests.
24. Preparation of Documents.
(a) Royale shall direct its counsel to prepare all documentation
relating to changes in the directors and senior management of Royale, and
all Board of Directors resolutions in connection with the Transactions all
such documents to be subject to the reasonable approval of the H/SIC
General Partners and their counsel.
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(b) The H/SIC General Partners shall direct their counsel to prepare
the UPREIT Agreement, all documents relating to the formation and
governance of the UPREIT and the UPREIT Subsidiary, all documents
pertaining to the issuance of the Common Units and Preferred Units, all
documents pertaining to the contribution of the H/SIC Partnership
Interests, all documents pertaining to the H/SIC Properties, documents
relating to the commitment for the Royale Acquisition Facility, the H/SIC
Properties Indebtedness (including negotiation of documents prepared by
lenders' counsel), and all documents pertaining to the transfer of H/SIC's
management of the H/SIC Properties to Royale.
(c) Royale and the H/SIC General Partners shall cooperate in good
faith and with due diligence to complete in a timely manner all documents
necessary or desirable to consummate the Transactions.
25. Transfer of H/SIC Management. The terms and conditions of the transfer
of H/SIC's management of the H/SIC Properties to Royale are set forth on Exhibit
"H/SIC Management Transfer" attached hereto.
26. Lease Guarantee Agreement. In order to maintain the projected net lease
income for the H/SIC Property known as 000 Xxxxx Xxxx, Xxxxxx, Xxx Xxxxxx and
the H/SIC Property known as 0000 Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx, the net
lease income from the operation of such properties shall be assured by
collateralized security and as otherwise more particularly described in Exhibit
"Lease Guarantee Agreement."
27. Notices. All notices and other communications under this Agreement
shall be addressed as follows, shall be sent by a reputable national overnight
delivery service and shall be deemed given one (1) business day after delivery
and acceptance by such reputable national overnight delivery service:
If to H/SIC General Partners or H/SIC:
Xx. Xxxx X. Xxxxxx, III
The Xxxxxxx Group
Xxx Xxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
with a copy to:
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F. Xxxxxxx Xxxxxxx, Esquire
Saul, Ewing, Xxxxxx & Xxxx
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
If to Royale:
Xx. Xxxxxx X. Xxxx, Chairman
Royale Investments, Inc.
0000 Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
with a copy to:
Xxxx Xxxxxxxx, Esquire
Parsinen, Kaplan, Levy, Rosberg & Xxxxxxx, P.A.
000 Xxxxx 0xx Xxxxxx - Xxxxx 0000
Xxxxxxxxxxx, XX 00000
28. Due Diligence. Royale and the H/SIC General Partners shall cooperate in
good faith to assist each other in their respective due diligence efforts and
will provide information as reasonably requested, including, without limitation,
copies of all existing corporate documentation, partnership documentation,
financial information, market studies, leases, engineering reports,
environmental reports, surveys, building plans, property contracts, title
policies and title reports, zoning and other information, subject at all times
to the disclosure requirements of the United States Securities Exchange
Commission. In addition, the H/SIC General Partners and Royale shall provide to
each other access to their respective properties for inspections (excluding any
invasive tests or investigations) of their respective properties, subject to the
rights of tenants.
29. No Public Disclosure. Subject to compliance with federal and state
securities law disclosure requirements, Royale and the H/SIC General Partners
agree that no press releases or other public disclosures shall be made by Royale
(or any person or entity affiliated with or controlled by Royale) or any of the
H/SIC General Partners (or any person or entity affiliated with or controlled by
any H/SIC General Partner) regarding the Transactions without the prior written
approval of Royale and the H/SIC General Partners.
30. Termination; Default.
(a) At any time prior to the Closing Date, this Agreement may be
terminated (1) by mutual written consent of Royale, the H/SIC General
Partners and H/SIC; (2) by
-45-
Royale or the H/SIC General Partners if (A) there shall be any order, or
any proceedings for the purpose of obtaining such an order, in effect
preventing consummation of the transactions contemplated by this Agreement
(other than an order sought by any of the parties), or (B) there shall be
any action taken, or any statute, rule, regulation or order enacted,
promulgated, issued or deemed applicable to the transactions contemplated
by this Agreement by any governmental entity that makes consummation of the
transactions contemplated by this Agreement illegal, or the economic effect
of which would be materially and adversely burdensome to any party to this
Agreement or, in the case of any H/SIC Partnership, to the H/SIC Partners
of such Partnership (and the party so burdened may elect to terminate), or
(3) by Royale or the H/SIC General Partners if the Closing Date is not on
or prior to one hundred twenty (120) days from the date of this Agreement.
(b) If this Agreement shall be terminated as provided in Section
30(a), this Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto to any other party, except that
nothing set forth herein shall relieve a party hereto from liability for
its willful breach of this Agreement or its own costs incurred with respect
to costs agreed upon by each party prior to such termination. If this
Agreement is terminated, each party hereto agrees to return or destroy all
documents and other information received from any other party hereto as
soon as practicable after the termination of this Agreement.
(c) Notwithstanding anything contained in this Section 30 or elsewhere
in this Agreement to the contrary,
(1) if Royale defaults in the performance of any of Royale's
obligations under this Agreement, the H/SIC General Partners and H/SIC
shall, as their sole and exclusive remedy, have the right either (A)
to seek specific performance of this Agreement by Royale, or (B) to be
paid One Hundred Fifty Thousand Dollars ($150,000) by Royale, and,
upon such election by the H/SIC General Partners and H/SIC, Royale
shall pay to the H/SIC General Partners and H/SIC One Hundred Fifty
Thousand Dollars ($150,000) as liquidated damages and the sole and
exclusive remedy, with no action for damages other than $150,000;
-46-
(2) if the H/SIC General Partners or H/SIC default in the
performance of any of the obligations of the H/SIC General Partners or
H/SIC under the Agreement, Royale shall, as its sole and exclusive
remedy, have the right either (A) to seek specific performance of this
Agreement by the H/SIC General Partners and H/SIC or (B) to be paid
One Hundred Fifty Thousand Dollars ($150,000) by H/SIC General
Partners and H/SIC, and, upon such election by Royale, the H/SIC
General Partners and H/SIC shall pay to Royale One Hundred Fifty
Thousand Dollars ($150,000) as liquidated damages and the sole and
exclusive remedy of Royale, with no action for damages other than
$150,000.
31. Miscellaneous.
(a) This Agreement may not be amended except by an instrument in
writing signed by the parties to this Agreement.
(b) This Agreement together, including the Exhibits attached hereto
and the agreements contemplated by the terms of this Agreement (1)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof, (2) may be executed in several counterparts,
each of which will be deemed an original and all of which shall constitute
one and the same instrument and (3) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the
Commonwealth of Pennsylvania. All Exhibits attached to this Agreement are
made a part of this Agreement.
(c) This Agreement shall be binding upon, and shall be enforceable by
and inure to the benefit of, the parties named herein and their respective
successors; provided, however, that this Agreement may not be assigned by
any party without the prior written consent of the other parties and any
attempted assignment without such consent shall be void and of no effect.
(d) The titles and captions of the Sections and paragraphs of this
Agreement are included for convenience of reference only and shall have no
effect on the construction or meaning of this Agreement.
-47-
(e) The representations and warranties set forth in this Agreement
shall survive Closing.
(f) Other than with respect to Section 4 and Section 23, no provision
of this Agreement is intended, nor shall it be interpreted, to provide or
create any third party beneficiary rights or any other rights of any kind
in any client, customer, affiliate, stockholder, partner or employee or any
party hereto or any other person or entity.
(g) Royale and H/SIC General Partners each agree to execute and
deliver, or to cause the execution and delivery of, such other documents,
certificates, agreement and other writings and to take such other actions
as may be necessary or desirable in order to consummate expeditiously or
implement the Transactions.
(h) The parties to this Agreement understand that the structure of the
Transactions may be subject to change as a result of many factors,
including, without limitation, federal and state tax considerations,
securities laws considerations, the requirements of lenders, and corporate
and partnership law considerations. The parties to this Agreement agree to
cooperate in good faith to attempt to accommodate any required changes,
provided that the ultimate benefits to, and burdens of, this Agreement and
the Transactions to the parties remain as specified in this Agreement,
notwithstanding any such changes.
(i) If any provision of this Agreement, or the application thereof, is
for any reason held to any extent to be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable
provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
H/SIC CORPORATION, a Delaware
corporation
By:
------------------------------
-48-
STRATEGIC FACILITY INVESTORS, INC., a Delaware limited
partnership, the sole general partner of Blue Xxxx
Investment Company, L.P., a Delaware limited
partnership
By:
-------------------------------
SOUTH BRUNSWICK INVESTMENT COMPANY, LLC, a New Jersey
limited liability company, a general partner of South
Brunswick Investors, L.P., a Delaware limited
partnership
By:
-------------------------------
COMCOURT INVESTMENT CORPORATION, a Pennsylvania
corporation, the sole general partner of ComCourt
Investors, L.P., a Delaware limited partnership
By:
-------------------------------
GATEWAY XXXXXXX DEVELOPMENT CORPORATION, a
Pennsylvania corporation, the sole general partners of
0000 Xxxxx Xxxxx, L.P.
By:
-------------------------------
ROYALE INVESTMENTS, INC., a Minnesota corporation
By:
-------------------------------
-49-
Crown Advisors, Inc. and all of its shareholders hereby join in this Agreement
for the purpose of confirming its obligation to execute and deliver the
documents required to effectuate the provisions of Section 6 and consummate the
Transactions.
CROWN ADVISORS, INC.
By:
------------------------------
SHAREHOLDERS:
---------------------------------
Xxxxxx X. Xxxx
---------------------------------
Xxxx Xxxxxxxx
Exhibit
"H/SIC Partners Unit Consideration"
The allocation of Royale Common Stock, Common Units and Preferred Units
among H/SIC and the H/SIC Partners shall be determined by the H/SIC General
Partners and confirmed by H/SIC and the H/SIC Partners at least 10 days in
advance of the Closing.
Exhibit "H/SIC Partners Authorization Agreements"
The Following agreements shall be executed by the H/SIC Partners and
provided at least 10 days prior to the Closing:
Consent, Authorization and Power of Attorney
UPREIT Partnership Signature Page
Subscription Agreement Signature Page
Accredited Investor Questionnaire
Exhibit "H/SIC Properties Violations"
Blue Xxxx Investment Company, L.P.
The following violations refer to all three Blue Xxxx Properties, 751/753 Jolly
Road, 760 Jolly road, and 000 Xxxxx Xxxx and the adjacent Option Land.
None
Comcourt Investors, L.P.
The following violations refer to 0000 Xxxxxxxxxx Xx. and 0000 Xxxxxx Xxxxx and
the adjacent Option Land.
None
South Brunswick Investors, L.P.
The following violations refer to all three South Brunswick Properties 000 Xxxxx
Xxxx, 000 Xxxxx Road, and 000 Xxxxx Xxxx along with the Adjacent Option Land.
None
0000 Xxxxx Xxxxx, L.P.
The following violations pertain to 0000 Xxxxx Xxxxx and the adjacent Option
Land.
None
Exhibit "H/SIC Leases"
Annual
Square Expiration Rental Rental Security
Property Address Tenant Feet Date Rate Revenue Deposit
-------- ------- ------ ---- ---- ---- ------- ------
Blue Xxxx, PA
Unisys World
Headquarters 000/000 Xxxxx Xxxx Unisys 537,338 Jun-09 $8.06 N $4,329,171 $12,750,000
Unisys World
Headquarters 000 Xxxxx Xxxx Unisys 199,380 Jun-09 $12.50 N $2,492,000 None
Merck Xxxxxxxx 000 Xxxxx Xxxx Unisys/Merck(1) 218,219 Jun-09 $9.61 N $2,096,951 None
Harrisburg, PA
0000 Xxxxx Xxxxx 0000 Xxxxx Xxxxx Xxxxx Capital 8,640 Oct-00 $10.79 N $93,226 None
Pitney Xxxxx 6,898 May-01 $10.42 N $71,877 None
Xxxxxx Magazines 11,309 Mar-02 $10.38 N $117,387 None
Orion Consulting 3,566 May-02 $10.31 N $36,765 $2,424
Hershey Foods 2,387 May-02 $10.98 N $26,209 None
----- -------
32,800 $345,465
Commerce Court 0000 Xxxxxx Xxxxx XxxxxxXxxxxxx 42,941 Jul-97 $17.21 G $738,808 None
Groundwater Sciences 4,293 Sep-99 $17.00 G $72,981 None
Texas Eastern 17,363 May-00 $16.50 G $286,490 None
XxXxxx-Xxxx 1,467 Apr-02 $17.50 G $25,673 None
Ernst & Young 17,499 Oct-07 $18.45 G $322,857 None
------ --------
66,064(2) $1,123,951(2)
Conrail Building 0000 Xxxxxxxxxx Xxxxx Health Central 12,699 Dec-00 $14.94 G $189,723 None
Aerotek 4,338 Apr-01 $15.00 G $65,070 None
PA Emergency Mgmt
Agency 43,828 Nov-01 $14.51 G $635,944 None
USF&G 19,903 Jun-02 $13.65 G $271,676 None
Vacant 3,500 Sep-02 G $0
----- --
84,268 $1,162,413
Princeton, NJ 000 Xxxxx Xxxx Teleport Communications 113,975 Jul-07 $17.62 G $2,008,240 None
Teleport
Communications
Group Headquarters Group (TCG)
Vacant-Teleport
Option Space 28,410(3) Dec-08 $17.62 G $500,584 (3) None
------ --------
142,385 $2,508,824 None
Xxxxxxxx Xxxxxxxx XX 000 Xxxxx Xxxx IBM/Teleport 30,000 Dec-06 $11.65 N $349,500 None
Communications Group(4)
IBM Building 000 Xxxxx Xxxx IBM 170,000 Mar-02 $8.50 N $1,445,000 None
-----------------------------------------------------------------------------------------------------------------------------
Total 1,480,454 $15,352,691
=============================================================================================================================
----------
(1) Merck subleased 50% of building from Unisys and will be leasing the
remainder as of January 1, 1999.
(2) The Ernst & Young lease has not been included in the totals as the lease
does not commence until November 1, 1997 after the expiration of the
HealthAmerica lease (8/1/97).
(3) Teleport has one remaining option for 28,410 s.f. which would bring their
total square footage to 142,385. We anticipate this option being exercised
shortly.
(4) IBM has leased this building along with 000 Xxxxx Xxxx under a single lease
until 3/31/02. Teleport has entered into a sub-lease with IBM ending
3/31/02 and a lease commencing 4/1/02 and ending 12/31/06 with Landlord.
Exhibit
"H/SIC Properties Service Contracts"
ComCourt Investors L.P.
0000 Xxxxxx Xxxxx
Allied Maintenance Janitorial Services
Xxxxxx Landscape Maintenance Landscape Maintenance
Berkshire System Fire Alarm System Maintenance
Xxxxxxxx Group Landscape Maintenance
Commonwealth Security Security System/Remote Alarms
Cummins Power Systems Diesel Generator Maintenance
First Industrial Management Corp. Management and Maintenance
Xxxxxx X. Xxxx, Inc. Fire Extinguisher Service
Xxxxxxxxx'x Plant Interiors Interior Plantscape Maintenance
Guardian Chemical Specialties Boiler Water Treatment
Home Paramount Pest Control Interior Pest Control
Xxxxxxxx'x Window Cleaning Window Cleaning
XxXxxxx Mechanical Services HVAC Maintenance
Security Elevator Elevator Maintenance
Suppression Systems, Inc. Halon Fire Protection Service
The Protection Bureau Security System Maintenance
Waste Management, Inc. Trash Removal Services
Worldwide Services UPS System Maintenance
Blue Xxxx Investment Co., LP
None
0000 Xxxxx Xxxxx XX
Xxxxxxxx Group Landscape Maintenance
Commonwealth Security Security System/Remote Alarms
First Industrial Management Corp. Management and Maintenance
Heintzelman's Window Cleaning Window Cleaning
Xxxxxx'x Florists Interior Plantscape Maintenance
USA Waste Trash Removal Services
Princeton Technology Center
Xxxx Atlantic Local phone service
Xxxxxxxx Landscape maintenance
Comcast Metrophone Cellphone service
Princeton Technology Center
continued
Xxxxxx Electric Generator maintenance
Fluidics Chiller maintenance
Xxxxxxx-Xxxxx Co. Property management
Klenzoid Equipment water treatment
Xxxxxx & Staefa Energy management system service
Manhattan Maintenance Cleaning service
MCI Long distance phone service
Metro Fire Protection Fire alarm system certification
Metrocall Pager service
Midco Recycling Trash recycling service
Midco Waste Systems Trash disposal
MobileComm Pager service
Public Service Gas & Electric Electricity & gas
Security Elevator co. Elevator maintenance
South Brunswick Township Water & sewer
Spectaguard Fire alarm system monitoring
Western Termite Pest control service
Exhibit
"H/SIC Properties Insurance"
Property Carrier Coverage
000 Xxxxx Xxxx Sun Insurance Office of America All Risk up to $200,000,000
000 Xxxxx Xxxx Sun Insurance Office of America All Risk up to $200,000,000
000 Xxxxx Xxxx Sun Insurance Office of America All Risk up to $200,000,000
000 Xxxxx Xxxx Sun Insurance Office of America All Risk up to $200,000,000
0000 Xxxxx Xxxxx Xxxxx All Risk up to $30,000,000
0000 Xxxxxx Xxxxx Xxxxx All Risk up to $30,000,000
0000 Xxxxxxxxxx Xxxxx Xxxxx All Risk up to $30,000,000
000 Xxxxx Xxxx Xxx Risk Services- All Risk up to $30,000,000
Multiple Carriers
000 Xxxxx Xxxx Xxx Risk Services- All Risk up to $30,000,000
Multiple Carriers
000 Xxxxx Xxxx Xxx Risk Services- All Risk up to $30,000,000
Multiple Carriers
Exhibit
"H/SIC Litigation"
The only litigation involving any of the H/SIC properties is the lawsuit
captioned Xxxxx Xxxxx v. Xxxxxx Xxxxxxxxxxx and Blue Xxxx Investment Co., L.P.
This is a personal injury claim for an alleged fall in Unisys' parking lot.
Under Unisys' lease, Unisys as Tenant completely indemnifies Blue Xxxx
Investment Company, L.P. in this matter.
Exhibit "H/SIC Environmental Matters"
Blue Xxxx Investment Company, L.P.
The following reports refer to all three Blue Xxxx Properties, 751/753 Jolly
Road, 000 Xxxxx Xxxx, and 000 Xxxxx Xxxx and the adjacent Option Land.
- Site Inspection and Supplemental Document Review performed by Leggette,
Brashears, & Xxxxxx, Inc. dated February 26, 1997
- Revised Environmental Baseline Report for Xxxxxx Xxxxxxxxxxx performed by
Xxxxxxx Xxxxxx, PE, XXX dated January 1997
- Environmental Indemnification Agreement for Unisys
Comcourt Investors, L.P.
0000 Xxxxxxxxxx Xxxxx
- Phase I Environmental Site Assessment - Conrail Building performed by GZA
GeoEnvironmental dated September 13, 1996
0000 Xxxxxx Xxxxx and Adjacent Option Land
- Phase I Environmental site Assessment Update - Commerce Court performed by
GZA GeoEnvironmental dated September 13, 0000
Xxxxx Xxxxxxxxx Investors, L.P.
The following reports refer to all three South Brunswick Properties 000 Xxxxx
Xxxx, 000 Xxxxx Xxxx and 000 Xxxxx Xxxx along with the Adjacent Option Land.
- Phase I Environmental Site Assessment Report prepared by Groundwater
Technology, Inc. dated October 27, 1994
- Phase I Environmental Update performed by Groundwater Technology, Inc.
dated April 19, 1296
- Asbestos Investigation Report prepared by Galson Corporation dated June,
1995
- Galson Summary Letter dated September 20, 1995
- Remedial Investigation Summary Report for Remedial Activities prepared by
Kroll Environmental Enterprises, Inc. dated July 1995 submitted by IBM to
the New Jersey Department of Environmental Protection (NJDEP)
- Remediation Agreement between NJDEP and IBM dated May 25, 1994
- Amended Administrative Consent Order between NJDEP and IBM dated May 24,
1984
- Environmental Indemnification Agreement from IBM
0000 Xxxxx Xxxxx, L.P.
The following report pertains to 0000 Xxxxx Xxxxx and the adjacent Option Land.
- Phase I Environmental Site Assessment Report prepared by Groundwater
Technology dated February 25, 1994.
Exhibit
"H/SIC Personal Property"
ComCourt Investors L.P.
2 Trash Cans - Cafeteria
2 Plastic Cones
1 Forklift
1 Volume-Air Air Balancer
1 Balometer
1 Pitot Tube
2 Temperature Recorders
2 Snapper 21' Mower w/Bag
1 STIHL String Trimmer
1 STIHL Blower/Vacuum
1 Gravely 36' Mower
1 Bench Grinder
2 Trash Cans - Lobbies
1 Wheelbarrow
Blue Xxxx Investment Co., LP
None
0000 Xxxxx Xxxxx XX
Xxxx
Xxxxx Xxxxxxxxx Investors, L.P.
1 Gateway Pentium desktop computer
2 Gateway 486 laptop computer
1 Hewlett Packard laser printer
1 Panasonic copier
1 Brother fax machine
1 IBM typewriter
1 Panasonic dictaphone transcriber
1 Olympus portable dictaphone unit
8 AT&T Merlin telephone sets
7 Motorola portable 2-way radios
3 Pager units
1 Small refrigerator
1 Xxxxxxx blueline drawing printer
8 Large drawing files
1 Secretarial station, files, chair
6 Office desks, credenzas, chairs
1 Conference table & 4 chairs
6 Picnic tables with benches
1 1981 Chevrolet Blazer with winch
1 Fork lift unit
1 Lift aloft bucket truck
Misc. tools, equipment, shelves
Exhibit
Royale Personal Property
None that we are aware of.
Exhibit
Royale Property Violations
None that we are aware of.
Exhibit
Royale Leases
Square Expiration Annual
Property Address Tenant Feet Date Rental
Cub Food Store 0000 Xxxxxxxxx Xxxx Xxxxxxx Companies, Inc. 67,510 Mar - 11
$522,813.48
Plymouth, MN
Cub Food Store Tenth & I-465 Wigest Corp. 67,541 Jul - 11
$548,196.48
Indianapolis, IN
Sentry Foods 0000 X. Xxxx Xxxxxxxxxx Xx Xxxxxxx Companies, Inc. 36,248 Oct - 10
$158,300.00
Glendale, WI
Sentry Foods 0000 Xxxx Xx. Xxxxxxx Companies, Inc. 50,000 Nov - 14
$312,201.00
Delafield, WI
Supersaver Foods 000 X. Xxxxxxxxx Xxx Xxxxxxx Companies, Inc. 39,272 May - 14
$249,125.00
Oconomowoc, WI
Sunmart 0000 X. Xxxxxxxx Xxxx-Xxxxx 46,134 Jan - 14
$305,773.94
Minot, ND
Econo Foods 0000 00xx Xx. X. Xxxx-Xxxxx 60,232 Jan - 14
$334,775.55
Peru, IL
Exhibit
Royale Purchase Options
Cub Food Store - Plymouth, MN None
Cub Food Store - Indianapolis, MN None
Sentry Foods - Glendale, WI None
Sentry Foods - Delafield, WI None
Supersaver Foods - Oconomowoc, WI None
Sunmart - Minot, ND None
Econo Foods - Peru, IL None
Exhibit
"Royale Service Contracts"
None.
Exhibit
"Royale Properties Insurance"
None.
Exhibit
Royale Litigation
Evets Corp., a Minnesota Corporation which is owned by Xxxxx Xxxx, is a
shareholder of Royale Investments, Inc. and has commenced a mandamus action to
compel Royale to produce a Non-Objecting Beneficiary List of shareholders (NOBO
List) and Royale has responded denying any obligation to provide any such list
to Evets Corp.
The action is pending.
Exhibit
Royale Environmental Matters
Cub Food Store - Plymouth, MN None
Cub Food Store - Indianapolis, MN None
Sentry Foods - Glendale, WI None
Sentry Foods - Delafield, WI None
Supersaver Foods - Oconomowoc, WI None
Sunmart - Minot, ND None
Econo Foods - Peru, IL None
"Schedule of H/SIC Debt Allocations"
The allocation of Project Specific Mortgages and Other Mortgages shall be
determined by the H/SIC General Partners and provided to all parties at least 15
days in advance of the closing.
Exhibit
"H/SIC Management Transfer"
At Closing, H/SIC shall transfer to Royale all of its employees, current
and historical property and partnership files and records, management
agreements, market research, property submittal and offer databases, software,
and The Xxxxxxx Group confidential proprietary acquisition and management
systems, licenses and publications. In addition, the following furniture,
fixtures and equipment shall be transferred:
Office Equipment
Copy Machines Minolta 5430
Xerox
Fax Machine Xerox 7020
Printer HP LaserJet
Telephone Equipment Symantec
nine desk phones
two courtesy phones
Desks 4 desk layouts with overhead storage
File Cabinets 5 Steelcase 5' tall
1 Steelcase Storage Cabinet
3 Steelcase 3' tall
Kitchen Equipment Microwave
Refrigerator
Coffee Machine
Table & Chairs
Computers
Hardware 2 Dell Pentiums
2 Gateway Pentiums
1 Microcenter - 486
SMC elite 3609TP (10Base-T Concentrator)
Smart-UPS 400 (Battery Backup)
Network Novell - Netware v. 3.12
Software Microsoft Word & Excel
Lotus - spreadsheets Project C
- project analysis FileMaker
Pro - submittal & mailing
database Business Works -
accounting DayTimer - scheduler
Back-up System Mountain Filesafe v. 5.4
Internet Service Provider Erol's
Virus Protection Symantec Norton AntiVirus
At Closing, H/SIC and its shareholders shall represent, covenant and
warrant to Royale, and hold Royale harmless, that all relevant and necessary
information with respect to the H/SIC Assets held by H/SIC has been transferred,
the non-existence of liens or obligations relating to the period of H/SIC's
ownership, including Bulk Sales and other unpaid taxes, absence of defaults,
valid ownership and authority, compliance with government requirements and other
standard provisions normally required in such instances and reasonably
acceptable to Royale's counsel. Such representations and warranties shall
survive the Closing.
The allocation of value attributable to the H/SIC Assets shall be
determined by the H/SIC General Partner and confirmed by H/SIC and the H/SIC
Partners at least 30 days in advance of the Closing.
Exhibit
"Lease Guarantee Agreement"
Two separate agreements shall be entered into and funded at Closing between
the UPREIT and (i) the partners of Comcourt Investors, L.P. and (ii) the
partners of South Brunswick Investors, L.P. The substance of the agreements
shall be as follows:
Comcourt Investors, L.P. ("Comcourt")
1. Comcourt owns an office building of 66,064 rentable square fee, located
at 0000 Xxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx, XX. The building is 100%
leased; however, on July 31, 1997, the lease for HealthAmerica, which occupies
42,941 sq. ft., is scheduled to expire (the "Vacant Space"). Comcourt has
executed a replacement lease dated May 30, 1997 between Comcourt as Landlord and
Ernst & Young U.S. LLP as Tenant for 17,499 sq. ft. of the Vacant Space,
commencing November 1, 1997 for a term of ten years, as well as a lease dated
August 8, 1997 with Penn State Xxxxxxxxx System Services as Tenant for 17,665
sq. ft. of the Vacant Space, commencing November 1, 1997 for a term of ten
years, leaving a balance of 7,777 sq. ft. to be leased (the "Unleased Vacant
Space"). The Comcourt partners are negotiating with prospective tenants and
anticipate that leases for the Unleased Vacant Space will be quickly executed.
2. The partners are transferring their partnership interests to UPREIT at
Closing. As partial consideration for the transfer, the UPREIT has required that
the partners of Comcourt provide the UPREIT an agreement to insure that the
lease income attributable to the Vacant Space is beginning at the date of
Closing attained at the level projected, and, in addition, that the partners of
Comcourt by responsible for all tenant improvement and leasing commissions for
new leases on the Vacant Space, as well as the Ernst and Young and Penn State
Xxxxxxxxx leases.
3. The Lease Income From the Vacant Space ("LEASE INCOME") means the
stabilized net rent determined on a GAAP basis.
4. The Comcourt partners shall fund two cash escrows at Closing. Comcourt
represents that the amounts escrowed are expected to cover all reasonably
anticipated amounts to be needed, based upon the lease terms and conservative
assumptions. The escrow amounts set forth below shall be reduced to the extent
that, prior to Closing, additional leasing of Vacant Space is achieved and/or
tenant improvements and/or leasing commissions are paid by Comcourt.
(a) The first escrow shall be in cash in the amount of $296,897 (the
"Comcourt LEASE INCOME Escrow") and shall be used by the UPREIT to the
extent required on a monthly basis to supplement the income as necessary to
achieve the LEASE INCOME, beginning at Closing.
(i) Upon lease up, commencement of occupancy and payment of rent
for the Vacant Space, the remaining balance of the Comcourt LEASE
INCOME Escrow shall be released to the Comcourt partners, provided
that the LEASE INCOME has been achieved. If the LEASE INCOME has not
been achieved, the amount retained shall be the present value
of the amount of the annualized deficit below the LEASE INCOME from
such time multiplied by the number of years remaining on the lease.
(b) The second cash escrow shall be created by the Comcourt partners
in the amount of $945,104 for tenant improvements and leasing commissions
for the Vacant Space, as well as the full amount of improvements to be
incurred for the Ernst & Young space and the Penn State Xxxxxxxxx space per
the attached schedule (the "Comcourt TI Escrow"). Such amount shall be
fully funded in cash at Closing. Payments from the Comcourt TI Escrow shall
be drawn for tenant improvements and leasing commissions for new tenants as
incurred by the UPREIT. Amounts not expended shall be refunded to the
Comcourt partners upon lease up of the Vacant Space.
South Brunswick Investors, L.P. ("SBI")
1. SBI owns an office building of 142,385 rentable square feet, located at
The Princeton Technology Center, 000 Xxxxx Xxxx, Xxxxxx, XX. The building has
been undergoing a total renovation and lease up since 1996. 113,975 square feet
have been leased to the tenant, Teleport Communications Group, Inc. ("TCG"), for
a 10 year initial term. TCG has exercised an option to lease the remaining
28,410 sq. ft. (the "Vacant Space") for a ten year term commencing February 1,
1998. The SBI partners have represented to the UPREIT that all capital
improvements respecting the renovation and all tenant improvements for the
113,975 of leased space and the 28,410 option space shall be paid at Closing.
2. The SBI partners are transferring their partnership interests to the
UPREIT at Closing. As partial consideration for the transfer, the SBI partners
will provide one cash escrow to subsidize the net income attributable to the
Vacant Space from the date of Closing until the commencement of rent and another
cash escrow to fund all tenant improvement and leasing commissions for the new
lease on the Vacant Space.
3. The Lease Income From the Vacant Space ("LEASE INCOME") means the
stabilized net rent determined on a GAAP basis.
4. The SBI partners shall fund two cash escrows at Closing. SBI represents
that the amounts escrowed are expected to cover all reasonably anticipated
amounts to be needed, based upon the lease terms. The escrow amounts set forth
below shall be reduced to the extent that, prior to Closing, tenant
improvements, leasing commission or capital improvements are otherwise paid for
which escrowed monies are to be provided hereinafter.
(a) The first escrow shall be in cash in the amount of $245,563 (the
"SBI LEASE INCOME Escrow") and shall be used by the UPREIT to the extent
required on a monthly basis to supplement the income as necessary to
achieve the LEASE INCOME, beginning at Closing.
(i) Upon commencement of occupancy and payment of rent for the
Vacant Space, the remaining balance of the SBI LEASE INCOME Escrow, if
any, shall be released to the SBI partners.
(b) The second cash escrow shall be created by the SBI partners at
Closing in the amount of $3,435,350 for the full amount of improve-
ments to be incurred for (i) any accrued but unpaid capital improvements
for the building renovation and unpaid leasing commissions and tenant
improvements for the 113,975 sq. ft. of leased space as of the date of
Closing, and (ii) tenant improvements and leasing commissions for the
Vacant Space, as per the attached schedule (collectively, the "SBI TI
Escrow"). Such amount shall be fully funded in cash at Closing. Payments
from the SBI TI Escrow shall be drawn for tenant improvements and leasing
commissions as incurred by the UPREIT. Amounts not expended shall be
refunded to the SBI partners upon rent commencement of the Vacant Space.
Comcourt Lease Income
0000 Xxxxxx Xxxxx
MONTH 1 2 3
Oct-97 Nov-97 (thereafter)
Square footage 7,777
Rent-E & Y 24,352
Rent-Penn State 24,289
Rent-Vacant Space 11,971 11,971 11,971
Reimbursements 0 0 0
--------------------------------------
Total Income 60,612 11,971 11,971
Less Expense Reduction (2,021) (2,021) (2,021)
======================================
Lease Income Guarantee 58,591 9,950 9,950
======================================
Years
Present Value @ 5% 2 296,897
Comcourt TI Escrow
0000 Xxxxxx Xxxxx
Xxxxxxxx Court
Tenant Capital
Tenant Square Footage Improvements Commissions Improvements Total
------ -------------- ------------ ----------- ------------ -----
Ernst & Young 17,499 316,732 73,617 390,349
Penn State/Xxxxxxxxx 17,665 247,310 121,087 368,397
Vacant Space 7,777 82,770 30,425 113,195
----------------------------------------------------------------------------------------------------
Total Commerce Court 646,812 225,129 0 871,941
----------------------------------------------------------------------------------------------------
Conrail Building
Tenant Capital
Tenant Square Footage Improvements Commissions Improvements Total
PEMA 73,163 73,163
----------------------------------------------------------------------------------------------------
Total Conrail 73,163 0 0 73,163
----------------------------------------------------------------------------------------------------
====================================================================================================
TOTAL 719,975 225,129 0 945,104
====================================================================================================
SBI Lease Income
000 Xxxxx Xxxx
Month 1 2 3 4
Oct-97 Nov-97 Dec-97 Jan-98 Total
Square footage 28,410
TCG Option Payment Refund 85,230 85,230
Rent 41,913 41,913 41,913 41,913 167,651
Reimbursements 988 988 988 988 3,951
----------------------------------------------------------------------------------------
Total Income 42,901 42,901 42,901 128,131 256,832
Less Expense Reduction (2,817) (2,817) (2,817) (2,817) (11,269)
========================================================================================
Less Income Guarantee 0,083 40,083 40,083 125,313 245,563
========================================================================================
SBI TI Escrow
000 Xxxxx Xxxx
Tenants Capital
Tenant Square Footage Improvements Commissions Improvements
Total
Teleport Communications Group 292,000 106,000
398,000
Initial Lease-Existing Obligations
Teleport Communications Group 26,425 1,057,000 285,950
1,342,950
First Option Space - already exercised
Teleport Communications Group 28,410 1,136,400 305,000 80,000
1,521,400
Second Option Space - already exercised
General Property Improvements 173,000
173,000
==================================================== =================
===============
Totals 2,485,400 696,950 253,000
3,435,350
==================================================== =================
===============
EXHIBIT 2
AMENDMENT TO
FORMATION/CONTRIBUTION AGREEMENT
THIS AMENDMENT TO FORMATION CONTRIBUTION AGREEMENT ("Amendment") dated as
of the 13th day of October, 1997 by and among ROYALE INVESTMENTS, INC., a
Minnesota corporation ("Royale"), H/SIC CORPORATION, a Delaware corporation
("H/SIC"), STRATEGIC FACILITY INVESTORS, INC., a Delaware corporation
("Strategic"), the sole general partner of BLUE XXXX INVESTMENT COMPANY, L.P., a
Delaware limited partnership ("Blue Xxxx"), SOUTH BRUNSWICK INVESTMENT COMPANY,
LLC, a New Jersey limited liability company ("SBIC"), a general partner of SOUTH
BRUNSWICK INVESTORS, L.P., a Delaware limited partnership ("South Brunswick"),
COMCOURT INVESTMENT CORPORATION, a Pennsylvania corporation ("ComCourt
Corporation"), the sole general partner of COMCOURT INVESTORS, L.P., a Delaware
limited partnership ("Comcourt"), and GATEWAY XXXXXXX DEVELOPMENT CORPORATION, a
Pennsylvania corporation ("Gateway"), the sole general partner of 0000 XXXXX
XXXXX, L.P., a Pennsylvania limited partnership ("Flank Drive") (collectively,
the "Parties").
BACKGROUND
The Parties are party to a certain Formation/Contribution Agreement dated
as of September 7, 1997 (the "Formation Agreement"), pursuant to which the
Parties agreed to pursue a series of transactions, the general structure of
which is set forth in the Formation Agreement. Capitalized terms used herein and
not otherwise defined shall have the meanings set forth in the Formation
Agreement.
Section 26 and Exhibit "Lease Guarantee Agreement" of the Formation
Agreement together outline terms calling for the funding of certain escrows by
the partners of Comcourt and South Brunswick (the "Partners") at Closing. The
Parties have agreed to modify these provisions in a manner intended to
facilitate the overall transaction.
The Parties also desire to amend the definition of H/SIC Assets, Section
9(d)(9) and Exhibit "UPREIT Agreement Terms" of the Formation Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree to the following
modifications of the terms of the Formation Agreement:
1. On the Closing Date, the Partners shall, in lieu of two escrows designed
to subsidize the lease income of Comcourt and South Brunswick (the "Receiving
Partnerships"), fund, or cause to be funded, a single rent escrow account (the
"Rent Escrow"). The Rent Escrow shall be in the amount set forth in the Exhibit
"Lease Income" attached hereto and shall be deposited in an account to be held
and disbursed by Bankers Trust Company pursuant to the provisions of that
certain Credit Agreement to be executed by Royale, FCO, L.P., FCO Holdings,
Inc., Blue Xxxx, Comcourt, South Brunswick, and Flank Drive in connection with
the H/SIC Properties Indebtedness (the "Credit Agreement"). The Rent Escrow
shall be delivered in its entirety to the Receiving Partnerships pursuant to the
schedule set forth in Exhibit "Lease Income", and the partners shall not be
entitled to the return of any portion of the Rent Escrow.
-2-
2. On the Closing Date, the Partnerships (and not the Partners) shall, in
lieu of two escrows designed to finance certain tenant improvement obligations
of the Receiving Partnerships, fund a single tenant improvement escrow account
(the "Tenants Costs"). The TI Escrow shall be funded in the amount set forth in
the Exhibit "TI Escrow" attached hereto and shall be deposited in an account to
be held and disbursed by Bankers Trust Company pursuant to the provisions of the
Credit Agreement. The TI Escrow shall be delivered in its entirety to the
Receiving Partnerships pursuant to the schedule set forth in Exhibit "Tenants
Costs", and the Partners shall not be entitled to the return of any portion of
the TI Escrow.
3. The definition of H/SIC Assets in the Formation Agreement is amended to
read as follows:
"H/SIC Assets" shall mean H/SIC's furniture, fixtures, equipment and
proprietary assets.
4. Section 9(d)(9) of the Formation Agreement is hereby amended to read as
follows:
"(9) Except as otherwise provided in Section 7(f) and except to
the extent the UPREIT Agreement may provide for a shorter holding
period or for shorter holding periods, such Contributor acknowledges
and agrees that (A) the Common Units to be issued at Closing shall not
be exchangeable or exchanged for Royale Common Stock for a period of
thirteen (13) months from and after the date of Closing, and (B)
Preferred Units to be issued at Closing shall not be exchangeable or
exchanged for Royale Common Stock for a period of twenty-five (25)
months from and after the Closing Date. Common Units and Preferred
Units received by the Retained Partners at the Retained Interests
Closing shall not be subject to any holding period and the Retained
Partners shall have the right to exchange immediately for Royale
Common Stock such Common Units and Preferred Units received at the
Retained Interests Closing."
5. The paragraph captioned "Management Expenses" is hereby deleted from
Exhibit "UPREIT Agreement Terms" of the Formation Agreement. The Parties agree
that the Limited Partnership Agreement of FCO, L.P. to be executed at Closing
satisfies the requirements of Exhibit "UPREIT Agreement Terms."
6. This Amendment may not be amended except by an instrument in writing
signed by the parties to this Amendment.
7. This Amendment may be executed in several counterparts, each of which
will be deemed an original and all of which shall constitute one and the same
instrument and shall be governed in all respects by the laws of the Commonwealth
of Pennsylvania.
8. As amended by this Amendment, the Formation Agreement shall remain in
full force and effect.
-3-
9. This Amendment shall be binding upon, and shall be enforceable by and
inure to the benefit of, the parties named herein and their respective
successors.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.
H/SIC CORPORATION, a Delaware
corporation
By:
-------------------------------
STRATEGIC FACILITY INVESTORS, INC., a Delaware limited
partnership, the sole general partner of Blue Xxxx
Investment Company, L.P., a Delaware limited
partnership
By:
-------------------------------
SOUTH BRUNSWICK INVESTMENT COMPANY, LLC, a New Jersey
limited liability company, a general partner of South
Brunswick Investors, L.P., a Delaware limited
partnership
By:
-------------------------------
(SIGNATURES CONTINUED ON NEXT PAGE)
-4-
COMCOURT INVESTMENT CORPORATION, a Pennsylvania
corporation, the sole general partner of ComCourt
Investors, L.P., a Delaware limited partnership
By:
-------------------------------
GATEWAY XXXXXXX DEVELOPMENT CORPORATION, a
Pennsylvania corporation, the sole general partners
of 0000 Xxxxx Xxxxx, L.P.
By:
-------------------------------
ROYALE INVESTMENTS, INC., a
Minnesota corporation
By:
-------------------------------
Crown Advisors, Inc. and its shareholders join in this Amendment.
CROWN ADVISORS, INC.
By:
-------------------------------
SHAREHOLDERS:
-----------------------------------
Xxxxxx X. Xxxx
-----------------------------------
Xxxx X. Xxxxxxxx
-5-
Exhibit "TI Escrow"
Square Tenant Capital
Tenant Footage Improvements Commissions Improvements Total
000 Xxxxx Xxxx
Teleport Communications Group 87,550 291,805 103,723 30,000 425,528
Initial Lease - Existing Obligations
Teleport Communications Group 26,425 0 359,450 359,450
First Option Space - already exercised
Teleport Communication Group 28,410 1,136,400 335,790 70,000 1,542,190
Second Option Space - already exercised
General Property Improvements 104,00 104,000
------------------------------------------------------------------------------
Total Ridge Road 1,428,205 798,963 204,000 2,431,168
----------------------------------------------------------------------------
Commerce Court
Ernst & Young 17,499 197,091 98,617 295,708
Penn State/Xxxxxxxxx 17,665 247,310 143,565 390,875
Groundwater Sciences 4,702 8,528 0 8,528
Penn State/Xxxxxxxxx 1st Floor 7,763 33,500 15,053 48,553
----------------------------------------------------------------------------
Total Commerce Court 486,429 257,235 0 743,664
----------------------------------------------------------------------------
Conrail Building
PEMA 51,161 51,161
---------------------------------------------------------------------------
Total Conrail 51,161 0 0 51,161
---------------------------------------------------------------------------
TOTAL 1,965,795 1,056,198 204,000 3,225,993
==========================================================================
-6-
Schedule 5.6
Lease Income
Oct-97 Nov-97 Dec-97 Jan-98 Total
000 Xxxxx Xxxx
TCG Option Payment Refund 92,333 92,333
Rent 24,222 41,715 41,715 41,715 149,368
Reimbursements 574 988 988 988 3,537
-----------------------------------------------------------------------------
Total Income 24,796 42,703 42,703 135,036 245,238
Less Expense Reduction (1,636) (2,817) (2,817) (2,817)
(10,088)
Lease Income Reserve 23,160 39,886 39,886 132,218 235,150
=============================================================================
Commerce Court Oct-97 Nov-97 Dec-97 Thereafter Total
Rent - E &Y 4,140
Rent - Penn State 14,103
Rent - Penn State - 1st Fl 5,785
Rent - Vacant Space 321 553 553 10,695
-----------------------------------------------------------------------------
Total Income 34,349 553 553 10,695 46,150
Less Expense Reduction 0 0 0 0 0
-----------------------------------------------------------------------------
Lease Income Reserve 34,349 553 553 10,695 46,150
=============================================================================
=============================================================================
Total Rent Reserve 57,509 40,439 40,439 142,913 281,300
=============================================================================
