EXHIBIT 10.1
EXECUTION COPY
CONTRIBUTION AND SALE AGREEMENT
THIS CONTRIBUTION AND SALE AGREEMENT ("Agreement") is made and entered into
as of the 29 day of May, 2003 among XXXXXX XXXXX, an individual, having an
address at c/o The Berkshire Group, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 (the "GK Transferor"), XXXXXXX XXXXX, an individual, having an address at
c/o The Berkshire Group, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "DK
Transferor" and together with the GK Transferor, the "LP Transferors"), XXXXX
XX, INC., a Massachusetts corporation having an address at c/o The Berkshire
Group, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "GP Transferor" and
together with the LP Transferors, the "Transferors"), BERKSHIRE INCOME
REALTY-OP, L.P., a Delaware limited partnership having an address at c/o The
Berkshire Group, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the
"Partnership") and BIR-OP MCNAB SUB, L.L.C., a Delaware limited liability
company having an address at c/o The Berkshire Group, Xxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (the "Partnership Sub" and together with the Partnership,
the "Transferees"). Capitalized terms used herein but not otherwise defined
shall have the meanings given to them in Section 1.1.
W I T N E S S E T H:
WHEREAS, (i) the GK Transferor owns a 49.5% limited partnership interest in
McNab - K C 3 Limited Partnership, a Massachusetts limited partnership
("McNab"), (ii) the DK Transferor owns a 49.5% limited partnership interest in
McNab (the interest of the GK Transferor together with the interest of the DK
Transferor in McNab, the "LP Interests") and (iii) the GP Transferor owns a 1%
general partnership interest in McNab (the "GP Interest" and together with the
LP Interests, the "Partnership Interests").
WHEREAS, McNab owns certain real property known as Windward Lakes
Apartments and located at 0000 X.X. 00xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 as more
particularly described in Exhibit A annexed hereto and hereby made a part hereof
(such real property, together with the associated personal property, the
"Property");
WHEREAS, (i) the LP Transferors desire to contribute the LP Interests to
the Partnership in exchange for Partnership Units, and (ii) the GP Transferor
desires to transfer the GP Interest to the Partnership Sub in exchange for
Partnership Units, all on the terms and conditions hereinafter set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto,
intending legally to be bound, hereby agree as follows:
2
ARTICLE I
Definitions
1.1 Definitions. Except as otherwise herein expressly provided, and in
addition to any other definitions herein contained, the following terms and
phrases shall have the meanings set forth below:
"Additional Loan" shall mean that certain loan as evidenced by (i) that
certain Additional Loan Agreement (the "Additional Loan Agreement")dated
December 28, 1990 by the Transferors, as borrowers, and Xxxxx Government Income
Trust ("GIT"), as lender, (ii) that certain Additional Loan Note (the
"Additional Loan Note") in the original principal amount of $2,471,294.00 dated
December 28, 1990 made by the Transferors in favor of GIT, (iii) that certain
Pledge and Security Agreement dated December 28, 1990 by and between the DK
Transferor, as debtor, and GIT, as secured party, (iv) that certain Pledge and
Security Agreement dated December 28, 1990 by and between the GK Transferor, as
debtor, and GIT, as secured party, (v) that certain Pledge and Security
Agreement dated December 28, 1990 by and between the GP Transferor, as debtor,
and GIT, as secured party and (vi) that certain Modification Agreement dated as
of May __, 1997 by and among GIT, Love Funding Corporation, McNab, the GP
Transferor, the GK Transferor and the DK Transferor (the "Modification
Agreement").
"Affiliate Fee" shall have the meaning set forth in Section 5.2(B).
"Apportionment Amount" shall have the meaning set forth in Section 5.1.
"Closing" and "Closing Date" shall have the meanings set forth in Article
IV.
"Closing Documents" shall mean either the "LP Transferors Closing
Documents" as defined in Section 6.1, the "GP Transferor Closing Documents" as
defined in Section 6.2 or the "Partnership Closing Documents" as defined in
Section 6.3, without distinction between them.
"Consideration" shall have the meaning set forth in Section 3.1.
"Contracts" shall mean those service, maintenance and other contracts
relating to the use, maintenance and operation of the Property or any portion
thereof (including, without limitation, leases or installment sale agreements
for certain items of personal property, but excluding Leases), which are listed
and described on the schedule of Contracts attached as Exhibit C hereto (the
"Schedule of Contracts"), together with any additions thereto, modifications
thereof or substitutions therefor hereafter entered into in the ordinary course
of business and consistent with past practices of McNab.
"Cutoff Date" shall mean 11:59 p.m. on the day preceding the Closing Date.
3
"Development Fee" shall mean the $912,318 fee owed in connection with the
initial development of the Property.
"DK Transferor" shall have the meaning set forth in the Recitals to this
Agreement.
"Environmental Laws" shall mean the Resource Conservation and Recovery Act
(42 U.S.C. ss. 6901 et seq.), as amended by the Hazardous and Solid Waste
Amendments of 1984; the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. ss. 9601 et seq.), as amended by the Superfund
Amendments and Reauthorization Act of 1986; the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.); the Toxic Substance Control Act
(15 U.S.C. ss. 2601 et seq.; the Clean Air Act (42 U.S.C. ss. 9402 et seq.); the
Clean Water Act (33 U.S.C. ss. 1251 et seq.); the Federal Insecticide, Fungicide
and Rodenticide Act (7 U.S.C. ss. 136 et seq.); the Occupational Safety and
Health Act (29 U.S.C. ss. 651 et seq.); and all other applicable federal, state
and local environmental laws, (including, without limitation, obligations under
the common law), ordinances, orders, rules and regulations, as any of the
foregoing may have been amended, supplemented or supplanted prior to the Closing
Date, relating to regulation or control of hazardous, toxic or dangerous
substances, materials or wastes (collectively "Hazardous Materials") or their
handling, storage or disposal or to environmental health and safety.
"Environmental Reports" shall have the meaning set forth in Section 7.6(Q).
"Final Adjustment Date" shall have the meaning set forth in Section 5.1.
"GIT Mortgage" shall mean, collectively, that certain Multifamily Mortgage,
Assignment of Rents and Security Agreement dated December 28, 1990 granted by
McNab in favor of Xxxxx Governmental Income Trust, which GIT Mortgage encumbers
the Property, and that certain Subordinated Promissory Mortgage Note of even
date therewith made by McNab in favor of Xxxxx Government Income Trust..
"GK Transferor" shall have the meaning set forth in the Recitals to this
Agreement.
"GP Assignment" shall have the meaning set forth in Section 6.2(A).
"GP Interest" shall have the meaning set forth in the Recitals to this
Agreement.
"GP Transferor" shall have the meaning set forth in the Recitals to this
Agreement.
"GP Transferor Closing Documents" shall have the meaning set forth in
Section 6.2.
4
"knowledge" or "known" or grammatical variations thereof, when used in
reference to the Transferors, shall mean the actual knowledge (as opposed to
constructive, deemed or imputed knowledge), acquired without independent
investigation, of Xxxxx Xxxxx. Whenever reference is herein made to the receipt
of notice (written or oral) by the Transferors or McNab, as the case may be, the
same shall mean only a notice "known" to the Transferors as such term is defined
above.
"Leases" shall mean those existing leases, tenancies, concessions, licenses
and occupancies affecting or relating to the Property which are listed and
described on the schedule of Leases attached as Exhibit D hereto (the "Schedule
of Leases"), together with any additions thereto, modifications thereof or
substitutions therefor hereafter entered into in the ordinary course of business
and consistent with past practices of McNab.
"Liens" shall mean mortgages, deeds of trust, liens, encumbrances, security
interests, leases, easements, encroachments, covenants, restrictions, leases and
other title and survey defects.
"Limited Partnership Agreement" shall mean the Agreement of Limited
Partnership of the Partnership dated as of July 22, 2002 as the same may be
amended or restated from time to time.
"Losses" shall have the meaning set forth in Section 7.10(A).
"LP Consideration" shall have the meaning set forth in Section 3.1(A).
"LP Interests" shall have the meaning set forth in the Recitals hereto.
"LP Transferors Closing Documents" shall have the meaning set forth in
Section 6.1.
"Management Agreement" shall mean that certain management agreement, and
all amendments thereto, dated January 1, 2002, between the Manager and McNab
with respect to the Property.
"Manager" shall mean BRI OP Limited Partnership a Delaware limited
partnership.
"McNab" shall have the meaning set forth in the Recitals hereto.
"McNab Partnership Agreement" shall mean that certain Agreement of Limited
Partnership of McNab dated as of February 20, 1990, as amended by First
Amendment dated as of August 3, 1990, Second Amendment dated as of December 11,
1990, Third Amendment dated as of November 23, 1998 and Fourth Amendment dated
as of March 24, 2000.
5
"Mortgage" shall mean the fee mortgage or deed of trust encumbering the
Property, which Mortgage is more particularly described in the Schedule of
Mortgage attached as Exhibit E hereto (the "Schedule of Mortgage").
"Net Contribution Amount" shall mean the dollar amount (which may be a
negative amount) determined by subtracting from $19,000,000 the sum of (i)
principal amount of the Mortgage as of the Closing Date, (ii) all amounts
necessary to satisfy the documents securing and evidencing the Additional Loan
and GIT Mortgage in full as of the Closing Date (including the Interest Rebate
(as defined in the Modification Agreement) pursuant to Section 2 of the
Modification Agreement).
"Notices" shall mean all notices, demands or requests made pursuant to,
under or by virtue of this Agreement.
"Partnership Closing Documents" shall have the meaning set forth in Section
6.3.
"Partnership Interest" shall have the meaning set forth in the Recitals to
this Agreement.
"Partnership Sub" shall have the meaning set forth in the Recitals to this
Agreement.
"Partnership Sub Closing Documents" shall have the meaning set forth in
Section 6.4.
"Partnership Unit" shall mean a common limited partnership unit in the
Partnership.
"Permitted Exceptions" shall mean (i) all encumbrances on title (not
including mortgages, deeds of trusts, mechanics' liens, judgment liens and other
monetary liens) which would not have a material adverse effect on the business,
operation or current use of the Property; (ii) the Mortgage; and (iii) the GIT
Mortgage. Without limiting the foregoing, Permitted Exceptions shall include all
Leases.
"Property" shall have the meaning set forth in the Recitals hereto.
"Radon Remediation Proposal" shall mean that certain Radon Mitigation
Proposal dated May 14, 2003 from Random Mitigation Services to Berkshire Realty
Holdings with respect to the Property.
"Rent Arrearages" shall mean Rents due and payable prior to but unpaid as
of the Cutoff Date, but shall not include additional amounts due after the
Closing Date by reason of year-end or other adjustments provided for in Leases.
"Rents" shall mean fixed, additional and other amounts payable to McNab by
the tenant under a Lease.
6
"Schedule of Rent Arrearages" shall have the meaning set forth in Section
5.10.
"Schedule of Leases" shall have the meaning set forth in Section 7.6(B).
"Service Contracts" shall have the meaning set forth in Section 7.6(M).
"Shortfall Amount" shall have the meaning set forth in Section 6.1(F).
"Tenants" shall mean tenants, subtenants and/or occupants under the Leases.
"Transferees" shall have the meaning set forth in the Recitals to this
Agreement.
"Transferors" shall have the meaning set forth in the Recitals to this
Agreement.
1.2 References. All references in this Agreement to particular Sections or
Articles shall, unless expressly otherwise provided, or unless the context
otherwise requires, be deemed to refer to the specific Sections or Articles in
this Agreement, and any references to "Exhibit" shall, unless otherwise
specified, refer to one of the Exhibits annexed hereto and, by such reference,
made a part hereof. The words "herein," "hereof," "hereunder," "hereinafter,"
"hereinabove" and other words of similar import refer to this Agreement as a
whole and not to any particular section, subsection or article hereof.
1.3 Gender and Number. Words of any gender shall include the other gender
and the neuter. Whenever the singular is used, the same shall include the plural
wherever appropriate, and whenever the plural is used, the same shall also
include the singular wherever appropriate.
ARTICLE II
Contribution and Purchase and Sale
2.1 Covenant. In consideration of the mutual covenants and agreements
hereinafter set forth and subject to and in accordance with the terms,
provisions, covenants and conditions more particularly set forth in this
Agreement, (i) the LP Transferors agree to contribute all of the LP Interests to
the Partnership on the Closing Date, and the Partnership agrees to accept such
LP Interests from the LP Transferors, and to assume all obligations of the LP
Transferors under the McNab Partnership Agreement accruing from and after the
Closing Date and (ii) the GP Transferor agrees to transfer all of the GP
Interest to the Partnership Sub, and the Partnership Sub agrees to accept such
GP Interest from the GP Transferor, and to assume all of the obligations of the
GP Transferor under the McNab Partnership Agreement. accruing from and after the
Closing Date
7
2.2 "As Is".
(A) The Partnership agrees to accept the LP Interests without
representation or warranty (including any representation or warranty
relating to the Property or the condition thereof) from the LP Transferors
or any other person or entity, except as may be expressly set forth in this
Agreement.
(B) The Partnership Sub agrees to accept the GP Interest without
representation or warranty (including any representation or warranty
relating to the Property or the condition thereof) from the GP Transferor
or any other person or entity, except as may be expressly set forth in this
Agreement.
ARTICLE III
Consideration
3.1 Consideration.
(A) The LP Transferors and the Partnership agree that the
consideration for the LP Interests to be contributed by the LP Transferors
(the "LP Consideration") to the Partnership pursuant to this Agreement
shall be that number of Partnership Units determined by computing the
product of (i) the LP Transferors' aggregate percentage ownership interest
in McNab (i.e., 99%) and (ii) an amount equal to (x) the Net Contribution
Amount (as adjusted pursuant to Article V) minus the outstanding principal
amount of the Additional Loan Note on the Closing Date divided by (y) $10
(it being agreed that the number of Partnership Units to be issued as so
determined shall be rounded to the nearest whole number). The LP
Consideration is to be allocated 50% to each of the LP Transferors.
(B) The GP Transferor and the Partnership Sub agree that the
consideration for the GP Interest to be transferred by the GP Transferor
(the "GP Consideration" and, together with the LP Consideration, the
"Consideration") to the Partnership Sub pursuant to this Agreement shall be
that number of Partnership Units determined by computing the product of (i)
the GP Transferor's percentage ownership interest in McNab (i.e., 1%) and
(ii) an amount equal to (x) the Net Contribution Amount (as adjusted
pursuant to Article V) minus the outstanding principal amount of the
Additional Loan Note on the Closing Date divided by (y) $10 (it being
agreed that the number of Partnership Units to be issued as so determined
shall be rounded to the nearest whole numbers).
3.2 Assumption of Obligations.
(A) Effective as of the Closing Date, the Partnership will assume all
of the obligations of the LP Transferors under the McNab Partnership
Agreement to the extent accruing after the Closing, and all of the
obligations of the LP Transferors with respect to the Additional Loan.
8
(B) Effective as of the Closing Date, the Partnership Sub will assume
all of the obligations of GP Transferor under the McNab Partnership
Agreement, to the extent accruing after the Closing, and all of the
obligations of the GP Transferor with respect to the Additional Loan.
ARTICLE IV
Closing Date
The Closing shall take place either (i) on May 27, 2003 or (ii) on such
other date as shall be agreed to by the parties hereto, at such location as the
Partnership shall designate. The consummation of the transactions contemplated
hereby shall be referred to herein as the "Closing" and the date on which the
Closing occurs shall be herein referred to as the "Closing Date."
ARTICLE V
Apportionments and Payments
5.1 Items to Be Apportioned. The following items with respect to the
Property shall be apportioned (i) between the LP Transferors and the Partnership
at the Closing as of the Cutoff Date and (ii) between the GP Transferor and the
Partnership Sub at the Closing as of the Cutoff Date, and each Transferor's
share of the net positive or negative amount thereof (the "Apportionment
Amount") (i.e., 49.5% in the case of GK Transferor, 49.5% in the case of DK
Transferor and 1% in the case of GP Transferor) shall be reflected by increasing
or decreasing, as applicable, such Transferors' share of the Net Contribution
Amount by such Transferors' share of the Apportionment Amount, subject to
further adjustments (to be computed based on the value of the Partnership Units
at such time, as agreed to by the Transferors and the Transferees, and paid by
the Transferors or the Transferees, as applicable, to the other of them in the
form of additional Partnership Units (rounded upward to the nearest whole
Partnership Unit)), if required, up to six (6) months thereafter (the "Final
Adjustment Date") as hereinafter provided:
(A) real property taxes and assessments (or installments thereof) on
the basis of the fiscal year for which payable;
(B) water rates and charges;
(C) sewer taxes and rents;
(D) interest and other charges payable under the Additional Loan;
(E) interest and other charges payable under the Mortgage;
9
(F) annual permit, license and inspection fees, if any, on the basis
of the fiscal year for which levied;
(G) fuel oil and liquid propane gas, if any, at the cost per gallon or
cubic foot most recently charged to McNab with respect to the Property,
based on the supplier's measurements thereof, plus sales taxes thereon;
(H) Rents as and when collected;
(I) amounts payable by McNab under the Contracts and the Management
Agreement including, without limitation, reimbursements due to, or accrued
as of, the Cutoff Date for salaries, wages and other employee benefits and
charges (including accrued vacation pay, pension contributions and other
similar benefits) payable or accrued to on-site employees of the Property;
and
(J) except as may be set forth below, all other items customarily
apportioned in connection with the transfer of similar properties similarly
located.
5.2 Credits and Deductions.
(A) There shall be a credit against the Net Contribution Amount in an
amount equal to the amount of any cash held by McNab.
(B) There shall be deducted from the Net Contribution Amount the
following amounts:
(1) the Development Fee; and
(2) $353,864 on account of fees owed to affiliates of the LP
Transferors for work and services performed at the Property (the
"Affiliate Fee").
5.3 Re-Proration of Impositions. If the real property taxes, water rates
and charges and sewer taxes and rents relating to the Property are not finally
fixed before the Cutoff Date, the apportionments thereof made at the Closing
shall be based upon the real property taxes, water rates and charges and sewer
taxes and rents assessed for the preceding fiscal year or applicable billing
period and, after the real property taxes, water rates and charges and sewer
taxes and rents are finally fixed, the Transferors and the Transferees shall
make a recalculation of the apportionment of the same, and the Transferors or
the Transferees, as the case may be, shall promptly make an appropriate
settlement with the other based upon such recalculation.
5.4 Utilities. Water rates and charges, sewer taxes and rents and gas and
electricity charges for the Property shall be prorated pursuant to Section 5.1,
based upon the per diem charges obtained by using the most recent period for
which such readings shall then be available. On the subsequent taking of actual
readings, the apportionment of such charges shall be recalculated and the
apportionment between the Transferors and the Transferees readjusted and settled
based upon such readings.
10
5.5 Rent Arrearages. Rents collected or received from a Tenant which, as of
the Closing Date, was in arrears in the payment of Rents, shall be applied as
follows: (i) in the case of Rents received from a Tenant which, at the Cutoff
Date, was not more than two (2) months in arrears in the payment of Rents, the
Rents so collected shall be applied first to such arrears and then to any other
amounts which may then be due after the Cutoff Date; and (ii) in the case of
Rents received from a Tenant which, at the Cutoff Date, was more than two (2)
months in arrears in the payment of Rents, the Rents so collected shall first be
applied to any amounts due after the Cutoff Date and any balance remaining shall
be applied to the arrears. All costs and expenses incurred by McNab in bringing
any action or proceeding to collect Rent Arrearages from any Tenant who is
delinquent on the Closing Date shall be borne by the Transferees and the
Transferors in proportion to the collected amounts (or the share thereof) to
which each may be entitled hereunder and the Transferors' portion may be
deducted from the Apportionment Amount. The Transferors shall have no right with
respect to Rent Arrearages collected after the Final Adjustment Date; provided,
however, if McNab shall institute a legal action or litigation to collect any
portion of such Rent Arrearages after the Closing Date and prior to the Final
Adjustment Date, the Transferors shall retain the right to receive its share of
such Rent Arrearages, net of litigation costs and expenses, if collected.
5.6 Security Deposits. The Schedule of Leases, attached hereto as Exhibit
H, includes a schedule setting forth the unapplied portion of any security
deposits which have been deposited with McNab or its agents (or with any
predecessors in interest to McNab with respect to the Property to the extent
said predecessors have turned over security deposits to McNab or given McNab a
credit therefor) by any Tenants. At the Closing, the Net Contribution Amount
shall be reduced by the amount of the aggregate amount of the security deposits
set forth on such schedule which are no longer on deposit with McNab. At the
Closing, the Net Contribution Amount shall be increased by the aggregate amount
of interest accrued prior to the Closing Date on any security deposits held by
McNab except to the extent such interest is required to be paid to any Tenants
pursuant to their respective Leases.
5.7 Reserves and Deposits. At the Closing, the Net Contribution Amount
shall be increased by the amount of any reserves, escrow deposits or accruals
made with, or held by, the holders of the Mortgage, Additional Loan or any
insurance carriers, together with all interest earned thereon, if any, which is
payable to the Transferors or McNab, for real property taxes and assessments,
insurance premiums or other items.
5.8 Settlement of Adjustments.
(A) On or before the Final Adjustment Date, the adjustments made as of
the Closing Date shall be further adjusted for any differences between the
actual apportionment or adjustment based on calculations as of the Cutoff
Date and the amount thereof estimated on the Closing Date and the net
amount of any such adjustments shall be paid in the form of Partnership
Units, as provided in the introductory
11
paragraph of Section 5.1, to the Transferees or to the Transferors. Any
payments which are due on or after the Final Adjustment Date and are
attributable to periods on or before the Cutoff Date will be apportioned
within ninety (90) days of receipt of such payment and the net amount of
any such adjustments shall be paid to the Transferees or to the Transferors
in the form of Partnership Units.
(B) Any errors or omissions in computing apportionments at the Closing
and from time to time after Closing shall be corrected promptly after such
discovery.
5.9 Inspection of Books and Records. Prior to Closing and upon request of
the Transferees , the Transferors shall from time to time make available for
inspection by the Transferees or their respective designees, at the place or
places where they are regularly kept and maintained, during reasonable business
hours, the records and books of account relating to the Property and, during
such inspection, shall permit extracts and copies to be made from said records
and books of account, at the Transferees' expense. The Transferors shall have
the right from time to time subsequent to the Closing to examine and audit the
records and books of account relating to the Property.
5.10 Schedule of Rent Arrearages. Attached as Exhibit F hereto is a
schedule of Rent Arrearages (the "Schedule of Rent Arrearages"), which schedule
sets forth each Tenant which is in arrears under a Lease and the items of Rents
with respect to which such Tenant is in arrears as of the Cutoff Date, the
amount of each item and the period of such arrearage.
5.11 Survival. Unless otherwise provided in, or reasonably inferable from,
this Article V, the provisions of this Article V shall survive until thirty days
after, or reasonably inferable from, the Final Adjustment Date except with
respect to claims made prior to the end of such thirty-day period.
ARTICLE VI
Closing Documents
6.1 LP Transferors Closing Documents. At the Closing (or subsequent thereto
with respect to documents contemplated by subsection (G) below), and
simultaneously with the issuance to the LP Transferors of the Partnership Units
by the Partnership (plus payment of any sums which the Partnership has agreed
herein to pay to the LP Transferors at the Closing, but less any credits to
which the Partnership may be entitled hereunder), and simultaneously with the
Partnership's delivery of all of the Partnership Closing Documents, the LP
Transferors shall deliver, or cause to be delivered, the following documents
(herein referred to collectively as the "LP Transferors Closing Documents"):
(A) An instrument ("LP Assignment") in form reasonably satisfactory to
the LP Transferors and the Partnership, assigning the LP Interests to the
12
Partnership (but without warranty or representation, it being agreed that
all representations and warranties with respect to the LP Interests are set
forth in this Agreement).
(B) An affidavit from each of the LP Transferors, in each case stating
its U.S. taxpayer identification number or social security number and that
it is not a "foreign person" as defined by Internal Revenue Code section
1445(f)(3).
(C) An amendment to the limited partnership agreement of McNab,
evidencing the withdrawal of each of the LP Transferors, and the admission
of the Partnership, as the sole limited partners of McNab.
(D) An updated set of Schedules C, D, F and H to this Agreement.
(E) An instrument in form reasonably satisfactory to the LP
Transferors and the Partnership, assigning to the Partnership all of the LP
Transferors' right, title and interest in respect of the Additional Loan.
(F) In the event the Net Contribution Amount (as adjusted pursuant to
Article V) minus the outstanding principal amount of the Additional Loan
Note on the Closing Date results in a negative dollar amount (such negative
amount, the "Shortfall Amount"), the LP Transferors shall contribute the
Shortfall Amount to McNab in cash.
(G) Such other documents, instruments or agreements which the LP
Transferors are required to deliver to the Partnership pursuant to the
provisions of this Agreement or which the Partnership may, either at or
subsequent to the Closing, reasonably deem necessary in order to consummate
the transactions contemplated by this Agreement.
6.2 GP Transferor Closing Documents. At the Closing (or subsequent thereto
with respect to documents contemplated by subsection (D) below), and
simultaneously with the transfer to the GP Transferor of the Partnership Units
by the Partnership Sub, (plus payment of any sums which the Partnership Sub has
agreed herein to pay to the GP Transferor at the Closing, but less any credits
to which the Partnership Sub may be entitled hereunder) and simultaneously with
the Partnership Sub's delivery of all of the Partnership Sub Closing Documents,
the GP Transferor shall deliver, or cause to be delivered, the following
documents to the relevant parties (herein referred to collectively as the "GP
Transferor Closing Documents"):
(A) An instrument ("GP Assignment") in form reasonably satisfactory to
the GP Transferor and the Partnership Sub, assigning the GP Interest to the
Partnership Sub (but without warranty or representation, it being agreed
that all representations and warranties with respect to the GP Interest are
set forth in this Agreement).
13
(B) An amendment to both of the limited partnership certificate and
the limited partnership agreement of McNab, evidencing the withdrawal of
the GP Transferor, and the admission of the Partnership Sub, as the sole
general partner of McNab.
(C) An instrument in form reasonably satisfactory to the GP Transferor
and the Partnership Sub, assigning to the Partnership Sub all of the GP
Transferor's right, title and interest in respect of the Additional Loan.
(D) Such other documents, instruments or agreements which the GP
Transferor is required to deliver to the Partnership Sub pursuant to the
provisions of this Agreement or which the Partnership or Partnership Sub
may, either at or subsequent to the Closing, reasonably deem necessary in
order to consummate the transactions contemplated by this Agreement.
6.3 Partnership Closing Documents. At the Closing (or subsequent thereto
with respect to documents contemplated by subsection (C) below), simultaneously
with the LP Transferors' delivery of the LP Transferors Closing Documents, the
Partnership shall deliver to the LP Transferors (and with respect to the
document contemplated by subsection (A) below, to the GP Transferor) the
following documents (herein referred to collectively as the "Partnership Closing
Documents"):
(A) An Amendment to the Amended and Restated Agreement of Limited
Partnership of the Partnership, executed by the partners thereof (which
execution may be, in the case of the existing limited partners of the
Partnership, by power of attorney as provided in said Amended and Restated
Agreement of Limited Partnership) to be executed by the Transferors and
providing for the issuance to the LP Transferors and the GP Transferor of
the Partnership Units which the LP Transferors and the GP Transferor are to
receive pursuant to the terms of this Agreement.
(B) An executed counterpart of the instrument referred to in Section
6.1(A) above, evidencing the Partnership's assumption of the obligations of
the LP Transferors under the McNab Partnership Agreement.
(C) An executed counterpart of the instrument referred to in Section
6.1(E), evidencing the Partnership's assumption of the obligations of the
LP Transferors in respect of the Additional Loan.
(D) An instrument in form reasonably satisfactory to the Transferor
and the Partnership, evidencing the Partnership's assumption of the
personal obligations of the Transferors, or any of them, in respect of the
loan secured by the Mortgage.
(E) A certified copy of (i) resolutions of the general partner of the
Partnership, authorizing the entering into of the transactions contemplated
by this Agreement by the Partnership and Partnership Sub and (ii) an
incumbency certificate evidencing the authority of the persons executing
the various Closing documents on
14
behalf of the Partnership and the Partnership Sub, all in form
reasonably acceptable to the Transferors.
(F) Such other documents, instruments or agreements, if any, which the
Partnership may be required to deliver to the LP Transferors pursuant to
the provisions of this Agreement or which the LP Transferors may, either at
or subsequent to the Closing reasonably deem necessary to consummate the
transactions contemplated by this Agreement.
6.4 Partnership Sub Closing Documents. At the Closing (or subsequent
thereto with respect to the documents contemplated by subsection (C) below),
simultaneously with the GP Transferor's delivery of the GP Transferor Closing
Documents, Partnership Sub shall deliver to the GP Transferor the following
documents (the "Partnership Sub Transferor Closing Documents"):
(A) An executed counterpart of the GP Assignment, evidencing
Partnership Sub's assumption of the obligations of the GP Transferor under
the McNab Partnership Agreement;
(B) An executed counterpart of the instruments referred to in Section
6.2(B); and
(C) An executed counterpart of the instrument referred to in Section
6.2(C), evidencing the Partnership Sub's assumption of the obligations of
the GP Transferor in respect of the Additional Loan; and
(D) Such other documents, instruments or agreements which Partnership
Sub is required to deliver to the GP Transferor pursuant to the provisions
of this Agreement or which the Transferors may, either at or subsequent to
the Closing, reasonably deem necessary in order to consummate the
transactions contemplated by this Agreement.
6.5 Further Assurances. The Transferors and the Transferees agree, at any
time and from time to time after the Closing, to execute, acknowledge where
appropriate and deliver such further instruments and documents and to take such
other action as the other of them may reasonably request in order to carry out
the intent and purpose of this Agreement. The provisions of this Section 6.5
shall survive the Closing.
ARTICLE VII
Representations and Warranties; Conditions to Closing
7.1 Investment Representations. Each of the Transferors hereby acknowledges
that it (i) has been given full and complete access to the Partnership and its
management in connection with this Agreement and the transactions contemplated
hereby, (ii) has had the opportunity to review all documents relevant to its
decision to enter into this Agreement, and (iii) has had the opportunity to ask
questions of the
15
Partnership and its management concerning its investment in the Partnership and
the transactions contemplated hereby. The Transferors acknowledge that they
understand that the Partnership Units to be acquired hereunder will not be
registered under the Securities Act of 1933, as amended, in reliance upon the
exemption afforded by Section 4(2) thereof for transactions by an issuer not
involving any public offering, and will not be registered or qualified under any
applicable state securities laws. The Transferors represent that (i) they are
acquiring such Partnership Units for investment only and not with any view
toward distribution thereof in violation of any applicable securities laws, and
it will not sell or otherwise dispose of such Partnership Units except in
compliance with the registration requirements or exemption provisions of any
applicable securities laws and in accordance with the terms of the Limited
Partnership Agreement, (ii) their economic circumstances are such that they are
able to bear all risks of the investment in the Partnership Units for an
indefinite period of time, including the risk of a complete loss of its
investment in the Partnership Units, (iii) they have knowledge and experience in
financial and business matters sufficient to evaluate the risks of investment in
the Partnership Units, and (iv) they have consulted with its own counsel and tax
advisors, to the extent deemed necessary by it, as to all legal and taxation
matters covered by this Agreement and have not relied upon the Partnership for
any explanation of the application of the various United States or state
securities laws or tax laws with regard to its acquisition of the Partnership
Units. The Transferors further acknowledge and represent that they have made
their own independent investigation of the Partnership and the business proposed
to be conducted by the Partnership. Such investigation does not affect the
Transferors' right to rely on the representations and warranties of the
Partnership contained in this Agreement and the Limited Partnership Agreement.
The representations and warranties contained in this Section shall survive the
Closing without limitation of time.
7.2 Partnership and Partnership Sub Acknowledgments. The Partnership and
the Partnership Sub represent, warrant, acknowledge and agree that (a) they have
made an independent investigation and examination of the Property (and all
matters related thereto), are familiar with the physical condition of the
Property, and have reviewed (i) the Leases, (ii) the Mortgage, (iii) the
Additional Loan, (iv) the Contracts and (v) the Environmental Reports and (b)
except as, and solely to the extent, expressly set forth in this Agreement,
neither the Transferors nor any officer, employee, partner, agent or attorney of
either of the Transferors has made any oral or written representations,
warranties or statements of any nature or kind whatsoever to the Partnership or
Partnership Sub, or its officers, employees, partners, agents or attorneys,
whether express or implied, with respect to the Property, or McNab, except as,
and solely to the extent, expressly set forth in this Agreement. Such
examination does not affect the Partnership's right to rely on the
representations and warranties contained in this Agreement. The Partnership and
Partnership Sub further agree that the Transferors shall not be bound in any
manner whatsoever by any guarantees, promises, projections, operating
statements, set-ups or other information pertaining to the Property, or McNab
made, furnished or claimed to have been made or furnished by the Transferors or
McNab or any other person or entity, including, without limitation, any officer,
trustee, partner, employee, agent, attorney or other person representing or
purporting to represent the
16
Transferors or McNab or any other person or entity, whether orally or in
writing, except as, and solely to the extent, expressly set forth in this
Agreement. The representations and warranties contained in this Section shall
survive the Closing without limitation of time.
7.3 Partnership and Partnership Sub Representations and Warranties. In
addition to any other representations and warranties of the Partnership herein
contained, the Partnership and Partnership Sub further represent and warrant to
the Transferors as follows:
(A) The Partnership is a limited partnership and Partnership Sub is a
limited liability company, in each case duly organized under the laws of
the State of Delaware with full right, power and authority to fulfill all
of its obligations hereunder or as herein contemplated.
(B) The execution and delivery by the Partnership of this Agreement
and the Partnership Closing Documents and the consummation by the
Partnership of the transactions contemplated by this Agreement have been
duly authorized by all requisite action of the Partnership and no other
action or approval is required to enable the Partnership to consummate the
transactions contemplated by this Agreement and the Partnership Closing
Documents in accordance with the terms hereof and thereof. This Agreement
and the Partnership Closing Documents have been duly executed and delivered
by the Partnership, or an authorized representative of the Partnership, and
constitute a legal, valid and binding obligation of the Partnership,
enforceable against the Partnership in accordance with the terms hereof and
thereof, except as the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally or by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(C) No consent, waiver, approval or authorization of, or filing,
registration or qualification with, or notice to, any governmental unit or
authority or any other person or entity (in each case, a "consent") is
required to be made, obtained or given by the Partnership in connection
with the execution, delivery and performance of this Agreement by the
Partnership.
(D) Assuming compliance with the terms of this Agreement and the
Limited Partnership Agreement by the parties thereto other than the
Partnership, none of the execution, delivery or performance of this
Agreement by the Partnership does or will, with or without the giving of
notice, lapse of time or both, violate, conflict with or constitute a
default under any term or condition of (i) the Limited Partnership
Agreement or any agreement to which the Partnership is a party or by which
the Partnership is bound whether or not such agreement relates specifically
to the Property, or (ii) any terms or provisions of any judgment, decree,
order, statute, injunction, rule or regulation of a governmental unit
applicable to the Partnership.
17
(E) The Partnership has furnished the Transferors with true, correct
and complete copies of the Limited Partnership Agreement with all
amendments thereto.
(F) The representations and warranties made with respect to the
Partnership in Section 7.3(B), (C) and (D) are true and correct with
respect to Partnership Sub, except that for purposes of said Section (B),
the term "Partnership", as used in such section, shall be deemed to refer
to Partnership Sub, the term "Partnership Closing Documents" as used in
such section, shall be deemed to refer to the Partnership Sub Closing
Documents and references in such section to the Limited Partnership
Agreement shall be deemed references to the organizational documents of the
Partnership Sub.
7.4 LP Transferors' Representations and Warranties. In addition to any
other representations and warranties of the LP Transferors herein contained, the
LP Transferors represent and warrant to the Partnership as follows:
(A) None of the LP Transferors is a "foreign person" within the
meaning of sections 1445(f) of the Internal Revenue Code.
(B) Delivery. The LP Transferors have furnished the Partnership with
true, correct and complete copies of the McNab Partnership Agreement, which
agreement is in full force and effect, and no party to such agreement is in
default in any material respect thereunder.
(C) LP Interests. The LP Transferors each own their LP Interests free
and clear of all Liens other than liens securing the Additional Loan. The
statements in the first two "WHEREAS" clauses hereof are true and correct
as to the LP Transferors and the LP Interests.
(D) Enforceability. This Agreement and the LP Transferors Closing
Documents have been duly and validly executed and delivered by the LP
Transferors. This Agreement and the LP Transferors Closing Documents are
valid and binding upon, and enforceable against, the LP Transferors in
accordance with their terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting creditors' rights generally,
or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
7.5 GP Transferor Representations and Warranties. In addition to any other
representations and warranties of the GP Transferor herein contained, the GP
Transferor represents and warrants to the Partnership Sub as follows:
(A) Authority. The GP Transferor has been duly organized and is
validly existing as a Massachusetts corporation with all requisite power
and authority to own the GP Interest and to conduct the business in which
it is engaged and to enter into and perform its obligations under this
Agreement, the GP
18
Transferor Closing Documents and any other documents contemplated by
this Agreement. The GP Transferor is not a "foreign person" within the
meaning of sections 1445(f) of the Internal Revenue Code.
(B) Ownership of the GP Interest. The GP Transferor owns the GP
Interest free and clear of all Liens other than liens securing the
Additional Loan. The statements in the first two "WHEREAS" clauses hereof
are true and correct.
(C) Enforceability. The execution, delivery and performance of this
Agreement and the GP Transferor Closing Documents by the GP Transferor have
been duly and validly authorized by all necessary actions of the GP
Transferor. This Agreement and the GP Transferor Closing Documents have
been duly and validly executed and delivered by the GP Transferor. This
Agreement and the GP Transferor Closing Documents are valid and binding
upon, and enforceable against, the GP Transferor in accordance with their
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium
or similar laws affecting creditors' rights generally, or by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
7.6 Transferors' Joint Representations and Warranties. In addition to any
other representations and warranties of the Transferors herein contained, the
Transferors represent and warrant to the Partnership and Partnership Sub as
follows:
(A) Conflicts. The execution and delivery of the Agreement and the
consummation of the transactions contemplated hereby by the Transferors
does not and will not (i) violate or conflict with the organizational
documents of McNab or the GP Transferor, (ii) violate or conflict with any
judgment, decree or order of any court applicable to or affecting any of
the Transferors or McNab, (iii) assuming all required consents of third
parties are obtained, breach the provisions of, or constitute a default
under, any contract, mortgage, loan agreement, note, lease, joint venture
or partnership agreement or other instrument or agreement obligation to
which any of the Transferors or McNab are a party or by which any of the
Transferors or McNab are bound, (iv) violate or conflict with any law or
governmental regulation or permit applicable to any Transferor or McNab, or
(v) require any authorization, approval, consent, license, exemption of or
filing or registration (in each case, a "consent") with any court or
governmental department, commission, board, bureau, agency or
instrumentality, foreign or domestic or any other person or entity, which
consents have been obtained and true and correct copies of which consents
have been made available to the Partnership.
(B) Leases. The Schedule of Leases (the "Schedule of Leases") sets
forth with respect to each Lease (whether or not the terms of each Lease
has commenced as of the date of such Schedule) (i) the name of the Tenant
under each Lease, (ii) the commencement date of such Lease, (iii) the term
of such Lease and (iv) the annual rent payable by such Tenant. This
Schedule of Leases is complete and accurate in all material respects, and
originals and/or true and complete copies of each such Lease, each
modification, amendment, extension and assignment thereof, have heretofore
either been furnished to the Partnership or been made available to the
Partnership for
19
inspection. To the Transferors' knowledge, there are no other leases
affecting any portion of the Property except as set forth on the Schedule
of Leases and except for those, if any, entered into after the date of such
Schedule in the ordinary course of business consistent with past practices
of McNab. No Tenant has paid more than one month's rent or other charges in
advance, except for security deposits.
(C) Modification of Leases. The Leases are unmodified and in full
force and effect as of the date of the Schedules of Leases (except for
those designated on the Schedule of Leases as "out for signature"), and
constitute the sole agreements and understandings (written or oral) between
McNab and the parties thereto. There have been no changes in the Leases
since the date of such Schedules except for those made in the ordinary
course of business.
(D) Lease Defaults. Except as set forth in the Schedule of Rent
Arrearages and the schedule of litigation attached as Exhibit G hereto (the
"Schedule of Litigation"), no action, proceeding or arbitration is pending
in respect of any Lease, the resolution of which would have a material
adverse effect on any of the Property, and except as set forth in the
Schedule of Rent Arrearages, (i) the Transferors have no actual knowledge
of any breaches of or defaults under any Lease by the Tenant or landlord
thereunder which would have a material adverse effect on the Property, and
(ii) all payments payable by or due to McNab under any Lease to the date of
such Schedule have been made and received without any material default
thereunder or, to the Transferors' knowledge, without any defenses,
counterclaims, offsets, concessions, rebates, credits or allowances having
been claimed or given.
(E) Security Deposits. All security deposits that have been paid to
McNab by or on behalf of any of the Tenants are as set forth in Exhibit H.
(F) Violations. Neither any of the Transferors nor McNab has received
written notice from any governmental authority claiming or noting with
respect to the Property any violation of any federal or local law,
regulation, requirement or ordinance, which violation remains uncured,
except as set forth in Exhibit I.
(G) Liabilities. Except for (i) obligations and liabilities referred
to, or contained in or arising under agreements referred to, in this
Agreement (including without limitation the Leases, the Mortgage, the
Service Contracts, the McNab Partnership Agreement and the other
organizational documents of McNab), including obligations and liabilities
for which adjustments are being made under Article V, (ii) matters
affecting title to the Property and (including real estate taxes and water
and sewer rents not yet due and payable), (iii) requirements of law
generally applicable to the Property and/or McNab (including laws imposing
taxes, assessments or other charges or the submission of reports or returns
with respect thereto), (iv) items set forth in the financial statements
described in Section 7.6(K) hereof, (v) matters which are the subject of
the litigations listed (or not required to be listed) in Exhibit G, (vi)
other liabilities and obligations arising in the ordinary course of
business and (vii) items set forth on Exhibit J, to the best of the
Transferors' knowledge, McNab does not have any liabilities or obligations.
20
(H) Business Purpose. McNab has not engaged in any activity or
business other than the acquisition, ownership, development, financing,
leasing and management of the Property or interests therein and actions
incidental thereto.
(I) Employees. McNab has no employees other than those set forth on
Exhibit K, for whom all applicable governmental filings and tax payments
have been made. There are no employment, union, collective bargaining, or
similar agreements or arrangements between McNab and any employees; and, to
the Transferors' knowledge and, except as set forth on Exhibit L, there are
no pending claims which have been asserted in writing or any threatened
claim against McNab by or on behalf of any employees whose employment
relates to the Property.
(J) Tax Filings. To the best of the Transferors' knowledge, all
Federal, state and local tax returns required to be filed by or on behalf
of the Transferors, and McNab have been timely, duly and accurately
completed and filed, and all Federal, state and local taxes due and payable
by any of such entities have been paid in full, except as set forth on
Exhibit M. No tax certiorari or audit proceedings are currently pending or
in progress with respect to the Property except as set forth on Exhibit N.
The Transferors have delivered or made available to the Partnership true,
correct and complete copies of each such tax return in Transferors'
possession, if any, filed prior to the date hereof.
(K) Financial Statements. The financial statements of McNab for the
most recent fiscal year fairly present, in all material respects, its
respective financial positions, its respective operations and its
respective cash flows for the periods indicated. Such financial statements
have been, in all material respects, accurately derived from the books and
records of McNab.
(L) Insurance. There is in full force and effect with reputable
insurance companies casualty and liability insurance with respect to the
Property in compliance with the requirements contained in all applicable
Leases and the Mortgage. No written notice of cancellation has been
received by the Transferors or McNab with respect to any insurance policy
maintained by any of such entities and, to the Transferors' knowledge, none
is threatened; and the Transferors and McNab have not received any written
notice that any act is required to maintain any such insurance policy which
has not heretofore been accomplished.
(M) Service Contracts. The Schedule of Contracts lists all service
contracts in effect with respect to the Property (the "Service Contracts"),
if any, and except as set forth in the Schedule of Contracts, all such
Service Contracts are in full force and effect in accordance with their
respective terms as of the date of such Schedule and, together with the
Management Agreement, constitute the sole agreements and understandings
(written or oral) of the Transferors and McNab with respect to the
operation and maintenance of the Property or any part thereof, and to the
Transferors' knowledge, such entities have not given and have not received
any written notice of default which remains outstanding with respect
thereto. The Transferors have no
21
knowledge of any breaches of or defaults under any service contracts by any
party thereunder which would have a material adverse effect on the
Property.
(N) Management Agreement. The Transferors have heretofore delivered or
made available to the Partnership true, correct and complete copies of the
Management Agreement. The Management Agreement has not been further
modified and is in full force and effect in accordance with their terms as
of the date hereof and constitute the sole agreements and understandings
(written or oral) of the Transferors, and McNab with respect to the
management of the Property or any part thereof. The Transferors have no
knowledge of any material breach of or material default under the
Management Agreement.
(O) Leasing or Brokerage Commissions. There are no leasing or
brokerage commissions which will be due after the Cutoff Date in respect of
any Leases.
(P) Licenses and Permits. To the Transferors' knowledge, McNab holds
all licenses, permits and authorizations with respect to the use, operation
and occupancy of the Property the failure of which to hold would have a
materially adverse effect on the current ownership and operation of the
Property.
(Q) Environmental Compliance. The Transferors have heretofore either
furnished to the Partnership or made available to the Partnership for
inspection complete and accurate copies of all reports, studies, analyses,
Phase I reports, notices from any governmental authority, correspondence or
agreements with any person or governmental authority and similar documents
relating to environmental matters on, in or under the Property
(collectively, including the Radon Remediation Proposal, the "Environmental
Reports"). Except as disclosed in the Environmental Reports, neither of the
Transferors nor McNab has received any written notice from any governmental
entity or other person that the Property, or current or former operations
on the Property, is not or has not been in compliance with any
Environmental Laws or that any such entity has any material liability with
respect thereto. To the Transferors' knowledge, except as set forth in the
Environmental Reports, there are no underground tanks for Hazardous
Materials, active or abandoned, at the Property and no Hazardous Materials
have been released in a reportable quantity (where such a quantity has been
established by statute, ordinance, rule, regulation or order) at, on or
under the Property.
(R) Condemnation. (i) No condemnation proceeding in which the
Transferors or McNab have been served with process is pending with respect
to all or any part of the Property, (ii) to the Transferors' knowledge, no
condemnation proceeding in which no such process has been served is pending
with respect to all or any part of the Property and (iii) to the
Transferors' knowledge, no taking in condemnation or by eminent domain is
threatened with respect to all or any part of the Property.
(S) Litigation. Except as set forth on the Schedule of Litigation,
there is no litigation, action or suit which is not fully covered by
insurance, excluding deductible or retained amounts, and there is no
governmental, administrative or
22
arbitration proceeding or investigation before any court or governmental
agency or body, domestic or foreign pending or, to the Transferors'
knowledge, threatened, before any court or governmental agency or body,
domestic or foreign, or any unsatisfied arbitration awards or judicial
orders against or affecting the Transferors, McNab or the Property.
(T) Bankruptcy. No attachments, execution proceedings, assignments for
the benefit of creditors, insolvency, bankruptcy, reorganization or other
similar proceedings are pending or, to the Transferors' knowledge,
threatened against the Transferors or McNab, nor are any of such
proceedings anticipated or contemplated by the Transferors or McNab.
(U) Mortgages. The Schedule of Mortgage sets forth with respect to the
Mortgage (i) the name of the holder thereof, (ii) the unpaid principal
balances as of the date hereof, (iii) the annual debt service thereunder,
(iv) the maturity date thereof, (v) the estimated balloon payment due
thereunder on maturity and (vi) the earliest date of which all notes
secured thereby can be prepaid. The Mortgage is in full force and effect,
the Transferors and McNab have not received any written notice of default
under the Mortgage, and, to the Transferors' knowledge, no material default
on the part of McNab or any other party thereto, exists under the Mortgage
and no event has occurred which with the giving of notice or passage of
time, or both, would constitute a material default under the Mortgage.
Originals and/or true and complete copies of the Mortgage, all loan
documents relating thereto, and each modification and amendment thereof
have heretofore either been furnished to the Partnership or been made
available to the Partnership for inspection. The outstanding principal
balance of the Mortgage as of May 27, 2003 will be $13,301,440.64.
(V) Additional Loan and GIT Mortgage. The documents evidencing or
securing the Additional Loan and the GIT Mortgage are in full force and
effect, the Transferors have not received any written notice of default
with respect to the Additional Loan or the GIT Mortgage, and, to the
Transferors' knowledge, no material default exists with respect to the
Additional Loan or the GIT Mortgage and no event has occurred which with
the giving of notice or passage of time, or both, would constitute a
material default with respect to the Additional Loan or the GIT Mortgage.
Originals and/or true and complete copies of the documents evidencing or
securing the Additional Loan and the GIT Mortgage, and each modification
and amendment thereof, have been furnished to the Partnership. The amount
necessary to satisfy the Additional Loan and the GIT Mortgage in full as of
the Closing Date will be $18,187,836.49.
(W) Title.
(a) Exhibit B accurately depicts the ownership interests of the
LP Transferors and the GP Transferor in McNab. All of such ownership
interests are held free and clear of all Liens except the liens
securing the Additional Loan. McNab has been duly formed, validly
existing and is in good standing under the laws of its state of
formation and is in good standing and duly qualified to conduct
business in any state in which such qualification is necessary. McNab
has no subsidiaries.
23
(b) McNab holds a valid title insurance policy ensuring its fee
title to the Property free and clear of all Liens other than Permitted
Exceptions, and Liens which have been discharged or otherwise
terminated (a true and correct copy of which title insurance policy
has been delivered to the Transferees), and McNab has not, since its
acquisition of the Property, done anything (other than the creation of
Permitted Exceptions and Liens which have been discharged or
terminated in full) to encumber its title to the Property.
(X) Employee Benefit Plans. McNab does not maintain or have any
liability under any employee benefit plan.
(Y) Development Fee. $912,381 is the entire amount necessary to pay
the Development Fee in full and no obligation other than such payment exist
in respect of the services for which the Development Fee is payable.
(Z) Affiliate Fee. $353,864 is the entire amount necessary to pay the
Affiliate Fee in full and no obligations other than such payment exist in
respect of the work and/or services for which the Affiliate Fee is payable.
(AA) GP Shareholders. The LP Transferors are the sole shareholders of
the GP Transferor.
7.7 Regarding Representations and Warranties. At the Closing, the
acknowledgments, representations and warranties in Sections 7.1, 7.2, 7.3, 7.4,
7.5 and 7.6 shall be deemed to have been remade on and as of the Closing Date,
provided that each party hereto shall, in the case of the representations and
warranties set forth in Sections 7.3, 7.4, 7.5 and 7.6, have the option to
update the same so that they reflect facts and circumstances on a current basis.
7.8 Conditions to Transferors' Obligations. The obligation of the
Transferors to effect the Closing is conditioned on the following, except to the
extent waived by the Transferors:
(a) All representations and warranties of Transferees set forth in
this Agreement shall be true and correct in all material respects on and as
of the Closing Date, as if made on and as of such date; and
(b) The Transferees shall have paid to Transferors the consideration
hereinabove provided for and fulfilled all of their other obligations under
this Agreement.
7.9 Conditions to Transferees' Obligations. The obligation of the
Transferees to effect the Closing is conditioned on the following, except to the
extent waived by the Transferees:
(a) The representations and warranties of the Transferors set forth in
this Agreement shall be true and correct in all material respects on and as
of the Closing Date as if made on and as of such date; subject, however to
changes resulting from the
24
operation of the Property between the date hereof and the Closing Date in
accordance with Section 10.13.
(b) The Transferors shall have made the Closing deliveries required
under the Agreement and shall have fulfilled in all material respects their
other obligations under this Agreement; and
(c) Title to the Property shall be subject to no liens or encumbrances
other than Permitted Exceptions.
7.10 Transferors Default. If at the Closing Date the conditions to the
obligations of Transferees to close as set forth in Section 7.9 hereof have not
been fulfilled on account of the default of the Transferors hereunder, and the
Closing shall not occur as a result thereof, then the Transferees shall be
entitled to pursue, at their election, either of the following as their sole and
exclusive remedy: (i) terminate this Agreement or (ii) seek specific performance
of the Transferors' obligations under this Agreement to consummate the Closing;
and, in each case, the Transferees shall be entitled to recover their reasonable
out-of-pocket costs (including without limitation reasonable attorneys' fees and
expenses) in exercising such remedy. The Transferees hereby waive any right to
xxx the Transferors for damages (including consequential and punitive damages)
for any default hereunder, but if the Closing occurs, such waiver shall not
apply to damages to which the Transferees may be entitled hereunder (other than
consequential punitive damages) by reason of any breach by the Transferors of
any of their representations or warranties hereunder which survive the Closing.
The provisions of this Section 7.10 shall survive the termination of this
Agreement.
7.11 Survival of Representations and Warranties. The representations and
warranties made by the Partnership and Partnership Sub in Section 7.3 and by the
Transferors in Sections 7.4. 7.5 and 7.6, as updated as of the Closing Date,
shall survive for one year after the Closing Date; provided, however that no
claim for breach of any representation or warranty in Sections 7.3, 7.4, 7.5 or
7.6 or for indemnification under Section 7.10 may be maintained by the
Partnership, Partnership Sub, or the Transferors unless the Partnership,
Partnership Sub, or the Transferors, as the case may be, shall have delivered a
written Notice specifying in reasonable detail such claim to the Partnership,
Partnership Sub, or the Transferors, as applicable, which Notice shall be
delivered for any representation or warranty in Sections 7.3, 7.4, 7.5 or 7.6 on
or before the first anniversary of the Closing Date (and, if such Notice is so
delivered, such claim shall survive until the expiration of the statute of
limitations applicable thereto). Notwithstanding anything contained in this
section 7.11, the representations and warranties contained in Sections 7.6(Y)
and 7.6(Z) shall survive forever.
7.12 Indemnification.
(A) Subject to the limitations set forth in Section 7.13 and the
provisions of Section 7.11, the Partnership shall indemnify and hold the
Transferors and each member or shareholder thereof (and their respective
officers, directors and employees) harmless from and against any claim,
loss, damage, expense, cost (including
25
reasonable attorney's fees and disbursements) or liability (including
liabilities arising by reason of damages incurred by a Party or other
person) (collectively, "Losses") resulting from a breach by the Partnership
of any representation, warranty or covenant contained in this Agreement.
(B) Subject to the limitations set forth in Section 7.13 and the
provisions of Sections 7.10 and 7.11, the Transferors shall indemnify and
hold the Partnership and Partnership Sub, and their respective members,
officers, partners, directors and employees, harmless from and against any
Losses resulting from a breach by the Transferors, or either of them, of
any representation, warranty or covenant contained in this Agreement.
7.13 Limitations on Indemnification. The indemnification provided for in
Section 7.10 shall be subject to the following limitations:
(A) In no event shall the aggregate liability of the Transferors under
Section 7.12(B) with respect to their representations and warranties under
this Agreement (other than the representations and warranties set forth in
Section 7.6(G), the last sentence of Section 7.6(U), the last sentence of
Section 7.6(V), Section 7.6(Y) and Section 7.6(Z)) exceed $800,000.
(B) Notwithstanding anything to the contrary in this Agreement, the
Transferors shall not be liable for any Losses based on a breach or alleged
breach of the representations and warranties contained in Sections 7.4, 7.5
and 7.6 unless all Losses arising out of such breaches or alleged breaches
shall exceed $100,000 in the aggregate, and then only to the extent of such
excess.
ARTICLE VIII
Casualty and Condemnation
8.1 Casualty. If, prior to the Closing Date, the Property shall be damaged
by fire or any other casualty with an estimated repair or restoration costs in
excess of $500,000, the Partnership may by written Notice delivered to the
Transferors on or before the Closing Date, elect either (i) to continue this
Agreement in effect without abatement of the Consideration on account thereof or
(ii) to terminate this Agreement (in which event the Partnership shall have no
further rights and obligations under this Agreement except for those which
expressly survive such termination).
8.2 Condemnation.
(A) If, prior to the Closing, condemnation proceedings are threatened
in writing by an authorized governmental agency or commenced with respect
to (i) five percent (5%) or more of the rentable area of the Property, (ii)
so much of the parking facilities included in the Property that the
remaining parking facilities are legally inadequate to serve the Property
or (iii) so much of the Property that access to the remaining portion of
the Property is materially adversely affected, the Partnership may by
26
written Notice delivered to the Transferors on or before the Closing Date,
elect either (i) to continue this Agreement in effect without abatement of
the Consideration on account thereof or (ii) to terminate this Agreement
(in which event the Partnership shall have no further rights and
obligations under this Agreement except for those which expressly survive
such termination).
(B) If a condemnation proceeding regarding any portion of the Property
is threatened or commenced prior to the Closing Date, the Transferors shall
promptly advise the Partnership of such event and shall keep the
Partnership reasonably informed as to any such proceeding. Between the date
hereof and the Closing Date, the Transferors shall not (i) agree to make
any conveyance in lieu of any such condemnation or (ii) make any conveyance
in lieu of any such condemnation without the Partnership's prior written
consent.
ARTICLE IX
Broker
9.1 Brokerage Indemnity. The Transferors represent and warrant to the
Partnership that the Transferors have not dealt, and the Partnership represents
and warrants to the Transferors that neither it nor the Partnership Sub has
dealt, with any real estate broker, firm, salesperson or other similar person or
entity in connection with the transactions contemplated by this Agreement. The
Partnership shall indemnify and hold the Transferors harmless from and against
any and all claims, liabilities, costs and expenses, including, without
limitation, reasonable attorneys' fees and disbursements, incurred in connection
with any claims made against the Transferors for brokerage commissions, and
other fees or compensation made by any broker, firm, salesperson or other entity
with whom the Partnership may have dealt in connection with this transaction.
The Transferors shall indemnify and hold the Partnership harmless from and
against any and all claims, liabilities, costs and expenses, including, without
limitation, reasonable attorneys' fees and disbursements, incurred in connection
with any claims made against the Partnership for brokerage commissions, and
other fees or compensation, made by any consultant, broker, firm, salesperson or
other person or entity with whom the Transferors may have dealt in connection
with this transaction. The provisions of this Article IX shall survive the
Closing or the termination of this Agreement.
ARTICLE X
Miscellaneous
10.1 Notices. Notices must be in writing and sent to the party to whom or
to which such Notice is being sent, by certified or registered mail, return
receipt requested with postage prepaid, or commercial overnight delivery service
or delivered by hand with receipt acknowledged in writing, as follows:
27
(A) To the Partnership:
Berkshire Income Realty-OP, L.P.
c/o The Berkshire Group
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
(B) To Partnership Sub:
BIR-OP McNab SUB, L.L.C.
c/o The Berkshire Group
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
(C) To Transferors:
Xxxxxx Xxxxx
c/o The Berkshire Group
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Xxxxxxx Xxxxx
c/o The Berkshire Group
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Xxxxx XX, Inc.
c/o The Berkshire Group
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
All Notices (i) shall be deemed given when received, and (ii) may be given
either by a party or by such party's attorneys. The cost of delivery shall
be borne by the party delivering the Notice.
10.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
shall constitute a single instrument.
10.3 Amendments. Except as otherwise provided herein, this Agreement
may not be changed, modified, supplemented or terminated, except by an
instrument executed by the party hereto which is or will be affected by the
terms of such change, modification, supplement or termination.
28
10.4 Waiver. No waiver by any party hereto of any failure or refusal
by any other party hereto to comply with its obligations hereunder shall be
deemed a waiver of any other or subsequent failure or refusal to so comply.
Any party hereto may waive compliance by any other party with respect to
any of the other's agreements or obligations set forth herein.
10.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. No party may assign its interest under this Agreement
without the prior written consent of all the other parties, and any
purported assignment in violation hereof shall be null and void.
Notwithstanding the foregoing, the parties hereto recognize that the GP
Transferor may liquidate and that such liquidation shall be permitted. Upon
such liquidation, the shareholders of the GP Transferor will automatically
succeed and be deemed to have assumed all the obligations and benefits of
the GP Transferor under this Agreement.
10.6 Third-Party Beneficiaries. The provisions of this Agreement are
made for the benefit of the parties hereto, and their respective successors
in interest and permitted assigns, and are not intended for, and may not be
enforced by, any other person or entity.
10.7 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term and provision of this Agreement shall be
valid and enforced to the fullest extent permitted by law.
10.8 Governing Law. This Agreement has been made pursuant to and shall
be governed by the laws of the State of New York.
10.9 Headings; Exhibits. The headings of the various Articles and
Sections of this Agreement have been inserted solely for purposes of
convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement. All references to Articles, Sections or paragraphs herein shall
be to the specified Article, Section or paragraph of this Agreement, unless
stated to the contrary, and all references to Exhibits shall be to the
specified Exhibit annexed hereto. All Exhibits annexed hereto are made a
part hereof. All terms defined herein shall have the same meanings in the
Exhibits, except as otherwise provided therein. All references in this
Agreement shall be deemed to include the Exhibits.
10.10 Binding Effect. This document does not constitute an offer to
sell and shall not bind the Transferors unless and until the Transferors,
in the Transferors' sole discretion, elects to be bound hereby by executing
and unconditionally delivering to the Partnership and Partnership Sub an
executed original counterpart hereof.
29
10.11 Casualty Insurance Coverage. The Transferors shall cause to be
kept in full force and effect all casualty insurance coverage currently in
effect with respect to the Property until the Closing.
10.12 Other Agreements. The Transferors shall not, without the
Partnership's prior written consent, which consent shall not be
unreasonably withheld, alter or amend the McNab Partnership Agreement. The
Transferors shall not, without the Partnership's prior written consent,
alter or amend the Mortgage, the GIT Mortgage, the note evidencing the
Additional Loan or any document relating to any of the foregoing.
10.13 Conduct of Business. From the date hereof through the Closing
Date, the Transferors (i) shall cause the Property to be maintained in the
ordinary course of business consistent with past practices;( provided,
however, that nothing contained in this Section shall be construed as
requiring the Transferors to undertake or cause to be undertaken major
repair or improvement in respect of the Property) and (ii) shall not permit
McNab to incur any contractual obligations or liabilities other than in the
ordinary course of McNab's business.
30
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
TRANSFERORS:
/s/ Xxxxxxx Xxxxx
---------------------------------------
Name: Xxxxxxx Xxxxx
/s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
XXXXX XX, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
PARTNERSHIP:
BERKSHIRE INCOME REALTY-OP, L.P.
By: BIR GP, L.L.C., its general partner
By: Berkshire Income Realty, Inc.,
its sole member
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: President
PARTNERSHIP SUB
BIR-OP MCNAB SUB, L.L.C.
By: Berkshire Income Realty-OP, L.P.,
its sole member
By: BIR GP, L.L.C., its general partner
By: Berkshire Income Realty, Inc.,
its sole member
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: President
CONTRIBUTION AND SALE AGREEMENT
AMONG
XXXXXX XXXXX;
XXXXXXX XXXXX;
XXXXX XX, INC.,
a Massachusetts corporation;
BERKSHIRE INCOME REALTY-OP, L.P.,
a Delaware limited partnership;
and
BIR-OP MCNAB SUB, L.L.C.
a Delaware limited liability company
For Transfer of the general and limited partnership interests in:
McNab - K C 3 Limited Partnership
As of May 29, 2003
iii
TABLE OF CONTENTS
Page
ARTICLE I Definitions..............................................2
1.1 Definitions..............................................2
1.2 References...............................................6
1.3 Gender and Number........................................6
ARTICLE II Contribution and Purchase and Sale.......................6
2.1 Covenant.................................................6
2.2 "As Is"..................................................7
ARTICLE III Consideration............................................7
3.1 Consideration............................................7
3.2 Assumption of Obligations................................7
ARTICLE IV Closing Date.............................................8
ARTICLE V Apportionments and Payments..............................8
5.1 Items to Be Apportioned..................................8
5.2 Credits..................................................9
5.3 Re-Proration of Impositions..............................9
5.4 Utilities................................................9
5.5 Rent Arrearages.........................................10
5.6 Security Deposits.......................................10
5.7 Reserves and Deposits...................................10
5.8 Settlement of Adjustments...............................10
5.9 Inspection of Books and Records.........................11
5.10 Schedule of Rent Arrearages.............................11
5.11 Survival................................................11
ARTICLE VI Closing Documents.......................................11
6.1 LP Transferors Closing Documents........................11
6.2 GP Transferor Closing Documents.........................12
6.3 Partnership Closing Documents...........................13
6.4 Partnership Sub Closing Documents.......................14
6.5 Further Assurances......................................14
ARTICLE VII Representations and Warranties; Conditions to Closing...14
7.1 Investment Representations..............................14
7.2 Partnership and Partnership Sub Acknowledgments.........15
7.3 Partnership and Partnership Sub Representations and
Warranties..............................................16
7.4 LP Transferors' Representations and Warranties..........17
7.5 GP Transferor Representations and Warranties............17
7.6 Transferors' Joint Representations and Warranties.......18
7.7 Regarding Representations and Warranties................23
7.8 Conditions to Transferors' Obligations..................23
7.9 Conditions to Transferees' Obligations..................23
7.10 Transferors Default.....................................24
7.11 Survival of Representations and Warranties..............24
7.12 Indemnification.........................................24
7.13 Limitations on Indemnification..........................25
ARTICLE VIII Casualty and Condemnation...............................25
8.1 Casualty................................................25
8.2 Condemnation............................................25
ARTICLE IX Broker..................................................26
9.1 Brokerage Indemnity.....................................26
ARTICLE X Miscellaneous...........................................26
10.1 Notices.................................................26
10.2 Counterparts............................................27
10.3 Amendments..............................................27
10.4 Waiver..................................................28
10.5 Successors and Assigns..................................28
10.6 Third-Party Beneficiaries...............................28
10.7 Partial Invalidity......................................28
10.8 Governing Law...........................................28
10.9 Headings; Exhibits......................................28
10.10 Binding Effect..........................................28
10.11 Casualty Insurance Coverage.............................29
10.12 Other Agreements........................................29
10.13 Conduct of Business.....................................29
EXHIBITS
A - Description of Property
B - Description of the Ownership Structure of the Property
C - Schedule of Contracts
D - Schedule of Leases
E - Schedule of Mortgage
F - Schedule of Rent Arrearages
G - Schedule of Litigation
H - Security Deposits
I - Violations
J - Liabilities and Obligations
K - Employees
L - Claims by Employees (threatened or asserted in writing)
M - Federal, State and Local Taxes Due
N - Tax Certiorari or Audit Proceedings
