SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) March 13, 1996
Paine Webber Growth Properties Two LP
(Exact name of registrant as specified in its charter)
Delaware 0-12085 04-2798594
(State or other jurisdiction) (Commission (IRS Employer
of incorporation File Number) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
(Former name or address, if changed since last report)
<PAGE>
FORM 8-K
CURRENT REPORT
PAINE WEBBER GROWTH PROPERTIES TWO LP
ITEM 2 - Disposition of Assets
Walker House Apartments, Montgomery Village, MD
Disposition Date - March 13, 1996
On March 13, 1996, the Partnership's joint venture investee which owned the
Walker House Apartments sold the operating investment property for $10,650,000.
The existing mortgage loan balance of $5,010,817 was paid off in conjunction
with the sale, and the venture paid closing costs of approximately $235,000, The
net proceeds from this sale totalled approximately $5.4 million, of which the
co-venture partner was entitled to $220,000 under the terms of the joint venture
agreement. Paine Webber Growth Properties Two LP received net sale proceeds of
approximately $5.2 million.
The current operations of the Walker House apartment complex reflect the
generally improving conditions in the real estate markets for multi-family
residential properties across the country. Over the past year, average monthly
rental rates at Walker House have increased by approximately 2.5% to a level of
$753 per apartment unit. Management believed with the property performing
favorably it was an appropriate time to market the property for sale. The
Partnership started formally marketing the Walker House Apartments for sale in
September 1995. After receiving significant interest from a number of parties,
the joint venture successfully consummated the transaction described above. The
Partnership's share of the net proceeds is expected to be distributed to the
Limited Partners as a Special Distrisbution paid concurrently with the regular
quarterly distributon on May 15, 1996.
ITEM 7 - Financial Statements and Exhibits
(a) Financial Statements: None
(b) Exhibits:
(1)Purchase Agreement between Montgomery Village Associates (as
Seller) and Washington Real Estate Investment Trust (as Purchaser)
Dated: January 19, 1996
(2)Ratification of Purchase Agreement between Montgomery Village HWH
Associates ("Seller"), as seller, and Washington Real Estate Investment
Trust ("WREIT"), as purchaser, as assigned by WREIT to WRIT Limited
Partnership, Seller, whose general partners are Paine Webber Growth
Properties Two LP (PWGPTLP"), and Montgomery Village Limited
Partnership ("MVLP")
(3)Bill of Sale by Montgomery Village Associates HWH Associates, a
Maryland general partnership ("Seller"), and WRIT Limited Partnership,
a Delaware limited partnership ("Purchaser")
(4) Seller's Settlement Statement
<PAGE>
FORM 8-K
CURRENT REPORT
PAINE WEBBER GROWTH PROPERTIES TWO LP
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAINE WEBBER GROWTH PROPERTIES TWO LP
(Registrant)
By: /S/ Walter V. Arnold
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Date: March 28, 1996
<PAGE>
PURCHASE AGREEMENT
between
Montgomery Village HWH Associates
(as Seller)
and
Washington Real Estate Investment Trust
(as Purchaser)
Dated: January 19, 1996
<PAGE>
PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 19th day of January, 1996, by
and between (i) WASHINGTON REAL ESTATE INVESTMENT TRUST ("Purchaser"), a
District of Columbia business trust, and (ii) MONTGOMERY VILLAGE HWH ASSOCIATES
("Seller"), a Maryland limited partnership.
RECITALS
A. Seller owns a certain parcel of land containing approximately 6.22
acres, and the improvements thereon, located in Gaithersburg,
Montgomery County, Maryland and known as the Walker House Apartments.
B. Seller has agreed to sell to Purchaser, and Purchaser has agreed to
purchase from Seller, all land, improvements, furniture, furnishings,
fixtures, equipment and other tangible and intangible assets and
properties owned by Seller, located at the property and used by it in
connection with the management, operation, promotion, maintenance and
repair of such land and improvements.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
Definitions
. For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, (I) the terms defined in this Section
include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other genders; (ii) accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles; (iii) references herein to "Articles,"
"Sections," "subsections," "paragraphs" and other subdivisions without reference
to a document are to designated Articles, Sections, subsections, paragraphs and
other subdivisions of this Agreement; (iv) a reference to an Exhibit or a
Schedule without a further reference to the document to which the Exhibit or
Schedule is attached is a reference to an Exhibit or Schedule to this Agreement;
(v) the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision; and (vi)
the word "including" means "including, but not limited to."
For all purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
"Additional Income" shall mean all amounts and charges payable by Tenants
to Seller, as landlord, under their Leases, other than Apartment Rent and
Security Deposits, and any income derived by Seller from the ownership and
operation of the Property from any source other than Apartment Rents, including
but not limited to separate charges for use of the Buildings' amenities (such as
the swimming pool).
"Affiliate" shall mean, with respect to any Person, a party controlling,
controlled by or under common control with such Person, and if such Person is a
partnership or limited partnership, a partner of such Person, or if such Person
is a corporation, a shareholder of such Person.
"Agreement" shall mean this Agreement in its present form or as it may be
amended from time to time.
"Apartment Rent" shall mean all rent payable by Tenants under their
Leases.
"Assignable Contracts" shall mean all Contracts listed on the Contract
Schedule other than the Contracts designated by Purchaser for cancellation
pursuant to Section 8.8.
"Bankruptcy Law" shall mean Title 11, U.S. Code, and any similar state law
for the relief of debtors.
"Billof Sale" shall mean a bill of sale, substantially in the form attached
as Exhibit E, signed by Seller and Purchaser, sufficient to transfer to
Purchaser good and indefeasible title to all Personal Property, free and clear
of all liens, encumbrances and security interests other than the Permitted
Exceptions.
"Buildings" shall mean the apartment buildings and other
improvements situated on or appurtenant to the Land.
"Business Days" shall mean any day of the week other than Saturday, Sunday
or a day on which banking institutions in either New York, New York, or
Washington, D. C., are obligated or authorized by law to close.
"Closing" shall have the meaning set forth in Section 13.1.
"Closing Date" shall mean the date which is fifteen (15) days after the
end of the Feasibility Period, or if such date is not a Business Day, the next
Business Day after such fifteenth (15th) day), or such earlier date as Seller
and Purchaser may mutually agree upon, as such date may be extended under the
provisions of this Agreement.
"Contracts" shall mean all contracts and agreements, oral or written,
providing for the management, operation, supply, maintenance, repair,
advertising or promotion of the Real Property to which Seller is a party that
relate to the Real Property, including service agreements, maintenance
contracts, cleaning contracts, contracts for the purchase or delivery of labor,
services, materials or supplies and equipment rental agreements or leases, and
landscaping and lawn maintenance agreements.
"Contract Schedule" shall mean the information concerning Contracts
contained in Schedule 1, as described in Section 6.3(b).
"Custodian" shall mean a receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Deed" shall mean a special warranty deed substantially in the form
attached as Exhibit D, signed by Seller in proper form for recording, sufficient
to convey to Purchaser good and marketable fee simple title to the Real
Property, free and clear of all liens, encumbrances, Leases, covenants,
conditions and other matters affecting title other than the Permitted
Exceptions.
"Delinquent Rent" shall mean Rent which is due and payable by a Tenant on
or before the Closing Date but has not been paid by the Closing Date.
"Deposit" shall mean the cash payments made by Purchaser to the Escrow
Agent pursuant to Section 4.1 and the interest earned thereon.
"Easement Agreements" shall mean any and all easement agreements,
reciprocal easement agreements, declarations of covenants, conditions,
restrictions and easements, party wall agreements, "tie-back" agreements, common
area agreements, shared maintenance agreements, common use agreements or similar
agreements or understandings which burden or benefit the Real Property and under
which Seller has any obligations, and all supplements, amendments, modifications
and memoranda thereof, relating to the development, use, operation, management,
maintenance or occupancy of the Real Property.
"Easement Agreements Schedule" means the information concerning Easement
Agreements contained in Schedule 7, as described in Section 6.3(c).
"Employee Schedule" shall mean the information concerning employees who
are engaged in the operation and maintenance of the Real Property, contained in
Schedule 2.
"Environmental Law" shall mean any federal, state or local law, ordinance,
rule, regulation, requirement, guideline, code, resolution, order or decree
(including consent decrees and administrative orders) in effect on the date of
this Agreement which regulates the use, generation, handling, storage,
treatment, transportation, decontamination, clean-up, removal, encapsulation,
enclosure, abatement or disposal of any Hazardous Material, including the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901, et seq., the Toxic Substance Control Act, 15 U.S.C. Sections
2601, et seq., the Clean Water Act, 33 U.S.C. Sections 1251 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C, Section 1802, their state
analogues, and any other federal, state or local statute, law, ordinance,
resolution, code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning any Hazardous Material.
"Escrow Agent" shall mean Chicago Title Insurance Company.
"Feasibility Period" shall mean the period beginning with the date this
Agreement is executed and delivered by both Seller and Purchaser, and expiring
on the forty-fifth (45th) day thereafter.
"General Assignment" shall mean an Assignment of Licenses, Intangibles and
Warranties in the form attached as Exhibit H.
"Governmental Authorities" shall mean any board, bureau, commission,
department or body of any municipal, county, state or federal governmental unit,
or any subdivision thereof, having or acquiring jurisdiction over the Real
Property or the management, operation, use or improvement thereof.
"Hazardous Material" shall mean any flammable, explosive, radioactive or
reactive materials, any asbestos (whether friable or non-friable), any
pollutants, contaminants or other hazardous, dangerous or toxic chemicals,
materials or substances, any petroleum products or substances or compounds
containing petroleum products, including gasoline, diesel fuel and oil, any
polychlorinated biphenyls or substances or compounds containing polychlorinated
biphenyls, and any other material or substance defined as a "hazardous
substance," "hazardous material," "hazardous waste," "toxic materials,"
"contamination," and/or "pollution" within the meaning of any Environmental Law.
"Intangibles" shall mean the trade name Walker House Apartments, as used
in connection with the ownership, operation and promotion of the Real Property,
all logos used in connection with the advertising and promotion of the Real
Property and all local telephone numbers and listings for the Property, to the
extent such items are assignable without cost to Seller.
"Land" shall mean the parcels of land more particularly described in
Exhibit A.
"Lease and Contract Assignment" shall mean an Assignment and Assumption of
Certain Leases, Tenancies and Written Contracts in the form attached as Exhibit
G, providing for the assignment of all Leases and Assignable Contracts.
"Lease Schedule" shall mean the information concerning Tenants contained
in Schedule 4, as described in Section 6.3(a).
"Leases" shall mean all leases, licenses or other agreements with Tenants
including all amendments, extensions, modifications and supplements thereto,
pursuant to which any Tenant uses or occupies any part of the Real Property.
"Leasing Guidelines" shall mean the minimum rent figures for categories of
apartment units in the Buildings as set forth in Exhibit I.
"Legal Requirements" shall mean all laws, ordinances, rules, regulations,
orders and requirements of all Governmental Authorities relating to, or
regulating, the ownership, use, operation, management, maintenance and repair of
the Real Property, including zoning laws, building, fire, safety and health laws
and Environmental Laws, and any obligations imposed on the owner of the Real
Property in connection with any site plan approval of the Real Property or any
part thereof, or zoning proffers relating to the Real Property or any part
thereof.
"License Schedule" shall mean the list of Licenses contained in Schedule 5.
"Licenses" shall mean all licenses, authorizations, approvals and permits
issued by Governmental Authorities relating to Seller's (and not any Tenant's)
use, operation, ownership or maintenance of the Real Property.
"Litigation Schedule" shall mean the information concerning pending and
threatened litigation contained in Schedule 6, as described in Section 6.2(m).
"Mortgage" shall mean a mortgage, deed of trust or other type of security
instrument of the type commonly given to secure loans or advances on, or the
unpaid purchase price of, real property in the jurisdiction in which such real
property is located.
"Operating Expenses" shall mean all costs, expenses, charges and fees
relating to the ownership, management, operation, maintenance and repair of the
Real Property, including electricity, gas, water and sewer charges, telephone
and other public utilities, common area maintenance charges, insurance premiums,
vault charges, personal property taxes, excise taxes on Rent, business
occupational taxes, periodic charges payable under Assignable Contracts,
periodic fees payable under transferable Licenses for the operation (as opposed
to the construction) of the Real Property, periodic charges under Easement
Agreements, salaries, wages, vacation and sick pay, pension, welfare and other
fringe benefits, employee-related taxes and other labor costs, but not including
any costs, expenses, charges or fees which are the direct responsibility of a
Tenant.
"Permitted Exceptions" shall mean (i) the lien of current real estate
taxes not yet due and payable, (ii) the Leases described in the Lease Schedule
and any permitted additions, renewals and replacements thereof, recorded or
unrecorded, and (iii) the additional exceptions contained in the commitment for
title insurance obtained by Purchaser pursuant to Section 9.1 (but not including
the survey exception; the exceptions for unfiled mechanics liens, rights of
parties in possession or Mortgages, if any, encumbering the Real Property; or
liens, encumbrances, adverse claims or other matters, if any, created after the
date of the title commitment but prior to the date title to the Real Property
vests in Purchaser).
"Person" shall mean an individual, estate, trust, partnership,
corporation, Governmental Authority or other legal entity.
"Personal Property" shall mean all furniture, furnishings, fixtures,
equipment, vehicles, tools, and other tangible personal property of every kind
and description owned by Seller located on, and used or useful in connection
with the management, leasing, operation, maintenance and repair of the Real
Property, including Seller's inventory of spare and replacement parts, Seller's
inventory of consumable supplies and the other tangible personal property
described in Exhibit B.
"Property" shall mean the Real Property, the Personal Property, the Leases,
the Assignable Contracts, the Licenses, the Intangibles and the Warranties.
"Property Documents" shall have the meaning set forth in Section 5.2.
"Purchase Price" shall mean the purchase price of the Property specified
in Section 3.1.
"Real Property" shall mean the Land and the Buildings known as Walker
House Apartments, located in Gaithersburg, Montgomery County, Maryland, and the
other rights described in subsections (c), (d) and (e) of Section 2.1.
"Sales Agent" shall mean Cassidy & Pinkard, Inc.
"Rent" shall mean, collectively, Apartment Rent and Additional Income.
"Security Deposits" shall mean all refundable security deposits, access
card or key deposits, cleaning fees, pet deposits and other deposits (including
any interest accrued thereon in accordance with the terms of the Tenant's
Leases) relating to space within the Real Property paid by Tenants to Seller,
its managing agent or any other Person.
"Seller's knowledge" or words of like import shall mean the actual
knowledge of Stephen D. Brady, and Karen Kopas, who is the resident manager at
the Property and an employee of the property manager of the Property, without
any investigation or other due diligence.
"Tax Schedule" shall mean the information concerning real estate taxes and
assessed valuation of the Real Property contained in Schedule 8, as described in
Section 6.2(c).
"Tenants" shall mean all Persons leasing or occupying space within or
appurtenant to the Real Property pursuant to written or oral agreements with
Seller or a prior owner of the Real Property.
"Tenant Work Orders" shall mean all written requests received by Seller
from any Tenant concerning the repair or maintenance of space occupied or leased
by such Tenant.
"Utility Deposits" shall mean all deposits made by Seller with the Persons
providing water, sewer, gas, electricity, telephone and other public utilities
to the Real Property.
"Utility Schedule" shall mean the information concerning utilities
servicing the Real Property contained in Schedule 10, as described in Section
6.2(t).
"Warranties" shall mean all assignable warranties or guaranties presently
in effect from contractors, suppliers or manufacturers of personal property
installed in or used in connection with the Real Property or any work performed
or improvements included as a part of the Real Property.
"Warranties Schedule" shall mean the information concerning the Warranties
contained in Schedule 9.
ARTICLE II
Purchase and Sale of the Property
. On the Closing Date, and subject to the terms and conditions set forth in this
Agreement, Seller agrees to sell to Purchaser, and Purchaser agrees to purchase
from Seller:
(a) the Land;
(b) the Buildings;
(c) all right, title and interest of Seller, if any, in any land
lying in the bed of any street, road, avenue or alley, open or closed, adjacent
to or abutting the Land, to the center line thereof;
(d) all Easement Agreements and other easements, covenants and
other rights appurtenant to, and all the estate and rights of Seller in and to,
the Land and the Buildings, including riparian rights appurtenant to the Land
and Buildings;
(e) all right, title and interest of Seller in and to the proceeds
of, or any award made for, a taking of all or any part of the Real Property by
any Governmental Authority pursuant to the exercise of its power of eminent
domain after the end of the Feasibility Period;
(f) the Personal Property; and
(g) all right, title and interest of Seller in and to the Leases,
the Assignable Contracts, transferable Licenses, assignable Intangibles and
Warranties.
Seller shall sell and convey and Purchaser shall purchase and accept fee simple
title to the Real Property and good title to the Personal Property and other
rights to be transferred to Purchaser as set forth above, free and clear of all
liens, encumbrances, easements, covenants, conditions, Leases and other matters
affecting title, except for the Permitted Exceptions.
. Except as expressly provided in this Agreement or in any document to be
executed and delivered on the Closing Date, Purchaser is not assuming any of the
debts, liabilities, taxes or obligations of, or claims against, Seller of any
kind or character, whether direct or contingent and whether known or unknown.
The only transactions contemplated by this Agreement are the sale and purchase
of the Property. Seller is not selling a business. Except as expressly provided
in this Agreement or in any document to be executed and delivered on the Closing
Date, the parties intend that Purchaser shall not be deemed to be a successor of
Seller with respect to any of Seller's liabilities or obligations to Tenants or
other third parties arising before the Closing Date. The provisions of this
Section shall not increase or diminish Seller's and Purchaser's respective
indemnification obligations under Article XVI.
<PAGE>
ARTICLE III
Purchase Price and Terms of Payment
. The purchase price to be paid by Purchaser to Seller for the Property shall be
$10,650,000.00, subject to the adjustments and prorations set forth in Article
XIV.
. On the Closing Date, and subject to the terms and conditions of this
Agreement, Purchaser shall pay the Purchase Price to, or for the account of,
Seller in the manner provided in Section 13.1.
ARTICLE IV
Deposit
. Within three Business Days after Seller delivers a fully-signed counterpart of
this Agreement to Purchaser, Purchaser shall deliver to the Escrow Agent a
deposit in the amount of $150,000.00, to be held by the Escrow Agent as a good
faith deposit under this Agreement (the "Initial Deposit"). Unless this
Agreement is terminated pursuant to Section 5.6, on or before the last day of
the Feasibility Period, Purchaser shall deliver to the Escrow Agent an
additional deposit in the amount of $150,000.00 to be held by the Escrow Agent
as an additional good faith deposit under this Agreement (the "Additional
Deposit").
. The payment of the Deposit shall be in the form of a good check payable to the
order of, or a wire transfer of federal funds to, the Escrow Agent. The Escrow
Agent shall, promptly after receipt, deposit Purchaser's check for collection,
and thereafter invest the proceeds of collection in any of the following types
of investments designated by Purchaser: (i) prime commercial paper, banker's
acceptances or certificates of deposit in a commercial bank approved by
Purchaser, in each case having a maturity of not more than 30 days (or, if
earlier, five (5) days prior to the Closing Date), or (ii) obligations of the
United States Government having a maturity of not more than 60 days (or, if
earlier, five (5) days prior to the Closing Date), or (iii) one or more mutual
funds which invest their assets primarily in investments of the type described
in clauses (i) and (ii), or (iv) one or more interest-bearing accounts in a
commercial bank approved by Purchaser.
If this Agreement is terminated pursuant to Section 15.1 and thereafter either
Seller or Purchaser makes a written demand on the Escrow Agent for the return of
the Deposit (if the demand is made by Purchaser) or for the payment of the
Deposit (if the demand is made by Seller), the Escrow Agent shall give written
notice of such demand to the other party. If the Escrow Agent does not receive a
written objection from the other party to the proposed payment or return of the
Deposit within 10 days after the giving of such notice, the Escrow Agent shall
pay the Deposit to the party making the demand. If the Escrow Agent receives a
written objection from the other party within the 10-day period, the Escrow
Agent shall continue to hold the Deposit until otherwise directed by written
instructions from Seller and Purchaser or until otherwise directed by the final
action of a court of competent jurisdiction. During the Feasibility Period, the
provisions of Section 5.6, and not the provisions of this Section, shall control
the disposition of the Deposit.
. In the event of a dispute concerning the disposition of the Deposit, the
Escrow Agent shall have the right at any time to deposit any cash funds held by
it under this Agreement with the clerk of the court having jurisdiction. The
Escrow Agent shall give written notice of such deposit to Seller and Purchaser.
Upon such deposit, the Escrow Agent shall be relieved and discharged of all
further obligations and responsibilities hereunder.
. The parties acknowledge that the Escrow Agent is acting solely as a
stakeholder at their request and for their convenience; that the Escrow Agent
shall not be deemed to be the agent of either of the parties; and that the
Escrow Agent shall not be liable to either of the parties for any act or
omission on its part unless taken or suffered in bad faith, in willful disregard
of this Agreement or involving gross negligence. Seller and Purchaser shall
jointly and severally indemnify and hold the Escrow Agent harmless from and
against all costs, claims, and expenses, including reasonable attorneys' fees,
incurred in connection with the performance of the Escrow Agent's duties
hereunder, except with respect to actions or omissions taken or suffered by the
Escrow Agent in bad faith, in willful disregard of this Agreement or involving
gross negligence on the part of the Escrow Agent.
. The Escrow Agent shall acknowledge its agreement to the provisions of this
Section, Article XIII and Article XV by executing this Agreement in the space
provided below.
ARTICLE V
Inspection and Feasibility Period
. Purchaser acknowledges and agrees that Seller has delivered to Purchaser (or,
in the case of the items described in Section 5.2(h), made available at the
Property or at the offices of the Property manager) copies of all Property
Documents, to the extent such Property Documents are available, i.e., in
Seller's or the Property manager's possession or obtainable by Seller with
reasonable efforts.
. The Property Documents consist of the following items, to the extent the same
are in the possession or control of Seller or Seller's Property manager:
(a) The latest survey of the Land.
(b) All site plans for the Real Property.
(c) All architectural, mechanical, electrical and structural
plans, specifications and drawings relating to the improvements on the Real
Property.
(d) All Licenses and all certificates of occupancy issued for the
Buildings.
(e) Certificates of insurance for all casualty, liability and
other insurance policies presently in effect with respect to the Property.
(f) Audited statements of income and expenses of the Real Property
for calendar years 1990 through 1994, monthly operating statements for the Real
Property for the months of January through November (and if available on the
date hereof, December), 1995.
(g) All assessments and bills for real estate and any other taxes
affecting the Property, and for special assessments affecting the Real Property,
for the preceding three (3) full tax years, together with a summary of any
contested tax assessments affecting the Real Property during such three (3)-year
period and copies of any income and expense statements filed with Montgomery
County, Maryland for such three (3)-year period.
(h) All Leases, including all amendments and modifications
thereto, all assignments thereof and subleases, if any, and any other agreements
between Seller, or an Affiliate of Seller, and a Tenant, or an Affiliate of a
Tenant, and a rent roll for the Real Property, listing all Leases in effect
(with the name of each Tenant), and for each Tenant, the Rent currently being
paid, security deposit (and interest accrued on such security deposit, if any),
any prepaid or Delinquent Rent (including an aging of any such Delinquent Rent),
apartment number, type of unit, size of unit, any assigned parking spaces and
parking allowances, and renewal options granted, if any.
(i) All Contracts.
(j) The most recent owner's title insurance policy issued in
connection with the Real Property and all amendments, endorsements and exhibits
thereto.
(k) A list of all pending and, to the best of Seller's knowledge,
threatened claims or lawsuits and a list of all outstanding judgments relating
to the Property, including suits for non-payment of rent or for the purpose of
Tenant eviction.
(l) All engineering, architectural, physical inspection,
maintenance, geological and environmental reports related to the Real Property,
including those relating to the presence (or absence) of Hazardous Materials.
(m) All business and professional license/tax returns filed by
Seller for the last two (2) fiscal years and copies of any correspondence from
Governmental Authorities related to such returns, and a summary of any contested
tax assessments.
(n) All warranties and guarantees related to the Property which are
presently in effect.
(o) Such other documents or data as Purchaser may reasonably
request, to be delivered at a later date as mutually agreed.
In the event that, during the Feasibility Period, Seller discovers items falling
within the categories described above in this Section 5.2, Seller shall deliver
such items promptly to Purchaser, but the failure to deliver such
newly-discovered items prior to the date this Agreement is signed shall not be a
breach by Seller of its obligations hereunder.
. Seller agrees that Purchaser shall have the right, at its own risk, cost and
expense, to enter upon the Real Property at any time or times prior to the
Closing Date, during normal business hours and after reasonable advance notice,
for purposes of inspecting apartments (in the company of the resident manager of
the Property) and conducting such surveys and environmental and engineering
tests, including inspections, investigations and studies, as Purchaser deems
necessary or desirable to evaluate the Property. In addition, Purchaser shall
have the right to interview Tenants in the course of Purchaser's inspection of
apartments and to conduct separate interviews of Tenants not in the course of
apartment inspections, provided not more than fifteen (15) Tenants are
separately interviewed and all such interviews are conducted in the company of
the resident manager of the Property. Purchaser may conduct such architectural,
engineering, environmental, economic and other studies of the Real Property as
Purchaser may deem desirable. Purchaser shall provide Seller at least
forty-eight (48) hours' notice in advance of its entry upon the Real Property
for purposes other than outside visual inspections. No advance notice shall be
required for outside visual inspections. Purchaser's access to the Real Property
shall be subject to the rights of Tenants under their Leases, Purchaser shall
not unreasonably disturb Seller or any of the Tenants in conducting its
inspections, tests and studies, or in conducting interviews of Tenants.
Purchaser shall not make any physical changes to the Real Property and shall
indemnify and hold harmless Seller from and against (i) all physical damage to
the Real Property caused by its tests and investigations and (ii) all loss,
liability or damage suffered or incurred by Seller or any of its agents or
employees arising out of or resulting from injury or death to individuals or
damage to property sustained on the Real Property and caused by the tests and
investigations conducted by, or at the direction of, Purchaser. Purchaser's
obligations to indemnify Seller pursuant to this Section shall survive the
termination of this Agreement.
. Between the date of this Agreement and the Closing Date, Purchaser shall have
the right to inspect all books, records, studies, reports and other documents in
the possession or control of Seller and its agents which pertain to the
construction, ownership, use, operation, occupancy, maintenance, operation or
leasing of the Property ("Seller's Books and Records"). Seller shall allow such
inspections to be conducted during normal business hours upon reasonable notice
to Seller and shall make Seller's Books and Records available to Purchaser at
the Real Property or at the offices of Seller or the Property manager. Seller
agrees that it will permit Purchaser to inspect the Books and Records in their
current state and will not "purge" the Books and Records prior to their review
by Purchaser.
Section 5.5 Intentionally Omitted.
. This Agreement shall automatically terminate at the end of the Feasibility
Period unless, on or before the last day of the Feasibility Period, (i)
Purchaser gives Seller written notification (the "Feasibility Notice") that
Purchaser elects to consummate the purchase of the Property in accordance with
the terms of this Agreement, and (ii) Purchaser delivers the Additional Deposit
to Escrow Agent. Purchaser shall also have the right to terminate this Agreement
by notice given to Seller at any time before the end of the Feasibility Period.
Purchaser shall have the absolute right, in its sole and absolute discretion, to
determine whether to give the Feasibility Notice. If the Feasibility Notice is
not timely given or if a notice of early termination is given, Purchaser or
Seller, or both, shall so notify the Escrow Agent, the Escrow Agent shall
promptly return the Initial Deposit to Purchaser, and, except as otherwise
provided in this Section, no party shall have any further liability to any other
party under this Agreement. If this Agreement is terminated pursuant to the
provisions of this Section, Purchaser agrees to pay the sum of $100 to Seller as
consideration for this Agreement and, within fifteen (15) days after the end of
the Feasibility Period or the earlier termination of this Agreement, to deliver
to Seller copies of all surveys, written engineering tests or studies and other
data prepared by third parties for Purchaser during the Feasibility Period and
to return to Seller all Property Documents previously delivered by Seller to
Purchaser.
Section 5.7 Confidentiality. In consideration for and as a condition of
Seller's furnishing to Purchaser the items described in Section 5.2 (the
"Evaluation Material"), Purchaser acknowledges the confidential and proprietary
nature of such Evaluation Material and agrees to hold and keep the same
confidential as provided in this Section. Purchaser agrees to exercise all
reasonable steps to safeguard the confidentiality of the Evaluation Material and
not to disclose any part of it to any third person except to such of Purchaser's
employees and legal, accounting and financial advisors as (i) may require access
to the Evaluation Material for the purpose of assisting Purchaser in evaluating
the purchase of the Property by Purchaser, and (ii) who have been directed to
preserve the confidentiality of such Evaluation Material.
ARTICLE VI
Representations and Warranties of Seller
Seller makes the following representations and warranties to Purchaser for
the purpose of inducing Purchaser to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement, each of which
representations and warranties are true and correct on the date hereof:
. Section 6.1 Representations and Warranties regarding Authority and Status
(a) Organization. Seller is a general partnership duly formed and
validly existing under the laws of the State of Maryland.
(b) Authorization. The partners of Seller have duly authorized the
execution and delivery of this Agreement and the transactions contemplated
hereby.
(c) No Conflicting Agreements. The execution and delivery by
Seller of, and the performance and compliance by Seller with the terms and
provisions of, this Agreement do not violate any of the terms, conditions or
provisions of (i) Seller's partnership agreement, (ii) to Seller's knowledge,
any judgment, order, injunction, decree, regulation or ruling of any court or
other Governmental Authority to which Seller is subject, or (iii) any agreement
or contract listed on any Schedule to this Agreement or any other agreement or
contract to which Seller is a party or to which it or the Property is subject,
nor shall such execution, delivery, performance or compliance constitute a
material default thereunder or give to others any material rights of termination
or cancellation in or with respect to the Property.
(d) Approvals. To Seller's knowledge, no authorization, consent,
order, approval or license from, filing with, or other act by any Governmental
Authority or other Person is or will be necessary to permit the valid execution
and delivery by Seller of this Agreement or the performance by Seller of the
obligations to be performed by it under this Agreement.
(e) United States Person. Seller is a "United States person" within the
meaning of Sections 1445(f)(3) and 7701(a)(30) of the Internal Revenue Code of
1986, as amended.
(f) Absence of Bankruptcy. Neither Seller nor any Affiliate of
Seller has commenced (within the meaning of any Bankruptcy Law) a voluntary
case, consented to the entry of an order for relief against it in an involuntary
case, or consented to the appointment of a Custodian of it or for all or any
substantial part of its property, nor has a court of competent jurisdiction
entered an order or decree under any Bankruptcy Law that is for relief against
Seller or any of its Affiliates in an involuntary case or appoints a Custodian
of Seller or any of its Affiliates or for all or any substantial part of its or
their property.
(g) Management of Real Property. Stephen Brady has been the
individual who has served as the asset manager for the Real Property, on behalf
of Seller, since 1989, and since such date has been the individual principally
responsible for the operation of the Property within Seller's organization.
Section 6.2 Representations and Warranties regarding Real Estate and Legal
Matters.
(a) Operating Statements. Seller has delivered to Purchaser (i)
audited statements of income and expense of the Real Property for calendar years
1990 through 1994, and (ii) monthly operating statements of the Real Property
for the months of January through November (and if available on the date hereof,
December), 1995. The monthly operating statements were prepared by Seller's
property manager. To Seller's knowledge, such statements of income and expense
present fairly the income and expenses of the Real Property for the respective
periods covered thereby in all material respects. Such statements have not been
modified for review by Purchaser.
(b) Intentionally Omitted.
(c) Real Estate Taxes. Except as otherwise set forth in the Tax
Schedule, (i) to Seller's knowledge there are no tax abatements or exemptions
affecting the Real Property, and (ii) Seller has not received any written notice
of (x) any increase in the assessed valuation of the Real Property, (y) any
pending or threatened special assessments affecting the Real Property or (z) any
contemplated improvements affecting the Real Property that may result in special
assessments affecting the Real Property.
(d) No Default of Permitted Exceptions. To Seller's knowledge,
Seller is not in default in complying with the terms and provisions of any of
the covenants, conditions, restrictions, rights-of-way or easements constituting
one or more of the Permitted Exceptions which are to be performed or complied
with by the owner of the Real Property.
(e) Condemnation. Seller has no knowledge of any pending or contemplated
condemnation proceedings affecting the Real Property, or any part thereof.
(f) Intentionally Omitted.
(g) Title to Personal Property. Seller has good and marketable
title to, and owns outright, the Personal Property listed in Exhibit B, if any,
free and clear of all liens, encumbrances, security interests and adverse claims
of any kind or character, other than liens which will be released at the
Closing.
(h) Intentionally Omitted.
(i) Intentionally Omitted.
(j) Intentionally Omitted.
(k) Labor Unions. Seller is not a party to any contract or agreement with
any labor union.
(l) Mechanics' Liens. All bills and claims for labor performed and
materials furnished to or for the benefit of the Real Property for all periods
prior to the Closing Date have been (or prior to the Closing Date will be) paid
in full, and on the Closing Date there shall be no mechanics' liens or
materialmen's liens (whether or not perfected) on or affecting the Real
Property.
(m) Litigation. The Litigation Schedule contains a complete and
correct list of all actions, suits, proceedings or written claims pending or, to
Seller's knowledge, threatened in writing against or affecting Seller or the
Real Property, at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, agency or instrumentality,
domestic or foreign (collectively, "Litigation"), and sets forth, with respect
to each such Litigation, the parties to such Litigation, the amount claimed as
damages (or other remedies sought) and the status of such Litigation as of the
date hereof. Except as set forth on the Litigation Schedule, to Seller's
knowledge there is no Litigation. To Seller's knowledge, Seller is not operating
under or subject to, and is not in default with respect to, any order, writ,
injunction or decree of any court or federal, state, municipal or other
governmental agency or department, commission, board, agency or instrumentality,
domestic or foreign, applicable specifically to the Property or any part
thereof, as opposed to properties generally in Montgomery County or any other
jurisdiction in which the Property may be situated.
(n) Compliance with Laws. Seller has not received a written notice
that the Buildings (including all adjoining streets, roads, parking areas,
curbs, sidewalks, sewers and other utilities within the boundaries of the Land)
have not been constructed, the Personal Property has not been installed and the
Real Property is not presently being used and operated in all material respects
in compliance with (i) all Legal Requirements, (ii) all building or occupancy
permits, and (iii) all easements, conditions, rights-of-way, covenants and
restrictions of record affecting or otherwise relating to the Real Property.
(o) Intentionally Omitted.
(p) Intentionally Omitted.
(q) Intentionally Omitted.
(r) Environmental Matters.
(1) To Seller's knowledge, the Real Property does not contain,
and there is not located on or about the Real Property, any Hazardous Materials,
except for prepackaged supplies, cleaning materials or other items which are
sold for consumer use or typically used in the operation, maintenance and repair
of buildings containing residential space. Seller is not currently using the
Real Property, nor to Seller's knowledge is any other Person currently using the
Real Property, nor to Seller's knowledge has the Real Property previously been
used, for the use, storage, treatment, production, manufacture, generation,
transportation, release or disposal of Hazardous Materials, except as otherwise
provided in the preceding sentence. Seller has not received any complaint,
order, summons, citation, notice of violation, directive letter or other written
communication from any Governmental Authority or other Person with regard to air
emissions, water discharges, noise emissions or Hazardous Materials, or any
other environmental, health or safety matters affecting the Real Property, or
any portion thereof. To Seller's knowledge, Seller has complied with all
Environmental Laws affecting the Real Property, including notification
requirements relating to the release of Hazardous Materials.
(2) There are no claims pending or, to Seller's knowledge,
threatened in writing, against Seller or the Real Property, or any portion
thereof, by any Governmental Authority or other Person relating to any Hazardous
Material or pursuant to any Environmental Law, whether for enforcement,
clean-up, removal, remediation, assertion of liability, cost recovery,
compensation, contribution, recovery of damages, injunction or other equitable
relief or otherwise.
(3) To Seller's knowledge, Seller has not undertaken, permitted,
authorized or suffered the presence, or suspected presence, use, manufacture,
handling, generation, storage, treatment, discharge, release, burial or disposal
on, under or about the Real Property of any Hazardous Material, except in
compliance with Environmental Laws, or the transportation to or from the Real
Property, of any Hazardous Material in violation of any Environmental Laws.
(s) Intentionally Omitted.
(t) Utilities. A list of all utilities servicing the Real Property
and the account numbers of such utilities is set forth on Schedule 10 attached
hereto.
(u) Underground Storage Tanks. Seller has not removed, or caused to be
removed, any underground storage tanks from the Real Property.
(v) No Unrecorded Liens. No lender claiming through Seller has a
right to encumber the Real Property or Personal Property, or any part thereof,
except for such liens or security interests as may be disclosed in the land
records or financing statement records of Montgomery County, Maryland.
(w) Appliances. Each of the apartments units in the Buildings
contains, and will contain on the Closing Date, a refrigerator, stove,
dishwasher and garbage disposal, but Seller makes no representation or warranty
regarding the condition of such items.
Section 6.3 Representations and Warranties regarding Leases, Contracts,
.nsurance and Other Documents
(a) Leases. To Seller's knowledge, the Lease Schedule contains a
description, which is true, correct and complete in all material respects, of
all Leases now in effect, including the name of each Tenant, the date of each
Tenant's Lease and all amendments, if any, thereto, the apartment unit number
and unit type under each Lease, rent waivers and other lease concessions
(originally granted and any remaining to be applied at a future date), the gross
monthly Rent (stated as gross Rent and/or plus utilities, etc.) payable by each
Tenant under its Lease, Rent paid for more than thirty (30) days in advance,
Rent delinquencies, the expiration date of each Lease, and the amount of any
Security Deposit paid by the Tenant under each Lease plus interest due thereon.
The Lease Schedule has been prepared by Seller's Property manager and attached
hereto without change. To Seller's knowledge, there are no Leases or other
tenancies for any space in the Real Property other than those set forth on the
Lease Schedule. Seller has delivered or made available to Purchaser true and
complete copies of each Lease described in the Lease Schedule. To Seller's
knowledge, except as otherwise disclosed on the Lease Schedule or elsewhere in
this Agreement:
(1) each of the Leases is in full force and effect;
(2) no written renewal or extension options have been granted to any
Tenant, except as set forth in such Tenant's Lease;
(3) no Tenant has an option to purchase the Real Property, or any part
thereof;
(4) no Tenant is entitled (pursuant to a written instrument) to any rebate,
concession, deduction or offset, except as set forth in such Tenant's Lease;
(5) no Tenant has paid any Rent for a period of more than 60 days in
advance; and
(6) Seller has the sole right to collect rent under each Lease and such
right has not been assigned, pledged, hypothecated, or otherwise encumbered
other than pursuant to a Mortgage to be released at the Closing.
(b) Contracts. The Contract Schedule contains a complete and
accurate list of all Contracts, including expirations dates, a description of
termination provisions (including any payment due on termination), amounts
payable by Seller thereunder and a description of services or materials to be
provided. Seller has delivered to Purchaser true and complete copies of each of
the Contracts described on the Contract Schedule. Each of such Contracts is in
full force and effect and has not been modified or amended, except as indicated
on the Contract Schedule. Seller is not in default of any of its monetary
obligations or any of its material non-monetary obligations under any of the
Contracts described on the Contract Schedule and knows of no material default on
the part of the other parties thereto. The Contracts described on the Contract
Schedule represent the complete agreement between Seller and such other parties
as to the services to be performed or materials to be provided thereunder and
the compensation to be paid for such services or materials, as applicable.
(c) Easement Agreements. The Easement Agreements Schedule contains
a description of the gross monthly, quarterly or annual amount (if any) payable
by the owner of the Real Property to any other Person who is a party to the
Easement Agreement and the gross monthly, quarterly or annual amount (if any)
payable by any other Person who is a party to the Easement Agreement to the
owner of the Real Property. Except as otherwise disclosed on the Easement
Agreements Schedule or elsewhere in this Agreement:
(1) each of the Easement Agreements is in full force and effect, and has
not been modified, amended or extended; and
(2) neither Seller nor any of the other parties to the Easement Agreements
is in default (beyond any grace period provided by such Easement Agreement) in
the payment of any amount payable by it under the Easement Agreement, and
neither Seller nor any of such parties is in default in the performance or
observance of any of the other covenants or conditions to be kept, observed or
performed by it under the Easement Agreement.
(d) Management Agreement. On the Closing Date, there will be no
contract or agreement in effect for the management of the Real Property.
(e) Leasing Commissions. No commission, fee or other compensation
is payable (or will, with the passage of time or occurrence of any event or
both, be payable), with respect to any Lease, and there are no leasing
commissions, fees or other compensation payable in respect of renewals of the
Leases. There does not currently exist any exclusive or continuing leasing or
brokerage agreements as to any of the Leases for which Purchaser will be
responsible after Closing.
(f) Intentionally Omitted.
(g) Intentionally Omitted.
Section 6.4 Certain Schedules. To Seller's knowledge, the information set
forth in the Employee Schedule, the License Schedule, the Warranties Schedule
and the Utility Schedule is true, correct and complete in all material respects.
. Except as expressly set forth in this Agreement, (i) the Property is being
sold in its condition on the Closing Date "as is", "where is" and "with all
faults", without any representation or warranty, express or implied, by Seller,
including, without limitation, any implied warranty of merchantability or
fitness for a particular purpose, and (ii) Seller has not made any agreement to
alter, repair or improve the Property.
All representations and warranties contained in this Article shall survive the
Closing, and the execution and delivery of the Deed, for a period of one year
after the Closing Date, and shall not be merged in the Deed at Closing.
<PAGE>
ARTICLE VII
Representations and Warranties of Purchaser
Purchaser makes the following representations and warranties to Seller for the
purpose of inducing Seller to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement:
(a) Organization. Purchaser is a business trust duly formed and
validly existing under the laws of the District of Columbia.
(b) Authorization. The Board of Trustees of Purchaser has duly
authorized the signer of this Agreement to execute and deliver this Agreement on
Purchaser's behalf.
(c) No Conflicting Agreements. The execution and delivery by
Purchaser of, and the performance and compliance by Purchaser with the terms and
provisions of, this Agreement do not violate any of the terms, conditions or
provisions of (i) Purchaser's organizational documents, (ii) any judgment,
order, injunction, decree, regulation or ruling of any court or other
Governmental Authority to which Purchaser is subject, or (iii) any agreement or
contract to which Purchaser is a party or to which it is subject.
ARTICLE VIII
Additional Obligations of Seller
. Seller agrees to surrender full, complete and actual possession of the
Property to Purchaser on the Closing Date, subject only to the rights of Tenants
under the Leases described in the Lease Schedule and permitted additions,
renewals and replacements thereof. Seller agrees to cooperate reasonably with
Purchaser to ensure that the transfer of possession on the Closing Date takes
place with the least possible disruption in the normal operation of the Real
Property and the duties of the employees.
. On the Closing Date, Seller shall also turn over to Purchaser, or leave at the
Real Property, all books, records, operating reports, files and other materials
necessary to a complete continuity in the operation of the business, or copies
thereof. Purchaser shall permit Seller to have access to such records and files
at all reasonable times after the Closing Date.
. Between the date of this Agreement and the Closing Date, Seller agrees that it
will:
(a) manage and operate the Real Property only in the ordinary and
usual manner, maintain in full force and effect until the Closing Date the
insurance policies in force on the date hereof, and use all reasonable efforts
to keep available the services of the management agent's employees and preserve
its relations with Tenants;
(b) at its expense, maintain the Real Property in its present
order and condition, make all necessary repairs and replacements in accordance
with Seller's past practices, and deliver the Real Property on the Closing Date
in substantially the same condition it is in on the date of this Agreement,
reasonable wear and tear and damage by fire or other casualty excepted;
(c) give prompt notice of any fire or other casualty affecting the
Property after the date of this Agreement;
(d) deliver to Purchaser, (i) promptly after the preparation
thereof by Seller in a manner consistent with its past practice (but at least as
often as monthly), a summary showing leasing activity at the Property, including
new rentals and eviction notices sent by Seller or its managing agent, and (ii)
promptly after its receipt by Seller, (A) any notice from a Tenant claiming that
Seller is in default under such Tenant's Lease or that such Tenant will be
vacating its apartment unit, and (B) any notice of violation issued by
Governmental Authorities with respect to the Real Property; Seller shall, at its
sole cost and expense, remedy before the Closing Date all violations of Legal
Requirements affecting or relating to the Real Property and any outstanding work
orders and requirements of any company insuring the Real Property against
casualty;
(e) enter into new Leases or amendments to Leases only for rents
in excess of those set forth in the Leasing Guidelines for the type of apartment
unit involved, and for terms not in excess of one year;
(f) notify Purchaser in writing, promptly after Seller acquires
knowledge thereof, of any facts or events which would cause any of Seller's
representations and warranties to be untrue or incorrect;
(g) perform, observe and comply with all terms and provisions of
all Easement Agreements to be performed, observed or complied with by Seller as
owner of the Real Property;
(h) maintain in full force and effect all Licenses listed on the
License Schedule and timely apply for renewals of all Licenses which will expire
before the Closing Date;
(i) on the Closing Date terminate all employees of Seller listed
on the Employee Schedule, except for those employees designated by Purchaser
prior to the end of the Feasibility Period; and
(i) promptly deliver to Purchaser any Property Document coming
into the possession of Seller which was not available during the Feasibility
Period.
. Between the date of this Agreement and the Closing Date, Seller agrees that,
without Purchaser's written consent in each case, it will not:
(a) voluntarily grant, create, assume or permit to exist any
Mortgage, lien, encumbrance, easement, covenant, condition, right-of-way or
restriction upon the Property other than the Permitted Exceptions, or
voluntarily take or permit any action adversely affecting the title to the
Property as it exists on the date of this Agreement, unless terminable at
Closing;
(b) agree to any commitment or incur any liability to any labor union;
(c) alter or amend any of the Assignable Contracts or become a
party to any new Contract unless the new Contract is terminable without penalty
to the then-owner of the Buildings upon not more than 30 days' notice;
(d) increase the salaries of the employees listed on the Employee
Schedule or hire additional employees for the management, operation, promotion,
maintenance or repair of the Real Property, unless any such increases or hires
are terminable at Closing;
(e) enter into a new Lease, or alter, amend, renew or extend any
Lease, providing for a monthly rent below the minimum monthly rent for the type
of apartment unit involved, as set forth in the Leasing Guidelines, or for a
term in excess of one year;
(f) terminate any Lease except for non-payment of Rent or other
default;
(g) remove any Personal Property from the Buildings unless the
same is replaced with similar items of equal or better quality before the
Closing Date; or
(h) enter into a contract for the sale of the Real Property to any
other Person, whether or not such contract is contingent on the termination of
this Agreement, except as may be required by Chapters 11A and 53A of the
Montgomery County, Maryland Code.
. Each of Seller and Purchaser agrees that it will, at any time and from time to
time within three (3) months after the Closing Date, upon request of other
party, do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further reasonable acts, deeds,
assignments, transfers, conveyances and assurances as may reasonably be required
for the completion of the transactions contemplated by this Agreement.
Section 8.6 Intentionally Omitted.
. Seller agrees to pay all expenses incurred by it in connection with the
negotiation, execution and performance of this Agreement and the transactions
contemplated hereby, including the fees and expenses of its legal counsel.
Section 8.8 Cancellation of Contracts. Seller shall cancel, as of the
Closing Date, all Contracts designated for cancellation by Purchaser in a
written notice given to Seller prior to the end of the Feasibility Period. If a
Contract cannot be cancelled as of the Closing Date, Seller shall nevertheless,
at the request of Purchaser, prior to Closing notify the other party to such
Contract of its cancellation in accordance with the terms of such Contract. In
such event, such Contract will be assigned to Purchaser at Closing and will be
cancelled after the Closing pursuant to Seller's notice.
Section 8.9 Title Defects.
(a) If the title examination performed by Purchaser during the
Feasibility Period (as provided in Section 9.1) discloses a defect in the title
to the Real Property such that the condition of title to the Real Property is
not (or will not be on the Closing Date) as required by Section 11.3, Purchaser
shall so notify Seller not later than fifteen (15) days prior to the end of the
Feasibility Period. Within ten (10) days after receipt of such notice, Seller
shall send a notice to Purchaser stating whether or not Seller elects to cure
such defect. Failure by Seller to send such a notice within such ten (10)-day
period shall be deemed an election not to cure such defect. If Seller elects to
cure such defect, it shall do so prior to the Closing Date; provided, however,
if such defect is of a nature that it cannot be cured prior to the Closing Date,
the Closing Date may be extended, at Purchaser's option, for any period required
to accomplish such cure.
(b) If a defect in the title to the Real Property is disclosed
after the end of the Feasibility Period such that the condition of title to the
Real Property is not (or will not be on the Closing Date) as required by Section
11.3, Purchaser shall so notify Seller. Seller shall be obligated to cure such
defect if the defect was caused by Seller after the end of the Feasibility
Period. If the defect was not caused by Seller after the end of the Feasibility
Period, then Seller shall have the right, but not the obligation, to elect to
cure such defect prior to the Closing Date. If Seller does not elect to cure
such defect, Purchaser shall have the right either (i) to terminate this
Agreement or (ii) waive the defect and proceed to Closing hereunder. If Seller
is required or elects to cure a defect in title under this Section 8.9(b) but is
not able to accomplish such cure prior to the Closing Date, the Closing Date may
be extended, at Purchaser's option, for any period required to accomplish such
cure.
Section 8.10. Pay-Off Letter. Seller shall obtain from any holder of a
mortgage on the Real Property, and deliver to the Escrow Agent a reasonable time
prior to the Closing Date, a letter from such mortgagee specifying the amounts
necessary to pay off such mortgage.
Section 8.11. Tenant Work Orders. Seller shall perform, and pay all
expenses incurred in connection with, all Tenant Work Orders in existence two
(2) days' prior to the Closing Date.
<PAGE>
ARTICLE IX
Additional Obligations of Purchaser
. Promptly after the date of this Agreement, Purchaser agrees to order an
examination of the title to the Real Property and to obtain a commitment for
issuance to Purchaser of an ALTA Form B owner's title insurance policy insuring
the fee simple title to the Real Property, in an amount equal to the Purchase
Price, subject to such exceptions to title as may be disclosed by the Land
Records or otherwise. If Purchaser does not terminate this Agreement within the
Feasibility Period, Purchaser shall be deemed to have accepted all exceptions to
title noted in Schedule B to the commitment (other than the survey exception and
the exception for unfiled mechanics' liens; the exception for defects, liens,
encumbrances, adverse claims or other matters, if any, created after the date of
the commitment (not earlier than the date of this Agreement) but prior to the
date title to the Real Property vests in Purchaser; the exception for rights of
parties in possession other than Tenants under the Leases; and the exception for
Mortgages encumbering the Real Property).
. Purchaser agrees to pay all expenses incurred by it in connection with the
negotiation, execution and performance of this Agreement and the transactions
contemplated hereby, including the fees and expenses of its legal counsel.
ARTICLE X
Conditions Precedent to Seller's Obligations
The obligations of Seller to sell the Property to Purchaser and to perform
the other covenants and obligations to be performed by it on the Closing Date
shall be subject to the following conditions (all or any of which may be waived,
in whole or in part, by Seller):
. The representations and warranties made by Purchaser in Article VII shall be
true and correct on and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of such date,
and Purchaser shall have executed and delivered to Seller a certificate, dated
as of the Closing Date, to the foregoing effect.
. Purchaser shall have performed all obligations required by this Agreement
to be performed by it on or before the Closing Date.
Section 10.3 Montgomery County Right of First Refusal. Seller shall have
received prior to the end of the Feasibility Period (i) a Certificate of
Compliance from Montgomery County, Maryland, in form and substance reasonably
acceptable to Seller, to the effect that Montgomery County has waived its right
of first refusal under Chapters 11A and 53A of the Montgomery County Code, and
(ii) a copy of a three (3)-year rental agreement between Purchaser and
Montgomery County (the "Rental Agreement") upon which such Certificate is based.
The terms and provisions of the Rental Agreement shall be subject to the
approval of Purchaser, in its sole discretion. If the condition set forth in
this Section 10.3 has not been satisfied on or prior to the Closing Date,
Purchaser shall have the right, at its option, to extend the Closing Date for up
to sixty (60) days in order to allow sufficient time for this condition to be
satisfied.
ARTICLE XI
Conditions Precedent to Purchaser's Obligations
The obligations of Purchaser to purchase the Property from Seller and to
perform the other covenants and obligations to be performed by it on the Closing
Date shall be subject to the following conditions (all or any of which may be
waived, in whole or in part, by Purchaser):
. The representations and warranties made by Seller in Article VI shall be true
and correct in every material respect on the date of this Agreement and shall be
true and correct in every material respect on and as of the Closing Date with
the same force and effect as if such representations had been made on and as of
such date, and Seller shall have executed and delivered to Purchaser a
certificate, dated as of the Closing Date, to the foregoing effect.
. Seller shall have performed in all material respects all covenants and
obligations required by this Agreement to be performed by it on or before the
Closing Date.
. On the Closing Date, (i) Seller shall have cured any title defects it has
elected to cure or is required to cure under the provisions of Section 8.9, and
(ii) subject to the payment by Purchaser of the applicable premium, Purchaser
shall be entitled to receive, at its expense, from the title insurance company
issuing the commitment obtained by Purchaser during the Feasibility Period a
current ALTA Form B owner's policy of title insurance, in a total amount equal
to the Purchase Price, dated, or updated to, the Closing Date, insuring, or
committing to insure, at standard rates, Purchaser's marketable fee simple title
to the Real Property subject only to the Permitted Exceptions.
Seller shall have received prior to the end of the Feasibility Period (i) a
Certificate of Compliance from Montgomery County, Maryland, in form and
substance reasonably acceptable to Seller, to the effect that Montgomery County
has waived its right of first refusal under Chapters 11A and 53A of the
Montgomery County Code, and (ii) a copy of a three (3)-year rental agreement
between Purchaser and Montgomery County (the "Rental Agreement") upon which such
Certificate is based. The terms and provisions of the Rental Agreement shall be
subject to the approval of Purchaser, in its sole discretion. If the condition
set forth in this Section 11.4 has not been satisfied on or prior to the Closing
Date, Purchaser shall have the right, at its option, to extend the Closing Date
for up to sixty (60) days in order to allow sufficient time for this condition
to be satisfied.
. On the Closing Date, no action or proceeding shall have been instituted or
threatened against Seller by a party other than Purchaser before any court to
restrain or prohibit, or to obtain substantial damages in respect of, or which
is related to or arises out of, the transfer of the Property by Seller to
Purchaser under the provisions of this Agreement or environmental matters
respecting the Property.
Section 11.6 Condemnation. On the Closing Date, no part of the Real
Property shall be about to be acquired, or shall previously have been acquired,
by authority of any governmental agency in the exercise of its power of eminent
domain or by private purchase in lieu thereof, nor on the Closing Date shall
there be any threat or imminence of any such acquisition or purchase.
ARTICLE XII
Damage by Fire or Other Casualty
. On the Closing Date, and as a condition precedent to the obligation of
Purchaser to purchase the Property pursuant to this Agreement, there shall be no
unrepaired damage by fire or other casualty to any portion of the Real Property
the estimated cost of repair of which is more than $100,000.
. If (i) any portion of the Property is damaged by fire or casualty after the
date of this Agreement and is not repaired and restored substantially to its
original condition prior to Closing and (ii) the estimated cost of repairs is
$100,000 or less, Purchaser shall be required to purchase the Property in
accordance with the terms of this Agreement and, at Closing, Seller shall assign
to Purchaser all insurance claims and proceeds with respect thereto and shall
pay or credit to Purchaser the amount of any deductible or uninsured loss with
respect to such casualty. If the estimated cost of repairing such damage is more
than $100,000, Purchaser may, at its sole option: (i) terminate this Agreement,
in which case the Escrow Agent shall return the Deposit to Purchaser and no
party shall have any further liability or obligation to any other party under
this Agreement, except as otherwise provided in Article V; or (ii) elect to
proceed with the Closing, in which case Seller shall assign to Purchaser all
insurance claims and proceeds (other than claims and proceeds for rent loss
insurance for periods prior to the Closing Date) with respect to such damage and
shall pay or credit to Purchaser the amount of any deductible or uninsured loss
with respect to such casualty. If a casualty to any part of the Property has
occurred and Purchaser is required or elects to complete the purchase of the
Property, Seller shall reasonably cooperate with Purchaser in prosecuting all
insurance claims assigned to Purchaser at Closing.
. For purposes of this Article XII, an architect selected by Seller and approved
in writing by Purchaser (such approval not to be unreasonably withheld, delayed
or conditioned), shall determine the estimated cost to repair damage caused by
fire or other casualty.
ARTICLE XIII
Closing
. The closing of the purchase and sale of the Property (the "Closing") shall be
held at the office of Arent Fox Kintner Plotkin & Kahn, 1050 Connecticut Avenue,
Washington, D. C. 20036, on the Closing Date. On the Closing Date, (i) Purchaser
shall effect a wire transfer of Federal funds to the Escrow Agent's escrow
account in an amount equal to the sum of (A) the Purchase Price (less the
Deposit) and (B) the net amount (if any) of the costs, expenses, prorations and
adjustments payable by Purchaser under this Agreement, and (ii) Escrow Agent
shall record the Deed (in accordance with reasonable and customary closing
escrow instructions of Seller and Purchaser not contrary to this Agreement).
After the Escrow Agent's receipt of the wire transfer of funds and immediately
following the recordation of the Deed vesting fee simple title in the Real
Property in Purchaser or its designee, (i) the Escrow Agent shall disburse to
Seller an amount equal to the Purchase Price (including, as a part of the
Purchase Price, the Deposit) reduced by the net amount of the costs, expenses,
prorations and adjustments payable by Seller under this Agreement (as evidenced
by the Closing Statement signed by Seller); (ii) the Escrow Agent shall deliver
to Purchaser all other documents and instruments received by it which, in
accordance with the terms of this Agreement, are to be delivered by Seller to
Purchaser at the Closing; and (iii) the Escrow Agent shall deliver to Seller all
other documents and instruments received by it which, in accordance with the
terms of this Agreement, are to be delivered by Purchaser to Seller at the
Closing.
. At the Closing, Seller shall deliver to Purchaser the following:
(a) the Deed of the Property to Purchaser or its designee, signed by
Seller;
(b) the Bill of Sale, signed by Seller;
(c) the Leases and Contract Assignment, signed by Seller;
(d) the General Assignment, signed by Seller;
(e) a letter in the form of Exhibit F signed by Seller, advising the
Tenants of the change in ownership of the Real Property;
(f) An updated Employee Schedule, License Schedule, Warranties
Schedule and Utility Schedule, showing any change in such Schedules since the
date of this Agreement;
(g) a certification as to Seller's non-foreign status which
complies with the provisions of Section 1445(b)(2) of the Internal Revenue Code
of 1986, as amended, signed by Seller;
(h) an Owner's Affidavit signed by Seller, addressed to the title
insurance company designated by Purchaser, with respect to the absence of claims
which would give rise to mechanics' liens, the absence of parties in possession
of the Real Property other than Tenants under the Leases (and other than
subtenants of Tenants) and the absence of unrecorded easements granted by
Seller, in the form reasonably required by the title insurance company to
eliminate the exceptions for those matters from Purchaser's title insurance
policy;
(i) the Closing Statement referred to in Section 14.1, signed by Seller;
(j) an original executed counterpart of each Lease and assignable Contract
then in effect (or a certified copy thereof);
(k) all keys to the Real Property and the Personal Property, if any, which
are in Seller's possession;
(l) a schedule updating the Lease Schedule and setting forth all
past due and uncollected Rent owed by Tenants, all prepayments of Rent and all
Security Deposits and interest due, if any, held by Seller, its managing agent
or any other Person under all Leases;
(m) all existing books, records, papers and agreements relating to the
Property which are in Seller's possession; and
(n) a certificate, signed by Seller, that all the representations
and warranties made by Seller in Article VI are true and correct on the Closing
Date with the same force and effect as if such representations and warranties
had been made on and as of such date;
. At the Closing, Purchaser shall deliver to Seller the following:
(a) an assumption agreement in the form of Exhibit G signed by
Purchaser, whereby Purchaser assumes certain liabilities and agrees to perform
certain obligations of Seller under the Leases and the Assignable Contracts;
(b) the Closing Statement referred to in Section 14.1, signed by
Purchaser; and
(c) a certificate, signed by Purchaser, that all the
representations and warranties made by Purchaser in Article VII are true and
correct on the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of such date;
. The delivery to the Escrow Agent of the Purchase Price, the executed Deed and
Bill of Sale and all other documents and instruments required to be delivered by
either party to the other by the terms of this Agreement (in accordance with
reasonable and customary closing escrow instructions of Seller and Purchaser not
contrary to this Agreement) shall be deemed to be a good and sufficient tender
of performance of the terms hereof. The Escrow Agent shall have the right, at
the Closing, to apply the Purchase Price to pay off and discharge encumbrances
or other obligations affecting the Real Property which are not Permitted
Exceptions, so that title to the Real Property shall be insurable as required by
Section 11.3.
ARTICLE XIV
Closing Adjustments and Prorations
All rentals, revenues and other income generated by the Real Property and all
utilities, real estate taxes, maintenance charges and other Operating Expenses
incurred in connection with the ownership, management and operation of the Real
Property shall be paid or shall be prorated between Seller and Purchaser in
accordance with the provisions of this Article. For purposes of the prorations
and adjustments to be made pursuant to this Article, Purchaser shall be deemed
to own the Real Property and therefore be entitled to any revenues and be
responsible for any expenses for the entire day upon which the Closing occurs.
Any apportionments and prorations which are not expressly provided for in this
Article shall be made in accordance with the customary practice in the
Metropolitan Washington D.C. area. Seller and Purchaser shall cause their
accountants to prepare a schedule of adjustments (the "Closing Statement")
before the Closing Date. Any net adjustment in favor of Purchaser shall be
credited against the Purchase Price at the Closing. Any net adjustment in favor
of Seller shall be paid in cash at the Closing by Purchaser to Seller. A copy of
the Closing Statement agreed upon by Seller and Purchaser shall be initialed by
Seller and Purchaser and delivered to the Escrow Agent at the Closing.
. Rent shall be prorated at the Closing in accordance with the following
provisions:
(a) Apartment Rent. Subject to Section 14.2(c), Apartment Rent
shall be prorated between Seller and Purchaser as of the Closing Date on an
accrual basis based on the actual number of days in the month during which the
Closing Date occurs. Seller shall be entitled to all Apartment Rent which
accrues before the Closing Date and Purchaser shall be entitled to all Apartment
Rent which accrues on and after the Closing Date.
(b) Additional Income. Subject to Section 14.2(c), items of
Additional Income shall be prorated between Seller and Purchaser as of the
Closing Date on an accrual basis based on the actual number of days in the
monthly or other period to which such item of Additional Income relates. Such
proration shall be made separately for each item of Additional Income.
(c) Delinquent Rent. Delinquent Rent shall be prorated between
Seller and Purchaser as of the Closing Date but not until it is actually
collected by Purchaser after the Closing, it being understood and agreed that
Purchaser shall have no obligation to collect Delinquent Rent on behalf of
Seller. Purchaser shall pay to Seller all Delinquent Rent collected by Purchaser
after the Closing Date. As a part of the Final Closing Adjustment, any
Delinquent Rent which has not as yet been paid shall be assigned to Seller, but
after the Closing and continuing through and after the Final Closing Adjustment,
without the express written consent of Purchaser, Seller shall not take any
action against a Tenant owing Delinquent Rent which would affect such Tenant's
right to occupy the premises leased under its Lease. Rent collected by Purchaser
after the Closing, net of the costs of collection (including reasonable
attorneys' fees and costs), shall be applied first to unpaid Rent then due and
payable and accruing after the Closing Date, and then to Delinquent Rent.
. Section 14.3 Taxes and Assessments
(a) Proration of Taxes at Closing. All non-delinquent real estate
taxes assessed against the Real Property shall be prorated between Seller and
Purchaser on an accrual basis, based upon the actual current tax bill. If the
most recent tax bill received by Seller before the Closing Date is not the
actual current tax bill, then Seller and Purchaser shall initially prorate the
real estate taxes at the Closing by applying 110% of the tax rate indicated on
the most recent tax bill received by Seller to the latest assessed valuation,
and shall reprorate the real estate taxes retroactively at the Final Closing
Adjustment. All real estate taxes accruing before the Closing Date shall be the
obligation of Seller and all real estate taxes accruing on and after the Closing
Date shall be the obligation of Purchaser. Any delinquent real estate taxes
assessed against the Real Property shall be paid (together with any interest and
penalties) by Seller at the Closing from the Purchase Price.
(b) Post-Closing Supplemental Taxes. If, after the Closing Date,
any additional or supplemental real estate taxes are assessed against the Real
Property by reason of back assessments, corrections of previous tax bills or
other events occurring before the Closing Date, Seller and Purchaser shall
reprorate the real estate taxes at the Final Closing Adjustment to provide the
appropriate credit to Purchaser.
(c) Post-Closing Refunds of Taxes. Any refunds of real estate
taxes made after the Closing shall be held by Purchaser (and, if received by
Seller, shall be delivered immediately to Purchaser to be held in accordance
with this Section) and shall first be applied to the unreimbursed costs incurred
in obtaining the refund, and the balance, if any, shall be paid to Seller (for
the period prior to the Closing Date) and to Purchaser (for the period
commencing on and after the Closing Date).
(d) Pending Tax Proceedings. If any proceeding to determine the
assessed value of the Real Property or the real estate taxes payable with
respect to the Real Property has been commenced before the date of this
Agreement and shall be continuing as of the Closing Date, Purchaser shall be
entitled to control the prosecution of such proceeding or proceedings to
completion and to settle or compromise any claim therein. Seller agrees to
cooperate reasonably with Purchaser and to execute any and all documents
reasonably requested by Purchaser in furtherance of the foregoing.
. All Operating Expenses shall be prorated between Seller and Purchaser as of
the Closing Date on an accrual basis, based on the actual number of days in the
month during which the Closing Date occurs for monthly expenses, and based on a
365-day year for annual expenses. Seller shall be responsible for all Operating
Expenses attributable to the period before the Closing Date and Purchaser shall
be responsible for all Operating Expenses attributable to the period on and
after the Closing Date. To the extent commercially reasonable and practicable,
Seller and Purchaser shall obtain billings and meter readings as of the Business
Day preceding the Closing Date to aid in the proration of charges for gas,
electricity and other utility services which are not the direct responsibility
of Tenants. If billings or meter readings as of the Business Day preceding the
Closing Date are obtained, adjustments of any costs, expenses, charges or fees
shown thereon shall be made in accordance with such billings or meter readings.
If billings or meter readings as of the Business Day preceding the Closing Date
are not available for any utility service, the charges therefor shall be
adjusted at the Closing on the basis of the per diem charges for the most recent
prior period for which bills were issued and shall be further adjusted at the
Final Closing Adjustment on the basis of the actual bills for the current
period.
. Purchaser shall be credited with and Seller shall be charged with an amount
equal to the sum of (i) all Security Deposits being held by Seller, Seller's
managing agent or any other Person under the Leases, and (ii) the amount of any
other credits due to Tenants as of the Closing Date in accordance with the terms
of the Leases, including prepaid rent and interest. Seller shall be entitled to
retain all Security Deposits or other such credits due. To the extent Purchaser
receives the Security Deposits at the Closing (or receives a credit against the
Purchase Price in an amount equal to the same), Purchaser shall, and does
hereby, indemnify and hold Seller harmless from and against any claims by
Tenants for the return of Security Deposits placed by such Tenants.
. Purchaser shall not be entitled to a credit for an amount equal to the
abatement of Rent for any period on and after the Closing Date to which Tenants
are entitled under Leases in effect on the Closing Date.
. Seller shall be entitled to retain all Utility Deposits. If any of the Utility
Deposits is not refundable to Seller without replacement by Purchaser, Purchaser
shall either: (i) deliver the requisite replacement Utility Deposit to the
utility company on or before the Closing Date, or (ii) pay to Seller at the
Closing the amount of such Utility Deposit, against a good and sufficient
transfer by Seller to Purchaser of all interest of Seller in the Utility
Deposit.
. No later than 120 days following the Closing Date, Seller and Purchaser shall
make a final adjustment to the prorations made pursuant to this Article (the
"Final Closing Adjustment"). The Final Closing Adjustment shall be made in the
following manner:
(a) General. All adjustments or prorations which could not be
determined at the Closing because of the lack of actual statements, bills or
invoices for the current period or any other reason, shall be made as a part of
the Final Closing Adjustment. Any net adjustment in favor of Purchaser shall be
paid in cash or cash equivalent by Seller to Purchaser no later than 30 days
after the Final Closing Adjustment. Any net adjustment in favor of Seller shall
be paid in cash or cash equivalent by Purchaser to Seller no later than 30 days
after the Final Closing Adjustment. The parties shall correct any manifest error
in the prorations and adjustments made at Closing promptly after such error is
discovered.
(b) No Further Adjustments. Except for: (i) additional or
supplemental real estate taxes, real estate tax credits or rebates, or other
adjustments to real estate taxes due to back assessments, corrections to
previous tax bills or real estate tax appeals or contests, (ii) manifest errors,
the Final Closing Adjustment shall be conclusive and binding upon Seller and
Purchaser, and Seller and Purchaser hereby waive any right to contest after the
Final Closing Adjustment any prorations, apportionments or adjustments to be
made pursuant to this Section.
. All State and County transfer taxes and recording charges payable in
connection with the recording of the Deed (whether imposed in the form of
transfer taxes, revenue stamps or otherwise) shall be paid fifty percent (50%)
by Seller and fifty percent (50%) by Purchaser. Purchaser shall pay for all
expenses of examinations of title, survey, all fees, charges and expenses of the
Escrow Agent, and all other recording fees and Closing expenses. Each party
shall pay its own legal fees and other expenses incurred by it prior to Closing.
. Notwithstanding any other provision of this Agreement to the contrary, all
federal, state or local income or gross receipts taxes payable with respect to
Seller or the Property, if any, accruing before the Closing Date, or any such
income or gross receipts tax assessed with respect to the transaction described
in this Agreement, if any, shall be the obligation of and for the account of
Seller, and Purchaser shall have no obligation or liability whatsoever with
respect thereto.
ARTICLE XV
Termination
. This Agreement may be terminated upon written notice given to the Escrow
Agent and the other party by:
(a) Purchaser at the Closing, if any one of the conditions set forth in
Article XI or Article XII is not satisfied on the Closing Date; or
(b) Seller at the Closing, if any one of the conditions set forth in
Article X is not satisfied on the Closing Date.
. If Purchaser terminates this Agreement pursuant to Section 15.1(a), this
Agreement shall become null and void, the Escrow Agent shall return the Deposit
to Purchaser and no party shall have any further liability or obligation to any
other party under this Agreement, except as otherwise provided in Article V or
the next sentence. If Purchaser terminates this Agreement pursuant to Section
15.1(a) because of a breach by Seller of any of the representations or
warranties made by it in this Agreement or the failure of Seller to perform any
of the covenants or agreements to be performed by it under this Agreement,
Purchaser shall have the right to sue to recover its damages arising out of such
breach or nonperformance in an amount not to exceed $300,000.
. If Seller terminates this Agreement pursuant to Section 15.1(b), this
Agreement shall become null and void, the Escrow Agent shall return the Deposit
to Purchaser and no party shall have any further liability or obligation to any
other party under this Agreement, except as otherwise provided in Article V or
the next sentence. If Seller terminates this Agreement pursuant to Section
15.1(b) because of a breach by Purchaser of any of the representations or
warranties made by it in this Agreement or the failure of Purchaser to perform
any of the covenants or agreements to be performed by it under this Agreement,
the Escrow Agent shall pay the Deposit to Seller. Seller's sole and exclusive
remedy for Purchaser's misrepresentation, breach of warranty or default shall be
to receive the Deposit as liquidated damages. In no event and under no
circumstances shall Seller be entitled to receive more than the Deposit as
damages for Purchaser's misrepresentation, breach of warranty or default.
Purchaser shall promptly return to Seller all engineering studies, Leases, Lease
files and other written material relating to the Real Property previously
delivered by Seller to Purchaser. Notwithstanding the foregoing provisions of
this Section 15.3, Seller shall have the right to sue Purchaser for damages
arising out of Purchaser's liability under the indemnities of Purchaser set
forth in Sections 5.3, 14.5, 16.2 and 16.4 hereof.
. If Seller defaults in performing any of the covenants or agreements to be
performed by it under this Agreement, Purchaser shall have the right, instead of
terminating this Agreement pursuant to Section 15.1, to elect to permit this
Agreement to remain in effect and to sue for specific performance.
ARTICLE XVI
Indemnification
. Subject to the provisions of Section 16.3, if Closing occurs, Seller agrees to
indemnify, hold harmless and defend Purchaser from and against:
(a) all debts, liabilities and obligations arising from business
done, transactions entered into or other events occurring before the Closing
Date with respect to the ownership, management, operation, maintenance and
repair of the Property, other than the debts, liabilities and obligations which
are being adjusted between Seller and Purchaser pursuant to this Agreement;
(b) any loss, liability or damage suffered or incurred by
Purchaser arising out of or resulting from injury or death to individuals or
damage to property sustained on the Real Property before the Closing and caused
by the willful or negligent act or omission (where applicable law imposes a duty
to act) of Seller;
(c) any loss, liability or damage suffered or incurred by
Purchaser because any representation or warranty made by Seller in Article VI,
or in any document furnished to Purchaser in connection with the Closing, is
false or misleading in any material respect;
(d) any loss, liability or damage suffered or incurred by
Purchaser because of the nonfulfillment of any covenant or agreement on the part
of Seller under this Agreement;
(e) all reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Purchaser in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the matters
indemnified against in this Section.
. Subject to the provisions of Section 16.3, if Closing occurs, Purchaser agrees
to indemnify, hold harmless and defend Seller from and against:
(a) all debts, liabilities and obligations arising from business
done, transactions entered into or other events occurring on and after the
Closing with respect to the ownership, management, operation, maintenance and
repair of the Property, other than the debts, liabilities and obligations which
are being adjusted between Seller and Purchaser pursuant to this Agreement;
(b) any loss, liability or damage suffered or incurred by Seller
arising out of or resulting from injury or death to individuals or damage to
property sustained on the Real Property on or after the Closing and caused by
the willful or negligent act or omission (where applicable law imposes a duty to
act) of Purchaser;
(c) any loss, liability or damage suffered or incurred by Seller
because any representation or warranty made by Purchaser in Article VII, or in
any document furnished to Seller in connection with the Closing, shall be false
or misleading in any material respect;
(d) any loss, liability or damage suffered or incurred by Seller
because of the nonfulfillment of any covenant or agreement on the part of
Purchaser under this Agreement;
(e) any loss, liability or damage suffered or incurred by Seller
with respect to the Security Deposits collected by Seller before the Closing
Date which are paid or credited to Purchaser at the Closing; and
(f) all reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Seller in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the matters
indemnified against in this Section.
. The obligations of Seller to indemnify Purchaser pursuant to Section 16.1 and
the obligations of Purchaser to indemnify Seller pursuant to Section 16.2 are
limited as follows:
(a) Limit on Seller's Obligation after Closing. If the Closing is
consummated, Seller shall not have any liability or obligation to Purchaser
pursuant to Section 16.1 with respect to any misrepresentation or breach of
warranty unless Seller receives written notice of such misrepresentation or
breach of warranty before the expiration of one year after the Closing Date.
(b) Limit on Purchaser's Obligation after Closing. If the Closing
is consummated, Purchaser shall not have any liability or obligation to Seller
pursuant to Section 16.2 with respect to any misrepresentation or breach of
warranty unless Purchaser receives written notice of such misrepresentation or
breach of warranty within one year after the Closing Date.
Section 16.4 No Brokers. Seller and Purchaser acknowledge and agree that
the Sales Agent has acted as the broker on behalf of Seller in connection with
the transaction contemplated hereby, and that Seller shall be solely responsible
for the payment of any fee or commission that may be due the Sales Agent. Except
for the Sales Agent, Seller represents and warrants to Purchaser that Seller has
not engaged any broker, agent or finder to act on its behalf in connection with
this transaction, and that Purchaser shall not be liable for the payment of any
fee or commission to the Sales Agent or any other broker, agent or finder
purporting to act on behalf of Seller. Similarly, Purchaser represents and
warrants to Seller that Purchaser has not engaged any broker, agent or finder to
act on its behalf in connection with this transaction, and that Seller shall not
be liable for the payment of any fee or commission to any broker, agent or
finder purporting to act on behalf of Purchaser in connection with this
transaction. Each of Seller and Purchaser does hereby agree to indemnify and
hold harmless the other party from any loss, damage, cost or expense incurred by
such other party and arising out of a breach of the representation and warranty
made by the indemnifying party as set forth in this Section 16.4.
ARTICLE XVII
Miscellaneous Provisions
. This Agreement, together with the Exhibits and Schedules hereto, contains the
entire agreement between the parties relating to the purchase and sale of the
Property, all prior negotiations between the parties, (including the letter of
intent dated November 13, 1995), are merged by this Agreement and there are no
promises, agreements, conditions, undertakings, warranties or representations,
oral or written, express or implied, between them other than as herein set
forth. No change or modification of this Agreement shall be valid unless the
same is in writing and signed by the parties hereto. No waiver of any of the
provisions of this Agreement, or any other agreement referred to herein, shall
be valid unless in writing and signed by the party against whom it is sought to
be enforced.
. The agreements and indemnities set forth in Article XIV, Article XVI and this
Article shall survive the Closing under this Agreement for a period of one (1)
year.
. This Agreement may be executed in any number of counterparts and it shall not
be necessary that each party to this Agreement execute each counterpart.
. All terms of this Agreement shall be binding upon, and inure to the benefit of
and be enforceable by, the parties hereto and their successors and assigns.
Purchaser shall have the right, without the consent of Seller, to assign its
rights, and delegate its duties, under this Agreement, to any Affiliate of
Purchaser.
. This Agreement is intended to be performed in the State of Maryland and shall
be construed and enforced in accordance with the laws of the State of Maryland.
. Section 17.6 Notices
(a) Manner of Giving Notice. Each notice, request, demand,
consent, approval or other communication (hereafter in this Section referred to
collectively as "notices" and referred to singly as a "notice") which Seller or
Purchaser is required or permitted to give to the other party pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given if
hand delivered with receipt therefor or sent by Federal Express or other
overnight courier service. Any such notice shall be deemed given when received
or when delivery is refused.
(b) Addresses for Notices. All notices shall be addressed to the
parties at the following addresses:
(1) if to Seller:
PaineWebber Properties, Inc.
265 Franklin Street
16th Floor
Boston, Massachusetts 02110
Attention: Mr. Stephen D. Brady
with a copy to:
Hunton & Williams
Suite 1700
1751 Pinnacle Drive
McLean, Virginia 22101
Attention: Gerald R. Best, Esq.
(2) if to Purchaser:
10400 Connecticut Avenue
Concourse Level
Kensington, Maryland 20895
Attention: Larry E. Finger, Senior Vice President
and Chief Financial Officer
and also, for any pre-Closing notices
Attention: Mary Beth Avedesian, Vice-President,
Investments
with a copy to:
Michael H. Leahy, Esq.
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue
Washington, D. C. 20036
Either party may, by notice given pursuant to this Section, change the person or
persons and/or address or addresses, or designate an additional person or
persons or an additional address or addresses, for its notices.
. Seller and Purchaser each agrees that before the Closing Date it will not
issue any press release, advertisement or other public communication with
respect to this Agreement or the transactions contemplated hereby without the
prior written consent of the other party hereto, except to the extent required
by law. If Seller or Purchaser is required by law to issue such a press release
or other public communication before the Closing Date, at least one Business Day
before the issuance of the same such party shall deliver a copy of the proposed
press release or other public communication to the other party hereto for its
review and approval, which approval shall not be unreasonably withheld or
delayed.
. If any term or provision of this Agreement or the application thereof to any
persons or circumstances 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 enforceable to the fullest extent permitted by law.
. Seller and Purchaser waive trial by jury in any action, proceeding or
counterclaim brought by either of them against the other on any matter arising
out of or in any way connected with this Agreement.
Section 17.10 Purchaser's Trustees Not Liable. Purchaser is a common law
trust organized under District of Columbia law on November 18, 1960. Under the
terms of the Declaration of Trust, all persons dealing with the trust shall look
solely to the trust property for satisfaction of claims of any nature, and no
trustee, officer or agent of the trust shall be held to any personal liability
whatsoever, in tort, contract or otherwise.
Section 17.11 SEC Requirements. If required by rules of the Securities and
Exchange Commission, Seller grants Purchaser the right, at Purchaser's sole
expense, to prepare an audited income statement of the Property for the most
recent fiscal year(s) as specified by Rule 3-14 of Regulation S-X under the
Securities Act of 1933 and the Securities Exchange Act of 1934, and Seller shall
provide and/or fully cooperate in obtaining any and all such other data and
financial information which shall be available to Seller (including, without
limitation, data and information obtainable from Seller's management agent for
the Property) and as advisable in connection with fulfilling Purchaser's
disclosure obligations as a public company subject to the rules and regulations
of the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above stated.
SELLER
Montgomery Village HWH Associates
By: PaineWebber Growth Properties Two L.P.,
General Partner
By: Second PW Growth Properties, Inc.,
General Partner
By: /s/ Stephen D. Brady
By: Montgomery Village Limited Partnership,
General Partner
By: Earl G. Glover, General Partner
By: /s/ Earl G. Glover
PURCHASER
Washington Real Estate Investment Trust
By: /s/ Edmund B. Cronin, Jr.
Edmund B. Cronin, Jr.
President and Chief Executive Officer
The undersigned Escrow Agent executes this Agreement solely for the
purpose of evidencing its agreement to perform its obligations as set forth in
Articles IV, XII, XIII and XV of the foregoing and annexed Purchase Agreement,
it being understood and agreed that Escrow Agent shall have absolutely no
liability for the performance by Seller or Purchaser of their obligations under
the Purchase Agreement.
Chicago Title Insurance Company
By: /s/ Craig A. Johnson
<PAGE>
RATIFICATION OF PURCHASE AGREEMENT
A. By Purchase Agreement, dates as of January 19, 1996 (the "Contract"), between
Montgomery Village HWH Associates ("Seller"), as seller, and Washington Real
Estate Investment Trust ("WREIT"), as purchaser, as assigned by WREIT to WRIT
Limited Partnership, Seller, whole general partners are Paine Webber Growth
Properties Two LP ("PWGPTLP"), and Montgomery Village Limited Partnership
("MVLP"), agreed to sell to WREIT, and WREIT agreed to buy, certain improved
real property known as Walker House Apartments.
B. Because there is a scrivener's error as to the execution of the Contract
on behalf of Seller, PWGPTLP and MVLP wish to ratify the Contract. Accordingly,
1. PWGPTLP and MVLP, the sole general partners of Seller and acting in such
capacities, ratify and confirm the execution of the contract on behalf of Seller
by PWGPTLP and Mr. Earl Glover,
2. This ratification, made this 11th date of March, 1996, is effective as
of January 19, 1996.
PWGPTLP:
Paine Webber Growth Properties Two LP
By: Second PW Growth Properties, Inc.
By: /s/ Rock M. D'Errico
Rock M. D'Errico
Vice President
MVLP:
Montgomery Village Limited Partnership
By: General American Real Estate and
Development, Inc.
By: /s/ Earl G. Glover
Earl G. Glover
President
<PAGE>
BILL OF SALE
THIS BILL OF SALE (this "Bill of Sale") is executed on this 13th day of
March, 1996, by Montgomery Village HWH Associates, a Maryland general
partnership ("Seller"), and WRIT Limited Partnership, a Delaware limited
partnership ("Purchaser").
1. Real Property. The "Real Property" shall mean the real property located
in Gaithersburg, Montgomery County, Maryland legally described in Exhibit A
attached to this Bill of Sale, and known as Walker House Apartments.
2. Personal Property. The "Personal Property" shall mean all furniture,
furnishings, fixtures, equipment, tools and other tangible personal property of
every kind and description owned by Seller and attached or appurtenant to,
located on or used or useful in connection with the management, operation,
maintenance and repair of the Real Property, including, but not limited to,
Seller's inventory of spare and replacement parts, Seller's inventory of
consumable supplies and the articles of personal property which are described in
Exhibit B attached to this Bill of Sale.
3. Sale. For good and valuable consideration received by Seller, the
receipt and sufficiency of which are hereby acknowledged, Seller hereby sells,
assigns and transfers the Personal Property to Purchaser. Seller covenants and
agrees to warrant and forever defend title to the Personal Property unto
Purchaser against all and every person or persons claiming through Seller.
Except as set forth in the immediately preceding sentence, Seller makes no
express or implied warranties or representations as to the Personal Property.
IN WITNESS WHEREOF, Seller and Purchaser have executed this Bill of Sale
the day and year first above written.
SELLER:
Montgomery Village HWH Associates
By: PaineWebber Growth Properties Two L.P.,
General Partner
By: Second PW Growth Properties, Inc.,
General Partner
By: /s/ Rock M. D'Errico
Name: Rock M. D'Errico
Title: Vice President
By:General American Real Estate & Development, Inc.,
General Partner
By:/s/ Earl G. Glover
Name: Earl G. Glover
Title: President
<PAGE>
WALKER HOUSE APARTMENTS
GAITHERSBURG, MARYLAND
PURCHASE AND SALE
3/13/96
PURCHASER: TITLE COMPANY:
WRIT LIMITED PARTNERSHIP Chicago Title Insurance Company
Case No. 9588-30030
SELLER:
Montgomery Village HWH Associates
SELLER'S SETTLEMENT STATEMENT
CONTRACT SALES PRICE $10,650,000.00
CREDITS TO SELLER:
TAXES & ASSESSMENTS:
Real Estate Taxes 34,743.66
South Village Homes Assessment 14.40
Montgomery Village Foundation Assessment 657.34
SERVICE CONTRACTS REIMBURSED BY/(REFUNDED TO) BUYER:
Western Termite 186.10
Solon (Income) (858.06)
UTILITIES REIMBURSED BY BUYER:
Oil 16,866 gals. @ $0.68427 11,541.00
-----------
TOTAL CREDITS TO SELLER 46,284.44
CHARGES TO SELLER:
1/2 TRANSFER & RECORDATION CHARGES:
County Transfer Tax 53,250.00
State Transfer Tax 26,625.00
State Recordation Fee 23,430.00
EXISTING MORTGAGE PAYOFF:
Mellon Mortgage/Fannie Mae 5,010,817.48
MORTGAGE RELEASE RECORDING FEE 125.00 EST
BROKERAGE COMMISSION: Cassidy & Pinkard 106,500.00
CAPITAL EXPENDITURES REIMBURSEMENT 25,000.00
MINIMUM RENT (3/13/96 thru 3/31/96) 89,456.59
SERVICE CONTRACTS DISBURSED BY ESCROW AGENT:
Boland Services 251.61
Otis Elevator 280.75
Metropolitan Termite 40.26
Waste Management 449.03
<PAGE>
UTILITIES DISBURSED BY ESCROW AGENT:
Washington Suburban Sanitary Commission
(thru 3/8/96 reading) 11,644.26
UTILITIES REIMBURSED BY SELLER:
Washington Suburban Sanitary Commission
(3/8/96 thru 3/12/96) 1,240.00 est
TENANT SECURITY DEPOSITS 65,336.00
INTEREST DUE ON TENANT SECURITY DEPOSITS 7,997.23
-----------
TOTAL CHARGES TO SELLER (5,422,443.21)
-------------
NET DUE TO SELLER $ 5,273,841.23
==============
SELLER: SELLER:
Montgomery Village HWH Associates Montgomery Village HWH Associates
By: PaineWebber Growth Properties Two LP, By: Montgomery Village Limited
General Partner Partnership
General Partner
By: Second PW Growth Properties, Inc. By:General American Real Estate
General Partner and Development, Inc.
General Partner
By: /s/ Rock M. D'Errico 3/13/96 By: /s/ Earl G. Glover 3/13/96
Rock M. D'Errico, Vice President Earl G. Glover, CEO
TITLE COMPANY:
Chicago Title Insurance Company
By: /s/ Craig A. Johnson
Craig A. Johnson, Assistant Vice President
Title Company is signing this settlement statement solely to confirm its
agreement to disburse funds in accordance herewith, subject to the attached
General Conditions of Escrow
