UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 1-9317
HRPT PROPERTIES TRUST
---------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Maryland 04-6558834
- ---------------------------------------------- -----------------------------------
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
</TABLE>
400 Centre Street, Newton, Massachusetts 02458
---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
617-332-3990
------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Number of Common Shares outstanding at the latest practicable date
November 9, 1998: 131,547,178 shares of beneficial interest, $.01 par value.
<PAGE>
HRPT PROPERTIES TRUST
FORM 10-Q
SEPTEMBER 30, 1998
INDEX
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<CAPTION>
Page
----
<S> <C> <C>
PART I Financial Information
---------------------
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 1998 and December 31, 1997 1
Consolidated Statements of Income - Three and Nine Months Ended September 30,
1998 and 1997 2
Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1998
and 1997 3
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 7
PART II Other Information
-----------------
Item 2. Changes in Securities 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 12
</TABLE>
<PAGE>
HRPT PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
- ------
Real estate properties, at cost (including properties leased to
affiliates with a cost of $113,079 and $112,075, respectively):
Land........................................................... $ 347,408 $ 256,582
Buildings and improvements..................................... 2,439,848 1,712,441
---------- -----------
2,787,256 1,969,023
Less accumulated depreciation.................................. 153,137 111,669
---------- -----------
2,634,119 1,857,354
Real estate mortgages and notes, net (including note from an
affiliate of $1,000 and $2,365, respectively)................... 69,369 104,288
Investment in Hospitality Properties Trust......................... 111,345 111,134
Cash and cash equivalents.......................................... 46,942 22,355
Interest and rents receivable...................................... 29,557 20,455
Other assets, net.................................................. 34,764 20,377
---------- -----------
$2,926,096 $ 2,135,963
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Bank notes payable................................................. $ 95,000 $ 200,000
Senior notes payable, net.......................................... 659,402 349,900
Mortgage notes payable............................................. 25,399 26,329
Convertible subordinated debentures................................ 204,863 211,650
Accounts payable and accrued expenses.............................. 34,780 27,865
Deferred rents..................................................... 34,696 30,089
Security deposits.................................................. 18,143 18,767
Due to affiliates.................................................. 15,245 5,103
Shareholders' equity:
Preferred shares of beneficial interest, $.01 par value:
50,000,000 shares authorized, none issued.................... -- --
Common shares of beneficial interest, $.01 par value:
150,000,000 shares and 125,000,000 shares authorized,
131,547,178 shares and 98,853,170 shares issued and
outstanding, respectively ................................... 1,315 988
Additional paid-in capital..................................... 1,964,878 1,371,236
Cumulative net income.......................................... 525,602 420,298
Dividends...................................................... (653,227) (526,262)
---------- -----------
Total shareholders' equity................................... 1,838,568 1,266,260
---------- -----------
$2,926,096 $2,135,963
========== ===========
</TABLE>
See accompanying notes
1
<PAGE>
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- --------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Rental income............................... $ 93,301 $ 52,226 $239,045 $129,518
Interest and other income................... 3,659 5,078 13,158 16,177
--------- -------- -------- --------
Total revenues.......................... 96,960 57,304 252,203 145,695
--------- -------- -------- --------
Expenses:
Operating expenses.......................... 21,449 8,205 51,535 16,961
Interest.................................... 16,355 9,209 45,788 24,955
Depreciation and amortization............... 16,366 10,395 43,093 26,633
General and administrative.................. 4,754 3,309 12,354 8,148
--------- -------- -------- --------
Total expenses.......................... 58,924 31,118 152,770 76,697
--------- -------- -------- --------
Income before equity in earnings of
Hospitality Properties Trust, gain on sale
of properties and extraordinary item........ 38,036 26,186 99,433 68,998
Equity in earnings of Hospitality Properties
Trust....................................... 2,076 2,238 5,541 6,683
Gain on equity transaction of Hospitality
Properties Trust............................ -- -- 2,470 --
--------- -------- -------- --------
Income before gain on sale of properties and
extraordinary item.......................... 40,112 28,424 107,444 75,681
Gain on sale of properties..................... -- 2,898 -- 2,898
--------- -------- -------- --------
Income before extraordinary item.............. 40,112 31,322 107,444 78,579
Extraordinary item - early extinguishment of
debt........................................ -- (1,102) (2,140) (1,102)
--------- -------- -------- --------
Net income..................................... $ 40,112 $ 30,220 $105,304 $ 77,477
========= ======== ======== ========
Weighted average shares outstanding............ 131,546 98,829 115,931 89,918
========= ======== ======== ========
Basic and diluted earnings per common share:
Income before gain on sale of properties and
extraordinary item.......................... $0.30 $0.29 $0.93 $0.84
========= ======== ======== ========
Income before extraordinary item............... $0.30 $0.32 $0.93 $0.87
========= ======== ======== ========
Net income..................................... $0.30 $0.31 $0.91 $0.86
========= ======== ======== ========
</TABLE>
See accompanying notes
2
<PAGE>
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1998 1997
---------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................................ $ 105,304 $ 77,477
Adjustments to reconcile net income to cash provided by operating
activities:
Gain on sale of properties........................................ -- (2,898)
Gain on equity transaction of Hospitality Properties Trust........ (2,470) --
Equity in earnings of Hospitality Properties Trust................ (5,541) (6,683)
Dividends from Hospitality Properties Trust....................... 7,800 7,280
Extraordinary item - early extinguishment of debt................. 2,140 1,102
Depreciation ..................................................... 41,713 25,422
Amortization...................................................... 1,380 1,211
Amortization of deferred interest costs and bond discount......... 35 699
Change in assets and liabilities:
Increase in interest and rents receivable and other assets.... (23,045) (4,068)
Increase in accounts payable and accrued expenses............. 6,915 21,129
Increase (decrease) in deferred rents......................... 4,607 (531)
Decrease in security deposits................................. (624) (5,515)
Increase (decrease) in due to affiliates...................... 11,182 (648)
---------- --------
Cash provided by operating activities............................. 149,396 113,977
---------- --------
Cash flows from investing activities:
Real estate acquisitions and improvements............................. (592,188) (215,310)
Acquisition of business, less cash acquired........................... -- (323,181)
Investments in mortgage loans......................................... (226,000) (576)
Proceeds from repayment of notes and mortgage loans, net.............. 33,404 33,690
Net proceeds from sale of real estate................................. 5,565 22,898
Repayment of loan by affiliate........................................ 1,365 --
---------- --------
Cash used for investing activities................................ (777,854) (482,479)
---------- --------
Cash flows from financing activities:
Proceeds from issuance of common shares................................ 580,306 483,153
Proceeds from borrowings............................................... 1,219,467 375,000
Payments on borrowings................................................. (1,015,930) (340,649)
Deferred finance costs incurred........................................ (3,833) (3,581)
Dividends paid......................................................... (126,965) (95,509)
---------- --------
Cash provided by financing activities.............................. 653,045 418,414
---------- --------
Increase in cash and cash equivalents..................................... 24,587 49,912
Cash and cash equivalents at beginning of period.......................... 22,355 21,853
---------- --------
Cash and cash equivalents at end of period................................ $ 46,942 $ 71,765
========== ========
Supplemental cash flow information:
Interest paid.......................................................... $ 41,451 $ 24,400
========== ========
</TABLE>
See accompanying notes
3
<PAGE>
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1998 1997
--------- ---------
<S> <C> <C>
Non-cash investing activities:
Real estate acquisitions........................................ $(237,404) $ (10,616)
Investment in mortgage loans.................................... 226,000 --
Sale of real estate............................................. 11,404 10,616
Acquisition of business, less cash acquired:
Real estate acquisitions........................................ $ 5,705 $ 422,920
Working capital, other than cash................................ -- 3,904
Liabilities assumed............................................. -- (27,588)
Net cash used to acquire business............................... -- (323,181)
--------- ---------
Issuance of common shares....................................... $ 5,705 $ 76,055
========= =========
Non-cash financing activities:
Issuance of common shares....................................... $ 7,958 $ 16,578
Conversion of convertible subordinated debentures, net.......... (6,629) (15,765)
</TABLE>
See accompanying notes
4
<PAGE>
HPRT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 1. Basis of Presentation
- ------------------------------
Effective July 1, 1998, Health and Retirement Properties Trust changed its
name to HRPT Properties Trust.
The financial statements of HRPT Properties Trust and its subsidiaries (the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for interim periods are
not necessarily indicative of the results that may be expected for the full
year. Certain prior year amounts have been reclassified to conform to the
current year's presentation.
The Financial Accounting Standards Board issued Financial Accounting
Standards Board Statement No. 130 "Reporting Comprehensive Income" ("FAS 130")
and Statement No. 131 "Disclosure about Segments of an Enterprise and Related
Information" ("FAS 131") in 1997 and Statement No. 133 "Accounting for
Derivative Instruments and Hedging Activities ("FAS 133") in 1998. FAS 130 was
adopted for the Company's financial statements in the first quarter of 1998 and
had no impact on the Company's financial condition or results of operations. FAS
131 is effective for the Company's annual 1998 financial statements and FAS 133
must be adopted for the Company's year 2000 financial statements. The Company
anticipates that FAS 131 and FAS 133 will have no impact on the Company's
financial condition or results of operations.
Note 2. Shareholders' Equity
- -----------------------------
During the nine months ended September 30, 1998, the Company sold
25,000,000 common shares pursuant to a public offering and sold 6,977,575 common
shares in four offerings to unit investment trusts sponsored by various
investment banks, raising net proceeds of $580,306. The net proceeds were used
to repay amounts outstanding under the Company's bank credit facility, to
purchase real estate and for general business purposes. The Company also issued
286,400 common shares for the purchase of real estate and issued 362,217 common
shares due to the conversion of $6,787 of its convertible subordinated
debentures due in 2003.
In July 1998, 13,000 common shares were granted to officers of the Company
and certain employees of REIT Management & Research, Inc. ("RMR"), the Company's
investment manager and advisor, pursuant to the 1992 Incentive Share Award Plan.
During 1998, the three independent trustees were each granted 500 common shares
as part of their annual fee, and 1,000 common shares were granted to a trust for
the child of a deceased former trustee, Ralph J. Watts. The shares granted to
the officers and certain employees of RMR vest over a three-year period. The
shares granted to the trustees vest immediately. The Company also issued 52,316
common shares to HRPT Advisors, Inc., an affiliate, as the incentive fee earned
for the year ended December 31, 1997.
During the nine months ended September 30, 1998, the Company increased the
number of common shares authorized from 125,000,000 to 150,000,000.
On October 5, 1998, the trustees declared a dividend on the Company's
common shares with respect to the quarter ended September 30, 1998 of $.38 per
share, which will be distributed on or about November 20, 1998 to shareholders
of record as of October 22, 1998.
Note 3. Real Estate Properties
- -------------------------------
During the nine months ended September 30, 1998, the Company purchased 28
commercial office properties, 10 medical office properties and five nursing
properties for approximately $819,059, using cash on hand and borrowings under
the Company's bank credit facility. In addition, during the nine-month period,
the Company sold one office property and four nursing properties for $16,969; no
gain or loss was recognized on the sale of these properties.
5
<PAGE>
HPRT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 3. Real Estate Properties - continued
- -------------------------------------------
During the nine months ended September 30, 1998, the Company funded $10,533
of improvements to its existing properties. At September 30,1998, the Company
had outstanding commitments aggregating approximately $154,585 to acquire
properties or to provide financing. The acquisition of these properties is
subject to various closing conditions customary in real estate transactions and
no assurances can be given as to when or if these properties will be acquired.
Subsequent to September 30, 1998, the Company purchased seven commercial
office properties for approximately $139,507, using cash on hand and by
borrowing $103,500 on the Company's revolving credit facility. The office
properties owned by the Company are managed by RMR.
Note 4. Investment in Hospitality Properties Trust
- ---------------------------------------------------
At September 30, 1998, the Company owned four million shares of the common
stock of Hospitality Properties Trust ("HPT") with a carrying value of $111,345
and a market value of $119,750. The Company's percentage ownership of HPT was
reduced from 10.3% at December 31, 1997 to 9.3% at September 30, 1998 as a
result of public stock offerings completed by HPT during 1998. As a result of
these transactions, the Company recognized gains of $2,470 in 1998.
Note 5. Real Estate Mortgages and Notes Receivable, net
- --------------------------------------------------------
During the nine months ended September 30, 1998, the Company received
regularly scheduled principal payments of $557, principal repayments of
mortgages secured by three retirement facilities and five nursing facilities
totaling $34,334, including principal repayment of $1,365 from a loan to an
affiliate. In addition, the Company purchased a mortgage loan secured by a
commercial office property for $226,000. Subsequent to the acquisition of the
mortgage loan, the Company acquired the beneficial ownership of the property.
Note 6. Indebtedness
- ---------------------
During February 1998, the Company issued $50,000 of Remarketed Reset Notes
due 2007 and $100,000 unsecured 6.7% Senior Notes due 2005. In August 1998, the
Company issued $160,000 unsecured 6 7/8% Senior Notes due 2002. Net proceeds
from these issuances of $307,108 were used to repay amounts outstanding under
the Company's revolving credit facility, to purchase real estate and for general
business purposes.
In April 1998, the Company entered into a new $500,000 unsecured revolving
bank credit facility (the "New Credit Facility.") The New Credit Facility
matures in 2002 and bears interest at LIBOR plus a premium. The Company
recognized an extraordinary loss on the early extinguishment of debt in the
second quarter of 1998 of $2,140, as a result of the write-off of deferred
financing fees associated with the previous bank credit facility.
In July 1998, the Company reset the terms of the Remarketed Reset Notes
(the "Reset Notes") for a period of one year at LIBOR plus a premium.
6
<PAGE>
HRPT PROPERTIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Three Months Ended September 30, 1998 Versus 1997
- -------------------------------------------------
Total revenues for the three months ended September 30, 1998 increased to
$97.0 million from $57.3 million for the three months ended September 30, 1997.
Rental income increased by $41.1 million and interest and other income decreased
by $1.4 million. Rental income increased because of new real estate investments
subsequent to September 30, 1997. Interest and other income decreased primarily
as a result of a decrease in mortgage interest income as the Company's mortgage
loan investments are repaid.
Total expenses for the three months ended September 30, 1998 increased to
$58.9 million from $31.1 million for the three months ended September 30, 1997.
Operating expenses increased by $13.2 million as a result of the Company's
increased investment in "gross leased" real estate assets during the 1998 period
as compared to the 1997 period. Interest expense increased by $7.1 million as a
result of higher borrowings outstanding due to new real estate investments
during the 1998 period. Depreciation and amortization, and general and
administrative expense increased by $6.0 million and $1.4 million, respectively,
primarily as a result of new real estate investments subsequent to September 30,
1997.
Net income increased to $40.1 million, or $.30 per basic and diluted common
share, for the 1998 period from $30.2 million, or $.31 per basic and diluted
common share, for the 1997 period. The change in net income is due primarily to
the increase in new real estate investments since September 30, 1997.
Funds from operations for the three months ended September 30, 1998 were
$58.2 million, or $.44 per basic common share, and $40.1 million, or $.41 per
basic common share, for the 1997 period. Diluted funds from operations for the
three months ended September 30, 1998 were $62.2 million, or $.44 per diluted
common share, and $44.2 million, or $.40 per diluted common share, for the 1997
period. The dividends declared which relate to the three months ended September
30, 1998 and 1997 were $50.0 million, or $.38 per common share, and $36.6
million, or $.37 per common share, respectively.
Nine Months Ended September 30, 1998 Versus 1997
- ------------------------------------------------
Total revenues for the nine months ended September 30, 1998 increased to
$252.2 million from $145.7 million for the nine months ended September 30, 1997.
Rental income increased by $109.5 million and interest and other income
decreased by $3.0 million. Rental income increased because of new real estate
investments subsequent to September 30, 1997. Interest and other income
decreased primarily as a result of a decrease in mortgage interest income as the
Company's mortgage loan investments are repaid.
Total expenses for the nine months ended September 30, 1998 increased to
$152.8 million from $76.7 million for the nine months ended September 30, 1997.
Operating expenses increased by $34.6 million as a result of the Company's
increased investment in "gross leased" real estate assets during the 1998 period
as compared to the 1997 period. Interest expense increased by $20.8 million as a
result of higher borrowings outstanding due to new real estate investments
during the 1998 period. Depreciation and amortization, and general and
administrative expense increased by $16.5 million and $4.2 million,
respectively, primarily as a result of new real estate investments subsequent to
September 30, 1997.
Net income increased to $105.3 million, or $.91 per basic and diluted
common share, for the 1998 period from $77.5 million, or $.86 per basic and
diluted common share, for the 1997 period. Net income increased primarily as a
result of new investments since September 30, 1997 and the recognition of a gain
on an equity transaction of HPT, offset by a decrease in gain on sale of
properties and an increase in extraordinary loss resulting from the early
extinguishment of debt.
7
<PAGE>
HRPT PROPERTIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Nine Months Ended September 30, 1998 Versus 1997 - continued
- ------------------------------------------------------------
Funds from operations for the nine months ended September 30, 1998, were
$153.2 million, or $1.32 per basic common share, and $105.2 million, or $1.17
per basic common share, for the 1997 period. Diluted funds from operations for
the nine months ended September 30, 1998, were $165.4 million, or $1.30 per
diluted common share, and $117.5 million, or $1.16 per diluted common share, for
the 1997 period. The dividends declared which relate to the nine months ended
September 30, 1998 and 1997 were $140.4 million, or $1.14 per common share, and
$107.7 million, or $1.09 per common share, respectively.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Total assets of the Company increased to $2.9 billion at September 30,
1998, from $2.1 billion at December 31, 1997. The increase is primarily
attributable to new real estate acquisitions.
During the nine months ended September 30, 1998, the Company purchased 28
commercial office properties, 10 medical office properties and five nursing
properties for approximately $819.1 million, using cash on hand and borrowings
under the Company's bank credit facility. In addition, during the nine-month
period, the Company sold one office property and four nursing properties for
$17.0 million; no gain or loss was recognized on the sale of these properties.
Subsequent to September 30, 1998, the Company purchased seven commercial
office properties for approximately $139.5 million, using cash on hand and by
borrowing $103.5 million on the Company's revolving credit facility.
During the nine months ended September 30, 1998, the Company funded $10.5
million of improvements to its existing properties, received $557,000 of
regularly scheduled principal payments, received $33.0 million representing
principal repayments of mortgages secured by three retirement facilities and
five nursing facilities, and received $1.4 million from a loan to an affiliate.
In addition, the Company purchased a mortgage loan secured by a commercial
office property for $226.0 million. Subsequent to the acquisition of the
mortgage loan, the Company acquired the beneficial ownership of the property.
At September 30, 1998, the Company owned 4.0 million, or 9.3%, of the
common shares of beneficial interest of HPT with a carrying value of $111.3
million and a market value of $119.8 million. During the nine months ended
September 30, 1998, HPT completed public stock offerings of 3.9 million common
shares of beneficial interest for total consideration of approximately $134.8
million. As a result of these transactions, the Company's ownership percentage
decreased from 10.3% at December 31, 1997 to 9.3% at September 30, 1998 and the
Company realized a gain of $2.5 million in 1998.
During the nine months ended September 30, 1998, the Company sold 25
million common shares in a public offering and sold 6,977,575 common shares in
four offerings to unit investment trusts sponsored by various investment banks,
raising net proceeds of $580.3 million. Proceeds from these offerings were used
to repay amounts outstanding under the Company's revolving bank credit facility,
to purchase real estate and for general business purposes. In addition, the
Company issued 362,217 common shares due to the conversion of $6.8 million of
its convertible subordinated debentures and issued 286,400 common shares for the
purchase of real estate.
In April 1998, the Company amended and restated its unsecured revolving
bank credit facility (the "New Credit Facility") and increased its amount to
$500.0 million and extended its expiration. The New Credit Facility matures in
2002 and bears interest at LIBOR plus a premium. The Company recognized an
extraordinary loss on the early extinguishment of debt in the second quarter of
1998 of $2.1 million as a result of the write-off of deferred financing fees
associated with the previous bank credit facility.
8
<PAGE>
HRPT PROPERTIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES - continued
- -------------------------------------------
At September 30, 1998, the Company had $46.9 million of cash and cash
equivalents, as well as $95.0 million outstanding and $405.0 million available
for borrowing under its bank credit facility.
During February 1998, the Company issued $50.0 million of Remarketed Reset
Notes due 2007 and $100.0 million unsecured 6.7% Senior Notes due 2005. In
August 1998, the Company issued $160.0 million unsecured 6 7/8% Senior Notes due
2002. Net proceeds of approximately $307.1 million were used to repay amounts
outstanding under the Company's revolving credit facility, to purchase real
estate and for general business purposes.
In July 1998, the Company reset the terms of the Reset Notes for a period
of one year at LIBOR plus a premium.
At September 30, 1998, the Company had outstanding commitments to purchase
properties or provide financing totaling approximately $154.6 million. The
Company intends to fund these commitments with a combination of cash on hand and
amounts available under its existing credit facility. The acquisition of these
properties is subject to various closing conditions customary in real estate
transactions, and no assurances can be given as to when and if these properties
will be acquired.
The Company continues to seek new investments to expand and diversify its
portfolio of leased real estate. As of September 30, 1998, the Company's debt as
a percentage of total market capitalization was approximately 32%.
Year 2000
- ---------
The Company's in-house computer systems environment is limited to software
and hardware developed by third parties and installed, operated and monitored by
the Company's investment advisor. All of the Company's computer systems (which
are limited to financial reporting and accounting systems) were installed within
the last two years and management believes such systems are Year 2000 compliant.
All costs associated with the Company's computer systems are borne by the
Company's investment advisor.
Most of the Company's healthcare properties are leased on a triple net
lease basis and are not managed by the Company. These triple net leased
properties are dependent upon the efforts of the Company's third party tenants
and their affiliates which operate such properties. The Company's leases and
other contractual relationships require these operators to conduct the daily
operations of the Company's properties and the scope of the operators'
responsibilities includes ensuring preparedness for the year 2000. Because of
this leasing arrangement, the only actions that the Company can take with
respect to these properties are to inquire about and evaluate its operators'
year 2000 preparedness plans. Some of the Company's triple net leased operators
have responded to Company inquiries regarding their preparedness for issues
related to the year 2000. Based on operator responses to the Company's
inquiries, the Company believes that these operators are in the process of
studying their systems and the systems of their vendors, suppliers and service
providers to ensure preparedness. Current levels of preparedness are varied and
include partially completed inventory and assessment of potential risks,
testing, implementation of plans for remediation and reprogramming and
compliance. While the Company believes the efforts of its tenants described in
their responses will be or are adequate to address year 2000 concerns, there can
be no guarantee that such systems will be year 2000 compliant on a timely basis
and will not have a material effect on the Company.
Most of the Company's commercial office properties and properties leased to
the U.S. Government are leased on a gross or modified gross lease basis and are
managed by the Company. In early 1998 the Company set out to identify issues
associated with year 2000 compliance for such managed leased properties. The
Company has been contacting and will continue to contact vendors to gather
information to assess vendor readiness. In addition, managers and engineers at
each of the Company's regional offices are responsible for gathering and
assessing year 2000 issues affecting specific building systems including life
safety, elevator, garage, security, and energy management systems. The Company
will also request its major tenants to provide the Company with periodic updates
of their year 2000 readiness. The Company expects to complete an overall
assessment of year 2000 issues by first quarter 1999 and perform necessary
system replacements or upgrades, including testing, by third quarter 1999.
Overall financial risk to the Company associated with year 2000 readiness for
these properties is not expected to be material, and most of the cost associated
with correcting non-compliance is expected to be classified as an operating
expense that is reimburseable to the Company under most tenant leases.
If the efforts of the Company, its vendors, its customers and its tenants
to prepare for the year 2000 were ineffective, the Company's properties could be
subject to significant adverse effects, including, but not limited to, loss of
business and growth opportunities, reduced revenues and increased expenses which
might cause operating losses by the Company's tenants at their operating
properties as well as operating losses at the Company's gross leased properties.
Continued or severe operating losses may cause one or more of the Company's
tenants to ultimately default on their leases. Numerous lease defaults could
jeopardize the Company's ability to maintain its financial results of operations
and meet its financial, operating and capital obligations.
The Company does not currently have a contingency plan in place in the
event it, or its operators, do not successfully remedy year 2000 compliance
issues that are identified in a timely manner or fail to identify any year 2000
issues. The Company will evaluate the status of its year 2000 compliance plan in
mid 1999 and determine whether such a plan is necessary.
9
<PAGE>
HRPT PROPERTIES TRUST
Part II Other Information
- --------------------------
Item 2. Changes in Securities.
On July 7, 1998, pursuant to the Company's Incentive Share Award Plan, one
of the Company's independent trustees received a grant of 500 common shares and
officers of the Company and certain employees of RMR received grants of 13,000
common shares, each valued at $18.625 per common share, the closing price of the
common shares on the New York Stock Exchange on July 7, 1998. The grants were
made pursuant to the exemption from registration contained in Section 4(2) of
the Securities Act of 1933, as amended.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4.1 Indenture dated as of July 9, 1997 by and between HRPT
Properties Trust and State Street Bank and Trust Company
pertaining to Senior Debt Securities. (Incorporated by
reference from the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.)
4.2 Supplemental Indenture dated as of August 26, 1998 by and
between HRPT Properties Trust and State Street Bank and Trust
Company pertaining to $160,000,000 in aggregate principal
amount of 6 7/8% Senior Notes due 2002.
10.1 Agreement of Purchase and Sale among Blackstone/TCC Austin
Partners L.P. and the Company dated July, 1998.
27. Financial Data Schedule
(b) Reports on Form 8-K:
1. Current Report on Form 8-K, dated July 1, 1998 relating to (a)
the change of the Company's name, (b) the election of a new
trustee, and (c) the completion of the acquisition of
beneficial ownership of 1735 Market Street (Items 5 and 7).
2. Current Report on Form 8-K, dated August 12, 1998 relating to
the pro forma consolidated financial statements of the Company
as of and for the six months ended June 30, 1998 and for the
year ended December 31, 1997 (Item 7).
3. Current Report on Form 8-K, dated August 21, 1998 relating to
(a) the purchase agreement dated as of August 21, 1998 by and
among HRPT Properties Trust and the several underwriters named
therein pertaining to $160,000,000 in aggregate principal
amount of 6 7/8 % Senior Notes due 2002, and (b) form of
supplemental indenture dated as of August 26, 1998 by and
between HRPT Properties Trust and State Street Bank and Trust
Company pertaining to $160,000,000 in aggregate principal
amount of 6 7/8% Senior Notes due 2002 (Item 7).
10
<PAGE>
HRPT PROPERTIES TRUST
CERTAIN IMPORTANT FACTORS
- -------------------------
The Company's Quarterly Report on Form 10-Q contains statements which
constitute forward looking statements within the meaning of the Securities
Exchange Act of 1934, as amended. Those statements appear in a number of places
in this Form 10-Q and include statements regarding the intent, belief or
expectations of the Company, its trustees or its officers with respect to the
declaration or payment of dividends, the consummation of additional
acquisitions, policies and plans of the Company regarding investments,
financings or other matters, the Company's qualification and continued
qualification as a real estate investment trust or trends affecting the
Company's or any property's financial condition or results of operations.
Readers are cautioned that any such forward looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those contained in the forward looking
statements as a result of various factors. Such factors include without
limitation changes in financing terms, the Company's ability or inability to
complete acquisitions and financing transactions, results of operations of the
Company's properties and general changes in economic conditions not presently
contemplated. The information contained in this Form 10-Q and the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, including the
information under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations", identifies other important factors that
could cause such differences.
THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING THE COMPANY,
DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HRPT PROPERTIES
TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL
PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HRPT PROPERTIES TRUST
By: /s/ David J. Hegarty
--------------------------------------
David J. Hegarty
President and Chief Operating Officer
Dated: November 12, 1998
By: /s/ Ajay Saini
--------------------------------------
Ajay Saini
Treasurer and Chief Financial Officer
Dated: November 12, 1998
12
SUPPLEMENTAL INDENTURE NO. 4
by and between
HRPT PROPERTIES TRUST
and
STATE STREET BANK AND TRUST COMPANY
as of August 26, 1998
SUPPLEMENTAL TO THE INDENTURE DATED AS OF JULY 9, 1997
------------------------------------
HRPT PROPERTIES TRUST
$160,000,000 6-7/8% Senior Notes due 2002
<PAGE>
This SUPPLEMENTAL INDENTURE NO. 4 (this "Supplemental Indenture") made
and entered into as of August 26, 1998 between HRPT PROPERTIES TRUST, a Maryland
real estate investment trust (the "Company"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, as Trustee (the "Trustee").
WITNESSETH THAT:
WHEREAS, the Company and the Trustee have executed and delivered an
Indenture dated as of July 9, 1997 (the "Indenture"), relating to the Company's
issuance, from time to time, of various series of debt securities; and
WHEREAS, the Company has determined to issue debt securities known as
its $160,000,000 6-7/8% Senior Notes due 2002; and
WHEREAS, the Indenture provides that certain terms and conditions for
each series of debt securities issued by the Company thereunder may be set forth
in an indenture supplemental to the Indenture;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
ARTICLE 1
DEFINED TERMS
Section 1.1 The following definitions supplement, and, to the extent
inconsistent with, replace the definitions in Section 101 of the Indenture:
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a Subsidiary or (ii) assumed in connection with the acquisition
of assets from such Person, in each case, other than Debt incurred in connection
with, or in contemplation of, such Person's becoming a Subsidiary or such
acquisition. Acquired Debt shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Subsidiary.
"Annual Debt Service" as of any date means the maximum amount which is
expensed in any 12-month period for interest on Debt of the Company and its
Subsidiaries.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in The City of New York or in the city in which
the Corporate Trust Office of the Trustee is located, are required or authorized
to close.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participation or other ownership
interests (however designated) of such Person and any rights (other than debt
securities convertible into or exchangeable for capital stock), warrants or
options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the Company and its Subsidiaries plus amounts which
have been deducted, and minus amounts which have been added, for the following
(without duplication): (i) interest on Debt of the Company and its Subsidiaries,
(ii) provision for taxes of the Company and its Subsidiaries based on income,
(iii) amortization of debt discount and deferred financing costs, (iv)
provisions for gains and losses on properties and property depreciation and
amortization, (v) the effect of any noncash charge resulting from a change in
accounting principles in determining Earnings from Operations for such period
and (vi) amortization of deferred charges.
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<PAGE>
"Debt" of the Company or any Subsidiary means, without duplication, any
indebtedness of the Company or any Subsidiary, whether or not contingent, in
respect of (i) borrowed money or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness for borrowed money secured by any
Encumbrance existing on property owned by the Company or any Subsidiary, (iii)
the reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued (other than letters of credit issued to
provide credit enhancement or support with respect to other indebtedness of the
Company or any Subsidiary otherwise reflected as Debt hereunder) or amounts
representing the balance deferred and unpaid of the purchase price of any
property or services, except any such balance that constitutes an accrued
expense or trade payable, or all conditional sale obligations or obligations
under any title retention agreement, (iv) the principal amount of all
obligations of the Company or any Subsidiary with respect to redemption,
repayment or other repurchase of any Disqualified Stock, or (v) any lease of
property by the Company or any Subsidiary as lessee which is reflected on the
Company's consolidated balance sheet as a capitalized lease in accordance with
GAAP, to the extent, in the case of items of indebtedness under (i) through
(iii) above, that any such items (other than letters of credit) would appear as
a liability on the Company's consolidated balance sheet in accordance with GAAP,
and also includes, to the extent not otherwise included, any obligation by the
Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), Debt of another Person (other than the Company or any Subsidiary) (it
being understood that Debt shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock or shares), (ii) is convertible into or exchangeable or exercisable for
Debt or Disqualified Stock, or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for common stock or shares), in each case on or prior to the
Stated Maturity of the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items and property
valuation losses, as reflected in the financial statements of the Company and
its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind.
"Interest Payment Date" means any date on which interest is due and
payable on the Notes in accordance with the terms thereof.
"Issuance Date" means the closing date for the sale and original
issuance of the Notes.
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Note, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semiannual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the Notes
being redeemed
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<PAGE>
or paid. For purposes of this Supplemental Indenture and the Notes, references
in the Indenture to the payment of the principal (and premium, if any) and
interest on the Notes shall be deemed to include the payment of the Make-Whole
Amount, if any, due upon redemption with respect to the Notes.
"Notes" means the Company's $160,000,000 aggregate principal amount of
6-7/8% Senior Notes, due 2002, issued under this Indenture, as amended or
supplemented from time to time.
"Record Date" means the fifteenth calendar day, whether or not a
Business Day, next preceding the applicable Interest Payment Date.
"Reinvestment Rate" means a rate per annum equal to the sum of 0.25%
(twenty-five one hundredths of one percent) plus the yield on treasury
securities at constant maturity under the heading "Week Ending" published in the
Statistical Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid. If no
maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For purposes of
calculating the Reinvestment Rate, the most recent Statistical Release published
prior to the date of determination of the Make-Whole Amount shall be used.
"SEC" means the Securities and Exchange Commission.
"Secured Debt" means Debt secured by any mortgage, lien, charge, pledge
or security interest of any kind.
"Securities Act" means the Securities Act of 1933, as amended.
"Statistical Release" means the statistical release designated "H.
15(519)" or any successor publication which is published weekly by the Federal
Reserve System and which establishes yields on actively traded United States
government securities adjusted to constant maturities or, if such statistical
release is not published at the time of any determination under this
Supplemental Indenture, then any publicly available source of similar market
data which shall be designated by the Company.
"Subsidiary" means any corporation or other entity of which a majority
of (i) the voting power of the voting equity securities or (ii) the outstanding
equity interests of which are owned, directly or indirectly, by the Company or
one or more other Subsidiaries of the Company. For the purposes of this
definition, "voting equity securities" means equity securities having voting
power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Company and its Subsidiaries not subject to an Encumbrance
for borrowed money determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
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<PAGE>
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization
determined on a consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt which is not secured by any of the
properties of the Company or any
Subsidiary.
ARTICLE 2
TERMS OF THE NOTES
Section 2.1 Pursuant to Section 301 of the Indenture, the Notes shall
have the following terms and conditions:
(a) Title; Limitation on Aggregate Principal Amount; Form of Notes. The
Notes shall be known as the Company's $160,000,000 6-7/8% Senior Notes due 2002.
The Notes will be limited to an aggregate principal amount of $160,000,000. The
Notes (together with the Trustee's certificate of authentication) shall be
substantially in the form of Exhibit A hereto, which is hereby incorporated in
and made a part of this Supplemental Indenture.
The Notes will be issued in the form of single fully registered global
security without coupons (the "Global Note") which will be deposited with, or on
behalf of, The Depository Trust Company ("DTC"), and registered in the name of
DTC's nominee, Cede & Co. Except under the circumstance described below, the
Notes will not be issuable in a definitive form. Unless and until it is
exchanged in whole or in part for the individual notes represented thereby, the
Global Note may not be transferred except as a whole by DTC to a nominee of DTC
or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee
of DTC to a successor depository or any nominee of such successor.
So long as DTC or its nominee is the registered owner of such Global
Note, DTC or such nominee, as the case may be, will be considered the sole owner
or holder of the Notes represented by such Global Note for all purposes under
this Supplemental Indenture. Except as described below, owners of beneficial
interest in Notes evidenced by the Global Note will not be entitled to have any
of the individual Notes represented by such Global Note registered in their
names, will not receive or be entitled to receive physical delivery of any such
Notes in definitive form and will not be considered the owners or holders
thereof under the Indenture or this Supplemental Indenture.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue individual Notes in exchange for the Global Note
representing such Notes and the Trustee, upon receipt of an authentication order
pursuant to [Section] 303 of the Indenture, shall authenticate and deliver such
Notes. In addition, the Company may at any time and in its sole discretion,
subject to certain limitations set forth in the Indenture, determine not to have
any of such Notes represented by one or more Global Notes and in such event will
issue individual Notes in exchange for the Global Note or Notes representing
such debt Securities. Individual Notes so issued will be issued in such names as
DTC should instruct and in denominations of $1,000 and integral multiples
thereof and will be issued in registered form only, without coupons.
(b) Principal Repayment; Currency. The Stated Maturity of the Notes is
August 26, 2002, provided, however, the Notes may be earlier redeemed at the
option of the Company as provided in paragraph (c) below. The principal of each
Note payable on its maturity date shall be paid against presentation and
surrender thereof at the Corporate Trust Office of the Trustee, located
initially at Two International Place,
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<PAGE>
Boston, Massachusetts 02110, in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public or
private debts. The Company will not pay Additional Amounts (as defined in the
Indenture) on the Notes.
(c) Redemption at the Option of the Company; Acceleration. The Notes
will be subject to redemption at any time at the option of the Company, in whole
or in part, upon not less than 30 nor more than 60 days' notice to each Holder
of Notes to be redeemed at its address appearing in the Security Register, at a
price equal to the sum of (i) the principal amount of the Notes being redeemed,
plus accrued and unpaid interest to but excluding the applicable redemption date
and (ii) the Make-Whole Amount. Upon the acceleration of the Notes in accordance
with Section 502 of the Indenture, the principal amount of the Notes, plus
accrued and unpaid interest thereon and the Make-Whole Amount shall become due
and payable immediately.
(d) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Company shall be directed
to it at 400 Centre Street, Newton, Massachusetts 02458, Attention: David J.
Hegarty, President; notices to the Trustee shall be directed to it at Two
International Place, Boston, Massachusetts 02110, Attention: Corporate Trust
Department, Re: HRPT Properties Trust 6-7/8% Senior Notes due 2002.
(e) Global Note Legend. The Global Note shall bear the following legend
on the face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
ARTICLE 3
ADDITIONAL COVENANTS
Section 3.1 In addition to the covenants of the Company set forth in
Article Ten of the Indenture, for the benefit of the holders of the Notes:
(a) Limitations on Incurrence of Debt.
(i) The Company will not, and will not permit any Subsidiary
to, incur any Debt if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP is greater than 60% of the sum ("Adjusted Total
Assets") of (without duplication) (i) the Total Assets of the Company
and its Subsidiaries as of the end of the calendar quarter covered in
the Company's Annual Report on Form 10-K, or the Quarterly Report on
Form 10-Q, as the case may be, most recently filed with the Securities
and Exchange Commission (or, if such filing is not permitted under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with
the Trustee) prior to the incurrence of such
-5-
<PAGE>
additional Debt and (ii) the purchase price of any real estate assets
or mortgages receivable acquired, and the amount of any securities
offering proceeds received (to the extent that such proceeds were not
used to acquire real estate assets or mortgages receivable or used to
reduce Debt), by the Company or any Subsidiary since the end of such
calendar quarter, including those proceeds obtained in connection with
the incurrence of such additional Debt.
(ii) In addition to the foregoing limitations on the
incurrence of Debt, the Company will not, and will not permit any
Subsidiary to, incur any Secured Debt if, immediately after giving
effect to the incurrence of such additional Secured Debt and the
application of the proceeds thereof, the aggregate principal amount of
all outstanding Secured Debt of the Company and its Subsidiaries on a
consolidated basis is greater than 40% of Adjusted Total Assets.
(iii) In addition to the foregoing limitations on the
Incurrence of Debt, the Company will not, and will not permit any
Subsidiary to, incur any Debt if the ratio of Consolidated Income
Available for Debt Service to the Annual Debt Service for the four
consecutive fiscal quarters most recently ended prior to the date on
which such additional Debt is to be incurred shall have been less than
1.5x, on a pro forma basis after giving effect thereto and to the
application of the proceeds therefrom, and calculated on the assumption
that (i) such Debt and any other Debt incurred by the Company and its
Subsidiaries since the first day of such four-quarter period and the
application of the proceeds therefrom, including to refinance other
Debt, had occurred at the beginning of such period; (ii) the repayment
or retirement of any other Debt by the Company and its Subsidiaries
since the first date of such four-quarter period had been repaid or
retired at the beginning of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility
shall be computed based upon the average daily balance of such Debt
during such period); (iii) in the case of Acquired Debt or Debt
incurred in connection with any acquisition since the first day of such
four-quarter period, the related acquisition had occurred as of the
first day of such period with appropriate adjustments with respect to
such acquisition being included in such pro forma calculation; and (iv)
in the case of any acquisition or disposition by the Company or its
Subsidiaries of any asset or group of assets since the first day of
such four-quarter period, whether by merger, stock purchase or sale, or
asset purchase or sale, such acquisition or disposition or any related
repayment of Debt had occurred as of the first day of such period with
the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation.
(b) Maintenance of Total Unencumbered Assets. The Company and its
Subsidiaries will maintain Total Unencumbered Assets of not less than 200% of
the aggregate outstanding principal amount of the Unsecured Debt of the Company
and its Subsidiaries on a consolidated basis.
(c) Applicability of Discharge, Defeasance and Covenant Defeasance
Provisions. The Discharge, Defeasance and Covenant Defeasance provisions in
Article Fourteen of the Indenture will apply to the Notes.
ARTICLE 4
ADDITIONAL EVENTS OF DEFAULT
For purposes of this Supplemental Indenture and the Notes, in addition
to the Events of Default set forth in Section 501 of the Indenture, it shall
also constitute an "Event of Default" if an event of default under any bond,
debenture, note or other evidence of indebtedness of the Company (including an
event of default with respect to any other series of securities), or under any
mortgage, indenture or other instrument of the Company under which there may be
issued or by which there may be secured or evidenced any indebtedness of the
Company (or by any Subsidiary, the repayment of which the Company has guaranteed
or for which the
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<PAGE>
Company is directly responsible or liable as obligor or guarantor), whether such
indebtedness now exists or shall hereafter be created, shall happen and shall
result in an aggregate principal amount exceeding $20,000,000 becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, without such indebtedness having been discharged, or
such acceleration having been rescinded or annulled, within a period of ten days
after there shall have been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the holders of at
least 25% in principal amount of the outstanding Notes, a written notice
specifying such default and requiring the Company to cause such indebtedness to
be discharged or cause such acceleration to be rescinded or annulled and stating
that such notice is a "Notice of Default" hereunder.
ARTICLE 5
EFFECTIVENESS
This Supplemental Indenture shall be effective for all purposes as of
the date and time this Supplemental Indenture has been executed and delivered by
the Company and the Trustee in accordance with Article Nine of the Indenture. As
supplemented hereby, the Indenture is hereby confirmed as being in full force
and effect.
ARTICLE 6
MISCELLANEOUS
Section 6.1 In the event any provision of this Supplemental Indenture
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof or any provision of the Indenture.
Section 6.2 To the extent that any terms of the Notes are inconsistent
with the terms of the Indenture, the terms of the Notes shall govern and
supersede such inconsistent terms.
Section 6.3 This Supplemental Indenture shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
Section 6.4 This Supplemental Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Supplemental Indenture to be executed as an instrument under seal in their
respective corporate names as of the date first above written.
HRPT PROPERTIES TRUST
By: /s/ David J. Hegarty
David J. Hegarty
President
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Ruth A. Smith
Name: Ruth A. Smith
Title: Vice President
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<PAGE>
EXHIBIT A
(Face of Note)
6-7/8% Senior Notes due 2002
No. $__________
HRPT PROPERTIES TRUST
promises to pay to _______________________________________ or registered
assigns, the principal sum of _____________________________________ Dollars on
August 26, 2002.
Interest Payment Dates: February 26 and August 26.
Record Dates: February 11 and August 11.
CUSIP No.: 40426WAF8
HRPT PROPERTIES TRUST
By: ___________________________________
Name:
Title:
[SEAL]
Dated:
This is one of the Notes referred to in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY, as Trustee
By: ________________________________
Authorized Signatory
A - 1
<PAGE>
(Back of Note)
HRPT PROPERTIES TRUST
6-7/8% Senior Notes due 2002
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
1. Interest. HRPT Properties Trust, a Maryland real estate investment
trust (the "Company"), promises to pay interest on the principal amount of this
Note at the rate and in the manner specified below.
The Company shall pay in cash interest on the principal amount of this
Note at the rate per annum of 6-7/8%. The Company will pay interest
semi-annually in arrears on February 26 and August 26 of each year, commencing
on February 26, 1999 or if any such day is not a Business Day (as defined in the
Indenture), on the next succeeding Business Day (each an "Interest Payment
Date"), to Holders of record on the immediately preceding February 11 and August
11.
Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Notes.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. The Company, however, may pay principal, premium, if
any, and interest by check payable in such money. It may mail an interest check
to a Holder's registered address.
3. Indenture. The Company issued the Notes under an Indenture dated as
of July 9, 1997, as supplemented by a Supplemental Indenture dated as of August
26, 1998 (the "Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code[Sections]77aaa-77bbbb) as in effect on the date of the Indenture. The Notes
are subject to all such terms, and Holders of the Notes are referred to the
Indenture and such act for a statement of such terms. The terms of the Indenture
shall govern any inconsistencies between the Indenture and the Notes. The Notes
are unsecured general obligations of the Company limited to $160,000,000 in
aggregate principal amount.
4. Optional Redemption. The Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at a redemption price equal to the sum of (i) the
principal amount of the Notes being redeemed, plus accrued and unpaid interest
to but excluding the applicable redemption date and (ii) the Make-Whole Amount.
As used herein the term "Make-Whole Amount" means, in connection with
any optional redemption or accelerated payment of any Note, the excess, if any,
of (i) the aggregate present value as of the date of such redemption or
accelerated payment of each dollar of principal being redeemed or paid and the
amount of interest (exclusive of interest accrued to the date of redemption or
accelerated payment) that would have been payable in respect of such dollar if
such redemption or accelerated payment had not been made, determined by
discounting, on a semiannual basis, such principal and interest at the
Reinvestment Rate (as defined herein) (determined on the third Business Day
preceding the date such notice of redemption is given or declaration
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of acceleration is made) from the respective dates on which such principal and
interest would have been payable if such redemption or accelerated payment had
not been made, over (ii) the aggregate principal amount of the Notes being
redeemed or paid.
As used herein the term "Reinvestment Rate" means a rate per annum
equal to the sum of 0.25% (twenty-five one hundredths of one percent) plus the
yield on treasury securities at constant maturity under the heading "Week
Ending" published in the Statistical Release (as defined herein) under the
caption "Treasury Constant Maturities" for the maturity (rounded to the nearest
month) corresponding to the remaining life to maturity, as of the payment date
of the principal being redeemed or paid. If no maturity exactly corresponds to
such maturity, yields for the two published maturities most closely
corresponding to such maturity shall be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding in each of such
relevant periods to the nearest month. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
As used herein the term "Statistical Release" means the statistical
release designated "H. 15(519)" or any successor publication which is published
weekly by the Federal Reserve System and which establishes yields on actively
traded United States government securities adjusted to constant maturities or,
if such statistical release is not published at the time of any determination
under the Supplemental Indenture, then such other reasonably comparable index
which shall be designated by the Company.
5. Mandatory Redemption. The Company shall not be required to make
sinking fund or redemption payments with respect to the Notes.
6. Notice of Redemption. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder of
Notes to be redeemed at its registered address. Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed. On and after the redemption date, interest ceases to accrue
on Notes or portions of them called for redemption.
7. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples thereof. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not exchange or register the transfer of any Note or portion of a Note
selected for redemption. Also, it need not exchange or register the transfer of
any Notes for a period of 15 days before the mailing of a notice of redemption
of Notes, or during the period between a record date and the corresponding
Interest Payment Date.
8. Defaults and Remedies. In case an Event of Default (as defined in
the Indenture) with respect to the Notes shall have occurred and be continuing,
the principal hereof may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the provisions
provided in the Indenture.
9. Actions of Holders. The Indenture contains provisions permitting the
holders of not less than a majority of the aggregate principal amount of the
outstanding Notes, on behalf of the holders of all such Notes at a meeting duly
called and held as provided in the Indenture, to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided in the Indenture to be made, given or taken by the holders of the
Notes, including without limitation, waiving (a) compliance by the Company with
certain provisions of the Indenture, and (b) certain past defaults under the
Indenture and their consequences. Any resolution passed or decision taken at any
meeting of the holders of the Notes in
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accordance with the provisions of the Indenture shall be conclusive and binding
upon such holders and upon all future holders of this Note and other Notes
issued upon the registration of transfer hereof or in exchange heretofore or in
lieu hereof
10. Persons Deemed Owners. The Company, the Trustee, and any agent of
the Company or the Trustee may deem and treat the Person in whose name this Note
is registered on the Security Register as its absolute owner for all purposes.
11. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
12. Governing Law. THE INTERNAL LAW OF THE COMMONWEALTH OF
MASSACHUSETTS SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE
NOTES.
13. No Personal Liability. THE AMENDED AND RESTATED DECLARATION OF
TRUST OF THE COMPANY, DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL
AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED IN THE OFFICE OF THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HRPT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO
ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
HRPT Properties Trust
400 Centre Street
Newton, MA 02458
Telecopier No.: (617) 332-2261
Attention: President
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee:
AGREEMENT OF PURCHASE AND SALE
among
BLACKSTONE/TCC AUSTIN PARTNERS L.P., the SELLER
and
HRPT PROPERTIES TRUST, the BUYER
As of July __, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I
<TABLE>
<S> <C>
DEFINITIONS.........................................................................6
Section 1.1 Defined Terms. .....................................................6
ARTICLE II
SALE, PURCHASE PRICE AND CLOSING...................................................12
Section 2.1 Sale of Asset......................................................12
Section 2.2 Earnest Money......................................................13
Section 2.3 The Closing........................................................14
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER............................14
Section 3.1 General Seller Representations and Warranties. ...................14
Section 3.2 Representations and Warranties of the Seller as to the Asset. .....15
Section 3.3 Covenants of the Seller Prior to Closing. .......................17
Section 3.4 Industrial Building 2. ...........................................19
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER.............................20
Section 4.1 Representations, Warranties and Covenants of the Buyer. ..........20
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING....................................................25
Section 5.1 Conditions Precedent To Seller's Obligations.......................25
Section 5.2 Conditions to the Buyer's Obligations. ...........................26
ARTICLE VI
CLOSING DELIVERIES.................................................................27
ARTICLE VII
INSPECTIONS........................................................................30
Section 7.1 Right of Inspection................................................30
Section 7.2 Due Diligence Period...............................................30
ARTICLE VIII
TITLE AND PERMITTED EXCEPTIONS.....................................................31
Section 8.1 Permitted Exceptions. ............................................31
Section 8.2 Title Report. ....................................................31
Section 8.3 Use of Purchase Price to Discharge Title Exceptions................31
Section 8.4 Inability to Convey................................................32
Section 8.5 Rights in Respect of Inability to Convey. .........................32
Section 8.6 Voluntary Title Exceptions.........................................33
Section 8.7 The Buyer's Right to Accept Title..................................33
</TABLE>
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<TABLE>
<S> <C>
Section 8.8 Cooperation........................................................33
ARTICLE IX
TRANSACTION COSTS; RISK OF LOSS....................................................33
Section 9.1 Transaction Costs. ...............................................33
Section 9.2 Risk of Loss.......................................................34
ARTICLE X
ADJUSTMENTS........................................................................35
Section 10.1 Fixed Rents........................................................35
Section 10.2 Overage Rents......................................................36
Section 10.3 Taxes and Assessments. ...........................................38
Section 10.4 Water and Sewer Charges. .........................................38
Section 10.5 Utility Charges....................................................39
Section 10.6 Material Contracts.................................................39
Section 10.7 Miscellaneous Revenues.............................................39
Section 10.8 Security Deposits. ...............................................39
Section 10.9 Other..............................................................39
Section 10.10 Re-Adjustment......................................................40
ARTICLE XI
INDEMNIFICATION....................................................................40
Section 11.1 Indemnification by the Seller......................................40
Section 11.2 Indemnification by the Buyer.......................................40
Section 11.3 Limitations on Indemnification. ..................................40
Section 11.4 Survival...........................................................41
Section 11.5 Indemnification as Sole Remedy.....................................41
ARTICLE XII
TAX CERTIORARI PROCEEDINGS.........................................................41
Section 12.1 Prosecution and Settlement of Proceedings.........................41
Section 12.2 Application of Refunds or Savings. ..............................42
Section 12.3 Survival..........................................................42
ARTICLE XIII
DEFAULT............................................................................42
Section 13.1 Default............................................................42
ARTICLE XIV
MISCELLANEOUS......................................................................43
Section 14.1 Use of Blackstone Name and Address.................................43
Section 14.2 Exculpation of the Seller..........................................43
Section 14.3 Brokers. .........................................................43
Section 14.4 Confidentiality; Press Release; IRS Reporting Requirements. .......44
Section 14.5 Escrow Provisions. ...............................................45
Section 14.6 Successors and Assigns; No Third-Party Beneficiaries...............45
Section 14.7 Assignment. ......................................................46
Section 14.8 Further Assurances. ..............................................46
</TABLE>
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<TABLE>
<S> <C>
Section 14.9 Notices............................................................46
Section 14.10 Entire Agreement. ................................................47
Section 14.11 Amendments. ......................................................47
Section 14.12 No Waiver. .....................................................47
Section 14.13 Governing Law......................................................47
Section 14.14 Submission to Jurisdiction. ......................................47
Section 14.15 Severability.......................................................48
Section 14.16 Section Headings...................................................48
Section 14.17 Counterparts.......................................................48
Section 14.18 Acceptance of Deed. ..............................................48
Section 14.19 Construction.......................................................48
Section 14.20 Recordation........................................................48
Section 14.21 Waiver of Jury Trial...............................................48
Section 14.22 Financials.........................................................48
Section 14.23 Nonliability of Trustees...........................................49
Section 14.24 Independent Contract Consideration.................................49
Section 14.25 Tax Free Exchange. ...............................................49
</TABLE>
iii
<PAGE>
Exhibits
Exhibit A - Assignment of Leases
Exhibit B - Assignment of Contracts
Exhibit C - Tenant Notices
Exhibit D - Special Warranty Deed
Exhibit E - Bill of Sale
Exhibit F - FIRPTA Certificate
Exhibit G - Estoppel Certificates
Schedules
Schedule I - Asset Schedule
Schedule II - Existing Title Policy and Survey
Schedule III - Phase II
Schedule IV - Seller SDP Deposits
Schedule V - Material Contracts
Schedule VI - Space Leases
Schedule VI-1 - Landlord's Work in Progress
Schedule VII - Brokerage Commissions
Schedule VIII - Litigation
Schedule IX - Space Leases in Progress
Schedule X - Security Deposits Held By Seller
iv
<PAGE>
AGREEMENT OF PURCHASE AND SALE
AGREEMENT OF PURCHASE AND SALE (this "Agreement"), made as of
the ____________________ day of July, 1998 by and between the entity (the
"Seller") listed in the column entitled "Seller" on Schedule I attached hereto
and made a part hereof (the "Asset Schedule") and HRPT Properties Trust, a
Maryland real estate investment trust (the "Buyer").
Background
A. The Seller is the owner of the land, buildings and other
improvements (or leasehold interest therein) constituting the "Property" listed
in the column entitled "Property" opposite its name on the Asset Schedule (the
"Property"). The Property listed on the Asset Schedule, together with the
Asset-Related Property (as defined below) with respect to the Property, shall be
referred to herein, collectively, as the "Asset".
B. The Seller desires to sell to the Buyer, and the Buyer
desires to purchase from the Seller, the Asset on the terms and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. The capitalized terms used herein
will have the following meanings.
"Agreement" shall mean this Agreement of Purchase and Sale and
all amendments hereto, together with the exhibits and schedules attached hereto,
as the same may be amended, restated, supplemented or otherwise modified.
"Asset" shall have the meaning assigned thereto in "Background"
paragraph A.
"Asset File" shall mean the materials with respect to the
Property
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<PAGE>
previously delivered to the Buyer or its representatives by or on behalf of the
Seller.
"Asset Manager" shall mean the person identified on the Asset
Schedule as the Asset Manager with respect to the Property, such person being
the individual responsible for management of the Asset on behalf of the Seller.
"Asset-Related Property" shall have the meaning assigned
thereto in subsection 2.1(b).
"Asset Schedule" shall have the meaning assigned thereto in the
Preamble to this Agreement.
"Assignment of Contracts" shall have the meaning assigned
thereto in Article VI.
"Assignment of Leases" shall have the meaning assigned thereto
in Article VI.
"Basket Limitation" shall mean (i) with respect to Phase I, an
amount equal to one percent (1%) of the Phase I Purchase Price Portion and (ii)
with respect to Phase II, an amount equal to one percent (1%) of the Phase II
Purchase Price Portion.
"Bill of Sale" shall have the meaning assigned thereto in
Article VI.
"BREA" shall mean Blackstone Real Estate Acquisitions L.L.C.
"Business Day" shall mean any day other than a Saturday, Sunday
or other day on which banks are authorized or required by law to be closed in
New York City, New York or Boston, Massachusetts.
"Buyer" shall have the meaning assigned thereto in the Preamble
to this Agreement.
"Buyer-Related Entities" shall have the meaning assigned
thereto in subsection 11.1.
"Cap Limitation" shall mean (i) with respect to Phase I, an
amount equal to three percent (3%) of the Phase I Purchase Price Portion and
(ii) with respect to Phase II, an amount equal to three percent (3%) of the
Phase II Purchase Price Portion.
"Cisco" shall mean Cisco Systems, Inc., a California
corporation.
"Cisco Lease" shall mean that certain lease dated as of April
10, 1998 between the Seller and Cisco with respect to Industrial Building 3 and
Industrial Building 4, as amended by that certain First Amendment to Lease
Agreement dated as of June 16,
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<PAGE>
1998. "Closing" shall mean the Phase I Closing or the Phase II
Closing; collectively the "Closings".
"Closing Date" shall mean the Phase I Closing Date or the Phase
II Closing Date.
"Condition of the Assets" shall have the meaning assigned
thereto in subsection 4.1(e)(ii).
"Deed" shall have the meaning assigned thereto in Article VI.
"Due Diligence Expiration Date" shall have the meaning assigned
thereto in subsection 7.2(a).
"Earnest Money" shall have the meaning assigned thereto in
subsection 2.2(b).
"Eastdil" shall mean Eastdil Realty Company, L.L.C.
"Escrow Account" shall have the meaning assigned thereto in
subsection 14.5(a).
"Escrow Agent" shall have the meaning assigned thereto in
subsection 2.2(b)(i).
"Estoppel Condition" shall mean the closing conditions set
forth in paragraph 5.2(g).
"Existing Survey" shall mean the survey with respect to the
Property listed on Schedule II attached hereto.
"Existing Title Commitment" shall mean the title commitment
with respect to the Property attached hereto as part of Schedule II.
"Fixed Rents" shall have the meaning assigned thereto in
subsection 10.1(a).
"Hazardous Materials" shall have the meaning assigned thereto
in subsection 4.1(e)(ii)(A).
"Independent Contract Consideration" shall have the meaning
assigned thereto in Section 14.24.
"Industrial Building 2": shall mean the single story, service
center type
3
<PAGE>
building to be constructed in Phase II containing approximately 29,425 gross
square feet.
"Industrial Building 3": shall mean the single story, service
center type building located in Phase II containing approximately 55,388 gross
square feet.
"Industrial Building 4": shall mean the single story, service
center type building located in Phase II containing approximately 93,188 gross
square feet.
"IRS" shall mean the Internal Revenue Service.
"IRS Reporting Requirements" shall have the meaning assigned
thereto in subsection 14.4(b).
"Losses" shall have the meaning assigned thereto in subsection
11.1.
"Material Contracts" shall have the meaning assigned thereto in
subsection 3.2(b).
"Overage Rent" shall have the meaning assigned thereto in
subsection 10.2(a).
"Permitted Exceptions" shall mean (i) the matters set forth on
the Existing Title Commitment which have not been marked out or the Existing
Survey, (ii) the Space Leases, Material Contracts and other contracts affecting
the Property and any Space Leases, Material Contracts or other contracts entered
into after the date, and in accordance with the terms, of this Agreement, (iii)
liens for current real estate taxes which are not yet due and payable, (iv)
standard pre-printed jacket exceptions and provisions contained in forms of
title insurance policies, (v) subject to the adjustments provided for herein,
any service, installation, connection or maintenance charge due after Closing
and charges for sewer, water, electricity, telephone, cable television or gas,
(vi) rights of vendors and holders of security interests on personal property
installed on the Property by tenants and rights of tenants to remove trade
fixtures at the expiration of the term of the Space Leases of such tenants,
(vii) matters contained in the updated title commitment or survey with respect
to the Property obtained by the Buyer as required under Section 8.2 which
matters do not qualify as Permitted Exceptions under one of the other clauses of
this definition and with respect to which either (A) the Buyer has not raised an
objection within the time period required in Section 8.2 or (B) the Buyer has
raised an objection within the time period required in Section 8.2 (the Buyer
being deemed to have raised an objection with respect to each item which has
been marked out in the Existing Title Commitment attached hereto as Schedule II)
and the Seller has not agreed to cause such title exception to be removed prior
to Closing and (viii) any other restrictions, easements, encumbrances and other
exceptions encumbering the Property which do not individually materially
interfere with the continued use of the relevant Property.
4
<PAGE>
"Person shall mean a natural person, partnership, limited
partnership, limited liability company, corporation, trust, estate, association,
unincorporated association or other entity.
"Phase I" shall mean the Asset less and except Phase II.
"Phase I Closing" shall have the meaning assigned thereto in
subsection 2.3(a).
"Phase I Closing Date" shall have the meaning assigned thereto
in subsection 2.3(a).
"Phase I Earnest Money Portion" shall mean a portion of the
Earnest Money in the amount of Two Million Six Hundred and Ten Thousand Dollars
($2,610,000).
"Phase I Purchase Price Portion" shall mean a portion of the
Purchase Price in the amount of Eighty-Nine Million Three Hundred Ninety-Nine
Thousand, Nine Hundred Twenty-Five Dollars ($89,399,925) as the same may be
reduced pursuant to subsection 2.3(c).
"Phase II" shall mean that portion of the Asset described on
Schedule III attached hereto.
"Phase II Closing" shall have the meaning assigned thereto in
subsection 2.3(a).
"Phase II Closing Date" shall mean the Phase II Scheduled
Closing Date, as the same may be extended pursuant to subsection 2.3(c).
"Phase II Closing Condition" shall mean the condition that
Cisco has commenced the payment of rent under the Cisco Lease.
"Phase II Earnest Money Portion" shall mean a portion of the
Earnest Money in the amount of Three Hundred and Ninety Thousand Dollars
($390,000).
"Phase II Liquidated Damages Amount" shall mean $6,000,000
provided that if the Phase II Purchase Price Portion is reduced pursuant to
paragraph 2.2(c), then the Phase II Liquidated Damages Amount shall be reduced
to $4,234,500.
"Phase II Purchase Price Portion" shall mean a portion of the
Purchase Price in the amount of $13,350,075.
"Phase II Scheduled Closing Date" shall have the meaning
assigned thereto in subsection 2.3(a).
5
<PAGE>
"Pre-Leasing Requirement" shall mean the requirement that one
or more leases for all of the leasable space in Industrial Building 2 have been
entered into between the Seller and Radian or another tenant (or tenants) which
other tenant or tenants are no less creditworthy, in the Buyer's reasonable
discretion, than Cisco and which leases have been approved or deemed approved by
the Buyer pursuant to paragraph 3.3(d) or Section 3.4.
"Property" shall have the meaning assigned thereto in
"Background" paragraph A.
"Purchase Price" shall have the meaning assigned thereto in
subsection 2.2(a).
"Radian" shall mean Radian International.
"Reporting Person" shall have the meaning assigned thereto in
subsection 14.4(b).
"Seller" shall have the meaning assigned thereto in the
Preamble to this Agreement.
"Seller Closing Documents" shall mean the documents to be
executed and delivered by the Seller pursuant to Article VI of this Agreement.
"Seller-Related Entities" shall have the meaning assigned
thereto in subsection 10.2.
"Seller SDP Deposits" shall mean the deposits and/or bonds more
particularly described on Schedule IV attached hereto which have been delivered
or posted by the Seller with the City of Austin in connection with the issuance
of certain site development permits for the Property.
"Seller's Knowledge" shall mean the actual knowledge of the
Seller based upon the actual knowledge of Gary M. Sumers and the Asset Manager,
without any duty on the part of any such executive officer or other Person to
conduct any independent investigation or make any inquiry of any Person.
"Solectron T/I Allowance" shall mean the tenant improvement
allowance in the aggregate amount of $5,763,450 payable by the Seller to
Solectron Texas, L.P. pursuant to the provisions of the Space Lease with
Solectron Texas, L.P. more particularly described as item 2 on Schedule VI
attached hereto.
"Space Lease" shall have the meaning assigned thereto in
subsection 3.2(c)(i).
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<PAGE>
"Tenant Notices" shall have the meaning assigned thereto in
Article VI.
"Title Company" shall mean Title Associates, as agent for
Chicago Title Insurance Company.
"UCC" shall mean the Uniform Commercial Code.
"Voluntary Title Exceptions" shall mean with respect to the
Property, title exceptions affecting the Property that are knowingly and
intentionally created by the Seller after the date of this Agreement through the
execution by the Seller of one or more instruments creating or granting such
title exceptions; provided, however, that the term "Voluntary Title Exceptions"
as used in this Agreement shall not include the following: (a) any Permitted
Exceptions; (b) Space Leases for the Property or any title exception created
pursuant to a Space Lease for the Property by the tenant thereunder; (c) any
title exceptions that are approved, waived or deemed to have been approved or
waived by the Buyer or that are created in accordance with the provisions of
this Agreement; (d) any title exceptions which, pursuant to a Space Lease for
the Property or otherwise, are to be discharged by a tenant or occupant of the
Property; (e) mechanic's or materialman's liens or (f) any federal tax liens.
ARTICLE II
SALE, PURCHASE PRICE AND CLOSING
Section 2.1 Sale of Asset. (a) On the Closing Dates and
pursuant to the terms and subject to the conditions set forth in this Agreement,
the Seller shall sell to the Buyer, and the Buyer shall purchase from the
Seller, the Asset.
(b) The transfer of the Asset to the Buyer shall include the
transfer of all Asset-Related Property with respect to the Asset. For purposes
of this Agreement, "Asset-Related Property" shall mean all of the Seller's
right, title and interest in and to (A) all easements, covenants and other
rights appurtenant to the Property and all right, title and interest of the
Seller, if any, in and to any land lying in the bed of any street, road, avenue
or alley, open or closed, in front of or adjoining the Property and to the
center line thereof, (B) all furniture, fixtures, equipment and other personal
property (except items owned or leased by tenants or which are leased by the
Seller) which are now, or may hereafter prior to the Closing Date be, placed in
or attached to the Property, (C) to the extent they may be transferred under
applicable law, all licenses, permits and authorizations presently issued in
connection with the operation of all or any part of the Property as it is
presently being operated, (D) to the extent assignable, all warranties, if any,
issued to the Seller by any manufacturer or contractor in connection with
construction or installation of equipment or any component of the improvements
included as part of the Property, (E) to the extent assignable, all service,
supply and maintenance contracts (if any) held by the Seller with respect to the
Property and its mechanical
7
<PAGE>
equipment, elevators and other elements, (F) to the extent assignable, all trade
names and general intangibles relating to the Property and (G) all leases,
licenses, contracts and other agreements, to the extent transferable, for the
use and occupancy of all or any part of the Property and all security and escrow
deposits held by the Seller in connection with any such leases, licenses,
contracts and other agreements.
Section 2.2 Earnest Money. (a) The aggregate consideration for
the Asset shall be equal to One Hundred and Two Million Seven Hundred Fifty
Thousand Dollars ($102,750,000) (as the same may be reduced pursuant to
subsection 2.2(c) below) (the "Purchase Price") which consists of the Phase I
Purchase Price Portion and the Phase II Purchase Price Portion. The Purchase
Price shall be paid by the Buyer to the Seller as set forth in subsection 2.2(c)
below by wire transfer of funds and adjusted for Closing adjustments as
described in Article X below.
(b) The Purchase Price shall be paid to the Seller as follows:
(i) upon execution of this Agreement, the Buyer shall deposit
with Title Associates, as agent for Chicago Title Insurance Company, as
escrow agent ("Escrow Agent"), the amount of Three Million Dollars
($3,000,000) (together with any interest earned thereon, the "Earnest
Money") in immediately available funds by wire transfer to such account as
Escrow Agent shall designate to the Buyer; the Earnest Money shall be held
in escrow in accordance with the provisions of Section 14.5 and shall be
nonrefundable to the Buyer except if all of the conditions set forth in
Section 5.2 have not been met by the Closing Date or otherwise as set
forth in Article VII or subsection 2.2(d) below; and
(ii) on the Phase I Closing Date, the Buyer shall deliver the
Phase I Purchase Price Portion as reduced by the Phase I Earnest Money
Portion to the Seller in immediately available funds by wire transfer to
such account or accounts that BREA, as agent for the Seller, shall
designate to the Buyer.
(iii) on the Phase II Closing Date, the Buyer shall deliver the
Phase II Purchase Price Portion (as the same may be reduced pursuant to
subsection 2.2(c) below) less the Phase II Earnest Money Portion to the
Seller in immediately available funds by wire transfer to such account or
accounts that BREA, as agent for the Seller, shall designate to the Buyer.
By execution of this Agreement, the Seller acknowledges that
the Purchase Price and all other amounts payable to the Seller hereunder may be
wired, to BREA as its agent hereunder unless otherwise explicitly stated in this
Agreement.
(c) In the event that the Pre-Leasing Requirement has not been
satisfied as of the Phase I Closing Date and, pursuant to Section 3.4,
Industrial Building 2 will not be constructed, the Phase II Purchase Price
Portion shall be reduced by the amount of One Million Seven Hundred Sixty-Five
Thousand Five Hundred Dollars
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($1,765,500). No adjustment shall be made to the Purchase Price except as
explicitly set forth in this subsection 2.2(c) or elsewhere in this Agreement.
Section 2.3 The Closing. (a) The closing of the sale and
purchase of (i) Phase I (the "Phase I Closing") shall take place on September
18, 1998 or such earlier date as the parties may agree, (the "Phase I Closing
Date") and (ii) Phase II (the "Phase II Closing") shall take place on April 1,
1999 (the "Phase II Scheduled Closing Date").
(b) The Closings shall be held on the respective Closing Dates
at 10:00 A.M. at the offices of Simpson Thacher & Bartlett, 425 Lexington
Avenue, New York, New York, or at such other location agreed upon by the parties
hereto.
(c) Notwithstanding the foregoing, in the event that, (i) as of
the Phase II Scheduled Closing Date, the Phase II Closing Condition has not been
satisfied, the Seller may, upon written notice to the Buyer, adjourn the Phase
II Closing Date until the date which is five (5) Business Days after the Phase
II Closing Condition has been satisfied; provided, however if the Phase II
Closing Condition has not been satisfied by July 1, 1999, then upon written
notice from the Buyer to the Seller delivered at any time after such date, the
Buyer may terminate this Agreement with respect to Phase II or (ii) as of the
Phase I Scheduled Closing Date or the Phase II Scheduled Closing Date, the
Estoppel Condition with respect to the portion of the Property to be transferred
on such date has not been satisfied or waived by the Buyer, the Seller may, upon
written notice to the Buyer, adjourn the relevant Closing Date until the
Estoppel Condition has been satisfied; provided, however that any adjournment of
the Phase I Closing Date or the Phase II Closing Date pursuant to this clause
(ii) shall not exceed 60 days. Upon receipt of such termination notice, the
Phase II Earnest Money Portion shall be returned to the Buyer, the provisions of
this Agreement relating to Phase II shall be terminated and neither party shall
have any further rights or obligations hereunder with respect to Phase II.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
Section 3.1 General Seller Representations and Warranties. The
Seller hereby represents, warrants and covenants to the Buyer as of the date
hereof and as of the Closing Date as follows:
(a) Formation; Existence. It is a limited partnership, limited
liability company or corporation, as applicable, duly formed, validly
existing and in good standing under the laws of the state of Delaware.
(b) Power and Authority. It has all requisite power and
authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance of
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this Agreement and the consummation of the transactions provided for in
this Agreement have been duly authorized by all necessary action on its
part. This Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights and by general principles of equity
(whether applied in a proceeding at law or in equity).
(c) No Consents. Except for any consent, license, approval,
order, permit, authorization, registration, filing or declaration, the
failure of which to obtain will not materially adversely effect (A) the
Seller's ability to consummate the transactions contemplated by this
Agreement, (B) the ownership of the Asset or (C) the operation of the
Property, no consent, license, approval, order, permit or authorization
of, or registration, filing or declaration with, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, is required to be obtained or made in connection with
the execution, delivery and performance of this Agreement or any of the
transactions required or contemplated hereby.
(d) No Conflicts. To the Seller's Knowledge, the execution,
delivery and compliance with, and performance of the terms and provisions
of, this Agreement, and the sale of the Asset, will not (i) conflict with
or result in any violation of its organizational documents, (ii) conflict
with or result in any violation of any provision of any bond, note or
other instrument of indebtedness, contract, indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which it
is a party in its individual capacity, or (iii) violate any existing term
or provision of any order, writ, judgment, injunction, decree, statute,
law, rule or regulation applicable to it or its assets or properties
except, in each case, for any conflict or violation which (A) will not
materially adversely effect (1) the Seller's ability to consummate the
transactions contemplated by this Agreement, (2) the ownership of the
Asset or (3) the operation of the Property or (B) arises under the
documents evidencing or securing the Third Party Loans.
(e) Foreign Person. The Seller is not a "foreign person" as
defined in Internal Revenue Code Section 1445 and the regulations issued
thereunder.
Section 3.2 Representations and Warranties of the Seller as to
the Asset. The Seller hereby represents, warrants and covenants to the Buyer as
of the date hereof and as of the Closing Date, as follows:
(a) Ownership of the Asset. It is the owner and holder of the
Asset and the Asset is held by it free and clear of any lien, pledge,
charge, security interest, encumbrance, title retention agreement, adverse
claim or restriction except for the Permitted Exceptions and possible
security interests which will be terminated prior to the Closing. It has
the right to sell the Asset pursuant to the terms of this
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Agreement. Upon transfer of the Property by it to the Buyer and
upon delivery by the Buyer to the Seller of the Purchase Price, the Buyer
will receive the Property free and clear of any encumbrances (other than
the Permitted Exceptions and any encumbrances arising from acts of the
Buyer or its affiliates). It has not prior to the date hereof sold (or
entered into an agreement to sell) the Asset (except for the possible
granting of security interests, all of which will be terminated prior to
the Closing).
(b) Material Contracts. To the Seller's Knowledge, all material
service, maintenance, supply, construction, development and management
contracts ("Material Contracts") affecting the Property are set forth on
Schedule V attached hereto and the same have not been modified or amended,
except as shown in such documents.
(c) Space Leases. With respect to the leases listed on Schedule
VI attached hereto (the "Space Leases"), to the Seller's Knowledge (A)
such Space Leases constitute all the leases relating to the Property under
which the Seller is the holder of the landlord's interest, (B) such Space
Leases have not been modified except as stated in Schedule VI, (C) such
Space Leases contain the entire agreement between the relevant landlord
and the tenants named therein and (D) except as set forth in Schedule VI,
fixed rent and additional rent are currently being collected under such
Space Leases without offset, counterclaim or deduction. True copies of the
Space Leases have been delivered to the Buyer. If any Space Lease so
delivered contains provisions that are inconsistent with the foregoing
representations and warranties, such representations and warranties shall
be deemed modified to the extent necessary to eliminate such
inconsistencies and to conform such representations and warranties to the
provisions of the Space Leases. Except (i) as set forth on Schedule VI,
(ii) for the obligation to construct Industrial Building 3 and Industrial
Building 4 pursuant to the Cisco Lease and (iii) the obligation to fund
the Solectron T/I Allowance, all tenant improvements or other construction
work relating to the initial occupancy of the tenants under the Space
Leases) or payments by the landlord relating thereto) have been fully
completed or made. To the Seller's Knowledge, Seller has not received any
written notices of default under the Space Leases (which defaults remain
uncured). To the Seller's Knowledge, the Seller has not received written
notice that a tenant has filed a petition in bankruptcy or for the
approval of a plan of reorganization or management under the Federal
Bankruptcy Code or under any other similar state law, made an admission in
writing as to the relief therein provided, or otherwise become the subject
of any proceeding under any federal or state bankruptcy law or insolvency
law, or admitted in writing its inability to pay its debts as they become
due or made an assignment for the benefit of creditors, or petitioned for
the appointment of or has had appointed a receiver, trustee or custodian
for any of its property. Except as set forth on Schedule VI, the Seller
has not delivered a notice of default to any tenant under the Space
Leases. No tenant is in arrears in the payment of base or additional rent
or any other material
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sum and no tenant has paid any base or additional rent more than one month
in advance.
(d) Brokerage Commissions. To the Seller's Knowledge, there are
no brokerage commissions of finders' fees payable by the landlord with
respect to the current or any renewal term of any of the Space Leases
other than those set forth on Schedule VII attached hereto and the Seller
has no agreement with any broker with respect to any renewal term of any
Space Lease except as set forth in Schedule VII.
(e) Condemnation. To the Seller's Knowledge, the Seller knows
of no pending condemnation or similar proceedings affecting the Property,
nor does the Seller have knowledge that any such action is threatened or
contemplated.
(f) Litigation. To the Seller's Knowledge, except as disclosed
in Schedule VIII attached hereto, there are no actions, suits or
proceedings pending against or affecting the Asset in any court or before
or by an arbitration tribunal or regulatory commission, department or
agency which, if adversely determined, would materially adversely effect
(1) the Seller's ability to consummate the transactions contemplated by
this Agreement, (2) the ownership of the Asset or (3) the operation of the
Property.
(g) Compliance With Law. To the Seller's Knowledge, the Seller
has not received written notice of (i) a violation of any material
federal, state or municipal or other governmental statute, ordinance,
by-law, rule, regulation or any other legal requirements, including,
without limitation, those relating to construction, occupancy, zoning,
adequacy of parking, environmental protection, occupational health and
safety and fire safety applicable thereto or (ii) any request,
application, proceeding, plan or study which would materially adversely
affect the present use or zoning of the Property or which would result in
the material modification or realignment of any street or highway adjacent
to the Property.
(h) The Seller has not received written notice from any
insurance carrier which has issued a policy insuring the Property, which
notice (i) identifies defects or inadequacies in the Property and (ii)
indicates that if such defects or inadequacies are uncorrected, then the
relevant policy will be terminated.
Section 3.3 Covenants of the Seller Prior to Closing. Until
Closing, the Seller or the Seller's agents shall:
(a) Insurance. Keep the Property insured against fire and other
hazards covered by the insurance policies maintained by the Seller on the
date of this Agreement.
(b) Operation. Operate and maintain the Property in a
businesslike
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manner and substantially in accordance with the Seller's past practices
with respect to the Property.
(c) New Contracts. Enter into third party contracts relating to
the Property, provided that, without the prior written consent of the
Buyer, which consent shall not be unreasonably withheld, the Seller will
not enter into any new third party contracts unless any such contract (i)
is necessary as a result of an emergency at the Property, (ii) does not
require the payment of more than $10,000 in each calendar year or (iii) is
entered into in the course of customary maintenance and repairs at the
Property and, in each case, is terminable upon no more than 30 days prior
notice without payment of premium or penalty. If the Seller enters into
any third party contracts after the date of this Agreement, then the
Seller shall promptly provide written notice and a copy thereof to the
Buyer and unless such contract required the Buyer's approval pursuant to
this paragraph and such approval was not obtained, the Buyer shall assume
such contract at Closing, such contract shall be deemed added to Schedule
V attached hereto and Schedule V shall be deemed amended at the Closing to
include such contracts. If a new contract requires the Buyer's approval
and the Buyer does not object within seven (7) Business Days after receipt
of a copy of such contract, then the Buyer shall be deemed to have
approved such contract.
(d) New Space Leases. (i) Continue its present rental program
and efforts at the Property to rent vacant space, provided that without
the prior consent of the Buyer, which consent shall not be unreasonably
withheld, the Seller will not execute any new lease or amend, terminate or
accept the surrender of any existing tenancies or approve any subleases
except that the Seller is authorized to (i) accept the termination of
Space Leases at the end of their existing terms, (ii) enter into Space
Leases with any of the tenants listed on Schedule IX with respect to the
specified space in the Property on substantially the same material terms
as set forth on Schedule IX and (iii) amend, extend or renew any existing
Space Lease provided that such amendment, extension or renewal is with any
of the tenants listed on Schedule IX on substantially the same material
terms as set forth on Schedule IX. If a new Space Lease or an amendment,
renewal or extension of an existing Space Lease requires the Buyer's
consent and the Buyer does not object in writing (which writing shall
include the specific basis or bases for such objection) within seven (7)
Business Days after receipt of a copy of such lease, amendment, extension
or renewal, then the Buyer shall be deemed to have approved such space
lease. Notwithstanding the foregoing, with respect to leases for space in
Industrial Building 2, if the Buyer has approved or is deemed to have
approved a letter of intent with respect to such lease pursuant to Section
3.4, then the Buyer's prior approval of the relevant lease shall be
limited to those terms of the lease which were not included in, or are
inconsistent with, the terms of the letter of intent.
(ii) If the Seller enters into any Space Leases after the date
of this
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Agreement, then unless such Space Lease required the Buyer's approval
pursuant to this paragraph and such approval was not obtained, the Buyer
shall assume such Space Lease at Closing, such Space Lease shall be shall
be deemed added to Schedule VI attached hereto and Schedule VI shall be
deemed amended at the Closing to include such Space Lease.
(e) Litigation. The Seller will advise the Buyer promptly of
any litigation, arbitration proceeding or administrative hearing
(including condemnation) before any governmental agency of which the
Seller has Knowledge, which affects the Asset in any respect.
(f) Sale of Personal Property. The Seller will not transfer or
dispose of, or permit to be sold, transferred or otherwise disposed of,
any item or group of items constituting personal property associated with
the Property, except for the use and consumption of inventory, office and
other supplies and spare parts, and the replacement of worn out, obsolete
and defective tools, equipment and appliances, in the ordinary course of
business.
(g) Performance Under Space Leases. The Seller will perform, or
cause its agents to perform, all obligations of landlord or lessor under
the Space Leases.
(h) Estoppel Certificates. Immediately upon execution of this
Agreement, the Seller and the Buyer will cooperate in preparing as
expeditiously as possible an estoppel certificate (each an "Estoppel
Certificate") with respect to each Space Lease substantially in the
relevant form attached hereto as Exhibit G, in each case revised to be
addressed to Purchaser and to reflect the facts of the transactions
contemplated by this Agreement and, in the case of the estoppel
certificate for Cisco, further revised to include a statement by the
tenant that "substantial completion" (as defined in the Cisco Lease and
the related workletter) has occurred.
(i) Delivery of Notices. The Seller agrees to issue default
notices under the Material Contracts and the Space Leases in a
commercially reasonable manner consistent with the Seller's past practices
of operation of the Property.
Section 3.4 Industrial Building 2. (a) The Seller intends to
construct Industrial Building 2 on a portion of Phase II. However, the Seller
agrees that such construction will not be commenced by the Seller unless and
until the Pre-Leasing Requirement has been met. The Seller agrees to keep the
Buyer apprised of the status of negotiations with respect to the Pre-Leasing
Requirement and shall submit to the Buyer for its approval any letter of intent
which the Seller intends to enter into with respect to leases which will satisfy
the Pre-Leasing Requirement. The Buyer shall either approve or disapprove such
letter of intent within five (5) Business Days after the same has been received
by the Buyer. The failure of the Buyer to respond within such five Business Day
period shall be deemed approval of the letter of intent by the Buyer. Upon
execution
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of leases pursuant to which all of Industrial Building 2 will be leased which
leases (i) include material terms consistent with letters of intent approved or
deemed approved by the Buyer or (ii) are otherwise approved by the Buyer, the
Pre-Leasing Requirement shall be deemed satisfied.
(b) If the Pre-Leasing Requirement is not satisfied by the
Phase I Closing Date, then the Seller shall not commence construction of
Industrial Building 2 and the Phase II Purchase Price Portion shall be
reduced pursuant to subsection 2.2(d). If the Pre-Leasing Requirement has
been satisfied as of the Phase I Closing Date, then the Seller shall cause
Industrial Building 2 to be constructed in accordance with the lease or
leases for Industrial Building 2. The lease or leases with respect to
Industrial Building 2 shall be subject to the provisions of subsection
3.3(d).
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER
Section 4.1 Representations, Warranties and Covenants of the
Buyer. The Buyer hereby represents, warrants and covenants to the Seller as of
the date hereof and as of the Closing Date as follows:
(a) Formation; Existence. Buyer is a real estate investment
trust duly organized, validly existing and in good standing under the laws
of the State of Maryland.
(b) Power; Authority. The Buyer has all requisite power and
authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement, the purchase of the
Asset and the consummation of the transactions provided for herein have
been duly authorized by all necessary action on the part of the Buyer.
This Agreement has been duly executed and delivered by the Buyer and
constitutes the legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights and by general
principles of equity (whether applied in a proceeding at law or in
equity).
(c) No Consents. No consent, license, approval, order, permit
or authorization of, or registration, filing or declaration with, any
court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, is required to be obtained or
made in connection with the execution, delivery and performance of this
Agreement or any of the transactions required or contemplated hereby.
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(d) No Conflicts. The execution, delivery and compliance with,
and performance of the terms and provisions of, this Agreement, and the
purchase of the Asset, will not (a) conflict with or result in any
violation of its organizational documents, (b) conflict with or result in
any violation of any provision of any bond, note or other instrument of
indebtedness, contract, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party
in its individual capacity, or (c) violate any existing term or provision
of any order, writ, judgment, injunction, decree, statute, law, rule or
regulation applicable to it or its assets or properties.
(e) Examination; No Contingencies. (i) Except as provided in
Article VII below, before entering into this Agreement, the Buyer has made
such examination of the Asset and all other matters affecting or relating
to the transactions contemplated hereunder as the Buyer has deemed
necessary. In entering into this Agreement, the Buyer has not been induced
by and has not relied upon any written or oral representations, warranties
or statements, whether express or implied, made by BREA, the Seller, any
partner of BREA or the Seller, or any agent, employee, or other
representative of any of the foregoing or by any broker or any other
person representing or purporting to represent BREA or the Seller, with
respect to the Asset, the Condition of the Asset or any other matter
affecting or relating to the transactions contemplated hereby, other than
those expressly set forth in this Agreement. The Buyer's obligations under
this Agreement shall not be subject to any contingencies, diligence or
conditions except as expressly set forth in this Agreement. The Buyer
acknowledges and agrees that, except as expressly set forth herein, the
Seller makes no representations or warranties whatsoever, whether express
or implied or arising by operation of law, with respect to the Asset or
the Condition of the Asset. The Buyer agrees that the Asset will be sold
and conveyed to (and accepted by) the Buyer at the Closing in the then
existing condition of the Asset, AS IS, WHERE IS, WITH ALL FAULTS, AND
WITHOUT ANY WRITTEN OR VERBAL REPRESENTATIONS OR WARRANTIES WHATSOEVER,
WHETHER EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW, other than
representations and warranties of the Seller expressly set forth in this
Agreement. Without limiting the generality of the foregoing, except for
the representations and warranties of the Seller contained in this
Agreement, the transactions contemplated by this Agreement are without
statutory, express or implied warranty, representation, agreement,
statement or expression of opinion of or with respect to (A) the Condition
of the Asset or any aspect thereof, including, without limitation, any and
all statutory, express or implied representations or warranties related to
the suitability for habitation, merchantability, or fitness for a
particular purpose, (B) the nature or quality of construction, structural
design or engineering of the improvements included in the Property, (C)
the quality of labor or materials included in the improvements included in
the Property, (D) the soil conditions, drainage, topographical features,
flora, fauna, or other conditions of or which affect the Property, (E) any
conditions at or which affect the Property with respect
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to a particular use, purpose, development, potential or otherwise, (F)
areas, size, shape, configuration, location, access, capacity, quantity,
quality, cash flow, expenses, value, condition, make, model, composition,
accuracy, completeness, applicability, assignability, enforceability,
exclusivity, usefulness, authenticity or amount, (G) any statutory,
express or implied representations or warranties created by any
affirmation of fact or promise, by any description of the Asset or by
operation of law, (H) any environmental, botanical, zoological,
hydrological, geological, meteorological, structural, or other condition
or hazard or the absence thereof heretofore, now or hereafter affecting in
any manner the Property and (I) all other statutory, express or implied
representations or warranties by the Seller whatsoever. The Buyer
acknowledges that the Buyer has knowledge and expertise in financial and
business matters that enable the Buyer to evaluate the merits and risks of
the transactions contemplated by this Agreement.
(ii) For purposes of this Agreement, the term "Condition of the
Asset" means the following matters:
(A) Physical Condition of the Property. The quality,
nature and adequacy of the physical condition of the Property,
including, without limitation, the quality of the design, labor
and materials used to construct the improvements included in
the Property; the condition of structural elements,
foundations, roofs, glass, mechanical, plumbing, electrical,
HVAC, sewage, and utility components and systems; the capacity
or availability of sewer, water, or other utilities; the
geology, flora, fauna, soils, subsurface conditions,
groundwater, landscaping, and irrigation of or with respect to
the Property, the location of the Property in or near any
special taxing district, flood hazard zone, wetlands area,
protected habitat, geological fault or subsidence zone,
hazardous waste disposal or clean-up site, or other special
area, the existence, location, or condition of ingress, egress,
access, and parking; the condition of the personal property and
any fixtures; and the presence of any asbestos or other
Hazardous Materials, dangerous, or toxic substance, material or
waste in, on, under or about the Property and the improvements
located thereon. "Hazardous Materials" means (A) those
substances included within the definitions of any one or more
of the terms "hazardous substances," "toxic pollutants",
"hazardous materials", "toxic substances", and "hazardous
waste" in the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. [Section]9601 et seq.
(as amended), the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Sections 1801
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et seq., the Resource Conservation and Recovery Act of 1976 as
amended, 42 U.S.C. Section 6901 et seq., Section 311 of the
Clean Water Act and any similar state laws or any regulations
issued under any such laws and (B) petroleum, radon gas, lead
based paint, asbestos or asbestos containing material and
polychlorinated biphenyls.
(B) Adequacy of the Asset. The economic feasibility,
cash flow and expenses of the Asset, and habitability,
merchantability, fitness, suitability and adequacy of the
Property for any particular use or purpose.
(C) Legal Compliance of the Asset. The compliance or
non-compliance of the Seller or the operation of the Property
or any part thereof in accordance with, and the contents of,
(i) all codes, laws, ordinances, regulations, agreements,
licenses, permits, approvals and applications of or with any
governmental authorities asserting jurisdiction over the
Property, including, without limitation, those relating to
zoning, building, public works, parking, fire and police
access, handicap access, life safety, subdivision and
subdivision sales, and Hazardous Materials, dangerous, and
toxic substances, materials, conditions or waste, including,
without limitation, the presence of Hazardous Materials in, on,
under or about the Property that would cause state or federal
agencies to order a clean up of the Property under any
applicable legal requirements and (ii) all agreements,
covenants, conditions, restrictions (public or private),
condominium plans, development agreements, site plans, building
permits, building rules, and other instruments and documents
governing or affecting the use, management, and operation of
the Property.
(D) Matters Disclosed in the Scheduled Documents and
Asset File. Those matters referred to in this Agreement and the
documents listed on the Schedules attached hereto and the
matters disclosed in the Asset File.
(E) Insurance. The availability, cost, terms and
coverage of liability, hazard, comprehensive and any other
insurance of or with respect to the Property.
(F) Condition of Title. The condition of title to the
Property, including, without limitation, vesting, legal
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description, matters affecting title, title defects, liens,
encumbrances, boundaries, encroachments, mineral rights,
options, easements, and access; violations of restrictive
covenants, zoning ordinances, setback lines, or development
agreements; the availability, cost, and coverage of title
insurance; leases, rental agreements, occupancy agreements,
rights of parties in possession of, using, or occupying the
Property; and standby fees, taxes, bonds and assessments.
(f) Leasing Costs. (i) The Buyer will be responsible for all
capital costs, tenant improvement costs, relocation costs, temporary
leasing costs, leasing commissions, legal, design and other professional
fees, and other expenses set forth on Schedule VI-1 attached hereto and
made a part hereof and shall assume the economic effect of any "free rent"
or other concessions pertaining to the period from and after the Closing
Date relating to the Space Leases:
(ii) To the extent that the Seller has paid any of the items
set forth on Schedule VI-1 prior to Closing, the Purchase Price will be
increased at Closing by the aggregate amount of such expenditures upon
presentation of an invoice therefor marked paid. The Buyer will pay all
other costs and expenses described in this subsection 4.1(f) as and when
the same are due.
(iii) In the event that any Space Leases are identified on
Schedule IX hereto, or the Seller executes any new Space Lease after the
date of this Agreement in accordance with subsection 3.3(d), and in either
event such Space Lease requires the construction of tenant fixtures or
improvements or the payment of leasing or brokerage commission(s) at the
expense of the landlord, the Buyer shall assume the obligation to pay
and/or at Closing to reimburse the Seller for the paid portion of the cost
of such improvements and leasing or brokerage commission(s) and any other
costs associated with such Space Lease.
(iv) In the event that the Solectron T/I Allowance has not been
fully funded by the Seller as of the Phase I Closing Date, the Buyer will
assume all obligations of the Seller to fund the balance of the Solectron
T/I Allowance and the Buyer shall receive a credit at Closing in the
amount of the balance of the Solectron T/I Allowance remaining to be
funded.
(g) Brokerage Commissions. Effective upon the Closing, the
Buyer assumes all obligations of the Seller to pay the brokerage
commissions listed on Schedule VII, which obligation shall survive the
Closing and shall be confirmed in writing by the Buyer upon request by the
Seller.
(h) Seller SDP Deposits. To the extent that the work necessary
for the return of the Seller SDP Deposits relating to the portion of the
Property to be
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transferred on a Closing Date will not be completed prior to such Closing
Date, the Buyer shall deliver replacement bonds or deposits to the City of
Austin and cause the Seller SDP Deposits to be returned to the Seller. To
the extent that, on a Closing Date, one or more Seller SDP Deposits
relating to the portion of the Property to be transferred on such Closing
Date have not been returned to the Seller, the relevant portion of the
Purchase Price payable on such Closing Date shall be increased by the
aggregate amount of the relevant outstanding Seller SDP Deposits and, if
such amounts are subsequently remitted by the City of Austin to the
Seller, then the Seller shall pay such amount, upon receipt, to the Buyer,
which payment obligation shall survive the Closing.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section 5.1 Conditions Precedent To Seller's Obligations. The
obligation of the Seller to consummate the transfer of the relevant portion of
the Asset to the Buyer on the relevant Closing Date is subject to the
satisfaction (or waiver by the Seller) as of the relevant Closing of the
following conditions; provided that the condition shall be deemed satisfied if
it has been satisfied as of the relevant Closing Date with respect to the
portion of the Asset to be transferred on such Closing Date:
(a) Each of the representations and warranties made by the
Buyer in this Agreement shall be true and correct in all material respects
when made and on and as of the Closing Date as though such representations
and warranties were made on and as of the Closing Date.
(b) The Buyer shall have performed or complied in all material
respects with each obligation and covenant required by this Agreement to
be performed or complied with by the Buyer on or before the Closing.
(c) No order or injunction of any court or administrative
agency of competent jurisdiction nor any statute, rule, regulation or
executive order promulgated by any governmental authority of competent
jurisdiction shall be in effect as of the Closing which restrains or
prohibits the transfer of the Asset or the consummation of any other
transaction contemplated hereby.
(d) No action, suit or other proceeding shall be pending which
shall have been brought by any person or entity (other than the parties
hereto and their affiliates) (i) to restrain, prohibit or change in any
material respect the purchase and sale of the Asset or the consummation of
any other transaction contemplated hereby or (ii) seeking material damages
with respect to such purchase and sale or any other transaction
contemplated hereby.
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(e) The Seller shall have received all of the documents
required to be delivered by the Buyer under Article VI.
(f) The Seller shall have received the relevant portion of the
Purchase Price in accordance with subsection 2.2(b) and all other amounts
due to the Seller hereunder.
Section 5.2 Conditions to the Buyer's Obligations. The
obligation of the Buyer to purchase and pay for the Asset is subject to the
satisfaction (or waiver by the Buyer) as of the Closing of the following
conditions; provided that the condition shall be deemed satisfied if it has been
satisfied as of the relevant Closing Date with respect to the portion of the
Asset to be transferred on such Closing Date:
(a) Each of the representations and warranties made by the
Seller in this Agreement shall be true and correct in all material
respects when made and on and as of the Closing Date as though such
representations and warranties were made on and as of Closing Date.
(b) The Seller shall have performed or complied in all material
respects with each obligation and covenant required by this Agreement to
be performed or complied with by the Seller on or before the Closing.
(c) No order or injunction of any court or administrative
agency of competent jurisdiction nor any statute, rule, regulation or
executive order promulgated by any governmental authority of competent
jurisdiction shall be in effect as of the Closing which restrains or
prohibits the transfer of the Asset or the consummation of any other
transaction contemplated hereby.
(d) No action, suit or other proceeding shall be pending which
shall have been brought by any person or entity (other than the parties
hereto and their affiliates) (i) to restrain, prohibit or change in any
material respect the purchase and sale of the Asset or the consummation of
any other transaction contemplated hereby or (ii) seeking material damages
with respect to such purchase and sale or any other transaction
contemplated hereby.
(e) Title to the Property shall be delivered to the Buyer in
the manner required under Section 8.1.
(f) The Buyer shall have received all of the documents required
to be delivered by the Seller under Article VI.
(g) The Buyer shall have received (i) with respect to the Phase
I Closing, Estoppel Certificates from all tenants of the Phase I Property
and (ii) with respect to the Phase II Closing, Estoppel Certificates from
all tenants of the Phase II Property.
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(h) (i) No notice of default shall have been given by the
Seller under any Material Contract or under any Space Lease, in each case,
which Material Contract or Space Lease (A) relates to, affects or benefits
the portion of the Property to be transferred on the relevant Closing Date
and (B) will be assumed by the Buyer as part of the relevant Closing and
(ii) all such Material Contracts and Space Leases shall be in full force
and effect, except in each case, to the extent that such notice of default
or failure of such Material Contract or Space Lease to continue in full
force and effect, would not materially adversely effect the value or
continued operation of the portion of the Property to be transferred on
the relevant Closing Date.
ARTICLE VI
CLOSING DELIVERIES
(a) The Buyer shall deliver the following documents at each
Closing:
(i) with respect to the relevant portion of the Property:
(A) an assignment and assumption of landlord's
interest in leases (an "Assignment of Leases") duly executed by
the Buyer in substantially the form of Exhibit A hereto;
(B) an assignment and assumption of contracts (an
"Assignment of Contracts") duly executed by the Buyer in
substantially the form of Exhibit B hereto; and
(C) notice letters ("Tenant Notices") duly executed
by the Buyer, in the form of Exhibit C attached hereto. Such
notice letters shall be retained by the Seller and delivered by
the Seller to each tenant and other such entity promptly
following Closing.
(ii) with respect to the transactions contemplated hereunder:
(A) such other assignments, instruments of transfer,
and other documents as the Seller may reasonably require in
order to complete the transactions contemplated hereunder or to
evidence compliance by the Buyer with the covenants,
agreements, representations and warranties made by it
hereunder, in each case, duly executed by the Buyer;
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(B) a duly executed and sworn Secretary's Certificate
from the Buyer (or the general partners of the Buyer, where
appropriate) certifying that the Buyer has taken all necessary
action to authorize the execution of all documents being
delivered hereunder and the consummation of all of the
transactions contemplated hereby and that such authorization
has not been revoked, modified or amended;
(C) an executed and acknowledged Incumbency
Certificate from the Buyer (or the general partners of the
Buyer, where appropriate) certifying the authority of the
officers of the Buyer (or the general partner of the Buyer,
where appropriate) to execute this Agreement and the other
documents delivered by the Buyer to the Seller at the Closing;
and
(D) all transfer tax returns which are required by
law and the regulations issued pursuant thereto in connection
with the payment of all state or local real property transfer
taxes that are payable or arise as a result of the consummation
of the transactions contemplated by this Agreement, in each
case, as prepared by the Seller and duly executed by the Buyer.
(b) The Seller shall deliver the following documents at
Closing:
(i) with respect to the relevant portion of the Property:
(A) a special warranty deed (a "Deed") in
substantially the form of Exhibit D (with any necessary
modifications in order to conform with the local laws for
recording in the land records in the jurisdiction in which the
Property is located), duly executed by the Seller, without
recourse, which deed, upon proper recording by the Buyer, shall
be sufficient to transfer and convey to the Buyer whatever
rights in the relevant portion of the Property the Seller has
acquired subject only to the Permitted Exceptions (as defined
below);
(B) an Assignment of Leases duly executed by the
Seller, together with copies, and if available, originals of
the Space Leases referred to in such assignment;
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(C) a bill of sale (a "Bill of Sale") duly executed
by the Seller in substantially the form of Exhibit E hereto,
relating to all fixtures, chattels, equipment and articles of
personal property owned by the relevant Seller which are
currently located upon or attached to the relevant portion of
the Property;
(D) an Assignment of Contracts duly executed by the
Seller;
(E) all keys to the relevant portion of the Property
which are in the Seller's possession;
(F) an affidavit that the Seller is not a "foreign
person" within the meaning of the Foreign Investment in Real
Property Tax Act of 1980, as amended, in substantially the form
of Exhibit F hereto; and
(G) with respect to the Phase II Closing only, the
Phase II CO.
(ii) with respect to the transactions contemplated hereunder:
(A) such other assignments, instruments of transfer,
and other documents as the Buyer may reasonably require in
order to complete the transactions contemplated hereunder or to
evidence compliance by the Seller with the covenants,
agreements, representations and warranties made by it
hereunder;
(B) a duly executed and sworn Secretary's Certificate
from the Seller (or the general partners of the Seller, where
appropriate) certifying that the Seller has taken all necessary
action to authorize the execution of all documents being
delivered hereunder and the consummation of all of the
transactions contemplated hereby and that such authorization
has not been revoked, modified or amended;
(C) an executed and acknowledged Incumbency
Certificate from the Seller (or the general partners of the
Seller, where appropriate) certifying the authority of the
officers of the Seller (or the general partner of the Seller,
where appropriate) to execute this Agreement and the other
documents delivered by the Seller to the Buyer at the
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Closing; and
(D) all transfer tax returns which are required by
law and the regulations issued pursuant thereto in connection
with the payment of all state or local real property transfer
taxes that are payable or arise as a result of the consummation
of the transactions contemplated by this Agreement, in each
case, as prepared and duly executed by the Seller.
(iii) In the event any Asset-Related Property is not assignable
(such as a letter of credit that is not transferable), the Seller shall
use commercially reasonable efforts to provide the Buyer, at no cost to
the Seller, with the economic benefits of such property by enforcing such
property (solely at the Buyer's direction) for the benefit and at the
expense of the Buyer.
ARTICLE VII
INSPECTIONS
Section 7.1 Right of Inspection. Prior to the Closing, the
Buyer and its agents shall have the right to inspect the Property during
business hours on Business Days, including the right to interview the tenants
under Space Leases, provided that (a) the Buyer shall first give the Seller
reasonable advance notification of its intention to conduct any such inspection
or interview, (b) the Buyer shall permit a representative of the Seller to
accompany the Buyer and/or its agents during any such inspection or interview if
the Seller shall make such a representative available and (c) such inspection or
interview shall not unreasonably impede the normal day-to-day business operation
of the Property. The Buyer's right of inspection of the Property shall be
subject to the rights of tenants. The Buyer hereby indemnifies and agrees to
defend and hold the Seller harmless from all loss, cost (including, without
limitation, reasonable attorneys' fees), claim or damage arising in connection
with or from any such inspection by the Buyer or its agents. The provisions of
this Article shall survive the Closing.
Section 7.2 Due Diligence Period.
(a) The Buyer confirms to the Seller that the Buyer has
conducted a detailed inspection of the Asset File, has made multiple site
visits and in certain instances consulted with third party professionals
in satisfying itself that the Property is appropriate for the Buyer's
acquisition. Notwithstanding the foregoing, in order to confirm
preliminary information with third party professionals, review materials
requested but not delivered, clarify certain discrepancies, conduct more
complete Phase I environmental and engineering analyses and complete its
investigation, the Buyer, for the period ending on July
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31, 1998 (the "Due Diligence Expiration Date"), shall have the right to
conduct or cause to be conducted, at the Buyer's sole cost, risk and
expense, such inspections, tests, examinations and studies of the Property
as the Buyer deems necessary or appropriate; to further examine all
applicable records relating to the income, operation and maintenance of
the Property; to determine compliance of the Property with applicable laws
and regulations, including, without limitation, zoning, building, land use
and environmental protection laws; and to further confirm certain title
matters. The provisions of Section 7.1 above shall apply to any on-site
investigations or inspections to be made by the Buyer.
(b) If the Buyer, in its judgment reasonably exercised,
determines that the Asset is not an acceptable investment for the Buyer,
then the Buyer shall have the right to terminate this Agreement by written
notice given to the Seller prior to 5:00 p.m. (E.D.T) on the Due Diligence
Expiration Date (TIME BEING OF THE ESSENCE). If the Buyer shall elect to
terminate this Agreement in the time and manner set forth in this
subsection 7.2(b), then the Earnest Money shall be returned to the Buyer,
this Agreement shall be deemed terminated and neither party shall have any
further rights or obligations to the other, except for those expressly
stated to survive the termination of this Agreement. If the Buyer shall
fail to terminate this Agreement in the time and manner set forth in this
subsection 7.2(b), then the Buyer shall be deemed to have irrevocably
waived its right to terminate this Agreement pursuant to this subsection
7.2(b).
ARTICLE VIII
TITLE AND PERMITTED EXCEPTIONS
Section 8.1 Permitted Exceptions. The Property shall be sold
and is to be conveyed, and the Buyer agrees to purchase the Property, subject to
the Permitted Exceptions.
Section 8.2 Title Report. The Buyer has received and/or
reviewed a copy of the Existing Title Commitment and the Existing Survey.
Promptly after the date of this Agreement the Seller shall order from the Title
Company an updated title commitment and survey with respect to the Property and
the Seller shall (a) instruct the Title Company to furnish copies of all updated
commitments and surveys to the Buyer's counsel at the address set forth in
Section 14.9 hereof. Within five (5) Business Days after issuance of any such
updated documents, the Buyer shall give notice to the Seller specifying all
title exceptions set forth in such updated documents which the Buyer claims are
not Permitted Exceptions.
Section 8.3 Use of Purchase Price to Discharge Title
Exceptions. With respect to the Property, if, at the Closing, there are any
title exceptions applicable to the Property which are not Permitted Exceptions
and which the Seller is obligated by this
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Agreement or elects to pay and discharge, the Seller may use any portion of the
Purchase Price to satisfy the same, provided that the Seller shall have
delivered to the Buyer at the Closing instruments in recordable form sufficient
to satisfy such title exceptions of record, together with the cost of any
applicable recording or filing fees. The existence of any such liens or
encumbrances shall not be deemed objections to title if the Seller shall comply
with the foregoing requirements. Any unpaid liens for taxes, water charges and
assessments applicable to the period prior to the Closing Date shall not be
objections to title, but the amount thereof plus any interest and penalties
thereon shall be deducted from the Purchase Price, subject to the provisions for
apportionment of taxes, water charges and assessments contained in Article X of
this Agreement.
Section 8.4 Inability to Convey. Except as expressly set forth
in Section 8.6, nothing contained in this Agreement shall be deemed to require
the Seller to take or bring any action or proceeding or any other steps to
remove any title exception or to expend any moneys therefor, nor shall the Buyer
have any right of action against the Seller, at law or in equity, for the
Seller's inability to convey title subject only to the Permitted Exceptions.
Section 8.5 Rights in Respect of Inability to Convey. Subject
to the Seller's obligations to remove Voluntary Title Exceptions pursuant to
Section 8.6 below, in the event that the Seller shall be unable to deliver title
to the Property in the condition required under Section 8.1 and the Buyer shall
not, prior to the Closing Date (as it may have been adjourned in accordance with
this Agreement), give notice to the Seller that the Buyer is willing to waive
objection to each title exception which is not a Permitted Exception and close
this transaction without abatement of the Purchase Price, credit or allowance of
any kind or any claim or right of action against the Seller for damages or
otherwise, the Seller shall have the right, at the Seller's sole election, to
either (l) take such action as the Seller shall deem advisable to discharge each
such title exception which is not a Permitted Exception or (2) terminate this
Agreement. In the event the Seller shall elect to take action to discharge each
such title exception which is not a Permitted Exception, the Seller shall be
entitled to one or more adjournments of the Closing Date for a period not to
exceed ninety (90) days in the aggregate (inclusive of any adjournments made by
the Seller pursuant to Section 8.6 below) and the Closing shall be adjourned to
a date specified by the Seller not beyond such ninety (90) day period. If, for
any reason whatsoever, the Seller shall not have succeeded in discharging each
such title exception at the expiration of such adjournment(s) and if the Buyer
shall not, prior to the expiration of the last of such adjournments, give notice
to the Seller that the Buyer is willing to waive objection to each such title
exception and to close this transaction without abatement of the Purchase Price,
credit or allowance of any kind or any claim or right of action against the
Seller for damages or otherwise, this Agreement shall be deemed to be terminated
as of the last date to which the Closing Date was adjourned by the Seller
pursuant to this Article VIII. Upon any termination of this Agreement pursuant
to this Section, (I) the Earnest Money shall be refunded to the Buyer and (II)
neither party shall have any further rights or obligations hereunder other than
those which expressly survive the termination of this Agreement. No action taken
by the Seller to discharge, or
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attempt to discharge, any purported title exception shall be an admission that
any such purported title exception is not a Permitted Exception. The provisions
of this Section 8.5 shall be subject to the Seller's and the Buyer's rights and
obligations with respect to Voluntary Title Exceptions set forth in Section 8.6.
Section 8.6 Voluntary Title Exceptions. If, from time to time
prior to the Closing, the Buyer shall become aware of any Voluntary Title
Exceptions, then the Buyer shall promptly notify the Seller thereof, which
notice shall describe in reasonable detail the Voluntary Title Exceptions(s).
The Seller shall discharge all Voluntary Title Exceptions on or prior to
Closing. The Seller shall be entitled to one or more adjournments of the Closing
Date not to exceed ninety (90) days in the aggregate (inclusive of any
adjournments made by the Seller pursuant to Section 8.5 hereof) to discharge
Voluntary Title Exceptions.
Section 8.7 The Buyer's Right to Accept Title. Notwithstanding
the foregoing provisions of this Article VIII, the Buyer may, by notice given to
the Seller at any time prior to the Closing Date (as it may have been adjourned
by the Seller pursuant to this Article VIII), elect to accept such title as the
Seller can convey, notwithstanding the existence of any title exceptions which
are not Permitted Exceptions. In such event, this Agreement shall remain in
effect and the parties shall proceed to Closing but, except to the extent set
forth in Section 8.6, the Buyer shall not be entitled to any abatement of the
Purchase Price, any credit or allowance of any kind or any claim or right of
action against the Seller for damages or otherwise by reason of the existence of
any title exceptions which are not Permitted Exceptions.
Section 8.8 Cooperation. The Buyer and the Seller shall
cooperate with the title company chosen by the Buyer in connection with
obtaining title insurance insuring title to the Property subject only to the
Permitted Exceptions. In furtherance and not in limitation of the foregoing, at
or prior to the Closing, the Buyer and the Seller shall deliver to the title
company chosen by the Buyer such affidavits, certificates and other instruments
as are reasonably requested by such title company and customarily furnished in
connection with the issuance of owner's policies of title insurance, including,
without limitation, (i) evidence sufficient to establish (x) the legal existence
of the Buyer and the Seller and (y) the authority of the respective signatories
of the Seller and the Buyer to bind the Seller and the Buyer, as the case may
be, and (ii) a certificate of good standing of the Seller.
ARTICLE IX
TRANSACTION COSTS; RISK OF LOSS
Section 9.1 Transaction Costs. The Buyer and the Seller agree
to comply with all real estate transfer tax laws applicable to the sale of the
Asset. Except as specifically set forth below, at Closing, the real property
transfer taxes, deed stamps,
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conveyance taxes, documentary stamp taxes and other taxes or charges payable as
a result of the conveyance of the Asset to the Buyer pursuant to this Agreement
shall be split equally between the Buyer and the Seller. In addition to the
foregoing and their respective apportionment obligations hereunder, (a) the
Seller and the Buyer shall each be responsible for the payment of the costs of
their respective legal counsel, advisors and other professionals employed
thereby in connection with the sale of the Asset, (b) the Buyer shall be
responsible for all costs and expenses associated with (i) the Buyer's due
diligence (other than the title costs described in clause (c)(i) below), (ii)
all survey and search costs and updates related thereto, whether commissioned by
the Buyer, the Seller or the Title Company provided that if such survey update
is not commissioned by the Buyer, the Buyer's prior approval has been obtained
for the commissioning of such survey update, (iii) the policy premiums and all
other costs in respect of any mortgage title insurance obtained by the Buyer (if
any) and the costs of any endorsements, coinsurance, reinsurance or affirmative
coverage requested by the Buyer in connection with the fee title insurance (if
any), (iv) all costs and expenses of obtaining any financing the Buyer may elect
to obtain (including any fees, financing costs, transfer taxes, mortgage and
recordation taxes and intangible taxes in connection therewith) and (v) all
other costs which are the responsibility under applicable law for the Buyer to
pay (including, without limitation, all sales and use taxes due as a result of
the sale of the Asset) and (c) the Seller shall be responsible for all costs and
expenses associated with (i) the policy premiums in respect of any fee title
insurance obtained by the Buyer (if any) but the Seller shall not be responsible
for the costs of any endorsements, coinsurance, reinsurance or affirmative
coverage requested by the Buyer in connection with such fee title insurance,
(iv) payment, at the Closing, of the recording charges and fees and recordation
taxes for the documents necessary to transfer the Asset,. Each party to this
Agreement shall indemnify the other parties and their respective successors and
assigns from and against any and all loss, damage, cost, charge, liability or
expense (including court costs and reasonable attorneys' fees) which such other
party may sustain or incur as a result of the failure of either party to timely
pay any of the aforementioned taxes, fees or other charges for which it has
assumed responsibility under this Section.
Section 9.2 Risk of Loss. If, on or before the Closing Date,
the Property or any portion thereof shall be (i) damaged or destroyed by fire or
other casualty or (ii) taken as a result of any condemnation or eminent domain
proceeding, the Seller shall promptly notify the Buyer.
(b) As soon as practicable after the occurrence of such
casualty or condemnation, the Seller shall notify the Buyer of (i) the estimated
cost of restoration of the Property with respect to any casualty as determined
by written estimate of an independent construction contracting firm chosen by
the Seller and reasonably acceptable to the Buyer or (ii) the estimated loss in
value of the Property as a result of such condemnation as determined by written
estimate of an independent appraisal firm chosen by the Seller and reasonably
acceptable to the Buyer. If the estimated cost of restoration arising from a
casualty or the loss in value of the Property arising from a condemnation
exceeds $10,000,000 or one of the Space Leases is terminated by the tenant
thereunder as
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a result of such casualty or condemnation, then the Buyer shall have the option
to either (i) terminate this Agreement upon notice to the Seller and upon
receipt of such notice, the Seller shall allow the return of the Earnest Money,
together with interest thereon, and thereupon this Agreement shall terminate and
be of no further force or effect except for the obligations specified to survive
termination or (ii) accept the Property "as is" together with an assignment of
the insurance or condemnation proceeds in accordance with the following
sentence. If (x)(1) the estimated cost of restoration arising out of a casualty
or estimated loss of value arising out of a condemnation, shall be $10,000,000
or less and (2) no Space Leases are terminated by the tenants thereunder as
result of such casualty or condemnation or (y) (1)(A) the estimated cost of
restoration arising from a casualty or the loss in value of the Property arising
from a condemnation exceeds $10,000,000 or (B) one of the Space Leases is
terminated by the tenant thereunder as a result of such casualty or condemnation
and (2) the Buyer elects, pursuant to clause (ii) of the preceding sentence, to
accept the Property "as is" together with an assignment of the insurance or
condemnation proceeds, then notwithstanding any provision in this Agreement to
the contrary, the Seller will credit against the Purchase Price payable by the
Buyer at the Closing an amount equal to the net proceeds, if any, received by
the Seller from such casualty or condemnation less any amounts spent by the
Seller prior to the Closing with respect to the restoration of the Property
plus, in the case of clause (x) only, the amount of any deductible and/or
deficiency with respect to such insurance proceeds or condemnation award. If as
of the Closing Date, the Seller has not received any such insurance or
condemnation proceeds, then the parties shall nevertheless consummate on the
Closing Date the conveyance of the Asset (without any deduction for such
insurance or condemnation proceeds) and the Seller will at Closing assign to the
Buyer all rights of the Seller, if any, to the insurance or condemnation
proceeds and to all other rights or claims arising out of or in connection with
such casualty or condemnation.
ARTICLE X
ADJUSTMENTS
Unless otherwise provided below, the following are to be
adjusted and prorated between the Sellers and the Buyer as of 11:59 P.M. on the
day preceding the Closing Date, based upon a 365 day year, and the net amount
thereof shall be added to (if such net amount is in the Seller's favor) or
deducted from (if such net amount is in the Buyer's favor) the Purchase Price
payable at Closing:
Section 10.1 Fixed Rents.
(a) Fixed rents (collectively, "Fixed Rents") paid or payable
by tenants under the Space Leases in connection with their occupancy of the
Property shall be adjusted and prorated on an if, as and when collected basis.
Any Fixed Rents collected by the Buyer or the Seller after the Closing from any
tenant who owes Fixed Rents for periods prior to the Closing, shall be applied
(i) first, in payment of Fixed Rents owed by
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such tenant for the month in which the Closing Date occurs, (ii) second, in
payment of Fixed Rents owed by such tenant for the period (if any) after the
month in which the Closing Date occurs but not beyond the then current month and
(iii) third, in payment of Fixed Rents owed by such tenant for the period prior
to the month in which the Closing Date occurs. Each such amount, less any costs
of collection (including reasonable counsel fees) reasonably allocable thereto,
shall be adjusted and prorated as provided above, and the party who receives
such amount shall promptly pay over to the other party the portion thereof to
which it is so entitled.
(b) The Buyer shall bill tenants who owe Fixed Rents for
periods prior to the Closing on a monthly basis for a period of six consecutive
months following the Closing Date and shall use good faith efforts to collect
such past due Fixed Rents. Any payment by a tenant in an amount less than the
full amount of Fixed Rents and Overage Rent (as defined below) then due and
payable by such tenant shall be applied first to Fixed Rents (in the order of
priority as to time periods as is set forth above) to the extent of all such
Fixed Rents then due and payable by such tenant, and thereafter to Overage Rents
(in the order of priority as to time periods as is set forth in Section 10.2
below).
Section 10.2 Overage Rents.
(a) With respect to any Space Lease that provides for (i) the
payment of additional rent based upon a percentage of the tenant's business
during a specified annual or other period (sometimes referred to as "percentage
rent"), (ii) so-called common area maintenance or "CAM" charges or (iii)
so-called "escalation rent" or additional rent based upon increases in real
estate taxes or operating expenses or labor costs or cost of living or porter's
wages or otherwise (such percentage rent, CAM charges, escalation rent and
additional rent being collectively called "Overage Rent"), such Overage Rent
shall be adjusted and prorated on an if, as and when collected basis.
(b) As to any Overage Rent in respect of an accounting period
that shall have expired prior to the Closing but which shall be paid after the
Closing, the Buyer agrees that it will pay the entire amount over to the Seller
upon receipt thereof, less any costs of collection (including reasonable counsel
fees) reasonably allocable thereto. The Buyer agrees that it shall (i) promptly
render bills for any Overage Rent in respect of an accounting period that shall
have expired prior to the Closing but which shall be paid after the Closing,
(ii) bill tenants such Overage Rent attributable to an accounting period that
shall have expired prior to the Closing on a monthly basis for a period of six
consecutive months thereafter and (iii) use good faith best efforts to collect
Overage Rent. The Seller shall furnish to the Buyer all information relating to
the period prior to the Closing that is reasonably necessary for the billing of
such Overage Rent and the Buyer will deliver to the Seller, concurrently with
the delivery to tenants, copies of all statements relating to Overage Rent for a
period prior to the Closing. The Buyer shall bill tenants for Overage Rents for
accounting periods prior to the Closing in accordance with and on the basis of
such information furnished by the Seller.
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(c) If, prior to the Closing, the Seller shall have received
any installments of Overage Rent attributable to Overage Rent for periods from
and after the Closing Date, such sum shall be apportioned at the Closing. If,
after the Closing, the Buyer shall receive any installments of Overage Rent
attributable to Overage Rent for periods prior to the Closing, such sum (less
any costs and expenses (including reasonable counsel fees) incurred by the Buyer
in the collection of such Overage Rent) shall be paid by the Buyer to the Seller
promptly after the Buyer receives payment thereof.
(d) Any payment by a tenant on account of Overage Rent (to the
extent not applied against Fixed Rents due and payable by such tenant in
accordance with subsection 10.1(b) above) shall be applied to Overage Rents then
due and payable in the following order of priority, (i) first, in payment of
Overage Rent for the accounting period in which the Closing Date occurs, (ii)
second, in payment of Overage Rent for accounting periods following the Closing
Date, in the chronological order in which such payments are due for such
accounting period pursuant to the applicable Space Lease, but not beyond the
then current accounting period and (iii) third, in payment of Overage Rent for
the accounting period preceding the accounting period in which the Closing Date
occurs, in the chronological order in which such payments are due for such
accounting period pursuant to the applicable Space Lease.
(e) To the extent that any portion of Overage Rent is required
to be paid monthly by tenants on account of estimated amounts for any calendar
year (or, if applicable, any lease year or tax year or any other applicable
accounting period), and at the end of such calendar year (or lease year, tax
year or other applicable accounting period, as the case may be), such estimated
amounts are to be recalculated based upon the actual expenses, taxes and other
relevant factors for that calendar (lease or tax) year or other applicable
accounting period, with the appropriate adjustments being made with such
tenants, then such portion of the Overage Rent shall be prorated between the
Seller and the Buyer at the Closing based on such estimated payments actually
paid by tenants (i.e., with the Seller entitled to retain all monthly or other
periodic installments of such amounts paid by tenants with respect to periods
prior to the calendar month or other applicable installment period in which the
Closing occurs, the Seller to pay to the Buyer at the Closing all monthly or
other periodic installments of such amounts theretofore received by the Seller
with respect to periods following the calendar month or other applicable
installment period in which the Closing occurs and the Seller and the Buyer to
apportion as of the Closing Date all monthly or other periodic installments of
such amounts paid by tenants with respect to the calendar month or other
applicable installment period in which the Closing occurs). At the time(s) of
final calculation and collection from (or refund to) each tenant of the amounts
in reconciliation of actual Overage Rent for a period for which estimated
amounts paid by such tenant have been prorated, there shall be a re-proration
between the Seller and the Buyer. If, with respect to any tenant, the
recalculated Overage Rent exceeds the estimated amount paid by such tenant, upon
collection from the tenant, (i) the entire excess shall be paid by the Buyer to
the Seller, if the accounting period for which such recalculation was made
expired prior to the Closing and (ii) such excess shall be apportioned between
the Seller and the Buyer
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as of the Closing Date (on the basis described in the first sentence of
subsection 10.2 above), if the Closing occurred during the accounting period for
which such recalculation was made, with the Buyer paying to the Seller the
portion of such excess which the Seller is so entitled to receive. If, with
respect to any tenant, the recalculated Overage Rent is less than the estimated
amount paid by such tenant, (1) the entire shortfall shall be paid by the Seller
to the Buyer (or, at the Seller's option, directly to the tenant in question),
if the accounting period for which such recalculation was made expired prior to
the Closing and (2) such shortfall shall be apportioned between the Seller and
the Buyer as of the Closing Date (on the basis described in the first sentence
of subsection 10.2(c) above), if the Closing occurred during the accounting
period for which such recalculation was made, with the Seller paying to the
Buyer (or, at the Seller's option, directly to the tenant in question) the
portion of such shortfall so allocable to the Seller.
(f) Until such time as all amounts required to be paid to the
Seller by the Buyer pursuant to Section 10.1 and this Section 10.2 shall have
been paid in full, the Buyer shall furnish to the Seller not less frequently
than monthly a reasonably detailed accounting of such amounts payable by the
Buyer, which accounting shall be delivered to the Seller on or prior to the 15th
day following the last day of each calendar month from and after the calendar
month in which the Closing occurs. The Seller shall have the right from time to
time following the Closing, on prior notice to the Buyer, during ordinary
business hours on Business Days, to review the Buyer's rental records with
respect to the Property to ascertain the accuracy of such accountings.
Section 10.3 Taxes and Assessments. Real estate taxes and
assessments assessed with respect to the year in which the Closing occurs shall
be adjusted and prorated based on (a) the periods of ownership by the Seller and
the Buyer during such year and (b) the most current official real property tax
information available from the county assessor's office where the Property is
located or other assessing authorities. If real property tax and assessment
figures for the taxes or assessments to be apportioned between the Buyer and the
Seller pursuant to this Section are not available, real property taxes shall be
prorated based on the most recent assessment, subject to further and final
adjustment when the tax rate and/or assessed valuation for such taxes and
assessments for the Property is fixed. In the event that the Property or any
part thereof shall be or shall have been affected by an assessment or
assessments, whether or not the same become payable in annual installments, the
Seller shall, at the Closing, be responsible for any installments due prior to
the Closing and the Buyer shall be responsible for any installments due on or
after the Closing.
Section 10.4 Water and Sewer Charges. Water rates, water meter
charges, sewer rents and vault charges, if any (other than any such charges,
rates or rents which are payable by tenants of the Property pursuant to such
tenants' Space Leases), shall be adjusted and prorated on the basis of the
fiscal period for which assessed. If there be a water meter, or meters, on the
Property, the Seller agrees that they shall at the Closing furnish a reading of
same to a date not more than 30 days prior to the Closing and the unfixed meter
charges and the unfixed sewer rent thereon for the time intervening from
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the date of the last reading shall be apportioned on the basis of such last
reading, and shall be appropriately readjusted after the Closing on the basis of
the next subsequent bills. Unmetered water charges shall be apportioned on the
basis of the charges therefor for the same period of the preceding calendar
year, but applying the current rate thereto. As to any unpaid water charges or
sewer rents payable directly by tenants, the Buyer shall consummate the Closing
subject to such unpaid charges and rents and any lien resulting therefrom,
without credit against the Purchase Price or any claim or right of action
against the Seller.
Section 10.5 Utility Charges. Gas, steam, electricity and other
public utility charges (other than any such charges which are payable by tenants
of the Property pursuant to such tenants' Space Leases) will be paid by the
Seller to the utility company to the Closing Date. The Seller shall arrange for
a final reading of all utility meters (covering gas, water, steam and
electricity) as of the Closing, except meters the charges of which are payable
by tenants of the Property pursuant to such tenants' Space Leases. The Seller
and the Buyer shall jointly execute a letter to each of such utility companies
advising such utility companies of the termination of the Seller's
responsibility for such charges for utilities furnished to the Property as of
the date of the Closing and commencement of the Buyer's responsibilities
therefor from and after such date. If a bill is obtained from any such utility
company as of the Closing, the Seller shall pay such bill on or before the
Closing. If such bill shall not have been obtained on or before the Closing, the
Seller shall, upon receipt of such bill, pay all such utility charges as
evidenced by such bill or bills pertaining to the period prior to the Closing,
and the Buyer shall pay all such utility charges pertaining to the period
thereafter. Any bill which shall be rendered which shall cover a period both
before and after the date of Closing shall be apportioned between the Buyer and
the Seller as of the Closing.
Section 10.6 Material Contracts. Charges and payments under all
Material Contracts.
Section 10.7 Miscellaneous Revenues. Revenues, if any, arising
out of telephone booths, vending machines, or other income-producing agreements.
Section 10.8 Security Deposits. The actual amounts of the
security deposits provided for under the Space Leases being held by the Seller
as set forth on Schedule X shall be assigned to the Buyer by, at the Seller's
option, (i) payment of the amount thereof to the Buyer, (ii) a credit to the
Buyer against the balance of the Purchase Price and/or (iii) assignment to the
Buyer of the bank accounts (or other security) in which same are held, which
assignment shall be in form reasonably acceptable to the Buyer and the
depositary bank. Any such tenants' securities in form other than cash shall be
transferred to the Buyer by way of appropriate instruments of transfer or
assignment.
Section 10.9 Other. If applicable, the Purchase Price shall be
adjusted at Closing in accordance with subsection 4.1(f)(ii), subsection
4.1(f)(iv), subsection 4.1(h) and Section 9.2 and to reflect the adjustment of
any other item which, under the terms of
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this Agreement, is to be apportioned at Closing.
Section 10.10 Re-Adjustment. Except for re- adjustments of
Overage Rent to be made pursuant to subsection 10.2(e), if any such items are
not determinable at the Closing, the adjustment shall be made subsequent to the
Closing when the charge is determined. Any errors or omissions in computing
adjustments at the Closing shall be promptly corrected, provided that the party
seeking to correct such error or omission shall have notified the other party of
such error or omission on or prior to the date that is 180 days following the
Closing Date. The provisions of this Article X shall survive the Closing.
ARTICLE XI
INDEMNIFICATION
Section 11.1 Indemnification by the Seller. The Seller shall
indemnify and hold the Buyer, its affiliates, members and partners, and the
partners, shareholders, officers, directors, employees, representatives and
agents of each of the foregoing (collectively, "Buyer-Related Entities")
harmless from and against any and all costs, fees, expenses, damages,
deficiencies, interest and penalties (including, without limitation, reasonable
attorneys' fees and disbursements) suffered or incurred by any such indemnified
party in connection with any and all losses, liabilities, claims, damages and
expenses ("Losses"), arising out of, or in any way relating to, (i) any breach
of any representation or warranty of the Seller contained in this Agreement or
in any Schedule, certificate, instrument or other document delivered pursuant
hereto and (ii) any breach of any covenant of the Seller contained in this
Agreement or in any Schedule, certificate, instrument or other document
delivered pursuant hereto, such obligation to survive the Closing subject to
Section 11.4.
Section 11.2 Indemnification by the Buyer. The Buyer shall
indemnify and hold the Seller, its affiliates, members and partners, and the
partners, shareholders, officers, directors, employees, representatives and
agents of each of the foregoing (collectively, "Seller-Related Entities")
harmless from any and all Losses arising out of, or in any way relating to, (i)
any breach of any representation or warranty by the Buyer contained in this
Agreement or in any Schedule, certificate, instrument or other document
delivered pursuant hereto or in connection herewith and (ii) any breach of any
covenant of the Buyer contained in this Agreement or in any Schedule,
certificate, instrument or other document delivered pursuant hereto, such
obligation to survive the Closing or termination of this Agreement subject to
Section 11.4.
Section 11.3 Limitations on Indemnification. Notwithstanding
the foregoing provisions of Section 11.1 or the provisions of any Seller Closing
Document, (a) the Seller shall not be required to indemnify the Buyer or any
Buyer-Related Person under this Agreement or under any Seller Closing Document
unless (i) the aggregate of all amounts for which an indemnity would otherwise
be payable by the Seller under this
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Agreement or under any Seller Closing Document, in each case, with respect to
Phase I or Phase II exceeds the relevant Basket Limitation and, in such event,
Sellers shall be responsible for only the amount in excess of the relevant
Basket Limitation and (ii) the Seller received written notice of such claim
prior to the expiration of the survival period, if any, under Section 11.4, of
the representation, warranty, indemnity or covenant which is the basis for such
claim and (b) in no event shall the liability of the Seller with respect to the
indemnification provided for in Section 11.1 above or in any Seller Closing
Document, in each case, with respect to Phase I or Phase II exceed in the
aggregate the relevant Cap Limitation. Without limitation of the foregoing, the
payment of the Phase II Liquidated Damages Amount shall not be subject to the
Cap Limitation or the Basket Limitation and shall not be taken into
consideration in determining whether such limitations have been exceeded.
Section 11.4 Survival. The representations and warranties of
Seller contained in this Agreement and any indemnity contained in any Seller
Closing Document shall survive for a period of 180 days after the Closing. The
covenants contained in this Agreement to the extent to be performed prior to or
at Closing shall not survive after the Closing. All other covenants, indemnities
and provisions of this Agreement shall survive the Closing unless otherwise
provided herein.
Section 11.5 Indemnification as Sole Remedy. If the Closing has
occurred, the sole and exclusive remedy available to a party in the event of a
breach by the other party to this Agreement of any representation, warranty,
covenant or other provision of this Agreement or in any Schedule, certificate,
instrument or other document delivered pursuant hereto which survives the
Closing shall be the indemnifications provided for under this Article XI.
ARTICLE XII
TAX CERTIORARI PROCEEDINGS
Section 12.1 Prosecution and Settlement of Proceedings. If any
tax reduction proceedings in respect of the Property, relating to any fiscal
years ending prior to the fiscal year in which the Closing occurs, are pending
at the time of the Closing, the Seller reserves and shall have the right to
continue to prosecute and/or settle the same. If any tax reduction proceedings
in respect of the Property, relating to the fiscal year in which the Closing
occurs, are pending at the time of Closing, then the Seller reserves and shall
have the right to continue to prosecute and/or settle the same; provided,
however, that the Seller shall not settle any such proceeding without the
Buyer's prior written consent, which consent shall not be unreasonably withheld
or delayed. The Buyer shall reasonably cooperate with the Seller in connection
with the prosecution of any such tax reduction proceedings. The Seller
represents that, as of the date of this Agreement, no such tax reduction
proceedings are pending and the Seller agrees not to initiate any such
proceedings after the date of this Agreement without the prior consent of the
Buyer, such
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consent not to be unreasonably withheld.
Section 12.2 Application of Refunds or Savings. Any refunds or
savings in the payment of taxes resulting from such tax reduction proceedings
applicable to taxes payable during the period prior to the date of the Closing
shall belong to and be the property of the Seller, and any refunds or savings in
the payment of taxes applicable taxes payable from and after the date of the
Closing shall belong to and be the property of the Buyer; provided, however,
that if any such refund creates an obligation to reimburse any tenants under
Space Leases for any rents or additional rents paid or to be paid, that portion
of such refund equal to the amount of such required reimbursement (after
deduction of allocable expenses as may be provided in the Space Lease to such
tenant) shall, at the Seller's election, either (a) be paid to the Buyer and the
Buyer shall disburse the same to such tenants or (b) be paid by the Seller
directly to the tenants entitled thereto. All attorneys' fees and other expenses
incurred in obtaining such refunds or savings shall be apportioned between the
Seller and the Buyer in proportion to the gross amount of such refunds or
savings payable to the Seller and the Buyer, respectively (without regard to any
amounts reimbursable to tenants).
Section 12.3 Survival. The provisions of this Article XII shall
survive the Closing.
ARTICLE XIII
DEFAULT
Section 13.1 Default. (a) If the Buyer shall default in the
performance of its obligations under this Agreement to purchase the Asset by the
Closing Date, the Seller, as its sole and exclusive remedy hereunder (except as
set forth in the last sentence of this subsection (a)), shall be entitled to
terminate this Agreement, to direct the Escrow Agent to deliver the Earnest
Money to the Seller, and to retain the Earnest Money as liquidated damages, at
which time this Agreement shall be terminated and of no further force and effect
except for the provisions which explicitly survive such termination. The Buyer
agrees that the Seller shall have the right to retain the Earnest Money as
liquidated damages without the necessity of proving actual damages due to the
difficulty of proving actual damages resulting from the Buyer's default
hereunder. Nothing in this Section shall be deemed to limit the Seller's
remedies with respect to a breach by the Buyer of any of its obligations which
survive the Closing but such remedies shall be limited as provided in Section
11.5.
(b) If the Seller shall default in the performance of its
obligations under this Agreement to cause the sale of the Asset by the Closing
Date, the Buyer, as its sole and exclusive remedy, shall be entitled at its
option, either (i) to terminate this Agreement, direct Escrow Agent to deliver
the Earnest Money to the Buyer and retain the Earnest Money, at which time this
Agreement shall be terminated and of no further force
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and effect except for the provisions which explicitly survive such termination
or (ii) specifically enforce the terms and conditions of this Agreement;
provided, however, if the Seller shall default in the performance of its
obligations to cause the sale of Phase II on the Phase II Closing Date, then, in
the event the Buyer elects to terminate this Agreement pursuant to clause (i)
above, the Buyer shall also be entitled to receive from the Seller the Phase II
Liquidated Damages Amount, as liquidated damages without the necessity of
proving actual damages due to the difficulty of proving actual damages resulting
from the Seller's default hereunder with respect to the Phase II Closing.
Nothing in this Section shall be deemed to limit the Buyer's remedies with
respect to a breach by the Seller of any of the Seller's obligations which
survive the Closing but such remedies shall be limited as provided in Section
11.5.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Use of Blackstone Name and Address. The Buyer
hereby acknowledges and agrees that neither the Buyer nor any affiliate,
successor, assignee or designee of Buyer shall be entitled to use the name
"Blackstone" in any way whatsoever.
Section 14.2 Exculpation of the Seller. Notwithstanding
anything to the contrary contained herein, the Seller's shareholders, partners,
the partners of such partners, the shareholders of such partners, and the
trustees, officers, directors, employees, agents and security holders of the
Seller and the partners of the Seller assumes no personal liability for any
obligations entered into on behalf of the Seller and its individual assets shall
not be subject to any claims of any person relating to such obligations. The
foregoing shall govern any direct and indirect obligations of the Seller under
this Agreement.
Section 14.3 Brokers. (a) The Seller represents and warrants to
the Buyer that it has dealt with no broker, salesman, finder or consultant with
respect to this Agreement or the transactions contemplated hereby other than
Eastdil. The Seller agrees to indemnify, protect, defend and hold the Buyer
harmless from and against all claims, losses, damages, liabilities, costs,
expenses (including reasonable attorneys' fees and disbursements) and charges
resulting from the Seller's breach of the foregoing representation in this
subsection (a). The provisions of this subsection (a) shall survive the Closing
and any termination of this Agreement.
(b) The Buyer represents and warrants to the Seller that it has
dealt with no broker, salesman, finder or consultant with respect to this
Agreement or the transactions contemplated hereby other than Eastdil. The Buyer
agrees to indemnify, protect, defend and hold the Seller harmless from and
against all claims, losses, damages, liabilities, costs, expenses (including
reasonable attorneys' fees and disbursements) and charges resulting from the
Buyer's breach of the foregoing representations in this
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subsection (b). The provisions of this subsection (b) shall survive the Closing
and any termination of this Agreement.
Section 14.4 Confidentiality; Press Release; IRS Reporting
Requirements. (a) The Buyer and the Seller shall hold as confidential all
information disclosed in connection with the transaction contemplated hereby and
concerning each other, the Asset, this Agreement and the transactions
contemplated hereby and shall not release any such information to third parties
without the prior written consent of the other parties hereto, except (i) any
information which was previously or is hereafter publicly disclosed (other than
in violation of this Agreement or other confidentiality agreements to which
affiliates of the Buyer are parties), (ii) to their partners, advisers,
underwriters, analysts, employees, affiliates, officers, directors, consultants,
lenders, accountants, legal counsel or other advisors of any of the foregoing,
provided that they are advised as to the confidential nature of such information
and are instructed to maintain such confidentiality and (iii) to comply with any
law, rule or regulation. The foregoing shall constitute a modification of any
prior confidentiality agreement that may have been entered into by the parties.
The provisions of this Section shall survive the termination of this Agreement
for a period of 180 days but shall not survive the Closing.
(b) The Seller or the Buyer may issue a press release with
respect to this Agreement and the transactions contemplated hereby, provided
that the content of any such press release shall be subject to the prior written
consent of the other party hereto and in no event shall any such press release
(i) issued by the Buyer disclose the identity of the Seller's direct or indirect
beneficial owners by name or the consideration paid to the Seller for the Asset
or (ii) issued by the Seller disclose the identity of the Buyer's direct or
indirect beneficial owners by name.
(c) For the purpose of complying with any information reporting
requirements or other rules and regulations of the IRS that are or may become
applicable as a result of or in connection with the transaction contemplated by
this Agreement, including, but not limited to, any requirements set forth in
proposed Income Tax Regulation Section 1.6045-4 and any final or successor
version thereof (collectively, the "IRS Reporting Requirements"), the Seller and
the Buyer hereby designate and appoint the Escrow Agent to act as the "Reporting
Person" (as that term is defined in the IRS Reporting Requirements) to be
responsible for complying with any IRS Reporting Requirements. The Escrow Agent
hereby acknowledges and accepts such designation and appointment and agrees to
fully comply with any IRS Reporting Requirements that are or may become
applicable as a result of or in connection with the transaction contemplated by
this Agreement. Without limiting the responsibility and obligations of the
Escrow Agent as the Reporting Person, the Seller and the Buyer hereby agree to
comply with any provisions of the IRS Reporting Requirements that are not
identified therein as the responsibility of the Reporting Person, including, but
not limited to, the requirement that the Seller and the Buyer each retain an
original counterpart of this Agreement for at least four (4) years following the
calendar year of the Closing.
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Section 14.5 Escrow Provisions. (a) The Escrow Agent shall hold
the Earnest Money in escrow in an interest-bearing bank account at Morgan
Guaranty Trust Company of New York (the "Escrow Account").
(b) The Escrow Agent shall hold the Earnest Money in escrow in
the Escrow Account until the Closing or sooner termination of all or a portion
of this Agreement and shall hold or apply such proceeds in accordance with the
terms of this paragraph (b). The Seller and the Buyer understand that no
interest is earned on the Earnest Money during the time it takes to transfer
into and out of the Escrow Account. At the relevant Closing, the relevant
portion of the Earnest Money shall be paid by the Escrow Agent to, or at the
direction of, the Seller. If for any reason a Closing does not occur and either
party makes a written demand upon the Escrow Agent for payment of such amount,
the Escrow Agent shall, within 24 hours give written notice to the other party
of such demand. If the Escrow Agent does not receive a written objection within
five business days after the giving of such notice, the Escrow Agent is hereby
authorized to make such payment. If the Escrow Agent does receive such written
objection within such five day period or if for any other reason the Escrow
Agent in good faith shall elect not to make such payment, the Escrow Agent shall
continue to hold such amount until otherwise directed by joint written
instructions from the parties to this Agreement or a final judgment of a court
of competent jurisdiction. However, the Escrow Agent shall have the right at any
time to deposit the Earnest Money with the clerk of the court of New York
County. The Escrow Agent shall give written notice of such deposit to the Seller
and the Buyer. Upon such deposit the Escrow Agent shall be relieved and
discharged of all further obligations and responsibilities hereunder.
(c) 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
the Escrow Agent shall not be liable to either of the parties for any act or
omission on its part, other than for its gross negligence or willful misconduct.
The Seller and the Buyer shall jointly and severally indemnify and hold the
Escrow Agent harmless from and against all costs, claims and expenses, including
attorneys' fees and disbursements, incurred in connection with the performance
of the Escrow Agent's duties hereunder.
(d) The Escrow Agent has acknowledged its agreement to these
provisions by signing this Agreement in the place indicated following the
signatures of the Seller and the Buyer.
Section 14.6 Successors and Assigns; No Third-Party
Beneficiaries. The stipulations, terms, covenants and agreements contained in
this Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective permitted successors and assigns (including
any successor entity after a public offering of stock, merger, consolidation,
purchase or other similar transaction involving a party hereto) and nothing
herein expressed or implied shall give or be construed to give to any person or
entity, other than the parties hereto and such assigns, any legal or equitable
rights
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hereunder.
Section 14.7 Assignment. This Agreement may not be assigned by
the Buyer without the consent of the prior written consent of the Seller. The
Buyer may designate an affiliate to which the Asset will be assigned at the
Closing, provided that the Buyer will continue to remain primarily liable under
this Agreement notwithstanding any such designation.
Section 14.8 Further Assurances. From time to time, as and when
requested by any party hereto, the other party shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions as such other
party may reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
Section 14.9 Notices.
(a) To the Seller:
c/o Blackstone Real Estate Advisors L.P.
345 Park Avenue
New York, New York 10154
Attention: Mr. Thomas J. Saylak
Facsimile: 212-754-8726
with copies thereof to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Gregory J. Ressa, Esq.
Facsimile: 212-455-2502
(b) To the Buyer:
HRPT Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attention: Mr. John A. Mannix
Facsimile: 617-928-1305
with copies thereof to:
Sullivan & Worcester LLP
One Post Office Square
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Boston, Massachusetts 02109
Attention: Jennifer B. Clark, Esq.
Facsimile: 617-338-2880.
All notices (i) shall be deemed to have been given on the date that the same
shall have been delivered in accordance with the provisions of this Section and
(ii) may be given either by a party or by such party's attorneys. Any party may,
from time to time, specify as its address for purposes of this Agreement any
other address upon the giving of 10 days' notice thereof to the other parties.
Section 14.10 Entire Agreement. This Agreement, along with the
Exhibits and Schedules hereto contains all of the terms agreed upon between the
parties hereto with respect to the subject matter hereof, and all understandings
and agreements heretofore had or made among the parties hereto are merged in
this Agreement which alone fully and completely expresses the agreement of the
parties hereto.
Section 14.11 Amendments. This Agreement may not be amended,
modified, supplemented or terminated, nor may any of the obligations of the
Seller or the Buyer hereunder be waived, except by written agreement executed by
the party or parties to be charged.
Section 14.12 No Waiver. No waiver by either party of any
failure or refusal by the other party to comply with its obligations hereunder
shall be deemed a waiver of any other or subsequent failure or refusal to so
comply.
Section 14.13 Governing Law. This Agreement shall be governed
by, interpreted under, and construed and enforced in accordance with, the laws
of the State of New York.
Section 14.14 Submission to Jurisdiction. Each of the Buyer and
the Seller irrevocably submits to the jurisdiction of (a) the Supreme Court of
the State of New York, New York County and (b) the United States District Court
for the Southern District of New York for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the Buyer and the Seller further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction as set forth above in the immediately preceding
sentence. Each of the Buyer and the Seller irrevocably and unconditionally
waives trial by jury and irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (a) the Supreme Court of
the State of New York, New York County and (b) the United States District Court
for the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court
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has been brought in an inconvenient forum.
Section 14.15 Severability. If any term or provision of this
Agreement or the application thereof to any person 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.
Section 14.16 Section Headings. The headings of the various
Sections of this Agreement have been inserted only for purposes of convenience,
are not part of this Agreement and shall not be deemed in any manner to modify,
explain, expand or restrict any of the provisions of this Agreement.
Section 14.17 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
Section 14.18 Acceptance of Deed. The acceptance of the Deed by
the Buyer shall be deemed full compliance by the Seller of all of the Seller's
obligations under this Agreement except for those obligations of the Seller
which are specifically stated to survive the delivery of the Deed hereunder.
Section 14.19 Construction. The parties acknowledge that the
parties and their counsel have reviewed and revised this Agreement and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement or any exhibits or amendments hereto.
Section 14.20 Recordation. Neither this Agreement nor any
memorandum or notice of this Agreement may be recorded by any party hereto
without the prior written consent of the other party hereto. The provisions of
this Section shall survive the Closing or any termination of this Agreement.
Section 14.21 Waiver of Jury Trial. The Seller and the Buyer
hereby waive trial by jury in any action, proceeding or counterclaim brought by
any party against another party on any matter arising out of or in any way
connected with this Agreement.
Section 14.22 Financials. The Seller shall provide the Buyer
with access to the books and records of the Seller for the purpose of preparing
audited financial statements for the Asset with respect to the 1996 and 1997
calendar years and the stub 1998 period, such financial statements to be
prepared at the Buyer's sole cost and expense. The Seller shall provide the
Buyer and its accountants with such reasonable certifications with respect to
the Seller's books and records as they shall require from time
43
<PAGE>
to time in their reasonable discretion in connection with the preparation of
such financial statements. The provisions of this Section shall survive the
Closing.
Section 14.23 Nonliability of Trustees. THE DECLARATION OF
TRUST ESTABLISHING THE BUYER, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS
THERETO (THE "DECLARATION"), IS DULY FILED WITH THE STATE OF MARYLAND, PROVIDES
THAT THE NAME "HRPT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE
DECLARATION COLLECTIVELY OR PERSONALLY, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE BUYER SHALL BE
HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR
CLAIM AGAINST, THE BUYER. ALL PERSONS DEALING WITH THE BUYER, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF THE BUYER FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE
CLOSING.
Section 14.24 Independent Contract Consideration. In addition
to the Earnest Money Deposit, the sum of one hundred dollars ($100) (the
"Independent Contract Consideration") has been paid and delivered by the Buyer
to the Seller along with the Buyer's executed originals of this Agreement, which
amount has been bargained for and agreed to by the parties hereto as
consideration for the Buyer's exclusive right to purchase the Property pursuant
to the terms of this Agreement. It is agreed and understood by the parties
hereto that the Independent Contract Consideration shall be in addition to and
independent of any and all other consideration payable pursuant to this
Agreement and is nonrefundable upon Closing.
Section 14.25 Tax Free Exchange. Notwithstanding any terms in
the Agreement to the contrary, Seller shall have the right to consummate the
transactions contemplated by this Agreement in a manner which qualifies as a
tax-deferred exchange, in whole or in part, under the provisions of Section 1031
of the Internal Revenue Code, and the Treasury Regulations thereunder. Purchaser
agrees to cooperate with Seller with respect to any tax-deferred exchange
pursuant to the provisions of Section 1031 of the Code and the Treasury
Regulations thereunder and to execute any and all documents reasonably requested
by Seller in connection therewith; provided, however that in no event shall
Purchaser be required to take title to any exchange property. Without limiting
the foregoing, Seller shall have the right to (i) transfer interests in the
Property or this Agreement to one or more of its direct or indirect members or
partners, (ii) transfer all or any portion of Seller's (or its transferee's)
interests under this Agreement to a qualified intermediary (the "Intermediary")
in accordance with the provisions of Section 1031 of the Internal Revenue Code
and the Treasury Regulations thereunder (and, as a result of the transfer, the
Intermediary will acquire an equitable interest in the title to the Property)
provided that Seller shall simultaneously with such transfer confirm its
continued obligations under this Agreement and (iii) cause all or any portion of
the Purchase Price to be transferred to a qualified escrow or qualified trust in
accordance with the provisions
44
<PAGE>
of Section 1031 of the Internal Revenue Code and the Treasury Regulations
thereunder. Seller shall indemnify and hold Purchaser, its assignees and
nominees harmless from and against all cost, loss and damage, including, without
limitation, reasonable attorneys' fees, incurred in connection with the matters
described in this Section 14.25. The preceding sentence shall survive the
Closings and shall not be subject to the Basket Limitation or Cap Limitation set
forth elsewhere in this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed
by the parties hereto as of the day and year first above written.
SELLER:
BLACKSTONE/TCC AUSTIN PARTNERS L.P.
By: BRE/AUSTIN L.L.C.
By: /s/ William J. Stein
------------------------
Name: William J. Stein
Title: Vice President
BUYER:
HRPT PROPERTIES TRUST
By: John A. Manning
------------------------
Name: John A. Manning
Title: Executive Vice President
45
<PAGE>
Schedule I
Asset Schedule
Seller: Blackstone/TCC Austin Partners L.P.
Property: Lot 1, 3-16, Research Park Subdivision, a subdivision in Travis and
Williamson Counties, according to the maps or plats of record in Volume 101,
Page 214, Plat Records of Travis County, Texas and Cabinet P, Slide 383, Plat
Records of Williamson County, Texas.
Asset Manager: William J. Stein
<PAGE>
Schedule II
Existing Title Commitment and Survey
Existing Survey
Plat of Survey dated and certified June 10, 1998 prepared by Survcon Inc., Job
Number 417-588.
Existing Title Commitment
See attached [attachment not included and available on request]
47
<PAGE>
Schedule III
Phase II
Lots 8, 9, and 10 of Block A, Research Park, a resubdivision of Research
Technology Subdivision, as recorded in Book 1, Pages 214 through 217 of the plat
records of Travis County, Texas and as recorded in Cabinet P, slides 383 through
386 of the plat records of Williamson County, Texas.
48
<PAGE>
Schedule IV
Seller SDP Deposits
RESEARCH PARK - COA REFUNDABLE DEPOSITS
<TABLE>
<CAPTION>
Solectron Industrial 2 Industrial 3 & 4 Office 1, 2 & 3
=========================================================================================================
<S> <C> <C> <C> <C>
E/S Fiscal $93,761.00
E/S Fiscal Bonds $6,108.00 $193,315.00 $162,540.00
Environmental Fiscal Deposit $44,000.00
PW/Water/Wastewater Inspection $34,993.25 $34,129.68
Fee
Landscape Inspection Fee $80.00 $1,180.00 $1,540.00
=========================================================================================================
TOTAL DEPOSITS $137,761.00 $6,188.00 $229,488.25 $198,209.68
=========================================================================================================
</TABLE>
TOTAL REFUNDABLE COA DEPOSITS - $571,646.93
<PAGE>
SCHEDULE V
MATERIAL CONTRACTS FOR RESEARCH PARK
<TABLE>
<CAPTION>
DOCUMENT DATE OF PARTIES
DOCUMENT
<S> <C> <C>
Roofing System Limited Warranty & Service Agreement, Warranty 6/27/94 Texas Instruments, Inc. and GE Silicones
No. 10-11386-01 Corporation
Dow Corning 3-7000 Silicone Roof Coating Silicone/Polyurethane 8/26/91 Texas Instruments, Inc. and Dow Corning
Foam System Warranty, Warranty No. 2510
Silicone/Polyurethane Foam System Warranty, Warranty No. 1914 6/20/89 Texas Instruments, Inc. and Dow Corning Corporation
Full System Limited Warranty Dow Corning Silicone/Polyurethane 8/11/95 Texas Instruments, Inc. and Dow Corning Corporation
Foam Roofing System, Warranty No. 1764
Full System Limited Warranty Dow Corning Silicone/Polyurethane 11/9/96 Texas Instruments, Inc. and Dow Corning Corporation
Foam Roofing System, Warranty No. 3737
Full System Limited Warranty Dow Corning Silicone/Polyurethane 8/11/95 Texas Instruments, Inc. and Dow Corning Corporation
Foam Roofing System, Warranty No. 3324
Roofing System Limited Warranty, Warranty No. 10-11845-01 11/8/97 Blackstone/TCC Austin Partners, L.P. and GE
Full System Limited Warranty Dow Corning Silicone/Polyurethane 8/8/96 Texas Instruments, Inc. and Dow Corning Corporation
Roof System, Warranty No. 3621
Gas Sales Agreement, Contract #GS 05291 5/1/98 Blackstone/TCC Austin Partners, L.P. and Mercado Gas
Services Inc.
Gas Transportation Agreement, Contract #GT 18112 4/18/97 Blackstone/TCC Austin Partners, L.P. and Southern
Union Gas Company
4
<PAGE>
Amendment to Gas Agreement Contract #GT 18112 9/2/97 Blackstone/TCC Austin Partners, L.P. and Southern
Union Gas Company
Document Management Services Agreement #2911127 5/16/97 Blackstone/TCC Austin Partners, L.P. and Xerox
Business Services
Amendment to Document Management Services Agreement 10/10/97 Blackstone/TCC Austin Partners, L.P. and Xerox
#2911127 Business Services
Cleaning Services Contract 4/1/98 Blackstone/TCC Austin Partners, L.P. (by Trammell Crow
Central Texas, Ltd., its manager) and Border
Maintenance Services, Inc.
Equipment Acceptance for Equipment Schedule No TCCT-01 7/21/97 Blackstone/TCC Austin Partners, L.P. and M&SD
Solectron Voice Mail Lease Financial Services
Equipment Acceptance for Equipment Schedule No TCCT-02P 11/1/97 Blackstone/TCC Austin Partners, L.P. and M&SD
Solectron Building 2 (McNeil 11) Phone Switch Financial Services
Equipment Schedule and Acceptance Form No.: TCCT-03P 11/1/97 Blackstone/TCC Austin Partners, L.P. and Southern
Research Park main phone switch lease Union Gas Company and MS&D Financial Services
Food Service/Management Services Contract 4/7/97 Marriott Management Services/and Blackstone
Evaporated Loss Adjustment Application to City of Austin 4/3/97 Per COA Letter assigning from Texas Instruments to
Blackstone/TCC Austin Partners, L.P.
Landscape Maintenance Contract 4/1/98 Blackstone/TCC Austin Partners, L.P. (by Trammell Crow
Central Texas) and Clean Cut
Telephone Maintenance Contract for Research Park Main Switch 10/31/97 Blackstone/TCC Austin Partners, L.P. and Williams
Telecommunications Systems (WilTel)
5
<PAGE>
Amendment to Gas Agreement Contract #GT 18112 9/2/97 Blackstone/TCC Austin Partners, L.P. and Southern
Union Gas Company
Document Management Services Agreement #2911127 5/16/97 Blackstone/TCC Austin Partners, L.P. and Xerox
Business Services
Amendment to Document Management Services Agreement 10/10/97 Blackstone/TCC Austin Partners, L.P. and Xerox
#2911127 Business Services
Cleaning Services Contract 4/1/98 Blackstone/TCC Austin Partners, L.P. (by Trammell Crow
Central Texas, Ltd., its manager) and Border
Maintenance Services, Inc.
Equipment Acceptance for Equipment Schedule No TCCT-01 7/21/97 Blackstone/TCC Austin Partners, L.P. and M&SD
Solectron Voice Mail Lease Financial Services
Equipment Acceptance for Equipment Schedule No TCCT-02P 11/1/97 Blackstone/TCC Austin Partners, L.P. and M&SD
Solectron Building 2 (McNeil 11) Phone Switch Financial Services
Equipment Schedule and Acceptance Form No.: TCCT-03P 11/1/97 Blackstone/TCC Austin Partners, L.P. and Southern
Research Park main phone switch lease Union Gas Company and MS&D Financial Services
Food Service/Management Services Contract 4/7/97 Marriott Management Services/and Blackstone
Evaporated Loss Adjustment Application to City of Austin 4/3/97 Per COA Letter assigning from Texas Instruments to
Blackstone/TCC Austin Partners, L.P.
Landscape Maintenance Contract 4/1/98 Blackstone/TCC Austin Partners, L.P. (by Trammell Crow
Central Texas) and Clean Cut
Telephone Maintenance Contract for Research Park Main Switch 10/31/97 Blackstone/TCC Austin Partners, L.P. and Williams
Telecommunications Systems (WilTel)
APS - Security Contract 4/1/98 Blackstone/TCC Austin Partners, L.P. and American
Protective Services, Inc.
5
<PAGE>
Security Pay Schedule Change and Amendment 5/27/98 Letter dated 5/27/98 for new rates effective 6/1/98
Fire System monitoring for Solectron expansion market 5/14/98 Trammell Crow Company and ADT Security Services, Inc.
(in the process of being assigned to Blackstone/TCC
Austin Partners, L.P.)
Window Cleaning Contract 4/15/98 Blackstone/TCC Austin Partners, L.P. and Sparkling
Clean Window Company
City of Austin Water and Wastewater Utility Service Extension 9/21/97 Trammell Crow Company and Turner Collie & Braden,
request for Administrative Approval Inc./City of Austin
Declaration of Covenants, Conditions and Restrictions for 6/23/98 Blackstone/TCC Austin Partners, L.P.
Research Park, Travis County Volume 13210, Page 109
Declaration of Covenants, Conditions and Restrictions for 6/24/98
Research Park, Williamson County Document Number 9034423,
Page 109
</TABLE>
<PAGE>
Schedule VI
Space Leases
1. Lease Agreement Between Trammell Crow Central Texas, Ltd. ("TCCT"), as
Landlord, and Texas Instruments Incorporated ("TI"), as Tenant, dated
December 30, 1996.
a. Assignment of Leases from TCCT to Blackstone/TCC Austin Partners L.P. dated
March 17, 1997.
b. Amendment To Assignment of Leases between TCCT and Blackstone/TCC Austin
Partners L.P. dated March 17, 1997.
c. Amendment To Lease Agreement dated March 17, 1997 between Blackstone/TCC
Austin Partners L.P. and TI.
d. Second Amendment to Lease Agreement dated May 22, 1997 between
Blackstone/TCC Austin Partners L.P. and TI.
e. Assignment of Lease from TI to Raytheon TI Systems, Inc. dated July 11,
1997.
f. Raytheon Guarantee executed by Raytheon Corporation dated July 2, 1997.
2. Lease Agreement By and Between TI and Solectron Texas, L.P. ("Solectron")
dated March 29, 1996.
a. First Amendment to Lease Agreement By and Between TI and Solectron dated May
6, 1996.
b. Second Amendment to Lease Agreement By and Between TI and Solectron dated
July 16, 1996.
c. Third Amendment to Lease Agreement By and Between TI and Solectron dated
August 8 and August 20, 1996.
d. Assignment of Leases from TI to TCCT dated December 30, 1996.
e. Assignment of Leases from TCCT to Blackstone/TCC Austin Partners L.P. dated
March 17, 1997.
f. Amendment To Assignment of Leases between TCCT and Blackstone/TCC Austin
Partners L.P. dated March 17, 1997.
3. Lease Agreement Between Blackstone/TCC Austin Partners L.P. and Solectron
dated September 25, 1997.
a. Amendment to Lease Agreement Between Blackstone/TCC Austin Partners L.P. and
Solectron dated as of July 23, 1998.
b. Letter dated June 24, 1998 Between Blackstone/TCC Austin Partners L.P. and
Solectron.
4. Lease Agreement Between Blackstone/TCC Austin Partners, L.P. and Netspeed,
Inc. dated April 10, 1998.
<PAGE>
a. Assignment Letter dated April 23, 1998 from Netspeed, Inc. to Cisco Systems,
Inc.
b. First Amendment to Lease Agreement Between Blackstone/TCC Austin Partners,
L.P. and Cisco Systems, Inc. dated June 16, 1998.
<PAGE>
Schedule VI-1
Landlord Work in Progress
None
<PAGE>
Schedule VII
Brokerage Commissions
<TABLE>
<CAPTION>
DOCUMENT DATE OF PARTIES COMMENTS
DOCUMENT
<S> <C> <C> <C>
Lease Commission Agreement 4/14/98 Blackstone/TCC Austin Commission Agreement
Partners, L.P., and for Cisco Systems, Inc.
The Staubach
Company
Lease Commission Agreement 5/8/97 Blackstone/TCC Austin Commission Agreement
Partners, L.P., and CB for Solectron Texas
Commercial
Landlord is not obligated
to pay any commission
on future expansions or
renewals
First Amendment to CB Not dated Blackstone/TCC Austin Amendment to the
Commercial Agreement Partners, L.P. and CB Solectron Texas
Commercial Commission Agreement
</TABLE>
<PAGE>
Schedule VIII
Litigation
None
<PAGE>
Schedule IX
Space Leases in Progress
None
<PAGE>
Schedule X
Security Deposits Held By The Seller
<TABLE>
<CAPTION>
TENANT AMOUNT PARTIES
<S> <C> <C>
Cisco Systems, Inc. $20,000 in cash Blackstone/TCC Austin Partners, L.P. and
Cisco Systems, Inc.
</TABLE>
13
<PAGE>
Exhibit A
ASSIGNMENT AND ASSUMPTION OF LANDLORD'S INTEREST IN LEASES
ASSIGNMENT AND ASSUMPTION OF LANDLORD'S INTEREST IN LEASES
dated _____ __, 1998, between ____________, a _________________ having an
address at 345 Park Avenue, New York, New York 10154 ("Assignor") and
___________, a _____________ having an address at _______________ ("Assignee").
Background
This Assignment and Assumption of Landlord's Interest in Leases
is being executed and delivered pursuant to that certain Purchase and Sale
Agreement dated as of July __, 1998 (the "Purchase Agreement") among Assignor,
as seller, and Assignee, as buyer. All capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Purchase Agreement.
Assignment and Assumption
In consideration of Ten ($10.00) Dollars in hand paid by
Assignee, the receipt and sufficiency of which is hereby acknowledged, Assignor
does hereby assign, transfer and set over unto Assignee, all of Assignor's
right, title and interest in and to:
All leases, occupancy agreements, license agreements, rental
agreements, concession agreements and other written agreements entered
into with any tenants relating to the Property and the buildings and other
improvements located thereon, or any portion thereof, including, without
limitation, the leases, occupancy agreements, license agreements, rental
agreements, concession agreements and other written agreements set forth
on Schedule A attached hereto (all of the foregoing leases, collectively,
the "Space Leases").
TO HAVE AND TO HOLD, the same unto Assignee, its successors and
assigns, from and after the date hereof, subject to the terms, covenants,
conditions and provisions contained in the Space Leases.
Assignee hereby assumes the performance of all of the terms,
covenants and conditions of the Space Leases described on Schedule A attached
hereto on the Assignor's part to be performed thereunder from and after the date
hereof and will well and truly perform all of the terms, covenants and
conditions of such Leases from and after the date hereof, all with the same
force and effect as though the Assignee had signed such Space Leases as a party
named therein.
Assignee does hereby agree for itself, its legal
representatives, successors and assigns to indemnify, defend and save the
Assignor, its legal representatives, successors and assigns, harmless from and
against any and all claims, losses, suits and expenses (including, but not
limited to, reasonable legal fees and litigation expenses) asserted or arising
in connection with the performance by Assignee under the Space Leases described
on Schedule A attached hereto from and after the date hereof.
Assignor does hereby agree for itself, its legal
representatives and its successors and assigns, to indemnify, defend and save
the Assignee, its legal representatives and its successors and assigns, harmless
from and against any and all
<PAGE>
claims, losses, suits and expenses (including, but not limited to, reasonable
legal fees and litigation expenses) asserted or arising in connection with the
performance by Assignor under the Space Leases prior to the date hereof.
IN WITNESS WHEREOF, the Assignor and Assignee have duly
executed this instrument as of the day first above written.
ASSIGNOR:
[SELLER]
By:___________________________
Name:
Title:
ASSIGNEE:
[BUYER]
By:___________________________
Name:
Title:
Schedules:
Schedule A Space Leases
[APPROPRIATE ACKNOWLEDGEMENT TO BE ADDED]
<PAGE>
Exhibit B
ASSIGNMENT AND ASSUMPTION OF CONTRACTS
ASSIGNMENT AND ASSUMPTION OF CONTRACTS dated __, 1998, between
____________, a _________________ having an address at 345 Park Avenue, New
York, New York 10154 ("Assignor") and ___________, a _____________ having an
address at _______________ ("Assignee").
Background
This Assignment and Assumption of Contracts is being executed
and delivered pursuant to that certain Purchase and Sale Agreement dated as of
July __, 1998 (the "Purchase Agreement") among Assignor, as seller, and
Assignee, as buyer. All capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Purchase Agreement.
Assignment and Assumption
In consideration of Ten ($10.00) Dollars in hand paid by
Assignee, the receipt and sufficiency of which is hereby acknowledged, Assignor
does hereby assign, transfer and set over unto Assignee, all of Assignor's
right, title and interest in and to:
(i) All agreements, contracts or understandings of Assignor
relating to ownership, operation, maintenance, and
management of the Property and the buildings and other
improvements located thereon, or any portion thereof,
including, without limitation, the contracts set forth on
Schedule A attached hereto (collectively, the
"Contracts");
(ii) All equipment leases and rental agreements relating to the
equipment, services, vehicles, furniture or other type of
personal property with regard to the Property and the
buildings and other improvements located thereon, or any
portion thereof, including, without limitation, the leases
set forth on Schedule B attached hereto (collectively, the
"Equipment Leases");
(iii) All of Assignor's right, title and interest in and to all
licenses, registrations, certificates, permits, approvals
and other governmental authorizations relating to the
construction, operation, use or occupancy of the Property
and the buildings and other improvements located thereon,
or any portion thereof (collectively, the "Permits");
(iv) all of Assignor's right, title and interest in and to all
warranties and guarantees, if any, relating to the
personal property located on the Property or in the
buildings and other improvements located thereon
(collectively, the "Warranties"; the Contracts, the
Equipment Leases, the Permits and the Warranties are
collectively referred to herein as the "Agreements").
TO HAVE AND TO HOLD, the same unto Assignee, its successors and
assigns, from and after the date hereof, subject to the terms, covenants,
conditions and provisions contained in the Agreements.
Assignee hereby assumes the performance of all of the terms,
covenants and conditions of the
<PAGE>
Contracts described on Schedule A attached hereto and the Equipment Leases
described on Schedule B attached hereto on the Assignor's part to be performed
thereunder from and after the date hereof and will perform all of the terms,
covenants and conditions of such Contracts and Equipment Leases arising or
accruing from and after the date hereof, all with the same force and effect as
though the Assignee had signed such Contracts and Equipment Leases as a party
named therein.
Assignee does hereby agree for itself, its legal
representatives, and its successors and assigns to indemnify, defend and save
the Assignor, its legal representatives, successors and assigns, harmless from
and against any and all claims, losses, suits and expenses (including, but not
limited to, reasonable legal fees and litigation expenses) asserted or arising
in connection with the performance by Assignee under the Contracts described on
Schedule A attached hereto and the Equipment Leases described on Schedule B
attached hereto from and after the date hereof.
Assignor does hereby agree for itself, its legal
representatives and its successors and assigns, to indemnify, defend and save
the Assignee, its legal representatives and its successors and assigns, harmless
from and against any and all claims, losses, suits and expenses (including, but
not limited to, reasonable legal fees and litigation expenses) asserted or
arising in connection with the performance by Assignor under the Contracts
described on Schedule A attached hereto and the Equipment Leases described on
Schedule B attached hereto prior to the date hereof.
IN WITNESS WHEREOF, the Assignor and Assignee have duly
executed this instrument as of the day first above written.
ASSIGNOR:
[SELLER]
By:___________________________
Name:
Title:
ASSIGNEE:
[BUYER]
By:___________________________
Name:
Title:
Schedules:
Schedule A Contracts
Schedule B Equipment Leases
<PAGE>
Exhibit C
[SELLER]
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
_____ ___, 1998
BY CERTIFIED MAIL
[Name and Address
of Tenant]
Premises: [__________________________]
Gentlemen and Ladies:
Please be advised that effective the date set forth above, the
Premises have been conveyed to _________________, a ____ ______________, whose
mailing address is ________________________________________. You are hereby
irrevocably and unconditionally directed that, effective immediately, all future
communications, rents and payments are to be directed as follows:
[TBD]
Very truly yours,
[SELLER]
By: __________________________
Title:
<PAGE>
Exhibit D
SPECIAL WARRANTY DEED
Date:
Grantor: Blackstone/TCC Austin Partners L.P.
Grantor's Mailing Address:
c/o The Blackstone Group
345 Park Avenue, 32nd Floor
New York County
New York, New York 10154
Grantee: HRPT Properties Trust
Grantee's Mailing Address:
Consideration: $10 and other good and valuable consideration
Property:
Reservations From and Exceptions From Conveyance:
Grantor, for the consideration and subject to the reservations
from and exceptions to conveyance and warranty, grants, sells and conveys to
Grantee the property, together with all and singular the rights and
appurtenances thereto in any wise belonging, to have and to hold it to Grantee,
Grantee's heirs, executors, administrators, successors, or assigns forever.
Grantor binds Grantor and Grantor's heirs, executors, administrators and
successor to warrant and forever defend all and singular the property to Grantee
and Grantee's heir, executors, administrators, successors and assigns against
every person whomsoever lawfully claiming or to claim the same or any part
thereof, except as to the reservations from and exceptions to conveyance and
warranty, when the claim is by, through, or under Grantor or otherwise.
When the context requires, singular nouns and pronouns include
the plural.
Blackstone/TCC Austin
Partners L.P.
By: BRE/Austin L.L.C., its general partner
By: ______________________________
Name:
Title:
<PAGE>
ACKNOWLEDGMENT
STATE OF ____________ )
)
COUNTY OF ___________ )
This instrument was acknowledged before me on the __ day of
_________, 199_ by _______________________, the of BRE/Austin L.L.C., a Delaware
limited liability company and general partner of Blackstone/TCC Austin Partners
L.P., a Delaware limited partnership on behalf of said limited liability company
and said partnership.
My Commission Expires: __________________________________
Notary Public, State of __________
_____________________ Notary Name Printed:
__________________________________
AFTER RECORDING RETURN TO: DOCUMENT PREPARED BY:
<PAGE>
Exhibit E
BILL OF SALE
________________________________, a __________________________,
whose address is 345 Park Avenue, New York, New York 10154 (hereinafter referred
to as "Seller"), in consideration of Ten ($10.00) Dollars in hand paid by
__________________ ___________________, a ___________________________, whose
mailing address is _____________________________ (hereinafter referred to as
"Buyer"), the receipt and sufficiency of which is hereby acknowledged, does
hereby sell, grant, assign, convey, transfer, set over, and quit-claim unto
Purchaser, its successors and assigns, all of Seller's right, title and interest
in and to any and all fixtures, chattels and articles of personal property that
are attached to or located in or upon the premises described on Schedule A
attached hereto and the buildings and other improvements located thereon, or any
portion thereof (all of the property and interests hereinbefore described are
hereinafter referred to as the "Property").
TO HAVE AND TO HOLD the Property unto Buyer, its successors and
assigns forever.
This Bill of Sale is made without warranty or representation,
express or implied, by or recourse against Seller of any kind or nature
whatsoever except as set forth in that certain Purchase and Sale Agreement dated
as of July , 1998 between Seller as seller, and Buyer, as buyer.
This Bill of Sale has been duly executed by Seller as of the
____ day of ________________, 1998.
[SELLER]
By: _________________________
Name:
Title:
Schedules:
Schedule A Description of Premises
<PAGE>
Exhibit F
ENTITY TRANSFEROR
FOREIGN INVESTORS REAL PROPERTY
TAX ACT CERTIFICATION AND AFFIDAVIT
Section 1445 of the Internal Revenue Code of 1986, as amended
(the "Code"), provides that a transferee of a U.S. real property interest must
withhold tax if the transferor is a foreign person. To inform [ ] (the
"Transferee") that withholding of tax is not required upon disposition of a U.S.
real property interest by [Property owner], a ___________________
_____________________ (the "Transferor"), the undersigned hereby certifies the
following on behalf of the Transferor:
[bullet] Transferor is not a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in the
Code and Income Tax Regulations);
[bullet] The U.S. employer identification number of Transferor
is ___________;
[bullet] Transferor has an address at 345 Park Avenue, New
York, New York 10154.
[bullet] The address of the subject property is
________________, .
Transferor understands that this Certification may be disclosed
to the Internal Revenue Service by Transferee and that any false statement
contained herein could be punished by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
Certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have the authority to sign this document
on behalf of Transferor.
__________________ ___, 1998
[SELLER]
By: ____________________________
Name:
Title:
<PAGE>
Exhibit G
[Tenant's Estoppel Certificate not included and available upon request]
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000803649
<NAME> HRPT PROPERTIES TRUST
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 46,942
<SECURITIES> 0
<RECEIVABLES> 69,369
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,787,256
<DEPRECIATION> 153,137
<TOTAL-ASSETS> 2,926,096
<CURRENT-LIABILITIES> 0
<BONDS> 984,664
0
0
<COMMON> 1,315
<OTHER-SE> 1,837,253
<TOTAL-LIABILITY-AND-EQUITY> 2,926,096
<SALES> 0
<TOTAL-REVENUES> 252,203
<CGS> 0
<TOTAL-COSTS> 152,770
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,788
<INCOME-PRETAX> 107,444
<INCOME-TAX> 0
<INCOME-CONTINUING> 107,444
<DISCONTINUED> 0
<EXTRAORDINARY> (2,140)
<CHANGES> 0
<NET-INCOME> 105,304
<EPS-PRIMARY> 0.91
<EPS-DILUTED> 0.91
</TABLE>
