<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 8-K
----------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 28, 1999
CORPORATE OFFICE PROPERTIES TRUST
---------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Maryland 0-20047 23-2947217
-------- ------- ----------
<S> <C> <C>
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification Number)
</TABLE>
401 City Avenue, Suite 615
Bala Cynwyd, PA 19004
---------------------
(Address of principal executive offices)
(610) 538-1800
--------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
COMMONS CORPORATE PORTFOLIO
On April 28, 1999, Corporate Office Properties Trust (the "Company"),
through affiliates of Corporate Office Properties, L.P. (the "Operating
Partnership"), acquired eight office buildings and a contiguous parcel of
developed land located in Hanover, Maryland (the "Commons Corporate Portfolio").
The Commons Corporate Portfolio was acquired at an aggregate price of
$25.9 million, including transaction costs. The purchase price was determined
through arms-length negotiation with the sellers, Copley Investors L.P. and
M.O.R. Commons L.P. The Company paid the purchase price and transaction costs
using $24.8 million in borrowings under its existing secured revolving credit
facility with Bankers Trust Company and cash reserves for the balance.
The Commons Corporate Portfolio is located in the Commons Corporate
Business Park in Hanover, Maryland. The office buildings comprising this
portfolio total approximately 250,000 square feet. The following schedule sets
forth certain information relating to each of the buildings as of April 30,
1999:
COMMONS CORPORATE PORTFOLIO OFFICE BUILDINGS
<TABLE>
<CAPTION>
Percentage of
Percentage Total Rental Total Rental
Occupied as of Total Revenue of Revenue Major
Property Year Built/ Rentable April 30, Rental Occupied Sq. per Occupied Tenants (10% of more of
Locations Renovated Sq. Ft. 1999 (1) Revenue (2) Ft. (3) Sq. Ft. (4) Rentable Square Feet)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1331 Ashton Road 1989 29,936 100.00% $ 377,602 10% $ 12.61 Booz.Allen Hamilton (71%);
Aerosol Monitoring (29%)
1334 Ashton Road 1989 37,631 96.60% 559,065 14% 15.38 Science Applications (62%);
Merrill Corporation (28%)
1340 Ashton Road 1989 46,400 100.00% 586,999 15% 12.65 Lockheed Martin (100%)
1341 Ashton Road 1989 15,825 100.00% 156,344 4% 9.88 Supertots Childcare (71%);
Preston Trucking, Inc. (29%)
1343 Ashton Road 1989 9,962 100.00% 121,829 3% 12.23 Meridian Sciences (100%)
1344 Ashton Road 1989 16,865 100.00% 321,376 8% 19.06 Titan Systems (28%); Student Travel
Services (23%); AMP Corporation (16%);
Dazer / MD Corporation (14%); Citizens
National Bank (12%)
7467 Ridge Road 1990 73,773 100.00% 1,522,766 40% 20.64 Travelers Casualty and Surety (55%);
Pepsi-Cola (17%)
1350 Dorsey Road 1989 19,706 83.41% 243,045 6% 14.79 Aerotek, Inc. (28%); Noodles, Inc.
(15%);Hunan Pagoda (15%); Electronic
System (13%)
--------- --------------------------
Total/Average 250,098 98.18% $3,889,026 100% $ 15.84
--------- --------------------------
--------- --------------------------
</TABLE>
(1) The percentage is based on all leases in effect as of April 30, 1999.
(2) Total rental revenue is the monthly contractual base rent as of April
30,1999 multiplied by 12 plus the estimated annualized expense
reimbursements under existing leases.
(3) This percentage is based on the property's rental revenue to the total
rental revenue of the Commons Corporate Portfolio office buildings.
(4) This represents the property's total rental revenue divided by the
respective property's occupied square feet as of April 30, 1999.
2
<PAGE>
The following schedule sets forth annual lease expirations for the
Commons Corporate Portfolio office buildings assuming that none of the tenants
exercise renewal options:
COMMONS CORPORATE PORTFOLIO OFFICE BUILDINGS
SCHEDULE OF LEASE EXPIRATIONS
<TABLE>
<CAPTION>
Total Rental
Revenue of
Number of Square Footage Percentage of Total Rental Percentage of Expiring Leases
Year of Leases of Leases Total Leased Revenue of Total Rental Per Rentable
Expiration Expiring Expiring Square Feet Expiring Leases(1) Revenue Expiring(1) Square Foot(1)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1999 -
December 31,
1999 6 10,887 4% $ 164,588 4% $ 15.12
2000 10 94,661 39% 1,800,111 46% 19.02
2001 6 62,409 25% 844,294 22% 13.53
2002 5 20,170 8% 301,295 8% 14.94
2003 4 24,144 10% 302,213 8% 12.52
2004 1 21,331 9% 278,796 7% 13.07
2005 0 - 0% - 0% -
2006 0 - 0% - 0% -
2007 1 9,962 4% 121,829 3% -
2008 1 1,987 1% 75,900 2% 38.20
---------------------------------------------------------------------------------------
34 245,551 100% $ 3,889,026 100% $ 15.84
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
</TABLE>
(1) Total rental revenue is the monthly contractual base rent as of April 30,
1999 multiplied by 12 plus the estimated annualized expense reimbursements
under existing leases.
UNITED PROPERTIES GROUP
The Company, through affiliates of the Operating Partnership, is
negotiating a contract with United Properties Group ("UPG") under which the
Company would sell a 104,000 square foot office property located in Baltimore,
Maryland ("Brown's Wharf") and assign its rights under a contract to acquire two
office buildings in Timonium, Maryland totaling 230,000 square feet (the
"Timonium Properties") for total consideration of approximately $11.9 million.
After acquiring Brown's Wharf and the Timonium Properties, UPG would have the
right to transfer Brown's Wharf and the Timonium Properties back to the Company
for total consideration of approximately $40.5 million on or before March 31,
2000. The Company would pay up to $25.0 million (but in no event less than $23.9
million) of the acquisition price in Preferred Units (the "Preferred Units") in
the Operating Partnership and the balance in cash or debt assumption. The
Company would also issue to UPG ten-year detachable warrants exercisable for an
additional number of Common Units in the Operating Partnership to be determined
based upon the share price of the Company's Common Shares over the first five
years following the acquisition.
The Preferred Units will be entitled to a 9% priority annual return for
the first ten years following issuance, 10.5% for the five following years and
12% thereafter. The Preferred Units are convertible, subject to certain
restrictions, commencing one year after their issuance into Common Units in the
Operating Partnership on the basis of 2.381 Common Units for each Preferred
Unit, plus any accrued return. The Common Units are exchangeable for Common
Shares, subject to certain conditions. The Preferred Units also carry a
liquidation preference of $25.00 per unit, plus any accrued return, and may be
redeemed for cash by the Operating Partnership at any time after the tenth
anniversary of their issuance.
3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired or to be Acquired
The financial statements of the Commons Corporate Properties
and the Timonium Properties are included herein. See pages
F-17 through F-26.
(b) Pro Forma Financial Information
The pro forma condensed consolidating financial statements of
the Company are included herein. See pages F-5 through F-16.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
2.1.1 Purchase and Sale Agreement, dated February 26, 1999, between Copley
Investors L.P., M.O.R. Commons L.P. and Corporate Acquisitions, Inc.
2.1.2 Amendment to Purchase and Sale Agreement, dated March 29, 1999, between
Copley Investors L.P., M.O.R. Commons L.P. and Corporate Acquisitions, Inc.
2.1.3 Third Amendment to Purchase and Sale Agreement
(Post-Closing Agreement), dated April 28,
1999, between Copley Investors L.P., Corporate
Office Properties, L.P., COPT Commons LLC and
Anchor Title Company.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 14, 1999
CORPORATE OFFICE PROPERTIES TRUST
By: /s/ Randall M. Griffin
----------------------
Name: Randall M. Griffin
Title: President and Chief
Operating Officer
By: /s/ Roger A. Waesche, Jr.
-------------------------
Name: Roger A. Waesche, Jr.
Title: Chief Financial Officer
4
<PAGE>
CORPORATE OFFICE PROPERTIES TRUST
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
I. PRO FORMA CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF THE COMPANY
Pro Forma Condensed Consolidating Balance Sheet
as of March 31, 1999 (unaudited) F-5
Pro Forma Condensed Consolidating Statement of Operations for the Year
Ended December 31, 1998 (unaudited) F-6
Pro Forma Condensed Consolidating Statement of Operations for the
Three Month Period Ended March 31, 1999 (unaudited) F-7
Notes and Management's Assumptions to Pro Forma Condensed
Consolidating Financial Information F-8
II. COMMONS CORPORATE PROPERTIES
Report of Independent Accountants F-17
Combined Statement of Revenue and Certain Expenses
for the Year Ended December 31, 1998 F-18
Notes to Combined Statement of Revenue and Certain Expenses F-19
Combined Statement of Revenue and Certain Expenses for the Three
Month Period Ended March 31, 1999 (unaudited) F-21
III. TIMONIUM PROPERTIES
Report of Independent Accountants F-22
Combined Statement of Revenue and Certain Expenses
for the Year Ended December 31, 1998 F-23
Notes to Combined Statement of Revenue and Certain Expenses F-24
Combined Statement of Revenue and Certain Expenses for the Three
Month Period Ended March 31, 1999 (unaudited) F-26
</TABLE>
F-1
<PAGE>
CORPORATE OFFICE PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following sets forth the unaudited pro forma condensed consolidating balance
sheet of Corporate Office Properties Trust and its consolidated affiliates,
including Corporate Office Properties, L.P. (the "Operating Partnership") as of
March 31, 1999, and the unaudited pro forma condensed consolidating statements
of operations for the year ended December 31, 1998 and the three month period
ended March 31, 1999, of the Company (as defined below). Corporate Office
Properties Trust and its consolidated affiliates, including the Operating
Partnership, are collectively referred to herein as the "Company."
The pro forma condensed consolidating financial information is presented as if
the following transactions had been consummated on the earlier of the actual
date of consummation or March 31, 1999, for balance sheet purposes, and at
January 1, 1998, for purposes of the statements of operations:
1998 TRANSACTIONS:
- - The consummation of a public offering (the "Offering") on April 27,
1998, in which the Company issued 7,500,000 Common Shares at $10.50 per
share and contributed all of the net proceeds to the Operating
Partnership in exchange for 7,500,000 Common Units.
- - The acquisition of nine multistory office buildings and three
office/flex buildings (the "Airport Square Properties") on April 30,
1998 using cash made available from the Offering.
- - The acquisition of two office properties (the "Fairfield Properties")
on May 28, 1998.
- - The closing of a $100 million, two-year secured revolving credit
facility (the "Revolving Credit Facility") on May 28, 1998, and the
borrowing of $23,750,000 under the Revolving Credit Facility to pay a
portion of the consideration for the Fairfield Properties.
- - The acquisition by the Company on September 28, 1998, from various
parties (collectively, "Constellation") of interests in (i) 10 office
and 2 retail properties (the "Constellation Properties"); (ii) a 75%
ownership interest in a real estate management services entity; and
(iii) certain equipment, furniture and other assets related to
management operations ((ii) and (iii) collectively, the "Constellation
Service Companies") for: (a) issuance by the Company of 865,566
non-voting Series A Convertible Preferred Shares of Beneficial
Interest, $0.01 par value, $25.00 liquidation preference ("Preferred
Shares") and 6,182,634 Common Shares; (b) the assumption of debt
aggregating $58,085,000 (net of $1,475,000 in debt repaid at
settlement); (c) utilization of loan proceeds from the Revolving Credit
Facility of $2,100,000, and (d) the payment of $2,485,000 in cash
(including $1,475,000 of debt repaid at settlement). The foregoing is
referred to herein as the "Constellation Transaction."
- - The acquisition by the Company from Constellation of an interest in a
newly-constructed office building (the "Woodlands One Property") on
October 22, 1998, for: (a) issuance by the Company of 72,509 Preferred
Shares and 517,923 Common Shares; (b) the assumption of debt
aggregating $9,533,000; and (c) the payment of $1,144,000 in cash.
F-2
<PAGE>
- - The acquisition of an interest in an office property on October 13,
1998 (the "Riverwood Property"), for: (a) issuance by the Company of
148,381 Common Units; and (b) the utilization of loan proceeds from the
Revolving Credit Facility of $18,798,000.
- - The closing of an $85,000,000, ten-year nonrecourse loan (the "TIAA
Loan") on October 22, 1998, the borrowing of $76,200,000 under this
loan on October 22, 1998, and the borrowing of $8,800,000 under this
loan on December 30, 1998.
- - The acquisition of six office buildings and two office/flex buildings
on October 30, 1998, (the "Centerpoint Properties") for: (a) the
payment of $700,000 in cash; and (b) the utilization of loan proceeds
from the Revolving Credit Facility of $31,000,000.
- - The acquisition of interests in entities which own two office
properties currently under construction from Constellation (the
"Constellation Construction Properties") on November 13, 1998, for: (a)
the assumption of debt aggregating $2,000,000; and (b) the utilization
of loan proceeds from the Revolving Credit Facility of $5,200,000.
- - The acquisition by the Company from Constellation of a
newly-constructed office building ("NBP 135") (NBP 135, the Woodlands
One Property and the Constellation Construction Properties are
collectively referred to herein as the "Additional Constellation
Properties") on December 30, 1998, for: (a) issuance by the Company of
46,233 Preferred Shares and 330,236 Common Shares; (b) the assumption
of debt aggregating $7,125,000; and (c) the payment of $652,000 in
cash.
- - The acquisition of three office buildings (the "Gateway Properties")
and a contiguous parcel of developed land (the "Gateway Land")
(collectively, the "Gateway Acquisitions") on December 31, 1998, using
loan proceeds from the Revolving Credit Facility of $19,100,000.
- - The contribution by the Company of all the assets acquired in the
Constellation Transaction, including the Woodlands One Property and NBP
135, to the Operating Partnership in exchange for 7,030,793 Common
Units and 984,308 preferred partnership units ("Preferred Units" or
"Preferred 1998 Units").
The above transactions are collectively referred to herein as the "1998
Transactions."
1999 TRANSACTIONS:
- - The disposition of one retail property (the "Maryland Retail
Property") on January 22, 1999 for $18,900,000.
- - The acquisition of an office building (the "Airport XXI Property") on
February 23, 1999, using loan proceeds from the Revolving Credit
Facility of $6,650,000 and cash payments of $101,000.
- - The disposition of four retail properties (the "Midwest Retail
Properties") for a total of $16,403,000. These property sales occurred
on February 26, 1999, March 9, 1999 and May 4, 1999.
F-3
<PAGE>
- - The acquisition of all of the ownership interests in Glacier Realty
LLC (the "Glacier Acquisition") on March 19, 1999 in exchange for the
issuance of 200,000 Common Units in the Operating Partnership.
- - The acquisition of two office buildings (the "Parkway Crossing
Properties") on April 16, 1999, for: (a) the issuance by the Operating
Partnership of 326,768 Common Units; (b) the assumption of debt
aggregating $4,974,000 (with a fair value of $5,097,000); and (c) the
payment of $1,000,000 using loan proceeds from the Revolving Credit
Facility.
- - The acquisition of eight office buildings and a contiguous parcel of
land (the "Commons Corporate Properties") on April 28, 1999, using loan
proceeds from the Revolving Credit Facility of $24,750,000 and cash
payments of $1,142,000.
- - The future acquisition of two office buildings (the "Timonium
Properties") for: (a) the issuance by the Operating Partnership of
1,000,000 Preferred Units (bearing a $25.00 per unit liquidation
preference and an annual preferred return of 9% for years one through
ten) ("Preferred Units" or " Preferred 1999 Units"); and (b) the
payment of $3,986,000 using loan proceeds from the Revolving Credit
Facility.
This pro forma condensed consolidating financial information should be read in
conjunction with the historical financial statements of the Company and those of
the Airport Square Properties, the Fairfield Properties, the Riverwood Property,
the Constellation Properties, the Constellation Service Companies, the
Centerpoint Properties, the Gateway Properties, the Commons Corporate Properties
and the Timonium Properties. In management's opinion, all adjustments necessary
to reflect the effects of the above transactions have been made. This pro forma
condensed consolidating financial information is unaudited and is not
necessarily indicative of what the actual financial position would have been at
March 31, 1999, nor does it purport to represent the future financial position
and the results of operations of the Company.
F-4
<PAGE>
Corporate Office Properties Trust
Pro Forma Condensed Consolidating Balance Sheet
As of March 31, 1999
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Sale of
Parkway Commons Midwest
Historical Crossing Corporate Retail Timonium
Consolidated Properties Properties Property in Properties
(A) (B) (C) Glendale, WI (E)
(D)
Assets
<S> <C> <C> <C> <C> <C>
Net investments in real estate $ 528,029 $ 9,524 $ 25,892 $ (1,605) $ 28,986
Cash and cash equivalents 3,615 4 (1,142) 791 -
Investment in and advances to Service
Companies 4,701 - - - -
Other assets 13,858 - - (74) -
------------ ---------- ---------- --------- ----------
Total assets $ 550,203 $ 9,528 $ 24,750 $ (888) $ 28,986
------------ ---------- ---------- --------- ----------
------------ ---------- ---------- --------- ----------
Liabilities and shareholders' equity
Liabilities
Mortgage loans payable $ 290,836 $ 6,097 $ 24,750 $ (988) $ 3,986
Other liabilities 11,752 - - - -
------------ ---------- ---------- --------- ----------
Total liabilities 302,588 6,097 24,750 (988) 3,986
------------ ---------- ---------- --------- ----------
-
Minority interests
Preferred Units 52,500 - - - 25,000
Common Units 26,422 3,431 - - -
------------ ---------- ---------- --------- ----------
Total minority interests 78,922 3,431 - - 25,000
------------ ---------- ---------- --------- ----------
Shareholders' equity
Preferred shares of beneficial interest 10 - - - -
Common shares of beneficial interest 168 - - - -
Additional paid in capital 175,532 - - - -
Accumulated deficit (7,017) - - 100 -
------------ ---------- ---------- --------- ----------
Total shareholders' equity 168,693 - - 100 -
------------ ---------- ---------- --------- ----------
Total liabilities and
shareholders' equity $ 550,203 $ 9,528 $ 24,750 $ (888) $ 28,986
------------ ---------- ---------- --------- ----------
------------ ---------- ---------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Adjustments Pro Forma
(F) Consolidated
Assets
<S> <C> <C>
Net investments in real estate $ - $ 590,826
Cash and cash equivalents - 3,268
Investment in and advances to Service
Companies - 4,701
Other assets - 13,784
--------- ----------
Total assets $ - $ 612,579
--------- ----------
--------- ----------
Liabilities and shareholders' equity
Liabilities
Mortgage loans payable $ - $ 324,681
Other liabilities - 11,752
--------- ----------
Total liabilities 336,433
--------- ----------
Minority interests
Preferred Units - 77,500
Common Units (399) 29,454
--------- ----------
Total minority interests (399) 106,954
--------- ----------
Shareholders' equity
Preferred shares of beneficial interest - 10
Common shares of beneficial interest - 168
Additional paid in capital 399 175,931
Accumulated deficit - (6,917)
--------- ----------
Total shareholders' equity 399 169,192
--------- ----------
Total liabilities and
shareholders' equity $ - $ 612,579
--------- ----------
--------- ----------
</TABLE>
See accompanying notes and management's assumptions to pro forma financial
statements.
F-5
<PAGE>
Corporate Office Properties Trust
Pro Forma Condensed Consolidating Statement of Operations
For the Year Ended December 31, 1998
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Maryland
Retail and
Parkway Commons Midwest
Historical 1998 Airport XXI Crossing Corporate Retail Timonium
Consolidated Transactions Property Properties Properties Properties Properties
(A) (B) (C) (D) (E) (F) (G)
Revenues:
<S> <C> <C> <C> <C> <C> <C> <C>
Base rents $ 35,676 $ 23,768 $ 996 $ 1,159 $ 3,382 $ (3,107) $ 4,192
Tenant reimbursements and other 4,538 3,474 24 - 273 (500) 104
---------- ---------- ---------- --------- ---------- --------- ---------
Total revenues 40,214 27,242 1,020 1,159 3,655 (3,607) 4,296
---------- ---------- ---------- --------- ---------- --------- ---------
Expenses:
Property operating 9,632 9,350 312 399 843 (461) 1,176
General and administrative 1,890 46 - - - - -
Interest 12,207 - - - - - -
Depreciation and amortization 6,708 - - - - - -
Reformation costs 637 - - - - - -
---------- ---------- ---------- --------- ---------- --------- ---------
Total expenses 31,074 9,396 312 399 843 (461) 1,176
---------- ---------- ---------- --------- ---------- --------- ---------
Equity in income (loss) of
Service Companies 139 (293) - - - - -
---------- ---------- ---------- --------- ---------- --------- ---------
Income (loss) before minority
interests 9,279 17,553 708 760 2,812 (3,146) 3,120
Minority interests
Preferred Units (3,412) - - - - - -
Common Units (1,171) - - - - - -
---------- ---------- ---------- --------- ---------- --------- ---------
Net income (loss) 4,696 17,553 708 760 2,812 (3,146) 3,120
Preferred share distributions (327) - - - - - -
---------- ---------- ---------- --------- ---------- --------- ---------
Net income (loss) available to
Common Shareholders $ 4,369 $ 17,553 $ 708 $ 760 $ 2,812 $ (3,146) $ 3,120
---------- ---------- ---------- --------- ---------- --------- ---------
---------- ---------- ---------- --------- ---------- --------- ---------
Earnings per share: Basic $ 0.48
----------
----------
Earnings per share: Diluted $ 0.47
----------
----------
Weighted average number of
shares:
Basic 9,099,000
---------
---------
Diluted 19,237,000
----------
----------
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments Consolidated
Revenues:
<S> <C> <C>
Base rents $ - $ 66,066
Tenant reimbursements and
other 150 (H) 8,063
---------- -----------
Total revenues 150 74,129
---------- -----------
Expenses:
Property operating (250)(I) 21,001
General and administrative 1,000 (J) 2,936
Interest 10,365 (K) 22,572
Depreciation and amortization 5,620 (L) 12,328
Reformation costs (637)(M) -
--------- ----------
Total expenses 16,098 58,837
---------- ----------
Equity in income (loss) of
Service Companies - (154)
---------- ----------
Income (loss) before minority (15,948) 15,138
interests
Minority interests
Preferred Units (2,250)(N) (5,662)
Common Units (287)(N) (1,458)
---------- ----------
Net income (loss) (18,485) 8,018
Preferred share distributions (1,026)(N) (1,353)
---------- ----------
Net income (loss) available to
Common Shareholders $ (19,511) $ 6,665
---------- ----------
---------- ----------
Earnings per share: Basic $ 0.40
----------
----------
Earnings per share: Diluted $ 0.40
----------
Weighted average number of ----------
shares:
Basic 16,802,000
-----------
-----------
Diluted 16,825,000
-----------
-----------
</TABLE>
See accompanying notes and management's assumptions to pro forma financial
statements.
F-6
<PAGE>
Corporate Office Properties Trust
Pro Forma Condensed Consolidating Statement of Operations
For the Three Month Period Ended March 31, 1999
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Maryland
Parkway Commons Retail and
Historical Airport XXI Crossing Corporate Midwest Timonium
Consolidated Property Properties Properties Retail Properties
(A) (C) (D) (E) Properties (G)
(F)
Revenues:
<S> <C> <C> <C> <C> <C> <C>
Base rents $ 16,179 $ 151 $ 290 $ 904 $ (393) $ 1,041
Tenant reimbursements and other 2,344 1 - 78 86 34
---------- ---------- ---------- ---------- --------- ----------
Total revenues 18,523 152 290 982 (307) 1,075
---------- ---------- ---------- ---------- --------- ----------
Expenses:
Property operating 5,003 47 100 228 (42) 307
General and administrative 889 - - - - -
Interest 5,193 - - - - -
Depreciation and amortization 3,017 - - - - -
---------- ---------- ---------- ---------- --------- ----------
Total expenses 14,102 47 100 228 (42) 307
---------- ---------- ---------- ---------- --------- ----------
Equity in income of Service Companies 181 - - - - -
Gain on sale of retail properties 986 - - - - -
---------- ---------- ---------- ---------- --------- ----------
Income (loss) before minority interests
and extraordinary item 5,588 105 190 754 (265) 768
Minority interests
Preferred Units (853) - - - - -
Common Units (496) - - - - -
---------- ---------- ---------- ---------- --------- ----------
Income (loss) before extraordinary item 4,239 105 190 754 (265) 768
Extraordinary item: loss on early
retirement of debt (694) - - - - -
---------- ---------- ---------- ---------- --------- ----------
Net income (loss) 3,545 105 190 754 (265) 768
Preferred share distributions (338) - - - - -
---------- ---------- ---------- ---------- --------- ----------
Net income (loss) available to Common
Shareholders $ 3,207 $ 105 $ 190 $ 754 $ (265) $ 768
---------- ---------- ---------- ---------- --------- ----------
---------- ---------- ---------- ---------- --------- ----------
Earnings per share: Basic $ 0.19
-----------
-----------
Earnings per share: Diluted $ 0.17
-----------
-----------
Weighted average number of shares:
Basic 16,802,000
-----------
-----------
Diluted 24,310,000
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Adjustments Total
Revenues:
<S> <C> <C>
Base rents $ - $ 18,172
Tenant reimbursements and other - 2,543
--------- -----------
Total revenues - 20,715
--------- -----------
Expenses:
Property operating (63) (I) 5,580
General and administrative - 889
Interest 481 (K) 5,674
Depreciation and amortization 267 (L) 3,284
--------- -----------
Total expenses 685 15,427
--------- -----------
Equity in income of Service Companies - 181
Gain on sale of retail properties (986) (M) -
--------- -----------
Income (loss) before minority interests
and extraordinary item (1,671) 5,469
Minority interests
Preferred Units (563) (N) (1,416)
Common Units (154) (N) (650)
--------- -----------
Income (loss) before extraordinary item (2,388) 3,403
Extraordinary item: loss on early
retirement of debt 694 (M) -
--------- -----------
Net income (loss) (1,694) 3,403
Preferred share distributions - (338)
--------- -----------
Net income (loss) available to Common
Shareholders $ (1,694) $ 3,065
--------- -----------
--------- -----------
Earnings per share: Basic $ 0.18
-----------
-----------
Earnings per share: Diluted $ 0.17
-----------
-----------
Weighted average number of shares:
Basic 16,802,000
-----------
-----------
Diluted 26,683,000
-----------
-----------
</TABLE>
See accompanying notes and management's assumptions to pro forma financial
statements.
F-7
<PAGE>
CORPORATE OFFICE PROPERTIES TRUST
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
PRO FORMA CONDENSED CONSOLIDATING
FINANCIAL INFORMATION
(Dollars in thousands, except share and per share amounts)
1. BASIS OF PRESENTATION:
Corporate Office Properties Trust (the "Company") is a self-administered
Maryland real estate investment trust. As of March 31, 1999, the Company's
portfolio included 54 commercial real estate properties leased for office and
retail purposes.
These pro forma condensed consolidating financial statements should be read in
conjunction with the historical financial statements and notes thereto of the
Company, the Airport Square Properties, the Fairfield Properties, the Riverwood
Property, the Constellation Properties, the Constellation Service Companies, the
Centerpoint Properties, the Gateway Properties, the Commons Corporate Properties
and the Timonium Properties. In management's opinion, all adjustments necessary
to reflect the effects of (i) the 1998 Transactions, (ii) the acquisitions of
the Airport XXI Property, the Parkway Crossing Properties and the Commons
Corporate Properties; (iii) the future acquisition of the Timonium Properties;
(iv) the disposition of the Maryland Retail Property; (v) the disposition of the
Midwest Retail Properties and (vi) the Glacier Acquisition have been made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the historical consolidated balance sheet of the Company as
of March 31, 1999.
(B) Reflects the acquisition of the Parkway Crossing Properties from an
unrelated party in exchange for: (i) the issuance of 326,768 Common
Units at a value of $10.50 per unit ($3,431); (ii) the assumption of
debt aggregating $4,974 with a fair value of $5,097 and (iii) the
utilization of loan proceeds from the Revolving Credit Facility of
$1,000.
(C) Reflects the acquisition of the Commons Corporate Properties in
exchange for: (a) the utilization of loan proceeds from the
Revolving Credit Facility of $24,750; and (b) cash payments of
$1,142.
(D) Reflects the sale of one of the Midwest Retail Properties for
$1,900, of which $988 was used to pay off the mortgage loan payable
on the property.
(E) Reflects the future acquisition of the Timonium Properties in
exchange for: (a) the issuance of 1,000,000 Preferred 1999Units at a
value of $25.00 per unit ($25,000); and (b) the utilization of loan
proceeds from the Revolving Credit Facility of $3,986.
F-8
<PAGE>
(F) Reflects the adjustment to minority interests as a result of changes
in ownership of the Operating Partnership. On a pro forma basis, the
Company holds a total of 15,130,793 Common Units or an 82.3%
interest in the Operating Partnership.
<TABLE>
<CAPTION>
Company Operating Partnership Consolidated
------------- ------------------------- ------------
<S> <C> <C> <C> <C>
Minority interests
Common Units $ - $ 29,454 17.7% $ 29,454
Shareholders' equity (1)
Common Shares 7,640 136,944 82.3% 144,584
------------- ------------- ----- -------------
$ 7,640 $ 166,398 100.0% $ 174,038
------------- ------------- ----- -------------
------------- ------------- ----- -------------
</TABLE>
(1) Excluding $24,608 related to the Company's Preferred Shares
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF
OPERATIONS:
(A) Reflects the historical consolidated operations of the Company.
(B) Reflects the effects of the combined historical operations of the 1998
Transactions prior to the actual acquisition date.
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Offering, Centerpoint Gateway
Airport Riverwood Office Acquisition
Square and Constellation Property Properties Properties
Fairfield Transaction through through through
Properties (ii) 10/12/98 10/30/98 12/30/98 Combined
(i)
Revenues
<S> <C> <C> <C> <C> <C> <C>
Base rents $ 4,984 $ 11,706 $ 1,514 $ 3,192 $ 2,372 $ 23,768
Tenant reimbursements and other 220 1,535 560 612 547 3,474
---------- --------- ---------- ---------- --------- ---------
Total revenues 5,204 13,241 2,074 3,804 2,919 27,242
---------- --------- ---------- ---------- --------- ---------
Expenses
Property operating 1,545 5,228 528 1,153 896 9,350
General and administrative 46 - - - - 46
Interest - - - - - -
Depreciation and amortization - - - - - -
---------- --------- ---------- ---------- --------- ---------
Total expenses 1,591 5,228 528 1,153 896 9,396
---------- --------- ---------- ---------- --------- ---------
Equity in loss of Service Companies - (293) - - - (293)
---------- --------- ---------- ---------- --------- ---------
Income before minority interests $ 3,613 $ 7,720 $ 1,546 $ 2,651 $ 2,023 $ 17,553
---------- --------- ---------- ---------- --------- ---------
---------- --------- ---------- ---------- --------- ---------
</TABLE>
F-9
<PAGE>
(i) Reflects the effects of the combined historical operations of the
Airport Square Properties and the Fairfield Properties prior to their
acquisitions on April 30, 1998 and May 28, 1998, respectively.
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Airport Square Fairfield
Properties Properties
through 4/29/98 through 5/27/98
Combined
Revenues
<S> <C> <C> <C>
Base rents $ 3,371 $ 1,613 $ 4,984
Tenant reimbursements and other 90 130 220
----------- ---------- ----------
Total revenues 3,461 1,743 5,204
----------- ---------- ----------
Expenses
Property operating 1,073 472 1,545
General and administrative 8 38 46
Interest - - -
Depreciation and amortization - - -
----------- ---------- ----------
Total expenses 1,081 510 1,591
----------- ---------- ----------
Income before minority interests $ 2,380 $ 1,233 $ 3,613
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
(ii) Reflects the effects of the adjusted combined historical operations of
the Constellation Properties and the Constellation Service Companies
prior to their acquisition on September 28, 1998. Historical operations
for the Additional Constellation Properties are not reflected as those
properties were not operational as of September 28, 1998.
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Constellation
Constellation Service
Properties Companies Pro Forma
through through Constellation
9/27/98 9/27/98 Adjustments Combined
Revenues
<S> <C> <C> <C> <C>
Base rents $ 11,706 $ - $ - $ 11,706
Tenant reimbursements and other 1,535 9,111 (9,111) (i) 1,535
----------- ------------- ---------- ----------
Total revenues 13,241 9,111 (9,111) 13,241
----------- ------------- ---------- ----------
Expenses
Property operating 5,228 - - 5,228
General and administrative - 8,765 (8,765) (ii) -
Interest - 10 (10) (iii) -
Depreciation and amortization - 235 (235) (iv) -
----------- ------------- ---------- ----------
Total expenses 5,228 9,010 (9,010) 5,228
----------- ------------- ---------- ----------
Equity in loss of Service Companies - - (293) (v) (293)
----------- ------------- ---------- ----------
Income (loss) before minority interests $ 8,013 $ 101 $ (394) $ 7,720
----------- ------------- ---------- ----------
----------- ------------- ---------- ----------
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
For the Year
Ended
December 31,
1998
<S> <C>
(i) Reflects the reclassification of Constellation Service
Companies' historical revenue to equity in (loss) of
Service Companies. $ (9,111)
-----------
-----------
(ii) Reflects the reclassification of Constellation Service
Companies' historical general and administrative expenses
to equity in (loss) of Service Companies. $ (8,765)
-----------
-----------
(iii) Reflects the reclassification of Constellation Service
Companies' historical interest expense to equity in
(loss) of Service Companies. $ (10)
-----------
-----------
(iv) Reflects the reclassification of Constellation Service
Companies' historical depreciation and amortization to
equity in (loss) of Service Companies. $ (235)
-----------
-----------
(v) Reflects the net change in equity in income (loss) of
Service Companies as follows:
- Reclassification of Constellation Service Companies'
historical income and expenses $ 101
- Elimination of construction contract revenue earned
by Constellation Service Companies in connection with
operations that are not expected to have a continuing
impact on the Company (3,084)
- Elimination of construction contract costs incurred
by Constellation Service Companies in connection with
operations that are not expected to have a continuing
impact on the Company 2,997
- Addition of net overhead costs not included in
historical costs and expected to have a continuing
impact on the Company (255)
- Addition of interest expense on indebtedness issued
by one of the Service Companies to the Company at a
rate of 10.0% per annum (150)
- Depreciation expense on personal property of $583
over a 5-year useful life (87)
- Adjustment to Constellation Service Companies'
historical depreciation and amortization 131
- To reflect income tax benefit at an assumed rate of
40% 176
- To reflect minority interest in Service Companies (82)
- To reflect adjustment for purchase price of Service
Companies to pro forma net income over 20 years (40)
-----------
$ (293)
-----------
-----------
</TABLE>
(C) Reflects the effects of the historical operations of the Airport XXI
Property prior to its acquisition on February 23, 1999.
(D) Reflects the effects of the historical operations of the Parkway
Crossing Properties prior to their acquisition on April 16, 1999.
F-11
<PAGE>
(E) Reflects the effects of the historical operations of the Commons
Corporate Properties prior to their acquisition on April 28, 1999.
(F) Reflects the effects of the historical operations of the Maryland
Retail Property and the Midwest Retail Properties.
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Maryland Maryland Midwest
Retail Retail Retail
Property Property Properties
1/1/98 through 9/28/98 through 1/1/98 through
9/27/98 12/31/98 12/31/98 Combined
Revenues
<S> <C> <C> <C> <C>
Base rents $ (1,118) $ (438) $ (1,551) $ (3,107)
Tenant reimbursements and other (250) (222) (28) (500)
---------- ---------- --------- ---------
Total revenues (1,368) (660) (1,579) (3,607)
---------- ---------- --------- ---------
Expenses
Property operating (349) (112) - (461)
General and administrative - - - -
Interest - - - -
Depreciation and amortization - - - -
---------- ---------- --------- ---------
Total expenses (349) (112) - (461)
---------- ---------- --------- ---------
Income before minority interests $ (1,019) $ (548) $ (1,579) $ (3,146)
---------- ---------- --------- ---------
---------- ---------- --------- ---------
</TABLE>
For the Three Month Period Ended March 31, 1999
<TABLE>
<CAPTION>
Maryland Midwest
Retail Retail
Property Properties
1/1/99 through 1/1/99 through
1/22/99 date of sale Combined
Revenues
<S> <C> <C> <C>
Base rents $ (101) $ (292) $ (393)
Tenant reimbursements and other 91 (5) 86
----------- --------- ---------
Total revenues (10) (297) (307)
----------- --------- ---------
Expenses
Property operating (42) - (42)
General and administrative - - -
Interest - - -
Depreciation and amortization - - -
----------- --------- ---------
Total expenses (42) - (42)
----------- --------- ---------
Income before minority interests $ 32 $ (297) $ (265)
----------- --------- ---------
----------- --------- ---------
</TABLE>
(G) Reflects the effects of the historical operations of the Timonium
Properties.
(H) Reflects interest income on the Company's $2,005 note receivable from
one of the Service Companies at a rate of 10.0% per annum.
(I) Reflects the reduction in management fees as a result of the Glacier
Acquisition.
(J) Reflects additional general and administrative costs as a result of the
Constellation Transaction. Such costs are expected to have a continuing
impact on the Company.
F-12
<PAGE>
(K) Represents net additional pro forma interest expense as a result of the
Company's net additional borrowings as follows:
<TABLE>
<CAPTION>
For the Year For the Three
Ended Month Period
Adjustment to interest expense, net of related December 31, Ended
historical amounts, as a result of: 1998 March 31, 1999
----------------------------------- ---- --------------
<S> <C> <C>
Revolving Credit Facility based upon a pro forma balance of
$99,200, bearing interest on the outstanding balance at LIBOR
plus 175 basis points, assuming a LIBOR rate of 4.95% per annum,
net of capitalized interest on the Company's construction
properties and subject to a fee of 25 basis points per annum on
the unused balance.
$ 4,897 $ 546
Debt assumed in connection with the acquisition of the Fairfield
Properties, which debt bears interest at a rate of 8.29% per
annum. Such debt is amortized in
accordance with the loan terms. 215 -
Debt assumed in connection with the Constellation Transaction,
based upon an initial pro forma aggregate balance of $30,904,
which debt bears interest at average effective rate of 7.39% per
annum, assuming a LIBOR rate of 4.95% per annum and a Prime rate
of 7.75% per annum. Such debt is amortized in accordance with
each loan's respective terms.
1,481 -
Debt assumed in connection with the Parkway Crossing Properties,
based upon a pro forma aggregate balance, recorded at fair value
aggregating $5,097, which debt bears interest at average
effective rate of 7.66% per annum, assuming a Prime rate of
7.75% per annum. Such debt is amortized in accordance with each
loan's respective terms.
390 97
Debt pay downs aggregating $7,387 in connection with the
disposition of the Midwest Retail Properties, which debt bears
interest at fixed rates ranging from 7.75% per annum to 9.50 %
per annum. Such debt is amortized in accordance with the loan
terms.
(671) (121)
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
For the Year For the Three
Ended Month Period
December 31, Ended
1998 March 31, 1999
---- --------------
<S> <C> <C>
Debt pay down of $9,513 in connection with the disposition of
the Maryland Retail Property, which debt bears interest at a
fixed rate of 7.50% per annum. Such debt is amortized in
accordance with the loan
terms. (697) (41)
TIAA Loan based upon a pro forma balance of $85,000, amortized
in accordance with the loan terms, and which debt bears interest
at 6.89% per annum.
4,750 -
--------- ------------
$ 10,365 $ 481
--------- ------------
--------- ------------
(L) Pro forma depreciation expense is reflected assuming an 80% building
and 20% land allocation of the purchase price and capitalized costs
over a useful life of 40 years. Pro forma amortization expense is
reflected assuming pro forma deferred financing fees are amortized over
the life of the related loan.
</TABLE>
<TABLE>
<CAPTION>
For the Three
For the Year Month Period
Adjustment to depreciation and Ended Ended
amortization expense, net of related historical December 31, March 31,
amounts, as a result of: 1998 1999
---- ----
Depreciation expense:
<S> <C> <C>
Airport Square Properties $ 464 $ -
Fairfield Properties 240 -
Constellation Transaction, including the Additional
Constellation Properties 2,731 -
Riverwood Property 322 -
Centerpoint Properties 529 -
Gateway Acquisition Properties 347 -
Airport XXI Property 135 22
Parkway Crossing Properties 190 48
Commons Corporate Properties 518 129
Timonium Properties 580 145
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
For the Three
For the Year Month Period
Ended Ended
December 31, March 31,
1998 1999
------------ ------------
<S> <C> <C>
Midwest Retail Properties (342) (60)
Maryland Retail Property (337) (16)
Amortization of deferred financing fees related to:
Revolving Credit Facility 183 -
TIAA Loan 64 -
Assumed debt in connection with Fairfield Properties
1 -
Retired debt in connection with Midwest Retail
Properties (4) (1)
Retired debt in connection with Maryland Retail Property
(1) -
------------ ------------
$ 5,620 $ 267
------------ ------------
------------ ------------
</TABLE>
(M) Costs (i) relating to the reformation of the Company aggregating $637
for the year ended December 31, 1998 and (ii) relating to the gain on
sale of real estate properties and the extraordinary item due to loss
on early extinquishment of debt aggregating $986 and $694,
respectively, for the three month period ended March 31, 1999, have
been excluded since such costs are not expected to have a continuing
impact on the Company.
(N) Reflects the effects of contribution of net assets received in exchange
for Units in the Operating Partnership. The following table presents
the calculation of the post closing percentage ownership of Common
Units in the Operating Partnership (i.e. not including Preferred
Units):
<TABLE>
<CAPTION>
Company Others Total
--------------------- ------------------- -----------------
<S> <C> <C> <C>
Common Units - pre closing 600,000 2,581,818 3,181,818
Offering 7,500,000 - 7,500,000
Constellation Transaction,
including the Additional
Constellation Properties 7,030,793 - 7,030,793
Riverwood Property - 148,381 148,381
Gateway Acquisitions - 1 1
Glacier Acquisition - 200,000 200,000
Parkway Crossing Properties - 326,768 326,768
Commons Corporate Properties - 7 7
---------- --------- ----------
Common Units - post closing 15,130,793 3,256,975 18,387,768
---------- --------- ----------
---------- --------- ----------
Percentage ownership 82.3% 17.7% 100.0%
---------- --------- ----------
---------- --------- ----------
</TABLE>
F-15
<PAGE>
Minority interest in income (loss) has been reflected, on a pro forma
basis, in accordance with the Operating Partnership Agreement. The
holders of Preferred Units are allocated income up to (i) 6.5%
(Preferred 1997 Units); (ii) 5.5% (Preferred 1998 Units) and (iii) 9.0%
(Preferred 1999 Units) of their investment on a pari passu basis with
remaining income, if any, or loss allocated between the Company (82.3%)
and the remaining partners (17.7%). The net income allocated to common
shareholders in the pro forma statements of operations was computed as
follows:
<TABLE>
<CAPTION>
For the Three
For the Year Month Period
Ended Ended
December 31, March 31,
1998 1999
---- ----
<S> <C> <C>
Income before minority interests $ 15,138 $ 5,469
Less: pro forma income (loss) from the retail
properties directly owned by the Company 107 (46)
------------- --------------
Income before minority interest
- Operating Partnership 15,245 5,423
Less: Preferred 1997 Unitholders
- $52,500 @ 6.5% (3,412) (853)
Less: Preferred 1998 Unitholders/Shareholders
- $24,608 @ 5.5% (1,353) (338)
Less: Preferred 1999 Unitholders/Shareholders
- $25,000 @ 9.0% (2,250) (563)
------------- --------------
Remaining Operating Partnership allocation 8,230 3,669
Less: Pro forma minority share
- Common Units (17.7%) (1,458) (650)
------------- --------------
Remaining Operating Partnership allocation (82.3%) 6,772 3,019
Add back: pro forma income (loss) from retail
properties directly owned by the Company (107) 46
------------- --------------
Net income allocated to Common Shareholders $ 6,665 $ 3,065
------------- --------------
------------- --------------
</TABLE>
F-16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Corporate Office Properties Trust
We have audited the accompanying combined statement of revenue and certain
expenses of the Commons Corporate Properties (the "Properties") as described in
Note 1 for the year ended December 31, 1998. This historical statement is the
responsibility of the Properties' management; our responsibility is to express
an opinion on this historical statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the historical statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the historical statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the historical
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying historical statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission as
described in Note 2, and is not intended to be a complete presentation of the
Properties' revenue and expenses.
In our opinion, the historical statement referred to above presents fairly, in
all material respects, the combined revenue and certain expenses described in
Note 2, of the Commons Corporate Properties for the year ended December 31,
1998, in conformity with generally accepted accounting principles.
/s/ PricewaterhouseCoopers LLP
1301 K Street NW, 800W
Washington, DC
May 28, 1999
F-17
<PAGE>
COMMONS CORPORATE PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1998
-------
<TABLE>
Revenue:
<S> <C>
Base rents $3,381,713
Tenant reimbursements 264,207
Interest income 9,451
----------
Total revenue 3,655,371
----------
Certain expenses:
Property operating 518,543
Repairs and maintenance 324,527
----------
Total certain expenses 843,070
----------
Revenue in excess of certain expenses $2,812,301
----------
----------
</TABLE>
F-18
<PAGE>
COMMONS CORPORATE PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1998
-------
1. BUSINESS:
The accompanying combined statement of revenue and certain expenses
relates to the operations of Commons Corporate Properties (the
"Properties"), consisting of the revenue and certain expenses of eight
office buildings totaling approximately 250,000 square feet, located
in Linthicum, Maryland.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
The accompanying combined statement of revenue and certain expenses was
prepared for the purpose of complying with the rules and regulations of
the Securities and Exchange Commission in contemplation of Corporate
Office Properties Trust acquiring the Properties. The statement is not
representative of the actual operations of the Properties for the
period presented nor indicative of future operations as certain
expenses, primarily depreciation, amortization, interest expense, and
management fees, which may not be comparable to the expenses expected
to be incurred by Corporate Office Properties Trust in future
operations of the Properties, have been excluded.
REVENUE AND EXPENSE RECOGNITION:
Revenue is recognized on a straight-line basis over the terms of the
related lease. Expenses are recognized in the period in which they are
incurred.
USE OF ESTIMATES:
The preparation of this historical statement in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue
and expenses during the reporting period. Actual results may differ
from these estimates.
MAJOR TENANT:
During 1998, 56% of the Properties' total rental revenue was earned
from three major tenants, each of which amounted to over 10% of total
rental revenue. Rental revenue earned from these three tenants for the
year ended December 31, 1998 was approximately $955,000, $586,000 and
$361,000, respectively.
F-19
<PAGE>
COMMONS CORPORATE PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1998
3. RENTALS:
The Properties have entered into non-cancelable tenant leases, with
expiration dates ranging from 1999 to 2008. Such leases provide that
tenants will share in operating expenses and real estate taxes on a
prorata basis, as defined in the leases. Future minimum rentals to be
received under these tenant leases are as follows:
<TABLE>
<S> <C>
1999 $3,668,619
2000 3,218,982
2001 1,695,114
2002 1,398,945
2003 615,861
2004 and thereafter 1,157,695
-----------
$11,755,216
-----------
-----------
</TABLE>
F-20
<PAGE>
COMMONS CORPORATE PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Three Months Ended March 31, 1999
-------
<TABLE>
Revenue:
<S> <C>
Base rents $904,472
Tenant reimbursements 76,228
Interest income 1,915
--------
Total revenue 982,615
--------
Certain expenses:
Property operating 123,361
Repairs and maintenance 104,673
--------
Total certain expenses 228,034
--------
Revenue in excess of certain expenses $754,581
--------
--------
</TABLE>
F-21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Corporate Office Properties Trust
We have audited the accompanying combined statement of revenue and certain
expenses of the Timonium Properties (the "Properties") as described in Note 1
for the year ended December 31, 1998. This historical statement is the
responsibility of the Properties' management; our responsibility is to express
an opinion on this historical statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the historical statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the historical statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the historical
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying historical statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission as
described in Note 2, and is not intended to be a complete presentation of the
Properties' revenue and expenses.
In our opinion, the historical statement referred to above presents fairly, in
all material respects, the combined revenue and certain expenses described in
Note 2, of the Timonium Properties for the year ended December 31, 1998, in
conformity with generally accepted accounting principles.
/s/ PricewaterhouseCoopers LLP
1301 K Street NW, 800W
Washington, DC
June 4, 1999
F-22
<PAGE>
TIMONIUM PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1998
-------
<TABLE>
Revenue:
<S> <C>
Base rents $4,191,578
Tenant reimbursements 102,185
Miscellaneous income 2,491
----------
Total revenue 4,296,254
----------
Certain expenses:
Property operating 371,873
Repairs and maintenance 803,753
----------
Total certain expenses 1,175,626
----------
Revenue in excess of certain expenses $3,120,628
----------
----------
</TABLE>
F-23
<PAGE>
TIMONIUM PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1998
-------
1. BUSINESS:
The accompanying statement of revenue and certain expenses relates to
the operations of the Timonium Properties (the "Properties"),
consisting of the revenue and certain expenses of two buildings
totaling approximately 230,000 square feet, located in Timonium,
Maryland.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
The accompanying combined statement of revenue and certain expenses was
prepared for the purpose of complying with the rules and regulations of
the Securities and Exchange Commission in contemplation of Corporate
Office Properties Trust acquiring the Properties. The statement is not
representative of the actual operations of the Properties for the
period presented nor indicative of future operations as certain
expenses, primarily depreciation, amortization, interest expense and
management fees, which may not be comparable to the expenses expected
to be incurred by Corporate Office Properties Trust in future
operations of the Properties, have been excluded.
REVENUE AND EXPENSE RECOGNITION:
Revenue is recognized on a straight-line basis over the terms of the
related lease. Expenses are recognized in the period in which they are
incurred.
USE OF ESTIMATES:
The preparation of this historical statement in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue
and expenses during the reporting period. Actual results may differ
from these estimates.
MAJOR TENANTS:
During 1998, 39% of the Properties' total rental revenue was earned
from two major tenants, each of which amounted to over 10% of total
rental revenue. Rental revenue earned from these two tenants for the
year ended December 31, 1998 was approximately $1,107,000 and
$515,000, respectively.
F-24
<PAGE>
TIMONIUM PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1998
-------
3. RENTALS:
The Properties have entered into non-cancelable tenant leases, with
expiration dates ranging from 1999 to 2004. Such leases provide that
tenants will share in operating expenses and real estate taxes on a
prorata basis, as defined in the leases. Future minimum rentals to be
received under these tenant leases are as follows:
<TABLE>
<S> <C> <C>
1999 $ 4,091,267
2000 3,116,018
2001 2,239,122
2002 1,940,328
2003 1,573,682
2004 737,365
-----------
$13,697,782
-----------
-----------
</TABLE>
F-25
<PAGE>
TIMONIUM PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Three Months Ended March 31, 1999
-------
<TABLE>
Revenue:
<S> <C>
Base rents $1,041,042
Tenant reimbursements 33,886
Miscellaneous income 190
----------
Total revenue 1,075,118
----------
Certain expenses:
Property operating 88,576
Repairs and maintenance 218,035
----------
Total certain expenses 306,611
----------
Revenue in excess of certain expenses $768,507
----------
----------
</TABLE>
F-26
<PAGE>
Exhibit 2.1.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of
the 26th day of February, 1999 ("CONTRACT DATE"), by and between COPLEY
INVESTORS LIMITED PARTNERSHIP, a limited partnership organized under the laws
of the State of Delaware ("CILP"), and CORPORATE ACQUISITIONS, INC., a
Delaware corporation ("BUYER"), for the purpose of setting forth the
agreement of the parties hereto, and is joined in for the limited purposes
set forth herein by Anchor Title Company of Columbia, Maryland (the "TITLE
COMPANY"), M.O.R. Commons Limited Partnership ("MOR"), Corporate Office
Properties, L.P. ("COP LP") and CILP/Commons Office Limited Partnership, a
limited partnership organized under the laws of the State of Delaware
("COLP").
BACKGROUND
A. CILP and COLP are the sole general partners of Commons Office
Research Partnership, a general partnership organized under the laws of the
State of Maryland (the "PARTNERSHIP"), and governed by a Second Amended and
Restated General Partnership Agreement dated as of June 1, 1997 (the
"PARTNERSHIP AGREEMENT"). CILP and COLP together hold 100% of the partnership
interests in the Partnership (CILP's interest in the Partnership being referred
to as the "CILP PARTNERSHIP INTEREST," and COLP's interest in the Partnership
being referred to as the "COLP PARTNERSHIP INTEREST").
B. CILP and MOR are the sole partners of COLP, CILP being the sole
general partner and MOR being the sole limited partner (CILP's interest in COLP
being referred to as the "CILP COLP INTEREST" and MOR's interest in COLP being
referred to as the "MOR COLP INTEREST").
C. The Partnership is the owner of the following real and personal
property (collectively, the "PROPERTY"):
1. The parcels of land described on EXHIBIT A attached hereto
(the "LAND"), together with all rights, easements and interests appurtenant
thereto, including, but not limited to, any streets or other public ways
adjacent to the Land and any water or mineral rights owned by the Partnership;
2. All improvements located on the Land, including, but not
limited to, all buildings, structures, systems, and utilities (all such
improvements being collectively referred to herein as the "IMPROVEMENTS"), but
excluding improvements, if any, owned by the tenants of such buildings
("TENANTS");
3. All fixtures, equipment, furniture, furnishings,
appliances, supplies and other personal property of every nature and description
attached or
<PAGE>
pertaining to, or otherwise used in connection with, the Land and Improvements,
owned by the Partnership and located within the Land and Improvements (the
"PERSONALTY"); and
4. All intangible property used or useful in connection with
the foregoing including, without limitation, all trademarks, tradenames,
development rights, entitlements, contract rights, tenant improvement loans,
guarantees, licenses, permits and warranties (collectively, the "INTANGIBLE
PERSONAL PROPERTY").
D. Subject to the negotiation of such mutually acceptable agreements,
if any, as MOR and/or COP LP deem reasonably necessary, MOR is prepared,
simultaneously with the Closing hereunder, to transfer, assign and convey the
MOR COLP Interest to COP LP in exchange for a seven (7) unit interest in COP LP
(the "COP INTEREST"), and COP LP is prepared to transfer, assign and convey the
COP Interest to MOR in exchange for the MOR COLP Interest, all on the terms and
conditions hereinafter set forth, and as may be set forth in any separate
agreements between MOR and/or COP LP (which separate agreements shall not be
inconsistent with the terms hereof). The MOR COLP Interest is encumbered by that
certain Amended and Restated Pledge and Security Agreement of M.O.R. Commons
Limited Partnership dated January 1, 1991 (the "PLEDGE AGREEMENT") by and
between MOR, as Debtor, and CILP, as Secured Party, securing MOR's obligations
under that certain Amended and Restated Promissory Note dated January 1, 1991
from MOR to CILP in the original principal amount of Eight Million Eight Hundred
Fifty-Six Thousand Four Hundred Fifty-Four Dollars and Forty Cents
($8,856,454.40) (the "NOTE"). All sums due under the Note, including all
outstanding principal and interest accrued through the date the Note is paid in
full, plus additional such additional principal as may have been advanced and
interest thereon, is hereafter referred to as the "DEBT." The MOR COLP Interest
shall be transferred to COP LP subject to the Debt, which COP LP shall assume,
and COP LP shall, immediately thereafter, at the Closing, pay to CILP, in
addition to the Purchase Price, the full amount of the Debt then outstanding.
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<PAGE>
E. CILP is prepared to sell, transfer, assign and convey to Buyer the
CILP Partnership Interest and the CILP COLP Interest, and Buyer desires to
purchase and accept the same from CILP for the Purchase Price (hereafter
defined) and on the other terms and conditions hereinafter set forth.
F. The Partnership holds title to that portion of the Property
described in EXHIBIT A as Building J ("BUILDING J") as nominee for MCA Phase
III-A Limited Partnership, a Connecticut limited partnership ("MCA"). CILP
desires to cause the Partnership, as general partner of MCA, and The Travelers
Insurance Company ("TRAVELERS"), as limited partner of MCA, to convey their
respective interests in MCA to Buyer, and Buyer desires to purchase and accept
the same from the Partnership and Travelers, respectively, for the Purchase
Price and on the other terms and conditions hereinafter set forth.
TERMS AND CONDITIONS
In consideration of the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, the parties hereto agree:
1. SALE AND PURCHASE. CILP hereby agrees to sell, transfer and convey
to Buyer the CILP Partnership Interest and the CILP COLP Interest and Buyer
hereby agrees to purchase and accept the same from CILP, all for the Purchase
Price and on and subject to the other terms and conditions set forth in this
Agreement.
1A. EXCHANGE OF UNITS. Subject to the negotiation and execution of such
mutually acceptable agreements, if any, as MOR and/or COP LP deem reasonably
necessary, simultaneously with the Closing hereunder, MOR shall transfer, assign
and convey the MOR COLP Interest to COP LP (subject to the Debt) in exchange for
the COP Interest, and COP LP shall simultaneously transfer, assign and convey
the COP Interest to MOR in exchange for the MOR COLP Interest. Simultaneously
with the aforesaid exchange, COP LP shall assume the Debt and shall immediately
thereafter pay the Debt in full to CILP. In no event shall CILP be obligated to
extend the Closing Date to permit the consummation of the aforesaid transaction
between MOR and COP LP, nor shall CILP be obligated to incur any additional
costs or assume any additional obligations or liabilities as a result thereof.
2. PURCHASE PRICE. As used herein, the term "PURCHASE PRICE" shall
mean:
(a) The sum of One Million Six Hundred Eleven Thousand Two
Hundred Eighty-One and 08/100 Dollars ($1,611,281.08) and the amount of cash
held by the Partnership on the Closing Date (the "MARCH 26 PURCHASE PRICE") if
the Closing occurs on March 26, 1999;
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<PAGE>
(b) If the Closing occurs prior to March 26, 1999, the sum of
(i) the March 26 Purchase Price plus (ii) the product of Seven Thousand
Fifty-Nine and 83/100 Dollars ($7,059.83) (the "DAILY ADJUSTMENT") and the
number of days between the date of Closing and March 26, 1999. For purposes of
illustration only, if the Closing occurs on March 24, 1999, and the Partnership
holds no cash on the Closing Date, then the Purchase Price shall be
$1,625,400.74 (I.E., the March 26 Purchase Price plus $14,119.66, the product of
the Daily Adjustment and two (2) days); and
(c) If the Closing occurs after March 26, 1999, the difference
between (i) the March 26 Purchase Price and (ii) the product of the Daily
Adjustment and the number of days between March 26, 1999 and the date of
Closing. For purposes of illustration only, if the Closing occurs on March 29,
1999, and the Partnership holds no cash on the Closing Date, the Purchase Price
shall be $1,590,101.59 (I.E., the March 26 Purchase Price minus $21,179.49, the
product of the Daily Adjustment and three (3) days).
The Purchase Price shall, subject to the terms and conditions hereinafter set
forth, be paid to CILP by Buyer as follows:
2.1. DEPOSIT. Concurrent with the execution and delivery of
this Agreement by Buyer, Buyer shall deliver to the Title Company Five Hundred
Thousand Dollars ($500,000.00) (the "FIRST DEPOSIT"). Upon the expiration of the
Second Inspection Period (as hereafter defined), Buyer shall deliver to the
Title Company an additional Five Hundred Thousand Dollars ($500,000.00) (the
"SECOND DEPOSIT") (the First Deposit and the Second Deposit are hereafter
individually and collectively referred to as the "DEPOSIT"). The Deposit shall
be held by the Title Company in accordance with the terms of Section 12 hereof.
If the Closing (hereafter defined) occurs, any interest earned on the Deposit
shall be paid to Buyer at the time of Closing; otherwise any interest earned on
the Deposit shall be paid to the party entitled to the Deposit pursuant to the
terms of this Agreement.
2.2. PAYMENT AT CLOSING; FUNDING AGREEMENT. At the
consummation of the transaction contemplated hereby (the "CLOSING"), Buyer shall
deliver to the Title Company cash in an amount equal to the Purchase Price less
the Deposit. The Purchase Price, subject to adjustments and apportionments as
set forth herein, shall be paid at Closing by wire transfer of immediately
available federal funds, transferred to the order or account of CILP or such
other person as CILP may designate in writing. In no event shall COLP, MOR or
COP LP be entitled to any portion of the Purchase Price. Buyer shall not be
responsible for the allocation of the Purchase Price among CILP and the
constituent partners of MCA.
-4-
<PAGE>
3. REPRESENTATIONS AND WARRANTIES. Except (A) as otherwise set forth in
the written schedules attached to this Agreement (the "SCHEDULES"), if any,
which set forth the exceptions to the representations and warranties contained
in this Section 3 and certain other information called for by this Agreement
(unless otherwise specified, (i) each reference in this Agreement to any
numbered schedule is a reference to that numbered schedule which is included in
the Schedules and (ii) no disclosure made in any particular numbered schedule of
the Schedules shall be deemed made in any other numbered schedule of the
Schedules unless expressly made therein (by cross-reference or otherwise)), and
(B) as expressly set forth in any document delivered to the Buyer by CILP, COLP,
the Partnership or MOR prior to the Closing, CILP, COLP and/or MOR, (solely as
to the matter set forth in Section 3.2(b)) as the case may be, represent and
warrant to Buyer that the following matters are true and correct as of the
Contract Date, in all material respects, and shall be true and correct as of the
Closing Date (hereafter defined), in all material respects, and further covenant
as set forth below. All representations, warranties and covenants made in this
Section 3 are made for the benefit of Buyer only, and all parties hereto agree
that no party other than Buyer may rely thereon.
3.1. REPRESENTATIONS AND WARRANTIES OF CILP.
(a) ORGANIZATION AND AUTHORITY. CILP has been duly
organized and is validly existing under the laws of the State of Delaware. The
execution and delivery of this Agreement by CILP, and the performance of this
Agreement by CILP, have been duly authorized by CILP, and, to the best of CILP's
knowledge, this Agreement is binding on CILP and enforceable against it in
accordance with its terms. Except for the Traveler's Approval and the SAIC
Estoppel (each described below), no consent of any creditor, investor, partner,
shareholder, tenant-in-common, judicial or administrative body, Governmental
Authority, or other governmental body or agency, or other party to such
execution, delivery and performance by CILP is required. Subject to the
execution of the Traveler's Approval and the SAIC Estoppel, neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in a breach of, default under, or
acceleration of, any agreement to which CILP is a party or by which CILP or the
Property are bound; or (ii) violate any restriction, court order, agreement or
other legal obligation to which CILP and/or the Property are subject. For the
purposes of this Agreement, "GOVERNMENTAL AUTHORITY/AUTHORITIES" shall mean any
agency, commission, department or body of any municipal, township, county,
local, state or Federal governmental or quasi-governmental regulatory unit,
entity or authority having jurisdiction or authority over all or any portion of
the Property or the management, operation, use or improvement thereof. CILP has
the full right and authority to transfer good title to
-5-
<PAGE>
the CILP Partnership Interest and the CILP COLP Interest free and clear of all
liens, encumbrances or other claims and to consummate or cause to be consummated
the transactions contemplated by this Agreement.
(b) PENDING ACTIONS. To CILP's knowledge, CILP has
not received written notice of any action, suit, arbitration, unsatisfied order
or judgment, government investigation or proceeding pending against CILP which,
if adversely determined, could individually or in the aggregate materially
interfere with the consummation of the transactions contemplated by this
Agreement.
3.2 REPRESENTATIONS AND WARRANTIES OF CILP AND MOR.
(a) CILP is the sole general partner of COLP and owns
a fifty percent (50%) partnership interest in COLP.
(b) MOR is a limited partner of COLP and owns a fifty
percent (50%) partnership interest in COLP.
3.3 REPRESENTATIONS AND WARRANTIES OF CILP AND COLP. CILP and
COLP are the sole general partners of the Partnership, and CILP and COLP,
together, hold one hundred percent (100%) of the Partnership Interests in the
Partnership.
3.4 FURTHER REPRESENTATIONS AND WARRANTIES OF CILP.
(a) ORGANIZATION OF THE PARTNERSHIP. The Partnership
has been duly organized and is validly existing under the laws of the State of
Maryland. COLP has been duly organized and is validly existing under the laws of
the State of Delaware.
(b) PARTNERSHIP AGREEMENT. The copies of the
agreements and amendments which comprise the Partnership Agreement and the
CILP/Common Office Limited Partnership Agreement of Limited Partnership dated
June 1, 1997 (the "COLP Partnership Agreement"), which have been delivered by
CILP and COLP to Buyer, are true, correct and complete copies of such agreements
and amendments and there are no other agreements, modifications or amendments
pertaining to the Partnership Agreement or to the COLP Partnership Agreement.
(c) FINANCIAL STATEMENTS. To CILP's knowledge, there
have been delivered to Buyer true, correct and complete copies of the audited
financial statements for the Partnership and COLP for 1995, 1996 and 1997,
prepared by Wolpoff & Company (collectively, the "Financial Statements"). To
CILP's
-6-
<PAGE>
knowledge, the Financial Statements present fairly in all material respects the
financial position, results of operations and cash flows of the Partnership and
of COLP as of the dates thereof and for the periods covered thereby, in
accordance with generally accepted accounting principles applied on a consistent
basis. To CILP's knowledge, since December 31, 1997, there has not been any
material adverse change in the business, assets, financial condition or results
of operations of the Partnership or COLP.
(d) TAXES AND TAX RETURNS. The Partnership and COLP
have filed all federal, state and local tax returns they are required by law to
file for each year of their existence except 1998 and 1999. The Partnership and
COLP have paid or caused to be paid all federal, state, local, foreign, and
other taxes, including without limitation, income taxes, estimated taxes,
alternative minimum taxes, excise taxes, sales taxes, use taxes, value-added
taxes, gross receipts taxes, franchise taxes, capital stock taxes, employment
and payroll-related taxes, withholding taxes, stamp taxes, transfer taxes,
windfall profit taxes, environmental taxes and property taxes, whether or not
measured in whole or in part by net income, and all deficiencies, or other
additions to tax, interest, fines and penalties owned by them (collectively,
"TAXES"), required to be paid by the Partnership and COLP through the date
hereof whether disputed or not.
(e) SINGLE PURPOSE PARTNERSHIPS. The Partnership is a
single purpose partnership, which purpose is the acquisition, ownership,
management, leasing and disposition of the Property, the Partnership has no
other assets other than the Property and the Partnership has never had any
employees. COLP is a single purpose partnership whose purpose is the ownership
of the COLP Partnership Interest, COLP has no other assets other than the COLP
Partnership Interest, and COLP has never had any employees.
(f) PENDING ACTIONS. To CILP's knowledge, neither the
Partnership nor COLP has received written notice of any action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against the Partnership or COLP which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(g) DELIVERIES BY THE PARTNERSHIP. The Partnership
has or will promptly deliver to Buyer copies of all (i) building permits,
certificates of occupancy, boiler certificates, elevator certificates, licenses,
approvals, entitlements, grants of right, environmental permits or similar
authorizations issued or pending before any governmental or quasi-governmental
authority, beneficial or necessary to the ownership, maintenance, construction
or operation of the Land and Improvements ("PERMITS"), (ii) plans and
specifications pertaining
-7-
<PAGE>
to the Improvements ("PLANS"), and (iii) other documents or instruments
referenced in the Schedules ("SCHEDULE ITEMS"), to the extent such Permits,
Plans or Schedule Items are in the Partnership's possession or control. To the
best of CILP's knowledge, all items delivered by CILP, COLP or the Partnership
or their agents in connection with this Agreement are true, accurate, correct
and complete in all material respects, and fairly present the information set
forth in a manner that is not misleading.
(h) DEFAULTS. The Partnership has not received
written notice alleging the existence of any default under (i) any of the
recorded documents affecting the Property, or (ii) under any certificate of
occupancy, license, permit, authorization or other approval required by law or
by any governmental authority having jurisdiction thereover in respect of the
Property, or any portion thereof, the occupancy thereof or any present use
thereof (the "GOVERNMENTAL APPROVALS").
(i) LEASES; CONTRACTS. Other than as set forth on
Schedule 1 ("LEASES") and Schedule 2 ("CONTRACTS"), there are no leases or
contracts of any kind to which the Partnership is a party relating to the
management, leasing, operation, maintenance or repair of the Property. Other
than for the Partnership's current lender, no rent under any of the Leases has
been voluntarily assigned or encumbered by Owner. CILP further represents and
warrants that, except as set forth in Schedule 1, to the best of CILP's
knowledge, the Partnership has paid in full all expenses connected with the
negotiation, execution and delivery of the leases set forth on Schedule 1
(together with such additional leases approved or permitted pursuant to Section
5 hereof, the "LEASES") which are due and owing as of the date hereof, including
without limitation brokers' commissions, leasing fees and recording fees (but
excluding any such commissions or fees attributable to extension, renewal or
expansion options exercised after the Closing Date). All contracts set forth on
Schedule 2 (together with such additional contracts approved or permitted
pursuant to Section 5 hereof, the "CONTRACTS") shall be terminated by the
Partnership as of the Closing Date, unless Buyer, prior to the expiration of the
Inspection Period, notifies the Partnership to continue the same.
(j) COMPLIANCE WITH LAWS AND CODES; RE-ZONING. The
Partnership has not received written notice of (i) any violations of any
applicable federal, state or local statutes, regulations, directives,
ordinances, regulations, codes, licenses, permits and authorizations affecting
the Property or the use thereof (or the use and operation of any component,
portion or area of the Property), including without limitation those pertaining
to environmental matters, contamination of any type whatsoever or health and
safety matters, (ii) any threatened proceeding for the re-zoning of the Property
or any portion thereof, or (iii) the taking of any other action by governmental
authorities that would have an adverse or material impact on the value of the
Property or use thereof.
-8-
<PAGE>
(k) LITIGATION. There are no pending or, to the best
of CILP's knowledge, threatened judicial, municipal or administrative
proceedings affecting the Partnership, COLP or the Property, or in which the
Partnership or COLP is or will be a party by reason of the Partnership's
ownership or operation of the Property or COLP's ownership of the COLP
Partnership Interest. No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending against the Partnership or COLP, or to the best of
CILP's knowledge, threatened against the Partnership or COLP or pending against
any direct or indirect partner of the Partnership, nor are any of such
proceedings contemplated by the Partnership or COLP. In the event any proceeding
of the character described in this Section 3.3(k) is initiated or threatened
against the Partnership or COLP prior to the Closing, the Partnership shall
promptly advise Buyer thereof in writing.
(l) REAL ESTATE TAXES. The Partnership has not
received written notice of any proposed increase in the assessed valuation or
rate of taxation of the Property from that reflected in the most recent real
estate tax bills. There is not now pending, and the Partnership will not,
without the prior written consent of Buyer (which consent shall not be
unreasonably withheld or delayed), institute prior to the Closing Date, any
proceeding or application for a reduction in the real estate tax assessment of
the Property or any other relief for any tax year.
(m) CONDEMNATION. CILP has no knowledge of any
pending or contemplated condemnation or other governmental taking proceedings
affecting all or any part of the Property.
(n) EMPLOYEES. Neither the Partnership, CILP nor COLP
have any employees and there are no charges or liabilities against the
Partnership, CILP or COLP for any worker related taxes, premiums or similar
matters.
(o) BUILDING J. The Partnership holds title to
Building J as nominee for MCA. The sole partners of MCA are the Partnership, as
general partner, and Travelers, as successor in interest to The Aetna Casualty
and Surety Company, as limited partner. MCA has been duly organized and is
validly existing under the laws of the State of Connecticut. Subject to the
approval by Travelers of the transaction contemplated by this Agreement (the
"TRAVELERS APPROVAL"), CILP and COLP have the full right and authority to enter
into this Agreement, and to cause all of the partnership interests in MCA to be
transferred to Buyer and its nominee in accordance with the terms of this
Agreement, free and clear of all liens, encumbrances or other claims and to
consummate or cause to be consummated the transaction contemplated by this
Agreement. To CILP's and COLP's knowledge, MCA has not received written notice
of any action, suit, arbitration, unsatisfied
-9-
<PAGE>
order or judgment, government investigation or proceeding pending against MCA
which, if adversely determined, could individually or in the aggregate
materially interfere with the consummation of the transaction contemplated by
this Agreement. The copies of the agreements and amendments which comprise the
partnership agreement of MCA (the "MCA PARTNERSHIP AGREEMENT"), which have been
delivered by CILP to Buyer are true, correct and complete copies of such
agreements and amendments and there are no other agreements, modifications or
amendments pertaining to the MCA Partnership Agreement.
Whenever a representation and warranty in this Section 3 or elsewhere
in this Agreement is qualified by "to the best knowledge of CILP," "to the best
knowledge of COLP" or similar phrases, it shall mean the actual, not imputed or
constructive, knowledge of Shelton Getter of AEW Advisors, Inc. ("AEW"),
managing general partner of CILP, without any obligation on such individual's
part to make any independent investigation of the matters being represented and
warranted.
The representations and warranties in this Section 3 shall be deemed
remade by CILP, COLP, and MOR, as the case may be, as of the Closing Date with
the same force and effect as if in fact specifically remade at that time. Such
representations and warranties shall survive the Closing for a period of one
year; provided, however, that Buyer shall not be entitled to bring a claim with
respect to any representation and warranty during such one year period if, on or
prior to the Closing Date, Buyer acquired actual, not imputed or constructive,
knowledge that the applicable representation and warranty was not true in all
material respects as of the Closing Date.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND
AGREED THAT CILP AND COLP ARE NOT MAKING AND HAVE NOT AT ANY TIME MADE ANY
WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PARTNERSHIP, COLP OR THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING CILP SHALL SELL AND
CONVEY TO BUYER AND BUYER SHALL ACCEPT THE CILP PARTNERSHIP INTEREST AND THE
CILP COLP INTEREST AND THE PROPERTY IN ITS CONDITION ON THE DATE THEREOF, EXCEPT
TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT. BUYER HAS NOT
RELIED AND WILL NOT RELY ON, AND CILP AND COLP ARE NOT LIABLE FOR OR BOUND BY,
ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PARTNERSHIP, COLP, THE PROPERTY OR RELATING
THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, ANY
-10-
<PAGE>
PROSPECTUS DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY CILP,
COLP, THE PARTNERSHIP, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER
OR AGENT REPRESENTING OR PURPORTING TO REPRESENT CILP, COLP OR THE PARTNERSHIP,
TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS
SPECIFICALLY SET FORTH IN THIS AGREEMENT.
BUYER AGREES THAT IT HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING,
SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL
AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY OR DESIRABLE TO
SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR
NONEXISTENCE OF OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR
TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY. BUYER ACKNOWLEDGES AND
AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT (INCLUDING WITHOUT
LIMITATION THE REPRESENTATIONS AND WARRANTIES AND THE PROVISIONS RELATING TO A
BREACH THEREOF), BUYER IS RELYING ON SUCH INDEPENDENT INVESTIGATIONS.
4. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
4.1. DELIVERIES BY THE PARTNERSHIP. To the extent in the
Partnership's or AEW's possession, the Partnership shall continue to make
available to Buyer, from and after the Contract Date, at reasonable times and
upon reasonable notice, all books, records, tax returns, correspondence,
financial data, leases, and all other documents and matters, public or private,
maintained by the Partnership or AEW, relating to receipts and expenditures
pertaining to the Property for the three most recent full calendar years and the
current calendar year and all contracts, rental agreements and all other
documents and matters, public or private, maintained by Partnership or its
agents, relating to operations of the Property (collectively, "RECORDS").
4.2. INSPECTION; ACCESS.
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<PAGE>
(a) BASIC PROPERTY INSPECTION. During the First
Inspection Period (as hereafter defined), at reasonable times and upon
reasonable notice, Buyer, its agents and representatives shall be entitled to
conduct inspections of the Property, which will include the rights to: (i) enter
upon the Land and Improvements to perform inspections and tests of any and all
of the Property, including, but not limited to, inspection, evaluation and
testing of the heating, ventilation and air-conditioning systems and all
components thereof, all structural and mechanical systems within the
Improvements, including, but not limited to, sprinkler systems, power lines and
panels, air lines and compressors, automatic doors, tanks, pumps, plumbing and
all equipment and vehicles; (ii) examine and copy any and all Records,
Contracts, Leases and other materials relating to the Property ("PROPERTY
MATERIALS") including but not limited to as-built plans, title reports, surveys,
legal descriptions, environmental studies, appraisals, assessments,
rights-of-way and liens; and (iii) make investigations with regard to zoning,
environmental (including, but not limited to, an environmental assessment as
specified in Section 4.2(b), which includes, but is not limited to, an analysis
of the presence of any asbestos, chlordane, formaldehyde or other Hazardous
Material in, under or upon the Property, or any underground storage tanks on, or
under, the Land), building, code, regulatory and other legal or governmental
requirements. Without limitation of the foregoing, Buyer or its designated
independent or other accountants may audit the financial statements and all
income and expense statements, year-end financial and monthly and annual
operating statements for the Property for calendar years 1995, 1996, 1997 and,
to the extent available, 1998, and the Partnership shall supply such
documentation as Buyer or its accountants may reasonably request in order to
complete such audit.
(b) ENVIRONMENTAL ASSESSMENT. During the First and
Second Inspection Periods, at reasonable times and upon reasonable notice, Buyer
or Buyer's agent(s) shall have the right to employ one or more environmental
consultants or other professional(s) to perform or complete such environmental
inspections and assessments of the Property as Buyer deems necessary or
desirable; provided, however, that Buyer shall not perform a "Phase II"
environmental assessment or undertake any other invasive physical tests at the
Property without first obtaining the Partnership's approval to do so, which
approval shall not be unreasonably withheld or delayed. Buyer and its
consultants shall also have the right to undertake or complete a technical
review of all documentation, reports, plans, studies and information in
possession of the Partnership or AEW, or its past or present environmental
consultants, concerning or in any way related to the environmental condition of
the Property. In order to facilitate the assessments and technical review, the
Partnership shall extend its full cooperation (but without third party expense
to CILP, COLP or the Partnership) to Buyer and its environmental consultants,
including, without limitation, providing access to all files and fully and
completely answering all questions.
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(c) SURVEY. Prior to the expiration of the First
Inspection Period, Buyer shall, at Buyer's cost and expense, obtain an
"as-built" survey of the Property (the "SURVEY"). If Buyer disapproves of any
matters disclosed in the Survey, Buyer shall give written notice to CILP of such
disapproval, indicating in reasonable detail the nature and reasons for Buyer's
objection, prior to the expiration of the First Inspection Period. If Buyer
fails to give such notice of disapproval prior to the expiration of the First
Inspection Period, Buyer shall be deemed to have approved all matters disclosed
in the Survey. In the event Buyer so notifies CILP of Buyer's disapproval of the
Survey, CILP may elect (but shall have no obligation whatsoever) to attempt to
cure any disapproved matter within thirty (30) days from receipt of such notice
(the "SURVEY CURE PERIOD"), in which event the Closing, if it otherwise is
scheduled to occur earlier, shall be extended until the earlier of thirty (30)
days after receipt of such notice or three (3) business days after such matter
is cured. Within five (5) business days after receiving Buyer's notice (the
"SURVEY NOTICE PERIOD"), CILP shall notify Buyer if CILP intends to attempt to
effectuate such cure. In the event that, prior to the expiration of the Survey
Notice Period, CILP fails to give such notice of its intention to attempt to
effectuate such cure, Buyer may, within two (2) business days after the
expiration of the Survey Notice Period, terminate this Agreement by notice to
CILP in which event the Deposit, and all interest earned thereon, shall be
returned to Buyer, provided if Buyer does not so terminate this Agreement within
two (2) business days after the expiration of the Survey Notice Period, Buyer
shall be deemed to have waived objection to any such survey matter and agreed to
accept title subject thereto, without reduction in the Purchase Price. In the
event CILP gives such notice of its intention to attempt to effectuate such cure
and thereafter fails to actually effectuate such cure within the Survey Cure
Period, Buyer's sole rights with respect thereto shall be to terminate this
Agreement within two (2) business days after the expiration of the Survey Cure
Period, in which event the Deposit, and all interest earned thereon, shall be
returned to Buyer, provided if Buyer does not so terminate this Agreement within
two (2) business days after the expiration of the Survey Cure Period, Buyer
shall be deemed to have waived objection to any such survey matter and agreed to
accept title subject thereto, without reduction in the Purchase Price.
(d) TITLE. Prior to the expiration of the First
Inspection Period, Buyer shall obtain a complete title report or commitment with
respect to the Property (with copies of all instruments listed as exceptions to
title). If Buyer disapproves of any matters disclosed in the title report, Buyer
shall give written notice to CILP of such disapproval, indicating in reasonable
detail the nature and reasons for Buyer's objection, prior to the expiration of
the First Inspection Period. If Buyer fails to give such notice of disapproval
prior to the expiration of the First Inspection Period, Buyer shall be deemed to
have approved all matters disclosed
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in the title report. In the event Buyer so notifies CILP of Buyer's disapproval
of the title report, CILP may elect (but shall have no obligation whatsoever) to
attempt to cure any disapproved matter within thirty (30) days from receipt of
such notice (the "TITLE CURE PERIOD"), in which event the Closing, if it
otherwise is scheduled to occur earlier, shall be extended until the earlier of
thirty (30) days after receipt of such notice or three (3) business days after
such matter is cured. Within five (5) business days after receiving Buyer's
notice (the "TITLE NOTICE PERIOD"), CILP shall notify Buyer if CILP intends to
attempt to effectuate such cure. In the event that, prior to the expiration of
the Title Notice Period, CILP fails to give such notice of its intention to
attempt to effectuate such cure, Buyer may, within two (2) business days after
the expiration of the Title Notice Period, terminate this Agreement by notice to
CILP in which event the Deposit, and all interest earned thereon, shall be
returned to Buyer, provided if Buyer does not so terminate this Agreement within
two (2) business days after the expiration of the Title Notice Period, Buyer
shall be deemed to have waived objection to any such title matter and agreed to
accept title subject thereto, without reduction in the Purchase Price. In the
event CILP gives such notice of its intention to attempt to effectuate such cure
and thereafter fails to actually effectuate such cure within the Title Cure
Period, Buyer's sole rights with respect thereto shall be to terminate this
Agreement within two (2) business days after the expiration of the Title Cure
Period, in which event the Deposit, and all interest earned thereon, shall be
returned to Buyer, provided if Buyer does not so terminate this Agreement within
two (2) business days after the expiration of the Title Cure Period, Buyer shall
be deemed to have waived objection to any such title matter and agreed to accept
title subject thereto, without reduction in the Purchase Price.
(e) BUYER'S UNDERTAKING. Buyer hereby covenants and
agrees that it shall cause all studies, investigations and inspections performed
at the Property pursuant to this Section 4.2 to be performed in a manner that
does not materially or unreasonably disturb or disrupt the tenancies at or
business operations of the Property. In the event that, as a result of Buyer's
exercise of its rights under Sections 4.2(a) and 4.2(b), physical damage occurs
to the Property, then Buyer shall promptly repair such damage, at Buyer's sole
cost and expense, so as to return the Property to substantially the same
condition as exists on the Contract Date. Buyer hereby indemnifies, protects,
defends and holds CILP, COLP and the Partnership harmless from and against any
and all losses, damages, claims, causes of action, judgments, damages, costs and
expenses that CILP, COLP or the Partnership actually suffers or incurs as a
direct result of any physical damage caused to, in, or at the Property during
the course of, or as a result of, any or all of the studies, investigations and
inspections that Buyer elects to perform (or causes to be performed) pursuant to
this Section 4.2.
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(f) CONFIDENTIALITY. Each party agrees to maintain in
confidence, and not to disclose to Tenants or Tenants' employees, the
information contained in this Agreement or pertaining to the transaction
contemplated hereby and the information and data furnished or made available by
CILP, COLP or the Partnership to Buyer, its agents and representatives in
connection with Buyer's investigation of the Property and the transactions
contemplated by this Agreement; provided, however, that each party, its agents
and representatives may disclose such information and data (i) to such party's
accountants, attorneys, existing or prospective lenders, investment bankers,
accountants, underwriters, ratings agencies, partners, consultants and other
advisors in connection with the transactions contemplated by this Agreement to
the extent that such representatives reasonably need to know (in the disclosing
party's reasonable discretion) such information and data in order to assist, and
perform services on behalf of, the disclosing party; (ii) to the extent required
by or appropriate under any applicable statute, law, regulation or Governmental
Authority; (iii) in connection with any litigation that may arise between the
parties in connection with the transactions contemplated by this Agreement or
otherwise relating to the Property or any of them; (iv) to the extent such
disclosure is required or appropriate in connection with any securities offering
or other capital markets or financing transaction undertaken by any corporate or
partnership entity affiliated with, or related to, the Buyer ("AFFILIATE"); (v)
to the extent such information and data become generally available to the public
other than as a result of disclosure by such party or its agents or
representatives; (vi) to the extent such information and data become available
to such party or its agents or representatives from a third party who, insofar
as is known to such party, is not subject to a confidentiality obligation to the
other party hereunder; and (vii) to the extent necessary in order to comply with
each party's respective covenants, agreements and obligations under this
Agreement. In the event the transactions contemplated by this Agreement shall
not be consummated, such confidentiality shall be maintained indefinitely.
Furthermore, CILP, COLP and Buyer acknowledge that, notwithstanding any contrary
term of this Section 4.2(f), Buyer shall have the right to conduct Tenant
interviews, and the disclosure of the existence of this Agreement to the Tenants
shall not constitute a breach of the above restriction. Buyer shall also have
the right to issue a press release upon the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(g) INSPECTION PERIOD. The term "FIRST INSPECTION
PERIOD," as used herein, shall mean the period ending at 5:00 p.m. eastern
standard time on March 3, 1999. The term "SECOND INSPECTION PERIOD," as used
herein, shall mean the period ending at 5:00 p.m. eastern standard time on March
9, 1999. If Buyer reasonably objects to any matter relating to physical aspects
of the Property (including, for purposes of illustration, structural or
mechanical elements of the Improvements), or any so-called "MARKET" related
matter Buyer may terminate this Agreement in its sole discretion on any
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day prior to and including the final day of the First Inspection Period by
giving written notice of such election, which notice shall specify the matter to
which Buyer objects in reasonable detail. In addition, if Buyer reasonably
objects to any matter relating to the environmental condition of the Property,
Buyer may terminate this Agreement in its sole discretion on any day prior to
and including the final day of the Second Inspection Period by giving written
notice of such election, which notice shall specify the matter to which Buyer
objects in reasonable detail. If Buyer terminates this Agreement as aforesaid,
the Deposit and any interest earned thereon shall be returned forthwith to Buyer
and, except as expressly set forth herein, no party shall have any further
liability or obligation to the others hereunder.
Except as expressly set forth in this Section 4.2(g),
in Sections 4.2(c) or 4.2(d) above, and as set forth in that certain letter
dated Feb. 26, 1999 from Roger A. Waesche, Jr. to Dennis P. Malone (for the
matters set forth therein), or as otherwise expressly permitted hereunder,
Buyer shall have no right to terminate this Agreement, it being specifically
agreed that (i) Buyer has no right, at any time, to terminate this Agreement
by reason of any objection to the Contracts, Leases, any other so-called
"market"-related matters, or any matter other than matters disclosed in the
title report (described in Section 4.2(d)), matters disclosed in the Survey,
physical aspects of the Property and the environmental condition of the
Property; (ii) after the expiration of the First Inspection Period, Buyer
shall have no right to terminate this Agreement by reason of any objection
other than an objection to the environmental condition of the Property; and
(iii) after the expiration of the Second Inspection Period, all of the
contingencies provided for in this Section 4.2(g) shall no longer be
applicable, and this Agreement shall continue in full force and effect.
4.3. ADDITIONAL BUYER'S CONDITIONS PRECEDENT. In addition to
the other conditions enumerated in this Agreement, the following shall be
conditions precedent to Buyer's obligation to close ("BUYER'S CONDITIONS
PRECEDENT"):
(a) PHYSICAL CONDITION. The physical condition of
Property shall be substantially the same on the Closing Date as on the last day
of the First Inspection Period, reasonable wear and tear excepted, unless the
alteration of said physical condition is the result of Damage.
(b) BANKRUPTCY. As of the Closing Date, neither the
Partnership nor COLP shall be the subject of any bankruptcy proceeding for which
approval of this transaction has not been given and issued by the applicable
bankruptcy court.
(c) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of CILP, MOR and COLP contained in this
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Agreement shall be true and correct as of the Closing Date, in all material
respects, as though such representations and warranties were made on such date.
(d) COVENANTS PERFORMED. All covenants of CILP and
COLP required to be performed on or prior to the Closing Date shall have been
performed, in all material respects.
5. NEW LEASES AND LEASE MODIFICATIONS. Effective as of the execution of
this Agreement, CILP hereby covenants with Buyer as follows:
5.1. NEW LEASES. The Partnership shall not amend or terminate
any Lease, nor shall the Partnership execute any new lease, license, or other
agreement affecting the ownership or operation of all or any portion of the
Property, without in each case obtaining Buyer's prior written approval, which
approval shall not be unreasonably withheld or delayed. Notwithstanding anything
in this Agreement to the contrary, the Partnership may cancel or terminate any
Lease or commence collection, unlawful detainer or other remedial action against
any Tenant without Buyer's consent upon the occurrence of a default by the
Tenant under said Lease.
5.2. NEW CONTRACTS. Neither the Partnership nor COLP shall
enter into any contract with respect to the ownership and operation of all or
any portion of the Property or the ownership of the COLP Partnership Interest
that will survive the Closing, or that would otherwise affect the use, operation
or enjoyment of the Property or affect the COLP Partnership Interest, without
Buyer's prior written approval, which approval may granted or denied in Buyer's
sole discretion.
5.3. OPERATION OF PROPERTY. The Partnership shall perform,
when due, all of its obligations under the Leases, Governmental Approvals,
Contracts and other agreements relating to the Property and otherwise in
accordance with applicable laws, ordinances, rules and regulations affecting the
Property. Except as otherwise specifically provided herein, the Property shall
be delivered at Closing in substantially the same condition as it is in on the
Contract Date, reasonable wear and tear and Damage excepted. The Partnership
shall not remove any fixtures from the Property, unless the same are replaced by
fixtures of equal or greater utility and value.
5.4. GOOD FAITH. All actions required pursuant to this
Agreement that are necessary to effectuate the transaction contemplated herein
will be taken promptly and in good faith by the parties hereto, and each party
shall furnish the other with such documents or further assurances as the
requesting party may reasonably require.
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5.5. NO ASSIGNMENT. After the Contract Date and prior to the
Closing, the Partnership shall not assign, alienate, lien, encumber or otherwise
transfer all or any part of the Property or any interest therein, nor shall CILP
assign, lien, encumber or otherwise transfer any interest in the CILP
Partnership Interest or the CILP COLP Interest.
5.6. AVAILABILITY OF RECORDS, AUDIT REPRESENTATION LETTER.
(a) Upon Buyer's reasonable request, for a period of
two years after the Closing, to the extent in the possession of CILP or AEW,
CILP shall make the Records available to Buyer for inspection, copying and audit
by Buyer's designated accountants. At any time before or within two years after
the Closing, CILP further agrees to provide to the Buyer's designated
independent auditor, upon the reasonable request of Buyer or such auditor, an
audit representation letter delivered by CILP, as a former partner of the
Partnership, regarding the books and records of the Property maintained by the
Partnership prior to the Closing, in a form reasonably agreed upon by Buyer,
CILP and their respective accountants.
(b) In addition, during such two year period, CILP
shall provide, and cooperate in all reasonable respects in providing, Buyer with
copies of, or access to, such factual information as may be reasonably requested
by Buyer, and in the possession of CILP or AEW, to enable any Affiliate of Buyer
to issue one or more press releases concerning the transaction that is the
subject of this Agreement, to file a Current Report on Form 8-K, if, as and when
such filing may be required by the Securities and Exchange Commission and to
make any other filings that may be required by any Governmental Authority. The
obligation of CILP to cooperate in providing Buyer with such information shall
be at Buyer's sole cost and expense.
5.7. CHANGE IN CONDITIONS. CILP and COLP shall promptly notify
Buyer of any change in any condition with respect to the Property of which it
receives notice or of the occurrence of any event or circumstance of which it
receives notice that makes any representation or warranty of CILP or COLP to
Buyer under this Agreement untrue or misleading, or any covenant of Buyer under
this Agreement incapable or less likely of being performed.
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6. CLOSING; DELIVERIES.
6.1. TIME OF CLOSING. Except as otherwise provided in this
Agreement, the closing of the transaction contemplated by this Agreement (the
"CLOSING") shall take place on the date (the "CLOSING DATE") specified by Buyer
upon not less than five (5) business days prior notice to CILP, provided that
the Closing Date shall occur no later than March 26, 1999. Notwithstanding the
foregoing, Buyer may, by written notice given to CILP, extend the Closing Date
for a period of not more than thirty (30) days, provided Buyer simultaneously
(a) delivers to the Title Company the sum of Two Hundred Fifty Thousand Dollars
($250,000.00), which sum shall be added to the First Deposit and the Second
Deposit (from and after such delivery, the term "Deposit" shall refer to the
First Deposit, the Second Deposit and such additional $250,000); and (b) pays to
the CILP the Extension Fee (as defined below). The Property is currently
encumbered by financing which will mature on or about March 31, 1999. In the
event Buyer extends the Closing Date beyond such maturity date, the Partnership
will incur costs and expenses that it would not have incurred if the Closing
Date occurred prior to such maturity date and the proceeds from closing were
used to pay such financing on or prior to maturity. Such costs and expenses (the
"EXTENSION COSTS") may include, but are not necessarily limited to, additional
interest, late penalties, and costs and expenses incurred by CILP or the
Partnership in connection with the lender's efforts to collect such financing.
As used herein, the "EXTENSION FEE" shall mean CILP's reasonable estimate of the
Extension Costs. Notwithstanding Buyer's payment of the Extension Fee, in the
event that the Extension Costs exceed the Extension Fee, COP LP shall pay such
excess to CILP. In the event that the Extension Fee exceeds the Extension Costs,
CILP shall refund such excess to Buyer. The obligations described in the two
immediately preceding sentences shall survive the Closing Date.
The Closing shall take place through escrow at the offices of
the Title Company or at such other place as may be mutually agreed upon by the
parties.
6.2. DELIVERIES BY CILP AND COLP. At the Closing (or such
other times as may be specified below), CILP shall deliver or cause to be
delivered to Buyer the following, each in form and substance reasonably
acceptable to CILP, Buyer and their respective counsel:
(a) ASSIGNMENT AND ASSUMPTION AGREEMENTS.
(i) An Assignment and Assumption Agreement
substantially in the form of EXHIBIT B, duly executed by CILP assigning the CILP
Partnership Interest to Buyer or Buyer's assignee;
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(ii) An Assignment and Assumption Agreement
substantially in the form of EXHIBIT B, duly executed by CILP assigning the CILP
COLP Interest to Buyer or Buyer's assignee;
(iii) An Assignment and Assumption Agreement
substantially in the form of EXHIBIT B, duly executed by the Partnership
assigning the Partnership's interest in MCA to Buyer or Buyer's assignee; and
(iv) An Assignment and Assumption Agreement
substantially in the form of EXHIBIT B-1, duly executed by Travelers assigning
Traveler's interest in MCA to Buyer or Buyer's assignee.
(b) AFFIDAVIT OF TITLE AND ALTA STATEMENT. An
Affidavit of Title (or comparable document) as required by the Title Company in
the State of Maryland as a condition to the deletion of the general exceptions
of Schedule B, Section 2 of the commitment for title insurance, executed by CILP
and in form and substance acceptable to the Title Company and to Buyer;
(c) ORIGINAL DOCUMENTS. Originals of the Leases,
Contracts, Records and any Governmental Approvals;
(d) CLOSING STATEMENT. A closing statement conforming
to the proration and other relevant provisions of this Agreement (the "CLOSING
STATEMENT") duly executed by CILP;
(e) PLANS AND SPECIFICATIONS. All engineering and
architectural plans and specifications, drawings, studies and surveys relating
to the Property in the possession of the Partnership, CILP, COLP or AEW;
(f) ENTITY TRANSFER CERTIFICATE. Entity transfer
certifications confirming that CILP and the partners of MCA are each "United
States Persons" within the meaning of Section 1445 of the Internal Revenue Code
of 1986, as amended;
(g) CLOSING CERTIFICATES. Certificates, signed by
CILP and COLP certifying that the representations and warranties of CILP and
COLP contained in this Agreement are true and correct as of the Closing Date and
that all covenants required to be performed by CILP and COLP prior to the
Closing Date have been performed;
(h) TENANT ESTOPPEL CERTIFICATES. A tenant estoppel
certificate, substantially in the form attached hereto as EXHIBIT C-1, duly
executed by tenants representing 100% of the rentable square footage actually
demised
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under Leases as of the Closing (the "ESTOPPEL CERTIFICATE REQUIREMENT"). A
Tenant Estoppel Certificate shall not be deemed unsatisfactory merely because
any tenant qualifies any statement or certification therein by a "best of
knowledge" standard or similar provision.
If CILP is unable to obtain tenant estoppel certificates which satisfy
the Estoppel Certificate Requirement, then CILP may elect (but shall have no
obligation whatsoever) to deliver its estoppel certificate in the form attached
hereto as EXHIBIT C-2 relating to Leases which, when combined with tenant
estoppel certificates delivered to Buyer, satisfy the Estoppel Certificate
Requirement, in which event the Closing delivery required by this Section shall
be deemed to have been satisfied. If CILP delivers its certificate with respect
to any tenant, it shall be entitled after Closing to continue to deal with any
tenant who has not delivered an estoppel certificate to attempt to obtain such a
certificate from such tenant, and Buyer shall reasonably cooperate with CILP in
such attempt, at no cost or expense to Buyer and without Buyer being obligated
to take any action under the applicable Lease against any tenant which fails to
deliver an estoppel certificate. If a tenant estoppel certificate is delivered
to Buyer after the Closing with respect to any tenant for whom CILP has
delivered its certificate at Closing pursuant to this paragraph, the certificate
of CILP with respect to such tenant shall automatically be deemed null and void
and Buyer shall return the same to CILP. With respect to any statement or
certification relating to a tenant contained in the certificate of CILP, CILP
may qualify said statement or certification therein by a "best of knowledge"
standard or similar provision.
The estoppel certificate to be provided by SAIC Corporation (the "SAIC
ESTOPPEL") shall either acknowledge that any rights of first refusal set forth
in the SAIC Corporation's lease are not applicable to the transaction
contemplated by this Agreement, or shall waive any such rights of first refusal
with respect to the transaction contemplated by this Agreement.
(i) MANEKIN ESTOPPEL CERTIFICATE. A written estoppel
certificate running to the benefit of the Buyer in the form attached hereto as
EXHIBIT D.
(j) RELEASE OF PLEDGE AGREEMENT. An instrument,
reasonably satisfactory to COP LP, releasing and terminating the Pledge
Agreement, duly executed by CILP.
(k) OTHER. Such other documents and instruments as
may reasonably be required by Buyer, its (or its underwriters' or lenders')
counsel or the Title Company and that may be necessary to consummate the
transaction that is the subject of this Agreement and to otherwise give effect
to the agreements of the
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parties hereto (including, without limitation, (i) copies of the documents
pursuant to which CILP and COLP are organized and operate their business,
together with proof of the authority of the signatory or signatories of this
Agreement on behalf of CILP and COLP to execute this Agreement, and (ii) any
documents and instruments in the possession of CILP, COLP or AEW that have not
previously been delivered to Buyer).
After the Closing, CILP and COLP shall execute and deliver to Buyer
such further documents and instruments as Buyer shall reasonably request to
effect this transaction and otherwise effect the agreements of the parties
hereto.
6.3. BUYER DELIVERIES. At the Closing (or such other times as
may be specified below), Buyer shall pay the balance of the Purchase Price in
accordance with Section 2.2, shall pay the Debt, and shall cause to be delivered
to CILP the following, each in form and substance reasonably acceptable to CILP,
Buyer and their respective counsel:
(a) ASSIGNMENTS. The Assignments described in Section
6.2(a) executed by Buyer;
(b) CLOSING STATEMENT. The Closing Statement, duly
executed by Buyer;
(c) CLOSING CERTIFICATE. A certificate, signed by
Buyer, certifying that the representations and warranties of Buyer contained in
this Agreement are true and correct as of the Closing Date and that all
covenants required to be performed by Buyer prior to the Closing Date have been
performed; and
(d) OTHER. Such other documents and instruments as
may reasonably be required by CILP, its counsel or the Title Company and that
are necessary to consummate the transaction which is the subject of this
Agreement and to otherwise effect the agreements of the parties hereto.
After Closing, Buyer shall execute and deliver to CILP such further
documents and instruments as CILP shall reasonably request to effect this
transaction and otherwise effect the agreements of the parties hereto.
6.4 ADDITIONAL SELLER'S CONDITION PRECEDENT. In addition to
the delivery of the items described in Section 6.3 above, and such other
conditions as may be set forth in this Agreement, the full payment of the Debt
by COP LP to CILP shall be a condition precedent to CILP's obligation to close
hereunder.
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70 APPORTIONMENTS; TAXES. The items described in Sections 7.1 through
7.9 below shall be prorated and adjusted between CILP and Buyer, as of the
Closing Date, except as otherwise specified. It is agreed that MOR, COP LP, COLP
and MCA shall not be entitled to receive, or obligated to pay, any sums that may
be due and owing to or from CILP or Buyer as a result of such prorations and
adjustments.
7.1. The parties hereto do not consider that any transfer tax
is payable in connection with the transaction contemplated by this Agreement. If
it is later determined that such a tax is payable, Buyer and CILP shall divide
the cost of any transfer taxes equally between them. Buyer and CILP shall divide
the cost of any recording charges incident to the transaction contemplated by
this Agreement;
7.2. Water, electricity, sewer, gas, telephone and other
utility charges based, to the extent practicable, on final meter readings and
final invoices, or, in the event final readings and invoices are not available,
based on the most currently available billing information, and reprorated upon
issuance of final utility bills;
7.3. All common area maintenance charges billed to Tenants on
an estimated basis shall be prorated on a per diem basis as of the Closing Date.
If any such charges cannot conclusively be determined as of the Closing Date,
then the same shall be adjusted at Closing based upon the most currently
available billing information, and reprorated upon determination of the actual
amount of such charges.
7.4. All real estate, personal property and ad valorem taxes
applicable to the Property and levied with respect to the tax year in which the
Closing occurs shall be prorated as of the Closing Date, utilizing the actual
final tax bills for the Property (if such actual final bills are not available
as of the date of Closing, such taxes shall be prorated at Closing based upon
the most recently issued bills therefor, and shall be reprorated when and if
final bills are issued). Prior to or at the Closing, CILP shall cause the
Partnership to pay all tax bills that are due and payable prior to or on the
Closing Date and shall furnish evidence of such payment to Buyer and the Title
Company. Each party's respective obligations to reprorate real estate taxes
shall survive the Closing.
7.5. All assessments, general or special, shall be prorated as
of the Closing Date on a "due date" basis such that CILP on behalf of the
Partnership shall be responsible for any installments of assessments which are
first due or payable prior to the Closing Date and Buyer shall be responsible
for any installments of assessments which are first due or payable on or after
the Closing Date;
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7.6. Broker's commissions for the Leases, if any, with respect
to base lease terms, but not with respect to future expansions, renewals or
extensions, shall be paid in full at or prior to the Closing by CILP on behalf
of the Partnership, without contribution or proration from Buyer. For purposes
hereof, a renewal or extension shall be deemed a "future" renewal or extension,
as the case may be, if the first day of such renewal or extension term occurs
after the Closing Date, regardless of when any renewal or extension option was
exercised, and regardless of when any agreement for such renewal or extension
term was executed. In the event that any portion of a broker's commission which
has been paid by CILP hereunder is refunded after the Closing Date, Buyer shall
promptly deliver such refund to CILP;
7.7. All rents and other charges due from Tenants under the
Leases, including, without limitation, all Additional Rent, shall be prorated as
of the Closing Date. If any rents under the Leases are accrued and unpaid at the
Closing Date, the rents collected by Buyer on or after the Closing Date will
first be applied to all rents due at the time of such collection on or after the
Closing Date with the balance paid to CILP to the extent of rents delinquent as
of the Closing Date, provided that Buyer will use reasonable efforts to collect
rents accrued and unpaid on the Closing Date, and provided further that if CILP
has not received all accrued and unpaid rents due them as of the Closing Date
within sixty (60) days thereafter, CILP, at its sole cost and expense, will be
entitled to bring such actions or proceedings (not affecting possession or
enforcing landlord's liens) in the Partnership's name, if necessary, as it
desires to collect any such accrued and unpaid rents, and Buyer will cooperate
with CILP in any such action.
7.8. The unpaid monetary obligations of the Partnership with
respect to any Contracts which are not terminated on or prior to the Closing
Date shall be prorated on a per diem basis as of the Closing Date.
7.9. Such other items that are customarily prorated in
transactions of this nature shall be ratably prorated.
For purposes of calculating prorations, Buyer shall be deemed to own
the CILP Partnership Interest and the CILP COLP Interest, for the entire Closing
Date. All such prorations shall be made on the basis of the actual number of
days of the year and month that shall have elapsed as of the Closing Date. Bills
received after the Closing that relate to expenses incurred, services performed
or other amounts allocable to the period prior to the Closing Date shall be
paid, in cash, by CILP, to the extent due and owing. Bills received after the
Closing Date that relate to expenses incurred, services performed or other
amounts allocable to the period on or after the Closing Date, shall be paid, in
cash, by the Buyer, to the extent due and owing.
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As a result of the Closing, the Partnership, COLP and MCA shall each
terminate for federal income tax purposes (but not state law purposes) pursuant
to Section 708(b)(1)(B) and their respective tax years shall close on the
Closing Date. CILP on behalf of the Partnership, on behalf of COLP, and on
behalf of the Partnership as general partner of MCA, shall prepare and timely
file any federal, state, local and foreign tax or information returns due after
Closing that are required to be filed by or on behalf of the Partnership, COLP
or MCA with respect to all tax years or periods ending on or prior to the
Closing Date. CILP on behalf of the Partnership, on behalf of COLP, and on
behalf of the Partnership as general partner of MCA, shall prepare and timely
file the terminating tax returns for the Partnership, COLP and MCA resulting
from the consummation of the transactions contemplated under this Agreement,
provided, however, that such tax returns shall be prepared in accordance with
the terms and provisions of this Agreement. In this regard, CILP agrees to make
an election under Section 754 of the Internal Revenue Code to step up the basis
of the assets of MCA to an amount equal to the portion of the Purchase Price and
other consideration allocated to MCA as a result of this transaction on the
final tax return of MCA, and CILP agrees to make an election under Section 754
of the Internal Revenue Code to step up the basis of the assets of the
Partnership and COLP to an amount equal to the portion of the Purchase Price and
other consideration hereunder allocated to the Partnership as a result of this
transaction on the final tax returns of the Partnership and COLP. Buyer shall
have the right to approve the form and substance of such Section 754 elections.
Buyer shall assist CILP in obtaining such data and information regarding the
Partnership, COLP, MCA and CILP to permit CILP to prepare such returns or to
respond to any audits or assessments for the periods covered by such returns.
80 DAMAGE OR DESTRUCTION; CONDEMNATION; INSURANCE. If, prior to the
Closing, there is damage or destruction to the Property caused by fire or other
casualty (collectively, "DAMAGE"), the cost for repair of which exceeds One
Million and 00/100 Dollars ($1,000,000.00), and the Property cannot be restored
to its original condition prior to Closing, or if all or any material portion of
the Property is condemned or taken by eminent domain proceedings by any public
authority (collectively, "EMINENT DOMAIN"), then Buyer, in its sole and absolute
discretion, may elect either of the following options: (i) Buyer may terminate
this Agreement by written notice to CILP and receive an immediate refund of the
Deposit, whereupon neither party shall have any further liability to the other
under this Agreement (except as provided in Section 9.3); or (ii) Buyer may
proceed to close. In such latter event, if the Property has been made the
subject of Eminent Domain, CILP and COLP shall fully cooperate with Buyer in the
adjustment and settlement of the governmental acquisition proceeding and the
entire amount of the condemnation award payable by the Governmental Authority
shall belong to Buyer and shall be retained by the Partnership at Closing.
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90 DEFAULT; INDEMNITY.
9.1. DEFAULT BY CILP OR COLP. If any of CILP's or COLP's
representations and warranties contained herein shall not be true and correct,
in all material respects, on the Contract Date, or if CILP fails to perform any
of the covenants and agreements contained herein to be performed by CILP within
the time for performance as specified herein (including CILP's obligation to
close), or if any of the Buyer's Conditions Precedent shall not have been
satisfied as of the Closing Date, Buyer may elect to terminate Buyer's
obligations under this Agreement by written notice to CILP and receive an
immediate return of the Deposit and any interest accrued thereon. In addition,
if any of CILP's or COLP's representations and warranties contained herein shall
not be true and correct, in all material respects, on the Contract Date, or if
CILP fails to perform any of the covenants and agreements contained herein to be
performed by CILP within the time for performance as specified herein (including
CILP's obligation to close), Buyer may elect to close, in which event Buyer may,
subject to the remaining provisions of this Section 9 and the other applicable
provisions of this Agreement, file an action for either or both of specific
performance and actual (but not special or consequential) damages to compel CILP
to cure all or any of such default(s), in whole or in part.
9.2. DEFAULT BY BUYER. In the event Buyer defaults in its
obligations to acquire the Property, then CILP's sole and exclusive remedy shall
be to terminate this Agreement and retain the Deposit as liquidated damages.
CILP shall have no other remedy for any default by Buyer. Buyer and CILP
acknowledge that the damages to CILP resulting from Buyer's breach would be
difficult, if not impossible, to ascertain with any accuracy, and that the
liquidated damage amount set forth in this Section 9.2 represents both parties'
best efforts to approximate such potential damages.
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9.3. INDEMNIFICATION.
(a) BUYER. CILP agrees to and does hereby indemnify,
defend and hold harmless Buyer, any assignee of Buyer's rights hereunder and
each of their respective partners, officers, directors, shareholders, agents and
employees, and each of their successors and assigns (collectively, the "BUYER
INDEMNIFIED PARTIES"), from and against any and all claims, losses, demands,
liabilities, suits, administrative proceedings, causes of action, costs and
damages suffered by any Buyer Indemnified Party, but excluding consequential
damages, and attorneys' fees of counsel selected by any Buyer Indemnified Party
and other costs of defense, incurred, arising against, or suffered by any Buyer
Indemnified Party, both known and unknown, present and future, at law or in
equity (collectively, "LOSSES"), arising out of, by virtue of or related in any
way to, a breach of any representation, warranty or covenant by CILP or COLP set
forth in this Agreement.
(b) ADDITIONAL INDEMNIFICATION OF BUYER. CILP agrees
to and does hereby indemnify, defend and hold harmless the Buyer Indemnified
Parties from and against any and all Losses arising out of, by virtue of or
related in any way to any act or omission of the Partnership or MCA occurring
prior to the Closing Date, including without limitation, any liability for
creditor claims that arose prior to the Closing Date, any liability for tort
claims by any person or entity attributable to any acts or omissions of the
Partnership, MCA, their employees or agents (excluding, however, acts or
omissions of MOR, COP LP and Travelers) that occurred prior to the Closing Date,
and any liability attributable to any failure of the Partnership MCA or COLP to
pay any tax owed to any governmental entity or agency whatsoever attributable to
income earned or taxable events that took place prior to the Closing Date.
(c) CILP AND COLP. Buyer agrees to and does hereby
indemnify, defend and hold harmless CILP, COLP and their respective partners,
officers, directors, shareholders, agents and employees, and each of their
successors and assigns (the "SELLER INDEMNIFIED PARTIES"), from and against any
and all Losses arising out of, by virtue of or related in any way to, a breach
of any representation, warranty or covenant of Buyer set forth in this
Agreement.
(d) ADDITIONAL INDEMNIFICATION OF CILP AND COLP.
Buyer agrees to and does hereby indemnify, defend and hold harmless the Seller
Indemnified Parties from and against any and all Losses arising out of, by
virtue of or related in any way to any act or omission of the Partnership, MCA
or COLP occurring after the Closing Date, including without limitation, any
liability for creditor claims that arise after the Closing Date, any liability
for tort claims by any person or entity attributable to any acts or omissions of
the Partnership, COLP or
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MCA, their employees or agents that occur after the Closing Date, and any
liability attributable to any failure of the Partnership, COLP or MCA to pay any
tax owed to any governmental entity or agency whatsoever attributable to income
earned or taxable events that take place after the Closing Date.
(e) CONTROL OF DEFENSE COUNSEL. Each indemnified
party shall give reasonably prompt notice to each indemnifying party of any
action or proceeding commenced against the indemnified party in respect of which
indemnity may be sought hereunder, but failure so to notify an indemnifying
party (i) shall not relieve it from any liability which it may have under any
indemnity provided herein unless and to the extent it did not otherwise learn of
such action and the lack of notice by the indemnified party results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
shall not, in any event, relieve the indemnifying party from any obligations to
any indemnified party hereunder other than its indemnification obligation. If
the indemnifying party so elects within a reasonable time after receipt of such
notice, the indemnifying party may assume the defense of such action or
proceeding at such indemnifying party's own expense with counsel chosen by the
indemnifying party; provided, however, that, if such indemnified party or
parties reasonably determine that a conflict of interest exists where it is
advisable for such indemnified party or parties to be represented by separate
counsel or that, upon advice of counsel, there may be legal defenses available
to them which are different from or in addition to those available to the
indemnifying party, then the indemnifying party shall not be entitled to
separate counsel at the indemnifying party's expense. If an indemnifying party
is not so entitled to assume the defense of such action or does not assume such
defense, after having received the notice referred to in the first sentence of
this Section 9.3(e), the indemnifying party or parties will pay the reasonable
fees and expenses of counsel for the indemnified party or parties. In such
event, however, no indemnifying party will be liable for any settlement effected
without the written consent of such indemnifying party. If an indemnifying party
is entitled to assume, and assumes, the defense of such action or proceeding in
accordance with this Section, such indemnifying party shall not be liable for
any fees and expenses of counsel for the indemnified parties incurred thereafter
in connection with such action or proceeding.
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9.4. LIMITATIONS.
(a) The obligations of the parties pursuant to
Section 9 shall be limited to claims made prior to the last date of survival of
the applicable representation, warranty or covenant referred to in this
Agreement (and the absence of any express survival period shall be construed to
mean that such representation, warranty or covenant survives without limit).
Without limiting the foregoing, the obligation of the parties pursuant to
Section 9.3(b) and 9.3(d) shall survive for a period of one (1) year following
the Closing Date, and shall thereafter be null and void and of no further
effect.
(b) The amount of either party's liability under this
Agreement shall be determined taking into account (A) any applicable insurance
proceeds actually received by the other party, and (B) any other savings
realized in connection with such liability that actually reduce the overall
impact of the Losses upon the other party.
(c) Notwithstanding anything in this Agreement to the
contrary, CILP and COLP shall have no liability to any Buyer Indemnified Party
unless the valid claims hereunder collectively aggregate more than $60,000, in
which event the full amount of such valid claims shall be actionable, up to the
cap described below in this paragraph (c) (except for any claim based on fraud
by CILP or COLP in connection with this Agreement, which claim shall not be
subject to the limitations of this Section 9.4(c)). Further, (i) any recovery
against CILP or COLP hereunder shall be limited to Buyer's actual damages, (ii)
the total recovery or recoveries against CILP and/or COLP based upon "Section
9.3(b) Claims" (as hereafter defined) shall not exceed an amount which, when
combined with any and all other recovery or recoveries from CILP and/or COLP
based upon Section 9.3(b) Claims, shall not exceed $572,000.00 in the aggregate,
and (iii) the total recovery or recoveries against CILP and/or COLP based upon
"Non-Section 9.3(b) Claims" (as hereafter defined) shall not exceed an amount
which, when combined with any and all other recovery or recoveries from CILP
and/or COLP based upon Non-Section 9.3(b) Claims, shall not exceed $300,000. As
used herein, the term "Section 9.3(b) Claims" shall refer to all claims against
CILP which can be brought only under Section 9.3(b) of this Agreement, and not
under any other provision of this Agreement (i.e., claims against CILP which are
not, in any way, based upon a breach by CILP or COLP of any representation or
covenant set forth in this Agreement that is actionable under Section 9.3(a)).
As used herein, the term "Non-Section 9.3(b) Claims" shall refer to all claims
against CILP or COLP which can be brought under a provision of this Agreement
other than Section 9.3(b), whether or not such claim can also be brought under
Section 9.3(b). Thus, for purposes of illustration only, a claim by Buyer
against CILP or COLP based upon an alleged breach of a representation set forth
herein, which representation relates to an action of the Partnership occurring
prior to the Closing, would constitute a Non-Section 9.3(b) Claim because, even
though such claim could be brought under
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Section 9.3(b), it could also be brought under Section 9.3(a). Further,
notwithstanding anything to the contrary contained in this Agreement, Buyer
agrees that any liability of CILP (including liability in its capacity as
general partner of COLP) under this Agreement or any other agreement,
document, certificate or instrument delivered by CILP or COLP to Buyer, or
under any law applicable to the Property or this transaction, shall be
strictly limited to the assets and properties of CILP, and no event shall
Buyer seek or obtain any recovery or judgment against any of CILP's partners
(or their constituent partners) or any director, officer, employee or
shareholder of any of the foregoing.
(d) Notwithstanding anything in this Agreement to the
contrary, Buyer shall not have any liability to CILP or COLP unless the valid
claims hereunder aggregate more than $60,000, in which event the full amount of
such valid claims shall be actionable, up to the cap described below in this
paragraph (d) (except for any claim based on fraud by Buyer in connection with
this Agreement, which claim shall not be subject to the limitations of this
Section 9.4(d)). Further, (i) any recovery against Buyer hereunder shall be
limited to CILP's or COLP's actual damages, (ii) the total recovery or
recoveries against Buyer based upon "Section 9.3(d) Claims" (as hereafter
defined) shall not exceed an amount which, when combined with any and all other
recovery or recoveries from Buyer based upon Section 9.3(d) Claims, shall not
exceed $572,000.00 in the aggregate, and (iii) the total recovery or recoveries
against Buyer based upon "Non-Section 9.3(d) Claims" (as hereafter defined)
shall not exceed an amount which, when combined with any and all other recovery
or recoveries from Buyer based upon Non-Section 9.3(d) Claims, shall not exceed
$300,000. As used herein, the term "Section 9.3(d) Claims" shall refer to all
claims against Buyer which can be brought only under Section 9.3(d) of this
Agreement, and not under any other provision of this Agreement. As used herein,
the term "Non-Section 9.3(d) Claims" shall refer to all claims against Buyer
which can be brought under a provision of this Agreement other than Section
9.3(d), whether or not such claim can also be brought under Section 9.3(d).
Thus, for purposes of illustration only, a claim by CILP or COLP against Buyer
based upon an alleged breach of a representation set forth herein, which
representation relates to an action of the Partnership occurring after the
Closing, would constitute a Non-Section 9.3(d) Claim because, even though such
claim could be brought under Section 9.3(d), it could also be brought under
Section 9.3(c).
100 NOTICES. All notices and other communications provided for herein
shall be in writing and shall be sent to the address set forth below (or such
other address as a party may hereafter designate for itself by notice to the
other parties as required hereby) of the party for whom such notice or
communication is intended:
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10.1. If to CILP or COLP:
AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Telephone No.: 617-261-9209
Fax No.: 617-261-9555
Attention: General Counsel
With a copy to:
AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Telephone No.: 617-261-9529
Fax No.: 617-261-9555
Attention: Mr. Kevin M. Stotts
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telephone No.: 617-526-6947
Fax No.: 617-526-5000
Attention: Joseph J. Christian, Esq.
10.2. If to Buyer or COP LP:
Corporate Acquisitions, Inc.
8815 Centre Park Drive
Columbia, Maryland 21045
Telephone: 410-992-7247
Facsimile: 410-992-7534
Attention: John Gurley, Esq.
10.3. If to MOR:
c/o Manekin Corporation
7165 Columbia Gateway Drive
Columbia, Maryland 21046
Telephone: 410-290-1432
Facsimile: 410-290-1498
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Attention: Mr. Louis C. LaPenna
With a copy to:
Lonnie M. Ritzer, Esq.
Shapiro and Olander
36 South Charles Street - 20th Floor
Baltimore, Maryland 21201
Telephone: 410-385-4221
Facsimile: 410-539-7611
Any such notice or communication shall be sufficient if sent by registered or
certified mail, return receipt requested, postage prepaid; by hand delivery; by
nationally recognized overnight courier service; or by telecopy during normal
business hours (with a follow-up telephone call within four (4) hours during
normal business hours), with an original by regular mail. Any such notice or
communication shall be effective when delivered or when delivery is refused.
110 BROKERS. Buyer, CILP, COLP, MOR and COP LP each represents to the
other that it has not dealt with any broker or agent in connection with this
transaction. Each party hereby indemnifies and holds harmless the other parties
from all loss, cost and expense (including reasonable attorneys' fees) arising
out of a breach of its representation or undertaking set forth in this Section
11. The provisions of this Section 11 shall survive Closing or the termination
of this Agreement.
120 TITLE COMPANY. Title Company shall hold the Deposit in accordance
with the terms and provisions of this Agreement, subject to the following:
12.1. OBLIGATIONS. Title Company undertakes to perform only
such duties as are expressly set forth in this Agreement and no implied duties
or obligations shall be read into this Agreement against Title Company.
12.2. RELIANCE. Title Company may act in reliance upon any
writing or instrument or signature which it, in good faith, believes, and any
statement or assertion contained in such writing or instrument, and may assume
that any person purporting to give any writing, notice, advice or instrument in
connection with the provisions of this Agreement has been duly authorized to do
so. Title Company shall not be liable in any manner for the sufficiency or
correctness as to form, manner and execution, or validity of any instrument
deposited in escrow, nor as to the identity, authority, or right of any person
executing the same, and Title
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Company's duties under this Agreement shall be limited to those provided in this
Agreement.
12.3. DISPUTES. If the parties (including Title Company) shall
be in disagreement about the interpretation of this Agreement, or about their
respective rights and obligations, or the propriety of any action contemplated
by Title Company, or the application of the Deposit, Title Company shall hold
the Deposit until the receipt of written instructions from Buyer and CILP or a
final order of a court of competent jurisdiction. In addition, in any such
event, Title Company may, but shall not be required to, file an action in
interpleader to resolve the disagreement. Title Company shall be indemnified for
all costs and reasonable attorneys' fees in its capacity as Title Company in
connection with any such interpleader action and shall be fully protected in
suspending all or part of its activities under this Agreement until a final
judgment in the interpleader action is received.
12.4. COUNSEL. Title Company may consult with counsel of its
own choice and have full and complete authorization and protection in accordance
with the opinion of such counsel. Title Company shall otherwise not be liable
for any mistakes of fact or errors of judgment, or for any acts or omissions of
any kind, unless caused by its negligence or willful misconduct.
130 REPRESENTATIONS OF BUYER. Buyer represents and warrants to CILP
that:
13.1. Buyer is a corporation duly authorized and validly
existing under Delaware law. The execution and delivery of this Agreement by
Buyer, and the performance of this Agreement by Buyer, has been duly authorized
by Buyer, and, to the best of Buyer's knowledge, this Agreement is binding on
Buyer and enforceable against it in accordance with its terms. No consent of any
trustee, beneficiary, creditor, investor, partner, shareholder, judicial or
administrative body, Governmental Authority, or other governmental body or
agency, or other party to such execution, delivery and performance by Buyer is
required. Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in a breach of, default under,
or acceleration of, any agreement to which Buyer is a party or by which Buyer is
bound; or (ii) violate any restriction, court order, agreement or other legal
obligation to which Buyer is subject.
13.2. Buyer has, or its assignee will have, available to it
unrestricted funds which it may use in its sole discretion to pay the full
Purchase Price and otherwise comply with the provisions of this Agreement. Buyer
acknowledges and agrees that its obligations hereunder are not contingent upon
Buyer obtaining third party financing.
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13.3. As of the date hereof and as of the Closing, (1) Buyer
will not be an employee benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), which is subject
to Title I of ERISA, nor a plan as defined in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended (each of the foregoing hereinafter referred to
collectively as "PLAN"), nor shall Buyer be a "party in interest" to a Plan as
defined in Section 3(14) of ERISA, and (2) the assets of the Buyer will not
constitute "plan assets" of one or more such Plans within the meaning of
Department of Labor ("DOL") Regulation Section 2510.3-101.
Neither Buyer nor any affiliate (within the meaning of Section IV (b)
of Prohibited Transaction Exemption 90-1) of Buyer exercises any discretionary
authority, control, responsibility or influence with respect to the investment
of the assets of any "DESIGNATED PLANS" in either "SEPARATE ACCOUNT" (as such
terms are defined in that certain side letter of even date herewith from CILP to
Buyer), and neither Buyer nor any such affiliate of Buyer has any discretionary
authority, control, responsibility or influence with respect to the management
or disposition of the assets of any Designated Plan held in either Separate
Account.
As of the Closing, if Buyer is a "governmental plan" as
defined in Section 3(32) of ERISA, the closing of the sale of the Property will
not constitute or result in a violation of state or local statutes regulating
investments of and fiduciary obligations with respect to governmental plans.
As of the Closing, Buyer will be acting on its own behalf and
not on account of or for the benefit of any Plan.
Buyer has no present intent to transfer the Property to any
entity, person or Plan which will cause a violation of ERISA.
Buyer shall not assign its interest under this contract of
sale to any entity, person, or Plan which will cause a violation of ERISA.
13.4. Buyer is acquiring the CILP Partnership Interest, the
CILP COLP Interest and the partnership interests in MCA (the "MCA INTERESTS")
for its own account for investment only, and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act of
1933, as amended (the "SECURITIES ACT"), or any rule or regulation thereunder.
Buyer understands that (i) the CILP Partnership Interest, the
CILP COLP Interest and the MCA Interests that Buyer is acquiring have not been
registered under the Securities Act or applicable state securities laws and
cannot be resold unless subsequently registered under the Securities Act and
such laws or
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unless an exemption from such registration is available, (ii) such registration
under the Securities Act and such laws is unlikely at any time in the future and
neither the Partnership nor CILP, COLP, MCA or Travelers are obligated to file a
registration statement under the Securities Act or such laws, and (iii) the
assignment, sale, transfer, exchange, or other disposition of the CILP
Partnership Interest, the CILP COLP Interest and the MCA Interests are each
restricted in accordance with the terms of the CILP Partnership Agreement, the
COLP Partnership Agreement and the MCA Partnership Agreement, respectively.
Buyer has had such opportunity as Buyer has deemed adequate to
ask questions of and receive answers from CILP concerning the Partnership, COLP
and MCA, and to obtain from representatives of CILP or COLP such information
which they possess or can acquire without unreasonable effort or expense, as is
necessary to evaluate the merits and risks of an investment in the Partnership,
COLP and MCA.
Buyer has, either alone or with its professional advisers,
sufficient experience in business, financial and investment matters to be able
to evaluate the merits and risks involved in investing in the Partnership, in
COLP and in MCA and to make an informed investment decision with respect to such
investments.
Buyer can afford a complete loss of the value of its
investment in the Partnership, COLP and MCA and is able to bear the economic
risk of holding such investment for an indefinite period.
The representations and warranties in this Section 13 shall be deemed remade by
Buyer as of the Closing Date with the same force and effect as if in fact
specifically remade at that time. Such representations and warranties shall
survive the Closing for a period of one year; provided, however, that CILP shall
not be entitled to bring a claim with respect to any representation and warranty
during such one year period if, on or prior to the Closing Date, CILP acquired
actual, not imputed or constructive, knowledge that the applicable
representation and warranty was not true in all material respects as of the
Closing Date.
140 MISCELLANEOUS.
14.1. ASSIGNABILITY. The terms, conditions and covenants of
this Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective nominees, successors, beneficiaries and assigns;
provided, however, no direct or indirect conveyance, assignment or transfer of
any interest whatsoever of, in or to the Property or of this Agreement shall be
made by any party hereto during the term of this Agreement without the prior
written consent of the other parties. Notwithstanding the foregoing, Buyer may,
without the consent
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of any other party hereto, assign or transfer all of its rights under this
Agreement, including without limitation the right to take title to the CILP
Partnership Interest and the CILP COLP Interest, provided however that Buyer
shall not be relieved of any of its obligations hereunder (including without
limitation the obligation to pay the Purchase Price) by reason of any such
assignment or transfer, but shall rather be jointly and severally responsible
for such obligations with any assignee or transferee.
14.2. EXPENSES. Except and to the extent as otherwise
expressly provided to the contrary herein, the parties hereto shall each bear
their own respective costs and expenses relating to the transactions
contemplated hereby, including, without limitation, fees and expenses of legal
counsel or other representatives for the services used, hired or connected with
the proposed transactions mentioned above.
14.3. LITIGATION. In the event of litigation between the
parties with respect to the Property, this Agreement, the performance of their
respective obligations hereunder or the effect of a termination under this
Agreement, the losing party shall pay all costs and expenses incurred by the
prevailing party in connection with such litigation, including, but not limited
to, reasonable attorneys' fees of counsel selected by the prevailing party. The
parties hereby further acknowledge and agree that in the event of litigation
between them, as contemplated above, and the resolution of that litigation
through compromise, settlement, or partial judgment, the court before which such
litigation is initially brought shall have the right to allocate responsibility,
between the parties hereto, for all costs and expenses (including, but not
limited to, attorneys' reasonable fees) incurred by the parties in the pursuit
of that litigation resolved through compromise, settlement or partial judgment.
Notwithstanding any provision of this Agreement to the contrary, the obligations
of the parties under this Section 14.3 shall survive termination of this
Agreement and the Closing, if applicable.
14.4. LIMITATION OF LIABILITY. All liabilities and obligations
of Buyer under this Agreement shall be those of Buyer only. Subject to the
consummation of an assignment, CILP and COLP shall not, under any circumstances,
look to any person or entity other than Buyer, including, but not limited to,
any Affiliate of Buyer, for performance or satisfaction of Buyer's obligations
and liabilities in connection with this Agreement. Without limiting the
foregoing, none of Buyer or any Affiliate of Buyer or their respective trustees,
beneficiaries, members, partners and shareholders shall incur any liability
under any document or agreement required in connection with this Agreement, and
Buyer shall not be required (in connection with this Agreement) to execute any
document or agreement that does not expressly exculpate and release such parties
and theirs respective successors, assigns, affiliates, officers, shareholders,
partners, employees, agents and
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representatives from any liability or obligation arising out of, or in
connection with, this Agreement.
14.5. REASONABLE EFFORTS. CILP, COLP and Buyer shall use their
reasonable, diligent and good faith efforts, and shall cooperate with and assist
each other in their efforts, to obtain any and all consents and approvals of
third parties (including, but not limited to, governmental authorities) to the
transaction contemplated hereby, and to otherwise perform as may be necessary or
otherwise reasonably requested by the other party to effectuate the transfer of
the CILP Partnership Interest and the CILP COLP Interest to Buyer in accordance
with, and to otherwise carry out the purposes of, this Agreement. MOR, as a
partner in COLP, hereby consents to the sale, transfer and conveyance of the
CILP COLP Interest to Buyer in accordance with this Agreement. CILP, as a
partner in COLP, hereby consents to the transfer and conveyance of the MOR COLP
Interest to COP LP in accordance with the terms of this Agreement. To the extent
COP LP becomes a partner in COLP, COP LP hereby consents to the sale, transfer
and conveyance of the CILP COLP Interest to Buyer in accordance with this
Agreement.
14.6. GOVERNING LAW; BIND AND INURE. This Agreement shall be
governed by the laws of the State of Maryland and shall bind and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors, assigns and personal representatives.
14.7. RECORDING. This Agreement or any notice or memorandum
hereof shall not be recorded in any public record. A violation of this
prohibition shall constitute a material breach of Buyer, entitling CILP to
terminate this Agreement.
14.8. TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
14.9. HEADINGS. The headings preceding the text of the
paragraphs and subparagraphs hereof are inserted solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.
14.10. COUNTERPARTS. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
14.11. EXHIBITS. All Exhibits and Schedules which are referred
to herein and which are attached hereto or bound separately and initialed by the
parties are expressly made and constitute a part of this Agreement.
-37-
<PAGE>
14.12. SUBMISSION NOT AN OFFER OR OPTION. The submission of
this Agreement or a summary of some or all of its provisions for examination or
negotiation by any party hereto does not constitute an offer by such party to
enter into an agreement to sell or purchase the Partnership Interests, and no
party shall be bound to the other with respect to any such purchase and sale
until a definitive agreement satisfactory to the parties hereto in their sole
discretion is executed and delivered by such parties.
14.13. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Schedules and Exhibits hereto set forth all of the promises, covenants,
agreements, conditions and undertakings between the parties hereto with respect
to the subject matter hereof, and supersede all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written, except as contained herein. This Agreement may not be changed
orally but only by an agreement in writing, duly executed by or on behalf of the
party or parties against whom enforcement of any waiver, change, modification,
consent or discharge is sought.
14.14 FAILURE OF MOR-COP LP EXCHANGE. In the event that, for
any reason whatsoever, MOR and COP LP fail to consummate the transaction
described in Section 1A above (the "Exchange") on or before the Closing Date (as
such date may be extended pursuant to Section 6.1 above), unless CILP elects, in
its sole and absolute discretion, to extend the Closing, then, notwithstanding
any other provision of this Agreement, CILP shall sell, transfer, assign and
convey the CILP Partnership Interest to Buyer, COLP shall sell, transfer, assign
and convey the COLP Partnership Interest to Buyer, and Buyer shall purchase and
accept the same from CILP and COLP for a purchase price of Twenty-Six Million
Dollars ($26,000,000.00), and on such other terms and conditions as are set
forth in the Purchase and Sale Agreement attached hereto as EXHIBIT E (the
"ALTERNATIVE CONTRACT"), provided that the "Contract Date" as that term is used
in the Alternative Contract shall have the same meaning as the "Contract Date"
as that term is used herein. Upon the failure of MOR and COP LP to timely
consummate the Exchange for any reason whatsoever, unless CILP elects in its
sole and absolute discretion to extend the Closing, the obligations of CILP,
COLP and Buyer under this Section 14.14 shall be immediately effective without
further act of any party. Notwithstanding the foregoing, upon the failure of the
Exchange as aforesaid, unless CILP elects in its sole and absolute discretion to
extend the Closing, CILP, COLP and Buyer each agree to confirm their obligations
hereunder by promptly executing the Alternative Contract, effective as of the
Contract Date (as defined herein). Upon the full execution of the Alternative
Contract by all parties thereto, this Agreement shall be null and void. In the
event that MOR and COP LP fail to consummate the Exchange on or before the
Closing Date, MOR hereby consents to the transactions described in this Section
14.14. Without limiting any of the provisions of this Section 14.14,
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<PAGE>
the parties hereto acknowledge that the Exchange is the preferable method to
achieve the objectives of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
CILP: COPLEY INVESTORS LIMITED PARTNERSHIP,
a Delaware Limited Partnership
By: Copley Management Partnership,
a Massachusetts general partnership, its
Managing Partner
By: AEW Advisors, Inc., a
Massachusetts corporation, its
Managing General Partner
By: /s/ Alison Husid Cutler
------------------------------
Name:Alison Husid Cutler
Title:Vice President
BUYER: CORPORATE ACQUISITIONS, INC.,
a Delaware corporation
By: /s/ Roger A. Waesche Jr.
--------------------------------
Name: ROGER A. WAESCHE JR.
Title: Sr. V.P. & CFO
TITLE COMPANY: ANCHOR TITLE COMPANY,
a Maryland corporation
-39-
<PAGE>
By: /s/ M. Charlotte Powel
--------------------------------------
Name:M. Charlotte Powel
Title: President
MOR: M.O.R. COMMONS LIMITED PARTNERSHIP
By: RA & DM, Inc., its general partner
By: /s/ Richard Alter
--------------------------------------
Name:Richard Alter
Title:President
COP LP: CORPORATE OFFICE PROPERTIES, L.P.
By: Corporate Office Properties Trust,
its general partner
By: /s/ Roger A. Waesche Jr.
-------------------------------
Name: ROGER A. WAESCHE JR.
Title: Sr. V.P. and CFO
COLP: CILP/COMMONS OFFICE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Copley Investors limited Partnership, a
Delaware limited partnership, its Managing
General Partner
By: Copley Management Partnership,
a Massachusetts general partnership, its
Managing General Partner
By: AEW Advisors, Inc., a
Massachusetts corporation, its
Managing General Partner
By: /s/ Alison Husid Cutler
---------------------------
Name:Alison Husid Cutler
Title:Vice President
-40-
<PAGE>
EXHIBIT A
Property Owned by Commons Office Research Partnership
1. Lots 2 (0.919 ac), 3 (3.305 ac), 4 (4.006 ac), 11 (SWM - 0.537 ac) and 12
(1.440 ac) and Cemetery (.270 ac) as shown on the Plat, dated by the
surveyor on June 27, 1988 and entitled "Commons Corporate Center, W1-B
Industrial Park District, Harmans, Maryland" and recorded among the Land
Records of Anne Arundel County, Maryland as Plat Nos. 5892 and 5893 in
Plat Book 112 at folios 17 and 18;
2. Lot 6A (5.23 ac) and Lot 6B (3.31 ac) as shown on the Plat, dated by the
surveyor on November 21, 1990 and entitled "Commons Corporate Center
Resubdivision of Lots 6 and 7" which plat is recorded as aforesaid in
Plat Book 133 at page 49 as Plat No. 6972;
3. Lots 7 (3.89 ac), 9 (2.86 ac) and 10 (3.46 ac) as shown on a plat, dated
by the surveyor on July 13, 1992 and entitled "Administrative
Resubdivision of Commons Corporate Center, Lots 7, 8, 9 and 10" which Plat
is recorded as aforesaid in Plat Book 148 at pages 3 and 4 as Plat Nos.
7976 and 7977;
4. Together with and subject to those easements and other rights granted
pursuant to that certain Declaration Establishing Reciprocal Parking and
Access Rights dated May 9, 1986 as recorded in Liber 4071 at folio 450 as
amended four times, each amendment of which is recorded among the Land
Records aforesaid;
5. Together with and subject to those easements and other rights granted
pursuant to that certain Declaration of Protective Covenants for
Baltimore Commons Business Park, dated November 27, 1974 and recorded as
aforesaid in Liber 2749 at folio 356, certain rights of which were
assigned pursuant to the Assignment and Assumption Agreement recorded in
Liber 5390 of folio 712; and
6. Together with and subject to the rights to use and the obligation to
maintain, in common with others entitled thereto, the private road known
as Mellon Road as shown on the Plats described in item 1 above.
<PAGE>
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
Assignment and Assumption Agreement dated this ___ day of ________,
1999 by and among ("Assignor"), and _________________, a _________________
("Assignee").
WITNESSETH:
WHEREAS, Assignor is the holder of a ___% partnership interest (the
"Partnership Interest") in __________, (the "Partnership"), governed by
________________________ (the "Partnership Agreement"); and
WHEREAS, Assignor and Corporate Acquisitions, Inc. ("Buyer") have
entered into a Purchase and Sale Agreement dated __________, 1999 with respect
to the transfer of the Partnership Interest from Assignor to Assignee (the
"Purchase and Sale Agreement"); and
WHEREAS, Assignee is the assignee of Buyer's rights under the Purchase
and Sale Agreement; and
WHEREAS, Assignor desires to assign and convey the Partnership Interest
to Assignee in accordance with the provisions of the Purchase and Sale
Agreement, and Assignee desires to so acquire the Partnership Interest.
NOW, THEREFORE, for good and valuable consideration, and in
consideration of the covenants and agreements herein contained, the receipt and
sufficiency of which is hereby acknowledged, Assignor and Assignee hereby agree
as follows:
1. ASSIGNMENT OF THE PARTNERSHIP INTEREST. Assignor hereby assigns,
conveys and transfers to Assignee, its successors and assigns, as of the date
hereof, all of its right, title and interest in and to the Partnership Interest,
including without limitation all allocations of profits and losses, and
distributions of cash or other property, represented by the Partnership
Interest, from and after the date hereof.
2. ACCEPTANCE BY ASSIGNEE. Assignee hereby accepts the Partnership
Interest assigned hereby and agrees to be substituted as a partner in the
Partnership to the extent of the assigned Partnership Interest, and to be bound
by
B-1
<PAGE>
and perform all of the obligations of Assignor under the Partnership
Agreement in respect of the Partnership Interest, from and after the date
hereof.
3. INDEMNIFICATION. Assignee covenants and agrees to indemnify and hold
harmless Assignor for, from and against any actions, suits, proceedings or
claims, and all costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred in connection therewith, based upon or arising out of
any breach or alleged breach of any of the obligations of Assignee hereunder or
out of any other facts connected with the Partnership, or the Partnership
Interest, occurring or alleged to have occurred from and after the date hereof.
4. RELEASE. Assignor does hereby, on its own behalf and on behalf of
its successors, assigns, personal representatives and heirs (the "Releasors"),
forever release, acquit, exonerate and discharge the Partnership and all of its
respective past, present and future officers, directors, partners, subsidiaries,
affiliates, agents, attorneys, servants and employees and their personal
representatives, heirs, successors and assigns (the "Releasees") from all
actions, causes of action, suits, proceedings, debts, sums of money, accounts,
reckonings, contracts, agreements, promises, covenants, damages, controversies,
demands, judgments, decrees, claims for damages, compensation, reasonable
attorneys fees and costs and expenses of suit, and any and all claims, demands
or liabilities whatsoever of every nature, in law, equity or otherwise
(collectively, "Claims"), which the Releasors ever had, now have or could ever
have against the Partnership. The foregoing release shall not apply to Claims
which the Releasors may have had, now have, or could (in the future) have,
against any past, present or future partners of the Partnership (the
"Partners"), notwithstanding the fact that the Partners may be past, present or
future partners of the Partnership, it being Assignor's intention that the
Partners shall not suffer liability, as partners of the Partnership, for Claims
asserted by Assignor against the Partnerships, but that Assignor shall reserve
the right to assert, prosecute and collect upon any Claims it may have directly
against the Partners. The provisions of this Section 4 shall survive the closing
under the Purchase and Sale Agreement.
5. BINDING EFFECT. This Assignment shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors and
assigns.
6. CONSTRUCTION; DEFINITIONS. This Assignment shall be construed
according to the laws of the State of Maryland. Capitalized terms used and not
otherwise defined herein shall have the meanings given to such terms in the
Purchase and Sale Agreement.
7. COUNTERPARTS. This Assignment may be executed in counterparts, which
taken together shall constitute one original instrument.
B-2
<PAGE>
8. NON-RECOURSE. Assignee agrees that the liability of Assignor under
this Assignment, the Purchase and Sale Agreement, and any other agreement,
document, certificate or instrument executed in connection with the transaction
contemplated herein, or under any law applicable to the Property or this
transaction, shall be limited as provided in Section 3 and Section 9.4 of the
Purchase and Sale Agreement.
DATED as of the day and year first above written.
ASSIGNOR:
--------------------------------------------
By:
------------------------------------
Name:
Title:
ASSIGNEE:
--------------------------------------------
By:
------------------------------------
Name:
Title:
The undersigned hereby consents to the above-described assignment.
CORPORATE OFFICE PROPERTIES, L.P.
By: ______________, Inc., its general
partner
By:
---------------------------
Name:
Title:
B-3
<PAGE>
EXHIBIT B-1
ASSIGNMENT AND ASSUMPTION AGREEMENT
Assignment and Assumption Agreement dated this ___ day of ________,
1999 by and among The Travelers Casualty and Surety Company ("Assignor"), and
_________________, a _________________ ("Assignee").
WITNESSETH:
WHEREAS, Assignor is the holder of a 25% limited partnership interest
(the "Partnership Interest") in MCA Phase III-A Limited Partnership, a
Connecticut limited partnership (the "Partnership"), governed by an Agreement of
Limited Partnership of MCA Phase III-A Limited Partnership dated December 31,
1990, as amended by a First Amendment to Agreement of Limited Partnership of MCA
Phase III-A Limited Partnership dated January 1, 1991 (as so amended, the
"Partnership Agreement"); and
WHEREAS, Assignor desires to assign and convey the Partnership Interest
to Assignee, and Assignee desires to so acquire the Partnership Interest.
NOW, THEREFORE, for good and valuable consideration, and in
consideration of the covenants and agreements herein contained, the receipt and
sufficiency of which is hereby acknowledged, Assignor and Assignee hereby agree
as follows:
1. ASSIGNMENT OF THE PARTNERSHIP INTEREST. Assignor hereby assigns,
conveys and transfers to Assignee, its successors and assigns, as of the date
hereof, all of its right, title and interest in and to the Partnership Interest,
including without limitation all allocations of profits and losses, and
distributions of cash or other property, represented by the Partnership
Interest, from and after the date hereof.
2. ACCEPTANCE BY ASSIGNEE. Assignee hereby accepts the Partnership
Interest assigned hereby and agrees to be substituted as a partner in the
Partnership to the extent of the assigned Partnership Interest, and to be bound
by and perform all of the obligations of Assignor under the Partnership
Agreement in respect of the Partnership Interest, from and after the date
hereof.
3. INDEMNIFICATION. Assignee covenants and agrees to indemnify and hold
harmless Assignor for, from and against any actions, suits, proceedings or
claims, and all costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred in connection therewith, based upon or arising out of
any
B-4
<PAGE>
breach or alleged breach of any of the obligations of Assignee hereunder or
out of any other facts connected with the Partnership, or the Partnership
Interest, occurring or alleged to have occurred from and after the date hereof.
4. RELEASE. Assignor has been advised that Assignor and Commons Office
Research Partnership ("Commons") are the sole partners of the Partnership;
Copley Investors Limited Partnership ("CILP") and CILP/Commons Office Limited
Partnership ("COLP") are the sole partners of Commons; and CILP and M.O.R.
Commons Limited Partnership ("MOR") are the sole partners of COLP.
Assignor does hereby, on its own behalf and on behalf of its
successors, assigns, personal representatives and heirs (the "Releasors"),
forever release, acquit, exonerate and discharge the Releasees (defined below)
from all actions, causes of action, suits, proceedings, debts, sums of money,
accounts, reckonings, contracts, agreements, promises, covenants, damages,
controversies, demands, judgments, decrees, claims for damages, compensation,
reasonable attorneys fees and costs and expenses of suit, and any and all
claims, demands or liabilities whatsoever of every nature, in law, equity or
otherwise (collectively, "Claims"), which the Releasors ever had, now have or
could ever have against the Releasees.
As used herein, the term "Releasees" shall mean:
(a) The Partnership and all of its past, present and future officers,
directors, subsidiaries, affiliates, agents, attorneys, servants and employees
and their personal representatives, heirs, successors and assigns;
(b) Commons and all of its past, present and future officers,
directors, subsidiaries, affiliates, agents, attorneys, servants and employees
and their personal representatives, heirs, successors and assigns; and
(c) COLP and all of its past, present and future officers, directors,
subsidiaries, affiliates, agents, attorneys, servants and employees and their
personal representatives, heirs, successors and assigns.
The foregoing release shall not apply to any Claims which the Releasors
may have had, now have, or could (in the future) have against CILP or MOR,
either directly or indirectly in their respective capacities (i) in the case of
CILP, as a partner of Commons and/or a partner of COLP, or (ii) in the case of
MOR, as a partner of COLP, it being Assignor's intention that the Releasors may
assert Claims against the Partnership, Commons or COLP to the extent, but only
to the extent, necessary in order to assert, prosecute and collect upon Claims
against CILP or MOR, in their respective capacities as a partner of Commons
and/or a partner of COLP. It is expressly agreed that the Claims described in
the immediately
B-5
<PAGE>
preceding sentence may be asserted, prosecuted and collected upon only to the
extent that the Partnership, Commons and COLP (as distinguished from CILP and
MOR) do not suffer any liabilities as a result thereof.
The provisions of this Section 4 shall survive the assignment made
hereby.
5. BINDING EFFECT. This Assignment shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors and
assigns.
6. CONSTRUCTION; DEFINITIONS. This Assignment shall be construed
according to the laws of the State of Maryland.
7. COUNTERPARTS. This Assignment may be executed in counterparts, which
taken together shall constitute one original instrument.
8. REPRESENTATIONS AND WARRANTIES. Assignor hereby represents and
warrants to Assignee that (a) Assignor has been duly organized and is validly
existing under the laws of the State of ; (b) the assignment effected hereby
has been duly authorized by Assignor; (c) Assignee owns the Partnership
Interest free and clear of all liens, claims and encumbrances; (d) together,
Assignor and Commons Office Research Partnership, a Maryland general
partnership, own one hundred percent (100%) of the partnership interests in
the Partnership. EXCEPT AS EXPRESSLY SET FORTH HEREIN, ASSIGNOR MAKES NO
REPRESENTATIONS OR WARRANTIES CONCERNING ASSIGNOR, THE PARTNERSHIP INTEREST,
THE PARTNERSHIP OR ANY PROPERTY OR ASSETS OWNED BY THE PARTNERSHIP.
Assignee hereby represents and warrants to Assignor that, as
of the date hereof, (1) Assignee is not an employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA, nor a plan as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (each of the
foregoing hereinafter referred to collectively as a "Plan"), (2) Assignee is not
a "party in interest" to a Plan as defined in Section 3(14) of ERISA, and (3)
the assets of Assignee do not constitute "plan assets" of one or more such Plans
within the meaning of Department of Labor Regulation Section 2510.3-101.
B-6
<PAGE>
DATED as of the day and year first above written.
ASSIGNOR: THE TRAVELERS CASUALTY AND SURETY COMPANY
By:
----------------------------------
Name:
Title:
ASSIGNEE:
------------------------------------------
By:
----------------------------------
Name:
Title:
The undersigned hereby consents to the above-described assignment.
COMMONS OFFICE RESEARCH PARTNERSHIP
By: Copley Investors Limited Partnership,
its general partner
By: Copley Management Partnership,
a Massachusetts general partnership, its
Managing General Partner
By: AEW Advisors, Inc., a
Massachusetts corporation, its
Managing General Partner
By:
------------------------
Name:
Title:
B-7
<PAGE>
EXHIBIT C-1
TENANT ESTOPPEL CERTIFICATE
THIS IS TO CERTIFY THAT:
1. The undersigned is the Lessee ("Tenant") under that certain
Lease (the "Lease") dated _______________ by and between
___________________ as Landlord ("Landlord"), and
_____________________________________, as Tenant, covering
those certain premises commonly known as
_____________________________________________________________,
(the "Premises") in the property known as
______________________________,
__________________________________________________ (the
"Property").
2. The Lease is in full force and effect and has not been
assigned, modified, supplemented, altered or amended in any
respect (except _____ as indicated following this sentence)
and is the only lease or agreement between the undersigned
and Landlord affecting the Premises. If none, state "none".
_________________________NONE______________________________.
3. The undersigned has accepted possession and now occupies the
Premises and is currently open for business. The improvements,
space and parking facilities, if any, required to be furnished
under the Lease have been completed and furnished and are
satisfactorily completed in all respects. All conditions of
the Lease to be performed by Landlord prior to the full
effectiveness of the Lease have been satisfied. Any required
payments or inducement from Landlord to Tenant have been made,
except _________________________________ (if none, so
indicate).
4. The undersigned has no knowledge of any event which with the
giving of notice, the passage of time or both would constitute
a default under the Lease on the part of Tenant or Landlord.
5. The lease term began _______________, and the current lease
term expires ______________. The fixed minimum rent presently
being paid is ____________________. All rentals, charges and
other obligations on the part of the undersigned under the
Lease have been paid to and including ______________, 19___.
No rental, other than for the current month, has been paid in
advance.
C-1
<PAGE>
6. In addition to the above-referenced fixed minimum rent, the
Tenant pays its pro-rata share of real estate taxes and
operating expenses [IN EXCESS OF DESCRIBE BASE IF APPLICABLE.]
7. There are no existing defenses which the undersigned has
against the enforcement of the Lease by Landlord. The
undersigned is entitled to no free rent nor any credits,
offsets or deductions in rent, nor other leasing concessions
except as follows:__________________________________________
8. The Lease contains, and the undersigned has, no outstanding
options or rights of first refusal to purchase the Premises or
any part thereof or the real property of which the Premises
are a part. As used in this paragraph, the term "options"
shall not include options to renew or extend the terms of the
Lease.
9. The amount of the security deposit presently held under the
Lease is $____________________ (if none, so indicate).
10. No actions, whether voluntary or otherwise, are pending
against the undersigned under the bankruptcy laws of the
United States or any state thereof.
11. This certification is made with the knowledge that it will be
relied upon in connection with financings and sales of the
Property and may be relied upon by the current and any future
Landlord of the Premises, any current or future holder of a
mortgage or deed of trust of the Property, and their
respective successors and assigns.
12. Upon completion please return to Landlord,
Commons Office Limited Partnership
c/o AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Attention: General Counsel
DATED this _____ day of _________________, 1999.
THIS ESTOPPEL MUST BE TENANT:
DATED WHEN SIGNED.
[Name of Tenant]
By:
------------------------
Name:
-------------
Its:
-------------
C-2
<PAGE>
EXHIBIT C-2
LANDLORD ESTOPPEL CERTIFICATE
THIS IS TO CERTIFY TO ____________ ("BUYER") THAT:
1. _______________ is the Lessee ("Tenant") under that certain
Lease (the "Lease") dated _______________ by and between
___________________ as Landlord ("Landlord"), and Tenant,
covering those certain premises commonly known as
___________________________________________________ (the
"Premises"), in _____________, ____________________ (the
"Property").
2. The Lease is in full force and effect and has not been
assigned, modified, supplemented, altered or amended in any
respect (except as indicated following this sentence) and is
the only lease or agreement between Tenant and Landlord
affecting the Premises. If none, state "none".
___________________________________________________________.
3. To the best of the undersigned's actual knowledge, Tenant has
accepted possession and now occupies the Premises and is
currently open for business. The improvements, space and
parking facilities, if any, required to be furnished under the
Lease by Landlord have been completed and furnished and are
satisfactorily completed in all respects. All conditions of
the Lease to be performed by Landlord prior to the full
effectiveness of the Lease have been satisfied. Any required
payment or inducement from Landlord to the Tenant have been
made, except ___________________________ (if none, so
indicate.)
4. The undersigned has no knowledge of any event which with the
giving of notice, the passage of time or both would constitute
a default under the Lease on the part of Tenant or Landlord.
5. The lease term began _______________, and the current lease
term expires ______________. The fixed minimum rent presently
being paid is ____________________. All rentals, charges and
other obligations on the part of the Tenant under the Lease
have been paid to and including ______________, 19___. No
rental, other than for the current month, has been paid in
advance.
C-3
<PAGE>
6. In addition to the above-referenced fixed minimum rent, the
Tenant pays its pro-rata share of real estate taxes and
operating expenses [IN EXCESS OF - DESCRIBE BASE, IF
APPLICABLE].
7. To the knowledge of the undersigned, there are no existing
defenses which Tenant has against the enforcement of the Lease
by Landlord. Tenant is entitled to no free rent nor any
credits, offsets or deductions in rent, nor other leasing
concessions except as follows: _____________________________
8. The Lease contains, and the Tenant has, no outstanding options
or rights of first refusal to purchase the Premises or any
part thereof or the real property of which the Premises are a
part. As used in this paragraph, the term "options" shall not
include options to renew or extend the terms of the Lease.
9. The amount of the security deposit presently held under the
Lease is $____________________________ (if none, so indicate).
10. To the knowledge of the undersigned, no actions, whether
voluntary or otherwise, are pending against Tenant under the
bankruptcy laws of the United States or any state thereof.
11. This certification is made with the knowledge that it will be
relied upon by the Buyer in connection with its acquisition of
property of which Premises are a part, and the lender
providing acquisition financing to Buyer. By its acceptance
hereof, Buyer and any such lender acknowledge and agree that
(i) the liability of the undersigned hereunder, and under that
certain Purchase and Sale Agreement between the undersigned
and Buyer dated ________________ (the "Purchase Agreement"),
and any other agreement, document, certificate or instrument
delivered by the undersigned to Buyer, or under any law
applicable to the Property or the transaction described in the
Purchase Agreement, shall be limited as provided in Section
9.4 of the Purchase Agreement; and (ii) the knowledge of the
undersigned shall be limited as provided in Section 3 of the
Purchase Agreement.
C-4
<PAGE>
DATED this _____ day of _________________, 199_.
THIS ESTOPPEL MUST BE
DATED WHEN SIGNED.
COPLEY INVESTORS LIMITED PARTNERSHIP,
a Delaware Limited Partnership
By: Copley Management Partnership,
a Massachusetts general partnership, its
Managing Partner
By: AEW Advisors, Inc., a
Massachusetts corporation, its
Managing General Partner
By:
---------------------------------
Name:
Title:
C-5
<PAGE>
EXHIBIT D
[See attached]
<PAGE>
SCHEDULE 1
LEASES
[See attached]
<PAGE>
SCHEDULE 2
CONTRACTS
[See attached]
<PAGE>
Exhibit 2.1.2
AMENDMENT AND REINSTATEMENT OF
PURCHASE AND SALE AGREEMENT
THIS AMENDMENT AND REINSTATEMENT OF PURCHASE AND SALE AGREEMENT (the
"AMENDMENT AND REINSTATEMENT") is made as of the 29th day of March, 1999, by and
between COPLEY INVESTORS LIMITED PARTNERSHIP, a limited partnership organized
under the laws of the State of Delaware ("CILP") and CORPORATE ACQUISITIONS,
INC., a Delaware corporation ("BUYER"), and is joined in by Anchor Title Company
of Columbia, Maryland (the "TITLE COMPANY"), M.O.R. Commons Limited Partnership
("MOR"), Corporate Office Properties, L.P. ("COP LP") and CILP/Commons Office
Limited Partnership, a limited partnership organized under the laws of the State
of Delaware ("COLP").
WHEREAS, CILP and Buyer have entered into that certain Purchase and
Sale Agreement dated February 26, 1999 (the "PURCHASE AND SALE AGREEMENT")
pursuant to which, INTER ALIA, CILP agreed to sell and Buyer agreed to purchase
CILP's partnership interests in Commons Office Research Partnership and COLP,
respectively;
WHEREAS, pursuant to that certain letter from Roger A. Waesche, Jr. to
AEW Capital Management dated March 3, 1999 (the "TERMINATION NOTICE"), Buyer
exercised its right to terminate the Purchase and Sale Agreement; and
WHEREAS, the parties hereto wish to reinstate the Purchase and Sale
Agreement, subject however to the amendments set forth below.
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Unless otherwise specifically defined herein, all capitalized terms
shall have the meanings set forth in the Purchase and Sale Agreement.
2. Notwithstanding anything to the contrary contained in the Purchase
and Sale Agreement, the Purchase Price (as that term is defined in the Purchase
and Sale Agreement) shall be reduced by Three Hundred Thousand Dollars
($300,000.00) so that the Purchase Price shall be the sum of Sixteen Million
Eight Hundred Forty-Three Thousand Five Hundred Forty-Five and 60/100 Dollars
($16,843,545.60) and the amount of cash held by the Partnership on the Closing
Date; or, if Closing occurs pursuant to the terms of Section 14.14 of the
Purchase and Sale Agreement, the Purchase Price shall be Twenty-Five Million
Seven Hundred Thousand and 00/100 Dollars ($25,700,000.00). The adjustment to
the Purchase Price depending upon the date on which Closing occurs, referred to
in Sections 2(a), 2(b) and 2(c) of the Purchase and Sale Agreement, shall no
longer apply, and, accordingly, Sections 2(b) and 2(c) are hereby deleted in
their entirety.
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3. CILP acknowledges receipt of written notice (the "TITLE OBJECTION")
from Buyer of Buyer's disapproval of certain matters disclosed in its title
report, which Title Objection was dated March 1, 1999 and was received on March
2, 1999. With respect to the matters set forth in the Title Objection, on or
before Closing, CILP shall do the following:
a. CILP shall use diligent efforts to cause the current owner
of Lot 5 (the "Lot 5 Owner") to (i) accept title to so-called "Lot 11,"
which is a storm water management area serving Lot 5; (ii) with respect
to Mellon Road, enter into an easement agreement, substantially in the
form entered into for the benefit of Northwest Airlines with respect to
Lot 8 (a copy of which has previously been delivered to Buyer), and
otherwise in form reasonably acceptable to Seller, Buyer and the Lot 5
Owner, providing for, among other things, a sharing of maintenance
expenses for Mellon Road; and (iii) either consent to the fence
blocking the Lot 5 Owner's access easement to Lot 5 from Lot 3, or
terminate such access easement. Seller shall be under no obligation to
accomplish any of the foregoing on or before Closing, and it shall not
be a condition of Buyer's obligation to proceed to closing that any of
the foregoing be accomplished.
b. CILP shall execute and deliver for the benefit of the Title
Company such affidavits and indemnities, in form and substance
reasonably acceptable to CILP, in order to permit the Title Company to
issue a non-imputation endorsement to Buyer's title policy.
c. CILP shall cause to be attached to the Certificate of
Compliance with respect to the Declaration of Covenants (a copy of
which has previously been delivered to Buyer) an acknowledgement,
permitting the Certificate to be recorded.
d. CILP shall provide Buyer with a copy of a Termination of
Agreement, pursuant to which Hardee's Food Systems has waived its right
to purchase Lot 2.
e. CILP shall provide a letter to Buyer that CILP is not aware
of any outstanding bonds or letters of credit except with respect to
grading permits for Lots 6 and 7 of the Property currently in effect.
CILP has been informed by the county that the grading on Lots 6 and 7
has been satisfactorily completed, and CILP shall cause the letters of
credit with respect to such grading permits to be released as soon as
reasonably practicable after Closing.
Subject to Seller's fulfillment of its obligations set forth above in
this Paragraph 3, Buyer accepts title to the Property in its current condition,
waives all objections to title set forth in the Title Objection not addressed in
this Paragraph 3, and waives any
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objections to title which were not described in the Title Objection.
4. Buyer hereby acknowledges that both the First Inspection Period and
the Second Inspection Period have expired. Buyer further acknowledges that,
subject to Paragraph 3 above, it has waived any objections it may have had to
any and all aspects of the Property, and that the Property is fully satisfactory
to Buyer in all respects. Consequently, Buyer shall have no right to terminate
the Purchase and Sale Agreement except for Buyer's right to terminate the
Purchase and Sale Agreement under Section 4.2(d) if CILP fails to perform its
obligations set forth in Paragraph 3 above.
5. If the First Deposit has been returned to Buyer, Buyer shall,
concurrent with the execution and delivery of this Amendment and Reinstatement,
redeliver the First Deposit to the Title Company.
6. Subject to the amendments set forth in paragraphs 2 through 5 above,
the parties hereto hereby reinstate the Purchase and Sale Agreement, so that the
Purchase and Sale Agreement shall continue in full force and effect,
notwithstanding the Termination Notice, as if the Termination Notice had never
been given.
7. The parties hereto agree that the Termination Notice never had any
effect upon the validity or enforceability of that certain Right of Entry
Agreement dated February 26, 1999, which Right of Entry Agreement has continued
and still continues in full force and effect.
8. CILP, COLP, Buyer, COP LP and MOR each hereby acknowledge that, for
purposes of the Purchase and Sale Agreement, the amount of the Debt as of the
Closing, regardless of the date upon which the Closing occurs, shall be deemed
to be Eight Million Eight Hundred Fifty-Six Thousand Four Hundred Fifty-Four and
40/100 Dollars ($8,856,454.40).
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IN WITNESS WHEREOF, the parties have executed and delivered this
Amendment and Reinstatement as of the date first written above.
CILP: COPLEY INVESTORS LIMITED PARTNERSHIP,
a Delaware Limited Partnership
By: Copley Management Partnership,
a Massachusetts general partnership, its
Managing Partner
By: AEW Advisors, Inc., a Massachusetts
corporation, its Managing General
Partner
By: /s/ Alison Husid Cutler
-------------------------------
Name:Alison Husid Cutler
Title:Vice President
BUYER: CORPORATE ACQUISITIONS, INC.,
a Delaware corporation
By: /s/ Roger A. Waesche Jr.
-------------------------------------
Name: ROGER A. WAESCHE JR.
Title: Sr. V.P.
TITLE COMPANY: ANCHOR TITLE COMPANY,
a Maryland corporation
By: /s/ M. Charlotte Powel
-------------------------------------
Name: M. Charlotte Powel
Title: President
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MOR: M.O.R. COMMONS LIMITED PARTNERSHIP
By: RA & DM, Inc., its general partner
By: /s/ Richard Alter
----------------------------
Name: Richard Alter
Title: President
COP LP: CORPORATE OFFICE PROPERTIES, L.P.
By: Corporate Office Properties Trust,
its general partner
By: /s/ Roger A. Waesche Jr.
----------------------------
Name: ROGER A. WAESCHE JR.
Title: Sr. V.P. and CFO
COLP: CILP/COMMONS OFFICE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Copley Investors limited Partnership, a
Delaware limited partnership, its Managing
General Partner
By: Copley Management Partnership,
a Massachusetts general partnership, its
Managing General Partner
By: AEW Advisors, Inc., a
Massachusetts corporation, its
Managing General Partner
By: /s/ Alison Husid Cutler
-------------------------
Name: Alison Husid Cutler
Title: Vice President
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Exhibit 2.1.3
THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT
(POST-CLOSING AGREEMENT)
THIS THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT (POST- CLOSING
AGREEMENT) is made and entered into this 28th day of April, 1999, between COPLEY
INVESTORS LIMITED PARTNERSHIP ("CILP"), CORPORATE OFFICE PROPERTIES, L.P. ("COP
LP"), COPT COMMONS LLC ("COPT Commons") and ANCHOR TITLE COMPANY ("Escrow
Agent").
RECITALS:
A. CILP and Corporate Acquisitions, Inc. are parties to that certain
Purchase and Sale Agreement dated February 26, 1999 regarding the sale by CILP
of its partnership interests in Commons Office Research Partnership (the
"Partnership") and in CILP/Commons Office Limited Partnership ("COLP") (as
amended, the "Purchase and Sale Agreement").
B. COP LP and COPT Commons (collectively, "Buyer") are the assignees of
the right and interest of Corporate Acquisitions, Inc. in the above-referenced
Purchase and Sale Agreement.
C. On April 28, 1999, CILP as a partner of COLP sold or assigned its
interest in COLP to COPT Commons.
D. On April 28, 1999, CILP sold or assigned its interest in the
Partnership, the owner of certain improved real property described in the
Purchase and Sale Agreement (the "Property"), to COP LP.
E. The parties hereto have agreed to perform certain post-closing
obligations as more specifically described herein.
NOW, THEREFORE, in consideration of the premises, mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:
1. Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Purchase and Sale Agreement.
2. COLLECTION OF PERCENTAGE RENT FROM NOODLES, INC. DBA MAMA LUCIA.
Pursuant to Section 7.7 of the Purchase and Sale Agreement, it was agreed that
(i) Buyer would use reasonable efforts to collect, on CILP's behalf, rents
accrued and unpaid on the Closing Date; and (ii) if, within sixty (60) days of
the Closing Date, CILP has not received all accrued and unpaid rents due as of
the Closing Date, CILP would be entitled to collect such accrued and unpaid
rents directly against the defaulting tenant. As of the Closing Date, Noodles,
Inc. dba Mama Lucia ("Mama Lucia"), a tenant of the Property, is in arrears in
percentage rent payments in the approximate amount of Seven Thousand Dollars
($7,000.00). CILP hereby agrees that, for a period of four (4) months following
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the Closing Date, it shall not take any action to collect the rents accrued but
unpaid by Mama Lucia as of the Closing Date. During said four (4) month period,
Buyer shall use reasonable efforts to collect such rents for the benefit of CILP
in accordance with Section 7.7 of the Purchase and Sale Agreement.
3. PAYMENT OF HARDEES' CLAIM. Hardees Food Systems, a former tenant of
the Property ("Hardees"), has claimed that, prior to the Closing Date, it paid
to the Partnership, as landlord, Hardees' share of real estate taxes on the
Property (as such share was defined in Hardees' lease) for the 1998-1999 tax
year (the "Hardees' 1998-1999 Tax Share"), notwithstanding the fact that the
term of Hardees' lease terminated prior to the expiration of such tax year.
Prior to the Closing Date, Hardees has claimed that it is owed a refund for the
portion of the Hardees' 1998-1999 Tax Share paid by Hardees which is
attributable to the period between the termination of Hardees' lease and the end
of the 1998-1999 tax year (the "Claimed Amount"). CILP hereby agrees to promptly
pay the Claimed Amount to Hardees and to provide Buyer with reasonable evidence
of such payment. CILP agrees that it shall not make any claim against Buyer or
the Partnership for the Claimed Amount so paid by CILP to Hardees.
4. ESCROW.
(a) CILP has delivered to Escrow Agent the sum of Twenty-Five
Thousand Dollars ($25,000.00) to be held in escrow and disbursed in accordance
with the terms of this Paragraph 4. CILP's Tax I.D. Number is 04-333-8796.
Escrow Agent shall deposit the Escrow Funds in an interest bearing escrow or
trust account for the benefit of CILP, COP LP and COPT Commons. All funds
deposited hereunder, together with all interest earned thereon, shall
hereinafter be referred to as the "Escrow Funds".
(b) For purposes of this Paragraph 4, the following terms
shall have the following meanings:
(i) "Overpayments" shall mean the total overpayments
in operating expenses, real estate taxes and percentage rent made by tenants of
the Property during the 1998 operating year.
(ii) "Underpayments" shall mean the total
underpayments in operating expenses, real estate taxes and percentage rent made
by tenants of the Property during the 1998 operating year.
(iii) "Net Overpayments" shall mean the amount, if
any, by which the Overpayments exceed the Underpayments.
(iv) "Estimated Net Overpayments" shall mean the
amount of Net Overpayments estimated by CILP and Buyer as of the Closing Date,
and set forth on the closing
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statement, a copy of which is attached hereto as EXHIBIT A.
(v) "Uncredited Net Overpayments" shall mean the
amount, if any, by which the Net Overpayments set forth on the Approved
Statement (as hereinafter defined) exceed the Estimated Net Overpayments.
(c) CILP has deposited the Escrow Funds with Escrow Agent for
the purpose of paying to COP LP the Uncredited Net Overpayments. CILP shall
prepare or cause to be prepared a statement identifying the amount of the Net
Overpayments, if any, together with such supporting documentation as COP LP
shall reasonably require (the "Statement"), and shall submit the same to COP LP
for its approval within sixty (60) days of the date hereof, which approval shall
not be unreasonably withheld, conditioned or delayed. The parties hereto agree
that it shall be unreasonable for COP LP to disapprove of the Statement on the
grounds that the Net Overpayments are not determined with certainty unless it
was reasonably possible for CILP to make such determination with the level of
certainty sought by COP LP during the aforesaid sixty (60) day period. CILP
shall simultaneously deliver a copy of the Statement to Escrow Agent. In the
event that the Statement is not submitted to COP LP within sixty (60) days of
the date hereof, all of the Escrow Funds shall be delivered by Escrow Agent to
COP LP.
(d) If the Statement, as reasonably approved by COP LP (the
"Approved Statement"), indicates that there are Uncredited Net Overpayments,
then COP LP shall be entitled to the Escrow Funds to the extent of such
Uncredited Net Overpayments, and CILP shall be entitled to the remainder of the
Escrow Funds. If the Approved Statement indicates that there are Uncredited Net
Overpayments which exceed the amount of the Escrow Funds, then COP LP shall be
entitled to all of the Escrow Funds. If the Approved Statement indicates that
there are no Uncredited Net Overpayments, then CILP shall be entitled to all of
the Escrow Funds.
(e) Notwithstanding the provisions of paragraph (d) above, (i)
Escrow Agent shall not make any disbursement of any of the Escrow Funds until
five (5) business days after the Statement is provided to COP LP; and (ii) if
Escrow Agent receives written objection to the Statement within such five (5)
business day period, then subject to paragraph (g) below, Escrow Agent shall not
make any disbursement of the Escrow Funds unless and until Escrow Agent receives
joint written instructions from CILP and COP LP.
(f) In performing any of its duties hereunder, Escrow Agent
shall not incur any liability to anyone for any damages, losses or expenses
except for willful default or negligence, and it shall accordingly not incur any
such liability with respect to (i) any action taken or omitted in good faith
upon advice of its counsel given with respect to any questions relating to the
duties and responsibilities of the Escrow Agent under this Agreement, or (ii)
any action taken or omitted in reliance upon any instrument, including the
written notices provided for herein, not only as to its provisions, but also as
to the truth and accuracy of any information contained therein which the Escrow
Agent shall in good faith believe to be genuine, to have been signed or
presented by a proper
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person or persons, and to conform with the provisions of this Agreement. The
parties hereby agree, jointly and severally, to indemnify and hold harmless the
Escrow Agent against any and all losses, claims, damages, liabilities and
expenses, including reasonable costs of investigation and counsel fees and
disbursements, which may be imposed upon the Escrow Agent or incurred by the
Escrow Agent hereunder or the performance of his duties hereunder, including any
litigation arising from this Agreement or involving the subject matter hereof or
the Escrow Funds.
(g) In the event of a dispute between the parties hereto, the
Escrow Agent shall be entitled to tender into the registry or custody of any
court of competent jurisdiction the money that is in dispute, together with such
legal pleadings as Escrow Agent deems appropriate. Any such legal action may be
brought in such court as Escrow Agent shall determine to have jurisdiction
thereof.
5. ADDITIONAL REPRESENTATION OF CILP. The following shall be added to
the Purchase and Sale Agreement as a new Section 3.4(p):
To the best knowledge of CILP, as of the Closing Date, the
Partnership does not owe any sums to any contractors, vendors or
tenants of the Property as a result of any tenant improvement work
performed at the Property.
6. EVIDENCE OF PERMITS. For a period of sixty (60) days following the
date hereof, CILP shall use, or shall cause its agents to use, at CILP's sole
cost and expense, reasonably diligent efforts to obtain evidence, reasonably
satisfactory to COP LP, that the Property has obtained all certificates of
occupancy, building permits and/or use and occupancy permits required under
applicable county law. The parties hereto specifically agree that, without
limitation, a letter from the Department of Planning and Code Enforcement,
substantially similar to the form of letter attached hereto as EXHIBIT B, shall
constitute such reasonably satisfactory evidence. The parties hereto further
agree that, for purposes of this paragraph 6, "reasonably diligent efforts"
shall not include any efforts to correct or cure any violation of any applicable
law, regulation, ordinance, order or permit, and CILP shall have no obligation
to undertake any such cure. COP LP and COPT Commons agree to cooperate with CILP
in obtaining reasonably satisfactory evidence, to the extent reasonably
necessary, including without limitation, causing the owner to join in any
request to the county for a letter similar to that attached hereto as Exhibit B,
if such joinder is required. Provided CILP uses reasonably diligent efforts to
obtain the aforesaid evidence during such sixty (60) day period, after the
expiration of such sixty (60) day period, CILP shall have no further obligations
hereunder.
7. SAIC. Buyer has been provided with a Tenant Estoppel Certificate
from Science Applications International Corporation ("SAIC") dated April 27,
1999. In said estoppel certificate, SAIC claims to have paid monthly base rent
through May 31, 1999. CILP has not yet received the rent payment from SAIC for
the month of May, 1999. CILP agrees to forward said payment to Buyer promptly
after it receives the same.
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8. Except as expressly amended hereby, the parties hereby ratify and
affirm the terms of the Purchase and Sale Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
as of the day and year first above-written.
COPLEY INVESTORS LIMITED PARTNERSHIP
BY: Copley Management Partnership
BY: AEW Advisors, Inc.
BY: /s/ Pamela J. Herbst
--------------------------------------
Name:Pamela J. Herbst
Title: President
CORPORATE OFFICE PROPERTIES, L.P.
a Delaware limited partnership
BY: Corporate Office Properties Trust,
General Partner
Theresa L. Moore Zseleczky BY: /s/ John Harris Gurley
- -------------------------- --------------------------------------
John Harris Gurley, Vice President
COPT COMMONS LLC
Theresa L. Moore Zseleczky BY: /s/ John Harris Gurley
- -------------------------- --------------------------------------
Name: John Harris Gurley
Title: Vice President
ANCHOR TITLE COMPANY
a Maryland corporation
Theresa L. Moore Zseleczky BY: /s/ MC Powel
- -------------------------- --------------------------------------
Printed Name: M. Charlotte Powel
----------------------------
Title: President
-----------------------------------
Date: 4/28/99
------------------------------------
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