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): March 27, 1997
BEACON PROPERTIES CORPORATION
(Exact name of Registrant as specified in its Charter)
Maryland
(State of Incorporation)
1-12926 04-3224258
(Commission File Number) (IRS Employer Id. Number)
50 Rowes Wharf
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
(617) 330-1400
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
Beacon Properties Corporation ("the Company") has entered into
contracts to purchase three office properties.
Westbrook Corporate Center:
In March 1997, the Company entered into a contract to acquire a
five-building office complex located in Westchester (suburban
Chicago), Illinois (the "Westbrook Corporate Center"). The purchase price of the
property is approximately $182.1 million, consisting of the expected assumption
of approximately $106 million of mortgage debt presently being negotiated by the
seller with their existing lender, the issuance of approximately $50 million of
Units (estimated to be 1,428,571 units valued at $35.00 each) and approximately
$26.1 million in cash. The sellers of this property are Westbrook Corporate
Center Associates, Westbrook Corporate Center IV Associates Limited Partnership
and Westbrook Corporate Center V Associates Limited Partnership, all of which
are not related to the Company, its affiliates or directors. The mortgage lender
is expected to be Aetna Life Insurance Company and the loan is expected to have
a 10 year term with interest at approximately 8%. The Company estimates that the
aggregate purchase price for the Westbrook Corporate Center is approximately 90%
of replacement cost. In addition, the Company has an option to purchase, and the
seller has a right to sell to the Company, a 10-acre parcel of land suitable for
development which is contiguous to the Westbrook Corporate Center, for $3.5
million within twelve months of the acquisition.
Westbrook Corporate Center consists of five 10-story office buildings
comprising an aggregate of approximately 1.1 million square feet. The buildings
each contain approximately 220,000 square feet and were developed between 1985
and 1996. Major tenants in the Westbrook Corporate Center include Navistar
(approximately 100,000 square feet), Ameritech (approximately 70,000 square
feet), Peoplesoft (approximately 50,000 square feet), Premier Health
(approximately 45,000 square feet) and SAP America (approximately 45,000 square
feet). The aggregate occupancy rate for the Westbrook Corporate Center as of
December 31, 1996 was approximately 90%. Nearly all of the vacancy at the
property is attributable to the newest building in the complex which opened in
February 1996.
10880 Wilshire Boulevard:
In March 1997, the Company entered into a contract to acquire the
leasehold interest in 10880 Wilshire Boulevard located in Westwood, California
from 10880 Property Corporation, which is not related to the Company, its
affiliates or directors. In connection with the acquisition, the Company will
also acquire the right to purchase the fee interest in the land at fair market
value in 2001. The Company will acquire the leasehold interest in 10880 Wilshire
Boulevard for aggregate consideration of approximately $102 million in cash,
approximately 75% of replacement cost, after giving effect to the leasehold.
Following the consummation of the acquisition, the Company intends to invest
approximately $2.2 million in capital improvements in the property.
2
<PAGE>
The 10880 Wilshire Boulevard property was built in 1970 and has
undergone approximately $34 million of capital improvements since 1992. The
property consists of approximately 531,000 square feet in a 23-story office
building. This property is one of the largest buildings in the Westwood
submarket of the West Los Angeles Office Market and given the current
constraints on development, this property cannot be duplicated in its market.
The property is located near Interstates 405 and 10 with easy access to other
West Los Angeles markets, downtown, the San Fernando Valley and the Los Angeles
airport. In addition, the property, which meets current earthquake construction
codes, is located in a business district, adjacent to other Class A office
buildings, Westwood Village, a retail area, and the UCLA campus. Major tenants
in 10880 Wilshire Boulevard include Showtime/Viacom (approximately 68,000 square
feet), Corporate Media (approximately 64,000 square feet), Oppenheimer
(approximately 50,000 square feet) and Pardee Construction (approximately 33,000
square feet). The Company currently intends to retain the existing property
manager of 10880 Wilshire Boulevard following the consummation of the
acquisition to facilitate the leasing and management of the property. As of
December 31, 1996, the occupancy rate for 10880 Wilshire Boulevard was
approximately 85%.
Centerpointe I and II:
In March 1997, the Company entered into a contract to acquire two
office properties located in Fairfax County, Virginia ("Centerpointe I and II")
from Joshua Realty Corporation (a General Electric Company affiliate). Dale
Frey, a Director of the Company since January 1997, is a former Director of
General Electric Investment Corporation and Vice President of General Electric
Company. The aggregate consideration is approximately $55 million consisting of
$25 million in cash and the assumption of approximately $30 million of mortgage
debt. The mortgage lender is CIGNA and the loan matures on February 28, 2001,
with interest at 7.32% and principal amortization commencing on February 1, 1999
based on a 25 year amortization schedule. The Company estimates that the
aggregate purchase price for Centerpointe I and II is approximately 75% of
replacement cost.
The Centerpointe property contains approximately 409,000 square feet
and consists of (i) Centerpointe I, an 11-story office building built in 1988
and comprising approximately 204,500 square feet and (ii) Centerpointe II, an
11-story office building built in 1990 comprising approximately 204,500 square
feet. The sole tenant at Centerpointe I is American Management Systems, which
also occupies approximately 64,000 square feet in Centerpointe II. Other major
tenants at Centerpointe II include Fujitsu (approximately 19,000 square feet)
and Liberty Mutual Insurance Company (approximately 15,000 square feet). As of
December 31, 1996, the aggregate occupancy rate for Centerpointe I and II was
approximately 100%.
In connection with the acquisition of Centerpointe I and II, the
Company has also entered into a option/put arrangement with the sellers of
Centerpointe I and II on an adjacent 7.8 acre parcel of land suitable for
development.
3
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements Under Rule 3-14 of Regulation S-X
Statement of Excess of Revenues over Specific Operating Expenses of
10880 Wilshire Boulevard for the year ended December 31, 1996
Statement of Excess of Revenues over Specific Operating Expenses of
Centerpointe for the year ended December 31, 1996
Statement of Excess of Revenues over Specific Operating Expenses of
Westbrook Corporate Center for the year ended December 31, 1996
(b) Pro Forma Financial Statements
Pro Forma Condensed Consolidated Balance Sheet as of December 31,
1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Year
Ended December 31, 1996 (Unaudited)
(c) Exhibits
2.1 Agreement of Purchase and Sale and Joint Escrow Instructions
between 10880 Property Corporation as seller and Beacon Properties,
L.P. as buyer dated March 19, 1997 (a)
2.2 Agreement of Sale dated March 26, 1997 between Joshua Realty
Corporation and Beacon Properties, L.P.
2.3 Contribution Agreement dated March 20, 1997 between Westbrook
Corporate Center Associates, Westbrook Corporate Center IV Associates
Limited Partnership and Westbrook Corporate Center V Associates
Limited Partnership, Illinois limited partnerships which are,
respectively, the sole beneficiaries of the land trusts which own
title to the Real Property and Beacon Properties, L.P.
23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
- ----------
(a) To be filed by amendment
4
<PAGE>
BEACON PROPERTIES CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BEACON PROPERTIES CORPORATION
/s/ Robert J. Perriello
-----------------------------------
Robert J. Perriello,
Senior Vice President,
and Chief Financial Officer
Date: March 27, 1997
5
<PAGE>
10880 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of 10880 Wilshire Boulevard in Westwood, California (the
"Property") for the year ended December 31, 1996. This financial statement is
the responsibility of the Property's management. Our responsibility is to
express an opinion on this financial 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 statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income and
expenses which would not be comparable with those resulting from the operations
of the Property after acquisition by Beacon Properties Corporation. The
accompanying financial statement was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of income and expenses described in Note 2) of 10880 Wilshire
Boulevard in Westwood, California, for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 11, 1997
F-2
<PAGE>
10880 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
<TABLE>
<CAPTION>
For the Year
Ended
December 31, 1996
-----------------
<S> <C>
Revenues:
Base rent $ 8,687,295
Recoveries from tenants 80,246
Parking income, net of management fees 991,828
Other income 314,125
-----------
10,073,494
-----------
Specific operating expenses (Note 2):
Utilities 980,518
Janitorial and cleaning 92,112
Security 331,954
General and administrative 401,004
Management fee 319,183
Repairs and maintenance 1,271,907
Insurance 101,671
Property taxes 1,042,614
Landscaping 76,811
Ground lease 210,000
-----------
4,827,774
-----------
Excess of revenues over specific operating expenses $ 5,245,720
===========
</TABLE>
The accompanying notes are an integral part of the financial statement.
F-3
<PAGE>
10880 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
10880 Wilshire Boulevard (the "Property") is located in Westwood,
California and consists of one office building encompassing
approximately 534,000 square feet. Beacon Properties Corporation
intends to acquire the entire leasehold interest in the Property.
Rental Revenues
Rental income is recognized on the straight-line method over the terms
of the related leases. The excess of recognized rentals over amounts
due pursuant to lease terms is recorded as accrued rent. The impact of
the straight-line rent adjustment increased revenues by approximately
$1,750,000 for the year ended December 31, 1996.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific
operating expenses is presented on the accrual basis. This statement
has been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, the statement
excludes certain historical income and expenses not comparable to the
operations of the property after acquisition, such as interest income
and amortization.
Continued
F-4
<PAGE>
10880 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES, CONTINUED
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate
tax reimbursement clauses, operating expense reimbursement clauses and
renewal options. Minimum lease payments to be received during the next
five years for noncancelable operating leases in effect at December 31,
1996 are approximately as follows:
Year Ending December 31,
1997 $ 8,614,000
1998 11,333,000
1999 11,770,000
2000 11,288,000
2001 9,438,000
Thereafter 9,427,000
As of December 31, 1996, three tenants occupied approximately 34% of
leasable square feet and represented 16% of total 1996 base revenues.
4. Ground Lease Commitment:
The property is subject to a ground lease expiring in 2068. The lease
provides for minimum rental payments of $210,000 per annum. At
specified dates as provided for in the lease, annual rent payable is
subject to adjustment at the greater of $210,000 or 7% of appraised
market value of the property, as defined.
The lessee has an option to buy out the lease on August 1, 2001 and pay
the lessor for the land at an amount based on fair market value, as
defined.
The future minimum commitments under the ground lease are approximately
as follows:
1997 $ 210,000
1998 210,000
1999 210,000
2000 210,000
2001 210,000
Thereafter 13,895,000
F-5
<PAGE>
CENTERPOINTE
FAIRFAX, VIRGINIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
F-6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of Centerpointe in Fairfax, Virginia (the "Properties") for
the year ended December 31, 1996. This financial statement is the responsibility
of the Properties' management. Our responsibility is to express an opinion on
this financial 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 statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income and
expenses which would not be comparable with those resulting from the operations
of the Properties after acquisition by Beacon Properties Corporation. The
accompanying financial statement was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the Properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of income and expenses described in Note 2) of Centerpointe in
Fairfax, Virginia, for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 18, 1997
F-7
<PAGE>
CENTERPOINTE
FAIRFAX, VIRGINIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
<TABLE>
<CAPTION>
For the Year
Ended
December 31, 1996
-----------------
<S> <C>
Revenues:
Base rent $ 7,293,132
Recoveries from tenants 577,788
Other income 98,827
-----------
7,969,747
-----------
Specific operating expenses (Note 2):
Mortgage interest (Note 4) 1,914,230
Utilities 563,917
Janitorial and cleaning 466,366
Security 106,847
General and administrative 179,771
Repairs and maintenance 505,785
Insurance 37,906
Property taxes 497,166
Landscaping 59,255
-----------
4,331,243
-----------
Excess of revenues over specific operating expenses $ 3,638,504
===========
</TABLE>
The accompanying notes are an integral part of the financial statement.
F-8
<PAGE>
CENTERPOINTE
FAIRFAX, VIRGINIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
Centerpointe (the "Properties") is an office portfolio located in
Fairfax, Virginia consisting of two office buildings and encompassing
approximately 427,000 square feet. Beacon Properties Corporation
intends to acquire the entire fee interest in the Properties.
Rental Revenues
Rental income is recognized on the straight-line method over the terms
of the related leases. The excess of recognized rentals over amounts
due pursuant to lease terms is recorded as accrued rent. The impact of
the straight-line rent adjustment increased revenues by approximately
$491,000 for the year ended December 31, 1996.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific
operating expenses is presented on the accrual basis. This statement
has been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, the statement
excludes certain historical income and expenses not comparable to the
operations of the property after acquisition, such as interest income,
management fees, and amortization.
Continued
F-9
<PAGE>
CENTERPOINTE
FAIRFAX, VIRGINIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES, CONTINUED
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate
tax reimbursement clauses, operating expense reimbursement clauses and
renewal options. Minimum lease payments to be received during the next
five years for noncancelable operating leases in effect at December 31,
1996 are approximately as follows:
Year Ending December 31,
1997 $ 5,881,000
1998 5,495,000
1999 5,256,000
2000 5,030,000
2001 5,033,000
Thereafter 29,413,000
As of December 31, 1996, one tenant occupied approximately 65% of
leasable square feet and represented 61% of total 1996 base revenues.
4. Mortgage Note:
The mortgage note in the amount of $30,000,000, requires interest only
monthly payments of $183,000 through December 1, 1998. Beginning on
January 1, 1999, the note requires monthly installments of principal
and interest of $218,197. The note bears interest at 7.32% and is due
on February 28, 2001. The note is collaterized by the property and
assignment of leases.
Principal payments due on the mortgage note during the next five years
are approximately as follows:
1997 -0-
1998 -0-
1999 437,000
2000 470,000
2001 29,039,000
F-10
<PAGE>
WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
F-11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of Westbrook Corporate Center in Westchester, Illinois (the
"Properties") for the year ended December 31, 1996. This financial statement is
the responsibility of the Properties' management. Our responsibility is to
express an opinion on this financial 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 statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income and
expenses which would not be comparable with those resulting from the operations
of the Properties after acquisition by Beacon Properties Corporation. The
accompanying financial statement was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the Properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of income and expenses described in Note 2) of Westbrook Corporate
Center in Westchester, Illinois for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 21, 1997
F-12
<PAGE>
WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Year
Ended
December 31, 1996
-----------------
Revenues:
Base rent $21,029,383
Recoveries from tenants 1,805,660
Other income 135,933
--------------
22,970,976
--------------
Specific operating expenses (Note 2):
Utilities 1,351,852
Janitorial and cleaning 1,176,162
Security 219,080
General and administrative 207,959
Repairs and maintenance 1,306,547
Insurance 140,967
Property taxes 3,112,555
Landscaping 204,898
--------------
7,720,020
--------------
Excess of revenues over specific operating expenses $15,250,956
==============
The accompanying notes are an integral part of the financial statement.
F-13
<PAGE>
WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
------------------------------------------------
Description of Properties
Westbrook Corporate Center (the "Properties") is an office complex
located in Westchester, Illinois consisting of five interconnected
ten-story office towers encompassing approximately 1,102,000 square
feet. Beacon Properties Corporation intends to acquire the entire fee
interest in the Properties.
Rental Revenues
Rental income is recognized on the straight-line method over the terms
of the related leases. The excess of recognized rentals over amounts
due pursuant to lease terms is recorded as accrued rent. The impact
of the straight-line rent adjustment decreased revenues by
approximately $1,600,000 for the year ended December 31, 1996.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Basis of Accounting:
-------------------
The accompanying statement of excess of revenues over specific
operating expenses is presented on the accrual basis. This statement
has been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, the statement
excludes certain historical income and expenses not comparable to the
operations of the property after acquisition, such as interest
income, management fees, depreciation, amortization and interest
expense.
Continued
F-14
<PAGE>
WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES, CONTINUED
3. Description of Leasing Arrangements:
-----------------------------------
The commercial and office space is leased to tenants under leases
with terms that vary in length. Certain of the leases contain real
estate tax reimbursement clauses, operating expense reimbursement
clauses and renewal options. Minimum lease payments to be received
during the next five years for noncancelable operating leases in
effect at December 31, 1996 are approximately as follows:
Year Ending December 31,
------------------------
1997 $ 23,329,000
1998 21,978,000
1999 19,607,000
2000 16,648,000
2001 9,246,000
Thereafter 13,883,000
As of December 31, 1996, one tenant occupied approximately 9% of
leaseable square feet and represented 12% of total 1996 base revenues.
F-15
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma Condensed Consolidated Balance Sheet of
Beacon Properties Corporation (the "Company") as of December 31, 1996, is
presented as if the 10880 Wilshire Boulevard, Centerpointe and Westbrook
Corporate Center properties had been acquired as of December 31, 1996.
Additionally, the Company's proposed, 7,000,000 share, common stock offering
($35.00 per share) and related repayment of the Credit Facility had occurred as
of December 31, 1996.
The pro forma Condensed Consolidated Statements of Operations for the
year ended December 31, 1996 is presented as if the acquisition of the
Properties acquired from January 1, 1996 to December 31, 1996 (as more fully
described below), the closing of the MetLife Mortgage loan, the Company's common
stock offerings from January 1, 1996 to December 31, 1996 (as more fully
described below) and the Company's proposed common stock offering had occurred
as of January 1, 1996. Furthermore, the Company qualified as a REIT, distributed
all of its taxable income and, therefore, incurred no income tax expense during
the period.
In management's opinion, all adjustments necessary to reflect the above
discussed transactions have been made. The unaudited pro forma Condensed
Consolidated Balance Sheet and Statement of Operations are not necessarily
indicative of what actual results of operations of the Company would have been
for the period, nor does it purport to represent the Company's results of
operations for future periods.
Acquisitions included in pro forma:
<TABLE>
<CAPTION>
Rentable Year Built/ Date of
Property Name Location Sq Ft Renovated Acquisition
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 Acquisitions
Perimeter Center Atlanta, GA 3,302,000 1970-1989 02/15/96
New York Life Portfolio Chicago, IL and Washington, D.C. 1,012,000 1984-1986 08/16/96
Fairfax County Portfolio McLean, VA and Herndon, VA 550,000 1981-1988 09/05/96
Rosslyn Virginia Portfolio Rosslyn, VA 666,000 1974-1980 10/18/96
New England Executive Park Burlington, MA 817,000 1970-1985 11/15/96
245 First Street Cambridge, MA 263,000 1985-1986 11/21/96
10960 Wilshire Boulevard Westwood, CA 544,000 1971-1992 11/21/96
Shoreline Technology Park Mountain View, CA 727,000 1985-1991 12/20/96
Lake Marriott Business Park Santa Clara, CA 400,000 1981 12/20/96
Presidents Plaza Chicago, IL 791,000 1980-1982 12/27/96
1997 Pending Acquisitions
10880 Wilshire Boulevard Westwood, CA 531,000 1970 Pending
Centerpointe Fairfax, VA 409,000 1986-1990 Pending
Westbrook Corporate Center Westchester, IL 1,106,000 1985-1996 Pending
</TABLE>
F-16
<PAGE>
<TABLE>
<CAPTION>
Purchase Price (in thousands)
----------------------------------------
Property Name Seller Cash Debt O.P.Units Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 Acquisitions
Perimeter Center Metropolitan Life Insurance Company 322,200 $13,800(2) 336,000
New York Life Portfolio New York Life Insurance Company 150,000 150,000
Fairfax County Portfolio Greensboro Associates, John Marshall
Associates Limited Partnership and
Woodland-Northridge I Limited Partnership $55,400 21,600(2) 77,000
Rosslyn Virginia Portfolio LaSalle Fund II 99,050 99,050
New England Executive Park New England Executive Park Limited Partnership
et al 75,000 75,000
245 First Street Riverview Building Combined Limited Partnership 45,000 45,000
10960 Wilshire Boulevard 10960 Property Corporation 133,000 133,000
Shoreline Technology Park Teachers Insurance and Annuity Association (TIAA) 139,080 139,080
Lake Marriott Business Park Teachers Insurance and Annuity Association (TIAA) 43,920 43,920
Presidents Plaza Metropolitan Life Insurance Company 38,000 39,000(2) 77,000
1997 Pending Acquisitions
10880 Wilshire Boulevard 10880 Property Corporation 102,000 102,000
Centerpointe Joshua Realty Corporation 25,000 30,000 55,000
Westbrook Corporate Center Westbrook Corporate Center Associates, 26,100 106,000 50,000(3) 182,100
Westbrook Corporate Center IV Associates
Limited Partnership and Westbrook Corporate
Center V Associates Limited Partnership
</TABLE>
(1) The Company holds approximately 52% of the common stock of a private
REIT which owns this property. The total purchase price was $156 million
consisting of $66 million in cash and proceeds from a $90 million first mortgage
loan. The Company accounts for this investment under the equity method of
accounting.
(2) The Company issued Operating Partnership Units in the amount of
540,059 for Perimeter Center ($25.55 per unit), 833,820 for the Fairfax County
Portfolio ($25.90 per unit) and 1,171,500 for Presidents Plaza ($33.29 per
unit). These Units were valued based on the average trading price of Beacon
Properties Corporation's Common Stock for the applicable period (20 to 30 days)
prior to closing as prescribed in the purchase and sale agreements.
(3) The Company expects to issue approximately 1,428,571 Operating
Partnership Units in connection with the purchase of Westbrook Corporate Center.
The number of units was estimated based on a valuation of $35.00 per unit. The
actual number of units will be based on the average price of Beacon Properties
Corporation's common stock for the 10 days prior to 2 days preceding the
closing of this property.
Common Stock Offerings included in pro forma:
Price Per Gross Net
Year Month Shares Share Proceeds Proceeds
- ---- ----- ------ ----- -------- --------
(in thousands)
1996 March 7,036,000 26.25 184,695 173,800
1996 August 5,750,000 25.75 148,063 139,400
1996 November 13,723,000 30.75 421,982 398,900
1996 December 1,132,400 33.47 37,896 37,800
1997 April(4) 7,000,000 35.00 245,000 230,300
(4) Proposed.
F-17
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------------------------------------
Beacon
Properties 10880 Westbrook Proposed
Corporation Wilshire Corporate 1997 Pro Forma
Historical Boulevard Centerpointe Center Stock Offering Consolidated
----------- --------- ------------ --------- -------------- ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Real estate, net $1,593,995 $102,000 $55,000 $182,100 $1,933,095
Deferred financing and leasing costs, net 17,321 17,321
Cash and cash equivalents 36,086 (102,000) (25,000) (26,100) $137,014 20,000
Mortgage notes receivable 51,491 51,491
Other assets 28,366 28,366
Investments in and advance to joint
ventures and corporations 52,153 52,153
---------- -------- ------- -------- -------- ----------
Total assets $1,779,412 $ -- $30,000 $156,000 $137,014 $2,102,426
========== ======== ======= ======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $452,212 $30,000(A) $106,000(B) $588,212
Note payable, Credit Facility 153,000 $(93,286)(D) 59,714
Other liabilities 41,764 41,764
Investment in joint venture 24,735 24,735
--------- -------- ------- -------- -------- ----------
Total liabilities 671,711 30,000 106,000 (93,286) 714,425
Minority interest in Operating Partnership 108,551 50,000(C) 158,551
Stockholders' equity 999,150 230,300(E) 1,229,450
--------- -------- ------- -------- -------- ----------
Total liabilities and stockholders' equity $1,779,412 $ -- $30,000 $156,000 $137,014 $2,102,426
========== ======== ======= ======== ======== ==========
</TABLE>
Notes:
(A) Mortgage debt due on February 28, 2002 with interest only through December
1999 at 7.32% and principal amortized over a 25 year period thereafter. This
mortgage will be assumed in connection with the purchase of Centerpointe.
(B) Mortgage debt is expected to have a 10 year term with interest at 8.03% and
principal amortized over a 26 year period and is expected to be assumed in
connection with the purchase of Westbrook Corporate Center.
(C) The seller of Westbrook will be issued $50,000,000 of Operating Partnership
Units expected to consist of 1,428,571 units valued at $35.00 each. The
valuation is based on the average trading price of Beacon Properties
Corporation common stock for the 10 days prior to 2 days preceding the
closing of the property.
(D) Expected repayment of Credit Facility.
(E) The Company expects to sell 7,000,000 shares of common stock at $35.00
per share.
Proceeds of Offering $245,000
Expenses of Offering (6.0%) (14,700)
--------
$230,300
========
F-18
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Beacon October &
Properties New York Life November
Corporation Perimeter and Fairfax Va. 1996
Historical Center (A) Portfolios(B) Acquisitions(G)
----------- ---------- --------------- ---------------
(dollars in thousands except per share amounts and shares outstanding)
<S> <C> <C> <C> <C>
Revenue:
Rental income $147,825 $6,420 $19,098 $38,886
Management fees 3,005
Recoveries from tenants 16,719 304 3,788 3,674
Mortgage interest income 4,970
Other income 11,272 208 845 3,012
-------- ------ ------ -------
Total revenue 183,791 6,932 23,731 45,572
-------- ------ ------ -------
Expenses:
Property expenses 37,211 1,562 4,875 11,716
Real estate taxes 18,124 591 1,708 3,991
General and administrative 19,331 378 812 1,700
Mortgage interest expense 30,300 1,895(C) 2,954(F)
Interest - amortization of financing costs 2,084 15(D)
Depreciation and amortization 33,184 1,196(E) 4,374(E) 9,105(E)
-------- ------ ------ -------
Total expenses 140,234 5,637 14,723 26,512
-------- ------ ------ -------
Income from operations 43,557 1,295 9,008 19,060
Equity in net income of joint ventures and corporation 4,989
-------- ------ ------ -------
Income from continuing operations 48,546 1,295 9,008 19,060
Discontinued operations - Construction Company:
Loss from operations (2,609)
Loss on sale (249)
-------- ------ ------ -------
Income before minority interest 45,688 1,295 9,008 19,060
Minority interest in Operating Partnership (5,988)
-------- ------ ------ -------
Net income before extraordinary items $39,700 $1,295 $9,008 $19,060
======== ====== ====== =======
F-19
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
December
1996 Pending Pro Forma Pro Forma
Acquisitions(H) Acquisitions(I) Adjustments Consolidated
--------------- --------------- ----------- ------------
(dollars in thousands except per share amounts and shares outstanding)
<S> <C> <C> <C> <C>
Revenue:
Rental income 26,858 40,486 $279,573
Management fees 3,005
Recoveries from tenants 6,099 2,464 33,048
Mortgage interest income 611(K) 5,581
Other income 470 1,541 17,348
------- ------ ------- --------
Total revenue 33,427 44,491 611 338,555
------- ------ ------- --------
Expenses:
Property expenses 4,509 9,206 69,078
Real estate taxes 5,036 4,653 34,103
General and administrative 1,250 1,108 250(L) 24,830
Mortgage interest expense 10,380(J) 1,634(M) 47,162
Interest - amortization of financing costs 2,099
Depreciation and amortization 6,555(E) 10,513(E) 64,927
------- ------ ------- --------
Total expenses 17,350 35,860 1,884 242,199
------- ------ ------- --------
Income from operations 16,077 8,631 (1,273) 96,356
Equity in net income of joint ventures and corporation 4,989(1)
------- ------ ------- --------
Income from continuing operations 16,077 8,631 (1,273) 101,345
Discontinued operations - Construction Company:
Loss from operations (2,609)
Loss on sale (249)
------- ------ ------- --------
Income before minority interest 16,077 8,631 (1,273) 98,487
Minority interest in Operating Partnership (6,038)(N) (12,026)
------- ------ ------- --------
Net income before extraordinary items $16,077 $8,631 ($7,311) $86,461(2)
======= ====== ======= ========
Common shares outstanding 55,116,480
Net income per common share $1.57
(1) Includes depreciation and amortization $4,033
(2) Company share of Operating Partnership is 87.79%
</TABLE>
See accompanying notes to pro forma condensed consolidated statement of
operations.
F-20
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(A) Results of operations of Perimeter Center for the period ended February 14,
1996.
(B) Results of operations of the Fairfax County Portfolio and the New York Life
Portfolio for the periods ended September 4, 1996 and August 15, 1996,
respectively.
<TABLE>
<CAPTION>
Fairfax New York
County Life
Portfolio Portfolio Total
-------------------------------------------
<S> <C> <C> <C>
Revenue:
Rental income $7,661 $11,437 $19,098
Management fees
Recoveries from tenants 542 3,247 3,788
Mortgage interest income
Other income 72 773 845
-------------------------------------------
Total revenue 8,274 15,457 23,731
-------------------------------------------
Expenses:
Property expenses 1,581 3,294 4,875
Real estate taxes 364 1,345 1,708
General and administrative 80 732 812
Mortgage interest expense (F) 2,954 2,954
Interest - amortization of financing costs
Depreciation and amortization (E) 1,568 2,806 4,374
-------------------------------------------
Total expenses 6,546 8,177 14,723
-------------------------------------------
Income from operations $1,728 $ 7,280 $ 9,008
===========================================
</TABLE>
(C) Net interest expense associated with the MetLife Mortgage Loan in the
amount of $218 million based on a 7.08% interest rate for the period
ended prior to March 15, 1996.
(D) Amortization of the costs of obtaining the permanent financing at $1.2
million over 10 years.
F-21
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(E) Detail of depreciation expense by property is presented as follows:
<TABLE>
<CAPTION>
Basis Life Depreciation
----- ---- ------------
<S> <C> <C> <C>
Perimeter Center $287,130 30 yrs $1,196
======
Fairfax County Portfolio $69,300 30 yrs $1,568
The New York Life Portfolio 135,000 30 yrs 2,806
------
$4,374
======
October & November 1996 Acquisitions:
-------------------------------------
Rosslyn, Virginia Portfolio 89,145 30 yrs $2,352
New England Executive Park 67,500 30 yrs 1,969
245 First Street 40,500 30 yrs 1,209
10960 Wilshire Boulevard 119,700 30 yrs 3,574
------
$9,105
======
December 1996 Acquisitions:
---------------------------
Lake Marriott Business Park 31,110 30 yrs $1,008
Shoreline Technology Park 100,650 30 yrs 3,263
Presidents Plaza 69,250 30 yrs 2,284
------
$6,555
======
Pending Acquisitions:
----------------------
10880 Wilshire Boulevard 102,000 30 yrs $3,400
Centerpointe 49,500 30 yrs 1,650
Westbrook Corporate Center 163,890 30 yrs 5,463
------
$10,513
======
</TABLE>
(F)Fairfax County Portfolio interest expense on debt assumed for period prior to
acquisition:
<TABLE>
<CAPTION>
Principal Rate Expense
--------- ---- -------
<S> <C> <C> <C>
JOHN MARSHALL $21,068 8.38% $1,197
EJ RANDOLPH (1) 18,016 7.78% 951
NORTHRIDGE 16,306 7.28% 806
------- ------
$55,390 $2,954
======= ======
</TABLE>
(1) Paid off by Credit Facility proceeds at closing.
F-22
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(G) Results of operations of the Rosslyn, Virginia Portfolio, New England
Executive Park, 245 First Street and 10960 Wilshire Boulevard for the period
prior acquisition.
<TABLE>
<CAPTION>
Rosslyn New England 10960
Virginia Executive Wilshire
Portfolio Park 245 First St. Blvd. Total
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Rental income $12,001 $12,049 $5,062 $9,774 $38,886
Management fees
Recoveries from tenants $528 1,113 1,776 257 3,674
Mortgage interest income
Other income $1,066 533 1,413 3,012
---------------------------------------------------------------------
Total revenue 13,595 13,162 7,371 11,444 45,572
---------------------------------------------------------------------
Expenses:
Property expenses 2,611 4,958 1,020 3,126 11,716
Real estate taxes 747 1,421 913 910 3,991
General and administrative 575 471 81 572 1,700
Mortgage interest expense
Interest - amortization of financing costs
Depreciation and amortization (E) 2,352 1,969 1,209 3,574 9,105
---------------------------------------------------------------------
Total expenses 6,286 8,819 3,223 8,183 26,512
---------------------------------------------------------------------
Income from operations $ 7,308 $ 4,343 $4,148 $ 3,262 $19,060
=====================================================================
</TABLE>
(H) Results of operations of Lake Marriott Business Park, Shoreline Technology
Park and Presidents Plaza for the period prior to acquisition.
<TABLE>
<CAPTION>
Shoreline Lake Marriott
Technology Business Presidents
Park Park Plaza Total
--------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Rental income $12,942 $4,061 $9,855 $26,858
Management fees
Recoveries from tenants 1,068 996 4,035 6,099
Mortgage interest income
Other income 470 470
--------------------------------------------------------
Total revenue 14,010 5,057 14,359 33,427
--------------------------------------------------------
Expenses:
Property expenses 105 718 3,685 4,509
Real estate taxes 1,068 395 3,572 5,036
General and administrative 71 8 1,171 1,250
Mortgage interest expense
Interest - amortization of financing costs
Depreciation and amortization (E) 3,263 1,008 2,284 6,555
--------------------------------------------------------
Total expenses 4,508 2,130 10,712 17,350
--------------------------------------------------------
Income from operations $ 9,503 $2,927 $3,647 $16,077
========================================================
</TABLE>
F-23
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(I)Results of operations of 10880 Wilshire Boulevard, Centerpointe and Westbrook
Corporate Center for the year 1996.
<TABLE>
<CAPTION>
10880 Westbrook
Wilshire Corporate
Boulevard Centerpointe Center Total
-------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Rental income $9,086 $7,593 $23,807 $40,486
Management fees
Recoveries from tenants 80 578 1,806 2,464
Mortgage interest income
Other income 1,306 99 136 1,541
-------------------------------------------------------
Total revenue 10,472 8,270 25,749 44,491
-------------------------------------------------------
Expenses:
Property expenses 3,066 1,740 4,400 9,206
Real estate taxes 1,043 497 3,113 4,653
General and administrative 720 180 208 1,108
Mortgage interest expense 1,914(J) 8,466(J) 10,380
Interest - amortization of financing costs
Depreciation and amortization (E) 3,400 1,650 5,463 10,513
-------------------------------------------------------
Total expenses 8,229 5,981 21,650 35,860
-------------------------------------------------------
Income from operations $2,243 $2,289 $ 4,099 $ 8,631
=======================================================
</TABLE>
(J) Interest expense on mortgage debt assumed:
Centerpointe - historical 1996 expense.
Westbrook Corporate Center - based on a principal balance of $106,000 with
interest calculated at 8.03%.
(K) Interest income related to the acquisition of the Rowes Wharf mortgage.
(L) Additional general and administrative expense attributable to acquisitions.
(M) Credit Facility Interest expense:
Pro Forma Credit Facility balance $59,714
Average Credit Facility rate through December 31, 1996 7.78%
-------
Pro Forma Credit Facility interest expense full year 4,646
Less historical 1996 Credit Facility interest expense 3,294
-------
Pro Forma adjustment 1,352
--------
Mortgage Interest:
Pro Forma Mortgage Interest on Centerpointe Full Year
based on principal balance of $30,000 with interest at
7.32% 2,196
Less: Historical 1996 Expense 1,914
-------
282
-------
Grand Total $1,634
=======
(N) Reflects decrease for minority interest (12.21%) in Operating Partnership.
F-24
AGREEMENT OF SALE
by and between
JOSHUA REALTY CORPORATION,
as Seller
and
BEACON PROPERTIES, L.P.,
As Buyer
Re: Centerpointe I and II
Fairfax, Virginia
<PAGE>
Table of Contents
Paragraph Caption Page
1. Sale and Purchase 1
2. Purchase Price 2
3. Closing 2
4. Condition of Title 2
5. Possession 4
6. Leases; Agreements 4
7. Closing Apportionments 5
8. Seller's Representations and Warranties 7
9. Buyer's Representations and Warranties 9
10. Conditions to Closing 9
11. Deliveries at Closing 11
12. Default 13
13. Notices 13
14. Fire or Other Casualty 15
15. Assignability 16
16. Inspection Period 17
17. Condemnation 18
18. Brokers 19
19. Condition of Premises 19
20. Survival of Provisions 21
21. ERISA 23
22. Escrow Provisions 23
23. Miscellaneous 24
Exhibits
A Legal Description of Premises
B List of Personal Property
C List of Permitted Title Exceptions
D List of Existing Leases
E List of Existing Agreements
F Form of Assignment and Assumption Agreement
G Form of Centerpointe III Option Agreement
H Form of Tenant Estoppel Certificate
(i)
<PAGE>
I-1 Form of Special Warranty Deed
I-2 Form of Bill of Sale
J-1 Form of FIRPTA Certification
J-2 Form of Seller's Title Affidavit
K Form of Notice to Tenants
L List of Excluded Personal Property
M Seller's Closing Certificate
N Buyer's Closing Certificate
Schedules
7(a) Copies of Existing Loan Documents
7(C) Tenant Security Deposits
7(g) Leasing Commissions and Tenant Improvement Costs
8(a)(iv) Pending Litigation
(ii)
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement") made this 26 day of March,
1997 by and between JOSHUA REALTY CORPORATION, a Delaware corporation
("Seller") and Beacon Properties, L.P., a Delaware Partnership ("Buyer").
W I T N E S S E T H:
1. Sale and Purchase. Seller agrees to sell and convey to
Buyer, and Buyer agrees to purchase from Seller, upon the terms
and conditions set forth in this Agreement.
(a) Real Property. All that certain lot or piece of ground
situate in Fairfax, Virginia, which is more fully described by metes and
bounds on Exhibit A to this Agreement, together with the two office buildings
and other improvements containing approximately 408,111 square feet situate
thereon (the "Premises"), together with all rights and appurtenances pertaining
to the Premises, including any right, title and interest of Seller in and to
adjacent streets and rights-of-way.
(b) Tangible Personal Property. The fixtures, furnishings,
equipment and other items of personal property owned by Seller and located on
and used in connection with the operation of the Premises which are listed on
Exhibit B to this Agreement (collectively, the "Tangible Personal Property").
(c) Intangible Personal Property. The intangible personal
property listed below:
(i) the interests of Seller in all available
booklets, manuals and promotional and advertising materials concerning the
Property and located at the Premises or at the offices of Lincoln Property
Company, the manager of the Premises ("Manager");
(ii) Seller's interest in the name "Centerpointe,"
subject nevertheless to the right of Centerpointe III Limited Partnership ("CP
III"), its successors and assigns, to utilize such name;
(iii) the interest of Seller in all existing surveys,
blueprints, drawings, plans and specifications (including, without limitation,
structural HVAC, mechanical and plumbing plans and specifications) and other
similar documentation for or with respect to the Premises or any part thereof
(all to the extent assignable or transferable), to the extent in the possession
of Seller or Manager;
(iv) all warranties and guaranties issued in
connection with the Property (all to the extent assignable or transferable); and
1
<PAGE>
(v) the interests of Seller in all consents,
authorizations, variances or waivers, licenses, permits and approvals from any
governmental or quasi-governmental agency, department, board, commission, bureau
or other instrumentality (all to the extent assignable or transferable) with
respect to the Premises;
(all of the foregoing, collectively, the "Intangible Personal
Property).
(d) Personal Property. The Tangible Personal Property and the
Intangible Personal Property are sometimes collectively referred to in this
Agreement as the "Personal Property."
2. Purchase Price. The purchase price to be paid by Buyer
to Seller for the Premises and the Personal Property is the sum
of Fifty-Five Million Dollars ($55,000,000) (the "Purchase
Price"). The Purchase Price shall be paid as follows:
(a) Deposit. The sum of One Million Dollars ($1,000,000) (the
"Deposit") by the delivery of funds to Commonwealth Land Title Insurance Company
(the "Escrowee"). The Deposit shall be held by Escrowee in accordance with the
provisions of Paragraph 22 of this Agreement.
(b) Loan Assumption. At Buyers's option, Thirty Million
Dollars ($30,000,000) shall be paid at Closing by Buyer's assumption of and
agreement to pay the loan (the "Existing Loan") evidenced by that certain
promissory note (the "Existing Note") dated February 12, 1996 from Seller, as
maker, to the Connecticut General Life Insurance Company, as payee ("Lender") in
the stated principal amount of $30,000,000 and secured by, among other
instruments, that certain Deed of Trust, Security Agreement and Assignment of
Rents and Leases dated February 12, 1996 encumbering the Premises between Seller
and Lender and recorded in the Office of the Clerk of the Circuit Court of
Fairfax County, Virginia in Deed Book 9627 Page 54 (the "Existing Deed of
Trust").
(c) Closing Payment. The balance of the Purchase Price shall
be paid to Seller at Closing by wire transfer of immediate United States federal
funds to Seller's account at a bank designated by Seller.
3. Closing. Closing shall commence at 10:00 a.m. on April
24, 1997 (the "Closing Date") at the offices of Wolf, Block,
Schorr and Solis-Cohen, Twelfth Floor Packard Building, 15th and
Chestnut Streets, Philadelphia, Pennsylvania 19102.
4. Condition of Title.
(a) (i) Title to Premises. Fee simple title to the
Premises shall be conveyed by Seller to Buyer at the completion
of Closing by a deed (the "Deed") containing Seller's special
warranty in substantially the form of Exhibit I-1 to this
Agreement, excluding from such warranty the Permitted Exceptions
(as defined below). Title to the Personal Property
2
<PAGE>
shall be conveyed by Seller to Buyer at the completion of Closing by a bill of
sale ("Bill of Sale") in substantially the form of Exhibit I-2 to this
Agreement. Title to the Premises shall be such as will be insured as good and
marketable by Escrowee pursuant to the standard stipulations and conditions of
the most current form of ALTA Policy of Owner's Title Insurance then in use in
the State in which the Premises is located, free and clear of all liens and
encumbrances except for the Permitted Exceptions. Buyer will pay the premium for
the owner's policy and the cost of any endorsements to such policy. The term
"Permitted Exceptions" shall mean the Existing Leases (as defined below), the
additional title exceptions set forth on Exhibit C to this Agreement and any
title exceptions defined as such under clause (ii) below. Title to the Personal
Property shall also be subject to the Permitted Exceptions.
(ii) Title Defects. Not later than the expiration of
the Inspection Period (as defined in Paragraph 16(a)), Buyer shall deliver to
Seller a current title commitment for the Premises issued by Escrowee, together
with a written notice ("Title Notice") specifying any alleged defects in or
objections to the title to the Premises which do not constitute Permitted
Exceptions. Buyer shall be deemed to have waived its right to object to any
encumbrance or other title objection existing at the Closing Date unless Buyer
shall have timely given to Seller the Title Notice which specifies Buyer's
objection, unless such encumbrance or other title objection was not a matter of
record on the effective date of such title commitment. Upon Buyer's failure to
timely object, such encumbrance or other title objection shall be deemed a
Permitted Exception. Seller shall have no obligation to cure any alleged defect
or objection raised in the Title Notice. If Buyer delivers a Title Notice,
Seller shall have five (5) days after receipt of the Title Notice in which to
notify Buyer in writing as to which of the alleged defects or objections raised
in the Title Notice Seller will undertake to cure and which Seller declines to
cure. If Seller fails to timely give such responsive notice to Buyer, Seller
will be deemed to have declined to cure any alleged defect or objection raised
in the Title Notice. In any event, Seller agrees to cure (i) any liens and
encumbrances securing the payment of money which were voluntarily created by
Seller and which are identified in Buyer's Title Notice or which arise after the
date of Buyer's title commitment and (ii) any mechanic's liens. If Seller does
not commit to undertake to cure any alleged title defect raised in Buyer's Title
Notice by April 7, 1997, Buyer shall have the right, exercisable by notice to
Seller given on or before April 11, 1997, to terminate this Agreement. If Buyer
so terminates this Agreement, Escrowee is authorized and directed to return the
Deposit to Buyer, and upon the return of the Deposit to Buyer, neither party
shall have any further rights or obligations under this Agreement (except for
the indemnity and confidentiality
<PAGE>
obligations of Buyer to Seller set forth in Paragraph 16(a) and 16(f) of this
Agreement which shall survive the termination of this Agreement). If Buyer does
not so terminate this Agreement, those matters which Buyer objected to in the
Title Notice and which Seller declined to cure shall be deemed Permitted
Exceptions. If Seller fails to cure by Closing any alleged title defect or title
objection which Seller notifies Buyer Seller will undertake to cure, Buyer shall
have the rights set forth in Paragraph 4(b).
(b) Failure of Title. If on the Closing Date title to the
Premises is not insurable as set forth in Paragraph 4(a) above, Buyer may elect,
as its sole right and remedy, either (i) to take such title to the Premises as
Seller can convey without abatement of the
3
<PAGE>
Purchase Price except for liens and encumbrances of an ascertainable amount
which Seller has agreed to cure pursuant to Paragraph 4(a)(ii) or (ii) to
terminate this Agreement by written notice to Seller and Escrowee and be paid
the Deposit. Notwithstanding the foregoing provisions, Buyer agrees to accept
title to the Premises and Personal Property subject to judgments against Seller
if buyer's title insurer insures Buyer against loss by reason of such judgments.
If Buyer so terminates this Agreement, Escrowee is authorized and directed to
return the Deposit to Buyer, and upon the return of the Deposit to Buyer,
neither party shall have any further rights or obligations under this Agreement
(except for the indemnity and confidentiality obligations of Buyer to Seller set
forth in Paragraph 16(a) and 16(f) of this Agreement which shall survive the
termination of this Agreement).
5. Possession. Possession of the Premises and the Personal
Property is to be given by Seller to Buyer at the completion of
Closing by delivery of the Deed and the Bill of Sale and by
assignment of the Existing Leases.
6. Leases; Agreements.
(a) Existing Leases. If Seller intends, prior to Closing, to
enter into new leases for portions of the Premises or to enter amendments of
Existing Leases, Seller shall first submit to Buyer for Buyer's approval a term
sheet (the "Leasing Term Sheet") identifying the tenant or proposed tenant and
setting forth the material economic terms of such transaction. If Buyer does not
disapprove such proposed lease transaction by written notice to Seller given
within five (5) business days after Buyer's receipt of the Leasing Term Sheet,
Buyer shall be deemed to have approved the proposed lease transaction which is
the subject of such Leasing Term Sheet. Buyer acknowledges that it has approved
the pending lease transactions described on Schedule 7(g) to this Agreement.
Notwithstanding the foregoing, Seller shall not be required to obtain Buyer's
consent to such amendments as Seller may be required to enter under the terms of
an Existing Lease or which Seller may enter to confirm matters for which a
tenant under an Existing Lease exercises an option (for example, an amendment to
confirm the terms pursuant to which a tenant may lease expansion space following
the exercise by such tenant of an expansion option). Seller shall promptly
notify Buyer of any such amendments. Seller shall not enter any new lease or
amend any Existing Lease, except as provided in this Paragraph. All existing
leases listed on Exhibit D to this Agreement, together with lease amendments and
new leases entered in accordance with this Paragraph, are collectively called
the "Existing Leases." Without limiting the effect of any other condition to
Closing contained in this Agreement, the termination of any of the Existing
Leases prior to Closing by reason of the expiration of its term or by reason of
the tenant's default or exercise of a termination right shall not excuse Buyer
from its obligation to complete Closing and to pay the Purchase Price. At
Closing, Buyer shall receive a credit on account of the Purchase Price equal to
the amount of any lease termination or similar payment made by any tenant to
Seller between the date of this Agreement and Closing.
(b) Existing Agreements. Seller shall also assign to Buyer at
the completion of Closing, to the extent assignable, Seller's interests under
the existing agreements listed on Exhibit E to this Agreement (collectively, the
"Existing Agreements"). Seller shall,
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prior to Closing, have the right to enter into new service agreements, provided
any such agreement shall be terminable without penalty on not more than thirty
(30) days' notice. Seller shall promptly provide Buyer with a copy of any new
service agreement. All such new service agreements shall also constitute
Existing Agreements. The termination of any of the Existing Agreements prior to
Closing by reason of the expiration of its term or by reason of a default
thereunder shall not excuse Buyer from its obligation to complete Closing and to
pay the full Purchase Price. Seller shall cause its existing management
agreement with Manager to be terminated as of Closing.
(c) Assignment and Assumption. At Closing, Seller and Buyer
shall execute and acknowledge an assignment and assumption agreement (the
"Assignment and Assumption Agreement") in the form of Exhibit F to this
Agreement pertaining to the Existing Leases and the Existing Agreements.
7. Closing; Apportionments.
(a) Items to be Apportioned. Personal property taxes, real
estate taxes and annual municipal or special district assessments (on the basis
of the actual fiscal years for which such taxes are assessed), sums paid to or
payable by Seller under the Existing Agreements, prepaid fees for licenses and
permits to remain in effect for Buyer's benefit after Closing, rent, parking
fees and other sums paid to Seller under the Existing Leases shall be
apportioned at Closing pro rata between Buyer and Seller on a per diem basis as
of the Closing Date.
(b) Tenant Pass-Throughs. If the apportionment of any
"escalation" payments relating to operating expenses, real estate taxes and
assessments or other additional rent payments under any of the Existing Leases
on account of periods prior to Closing and on account of sums which are
attributable to expenses incurred by the lessor for periods of time prior to
Closing, cannot be precisely determined at the time of Closing, Seller and Buyer
shall reasonably estimate the apportionment of such sums, and such estimated
sums shall be apportioned pro-rata between Buyer and Seller on a per diem basis
as of the Closing Date. A post Closing adjustment shall be made, if necessary,
between Buyer and Seller for such apportioned items within thirty (30) days
after such sums can be precisely determined. Seller shall provide Buyer after
Closing a final accounting of all escalatable operating costs for the portion of
1997 falling within the period of Seller's ownership of the Property.
(c) Tenant Security Deposits. At Closing, Seller shall credit
against the Purchase Price the amount of all cash security deposits payable to
tenants then held by or for Seller under the Existing Leases as set forth on
Schedule 7(c), together with an amount equal to interest thereon as may be
required by law or under the terms of an Existing Lease. At Closing, Seller
shall deliver to Buyer a current schedule of tenants and such security
deposits. Seller shall not apply any tenant security deposit on account of a
default by a tenant under its Existing Lease occurring between the date of this
Agreement and Closing.
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(d) Utility Charges. Seller shall use reasonable efforts to
obtain readings of a gas, water and electric meters on the Premises (other than
meters measuring utility consumption whose charges are payable by tenants in
accordance with the Existing Leases) to a date no sooner than two (2) days prior
to the Closing Date. Seller shall pay all utility charges based upon such meter
readings. However, if after reasonable efforts Seller is unable to obtain
readings of any meters prior to Closing, Closing shall be completed without such
readings and upon the obtaining thereof after Closing, Seller shall pay the
charges incurred prior to Closing as determined based upon such readings. Seller
shall not assign to Purchaser any deposits which Seller has with any utility
service or company servicing the Premises.
(e) Unpaid Real Estate Taxes. If, on the Closing Date, bills
for real estate taxes imposed upon the Premises for any part of the tax fiscal
years in which Closing occurs have been issued but shall not have been paid,
such taxes shall be paid at the time of Closing.
(f) Arrearages.
(i) Rent Arrearages. At or before Closing, Seller shall
identify those tenants in arrears in the payment of rent or any other amount due
Seller, and the amount thereof. Any payments received by Buyer after the Closing
Date from a tenant so identified under any of the Existing Leases on account of
rentals or other sums which are applicable to periods prior to Closing, shall be
apportioned by Buyer upon receipt and the portion thereof attributable to
periods prior to Closing shall immediately be paid by Buyer to Seller; provided
all payments by such tenants after Closing will be deemed as being applicable,
first, as against current rental due, then, as against such arrearages which
existed as of Closing. Seller shall be deemed to have retained all claims
existing against tenants for arrearages under any of the Existing Leases as of
Closing.
(ii) Contract Arrearages. Any payments received by Buyer
after the Closing Date under any of the Existing Agreements on account of
payments which are applicable to periods prior to Closing shall be apportioned
by Buyer upon receipt and the portion thereof attributable to periods prior to
Closing shall immediately be paid by Buyer to Seller.
(iii) Accounting. Until the earlier to occur of (A) such
time as Seller shall have received in full all sums which are potentially
payable to it on account of any of the Existing Leases or the Existing
Agreements as provided in subparagraphs (i) and (ii) above or (B) twelve (12)
months after Closing, Buyer shall provide to Seller after Closing a monthly
statement of rent received by Buyer under any of the Existing Leases or other
sums received by Buyer under any of the Existing Agreements for those tenants
and vendors pursuant to which Seller might be entitled to payments as provided
in said subparagraphs.
(g) Leasing Commissions: Tenant Improvements. At Closing,
Seller will either deliver to Buyer evidence of payment or provide a credit
against the Purchase Price for those unpaid leasing commissions and tenant
improvement allowance amounts shown on
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Schedule 7(g) to this Agreement as being payable by Seller. Buyer shall assume
the obligations of Seller to pay any leasing commission and perform any tenant
improvement work for which Buyer receives a credit on account of the Purchase
Price under this Paragraph 7(g). At Closing buyer shall reimburse Seller for all
leasing commissions and tenant costs actually paid or payable by Seller (i) for
lease transactions entered after the date of this Agreement in accordance with
Paragraph 6(a) of this Agreement, (ii) for lease transactions shown on Schedule
7(g) to this Agreement as being payable by Buyer and (iii) as a result of the
renewal or expansion of Existing Leases which occur between March 4, 1997 and
the Closing Date which are effectuated pursuant to existing renewal or expansion
options under Existing Leases. Seller shall provide Buyer with invoices and
evidence of Seller's payment of such costs for which Buyer is to reimburse
Seller. Buyer shall timely pay after the Closing Date all leasing commissions
and tenant costs which become due and payable after the Closing Date. Tenant
costs include tenant improvement costs and if the lease so provides moving
costs, design costs and incurred by the tenant, lease buyout costs and tenant
inducement costs.
(h) Interest to Lender. Interest under the Note which is
secured by the Existing Deed of Trust is payable monthly in arrears. Therefore,
the interest portion of the monthly payment to be made to the holder of the
Existing Note on the Closing Date, if Closing occurs on the day such payment is
due and payable, or to be made on the next payment date if Closing does not
occur on a date on which any payment is due and payable, shall be apportioned on
a per diem basis for the monthly period preceding such payment, and Buyer shall
be given a credit at Closing on account of the Purchase Price for the portion of
such interest payment attributable to the period occurring prior to closing.
(i) Escrows. At Closing, Seller shall assign to Buyer all sums
(if any) then held in escrow by the holder of the Existing Deed of Trust on
account of real estate taxes and insurance premiums, if any, and Buyer shall pay
to Seller at Closing a sum equal to such escrowed funds assigned to Buyer.
(j) Fees to Lender. Buyer will also pay the $150,000
assumption fee, if imposed by Lender, in connection with Buyer's assumption of
the Existing Loan. If Buyer does not assume the Existing Loan and the Existing
Loan is paid off at Closing, Buyer will also pay the prepayment fee or premium
payable under the Existing Note.
(k) Transfer Tax. Buyer shall pay the state and county realty
transfer taxes imposed in connection with the Deed or transactions contemplated
by this Agreement. Seller shall pay the grantor's tax imposed in connection with
the Deed or transactions contemplated by this Agreement.
8. Seller's Representations and Warranties.
(a) Seller represents and warrants to Buyer as follows:
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(i) Organization. Seller is a corporation, duly organized and
validly existing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now conducted.
(ii) Authorization. Seller has all requisite corporate power
and authority to enter into and perform this Agreement, and Seller has duly
authorized the execution and performance of this Agreement. No consent or
approval from any third party is required in order to enable Seller to execute
this Agreement and perform its obligations hereunder.
(iii) No Condemnation. To Seller's knowledge, there are no
existing or pending condemnation proceedings affecting the Premises, nor, to
Seller's actual knowledge, have any such condemnation proceedings been overtly
threatened.
(iv) No Proceedings. Except as set forth on Schedule 8(a)(iv)
to this Agreement, Seller has received no written notice of any pending actions,
suits or proceedings against Seller or the Premises nor, to Seller's knowledge,
is there any action, suit or proceeding against Seller or the Premises
threatened which would prevent consummation by Seller of the sale of the
Premises or materially and adversely affect the performance of any of Seller's
other obligations to be performed under this Agreement. Seller has not received
any written notice from any governmental authority claiming a violation or
alleged violation of any law, rule, ordinance or code with respect to the
Premises which remains uncured.
(v) Existing Leases. The list of Existing Leases attached to
this Agreement as Exhibit D-1 is, to Seller's knowledge, true, correct and
complete in all material respects. To Seller's knowledge, all of the Existing
Leases listed on Exhibit D-1 are, except as otherwise noted thereon, in full
force and effect and Seller has received no notice of default from any of the
tenants thereunder which remains uncured. To Seller's knowledge, except as
otherwise noted on Exhibit D-1, none of the tenants is in default under its
Existing Lease (except for rental obligations for the current month) in any
material respect. Except as set forth on Exhibit D-1, Seller has received no
prepayments of rent under any Existing Lease. Exhibit D-1 contains a schedule of
deposits made by tenants as security for such tenants' obligations under their
Existing Leases presently on deposit with Seller for the account of tenants.
Except as set forth on Exhibit D-1 or Schedule 7(g), (A) Seller has paid in full
all concessions, relocation payments and tenant allowances and has completed all
tenant improvement obligations under the Existing Leases and (B) all leasing
commissions and fees due with respect to the current demised premises and
current unexpired term of each Existing Lease have been paid in full. The copies
of the Existing Leases previously delivered by Seller to Buyer are true and
complete copies of such Existing Leases and the same have not been further
amended, modified or supplemented.
(vi) Existing Agreements. Exhibit E is a true, correct and
complete list of all Existing Agreements to which Seller is a party or by which
Seller is bound for the provision of services to or management of the Premises.
To Seller's knowledge, all of the Existing Agreements are in full force and
effect and free from material default. The copies of
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the Existing Agreements previously delivered by Seller to Buyer are true,
correct and complete copies of such Existing Agreements and the same have not
been further amended, modified or supplemented.
(vii) Existing Loan. Attached as Schedule 7(a) to this
Agreement are true and correct copies of the Existing Note, Existing Deed of
Trust, the Assignment of Rents and Leases from Buyer in favor of Lender,
Borrower's Certificate, the Environmental Indemnification Agreement between
Seller and Lender, the Tax Deposit Agreement among Seller, Lender and Columbia
National Real Estate Finance, Inc., the Collateral Assignment of Contracts,
Licenses and Permits and UCC Financing Statements. Such documents constitute all
of the material documents executed by Seller at closing on the Existing Loan and
none of such documents has been materially amended. Seller has received no
written notice from Lender asserting any default by Seller under the Existing
Loan.
(b) All references in this Paragraph 8 or elsewhere in this
Agreement to "Seller's knowledge" shall refer solely to the actual knowledge of
Stephen B. Hoover, Raymond L. Owens and Daniel Coughlan after having made
inquiry of Terry Landers, Manager's on-site manager for the Premises, and shall
not be construed to refer to the knowledge of any other employee, officer,
director, shareholder or agent (including Manager) of Seller or any affiliate of
Seller, and shall not include inputed or constructive knowledge.
9. Buyer's Representations and Warranties. Buyer hereby
represents and warrants to Seller as follows:
(a) Organization. Buyer is a limited partnership duly
organized and validly existing under the laws of the State of Delaware and has
all requisite partnership power and authority to carry on its business as now
conducted.
(b) Authorization. Buyer has all requisite partnership power
and authority to enter into and perform this Agreement and Buyer has or prior to
the end of the Inspection Period, will have duly authorized the execution and
performance of this Agreement. Buyer has received all approvals (except any
approvals to be obtained during the Inspection Period) necessary to consummate
the transactions described herein.
10. Conditions to Closing.
(a) Buyer shall not be obligated to complete Closing under
this Agreement unless each of the following conditions shall be fulfilled on the
Closing Date.
(i) Title Policy. Escrowee or another title insurance
company authorized to transact business in the State of Virginia reasonably
acceptable to Buyer and Buyer's counsel shall commit in writing to Buyer to
issue an owner's policy of title insurance as described in Paragraph 4(a).
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(ii) Accuracy of Representations. The representations and
warranties made by Seller in this Agreement shall be true and correct as of the
Closing Date in all material respects.
(iii) Seller's Performance. Seller shall have complied
with and performed in all material respects all of its obligations under this
Agreement.
(iv) Tenant Estoppel Certificates. Seller shall have
obtained and delivered to Buyer by Closing Tenant Estoppel Certificates (as
defined below) from American Management Systems, Inc. ("AMS") and from other
tenants occupying not less than seventy-five percent (75%) of the remaining
rentable area of the Premises not occupied by AMS. Seller may satisfy this
condition by executing and delivering to Buyer at Closing Tenant Estoppel
Certificates ("Seller Estoppels") with respect to any one or more Existing
Leases for which no Tenant Estoppel Certificate was obtained; provided, Seller
may not satisfy this condition by delivering a Seller Estoppel for AMS, Fujitsu
or Liberty Mutual. Each Seller Estoppel shall cease to be effective, and
Seller's obligations thereunder will terminate, upon the earlier of receipt from
the applicable tenant of a Tenant Estoppel Certificate consistent with the
requirements of this Paragraph or twelve (12) months after Closing. Seller
agrees to use its reasonable efforts to cause tenants under the Existing Leases
to deliver to Buyer at Closing a written statement ("Tenant Estoppel
Certificate") in substantially the form of the tenant estoppel certificate set
forth on Exhibit H to this Agreement or in the form which any tenant is required
to give under its lease. Buyer agrees not to object to any non-material
qualifications or modifications, including any "knowledge" qualification as to
defaults which a tenant may make to the form of Tenant Estoppel Certificate. If
any tenant has a claim which would entitle it to set-off the amount of the claim
against rent due under such tenant's lease and the amount of such claim is
ascertainable, Seller shall have the right, at its sole option, to give Buyer a
credit against the cash portion of the Purchase Price payable at Closing in the
amount of the claim and, in such event, Buyer shall, subject to the provisions
of this Agreement, complete Closing subject to such claim.
(v) Centerpointe III Option. CP III shall have delivered
to Buyer CP III's executive option agreement in the form of Exhibit G to this
Agreement with respect to certain land located in Fairfax, Virginia and
generally known as Centerpointe III (the "Option Agreement"). Prior to the end
of the Inspection Period, Buyer will deliver to Seller a title commitment for
the real property which is the subject of the Option Agreement. It shall be a
condition of Buyer's obligation to close under this Agreement that, prior to
Closing, Buyer and CP III shall agree upon the content of Exhibit B, List of
Permitted Title Exceptions, to be inserted in such Option Agreement.
(b) Seller shall not be obligated to complete Closing under
this Agreement unless each of the following conditions shall be fulfilled on the
Closing Date:
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(i) Buyer's Performance. Buyer shall have paid
the Purchase Price and shall have complied with and performed in all material
respects all of its other obligations under this Agreement.
(ii) Loan Assumption. If Buyer assumes the
Existing Loan, Lender shall have agreed to release Seller from all liability
under the Existing Loan accruing from and after Closing; provided, that this
condition shall be deemed waived if Buyer elects to purchase the Premises
without assuming the Existing Loan.
(iii) Centerpointe III Option. Buyer and CP III
shall have agreed prior to Closing upon the content of Exhibit B, List of
Permitted Title Exceptions, to be inserted in the Option Agreement.
11. Deliveries at Closing.
(a) Seller's Deliveries. On the Closing Date, Seller
shall deliver to Buyer the following:
(i) Deed. The Deed.
(ii) Bill of Sale. The Bill of Sale.
(iii) Assignment and Assumption Agreement. The
Assignment and Assumption Agreement.
(iv) Authority Documents. A resolution, to evidence
Seller's authorization of performance of this Agreement and an incumbency
certificate to evidence the capacity of the signatory for Seller.
(v) FIRPTA Certification and Title Affidavit. A
certificate in the form attached to this Agreement as Exhibit J-1 with respect
to compliance with the Foreign Investment in Real Property Tax Act (Internal
Revenue Code Section 1445, as amended, and the regulations issued thereunder)
and an affidavit in the form of Exhibit J-2 in favor of the title insurer who
will insure Buyer's title to the Premises (which affidavit shall in no event
expand Seller's warranty contained in the Deed).
(vi) Keys. All keys, codes and other security devices
for the Property (to the extend in Seller's possession).
(vii) Tenant Notices. Written notice from Seller to
each tenant of the Property under the Existing Leases in substantially the form
of Exhibit K to this Agreement.
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(viii) Books and Records. Copies (to the extent in
Seller's possession) of all books and records for the orderly transition of
operation of the Premises (delivery of same being deemed made by making them
available to buyer at the office of Seller's managing agent).
(ix) Original Documents. The originals (to the extent
in Seller's possession) of all Existing Leases, all Existing Agreements,
warranties, guaranties, permits and approvals, plans and specifications and all
other materials owned by Seller relating to the Intangible Personal Property,
the maintenance and operation of the Property and which are currently in
Seller's possession (delivery of same being deemed made by making them available
to Buyer at the office of Seller's managing agent).
(x) Seller's Closing Certificate. An executive
original of the Seller's Closing Certificate in the form attached as Exhibit M.
(xi) Termination of Management Agreement. Evidence of
the Termination of the existing Management Agreement with Manager with respect
to the Property.
(xii) Closing Statement. An executive original
Closing Statement setting forth the calculation of the Purchase Price and the
prorations provided for hereunder.
(xiii) Transfer Tax Forms. An executed original of
any transfer tax forms required in connection with the Closing.
(xiv) Other Documents. Any other documents which
Seller is obligated to deliver pursuant to this Agreement.
(b) Buyer's Deliveries. On the Closing Date, Buyer
will deliver to Seller the following:
(i) Assignment and Assumption Agreement. The
Assignment and Assumption Agreement.
(ii) Tenant Notices. Written notice from Buyer to
each tenant of the Premises under the Existing Leases in substantially the form
of Exhibit K to this Agreement.
(iii) Authority Documents. A resolution, to evidence
Buyer's authorization of performance of this Agreement, and an incumbency
certificate to evidence the capacity of the signatory for Buyer.
(iv) Purchase Price. That portion of the Purchase
Price payable at Closing.
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(v) Buyer's Closing Certificate. An executed original
of Buyer's Closing Certificate in the form attached as Exhibit N.
(vi) Transfer Tax Forms. An executed original of any
transfer tax forms required in connection with the Closing.
(vii) Other Documents. Any other documents which
Buyer is obligated to deliver pursuant to this Agreement.
12. Default.
(a) Buyer Default. If Buyer defaults under this Agreement at
the Closing Date by failing to complete Closing in accordance with the terms of
this Agreement, then on the Closing Date, Seller shall be entitled, as Seller's
sole and exclusive remedy at law or in equity for such default by Buyer
hereunder, to be paid the Deposit as liquidated damages and not as a penalty.
Seller and Buyer agree that the actual damages to Seller in the event of such
default are impractical to ascertain as of the date of this Agreement and that
the amount of the Deposit is a reasonable estimate thereof. Nothing in this
Paragraph, however, shall limit Seller's rights against Buyer by reason of any
indemnity obligations of Buyer to Seller set forth in this Agreement, all of
which shall survive the termination of this Agreement.
(b) Seller Default. If Seller defaults under this Agreement at
or prior to the Closing Date by failing to complete Closing in accordance with
the terms of this Agreement, then on the earlier of the Closing Date or the date
of Seller's default, Buyer shall be entitled, as Buyer's sole and exclusive
remedy, to institute an action for specific performance of this Agreement.
13. Notices.
(a) All notices given by either party to the other shall be in
writing and shall be sent either (i) by United States Postal Service registered
or certified mail, postage prepaid, return receipt requested, (ii) by nationally
recognized overnight courier service for next business day delivery, addressed
to the other party at the addresses listed below or (iii) via telecopier or
facsimile transmission to the facsimile numbers listed below, provided, however,
that if such communication is given via telecopier or facsimile transmission, an
original counterpart of such communication shall concurrently be sent in the
manner specified in clause (ii) above. Addresses and facsimile numbers of the
parties are as follows:
As to Seller:
c/o GE Investments
3003 Summer Street
P.O. Box 7900
Stamford, Connecticut 06905
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Attention: Raymond L. Owens
Fax: (203) 326-4169
With copies at the same time to:
GE Investments
3003 Summer Street
P.O. Box 7900
Stamford, Connecticut 06905
Attention: Michael J. Strone, Esquire
Fax: (203) 326-2497
and
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor Packard Building
15th and Chestnut Streets
Philadelphia, Pennsylvania 19102
Attention: James R. Williams, Esquire
Fax: (215) 977-2346
As to Buyer:
Beacon Properties, L.P.
50 Rowes Wharf
Boston, Massachusetts 02110
Attention: Ms. Erin O'Boyle
Fax: (617) 261-0152
with a copy at
the same time to:
Beacon Properties Corporation
50 Rowes Wharf
Boston, Massachusetts 02110
Attention: William A. Bonn, Esquire, General
Counsel
Fax: (617) 261-0152
and to
Goulston & Storrs
400 Atlantic Avenue
Boston, Massachusetts 02210
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Attention: Jordan P. Krasnow, Esquire
Fax: (617) 574-4412
As to Escrowee:
Commonwealth Land Title Insurance Company
50 Federal Street
Boston, Massachusetts 02110
Attention: Haskell Shapiro
Fax: (617) 542-0636
or to such other address as the respective parties may hereafter designate by
notice in writing in the manner specified above. Any notice may be given on
behalf of any party by its counsel.
(b) Notices given in the manner aforesaid shall be deemed
sufficiently served or given for all purposes under this Agreement upon the
earlier of (i) actual receipt or refusal by the addressee or (ii) one day
following the date such notices, demands or requests shall be deposited in any
Post Office, or branch Post Office regularly maintained by the United States
Government or delivered to the overnight courier service.
14. Fire or Other Casualty.
(a) Casualty Insurance. Seller agrees to maintain in effect
until the Closing Date the fire and extended coverage insurance policies now in
effect for the Premises.
(b) Casualty Damage. Subject to subparagraph (c) below, the
obligations of the parties to complete Closing under this Agreement shall in no
way be voided or impaired if the Premises or Personal Property, or any part
thereof, shall be damaged or destroyed by fire or other casualty between the
date of this Agreement and the Closing Date. If any such damage or destruction
occurs after the date of this Agreement: (i) Seller shall provide Buyer with
notice thereof, (ii) the cash proceeds of all fire and extended coverage
insurance policies attributable to the Premises or the Personal Property
received by Seller prior to the Closing Date and not used by Seller for the
repair of the Premises and the Personal Property (and Buyer hereby authorizes
Seller to use the proceeds for such purpose) shall be applied on account of the
cash portion of the Purchase Price payable at Closing, (iii) the cash proceeds
of such insurance proceeds retained by Lender on account of the Existing Loan
shall be applied on account of that portion of the Purchase Price payable by
Buyer's assumption of the Existing Loan or, if buyer does not assume the
Existing Loan, shall be applied on account of the cash portion of the Purchase
Price payable at Closing, (iv) all unpaid claims under such insurance policies
attributable to the Premises and Personal Property shall be assigned by Seller
to Buyer at the Closing and (v) at Closing Seller shall pay to Buyer an amount
equal to Seller's deductible under such insurance policies attributable to the
Premises and Personal Property.
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(c) Right of Termination. Notwithstanding any of the preceding
provisions of the Paragraph 14, if the cost to repair damage caused by fire or
other casualty to the Premises exceeds One Million Dollars ($1,000,000), Buyer
shall have the right to terminate this Agreement by written notice to Seller.
Upon such termination, the Deposit shall be returned by Escrowee to Buyer and
neither party shall have any further rights or obligations under this Agreement
(except for the indemnity and confidentiality obligations of Buyer to Seller set
forth in Paragraph 16(a) and 16(f) of this Agreement which shall survive the
termination of this Agreement). If Buyer desires to terminate this Agreement
pursuant to this subparagraph (c), Buyer, shall give a written notice of
termination to Seller within ten (10) business days after Seller's notice to
Buyer of the occurrence of the casualty. If Seller's notice pursuant to
Paragraph 14(b)(i) is given to Buyer less than ten (10) business days prior to
Closing, at Buyer's option Closing may be postponed to a date not earlier than
ten (10) business days or later than thirty (30) days after Buyer's receipt of
such notice.
15. Assignability.
(a) Limited Assignment. Subject to the limitations set forth
in subparagraph (b) below, this Agreement and all, but not part, of Buyer's
rights under this Agreement may be assigned by Buyer, without the prior written
consent of Seller, to an entity which is qualified to do business in the State
in which the Premises is located and in which Buyer (and/or Beacon Properties
Corporation ("BPC") and/or one or more entitled 100% owned and controlled by
Buyer and/or BPC) owns for its own account not less than one hundred percent
(100%) of the ownership interests therein and maintains control over the
management and affairs of the entity; provided, however, that such assignment
shall not release or relieve Buyer of an from any liability or obligation under
this Agreement, and Buyer shall continue to be primarily liable to Seller under
this Agreement. No such assignment shall be effective, however, unless and until
Buyer shall have furnished to Seller both an executed copy of the assignment
plus a written assumption agreement, in form satisfactory to Seller, by the
assignee to assume, perform and be responsible, jointly and severally with the
Buyer named herein, for the performance of all of the obligations of Buyer under
this Agreement and to pay all additional transfer or documentary taxes imposed
as a result of such assignment, and which contains a representation by the
assignee that all of the representations and warranties made by Buyer in this
Agreement are true and correct with respect to the assignee as of the date of
the assumption agreement. Seller shall have the right to rely in good faith on
the genuineness and validity of the notice from Buyer of an assignment and to
convey the Premises to the assignee without liability to Buyer or any other
person.
(b) Prohibited Assignments. Notwithstanding the foregoing
provisions of subparagraph (a), Buyer shall have no right to assign this
Agreement to any entity owned or controlled by an employee benefit plan if
Seller's sale of the Premises to such entity would, in the judgment of Seller or
Seller's counsel, either create, otherwise cause, or raise a material question
as to whether it would create or otherwise cause, a "prohibited transaction"
under the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
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(c) Successors and Assigns. Except as provided in subparagraph
(a), Buyer may not assign or suffer an assignment of this Agreement and its
rights under this Agreement. Subject to the foregoing limitations, this
Agreement shall extend to, and shall bind, the respective heirs, executors,
personal representatives, successors and assigns of Seller and Buyer.
16. Inspection Period.
(a) Right to Inspect. Buyer, and Buyer's agents and
representatives, shall have the right, from time to time, through 5:00 p.m.,
Eastern Standard Time on April 3, 1997 ("Inspection Period"), during normal
business hours, to enter upon the Premises for the purpose of inspection of the
physical condition of the Premises (including a Phase I environmental assessment
report, soils report, structural engineering report), evaluation of title,
survey of the Premises, testing of machinery and equipment, evaluation of plans
and specifications and generally for the reasonable ascertainment of the
physical condition of the Premises; provided, however, that Buyer shall (i) give
Seller at least one (1) business day prior notice of the time and place of such
entry and permit a representative of Seller to accompany Buyer; (ii) restore any
damage to the Premises or any adjacent property caused by such actions; (iii)
indemnify, defend and save Seller and, as the case may be, its partners,
trustees, shareholders, directors, officers, employees and agents (each, an
"Indemnified Party") harmless of and from any and all claims, costs and
liabilities actually incurred by any Indemnified Party such entry and such
activities; (iv) not enter into any tenant's leased premises or communicate with
any tenant without Seller's prior consent, which consent will not be
unreasonably withheld, and in all such events Seller shall be afforded the
opportunity to accompany Buyer's representatives when exercising any rights
under this cause (iv). All such inspection rights shall be subject to the right
of tenants under the Existing Leases. The costs of all inspections and
examinations so performed shall be borne by Buyer.
(b) No Liens Permitted. Nothing contained in this Agreement
shall be deemed or construed in any way as constituting the consent or request
of Seller, express or implied by inference or otherwise, to any party for the
performance of any labor or the furnishing of any materials to the Premises or
any part thereof, nor as giving Buyer any right, power or authority to contract
for or permit the rendering of any services or the furnishing of any materials
that would give rise to the filing of any liens against the Premises or any part
thereof.
(c) Right of Termination. Buyer shall have the right to
terminate this Agreement by giving Seller written notice ("Termination Notice")
on or prior to the end of the Inspection Period, which right shall be
exercisable by Buyer in its sole discretion. Without limiting the foregoing,
Buyer may terminate this Agreement pursuant to this Paragraph 16(c) if Buyer has
not received all necessary internal board approvals Buyer may require by the end
of the Inspection Period. Upon giving the Termination Notice, this Agreement
shall immediately terminate (except for the indemnity and confidentiality
obligations of Buyer to Seller under Paragraph 16(a) and 16(f) of this Agreement
which shall survive termination of this Agreement) and Escrowee is authorized
and directed to return the Deposit to Buyer. Buyer's failure to
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deliver the Termination Notice on or before the expiration of the Inspection
Period shall be deemed a waiver of Buyer's right to terminate this Agreement
under this Paragraph.
(d) Deliveries. Seller has furnished or made available to
Buyer, and Buyer acknowledges receipt or the availability of, the following:
(i) Copies of plans and specifications for the
Premises, to the extent currently in Seller's possession.
(ii) The current books and records (excluding,
however, internal memoranda, financial projections, appraisals and projected
budgets) customarily prepared by or at Seller's request with respect to the
Premises, including, without limitation, to the extent so prepared, all ledgers,
records of income, expense, capital expenditures, utility bills and the most
recent property tax bill.
(iii) Copies of all service and maintenance contracts
currently in force with respect to the Premises.
(iv) Copies of all Existing Leases and other
occupancy agreements currently in force with respect to the Premises.
(e) NO WARRANTY. NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH
16(d), BUYER ACKNOWLEDGES AND UNDERSTANDS THAT SOME OF THE MATERIALS DELIVERED
BY SELLER HAVE BEEN PREPARED BY PARTIES OTHER THAN SELLER. SELLER MAKES NO
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE
COMPLETENESS, CONTENT OR ACCURACY OF THE DELIVERED MATERIALS WHICH WERE NOT
PREPARED BY SELLER.
(f) Buyer shall hold as confidential all information
concerning Seller or the Premises obtained by Buyer in connection with the
transactions contemplated by this Agreement. Buyer shall not, prior to
completion of Closing, release any such information relating to Seller or the
Premises without Seller's prior written consent, except pursuant to court order
or as may otherwise be required by law. Seller hereby consents to Buyer's
disclosure of information relating to Seller or the Premises to Buyer's
prospective mortgage lenders and investors, consultants, officers, directors and
attorneys, and pursuant to Paragraph 23(h).
17. Condemnation.
(a) Immaterial Taking. If any part of the Premises shall be
taken by exercise of the power of eminent domain after the date of this
Agreement, this Agreement shall continue in full force and effect and there
shall be no abatement of the Purchase Price. Seller shall be relieved, however,
of its duty to convey title to the portion so taken, but Seller shall, on the
Closing Date, assign to Buyer all rights and claims to any awards arising
therefrom as well as
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any money theretofore received by Seller on account thereof net of any expenses
to Seller, including attorneys' fees of collecting the same. Seller shall
promptly furnish Buyer with a copy of the declaration of taking promptly after
Seller's receipt thereof.
(b) Material Taking. If any such taking of a portion of the
Premises materially interferes with the use of the Premises for the purposes for
which it is currently used, either Seller or Buyer may terminate this Agreement
by written notice to the other party. Upon such termination, the Deposit shall
be returned by Escrowee to Buyer and neither party shall have any further rights
or obligations hereunder (except for the indemnity and confidentiality
obligations of Buyer to Seller set forth in Paragraph 16(a) and 16(f) of this
Agreement which will survive termination of this Agreement).
18. Brokers. Each party represents and warrants to the other that it
has dealt with no broker or other intermediary in connection with this
transaction or the Premises other than Cushman & Wakefield (the "Disclosed
Broker"), whose fees shall be payable by Seller pursuant to a separate agreement
between Seller and Disclosed Broker, and Buyer shall have no liability or
obligation in connection therewith. Each party shall indemnify, defend and save
harmless the other of and from any claim for commission or compensation by any
other broker or other intermediary claiming through the indemnifying party. The
provisions of this Paragraph shall survive Closing.
19. CONDITION OF PREMISES.
(A) ENTIRE AGREEMENT. THE ENTIRE AGREEMENT BETWEEN SELLER AND
BUYER WITH RESPECT TO THE PREMISES AND THE PERSONAL PROPERTY AND THE SALE
THEREOF IS EXPRESSLY SET FORTH IN THIS AGREEMENT. THE PARTIES ARE NOT BOUND BY
ANY AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR
WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY SELLER OR ANY AGENT,
EMPLOYEE OR PRINCIPAL OF SELLER OR ANY OTHER PARTY) OTHER THAN AS ARE EXPRESSLY
SET FORTH IN THIS AGREEMENT. WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF
THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES HAVE FULLY
INSPECTED THE PREMISES, THE PERSONAL PROPERTY, THE EXISTING LEASES AND EXISTING
AGREEMENTS, OR WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR
WILL BE FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING WITHOUT
LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THAT THE PREMISES, THE
PERSONAL PROPERTY, THE EXISTING LEASES AND EXISTING AGREEMENTS HAVE BEEN
PURCHASED BY BUYER IN AN "AS IS" AND "WHERE IS" CONDITION AND WITH ALL EXISTING
DEFECTS AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE
ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT
LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER OR ANY
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AGENT, EMPLOYEE OR PRINCIPAL OF SELLER OR ANY OTHER PARTY AS TO THE FINANCIAL OR
PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE
PREMISES OR THE PERSONAL PROPERTY OR THE AREAS SURROUNDING THE PREMISES, AS TO
ANY MATTER, INCLUDING WITHOUT LIMITATION AS TO ANY PERMITTED USE THEREOF, THE
ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL
LAWS, AS TO INCOME OR EXPENSES IN CONNECTION THEREWITH, OR AS TO ANY OTHER
MATTER IN CONNECTION THEREWITH, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT
OR IN ANY INSTRUMENT TO BE DELIVERED TO BUYER BY SELLER AT CLOSING. BUYER
ACKNOWLEDGES THAT NEITHER SELLER, NOR ANY AGENT OR EMPLOYEE OF SELLER NOR ANY
OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE
ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR
IMPLIED, OTHER THAN AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY
INSTRUMENT TO BE DELIVERED TO BUYER BY SELLER AT CLOSING. THIS PARAGRAPH SHALL
SURVIVE CLOSING.
(b) CHANGE OF CONDITIONS. BUYER SHALL ACCEPT THE PREMISES AND
THE PERSONAL PROPERTY AT THE TIME OF CLOSING IN THE SAME CONDITION AS THE SAME
ARE AS OF THE END OF THE INSPECTION PERIOD, AS SUCH CONDITION SHALL HAVE CHANGED
BY REASON OF WEAR AND TEAR AND DAMAGE BY FIRE OR OTHER CASUALTY, SUBJECT
NEVERTHELESS TO THE PROVISIONS OF PARAGRAPHS 14 AND 17. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, EXCEPT AS PROVIDED IN PARAGRAPHS 14 AND 17, BUYER
SPECIFICALLY ACKNOWLEDGES THAT THE FACT THAT ANY PORTION OF THE PREMISES OR THE
PERSONAL PROPERTY OR ANY EQUIPMENT OR MACHINERY THEREIN OR ANY PART THEREOF MAY
NOT BE IN WORKING ORDER OR CONDITION AT THE CLOSING DATE BY REASON OF WEAR AND
TEAR OR DAMAGE BY FIRE OR OTHER CASUALTY, OR BY REASON OF ITS PRESENT CONDITION,
SHALL NOT RELIEVE BUYER OF ITS OBLIGATION TO COMPLETE CLOSING UNDER THIS
AGREEMENT, EXCEPT AS PROVIDED IN SUBPARAGRAPH (c) BELOW, SELLER HAS NO
OBLIGATION TO MAKE ANY REPAIRS OR REPLACEMENTS TO THE PREMISES.
(c) Seller Repairs. Between the date of the execution of this
Agreement and the Closing Date, Seller shall perform such repairs to the
Premises and the Personal Property as Seller has customarily previously
performed to maintain them in the same condition as they are as of the end of
the Inspection Period, as said condition shall be changed by wear and tear and
damage by fire or other casualty.
(d) RELEASE. WITHOUT LIMITING THE PROVISION OF SUBPARAGRAPH
(a) ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, BUYER HEREBY RELEASES SELLER AND (AS THE CASE MAY BE) SELLER'S
OFFICERS, DIRECTORS, SHAREHOLDERS,
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TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS AND AGENTS FROM ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES
(INCLUDING ATTORNEYS' FEES WHETHER THE SUIT IS INSTITUTED OR NOT) WHETHER KNOWN
OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE
"CLAIMS") ARISING FROM OR RELATING TO (i) ANY DEFECTS, ERRORS OR OMISSIONS IN
THE DESIGN OR CONSTRUCTION OF THE PREMISES AND PERSONAL PROPERTY WHETHER THE
SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER CONDITIONS,
INCLUDING ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PREMISES OR
PERSONAL PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE. THE
RELEASE SET FORTH IN THIS SECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY
CLAIMS (INCLUDING INDEMNITY AND CONTRIBUTION CLAIMS) ARISING UNDER ANY
ENVIRONMENTAL LAWS OF THE UNITED STATES, THE STATE IN WHICH THE PREMISES IS
LOCATED OR ANY POLITICAL SUBDIVISION THEREOF OR UNDER THE AMERICANS WITH
DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME
AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN
CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE
DATE OF THIS AGREEMENT.
(e) NOTHING IN SUBPARAGRAPH 19(d) SHALL CONSTITUTE A RELEASE
OF SELLER FOR ANY CLAIM MADE BY A THIRD PARTY AGAINST BUYER ASSERTING INJURY OR
DAMAGE TO SUCH THIRD PARTY ARISING DURING SELLER'S OWNERSHIP OF THE PREMISES,
PROVIDED (i) BUYER DELIVERS WRITTEN NOTICE TO SELLER OF THE THIRD PARTY CLAIM
WITHIN THIRTY (30) DAYS AFTER BUYER'S RECEIPT OF THE THIRD PARTY CLAIM, (ii)
SELLER SHALL BE PERMITTED TO INTERVENE IN DEFENDING THE THIRD PARTY CLAIM AND
(iii) BUYER DOES NOT SETTLE THE THIRD PARTY CLAIM WITHOUT THE WRITTEN CONSENT OF
SELLER. A THIRD PARTY DOES NOT INCLUDE ANY DIRECT OR INDIRECT PRINCIPAL OR
AFFILIATE OF BUYER. NOTWITHSTANDING ANYTHING CONTAINED IN THIS PARAGRAPH, BUYER
AGREES THAT SELLER SHALL HAVE NO LIABILITY TO BUYER UNDER THIS PARAGRAPH
(WHETHER BY REIMBURSEMENT OR CONTRIBUTION UNDER ENVIRONMENTAL LAWS OR OTHERWISE)
FOR THE COST OF ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES, FOR
THE COST OF ANY REPAIRS OR REPLACEMENTS TO THE PREMISES, OR FOR ANY OTHER COSTS
OF REMEDIATING THE CONDITION GIVING RISE TO THE THIRD PARTY CLAIM (TOGETHER,
"REMEDIATION COSTS") OR FOR BUYER'S LEGAL FEES AND COURT COSTS IN DEFENDING A
THIRD PARTY CLAIM. BUYER SHALL PAY ALL REMEDIATION COSTS AND BUYER'S LEGAL FEES
AND COURT COSTS. SELLER SHALL PAY ITS LEGAL FEES AND COURT COSTS.
(f) Seller Reports. Buyer acknowledges that Seller makes no
warranties or representations regarding the adequacy, accuracy or completeness
of Seller's
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environmental reports (collectively the "Reports") or other documents relating
to the Reports, and Buyer shall have no claim against Seller based upon the
"Reports or such other documents relating to the Reports. Buyer further
acknowledges that Buyer has had full opportunity to perform such environmental,
engineering, legal and financial investigations and evaluations of the Premises
as Buyer deems appropriate prior to entering into this Agreement or shall have
such opportunity during the Inspection Period, and Buyer has obtained or shall
obtain its own environmental, engineering, legal and financial assessments of
the Premises.
(g) Effect of Disclaimers. Buyer acknowledges and agrees that
the Purchase Price has been negotiated to take into account that the Premises
and Personal Property are being sold subject to the provisions of this Paragraph
19 and that Seller would have charged a higher purchase price if the provisions
in this Paragraph 19 were not agreed upon by Buyer.
20. Survival of Provisions.
(a) Notwithstanding any provision to the contrary set forth in
this Agreement, the agreements and obligations of Buyer under Paragraph 7,
16(a), 16(e), 16(f), 18, and 19, and 23(h) shall survive Closing, and the
warranties and representations of Buyer set forth in Paragraph 9 shall survive
Closing under this Agreement for a period of twelve (12) months.
(b) (i) Notwithstanding any provision to the contrary set
forth in this Agreement, the agreements and obligations of Seller under
Paragraph 7, 18 and 23(h) shall survive Closing, and the warranties and
representations of Seller set forth in Paragraph 8(a) (the "Surviving
Warranties") shall survive Closing under this Agreement for a period of twelve
(12) months, as the same may be extended pursuant to Paragraph 20(b)(iii).
Notwithstanding the foregoing, the representations and warranties of Seller
contained in Paragraph 8(a)(v) with respect to any Existing Lease shall not
survive the delivery to Buyer of a Tenant Estoppel Certificate confirming
matters represented and warranted by Seller with respect to such Existing Lease.
For example, if Buyer receives a Tenant Estoppel Certificate from a tenant and
such certificate confirms some but not all of Seller's representations and
warranties with respect to such Existing Lease contained in Paragraph 8(a)(v),
the representations and warranties of Seller with respect to the matters so
confirmed shall not survive Closing and the representations and warranties of
Seller with respect to the matters not so confirmed shall survive Closing as
provided herein.
(ii) If Buyer determines that any of the Surviving
Warranties are breached prior to the Closing Date, Buyer's sole right and remedy
shall be to terminate this Agreement by giving to Seller written notice of such
termination on or prior to the Closing Date. If Buyer fails to timely give such
written termination notice to Seller, Buyer shall be deemed to have waived any
right or remedy (including, without limitation, any right under this Agreement
to terminate this Agreement) against Seller by reason of the breach of such
warranty. If Buyer terminates this Agreement pursuant to this Paragraph, Buyer
shall be entitled to the return of the Deposit, and upon the return of the
Deposit to Buyer, neither Buyer nor Seller shall have any
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further rights nor obligations under this Agreement (except for the indemnity
and confidentiality obligations of Buyer to Seller set forth in Paragraph 16(a)
and 16(f) of this Agreement).
(iii) Seller shall have no liability to Buyer by reason of
a breach or default of any of the Surviving Warranties unless Buyer shall have
given to Seller written notice ("Warranty Notice") of such breach or default
within twelve (12) months of the Closing Date, and shall have given to Seller an
opportunity to cure any such breach or default within a reasonable period of
time after Buyer's learning of such breach of warranty. In no event shall
Seller's liability to Buyer by reason of a breach or default of any or all of
the Surviving Warranties exceed $2,000,000, and Seller shall have no liability
to Buyer for breach of the Surviving Warranties except to the extent of the loss
incurred by Buyer as a result thereof exceeds $50,000. Any litigation to enforce
any Surviving Warranty must be commenced within three (3) months from the date
of the Warranty Notice, and if not commenced within such time period, Buyer
shall be deemed to have waived its claims for such breach or default.
21. ERISA. Seller and Buyer hereby agree that, if the transactions
contemplated by this Agreement are non-exempt prohibited transactions under
Section 406 of ERISA, Seller shall not be obligated to sell the Premises to
Buyer and Buyer shall not be obligated to purchase the Premises from Seller.
22. Escrow Provisions.
(a) Investment of Deposit. Escrowee shall invest the Deposit
in such accounts, commercial paper, U.S. government securities, repurchase
agreements or other instruments as Purchaser shall from time-to-time direct and
Seller may approve. Escrowee shall promptly advise Seller and Buyer of the
investment of the Deposit. All interest earned on the Deposit shall be added to
the deemed part of the Deposit.
(b) Payment at Closing. If the Closing is completed under this
Agreement, Escrowee shall deliver the Deposit to Seller on the Closing Date on
account of the Purchase Price.
(c) Other Payment. Notwithstanding anything contained in this
Agreement, upon receipt of any written notice from Seller or Buyer claiming the
Deposit pursuant to the provisions of this Agreement, Escrowee shall promptly
forward a copy thereof to the other party and, unless such other party within
ten (10) days thereafter notifies Escrowee of any objection to such request for
the disbursement of the Deposit, Escrowee shall disburse the Deposit to the
party demanding the same and Escrowee shall thereupon be released and discharged
from any further duty or obligation under this Agreement.
(d) Stakeholder. Escrowee is acting as a stakeholder only with
respect to the Deposit. If there is any dispute as to whether Escrowee is
obligated to deliver the Deposit, or as to whom the Deposit is to be delivered,
Escrowee may refuse to make any delivery and may continue to hold the Deposit
until receipt by Escrowee of written authorization, signed by
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both Seller and Buyer, directing the disposition of the Deposit or, in the
absence of such joint written authorization, until final determination of the
rights of the parties in appropriate judicial proceeding. Escrowee may also
bring an appropriate action or proceeding for leave to deposit the Deposit in a
court of competent jurisdiction located in Fairfax, Virginia and to interplead
Seller and Buyer. Upon making delivery of the Deposit, Escrowee shall have no
further liability with respect to the Deposit. Seller and Buyer agree that the
duties of Escrowee in its capacity as escrow holder under this Agreement are
ministerial in nature and that Escrowee shall incur no liability except for its
willful misconduct or gross negligence so long as Escrowee acts in good faith.
(e) Tax Information. The federal tax identification number of
Buyer is 04-3224259. The federal tax identification number of Seller is
06-1184599.
(f) Escrow Fees. Seller and Buyer shall each pay one-half of
the fees and expenses, if any, due to Escrowee as compensation for its escrow
services pursuant to this Agreement, and shall each reimburse Escrowee for
one-half of the expenses incurred by Escrowee in discharging its duties and
obligations as escrow holder under this Agreement.
23. Miscellaneous.
(a) Captions or Headings; Interpretation. The captions or
headings of the Paragraphs and subparagraphs of this Agreement are for
convenience only, and shall not control or affect the meaning or construction of
any of the terms or provisions of this Agreement. Wherever in this Agreement the
singular number is used, the same shall include the plural and vice versa and
the masculine gender shall include the feminine gender and vice versa as the
context shall require.
(b) Amendments and Waivers. No change, alteration, amendment,
modification or waiver of any of the terms or provisions of this Agreement shall
be valid, unless the same shall be in writing and signed by Buyer and Seller.
(c) No Rule of Construction. This Agreement has been
negotiated at arms length by both Seller and Buyer, and no rule of construction
shall be invoked against either party with respect to the authorship thereof or
of any of the documents to be delivered by the respective parties at the
Closing.
(d) Counterparts. This Contract may be executed in multiple
counterparts each of which shall be deemed an original but together shall
constitute one agreement.
(e) Applicable Law. This Agreement shall be governed and
construed according to the laws of the State in which the Premises is located.
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(f) Right to Waive Conditions or Contingency. Either party may
waive any of the terms and conditions of this Agreement made for its benefit
provided such waiver is in writing and signed by the party waiving such term or
condition.
(g) Partial Invalidity. If any term, covenant, condition or
provision of this Agreement or the application thereof to any person or
circumstance shall be invalid or unenforceable, at any time or to any extent,
the remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby. Each term, covenant, condition and
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
(h) Public Disclosure of Agreement. Seller acknowledges that
Beacon Properties Corporation, the general partner of Buyer, is a publicly owned
corporation subject to regulation by the Securities and Exchange Commission
("SEC"), and that the regulations of the SEC may require that Buyer disclose the
existence of this Agreement and the contents of some or all of the documents and
materials delivered by Seller. Accordingly, Seller expressly consents to the
disclosure of the terms and conditions of this transaction, this Agreement
itself, and terms of any document or materials which Buyer in good faith
believes should be disclosed in connection with fulfillment of its disclosure
requirements under SEC regulations. In addition, following Closing, Buyer shall
have the right to issue press releases announcing this transaction. Seller shall
be entitled to a prior review and approval of the press release.
(i) Property Excluded. This sale does not include, and Seller
shall remove the Premises prior to Closing, the items of personal property
listed on Exhibit L to this Agreement. Prior to the Closing Date, Seller shall
repair in a reasonable manner, all holes and other damage to the building
directly resulting from the removal by Seller from the building of the items of
property not included in this sale.
(j) Agreement Not To Be Recorded. This Agreement shall not be
filed of record by or on behalf of Buyer in any office or place of public
record. If Buyer fails to comply with the terms hereof by recording or
attempting to record this Agreement or a notice thereof, such act shall not
operate to bind or cloud the title to the Premises. Seller shall, nevertheless,
have the right forthwith to institute appropriate legal proceedings to have the
same removed from record. If Buyer or any agent, broker or counsel acting for
Buyer shall cause or permit this Agreement or a copy thereof to be filed in an
office or place of public record, Seller, at its option, and in addition to
Seller's other rights and remedies, may treat such act as a default of this
Agreement on the part of Buyer. However, the filing of this Agreement in any
lawsuit or other proceedings in which such document is relevant or material
shall not be deemed to be a violation of this Paragraph.
(k) Waiver of Tender of Deed and Purchase Monies. The tender
of an executed Deed by Seller and the tender by Buyer of the portion of the
Purchase Price payable at Closing are hereby mutually waived, but nothing herein
contained shall be construed as a waiver
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of Seller's obligation to deliver the Deed and/or of the concurrent obligation
of Buyer to pay the Purchase Price.
(l) Time of the Essence. Time, wherever specified herein for
the performance by Seller or Buyer of any of their respective obligations
hereunder (including, without limitation the time deadline for Buyer's delivery
of a Termination Notice under Paragraph 16), is hereby made and declared to be
of the essence of this Agreement.
(m) Computation of Periods. If the final day of any period of
time in any provision of this agreement falls upon a Saturday, Sunday or a
holiday observed by federally insured banks in the State in which the Premises
is located or by the United States Postal Service, then, the time of such period
shall be extended to the next day which is not a Saturday, Sunday or holiday.
Unless otherwise specified, in computing any period of time described in this
Agreement, the day of the act or event after which the designated period of time
begins to run is not to be included and the last day of the period is so
computed is to be included, unless such last day is a Saturday, Sunday or
holiday in which event the period shall run until the end of the next day which
is neither a Saturday, Sunday or holiday.
(n) Exhibits. All exhibits annexed to this Agreement
are incorporated by reference into and made a part of this Agreement.
(o) Right to Audit. Pursuant to Paragraph 16(d), Seller has
furnished or made available to Buyer certain financial statements and balance
sheets for the Property. In order to comply with SEC regulations, Buyer may need
the right prior to or subsequent to Closing, to conduct an audit of Seller's
books and records for the Property in conformity with Section 3.14 of SEC
Regulation SX for 1994, 1995, 1996 and/or for Seller's period of ownership
during the year in which the Closing occurs. Seller hereby agrees to permit
Buyer and Buyer's accountants access to such books and records (including those
maintained by Manager) and to cooperate with Buyer, and to cause Seller's
accountants to cooperate with Buyer, at no cost to Seller, to enable such audit
to be performed. Buyer agrees that no information disclosed in such audit will
alter any obligation of Buyer. The provisions of this Paragraph 23(o) shall
survive the Closing indefinitely.
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IN WITNESS WHEREOF, the parties, intending legally to be bound, have
executed this Agreement as of the date first above written.
SELLER:
JOSHUA REALTY CORPORATION
By: /s/ Stephen B. Hoover
________________________________
Name: Stephen B. Hoover
Title: Executive Vice President
BUYER:
BEACON PROPERTIES, L.P.
By: Beacon Properties Corporation
General Partner
By: /s/ Charles H. Cremens
____________________________
Name: Charles H. Cremens
Title: Senior Vice President
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OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") made this ____ day of
___________________, 1997 by and between CENTERPOINTE III LIMITED PARTNERSHIP, a
Delaware limited partnership ("Seller") and BEACON PROPERTIES, L.P., a Delaware
limited partnership ("Buyer").
W I T N E S S E T H:
In consideration of the covenants and provisions contained herein, the
parties agree as follows:
1. Grant.
(a) For and in consideration of the sum of _________________ Dollars
($____________) paid by Buyer on the signing of this Agreement, receipt of which
is hereby acknowledged by Seller, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer grant
to the other the right, privilege and option, exercisable on the terms set out
below in Paragraph 2 (the "Option"), to effect the sale of that certain lot or
piece of ground containing approximately 7.85 acres and situate in Fairfax,
Virginia, which is more fully described by metes and bounds on Exhibit A to this
Agreement (the "Real Property"), together with all rights and appurtenances
pertaining to the Real Property, including any right, title and interest of
Seller in and to adjacent streets and rights-of-way, and Seller's interests in
the Intangible Personal Property (defined below). Seller and Buyer stipulate and
agree that the Real Property has the potential for approximately 341,948 square
feet of developable office space (the "Agreed Amount of Developable Office
FAR").
(b) The Intangible Personal Property shall refer to the interests of
Seller in all existing surveys, consents, authorizations, variances or waivers,
licenses, permits and approvals from any governmental or quasi-governmental
agency, department, board, commission, bureau or other instrumentality (all to
the extent assignable or transferable) with respect to the Real Property. The
Real Property and Intangible Personal Property are collectively referred to as
the "Property."
(c) Concurrently with the execution of this Agreement, the parties
have executed a Memorandum of Option (the "Memorandum") which Buyer may, at its
election, record with the Office of the Clerk of the Circuit Court of Fairfax
County, Virginia (the "Recorder's Office"), and have also executed and delivered
to Commonwealth Land Title Insurance Company (the "Escrowee") to be held in
escrow a Termination of Memorandum of Option (the "Termination") pending
termination of this Agreement or the completion of Closing.
2. Exercise.
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(a) Subject to Paragraphs 2(c) and 2(d) below, the Option may be
exercised by Buyer or Seller by written notice (the "Option Notice") given to
the other party on or before the Option Expiration Date. The "Option Expiration
Date" shall be the earlier to occur of (I______,2000 [insert day which is three
(3) years from the date of this Agreement] or (ii) the date which is forty-five
(45) days after the date Buyer receives written notice from Seller that Seller
intends to begin development of the Real Property. In no event may Seller
deliver the notice contemplated by clause (ii) of the immediately preceding
sentence prior to the earlier of January 1, 1998 or the date of the Final Local
Master Plan Amendment (as defined in Paragraph 14, below). The period from the
date of this Agreement to the Option Expiration Date is called the "Term of the
Option." If the Option is not exercised on or before the Option Expiration Date,
this Agreement shall automatically terminate, neither party shall have any
further obligations hereunder and Escrowee is authorized and directed to record
the Termination in the Recorder's Office. If, however, the Option is exercised
by Buyer or Seller on or before the Option Expiration Date, this Agreement,
together with the Option Notice from the party exercising this Option, shall be
deemed to be an Agreement of Sale and Purchase between Seller and Buyer with
respect to the Property pursuant to the terms and provisions set forth below,
without the necessity of any further act or agreement.
(b) If not previously exercised by Seller, Buyer shall have the right
to exercise the Option at any time during the Term of the Option. To be
effective, Buyer's Option Notice must be accompanied by delivery of the sum of
Two Hundred Fifty Thousand Dollars ($250,000) (the "Deposit") to Escrowee. The
Deposit shall be held by Escsrowee in accordance with the provisions of
Paragraph 22 of this Agreement.
(c) If not previously exercised by Buyer, Seller shall have the right
to exercise the Option during the period commencing sixty (60) days prior to the
Option Expiration Date and expiring on the Option Expiration Date; provided,
that prior to such exercise of the Option the Average Appraised Value (as
defined below) of the Property shall have first been established and that the
Average Appraised Value of the Property is equal to or greater than $3,419,480.
Within thirty (30) days after receipt of a request from Seller ("Seller's
Appraisal Request"), Buyer shall engage a Qualified Appraiser to prepare an MAI
appraisal of the Property. A "Qualified Appraiser" is an appraiser having not
less than five (5) years' appraisal experience in the Fairfax County, Virginia
market area. Seller shall also engage a Qualified Appraiser to perform such an
appraisal of the Property. In preparing such appraisals, the appraisers shall be
instructed to assume that the Real Property has been zoned to permit an office
use development of not less than the Agreed Amount of Developable Office FAR and
to prepare the appraisal in accordance with the instructions set forth on
Schedule 2(c) to this Agreement. The Qualified Appraisers so engaged shall
deliver their appraisal reports within thirty (30) days after being so engaged.
If the value of the Property reported by either appraisal is five percent (5%)
or less than the value reported by the other, then the "Average Appraised Value"
of the Property shall be the average of the two (2) appraisals. If the values
are more than five percent (5%) apart, then within ten (10) days after
submission of the last of the appraisals to be submitted to either Seller or
Buyer, the two (2) Qualified Appraisers shall engage a third Qualified Appraiser
to prepare such an appraisal of the Property and to deliver such appraisal
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report to Seller and Buyer within thirty (30) days after being so engaged. In
such event, the Average Appraised Value of the Property shall be equal to
average of the two closest appraised values, unless one of the three appraised
values is equidistant from the other two, in which case the Average Appraised
Value shall equal such middle appraised value. If the Qualified Appraiser
selected by either buyer or Seller does not submit its appraisal report within
the time period specified above, the appraised value reported by the Qualified
Appraiser which does timely submit its report shall constitute the Average
Appraised Value of the Property. Each party shall pay the costs of any Qualified
Appraiser selected by it, and shall pay one-half of the costs charged by the
third Qualified Appraiser.
(d) If not previously exercised by either party, Seller shall have the
right to exercise the Option at any time during the Term of the Option if Seller
executes a New AMS Lease. A "New AMS Lease" shall be a lease agreement (i) with
American Management Systems, Inc. ("AMS") to lease space exceeding 200,000
rentable square feet within a new, build-to-suit office building to be built on
the Real Property, (ii) which shall yield to Buyer a Stabilized Return (as
defined in Schedule 2(d) of ten percent (10%) per annum (cash on bona fide
third-party costs) on all Budgeted Development Costs (as defined in Schedule
2(d)), and (iii) which shall otherwise be substantially in the form of the
existing AMS Lease for Centerpointe I and II, shall provide a reasonable,
realistic time frame for the delivery of the leased space, and shall be for a
term of not less than ten (10) years with no contingencies or termination rights
prior to the tenth year of the term in favor of AMS (other than reasonable and
customary termination rights for failure to timely complete construction or
failure to rebuild following casualty or eminent domain).
3. Purchase Price.
(a) The purchase price (the "Purchase Price") to be paid by Buyer to
Seller for the Property shall be a sum calculated as follows:
(i) If Buyer exercises the Option pursuant to Paragraph 2(b),
the Purchase Price shall be the product of the Agreed Amount of Developable
Office FAR multiplied by:
(A) subject to the provisions of Paragraph 3(a)(i)(B),
Eighteen Dollars and Thirty Five Cents ($18.35) if Buyer exercises the Option
during the period from the date of this Agreement to and including the day
immediately preceding the first anniversary of the date of this Agreement;
(B) notwithstanding the provisions of Paragraph 3(a)(i)(A),
Twenty Dollars ($20.00) if Buyer exercises the Option during the period
beginning on the date Seller gives Buyer written notice that Seller has entered
active negotiations with AMS for the New AMS Lease to and including the first
anniversary of the date of this Agreement; provided, that if Seller fails to
execute a New AMS Lease within four (4) months following the date of Buyer's
exercise of the Option, this Paragraph 3(a)(i)(B) shall be of no
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force or effect and the calculation of the Purchase Price shall
be governed by Paragraph 3(a)(i)(A);
(C) Twenty Dollars ($20.00) if Buyer exercises the Option
during the period beginning on the first anniversary of the date of this
Agreement to and including the day immediately preceding the second anniversary
of the date of this Agreement; and
(D) Twenty One Dollars and Eighty Cents ($21.80) if Buyer
exercises the Option during the period beginning on the second anniversary of
the date of this Agreement to and including the Option Expiration Date.
(ii) If Seller exercises the Option pursuant to Paragraph
2(c), the Purchase Price shall equal the greater of (A) $4,428,226.60 (which
amount equals the product obtained by multiplying the Agreed Amount of
Developable Office FAR times $12.95) or (B) the Average Appraised Value.
(iii) If Seller exercises the Option pursuant to Paragraph
2(d) prior to the second anniversary of the date of this Agreement, the Purchase
Price shall equal $6,838,960 (which amount equals the product obtained by
multiplying the Agreed Amount of Developable Office FAR times $20.00).
(iv) If Seller exercises the Option pursuant to Paragraph 2(d)
on or after the second anniversary of the date of this Agreement, the Purchase
Price shall equal $7,454,466 (which amount equals the product obtained by
multiplying the Agreed Amount of Developable Office FAR times $21.80).
(b) Buyer shall pay the Purchase Price at Closing by wire transfer of
immediate United States federal funds to Seller's account at a bank designated
by Seller.
4. Closing. Closing shall commence at 10:00 a.m. on the date which is
thirty (30) days after the date of the Option Exercise Notice (the "Closing
Date") at the offices of Wolf, Block, Schorr and Solis-Cohen, Twelfth Floor
Packard Building, 15th and Chestnut Streets, Philadelphia, Pennsylvania 19102;
provided, if such thirtieth day is a Saturday, Sunday or a holiday observed by
federally insured banks in the State in which the Real Property is located, the
Closing Date shall be the next day which is not a Saturday, Sunday or holiday.
5. Condition of Title.
(a) Title to Real Property. Fee simple title to the
Real Property shall be conveyed by Seller to Buyer at the completion of Closing
by a deed (the "Deed") containing Seller's special warranty in substantially the
form of Exhibit C-1 to this Agreement, excluding from such warranty the
Permitted Exceptions (as defined below). Title to the Intangible Personal
Property shall be conveyed by Seller to Buyer at the completion of Closing by a
bill of
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sale ("Bill of Sale") in substantially the form of Exhibit C-2 to this
Agreement. Title to the Property shall be such as will be insured as good and
marketable by Escrowee pursuant to the standard stipulations and conditions of
the most current form of ALTA Policy of Owner's Title Insurance then in use in
the State in which the Real Property is located, free and clear of all liens and
encumbrances except for the Permitted Exceptions. Buyer will pay the premium for
the owner's policy and the cost of any endorsements to such policy. The term
"Permitted Exceptions" shall mean the title exceptions set forth on Exhibit B to
this Agreement.'
(b) Failure of Title. If on the Closing Date title to the
Property is not insurable as set forth in Paragraph 5(a) above, Buyer may elect,
as its sole right and remedy, either (i) to take such title to the Property as
Seller can convey without abatement of the Purchase Price except for liens and
encumbrances securing the payment of money which were voluntarily created by
Seller and mechanic's liens or (ii) to terminate this Agreement by written
notice to Seller and Escrowee and be paid the Deposit. Notwithstanding the
foregoing provisions, Buyer agrees to accept title to the Property subject to
judgments against Seller if Buyer's title insurer insures Buyer against loss by
reason of such judgments.
6. Possession. Possession of the Property is to be given by
Seller to Buyer at the completion of Closing by delivery of the
Deed.
7. Closing: Apportionments.
(a) Items to be Apportioned. Personal property taxes, real
estate taxes and annual municipal or special district assessments (on the basis
of the actual fiscal years for which such taxes are assessed), prepaid fees for
licenses and permits to remain in effect for Buyer's benefit after Closing shall
be apportioned at Closing pro rata between Buyer and Seller on a per diem basis
as of the Closing Date.
(b) Unpaid Real Estate Taxes. If, on the Closing Date, bills
for real estate taxes imposed upon the Property for any part of the tax fiscal
years in which Closing occurs have been used but shall not have been paid, such
taxes shall be paid at the time of Closing.
(c) Transfer Tax. Buyer shall pay the state and county realty
transfer taxes imposed in connection with the Deed or transactions contemplated
by this Agreement. Seller shall pay the grantor's tax imposed in connection with
the Deed or transactions contemplated by this Agreement.
8. Seller's Representations and Warranties.
(a) Seller represents and warrants to Buyer as follows:
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(i) Organization. Seller is a limited partnership, duly
organized and validly subsisting under the laws of the State of Delaware and has
all requisite partnership power and authority to carry on its business as now
conducted.
(ii) Authorization. Seller has all requisite partnership power
and authority to enter into and perform this Agreement, and Seller has duly
authorized the execution and performance of this Agreement. No consent or
approval from any third party is required in order to enable Seller to execute
this Agreement and perform its obligations hereunder.
(iii) No Condemnation. To Seller's knowledge, there are no
existing or pending condemnation proceedings affecting the Property, nor, to
Seller's actual knowledge, have any such condemnation proceedings been overtly
threatened.
(iv) No Proceedings. Except as set forth on Schedule 8(a)(iv)
to this Agreement, Seller has received no written notice of any pending actions,
suits or proceedings against Seller or the Property nor, to Seller's knowledge,
is there any action, suit or proceeding against Seller or the Property
threatened which would prevent consummation by Seller of the sale of the
Property or materially and adversely affect the performance of any of Seller's
other obligations to be performed under this Agreement. Seller has not received
any written notice from any governmental authority claiming a violation or
alleged violation of any law, rule, ordinance or code with respect to the
Property which remains uncured.
(b) All references in this Paragraph 8 or elsewhere in this
Agreement to "Seller's knowledge" shall refer solely to the actual knowledge of
Stephen B. Hoover, Raymond L. Owens and Daniel Coughlan and shall not be
construed to refer to the knowledge of any other employee, officer, director,
shareholder or agent of Seller or any affiliate of Seller, and shall not include
imputed or constructive knowledge.
9. Buyer's Representations and Warranties. Buyer hereby
represents and warrants to Seller as follows:
(a) Organization. Buyer is a limited partnership duly
organized and validly existing under the laws of the State of Delaware and has
all requisite partnership power and authority to carry on its business as now
conducted.
(b) Authorization. Buyer has all requisite partnership power
and authority to enter into and perform this Agreement and Buyer has duly
authorized the execution and performance of this Agreement. Buyer has received
all approvals (except any approvals to be obtained during the Inspection Period)
necessary to consummate the transactions described herein.
10. Conditions to Closing.
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(a) Buyer shall not be obligated to complete Closing under
this Agreement unless each of the following conditions shall be fulfilled on the
Closing Date:
(i) Title Policy. Escrowee or another title insurance
company authorized to transact business in the State of Virginia reasonably
acceptable to Buyer and Buyer's counsel shall commit in writing to Buyer to
issue an owner's policy of title insurance as described in Paragraph 5(a).
(ii) Accuracy of Representations. The representations and
warranties made by Seller in this Agreement shall be true and correct as of the
Closing Date in all material respects.
(iii) Seller's Performance. Seller shall have complied with
and performed in all material respects all of its obligations under this
Agreement.
(b) Seller shall not be obligated to complete Closing under
this Agreement unless Buyer shall have paid the Purchase Price and shall have
complied with and performed in all material respects all of its other
obligations under this Agreement.
11. Deliveries at Closing.
(a) Seller's Deliveries. On the Closing Date, Seller
shall deliver to Buyer the following:
(i) Transfer Documents. The Deed and Bill of Sale.
(ii) Authority Documents. A resolution, to evidence
Seller's authorization of performance of this Agreement and an
incumbency certificate to evidence the capacity of the signatory
for Seller.
(iii) FIRPTA Certification and Title Affidavit. A
certificate in the form attached to this Agreement as Exhibit D with respect to
compliance with the Foreign Investment in Real Property Tax Act (Internal
Revenue Code Section 1445, as amended, and the regulations issued thereunder)
and an affidavit in the form of Exhibit E in favor of the title insurer who will
insure Buyer's title to the Property (which affidavit shall in no event expand
Seller's warranty contained in the Deed).
(iv) Original Documents. The originals (to the extent
in Seller's possession) of all Intangible Personal Property.
(v) Seller's Closing Certificate. An executed
original of the Seller's Closing Certificate in the form attached
as Exhibit F.
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(vi) Closing Statement. An executed original Closing
Statement setting forth the calculation of the Purchase Price and
the prorations provided for hereunder.
(vii) Transfer Tax Forms. An executed original of any
transfer tax forms required in connection with Closing.
(viii) New AMS Lease. If the Closing is occurring as a
result of an exercise of the Option by Seller under Paragraph 2(d), Seller shall
also deliver an executed original of the New AMS Lease, an estoppel certificate
from AMS and any security deposit being held by Seller thereunder.
(ix) Other Documents. Any other documents which
Seller is obligated to deliver pursuant to this Agreement.
(b) Buyer's Deliveries. On the Closing Date, Buyer will
deliver to Seller the following:
(i) Authority Documents. A resolution, to evidence
Buyer's authorization of performance of this Agreement, and an
incumbency certificate to evidence the capacity of the signatory
for Buyer.
(ii) Purchase Price. That portion of the Purchase
Price payable at Closing.
(iii) Buyer's Closing Certificate. An executed original of
the Buyer's Closing Certificate in the form attached as Exhibit G.
(iv) Closing Statement. An executed original Closing
Statement setting forth the calculation of the Purchase Price and
the prorations provided for hereunder.
(v) Transfer Tax Forms. An executed original of any
transfer tax forms required in connection with Closing.
(vi) Other Documents. Any other documents which Buyer
is obligated to deliver pursuant to this Agreement.
12. Default
(a) Buyer Default. If Buyer defaults under this Agreement at
the Closing Date by failing to complete Closing in accordance with the terms of
this Agreement, then, provided Buyer has posted the Deposit, on the Closing Date
Seller shall be entitled, as Seller's sole and exclusive remedy at law or in
equity for such default by Buyer hereunder, to be
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paid the Deposit as liquidated damages and not as a penalty. In such event,
Seller and Buyer agree that the actual damages to Seller in the event of such
default are impractical to ascertain as of the date of this Agreement and that
the amount of the Deposit is a reasonable estimate thereof. Nothing in this
Paragraph, however, shall limit Seller's rights against Buyer by reason of any
indemnity obligations of Buyer to Seller set forth in this Agreement, all of
which shall survive the termination of this Agreement. Notwithstanding the
foregoing, if Buyer has not posted a Deposit by reason of the Option having been
exercised by Seller, and if Buyer defaults under this Agreement at the Closing
Date by failing to complete Closing in accordance with the terms of this
Agreement, then Seller shall be entitled to pursue all remedies available to
Seller at law or in equity including, without limitation, the right to institute
an action for specific performance of this Agreement.
(b) Seller Default. If Seller defaults under this Agreement at
or prior to the Closing Date by failing to complete Closing in accordance with
the terms of this Agreement, then on the earlier of the Closing Date or the date
of Seller's default, Buyer shall be entitled, as Buyer's sole and exclusive
remedy, to institute an action for specific performance of this Agreement.
13. Notices.
(a) All notices given by either party to the other shall be in
writing and shall be sent either (i) by United States Postal Service registered
or certified mail, postage prepaid, return receipt requested, (ii) by nationally
recognized overnight courier service for next business day delivery, addressed
to the other party at the addresses listed below or (iii) via telecopier or
facsimile transmission to the facsimile numbers listed below, provided, however,
that if such communication is given via telecopier or facsimile transmission, an
original counterpart of such communication shall concurrently be sent in the
manner specified in clause (ii) above. Addresses and facsimile numbers of the
parties are as follows:
As to Seller:
c/o GE Investments
3003 Summer Street
P.O. Box 7900
Stamford, Connecticut 06905
Attention: Raymond L. Owens
Fax: (203) 326-4169
with copies at
the same time to:
Centerpointe III Limited Partnership
c/o GE Investments
3003 Summer Street
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P.O. Box 7900
Stamford, Connecticut 06905
Attention: Michael J. Strone, Esquire
Fax: (203) 326-2497
and
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor Packard Building
15th and Chestnut Streets
Philadelphia, Pennsylvania 19102
Attention: James R. Williams, Esquire
Fax: (215) 977-2346
As to Buyer:
Beacon Properties, L.P.
50 Rowes Wharf
Boston, Massachusetts 02110
Attention: Ms. Erin O'Boyle
Fax: (617) 261-0152
with a copy at
the same time to:
Beacon Properties Corporation
50 Rowes Wharf
Boston, Massachusetts 02110
Attention: William A. Bonn, Esquire, General
Counsel
Fax: (617) 261-0152
and to
Goulston & Storrs
400 Atlantic Avenue
Boston, Massachusetts 02210
Attention: Jordan P. Krasnow, Esquire
Fax: (617) 574-4112
As to Escrowee:
Commonwealth Land Title Insurance Company
50 Federal Street
Boston, Massachusetts 02110
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Attention: Haskell Shapiro
Fax: (617) 542-0636
or to such other address as the respective parties may hereafter designate by
notice in writing in the manner specified above. Any notice may be given on
behalf of any party by its counsel.
(b) Notices given in the manner aforesaid shall be deemed
sufficiently served or given for all purposes under this Agreement upon the
earlier of (i) actual receipt or refusal by the addressee or (ii) one (1) day
following the date such notices, demands or requests shall be deposited in any
Post Office, or branch Post Office regularly maintained by the United States
Government or delivered to the overnight courier service.
14. Operations Prior to Exercise and Closing. During the Term of the
Option, Seller shall diligently pursue such amendments to the local master plan
for the Real Property necessary to change approved use of the Real Property to
office use and to permit the actual developable FAR to equal or exceed the
Agreed Amount of Developable FAR, until such amendments have been approved and
all appeal periods have expired without an appeal being granted (the "Final
Local Master Plan Amendment"). Seller and Buyer shall share equally the bona
fide third-party costs of Seller's efforts to obtain the Final Local Master Plan
Amendment, including (without limitation) the costs of engineering, surveying
and zoning counsel. During the Term of the Option, Buyer shall have the right to
prepare and submit to Seller applications for rezoning the Real Property, which
applications Seller in its sole discretion shall approve or disapprove for
submission to the appropriate zoning authorities, such approval or disapproval
to be based on the form of each such application and Seller's determination
whether the timing of submission of each application would interfere with the
pursuit of the Final Local Master Plan Amendment. If Seller approves the
application, Seller shall submit the application to the appropriate zoning
authority, and the bona fide third-party costs of such submission shall be
Buyer's sole cost and expense. Following the exercise of the Option by either
party, Buyer shall take over and thereafter control, at Buyer's sole cost and
expense any procedures then pending for the amendment to such master plan and/or
rezoning of the Real Property; provided, Buyer shall not be obligated to
reimburse Seller for Seller's share of any such costs incurred by Seller prior
to the exercise of the Option. Seller shall reasonably cooperate with Buyer in
transitioning control of such pending matters to Buyer prior to Closing. During
the Term of the Option, Seller shall also have the right to enter leases with
tenants for space in one or more buildings to be constructed on the Real
Property, provided that such leases contain provisions subordinating the
leasehold to Buyer's rights under the Option. Seller shall from time to time
keep Buyer reasonably well advised of all prospective lease transactions which
Seller may elect to pursue, and shall provide Buyer with a copy of any such
lease promptly after executing same.
15. Assignability.
(a) Limited Assignment. Subject to the limitations set
forth in subparagraph (b) below, this Agreement and all, but not
part, of Buyer's rights under this Agreement may be assigned by
Buyer, without the prior written consent of Seller, to an entity
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which is qualified to do business in the State in which the Property is located
and in which Buyer (and/or Beacon Properties Corporation ("BP"), and/or one or
more entities 100% owned and controlled by Buyer and/or B.C.) owns for its own
account not less than one hundred percent (100%) of the ownership interests
therein and maintains control over the management and affairs of the entity;
provided, however, that such assignment shall not release or relieve Buyer of
and from any liability or obligation under this Agreement, and Buyer shall
continue to be primarily liable to Seller under this Agreement. No such
assignment shall be effective, however, unless and until Buyer shall have
furnished to Seller both an executed copy of the assignment plus a written
assumption agreement, in form satisfactory to Seller, by the assignee to assume,
perform and be responsible, jointly and severally with the Buyer named herein,
for the performance of all of the obligations of Buyer under this Agreement and
to pay all additional transfer or documentary taxes imposed as a result of such
assignment, and which contains a representation by the assignee that all of the
representations and warranties made by Buyer in this Agreement are true and
correct with respect to the assignee as of the date of the assumption agreement.
Seller shall have the right to rely in good faith on the genuineness and
validity of the notice from Buyer of an assignment and to convey the Property to
the assignee without liability to Buyer or any other person.
(b) Prohibited Assignments. Notwithstanding the foregoing
provisions of subparagraph (a), Buyer shall have no right to assign this
Agreement to any entity owned or controlled by an employee benefit plan if
Seller's sale of the Property to such entity would, in the judgment of Seller's
counsel, either create, otherwise cause, or raise a material question as to
whether it would create or otherwise cause, a "prohibited transaction" under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(c) Successors and Assigns. Except as provided in subparagraph
(a), Buyer may not assign or suffer an assignment of this Agreement and its
rights under this Agreement. Subject to the foregoing limitations, this
Agreement shall extend to, and shall bind, the respective heirs, executors,
personal representatives, successors and assigns of Seller and Buyer.
16. Intentionally Omitted.
17. Condemnation.
(a) Immaterial Taking. If any part of the Property shall be
taken by exercise of the power of eminent domain after the date of this
Agreement, this Agreement shall continue in full force and effect and there
shall be no abatement of the Purchase Price. Seller shall be relieved, however,
of its duty to convey title to the portion so taken, but Seller shall, on the
Closing Date, assign to Buyer all rights and claims to any awards arising
therefrom as well as any money theretofore received by Seller on account thereof
net of any expenses to Seller, including attorneys' fees of collecting the same.
Seller shall promptly furnish Buyer with a copy of the declaration of taking
promptly after Seller's receipt thereof.
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(b) Material Taking. If any such taking of a portion of the
Property materially interferes with the use of the Property for the purposes for
which the Buyer intends, either Seller or Buyer may terminate this Agreement by
written notice to the other party. Upon such termination, the Deposit shall be
returned by Escrowee to Buyer and neither party shall have any further rights or
obligations hereunder.
18. Brokers. Each party represents and warrants to the other that it
has dealt with no broker or other intermediary in connection with this
transaction or the Property other than Cushman & Wakefield (the "Disclosed
Broker"), whose fees shall be payable by Seller pursuant to a separate agreement
between Seller and Disclosed Broker, and Buyer shall have no liability or
obligation in connection therewith. Each party shall indemnify, defend and save
harmless the other of and from any claim for commission or compensation by any
other broker or other intermediary claiming through the indemnifying party. The
provisions of this Paragraph shall survive Closing.
19. CONDITION OF PROPERTY.
(a) ENTIRE AGREEMENT. THE ENTIRE AGREEMENT BETWEEN SELLER AND
BUYER WITH RESPECT TO THE PROPERTY AND THE SALE THEREOF IS EXPRESSLY SET FORTH
IN THIS AGREEMENT. THE PARTIES ARE NOT BOUND BY ANY AGREEMENTS, UNDERSTANDINGS,
PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL
AND WHETHER MADE BY SELLER OR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SELLER OR ANY
OTHER PARTY) OTHER THAN AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. WITHOUT IN
ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT
AND ITS REPRESENTATIVES HAVE FULLY INSPECTED THE PROPERTY OR HAVE BEEN PROVIDED
WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR WILL BE FULLY FAMILIAR WITH THE
FINANCIAL AND PHYSICAL (INCLUDING WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION
THEREOF, AND THAT THE PROPERTY HAS BEEN PURCHASED BY BUYER IN AN "AS IS" AND
"WHERE IS" CONDITION AND WITH ALL EXISTING DEFECTS AS A RESULT OF SUCH
INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE ON ANY AGREEMENT,
UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR
REPRESENTATION MADE BY SELLER OR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SELLER OR
ANY OTHER PARTY AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION,
ENVIRONMENTAL) CONDITION OF THE PROPERTY AS TO ANY MATTER, INCLUDING WITHOUT
LIMITATION AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR
COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, AS TO INCOME OR EXPENSES
IN CONNECTION THEREWITH, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH,
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY INSTRUMENT
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TO BE DELIVERED TO BUYER BY SELLER AT CLOSING. BUYER ACKNOWLEDGES THAT NEITHER
SELLER, NOR ANY AGENT OR EMPLOYEE OF SELLER NOR ANY OTHER PARTY ACTING ON BEHALF
OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT,
CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED, OTHER THAN AS
ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY INSTRUMENT TO BE DELIVERED
TO BUYER BY SELLER AT CLOSING. THIS PARAGRAPH SHALL SURVIVE CLOSING.
(b) RELEASE. WITHOUT LIMITING THE PROVISIONS OF SUBPARAGRAPH
(a) ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, BUYER HEREBY RELEASES SELLER AND (AS THE CASE MAY BE) SELLER'S
OFFICERS, DIRECTORS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS AND
AGENTS FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES WHETHER THE SUIT IS
INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT
(HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS") ARISING FROM OR RELATING TO (i)
ANY DEFECTS IN THE PROPERTY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR
OTHERWISE, OR (ii) ANY OTHER CONDITIONS, INCLUDING ENVIRONMENTAL AND OTHER
PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF
NEGLIGENCE OR OTHERWISE. THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY
INCLUDES, WITHOUT LIMITATION, ANY CLAIMS (INCLUDING INDEMNITY AND CONTRIBUTION
CLAIMS) ARISING UNDER ANY ENVIRONMENTAL LAWS OF THE UNITED STATES, THE STATE IN
WHICH THE PROPERTY IS LOCATED OR ANY POLITICAL SUBDIVISION THEREOF OR UNDER THE
AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED
FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES
PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN
EXISTENCE ON THE DATE OF THIS AGREEMENT.
(c) NOTHING IN SUBPARAGRAPH 19(b) SHALL CONSTITUTE A RELEASE
OF SELLER FOR ANY CLAIM MADE BY A THIRD PARTY AGAINST BUYER ASSERTING INJURY OR
DAMAGE TO SUCH THIRD PARTY ARISING DURING SELLER'S OWNERSHIP OF THE PREMISES,
PROVIDED (i) BUYER DELIVERS WRITTEN NOTICE TO SELLER OF THE THIRD PARTY CLAIM
WITHIN THIRTY (30) DAYS AFTER BUYER'S RECEIPT OF THE THIRD PARTY CLAIM, (ii)
SELLER SHALL BE PERMITTED TO INTERVENE IN DEFENDING THE THIRD PARTY CLAIM AND
(iii) BUYER DOES NOT SETTLE THE THIRD PARTY CLAIM WITHOUT THE WRITTEN CONSENT OF
SELLER. A THIRD PARTY DOES NOT INCLUDE ANY DIRECT OR INDIRECT PRINCIPAL OR
AFFILIATE OF BUYER. NOTWITHSTANDING ANYTHING CONTAINED IN THIS PARAGRAPH, BUYER
AGREES THAT SELLER SHALL HAVE NO LIABILITY TO BUYER UNDER THIS PARAGRAPH
(WHETHER BY REIMBURSEMENT OR CONTRIBUTION UNDER ENVIRONMENTAL LAWS OR OTHERWISE)
FOR THE
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COST OF ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES, FOR THE
COST OF ANY REPAIRS OR REPLACEMENTS TO THE PREMISES, OR FOR ANY OTHER COSTS OF
REMEDIATING THE CONDITION GIVING RISE TO THE THIRD PARTY CLAIM (TOGETHER,
"REMEDIATION COSTS") OR FOR BUYER'S LEGAL FEES AND COURT COSTS IN DEFENDING A
THIRD PARTY CLAIM. BUYER SHALL PAY ALL REMEDIATION COSTS AND BUYER'S LEGAL FEES
AND COURT COSTS. SELLER SHALL PAY ITS LEGAL FEES AND COURT COSTS.
(d) Effect of Disclaimers. Buyer acknowledges and agrees that
the Purchase Price has been negotiated to take into account that the Property is
being sold subject to the provisions of this Paragraph 19 and that Seller would
have charged a higher purchase price if the provisions in this Paragraph 19 were
not agreed upon by Buyer.
20. Survival of Provisions.
(a) Notwithstanding any provision to the contrary set forth in
this Agreement, the agreements and obligations of Buyer under Paragraph 7,
16(a), 16(e), 16(f), 18, and 19 shall survive Closing, and the warranties and
representations of Buyer set forth in Paragraph 9 shall survive Closing under
this Agreement for a period of six (6) months.
(b) (i) Notwithstanding any provision to the contrary set
forth in this Agreement, the agreements and obligations of Seller under
Paragraph 7 and 18 shall survive Closing, and the warranties and representations
of Seller set forth in Paragraph 8(a) (the "Surviving Warranties") shall survive
Closing under this Agreement for a period of six (6) months.
(ii) If Buyer determines that any of the Surviving
Warranties are breached prior to the Closing Date, Buyer's sole right and remedy
shall be to terminate this Agreement by giving to Seller written notice of such
termination on or prior to the Closing Date. If Buyer fails to timely given such
written termination notice to Seller, Buyer shall be deemed to have waived any
right or remedy (including, without limitation, any right under this Agreement
to terminate this Agreement) against Seller by reason of the breach of such
warranty. If Buyer terminates this Agreement pursuant to this Paragraph, Buyer
shall be entitled to the return of the Deposit, and upon the return of the
Deposit to Buyer, neither Buyer nor Seller shall have any further rights nor
obligations under this Agreement.
(iii) Seller shall have no liability to Buyer by reason or
a breach or default of any of the Surviving Warranties unless Buyer shall have
given to Seller written notice ("Warranty Notice") of such breach or default
within six (6) months of the Closing Date, and shall have given to Seller an
opportunity to cure any such breach or default within a reasonable period of
time after Buyer's learning of such breach of warranty. In no event shall
Seller's liability to Buyer by reason of a breach or default of any or all of
the Surviving Warranties exceed $500,000, and Seller shall have no liability to
Buyer for breach of the Surviving Warranties except to the extent of the loss
incurred by Buyer as a result thereof
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exceeds $500,000. Any litigation to enforce any Surviving Warranty must be
commenced within three (3) months from the date of the Warranty Notice, and if
not commenced within such time period, Buyer shall be deemed to have waived its
claims for such breach or default.
21. ERISA. Seller and Buyer hereby agree that, if the transactions
contemplated by this Agreement are non-exempt prohibited transactions under
Section 406 of ERISA, Seller shall not be obligated to sell the Property to
Buyer and Buyer shall not be obligated to purchase the Property from Seller.
22. Escrow Provisions.
(a) Investment of Deposit. Escrowee shall invest the Deposit
in such accounts, commercial paper, U.S. government securities, repurchase
agreements or other instruments as Purchaser shall from time-to-time direct and
Seller may approve. Escrowee shall promptly advise Seller and Buyer of the
investment of the Deposit. All interest earned on the Deposit shall be added to
and deemed part of the Deposit.
(b) Payment at Closing. If the Closing is completed under this
Agreement, Escrowee shall deliver the Deposit to Seller on the Closing Date.
(c) Other Payment. Notwithstanding anything contained in this
Agreement, upon receipt of any written notice from Seller or Buyer claiming the
Deposit pursuant to the provisions of this Agreement, Escrowee shall promptly
forward a copy thereof to the other party and, unless such other party within
ten (10) days thereafter notifies Escrowee of any objection to such request for
the disbursement of the Deposit, Escrowee shall disburse the Deposit to the
party demanding the same and Escrowee shall thereupon be released and discharged
from any further duty or obligation under this Agreement.
(d) Stakeholder. Escrowee is acting as a stakeholder only with
respect to the Deposit and Termination. If there is any dispute as to whether
Escrowee is obligated to deliver the Deposit or Termination, or as to whom the
Deposit or Termination is to be delivered, Escrowee may refuse to make any
delivery and may continue to hold the Deposit or Termination until receipt by
Escrowee of written authorization, signed by both Seller and Buyer, directing
the disposition of the Deposit or Termination or, in the absence of such joint
written authorization, until final determination of the rights of the parties in
appropriate judicial proceeding. Escrowee may also bring an appropriate action
or proceeding for leave to deposit the Deposit or Termination in a court of
competent jurisdiction located in Fairfax, Virginia and to interplead Seller and
Buyer. Upon making delivery of the Deposit of Termination, Escrowee shall have
no further liability with respect to the Deposit or Termination so delivered.
Seller and Buyer agree that the duties of Escrowee in its capacity as escrow
holder under this Agreement are ministerial in nature and that Escrowee shall
incur no liability except for its willful misconduct or gross negligence so long
as Escrowee acts in good faith.
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(e) Tax Information. The federal tax identification
number of Buyer is 04-3224259. The federal tax identification
number of Seller is ___________________.
(f) Escrow Fees. Seller and Buyer shall each pay one-half of
the fees and expenses, if any, due to Escrowee as compensation for its escrow
services pursuant to this Agreement, and shall each reimburse Escrowee for
one-half of the expenses incurred by Escrowee in discharging its duties and
obligations as escrow holder under this Agreement.
23. Miscellaneous.
(a) Captions or Headings: Interpretation. The captions or
headings of the Paragraphs and subparagraphs of this Agreement are for
convenience only, and shall not control or affect the meaning or construction of
any of the terms or provisions of this Agreement. Wherever in this Agreement the
singular number is used, the same shall include the plural and vice versa and
the masculine gender shall include the feminine gender and vice versa as the
context shall require.
(b) Amendments and Waivers. No change, alteration, amendment,
modification or waiver of any of the terms or provisions of this Agreement shall
be valid, unless the same shall be in writing and signed by Buyer and Seller.
(c) No Rule of Construction. This Agreement has been
negotiated at arms length by both Seller and Buyer, and no rule of construction
shall be invoked against either party with respect to the authorship thereof or
of any of the documents to be delivered by the respective parties at the
Closing.
(d) Counterparts. This Contract may be executed in multiple
counterparts each of which shall be deemed an original but together shall
constitute one agreement.
(e) Applicable Law. This Agreement shall be governed
and construed according to the laws of the State in which the
Property is located.
(f) Right to Waive Conditions or Contingency. Either party may
waive any of the terms and conditions of this Agreement made for its benefit
provided such waiver is in writing and signed by the party waiving such term or
condition.
(g) Partial Invalidity. If any term, covenant,
condition or provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable, at any time or to any
extent, the remainder of this Agreement, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby. Each term, covenant,
condition and provision of this Agreement shall be valid and enforced to the
fullest permitted by law.
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(h) Public Disclosure of Agreement. Seller acknowledges that
Beacon Properties Corporation, the general partner of Buyer, is a publicly owned
corporation subject to regulation by the Securities and Exchange Commission
("SEC"), and that the regulations of the SEC may require that Buyer disclose the
existence of this Agreement and the contents of some or all of the documents and
materials delivered by Seller. Accordingly, Seller expressly consents to the
disclosure of the terms and conditions of this transaction, this Agreement
itself, and terms of any document or materials which Buyer in good faith
believes should be disclosed in connection with fulfillment of its disclosure
requirements under SEC regulations. In addition, following Closing, Buyer shall
have the right to issue press releases announcing this transaction. Seller shall
be entitled to a prior review and approval of the press release.
(i) Intentionally Omitted.
(j) Waiver of Tender of Deed and Purchase Monies. The tender
of an executed Deed by Seller and the tender by Buyer of the portion of the
Purchase Price payable at Closing are hereby mutually waived, but nothing herein
contained shall be construed as a waiver of Seller's obligation to deliver the
Deed and/or of the concurrent obligation of Buyer to pay the Purchase Price.
(k) Time of the Essence. Time, wherever specified herein for
the performance by Seller or buyer of any of their respective obligations
hereunder (including, without limitation the time deadline for delivery of an
Option Notice), is hereby made and declared to be of the essence of this
Agreement.
(l) Computation of Periods. If the final day of any period of
time in any provision of this Agreement falls upon a Saturday, Sunday or a
holiday observed by federally insured banks in the State in which the Property
is located or by the United States Postal Service, then, the time of such period
shall be extended to the next day which is not a Saturday, Sunday or holiday.
Unless otherwise specified, in computing any period of time described in this
Agreement, the day of the act or event after which the designated period of time
begins to run is not to be included and the last day of the period is so
computed is to be included, unless such last day is a Saturday, Sunday or
holiday in which event the period shall run until the end of the next day which
is neither a Saturday, Sunday or holiday.
(m) Exhibits and Schedules. All exhibits and schedules annexed
to this Agreement are incorporated by reference into and made a part of this
Agreement.
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IN WITNESS WHEREOF, the parties, intending legally to be bound, have
executed this Agreement as of the date first above written.
SELLER:
CENTERPOINTE III LIMITED PARTNERSHIP
By: Pension Realty Holding Corporation,
General Partner
By: ______________________________________________
Name:
Title:
BUYER:
BEACON PROPERTIES, L.P.
By: Beacon Properties Corporation,
General Partner
By: _____________________________________________
Name:
Title:
19
CONTRIBUTION AGREEMENT
Owner: Westbrook Corporate Center
Associates, Westbrook
Corporate Center IV
Associates Limited
Partnership and Westbrook
Corporate Center V
Associates Limited
Partnership, Illinois
limited partnerships which
are, respectively, the sole
beneficiaries of the land
trusts which own title to
the Real Property.
Operating Partnership: BEACON PROPERTIES, L.P.
Dated as of: MARCH 20, 1997
Property: WESTBROOK CORPORATE CENTER,
WESTCHESTER, ILLINOIS 60154
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TABLE OF CONTENTS
Section Page
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1. Defined Terms 1
2. Contribution of Property; Agreed Value 5
3. Deposit 11
4. Delivery of Materials for Review 11
5. Contingencies 13
6. Title 14
7 Closing Requirements 14
8. Closing Deliveries 17
9. Closing Costs and Prorations 22
10. Notice to Tenants 24
11. Default 25
12. Owner's Representations and Warranties 25
13. Operating Partnership's Representations, Warranties and Covenants 29
14. Actions After the Effective Date 33
15. Use of Proceeds to Clear Title 35
16. Survival 36
17. Damage to Property 36
18. Brokerage Commission 37
19. Disclosure; Audit Right 37
20. Option 38
21. Successors and Assigns 38
22. Entire Agreement 38
23. Attorneys' Fees 38
24. Notices 38
25. Exhibits and Defined Terms 39
26. Time 39
27. Applicable Law 39
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28. No Oral Modification or Waiver 39
29. No Recording 39
30. Counterparts 39
31. Books and Records 39
Exhibits
Exhibit A Legal Description
Exhibit B Schedule of Personal Property
Exhibit C Schedule of Contributors
Exhibit D Form of Lock-Up Agreement
Exhibit E Registration Rights Agreement
Exhibit F Prospective Subscription Questionnaire
Exhibit G Foreign Persons Agreement
Exhibit H Allocation of Value
Exhibit I Schedule of Leases and Rent Roll
Exhibit J Contracts
Exhibit K Escrow Agreement
Exhibit L-1 Form of Tenant Estoppel Certificate
Exhibit L-2 Form of Owner Estoppel Certificate
Exhibit M Mandatory Estoppels
Exhibit N Lease Commissions
Exhibit O Legal Proceedings
Exhibit P Intentionally Deleted
Exhibit Q New Leases
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Operating Partnership and Owner hereby enter into this
Contribution Agreement (this "Agreement") as of the Effective Date.
1. Defined Terms.
a. The terms listed below shall have the following meanings
throughout this Agreement:
Agreed Value: $180,500,000.00 minus (i) the principal
balance of the Loans on the date of Closing,
including the Redemption Notes, and plus or minus
(ii) any closing costs and net prorations.
Beneficiaries: Westbrook Corporate Center Associates, an Illinois
limited partnership, as to the Parcel 1 Trust and the
Parcel 3 Trust; Westbrook Corporate Center IV
Associates Limited Partnership as to the Parcel 4
Trust; and Westbrook Corporate Center V Associates
Limited Partnership as to the Parcel 5 Trust.
Business Day: Any day on which banking institutions in
Chicago, Illinois and Boston, Massachusetts, are open
for the transaction of banking business.
Closing Date: On or before April 15, 1997.
Contracts: Contracts means agreements relating to all service,
maintenance, supply, construction, utility, parking
and management contracts affecting the construction,
use, ownership, maintenance and/or operation of the
Property (expressly excluding the Leases), except
those agreements which as of the date hereof have
been fully performed.
Contract Rights: Any rights of Owner, as owner of the Property, in
and to the Contracts.
Contributors: Those Partners who become holders of Units in
connection with the closing of the transaction
contemplated hereby and the liquidation of the
Beneficiaries.
Deposit: Five Million and 00/100 Dollars ($5,000,000.00).
Description of Five interconnected ten-story office buildings at
Buildings: Wolf Road and 22nd Street, Westchester, Illinois
collectively known as Westbrook Corporate Center.
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Effective Date: The date all parties have executed this Agreement,
and a fully executed copy has been delivered to each
of Owner and Operating Partnership.
Escrow Holder: The Title Company.
Improvements: All Buildings and other improvements located on or
affixed to the Land, including, without limitation,
any and all utility, plumbing, electrical, heating,
air-conditioning and ventilation lines, systems, and
boilers.
Intangible All intangible and mixed property used in connection
Rights: with or relating to the Property, including without
limitation all representations, warranties,
guarantees, indemnities, bonds, approvals, licenses,
applications, permits, plans, drawings,
specifications, surveys, maps, engineering reports
and other technical descriptions, environmental
reports (including, without limitation, the
Environmental Reports, as defined in Section 4.a
below), the trade name "Westbrook Corporate Center",
and right to insurance proceeds for any unrepaired
losses as provided for herein and similar property,
other than the Contract Rights and the Leases. The
term Intangible Rights shall exclude all telephone
numbers of Podolsky and Associates L.P., the right to
delinquent rents due on or before Closing and the
right to the bankruptcy claim regarding Demert and
Dougherty, Inc. (a former tenant no longer in
possession or having a right of possession).
Land: That certain parcel of land in Westchester, Cook
County, Illinois described on Exhibit A attached
hereto and made a part hereof containing
approximately 38.5 acres and more particularly
described on Exhibit A, together with all rights and
interests appurtenant thereto, including, without
limitation, any water and mineral rights, development
rights, air rights, easements and rights-of-way.
Leasing Costs: Legal expenses, space planning and architectural
fees, tenant improvement costs, moving allowances,
and leasing commissions.
Loans: (a) The Loan evidenced by a Promissory Note in favor
of Aetna Life Insurance Company dated April 11, 1988,
in the original principal sum of $55,000,000; and
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(b) the Loan evidenced by a Promissory Note in favor
of Aetna Life Insurance Company dated July 30, 1990,
in the original principal sum of $29,000,000, (items
(a) and (b) together being referred to herein as the
"Aetna Loans");
(c) That certain loan from American National Bank and
Trust Company of Chicago and the Northern Trust
Company to Westbrook Corporate Center IV Associates
L.P. dated as of March 31, 1995 in the original sum
of $25,000,000;
(d) That certain loan from American National Bank and
Trust Company of Chicago and the Northern Trust
Company to Westbrook Corporate Center V Associates
L.P. dated as of June 27, 1996 in the original sum of
$27,000,000;
(e) That certain $1,520,000 second mortgage loan
dated March 22, 1995 in favor of Westbrook Executive
Suites LLC.
(f) The Redemption Loans.
Operating Beacon Properties, L.P., a Delaware limited
Partnership: partnership of which Beacon Properties Corporation, a
Maryland corporation, is the sole general partner.
Operating c/o Beacon Properties Corporation
Partnership's 50 Rowes Wharf
Address: Boston, Massachusetts 02110
Attention: Charles H. Cremens, Senior Vice President
Owner: Collectively, jointly and severally, the
Beneficiaries of the Trusts.
Owner's Address: c/o Podolsky and Associates L.P., Agent
One Westbrook Corporate Center
Suite 400
Westchester, Illinois 60154
Attn: Randy D. Podolsky, President
Partners: Those individuals and entities who are general or
limited partners in the Beneficiaries, as set forth
on Exhibit C attached hereto and made a part hereof.
Personal All tangible personal property interests of Owner
Property: (but excluding office furniture, fixtures and
equipment of Podolsky and Associates L.P.) in any way
relating directly or indirectly to the
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Real Property, including all furniture, fixtures,
equipment, machinery, furnishings, carpets, drapes,
blinds and mini-blinds, service and maintenance
equipment, tools, signs, telephones and other
communication equipment, intercom equipment and
systems, construction inventory, vehicles and
replacement parts set forth on Exhibit B attached
hereto and made a part hereof and any replacements
thereof and the Intangible Rights.
Property: The Real Property, the Personal Property and the
Contract Rights.
Property Westbrook Corporate Center
Location Westchester, Cook County, Illinois
City, County and
State)
Real Property: The Land and the Improvements.
Redemption Notes: Promissory notes issued by Owner to certain Partners
pursuant to the Interest Purchase
Securities Laws: Any federal or state securities, blue sky or
similar law, rule or regulation or the interpretation
thereof, which governs or is applicable to the
prospective issuance of Units pursuant to this
Agreement or to the conversion of such Units as
contemplated by the Registration Rights Agreement.
Title Company: Commonwealth Land Title Insurance Company
50 Federal Street
Boston, Massachusetts 02109
Trusts: As to Parcels 1 and 2, LaSalle National Trust, N.A.,
not individually but as Successor Trustee under a
Trust Agreement dated March 26, 1984 and known as
Trust No. 107822 (the "Parcel 1 Trust"); as to Parcel
3, LaSalle National Trust, N.A., not individually but
as Successor Trustee under a Trust Agreement dated
March 14, 1988 and known as Trust No. 103063 (the
"Parcel 3 Trust"); as to Parcel 4, LaSalle National
Trust, N.A., not individually but as Successor
Trustee under a Trust Agreement dated February 9,
1990 and known as Trust No. 115264 (the "Parcel 4
Trust"); and as to Parcel 5, LaSalle National Trust,
N.A., not individually but as Successor Trustee under
a Trust Agreement dated February 9, 1990 and known as
Trust No. 115265 (the "Parcel 5 Trust").
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Units: Limited partner interests in the Operating
Partnership.
2. Contribution of Property; Agreed Value.
Owner desires to contribute the Property to Operating Partnership in exchange
for Units and Operating Partnership desires to accept the Property from Owner,
subject to all of the terms, covenants and conditions hereinafter set forth in
this Agreement.
Prior to the Closing Date, the Owner shall purchase from the Partners
who are not Contributors such Partners' interests in the Beneficiaries for the
Redemption Notes (the "Interest Purchase"). The Redemption Notes shall be issued
to the Partners selling their interests pursuant to this section. At the Closing
Date, the Operating Partnership shall satisfy the Redemption Notes provided the
same does not result in the value of the Units to be issued being below
$32,500,000.00. Owner acknowledges that the Partner Approval required by Section
5(d) of this Agreement shall be obtained subsequent to the Interest Purchase and
further acknowledges that the Operating Partnership will offer to issue Units
pursuant to this Agreement only to the Contributors.
a. Agreed Value. Operating Partnership shall issue to the
Partnerships at Closing the number of Units equal to the Agreed Value divided by
the average closing sales price on the New York Stock Exchange ("NYSE") of
Beacon Property Corporation's (the "Company") common stock $.01 par value (the
"Common Stock") for the ten (10) consecutive trading days ending on the second
business day immediately preceding the Closing Date (the "Average Stock Price"),
provided that if the Closing occurs on or before April 15, 1997, the Agreed
Value shall be divided by the lesser of (w) the Average Stock Price, (x) the
said average closing sales price of the Common Stock for the twenty (20)
consecutive trading days ending on the second business day immediately preceding
Closing Date or (y) the offering price of Common Stock in any supplemental stock
offering of the Company made between the date hereof and the Closing Date. In
that connection the following provisions shall apply:
(i) Redemption of Units. In addition to the Special
Redemption Right described in subsection (vii) below,
the Units, at any time after the first anniversary
and in accordance with the terms of the Amended and
Restated Agreement of Limited Partnership of the
Operating Partnership, shall be redeemable for cash,
or at the Company's option, on a one for one basis in
exchange for shares of Common Stock.
(ii) Restrictions: No Contributor shall sell, offer or
contract to sell, grant any option to purchase,
pledge, redeem (other than pursuant to the Special
Redemption Right), convert, distribute or otherwise
dispose of all or any portion of the Units issued
hereunder for a period of one (1) year from the
Closing Date. The foregoing
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restriction shall not apply to involuntary transfers
resulting from death, bankruptcy or the like, but
shall continue to apply after any such involuntary
transfer. This restriction shall not apply to shares
of Common Stock currently held by the Contributors or
acquired by the Contributors in the open market. At
Closing, Owner shall execute a so-called "lock up"
agreement containing the foregoing restrictions in
the form of Exhibit D hereto and in connection with
the distribution of the Units upon dissolution shall
require each Contributor to agree to be bound
thereby.
(iii) Registration Rights: The Company will grant certain
registration rights to the Contributors in accordance
with terms of that certain Registration Rights
Agreement attached as Exhibit E hereto.
(iv) Units. Owner acknowledges that any Units offered
hereby are being offered without registration under
the Securities Act of 1933, as amended (the
"Securities Act"), and the securities laws of certain
states. The Units are being offered in reliance on an
exemption from registration under Regulation D of the
Securities Act ("Regulation D") and similar state law
exemptions. Owner further acknowledges that, to
satisfy the requirements of these exemptions,
Operating Partnership must determine whether a
prospective holder of Units meets the Regulation D
and state law definitions of "accredited investor"
before selling (or, in some states, offering)
securities to such prospective holder. Owner shall
deliver to Operating Partnership on or before April
3, 1997, subscriber questionnaires in the form set
forth in Exhibit J attached hereto and incorporated
herein completed and signed by each Contributor.
Additionally, in the event of any change in any
securities or related law or interpretation thereof
after the date of this Agreement, Owner shall deliver
to Operating Partnership, upon Operating
Partnership's request, such other information,
certificates and materials as Operating Partnership
shall reasonably request. It shall be a condition
precedent to Operating Partnership's and Owner's
obligations under this Agreement that there shall
have been no change in any securities or related law
or interpretation thereof that would render
consummation of conveyance of the Property as
contemplated by this Agreement a violation of law or
interpretation thereof.
Within fifteen (15) days following the Effective Date hereof, Westbrook
Corporate Center Associates, on behalf of all of the Beneficiaries, shall notify
Operating Partnership in writing that:
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(a) each of the Beneficiaries has adopted a
Plan of Liquidation as required under the terms of
this Agreement, to take effect if and when the
Closing occurs;
(b) the state of residence (or organization)
of each Offeree, and such other information as
Operating Partnership may request in order to assure
compliance with the Securities Laws.
(v) Partnership Agreement; Admission. Operating
Partnership represents and warrants to Owner that a
true and complete copy of the limited partnership
agreement of Operating Partnership in effect as of
the date of this Agreement (the "Partnership
Agreement") has been delivered to Owner. Operating
Partnership agrees that between the date hereof and
Closing, it will not amend the Partnership Agreement
without Owner's consent which shall not be
unreasonably withheld or delayed. Upon liquidation of
each Beneficiary, the general partner of Operating
Partnership (i) shall consent to the admission of
each Contributor as a limited partner in Operating
Partnership and (ii) upon execution and delivery by
each such Contributor of an amendment to the
Partnership Agreement providing for (x) the
acceptance of the Units to be delivered to it
pursuant to the terms of this Agreement and
containing an agreement to be bound by all terms and
conditions of the Partnership Agreement, and (y) a
Schedule showing the "Value" of each portion of the
Property as the "704(c) Value" of such Property for
purposes of the Partnership Agreement, in form and
substance reasonably satisfactory to Operating
Partnership (the "Amendment"), and shall add the name
of each such Contributor as a limited partner to the
books and records of Operating Partnership. Operating
Partnership agrees that no other documentation shall
be required to effect such admission pursuant to the
Partnership Agreement unless required by any law,
rule or regulation or interpretation thereof becoming
effective after the date hereof, and Operating
Partnership agrees to take the actions required of it
pursuant to Section 4.4 of the Partnership Agreement
in respect of the contribution to be made by Owner.
In the event any partner of the Operating Partnership
exercises its rights under Section 4.4, Operating
Partnership shall immediately notify Owner, who shall
have the right, within five (5) days of receipt of
such notice to terminate this Agreement whereupon the
Deposit shall be returned to Operating Partnership,
this Agreement shall terminate and neither party
shall have further rights or remedies hereunder. The
Amendment shall also provide that Operating
Partnership shall use any convention permitted by law
and selected by the general
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partner of Operating Partnership to make the
allocations contemplated in Section 12.2(C) of the
Partnership Agreement in respect of the issuance of
Units to be made pursuant to this Agreement, except
that capital gains and losses shall be allocated to
all the holders of Units in accordance with their
interests on the date of the transaction giving rise
to the capital gain or loss, and Operating
Partnership shall use the traditional method
(specified in Regulation s.1.704-3(b)) to allocate
book-tax differences with respect to the contribution
of the Property to Operating Partnership.
(vi) Special Redemption Right. Each Contributor shall have
a one-time right (the "Special Redemption Right") to
require the Operating Partnership to redeem for cash
all or any portion of the Units issued to such
Contributor upon liquidation of each Beneficiary. The
Special Redemption Right shall be exercised by
written notice given by Owner to the Operating
Partnership on or before the date which is thirty
(30) days following the Closing (each such
Contributor being referred to herein as a "Redeeming
Partner" and each such notice being referred to
herein as a "Special Redemption Notice"). Each
Special Redemption Notice shall specify the number of
Units designated by the applicable Redeeming Partner
to be redeemed. On or before the date which is
forty-five (45) days following the Closing, the
Operating Partnership shall redeem the designated
portion of each Redeeming Partner's Units for cash
based on the same price per Unit as was determined at
Closing in accordance with the provisions of Section
2(a) (that is, without further adjustment based upon
post-closing fluctuations in the share price of the
Company). If the redemption of all of the Units which
are the subject of Special Redemption Notices would
result in there remaining outstanding Units issued to
Contributors hereunder having a value of less than
Thirty-Two Million Five Hundred Thousand Dollars
($32,500,000.00) (based on the Closing price per
Unit, as aforesaid), then the Operating Partnership
shall redeem an aggregate number of Units which,
following such redemption, would leave remaining
Units issued to Contributors hereunder having a value
of Thirty-Two Million Five Hundred Thousand Dollars
($32,500,000.00), and the number of Units to be
redeemed from each Redeeming Partner shall be
prorated among the Redeeming Partners as follows: (X)
first, Units shall be redeemed from each Redeeming
Partner in an amount equal to the lesser of (i) the
number of Units the Redeeming Partner offered for
redemption and (ii) the number of Units received by
the redeeming Partner from the Owner times a fraction
the numerator of which is the maximum number of Units
the Operating Partnership is
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required to redeem pursuant to this provision and the
denominator of which is the total Units issued to
Owners and (Y) any remaining Units the Operating
Partnership is required to redeem in excess of the
number of Units to be redeemed pursuant to (X) (the
"Remaining Redemption Units") shall be allocated to
each Redeeming Partner in an amount equal to the
number of Units the Redeeming Partner gave a Special
Redemption Notice in regard to less the Units
required to be redeemed from such Redeeming Partner
pursuant to (X) above (the "Remaining Offered Units")
times a fraction the numerator of which is the
Remaining Redemption Units and the denominator of
which is the Remaining Offered Units of all Redeeming
Partners. The total number of Units to be redeemed
from each Remaining Partner shall be rounded to the
nearest whole number of Units (but in no event shall
be in excess of the number of Units offered for
Redemption). Each Redeeming Partner shall execute
such documents as the Company may reasonably require
in connection with the redemption of the Units.
b. The Loans. It is the intention of the parties that the
Contribution shall be made subject to the Loans provided the Aetna Loans can be
renegotiated to terms which contain a "market" rate of interest, as determined
by the Operating Partnership in its reasonable judgment. Prior to Closing,
Operating Partnership and Owner shall endeavor to obtain the approval of the
holders of the Loans to the transfer of the Property to the Operating
Partnership subject to the Loans and to adjust the terms of the Aetna Loans to
current market provisions and an increase in the principal thereof to
$106,000,000. If Aetna refuses to grant such consent on terms satisfactory to
Operating Partnership, either Owner or Operating Partnership shall be entitled
to seek a commitment for refinancing of the Aetna Loans in an amount not less
than $106,000,000 secured by the Property, containing non-recourse provisions
similar to the Aetna Loans, and otherwise on terms mutually satisfactory to
Owner and Operating Partnership. Any and all costs and expenses incurred in
connection with the assumption of the Aetna Loans including any assumption fee
or fee associated with a change in interest rates or increase in principal shall
be borne by Owner. In the event such fee or any other fees imposed by Aetna
exceeds $6,500,000 in the aggregate Owner may terminate this Agreement by
written notice to Operating Partnership given prior to the Closing. In addition,
Owner shall not be responsible for any other fees or commissions due third
parties in connection with the Aetna loan. In the event approval for such
assumptions is not obtained, or refinancing commitments not obtained, prior to
the Closing, either party may terminate this Agreement whereupon the Deposit
shall be returned to Operating Partnership and, except for covenants expressly
stated to survive, this Agreement shall terminate without further recourse or
remedy to either party hereto.
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c. Real Property. Owner shall contribute the Real Property to
Operating Partnership, and Operating Partnership shall accept the Real Property
from Owner, on all of the mutual terms, covenants and conditions hereinafter set
forth in this Agreement. Owner shall cause the fee title to the Real Property to
be contributed to Operating Partnership by four (4) good and sufficient
Trustee's Deeds (the "Deeds") from the Trustees of the Trusts in form and
substance reasonably satisfactory to Operating Partnership and Owner.
d. Leases. Owner shall assign to Operating Partnership all of
its right, title and interest in and to all of the leases, occupancy agreements,
or licenses of space in the Real Property, together with any amendments of any
of the foregoing set forth on Exhibit I attached hereto as well as any New
Leases, as hereinafter defined (collectively "Leases"), and Operating
Partnership shall assume all obligations under the same, pursuant to an
Assignment and Assumption Agreement (the "Lease Assignment") in form and
substance reasonably satisfactory to Operating Partnership and Owner.
e. Contract Rights. Attached hereto as Exhibit J is a complete
list of the Contracts, full and complete copies of which have been delivered to
the Operating Partnership. Those Contracts marked with an asterisk on Exhibit J
are those Contracts which Operating Partnership desires to be terminated by
Owner prior to Closing. Owner shall send notice of termination of such
unapproved Contracts prior to Closing, it being agreed that in any event all
management agreements and leasing agreements for the Real Property shall be
terminated by the Closing Date. Owner shall assign to Operating Partnership
Owner's interest in the Contract Rights which relate to those Contracts not
being terminated (the Approved Contracts), and Operating Partnership shall
assume the same pursuant to a Contract Rights Assignment (the "Contract
Assignment") in form and substance reasonably satisfactory to Operating
Partnership and Owner.
f. Other Interests. All other interests of Owner in the
Property (including, without limitation, the Personal Property) shall be
contributed by Owner to Operating Partnership pursuant to a Bill of Sale and
General Instrument of Transfer (the "General Instrument of Transfer") in form
and substance reasonably satisfactory to Operating Partnership and Owner.
3. Deposit. On the second business day after the Effective
Date, Operating Partnership shall deposit with the Escrow Holder, by wire
transfer to Escrow Holder's account, the sum of Five Million and 00/100 Dollars
($5,000,000.00) as a deposit on account of the Agreed Value. The Escrow Holder
shall hold the Deposit pursuant to the terms of an escrow agreement (the "Escrow
Agreement") in the form attached hereto as Exhibit K. Interest earned on the
Deposit shall become a part thereof and shall be payable to the party receiving
the Deposit. The party receiving the interest on the Deposit shall bear the
costs and
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expenses, if any, charged by the Escrow Holder; provided, however, that in the
event of any dispute between Operating Partnership and Owner involving the
Escrow Holder, the losing party shall bear all the costs and expenses, if any,
of the Escrow Holder in connection with the resolution of such dispute. If
Operating Partnership shall fail to wire the Deposit to the Escrow Holder as
herein required, this Agreement shall automatically terminate and be null and
void, without recourse to the parties hereto. At Closing, the Deposit shall be
returned to Operating Partnership.
4. Delivery of Materials for Review.
In connection with Operating Partnership's investigation of
the Property, Owner has delivered, the documents ("Documents") set forth below
which are in Owner's possession or the possession of Owner's property manager or
are reasonably obtainable by Owner:
a. Environmental Reports. Copies of any and all soils, ground
water and environmental reports concerning the Property ("Environmental
Reports"), including, without limitation, the Environmental Reports prepared in
connection with the any mortgage or similar encumbrance now encumbering all or
any portion of the Property.
b. Building Information. Copies of any and all architectural
and engineering reports, as-built plans and specifications, the most recent
as-built surveys, permits, licenses, applications, violation notices,
certificates of occupancy, pending letters of intent for leasing space in the
Real Property, a list of all current litigation and pending claims, inspection
reports and/or approvals concerning the Property, all agreements with any
abutters to the Property, including summaries of any existing agreements with
said abutters that are oral rather than written.
c. Leases. Copies of all Leases, including all summaries
thereof, and copies of all material information contained in Owner's or Owner's
property manager's leasing files with respect to the Leases or any prospective
tenants.
d. Contract Rights. Copies of the Contracts, including
summaries of any Contracts that are oral rather than written.
e. Approvals. Copies of all governmental licenses, permits,
approvals, certificates and filings which have been obtained with respect to the
Property ("Approvals") and, where applicable, certificates evidencing compliance
therewith. The Approvals shall include, but not be limited to, environmental
notification forms and impact reports, facade maintenance agreements, historic
approvals, linkage agreements, licenses and permits required by any
environmental laws, and certifications, rezonings, general plan amendments,
parcel maps, development agreements, permits, licenses, and applications.
f. Title Policies and Surveys. A copy of Owner's most recent
owner's title policy on the Property, all endorsements to such policy, and (to
the extent in Owner's
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possession) copies of any lender's title policies issued to the holder of
outstanding mortgage indebtedness on the Property. A copy of the most recent as
built survey(s) covering the Property.
g. Books and Records. Copies of the appropriate materials
necessary to establish the operating history of the Property, including without
limitation copies of property tax bills, utility bills, insurance policies, the
most current rent roll, financial statements and balance sheets for calendar
years 1993 through 1996, inclusive, and balance sheets audited if such audited
statements exist and otherwise unaudited, and year to date statements and
balance sheets for 1997 (all such financial statements and balance sheets
collectively referred to as "Financial Statements"), monthly property operating
and/or management reports for the 12 months preceding the Effective Date, and a
list of all deposits, and similar records concerning the Property from 1993
through the present.
h. Other Material Documents. Copies of all other materials and
other information contained in Owner's or Owner's property manager's files, to
the extent the same are requested from time to time in writing by Operating
Partnership or its counsel and are reasonably material to Operating
Partnership's due diligence investigation of the Property.
i. Insurance Policies. Copies of all insurance policies, both
liability and casualty, relating to the Property in currently in effect and a
current loss report print-out with respect to such policies.
j. Loans. True and complete copies of all documents evidencing
the loans and security given therefor.
5. Contingencies.
(a) Inspection. Operating Partnership acknowledges that it has
conducted its own thorough investigation of the Property including, without
limitation, an examination of all structural and mechanical aspects thereof, a
review of any and all documentation with respect to the Property (including
without limitation, its income and expenses, the Loans, real estate tax status,
all Leases and tenant files, records of repairs and capital improvements,
examination of the title to the Property), conducting of tests to determine the
presence or absence of hazardous waste, asbestos, radon and other similar
materials and substances, obtaining current "as built" surveys thereof, and
determining the compliance of the Property with all applicable laws, rules,
codes and regulations. Operating Partnership hereby confirms that it is
satisfied with its investigation of the Property and accordingly, and except as
otherwise set forth in this Agreement shall have no further claims against
Owner, and the Contribution Agreement and Operating Partnership's obligations to
close hereunder are not subject to any further review period contingency.
Further, all corporate and partnership action necessary to authorize the
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execution of this Agreement by the Operating Partnership and the performance of
its obligations hereunder have been taken.
(b) Property Availability. Owner shall continue to make the
Property available to Operating Partnership and its agents, consultants and
engineers during normal business hours to update the results of inspections and
tests as Operating Partnership deems appropriate. Operating Partnership hereby
agrees to indemnify, defend and hold Owner harmless from and against any and all
loss, cost or damage to the Property arising out of actions taken by Operating
Partnership or its agents, engineers or consultants.
(c) Illinois Responsible Property Transfer Act. Owner hereby
represents and warrants to Operating Partnership that neither the Property nor
the transfer of the Property pursuant to this Agreement is subject to the
Illinois Responsible Property Transfer Act ("RPTA"). On the Closing Date, Owner
shall deliver to Operating Partnership an affidavit stating that as of the
Closing Date neither the Property nor the transfer of the Property pursuant to
this Agreement is subject to the RPTA.
(d) Partner Approval. It shall be a condition of Owner's
obligation hereunder that, (i) to the extent required by the respective
partnership agreements of Owner, consent be obtained from the requisite number
of Partners at or prior to Closing, and (ii) agreement be obtained from limited
partners who are "unaccredited investors" to have their partnership interest
redeemed by Owner. If such consent and agreement is not obtained, Owner shall
notify Operating Partnership in writing whereupon the Deposit shall be returned
to Operating Partnership and this Agreement will terminate and the parties shall
be without further recourse or remedy, except as otherwise provided hereunder.
Owner acknowledges that any consent required by this Section 5(d) shall be
solicited subsequent to the Interest Purchase and further acknowledges that the
Operating Partnership will offer to issue Units to Owner pursuant to this
Agreement for distribution only to the Contributors.
6. Title.
a. Title Commitment; Survey. Operating Partnership
acknowledges that it has received title insurance commitments from the Title
Company and surveys for the Property. Subject to Owner satisfying the standard
requirements set forth in Schedule B-1 to said commitments, as previously
forwarded to Owner's counsel, Operating Partnership shall close title subject to
the exceptions set forth in said title commitments and the surveys.
b. Later Changes Relating to Title. Operating Partnership
shall have the right to approve or disapprove any exceptions to title that could
have a material adverse effect on the value of the Property and that arise or
occur during the period (the
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"Interim Period") which begins after the date and time of the title commitment
and ends at the time of recording the Deed from Owner to Operating Partnership
in connection with the Closing hereunder. If Operating Partnership disapproves
of any such exception to title, then Operating Partnership shall give to Owner a
notice to such effect. Owner by written notice to Operating Partnership may
elect to cure or not cure such matters within five (5) days of such notice from
Operating Partnership. If Owner elects to cure such matters, it shall so advise
Operating Partnership and the Closing shall be extended for a period not to
exceed thirty (30) days. In the event Owner does not elect to cure such matter,
Operating Partnership shall have the right to accept title subject to such
matter without adjustment of the Purchase Price, or terminate the Agreement
whereupon the Deposit shall be returned to Operating Partnership and neither
party shall have further recourse hereunder. Notwithstanding the foregoing Owner
hereby agrees that it shall remove, and shall not object to (i) a mortgage or
related security documents or similar encumbrance given to secure indebtedness
for money borrowed, or (ii) involuntary encumbrances which may be discharged by
the payment of money, or bonding in lieu thereof (or, with respect to mechanics
liens only, by obtaining affirmative coverage from the Title Company in form
satisfactory to Operating Partnership), in the amount of $250,000 in the
aggregate.
7. Closing Requirements.
a. The Closing. On the Closing Date, all matters to be
performed under this Agreement incident to the sale of the Property, and the
payment of the Agreed Value (collectively, the "Closing") shall be performed at
the offices of the Escrow Holder, 30 N. LaSalle Street, Chicago, Illinois, or
other mutually acceptable location. The Closing shall commence on the day
preceding the Closing Date at 10:00 a.m. All documents to be delivered at the
Closing and all payments to be made shall be delivered to the Escrow Holder on
the Closing Date, in escrow, pending the prompt recording of the Deed and other
instruments as are required to be recorded to effect the transfer and conveyance
of the Property, upon which recording, and confirmation from the Title Company
that it is prepared to issue an owner's policy of title insurance in the form of
the Specimen Title Policy, insuring the Operating Partnership's title to the
Real Property in the amount of $180,500,000, all instruments and funds shall
then be delivered out of escrow; provided, however, that the Deed shall not be
recorded and such other instruments, funds, and other Closing deliveries shall
be returned by the Escrow Holder to the party which delivered them in the event
that on the Closing Date (i) Owner shall be unable to give title, or to make
conveyance, or to deliver possession, all as herein provided, (ii) the Title
Requirements shall not be satisfied to the satisfaction of the Title Company,
(iii) Owner has not satisfied its obligations or is otherwise in default
hereunder, or (iv) the Property does not conform to the provisions of Section
7.b. hereof, and the provisions of Section 7.c hereof shall then be applicable.
It is acknowledged that time is of the essence of this Agreement. Owner and
Operating Partnership agree (subject to lender approval) to cooperate in good
faith to accomplish the Closing in the so-called "New York style" (that is,
where the Owner's title policy, closing funds and Units are to
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be released from escrow prior to recording of the Deed), but each acknowledges
that a New York style closing shall not be required by this Agreement.
b. Possession and Condition of the Property . Without limiting
the generality of the foregoing, at Closing full possession of the Real Property
free of all tenants and occupants, except for tenants and occupants under the
Leases and the New Leases, is to be delivered, said Property to be then (i) in
substantially the same condition as it is on the date hereof, reasonable use and
wear thereof excepted and except as otherwise provided in Section 17, (ii) in
substantially the same compliance with applicable laws and regulations as at
February 1, 1987, and (iii) in compliance with the provisions of Section 6
hereof. Operating Partnership and/or Operating Partnership's agents shall be
entitled to inspect the Property prior to the delivery of the Deed in order to
determine whether the condition thereof complies with the terms hereof.
c. Extension to Cure. If on the Closing Date Owner shall be
unable to give title, or to make the contribution, or to deliver possession, all
as herein provided, or if on the Closing Date the Property does not conform to
the provisions of Section 7.b. for reasons beyond Owner's reasonable control,
Owner, in its sole discretion, may give notice to Operating Partnership, on or
before the Closing Date, that it elects to use reasonable efforts to cure all
impediments which cause it to be unable to give title, make conveyance or
deliver possession as aforesaid, all as herein provided. Operating Partnership
shall thereupon have the option, to be exercised by notice to Owner given on or
before the third (3rd) business day following receipt of such notice from Owner,
(i) to terminate this Agreement, whereupon Escrow Holder shall return the
Deposit to Operating Partnership and all obligations of the parties hereto shall
cease without recourse to the parties hereto except as otherwise expressly set
forth herein, (ii) to exercise its election under Section 7.e, or (iii) to
extend the Closing Date for a period (the "Owner's Extension Period") of up to
thirty (30) days to permit Owner to cure as aforesaid. In the event that
Operating Partnership shall fail to timely give the aforesaid notice then
Operating Partnership shall be deemed to have elected the option in the
foregoing clause (i).
d. Termination. If at the expiration of the Owner's Extension
Period Owner shall have failed so to give title, make conveyance, deliver
possession, or make the Property conform, as the case may be, all as herein
provided, or if at any time during the period of this Agreement or any extension
thereof, the holder of a mortgage on the Real Property shall refuse to permit
insurance proceeds, if any, to be used for such purposes, then, subject to
Operating Partnership's rights under Section 7.e, this Agreement shall
terminate, whereupon Escrow Holder shall return the Deposit to Operating
Partnership and all obligations of the parties hereto shall cease without
recourse to the parties hereto except as otherwise specifically set forth
herein.
e. Operating Partnership's Election. Operating Partnership
shall have the election, on the original or any extended Closing Date, to accept
such title as Owner
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can deliver to the Property in its then condition and to pay therefor the Agreed
Value without deduction (except to the extent necessary to clear title of (i)
any mortgages or related security documents given or similar encumbrance to
secure indebtedness for money borrowed other than the Loans, (ii) any mechanic's
lien not insured over, or (iii) involuntary liens encumbrances which may be
discharged by the payment of a definite or ascertainable amount of money, or
bonding in lieu thereof, in the amount of $250,000 in the aggregate), in which
case Owner shall convey such title by delivering the Deed subject to the
conditions contained in this Agreement.
f. Accuracy of Representations and Warranties. It is a
condition to Operating Partnership's obligations to proceed to Closing that all
of the representations and warranties of the Owner hereunder are true and
correct in all material respects as of the Closing Date (and subject to any
update or modification thereof as hereinafter provided) and the Owner has
performed all of its covenants hereunder. If any material condition to Operating
Partnership's obligations hereunder is not fulfilled, Operating Partnership
shall have no obligation to proceed to Closing. For purposes of this clause (f),
a material condition shall include, without limitation, any condition(s) which
cannot be cured by the payment of $250,000 in the aggregate.
g. Securities Laws. It shall be a condition of Closing that
there shall be no change in applicable securities laws, or any regulations or
judicial decisions thereunder which would adversely affect the practical
realization of the intended benefits of this Agreement by either party.
h. Status of Contributors. It shall be a condition of Closing
that there shall be no change in the status of any Contributor which would cause
the issuance of any of the Units to be in violation of applicable Securities
Laws.
8. Closing Deliveries.
a. Owner's Deliveries. Owner shall deliver or cause to be
delivered the following documents to Operating Partnership at Closing (the
receipt of all the following by Operating Partnership shall be a precondition to
Operating Partnership's obligation to complete the Closing):
(1) The duly executed and acknowledged Deeds.
(2) The original, signed Leases (or copies thereof if
originals are not available) as well as Owner's
tenant lease files, and the rent roll for the current
month (showing no material adverse change from the
rent roll attached hereto as Exhibit I, each
certified by Owner as being true and correct as of
the Closing. For purposes of this clause (2), a
material adverse change shall include, without
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limitation, any reduction in revenue of $250,000 or
more, in the aggregate.
(3) All tenant security deposits including any interest
earned thereon to the extent required under any
Lease. If any tenant security deposit is in the form
of a letter of credit, Owner shall use reasonable
efforts, after the Closing, to obtain and deliver an
amendment thereto or a replacement letter of credit
naming Operating Partnership as beneficiary. If any
such letter of credit has not been so amended or
replaced as of the Closing, at Closing Owner shall
enter or shall cause Podolsky and Associates L.P.
("Manager") to enter into an agency agreement with
Operating Partnership pursuant to which Owner (or
Manager, as the case may be) will acknowledge that
any such letter of credit is in the name of Owner (or
Manager, as the case may be) as agent for Operating
Partnership, and that Owner or Manager as the case
may be will, as agent for Operating Partnership,
present and draw upon such letter of credit upon
demand by Operating Partnership provided Owner and
Manager are indemnified for all actions taken at the
request of Operating Partnership and are reimbursed
for all costs in connection therewith. The
obligations of Owner and Manager with respect to such
letter of credit security deposits shall survive the
Closing.
(4) A certification duly executed by Owner under penalty
of perjury stating that Owner is not a "foreign
person" within the meaning of Section 1445 of the
Internal Revenue Code of 1986, as amended. If Owner
shall fail or be unable to deliver the same, then
Operating Partnership shall have the right to
withhold such portion of the Agreed Value as may be
necessary, in the opinion of Operating Partnership or
its counsel, to comply with said Section 1445.
(5) Originals (or copies thereof if originals are not
available) of all documents and materials assigned
pursuant to the Contract Assignment.
(6) Originals (if available) of all other Documents which
will be binding upon the Operating Partnership
following the Closing if not already provided,
together with all updates and modifications thereof
and additions thereto through the Closing, and all
other books and records of Owner pertaining in a
material way to the operation and management of the
Property, all certified as being true, complete and
correct by Owner.
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(7) A certificate by Owner to Operating Partnership to
the effect that all of the representations and
warranties of Owner hereunder, as the same may be
modified or updated as set forth herein, remain true
and correct in all material respects as of the
Closing.
(8) Executed and acknowledged counterparts of the General
Instrument of Transfer.
(9) Such affidavits and indemnities, including a standard
owner's affidavit, as the Title Company may
reasonably require to provide extended coverage and
in order to omit from any title insurance policy
issued to Operating Partnership or Operating
Partnership's mortgagee exceptions for (i) parties in
possession (except for tenants under the Leases) and
(ii) mechanic's liens created by or through Owner.
(10) Any trust, corporate, partnership or other
authorization documents necessary to record the Deed.
(11) All necessary consents from the constituent partners
in Owner to the extent such consents are required in
connection with the consummation of the transactions
contemplated by this Agreement.
(12) Evidence of the authority of any individuals or
constituent partners in Owner to execute any
instruments executed and delivered by Owner at
Closing.
(13) Estoppel certificates from tenants of the Property
dated no earlier than thirty (30) days prior to the
Closing Date ("Tenant Estoppels") in the form
attached as Exhibit L-1 hereto (containing no
information which, in Operating Partnership's
reasonable judgment, represents an adverse deviation
from the status of the Lease previously disclosed to
Operating Partnership as of February 1, 1997) from
(i) all tenants identified on Exhibit M hereto as
"Mandatory Estoppels" and (ii) sufficient additional
Tenant Estoppels so as to represent, when added to
the aggregate square footage demised to the Tenants
from whom Tenant Estoppels are obtained as required
by clauses (i) and (ii) of this paragraph, ninety
percent (90%) of the space demised under the Leases.
Owner shall use diligent efforts to obtain Tenant
Estoppels from all tenants. Owner shall provide
Operating Partnership with all executed Tenant
Estoppels and a list of the missing Tenant Estoppels
five (5) business days prior to the Closing Date. To
the extent Tenant Estoppels are received for less
than ninety percent (90%) of the space demised under
the Leases, Owner shall provide, to the extent
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factually true, Owner estoppel certificates in the
form attached as Exhibit L-2 for tenants to the
extent necessary to achieve the ninety percent (90%)
threshold (but Owner shall not be required to provide
estoppel certificates representing more than fifteen
percent (15%) of the demised space). In no event
shall Owner estoppel certificates be substituted for
Mandatory Estoppels. If Owner is unable to deliver
such Owner's estoppel letters because the required
information is untrue (such as a tenant being in
default), Operating Partnership shall have the right
to terminate this Agreement, obtain a return of the
Deposit and neither party shall have further rights
or remedies, except as otherwise provided hereunder.
(14) Evidence of the termination of Owner's property
manager and any leasing agent for the Property.
(15) Evidence satisfactory to Operating Partnership and
Title Company that all real estate taxes, sewer and
water rates and charges, special assessments and
betterments, and any utility charges the non-payment
of which could result in a lien upon the Property
have been paid, to the extent the same are then due
and payable (except for special assessments which may
be paid in installments).
(16) Any of the following which are requested by Operating
Partnership and in the possession of or reasonably
available to Owner: any and all keys, lock and safe
combinations, training and instruction manuals
relating to the maintenance, and operation of the
Property, and copies of books and records.
(17) Evidence reasonably satisfactory to Operating
Partnership that Owner has sent notices of
termination of all Contracts other than the Approved
Contracts.
(18) If the Approved Contracts include any contract for
the construction of tenant improvements to be
assigned by Owner to Operating Partnership, (i)
subject to Operating Partnership's obligations set
forth in Exhibit Q, evidence of payment by Owner of
all amounts incurred thereunder through the Closing
Date, including without limitation receipts and lien
waivers from the general contractor and all
subcontractors thereunder (or, to the extent lien
waivers are not available, such indemnification and
other documentation as shall be required by the Title
Company in order to provide Operating Partnership and
its Lender(s) with affirmative coverage under their
respective title policies), and (ii) if the contract
does not by its
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terms permit assignment, that the contractor consents
to such assignment. In addition, with respect to any
such construction contract having an aggregate
contract price of more than $25,000, Owner shall
represent to Operating Partnership the amounts
theretofore paid under such contract and, to the best
of Owner's knowledge, that (i) the contract is free
from default by such contractor or by Owner as
"owner" thereunder; (ii) all amounts theretofore paid
under such contract; (iii) the contractor has no
claims against the Owner other than for quantified
unpaid amounts; and (iv) the amount of the contract
sum not then due and payable, which representation
shall be treated for all purposes as a representation
made in Section 12 hereof.
(19) Any discharges, releases, other documents or other
conditions required by the Title Company as Owner's
Title Requirements under the Title Commitment are
received or satisfied (and, in addition, it shall be
a condition to Operating Partnership's obligation to
purchase the Property that all of the other Title
Requirements contained in the Title Commitment are
satisfied, other than those Title Requirements which
are personal to Operating Partnership), in each
instance, to the reasonable satisfaction of Title
Company so as to enable Title Company to issue the
owner's title policy in the form of the Specimen
Title Policy.
(20) Subject to the limitations set forth in Section 2(b),
payment of any fees or charges imposed in connection
with the assumption of the Loans, prepayment of any
of the Loans.
(21) Payoff letters in form and substance acceptable to
the Operating Partnership from the holders of the
Loans (other than the Aetna Loans) being assumed.
(22) A "lock up" agreement from each Contributor
containing the restrictions set forth in Paragraph
2(a)(iii) above (which agreement may be incorporated
in the form of assignments to be executed by the
Owner in connection with the liquidation of the
Beneficiaries, subject to the reasonable review and
approval of Operating Partnership).
(23) Documents required by Paragraph 2(a) hereof.
(24) The RPTA Affidavit described in paragraph 5(e)(i)
hereof.
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(25) Such other instruments as Operating Partnership may
reasonably request, provided the same are not
inconsistent with the terms of this Agreement.
If Owner shall be unable to deliver the originals of any of
the Leases, Approved Contracts or other Documents, and if Operating Partnership
shall have need to establish the authenticity of any such Leases, Approved
Contracts or other Documents in connection with any dispute, or legal,
administrative or other proceeding, Owner agrees that upon request by Operating
Partnership at any time, Owner shall provide such affidavits with respect to the
authenticity of any such Leases, Approved Contracts or other Documents as
Operating Partnership shall request. Such obligation to provide affidavits as
aforesaid shall survive the Closing.
b. Mutual Deliveries. Operating Partnership and Owner shall
deliver or cause to be delivered the following at the Closing:
(1) Executed and acknowledged counterparts of the Contract
Assignment.
(2) Executed and acknowledged counterparts of the Lease
Assignment.
(3) A closing statement reflecting the adjustments made at the
Closing and described in Section 9 hereof.
(4) Agreements in the form and substance reasonably
satisfactory to the parties between the Lenders, and Owner and
Operating Partnership related to the acquisition of the
Property "subject to the Loans.
(5) Documents called for by Section 2(a) hereof.
c. Operating Partnership's Deliveries. On the Closing Date,
Operating Partnership shall deliver at the Closing in escrow with the Title
Company:
(1) All documents required of Operating Partnership or the
Company called for by Section 2(a) hereof; and
(2) Such other instruments as Owner may reasonably request.
9. Closing Costs and Prorations. At Closing, closing costs
shall be paid and prorations made as follows:
a. Closing Costs. Owner shall pay any state, county, or local
transfer taxes. Operating Partnership shall pay any recording costs customarily
paid by purchasers of commercial real estate in the Chicago metropolitan area,
and the title insurance
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premium for the owner's title insurance policy issued at Closing to Operating
Partnership by the Title Company and the costs for the Survey. Operating
Partnership and Owner shall each pay one half of any escrow fee charged by the
Title Company.
b. Prorations. The Agreed Value shall be subject to the
following prorations which, at the election of Owner, shall be made in cash and
shall not affect the number of Units issued to Owner:
(1) Taxes. Real property taxes and general, and
special assessments shall be prorated through the Closing Date
on the basis of the fiscal year for such taxes and
assessments. To the extent Owner has undertaken to obtain any
real estate tax abatement, the amount of the net proceeds of
such tax abatement shall be prorated through the Closing Date,
if, as and when such proceeds are paid by the applicable
governmental taxing authority (it being understood that to the
extent any tenant leasing space in the Real Property shall be
entitled to any portion of such tax abatement, that such
portion shall be turned over to Operating Partnership to remit
to such tenant and shall be deducted from any tax abatement
proceeds in connection with calculating the net proceeds
thereof). At Closing, Operating Partnership shall be deemed to
have assumed the obligation of Owner to pay $100,000 in each
of the years 1997 and 1998 to Hynes & Johnson for that firm's
legal representation of Owner regarding real estate tax
assessments for those years.
(2) Rents. Prepaid rent, nondelinquent base rents,
additional rents in the nature of operating expense recoveries
and tax reimbursements under the Leases shall be prorated as
of the Closing Date. Rents collected after the Closing Date
from tenants whose rental was delinquent on the Closing Date,
shall be deemed to apply first to current rental due at the
time of payment and second to the rentals which were
delinquent on the Closing Date. Unpaid and delinquent rents,
to which Owner is entitled, shall be turned over promptly to
Owner if collected by Operating Partnership after the Closing
Date, less any reasonable collection costs actually incurred
by Operating Partnership. Operating Partnership agrees to use
good faith efforts to attempt to collect such rents but shall
not be obligated to terminate any lease or initiate any legal
proceedings. As of the Closing Date, Operating Partnership
shall be entitled to a credit for any tenant security deposits
and interest thereon, if any, and any other amounts due
tenants' pursuant to such security deposits unless such
security deposits are assigned pursuant to Section 8 or have
been previously applied by Owner (an "Applied Security
Deposit"). Owner hereby indemnifies Operating Partnership,
effective from and after the Closing, for the amount of any
Applied Security Deposit and interest, if any, payable thereon
under the applicable Lease applied in violation of any
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Lease, as to which the Tenant under the applicable Lease does
not supply a Tenant Estoppel acknowledging that the security
deposit has become an Applied Security Deposit. In the event
that any additional rent or the calculation thereof is subject
to adjustment pursuant to the terms and provisions of any
Lease (e.g., year-end adjustments to escalation charges and
the like), then after the amount of such additional rent is
finally determined by Operating Partnership and Owner, the
parties shall make the proper adjustments so that the
proration of rents will be accurate based upon the actual
amount of additional rent collected for the period in
question, and payment shall be made promptly to Operating
Partnership or Owner, whichever may be entitled to such
payment, by the other party for the purpose of making such
adjustment.
(3) Utilities. Charges and assessments for sewer and
water and other utilities, including charges for consumption
of electricity, steam and gas shall be apportioned by
Operating Partnership and Owner as of the Closing Date based
on final readings therefor as of the Closing Date (or, if such
final readings have not been obtained, based upon estimates of
the amounts that will be due and payable on the next payment
date). During the 60-day period following the Closing, to the
extent not payable by Tenants, Owner and Operating Partnership
shall recalculate the foregoing adjustments based upon actual
final invoices.
(4) Adjustment of Contracts. Payments required or
received under all Approved Contracts (and unapproved
Contracts, the termination of which is not effective until
after Closing), shall be apportioned by Operating Partnership
and Owner as of the Closing Date, provided, however, that
Owner shall be entitled to reimbursement at Closing for all
Leasing Costs incurred and paid pursuant to any New Lease.
(5) The Loans. Interest due under the Loans shall be
prorated as of the Closing Date.
(6) Construction Inventory. Operating Partnership
shall pay to Owner the sum of $123,160 for the construction
inventory listed on Exhibit B attached hereto.
c. Owner's Payment Obligation. Except as otherwise provided
for herein, all expenses, taxes, fees, charges and assessment of every type
relating to the Property and accruing for any period prior to the Closing shall
be paid promptly by Owner except to the extent that Operating Partnership
received credit therefor at the Closing.
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d. Post Closing Cooperation. After the Closing Operating
Partnership and Owner shall cooperate with each other, and shall cause their
respective property managers for the Property to cooperate with each other,
including without limitation making available books and records for the
Property, in order to respond to any Tenant inquiry concerning, challenge to or
audit of, any operating expense or similar additional rent or rent escalation
item.
The provisions of this Section 9 shall survive Closing.
10. Notice to Tenants. At Closing, Operating Partnership and
Owner shall notify tenants under the Leases in writing of Operating
Partnership's acquisition of the Property, which notices shall be in the form
and substance reasonably satisfactory to Operating Partnership and Owner.
11. Default.
a. Operating Partnership's Default. In the event that this
Agreement does not close due to a default by Operating Partnership, Owner shall
retain the Deposit as liquidated damages, and not as a penalty, and this shall
be Owner's sole and exclusive remedy. The parties agree that Owner's actual
damages would be difficult or impossible to determine if Operating Partnership
defaults, and the Deposit is the best estimate of the amount of damages Owner
would suffer. Owner and Operating Partnership agree that if the Deposit is so
retained by Owner pursuant to this Section 11(a), it shall be paid 60% to
Westbrook Corporate Center Associates, 20% to Westbrook Corporate Center IV
Associates Limited Partnership and 20% to Westbrook Corporate Center V
Associates Limited Partnership.
b. Owner's Default. In the event that this Agreement does not
close as a result of a default by Owner, Operating Partnership shall have the
election (i) to terminate this Agreement, secure a refund of its Deposit and be
reimbursed all costs incurred by Buyer in connection with this transaction, (ii)
seek equitable relief, including specific performance of this Agreement, or
(iii) waive the default and proceed to Closing.
12. Owner's Representations and Warranties. Owner hereby makes
the following representations and warranties to Operating Partnership as of the
Effective Date, which representations and warranties shall survive Closing for
one (1) year:
a. Delivery of Written Materials. All Documents and other
written materials (including, without limitation, the Exhibits to this
Agreement) which Owner has delivered or shall deliver to Operating Partnership
pursuant this Agreement are and shall be complete in all material respects, and
Owner shall deliver or cause to be delivered all such Documents and other
written materials to Operating Partnership pursuant to Section 4 and Section 8
hereof. The copies of the Leases, the Contracts and the Financial
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<PAGE>
Statements now or hereafter delivered to Owner are true and accurate in all
material respects.
b. Other Agreements. On the Closing Date there will be no
material contracts, agreements or understandings oral or written, with any
person affecting the Property which have not been fully performed except the
Approved Contracts, the Leases, the Approvals, the exceptions to title to the
Property.
c. Due Authorization. Subject to the consent and agreement
referred to in paragraph 5(d), Owner has all necessary power and authority to
own and use its properties and to transact the business in which it is engaged,
and has full power and authority to enter into this Agreement, to execute and
deliver the documents and instruments required of Owner herein, and to perform
its obligations hereunder. Owner is duly authorized to execute and deliver, and
perform this Agreement and all documents and instruments and transactions
contemplated hereby or incidental hereto.
d. Intentionally deleted.
e. No Conflict. The execution and delivery of, and
consummation of the transactions contemplated by this Agreement is not
prohibited by, and will not conflict with, constitute grounds for termination
of, or result in the breach of any of the Leases or the Contract Rights or any
other agreement or instrument to which Owner is now a party or otherwise
subject.
f. Leases. (i) Attached hereto as Exhibit I is a full and
complete list of the Leases and any amendments thereto or modifications thereof
and of all other rental or occupancy agreement entered into by Owner with
respect to or affecting the Property, (ii) a full and complete copy of each
Lease and any and all amendments thereto and modifications thereof have been
made available to Operating Partnership, (iii) there are no brokerage fees,
commission or any other payments owed or payable by the Lessor under any of the
Leases, now or in the future, to any parties in connection with any of the
Leases, except for commissions that may become payable for future, unexercised
renewals, extensions or expansions of Leases, a complete list of which is set
forth on Exhibit N or Exhibit Q, the responsibility for which Operating
Partnership shall assume, (iv) no rentals or other amounts due under the Leases
have been paid more than one (1) month in advance (except for rent paid upon
execution of Leases which have not yet commenced, as indicated on Exhibit I),
(v) the transactions contemplated in this Agreement will not cause or constitute
a breach or default under any of the Leases; (vi) except as set forth on Exhibit
I, no security or other deposits of any type have been paid by any of the
Tenants under any of the Leases; (vii) to Owner's knowledge the Leases are in
full force and effect; (viii) except as set forth in Exhibit I to Owner's
knowledge no tenant is delinquent in its obligation to pay rent or other charges
under its Lease and no material breaches or defaults of any of the terms and
provisions of any of the Leases by the Owner or the Tenant thereunder exists;
(ix) except as set forth in Exhibit I or provided
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<PAGE>
in the Lease, there are no outstanding tenant improvement obligations, rent
credits or lease concessions due tenants under the Leases, and (x) none of the
tenants under the Leases has asserted any defenses, set-offs or claims in
connection with any of the Leases;
g. Contracts. There are no service or maintenance contracts or
other Contracts of agreements now in force between Owner and any other party
with respect to or affecting the Property, except for the Contracts set forth on
Exhibit J attached hereto and made a part hereof and except for an either oral
or written agreement from the owner of property across 22nd Street to contribute
to the traffic light maintenance costs, and Owner has made available for
Operating Partnership's inspection full and complete copies of all of the
Contracts and all amendments thereto. There are no agreements with any abutters
to the Property, oral or written, except as described on Part II of Exhibit J
attached hereto.
h. Notices. Owner has received no written notice or citation
(a "Notice"):
(1) From any federal, state, county or municipal authority
alleging any fire, health, safety, building, pollution, environmental,
zoning or other violation of any law, regulation, permit, order or
directive in respect of the Property or any part thereof, which has not
been entirely corrected;
(2) From any insurance company or bonding company of any
defects or inadequacies in the Property or any part thereof, which
would adversely affect the insurability of the same or of any
termination or threatened termination of any policy of insurance or
bond.
If any such Notice is received by Owner prior to Closing, Owner shall
notify Operating Partnership promptly thereof and provide a copy of
such Notice to Operating Partnership.
i. Legal Proceedings. Except as set forth on Exhibit O hereto,
there are no actions, suits or proceedings, pending, or, to Owner's knowledge,
threatened before any court, commission, agency or other administrative
authority against, or affecting Owner or the Property which are not covered by
insurance maintained by Owner.
j. No Employees. Owner does not directly employ any employees
who work at the Property, or, if Owner does employ employees who work at the
Property, the employment of all such employees shall be terminated at Closing.
k. No Adverse Facts. Owner has no actual knowledge of any
structural or material defects to the Property.
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l. Union Contracts. There are no union contracts or collective
bargaining agreements in force affecting Owner or the Property, except with
regard to janitorial services.
m. Hazardous Materials. Owner has delivered to Operating
Partnership all reports in Owner's possession or control related to hazardous
materials. Owner has never used, generated, processed, stored, released,
discharged, transported, handled or disposed of any hazardous matter, hazardous
waste or hazardous substance on, in or in connection with the Property except in
compliance with all applicable laws, and, to Owner's actual knowledge, no prior
owner or operator of the Property has used, generated, processed, stored,
released, discharged, transported, handled or disposed of such waste or
substance on or in the Property. To Owner's actual knowledge, no such hazardous
matter, hazardous waste or hazardous substance is now or has ever been used,
generated, processed, stored, released, discharged, transported, handled or
disposed of on or in the Property except in compliance with all applicable laws.
For the purposes of this paragraph, "hazardous matter", "hazardous waste" and
"hazardous substance" shall mean any material which may be dangerous to health
or to the environment, including without implied limitation all "hazardous
matter", "hazardous materials," "hazardous substances," and "oil" as defined in
any applicable federal, state or local law, rule, order or regulation relating
to the protection of human health and the environment or hazardous or toxic
substances or wastes, pollutants or contaminants, including all of the following
statutes and their implementing regulations:
(A) Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. s.9601 et seq;
(B) Toxic Substances Control Act, 15 U.S.C. s.2601 et
seq;
(C) Federal Insecticide, Fungicide, and Rodenticide Act,
7 U.S.C. s.136;
(D) Federal Water Pollution Control Act, 33 U.S.C.
s.1251 et seq;
(E) Federal Solid Waste Disposal Act, 42 U.S.C. s.6901
et seq;
(F) Clean Air Act, 42 U.S.C. s.7401 et seq;
(G) Applicable laws and regulations of the State of
Illinois relating to hazardous matter, substances or
wastes, waste oil, and air or water quality.
n Assessments. There are no special assessments filed, pending
or, to Owner's actual knowledge, proposed, against the Premises or any portion
thereof, including, without limitation, any street improvement or special
district assessments.
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o [Intentionally Omitted]
p. The Loans. True and complete copies of all documents
evidencing the Loans have been delivered to Operating Partnership. The Loans are
in full force and effect, and Owner is not in default thereunder. The
outstanding principal balance of the Loans excluding the Redemption Notes as of
this date is $126,458,603.69. Owner intends to draw an additional $6,500,000
under the Loan on Building IV (which sum is included in the calculation of
Agreed Value). Other than with respect to the Aetna Loans there are no breakage
costs, prepayment penalties or premiums, assumption fees or like charges which
will be due or payable in connection with the transactions contemplated hereby,
and the Loans (other than the Aetna Loans) may be prepaid at any time.
q. Updating of Schedules, Exhibits, Representations and
Warranties. Owner shall have the right to modify, update and supplement all
representations, warranties, exhibits and schedules attached to or delivered in
connection with this Agreement through the Closing Date, solely with respect to
events occurring after the Effective Date which were not within the reasonable
control of Owner or of which Owner first became aware after the Effective Date,
to the extent required to make such representations, warranties, exhibits and
schedules true, accurate and complete in light of such events; provided,
however, that if any such modification, update or supplement has, in Operating
Partnership's sole judgment, a material adverse effect on the condition or value
of the Property, Operating Partnership shall have the right, as its sole remedy
(unless the same otherwise constitutes or is caused by an intentional default by
Owner hereunder), to terminate this Agreement by notifying Owner, in writing.
For purposes of this clause (q), the term material adverse effect shall include,
without limitation, any condition or state of facts the cost of which exceeds
$250,000 in the aggregate.
r. Village Inspection. Owner and Operating Partnership are
aware that the Village of Westchester requires an inspection of the Property
upon a sale and imposes a fee of $.05 per square foot of space inspected. The
applicable ordinance has been determined to be unconstitutional by the Illinois
Attorney General. Nevertheless, Owner hereby indemnifies and holds Operating
Partnership harmless from any and all loss, cost, claim or damage, including
without limitation the payments of such fee and the repair of any matters
discovered in any subsequent inspection of the Property under such provision,
and any and all fines imposed for failure to so comply. Owner shall not be
required, however, to resolve the matter prior to Closing unless resolution is
necessary to obtain documentary stamps or record the deed.
13. Operating Partnership's Representations, Warranties and
Covenants. Operating Partnership hereby makes the following representations and
warranties to Owner as of the Effective Date:
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a. Due Authorization. Upon satisfaction of the Contingency
described in Section 5(c), Operating Partnership has full power to execute,
deliver and carry out the terms and provisions of this Agreement and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and the individual(s) executing this Agreement on behalf of
Operating Partnership has the authority to bind Operating Partnership to the
terms and conditions of this Agreement.
b. Enforceability. Upon satisfaction of the Contingency
described in Section 5(c), this Agreement and all documents required hereby to
be executed by Operating Partnership, when so executed, shall be legal, valid,
and binding obligations of Operating Partnership, enforceable against Operating
Partnership in accordance with their respective terms.
c. Deferral of Contributor's Gain. If Operating Partnership
(i) fails to maintain for a period of ten (10) years from the Closing Date
nonrecourse indebtedness ("Nonrecourse Debt") such that the amount of such
indebtedness includable by each of the Contributors in each such Contributor's
respective Federal income tax basis for its interest in Operating Partnership is
at least equal to the respective amounts (the "Nonrecourse Built-in Gain") for
such Contributor set forth in the NBG Schedule (as hereinafter defined and
including adjustments thereto pursuant to the third sentence of the fifth
paragraph of this Section 13.c.) (a "Basis Event"), or (ii) sells or otherwise
transfers any portion of the Property prior to the tenth (10th) anniversary of
the Closing Date in a taxable transaction or a non-taxable transaction with
"boot" (a "Sale Event"), then Operating Partnership shall pay to each
Contributor an amount equal to the Tax Payment, calculated in the manner
provided below in this Section 13.c. Each of the events described in the
preceding sentence is herein referred to as a "Gain Recognition Event". Subject
to the remaining terms of this Section 13.c. below, Operating Partnership's
obligation to maintain Nonrecourse Debt includable in a Contributor's Federal
income tax basis for its interest in Operating Partnership shall cease with
respect to each particular Contributor as to that portion of the Nonrecourse
Built-in Gain attributable to the portion of any Property sold or otherwise
transferred by Operating Partnership in a taxable transaction, or, as the case
may be, if there is a non-taxable transaction with boot, as to that portion, if
any, of the Nonrecourse Built-in Gain as to which gain was recognized.
The Tax Payment payable by Operating Partnership to a Contributor
affected by a Sale Event shall be an amount equal to the product of (i) the
Applicable Percentage (as defined below) on the date of the Sale Event, and (ii)
the tax (computed as provided below) on (A) the gain required to be allocated to
the Contributor under Internal Revenue Code Section 704(c) as a result of the
Sale Event minus (B) any passive loss carryforwards at the time of the Sale
Event attributable to the Property which may be available to offset such gain.
The "Applicable Percentage" for purposes of this paragraph shall be 100%,
reducing by 10% on each anniversary of the Closing. Thus, if a Sale Event
occurred between the fifth and sixth anniversaries of the Closing, Operating
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Partnership would be required to pay fifty percent (50%) of the amount
determined under clause (ii).
The Tax Payment payable by the Operating Partnership to a
Contributor affected by a Basis Event shall be an amount equal to the product of
(i) the Applicable Percentage on the date of the Basis Event and (ii) the tax
(computed as provided below) on (A) the gain recognized by the Contributor as a
result of the deemed cash distribution to the Contributor due to the Basis Event
minus (B) any passive loss carryforwards at the time of the Basis Event
attributable to the Property which may be available to offset such gain. The
"Applicable Percentage" for purposes of this paragraph shall be 100%. For
purposes of the Applicable Percentage under this paragraph, a Basis Event shall
be deemed to occur when the payment, repayment, refinancing or other event
occurred which resulted in a reduction in Nonrecourse Debt basis allocable to
the Contributor despite the fact that the occurrence of a Basis Event may not be
determined until the end of Operating Partnership's tax year pursuant to the
provisions of the applicable regulations promulgated pursuant to the Internal
Revenue Code. Nothing in the preceding sentence shall be deemed to affect the
fact that a failure to maintain adequate Nonrecourse Debt may in some instances
be determined only as of the end of Operating Partnership's tax year.
For purposes of computing the Tax Payment, the tax on the
relevant amount of gain or income shall be computed on the basis of the highest
stated marginal federal and state tax rates applicable to the type of gain or
income resulting from the Sale or Basis Event regardless of the amount of tax
actually paid or incurred by the Contributor, except that in determining such
taxes a deduction shall be made for the tax benefit attributable to the
deduction for federal income tax purposes of the assumed state income tax, with
the tax benefit calculated based upon the highest stated marginal federal income
tax rates. For the purposes hereof, the highest applicable stated marginal rate
shall be the highest rate (based on the type of gain or income) stated as a
number (i.e., a percentage), determined without regard to phase-outs, use of tax
tables, and other matters which may affect or result in a different effective
marginal rate. For example, for the above purposes, the highest stated marginal
rate for an individual as of the date hereof (and, for purposes of this example,
without regard to any retroactive changes which may be made in the applicable
law after the date hereof) is 39.6% for ordinary income and 28% for capital
gains.
Within ten (10) days after the date hereof, Owner shall
deliver to Operating Partnership a schedule of the Nonrecourse Built-in Gain
(i.e., the "negative capital account") attributable to each Owner as of December
31, 1996. No later than September 30, 1997, Owner shall deliver to Operating
Partnership a schedule (the "NBG Schedule") of the negative capital accounts for
each Contributor in each Owner as of the Closing (but reflecting any cash
distribution on liquidation of Owner) and the sum of these amounts as to all
Owners shall be the Nonrecourse Built-in Gain as to each Contributor. The sum of
the Nonrecourse Built-in Gain for all Contributors shall not
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exceed $55,000,000 and, should the sum on the NBG Schedule exceed such amount,
the Nonrecourse Built-in Gain of each Contributor shall be reduced
proportionally (in proportion to their respective negative capital account(s))
to the extent necessary to make the total Nonrecourse Built-in Gain for purposes
of the NBG Schedule no more than $55,000,000. Operating Partnership is relying
on the information provided in Schedule NBG as to the amount of Nonrecourse
Built-in Gain, and the occurrence of a Basis Event, and thus Operating
Partnership's responsibility for Tax Payments with respect thereto, shall be
limited based upon the amounts set forth in Schedule NBG (as adjusted pursuant
to the immediately preceding sentence) notwithstanding that a Contributor's
actual amount may be greater than the amounts set forth in Schedule NBG (as
adjusted pursuant to the immediately preceding sentence); however, if the amount
of any Contributor's actual negative capital account as of the Closing (as
adjusted for any cash distribution on liquidation of the Owner) is less than
that shown on Schedule NBG (as adjusted pursuant to the immediately preceding
sentence) the occurrence of a Basis Event, and thus the requirement and amount
of any Tax Payment, shall be based upon the actual amounts.
Within ten (10) days after the date hereof the parties hereto
shall agree on an Exhibit H to be attached hereto, which Exhibit H shall be the
agreed value allocation to each Owner of the aggregate gross value of the Real
Property.
Each Contributor shall, upon request of Operating Partnership,
provide it with copies of such tax returns, schedules and other information
reasonably requested by Operating Partnership to enable it to make any necessary
calculations hereunder, including, without limitation, copies of state and
federal tax returns and schedules of passive loss carryforwards. In lieu of
providing such information, a Contributor may instead provide a certification
from a certified public accountant reasonably acceptable to Operating
Partnership as to the Tax Payment due to such Contributor, such certification to
include reasonable detail as to the calculation thereof and any assumptions and
other material matters with respect thereto.
Any Tax Payment hereunder shall be payable by Operating
Partnership on or before the later of (i) March 15th of the calendar year
following a Gain Recognition Event or (ii) twenty-five (25) days after the
Contributor has provided the information required under the preceding provisions
of this Section 13.c. as to the calculation of any Tax Payment, provided that if
as a result of a Gain Recognition Event a Contributor is required to make
estimated tax payments in excess of the estimated tax payments it would have had
to make to qualify under the applicable safe harbor rules, then appropriate
portions of the Tax Payment shall be made to Contributor in the amount of such
excess on the later of (x) ten (10) days before each such estimated tax payment
is due, and (y) ten (10) days after the Contributor has provided Operating
Partnership with the amount of such excess then due, including reasonable detail
as to the calculation thereof. Any Tax Payment not made when due hereunder shall
bear interest and late payment penalties in the same amount as would be imposed
by the Internal Revenue Service on a tax not paid
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when due. The Contributor shall also be entitled to recover all costs of
collection including reasonable attorneys' fees.
The provisions of this Section 13.c. shall apply only to the circumstances
specifically defined as either a Basis Event or a Sale Event and shall not apply
to, and no Tax Payment shall be payable as a result of, any tax consequences
arising from any other transaction or event or as a result of any transfer by,
or any other act, action or omission of, any Contributor.
Operating Partnership agrees that to the extent of any conflict between the
terms of this Section 13.c. and Section 7.1D of the Partnership Agreement,
Section 13 of this Agreement shall control. The provisions of this Section 13.c.
shall survive the Closing and shall continue without regard to the limits set
forth in Section 16 hereof. The payments required to be made to a Contributor
pursuant to this Section 13.c. shall be the sole and exclusive remedy available
to a Contributor in the event of a Gain Recognition Event.
d. If the Closing shall occur, the provisions of Section 11
and 16 hereof shall not limit the liability of Operating Partnership for breach
of the foregoing representations, warranties and covenants.
14. Actions After the Effective Date. The parties covenant to
do the following through the Closing Date.
a. Title. Owner shall not make any changes in the condition of
title to the Property from and after the Effective Date which will not be
released and removed at Closing, except with Operating Partnership's advance
written consent, which consent shall not be unreasonably withheld or delayed.
b. Maintenance and Operation of Property. Owner shall continue
to operate, maintain and insure the Property consistent with the present
business and operations thereof and in a first-class manner, and Owner shall
maintain the Buildings, improvements, utilities, and systems that comprise or
that are upon the Property in good condition and repair, normal wear and tear
and casualty (subject to the provisions of Section 17 below) excepted, it being
the intention of the parties hereto that the general operations of the Property
shall not be changed between the date hereof and the date of Closing; and to the
extent any of the building systems should break or otherwise become
dysfunctional, Owner shall cause the same to be repaired and put in good working
order prior to the Closing Date. Owner shall maintain all existing insurance
property and casualty insurance coverages (or similar replacements thereof) and
liability insurance in an amount of no less than $10,000,000 in full force and
effect until the Closing. Owner shall not enter into any new Contract or
equipment lease which will survive the Closing without the prior written consent
of Operating Partnership, which consent shall not be unreasonably withheld with
respect to any such proposed Contract or equipment lease
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<PAGE>
that may be terminated with thirty (30) days notice. Any such Contract or
equipment lease approved by Operating Partnership shall be deemed an Approved
Contract. Except as provided in Exhibit Q, Owner shall complete all tenant
improvement work and pay all brokerage commissions with respect to any leases
entered into prior to the date of this Agreement.
c. Intentionally Deleted.
d. Entry; Operating Partnership's Inspection. Operating
Partnership and its agents, employees and contractors may enter the Property for
purposes of inspection and survey and conducting soils, engineering and other
tests. Operating Partnership shall perform any testing or inspection of the
Property only after Operating Partnership has provided to Owner certificates of
insurance or other evidence reasonably satisfactory to Owner that Operating
Partnership and its consultant, agent or representative carries general
liability insurance in an amount of at least Three Million Dollars ($3,000,000)
together with evidence of adequate worker's compensation insurance. Operating
Partnership shall perform the testing and inspection of the Property at such
times and so as to cause no unreasonable disturbance of the operation of the
Property and the possession thereof by the tenants. Owner shall have the right,
at its option, to cause Owner's representative to be present at all inspections,
reviews and examinations conducted on the Property by Operating Partnership.
Operating Partnership shall give to Owner one (1) business day's advance notice
of any such inspections, reviews or examinations. Operating Partnership shall
repair any damage and indemnify, defend and hold Owner harmless from any cost,
claim or expense arising from such entry by Operating Partnership or from the
performance of any such tests by Operating Partnership, except that Operating
Partnership's agreements as set forth in this sentence shall not extend to any
pre-existing condition that is discovered by Operating Partnership to be present
on, under or about the Property. The obligations of Operating Partnership set
forth in the immediately preceding sentence shall survive the Closing or any
earlier termination of this Agreement. Operating Partnership may also enter the
Property for the purpose of conducting interviews with existing tenants under
the Leases, but entry for such purpose shall be made only with prior appointment
with Owner or Owner's management agent for the Property, and Owner shall have
the right to have its representative accompany Operating Partnership on any such
interview.
e. Leasing. In order to provide for an efficient process for
the approval of any New Lease (hereinafter defined), Owner shall meet with
Operating Partnership from time to time to discuss leasing parameters and lease
proposals. As any proposal for a New Lease is received by Owner, it shall notify
Operating Partnership and afford Operating Partnership an opportunity to comment
upon the proposal to Owner prior to Owner responding to such proposal. Owner,
however, shall not be bound by the comments or suggestions of Operating
Partnership. Owner, however, shall not enter into any new Lease or any amendment
or modification to any Lease except as may be required pursuant to such Lease
(any of the foregoing and those leases set forth in Exhibit Q
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<PAGE>
attached hereto a "New Lease") of the Property or any portion thereof, or any
construction contract for the construction of tenant improvements in connection
with any proposed Lease, except in compliance with this Section 14.e. A copy of
each New Lease proposed to be entered into by Owner after the Effective Date
will be submitted to Operating Partnership for its approval prior to execution
by Owner, together with a reasonably detailed budget setting forth the Leasing
Costs to be incurred in connection with such New Lease, and a copy of any
proposed construction contract for the construction of tenant improvements in
connection with such proposed New Lease, together with a full disclosure of any
affiliation between Owner and the proposed tenant or contractor. Operating
Partnership shall notify Owner in writing within five (5) business days after
its receipt of each such proposed New Lease, budget, and construction contract,
if applicable, either of its approval or disapproval thereof, including of the
leasing costs to be incurred in connection therewith and of any such
construction contract. In the event Operating Partnership informs Owner that
Operating Partnership does not approve any such proposed New Lease, which
approval shall not be unreasonably withheld or delayed, Owner shall not enter
into such New Lease, or any such construction contract, as the case may be. In
the event Operating Partnership fails to notify Owner in writing of its approval
or disapproval of any such proposed New Lease or contract within the five-day
time period for such purpose set forth above, such failure shall be deemed the
approval by Operating Partnership of such New Lease, budget and contract. Upon
the approval or deemed approval of any such construction contract, if the work
under such contract is not complete as of the Closing Date, such contract shall
be treated for all purposes as an Approved Contract. If Operating Partnership
approves, or is deemed to have approved of, any New Lease, Leasing Costs
incurred by Owner in connection therewith in an amount not to exceed the amount
of such Leasing Costs approved or deemed approved by Operating Partnership as
provided herein, shall, if a Closing shall occur, be the obligation of Operating
Partnership, and to the extent that Owner has theretofore expended any sums for
any of the foregoing, Operating Partnership shall, subject to such limitation,
reimburse Owner at Closing for the amount of any such sums expended.
In connection with the New Leases, Owner has an existing
contract with Krusinski Construction Company for tenant improvement work at the
Property. Owner shall terminate that contract at or prior to the Closing Date
except with respect to work in process on the Closing Date and authorized in
accordance with the prior paragraph.
f. Subordination Non-Disturbance, and Attornment Agreements.
To the extent required by Aetna, Owner shall seek Subordination, Non-Disturbance
and Attornment Agreements from Tenants under Leases and New Leases, in such form
as may be required by Aetna for execution and delivery by such Tenants on or
before the Closing (or, if a Lease requires a particular form of SNDA, in the
form required by such Lease).
15. Use of Proceeds to Clear Title. Any unpaid taxes,
assessments, water charges and sewer rents, together with the interest and
penalties thereon to Closing
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<PAGE>
Date, and any other liens and encumbrances which Owner is obligated to pay and
discharge together with the cost of recording and filing any instruments
necessary to discharge such liens and encumbrances of record, may be paid out of
the proceeds of the monies payable on the Closing Date if Owner delivers to
Operating Partnership on the Closing Date official bills for such taxes,
assessments, water charges, sewer rents, interest and penalties and instruments
in recordable form sufficient to discharge any other liens and encumbrances of
record and Operating Partnership's title company agrees to insure against such
liens or encumbrances.
16. Survival. Unless otherwise expressly stated to the
contrary, the remedies for breach of representations and warranties of Owner
contained in Section 12 hereof and the terms, covenants and indemnities
contained in this Agreement required to be operative after delivery of the Deed
shall survive delivery of the Deed for one (1) year after the Closing, and, to
the extent notice of breach has been sent within such one (1) year period and an
action has been commenced within ninety (90) days thereafter, until final
unappealable adjudication thereof, and shall not be deemed to have been merged
in the Deed. Owner agrees to indemnify and hold Operating Partnership harmless
from and against any and all claim, loss, liability or expense (including
reasonable counsel fees) incurred in connection with or arising out of the
breach of any representation, warranty or agreement of Owner contained in this
Agreement. The representations and warranties of the Owner which by the terms of
this Agreement survive the Closing shall be enforceable against Podolsky Family
Limited Partnership (PFLP). For the period set forth above, the PFLP shall not,
by its act or omission, dispose of or encumber the Units delivered to it
pursuant to this Agreement and the liquidation of the respective Owners in a
manner which will reduce the unencumbered value of Units held by PFLP below
$5,000,000.00.
Unless otherwise expressly stated to the contrary, the
representations and warranties of Operating Partnership contained in Section 13
hereof and the terms, covenants and indemnities contained in this Agreement
required to be operative after delivery of the Deed shall survive for one (1)
year after the Closing and shall not be deemed to have merged into the Deed.
Operating Partnership agrees to indemnify and hold Owner harmless from and
against any and all claims, loss, liability or expense (including reasonable
counsel fees) incurred in connection with or arising out of breach of any
representation, warranty, easement or agreement of Operating Partnership
contained in this Agreement.
17. Damage to Property. If the Property or any part thereof
(i) is damaged by casualty or (ii) is taken by exercise of the power of eminent
domain prior to the Closing Date, and in the case of either such casualty or
taking the damage to the Property exceeds $250,000, as reasonably determined by
Operating Partnership, Operating Partnership may terminate by notice given to
Owner within thirty (30) days of the date Owner gives notice to Operating
Partnership of such casualty or taking. If Operating Partnership does not so
terminate this Agreement or such damage does not exceed $250,000 the parties
shall proceed to Closing without any reduction in the Agreed
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<PAGE>
Value except as specifically provided below. At the Closing, Owner shall assign
to Operating Partnership all insurance proceeds arising from the casualty (to
the extent not applied to any restoration relating thereto), together with a
credit against the Agreed Value equal to the deductible amount under the
applicable insurance policy, or pay over or assign to Operating Partnership all
awards recovered or recoverable on account of such taking.
18. Brokerage Commission. Owner and Operating Partnership each
warrant to the other party that its sole contact with the other party or the
Property regarding this transaction has been directly with the other party other
than Podolsky and Associates L.P. (the "Owner's Broker"). Owner shall be
responsible for any fees or commissions payable to the Broker. Owner and
Operating Partnership further warrant to each other that, except as set forth
above, no broker or finder can properly claim a right to a commission or
finder's fee based upon contacts between the claimant and the warranting party
with respect to the other party or the Property. Owner and Operating Partnership
shall indemnify, defend and hold the other party harmless from and against any
loss, cost or expense, including, but not limited to, attorneys' fees and court
costs, resulting from any claim for a fee or commission by any broker or finder
in connection with the Property and this Agreement resulting from the
indemnifying party's actions. The foregoing indemnities shall survive the
Closing and shall not be subject to the general one (1) year limitation on
survival of representations and warranties.
19. Disclosure; Audit Right.
a. Public Disclosure of Agreement. Owner acknowledges that
Beacon Properties Corporation, the general partner of Operating Partnership, is
a publicly owned corporation subject to regulation by the Securities and
Exchange Commission ("SEC"), and that the regulations of the SEC may require
that Operating Partnership disclose the existence of this Agreement and the
contents of some or all of the Documents delivered by Owner. Accordingly, Owner
expressly consents to the disclosure of the terms and conditions of this
transaction, this Agreement itself, and terms of any Document which Operating
Partnership in good faith believes should be disclosed in connection with
fulfillment of its disclosure requirements under SEC regulations. In addition,
Operating Partnership and Owner shall have the right to issue press releases
announcing this transaction at any time after the date hereof. Each shall be
entitled to a prior review of the other's press release.
b. Right to Audit. Pursuant to Section 4.g hereof, Owner is
obligated to deliver to Operating Partnership certain financial statements and
balance sheets for the Property. In order to comply with SEC regulations,
Operating Partnership may need the right prior to or subsequent to Closing, to
conduct an audit of Owner's books and records for the Property in conformity
with Section 3.14 of SEC Regulation SX for 1994, 1995, 1996 and/or for Owner's
period of ownership in 1997, at Operating Partnership's sole cost and expense.
Owner hereby agrees to permit Operating Partnership and Operating
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<PAGE>
Partnership's accountants access to such books and records (including those
maintained by Owner's management agent for the Property) and to cooperate with
Operating Partnership, and to cause Owner's accountants to cooperate with
Operating Partnership, at no cost to Owner, to enable such audit to be
performed. Operating Partnership agrees that no information disclosed in such
audit will alter any obligation of Owner. The provisions of this Section 19.b
shall survive the Closing indefinitely.
20. Successors and Assigns. The terms, covenants and
conditions herein contained shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto. Operating Partnership may
assign its rights and obligations hereunder to any affiliate of Beacon
Properties Corporation or to any entity in which Operating Partnership, and/or
any affiliate of Beacon Properties Corporation, have an economic interest.
Except for the assignment permitted by the preceding sentence, Operating
Partnership may not assign Operating Partnership's rights hereunder to any party
without Owner's consent. No such assignment shall relieve Operating Partnership
named herein of any liability to Owner.
21. Entire Agreement. This Agreement and the Confidentiality
Agreement contain all of the covenants, conditions and agreements between the
parties and shall supersede all prior correspondence, agreements and
understandings, both verbal and written. The parties intend that this Agreement
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence may be introduced in any proceeding involving this Agreement.
22. Attorneys' Fees. In the event of any litigation regarding
the rights and obligations under this Agreement or in the Escrow Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees and court
costs. Each party shall bear its own attorneys' fees in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereunder.
23. Notices. All notices required to be given pursuant to the
terms hereof shall be in writing and delivered by registered or certified mail
(with postage prepaid and return receipt requested), or by overnight delivery
service or private commercial courier which provides receipt of delivery (such
as Federal Express) or via facsimile transmission (with confirmation copy sent
by overnight delivery service), and any notice so delivered shall be deemed
given upon receipt or refusal of delivery, whichever shall first occur,
addressed to Owner at Owner's Address, with a courtesy copy to Sidney G. Saltz,
Esq., Jenner & Block, One IBM Plaza, Chicago, Illinois 60611 and to Larry Blust,
Esq. Jenner & Block, One IBM Plaza, Chicago, Illinois 60611; and to Operating
Partnership at Operating Partnership's Address, with a courtesy copy to Jordan
P. Krasnow, Esq., Goulston & Storrs, P.C., 400 Atlantic Avenue, Boston,
Massachusetts 02110-3333 and to William A. Bonn, Esq. General Counsel, Beacon
Properties Corporation, 50 Rowes Wharf, Boston, MA 02110. The foregoing
addresses may be changed by written notice to the other party as provided
herein.
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<PAGE>
24. Exhibits and Defined Terms. All exhibits attached hereto
are incorporated herein by reference thereto. All of the terms and definitions
set forth in the Defined Terms section are incorporated in this Agreement by
reference thereto.
25. Time. Time is of the essence of every provision herein
contained. When the last day for the performance of any act permitted or
required hereunder falls on any day which is not a business day in the Chicago,
Illinois or Boston, Massachusetts, such act may be performed on the next
business day in said city.
26. Applicable Law. This Agreement shall be governed by the
laws of the State of Illinois.
27. No Oral Modification or Waiver. This Agreement may not be
changed or amended orally, but only by an agreement in writing. No waiver shall
be effective hereunder unless given in writing, and waiver shall not be inferred
from any conduct of either party.
28. No Recording. Operating Partnership agrees that it shall
not record this Agreement or any summary of the provisions thereof. Any such
recording shall automatically render this Agreement null and void.
29. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
30. Books and Records. From and after Closing, Owner shall
have the right to inspect and otherwise have access to any books and records for
the Property to the extent necessary for Owner to complete any tax returns or to
reconcile any payments or credits for real estate taxes, common area expenses or
other similar items.
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<PAGE>
THE FOLLOWING PAGES ARE THE SIGNATURE PAGES FOR THAT CERTAIN
CONTRIBUTION AGREEMENT BETWEEN THE PARTIES DESCRIBED BELOW
DATED AS OF MARCH __, 1997
IN WITNESS WHEREOF, the parties hereto have executed one or more copies of this
Agreement under seal the day and year first above written.
"Owner"
WESTBROOK CORPORATE CENTER ASSOCIATES, an Illinois limited
partnership
By: Podolsky Family Limited Partnership, an Illinois
limited partnership, its sole general partner
By: The Milton Podolsky Revocable Trust under
agreement dated May 26, 1978, General
Partner
By: _____________________________________
Milton Podolsky, Trustee
WESTBROOK CORPORATE CENTER IV ASSOCIATES, an Illinois
limited partnership
By: Podolsky Family Limited Partnership, an Illinois
limited partnership, its sole general partner
By: The Milton Podolsky Revocable Trust under
agreement dated May 26, 1978, General
Partner
By: _____________________________________
Milton Podolsky, Trustee
<PAGE>
THE FOLLOWING PAGES ARE THE SIGNATURE PAGES FOR THAT CERTAIN CONTRIBUTION
AGREEMENT BETWEEN THE PARTIES DESCRIBED BELOW DATED AS OF MARCH __, 1997
WESTBROOK CORPORATE CENTER
V ASSOCIATES, an Illinois limited
partnership
By: Podolsky Family Limited Partnership, an Illinois
limited partnership, its sole general partner
By: The Milton Podolsky Revocable Trust under
agreement dated May 26, 1978, General
Partner
By: _____________________________________
Milton Podolsky, Trustee
"Operating Partnership"
BEACON PROPERTIES, L.P.
By: Beacon Properties Corporation, General Partner
By: ______________________________________________
Charles H. Cremens
Senior Vice President
<PAGE>
EXHIBIT K
ESCROW AGREEMENT
To: Commonwealth Land Title Insurance Company
Re: Contribution Agreement dated __________, 1997 (the
"Agreement") by and between Westbrook Corporate Center
Associates, Westbrook Corporate Center IV Associates Limited
Partnership, and Westbrook Corporate Center V Associates
Limited Partnership (collectively, "Owner"), and Beacon
Properties, L.P., a Delaware limited partnership ("Operating
Partnership"), with respect to the purchase and sale of
Westbrook Corporate Center, Westchester, Illinois 60154
Date: ____________, 1997
Gentlemen:
Commonwealth Land Title Insurance Company is hereby requested to act as escrow
holder for the above referenced transaction pursuant to and in accordance with
this Escrow Agreement (this "Agreement"). Capitalized terms used herein without
definition which are defined in the Agreement, a copy of which is delivered
herewith, shall have the meanings ascribed to them therein. Without limiting the
generality of the foregoing, Commonwealth Land Title Insurance Company is hereby
deemed to be the "Escrow Holder" within the meaning of the Purchase Agreement.
1. On or before ____, 1997 Operating Partnership shall deposit with Escrow
Holder the sum of Five Million and 00/100 Dollars ($5,000,000.00) pursuant to
the Agreement, which is to be held in an interest-bearing account with The First
National Bank of Boston or other bank acceptable to Operating Partnership and
Owner. Such cash deposit, together with all interest earned thereon, shall
hereinafter be referred to as the "Deposit".
2. Operating Partnership's tax identification number is 04-3224259. Owner's tax
identification numbers are Westbrook Corporate Center Associates 36-3313288;
Westbrook Corporate Center IV Associates Limited Partnership 36-3980287;
Westbrook Corporate Center V Associates Limited Partnership 36-3981444. Wiring
instructions for each of Escrow Holder, Operating Partnership and Owner are
attached hereto as Schedule A.
<PAGE>
3. If Operating Partnership shall terminate the Purchase Agreement or the
Purchase Agreement shall terminate in accordance with its terms, Operating
Partnership may so notify Escrow Holder in writing (the "Operating Partnership's
Deposit Notice"), with a copy of such notice to Owner. If within ten (10) days
after the date of the Operating Partnership's Deposit Notice Owner has not given
Escrow Holder a Dispute Notice in accordance with in Section 6 below, Escrow
Holder shall pay over the Deposit to Operating Partnership, whereupon this
Agreement shall terminate.
4. If Owner shall have a right to retain the Deposit pursuant to Section 11.a of
the Purchase Agreement by reason of Operating Partnership's default, Owner may
so notify Escrow Holder in writing (the "Owner's Deposit Notice"), with a copy
of such notice to Operating Partnership. If within ten (10) days after the date
of the Owner's Deposit Notice, Operating Partnership has not given Escrow Holder
a Dispute Notice in accordance with Section 6 below, Escrow Holder shall pay
over the Deposit to Owner, whereupon this Agreement shall terminate.
5. Upon the occurrence of the Closing, Operating Partnership and Owner shall
jointly notify Escrow Holder thereof in writing, and Escrow Holder shall release
the Deposit to Operating Partnership, whereupon this Agreement shall terminate.
6. If at any time hereafter either Operating Partnership or Owner (the "Notice
Party") shall deliver to the other (the "Recipient") and to Escrow Holder a
written notice (given in accordance with either Paragraph 3 or 4 hereof)
asserting that the Notice Party is entitled to the Deposit (a "Demand Notice"),
the Demand Notice shall include a copy of the notice to given to the Recipient
pursuant to the Agreement and a statement, on which Escrow Holder may rely, that
the Notice Party has notified the Recipient that the Notice Party is entitled to
the Deposit. Escrow Holder shall, ten (10) days after receipt of a Demand
Notice, deliver the Deposit in accordance with Section 3 or Section 4 hereof, as
applicable, unless within said period of ten (10) days the Recipient shall give
written notice to Escrow Holder and the Notice Party that it disputes the Notice
Party's claim to the Deposit (a "Dispute Notice"), in which case Escrow Holder
shall retain the Deposit until it receives written instructions executed by both
Owner and Operating Partnership as to the disposition and disbursement of the
Deposit, or until ordered by final court order, decree or judgment, which has
not been appealed, to deliver the Deposit to a particular party, in which event
the Deposit shall be delivered in accordance with such notice, instruction,
order, decree or judgment.
7. The duties of the Escrow Holder shall be determined solely by the express
provisions of this Agreement and are purely ministerial in nature. The Escrow
Holder is not charging a fee for performing its services under this Agreement.
If there is any dispute between the parties hereto as to whether or not the
Escrow Holder is obligated to disburse or release the Deposit held under and
pursuant to this Agreement, the Escrow Holder shall not be obligated to make
such disbursement or delivery, but in such event shall hold the Deposit until
receipt by the Escrow Holder of (i) an
<PAGE>
authorization in writing signed by all persons having an interest in said
dispute, directing the disposition of the Deposit, or (ii) a final judgment
regarding the rights of the parties in an appropriate legal proceeding. The
Escrow Holder is authorized by Operating Partnership and Owner to interplead all
interested parties in any court having jurisdiction and to deposit the Deposit
with the clerk of any such court, and thereupon the Escrow Holder shall be fully
relieved and discharged of any further responsibility under this Agreement.
8. Upon disbursement of the Deposit in accordance with this Agreement, all
rights and obligations of the Escrow Holder shall be deemed to have been
satisfied and Operating Partnership and Owner shall have no recourse against the
Escrow Holder.
9. The Escrow Holder shall not be liable for any mistake of fact or error of
judgment or any acts or omissions of any kind unless caused by its willful
misconduct or gross negligence. The parties hereto each release the Escrow
Holder from liability for any act done or omitted to be done by the Escrow
Holder in good faith in the performance of its obligations and duties hereunder.
The Escrow Holder shall be entitled to rely on any instrument or signature
believed by it to be genuine and may assume that any person purporting to give
any writing, notice, or instruction in connection with this Agreement is duly
authorized to do so by the party on whose behalf of such writing, notice, or
instruction is given.
10. The undersigned hereby jointly and severally indemnify, the Escrow Holder
for and hold it harmless against any loss, liability, or expense incurred
without negligence or bad faith on the part of the Escrow Holder arising out of
or in connection with the acceptance of or the performance of its duties under
this Agreement ("Indemnified Expenses"), as well as the costs and expenses,
including reasonable attorneys' fees and disbursements, of defending against any
claim or liability arising under this Agreement; provided, however, that if the
Indemnified Expense is incurred because of the fault of either the Operating
Partnership or Owner then the party at fault shall be responsible for the cost.
11. This Agreement shall be construed in accordance with the laws of State of
Illinois.
12. This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
13. This Agreement may not be changed or modified except as agreed in a writing
signed by each of the parties hereto. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective heirs, successors and
assigns.
<PAGE>
14. All notices required to be given pursuant to the terms hereof shall be in
writing and delivered by registered or certified mail (with postage prepaid,
return receipt requested) or by overnight delivery service or private commercial
courier (such as Federal Express), addressed to Owner and Operating Partnership
and to the parties entitled to copies as provided in the Agreement and to Escrow
Holder at _______________________, Boston, Massachusetts, Attention:
______________, Esq. Any notice so given shall be deemed given upon receipt or
refusal of delivery, whichever shall first occur.
15. As between the Operating Partnership and Owner, in the event of any
inconsistency between the terms of this Agreement and the Purchase Agreement,
the terms of the Purchase Agreement shall control.
The foregoing is executed under seal as of the date first above written.
THE OWNER:
WESTBROOK CORPORATE CENTER
ASSOCIATES, an Illinois limited
partnership
By their counsel Jenner & Block
By:________________________
<PAGE>
WESTBROOK CORPORATE CENTER
IV ASSOCIATES, an Illinois limited
partnership
By their counsel Jenner & Block
By:________________________
WESTBROOK CORPORATE CENTER
V ASSOCIATES, an Illinois limited
partnership
By their counsel Jenner & Block
By:________________________
"Operating Partnership"
BEACON PROPERTIES, L.P.
By: Beacon Properties Corporation, General Partner
By:___________________________
Charles H. Cremens
Senior Vice President
<PAGE>
The foregoing is agreed to
as of this day of ____________, 1997.
COMMONWEALTH LAND
TITLE INSURANCE COMPANY
By:__________________________________
Title:
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
Beacon Properties Corporation on Form S-3 (File Nos. 333-05707, 333-21787 and
333-21769) and Form S-8 (File Nos. 33-88606 and 333-19603) of our audit report
dated March 11, 1997 on our audit of the statement of excess of revenues over
specific operating expenses of 10880 Wilshire Boulevard in Westwood, California
for the year ended December 31, 1996, of our report dated March 18, 1997 on our
audit of the statement of excess of revenues over specific operating expenses of
Centerpointe in Fairfax, Virginia for the year ended December 31, 1996, and of
our report dated March 21, 1997 on our audit of the statement of excess of
revenues over specific operating expenses of Westbrook Corporate Center in
Westchester, Illinois for the year ended December 31, 1996, which reports are
included in this Form 8-K.
/s/ COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 26, 1997
